SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C. 20549


                                 FORM 10-K


               ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                 OF THE SECURITIES AND EXCHANGE ACT OF 1934

               For the fiscal year ended September 30, 1998

                     Commission file number: 000-21377


                       ROFIN-SINAR TECHNOLOGIES, INC.
          ------------------------------------------------------
          (Exact name of Registrant as specified in its charter)


            Delaware                                          38-3306461
-------------------------------                          -------------------
(State or other jurisdiction of                           (I.R.S. Employer
 incorporation or organization)                          Identification No.)



   45701 Mast Street, Plymouth, MI                               48170
--------------------------------------                         ----------
(Address of principal executive offices)                       (Zip Code)


Registrant's telephone number, including area code:  (734) 455-5400

Securities registered pursuant to Section 12(b) of the Act:  NONE

Securities registered pursuant to Section 12(g) of the Act:


                            Title of each class
                            -------------------
                       Common Stock, $.01 par value
       Rights Associated with Common Stock, par value $.01 per Share


Indicate by check mark whether the Registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act 
of 1934 during the preceding 12 months (or for such shorter period that the 
Registrant was required to file such reports) and (2) has been subject to 
such filing requirements for the past 90 days.

YES [ X ]    NO [   ]
   

Indicate by check mark if disclosure of delinquent filers pursuant to Item 
405 of Regulation S-K is not contained herein, and will not be contained, to 
the best of Registrant's knowledge, in definitive proxy or information 
statements incorporated by reference in Part III of this Form 10-K or any 
amendment to this Form 10-K. [X]

The aggregate market value of the common stock held by non-affiliates of the 
Registrant (based upon the closing price of the stock on the Nasdaq National 
Market on December 17, 1998) was approximately $109,467,550.

11,522,900 shares of the Registrant's common stock, par value $.01 per 
share, were outstanding as of December 17, 1998.


                       Documents Incorporated by Reference
                      -------------------------------------
Certain sections of the Company's Proxy Statement to be filed in connection 
with the Company's 1999 Annual Meeting of Stockholders to be held in March
1999 are incorporated by reference herein at Part III, Items 10 - 13.



<PAGE>
                        ROFIN-SINAR TECHNOLOGIES, INC.

                              TABLE OF CONTENTS


            Item                                                        Page
--------    ------------------------------------------------------      ----

PART I      1.  Business                                                  3

            2.  Properties                                               24

            3.  Legal Proceedings                                        24

            4.  Submission of Matters to a Vote of Security Holders      24

PART II     5.  Market Price of the Registrant's Common
                Equity and Related Stockholder Matters                   25

            6.  Selected Financial Data                                  26

            7.  Management's Discussion and Analysis of
                Financial Condition and Results of Operations            27

            7A. Quantitative and Qualitative Disclosures about
                Market Risk                                              33

            8.  Consolidated Financial Statements and 
                Supplementary Data                                       33

            9.  Changes in and Disagreements with Accountants
                on Accounting and Financial Disclosure                   33

PART III    10. Directors and Executive Officers of the Registrant       34

            11. Executive Compensation                                   34

            12. Security Ownership of Certain
                Beneficial Owners and Management                         34

            13. Certain Relationships and Related Transactions           34

PART IV     14. Exhibits, Consolidated Financial Statement
                Schedules, and Reports on Form 8-K                       35


SIGNATURES                                                               38









<PAGE>
                                   PART I


Special Note Regarding Forward-Looking Statements

Certain statements in this Annual Report on Form 10-K constitute forward-
looking statements within the meaning of the Private Securities Litigation 
Reform Act of 1995 (the "Reform Act").  Such forward-looking statements 
involve known and unknown risks, uncertainties, and other factors which may 
cause the actual results, performance, or achievements of the Company to be 
materially different from any future results, performance or achievements, 
expressed or implied by such forward-looking statements, including those 
factors set forth under "Risk Factors", below.  In making these forward- 
looking statements, the Company claims the protection of the safe-harbor for 
forward-looking statements contained in the Reform Act.  The Company does 
not assume any obligation to update these forward-looking statements to 
reflect actual results, changes in assumptions, or changes in other factors 
affecting such forward-looking statements.

ITEM 1.     BUSINESS

COMPANY OVERVIEW

Rofin-Sinar Technologies Inc. ("Rofin-Sinar" or the "Company") was 
incorporated in Delaware on July 19, 1996.  On September 30, 1996, the 
Company consummated an initial public offering of its common stock ("IPO").  
Prior to the IPO, the common stock of Rofin-Sinar, a newly formed holding 
company, Rofin-Sinar Inc. ("RSI") and Rofin-Sinar Laser GmbH ("RSL") were 
each owned directly or indirectly by Siemens AG ("Siemens").   RSL includes 
the consolidated accounts of its 99.97% owned subsidiary, Rofin-Sinar France 
S.A.; its 90.65% owned subsidiary Rofin-Sinar Italiana S.r.l.; and its 51% 
owned subsidiary Rofin-Marubeni Laser Corporation (a Japanese corporation).  
Concurrent with the IPO, the stock of RSI and RSL (together, the "Rofin-
Sinar Group"), including all business operations, assets and liabilities, 
were sold to the Company in a reorganization.

Rofin-Sinar designs, develops, engineers, manufactures and markets laser 
products for cutting, welding and marking a wide range of industrial 
materials.  Lasers are a non-contact technology for material processing 
which have several advantages that are desirable in industrial applications.  
The Company believes it has a worldwide market share (based on sales volume) 
of approximately 18% for laser products used for cutting/welding and marking 
applications and that it is among the largest suppliers of laser products 
used for marking applications in Europe and the Asia/Pacific region (other 
than Japan).  Over 80% of the Company's sales in fiscal 1998 were made to 
existing customers.  The Company has sold more than 5,500 laser sources 
since 1975 and currently has over 1,500 active customers (including 
multinational companies with multiple facilities purchasing from the 
Company).  During both fiscal 1996 and 1997, approximately 72% of the 
Company's revenues came from sales and servicing of laser products for 
cutting and welding applications and approximately 28% came from sales and 
servicing of laser products for marking applications, compared to fiscal 
1998 where 67% of revenue was from cutting/welding applications and 33% from 
marking applications.

                                   - 3 - 
<PAGE>
Through its global manufacturing, distribution and service network, the 
Company provides a comprehensive range of laser solutions to three principal 
target markets for material processing lasers: the machine tool, automotive 
and semiconductor & electronics industries.  The Company sells directly to 
industrial end-users, to original equipment manufacturers ("OEMs") 
(principally in the machine tool industry) who integrate Rofin-Sinar's laser 
sources with other system components, and to distributors.  Many of Rofin-
Sinar's customers are among the largest global participants in their 
respective industries.  During the 1996, 1997, and 1998 fiscal years, 34%, 
35%, and 31%, respectively, of the Company's sales were in North America, 
and 66%, 65%, and 69% in Europe/Asia. 

In August 1997, Rofin-Sinar acquired 80% of the common stock of Dilas 
Diodenlaser GmbH ("Dilas"), a German limited liability company based in 
Mainz, Germany.  Dilas designs and manufactures diode lasers and components 
for a wide range of material processing applications and sells them to the 
machine tool, automotive and semiconductor & electronic industries, as well 
as to the research, measurement and medical instruments industries.

In January 1998, Rofin-Sinar formed a 74% owned company, Rofin-Sinar UK 
Ltd., based in Kingston upon Hull, England, and acquired certain business 
assets from Palomar Technologies Ltd. UK to design and manufacture low power 
CO2 lasers for cutting and marking applications to be sold mainly to the 
machine tool and packaging industries.


THE COMPANY'S LASER PRODUCTS

The Company currently offers a comprehensive range of laser products and 
related services for three principal material processing applications: (1) 
cutting; (2) welding; and (3) marking.  Rather than offering standardized 
laser systems, the Company works directly with its customers to develop and 
customize optimal solutions for their manufacturing requirements.  In 
developing its laser solutions, the Company offers customers its expertise 
in: (i) product development and manufacturing services based on over 20 
years of laser technology experience and applications know-how; (ii) 
application and process development (i.e., developing new laser-based 
applications for manufacturing customers and assisting them in integrating 
lasers into their production processes); (iii) system engineering (i.e., 
advising customers on machine design, including tooling, automation and 
controls for customers in need of "turn-key" solutions); and (iv) extensive 
after-sales support of its laser products (including technical support, 
field service, maintenance and training programs, and rapid spare parts 
delivery). 

The following table sets forth the Company's net sales of laser products 
used for cutting and welding applications and of laser products used for 
marking applications in fiscal 1996, 1997 and 1998: 

              





                                   - 4 -
<PAGE>
                                                  September 30,
                                       -----------------------------------
      Product Category *                 1996         1997         1998
      ------------------------------   ---------    ---------    ---------
                                                 (in thousands)
      Lasers for cutting and welding   $  83,473    $  93,452    $  78,472
      Laser marking products              32,430       35,941       39,111
                                       ---------    ---------    ---------
      Total sales, net                 $ 115,903    $ 129,393    $ 117,583
                                       =========    =========    =========

*  For each product category, net sales includes sales of services 
(including training, maintenance and repair) and spare parts. 

The Company from time to time reviews various opportunities to acquire 
businesses, technologies or products complementary to the Company's present 
business.   

The laser sources sold by the Company consist of a laser head (containing 
the lasing medium, resonator, source of excitation, resonator mirrors and 
cooling mechanism), power supply and microcontroller (for control and 
monitoring). For a more detailed discussion of the components of a laser 
source, see "Laser Technology".  Products are offered in different 
configurations and utilize different design principles according to the 
desired application.  The Company's engineers and other technical experts 
work directly with customers in the Company's applications centers to 
develop and customize the optimal solution for the customers' manufacturing 
requirements. 

LASER PRODUCTS FOR CUTTING AND WELDING

The Company's family of CO2 laser products for cutting and welding, and 
their principal markets and applications, are discussed below.

      LASER SERIES           POWER RANGE         MODE OF EXCITATION
      -----------------      --------------      ---------------------
      RS DC Slab Series      1.5kW - 3.5kW       High Frequency
      RS HF Series           4.0kW - 8.0kW       High Frequency
      RS SM Series           700W  - 2.0kW       Direct Current
      RS SC Series           100W  - 200 W       High Frequency


Rofin-Sinar introduced its diffusion-cooled RS DC Slab Series laser in mid-
1995 and, to date, has shipped over 340 units.  The Company believes that it 
is the only laser manufacturer of diffusion-cooled slab-based lasers in the 
high power range.  In this laser design, a high frequency (HF) excited gas 
discharge occurs between two water-cooled electrodes which have a large 
surface area that permits maximum heat dissipation.  In December 1997, 
Rofin-Sinar introduced its second generation of Slab lasers using a diamond 
window as the only transmissive optic, which further improved the mode 
stability and enabled higher laser power.  The core diffusion-cooled 
technology is protected by two patents and the Company has exclusive license 
rights to this technology on a worldwide basis for power levels above 500 


                                   - 5 -
<PAGE>
watts for material processing applications.  The Company's current focus 
with respect to its Slab Series lasers is on continuing to increase their 
power output and continuing to reduce their manufacturing costs in order to 
achieve more attractive pricing.  Principal markets for the Slab Series 
lasers are the machine tool and automotive industries.

The Company's RS HF Series lasers combine proven cross-flow design 
principles with modern high frequency (HF) discharge excitation technology.  
Since its introduction in 1995, the Company has shipped this product 
predominantly to customers in the automotive industry, and their sub-
suppliers, in the United States and Europe, where it has been used in a 
significant number of welding applications, including transmissions, 
tailored blanks, steel tubing and many other car parts and components.  In 
fiscal 1997 the Company increased the output power of this product to 8kW.  
The automotive industry is the principal market for the HF Series laser.

The Company's SM Series fast-axial flow CO2 laser is used for both cutting 
and welding applications.  In the fast-axial flow principle, the gas 
discharge occurs in a tube in the same direction as the resonator, through 
which the laser gas mixture flows at a high speed.  Due to the potential to 
reduce the manufacturing cost of the Slab lasers, the Company intends, over 
the next years, to replace the SM Series product family with the Slab Series 
laser.  SM Series products are used primarily by the machine tool industry.

The Company's SC Series diffusion-cooled CO2 lasers are developed and 
produced by Rofin-Sinar UK Ltd.  The SC Series are sealed-off lasers which 
are also based on the Slab laser principle used for the DC Series. The 
lasers are used for cutting and marking applications.  Principal markets are 
the machine tool and packaging industries.


The Company's family of Nd:YAG laser products for cutting and welding, and 
their principal markets, are discussed below.

      LASER SERIES           POWER RANGE         MODE OF EXCITATION
      -----------------      --------------      ---------------------
      RS P Series            50W - 1kW           Flash Lamp
      RS CW Series           1kW - 2.5kW         Flash Lamp


The Company's RS P Series of pulsed Nd:YAG lasers are designed to meet the 
requirements of a wide range of welding and cutting applications.  Their 
high peak power, flexible fiber optic beam delivery system, and small 
focused beam spot size allow these lasers to be successfully applied in many 
cutting and welding applications.  The RS lasers' pulse shaping capability 
(achieved through programming of the power supply) makes them particularly 
well suited to the processing of metallurgically difficult materials such as 
aluminum and its various alloys.  Principal markets for these lasers are the 
automotive and precision welding markets.

Rofin-Sinar's RS CW Series of continuous wave Nd:YAG lasers are designed 
exclusively for use with flexible fiber optic beam delivery systems, making 
them particularly well suited for integration into complex production 
systems.  The key competitive advantages of the CW Series lasers are their 

                                   - 6 - 
<PAGE>
pulse shaping capability and multiple power output configurations.  These 
configurations include continuous wave and pulsed power ramping modes 
separately or in combination with each other, which allows the Company to 
address a wide range of customer applications.  Power ramping is 
particularly suited for achieving smooth welds and avoiding cracks during 
the welding process.  In addition, several features of the CW Series laser 
such as the simple resonator design, easily accessed power supply and highly 
durable ceramic pumping chambers are designed with a view to long service 
intervals and, therefore, low maintenance costs.  These lasers are used 
principally in the automotive industry.

The Company is actively engaged in the development of diode-pumped solid- 
state Nd:YAG lasers through a joint research program with the Fraunhofer 
Institute for Laser Technology.  The Company's objective is to develop diode-
pumped lasers capable of performing industrial material processing 
applications (e.g. car body welding) more rapidly than previously possible 
and at reduced operating and maintenance costs.  The first prototype, with 
an output power of 1,300 watts, was shipped in the third quarter of 1998 to 
the Fraunhofer Institute in Aachen, Germany.  See "Business-Research and 
Development."

As a result of the Company's fiscal 1997 acquisition of Dilas, the Company's 
laser product offerings were extended to include a family of diode laser 
products for welding, soldering, and surface treatment applications, the 
principal markets for which are discussed below.

      LASER SERIES           POWER RANGE         MODE OF EXCITATION
      -----------------      --------------      ---------------------
      Diode Lasers           10W-4000W           Direct Current

The Company's diode lasers are designed to meet the requirements of a wide 
range of welding, soldering, and surface treatment applications.  The 
Company's high power laser diodes can be stacked into arrays achieving 
output powers in the multiple kilowatt range.  In addition to their use in 
the automotive, machine tool and semiconductor & electronic markets, these 
lasers are also sold into the medical device and research markets.  
Additionally, laser diodes are sold as components both internally and 
externally.

LASER MARKING PRODUCTS

The Company's family of laser marking products is as follows:

     LASER SERIES         POWER RANGE         MODE OF EXCITATION
     -----------------    --------------      ---------------------
      PowerLine;
        CombiLine;
        S-Line            25W - 130W          Flash Lamp
      Diode Markers       3W  - 50W           Laser Diodes

PowerLine - The Company's standard PowerLine laser marking product consists 
of an Nd:YAG laser in the range of 25 to 130W,  galvo-head,  personal 
computer with Pentium processor, and Rofin-Sinar's proprietary Laser Work 


                                   - 7 -
<PAGE>
Bench software.  The modular design of the PowerLine marker enables 
customers to order the most suitable configuration for their production 
processes or systems (e.g. OEM customers may order the laser head, power 
supply, and laser cooling assembly plates as subassemblies without the 
cabinet for easier integration into the handling system specified by the 
end-user).  The PowerLine marker's Nd:YAG laser incorporates a dual lamp 
ceramic cavity design using "long-life" lamps (guaranteed to provide 1,200 
hours usage), which results in higher output power (and therefore higher 
marking speeds), higher energy efficiency (and therefore reduced operating 
costs), high beam quality (and therefore constant and reliable marking 
quality), and longer service intervals.  The Company's proprietary Laser 
Work Bench software provides operators with a user-friendly desktop 
publishing environment that allows them to manipulate fonts, import 
graphics, preview marking and control all laser parameters and job programs.  
Special options and accessories include a double-marking head allowing 
marking speeds of up to 1,000 characters per second in certain applications 
(most notably marking of integrated circuits), as well as beam-switching and 
-splitting options for marking of products in multiple production lines.

CombiLine - Built on a modular design, the CombiLine consists of a PowerLine 
laser marker that can be combined with a variety of parts handling systems 
developed by the Company, including: motor driven positioning tables, foil 
handling systems for marking labels, conveyor belts and pick-and-place 
systems, allowing the CombiLine to be customized as a turn-key system.  

S-Line - The S-Line is targeted for the low-end laser marking segment in 
North America and Europe currently served by a number of smaller regional 
competitors.  This product is a lower-cost, more standardized version of the 
Company's PowerLine product with the same base software but fewer features 
and options.  The Company introduced this product in June 1997.

Diode Markers - The Diode Marker products are based on the PowerLine model 
but utilize laser diodes, in place of flash-lamps, to pump the Nd:YAG rod.   
The laser diodes, with their guarantee to provide 5,000 hours usage, offer 
significantly higher up-time for customers.  The main application is marking 
of plastics in the semiconductor and electronics industries.  This product 
was introduced in June 1997.

Applications Development

In addition to manufacturing and selling laser sources for cutting and 
welding and laser marking products, the Company also develops in its 
applications centers laser-based solutions for customers seeking 
alternatives to conventional manufacturing techniques.  More than 20 years 
of laser technology experience and know-how are embodied in the Company's 
applications groups, developed as a result of its participation in a broad 
range of industrial markets.  

Markets and Customers

Rofin-Sinar's laser products and systems are currently sold to three 
principal industrial markets:  the machine tool, automotive and 
semiconductor & electronics industries.  The following table sets forth the 
distribution of the Company's total sales among the Company's principal 
markets:
                                   - 8 - 
<PAGE>
                       Fiscal Years
                  ----------------------
Principal Market   1996    1997    1998   Primary Applications
----------------  ------  ------  ------  --------------------------------
Machine Tool        31%     28%     26%   Cutting
Automotive          27%     29%     19%   Welding and component marking
Semiconductor &
   Electronics      15%     14%     19%   Marking of integrated circuits
                  ------  ------  ------
                    72%     71%     64%

The remaining 28%, 29%, and 36%, respectively, of sales in fiscal 1996,  
1997, and 1998 were attributable to customers in a wide variety of other 
industries (including aerospace, consumer goods, medical device 
manufacturers, job shops, universities and institutes).  No one customer 
accounted for over 10% of total sales in any of such periods.

Sales, Marketing and Distribution

Rofin-Sinar sells its products in approximately 30 countries through OEMs 
and to major end-users who have in-house engineering resources capable of 
integrating the Company's products into their own production systems.  Laser 
sources for cutting applications are marketed and sold principally to OEMs 
in the machine tool industry who sell laser cutting machines incorporating 
the Company's products without any substantial involvement by the Company.   
Laser sources for welding applications are marketed and sold both to systems 
integrators and to end-users.  Laser marking products are marketed and sold 
directly to end-users and to OEMs for integration into their handling 
systems (mainly for integrated circuit marking applications).  In the case 
of both welding lasers and laser marking products, since product samples are 
required to be run through the OEM's system, the end-user is significantly 
involved in the selection of the laser component and will often specify that 
it desires a Rofin-Sinar device.  In such cases, the Company's application 
engineers work directly with the end-user to optimize the application's 
performance and demonstrate the advantages of the Company's products.
      
The Company has 39 direct sales engineers operating in 14 countries, 21 
employees are dedicated to marketing CO2 and Nd:YAG lasers for cutting and 
welding and 18 are dedicated to marketing laser marking products.  In 
addition, Rofin-Sinar has 11 independent distributors and agents marketing 
the Company's welding and cutting laser products and laser marking products 
in Australia, Brazil, Denmark, Israel, the Philippines, the People's 
Republic of China, Portugal, Singapore, Spain, Sweden and Finland.

The Company directs its worldwide sales and marketing of cutting and welding 
lasers from its offices in Hamburg, Germany and for laser diode components 
from Mainz, Germany. Worldwide sales and marketing of laser marking products 
is directed from the Company's offices in Gunding-Munich, Germany.  U.S. 
sales of the Company's cutting and welding laser products are managed out of 
its Plymouth, Michigan facility.  The sales office in Phoenix, Arizona 
supports the expansion of the Company's laser marking business in the North 
American market.  In Europe, Rofin-Sinar also maintains sales and service 
offices in Italy, France, the United Kingdom and Belgium.  Sales offices are 
maintained in South Korea and Taiwan to cover the Asia/Pacific region (other 

                                   - 9 - 
<PAGE>
than Japan).  Subsequent to the end of fiscal 1998, the Company opened a 
sales and service office in Singapore.  In Japan, the Company's principal 
distributor is its joint venture with Marubeni Corporation and Nippei Toyama 
Corporation.

Customer Service and Replacement Parts

During fiscal 1996 and fiscal 1997 approximately 23%, and in fiscal 1998 
approximately 27%, of the Company's revenues were generated from sales of 
after-sale services, replacement parts and components for its laser 
products.  The Company believes that a high level of customer support is 
necessary to successfully develop and maintain long-term relationships with 
its OEM and end-user customers in its laser products and laser marking 
systems business.  This close relationship is maintained as customers' needs 
change and evolve.  Recognizing the importance of its existing and growing 
installed multinational customer base, the Company has expanded into new 
geographic regions by providing local service and support.  Rofin-Sinar has 
over 115 customer service personnel.  The Company's field service and in-
house technical support personnel receive ongoing training with respect to 
the Company's laser products, maintenance procedures, laser-operating 
techniques and processing technology.  Most of the Company's distributors 
also provide customer service and support.

Many of Rofin-Sinar's laser products are operated 24 hours a day in high 
speed, quality-oriented manufacturing operations.  Accordingly, the Company 
provides 24-hour, year-round service support to its customers in Germany, 
the United States, and the majority of other countries in which it has 
operations.  The Company plans to continue adopting similar service support 
elsewhere.  In addition, eight-hour response time is provided to certain key 
customers.  This support includes field service personnel who reside in 
close proximity to the Company's installed base.  The Company provides 
customers with process diagnostic and verification techniques, as well as 
specialized training in the operation and maintenance of its systems.  The 
Company also offers regularly scheduled and intensive training programs and 
customized maintenance contracts for its customers.

Of Rofin-Sinar's customer service personnel, approximately 84 employees 
operate in the field in 40 countries.  Field service personnel are also 
involved in the installation of the Company's systems.

Rofin-Sinar's approach to the sale of replacement parts is closely linked to 
the Company's strategic focus on rapid customer response.  The Company 
provides around-the-clock order entry and provides same or next day delivery 
of parts worldwide in order to minimize disruption to customers' 
manufacturing operations.  Rofin-Sinar generally agrees to provide after 
sale parts and service for 10 years if requested by the customer.  The 
Company's growing base of installed laser sources and laser marking products 
is expected to continue to generate a stable source of parts and service 
sales.






                                   - 10 -
<PAGE>
COMPETITION

Laser Products for Cutting and Welding

The market for laser products and systems is fragmented, and includes a 
large number of competitors, many of which are small or privately owned or 
which compete with Rofin-Sinar on a limited geographic, industry-specific or 
application-specific basis.  The Company also competes in certain target 
markets with competitors which are part of large industrial groups and have 
access to substantially greater financial and other resources than the 
Company.  Competition among laser manufacturers includes attracting and 
retaining qualified engineering and technical personnel.  The overall 
competitive position of the Company will depend upon a number of factors, 
including product performance and reliability, customer support, 
manufacturing quality, the compatibility of its products with existing laser 
systems, and the ability to successfully develop products utilizing the 
emerging technologies of diode lasers and diode-pumped solid-state lasers.

Rofin-Sinar believes it is among the top three suppliers of laser sources in 
the worldwide market for cutting and welding applications.  Companies such 
as Trumpf, Fanuc and PRC (for high power CO2 lasers), Synrad and Coherent 
(for low power CO2 lasers), Haas and Lumonics (for Nd:YAG lasers) and 
Optopower and SDL (for diode lasers and laser diodes) compete in certain of 
the markets in which Rofin-Sinar operates.  However, in the Company's 
opinion, none of these companies competes in all of the industries, 
applications and geographic markets currently served by Rofin-Sinar.  Only 
Trumpf/Haas has a product range and worldwide presence similar to those of 
the Company.  The Company believes that it has a competitive advantage over 
such companies due to its exclusive access (for material applications of 500 
watts and above) to the patented diffusion cooling technology incorporated 
in its CO2 Slab lasers.  

Laser Marking Products

Significant competitive factors in the laser marking market include system 
performance and flexibility, cost, the size of each manufacturer's installed 
base, capability for customer support, and breadth of product line.  Because 
many of the components required to develop and produce a laser marker are 
commercially available, barriers to entry into this market are low, and the 
Company expects new competitive product entries into this market.  The 
Company believes that its product range of laser markers will compete 
favorably in this market primarily due to the performance and price 
characteristics of such products.

The Company's products compete in the laser marking market with conventional 
ink-based and acid-etching technologies, as well as with laser mask-marking.  
The Company believes that its principal competitors in the laser marking 
market include Baasel, General Scanning, Excel Technology and Lumonics.

Rofin-Sinar also competes with manufacturers of conventional non-laser 
products in applications such as welding, drilling, soldering, cutting and 
marking.  The Company believes that as industries continue to modernize, 
seek to reduce production costs and require more precise and flexible 
manufacturing, the features of laser-based systems will become more 

                                   - 11 -
<PAGE>
desirable than systems incorporating conventional manufacturing techniques 
and processes.  This increased acceptance of laser applications by 
industrial users will be enhanced by product-line expansion to include lower 
and higher power C02 lasers, advancements in fiber optic beam delivery 
systems, improvements in reliability, and the introduction of diode lasers 
and diode-pumped solid-state lasers capable of performing heavy industrial 
material processing and marking applications.

MANUFACTURING AND ASSEMBLY

Rofin-Sinar manufactures and tests its high power CO2 and Nd:YAG laser 
products for cutting and welding at its Hamburg, Germany and Plymouth, 
Michigan facilities.  The Company's laser marking products are manufactured 
and tested at its facilities in Gunding-Munich, Germany.  The diode laser 
products are manufactured and tested at the Mainz, Germany facility.  Low 
power CO2 laser products are manufactured and tested in Kingston upon Hull, 
UK.  The Company's joint venture in Japan performs assembly and testing of 
SM Series CO2 lasers. 

Given the competitive nature of the laser business, the Company focuses 
substantial efforts on maintaining and enhancing the efficiency and quality 
of its manufacturing operations.  The Company utilizes just-in-time and 
cell-based manufacturing techniques to reduce manufacturing cycle times and 
inventory levels, thus enabling it to offer on-time delivery and high 
quality products to its customers.

Rofin-Sinar's in-house manufacturing includes only those manufacturing 
operations which are critical to achieve quality standards or protect 
intellectual property.  These manufacturing activities consist primarily of 
product development, testing of components and subassemblies (some of which 
are supplied from within the Company and others of which are supplied by 
third party vendors and then integrated into the Company's finished 
products), assembly and final testing of the completed product, as well as 
proprietary software design and hardware/software integration.  The Company 
minimizes the number of suppliers and component types; however, wherever 
practicable, it has at least two sources of supply for key items.  The 
Company has a qualifying program for its vendors and generally seeks to 
build long-term relationships with such vendors.  The Company purchases 
certain major components from single suppliers.  The Company has reason to 
believe that it could, if necessary, purchase such components from 
alternative sources of supply following appropriate qualification of such 
new vendors.  The Company cannot assure, however, that alternative sources 
of supply could be obtained on as favorable terms.

Rofin-Sinar is committed to meeting internationally recognized manufacturing 
standards.  In 1995, the Company's Hamburg facility received ISO 9001 
certification.  During fiscal 1997, both the Plymouth and Gunding-Munich 
facilities obtained their ISO 9001 certification.  During fiscal 1998 the 
Company's Plymouth facility passed its QS9000TE external audit, and 
anticipates becoming certified in fiscal 1999.

The Company's production is controlled by production planning software.  By 
reducing the variety of products and options, designing new products on a 
modular concept, reducing the number of vendors and the depth of production 

                                   - 12 -
<PAGE>
through outsourcing, the Company has been able to reduce its manufacturing 
costs and improve its production efficiency.

RESEARCH AND DEVELOPMENT

During fiscal 1996, 1997 and 1998, Rofin-Sinar spent $9.3 million, $9.7 
million, and $10.0 million, respectively, on research and development.  In 
addition, the Company received funding under German government grants 
totaling $0.8 million, $0.9 million, and $1.1 million in fiscal 1996, 1997 
and 1998, respectively.

Rofin-Sinar's research and development activities are directed at meeting 
customers' manufacturing needs and application processes.  Core competencies 
include CO2 gas lasers, Nd:YAG solid-state lasers and diode lasers, 
precision optics, electronic power supplies, fiber optics, beam delivery, 
control interfaces, software programming and systems integration.  The 
Company strives for customer-driven development activities and promotes the 
use of alliances with key customers and joint development programs in a wide 
range of its target markets.

The Company's research and development activities are carried out in five 
centers in Hamburg, Gunding-Munich and Mainz, Germany, Kingston upon Hull, 
UK, and Plymouth, Michigan and are centrally coordinated and managed.  
Rofin-Sinar maintains close working relationships with the leading 
industrial, government and university research laboratories in Germany, 
including the Fraunhofer Institute for Laser Technology in Aachen, the 
Institute for "Technische Physik" of the German Space and Aerospace Research 
Center in Stuttgart, the Fraunhofer Institute for Material Science in 
Dresden, the Laser Center in Hanover, and elsewhere around the world, 
including the University of Alberta in Canada.  Such relationships include 
funding of research, joint development programs, personnel exchange programs 
and licensing of patents developed at such institutes.  

In September 1996, the Company began a research program with the Fraunhofer 
Institute for Laser Technology to develop a modular 5 kW diode-pumped Nd:YAG 
laser.  Under this arrangement, the total project budget to be spent by both 
parties is approximately DM 6.5 million.  In fiscal 1997 and fiscal 1998, 
outlays by the Company for this project totaled DM 3.5 million.  Under the 
terms of the collaboration, the Company will be granted access to technology 
previously developed by the Fraunhofer Institute.  The Company anticipates 
that the project's development and manufacturing scale-up efforts will occur 
over a three-year period.  No assurance can be given, however, that the 
collaboration with the Fraunhofer Institute will be successful.

INTELLECTUAL PROPERTY

Rofin-Sinar owns intellectual property, which includes patents, proprietary 
software, technical know-how and expertise, designs, process techniques and 
inventions.  While policies and procedures are in place to protect critical 
intellectual properties, Rofin-Sinar believes that its success depends to a 
larger extent on the innovative skills, know-how, technical competence and 
abilities of the Company's personnel.  The Company is also an exclusive 
licensee on a worldwide basis of two patents, one of which expires in July 
2007 (as to which the license is exclusive for five years from 

                                   - 13 -
<PAGE>
commercialization of products) and one of which expires in January 2005 (as 
to which the license is exclusive for the duration of the patent), covering 
the diffusion-cooled technology used in its Slab Series CO2 lasers for 
industrial material processing applications of 500 watts and above.  In the 
Company's view, the technology protected by these two patents represents a 
significant step forward in industrial laser technology for material 
processing and an important source of the Company's future growth and 
profitability.

Rofin-Sinar protects its intellectual property in a number of ways 
including, in certain circumstances, through patents.  The Company has 
sought patent protection primarily in Germany and the United States.  Some 
patents have also been registered in other jurisdictions including Great 
Britain, France, Italy and Japan.  The Company currently holds 55 separate 
patents for inventions relating to lasers, processes and power supplies 
which expire from 1999 to 2017.  In addition, Rofin-Sinar requires its 
employees and certain of its customers, suppliers, distributors, agents and 
consultants to enter into confidentiality agreements to further safeguard 
the Company's intellectual property.

The Company from time to time receives notices from third parties alleging 
infringement of such parties' patent or other intellectual property rights 
by the Company's products.  While such notices are common in the laser 
industry, and the Company has in the past been able to develop non-
infringing technology or license necessary patents or technology on 
commercially reasonable terms, there can be no assurance that the Company 
would in the future prevail in any litigation seeking damages or expenses 
from the Company or to enjoin the Company from selling its products on the 
basis of such alleged infringement, or that the Company would be able to 
develop any non-infringing technology or license any valid and infringed 
patents on commercially reasonable terms.  In the event any third party made 
a valid claim against the Company or its customers and a license were not 
made available to the Company on commercially reasonable terms, the Company 
would be adversely affected.

In July 1996, the Company received notice of an opposition filed by a 
competitor in the European Patent Office ("EPO") which challenges on a 
number of grounds one of the two third-party patents licensed by the Company 
covering certain aspects of its diffusion-cooled CO2 Slab laser.  The U.S.-
issued counterpart of this patent was previously the subject of a 
reexamination proceeding in the U.S. Patent and Trademark Office ("PTO"), at 
the conclusion of which the patent was upheld.  While the decision of the 
PTO is not binding on the EPO, based on the outcome of the U.S. 
reexamination proceeding and management's review of the arguments made in 
the notice of opposition, the Company believes that such notice of 
opposition is without substantial merit.  The Company intends to defend the 
EPO opposition proceeding vigorously. 

In July 1996, the Company received correspondence from a manufacturer of 
sealed-off, RF-excited CO2 lasers for military and commercial avionics 
applications offering a license of its U.S. patents covering such technology 
in exchange for a cross-license of the Company's CO2 Slab laser technology.  
Based on its review of the patents held by such manufacturer, the Company 
does not believe that its products infringe such patents, and it intends to 

                                   - 14 -
<PAGE>
defend vigorously any infringement action which such party may commence 
against the Company. 

In September 1997, the Company filed a complaint against a competitor in the 
US District Court of New York concerning infringement of one of the 
Company's patents covering the design of optical resonators and beam 
delivery systems.  This case has not been terminated as of September 30, 
1998.

From time to time, the Company files notices of opposition to certain 
patents on laser technologies held by others, including academic 
institutions and competitors of the Company, which the Company believes 
could inhibit its ability to develop products in this area.  In particular, 
the Company has a pending notice of opposition against a patent held by a 
competitor which it believes conflicts with a third-party patent licensed by 
the Company covering certain aspects of its diffusion-cooled CO2 Slab laser.  
No assurance can be given that the Company will be able to avoid an action 
by such competitor or others or not be forced to initiate its own actions to 
protect its proprietary position.

ORDER BACKLOG

The Company's order backlog was $35.9 million, $29.1 million and $35.9 
million, as of September 30, 1996, 1997, and 1998, respectively.  The 
Company's order backlog, which contains relatively little service, training 
and spare parts, represents approximately three months of laser shipments.  
The decline in the Company's order backlog from September 30, 1996 to 
September 30, 1997 was primarily attributable to lower order entry in the 
fourth quarter of fiscal 1997 due to a relatively flat automotive welding 
market in the United States and by the introduction in such period of the 
second generation of the Company's Slab Series lasers, which resulted in 
delays in orders by European OEM customers.  The strengthening of the U.S. 
dollar had an additional negative impact of approximately $2 million on 
year-to-year order backlog. The increase in the Company's backlog from 
September 30, 1997 to September 30, 1998 was primarily attributable to 
higher order entry in the fourth quarter of fiscal 1998 due to high demand 
for high power CO2 lasers from the automotive industry and strong Slab laser 
order entry from the machine tool industry in Europe. The strengthening of 
the U.S. dollar had a negative impact of approximately $1.4 million on year-
to-year order backlog.

An order is booked by Rofin-Sinar when a purchase order with an assigned 
delivery date has been received.  Delivery schedules range from one week to 
six months, depending on the size, complexity and availability of the 
product or system ordered, although typical delivery dates for laser source 
products range 8-12 weeks from the date an order is placed.  Orders in 
backlog are subject to cancellation (subject to penalties), or rescheduling 
by the customer.  The Company's backlog on any particular date is not 
necessarily indicative of actual sales for any future period.

The Company anticipates shipping the present backlog during fiscal 1999.  In 
the event that the Company's marketing activities in the United States 
related to its laser marking systems result in additional demand for such 
systems, the Company will require added manufacturing capacity in the United 

                                   - 15 -
<PAGE>
States.  The Company estimates that the total capital expenditures required 
to add such manufacturing capacity in the United States would be 
approximately $200,000.

LASER TECHNOLOGY

The term "laser" is an acronym for "Light Amplification by Stimulated 
Emission of Radiation".  Lasers were first developed in the early 1960s in 
the United States.  A laser consists of an active lasing medium that gives 
off its own light (radiation) when excited, an optical resonator with a 
partially reflective output mirror at one end, a fully reflective rear 
mirror at the other that permits the light to bounce back and forth between 
the mirrors through the lasing medium, and an external energy source used to 
excite the lasing medium.  A laser works by causing the energy source to 
excite (pump) the lasing medium which converts the energy from the source 
into an emission consisting of particles of light (photons).  These photons 
stimulate the release of more photons, as they are reflected between the two 
mirrors which form the resonator.  The resulting build-up in the number of 
photons is emitted in the form of a laser beam through an output port or 
"window."  By changing the energy and the lasing medium, different 
wavelengths and types of laser light can be produced.  The laser produces 
light from the lasing medium to achieve the desired intensity, uniformity 
and wavelength through a series of reflective mirrors.  The heat generated 
by the excitation of the lasing medium is dissipated through a cooling 
mechanism, which varies according to the type of laser technology.

EMPLOYEES

At September 30, 1998, Rofin-Sinar had 552 full time employees, of which 373 
were in Germany, 103 were in the United States, 13 in France, 21 in Italy, 
20 in UK and 22 in Japan, whereas at September 30, 1997, Rofin-Sinar had 500 
full time employees, of which 345 were in Germany, 105 were in the United 
States, 13 in France, 16 in Italy and 21 in Japan.

While the Company's employees are not covered by collective bargaining 
agreements and the Company has never experienced a work stoppage, slowdown 
or strike, the Company's employees at its Hamburg and Gunding-Munich 
facilities are represented by a seven-person and five-person works council, 
respectively, as well as by a four-person central works council.  Matters 
relating to compensation, benefits and work rules are negotiated and 
resolved between management and the works council for the relevant location.  
The Company considers its relations with its employees to be excellent.

GOVERNMENT REGULATION

The majority of the Company's laser products sold in the United States are 
classified as Class IV Laser Products under applicable rules and regulations 
of the Center for Devices and Radiological Health ("CDRH") of the U.S. Food 
and Drug Administration.  The same classification system is applied in the 
European markets.  Safety rules are formulated with Deutsche Industrie Norm 
(i.e., German Industrial Standards) or ISO standards which are 
internationally harmonized.  Such regulations generally require a self-
certification procedure pursuant to which a manufacturer must file with the 
CDRH with respect to each product incorporating a laser device, periodic 

                                   - 16 -
<PAGE>
reporting of sales and purchases and compliance with product labeling 
standards.  The Company's laser products for cutting and welding and laser 
marking products can result in injury to human tissue if directed at an 
individual or otherwise misused.  The Company believes that its laser 
products for cutting and welding and laser marking products are in 
substantial compliance with all applicable laws for the manufacture of laser 
devices.

RISK FACTORS

Industry Concentration and Cyclicality; Dependence on Sales by Third Parties
 
The Company's business is significantly dependent on capital expenditures by 
manufacturers in the machine tool, automotive and semiconductor & 
electronics industries.  These industries are cyclical and have historically 
experienced periods of oversupply, resulting in significantly reduced demand 
for capital equipment, including the products manufactured and marketed by 
the Company. For the foreseeable future, the Company's operations will 
continue to be dependent on capital expenditures in these industries which, 
in turn, are largely dependent on the market demand for their products.  The 
Company's net sales and results of operations may be materially adversely 
affected if downturns or slowdowns in the machine tool, automotive, and 
semiconductor & electronics industries occur in the future. 

The Company's net sales are dependent in part upon the ability of its OEM 
customers to develop and sell systems that incorporate the Company's laser 
products.  Adverse economic conditions, large inventory positions, limited 
marketing resources and other factors affecting these OEM customers could 
have a substantial impact upon the Company's financial results.  No 
assurances can be given that the Company's OEM customers will not experience 
financial or other difficulties that could adversely affect their operations 
and, in turn, the financial condition or results of operations of the 
Company. 

Variability and Uncertainty of Quarterly Operating Results; Potential 
Volatility of Stock Price

The Company has experienced and expects to continue to experience some 
fluctuations in its quarterly results.  The Company believes that 
fluctuations in quarterly results may cause the market price of its common 
stock to fluctuate, perhaps substantially.  Factors which may have an 
influence on the Company's operating results in a particular quarter include 
the timing of the receipt of orders from major customers, product mix, 
competitive pricing pressures, the relative proportions of domestic and 
international sales, the Company's ability to design, manufacture and 
introduce new products on a cost-effective and timely basis, the delay 
between incurrence of expenses to further develop marketing and service 
capabilities and realization of benefits from such improved capabilities, 
and the introduction of new products by the Company and its competitors.  In 
addition, the Company's backlog at any given time is not necessarily 
indicative of actual sales for any succeeding period.  The Company's sales 
will often reflect orders shipped in the same quarter that they are 
received.  Moreover, customers may cancel or reschedule shipments, and 
production difficulties could delay shipments.  Accordingly, the Company's 

                                   - 17 -
<PAGE>
results of operations are subject to significant variability from quarter to 
quarter. See "Business-Order Backlog."

Other factors which the Company believes may cause the market price of its 
common stock to fluctuate, perhaps substantially, include announcements of 
new products, technologies or customers by the Company or its competitors 
and developments with respect to intellectual property and shortfalls in the 
Company's operations relative to analysts' expectations.  In addition, in 
recent years, the stock market in general, and the shares of technology 
companies in particular, have experienced wide price fluctuations.  These 
broad market and industry fluctuations, particularly in the semiconductor & 
electronics and automotive industries, may adversely affect the market price 
of the Company's common stock. 

Currency Risk 

Although the Company reports its results in U.S. dollars, approximately two-
thirds of its sales are denominated in other currencies, including primarily 
German marks, as well as French francs, Italian lire, British pounds and 
Japanese yen. Although a predominant portion of the Company's cost of goods 
sold, selling, general and administrative expenses and research development 
expenses are incurred in German marks, net sales and costs and related 
assets and liabilities are generally denominated in the functional 
currencies of the operations, thereby serving to reduce the Company's 
exposure to exchange gains and losses.  Exchange differences upon 
translation from each operation's functional currency to U.S. dollars are 
accumulated as a separate component of equity.  The currency translation 
adjustment component of shareholders' equity changed from a $2.2 million 
credit at September 30, 1996 to a $2.8 million debit at September 30, 1997 
and from a $2.8 million debit at September 30, 1997 to a $0.8 million debit 
at September 30, 1998.  These changes arose primarily from the strengthening 
of the U.S. dollar against such foreign currencies during the fiscal 1996 - 
1998 period, and reflect the fact that a high proportion of the Company's 
capital is invested in its German operations, whose functional currency is 
the German mark.  The fluctuation of the German mark and the other 
functional currencies against the U.S. dollar has had the effect of 
increasing and decreasing (as applicable) reported net sales as well as cost 
of goods sold and gross margin and selling, general and administrative 
expenses denominated in such foreign currencies when translated into U.S. 
dollars as compared to prior periods.  The Company's subsidiaries will from 
time to time pay dividends in their respective functional currencies, thus 
presenting another area of potential currency exposure in the future. 

The Company has implemented a policy to hedge a certain portion of its net 
foreign currency exposure on sales transactions utilizing forward exchange 
contracts and forward exchange options. The Company has also implemented a 
policy to continue to borrow in each operating subsidiary's functional 
currency to reduce exposure to exchange gains and losses.  There can be no 
assurance that changes in currency exchange rates will not have a material 
adverse effect on the Company's business, financial condition and results of 
operations. 




                                   - 18 -
<PAGE>
Competition

The laser industry is characterized by significant price and technical 
competition.  The Company's current and proposed laser products and laser 
marking products compete with those of several well-established companies, 
some of which are larger and have substantially greater financial, 
managerial and technical resources, more extensive distribution and service 
networks and larger installed customer bases than the Company.  The Company 
believes that this competition will be particularly intense in the CO2, 
diode laser and Nd:YAG solid-state laser markets, as many companies have 
committed significant research and development resources to pursue 
opportunities in these markets.  There can be no assurance that the Company 
will successfully differentiate its current and proposed products from the 
products of its competitors or that the marketplace will consider the 
Company's products to be superior to competing products.  With respect to 
the Company's laser marking products, because many of the components 
required to develop and produce a laser-based marking system are 
commercially available, barriers to entry into this market are relatively 
low, and the Company expects new competitive product entry in this market.  
To maintain its competitive position in this market, the Company believes 
that it will be required to continue a high level of investment in 
engineering, research and development, marketing and customer service and 
support.  There can be no assurance that the Company will have sufficient 
resources to continue to make such investments, that the Company will be 
able to make the technological advances necessary to maintain its 
competitive position, or that its products will receive market acceptance.  
See "Business-Competition." 

Risks Relating to Sales Growth in CO2, Diode and Nd:YAG Lasers

In recent years, the Company has experienced a decline in sales revenues.  
If the Company is to increase the rate of growth of its laser sales in the 
near term, such sales will have to come through increases in market share 
for the Company's existing products, through the development of new products 
or through the Company's acquisition of its competitors or their products.  
To date, a substantial portion of the Company's revenue has been derived 
from sales of high-powered CO2 laser sources and, more recently, solid-state 
flash lamp-pumped laser sources.  The Company intends to devote substantial 
resources to widening the low power CO2 Slab laser product range, to 
increasing the output power of its diffusion-cooled CO2 Slab laser sources 
and to developing diode lasers and diode-pumped Nd:YAG solid-state laser 
products in accordance with market demand.  The Company is currently focused 
on developing low power CO2 Slab lasers with broadened output powers to 
offer the full range of low power CO2 lasers and on continuing to reduce the 
manufacturing costs of its diffusion-cooled CO2 Slab lasers to achieve more 
attractive pricing.  The Company's diode-pumped lasers are currently being 
introduced to the market and are not expected to generate substantial 
revenue in fiscal 1999.  The Dilas diode lasers are modified for use in 
industrial production environments and are currently marketed for welding, 
soldering, and surface treatment applications.  A large part of the 
Company's growth strategy depends upon being able to increase substantially 
its market share for laser marking products, particularly in the United 
States and Japan.  


                                   - 19 -
<PAGE>
If the Company is unable to implement its strategy of increasing demand for 
its laser marking products, expanding the product range in the CO2 Slab 
laser series to include both higher and lower output power levels, and 
developing diode lasers and diode-pumped Nd:YAG solid-state lasers at 
attractive prices, it may not be able to increase its revenue, as a result 
of which its business, operating results and financial condition could be 
adversely affected.  No assurance can be given that the Company will 
successfully expand its marking products market share, widen the low power 
CO2 Slab laser Series, increase the output power of its diffusion-cooled CO2 
Slab laser sources, successfully market diode lasers for welding and 
hardening applications or develop diode-pumped Nd:YAG solid-state laser 
products or that any such products will achieve market acceptance or not be 
rendered obsolete or uncompetitive by products of other companies.  See Item 
7, "Management's Discussion and Analysis of Financial Condition and Results 
of Operations" and "Business-The Company's Laser Products." 

While there are currently no commitments with respect to any future 
acquisitions, the Company's business strategy includes the expansion of its 
products and services, which may be effected through acquisitions.  The 
Company from time to time reviews various opportunities to acquire 
businesses, technologies or products complementary to the Company's present 
business.  There can be no assurance that the Company will be able to 
integrate any acquired business effectively or that any acquisition will 
result in long-term benefits to the Company. 

Conflicting Patents and Other Intellectual Property Rights of Third Parties; 
Limited Protection of Intellectual Property

The Company from time to time receives notices from third parties alleging 
infringement of such parties' patent or other intellectual property rights 
by the Company's products.  While such notices are common in the laser 
industry and the Company has in the past been able to develop non-infringing 
technology or license necessary patents or technology on commercially 
reasonable terms, there can be no assurance that the Company would in the 
future prevail in any litigation seeking damages or expenses from the 
Company or to enjoin the Company from selling its products on the basis of 
such alleged infringement, or that the Company would be able to develop any 
non-infringing technology or license any valid and infringed patents on 
commercially reasonable terms.  In the event any third party made a valid 
claim against the Company or its customers and a license were not made 
available to the Company on commercially reasonable terms, the Company would 
be adversely affected. 

The Company's future success depends in part upon its intellectual property, 
including trade secrets, know-how and continuing technological innovation. 
There can be no assurance that the steps taken by the Company to protect its 
intellectual property will be adequate to prevent misappropriation or that 
others will not develop competitive technologies or products.  The Company 
currently holds 55 United States and foreign patents on its laser sources 
which expire from 1999 to 2017.  There can be no assurance that other 
companies are not investigating or developing other technologies that are 
similar to the Company's, that any patents will issue from any application 
filed by the Company or that, if patents do issue, the claims allowed will 
be sufficiently broad to deter or prohibit others from marketing similar 

                                   - 20 -
<PAGE>
products.  In addition, there can be no assurance that any patents issued to 
the Company will not be challenged, invalidated or circumvented, or that the 
rights thereunder will provide a competitive advantage to the Company.  See 
"Business-Intellectual Property." 

Risks Associated with International Operations

The Company's products are currently marketed in approximately 30 countries, 
with Germany, the rest of Europe, the United States and the Asia/Pacific 
region being the Company's principal markets.  Sales in the Company's 
principal markets are subject to risks inherent in international business 
activities, including, in particular, general economic conditions in each 
such country, overlap of differing tax structures, management of an 
organization spread over various jurisdictions, unexpected changes in 
regulatory requirements and compliance with a variety of foreign laws and 
regulations.  Other general risks associated with international operations 
include import and export licensing requirements, trade restrictions and 
changes in tariff and freight rates.  The business and operations of the 
Company's principal subsidiary, RSL, are primarily subject to the changing 
economic and political conditions prevailing in Germany. Although 
productivity in Germany is generally high, labor costs, corporate taxes and 
employee benefit expenses are high and weekly working hours are shorter in 
Germany compared to the rest of the European Union, the United States and 
Japan. 

Asia/Pacific Risk

Countries in the Asia/Pacific region, including Japan, have recently 
experienced weaknesses in their currency, banking and equity markets.  As 
the Asia/Pacific market currently represents approximately 17% of the 
Company's revenue, these weaknesses could adversely affect consumer demand 
for the Company's product, the U.S. dollar value of the Company's foreign 
currency denominated sales, and ultimately the Company's consolidated 
results of operations.

Risks Associated with the Conversion by EU Member States to the "Euro"

The "euro" is a new legal currency being introduced by certain European 
Union member states.  On January 1, 1999, eleven European countries will 
establish fixed conversion rates between their existing currencies (legacy 
currencies) and the euro.  As of that date, the legacy currencies of such 
countries will not be directly convertible into each other; instead a legacy 
currency must be converted into the euro, which then will be converted into 
a target legacy currency.  The legacy currencies and the euro will both be 
used through June 30, 2002, after which the legacy currencies will be 
withdrawn.

With regard to information systems, the Company has completed a review of 
its information systems and believes the introduction of the euro in 1999 
will have no material impact on its systems.  Furthermore, the Company's 
review indicates that its information systems can operate in the "euro only" 
environment, beginning in July 2002.  The Company plans to conduct another 
survey concerning the euro's impact on information systems during 2000, 
following the actual introduction of the euro.

                                   - 21 -
<PAGE>
With regard to the Company markets, the Company has reviewed its customer 
list and current selling practices and expects no material impact from the 
introduction of the euro on January 1, 1999.

The Company is currently unable to determine the ultimate long term 
financial impact of the exclusive use of the euro on the Company's markets 
and on the economies of the countries in which it operates.  This impact 
will depend upon the evolving competitive situations and macro-economic 
impact of the introduction of the euro.

Year 2000 Compliance

The Year 2000 (Y2K) issue refers to the result of computer programs being 
written using two digits rather than four to define an applicable year.  Any 
of the Company's products, manufacturing equipment, information technology 
hardware or software that have date-sensitive software or embedded chips may 
recognize a date using "00" as the year 1900 rather than the year 2000.  
This could result in miscalculations causing disruptions of operations, 
including, among other things, a temporary inability to operate equipment, 
process transactions, send invoices, or engage in other normal business 
activities, as well as product failures and system failures.

The Company's plan to address the Y2K issue involves four phases: 
assessment, remediation, testing and implementation.  In a coordinated 
effort among the Company, outside consultants, and product suppliers, the 
Company has completed the "assessment" phase of its critical information 
technology hardware and software components as well as its embedded 
technology equipment related to computer operations and manufacturing (such 
as manufacturing equipment, security systems, telephone systems).  The 
Company has determined that it will be required to modify or replace certain 
portions of its hardware, software or other embedded chip devices in order 
to ensure that they will properly recognize dates beyond December 31, 1999.  
The Company presently believes that by completing these minor upgrades to 
its current technology the Y2K issue can be mitigated and that the Company's 
systems would not be materially affected.

The Company's information technology (I.T.) hardware and operating systems 
were upgraded to Y2K compliant versions during fiscal 1998 at a total cost 
of $100,000.  Related I.T. exposures are covered under the Company's normal 
support contracts with an outside company.  The remediation and testing of 
certain software programs are expected to be completed by February 1999, 
with implementation of the new programming scheduled for March 1999.  No 
unique costs are expected to be incurred in upgrading the Company's I.T. 
systems. 

While the assessment of all non-I.T. systems utilizing embedded technology 
has already been completed, the remediation, testing and implementation 
phases of such systems are scheduled to be completed by June 1999.  These 
systems include: manufacturing equipment, security systems, 
telecommunication systems, and other non-critical systems.  To date, the 
Company has incurred approximately $10,000 to upgrade these systems.  
Additional costs of up to $20,000 are expected to be incurred during fiscal 
1999 in order to complete the remediation, testing and implementation of 
these systems.

                                   - 22 -
<PAGE>
In addition to the I.T. and embedded technology exposures, the Company has 
assessed the Y2K compliance of each of its product lines.  The conclusion of 
this assessment was that none of the Company's current products contain 
date-sensitive programming which make them vulnerable to the Y2K problem.  

The Company has initiated formal communications with its significant 
suppliers and customers in an effort to determine the extent to which the 
Company may be vulnerable to their failure to correct their own Y2K issues.  
Failure of the Company's significant trading partners to address Y2K issues 
could have a material adverse effect on the Company's operations, although 
it is not possible at this time to quantify the amount of business that 
might be lost or the costs that could be incurred by the Company.

In addition, parts of the global infrastructure, including banking systems, 
electrical power, other utilities, communications and governmental 
activities, may not be fully functional after 1999.  Infrastructure failures 
could significantly reduce the Company's ability to manufacture its products 
and its ability to serve its customers as effectively as they are now being 
served.  The Company is currently identifying elements of the infrastructure 
that are critical to its operations and obtaining information as to their 
anticipated Y2K readiness.

While the Company believes its efforts to address the Y2K issue will be 
successful in avoiding any material adverse effect on the Company's 
operations or financial condition, it recognizes that failing to resolve Y2K 
issues on a timely basis would, in a "worst case scenario", significantly 
limit its ability to manufacture and distribute its products and process its 
daily business transactions for a period of time, especially if such failure 
is coupled with third party or infrastructure failures.  Similarly, the 
Company could be significantly affected by the failure of one or more 
significant trading partners to conduct their respective operations after 
1999.  Adverse affects on the Company could include, among other things, 
business disruption, increased costs, loss of business and other similar 
risks, the combined costs of which are impossible to estimate at this time.

The Company has primarily utilized (and will continue to primarily utilize) 
internal resources to oversee and complete the various phases of its Y2K 
program.  Internal costs to date have been minimal (approximately $15,000), 
whereas future internal costs are estimated to not exceed $20,000.   

The foregoing discussion regarding Y2K project timing, implementation, 
effectiveness, and costs are based upon management's current evaluation 
using available information.  However, there can be no guarantees that 
unexpected events will not occur and actual results could be materially 
different than anticipated.










                                   - 23 -
<PAGE>
ITEM 2.     PROPERTIES

The Company's manufacturing facilities include the following:

                           Owned or      Size
Location of Facility        Leased     (sq. ft.)   Primary Activity
------------------------  ----------  -----------  -------------------------
Hamburg, Germany            Owned *     110,840    CO2 lasers, Nd:YAG lasers
Plymouth, Michigan          Leased       58,075    CO2 lasers
Kingston upon Hull, 
  United Kingdom            Leased       48,504    Low power CO2 lasers
Gunding-Munich, Germany     Leased       46,634    Nd:YAG lasers, laser 
                                                      Marking products
Sakai Atsugi-shi, Japan     Leased       11,245    CO2 lasers
Mainz, Germany              Leased        7,532    Diode lasers & components


*     The facility is owned by RSL; the real property on which the facility  
      is located is leased by RSL under a 99-year lease.      


The Company's leases of its facilities in Plymouth, Michigan expire in 1999 
(with renewal options until 2001).  The Company intends to continue to 
exercise its renewal options.  The Kingston upon Hull, United Kingdom 
facility lease expires in 2007, with the option to purchase the facility in 
June 2002.  The Gunding-Munich, Germany facility lease expires in 2005, with 
an optional yearly notice of termination.  The leases on its Japanese 
facilities in Atsugi-shi expire in 1999 (renewable for two years) and in 
2001 (renewable for three years).  The Mainz, Germany facility lease expires 
in 1999.  

The Company maintains sales, administration and research and development 
facilities at each of the Hamburg, Gunding-Munich, Mainz, Kingston upon Hull  
and Plymouth locations.  The Company also maintains sales and service 
offices worldwide, all of which are leased.

The Company believes that its existing facilities are adequate to meet its 
needs for the next 12 months and that suitable additional or alternative 
space would be available, if necessary, in the future on commercially 
reasonable terms.  The Company expects to make additional capital 
expenditures to support its diode laser and diode-pumped solid-state laser 
development activities in Germany.


ITEM 3.     LEGAL PROCEEDINGS

There are no pending material legal proceedings to which the Company is a 
party.


ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of the security holders during the 
fourth quarter of fiscal 1998.

                                   - 24 -
<PAGE>
                                  PART II


ITEM 5.      MARKET PRICE OF THE REGISTRANT'S COMMON EQUITY AND RELATED
             STOCKHOLDER MATTERS

The Company's common stock is traded on the Nasdaq National Market under the 
symbol RSTI.  The table below sets forth the high and low sales prices of 
the Company's common stock for each quarter ended during the last two years 
as reported by the National Association of Securities Dealers, Inc.:

                                       Common Trade Prices
                                     -----------------------
      Quarter ended                     High          Low
      ---------------------          ---------     ---------
      December 31, 1996               $14 3/8       $10 3/4
      March 31, 1997                  $16 3/4       $10 1/2
      June 30, 1997                   $19 5/8       $13 7/8
      September 30, 1997              $19 3/8       $15 3/8
      December 31, 1997               $17 1/4       $10 3/4
      March 31, 1998                  $23 1/2       $11 7/8
      June 30, 1998                   $25 5/8       $15 3/4
      September 30, 1998              $18 1/2       $ 9 1/4


At December 17, 1998, the Company had approximately twelve holders of record 
of its common stock and 11,522,900 shares outstanding.  The Company has not 
paid dividends on its common stock and does not anticipate paying dividends 
in the foreseeable future.

Use of IPO Proceeds

The Company completed its initial public offering of 11,500,000 shares of 
its common stock on September 30, 1996 for gross proceeds of $109.2 million 
pursuant to its registration statement on Form S-1 (No. 333-09539) declared 
effective on September 25, 1996.  The lead managers for the offering were 
Deutsche Morgan Grenfell/C.J. Lawrence, Inc., Alex Brown & Sons Incorporated 
and Lehman Brothers Inc.  Net proceeds of the offering (after deduction of 
$6.6 million in underwriting discounts and commissions and $0.3 million in 
other offering expenses) were $102.3 million.  Of such amount approximately 
$77.1 million was used to purchase all outstanding shares of RSL and RSI 
from the former Parent and to repay certain indebtedness owed to the former 
Parent.  Of the remainder, $25.0 million was invested in certificates of 
deposit, with the balance applied to working capital.  In fiscal 1997 the 
Company used approximately $5.2 million to consummate the acquisition of 
Dilas, and $1.8 million to acquire other business assets.  In fiscal 1998 
the Company used approximately $3.5 million to acquire business assets, 
which included the acquisition of certain business assets of Palomar 
Technologies Ltd.  In addition, the Company used $1.8 million to fund 
working capital needs.  Accordingly, approximately $12.7 million of the net 
offering proceeds remain to be applied.




                                   - 25 -
<PAGE>
ITEM 6.  SELECTED FINANCIAL DATA

The following table sets forth selected consolidated financial data for the 
five fiscal years ended September 30, 1998.  The information set forth below 
should be read in conjunction with the consolidated financial statements and 
notes thereto filed as part of this annual report.

                                           Year ended September 30,
                                --------------------------------------------
                                  1994     1995     1996     1997     1998
                                -------- -------- -------- -------- --------
                                    (in thousands, except share amounts)
STATEMENT OF INCOME DATA:
Net sales                       $ 69,217 $ 92,466 $115,903 $129,393 $117,583
Cost of goods sold                46,993   57,162   72,096   82,982   74,476
Gross profit                      22,224   35,304   43,807   46,411   43,107
SG&A expenses                     17,059   20,673   21,246   22,101   22,656
R&D expenses                       6,834    6,719    9,335    9,727    9,960
Special charge                        -        -        -     1,350       -
Income (loss) from operations    ( 1,669)   7,912   13,226   13,233   10,491
Net interest expense (income)      1,308    1,272    1,010  (   854)  (  759)
Income (loss) before income taxes( 3,116)   6,265   12,244   14,712   11,799
Net tax expense (benefit)        ( 1,422)   3,052    4,956    5,758    5,118
Net income (loss)                ( 1,694)   3,213    7,288    8,954    6,681
Net income per
   common share-Basic             ( 0.20)    0.37     0.84     0.78     0.58
Net income per
   common share-Diluted           ( 0.20)    0.37     0.84     0.77     0.58
Shares used in computing net 
  income per share - Basic         8,632    8,632    8,632   11,505   11,517
Shares used in computing net 
  income per share - Diluted       8,632    8,632    8,639   11,606   11,615


OPERATING DATA (as percentage of sales):
Gross profit                       32.1%    38.2%    37.8%    35.9%    36.7%
SG&A expenses                      24.6%    22.4%    18.3%    17.1%    19.3%
R&D expenses                        9.9%     7.3%     8.1%     7.5%     8.5%
Income (loss) from operations     ( 2.4%)    8.6%    11.4%    10.2%     8.9%
Income (loss) before income taxes ( 4.5%)    6.8%    10.6%    11.4%    10.0%


BALANCE SHEET DATA:
Working capital                  $ 4,927 $ 14,530 $ 56,138 $ 55,007 $ 67,119
Total assets                      76,667   90,995  133,147  132,189  143,742
Line of credit and loans          22,380   21,805   24,780   18,569   22,703
Stockholders' equity              30,583   39,673   78,000   81,925   90,765


OTHER DATA:
Depreciation and amortization      2,527    2,364    2,449    2,142    2,512
Backlog                           17,000   26,500   35,900   29,100   35,900
Sales per employee                   184      227      256      259      213


                                   - 26 -
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
        RESULTS OF OPERATIONS

OVERVIEW

Rofin-Sinar is a leader in the design, development, engineering, 
manufacturing and marketing of laser-based products used for cutting, 
welding and marking a wide range of industrial materials.  During fiscal 
1998, approximately 67% of the Company's revenues were from sales and 
servicing of laser products for cutting and welding applications and 
approximately 33% were from sales and servicing of laser products for 
marking applications.

Formation of Rofin-Sinar UK, Ltd.

In January 1998, Rofin-Sinar formed a 74% owned company, Rofin-Sinar UK 
Ltd., based in Kingston upon Hull, England, and acquired certain business 
assets of Palomar Technologies Ltd. (Palomar), Kingston upon Hull, UK, a 
wholly owned subsidiary of Palomar Medical Technologies, Inc., USA.

Rofin-Sinar UK designs and manufactures low power CO2 lasers, based on the 
slab laser technology, for cutting and marking applications and sells them 
mainly to the machine tool and packaging industries.

The Company's business strategy continues to include the expansion of its 
products and services, which may be effected through acquisitions.  The 
Company, from time to time, reviews various opportunities to acquire 
businesses, technologies or products complementary to the Company's present 
business.

Currency Exchange Rates

Although the Company reports its Consolidated Financial Statements in U.S. 
dollars, approximately two-thirds of its sales are denominated in other 
currencies, primarily German marks, as well as French francs, Italian lire, 
British pounds and Japanese yen.  Net sales and costs and related assets and 
liabilities are generally denominated in the functional currencies of the 
operations, thereby serving to reduce the Company's exposure to exchange 
gains and losses.  

Exchange differences upon translation from each operation's functional 
currency to United States dollars are accumulated as a separate component of 
equity.  Due to the strengthening of the U.S. dollar against such foreign 
currencies during fiscal 1997 and 1998, the currency translation adjustment 
component of shareholders' equity changed from a $2.2 million credit at 
September 30, 1996 to a $0.8 million debit at September 30, 1998. 

The fluctuation of the German mark and the other relevant functional 
currencies against the U.S. dollar has had the effect of increasing or 
decreasing (as applicable) reported net sales, as well as cost of goods sold 
and gross margin and selling, general and administrative expenses,  
denominated in such foreign currencies when translated into U.S. dollars as 
compared to prior periods.


                                   - 27 -
<PAGE>
The following table illustrates the effect of the changes in exchange rates 
on the Company's fiscal 1996, 1997, and 1998 net sales, gross profit and 
income from operations.

                       ----------------- ----------------- -----------------
                          Fiscal 1996       Fiscal 1997       Fiscal 1998
                       ----------------- ----------------- -----------------
                                In 1995           In 1996           In 1997
                                Exchange          Exchange          Exchange
                        Actual   Rates    Actual   Rates    Actual   Rates
                       -------- -------- -------- -------- -------- --------
                                         (in millions)
Net Sales              $ 115.9  $ 117.2  $ 129.4  $ 140.0  $ 117.6  $ 123.3
Gross Profit              43.8     44.3     46.4     50.6     43.1     45.3
Income from operations    13.2     13.4     13.2     14.4     10.5     11.2

Between fiscal 1995 and 1996, the German mark weakened against the U.S. 
dollar by approximately 1.7%.  The impact of this weakening of the German 
mark was to decrease net sales, gross profit and income from operations by 
$1.3, $0.5 and $0.2 million, respectively.  Between fiscal 1996 and 1997, 
the German mark weakened against the U.S. dollar by approximately 13.2%.  
The impact of this weakening was to decrease net sales, gross profit and 
income from operations by $10.6, $4.2, and $1.2 million, respectively.  
Between fiscal 1997 and 1998, the German mark weakened against the U.S. 
dollar by approximately 6.7%.  The impact of this weakening was to decrease 
net sales, gross profit and income from operations by $5.7, $2.2, and $0.7 
million, respectively.

Taxes

The Company's subsidiaries pay taxes in many jurisdictions and the 
provisions for income taxes in the Company's Consolidated Financial 
Statements are based on separate local tax computations.  On a consolidated 
basis, this practice may result in the Company incurring income tax expense 
even though it may not have consolidated pre-tax income or in paying taxes 
in excess of pre-tax income if some, but not all, of its subsidiaries are 
not profitable (see Note 9 of the Notes to the Consolidated Financial 
Statements).  In particular, because of the Company's substantial operations 
in Germany, the Company historically has had a higher effective tax rate 
than many of its competitors who do not have substantial operations in 
Germany.

The Company currently generates taxable income, principally in Germany and 
the United States.  German corporate tax law applies the imputation system 
with regard to the taxation of the income of a corporation (such as RSL and 
Dilas).  In general, retained corporate income is subject to a municipal 
trade tax (which for Hamburg and Gunding on a combined basis is 16.5%, and 
for Mainz is 18.0%), which is deductible for federal corporate income tax 
purposes, a federal corporate income tax of 45% and, effective January 1, 
1995 and January 1, 1998, a surcharge of 7.5% and 5.5 %, respectively, on 
the federal corporate income tax amount.

Profits which are distributed by a German corporate taxpayer (such as RSL 
and Dilas) in the form of a dividend are subject to a reduced federal 

                                   - 28 -
<PAGE>
corporate income tax rate of 30%, plus the 7.5% or 5.5% surcharge on the 
federal corporate income tax amount calculated at the reduced rate.  
Dividends may be paid by RSL and Dilas to the Company and may be subject to 
a withholding tax pursuant to the income tax treaty currently in effect 
between the United States and the country from which the dividend is paid.

The Company is currently looking into various foreign tax minimization 
strategies which could result in reducing or eliminating its foreign 
withholding taxes.  Tax expense and deferred taxes in fiscal 1998 have been 
recorded at rates assuming all earnings of RSL and Dilas will be dividended 
to Rofin-Sinar Technologies, Inc.


RESULTS OF OPERATIONS

For the periods indicated, the following table sets forth the percentage of 
net sales represented by the respective line items in the Company's 
consolidated statements of operations.
                                            Fiscal Year Ended September 30,
                                            --------------------------------
                                              1996        1997        1998
                                            --------    --------    --------
Net sales                                     100%        100%        100%
Cost of goods sold                             62%         64%         63%
Gross profit                                   38%         36%         37%
Selling, general and administrative expenses   19%         17%         19%
Research and development expenses               8%          8%          9%
Special charge                                  0%          1%          0%
Income from operations                         11%         10%          9%
Income before income taxes                     11%         11%         10%
Net income                                      6%          7%          6%


FISCAL 1998 COMPARED TO FISCAL 1997

Net Sales - Net sales of $117.6 million for fiscal 1998 decreased by $11.8 
million, or 9%, from the prior year.  The decrease resulted from net sales 
decreases of $15.0 million in cutting and welding laser products, due to the 
transition from the C02 fast-axial flow laser technology to the new 
diffusion-cooled C02 Slab laser technology whereby OEMs delayed orders to 
redesign their handling systems.  The current year decrease in sales is also 
a reflection of a higher level of sales to the automotive industry booked in 
fiscal 1997 versus 1998.  Net sales of marking and microwelding products 
increased by $3.2 million due to strong demand for the Company's integrated-
circuit markers in the semiconductor industry.
 
Geographically, net sales decreased $8.8 million, or 19%, in the United 
States and $3.0 million, or 4% in Europe/Asia.  The effect of currency 
translation was to reduce net sales by $5.7 million, or 5%, of fiscal 1998 
net sales. 

Cost of Goods Sold - Cost of goods sold of $74.5 million in fiscal 1998 
decreased by $8.5 million, or 10%, over the prior year, and primarily 
reflect the decrease in net sales.

                                   - 29 -
<PAGE>
Gross Profit - Gross profit of $43.1 million in fiscal 1998 decreased by 
$3.3 million, or 7%, over the prior year.  As a percentage of net sales, 
gross profit increased from 36% in fiscal 1997 to 37% in fiscal 1998.  The 
increase in margin percentage was primarily caused by a favorable mix 
towards higher margin products and the current year results not being 
negatively affected by losses related to lasers repossessed as part of legal 
action taken against delinquent customers, as was the case in 1997.  The 
effect of currency translation was to reduce gross profit by $2.2 million, 
or 5%, of fiscal 1998 gross profit.

Selling, General and Administrative Expenses - Selling, general and 
administrative expenses of $22.7 million for fiscal 1998 increased $0.6 
million over the prior year.  As a percentage of net sales, SG&A expenses 
increased from 17% in 1997 to 19% in 1998 due to the fixed nature of certain 
costs as compared to lower sales levels in fiscal 1998 as well as to the 
first full year SG&A costs incurred by the Dilas entity. However, SG&A 
benefited from the translation of foreign currency denominated expenses into 
the strong US dollar.

Research and Development Expenses - Research and development expenses of 
$10.0 million increased $0.2 million, or 2%, over fiscal 1997.  R&D expenses 
are incurred primarily in German marks and are net of $1.1 million in 
government grants.  As a percentage of sales research and development 
expenses increased from 8% in fiscal 1997 to 9% in fiscal 1998 due to the 
additional expenses incurred by the Dilas and Rofin-Sinar UK subsidiaries, 
which was partially offset by the beneficial effect of the translation of 
foreign currency denominated expenses into the strong US dollar.

Income from Operations - The Company's income from operations of $10.5 
million for fiscal 1998 decreased by $2.7 million, or 21%, from fiscal 1997.  
The effect of currency translation was to reduce income from operations by 
$0.7 million, or 6%, of fiscal 1998 income from operations. 

Income Before Income Taxes - The Company's income before income taxes of 
$11.8 million for fiscal 1998, decreased $2.9 million, or 20%, from the 
prior year.  The decrease was due primarily to lower income from operations 
of $2.7 million and higher net interest expense and other income of $0.2 
million.  As a percentage of net sales, income before income taxes decreased 
in fiscal 1998 compared to fiscal 1997 by 1% to 10% of net sales.

Income Tax Expense - Income tax expense was $5.1 million in fiscal 1998 and 
$5.8 million in fiscal 1997.  The effective tax rates in fiscal 1998 and 
1997 were 43% and 39%, respectively.  The effective tax rates were higher 
than the U.S. statutory rate of 35% principally as a result of earnings 
taxed at higher foreign statutory rates.  The increase in the effective tax 
rate in fiscal 1998 compared to fiscal 1997 of 4% was due to the higher 
proportion of foreign income, which is taxed at higher statutory rates 
including increased tax rates in France. 

Net Income - As a result of the foregoing factors, the Company's net income 
of $6.7 million ($0.58 per diluted share) in fiscal 1998 decreased by $2.3 
million from the prior year's net income of $9.0 million ($0.77 per diluted 
share).  The effect of currency translation was to reduce net income by $0.4 
million, or 6%, of fiscal 1998 net income.

                                   - 30 -
<PAGE>
FISCAL 1997 COMPARED TO FISCAL 1996

Net Sales - Net sales of $129.4 million for fiscal 1997 increased by $13.5 
million, or 12%, over the prior year.  The improvement resulted from net 
sales increases of $10.0 million, or 11%, in cutting and welding laser 
products, and $3.5 million, or 11%, in marking and microwelding products.  
The increase in cutting and welding was due to strength in the OEM cutting 
market, sales of the Slab Series laser for welding applications, and a major 
welding program for a supplier to the automotive market.  The increase in 
marking and microwelding was due primarily to the introduction of a laser 
system designed specifically for the dental instruments market and the 
demand for the Company's integrated-circuit markers in the semiconductor 
industry.  Geographically, net sales increased $8.5 million, or 11%, in 
Europe/Asia and $5.0 million, or 13%, in the United States.  The effect of 
currency translation was to reduce net sales by $10.6 million, or 8%, of 
fiscal 1997 net sales.  At 1996 exchange rates, the Company would have 
achieved growth in net sales of 21%.

Cost of Goods Sold - Cost of goods sold of $83.0 million in fiscal 1997 
increased by $10.9 million, or 15%, over the prior year, and primarily 
reflect the increase in net sales.

Gross Profit - Gross profit of $46.4 million in fiscal 1997 increased by 
$2.6 million, or 6%, over the prior year.  As a percentage of net sales, 
gross profit decreased from 38% in fiscal 1996 to 36% in fiscal 1997.  The 
decrease in margin percentage was primarily caused by the mix of products 
sold in fiscal 1997 being weighted more heavily towards models with lower 
margins.  Gross profit was also negatively affected by losses related to 
lasers repossessed as part of legal action taken against delinquent 
customers.  The effect of currency translation was to reduce gross profit by 
$4.2 million, or 9%, of fiscal 1997 gross profit.

Selling, General and Administrative Expenses - Selling, general and 
administrative expenses of $22.1 million for fiscal 1997 increased only $0.9 
million over the prior year.  As a percentage of net sales, selling, 
general, and administrative expenses decreased from 19% in 1996 to 17% in 
1997 as the Company continues its strategy of achieving economies of scale 
by focusing its sales growth in the core business segments.

Research and Development Expenses - Research and development expenses of 
$9.7 million increased $0.4 million, or 4%, over fiscal 1996.  Research and 
development expenses are incurred primarily in German marks and are net of 
government grants.  As a percentage of sales research and development 
expenses remained unchanged at 8%.  Current year research and development 
spending includes a $1.7 million outlay towards the Company's diode-pumped 
solid-state laser program.

Special Charge - The special charge of $1.4 million relates to the payment 
to a customer in fiscal 1997 in settlement of a dispute arising out of the 
use of one of the Company's existing products in a newly developed customer 
application.  The Company's lasers were determined to be incompatible with 
the customer's intended use.  As part of the settlement the Company accepted 
the return of product for full refund which had the effect of reducing 
revenue by $0.5 million and gross profit by $0.3 million.

                                   - 31 -
<PAGE>
Income from Operations - The Company's income from operations of $13.2 
million for fiscal 1997 remained unchanged from fiscal 1996.  The effect of 
currency translation was to reduce income from operations by $1.2 million, 
or 9% of fiscal 1997 income from operations.  The reduction in income from 
operations from 11%, in fiscal 1996, to 10%, in fiscal 1997, was due 
primarily to the $1.4 million special charge.  Net sales per employee 
increased from $256,000 in fiscal 1996 to $285,000 in fiscal 1997 based on 
1996 exchange rates, representing a productivity increase of 11%. 

Income Before Income Taxes - The Company's income before income taxes of 
$14.7 million for fiscal 1997, increased $2.5 million, or 20%, over the 
prior year.  The increase was due primarily to interest income resulting 
from the $32.6 million net IPO proceeds (after the purchase of RSL and RSI 
from the former parent) and from cash generated by operating activities in 
fiscal 1997.

Income Tax Expense - Income tax expense was $5.8 million in fiscal 1997 
compared to $5.0 million in fiscal 1996.  The effective tax rates for fiscal 
1997 and 1996 were 39% and 40%, respectively.  The effective tax rates were 
higher than the U.S. statutory rate of 35% principally as a result of 
earnings taxed at higher foreign statutory rates.  The slight decrease in 
the effective tax rate was due to certain foreign income which was not taxed 
due to the use of tax loss carryforwards.

Net Income - As a result of the foregoing factors, the Company's net income 
of $9.0 million ($0.77 per diluted share) in fiscal 1997 increased by $1.7 
million over the prior year's net income of $7.3 million ($0.84 per diluted 
share).  The effect of currency translation was to reduce net income by $0.6 
million, or 7%, of fiscal 1997 net income.


LIQUIDITY AND CAPITAL RESOURCES

The Company completed its initial public offering of 11,500,000 shares of 
its Common Stock on September 30, 1996 for net proceeds of $102.7 million 
(before deduction of other offering expenses borne proportionately by the 
Company's former parent and the Company).  Of such amount, approximately 
$82.0 million of the gross proceeds ($77.1 million of the net proceeds) were 
used to purchase all outstanding shares of RSL and RSI from the former 
parent and its affiliates and to repay certain indebtedness owed to Siemens 
and its affiliates.

The Company's primary sources of liquidity are cash and cash equivalents of 
$34.9 million at September 30, 1998.  Additional sources of liquidity 
include the Company's $25 million line of credit with Deutsche Bank and DM 
12 million line of credit with Commerzbank., of which $13.4 million is 
unused and available as of September 30, 1998.  Management believes that 
cash flow from operations, cash and cash equivalents and the existing 
available lines of credit to be sufficient to fund operations for fiscal 
1999.  

Cash and cash equivalents decreased by $5.9 million during fiscal 1998.  Net 
cash used in operating activities of $5.8 million was due primarily to net 
income offset by increases in receivables and inventories and decreases in 

                                   - 32 -
<PAGE>
taxes payable due to timing.  Cash used in Investing activities of $3.1 
million included $3.5 million used to acquire property and equipment offset 
by miscellaneous other items.  Financing activities provided a net of $3.2 
million in cash including borrowings from banks of $4.0 million offset by 
repayment to related parties of $0.9 million and miscellaneous other items.


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The following discussion about the Company's market risk disclosures 
involves forward looking statements.  Actual results could differ materially 
from those projected in the forward looking statements.  The Company is 
exposed to market risk related to changes in interest rates and foreign 
currency exchange rates.  The Company does not use derivative financial 
instruments for speculative or trading purposes.

Interest Rate Sensitivity  

As of September 30, 1998, the Company maintained a cash equivalents 
portfolio of $28.4 million, consisting mainly of taxable interest bearing 
securities and demand deposits all with maturities of less than three 
months.  If short term interest rates were to increase or decrease by 10% 
interest income would increase or decrease by $0.2 million, accordingly. 

At September 30, 1998, the Company had $19.1 million of annually adjusted 
interest rate debt and $3.6 million of fixed rate debt expiring in the year 
2000.  A 10% change in the average cost of the Company's debt would result 
in an increase or decrease in pre-tax interest expense of less than $0.1 
million.

Foreign Currency Exchange Risk

The Company enters into foreign currency forward contracts and forward 
exchange options generally of less than six months duration to hedge its 
foreign currency risk on sales transactions.  At September 30, 1998, the 
Company had 53.1 million yen of contracts to buy 700,000 German marks, which 
would result in gains or losses which would not be material, were the 
Japanese yen / German mark currency exchange to increase or decrease by 10 
percent.  Such gains and losses would be offset by gains and losses on the 
related receivables.


ITEM 8.  CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Item 14(a) for an index to the consolidated financial statements.  No 
supplementary financial information is required to be presented pursuant to 
Item 302(a) of Regulation S-K.


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
         FINANCIAL DISCLOSURE

None


                                   - 33 -
<PAGE>
                                  PART III


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item is included in the "Election of 
Directors",  "Directors and Executive Officers" and "Section 16(a) 
Beneficial Ownership Reporting Compliance" sections of the Company's Proxy 
Statement to be filed in connection with the Company's 1999 Annual Meeting 
of Stockholders to be held in March 1999, and is incorporated by reference 
herein.


ITEM 11.  EXECUTIVE COMPENSATION

The information required by this Item is included in the "Executive 
Compensation and Related Information" section of the Company's Proxy 
Statement to be filed in connection with the Company's 1999 Annual Meeting 
of Stockholders to be held in March 1999, and is incorporated by reference 
herein.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this Item is included in the "Security Ownership 
of Certain Beneficial Owners" and "Management" sections of the Company's 
Proxy Statement to be filed in connection with the Company's 1999 Annual 
Meeting of Stockholders to be held in March 1999, and is incorporated By 
reference herein.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this Item is included in the "Compensation 
Committee",  "Interlocks and Insider Participation" and "Certain 
Transactions" sections of the Company's Proxy Statement to be filed in 
connection with the Company's 1999 Annual Meeting of Stockholders to be held 
in March 1999, and is incorporated by reference herein.

















                                   - 34 -
<PAGE>
                                  PART IV

ITEM 14.  EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES AND REPORTS 
          ON FORM 8-K

a.  1. Consolidated Financial Statements

       The following financial statements are filed as part of 
       this annual report.

       Independent Auditors' Report                                      F-1

       Consolidated Balance Sheets as of September 30, 1997 and 1998     F-2

       Consolidated Statements of Operations for the years ended
            September 30, 1996, 1997, and 1998                           F-3

       Consolidated Statements of Stockholders' Equity and 
            Comprehensive Income for the years ended 
            September 30, 1996, 1997, and 1998                           F-4

       Consolidated Statements of Cash Flows for the years ended 
            September 30, 1996, 1997, and 1998                           F-5

       Notes to Consolidated Financial Statements                        F-6

    2. Financial Statement Schedules

       Independent Auditors' Report                                     F-22

       Schedule II - Valuation and Qualifying Accounts                  F-23

       Schedules not listed above have been omitted because the matter or 
       conditions are not present or the information required to be set forth
       therein is included in the Consolidated Financial Statements hereto.

    3. Exhibits

       The exhibits listed in the accompanying index to exhibits is filed 
       or incorporated by reference as part of this annual report.

b.  Reports on Form 8-K

    The Registrant filed a report on Form 8-K on July 8, 1998, announcing 
    that DILAS Diodenlaser GmbH recently booked an order amounting to over 
    one million dollars from a major US customer.

    The Registrant filed a report on Form 8-K on August 25, 1998, 
    announcing its earnings for the third quarter of fiscal 1998.

c.  Exhibits

    The exhibits listed in the accompanying index to exhibits are filed or 
    incorporated by reference as part of this annual report.

                                   - 35 - 
<PAGE>
EXHIBIT
NUMBER     DESCRIPTION
-------  -------------------------------------------------------------------
 3.1     Certificate of Incorporation of the Company and Form of Certificate 
         of Amendment thereto  (*)

 3.2     By-Laws of the Company  (**)

 4.1     Form of Rights Agreement  (*)

10.1     Form of Sale and Transfer Agreement between Siemens
         Aktiengesellschaft and Rofin-Sinar Technologies Inc.  (*)

10.2     Form of Sale and Transfer Agreement by and among Siemens Power 
         Corporation and Rofin-Sinar Technologies Inc.  (*)

10.3     Form of Tax Allocation and Indemnification Agreement among Rofin-
         Sinar Technologies Inc., Rofin-Sinar Inc., Siemens Corporation and 
         Siemens Power Corporation  (*)

10.4     Joint Venture Agreement, dated as of May 27, 1992, by and among 
         Rofin-Sinar Laser GmbH, Marubeni Corporation and Nippei Toyama 
         Corporation  (*)

10.5     Cooperation Agreement, dated as of May 27, 1992, among Nippei 
         Toyama Corp., Rofin-Sinar Laser GmbH and Marubeni Corporation  (*)

10.6     Cooperation Agreement, dated as of May 27, 1992, among Rofin-Sinar 
         Laser GmbH, Marubeni Corporation and Nippei Toyama Corporation  (*)

10.7     Inheritable Building Right (Erbbaurecht), dated as of March 1, 
         1990, between Rofin-Sinar Laser GmbH and Lohss GmbH (in German, 
         English summary provided)  (*)

10.8     Lease Agreement, dated August 10, 1990, between Josef and Maria 
         Kranz and Rofin-Sinar Laser GmbH (in German, English summary 
         provided)  (*)

10.9     Lease Agreement, dated June 14, 1989, between DR Group and Rofin-
         Sinar Incorporated (Mast Street property)  (*)

10.10    Lease Agreement, dated March 25, 1993 between DR Group and Rofin-
         Sinar Incorporated (Plymouth Oaks Drive property)  (*)

10.11    Rofin-Sinar Laser GmbH Pension Plan (in German, English summary 
         provided)  (*)

10.12    Form of 1996 Equity Incentive Plan  (*)

10.13    Form of 1996 Non-Employee Directors' Stock Plan  (*)

10.14    Deutsche Bank AG Commitment Letter dated August 22, 1996  (*)



                                   - 36 -
<PAGE>
10.15    Form of Employment Agreement, dated as of September 2, 1996, among 
         Peter Wirth, Rofin-Sinar Laser GmbH and Rofin-Sinar Technologies 
         Inc. (in German, English summary provided)  (*)

10.16    Form of Employment Agreement, dated as of September 2, 1996, among 
         Hinrich Martinen, Rofin-Sinar Laser GmbH and Rofin-Sinar 
         Technologies Inc. (in German, English summary provided)  (*)

10.17    Form of Employment Agreement, dated as of September 2, 1996, among 
         Gunther Braun, Rofin-Sinar Laser GmbH and Rofin-Sinar Technologies 
         Inc. (in German, English summary provided)  (*)

11.1     Statement of earnings per share

21.1     List of Subsidiaries of the Registrant 

27.1     Financial Data Schedule for fiscal year ended September 30, 1998



----------------------------------------------------------------------------
(*)      Incorporated by reference to the exhibits filed with the Company's 
         Registration Statement on Form S-1 (File No. 333-09539) which was 
         declared effective on September 25, 1996.

(**)     Incorporated by reference to the exhibit filed with the Company's 
         Quarterly Report for the period ended March 31, 1998.




























                                   - 37 -
<PAGE>
                               SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities 
Exchange Act of 1934, the Registrant has duly caused this Report to be 
signed on its behalf by the undersigned, thereunto duly authorized.


Date:   December 23, 1998            ROFIN-SINAR TECHNOLOGIES INC.      

                                     By:        /s/  Peter Wirth
                                         -------------------------------
                                                     Peter Wirth
 
                                         Chairman of the Board, 
                                         Chief Executive Officer, and
                                         President



Pursuant to the requirements of the Securities Act of 1934, this report has 
been signed below by the following persons on behalf of the Registrant and 
in the capacities and on the dates indicated.


      SIGNATURE                      TITLE                     DATE
---------------------    -----------------------------    ----------------- 

/s/  Peter Wirth         Chairman of the Board of         December 23, 1998
---------------------    Directors, Chief Executive
     Peter Wirth         Officer and President

/s/  Hinrich Martinen    Executive Vice President,        December 23, 1998
---------------------    Research and Development/
     Hinrich Martinen    Operations, Chief Technical
                         Officer and Director

/s/  Gunther Braun       Executive Vice President,        December 23, 1998
---------------------    Finance and Administration,
     Gunther Braun       Chief Financial Officer,
                         Principal Accounting Officer
                         and Director

/s/  William Hoover      Director                         December 23, 1998
---------------------
     William Hoover

/s/  Ralph Reins         Director                         December 23, 1998
---------------------
     Ralph Reins

/s/  Gary Willis         Director                         December 23, 1998
---------------------
     Gary Willis
      

<PAGE>
                         INDEPENDENT AUDITORS' REPORT



The Board of Directors and Stockholders
Rofin-Sinar Technologies Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of Rofin-Sinar 
Technologies Inc. and Subsidiaries as of September 30, 1997 and 1998, and 
the related consolidated statements of operations, stockholders' equity and 
comprehensive income, and cash flows for each of the years in the three-year 
period ended September 30, 1998.  These consolidated financial statements 
are the responsibility of the Company's management.  Our responsibility is 
to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing 
standards.  Those standards require that we plan and perform the audit to 
obtain reasonable assurance about whether the financial statements are free 
of material misstatement.  An audit includes examining, on a test basis, 
evidence supporting the amounts and disclosures in the financial statements. 
An audit also includes assessing the accounting principles used and 
significant estimates made by management, as well as evaluating the overall 
financial statement presentation.  We believe that our audits provide a 
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above 
present fairly, in all material respects, the financial position of Rofin-
Sinar Technologies Inc. and Subsidiaries as of September 30, 1997 and 1998, 
and the results of their operations and their cash flows for each of the 
years in the three-year period ended September 30, 1998, in conformity with 
generally accepted accounting principles.


KPMG Peat Marwick LLP
Detroit,  Michigan



October 30, 1998
















                                    F-1
<PAGE>
               ROFIN-SINAR TECHNOLOGIES INC. AND SUBSIDIARIES
                       CONSOLIDATED BALANCE SHEETS
                          (dollars in thousands)


                                                           September 30,
                                                      ----------------------
                                                         1997         1998
                                                      ---------    ---------
ASSETS
Current Assets:
    Cash and cash equivalents                         $  40,743    $  34,874

    Accounts receivable, trade                           28,058       34,722
    Less allowance for doubtful accounts                (   910)    (  1,093)
                                                      ---------    ---------
    Trade accounts receivable, net                       27,148       33,629

    Accounts receivable, related party                      721          379
    Other accounts receivable                               726        1,600
    Inventories (note 2)                                 28,731       38,372
    Prepaid expenses                                        390          280
    Deferred income tax assets - current (note 9)         3,508        2,680
                                                      ---------    ---------
        Total current assets                            101,967      111,814

Property and equipment, at cost (note 3)                 37,166       41,689
    Less accumulated depreciation                      ( 15,048)    ( 17,691)
                                                      ---------    ---------
    Property and equipment, net                          22,118       23,998

Deferred income tax assets - noncurrent (note 9)          2,769        2,833
Goodwill (note 1)                                         5,054        4,713
Other assets                                                281          384
                                                      ---------    ---------
        Total assets                                  $ 132,189    $ 143,742
                                                      =========    =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Line of credit (note 5)                           $  18,569    $  19,123
    Accounts payable, related party                         894           - 
    Accounts payable, trade                               5,837        6,257
    Income taxes payable (note 9)                         5,826        3,154
    Accrued liabilities (note 4)                         15,834       16,161
                                                      ---------    ---------
        Total current liabilities                        46,960       44,695

Long-term debt (note 6)                                      -         3,580
Pension obligations (note 8)                              3,044        3,673
Deferred income tax liability - noncurrent (note 9)         191          415
Minority interests                                           69          430
Other long-term liabilities                                  -           184
                                                      ---------    ---------
        Total liabilities                                50,264       52,977



Commitments and contingencies (note 7)
Stockholders' equity:
    Preferred stock, 5,000,000 shares authorized,
      none issued or outstanding                           -            -
    Common stock, $0.01 par value, 50,000,000 shares
      authorized, 11,522,900 (11,510,500 at 
      September 30, 1997) shares issued 
      and outstanding                                       115         115
    Additional paid-in capital                           75,666      75,861
    Retained earnings                                     8,954      15,635
    Accumulated other comprehensive income              ( 2,810)     (  846)
                                                      ---------   ---------
        Total stockholders' equity                       81,925      90,765
                                                      ---------   ---------
        Total liabilities and stockholders' equity    $ 132,189   $ 143,742
                                                      =========   =========

See accompanying notes to consolidated financial statements





































                                    F-2
<PAGE>
              ROFIN-SINAR TECHNOLOGIES INC. AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF OPERATIONS
             (dollars in thousands, except per share amounts)


                                                Years ended September 30,
                                             -------------------------------
                                                1996       1997       1998
                                             ---------  ---------  ---------
Net sales                                    $ 115,903  $ 129,393  $ 117,583
Cost of goods sold                              72,096     82,982     74,476
                                             ---------  ---------  ---------
    Gross profit                                43,807     46,411     43,107
                                             ---------  ---------  ---------

Selling, general, and administrative expenses   20,762     20,856     22,508
Provision for doubtful accounts                    484      1,245        148
Research and development expenses                9,335      9,727      9,960
Special charge (note 10)                            -       1,350         - 
                                             ---------  ---------  ---------
    Income from operations                      13,226     13,233     10,491

Other expense (income):
    Interest expense, net (notes 5 and 6)        1,010    (   854)   (   759)
    Minority interest                               10         13        111
    Miscellaneous                              (    38)   (   638)   (   660)
                                             ---------  ---------  ---------
        Total other expense, net                   982    ( 1,479)   ( 1,308)
                                             ---------  ---------  ---------
        Income before income taxes              12,244     14,712     11,799

Income tax expense (note 9)                      4,956      5,758      5,118
                                             ---------  ---------  ---------
        Net income                           $   7,288  $   8,954  $   6,681
                                             =========  =========  =========

Net income per share (note 11):
Basic                                        $    0.84  $    0.78  $    0.58

Diluted                                      $    0.84  $    0.77  $    0.58
                                             =========  =========  =========

Weighted average shares used in computing
   Net income per share (note 11):
Basic                                        8,631,578 11,504,500 11,516,631

Diluted                                      8,639,498 11,605,706 11,614,692
                                             ========= ========== ==========


See accompanying notes to consolidated financial statements




                                    F-3
<PAGE>
               ROFIN-SINAR TECHNOLOGIES INC. AND SUBSIDIARIES   
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
              Years ended September 30, 1996, 1997, and 1998 
                         (dollars in thousands)
                                                         
<TABLE>
                                                                                                       Accumulated
                                                   Common     Additional                    Former        Other          Total
                                                   Stock       Paid-in       Retained      Parent's   Comprehensive  Stockholders'
                                                 Par Value     Capital       Earnings      Capital        Income        Equity
                                               ------------  ------------  ------------  ------------  ------------  ------------
<S>                                            <C>           <C>           <C>           <C>           <C>           <C>
BALANCES at September 30, 1995                          -             -             -         34,224         5,449        39,673

Comprehensive income:
Foreign currency translation adjustment                 -             -             -             -        ( 3,264)      ( 3,264)
Net income                                              -             -             -          7,288            -          7,288
                                                                                                                     ------------
Total comprehensive income                                                                                                 4,024

Capital contributions from former Parent                -             -             -          1,938            -          1,938
Public sale of common stock, net of expense            115        75,700            -       ( 43,450)           -         32,365
                                               ------------  ------------  ------------  ------------  ------------  ------------
BALANCES at September 30, 1996                         115        75,700            -             -          2,185        78,000

Comprehensive income:
Foreign currency translation adjustment                 -             -             -             -        ( 4,995)      ( 4,995)
Net income                                              -             -          8,954            -             -          8,954
                                                                                                                     ------------
Total comprehensive income                                                                                                 3,959

Adjustment of public offering expenses                  -        (    77)           -             -             -        (    77)
Common stock issued                                     -             43            -             -             -             43
                                               ------------  ------------  ------------  ------------  ------------  ------------
BALANCES at September 30, 1997                         115        75,666         8,954            -        ( 2,810)       81,925

Comprehensive income:
Foreign currency translation adjustment                 -             -             -             -          1,964         1,964
Net income                                              -             -          6,681            -             -          6,681
                                                                                                                     ------------
Total comprehensive income                                                                                                 8,645

Common stock issued                                     -            195            -             -             -            195
                                               ------------  ------------  ------------  ------------  ------------  ------------
BALANCES at September 30, 1998                  $      115    $   75,861    $   15,635    $       -     $   (  846)   $   90,765
                                               ============  ============  ============  ============  ============  ============
</TABLE>
See accompanying notes to consolidated financial statements
                                    F-4
<PAGE>
            ROFIN-SINAR TECHNOLOGIES INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF CASH FLOWS

                        (dollars in thousands)


                                                   Years ended September 30,
                                                  --------------------------
                                                    1996     1997     1998
                                                  -------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                      $  7,288 $  8,954 $  6,681
    Adjustments to reconcile net income 
     to net cash provided (used) by 
     operating activities:
       Depreciation and amortization                 2,449    2,142    2,512
       Issuance of restricted stock                     -        43       63
       Provision for doubtful accounts                 484    1,245      148
       Loss on disposal of property and equipment        7        5        2
       Deferred income taxes                         1,118  (   375)     831
       Increase in minority interest                    10       43      400
       Change in operating assets and liabilities:
         Trade accounts receivable                 ( 7,355) (   270) ( 5,846)
         Other accounts receivable                 (   373)     782  ( 1,040)
         Inventories                               ( 6,976)   2,776  ( 8,339)
         Prepaid expenses and other                      8  (   166)     242
         Accounts payable, trade                   (   249)     321    1,352
         Income taxes payable                        3,636    2,752  ( 2,902)
         Accrued liabilities and pension obligation  6,049  (    44)      53
                                                  -------- -------- --------
  Net cash provided (used) by operating activities   6,096   18,208  ( 5,843)
                                                  -------- -------- --------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to property and equipment              ( 1,955) ( 1,798) ( 3,525)
  Proceeds from the sale of property and equipment      91       44       37
  Investment in subsidiaries                            -   ( 5,092)      - 
  Goodwill                                              -        -       376
                                                  -------- -------- --------
  Net cash used by investing activities            ( 1,864) ( 6,846) ( 3,112)
                                                  -------- -------- --------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Increase in former parent's capital                1,938       -        - 
  Repayment of former parent loans                 ( 7,473) (16,586)      - 
  Public sale of common stock, net of expenses     102,445       -        - 
  Purchase of RSI and RSL stock                    (70,080)      -        - 
  Borrowings from bank                               6,318   12,209    4,003
  Repayments to bank                               ( 3,129)      -        - 
  Repayments to related party                           -        -    (  942)
  Other                                                 -   (    77)     132
                                                  -------- -------- --------
  Net cash provided (used) by financing activities  30,019  ( 4,454)   3,193
                                                  -------- -------- --------
Effect of foreign currency translation on cash     (    72) ( 1,034) (   107)
                                                  -------- -------- --------

Net increase (decrease)in cash and cash equivalents 34,178    5,874 ( 5,869)
Cash and cash equivalents at beginning of year         691   34,869   40,743
                                                  -------- -------- --------
Cash and cash equivalents at end of year          $ 34,869 $ 40,743 $ 34,874
                                                  ======== ======== ========

Cash paid during the year for interest            $    134 $    624 $    777
                                                  ======== ======== ========
Cash paid during the year for income taxes        $     -  $  3,316 $  6,921
                                                  ======== ======== ========


See accompanying notes to consolidated financial statements










































                                    F-5
<PAGE>
              ROFIN-SINAR TECHNOLOGIES INC. AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    September 30, 1996, 1997, and 1998
                         (dollars in thousands)

1.  SUMMARY OF ACCOUNTING POLICIES
(a) Description of the Company and Business

The accompanying financial statements present the historical financial 
information of Rofin-Sinar Technologies Inc. ("Rofin-Sinar" or "the Company") 
its wholly owned consolidated subsidiaries; Rofin-Sinar, Inc. (a United 
States company) ("RSI"), and Rofin-Sinar Laser GmbH (a Federal Republic of 
Germany limited liability company)("RSL"), the accounts of its 80% owned 
subsidiary, Dilas Diodenlaser GmbH ("Dilas"), and the accounts of its 74% 
owned subsidiary, Rofin-Sinar UK, Ltd. ("RS, UK").  RSI and RSL were formerly 
the industrial laser businesses of Siemens AG ("Siemens" or "former Parent").  
RSL includes the consolidated accounts of its 99.97% owned subsidiary, Rofin-
Sinar France S.A.; its 90.65% owned subsidiary, Rofin-Sinar Italiana S.r.L.; 
and its 51% owned subsidiary, Rofin-Marubeni Laser Corporation (a Japanese 
entity).  All significant intercompany balances and transactions have been 
eliminated in consolidation.

On September 30, 1996, Rofin-Sinar consummated an initial public offering of 
its common stock (IPO).  Prior to the IPO the common stock of Rofin-Sinar, a 
newly formed holding company, RSI and RSL were each owned directly or 
indirectly by Siemens AG.  Concurrent with the IPO the stock of RSI and RSL 
(together, Rofin-Sinar Group), including all business operations, assets and 
liabilities, were sold to the Company (reorganization).  Approximately 
$82,000 of the gross proceeds ($77,080 of the net proceeds) from the public 
offering were used to purchase such stock of Rofin-Sinar Group from Siemens 
AG and its subsidiaries and to repay certain indebtedness to Siemens.  The 
reorganization constituted a combination of entities under common control 
and, for financial statements purposes, was accounted for by combining the 
historical accounts of Rofin-Sinar Group and Rofin-Sinar, in a manner similar 
to pooling-of-interest accounting.

On August 1, 1997, the Company acquired 80% of the common stock of Dilas 
Diodenlaser GmbH, a German corporation, based in Mainz, Germany, for $5,200.  
Dilas designs, manufactures and markets diode lasers and components.  The 
transaction was accounted for on a purchase accounting basis.  The excess of 
purchase price over the fair value of the net assets acquired was $5,100 and 
has been recorded as goodwill, which is being amortized on a straight-line 
basis over 15 years.  Accumulated amortization as of September 30, 1998 
totaled $398.  The Company periodically assesses the recoverability of the 
unamortized balance of the intangible asset based on expected future 
profitability and undiscounted future cash flows of Dilas and their 
contribution to the overall operation of the Company.  The operating results 
of Dilas have been included in the consolidated statement of operations from 
the date of acquisition. 




                                    F-6
<PAGE>
The combined financial statements for the fiscal year ended September 30, 
1996 are derived from the historical financial statements of the Rofin-Sinar 
Group.  Management believes the accompanying historical statements of 
operations for this fiscal period include a reasonable allocation of all 
expenses the Company would have incurred as an independent company.

The primary business of Rofin-Sinar is to develop, manufacture, and market 
industrial lasers and supplies used for material processing applications.  
The majority of the Company's customers are in the machine tool, automotive, 
semiconductor & electronics industries and are located in the United States, 
Europe, and Asia.  For the year ended September 30, 1998, Rofin-Sinar 
generated approximately 73% of its revenues from the sale and installation of 
new lasers and approximately 27% from aftermarket support for the Company's 
existing laser products.

(b) Cash Equivalents

Cash equivalents consist of liquid instruments with an original maturity of 
three months or less as well as taxable and tax-exempt variable rate demand 
obligations which are redeemable upon a five day minimum notice.  Interest 
income was $0, $1,601, and $1,579 for the years ended September 30, 1996, 
1997, and 1998, respectively, and was offset by interest expense in the 
accompanying consolidated statements of operations.

(c) Inventories

Inventories are stated at the lower of cost or market, after provisions for 
excess and obsolete inventory salable at prices below cost.  Costs are 
determined using the first in, first out and weighted average cost methods.

(d) Property and Equipment

Property and equipment are recorded at cost and depreciated over their useful 
lives, except for leasehold improvements, which are amortized over the lesser 
of their useful lives or the term of the lease.  The methods of depreciation 
are straight line for financial reporting purposes and accelerated for income 
tax purposes.  Depreciable lives for financial reporting purposes are as 
follows:
                                              Useful
                                              Lives
                                           -----------
       Buildings                              40 Years
       Machinery and equipment              3-10 Years
       Furniture and fixtures               3-10 Years
       Computers and software                3-4 Years
       Leasehold improvements               5-15 Years

(e) Revenue Recognition

Revenues are recognized when a laser product is shipped or services are 
performed.




                                    F-7
<PAGE>
(f) Income Taxes

Income taxes are accounted for under the asset and liability method.  
Deferred tax assets and liabilities are recognized for the future tax 
consequences attributable to differences between the financial statement 
carrying amounts of existing assets and liabilities and their respective tax 
bases.  Deferred tax assets and liabilities are measured using enacted tax 
rates expected to apply to taxable income in the years in which those 
temporary differences are expected to be recovered or settled.  The effect on 
deferred taxes of a change in tax rates is recognized in income in the period 
that includes the enactment date.

The Company's results through September 30, 1996 were included in the 
consolidated federal income tax return of Siemens Corporation in the U.S.  
For periods from and after September 30, 1996, the Company bears sole 
responsibility for filing tax returns in the respective jurisdictions. 

(g) Accounting for Warranties

The Company issues a standard warranty of one year for parts and labor on 
lasers that are sold.  However, extended warranties are negotiated on a 
contract-by-contract basis.  The Company provides for estimated warranty 
costs as products are shipped.  

(h) Foreign Currency Translation

In accordance with Statement of Financial Accounting Standards No. 52, 
Foreign Currency Translation, the assets and liabilities of the Company's 
operations outside the United States are translated into U.S. dollars at 
exchange rates in effect on the balance sheet date, and revenues and expenses 
are translated using a weighted average exchange rate during the period.  
Gains or losses resulting from translating foreign currency financial 
statements are recorded as a separate component of shareholders' equity.  
Gains or losses resulting from foreign currency transactions are included in 
net income.

(i) Comprehensive Income

In 1997, the Financial Accounting Standards Board issued SFAS No. 130 (FAS 
130), "Reporting Comprehensive Income".  FAS 130 establishes standards for 
reporting and presenting comprehensive income and its components in a full 
set of financial statements.  During fiscal 1998 the Company adopted FAS 130 
and is now required to report the sum of net income and accumulated foreign 
currency translation adjustment as "comprehensive income" in the consolidated 
statements of stockholders' equity and comprehensive income.  FAS 130 only 
requires additional disclosures in the consolidated financial statements, and 
does not affect the Company's financial position or results of operations.  
Prior year financial statements have been reclassified to conform to the 
requirements of FAS 130.






                                    F-8
<PAGE>
(j) Research and Development Expenses

Research and development costs are expensed when incurred and are net of 
German government grants of $822, $876, and $1,145 received for the years 
ended September 30, 1996, 1997, and 1998, respectively.  The Company has no 
future obligations under such grants.

(k) Financial Instruments

Financial instruments of the Company, consisting principally of cash, 
accounts receivable, accounts payable, and bank loans, are recorded at 
amounts which approximate estimated fair value.  The estimated fair value 
amounts are determined by the Company using available market information and 
available valuation methodologies.

(l) Use of Estimates

Management of the Company makes a number of estimates and assumptions 
relating to the reporting of assets and liabilities and the disclosure of 
contingent liabilities to prepare these financial statements in conformity 
with generally accepted accounting principles.  Actual results could differ 
from these estimates. 

(m) Reclassifications

Certain reclassifications of prior year amounts have been made for consistent 
presentation.


2.  INVENTORIES

Inventories are summarized as follows:
                                                        September 30,
                                                  ------------------------
                                                     1997          1998
                                                  ----------    ----------
      Finished goods                               $  2,732      $  3,809
      Work in progress                                7,944        10,039
      Raw materials and supplies                      6,903        10,605
      Demo inventory                                  4,335         5,395
      Service parts                                   6,817         8,524
                                                  ----------    ----------
      Total inventories, net                       $ 28,731      $ 38,372
                                                  ==========    ==========











                                    F-9
<PAGE>
3.  PROPERTY AND EQUIPMENT    Property and equipment include the following:

                                                        September 30,
                                                  ------------------------
                                                     1997          1998
                                                  ----------    ----------
      Buildings                                    $ 20,878      $ 22,009
      Technical machinery and equipment               5,801         7,014
      Furniture and fixtures                          5,867         6,414
      Computers and software                          3,123         3,781
      Leasehold improvements                          1,497         2,471
                                                  ----------    ----------
      Total property and equipment, at cost        $ 37,166      $ 41,689
                                                  ==========    ==========

4.  ACCRUED LIABILITIES

    Accrued liabilities are comprised of the following:
                                                         September 30,
                                                  ------------------------
                                                     1997          1998
                                                  ----------    ----------
      Employee compensation                        $  4,960      $  5,211
      Warranty reserves                               5,724         5,245
      Other taxes payable                               820           721
      Customer deposits                               2,016         1,690
      Other                                           2,314         3,294
                                                  ----------    ----------
      Total accrued liabilities                    $ 15,834      $ 16,161
                                                  ==========    ==========


5.  LINE OF CREDIT

In October 1996 the Company obtained an annually renewable credit line of 
$25,000 with Deutsche Bank AG to support its working capital needs.  As of 
September 30, 1997 $12,209 was borrowed against this loan facility by RSL and 
Rofin-Sinar Italiana S.r.L. at a fixed interest rate of 3.9%, whereas at 
September 30, 1998 $14,570 was borrowed against this loan facility by RSL, 
Dilas, Rofin-Marubeni, Rofin-Sinar Italiana S.r.L. and RS UK at an average 
fixed interest rate of 3.7%.  

In addition, the Company has several foreign lines of credit which allow it 
to borrow in the applicable local currency.  At September 30, 1997 direct 
borrowings under these agreements totaled $489, while at September 30, 1998, 
they totaled $4,553; and $3,744 remain unused.  Fixed interest rates under 
these agreements can vary from 1.3% to 7.4%, depending upon the country and 
amount of usage.





                                    F-10
<PAGE>
6.  LONG-TERM DEBT

As of September 30, 1998, Dilas had long-term borrowings totaling $597 under 
the credit line with Deutsche Bank AG at a fixed interest rate of 5.1%(see 
Note 5, above).  Furthermore, RSL entered into a loan agreement with a German 
bank for a $2,983 long-term credit facility, at a fixed interest rate of 
4.8%, which was completely used at September 30, 1998.  Both agreements 
expire in 2000.


7.  LEASE COMMITMENTS

The Company leases operating facilities and equipment under operating leases 
which expire at various dates through 2007.  The lease agreements require 
payment of real estate taxes, insurance, and maintenance expenses by the 
Company.

Minimum lease payments for future fiscal years under noncancelable operating 
leases as of September 30, 1998 are:

      Fiscal Year Ending September 30,               Total
      --------------------------------             ---------
      1999                                         $  1,834
      2000                                            1,099
      2001                                              676
      2002                                              519
      2003 and thereafter                             1,443

Rent expense charged to operations for the years ended September 30, 1996, 
1997, and 1998, approximates $1,568, $1,609, and $1,656, respectively.  


8.  EMPLOYEE BENEFIT PLANS

Substantially all of the Company's U.S. and German employees participate in 
defined benefit pension plans.  The Company's U.S. plan began in fiscal 1995 
and is funded.  As is the normal practice with German companies, the German 
plan is unfunded.

The following table sets forth the funded status of the plans at the balance 
sheet dates: 
                                                        September 30,
                                                  ------------------------
                                                     1997          1998
                                                  ----------    ----------
   Actuarial present value of benefit obligation:
      Vested employees                             $  2,944      $  3,727
      Nonvested employees                               567           648
                                                  ----------    ----------
         Accumulated benefit obligation               3,511         4,375

   Effects of assumed future compensation increase    1,181         1,602
                                                  ----------    ----------
         Projected benefit obligation                 4,692         5,977

                                    F-11
<PAGE>
   Plan assets                                      ( 1,607)      ( 1,899) 
                                                  ----------    ----------
         Projected benefit obligation in excess 
            of plan assets                            3,085         4,078

   Unrecognized net gain                                488            61
   Unrecognized prior service cost                  (   529)      (   466) 
                                                  ----------    ----------
      Accrued pension cost                         $  3,044      $  3,673
                                                  ==========    ==========   

Pension costs consist of the following components:
                                                  Years ended September 30,
                                                ----------------------------
                                                  1996      1997      1998
                                                --------  --------  --------
  Service cost                                   $  431    $  418    $  466
  Interest on projected benefit obligations         275       294       351
  Actual Return on Assets                             -         -     (  34)
  Amortization of unrecognized prior service cost    64        52        63
  Amortization of unrecognized gain               (  11)    (  84)    ( 111)
                                                --------  --------  --------
  Net pension cost                               $  759    $  680    $  735
                                                ========  ========  ========

   
Pensions generally provide benefits based on years of service.  A discount 
rate for the U.S. of 7.5% (7.0% for foreign plan) as of September 30, 1998, 
and 8% (7.0% for foreign plan) as of September 30, 1997 and 1996, is assumed.  
Increases in future compensation levels for the U.S. plan are projected at 6% 
(2% for foreign plan).  Prior service costs and actuarial gains and losses 
are generally amortized over the average remaining service period of active 
employees.

RSI has a 401(k) plan for the benefit of all eligible U.S. employees, as 
defined by the plan.  Participating employees may contribute up to 16% of 
their qualified annual compensation.  The Company matches 50% of the first 6% 
of the employees' compensation contributed as a salary deferral.  Company 
contributions for the years ended September 30, 1996, 1997, and 1998 are 
$119, $146, and $148, respectively.















                                    F-12
<PAGE>
9.  INCOME TAXES

Income before income taxes is attributable to the following geographic 
regions:
                                                 Years ended September 30,
                                               ----------------------------
                                                 1996      1997      1998
                                               --------  --------  --------
    United States                              $  3,680  $  3,178  $    864
    Germany                                       8,186    10,525    10,256
    France                                          169       183       570
    Italy                                           109       180       296
    Japan                                           100       646       125
    United Kingdom                                   -         -     (  312)
                                               --------  --------  --------
    Total income before income taxes           $ 12,244  $ 14,712  $ 11,799
                                               ========  ========  ========


The provision for income tax expense is comprised of the following amounts:

                                                 Years ended September 30,
                                               ----------------------------
                                                 1996      1997      1998
                                               --------  --------  --------
    Current: 
        United States                          $     -   $  1,981   ( $ 101) 
        Foreign                                   3,838     4,152     4,481
                                               --------  --------  --------
            Total current                         3,838     6,133     4,380
                                               --------  --------  --------
    Deferred:
        United States                             1,316    (  395)      348
        Foreign                                  (  198)       20       390
                                               --------  --------  --------
            Total deferred                        1,118    (  375)      738
                                               --------  --------  --------
            Total income tax expense           $  4,956  $  5,758  $  5,118
                                               ========  ========  ========

Statutory tax rates in the U.S., U.K., Italy, France, and Japan approximate 
34%, 20%, 41% (52% for fiscal 1996 and 53% for fiscal 1997), 42% (37% for 
fiscal 1996 and 1997), and 51% (52% for fiscal 1996), respectively.  German 
corporate tax law applies the imputation system with regard to the taxation 
of the income of a corporation (such as RSL and Dilas).  In general, retained 
corporate income is subject to a municipal trade tax (which for Hamburg and 
Gunding on a combined basis is 16.5%, and for Mainz is 18.0%), which is 
deductible for federal corporate income tax purposes, a federal corporate 
income tax of 45% and, effective January 1, 1995 and January 1, 1998, a 
surcharge of 7.5% and 5.5%, respectively, on the federal corporate income tax 
amount.



                                    F-13
<PAGE>
Profits which are distributed by a German corporate taxpayer in the form of a 
dividend are subject to a reduced federal corporate income tax rate of 30% 
plus the 7.5% or 5.5% surcharge on the federal corporate income tax amount 
calculated at the reduced rate.  Dividends may be paid by RSL and Dilas to 
the Company and may be subject to a withholding tax pursuant to the income 
tax treaty currently in effect between the United States and the country from 
which the dividend is paid.

The Company is currently looking into various foreign tax minimization 
strategies which could result in reducing or eliminating its foreign 
withholding taxes.  Tax expense and deferred taxes in fiscal 1998 have been 
recorded at rates assuming all earnings of RSL and Dilas will be dividended 
to Rofin-Sinar Technologies, Inc.

The difference between actual income tax expense and the amount computed by 
applying the U.S. federal income tax rate of 34% is as follows: 

                                                 Years ended September 30,
                                               ----------------------------
                                                 1996      1997      1998
                                               --------  --------  --------
      Computed "expected" tax expense          $  4,163  $  5,002  $  4,012
      Difference between U.S. and foreign 
         statutory rates                            741     1,019     1,083
      Foreign operating loss for which no 
         benefit is recognized                       -    (   286)       -
      Use of unrecognized operating loss             -    (   374)       -
      Tax exempt interest                            -         -     (  248)
      Reduction of N.O.L. Valuation Allowance        -         -     (  525)
      Adjustment of prior-year tax estimates         -         -        434
      German dividend withholding tax                -        262        -
      Other                                          52       135       362
                                               --------  --------  --------
      Actual tax expense                       $  4,956  $  5,758  $  5,118
                                               ========  ========  ========


The tax effects of temporary differences that give rise to the net deferred 
tax assets are as follows: 
                                                        September 30,
                                                  ------------------------
                                                     1997          1998
                                                  ----------    ----------
   Deferred tax assets:
       Foreign:
           German reorganization benefits          $  1,969      $  1,569
           Net operating loss carryforwards           1,227           744
           Pension accrual                              252           281
           Inventory                                    480           511
           Other, net                                   244            13
                                                  ----------    ----------
               Total Foreign                          4,172         3,118



                                    F-14
<PAGE>
       United States:
           Net operating loss carryforwards           3,380         2,912
           Depreciation                                 180           271
           Warranty accrual                             959           722
           Inventory                                  1,024         1,089
           Other                                        387           650
                                                  ----------    ----------
               Total United States                    5,930         5,644
      
           Gross deferred tax assets                 10,102         8,762
           Less:  Valuation allowance               (   950)       (  289) 
                                                  ----------    ----------
               Net deferred tax assets                9,152         8,473
                                                  ----------    ----------

   Deferred tax liabilities:
       Foreign:
           Depreciation                             ( 2,309)      ( 2,415)
           Inventory                                (   310)      (   448)
           Bad debt allowance                       (   134)      (   105)
           Accrued liabilities                      (   179)      (   279) 
                                                  ----------    ----------
               Total Foreign                        ( 2,932)      ( 3,247)

       United States:
           Pension accrual                          (   134)      (   128) 
                                                  ----------    ----------
               Deferred tax liabilities             ( 3,066)      ( 3,375) 
                                                  ----------    ----------
   Net deferred income tax assets                  $  6,086      $  5,098
                                                  ==========    ==========  

In assessing the realizability of deferred tax assets, management    
considers whether it is more likely than not that some portion or all of the 
deferred tax assets will not be realized.  The ultimate realization of 
deferred tax assets is dependent upon the generation of future taxable income 
during the periods in which those temporary differences become deductible.  
Management considers the scheduled reversal of deferred tax liabilities, 
projected future taxable income, and tax planning strategies in making this 
assessment.  Based upon the level of historical taxable income and 
projections for future taxable income over the periods in which the deferred 
tax assets are deductible, management believes it is more likely than not 
that the Company will realize the benefits of these deductible differences, 
net of the existing valuation allowances at September 30, 1998.

At September 30, 1998, the Company has U.S. federal net operating loss 
carryforwards available of $8,565, which expire in 2008, and Japanese net 
operating loss carryforwards of $1,273, which expire in 2000.  The annual 
utilization by the Company of its U.S. net operating loss carryforwards will 
be subject to limitation under Section 382 of the Internal Revenue Code of 
1986, as amended, as a result of the occurrence of a change of ownership 
within the meaning of Section 382 in connection with the Company's initial 
public offering in September 1996.


                                    F-15
<PAGE>
10.  SPECIAL CHARGE
The special charge of $1,350 relates to the payment to a customer in fiscal 
1997 in settlement of a dispute arising out of the use of one of the 
Company's existing products in a newly developed customer application.  The 
Company's lasers were determined to be incompatible with the customer's 
intended use.  As part of the settlement the Company accepted the return of 
product for full refund which had the effect of reducing revenue by $507 and 
gross profit by $322.


11.  NET INCOME PER COMMON SHARE

On March 31, 1997, the Financial Accounting Standards Board issued SFAS No. 
128 (FAS 128) , "Earnings Per Share".  FAS 128 establishes standards for 
computing and presenting earnings per share (EPS) and applies to entities 
with publicly held common stock or potential common stock.  During fiscal 
1998 the Company adopted FAS 128 and is now required to report both basic and 
diluted earnings per share.  Basic EPS is computed by dividing net income by 
the weighted average number of common shares outstanding during the period.  
Diluted EPS reflects the potential dilution from common stock equivalents 
(stock options).  The Company has restated earnings per share for the 
comparative prior periods, as required by FAS 128. Shares prior to the IPO 
represent a pro-rata portion of the number of shares issued pursuant to the 
offering, the proceeds from which were used to purchase the shares of RSI and 
RSL and to repay the remaining indebtedness owed to Siemens.  The calculation 
of the weighted average number of common shares outstanding for each period 
is as follows:
                                              Years ended September 30,
                                       --------------------------------------
                                           1996         1997         1998
                                       ------------ ------------ ------------
Weighted average number of 
  shares for BASIC net income 
  per common share                       8,631,578   11,504,500   11,516,631

Potential additional shares 
  due to outstanding dilutive 
  stock options                              7,920      101,206       98,061
                                       ------------ ------------ ------------
Weighted average number of 
  shares for DILUTED net 
  income per common share                8,639,498   11,605,706   11,614,692
                                       ============ ============ ============

Excluded from the calculation of diluted EPS for the year ended September 30, 
1998 were 193,000 outstanding stock options.  These could potentially dilute 
future EPS calculations but were not included in the current period because 
their effect was antidilutive.






                                    F-16
<PAGE>
12.  RELATED PARTY TRANSACTIONS
The Company had sales to its joint venture partners in Japan amounting to 
$1,969, $3,776, and $2,153 in fiscal years 1996, 1997, and 1998, respectively.

The Company's purchases from and sales to related parties have generally been 
on terms comparable to those available in connection with purchases from or 
sales to unaffiliated parties.


13.  GEOGRAPHIC INFORMATION

Assets, revenues, and income before taxes, by geographic region, at September 
30, 1996, 1997, and 1998, and for the years then ended, are summarized below:
       
      ASSETS                                         September 30,
                                                ------------------------
                                                   1997          1998
                                                ----------    ----------
      United States                             $  55,794     $  60,267
      Germany                                      71,059        77,312
      Other                                        11,666        17,180
      Intercompany eliminations                  (  6,330)    (  11,017)
                                                ----------    ----------
      Total Assets                              $ 132,189     $ 143,742
                                                ==========    ==========

      REVENUES                                    TOTAL BUSINESS              
                                             Years ended September 30, 
                                        ----------------------------------  
                                           1996        1997        1998       
                                        ----------  ----------  ----------  
      United States                     $  45,227   $  49,675   $  39,594      
      Germany                              88,433      96,167      91,842      
      Other                                16,350      21,494      20,434      
      Intercompany 
        Eliminations                    (  34,107)  (  37,943)  (  34,287) 
                                        ----------  ----------  ----------  
                                        $ 115,903   $ 129,393   $ 117,583       
                                        ==========  ==========  ==========  

                                               INTERCOMPANY REVENUES
                                             Years ended September 30, 
                                        ----------------------------------  
                                           1996        1997        1998       
                                        ----------  ----------  ----------  
      United States                      $  5,347    $  4,737    $  3,412
      Germany                              28,083      32,544      30,000
      Other                                   677         662         875
      Intercompany 
        Eliminations                    (  34,107)  (  37,943)  (  34,287) 
                                        ----------  ----------  ----------  
                                         $      -    $      -    $      -  
                                        ==========  ==========  ==========  

                                    F-17
<PAGE>
                                               EXTERNAL REVENUES 
                                            Years ended September 30, 
                                        ----------------------------------  
                                           1996        1997        1998       
                                        ----------  ----------  ----------  
      United States                     $  39,880   $  44,938   $  36,181      
      Germany                              60,350      63,623      61,842      
      Other                                15,673      20,832      19,560      
                                        ----------  ----------  ----------  
                                        $ 115,903   $ 129,393   $ 117,583      
                                        ==========  ==========  ==========  

      INCOME BEFORE INCOME TAXES
                                            Years ended September 30, 
                                        ----------------------------------  
                                           1996        1997        1998       
                                        ----------  ----------  ----------  
      United States                      $  3,680    $  3,178    $    864
      Germany                               8,186      10,525      10,256
      Other                                   378       1,009         679
                                        ----------  ----------  ----------  
                                         $ 12,244    $ 14,712    $ 11,799 
                                        ==========  ==========  ==========  


14.  SELECTED QUARTERLY FINANCIAL DATA (Unaudited)

The following represents the Company's quarterly results (millions of 
dollars, except per share amounts):
                                               Quarters Ended
                                  ------------------------------------------
                                   Dec.31,   March 31,  June 30,   Sept. 30,
                                    1997       1998       1998       1998
                                  ---------  ---------  ---------  ---------
Net sales                          $ 28.2     $ 30.0     $ 28.9     $ 30.5
Gross profit                         11.0       11.0       10.0       11.1
Net income                            2.0        1.9        1.3        1.5
Net income per share - Basic         0.18       0.17       0.11       0.13 
Net income per share - Diluted       0.18       0.17       0.11       0.13


                                                Quarters Ended
                                  ------------------------------------------
                                   Dec.31,   March 31,  June 30,   Sept. 30,
                                    1996       1997       1997       1997
                                  ---------  ---------  ---------  ---------
Net sales                          $ 34.0     $ 33.5     $ 31.2     $ 30.7
Gross profit                         12.1       12.2       12.0       10.1
Net income                            2.7        2.5        1.5        2.3
Net income per share - Basic         0.23       0.22       0.13       0.20
Net income per share - Diluted       0.23       0.21       0.13       0.20




                                    F-18
<PAGE>
15.  STOCK INCENTIVE PLANS

Directors' Plan

The Company has reserved 100,000 shares of common stock for the Directors' 
Plan, which covers non-employee members of the Board of Directors.  Under 
this plan each member of the Board of Directors who is not an employee of the 
Company and who is elected or continues as a member of the Board of Directors 
is entitled to receive an initial grant of 1,500 shares of common stock and 
thereafter an annual grant of 1,500 shares of common stock.  The Directors' 
Plan provides that non-employee directors aged 65 or older, upon their 
appointment or election to the Board of Directors, will receive, in lieu of 
such initial and annual grants of shares of common stock, 7,500 shares of 
restricted stock which shall vest in five equal installments on the date of 
grant and each of the following four anniversaries thereof.  Prior to 
vesting, no shares of restricted stock may be sold, transferred, assigned, 
pledged, encumbered or otherwise disposed of, subject to certain exceptions.  
The Directors' Plan will continue in effect until the earlier of ten years 
from the date of the first grant or the termination of the Directors' Plan by 
the Board of Directors.  A total of 13,500 shares are issued and outstanding 
under the plan at September 30, 1998, of which 4,500 vest in future periods.

Equity Incentive Plan

The Company maintains an Equity Incentive Plan, whereby incentive and 
nonqualified stock options, restricted stock and performance shares may be 
granted to officers and other key employees to purchase a specified number of 
shares of common stock at a price not less than the fair market value on the 
date of grant.  There were no incentive stock options, restricted stock or 
performance shares granted in fiscal 1996, 1997, or 1998.  On September 26, 
1996 and 1997, nonqualified stock options were granted to officers and other 
key employees.  Options will expire not later than ten years after the date 
on which they are granted, and become exercisable at such times and in such 
installments as determined by the Compensation Committee of the Board of 
Directors.  The balance of outstanding stock options as of September 30, 
1996, 1997, and 1998, and all options activity for the periods then ended are 
as follows:
                                                         Price per Share
                                                   --------------------------
                                         Number        Price        Weighted
                                        Of Shares      Range         Average
                                        ---------  --------------- ----------
     Granted September 26, 1996          282,000      $ 9 1/2        $ 9 1/2
     Exercised                                 -
     Forfeited                                 -
                                        ---------  --------------- ----------
     Outstanding at September 30, 1996   282,000      $ 9 1/2        $ 9 1/2
                                        ---------  --------------- ----------
     Granted                             193,000     $ 16 7/8       $ 16 7/8
     Exercised                                 -
     Forfeited                                 -
                                        ---------  --------------- ----------
     Outstanding at September 30, 1997   475,000   $9 1/2 - 16 7/8  $ 12 1/2
                                        ---------  --------------- ----------

                                    F-19
<PAGE>
     Granted                                   -          
     Exercised                          ( 13,900)
     Forfeited                          (  9,600)
                                        ---------  --------------- ----------
     Outstanding at September 30, 1998   451,500   $9 1/2 - 16 7/8  $ 12 1/2
                                        ---------  --------------- ----------


                          Outstanding Options        Exercisable Options
                   --------------------------------  -------------------
                            Remaining    Weighted             Weighted
                              Life        Average              Average
                    Shares   (years)       Price     Shares     Price
                   -------  ----------  -----------  ------  -----------
                   258,500       3       $  9 1/2    96,500    $ 9 1/2  
                   193,000       4       $ 16 7/8    38,600    $16 7/8  


The Company follows APB Opinion 25, Accounting for Stock Issued to Employees, 
to account for stock options.  No compensation cost is recognized because the 
option exercise price is equal to the market price of the underlying stock on 
the date of grant.  Had compensation cost for these plans, as prescribed by 
SFAS Statement 123, been determined based on the Black-Scholes value at the 
grant dates for awards, pro forma net income and earnings per share would 
have been:
                                              Year ended September 30,
                                         ----------------------------------
                                            1996        1997        1998
                                         ----------  ----------  ----------
  Pro forma net income                     $ 7,288     $ 8,781     $ 6,292
  Pro forma earnings per share - BASIC     $  0.84     $  0.76     $  0.55
  Pro forma earnings per share - DILUTED   $  0.84     $  0.76     $  0.54
                                         ----------  ----------  ----------

The pro forma disclosures above include the amortization of the fair value of 
all options vested during 1998 and are not necessarily representative of 
actual results which will be reported in future years.  The weighted average 
Black-Scholes value of options granted under the stock option plan during 
1996 and 1997 was $5.10 and $9.25, respectively.  Value was estimated using 
an expected life of five years, no dividends, volatility of 56% and 53%, and 
risk-free interest rates of 6.6 % and 6.0% in fiscal 1996 and 1997.


16.  RECENTLY ISSUED ACCOUNTING STANDARDS

In 1997 Financial Accounting Standards No. 131 (FAS 131), "Disclosures about 
Segments of an Enterprise and Related Information", was issued and is 
effective for fiscal years commencing after December 15, 1997.  The Company 
will comply with the requirements of FAS 131 in fiscal year 1999.

In 1998 Financial Accounting Standards No. 132 (FAS 132), "Employer's 
Disclosures about Pensions and Other Postretirement Benefits", was issued and 
is effective for fiscal years commencing after December 15, 1997.  The 
Company will comply with the requirements of FAS 132 in fiscal year 1999.

                                    F-20
<PAGE>
In 1998 Financial Accounting Standards No. 133 (FAS 133), "Accounting for 
Derivative Instruments and Hedging Activities", was issued and is effective 
for fiscal years commencing after June 15, 1999.  The Company will comply 
with the requirements of FAS 133 in fiscal year 2000.  It is not anticipated 
that the implementation of this standard will have a material impact on the 
financial statements.

















































                                    F-21
<PAGE>
                       Independent Auditors' Report


The Board of Directors and Stockholders
Rofin-Sinar Technologies Inc. and Subsidiaries:

On October 30, 1998, we reported on the consolidated balance sheets of Rofin-
Sinar Technologies Inc. and Subsidiaries as of September 30, 1997 and 1998, 
and the related consolidated statements of operations, stockholders' equity 
and comprehensive income, and cash flows for each of the years in the three-
year period ended September 30, 1998, which are included in the annual report 
on Form 10-K.  In connection with our audits of the aforementioned 
consolidated financial statements, we also audited the related financial 
statement schedule in the annual report on Form 10-K.  This financial 
statement schedule, Valuation and Qualifying Accounts, is the responsibility 
of the Company's management.  Our responsibility is to express an opinion on 
this financial statement schedule based on our audit.

In our opinion, such financial statement schedule, when considered in 
relation to the basic consolidated financial statements taken as a whole, 
presents fairly, in all material respects, the information set forth therein.



KPMG PEAT MARWICK LLP
Detroit,  Michigan

October 30, 1998



























                                    F-22
<PAGE>
              ROFIN-SINAR TECHNOLOGIES INC. AND SUBSIDIARIES
    Valuation and Qualifying Accounts - Allowance for Doubtful Accounts
              Years ended September 30, 1996, 1997, and 1998
                          (dollars in thousands)


                           Balance at   Charged to                Balance at
                            Beginning    Costs and   Deductions     End of
                            Of Period     Expenses                  Period
                           -----------  -----------  -----------  -----------

    September 30, 1996          1,252          484      (   773)         963

    September 30, 1997            963        1,245      ( 1,298)         910

    September 30, 1998            910          148           35        1,093







































                                    F-23
<PAGE>
                               INDEX TO EXHIBITS



Exhibit No.                Exhibit
-----------        --------------------------------------------------------

   11.1             Earnings Per Share Table
   21.1             List of Subsidiaries of Rofin-Sinar Technologies Inc.
   27.1             Financial Data Schedule








































                                    





<PAGE>