Excel Technology Announces Second Quarter Results Record Sales, Profits* and EPS*.

EAST SETAUKET, N.Y. -- Excel Technology, Inc. (NASDAQ: XLTC):

--Record Sales - $39.5 million for Q2 2006 vs $33.3 million for Q2 2005, (18.7% increase)

--Record Profits - $4.9* million for Q2 2006 vs $4.0 million for Q2 2005, (23% increase)

--Record EPS - $0.39* for Q2 2006 vs. $0.33 for Q2 2005 per diluted share, (18% increase)

--Record EPS YTD - $0.75* for YTD Q2 2006 vs. $0.53 for YTD Q2 2005 per diluted share (41.5% increase)

* WITHOUT MERGER RELATED COSTS, NET OF TAXES

Excel Technology, Inc. (NASDAQ: XLTC) today announced the results for the second quarter ended June 30, 2006, posting record sales of $39.5 million and net income of $4.0 million ($0.32 per diluted share) which included $0.9 million (net of taxes) of costs related to the pending merger with Coherent. Excluding the $0.9 million (net of taxes) of merger costs ($0.07 per diluted share), the Company earned $4.9 million ($0.39 per diluted share).

Sales: The Company realized record sales of $39.5 million, an increase of 18.7% or $6.2 million, for the three months ended June 30, 2006 and $75.9 million, an increase of 19.4% or $12.4 million, for the six months ended June 2006, over the comparable periods in 2005.

Profits: Net income, excluding merger costs was $4.9 million for the second quarter of this year as compared to $4.0 million in the same period last year, an increase of 23%. For the six months ended June 2006, net income, without costs associated with the pending merger was $9.4 million compared to $6.5 million for the same period in 2005, an increase of 45%.

EPS: Net income per share, including merger related costs, is $0.32 per diluted share for the quarter and $0.63 per diluted share for the six months ending June 30, 2006. Net income per share, without merger related expenses, was $0.39 on a diluted basis for the quarter ended June 30, 2006, 18% higher than the $0.33 per share on a diluted basis reported for the same period in 2005. For the six months ended June 30, 2006, net income per share, without merger related expenses, was $ 0.75 on a diluted basis in 2006 compared to $0.53 on a diluted basis for 2005, a 41.5% increase.

Q 1 2006 Results: Sales for the first quarter ended March 31, 2006 were $36.3 million and net income was $3.9 million ($0.31 per diluted share). Net income for the first quarter of 2006 on a GAAP basis included $0.6 million (net of tax) ($0.05 per diluted share) in merger related expenditures related to the pending Coherent acquisition. Excluding this charge, non-GAAP net income was $4.5 million ($0.36 per diluted share).

Antoine Dominic, Chief Executive Officer, stated, "Our growth rate of revenues and income was quite good for the quarter and for the first six months of 2006. I believe we could have achieved better results if not for the distractions associated with the acquisition. Our bookings growth of 20% for the first six months has resulted in a higher backlog entering the second half of 2006. Our operational strategy still remains the same as we continue to invest in our product development efforts thereby broadening our product and application portfolio. Our new product introductions during the first six months of 2006 have been well received in the markets and should help us in achieving our growth strategies. We have held off on some of our direct global expansion plans due to the pending merger with Coherent. We are optimistic about our opportunities and future growth."

Alice Hughes Varisano, Chief Financial Officer, concluded, "The Company has delivered four straight quarters of record sales, profits and earnings per share (excluding costs associated with the pending merger with Coherent). Sales increased 18.7% during the quarter and 19.4% for the first six months compared to the same period last year. Second quarter pre tax net income (without merger related expenditures) increased 33.8% to $7.1 million and for the six months ending June 30, 2006 increased 55.7% to $13.6 million, compared to the same period last year. The Company generated $8.0 million of cash during the first six months of 2006, resulting in a cash and investment balance of $58 million as of June 30, 2006, with no debt. Year to date bookings at June 30, 2006 were $80 million, an increase of over 20% or $13.7 million over the same period in the prior year. The backlog at the end of the second quarter 2006 was $37.3 million an increase of 16.6% or $5.3 million compared to $32.0 million backlog for the second quarter 2005, which is a healthy foundation for the second half of the year."

Excel and its wholly owned subsidiaries manufacture and market photonics-based solutions, consisting of laser systems and electro-optical components, primarily for industrial/commercial and scientific applications.

FINANCIAL SUMMARY

          (unaudited and in thousands, except per share data)

                                    FOR THE QUARTER     FOR THE YEAR
                                     ENDED JUNE 30     ENDED JUNE 30
                                     2006     2005     2006     2005
                                     ----     ----     ----     ----
Net Sales & Services                $39,530  $33,296  $75,855  $63,510
Cost of Sales and Services          $21,484  $17,073  $40,540  $33,265
                                    -------  -------  -------  -------
Gross Profit                        $18,046  $16,223  $35,315  $30,245
Operating Expenses:
     Selling & Marketing            $ 4,965  $ 4,718  $ 9,741  $ 9,067
     General & Administrative       $ 3,070  $ 2,727  $ 5,965  $ 5,961
     Research and Development       $ 3,655  $ 3,755  $ 7,280  $ 7,090
                                    -------  -------  -------  -------
Operating Income                    $ 6,356  $ 5,023  $12,329  $ 8,127
Merger Expenses                     $ 1,146             1,984
Other Income                        $   736  $   279  $ 1,288  $   618
                                    -------  -------  -------  -------
Pre-Tax Income                      $ 5,946  $ 5,302  $11,633  $ 8,745
Provision for Income Taxes          $ 1,956  $ 1,313  $ 3,776  $ 2,243
                                    -------  -------  -------  -------
Net Income                          $ 3,990* $ 3,989  $ 7,857* $ 6,502
                                    =======  =======  =======  =======
Net Income Per Common Share -
 Diluted                            $  0.32* $  0.33  $  0.63* $  0.53

Weighted Average Common
Shares Outstanding - Diluted         12,531   12,237   12,496   12,236

Reconciliation of GAAP to non-GAAP net income and EPS

* Net income as reported under GAAP of $3,990 and $7,857, excluding
the merger related expenditures, net of tax effect, of approximately
$904 for the three months ending June 30, 2006 (or 7 cents per diluted
share) and 1,539 for the six months ending June 30, 2006 (or 12 cents
per diluted share) would have been $4,894 and 9,396 respectively
(unaudited). EPS without these charges would have been $0.39 and $0.75
per diluted share for the three and six months ending June 30,2006,
respectively (unaudited).

                BALANCE SHEET & SELECTED FINANCIAL DATA

                                   JUNE 30, 2006     DECEMBER 31, 2005
Cash                           $           9,475     $          16,303
Investments                    $          48,500     $          34,000
Accounts Receivable, net       $          25,151     $          22,879
Inventory                      $          36,255     $          30,269
Other Current Assets           $           2,820     $           3,013
                               -----------------     -----------------
Total Current Assets           $         122,201     $         106,464
Property, Plant & Equipment,
 net                           $          25,394     $          25,983
Other Non-Current Assets &
 Goodwill                      $          32,108     $          31,591
                               -----------------     -----------------
Total Assets                   $         179,703     $         164,038
                               =================     =================
Accounts Payable               $           7,602     $           4,829
Accrued Expenses and
   Other Current Liabilities   $           6,102     $           5,882
Income Taxes Payable           $           4,456     $           1,097
                               -----------------     -----------------

Total Current Liabilities      $          18,160     $          11,808
Other Non-Current Liabilities  $           3,478     $           3,492
Minority Interest in Net Income
 of Subsidiary                 $              61     $              48
Stockholders' Equity           $         158,004     $         148,690
                               -----------------     -----------------
Total Liabilities &
 Stockholders' Equity          $         179,703     $         164,038
                               =================     =================
Working Capital                $         104,041     $          94,656
Current Ratio                               6.73                  9.02