Excel Technology Reports Results for the Third Quarter of 2004.

EAST SETAUKET, N.Y. -- Excel Technology, Inc. (NASDAQ: XLTC) today announced the results for the quarter ended September 30, 2004. Revenues for the period were $34.9 million, an increase of 22%, from the $28.7 million for the same period in 2003. Net income increased 56% to $4.1 million for the third quarter of this year as compared to $2.7 million in the same period last year. For the nine months ended September 30, 2004 net income increased 46% to $12.2 million compared to $8.4 million for the same period in 2003. Revenue for the nine months ended September 30, 2004 increased 15% to $105.4 million from $91.6 million in 2003. Diluted earnings per common share of $0.34 for the quarter were 55% higher than the $0.22 per common share reported for the same period in 2003. For the nine months ended September 30, 2004, diluted earnings per common share increased 43% to $0.99 compared to $0.69 for the same period in 2003.

J. Donald Hill, Chairman, commented, "In the quarter just ended, we reported a good year over year revenue gain, sharp profit growth and strong positive cash generation. We are pleased with the results. Successfully executing our long term growth strategy should further strengthen our position in our industry."

Antoine Dominic, Chief Executive Officer, added, "Our net income growth for the year and quarter of 46% and 56% is quite pleasing. Our revenue increase of 15% for the first nine months compared to last year is good considering the economy and that substantially all of the growth was organic. However, we hope the investments we continue to make in marketing, sales and product development will result in continued improvements in our performance. We generated cash of $4.6 million for the quarter, and $10.9 million for the nine months ended September 30, 2004. We now have a cash balance of $36.7 million with no debt. Our emphasis and efficiency in converting our profitability into cash has been, and continues to be, exceptional."

Dominic concluded, "Our product development efforts have resulted in several new product offerings by our manufacturing subsidiaries. In September, four of our manufacturing subsidiaries had several new product introductions that were well received at the IMTS show in Chicago. We plan to capitalize on our new products along with the investments and efforts in marketing and sales, specifically in our global expansion."

This news release contains forward-looking statements which are based on current expectations. Actual results could differ materially from those discussed or implied in the forward-looking statements as a result of various factors including future economic, competitive, regulatory, and market conditions, future business decisions, market acceptance of the Company's products, and those factors discussed in the Company's Form 10-K for the year ended December 31, 2003. In light of the significant uncertainties inherent in such forward-looking statements, they should not be regarded as a representation that the Company's objectives and plans will be achieved, and they should not be relied upon by investors when making an investment decision. Words such as "believes," "anticipates," "expects," "intends," "may," and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements.

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
                 (in thousands, except per share data)

                                FOR THE QUARTER    FOR THE NINE MONTHS
                               ENDED SEPTEMBER 30   ENDED SEPTEMBER 30
                                   (unaudited)         (unaudited)

                                  2004      2003      2004      2003
                                --------  --------  --------  --------
Net Sales                      $ 34,902  $ 28,690  $105,355  $ 91,641
Cost of Sales and Services       18,754    15,010    56,058    49,302
                                --------  --------  --------  --------
Gross Profit                     16,148    13,680    49,297    42,339
Operating Expenses:
 Selling & Marketing              4,521     3,949    14,119    12,408
 General & Administrative         2,631     2,984     8,361     8,341
 Research & Development           3,291     2,999    10,057     9,435
                                --------  --------  --------  --------
 Total Operating Expenses        10,443     9,932    32,537    30,184
Operating Income                  5,705     3,748    16,760    12,155
Other Income                        221       281       726       633
                                --------  --------  --------  --------
Pre-Tax Income                    5,926     4,029    17,486    12,788
Provision for Income Taxes        1,778     1,370     5,240     4,414
                                --------  --------  --------  --------
Net Income                     $  4,148  $  2,659  $ 12,246  $  8,374
                                ========  ========  ========  ========
Net Income Per Common Share -
 Diluted                       $   0.34  $   0.22  $   0.99  $   0.69
Weighted Average Common
Shares Outstanding - Diluted     12,255    12,273    12,392    12,186


                BALANCE SHEET & SELECTED FINANCIAL DATA

                                               SEPT. 30,    DEC. 31,
                                                 2004         2003
                                             ------------ ------------
                                                    (unaudited)
Cash and Equivalents                          $   36,657  $    25,740
Accounts Receivable, net                      $   24,089  $    21,917
Inventory                                     $   27,891  $    25,038
Other Current Assets                          $    2,713  $     2,314
                                             ------------ ------------
Total Current Assets                          $   91,350  $    75,009
Property, Plant & Equipment, net              $   26,763  $    27,665
Other Non-Current Assets & Goodwill           $   31,997  $    31,064
                                             ------------ ------------
Total Assets                                  $  150,110  $   133,738
                                             ============ ============
Accounts Payable                              $    6,526  $     4,801
Accrued Expenses and Other Current
 Liabilities                                  $   10,771  $    10,668
                                             ------------ ------------
Total Current Liabilities                     $   17,297  $    15,469
Other Non-Current Liabilities                        991          997
Common Stock & Additional Paid-in-Capital     $   49,586  $    47,526
Retained Earnings                             $   79,859  $    67,613
Other Stockholder's Equity                    $    2,377  $     2,133
                                             ------------ ------------
Total Liabilities & Stockholders' Equity      $  150,110  $   133,738
                                             ============ ============
Working Capital                               $   74,053  $    59,540
Current Ratio                                       5.28         4.85