Excel Technology Delivers Record Results for Q4 and for the Year 2005

Excel Technology, Inc. (NASDAQ: XLTC):

   --  Record Fourth Quarter Revenue - $36.4 million

   --  Record Annual Revenue - $137.7 million

   --  Net income for the quarter increases 73% to $4.4 million, or
        $0.36 per diluted share

   --  Net income for the year without a special charge related to a
        lease dispute was $16.0 million, or $1.31 per diluted share

   Excel Technology, Inc. (NASDAQ: XLTC) today announced the results
for the quarter and year ended December 31, 2005. Revenues of $36.4
million and $137.7 million for the quarter and year ended December 31,
2005, respectively, were 16% and 1% higher than the $31.3 million and
$136.6 million for the quarter and year ended December 31, 2004,
respectively. Net income was $4.4 million for the fourth quarter of
this year as compared to $2.5 million in the same period last year, an
increase of 73%. For the year ended December 31, 2005, net income was
$15.2 million compared to $14.8 million for the same period in 2004.
Net income per share on a diluted basis of $0.36 for the quarter ended
December 31, 2005 was 71% higher than the $0.21 per share on a diluted
basis reported for the same period in 2004. For the year ended
December 31, 2005, net income per share on a diluted basis was $1.24
in 2005 compared to $1.20 for 2004.
   J. Donald Hill, Chairman, stated, "The year 2005 ended on a strong
note, providing us with good opportunities as we enter 2006. We are
benefiting from new products in all product categories. Bookings rose
again in Q4 and cash generation was positive. Our long term strategic
growth plan is on track."
   Antoine Dominic, Chief Executive Officer, added, "Although we
started the year slowly we kept building momentum throughout the year
ending with record fourth quarter results in 2005. Our emphasis on
increasing our market presence and opportunities resulted in bookings
of over $144 million in 2005, which was $6.5 million more than our
revenues. This has been Excel's fifth straight year of sequential
growth in revenues and profit. Our higher ending backlog has set a
stronger foundation for our first quarter in 2006 as compared to 2005.
Our commitment to a focused research and development effort has led to
several new product introductions, which also was a key contributor to
our improved bookings. We expect to continue to achieve forward
progress in all our product lines in 2006 including our turn-key
systems which lagged in 2005. We look forward to building upon this
success in 2006."
   Alice Hughes Varisano, Chief Financial Officer, concluded, "The
Company has delivered the second consecutive record quarter. Sales
were up 16.3% compared to 4th quarter 2004 resulting in record
revenues since the inception of the Company of $137.7 million. Fourth
quarter net income was up 73% compared to the 4th quarter of 2004
resulting in the Company reaching net income of $15.2 million in 2005.
The Company was able to translate a significant amount of its after
tax profits, $8.5 million, into cash. The Company executed well on the
introduction of new and expanded product lines, while managing
inventory levels. The backlog for the end of the fourth quarter 2005
was $33.0 million as compared to $26.5 million in 2004, an increase of
25% or $6.5 million. The Company continues to place strong emphasis on
research and development, increasing its investment from 10% to 10.5%
of sales from 2004 to 2005. We continue to pursue organic growth and
investment strategies that will further expand our opportunities. On
December 31, 2005, we had over $50 million in cash and investments and
no debt".
   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, 2004. 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.
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                           FINANCIAL SUMMARY
          (unaudited and in thousands, except per share data)

                                 FOR THE QUARTER       FOR THE YEAR
                                ENDED DECEMBER 31   ENDED DECEMBER 31
                                  2005      2004      2005      2004
                                --------  --------  --------  --------
Net Sales & Services           $ 36,364  $ 31,276  $137,717  $136,631
Cost of Sales and Services     $ 19,227  $ 16,665  $ 72,295  $ 72,723
                                --------  --------  --------  --------
Gross Profit                   $ 17,137  $ 14,611  $ 65,422  $ 63,908
Operating Expenses:
 Selling & Marketing           $  4,865  $  4,732  $ 18,959  $ 18,850
 General & Administrative      $  2,952  $  2,980  $ 12,448  $ 11,341
 Research and Development      $  3,629  $  3,653  $ 14,477  $ 13,710
                                --------  --------  --------  --------
Operating Income               $  5,691  $  3,246  $ 19,538  $ 20,007
Other Income                   $    271  $    247  $  1,133  $    973
                                --------  --------  --------  --------
Pre-Tax Income                 $  5,962  $  3,493  $ 20,671  $ 20,980
Provision for Income Taxes     $  1,610  $    978  $  5,463  $  6,218
                                --------  --------  --------  --------
Net Income                     $  4,352  $  2,515  $ 15,208* $ 14,762
                                ========  ======== =========  ========
Net Income Per Common Share -                      $   1.24*
 Diluted                       $   0.36  $   0.21            $   1.20
Weighted Average Common
 Shares Outstanding - Diluted    12,254    12,256    12,246    12,351

* Net income of $15,208, excluding the lease dispute charges, net
of tax effect, of approximately $810 (or 7 cents per diluted share)
would have been $16,019 (unaudited). The diluted EPS for the year
without these charges would have been $1.31 per diluted share
(unaudited).

                BALANCE SHEET & SELECTED FINANCIAL DATA

                                             DECEMBER 31, DECEMBER 31,
                                                 2005         2004

Cash                                         $    16,303  $    11,329
Investments                                  $    34,000  $    30,425
Accounts Receivable, net                     $    22,879  $    19,782
Inventory                                    $    30,269  $    28,839
Other Current Assets                         $     3,013  $     3,301
                                              -----------  -----------
Total Current Assets                         $   106,464  $    93,676
Property, Plant & Equipment, net             $    25,983  $    26,492
Other Non-Current Assets & Goodwill          $    31,591  $    32,310
                                              -----------  -----------
Total Assets                                 $   164,038  $   152,478
                                              ===========  ===========
Accounts Payable                             $     4,829  $     5,265
Accrued Expenses and Other Current
 Liabilities                                 $     6,979  $     8,405
                                              -----------  -----------
Total Current Liabilities                    $    11,808  $    13,670
Other Non-Current Liabilities                $     3,492  $     2,807
Minority Interest in Net Income of
 Subsidiary                                  $        48  $        --
Stockholders' Equity                         $   148,690  $   136,001
                                              -----------  -----------
Total Liabilities & Stockholders' Equity     $   164,038  $   152,478
                                              ===========  ===========
Working Capital                              $    94,656  $    80,006
Current Ratio                                       9.02         6.85
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