UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

......................

FORM 10-Q

......................

(Mark One)

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 29, 2006

[ ] TRANSITION REPORT PURSUANT TO SECTION 12 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 0-19306

......................

EXCEL TECHNOLOGY, INC.

Delaware 11-2780242
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)

41 Research Way, East Setauket, New York 11733
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (631) 784-6175

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 whether the registrant is a large accelerated
filer, an accelerated filer, or a non-accelerated filer. See definition
of "accelerated filer and large accelerated filer" in Rule 12b-2 of the
Exchange Act. (Check one):

Large accelerated filer [ ]
Accelerated filer [X]
Non-accelerated filer [ ]

Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

The number of shares outstanding of registrant's common stock, par value
$.001 on November 7, 2006 was 12,067,196.

CONTENTS

PART I. FINANCIAL INFORMATION

Page
Item 1. Consolidated Financial Statements:
.................................

Consolidated Balance Sheets as of September 29, 2006
(unaudited) and December 31, 2005 3

Consolidated Statements of Income (unaudited)
for the Three Months Ended September 29, 2006
and September 30, 2005 4

Consolidated Statements of Income (unaudited) for
the Nine Months Ended September 29, 2006 and
September 30,2005 5

Consolidated Statements of Cash Flows (unaudited)
for the Nine Months Ended September 29, 2006 and
September 30, 2005 6

Notes to Consolidated Financial Statements (unaudited) 7

Item 2. Management's Discussion and Analysis of Financial
.................................................
Condition and Results of Operations 12
...................................

Item 3. Quantitative and Qualitative Disclosures about Market Risk 18
..........................................................

Item 4. Controls and Procedures 19
.......................

PART II. OTHER INFORMATION

Item 1. Legal Proceedings 19
.................

Item 1A. Risk Factors 19
............

Item 2. Unregistered Sale of Equity Securities and Use of Proceeds 20
..........................................................

Item 3. Defaults Upon Senior Securities 20
...............................

Item 4. Submission of Matters to a Vote of Security-Holders 20
...................................................

Item 5. Other Information 20
.................

Item 6. Exhibits 20

Exhibits - (11) Computation of net income per share 23
(31) Certifications Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 24
(32) Certifications Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, 18 U.S.C.
Section 1350 26

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements:
..................................

CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)

September 29, 2006 Dec. 31, 2005
.................. .............
(Unaudited)
Assets
.......
Current assets:
Cash and cash equivalents $ 9,774 $ 16,303
Investments 49,150 34,000
Accounts receivable, less allowance
for doubtful accounts of $614 and
$810 in 2006 and 2005, respectively 26,044 22,879
Inventories 36,497 30,269
Deferred income taxes 1,661 1,660
Other current assets 1,194 1,353
........ .........
Total current assets 124,320 106,464
........ .........
Property, plant and equipment, net of
accumulated depreciation of $12,927
and $11,090 in 2006 and 2005,
respectively 25,158 25,983
Other assets 416 158
Goodwill 31,726 31,433
........ .........
Total assets $181,620 $164,038
........ .........
........ .........
Liabilities and Stockholders' Equity

Current liabilities:
.....................
Accounts payable $ 6,950 $ 4,829
Accrued expenses and other current liabilities 9,013 5,882
Income taxes payable 436 1,097
........ .........
Total current liabilities 16,399 11,808
........ .........
Accrued deferred compensation 1,375 0
Deferred income taxes 3,478 3,492
Minority interest in subsidiary 89 48

Stockholders' equity:
Preferred stock, par value $.001 per share:
2,000 shares authorized, none issued 0 0
Common stock, par value $.001 per share:
20,000 shares authorized, 12,067 and 12,055
shares issued and outstanding in 2006 and
2005, respectively 12 12
Additional paid-in capital 49,957 49,621
Retained earnings 107,928 97,583
Accumulated other comprehensive income 2,382 1,474
........ .........

Total stockholders' equity 160,279 148,690
........ .........

Total liabilities and
stockholders' equity $181,620 $ 164,038
........ .........
........ .........

See Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited and in thousands, except income per share amounts)

Three Months Ended
............................
September 29, September 30,
2006 2005
............. .............

Net sales and services $ 40,299 $ 37,842
Cost of sales and services 22,350 19,803
......... ..........
Gross profit 17,949 18,039

Operating expenses:
Selling and marketing 4,611 5,027
General and administrative 3,724 3,536
Research and development 3,527 3,757
Merger related and deferred
compensation expenses 2,875 0
......... ..........

Total operating expenses 14,737 12,320
......... ..........

Income from operations 3,212 5,719

Non-operating income (expense):
Interest income 755 337
Minority interest in net income of subsidiary (28) (34)
Merger expenses (210) 0
Foreign currency losses and other income
(expense), net (15) (58)
......... ..........

Income before provision for income taxes 3,714 5,964

Provision for income taxes 1,226 1,610
......... ..........

Net income $ 2,488 $ 4,354
......... ..........
......... ..........

Basic income per common share $0.21 $0.36
..... .....
..... .....

Weighted average common shares outstanding 12,066 12,054
......... ..........
......... ..........

Diluted income per common share $0.20 $0.36
..... .....
..... .....
Weighted average common and
common equivalent shares outstanding 12,522 12,259
......... ..........
......... ..........

See Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited and in thousands, except income per share amounts)

Nine Months Ended
...........................
September 29, September 30,
2006 2005
......... ..........

Net sales and services $ 116,154 $ 101,352
Cost of sales and services 62,890 53,068
......... ..........
Gross profit 53,264 48,284

Operating expenses:
Selling and marketing 14,352 14,094
General and administrative 9,689 9,496
Research and development 10,807 10,848
Merger related and deferred
compensation expenses 2,875 0
......... ..........
Total operating expenses 37,723 34,438
......... ..........

Income from operations 15,541 13,846

Non-operating income (expense):
Interest income 1,772 794
Minority interest in net income of subsidiary (41) (34)
Merger expenses (2,194) 0
Foreign currency gains and other income, net 269 103
......... ..........

Income before provision for income taxes 15,347 14,709

Provision for income taxes 5,002 3,853
......... ..........

Net income $ 10,345 $ 10,856
......... ..........
......... ..........

Basic income per common share $0.86 $0.90
..... .....
..... .....

Weighted average common shares outstanding 12,064 12,053
......... ..........
......... ..........

Diluted income per common share $0.83 $0.89
..... .....
..... .....
Weighted average common and
common equivalent shares outstanding 12,505 12,243
......... ..........
......... ..........

See Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited and in thousands)

Nine Months Ended
...........................
September 29, September 30,
2006 2005
......... ..........
Operating activities:
Net income $ 10,345 $ 10,856
Adjustments to reconcile net income to net
cash provided by operating activities:
Minority interest in net income of
subsidiary 41 34
Depreciation and amortization 1,971 2,122
Stock compensation expense 95 0
Tax benefit from employee stock option
exercises 0 2
Excess income tax benefit from employee
stock options (37) 7
Gain on sale of equipment (116) 0
Provision for bad debts 54 42
Changes in operating assets and
liabilities:
Accounts receivable (2,792) (5,746)
Inventories (5,726) (3,766)
Other current assets 176 95
Other assets (576) 182
Accounts payable 2,030 306
Accrued expenses and other current
liabilities 3,835 1,173
......... .........
Net cash provided by
operating activities 9,300 5,307
......... .........
Investing activities:
Purchases of investments, net of redemptions (15,150) (6,575)
Purchases of property, plant and equipment (1,290) (1,508)
Proceeds from the sale of equipment 291 0
......... .........
Net cash used in investing activities (16,149) (8,083)
......... .........
Financing activities:
Proceeds from exercise of common stock options 204 11
Excess income tax benefit from employee
stock options 37 0
......... .........
Net cash provided by
financing activities 241 11
......... .........

Effect of exchange rate changes on
cash and equivalents 79 (97)
......... .........
Net decrease in cash and equivalents (6,529) (2,862)
Cash and equivalents, beginning of period 16,303 11,329
......... .........
Cash and equivalents, end of period $ 9,774 $ 8,467
......... .........
......... .........
Supplemental cash flow information:
....................................
Cash paid for:
Interest $ 0 $ 0
Income taxes $ 5,625 $ 3,327

See Notes to Consolidated Financial Statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

A. CONSOLIDATED FINANCIAL STATEMENTS
.................................

Excel Technology, Inc. and Subsidiaries (the "Company") manufactures
and markets laser systems and electro-optical components primarily for
industrial and scientific applications.

The consolidated balance sheet as of September 29, 2006, and the
consolidated statements of income for the three and nine months ended
September 29, 2006 and September 30, 2005 and the consolidated statements
of cash flows for the nine months ended September 29, 2006 and September
30, 2005 have been prepared by the Company and are unaudited. In the
opinion of management, all adjustments (which included only normal
recurring adjustments) have been made which are necessary to present
fairly the financial position, results of operations and cash flows of
the Company at September 29, 2006 and for all periods presented.

The preparation of financial statements in conformity with U.S.
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses reported in those financial
statements. These judgments can be subjective and complex, and
consequently actual results could differ from those estimates and
assumptions.

For information concerning the Company's significant accounting
policies, reference is made to the Company's Annual Report on Form 10-K
for the year ended December 31, 2005. While the Company believes that the
disclosures presented are adequate to make the information contained
herein not misleading, it is suggested that these statements be read in
conjunction with the consolidated financial statements and notes included
in the Form 10-K. Results of operations for the period ended September
29, 2006 are not necessarily indicative of the operating results to be
expected for the full year.

The Company's quarterly closing dates end on the Friday prior and
closest to or on the last day of each calendar quarter. The Company's
fiscal year always ends on December 31st.

B. MERGER
......

On February 20, 2006, the Company entered into an Agreement and Plan
of Merger (the "Merger Agreement") with Coherent, Inc. ("Parent"), and
Spider Acquisition Merger Corporation, a wholly owned subsidiary of
Coherent, Inc. ("Merger Sub"). Under the Merger Agreement, Merger Sub
was to be merged with and into the Company (the "Merger"), the separate
corporate existence of Merger Sub would cease and the Company would have
continued as the surviving corporation and as a wholly-owned subsidiary
of Parent.

Pursuant to the Merger Agreement, at the effective time of the
Merger, each issued and outstanding share of common stock of the Company
issued and outstanding immediately prior to the effective time, other
than common stock held by any stockholders who are entitled to and
properly exercise appraisal rights under Delaware law, would have been
automatically converted into the right to receive $30.00 in cash per
share.

The Merger was conditioned upon, among other things, the adoption of
the Merger Agreement by the stockholders of the Company pursuant to
applicable law, the termination or expiration of the waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and obtaining
material foreign antitrust approvals reasonably determined by Coherent to
be required.

On April 4, 2006, the stockholders of the Company voted to adopt the
Merger Agreement providing for the acquisition of the Company by
Coherent. The Antitrust Division of the Department of Justice as well as
the German Federal Cartel Office had requested additional information and
documentary material in connection with their review of the proposed
merger. On May 9, 2006, Coherent, Inc. received U.S. antitrust approval
to acquire the Company. On July 10, 2006, the German Federal Cartel
Office stated that it had decided to extend its investigation into the
acquisition of the Company by Coherent, and on October 25, 2006 issued a
prohibition order on the merger. On November 1, 2006, the Merger
Agreement between the Company and Coherent was terminated.

The foregoing description of the Merger Agreement does not purport
to be complete and is qualified in its entirety by reference to the
Merger Agreement, which was filed as Exhibit 2.1 on a Current Report on
Form 8-K on February 21, 2006.

In connection with the merger, the Company incurred $210 thousand
and $2.2 million in merger related expenses, which consist primarily of
legal and other professional fees and have been included in the
consolidated statements of income for the three and nine months ended
September 29, 2006, respectively. The amount for the nine months ended
September 29, 2006 included $200 thousand for the law firm of one
director of the Company for reimbursement of expenses by the director's
law firm in connection with the merger. In addition, the employment
agreements of certain key executives include a change in control clause
that provide for payments aggregating $6.1 million. These change in
control payments have not been recorded as a liability in the
consolidated balance sheet as of September 29, 2006, as such payments
were contingent upon consummation of the merger, which has been
terminated. In the third quarter of 2006, as a result of effectively
addressing all merger-related matters while the announced merger was
pending for eight months and as payment in lieu of options that, but for
the proposed merger, would have been granted towards the end of 2005, an
executive of the Company was awarded $1.5 million of compensation, of
which the payment of $1.0 million is subject to the attainment of
specified Company performance criteria. Such compensation, along with
$1.4 million of deferred executive compensation awarded for prior
services during the third quarter of 2006 (under a deferred compensation
plan approved by the Board of Directors), is included in operating
expenses in the consolidated statements of income.

C. ACCOUNTING FOR STOCK-BASED COMPENSATION
.......................................

The Company currently has two stock-based employee compensation
plans, which are described more fully below. Prior to January 1, 2006,
the Company accounted for stock-based compensation related to those plans
under the recognition and measurement provisions of Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB
No. 25"), and related Interpretations, as permitted by Financial
Accounting Standards Board ("FASB") Statement of Financial Accounting
Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation"
("SFAS No. 123"). As such, prior to January 1, 2006, no stock-based
employee compensation expense was recognized in net income, as all
options granted under those plans had an exercise price equal to the fair
market values of the underlying common stock on the date of grant.

Effective January 1, 2006, the Company adopted the fair value
recognition provisions of SFAS No. 123(R), "Share-Based Payment" ("SFAS
No. 123 (R)"), using the modified prospective transition method. Under
that transition method, compensation expense recognized for the three and
nine months ended September 29, 2006 includes compensation expense for
all share-based payments granted prior to, but not yet vested as of
January 1, 2006, based on the grant date fair value determined in
accordance with the original provisions of SFAS No. 123. The fair value
of the options was determined at the date of grant using the Black-
Scholes option pricing model and is being amortized to expense over the
options' vesting periods. There were no option or other share-based
award grants subsequent to January 1, 2006 through September 29, 2006.
Results for prior periods have not been restated.

The following table illustrates the stock based compensation expense
recorded in the statement of income for the three and nine months ended
September 29, 2006 and the impact of adopting SFAS No. 123(R) effective
January 1, 2006 on the Company's income before provision for income
taxes, net income and income per share (In thousands, except per share
data).

Three months ended Nine months ended
September 29, 2006 September 29, 2006
Stock option
compensation expense $ 18 $ 95
Impact on income before
provision for taxes $ 18 $ 95
Impact on net income $ 18 $ 95
Impact on basic income per
common share $ 0.00 $ 0.01
Impact on diluted income
per common share $ 0.00 $ 0.01

Prior to the adoption of SFAS No. 123(R), the Company reported
excess tax benefits from employee stock option exercises as operating
cash flows in its consolidated statement of cash flows. In accordance
with SFAS No. 123(R), the Company now reports excess tax benefits as
financing cash inflows. The actual income tax benefit realized for the
tax deductions from stock option exercises for the three months ended
September 29, 2006 was $12 thousand. There were no stock option
exercises during the three months ended September 30, 2005. As such,
there were no income tax benefits realized for that period. The actual
income tax benefit realized for the tax deductions from stock option
exercises for the nine months ended September 29, 2006 and September 30,
2005 was $37 thousand and $2 thousand, respectively. There was no tax
benefit recognized related to the total compensation expense for share-
based payment arrangements for the three and nine months ended September
29, 2006 and September 30, 2005, as all the related options were
incentive stock options and the tax benefit associated with disqualified
incentive stock options is recognized by the Company only after such
incentive stock options are exercised and disqualified.

The following table illustrates the effect on net income and income
per share for the three and nine months ended September 30, 2005 as if
the Company had applied the fair value recognition provisions of SFAS No.
123 to options granted under the Company's stock plans prior to adoption
of SFAS No. 123(R) on January 1, 2006. No pro forma disclosure has been
made for periods subsequent to January 1, 2006, as all stock-based
compensation has been recognized in net income. For purposes of this pro
forma disclosure and compensation expense recorded in the Company's
consolidated financial statements, the value of the options is estimated
using a Black-Scholes option pricing model and amortized to expense over
the options' vesting periods.

Three Months Ended Nine Months Ended
September 30, 2005 September 30, 2005
In thousands, except (In thousands, except
per share data) per share data)

Net income, as reported $4,354 $10,856

Deduct: Total stock-based
employee compensation expense
determined under fair value
based method for all awards,
net of related tax effects (8) (2,936)
...... .......
Proforma net income $4,346 $ 7,920
...... .......
...... .......

Net income per share:
Basic - as reported $0.36 $0.90
..... .....
Basic - proforma $0.36 $0.66
..... .....
Diluted - as reported $0.36 $0.89
..... .....
Diluted - proforma $0.35 $0.65
..... .....

Stock-based employee compensation expense under the fair value
method for the nine months ended September 30, 2005, includes $3.6
million, which represents the entire fair value of 440 thousand options
granted to employees and directors in February 2005, all of which had an
exercise price equal to or greater than the market value of the common
stock on the date of the grant, as those options were vested as of the
date of the grant.

No options were granted during the nine months ended September 29,
2006 or during the three months ended September 30, 2005. The following
weighted average assumptions were used in determining the fair value of
stock options granted during the nine months ended September 30, 2005:

Average fair value of stock-based
compensation awards granted $ 8.20
Valuation assumptions:
Expected dividend yield 0.0%
Expected volatility 41.0%
Expected life (years) 3.9
Risk-free interest rate 3.6%

The Company has placed exclusive reliance on historical volatility
in its estimate of expected volatility. The Company used a sequential
period of historical data equal to the expected term (or expected life)
of the options using a simple average calculation based upon the daily
closing prices during the aforementioned period.

The expected life (years) represents the period of time for which
the options granted are expected to be outstanding. This estimate was
derived from historical share option exercise experience, which
management believes provides the best estimate of the expected term.

The following paragraphs describe each of the Company's stock option
plans:

In 2004, the Company adopted a stock option plan (the "2004 Plan")
which provides for the granting of incentive stock options and non-
incentive stock options to certain key employees, including officers and
directors of the Company and consultants to purchase an aggregate of
1,000,000 shares of common stock at prices and terms determined by the
Board of Directors. The option price per share of incentive stock
options must be at least 100% of the market value of the stock on the
date of the grant, except in the case of shareholders owning more than
10% of the outstanding shares of common stock, the option price must be
at least 110% of the market value on the date of the grant, and for non-
incentive stock options such price may be less than 100% of the market
value of the stock on the date of grant. Options granted under the 2004
Plan, which terminates on February 23, 2014, may be exercisable for a
period up to ten years. Through September 29, 2006, all options granted
to employees under the 2004 Plan have exercise prices equal to the market
value of the stock on the date of grant, vest immediately, and expire ten
years from the date of grant.

In 1998, the Company adopted a stock option plan (the "1998 Plan")
which provides for the granting of incentive stock options and non-
incentive stock options to certain key employees, including officers and
directors, and consultants to purchase an aggregate of 1,000,000 shares
of common stock at prices and terms determined by the Board of Directors.
The option price per share of incentive stock options must be at least
100% of the market value of the stock on the date of the grant, except in
the case of shareholders owning more than 10% of the outstanding shares
of common stock, the option price must be at least 110% of the market
value on the date of the grant, and for non-incentive stock options such
price may be less than 100% of the market value of the stock on the date
of grant. Options granted under the 1998 Plan, which terminates on April
8, 2008, may be exercisable for a period up to ten years. Through
September 29, 2006, all options granted to employees under the 1998 Plan
have exercise prices equal to the market value of the stock on the date
of grant, vest ratably over three or five years, and expire either five
or ten years from the date of grant.

Effective November 1, 2006, the Board of Directors approved a stock
option / stock issuance plan (the "2006 Plan"), which is subject to
shareholder approval and provides an aggregate of up to 750,000 shares of
common stock, which may be directly issued to eligible participants,
granted as incentive stock options to employees of the Company or granted
as non-statutory stock options to employees, including officers and
directors of the Company, as well as to certain advisors and consultants.
Shares of common stock issued under the 2006 Plan may, in the discretion
of the Company's Compensation Committee ("the Committee"), be fully and
immediately vested upon issuance or may vest in one or more installments
over the participant's period of service or upon attainment of specified
performance objectives. The exercise price for the common stock
underlying the options is determined by the Committee, but in no event
shall it be less than 100% of the fair market value of the Company's
common stock on the date the option is granted (110% in the case of
incentive stock options granted to optionees who own more than 10% of the
voting power of all classes of stock of the Company). No option granted
under the 2006 Plan may be exercised after the expiration of the option,
which may not, in any case, exceed ten years from the date of grant (five
years in the case of incentive options granted to persons who own more
than 10% of the voting power of all classes of the stock of the Company).
Options granted under the 2006 Plan are exercisable on such basis as
determined by the Committee. No options or common stock will be issued
under the 2006 Plan until shareholder approval is received by the
Company.

The following table summarizes stock option activity of the Company
during the nine months ended September 29, 2006:

Weighted
Average Aggregate
Weighted Remaining Intrinsic
Shares Average Contractual Value
(in thousands) Exercise Price Term (in years) (in thousands)
...............................................................

Outstanding at December 31, 2005 1,441 $ 20.38
Granted 0 $ 0
Exercised (12) $ 17.19
Cancelled 0 $ 0
..............

Outstanding at September 29, 2006 1,429 $ 20.41 5.87 $ 13,735
..............
..............

Options expected to vest at
September 29, 2006 16 $ 19.14 6.31 $ 166

Exercisable at September 29, 2006 1,413 $ 20.42 5.86 $ 13,569

The aggregate intrinsic value in the table above represents the
total pre-tax intrinsic value (the difference between the Company's
closing common stock price on the last trading day of the third quarter
of 2006 and the exercise price, multiplied by the number of in-the-money
options) that would have been received by the option holders had all
option holders exercised their options on September 29, 2006. This
amount changes based on the fair market value of the Company's common
stock. Total intrinsic value of options exercised for the three months
ended September 29, 2006 was $35 thousand. There were no stock option
exercises during the three months ended September 30, 2005. Total
intrinsic value of options exercised for the nine months ended September
29, 2006 and September 30, 2005 was $106 thousand and $6 thousand,
respectively.

As of September 29, 2006, there was $89 thousand of unrecognized
stock-based compensation expense related to non-vested stock options,
which is expected to be recognized over a weighted average period of 1.3
years.

When an option is exercised, the Company issues new shares of common
stock.

D. INVENTORIES
...........

Inventories are recorded at the lower of cost, on a first-in, first
out basis, or market value. Inventories consist of the following (in
thousands):

September 29, 2006 December 31, 2005
.................. .................
Raw Materials $ 18,910 $ 16,474
Work-in-Process 11,052 8,158
Finished Goods 4,961 4,246
Consigned Inventory 1,574 1,391
......... .........
$ 36,497 $ 30,269

E. COMPREHENSIVE INCOME
....................

Comprehensive income is comprised of net income and foreign currency
translation adjustments, amounting in the aggregate to $2.2 million and
$4.5 million for the three months ended September 29, 2006 and September
30, 2005, respectively and $11.3 million and $8.6 million for the nine
months ended September 29, 2006 and September 30, 2005, respectively.

F. ACCRUED WARRANTY COSTS
......................

Quarterly, the Company analyzes its warranty liability for
reasonableness based upon a five-year history of warranty costs incurred,
the nature of the products shipped subject to warranty and anticipated
warranty trends.

Changes in the warranty liability during the nine-month period ended
September 29, 2006 were as follows (In thousands):

Balance at December 31, 2005 $ 720
Provisions for warranties during the
nine-month period ended September 29, 2006 652
Costs of warranty obligations during the nine-
month period ended September 29, 2006 (603)
......
Balance at September 29, 2006 $ 769
......
......

G. COMMITMENTS AND CONTINGENCIES
.............................

The Company and its subsidiaries are subject to various claims,
which have arisen in the normal course of business. The impact of the
final resolution of these matters on the Company's results of operations
in a particular reporting period is not known. Management is of the
opinion, however, that the ultimate outcome of such matters will not have
a material adverse effect upon the Company's financial condition or
liquidity.

On October 17, 2006, the Company entered into a lease agreement for
a building in Cambridge, MA. The term of the operating lease is for 10
years and the cost is $5.7 million over the life of the lease.

H. GOODWILL
........

The change in the goodwill balance during the nine months ended
September 29, 2006 is attributable to changes in foreign currency
exchange rates used to translate the goodwill contained in the financial
statements of foreign subsidiaries.

I. SUBSEQUENT EVENT
................

On November 7, 2006, the Company announced that its Board of
Directors had authorized a stock buy-back plan. The buy-back plan
authorizes the repurchase of up to 2,000,000 shares of common stock, or
16.6% of the shares of common stock outstanding as of November 7, 2006.
The shares may be repurchased from time to time in open market
transactions or privately negotiated transactions at the Company's
discretion, including the quantity, timing and price thereof.

Item 2. Management's Discussion and Analysis of Financial Condition
...........................................................
and Results of Operations
.........................

Overview
.........

The Company designs, manufactures and markets a variety of
photonics-based solutions consisting of laser systems and electro-optical
components primarily for industrial and scientific applications. The
Company's current range of products include laser marking and engraving
systems, laser micro-machining systems, CO2 lasers, optical scanners,
high power solid state CW and Q-switched lasers, ultrafast lasers, high
energy solid state pulsed lasers, precision optical components and light
and color measurement instruments. The laser and electro-optical
industry is subject to intense competition and rapid technological
developments. Our strength and success is dependent upon us developing
and delivering successful, timely and cost effective solutions to our
customers. The Company believes, for it to maintain its performance, it
must continue to increase its operational efficiencies, improve and
refine its existing products, expand its product offerings and develop
new applications for its technology. The Company's strategy has been to
grow internally and through acquisitions of complementary businesses.
Historically, the Company has successfully integrated acquired companies.

Merger
.......

In connection with the merger, the Company incurred $210 thousand
and $2.2 million in merger related expenses, which consist primarily of
legal and other professional fees and have been included in the
accompanying consolidated statements of income for the three and nine
months ended September 29, 2006, respectively. The amount for the nine
months ended September 29, 2006 included $200 thousand for the law firm
of one director of the Company for reimbursement of expenses by the
director's law firm in connection with the merger. In addition, the
employment agreements of certain key executives include a change in
control clause that provide for payments aggregating $6.1 million. These
change in control payments have not been recorded as a liability in the
consolidated balance sheet as of September 29, 2006, as such payments
were contingent upon consummation of the merger, which has been
terminated. In the third quarter of 2006, as a result of effectively
addressing all merger-related matters while the announced merger was
pending for eight months and as payment in lieu of options that, but for
the proposed merger, would have been granted towards the end of 2005, an
executive of the Company was awarded $1.5 million of compensation, of
which the payment of $1.0 million is subject to the attainment of
specified Company performance criteria. Such compensation, along with
$1.4 million of deferred executive compensation awarded for prior
services during the third quarter of 2006 (under a deferred compensation
plan approved by the Board of Directors), is included in operating
expenses in the accompanying consolidated statements of income.

Results of Operations
......................

Net sales and services for the quarter ended September 29, 2006
increased $2.5 million or 6.5% to $40.3 million from $37.8 million for
the quarter ended September 30 2005. For the nine months ended September
29, 2006, net sales and services were $116.2 million, an increase of
$14.8 million or 14.6% from $101.4 million for the nine months ended
September 30, 2005. The increases for the quarter and the nine months in
comparison are attributable to increased CO2 laser, scanner, marking
systems and high energy solid state pulsed laser sales.

Gross margins decreased to 44.5% for the three months ended
September 29, 2006 from 47.7% for the three months ended September 30,
2005. For the nine months ended September 29, 2006, gross margins
decreased to 45.9% from 47.6% in the nine months ended September 30,
2005. The decreases are primarily due to the product mix where gross
margins vary from product to product. Gross margins vary from direct
sales to distributor sales, which result in no variable selling expenses,
and also among the more than 250 Company product configurations.

Selling and marketing expenses decreased to $4.6 million in the
quarter ended September 29, 2006 from $5.0 million in the quarter ended
September 30, 2005. The decrease of $416 thousand or 8.3% is primarily
attributable to lower variable costs and fixed cost reductions in 2006
partially due to turnover related to the pending merger, which was
terminated in November 2006, compared to higher levels of sales and
marketing staff in 2005. For the nine months ended September 29, 2006,
selling and marketing expenses were $14.4 million as compared to $14.1
million for the same period in 2005. The increase of $258 thousand or
1.8% is primarily attributable to increased variable costs such as
commissions associated with the increased sales volume. Selling and
marketing expenses as a percentage of sales decreased to 11.4% for the
quarter ended September 29, 2006 from 13.3% for the quarter ended
September 30, 2005. Selling and marketing expenses as a percentage of
sales decreased to 12.4% for the nine months ended September 29, 2006
from 13.9% for the comparable period in the prior year. The decreases as
a percentage of sales are essentially attributable to fixed costs being
absorbed by higher sales volume.

General and administrative expenses increased $188 thousand or 5.3%
from $3.5 million in the quarter ended September 30, 2005 to $3.7 million
in the quarter ended September 29, 2006. For the nine months ended
September 29, 2006 and September 30, 2005, general and administrative
expenses were $9.7 million and $9.5 million, respectively, an increase of
$193 thousand or 2.0%. The increases are primarily attributable to
higher bonus expense as a result of higher operating income.

Research and development costs decreased $230 thousand or 6.1% to
$3.5 million from $3.8 million for the quarters ended September 29, 2006
and September 30, 2005, respectively. For both the nine months ended
September 29, 2006 and 2005 research and development costs were $10.8
million. The cost of research activities for most of our products was
consistent for the two periods in comparison. Research and development
costs decreased as a percentage of sales due to increased sales volume,
as our research and development expenditures primarily consist of fixed
costs.

Merger related and deferred compensation expenses for the quarter
ended September 29, 2006 of $2.9 million consisted primarily of $1.4
million of deferred executive compensation, $1.0 million of compensation
in lieu of option grants, and $500 thousand of bonus expense.

Interest income increased $418 thousand to $755 thousand in the
quarter ended September 29, 2006 from $337 thousand in the same period of
2005 and $978 thousand to $1.8 million in the nine months ended September
29, 2006 from $794 thousand in the same period of 2005. The increases
are primarily due to higher average investable cash balances and higher
interest rates during each 2006 period.

Merger expenses of $2.2 million for the nine months ended September
29, 2006 were primarily for professional fees related to the Merger
Agreement with Coherent, Inc. more fully described above.

Foreign currency losses and other income was $15 thousand for the
quarter ended September 29, 2006 as compared to $58 thousand for the
quarter ended September 30, 2005, which included foreign currency
transaction losses of $20 thousand and $70 thousand, respectively.
Foreign currency gains and other income was $269 thousand for the nine
months ended September 29, 2006 as compared to $103 thousand for the nine
months ended September 30, 2005. This is primarily attributable to the
recording of $212 thousand and $71 thousand of foreign currency
transaction gains in 2006 and 2005, respectively, principally at Excel
Europe and Japan for the settlement of payables due in U.S. dollars for
the purchase of inventories from the Company's U.S. subsidiaries, as a
result of the decline in the value of the U.S. dollar against the Euro
and Japanese Yen.

The provision for income taxes decreased $384 thousand or 23.9% from
$1.6 million in the quarter ended September 30, 2005 to $1.2 million for
the current quarter ended September 29, 2006. For the nine months ended
September 29, 2006 the provision for income taxes was $5.0 million, an
increase of $1.1 million or 29.8% from $3.9 million for the nine months
ended September 30, 2005. The decrease for the quarter ended September
29, 2006 was primarily due to lower pre-tax income for the quarter as a
result of merger related expenses in that period. The increase for the
nine months ended September 29, 2006 is primarily attributable to higher
year to date pre-tax income combined with higher effective tax rates.
The effective tax rate was 33.0% for the quarter ended September 29, 2006
and 32.6% for the nine months ended September 29, 2006 compared to 26.4%
for the year ended December 31, 2005. In 2006, due to the non-
deductibility of certain merger related costs, the suspension of the R&D
credit and investing in taxable versus non-taxable instruments, the
Company's effective tax rate increased approximately 5%. The lower rate
in 2005 was primarily due to the settlement of an income tax contingency
for less than the amount previously accrued.

Liquidity and Capital Resources
................................

Cash Flow Overview

Cash, cash equivalents and investments increased $8.6 million during
the nine months ended September 29, 2006 to $58.9 million. The increase
was primarily due to the net cash provided by operating activities of
$9.3 million, proceeds from the sale of equipment of $291 thousand and
proceeds from the exercise of common stock options of $204 thousand
partially offset by net cash used for capital expenditures of $1.3
million. The Company also experienced a favorable foreign exchange
effect on cash and cash equivalents of $79 thousand in 2006. As of
September 29, 2006 the Company had no bank debt.

At September 29, 2006, the Company had working capital of $107.9
million, including cash, cash equivalents and auction rate notes of $58.9
million, compared to working capital of $94.7 million, including cash,
cash equivalents and auction rate notes of $50.3 million, at December 31,
2005. The working capital increased by $13.2 million and cash, cash
equivalents and investments increased by $8.6 million during the nine
months ended September 29, 2006.

Net cash provided by operating activities was $9.3 million for the
nine months ended September 29, 2006 and $5.3 million for the nine months
ended September 30, 2005, which were primarily attributable to net income
plus depreciation and amortization expenses, offset partially by net
changes in working capital items. Depreciation and amortization for the
nine months ended September 29, 2006 was $2.0 million. Accounts
receivable at September 29, 2006 of $26.0 million increased $3.2 million
from December 31, 2005 primarily due to the increase in sales in 2006
coupled with the timing of the shipments in the third quarter of 2006
compared to the fourth quarter of 2005. Inventory at September 29, 2006
of $36.5 million increased $6.2 million from December 31, 2005 primarily
due to increased projected sales volume for the fourth quarter of 2006
compared to the first quarter of 2006 as well as the introduction of new
products.

Net cash used in investing activities of $16.1 million was primarily
attributable to the purchase of short-term auction rate notes for $15.2
million and equipment for $1.3 million offset partially by the proceeds
from the sale of equipment of $291 thousand for the nine months ended
September 29, 2006. Net cash used in investing activities of $8.1
million for the nine months ended September 30, 2005 was due primarily to
the purchase of short-term auction rate notes for $6.6 million and
equipment for $1.5 million.

Net cash provided by financing activities was $241 thousand and $11
thousand for the nine months ended September 29, 2006 and September 30,
2005, respectively resulting primarily from the proceeds received upon
the exercise of employee stock options.

As of September 29, 2006, the Company has no lines of credit.

The Company intends to continue to invest in product development,
plant and equipment and marketing in support of its growth strategy.
These investments aid in retaining and acquiring new customers, expanding
the Company's current product offerings and further developing its
operating infrastructure. The Company believes that current cash, cash
equivalents and investments will be sufficient to meet these anticipated
cash needs for at least the next twelve months. However, any projections
of future cash needs and cash flows are subject to substantial
uncertainty. If current cash, cash equivalents and investments and those
that may be generated from operations are insufficient to satisfy the
Company's liquidity requirements, the Company may seek to sell additional
equity or debt securities or secure lines of credit. The sale of
additional equity or convertible debt securities could result in
additional dilution to the Company's stockholders. In addition, the
Company will, from time to time, consider the acquisition of, or
investment in, complementary businesses, products, services and
technologies, which might impact the Company's liquidity requirements or
cause the Company to issue additional equity or debt securities. There
can be no assurance that financing will be available, on terms that are
acceptable to the Company or at all.

Inflation
..........

In the opinion of management, inflation has not had a material
effect on the operations of the Company.

Adoption of New Accounting Pronouncement
.........................................

The Company receives a tax deduction from certain stock option
exercises during the period the options are exercised, generally for the
excess of the price at which the underlying stock is sold over the
exercise price of the options. Prior to the adoption of SFAS No. 123(R),
the Company reported excess tax benefits from employee stock option
exercises as operating cash flows in its consolidated statement of cash
flows. In accordance with SFAS No. 123(R), the Company now reports
excess tax benefits as financing cash inflows. The actual income tax
benefit realized for the tax deductions from stock option exercises for
the three months ended September 29, 2006 was $12 thousand. There were
no stock option exercises during the three months ended September 30,
2005. As such, there were no income tax benefits realized for that
period. The actual income tax benefit realized for the tax deductions
from stock option exercises for the nine months ended September 29, 2006
and September 30, 2005 was $37 thousand and $2 thousand, respectively.
There was no tax benefit recognized related to the total compensation
expense for share-based payment arrangements for the three and nine
months ended September 29, 2006 and September 30, 2005, as all the
related options were incentive stock options and the tax benefit
associated with disqualified incentive stock options is recognized by the
Company only after such incentive stock options are exercised and
disqualified.

Recently Issued Accounting Pronouncements
..........................................

In February 2006, the FASB issued SFAS No. 155, "Accounting for
Certain Hybrid Financial Instruments." This Statement amends SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities" and
SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities" and provides for simplified
accounting for certain hybrid financial instruments by permitting fair
value remeasurement for any hybrid financial instrument that contains an
embedded derivative that otherwise would require bifurcation and by
eliminating a restriction on the passive derivative instruments that a
qualifying special-purpose entity (SPE) may hold. This Statement is
effective for all financial instruments acquired or issued after the
beginning of an entity's first fiscal year that begins after September
15, 2006. Management has evaluated the new statement and has determined
that it does not have a material affect on the Company's consolidated
financial statements.

In March 2006, the FASB issued SFAS No. 156, "Accounting for
Servicing of Financial Assets" ("SFAS 156"), which requires all
separately recognized servicing assets and servicing liabilities be
initially measured at fair value. SFAS 156 permits, but does not
require, the subsequent measurement of servicing assets and servicing
liabilities at fair value. Adoption is required as of the beginning of
the first fiscal year that begins after September 15, 2006. Management
has evaluated the new statement and has determined that it does not have
a material affect on the Company's consolidated financial statements.

In March 2006, the Emerging Issues Task Force ("EITF") issued EITF
Issue 06-3, "How Taxes Collected from Customers and Remitted to
Governmental Authorities Should Be Presented in the Income Statement
(That Is, Gross verses Net Presentation)." A consensus was reached that
entities may adopt a policy of presenting sales taxes and other similar
taxes in the income statement on either a gross or net basis. If taxes
are significant, an entity should disclose its policy of presenting taxes
and the amounts of taxes. The guidance is effective for periods
beginning after December 15, 2006. The Company presents sales net of
sales taxes. This Issue will not impact the method for recording these
sales taxes in the Company's consolidated financial statements.

In June 2006, the FASB issued FASB Interpretation No. ("FIN") 48,
"Accounting for Uncertainty in Income Taxes - an Interpretation of SFAS
No. 109," which clarifies the accounting for uncertainty in income taxes
recognized in the financial statements in accordance with SFAS No. 109,
"Accounting for Income Taxes." FIN 48 prescribes a recognition threshold
and measurement attribute for the financial statement recognition and
measurement of a tax position taken or expected to be taken in a tax
return. Any change in the net assets or liabilities recognized as a
result of adopting the provisions of FIN 48 would be recorded as an
adjustment to the opening balance of retained earnings. FIN 48 is
effective for fiscal years beginning after December 15, 2006. Management
is evaluating the impact the adoption of FIN 48 will have on the
Company's consolidated financial statements.

In September 2006, the FASB issued SFAS No. 157, "Fair Value
Measurements" ("SFAS 157"), which defines fair value, establishes a
framework for measuring fair value and expands the related disclosure
requirements. Adoption is required as of the beginning of the first
fiscal year that begins after November 15, 2007. Management is
evaluating the impact the adoption of this statement will have on the
Company's consolidated financial statements.

In September 2006, the FASB issued SFAS No. 158, "Employers'
Accounting for Defined Benefit Pension and Other Postretirement Plans -
an amendment of FASB Statements No. 87, 88, 106 and 132(R)" ("SFAS 158").
SFAS 158 requires that employers recognize on a prospective basis the
funded status of their defined benefit pension and other postretirement
plans on their consolidated balance sheet and recognize as a component of
other comprehensive income, net of tax, the gains or losses and prior
service costs or credits that arise during the period but are not
recognized as components of net periodic benefit cost. SFAS No. 158 also
requires additional disclosures in the notes to financial statements.
SFAS No. 158 is effective as of the end of fiscal years ending after
December 15, 2006. Management concluded that this statement will not
impact the Company's consolidated financial statements, as the Company
has no defined benefit pension or other postretirement plans.

In September 2006, the FASB issued FASB Staff Position AUG AIR-1,
"Accounting for Planned Major Maintenance Activities" which is effective
for fiscal years beginning after December 15, 2006. This position
statement eliminates the accrue-in-advance method of accounting for
planned major maintenance activities. Management does not believe that
the adoption of this position will have a material affect on the
Company's consolidated financial statements.

In September 2006, the Staff of the SEC issued Staff Accounting
Bulletin (SAB) No. 108, "Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year Financial
Statements." SAB No. 108 provides guidance on the consideration of the
effects of prior year misstatements in quantifying current year
misstatements for the purpose of determining whether the current year's
financial statements are materially misstated. SAB No. 108 is effective
for fiscal years ending after November 15, 2006. Management does not
expect the adoption of SAB No. 108 to have a material impact on our
consolidated financial statements.

Forward-Looking Statements
...........................

The information set forth in this Report (and other reports issued
by the Company and its officers from time to time) contain certain
statements concerning the Company's future results, future performance,
intentions, objectives, plans and expectations that are or may be deemed
to be "forward-looking statements". Such statements are made in reliance
upon safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. These forward-looking statements are based on current
expectations that involve numerous risks and uncertainties, including
those risks and uncertainties discussed in the Company's Annual Report on
Form 10K for the year ended December 31, 2005. Assumptions relating to
the foregoing involve judgments with respect to, among other things,
future economic, competitive, and market conditions and future business
decisions, all of which are difficult or impossible to predict accurately
and many of which are beyond the Company's control. Although the Company
believes that its assumptions underlying the forward-looking statements
are reasonable, any of the assumptions could prove inaccurate and,
therefore, the Company cannot assure you that the results discussed or
implied in such forward-looking statements will prove to be accurate. In
light of the significant uncertainties inherent in such forward-looking
statements, the inclusion of such statements should not be regarded as a
representation by the Company or any other person that the Company's
objectives and plans will be achieved. 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. The Company undertakes
no obligation to revise any of these forward-looking statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk
..........................................................

Market Risk
............

The principal market risks (i.e. the risk of loss arising from
adverse changes in market rates and prices) to which the Company is
exposed are interest rates on demand deposits with banks and money market
funds and foreign currency exchange rates, generating translation and
transaction gains and losses.

Interest Rates
...............

The Company manages its cash and investment portfolios considering
investment opportunities and risks, tax consequences and overall
financing strategies. The Company's investment portfolios consist
primarily of cash, cash equivalents and investments, with carrying
amounts approximating market value. Assuming September 29, 2006 cash and
investment levels, a one-point change in interest rates would have an
approximate $589 thousand impact on the annual interest income of the
Company.

Foreign Currency Exchange Rates
................................

Operating in international markets involves exposure to movements in
currency exchange rates that are volatile at times. The economic impact
of currency exchange rate movements on the Company is complex because
such changes are often linked to variability in real growth, inflation,
interest rates, governmental actions and other factors. These changes,
if material, could cause the Company to adjust its financing and
operating strategies. Consequently, isolating the effect of changes in
currency does not incorporate these other important economic factors.

The Company's net sales and services to foreign customers represent
a large percentage of total net sales and services. The Company expects
net sales and services to foreign customers will continue to represent a
large percentage of its total net sales and services. The Company
generally has not engaged in foreign currency hedging transactions. The
aggregate foreign exchange gains included in determining consolidated
results of operations were $212 thousand and $71 thousand in the nine
months ended September 29, 2006 and September 30, 2005, respectively.

Changes in the Euro and Yen have the largest impact on the Company's
operating profits. The Company estimates that a 10% change in foreign
exchange rates would not materially impact reported operating profits.

Item 4. Controls and Procedures
.......................
Conclusion Regarding the Effectiveness of
Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form
10-Q, the Company carried out an evaluation, under the supervision and
with the participation of the Company's management, including the CEO and
CFO, of the effectiveness of the design and operation of the Company's
disclosure controls and procedures pursuant to Exchange Act Rule 13a-15.
Based upon that evaluation, the Company's CEO and CFO concluded that the
Company's disclosure controls and procedures are effective in timely
alerting them to material information relating to the Company (including
its consolidated subsidiaries) required to be included in the Company's
periodic SEC filings.

There were no changes in the Company's internal control over
financial reporting during the quarterly period ended September 29, 2006
that has materially affected, or is reasonably likely to materially
affect, the Company's internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings
.................

The Company and its subsidiaries are subject to various claims, which
have arisen in the normal course of business. The impact of the final
resolution of these matters on the Company's results of operations in a
particular reporting period is not known. Management is of the opinion,
however, that the ultimate outcome of such matters will not have a
material adverse effect upon the Company's financial condition or
liquidity.

Item 1A. Risk Factors
............

A description of the risk factors associated with our business is
contained in Item 1A, "Risk Factors," of our 2005 Annual Report on Form
10-K filed with the Securities and Exchange Commission on February 16,
2006 and incorporated herein by reference. There have been no material
changes in the risk factors associated with our business. These
cautionary statements are to be used as a reference in connection with
any forward-looking statements. The factors, risks and uncertainties
identified in these cautionary statements are in addition to those
contained in any other cautionary statements, written or oral, which may
be made or otherwise addressed in connection with a forward-looking
statement or contained in any of our subsequent filings with the
Securities and Exchange Commission.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
...........................................................

None.

Item 3. Defaults Upon Senior Securities
...............................

None.

Item 4. Submission of Matters to a Vote of Security-Holders
...................................................

None.

Item 5. Other Information
.................

None.

Item 6. Exhibits
........

Exhibits - See accompanying Index to Exhibits included after
the signature page of this report for a list of
the exhibits filed or furnished with this report.

SIGNATURES
...........

PURSUANT TO THE REQUIREMENTS 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.

DATED: November 8, 2006

EXCEL TECHNOLOGY, INC.

By: /s/ Alice Varisano
................................
Alice Varisano,
Chief Financial Officer

By: /s/ J. Donald Hill
.................................
J. Donald Hill, Chairman of the Board

By: /s/ Antoine Dominic
.................................
Antoine Dominic, President,
Chief Executive Officer and
Chief Operating Officer

INDEX TO EXHIBITS
.................

Exhibit No. Description

11 Computation of Net Income Per Share

31.1 Certification of Chief Executive Officer Pursuant to
Exchange Act Rule 13a-14(a)/15d-14(a) as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2 Certification of Chief Financial Officer Pursuant to
Exchange Act Rule 13a-14(a)/15d-14(a) as Adopted Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002

32.1 Certification of Chief Executive Officer Pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.

32.2 Certification of Chief Financial Officer Pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.

EXHIBIT 11

COMPUTATION OF NET INCOME PER SHARE
(In thousands, except per share data)(Unaudited)

BASIC DILUTED
Three Months Ended Three Months Ended
.................. ..................
Sept 29, Sept 30, Sept 29, Sept 30,
2006 2005 2006 2005
........ ........ ........ ........
Net income $ 2,488 $ 4,354 $ 2,488 $ 4,354
........ ........ ........ ........
........ ........ ........ ........
Weighted average common
shares outstanding 12,066 12,054 12,066 12,054

Weighted average common
share equivalents outstanding:
Stock options 0 0 456 205
........ ........ ........ ........
Weighted average common shares
and common share equivalents
outstanding 12,066 12,054 12,522 12,259
........ ........ ........ ........
........ ........ ........ ........

Net income per share $ 0.21 $ 0.36 $ 0.20 $ 0.36
........ ........ ........ ........
........ ........ ........ ........

Nine Months Ended Nine Months Ended
.................. ..................
Sept 29, Sept 30, Sept 29, Sept 30,
2006 2005 2006 2005
........ ........ ........ ........
Net income $ 10,345 $ 10,856 $ 10,345 $ 10,856
........ ........ ........ ........
........ ........ ........ ........

Weighted average common
shares outstanding 12,064 12,053 12,064 12,053

Weighted average common
share equivalents outstanding:
Stock options 0 0 441 190
........ ........ ........ ........

Weighted average common shares
and common share equivalents
outstanding 12,064 12,053 12,505 12,243
........ ........ ........ ........
........ ........ ........ ........

Net income per share $ 0.86 $ 0.90 $ 0.83 $ 0.89
........ ........ ........ ........
........ ........ ........ ........

For the three and nine months ended September 29, 2006, there were 125
thousand and 135 thousand, respectively, stock options outstanding that
are antidulutive and are not included in the above income per share
calculations.

For both the three and nine months ended September 30, 2005, there were
215 thousand stock options outstanding that are antidilutive and are not
included in the above income per share calculations.

EXHIBIT 31.1

CERTIFICATION

I, Antoine Dominic, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Excel
Technology, Inc.;

2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules 13a-
15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;

b) Designed such internal control over financial reporting, or
caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such evaluation;
and

d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over
financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
control over financial reporting.

Dated: November 8, 2006

By: /s/ Antoine Dominic
.................................
Antoine Dominic, President,
Chief Executive Officer, and
Chief Operating Officer

EXHIBIT 31.2

CERTIFICATION

I, Alice Varisano, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Excel
Technology, Inc.;

b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
control over financial reporting.

Dated: November 8, 2006
By: /s/ Alice Varisano
.......................
Alice Varisano,
Chief Financial Officer

EXHIBIT 32.1

CERTIFICATION OF PERIODIC REPORT

I, Antoine Dominic, Chief Executive Officer of Excel Technology,
Inc. (the "Company"), certify, pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002, 18 U.S.C. Section 1350, that, to my knowledge,:

(1) the Quarterly Report on Form 10-Q of the Company for the period
ended September 29, 2006 (the "Report") fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934 (15. U.S.C. 78m or 78o(d)); and

(2) the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of
the Company.

Dated: November 8, 2006

/s/ Antoine Dominic
............................
Antoine Dominic, President,
Chief Executive Officer, and
Chief Operating Officer

A signed original of this written statement required by Section 906
of the Sarbanes-Oxley Act of 2002 has been provided to the Company and
will be retained by the Company and furnished to the Securities and
Exchange Commission or its staff upon request.

EXHIBIT 32.2

CERTIFICATION OF PERIODIC REPORT

I, Alice Varisano, Chief Financial Officer of Excel Technology, Inc.
(the "Company"), certify, pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, 18 U.S.C. Section 1350, that, to my knowledge,:

(2) the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of
the Company.

Dated: November 8, 2006

/s/ Alice Varisano
.............................
Alice Varisano,
Chief Financial Officer