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 28, 2007
[ ] 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 October 17, 2007 was 11,621,156.
CONTENTS
PART I. FINANCIAL INFORMATION
Page
Item 1. Consolidated Financial Statements:
..................................
Consolidated Balance Sheets as of September 28, 2007
(unaudited)and December 31, 2006 3
Consolidated Statements of Income (unaudited) for the Three
Months Ended September 28, 2007 and September 29, 2006 4
Consolidated Statements of Income (unaudited) for the Nine
Months Ended September 28, 2007 and September 29, 2006 5
Consolidated Statements of Cash Flows (unaudited) for the
Nine Months Ended September 28, 2007 and September 29, 2006 6
Notes to Consolidated Financial Statements (unaudited) 7
Item 2. Management's Discussion and Analysis of Financial
.................................................
Condition and Results of Operations 14
...................................
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 19
..........................................................
Item 3. Defaults Upon Senior Securities 19
...............................
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)
Sept. 28, 2007 Dec. 31, 2006
.............. .............
(Unaudited)
Assets
.......
Current assets:
Cash $ 7,519 $ 9,903
Investments 50,550 53,220
Accounts receivable, less allowance for
doubtful accounts of $813 and $784 in
2007 and 2006, respectively 23,937 22,716
Inventories 36,569 34,906
Deferred income taxes 2,367 2,131
Other current assets 1,607 1,314
Income taxes receivable 2,135 0
.......... ..........
Total current assets 124,684 124,190
.......... ..........
Property, plant and equipment 24,876 25,503
Other assets 1,806 391
Goodwill 32,247 31,895
.......... ..........
Total Assets $ 183,613 $ 181,979
.......... ..........
.......... ..........
Liabilities and Stockholders' Equity
.....................................
Current liabilities:
Accounts payable $ 5,149 $ 6,386
Accrued expenses and other
current liabilities 6,769 6,902
Income taxes payable 1,378 354
.......... ..........
Total current liabilities 13,296 13,642
.......... ..........
Deferred income taxes 3,176 3,171
Accrued deferred compensation 1,475 1,375
Minority interest in subsidiary 133 66
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, 11,617 and
12,088 shares issued and outstanding in
2007 and 2006, respectively 12 12
Additional paid-in capital 36,466 49,161
Retained earnings 124,683 111,602
Accumulated other comprehensive income 4,372 2,950
.......... ..........
Total stockholders' equity 165,533 163,725
.......... ..........
Total Liabilities and Stockholders' Equity $ 183,613 $ 181,979
.......... ..........
.......... ..........
See Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited and in thousands, except income per share amounts)
Three Months Ended
............................
September 28, September 29,
2007 2006
.............. .............
Net sales and services $ 37,446 $ 40,299
Cost of sales and services 21,285 22,350
.......... ..........
Gross profit 16,161 17,949
Operating expenses:
Selling and marketing 4,107 4,611
General and administrative 3,933 3,724
Research and development 3,662 3,527
Merger related and deferred
compensation expenses 0 2,875
Merger expenses 0 210
.......... ..........
Total operating expenses 11,702 14,947
.......... ..........
Income from operations 4,459 3,002
Non-operating income (expense):
Interest income 703 755
Minority interest (9) (28)
Foreign currency gains/losses and other, net 177 (15)
.......... ..........
Income before provision for income taxes 5,330 3,714
Provision for income taxes 1,417 1,226
.......... ..........
Net income $ 3,913 $ 2,488
Basic income per common share $0.33 $0.21
.......... ..........
.......... ..........
Weighted average common shares outstanding 11,795 12,066
.......... ..........
.......... ..........
Diluted income per common share $0.33 $0.20
.......... ..........
.......... ..........
Weighted average common and
common equivalent shares outstanding 12,030 12,522
.......... ..........
.......... ..........
See Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited and in thousands, except income per share amounts)
Nine Months Ended
............................
September 28, September 29,
2007 2006
.............. .............
Net sales and services $ 118,919 $ 116,154
Cost of sales and services 66,855 62,890
.......... ..........
Gross profit 52,064 53,264
Operating expenses:
Selling and marketing 13,053 14,352
General and administrative 12,051 9,689
Research and development 11,271 10,807
Merger related and deferred
compensation expenses 0 2,875
Merger expenses 0 2,194
.......... ..........
Total operating expenses 36,375 39,917
.......... ..........
Income from operations 15,689 13,347
Non-operating income (expense):
Interest income 2,327 1,772
Minority interest in net income
of subsidiary (67) (41)
Foreign currency gains and other, net 315 269
.......... ..........
Income before provision for income taxes 18,264 15,347
Provision for income taxes 5,183 5,002
.......... ..........
Net income $ 13,081 $ 10,345
.......... ..........
.......... ..........
Basic income per common share $1.09 $0.86
.......... ..........
.......... ..........
Weighted average common shares outstanding 11,987 12,064
.......... ..........
.......... ..........
Diluted income per common share $1.07 $0.83
.......... ..........
.......... ..........
Weighted average common and
common equivalent shares outstanding 12,263 12,505
.......... ..........
.......... ..........
See Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited and in thousands)
Nine Months Ended
............................
September 28, September 29,
2007 2006
.............. .............
Operating activities:
Net income $ 13,081 $ 10,345
Adjustments to reconcile net income to net
cash provided by operating activities:
Minority interest 67 41
Depreciation and amortization 1,980 1,971
Stock-based compensation expense 2,292 95
Stock-based compensation excess
tax benefit (516) 0
Excess income tax benefit from
employee stock options 0 (37)
Gain on sale of equipment 0 (116)
Provision for doubtful accounts 44 54
Deferred income taxes (237) 0
Changes in operating assets
and liabilities:
Accounts receivable (778) (2,792)
Inventories (1,007) (5,726)
Other current assets (254) 176
Other assets (1,512) (576)
Accounts payable (1,316) 2,030
Accrued expenses and other
current liabilities (983) 3,835
.......... ..........
Net cash provided by
operating activities 10,861 9,300
.......... ..........
Investing activities:
Purchases of investments, net of redemptions 0 (15,150)
Proceeds from investment redemptions,
net of purchases 2,670 0
Purchases of property, plant and equipment (1,095) (1,290)
Proceeds from the sale of equipment 0 291
.......... ..........
Net cash provided by (used in)
investing activities 1,575 (16,149)
.......... ..........
Financing activities:
Proceeds from exercise of common stock options 1,209 204
Repurchases of common stock (16,664) 0
Stock-based compensation excess tax benefit 516 37
.......... ..........
Net cash (used in) provided by
financing activities (14,939) 241
.......... ..........
Effect of exchange rate changes on cash 119 79
.......... ..........
Net decrease in cash (2,384) (6,529)
Cash - beginning of period 9,903 16,303
.......... ..........
Cash - end of period $ 7,519 $ 9,774
.......... ..........
.......... ..........
Supplemental cash flow information:
Cash paid for:
Interest $ 0 $ 0
Income taxes $ 6,011 $ 5,625
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 28, 2007, the
consolidated statements of income for the three and nine months ended
September 28, 2007 and September 29, 2006 and the consolidated statements
of cash flows for the nine months ended September 28, 2007 and September
29, 2006 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 28, 2007 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, 2006. 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
28, 2007 are not necessarily indicative of the operating results to be
expected for future interim periods or the full year ending December 31,
2007.
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. TERMINATED MERGER
.................
On February 20, 2006, the Company entered into an Agreement and Plan
of Merger (the "Merger Agreement") with Coherent, Inc. ("Coherent"), and
Spider Acquisition Merger Corporation, a wholly owned subsidiary of
Coherent ("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 Coherent.
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 would have been automatically converted into the
right to receive $30.00 per share in cash.
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. On May 9, 2006, Coherent, Inc. received U.S. antitrust approval
to acquire the Company. On October 25, 2006, the German Federal Cartel
Office issued a prohibition order on the merger. On November 1, 2006,
the Merger Agreement between the Company and Coherent was terminated. In
connection with the merger, the Company incurred $210 thousand and $2.2
million in merger related expenses, which have been included in the
consolidated statement of income for the three and nine months ended
September 29, 2006, respectively. Such costs, which were previously
separately disclosed as non-operating expense, have been reclassified to
operating expense.
C. ACCOUNTING FOR STOCK-BASED COMPENSATION
.......................................
The Company's stock-based employee compensation plans are described
more fully below. 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 28, 2007 and 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. Stock based
compensation expense for an award with only service conditions that has a
graded vesting schedule is recognized on a straight-line basis over the
requisite service period for the entire award, with such amount
recognized at any date at least equaling the portion of the grant date
fair value of the award that is vested at that date. Stock based
compensation expense for an award that includes a performance condition
that has a graded vesting schedule is recognized on a straight-line basis
over the requisite service period for each separately vesting portion of
the award.
There were no restricted stock grants during the three months ended
September 28, 2007 and 125 thousand shares of restricted stock granted
for the nine months ended September 28, 2007, of which 61 thousand had
vested as of September 28, 2007. At September 28, 2007, 39 thousand
shares of restricted stock vest contingent on attainment of a performance
condition. Of the 61 thousand restricted shares that vested and were
issued to employees during the nine months ended September 28, 2007, 26
thousand were surrendered to the Company to fulfill the employee's
minimum statutory tax withholding obligations of $722 thousand for the
applicable income. The 26 thousand acquired shares were retired. This
net share settlement had no impact on the amount of compensation cost
recognized in respect of these awards. There were no stock option grants
during the nine months ended September 28, 2007. There were no stock
option or other share-based award grants during the nine months ended
September 29, 2006.
The following table illustrates the stock based compensation expense
recorded in the statements of income for the three and nine months ended
September 28, 2007 and September 29, 2006 and the impact 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
............................
September 28, September 29,
2007 2006
.............. .............
Stock based compensation expense:
Stock options $ 17 $ 18
Restricted stock $ 633 $ 0
Impact on income before provision
for income taxes $ 650 $ 18
Impact on net income $ 422 $ 18
Impact on basic income per common share $ 0.04 $ 0.00
Impact on diluted income per common share $ 0.04 $ 0.00
Nine Months Ended
............................
September 28, September 29,
2007 2006
.............. .............
Stock based compensation expense:
Stock options $ 51 $ 95
Restricted stock $ 2,241 $ 0
Impact on income before provision
for income taxes $ 2,292 $ 95
Impact on net income $ 1,485 $ 95
Impact on basic income per common share $ 0.12 $ 0.01
Impact on diluted income per common share $ 0.12 $ 0.01
The actual income tax benefit realized for the tax deductions from
stock option exercises for the nine months ended September 28, 2007 and
September 29, 2006 was $488 thousand and $37 thousand, respectively.
There was a $807 thousand tax benefit recognized related to the
compensation expense for share-based payment arrangements for the nine
months ended September 28, 2007, of which $572 thousand related to
restricted stock that vested, resulting in a $235 thousand deferred tax
asset at September 28, 2007. The excess tax benefit associated with
vested restricted stock was $28 thousand for the nine months ended
September 28, 2007. There was no tax benefit recognized on the total
compensation expense for the share-based payment arrangements for the
nine months ended September 29, 2006, 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 paragraphs describe each of the Company's stock-based
compensation plans:
In 1990, the Company adopted a stock option plan (the "Plan") which
provided for the granting of incentive stock options and non-incentive
stock options to certain key employees, including officers and directors,
to purchase an aggregate of 2,000,000 shares of common stock, as amended,
at prices and terms determined by the Board of Directors. Options
granted under the Plan, which terminated on July 30, 2000, may be
exercisable for a period of up to ten years. All options granted to
employees under the 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 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 exercise 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 28, 2007, 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. As of September 28, 2007, options
for the purchase of 10,092 shares were available for future grant under
the 1998 Plan.
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 28, 2007, 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. Although there were 445,000 shares of
common stock available for issuance under the 2004 Plan, when the 2006
option plan discussed below was approved, the Company agreed to
discontinue granting options under the 2004 Plan.
In 2006, the Company adopted a stock option / stock issuance plan
(the "2006 Plan"), which provides for 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 and / or upon
attainment of specified performance objectives. Recipients of common
stock under the stock issuance program have full stockholder rights with
respect to those shares, whether or not their interest in those shares is
vested. 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, and become fully exercisable upon the sale or merger of the
Company, as defined in the 2006 Plan. As of September 28, 2007, no
options were granted and 125 thousand restricted common shares were
awarded under the 2006 Plan.
The following table summarizes activity related to the Company's
stock option / stock issuance plans during the nine months ended
September 28, 2007:
Stock Weighted Stock
Options' Average Options'
Number of Number Weighted Remaining Aggregate
restricted of stock Average Contractual Intrinsic
shares (in options (in Exercise Term (in Value(in
thousands) thousands) Price years) thousands)
.......... ........... ........ ........... ..........
Outstanding at
December 31, 2006 0 1,299 $ 21.51
Granted 125 0 $ 0
Options exercised/
restricted stock
vested (61) (126) $ 12.95
Cancelled 0 (31) $ 32.47
.......... ...........
Outstanding at
September 28, 2007 64 1,142 $ 22.16 5.51 $ 4,382
.......... ...........
.......... ...........
Shares/Options
expected to vest at
September 28, 2007 64 8 $ 20.00 5.41 $ 48
Exercisable at
September 28, 2007 0 1,134 $ 22.17 5.51 $ 4,334
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 2007 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 28, 2007. This
amount changes based on the fair market value of the Company's common
stock. No options were exercised during the three months ended September
28, 2007. Total intrinsic value of options exercised for the three
months ended September 29, 2006 was $35 thousand. Total intrinsic value
of options exercised for the nine months ended September 28, 2007 and
September 29, 2006 was $1.8 million and $106 thousand, respectively.
As of September 28, 2007, there was $19 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 less
than one year and $1.0 million of unrecognized stock-based compensation
expense related to non-vested restricted stock, which is expected to be
recognized over a weighted average period of approximately one year.
When an option is exercised, the Company issues new shares of common
stock.
In 2007, 15 thousand shares of common stock were used by employees
to exercise options. Such shares, which had a market value of $420
thousand, were retired.
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 28, 2007 December 31, 2006
.................. .................
Raw Materials $ 19,176 $ 18,584
Work-in-Process 9,660 9,410
Finished Goods 5,360 4,907
Consigned Inventory 2,373 2,005
.......... ..........
$ 36,569 $ 34,906
.......... ..........
.......... ..........
E. COMPREHENSIVE INCOME
....................
Comprehensive income is comprised of net income and foreign currency
translation adjustments, amounting in the aggregate to $4.9 million and
$2.2 million for the three months ended September 28, 2007 and September
29, 2006, respectively and $14.5 million and $11.3 million for the nine
months ended September 28, 2007 and September 29, 2006, 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 28, 2007 were as follows (In thousands):
Balance at December 31, 2006 $ 754
Provisions for warranties during the nine-
months ended September 28, 2007 569
Costs of warranty obligations during the nine-
months ended September 28, 2007 (494)
......
Balance at September 28, 2007 $ 829
......
......
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.
H. GOODWILL
........
The change in the goodwill balance during the nine months ended
September 28, 2007 is attributable to changes in foreign currency
exchange rates used to translate the goodwill contained in the financial
statements of foreign subsidiaries.
I. TREASURY STOCK
..............
Effective November 1, 2006, the Company's Board of Directors
authorized a stock buy-back program for the repurchase of up to 2,000,000
shares of its common stock. Purchases have occurred and will continue to
occur from time to time in open market transactions or privately
negotiated transactions at the Company's discretion, including the
quantity, timing and price thereof. During the nine months ended
September 28, 2007, the Company repurchased 617,454 shares of common
stock for $15.9 million. As of September 28, 2007, the Company had
repurchased 696,954 shares of common stock under the program.
J. DEFERRED COMPENSATION
.....................
The Company has a deferred compensation plan whereby certain
compensation earned by a participant can be deferred and, if funded, the
related assets are placed in an employee benefit trust, also known as a
"rabbi trust." Under the deferred compensation plan, the participant may
choose from several investment designations. At September 28, 2007, the
Company had $1.5 million of accrued deferred compensation, which was
funded and the related assets are included in non-current assets on the
balance sheet.
K. INCOME TAXES
............
On January 1, 2007, the Company adopted FASB Interpretation No.
("FIN") 48, Accounting for Uncertainty in Income Taxes-an interpretation
of SFAS No. 109. This Interpretation clarifies the accounting for
uncertainty in income taxes recognized in an enterprise's financial
statements in accordance with Statement of Financial Accounting Standards
(SFAS) No. 109, Accounting for Income Taxes. FIN 48 prescribes a
recognition threshold and measurement attribute for the financial
statement recognition and measurement of an income tax position taken or
expected to be taken in an income tax return. FIN 48 provides that
unrecognized tax benefits should be based on the facts, circumstances and
information available at each balance sheet date and that subsequent
changes in judgment should be based on new facts and circumstances and
any resulting change in the amount of unrecognized tax benefit should be
accounted for in the interim period in which the change occurs. The
adoption of FIN 48 had no impact on the Company's consolidated financial
statements.
As of January 1, 2007, the aggregate amount of unrecognized tax
benefit included in liabilities was $1.8 million which, if recognized,
would affect the effective tax rate, and includes accrued interest for
tax positions which either do not meet the more-likely-than-not
recognition threshold or where the tax benefit is measured at an amount
less than the tax benefit claimed or expected to be claimed on an income
tax return. At January 1, 2007, accrued interest on uncertain tax
positions was approximately $180 thousand.
As of September 28, 2007, there were no significant changes to the
Company's unrecognized income tax benefit which was recorded as of
January 1,2007, except a reduction of $259 thousand, including the
related accrued interest, for the expiration of certain statute of
limitations.
Interest expense related to income tax liabilities recognized in
accordance with the provisions of FIN 48 is included in income tax
expense, consistent with the Company's historical policy.
With a few exceptions, the Company is no longer subject to federal,
state or local income tax audits by taxing authorities for years before
2004. The most significant jurisdictions in which the Company is
required to file income tax returns include the state of California,
Massachusetts and New York. The Company is currently being audited by
the Internal Revenue Service for the tax year ended December 31, 2005.
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.
Terminated Merger
..................
On February 20, 2006, the Company entered into an Agreement and Plan
of Merger (the "Merger Agreement") with Coherent, Inc. ("Coherent"), and
Spider Acquisition Merger Corporation, a wholly owned subsidiary of
Coherent ("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 Coherent.
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 would have been automatically converted into the
right to receive $30.00 per share in cash.
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. On May 9, 2006, Coherent, Inc. received U.S. antitrust
approval to acquire the Company. On October 25, 2006, the German Federal
Cartel Office issued a prohibition order on the merger. On November 1,
2006, the Merger Agreement between the Company and Coherent was
terminated.
Results of Operations
......................
Net sales and services for the quarter ended September 28, 2007
decreased $2.9 million or 7.1% to $37.4 million from $40.3 million for
the quarter ended September 29, 2006. The decrease for the quarters in
comparison is attributable to decreased scanner, high power and high
energy solid state laser and light and color instrument sales partially
offset by increased CO2 laser sales. For the nine months ended September
28, 2007, net sales and services were $118.9 million, an increase of $2.8
million or 2.4% from $116.2 million for the nine months ended September
29, 2006. The increase for the nine months in comparison is primarily
attributable to increased CO2 laser, scanner, and high-energy solid state
pulsed laser sales offset partially by decreased marking system and high
power solid state laser sales.
Gross margins decreased to 43.2% for the three months ended
September 28, 2007 from 44.5% for the three months ended September 29,
2006. For the nine months ended September 28, 2007, gross margins
decreased to 43.8% from 45.9% in the nine months ended September 29,
2006. The decreases are primarily due to the product mix as gross
margins vary among the numerous Company product configurations. Gross
margins also decreased due to higher distributor sales in the 2007
periods, which had lower gross margins than direct sales.
Selling and marketing expenses decreased to $4.1 million in the
quarter ended September 28, 2007 from $4.6 million in the quarter ended
September 29, 2006. The decrease of $504 thousand or 10.9% is primarily
attributable to lower variable costs associated with lower net sales. In
addition, increased sales by distributors as contrasted to direct sales
resulted in lower variable costs. Also, selling costs were lower as a
consequence of a reduced sales force that resulted from loss of personnel
while the terminated merger with Coherent was pending. For the nine
months ended September 28, 2007, selling and marketing expenses were
$13.1 million as compared to $14.4 million for the same period in 2006,
which also resulted from decreased variable costs. Selling and marketing
expenses as a percentage of sales decreased to 11.0% for the quarter
ended September 28, 2007 from 11.4% for the quarter ended September 29,
2006. Selling and marketing expenses as a percentage of sales decreased
to 11.0% for the nine months ended September 28, 2007 from 12.4% for the
comparable period in the prior year. The decrease as a percentage of
sales for the nine months ended September 28, 2007 is essentially
attributable to fixed costs being absorbed by higher sales volume and
increased sales by distributors.
General and administrative expenses increased $209 thousand or 5.6%
from $3.7 million in the quarter ended September 29, 2006 to $3.9 million
in the quarter ended September 28, 2007. For the nine months ended
September 28, 2007, general and administrative expenses were $12.1
million, an increase of $2.4 million or 24.4% over the $9.7 million for
the nine months ended September 29, 2006. The increases are primarily
attributable to increases in stock-based compensation expense in 2007 of
$632 thousand and $2.2 million for the three and nine months ended
September 28, 2007, respectively.
Research and development costs increased $135 thousand or 3.8% to
$3.7 million from $3.5 million for the quarters ended September 28, 2007
and September 29, 2006, respectively. For the nine months ended
September 28, 2007, research and development costs increased $463
thousand or 4.3% to $11.3 million from $10.8 million in 2006. The
increases in research and development costs were primarily attributable
to increased investments throughout our product lines, most notably the
expansion of our development efforts in software embedded in our
products.
Merger related and deferred compensation expenses of $2.9 million
for the quarter ended September 29, 2006, 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 decreased $51 thousand to $703 thousand in the
quarter ended September 28, 2007 from $755 thousand in the same period of
2006. The decrease is primarily due to investing in non-taxable versus
taxable instruments, which benefit the Company's effective tax rate but
offer lower yields. Interest income increased $555 thousand to $2.3
million in the nine months ended September 28, 2007 from $1.8 million in
the same period of 2006, primarily due to higher average investable cash
balances and higher interest rates during the nine months ended September
28, 2007.
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 gains (losses) and other income was $177 thousand
for the quarter ended September 28, 2007 as compared to ($15) thousand
for the quarter ended September 29, 2006, which included foreign currency
transaction gains of $150 thousand and foreign currency transaction
losses of $27 thousand, respectively. Foreign currency gains and other
income was $315 thousand for the nine months ended September 28, 2007 as
compared to $269 thousand for the nine months ended September 29, 2006.
This is primarily attributable to the recording of $196 thousand and $212
thousand of foreign currency transaction gains in 2007 and 2006,
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 increased $192 thousand or 15.7% from
$1.2 million in the quarter ended September 29, 2006 to $1.4 million for
the current quarter ended September 28, 2007. For the nine months ended
September 28, 2007 the provision for income taxes was $5.2 million, an
increase of $182 thousand or 3.6% from the $5.0 million for the nine
months ended September 29, 2006. The effective tax rate was 26.6% for
the quarter ended September 28, 2007 and 28.4% for the nine months ended
September 28, 2007 compared to 31.4% for the year ended December 31,
2006. In 2007, the effective tax rate was lower due to the jurisdictions
where income was earned and an increase in credits earned.
Liquidity and Capital Resources
................................
Cash Flow Overview
Cash and investments decreased $5.1 million during the nine months
ended September 28, 2007 to $58.1 million. The decrease was primarily
due to $16.7 million used for the repurchase of common shares and net
cash used for capital expenditures of $1.1 million partially offset by
the net cash provided by operating activities of $10.9 million and
proceeds from the exercise of common stock options of $1.2 million. The
Company also experienced a favorable foreign exchange effect on cash of
$119 thousand in 2007. As of September 28, 2007 the Company had no bank
debt.
At September 28, 2007, the Company had working capital of $111.4
million, including cash and investments of $58.1 million, compared to
working capital of $110.5 million, including cash and investments of
$63.1 million, at December 31, 2006. The working capital increased by
$840 thousand and cash and investments decreased by $5.1 million during
the nine months ended September 28, 2007.
Net cash provided by operating activities was $10.9 million for the
nine months ended September 28, 2007 and $9.3 million for the nine months
ended September 29, 2006, 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 28, 2007 was $2.0 million. Accounts
receivable at September 28, 2007 of $23.9 million increased $1.2 million
from December 31, 2006 primarily due to the increase in sales in 2007
coupled with the timing of the shipments in the third quarter of 2007
compared to the fourth quarter of 2006. Inventory at September 28, 2007
of $36.6 million increased $1.7 million from December 31, 2006 primarily
due to increased projected sales volume for the fourth quarter of 2007
compared to the first quarter of 2007 as well as the introduction of new
products.
Net cash provided by investing activities of $1.6 million was
attributable to the net redemptions of short-term auction rate notes for
$2.7 million offset by purchases of equipment for $1.1 million for the
nine months ended September 28, 2007. 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 financing activities of $14.9 million for the nine
months ended September 28, 2007 was primarily attributable to the
repurchase of common stock for $16.7 million, offset by $1.2 million of
proceeds received upon the exercise of employee stock options and a $516
thousand income tax benefit from employee stock option exercises. Net
cash provided by financing activities was $241 thousand for the nine
months ended September 29, 2006 resulting primarily from the proceeds
received upon the exercise of employee stock options.
As of September 28, 2007, 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 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 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.
Recently Issued Accounting Pronouncements Not Yet Adopted
..........................................................
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. SFAS 157 applies under
other accounting pronouncements that require or permit fair value
measurements and does not require any new fair value measurements.
Management is evaluating the impact the adoption of this statement will
have on the Company's consolidated financial statements.
In February 2007, the FASB issued SFAS No. 159, "The Fair Value
Option for Financial Assets and Financial Liabilities" ("SFAS 159") which
permits entities to choose to measure many financial instruments and
certain other items at fair value that are not currently required to be
measured at fair value. SFAS 159 also establishes presentation and
disclosure requirements designed to facilitate comparisons between
entities that choose different measurement attributes for similar types
of assets and liabilities. SFAS 159 is effective for financial
statements issued for fiscal years beginning after November 15, 2007,
although early application is allowed. The Company is currently
evaluating the application of this statement and its effect on the
Company's financial position and results of operations.
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, 2006. 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 28, 2007 cash and
investment levels, a one-point change in interest rates would have an
approximate $581 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 $196 thousand and $212 thousand in the nine
months ended September 28, 2007 and September 29, 2006, 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(b). 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 28, 2007
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
2006 Annual Report on Form 10-K filed with the Securities
and Exchange Commission on February 20, 2007 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: October 18, 2007
EXCEL TECHNOLOGY, INC.
By: /s/ Alice Varisano
..........................
Alice Varisano,
Chief Financial Officer
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. 28, Sept. 29, Sept. 28, Sept. 29,
2007 2006 2007 2006
......... ......... ......... .........
Net income $ 3,913 $ 2,488 $ 3,913 $ 2,488
......... ......... ......... .........
......... ......... ......... .........
Weighted average common
shares outstanding 11,795 12,066 11,795 12,066
Weighted average common share
equivalents outstanding:
Stock options and
restricted stock 0 0 235 456
......... ......... ......... .........
Weighted average common shares
and common share equivalents
outstanding 11,795 12,066 12,030 12,522
......... ......... ......... .........
......... ......... ......... .........
Net income per share $ 0.33 $ 0.21 $ 0.33 $ 0.20
......... ......... ......... .........
......... ......... ......... .........
Nine Months Ended Nine Months Ended
................... ...................
Sept. 28, Sept. 29, Sept. 28, Sept. 29,
2007 2006 2007 2006
......... ......... ......... .........
Net income $ 13,081 $ 10,345 $ 13,081 $ 10,345
......... ......... ......... .........
......... ......... ......... .........
Weighted average common
shares outstanding 11,987 12,064 11,987 12,064
Weighted average common share
equivalents outstanding:
Stock options and
restricted stock 0 0 276 441
......... ......... ......... .........
Weighted average common shares
and common share equivalents
outstanding 11,987 12,064 12,263 12,505
......... ......... ......... .........
......... ......... ......... .........
Net income per share $ 1.09 $ 0.86 $ 1.07 $ 0.83
......... ......... ......... .........
......... ......... ......... .........
For the three and nine months ended September 28, 2007, there were 185
thousand and 158 thousand, respectively, stock options outstanding that
are antidulutive and are not included in the above income per share
calculations.
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.
EXHIBIT 31.1
CERTIFICATION
..............
I, Antoine Dominic, certify that:
1. I have reviewed this quarterly report on Form 100 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 13a0 15(e) and 15d0 15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules 13a0
15(f) and 15d0 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: October 18, 2007
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.;
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: October 18, 2007
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 28, 2007 (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: October 18, 2007
/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,:
(1) the Quarterly Report on Form 10-Q of the Company for the period
ended September 28, 2007 (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: October 18, 2007
/s/ Alice Varisano
.......................
Alice Varisano,
Chief Financial 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.