XLTC Excel Tech (MM)

Excel Technology, Inc. (NASDAQ: XLTC) today announced the results for the quarter and year ended December 31, 2006. Revenues of $38.3 million and $154.5 million for the quarter and year ended December 31, 2006, respectively, were 5.2% and 12.2% higher than the $36.4 million and $137.7 million for the quarter and year ended December 31, 2005, respectively. Pre-tax profits were $5.1 million for the fourth quarter of this year compared to $6.0 million in the same period last year, a decrease of 15.0%. For the year ended December 31, 2006, pre-tax profits were $20.4 million compared to $20.7 million in 2005, a decrease of 1.4%. Net income was $3.7 million for the fourth quarter of this year as compared to $4.4 million in the same period last year, a decrease of 15.9%. For the year ended December 31, 2006, net income was $14.0 million compared to $15.2 million for the same period in 2005. Net income per share on a diluted basis of $0.30 for the quarter ended December 31, 2006 was 16.7% lower than the $0.36 per share on a diluted basis reported for the same period in 2005. For the year ended December 31, 2006, net income per share on a diluted basis was $1.12 in 2006 compared to $1.24 in 2005. Non-GAAP Net Income and EPS: Net income for 2006 would have been $17.5 million (unaudited) excluding merger, merger related and deferred compensation and stock based compensation expenses (�special items�) of $5.2 million or $3.5 million net of tax. These �special items� had a $0.28 cents per diluted share effect on EPS. EPS without these charges would have been $1.40 per diluted share for the year ended December 31, 2006 (unaudited). Antoine Dominic, Chief Executive Officer, stated, "We are quite pleased with our revenues for the year and the quarter. Our gross profit and margins were affected negatively during the quarter due to a provision for excess inventory and lower margins associated with a newly introduced product during the initial phase of production. During the year we launched several new products that helped us in achieving our record bookings of $157 million. Our market development efforts, which were hindered in 2006 due to the pending merger are now back on track and we plan to further expand our organic growth. Having just completed our sixth consecutive year of growth in revenues and profits (excluding merger costs), we hope to build on these achievements in 2007. In addition to increasing our market presence and new product introductions, we plan to continue our emphasis on increased operational efficiencies that will result in higher profit growth rates in relation to sales. We have a healthy backlog going into 2007 and we are optimistic about our future.� Alice Hughes Varisano, Chief Financial Officer, concluded, "The Company increased its sales 12.2% to $154.5 million for the year ended December 31, 2006. Pre tax profits increased 23.7% (excluding special items) to $25.6 million compared to the same period last year. Net income after tax increased 15.1% (excluding special items) to $17.5 million compared to 2005. The pre-tax profits increased more than net income due to the effective tax rate increasing from 26.4% to 31.4% in 2006. The increase in the tax rate was due in part to increased non-deductible expenses and the reduction of a tax exposure liability due to a settlement in 2005 that did not reoccur in 2006. The Company increased its cash by $12.8 million resulting in a cash and investment balance of $63.1 million as of December 31, 2006, with no debt. The Company utilized $2.0 million of cash during the quarter in order to repurchase 79,500 shares of its stock. Year to date bookings at December 31, 2006 were $157 million, an increase of $13 million over the same period in the prior year. The backlog at the end of the fourth quarter 2006 was $36 million an increase of $3 million compared to $33 million backlog for the fourth quarter of 2005. Now that the failed merger is behind the Company, we are focused on building upon our achievements of 2006.� This news release contains forward-looking statements, which are based on current expectations. Actual results could differ materially from those discussed or implied in the forward-looking statements as a result of various factors including future economic, competitive, regulatory, and market conditions, future business decisions, market acceptance of the Company�s products, and those factors discussed in the Company�s Form 10-K for the year ended December 31, 2005. In light of the significant uncertainties inherent in such forward-looking statements, they should not be regarded as a representation that the Company�s objectives and plans will be achieved, and they should not be relied upon by investors when making an investment decision. Words such as "believes," "anticipates," "expects," "intends," "may," and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. Excel and its wholly owned subsidiaries manufacture and market photonics-based solutions, consisting of laser systems and electro-optical components, primarily for industrial and scientific applications. FINANCIAL SUMMARY (unaudited and in thousands, except per share data) � FOR THE QUARTER FOR THE YEAR ENDED DECEMBER 31 ENDED DECEMBER 31 2006� 2005� 2006� 2005� Net Sales & Services $ 38,343� $ 36,364� $ 154,496� $ 137,717� Cost of Sales and Services $ 22,713� $ 19,227� $ 85,602� $ 72,295� Gross Profit $ 15,630� $ 17,137� $ 68,894� $ 65,422� Operating Expenses: Selling & Marketing $ 4,393� $ 4,865� $ 18,745� $ 18,959� General & Administrative $ 3,362� $ 2,952� $ 13,051� $ 12,448� Research and Development $ 3,716� $ 3,629� $ 14,523� $ 14,477� Operating Income (without merger related & deferred compensation expenses) $ 4,159� $ 5,691� $ 22,575� $ 19,538� Merger and Merger Related and Deferred Compensation Expense $ -� $ -� $ (5,069) $ -� Interest Income $ 774� $ 386� $ 2,545� $ 1,180� Other Income (Expense) $ 162� $ (115) $ 391� $ (47) Pre-Tax Income $ 5,095� $ 5,962� $ 20,442� $ 20,671� Provision for Income Taxes $ 1,421� $ 1,610� $ 6,423� $ 5,463� Net Income $ 3,674� $ 4,352� $ 14,019* $ 15,208� Net Income Per Common Share - Diluted $ 0.30� $ 0.36� $ 1.12* $ 1.24� Weighted Average Common Shares Outstanding - Diluted 12,437� 12,254� 12,488� 12,246� � Reconciliation of GAAP to non-GAAP net income and EPS � * Net income as reported under GAAP of $14,019, excluding the merger, merger related and deferred compensation expenses, and stock based compensation (�special items�) net of tax effect, of approximately $3,530 for the year ended December 31, 2006 (or 28 cents per diluted share) would have been $17,549 (unaudited).���EPS without these charges would have been $1.40 per diluted share for the year ended December 31, 2006 (unaudited). BALANCE SHEET & SELECTED FINANCIAL DATA (unaudited ) � DECEMBER 31, 2006 DECEMBER 31, 2005 Cash $ 9,903� $ 16,303� Investments $ 53,220� $ 34,000� Accounts Receivable, net $ 22,716� $ 22,879� Inventory $ 34,906� $ 30,269� Other Current Assets $ 3,445� $ 3,013� Total Current Assets $ 124,190� $ 106,464� Property, Plant & Equipment, net $ 25,503� $ 25,983� Other Non-Current Assets & Goodwill $ 32,286� $ 31,591� Total Assets $ 181,979� $ 164,038� Accounts Payable $ 6,386� $ 4,829� Accrued Expenses and Other Current Liabilities $ 7,256� $ 6,979� Total Current Liabilities $ 13,642� $ 11,808� Other Non-Current Liabilities $ 4,546� $ 3,492� Minority Interest in Net Income of Subsidiary $ 66� $ 48� Stockholders' Equity $ 163,725� $ 148,690� Total Liabilities & Stockholders' Equity $ 181,979� $ 164,038� Working Capital $ 110,548� $ 94,656�