GSI Group Inc. Investor Presentation

Important Information

The tender offer for outstanding common stock of Excel Technology, Inc.

(Excel) referred to in this presentation has not yet been commenced. Neither

this presentation, nor the description of the tender offer contained herein, is

an offer to purchase nor a solicitation of an offer to sell securities of Excel.

At the time the tender offer is commenced by Eagle Acquisition Corporation

(Purchaser), an indirect wholly owned subsidiary of GSI Group Inc. (GSI),

GSI and Purchaser will file with the Securities and Exchange Commission

(SEC) a Tender Offer Statement on Schedule TO containing an offer to

purchase, forms of letters of transmittal and other documents relating to the

tender offer, and Excel will file with the SEC a Solicitation/Recommendation

Statement on Schedule 14D-9 with respect to the tender offer. These

documents will be sent free of charge to the stockholders of Excel. These

documents will contain important information about the tender offer, and

stockholders

Excel

are

urged

read

them

carefully

when

they

become

available. Stockholders of Excel will be able to obtain a free copy of these

documents

(when

they

become

available)

and

other

documents

filed

Excel

or GSI with the SEC at the website maintained by the SEC at www.sec.gov.

In addition, stockholders will be able to obtain a free copy of these

documents (when they become available) from GSI by contacting GSI at 125

Middlesex Turnpike, Bedford, Massachusetts 01730, attention: Investor

Relations,

from

Excel

contacting

Excel

Research

Way,

East

Setauket, New York 11733, attention: Investor Relations.

Safe Harbor

Certain

matters

being

discussed

today

that

are

not

statements

historical

fact

constitute

forward-looking

statements relating to current or future financial performance, management's plans and objectives for

future operations, product plans and performance, management's assessment of market factors, and

statements

regarding

the

strategy

and

plans

the

Company.

Such

forward

looking

statements

are

made

pursuant

the

safe

harbor

provisions

the

Private

Securities

Litigation

Reform

Act

1995.

These

statements

are

not

guarantees

GSI

Group's

future

performance.

Listeners

are

cautioned

that

all

forward-looking statements are subject to a number of risks and uncertainties that could cause the

Company's

actual

results

the

future

differ

materially

from

these

forward-looking

statements.

These

risks and uncertainties are detailed in the Company's filings with the Securities and Exchange Commission,

including its 10-K, copies of which may be accessed through the SEC's website at http://www.sec.gov.

Current data and other statistical information used throughout this presentation are based on independent

industry publications, government publications, and reports by market research firms or other published

independent sources. Some data are also based on our good faith estimates, which are derived from our

review of internal surveys, as well the independent sources listed above. We believe that these sources are

reliable.

The

2007

pro

forma

information

for

the

Excel

Technology

acquisition

preliminary

and

has

not

been

audited.

A Compelling Combination of Laser and Precision

Technology Leaders

2007 Revenue: $160.0 million

2007 Adj. EBITDA: $23.9 million

2007 Revenue:

$317.8 million

2007 Adj. EBITDA

$45.5 million

Combined company better positioned to offer expanded portfolio of products

Leading designer and manufacturer of:

–

precision motion component products

–

lasers

–

laser systems

Leading worldwide supplier of :

–

precision motion component products

–

lasers

–

laser-based manufacturing systems

169

199

197

41%

43%

42%

120

160

200

240

2005

2006

2007

40%

41%

42%

43%

44%

45%

CAGR = 8

Building on Solid Historical Performance

Pro Forma Revenue

Pro Forma Gross Profit

Pro Forma Adj. EBITDA

Source: GSI and Excel filings

Note: Assumes no intercompany sales

399

468

478

100

200

300

400

500

600

2005

2006

2007

CAGR = 9%

15%

12%

100

2005

2006

2007

10%

13%

16%

19%

22%

25%

CAGR = 20%

Unique Value Creation

Expanded offerings in largest market

currently served: lasers

Expanded offerings in attractive businesses:

lasers, scanners

Strong operational business processes

Presence in India

Complementary laser technology,

including industrial YAG and fiber

lasers

Complementary motion technology

Systems know-how

Presence and operation in China

Long-term growth potential of laser-based solutions combined with need for

industry

consolidation

Broad combined product offerings, with expanded sales channels in Asia, including

China and India

Uniquely positioned to take on leading players with a complete set of laser

technologies:

pulsed,

ultrafast,

solid

state

and

fiber

GSI Brings to Excel

Excel Brings to GSI

Key Transaction Terms

Purchase Price

Timing

Closing Conditions

Other

Financing

$32 cash per Excel share

$309.9 million enterprise value

$360.5 million equity value, fully diluted

Anticipated to close in Q3 2008

Regulatory / government approvals

MAC clause

Available cash balances

Financing arranged by UBS

Structured as a tender offer

Key Financing Terms

Principle amount

$210 million

Rank/security

Senior unsecured notes from GSI (US) sub and warrants

exercisable into common stock from GSI parent

Maturity

5 years

Interest rate

11% per annum, payable semi annually in arrears

Optional redemption

After 1 year, up to 50% redeemable. Fully redeemable after 3

years

Warrants

purchase

GSI

stock

strike

price

$0.01

Financial Rationale

Game changing transaction unlocks value and establishes GSI as an industry leader

Creates conditions for valuation multiple expansion

–

Transforms

capital

markets’

view

GSI

from

niche

semiconductor

capital

equipment

supplier to a precision motion and laser leader

–

GSI achieves size and efficiency in a consolidating laser / precision motion industry

–

Reduces volatility in business performance due to cyclical semiconductor systems business

Conservative estimates show upwards of $6.5 million in 2009 and $8.7 million in 2010 pre-tax

synergies, with twice the upside potential

–

Consolidation of corporate headquarters

–

Integration and consolidation of scanning businesses

–

Rationalization of Germany and Japan field offices

Leverage combined distribution network to capture cross-selling opportunities

Moderately accretive to 2009 cash EPS on a post-synergy basis

Growth and Operational Strategy

We believe substantial synergies can be realized through the following steps

Capture substantial

growth

opportunities

Increase integration

core technologies

Leverage power

combined

sales

channels

Consolidate, integrate and standardize on a common operational infrastructure

Rationalize R&D and SG&A operations across GSI and Excel

Combined company competes in a roughly $1.3bn market

Adjacent

markets

are

even

larger

approximately

$8bn,

and

growing

double

digit rates

GSI has taken aggressive moves to relocate manufacturing and sales

resources to low-cost regions in closer proximity to customers

Excel brings substantial Asian presence

Increased integration of scanner, encoder and laser technology to offer

customers enhanced system and subsystem value

Broaden the combined company’s presence in key emerging high-growth

laser

segments

Cross-sales of products into existing channels, providing customers with

expanded competitive choices

Expand Asian presence

Continued focus on

Operational excellence

Strong new product development effort, with nearly

10% of sales devoted to R&D

Strong presence in North America and

gaining overseas, especially in Asia

Valuable IP and a critical set of core competencies

Growth achieved organically and through

selective acquisitions of complementary laser

technologies

Founded in 1985 as designer and manufacturer

of laser systems electro-optical products

Excel Investment Highlights

A leading broad-based laser technology company with unique core competencies

Galvanometer-

based scanners

High energy solid

state pulsed laser

systems

Laser micro-

machining systems

Marking and

Engraving Systems

Sealed CO2 lasers

High-powered solid

state and ultrafast

lasers

Light and color

measurement

systems

Optical products and

laser power systems

Complete systems employing

laser technology and

customized software for

welding, soldering, materials

analysis, and marking and

engraving

Excel Business Segments

Source: Excel Technology

2007 Revenue

Breakdown

A complete line of lasers and

laser subsystems for industrial

material processing and

research and development

Optical technology products

that measure light and control

light beams

Components and

Subsystems

Integrated Systems and

Workstations

Optical Products and

Laser Power Systems

Light and Color

Measurement Systems

High-Energy Solid-State

Pulsed Laser Systems

Laser Micro-Machining

Systems

High-Powered Solid-

State Lasers and

Ultrafast Lasers

Measurement of hard

drive flight

characteristics,

galvanometer scan head

systems

Excel Product Portfolio

Marking, engraving,

thin-film welding, textile

processing, and

semiconductor wafer

processing

Material processing,

marking and engraving,

ophthalmology, DNA

analysis, imaging and

printing

Marking, deep engraving,

micromachining, with

customized control

software

Scientific and research

applications, including

velocimetry,

spectroscopy, reaction

kinetics

Color testing for TV

displays, calibration of

digital cinematic products,

characterization of LEDs,

lamps and lighting

Marking, coding, and

engraving systems

Components and Subsystems

Diamond drilling and

processing, welding and

soldering, photomask

repair, chip failure

analysis

Integrated Systems

and Workstations

Sealed CO2

Lasers

Galvanometer-Based

Scanners

Marking and

Engraving Systems

Investment Highlights

Strong Balance

Sheet and Healthy

Operating Cash

Flows

Experienced

Management Team

with Track Record

of Success

Serving Multiple

Markets with Large

Adjacent Growth

Opportunities

Innovator and

Leader in Multiple

Core Markets

Long-Term, Repeat

Customer

Relationships

Unique Product Set

of Scanners,

Encoders and Laser

Technology

Company History

1968

1989

1994

1995

1996

1997

1998

1999

2000

2001

2002

2004

2005

2003

2006

2007

General Scanning

founded

Lumonics merger

GSI IPO

DRC, Spectron,

Westwind (PCB drill) acquisitions

MicroE (encoder)

acquisition

GSI purchases

systems business from Teradyne

Dr. Sergio Edelstein

assumes CEO position

Life Sciences business

divested

Suzhou, China

plant opened

Optics

Printers

Spindles

Trim

Mark

Repair

Scanners

Lasers

Encoders

GSI Business Segments

Laser material-processing and

high speed beam placement for

semiconductor processing

GSI has 30% share of this $400

million industry segment

Industry has few competitors

Product differentiation achieved

through superior speed and accuracy

Precision motion products used

in consumer electronics, medical,

government, aerospace, and

industrial manufacturing

GSI has 26% share of this $700

million industry segment

Highly diversified customer base

Product differentiation through

technological superiority

Increasing automation and

miniaturization in manufacturing

continues to drive demand

Source: Company management

2007 Revenue

Breakdown

Precision Technology

Semiconductor Systems

GSI Market Segments

Lasers is the Largest and Fastest Growing Market Served by GSI

Served

Market

Available

Market

Total

Market

Annual

Growth

Market

Position

Lasers

$300M

$1B

$7B

10%

Encoders

$150M

$300M

$1B

Scanners

$110M

$150M

Spindles

$100M

$130M

Laser Systems (Semi)

$400M

Laser Systems (Non-Semi)

$600M

None

Optics

Printers

Niche

$1B

Product Portfolio: Precision Technology

Components and subsystems for the OEM market

Market sizes are GSI estimates

Lasers and electromechanical

motors that move mirrors

Market size: $110 million

Market position: #3

Laser-based rulers measuring

movement to sub-microns

Market size: $150 million

Market position: #3

Pulsed, YAG, CO2, diode, and

fiber lasers

Market size: $300 million

Market position: niche

High speed drills for printed

circuit board holes

Market size: $100 million

Market position: #1

Thermal printers for patient

monitoring and defibrillators

Market size: $30 million

Market position: #1

Super-polished, super-flat

mirrors

Market size: $30 million

Market position: #1

Scanners

Encoders

Lasers

Spindles

Medical Printers

Optics

Precision Technology

Precision motion used in the manufacture of consumer electronics, medical products

Established customer base

Highly diversified

Product differentiation achieved through

—

Patented technology

—

Processing accuracy

Trends expected to benefit the Company

—

Continued high consumer demand for

electronics

—

Continued drive to miniaturize

—

Increased use of lasers in multiple end such

as industrial, automation, textile processing

and solar cell production

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

2002

2003

2004

2005

2006

2007

10%

20%

30%

40%

50%

60%

($ in millions)

2002

2003

2004

2005

2006

2007

External Revenue Total

$93.2

$102.8

$183.4

$172.6

$186.0

$183.4

Growth Rate

10%

78%

(6%)

(1%)

Gross Margin

35%

37%

35%

38%

40%

38%

Segment Trends

Commentary

Semiconductor Systems: Product Portfolio

Wafer repair to raise production

yield

Market

size:

$150

$250

million

Market position: #2

Production marking of silicon

wafers

Market size: $45 million

Market position: #1

Adjustment and tuning of mixed

signal chips

Market size: $50 million

Market position #1

Laser system solutions for semiconductor manufacturers

Market sizes are GSI estimates

Wafer Repair

Wafer Mark

Wafer Trim

Semiconductor Systems

Experts in laser material-processing and high speed precision beam placement

High levels of product penetration

Product

differentiation

achieved

through

—

Processing speed

—

Processing accuracy

Trends expected to benefit the Company

—

Continued high consumer demand for

electronics

—

Increasing demand for memory

—

Continued drive to miniaturize

—

Continued conversion to 300mm wafers

$20

$40

$60

$80

$100

$120

$140

$160

2002

2003

2004

2005

2006

2007

10%

20%

30%

40%

50%

60%

($ in millions)

2002

2003

2004

2005

2006

2007

Revenue

$65.9

$82.7

$146.6

$88.2

$127.6

$134.4

Growth Rate

25%

77%

(40%)

45%

Gross Margin

18%

32%

44%

40%

41%

Trends by Product Lines

Commentary

2007 Combined Company Highlights

Proforma

Note: Assumes no intercompany sales

(in millions)

Revenues

$317.8

$160.0

$477.8

Gross profit

$126.7

$69.8

$196.5

Gross margin

39.9%

43.6%

41.1%

Operting

income

$29.3

$21.3

$50.6

Operating income margin

9.2%

13.3%

10.6%

Adj. EBITDA

$45.5

$23.9

$69.4

Adj. EBITDA margin

14.3%

14.9%

14.5%

Capex

$4.8

$1.6

$6.4

Capex

as % of revenues

1.5%

1.0%

1.3%

Pro Forma Performance

Note: Assumes no intercompany sales

Revenue

2005

2006¹

2007²

Q1 2008

Excel

137.7

154.5

160.0

39.3

GSI

260.8

313.6

317.8

71.7

Combined

398.5

468.1

477.8

111.0

Gross Profit

Excel

65.4

68.9

69.8

17.1

GSI

103.7

130.3

126.7

27.3

Combined

169.1

199.2

196.5

44.4

42%

43%

41%

40%

Adj. EBITDA

Excel

22.4

27.5

23.9

5.4

GSI

25.9

44.4

45.5

5.3

Combined

48.3

71.9

69.4

10.7

12%

15%

10%

(1)

Excel results exclude merger related costs

(2)

Excel results include stock-based compensation of $2.8 million