Coherent Inc.’s Lambda Physik to discontinue future litho product development

December 16, 2004 – Coherent Inc. today announced its Lambda Physik subsidiary would discontinue future product development and investments in the semiconductor lithography market due to market conditions. Lambda will continue to support its installed lithography base.

As a result of this decision, the Company expects to take an after-tax charge of between $3 and $6 million during the first quarter ending January 1, 2005. These charges are primarily related to excessive and obsolete inventories.

John Ambroseo, Coherent’s president and CEO, commented, “Based upon careful analysis of market conditions, Lambda management concluded its new 193nm LithoTex laser will not generate a satisfactory economic return and its deployment has been cancelled. The anticipated savings resulting from these transactions, which will begin in calendar 2005, will be disclosed during the upcoming first fiscal quarter earnings conference call January 25, 2005.”

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