Nanometrics Announces a Profitable Second Quarter of 2005

MILPITAS, Calif.--(BUSINESS WIRE)--July 28, 2005--Nanometrics Incorporated (Nasdaq:NANO) today reported financial results for the second quarter of 2005.

Total revenues for the second quarter of 2005 were $18.8 million, an increase of 16% compared to the second quarter of 2004. The increase in revenues during the second quarter of 2005 compared to the same period in 2004 resulted from increased demand for Nanometrics' semiconductor process control metrology equipment, particularly in Taiwan. Net income in the second quarter of 2005 was $4.7 million, or $0.35 per diluted share, compared to net income of $1.3 million, or $0.10 per diluted share, for the same period last year. The second quarter results include receipt of a merger termination fee in the amount of $8.3 million in connection with the termination of Nanometrics' merger agreement with August Technology Corporation. The second quarter results also include a $2.2 million charge for an asset impairment of certain assets in Nanometrics' Japanese operations.

For the six months ended July 2, 2005, total net revenues were $42.3 million, an increase of 42% from the same period in 2004. Net income for the first six months of 2005 was $7.3 million, or $0.55 per diluted share, compared to net income of $90,000, or $0.01 per diluted share, for the same period last year. Nanometrics' financial position continues to be strong with cash and short-term investments totaling $45.2 million.

About Nanometrics: Nanometrics Incorporated is a leading supplier of advanced integrated and standalone metrology equipment used in the semiconductor industry. The Company's corporate office is located at 1550 Buckeye Drive, Milpitas, CA 95035, with sales and service offices worldwide. Nanometrics is traded on NASDAQ under the symbol NANO. Nanometrics' website is http://www.nanometrics.com. An earnings conference call will be held on July 28, 2005 at 8:00 A.M. Pacific Time. To participate in the earnings conference call, the dial-in numbers are 800-591-6923 in the United States or 617-614-4907 for international calls. The passcode is 70223098.





                       NANOMETRICS INCORPORATED
                 CONDENSED CONSOLIDATED BALANCE SHEETS
              (Amounts in thousands except share amounts)
                              (Unaudited)

                                                  July 2,   January 1,
                                                   2005        2005
ASSETS
                                              ----------- ------------
CURRENT ASSETS:
  Cash and cash equivalents                   $   26,319   $   15,949
  Short-term investments                          18,848       17,919
  Accounts receivable, net of allowances of
   $596 and $603                                  24,499       22,222
  Inventories                                     25,421       25,494
  Prepaid expenses and other                         877          944
                                                ---------    ---------

Total current assets                              95,964       82,528

Property, plant and equipment, net                45,236       49,035

Intangible assets                                    771          924

Other assets                                       1,410        1,282
                                                ---------    ---------

  TOTAL                                       $  143,381   $  133,769
                                                =========    =========

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
  Accounts payable                            $    2,991   $    3,146
  Accrued payroll and related expenses             2,644        2,206
  Deferred revenue                                 2,798        2,742
  Other current liabilities                        3,649        1,840
  Income taxes payable                             1,106        1,515
  Current portion of debt obligations              2,248        1,164
                                                ---------    ---------
Total current liabilities                         15,436       12,613

Deferred income taxes and other long-term
 liabilities                                         118          930

Debt obligations                                   1,668        2,070
                                                ---------    ---------
Total liabilities                                 17,222       15,613
                                                ---------    ---------
SHAREHOLDERS' EQUITY:
  Common stock, no par value; 50,000,000
   shares authorized; 12,762,007 and
   12,566,636 outstanding                        105,494      104,191
  Retained earnings                               19,371       12,034
  Accumulated translation adjustment               1,294        1,931
                                                ---------    ---------
Total shareholders' equity                       126,159      118,156
                                                ---------    ---------
  TOTAL                                       $  143,381   $  133,769
                                                =========    =========






                       NANOMETRICS INCORPORATED
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
           (Amounts in thousands, except per share amounts)
                              (Unaudited)

                              Three Months Ended    Six Months Ended
                             -------------------- --------------------
                               July 2,   July 3,    July 2,    July 3,
                                2005      2004       2005       2004
                             ---------- --------- --------- ----------
NET REVENUES:
  Product sales               $ 16,654  $ 14,174  $ 37,820  $  25,837
  Service                        2,170     2,037     4,495      4,045
                                -------   -------   -------   --------

  Total net revenues            18,824    16,211    42,315     29,882
                                -------   -------   -------   --------

COSTS AND EXPENSES:
  Cost of product sales          8,334     5,922    18,084     11,325
  Cost of service                2,608     1,648     5,181      3,259
  Research and development       3,656     2,670     6,835      6,159
  Selling                        2,824     3,091     5,969      6,157
  General and administrative     2,400     1,363     4,398      2,658
  Asset impairment               2,232        --     2,232         --
  Merger termination fee        (8,300)       --    (8,300)        --
                                -------   -------   -------   --------
  Total costs and expenses      13,754    14,694    34,399     29,558
                                -------   -------   -------   --------

INCOME FROM OPERATIONS           5,070     1,517     7,916        324

OTHER INCOME (EXPENSE):
  Interest income                  193        49       323        105
  Interest expense                 (17)      (21)      (35)       (50)
  Other, net                      (206)     (182)     (476)      (185)
                                -------   -------   -------   --------
Total other income, net            (30)     (154)     (188)      (130)
                                -------   -------   -------   --------

INCOME BEFORE INCOME TAXES       5,040     1,363     7,728        194

PROVISION FOR INCOME TAXES        (308)      (61)     (391)      (104)
                                -------   -------   -------   --------

NET INCOME                    $  4,732  $  1,302  $  7,337  $      90
                                =======   =======   =======   ========

NET INCOME PER SHARE:
   Basic                      $   0.37  $   0.11  $   0.58  $    0.01
                                =======   =======   =======   ========
   Diluted                    $   0.35  $   0.10  $   0.55  $    0.01
                                =======   =======   =======   ========

SHARES USED IN PER SHARE
 COMPUTATION:
   Basic                        12,629    12,262    12,602     12,226
                                =======   =======   =======   ========
   Diluted                      13,374    13,292    13,414     13,445
                                =======   =======   =======   ========

Contacts

Nanometrics, Incorporated
Paul Nolan, 408-435-9600 x122

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