Milpitas, California. July 27, 2006.

Nanometrics Reports Financial Results for the Second Quarter of 2006

Nanometrics Incorporated (Nasdaq: NANO), a leading supplier of advanced integrated and standalone metrology equipment to the semiconductor industry, today announced its results for the second quarter ended July 1, 2006.

Revenues for the second quarter of 2006 were a record $23.4 million, representing a 23 percent increase over first quarter 2006 revenues of $19.0 million and a 25 percent increase from restated revenues of $18.7 million for the second quarter of 2005. Net loss for the second quarter of 2006 was $2.2 million or $0.16 per share. This compares to a net loss of $1.3 million or $0.10 per share for the first quarter of 2006 and net income of $4.5 million or $0.34 per diluted share for the restated second quarter of 2005.

Included in the net loss for the second quarter of 2006 is a non-cash charge of $1.2 million for stock-based compensation expenses as required with the adoption of Financial Accounting Standard 123R.

“We are pleased to report a record revenue quarter for Nanometrics,” commented Douglas J. McCutcheon, chief financial officer. “With a 23 percent sequential increase over the first quarter, revenues came in at the high end of our guidance range. However, we incurred several unanticipated charges to product cost of sales in the quarter as well as a decrease in our service gross margin. Those two factors, combined with increased operating and stock-based compensation expenses attributable to the Soluris, Inc. acquisition, resulted in a net loss for the second quarter. While we are disappointed by the loss, we believe the impact of the unanticipated costs is behind us.”

John Heaton, Nanometrics president and chief executive officer added, “While we are happy to be announcing record revenues for the quarter, our recent trend of improved operating performance has taken a temporary setback. For the last several quarters, our team has been focused on completing two acquisitions as well as achieving Sarbanes-Oxley compliance. Looking towards the second half of 2006, we remain encouraged by the rational growth of spending by our customers and expect to return to our trend towards achieving profitability and our target operating model for Nanometrics.”

Q2 2006 consolidated balance sheet and statements of operations [pdf]

About Nanometrics
Nanometrics is a leader in the design, manufacture and marketing of high-performance process control metrology systems used in semiconductor manufacturing. Nanometrics metrology systems measure various thin film properties, critical circuit dimensions and layer-to-layer circuit alignment (overlay) during various steps of the manufacturing process, enabling semiconductor and integrated circuit manufacturers to improve yields, increase productivity and lower their manufacturing costs. Nanometrics maintains its headquarters in Milpitas, California, with sales and service offices worldwide. Nanometrics is traded on the Nasdaq Global Market under the symbol NANO. Nanometrics’ website is: http://www.nanometrics.com.

A conference call to discuss results for the second quarter of 2006 and the recently-announced close of Nanometrics’ acquisition of Accent Optical will be held today, July 27, 2006, at 4:30 p.m. ET (1:30 p.m. PT). To participate in the earnings conference call, the dial-in numbers are (866) 314-4483 in the United States or (617) 213-8049 for international calls. The passcode is 94252825. If you are unable to participate during the live conference call, a webcast will be made available on the “Investors” section of the Nanometrics website.

Forward Looking Statements
This press release contains forward-looking statements including, but not limited to, statements regarding Nanometrics’ expected results for its most recently completed fiscal quarter, which may be subject to adjustment in our quarterly report on 10-Q as well as statements made by our CEO and CFO concerning the Company's expected operating performance and profitability in future periods. These statements relate to future events and involve known and unknown risks, uncertainties and other factors that may cause Nanometrics’ actual financial results, levels of activity, performance or achievements to differ materially from those expressed or implied by the forward-looking statements. Forward-looking statements are only predictions and actual events or results may differ materially. Nanometrics cannot provide any assurance that its future results will meet expectations. For additional information and considerations regarding the risks faced by Nanometrics, see its annual report on Form 10-K for the year ended December 31, 2005 as filed with the Securities and Exchange Commission, as well as other periodic reports filed with the SEC from time to time including its quarterly reports on Form 10-Q. Although Nanometrics believes that the expectations reflected in the forward-looking statements are reasonable, Nanometrics cannot guarantee future results, levels of activity, performance or achievements. In addition, neither Nanometrics nor any other person assumes responsibility for the accuracy or completeness of these forward-looking statements. Nanometrics disclaims any obligation to update information contained in any forward-looking statement.

Contact:
Doug McCutcheon
Nanometrics
408.435.9600