Milpitas, California. July 31, 2008.

Nanometrics Reports Second Quarter 2008 Financial Results

Nanometrics Incorporated (Nasdaq: NANO), a leading supplier of advanced process control metrology equipment, today announced financial results for its second quarter ended June 28, 2008.

Revenues for the second quarter were $23.8 million, representing a 32% decrease from first quarter 2008 revenues of $34.7 million and a 36% decrease from second quarter 2007 revenues of $37.3 million. Net loss for the second quarter was $18.9 million, or $1.02 per share. This compares to a net loss of $0.7 million, or $0.04 per share, for the first quarter of 2008 and a net loss of $0.1 million, or $0.01 per share, for the second quarter of 2007.

The second quarter net loss includes non-cash expenses of $16.6 million. We took a FAS 144 asset impairment charge of $13.2 million, primarily consisting of intangible assets related to the 2006 acquisitions of Accent Optical and Soluris. Other non-cash charges include $1.3 million for amortization of acquired intangible assets, $1.1 million for stock-based compensation expenses and $1.0 million for depreciation.

Operating expenses include $0.3 million in severance charges related to a 3% workforce reduction during the second quarter.

“In a difficult market environment, we are gratified to see the benefit of our restructuring efforts evidenced in part by achieving 42% gross margins in spite of the sharp decline in revenues,” commented Tim Stultz, president and chief executive officer. “So far this year, we have also strengthened our product portfolio by launching new solutions in every one of our primary served markets as well as completing the acquisition of Tevet, which has already led to new customer wins in the solar photovoltaics industry.”

“We took an impairment charge in the second quarter that will reduce our amortization of acquired intangible assets expense by approximately $700,000 per quarter,” continued Dr. Stultz. “We recently completed a $13.5 million real estate loan transaction on our Milpitas headquarters that will improve our cash position. Going forward we will continue to aggressively seek ways to improve both our operational and capital efficiencies.”

Selected Revenue Segment Information

Revenues by Product
Automated Metrology: 42%
Integrated Metrology: 13%
Materials Characterization: 23%
Service: 22%

Revenues by Region
Japan: 38%
South Korea: 19%
United States: 17%
ROW: 26%

View Q2 2008 consolidated balance sheets and statement of operations [pdf]

Conference Call Details
A conference call to discuss the second quarter results will be held later today at 4:30 p.m. Eastern Daylight Time (1:30 p.m. PDT). To participate in the conference call, the dial-in numbers are 800-659-1966 for domestic callers and 617-614-2711 for international callers.  The passcode is 13506760.  A live and recorded webcast will be made available on the investor page of the Nanometrics website at www.nanometrics.com.

About Nanometrics
Nanometrics is a leader in the design, manufacture and marketing of high-performance process control metrology systems used in semiconductor manufacturing.  Nanometrics standalone and integrated metrology systems measure various thin film properties, critical dimensions, overlay control and optical, electrical and material properties, including the structural composition of silicon and compound semiconductor devices, during various steps of the manufacturing process. These systems enable semiconductor manufacturers to improve yields, increase productivity and lower their manufacturing costs. The company 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.

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 remain subject to adjustment in connection with the preparation of Nanometrics’ financial statements and periodic report on Form 10-Q for the quarter ended June 28, 2008. For additional information and considerations regarding the risks faced by Nanometrics, see its annual report on Form 10-K, as amended, for the year ended December 29, 2007 as filed with the Securities and Exchange Commission, as well as other periodic reports filed with the SEC from time to time. 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. Nanometrics disclaims any obligation to update information contained in any forward-looking statement.

Contact
Investor Relations:
Claire McAdams
Headgate Partners LLC
530-265-9899 tel; 530-265-9699 fax
claire@headgatepartners.com

Company Contact:
Gary Schaefer, CFO
408-545-6000 tel; 408-232-5910 fax
gschaefer@nanometrics.com