Onto Innovation (ONTO) 8-K Nanometrics Reports Third Quarter 2008 Financial Results

Exhibit 99.1

Nanometrics Incorporated 1550 Buckeye Drive Milpitas, CA 95035 Tel: 408.545.6000 Fax: 408.232.5910 www.nanometrics.com

Investor Relations Contact:	Company Contact:
Claire McAdams	Bruce Crawford, CFO
Headgate Partners LLC	Nanometrics Incorporated
530.274.0551, 530.274.0531 fax	408.545.6000, 408.232.5910 fax
email: claire@headgatepartners.com	email: bcrawford@nanometrics.com

Nanometrics Reports Third Quarter 2008 Financial Results

Gross Margin Increases to 44%, SG&A Expenses Down 9%, $22 Million in Cash

MILPITAS, Calif., October 30, 2008 — Nanometrics Incorporated (Nasdaq: NANO), a leading supplier of advanced process control metrology equipment, today announced financial results for its third quarter ended September 27, 2008.

Revenues for the third quarter were $23.1 million, down 3% from $23.8 million for the second quarter of 2008 and down 40% from $38.6 million for the third quarter of 2007.

Total gross margin for the third quarter was 44.1%, up from 42.4% for the second quarter of 2008 and roughly flat compared to third quarter 2007 gross margin of 44.2%. Product gross margin was 50.0%, roughly flat compared to 50.5% for the second quarter of 2008 and 49.6% for the third quarter of 2007. Service gross margin was 30.0%, up from 13.8% for the second quarter of 2008 and 10.3% for the third quarter of 2007.

Total research and development, selling, general and administrative expenses were $13.6 million in the third quarter, down 6% from $14.6 million in the second quarter of 2008 and down 3% from $14.0 million in the third quarter of 2007.

Net loss for the third quarter was $60.5 million, or $3.25 per share. This compares to a net loss of $18.9 million, or $1.02 per share, for the second quarter of 2008 and net income of $2.0 million, or $0.11 per diluted share, for the third quarter of 2007.

Net loss for the third quarter includes an asset impairment charge of $55.3 million related to goodwill and intangible assets. Also included in the net loss for the third quarter are a restructuring charge of $0.7 million, stock-based compensation expense of $1.1 million, amortization of acquired intangible assets of $0.6 million and depreciation expense of $0.9 million.

“While macro-economic conditions continue to weaken and semiconductor capital spending has decelerated sharply, I’m pleased to announce that we demonstrated further improvements to our business model in the third quarter,” commented Tim Stultz, president and chief executive officer. “Revenues declined by 3% sequentially, yet we grew our gross margin and decreased our operating expenses, which brought us closer to our goal of $25 million revenue break-even on a cash basis. We added more than $12 million to our cash balance during the quarter, which reflects a minimal amount of cash losses from operations, improved working capital management and the completion of a $13.5 million real estate loan on our Milpitas headquarters. We also used more than $1.3 million of our cash for stock repurchases during the quarter. Our third quarter results are indicative of our commitment to aggressively seek ways to improve our operational and capital efficiencies. Today Nanometrics is well-equipped to face the current market challenges, with a breadth of competitive products, solid financial footing and an improved business model.”

Selected Revenue Segment Information

Revenues by Product			Revenues by Region
Automated Metrology	27	%	United States	34	%
Integrated Metrology	31	%	Japan	30	%
Materials Characterization	12	%	South Korea	13	%
Service	30	%	ROW	23	%

Conference Call Details

A conference call to discuss the third quarter results will be held later today at 6:00 p.m. Eastern Daylight Time (3:00 p.m. PDT). To participate in the conference call, the dial-in numbers are 866-578-5788 for domestic callers and 617-213-8057 for international callers. The passcode is 17755429. 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 primarily 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, compound semiconductor and photovoltaic devices, during various steps of the manufacturing process. These systems enable device 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 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 September 27, 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 30, 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.

NANOMETRICS INCORPORATED

CONSOLIDATED BALANCE SHEETS

(In thousands except share amounts)

(Unaudited)

		September 27, 2008			December 29, 2007
ASSETS
Current assets:
Cash and cash equivalents		$	21,779		$	14,919
Accounts receivable, net of allowances of $311 and $323			21,333			34,855
Inventories			33,951			33,343
Inventories - delivered systems			175			785
Prepaid expenses and other			2,743			2,598
Total current assets			79,981			86,500
Property, plant and equipment, net			42,181			44,419
Goodwill and indefinite lived intangible assets			—			52,532
Intangible assets, net			7,224			21,820
Other assets			1,816			1,805
Total assets		$	131,202		$	207,076
LIABILITIES AND STOCKHOLDERS' EQUITY	��
Current liabilities:
Revolving line of credit		$	—		$	—
Accounts payable			8,055			13,931
Accrued payroll and related expenses			3,804			4,514
Deferred revenue			988			2,501
Other current liabilities			7,750			7,243
Income taxes payable			244			1,101
Current portion of debt obligations			468			148
Total current liabilities			21,309			29,438
Deferred income taxes			382			382
Other long- term liabilities			558			1,283
Debt obligations due after one year			13,162			129
Total liabilities			35,411			31,232
Stockholders’ equity
Common stock, $0.001 par value; 47,000,000 shares authorized; 18,297,003 and 18,620,682, respectively, outstanding			18			19
Additional paid-in capital			189,086			187,180
Accumulated deficit			(94,002	)		(13,917	)
Accumulated other comprehensive income			689			2,562
Total stockholders’ equity			95,791			175,844
Total liabilities and stockholders’ equity		$	131,202		$	207,076

NANOMETRICS INCORPORATED

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended						Nine Months Ended
	September 27, 2008			September 29, 2007			September 27, 2008			September 29, 2007
Net revenues:
Products	$	16,311		$	33,306		$	62,744		$	98,564
Service		6,826			5,341			18,882			14,533
Total net revenues		23,137			38,647			81,626			113,097
Costs of net revenues:
Cost of products		8,150			16,773			30,974			50,628
Cost of service		4,778			4,791			14,548			15,459
Total costs of net revenues		12,928			21,564			45,522			66,087
Gross profit		10,209			17,083			36,104			47,010
Operating expenses:
Research and development		4,430			4,661			13,107			13,986
Selling		4,280			4,603			13,963			14,636
General and administrative		4,935			4,783			15,761			16,538
Amortization of intangible assets		600			1,285			3,215			4,497
Restructuring charge		655			2,128			1,525			2,128
Asset impairment		55,332			—			68,545			—
Gain on sale of assets		—			(2,100	)		—			(2,100	)
Total operating expenses		70,232			15,360			116,116			49,685
Income (loss) from operations		(60,023	)		1,723			(80,012	)		(2,675	)
Other income (expense):
Interest income		24			69			156			121
Interest expense		(240	)		(56	)		(343	)		(141	)
Other, net		142			382			564			(40	)
Total other income (expense), net		(74	)		395			377			(60	)
Income (loss) before income tax provision (benefit)		(60,097	)		2,118			(79,635	)		(2,735	)
Income tax provision (benefit)		350			110			450			(2	)
Net income (loss)	$	(60,447	)	$	2,008		$	(80,085	)	$	(2,733	)
Net income (loss) per share:
Basic	$	(3.25	)	$	0.11		$	(4.31	)	$	(0.15	)
Diluted	$	(3.25	)	$	0.11		$	(4.31	)	$	(0.15	)
Shares used in per share computation:
Basic		18,574			18,278			18,599			17,931
Diluted		18,574			18,676			18,599			17,931