MIRA INFORM REPORT

Report Date :

11.11.2013

IDENTIFICATION DETAILS

Name :	NANOMETRICS INCORPORATED
Registered Office :	1550 Buckeye Drive, Milpitas, CA, 95035, Santa Clara County
Country :	United States
Financials (as on) :	29.12.2012
Date of Incorporation :	18.01.2005
Legal Form :	Public Parent
Line of Business :	Subject provider of advanced, high-performance process control metrology and inspection systems used primarily in the fabrication of integrated circuits, high-brightness (HB) light emitting diodes (LEDs), data storage devices and solar photovoltaics (solar PV).
No. of Employees :	536

RATING & COMMENTS

MIRA’s Rating :

B

RATING		STATUS	PROPOSED CREDIT LINE
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small

Status :	Moderate
Payment Behaviour :	Slow but correct
Litigation :	Clear

NOTES :

Any query related to this report can be made on e-mail: infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – March 31^st, 2013

Country Name	Previous Rating (31.12.2012)	Current Rating (31.03.2013)
United States	A1	A1

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

UNITED STATES - ECONOMIC OVERVIEW

The US has the largest and most technologically powerful economy in the world, with a per capita GDP of $49,800. In this market-oriented economy, private individuals and business firms make most of the decisions, and the federal and state governments buy needed goods and services predominantly in the private marketplace. US business firms enjoy greater flexibility than their counterparts in Western Europe and Japan in decisions to expand capital plant, to lay off surplus workers, and to develop new products. At the same time, they face higher barriers to enter their rivals' home markets than foreign firms face entering US markets. US firms are at or near the forefront in technological advances, especially in computers and in medical, aerospace, and military equipment; their advantage has narrowed since the end of World War II. The onrush of technology largely explains the gradual development of a "two-tier labor market" in which those at the bottom lack the education and the professional/technical skills of those at the top and, more and more, fail to get comparable pay raises, health insurance coverage, and other benefits. Since 1975, practically all the gains in household income have gone to the top 20% of households. Since 1996, dividends and capital gains have grown faster than wages or any other category of after-tax income. Imported oil accounts for nearly 55% of US consumption. Crude oil prices doubled between 2001 and 2006, the year home prices peaked; higher gasoline prices ate into consumers' budgets and many individuals fell behind in their mortgage payments. Oil prices climbed another 50% between 2006 and 2008, and bank foreclosures more than doubled in the same period. Besides dampening the housing market, soaring oil prices caused a drop in the value of the dollar and a deterioration in the US merchandise trade deficit, which peaked at $840 billion in 2008. The sub-prime mortgage crisis, falling home prices, investment bank failures, tight credit, and the global economic downturn pushed the United States into a recession by mid-2008. GDP contracted until the third quarter of 2009, making this the deepest and longest downturn since the Great Depression. To help stabilize financial markets, in October 2008 the US Congress established a $700 billion Troubled Asset Relief Program (TARP). The government used some of these funds to purchase equity in US banks and industrial corporations, much of which had been returned to the government by early 2011. In January 2009 the US Congress passed and President Barack OBAMA signed a bill providing an additional $787 billion fiscal stimulus to be used over 10 years - two-thirds on additional spending and one-third on tax cuts - to create jobs and to help the economy recover. In 2010 and 2011, the federal budget deficit reached nearly 9% of GDP. In 2012 the federal government reduced the growth of spending and the deficit shrank to 7.6% of GDP. Wars in Iraq and Afghanistan required major shifts in national resources from civilian to military purposes and contributed to the growth of the budget deficit and public debt. Through 2011, the direct costs of the wars totaled nearly $900 billion, according to US government figures. US revenues from taxes and other sources are lower, as a percentage of GDP, than those of most other countries. In March 2010, President OBAMA signed into law the Patient Protection and Affordable Care Act, a health insurance reform that will extend coverage to an additional 32 million American citizens by 2016, through private health insurance for the general population and Medicaid for the impoverished. Total spending on health care - public plus private - rose from 9.0% of GDP in 1980 to 17.9% in 2010. In July 2010, the president signed the DODD-FRANK Wall Street Reform and Consumer Protection Act, a law designed to promote financial stability by protecting consumers from financial abuses, ending taxpayer bailouts of financial firms, dealing with troubled banks that are "too big to fail," and improving accountability and transparency in the financial system - in particular, by requiring certain financial derivatives to be traded in markets that are subject to government regulation and oversight. In December 2012, the Federal Reserve Board announced plans to purchase $85 billion per month of mortgage-backed and Treasury securities in an effort to hold down long-term interest rates, and to keep short term rates near zero until unemployment drops to 6.5% from the December rate of 7.8%, or until inflation rises above 2.5%. Long-term problems include stagnation of wages for lower-income families, inadequate investment in deteriorating infrastructure, rapidly rising medical and pension costs of an aging population, energy shortages, and sizable current account and budget deficits - including significant budget shortages for state governments

Source : CIA

Company name and address

Nanometrics Incorporated

1550 Buckeye Drive
Milpitas, CA 95035
United States
Tel:	408-545-6000
Fax:	302-655-5049
Toll Free:	(800) 955-6266
www.nanometrics.com

Employees:

536

Company Type:

Public Parent

Corporate Family:

9 Companies

Traded:

NASDAQ:

NANO

Incorporation Date:

18-Jan-2005

Auditor:

PricewaterhouseCoopers LLP

Fiscal Year End:	29-Dec-2012
Reporting Currency:	US Dollar
Annual Sales:	182.9 ^1
Net Income:	4.5
Total Assets:	259.5 ^2
Market Value:	402.1
	(18-Oct-2013)

Business Description

Nanometrics Incorporated (Nanometrics) is a provider of advanced, high-performance process control metrology and inspection systems used primarily in the fabrication of integrated circuits, high-brightness (HB) light emitting diodes (LEDs), data storage devices and solar photovoltaics (solar PV). Its automated and integrated systems address numerous process control applications, including critical dimension and film thickness measurement, device topography, defect inspection, overlay registration and analysis of various other film properties, such as optical, electrical and material characteristics. It offer a diverse line of process control and inspection products and technologies to address the manufacturing requirements of the semiconductor (and other solid state device) manufacturing industry. On November 21, 2011, the Company acquired 100% interests in Nanda Technologies GmbH. For the 26 weeks ended 29 June 2013, Nanometrics Incorporated revenues decreased 46% to $59.1M. Net loss totaled $10.1M vs. income of $6.2M. Revenues reflect Korea segment decrease of 84% to $9.1M, Israel segment decrease of 88% to $761K. Net loss reflects Other Research and development increase from $7M to $15.1M (expense), Other Selling increase from $6.1M to $12.6M (expense).

Industry

Industry	Electromedical and Control Instruments Manufacturing
ANZSIC 2006:	2419 - Other Professional and Scientific Equipment Manufacturing
ISIC Rev 4:	2651 - Manufacture of measuring, testing, navigating and control equipment
NACE Rev 2:	2651 - Manufacture of instruments and appliances for measuring, testing and navigation
NAICS 2012:	333242 - Semiconductor Machinery Manufacturing
UK SIC 2007:	2651 - Manufacture of instruments and appliances for measuring, testing and navigation
US SIC 1987:	3829 - Measuring and Controlling Devices, Not Elsewhere Classified

Key Executives   (Emails Available)

Name	Title
Timothy J. Stultz	President, Chief Executive Officer, Director
Ronald W. Kisling	Chief Financial Officer, Principal Accounting Officer
Rollin Kocher	Vice President, Sales Worldwide
Bruce A. Crawford	Chief Operating Officer
Nancy E. Egan	General Counsel

Significant Developments

Topic	#*	Most Recent Headline	Date
Class Action Lawsuit	1	Faruqi & Faruqi, LLP Launches Investigation Against Nanometrics Inc For Potential Breaches Of Fiduciary Duties By Board Of Directors	20-Apr-2013
Negative Earnings Pre-Announcement	1	Nanometrics Inc Issues Q3 2013 Guidance Below Analysts' Estimates	30-Jul-2013
Other Earnings Pre-Announcement	2	Nanometrics Inc Issues Q2 2013 Guidance In Line With Analysts' Estimates	30-Apr-2013

News

Title	Date
Nanometrics COO Sells $831,782 in Stock (NANO) American Banking News (447 Words)	5-Nov-2013
Insider Selling: Nanometrics Director Sells 4,887 Shares of Stock (NANO) Zolmax News (458 Words)	5-Nov-2013
Form 4 NANOMETRICS INC For: Nov 01 Filed by: BAIN HOWARD A III BusinessWeek (22 Words)	5-Nov-2013
Nanometrics Defies the Rating: Up 3.9% Fails to Respond: Flat Since Last Week's Downgrade Individual.com (48 Words)	5-Nov-2013
Potential Nanometrics (NANO) Trade Has 11.29% Downside Protection TradingCharts.com (367 Words)	4-Nov-2013
Nanometrics reports net loss for Q3, provides outlook for Q4 Datamonitor TechnologyWire (332 Words)	4-Nov-2013

Financial Summary

As of 29-Jun-2013

Key Ratios	Company	Industry
Current Ratio (MRQ)	4.59	3.16
Quick Ratio (MRQ)	3.55	1.74
Debt to Equity (MRQ)	0.02	0.29
Sales 5 Year Growth	4.57	6.76
Net Profit Margin (TTM) %	-8.92	8.43
Return on Assets (TTM) %	-4.52	7.34
Return on Equity (TTM) %	-5.65	12.34

Stock Snapshot

Traded: NASDAQ: NANO

As of 18-Oct-2013

   Financials in: USD

Recent Price	17.29	EPS	0.19
52 Week High	17.35	Price/Sales	2.20
52 Week Low	12.39	Price/Book	1.86
Avg. Volume (mil)	0.09	Beta	1.01
Market Value (mil)	402.09

	Price % Change	Rel S&P 500%
4 Week	7.19%	5.07%
13 Week	11.55%	8.20%
52 Week	34.24%	12.15%
Year to Date	19.90%	-1.98%

Source: Reuters

2 Year Weekly End Price & Volume

>> Stock Report

1 - Profit & Loss Item Exchange Rate: USD 1 = USD 1

2 - Balance Sheet Item Exchange Rate: USD 1 = USD 1

Corporate Overview

Nanometrics Incorporated

Location
1550 Buckeye Drive
Milpitas, CA, 95035
Santa Clara County
United States

Tel:	408-545-6000
Fax:	302-655-5049
Toll Free Tel:	(800) 955-6266

www.nanometrics.com

Quote Symbol - Exchange
NANO - NASDAQ
Sales USD(mil):	182.9
Assets USD(mil):	259.5
Employees:	536
Fiscal Year End:	29-Dec-2012

Industry:	Scientific and Technical Instruments

Incorporation Date:	18-Jan-2005
Company Type:	Public Parent
Quoted Status:	Quoted

President, Chief Executive Officer, Director:	Timothy J. Stultz

Industry Codes

ANZSIC 2006 Codes:
2419	-	Other Professional and Scientific Equipment Manufacturing
2469	-	Other Specialised Machinery and Equipment Manufacturing

ISIC Rev 4 Codes:
2651	-	Manufacture of measuring, testing, navigating and control equipment
2819	-	Manufacture of other general-purpose machinery

NACE Rev 2 Codes:
2651	-	Manufacture of instruments and appliances for measuring, testing and navigation
2829	-	Manufacture of other general-purpose machinery n.e.c.

NAICS 2012 Codes:
333242	-	Semiconductor Machinery Manufacturing
333249	-	Other Industrial Machinery Manufacturing
334515	-	Instrument Manufacturing for Measuring and Testing Electricity and Electrical Signals

US SIC 1987:
3829	-	Measuring and Controlling Devices, Not Elsewhere Classified
3559	-	Special Industry Machinery, Not Elsewhere Classified
3825	-	Instruments for Measuring and Testing of Electricity and Electrical Signals

UK SIC 2007:
2651	-	Manufacture of instruments and appliances for measuring, testing and navigation
2829	-	Manufacture of other general-purpose machinery n.e.c.

Top

Business Description

Nanometrics Incorporated (Nanometrics), incorporated in 1975, is a provider of advanced, high-performance process control metrology and inspection systems used primarily in the fabrication of integrated circuits, high-brightness (HB) light emitting diodes (LEDs), data storage devices and solar photovoltaics (solar PV). Its automated and integrated systems address numerous process control applications, including critical dimension and film thickness measurement, device topography, defect inspection, overlay registration and analysis of various other film properties, such as optical, electrical and material characteristics. It offer a diverse line of process control and inspection products and technologies to address the manufacturing requirements of the semiconductor (and other solid state device) manufacturing industry. On November 21, 2011, the Company acquired 100% interests in Nanda Technologies GmbH.

The Company has an installed base of over 6,500 systems in over 150 production factories worldwide. Its customers and original equipment manufacturer (OEM) partners include Samsung Electronics Co. Ltd., Intel Corporation, Hynix Semiconductor, Inc., Toshiba Corporation, Applied Materials, Inc., Taiwan Semiconductor Manufacturing Company Limited and Micron, Inc.

Automated Standalone Systems

The Company’s automated systems are made up of both semi-automated and fully automated metrology systems, which are employed in high-volume and low-volume production environments. The Atlas II, Atlas XP/Atlas XP+ and Atlas-M represent our line of high-performance metrology systems providing optical critical dimension (OCD), thin film metrology and wafer stress for transistor and interconnect metrology applications. The OCD technology is supported by its NanoCD suite of solutions, including its NanoDiffract software and NanoGen scalable computing engine that enables visualization, modeling, and analysis of complex structures. The Mosaic II provides overlay metrology solutions, for advanced 300mm overlay process technologies, and is available on its Lynx platform. Its SPARK defect inspection system, offers ultra-fast inspection of patterned and unpatterned semiconductor wafers.

The Company offer automated products for 200 millimeter factories running at 90 millimeter nodes and above, as well as systems supporting micro-electrical mechanical systems (MEMS). Its Q240AT is a 200 millimeter overlay metrology system that incorporates the same measurement technology as the Mosaic, which thereby extends the technology capability of its customers' existing factories. The IVS-185 system supports critical dimension and overlay measurements for semiconductor, MEMS, and HB-LED manufacturing. The NanoSpec 9100 thin film measurement system is capable of handling wafers ranging in size from 75 to 200 millimeter in diameter, and is used in all segments of semiconductor manufacturing, including data storage head manufacturing.

The Lynx cluster metrology platform enables improved cost of ownership to its customers by combining its Mosaic, Atlas II and IMPULSE metrology systems in configurations to provide high throughput, reduced footprint systems for 300 millimeter wafer metrology applications including OCD, overlay, and thin film process control. The Company’s integrated metrology (IM) systems are installed directly onto wafer processing equipment to provide near real-time measurements for improved process control and maximum throughput. Its IM systems are sold directly to end customers and through OEM channels. The IMPULSE system is its latest metrology platform for OCD, DBO, and thin film metrology and has been qualified on numerous OEM platforms. Its 90x0 system is qualified for OEM and direct sales supporting thin film and OCD applications. Its NanoCD solutions suite is sold in conjunction with its IMPULSE and legacy 90x0 systems. Its Trajectory system provides in-line measurement of layers in thin film thickness and composition in solar cell and semiconductor applications.

The Materials Characterization products include systems that are used to monitor the physical, optical, electrical and material characteristics of HB-LED, solar PV, compound semiconductor, strained silicon and silicon-on-insulator (SOI) devices, including composition, crystal structure, layer thickness, dopant concentration, contamination and electron mobility. Its Vertex is a photoluminescence (PL) mapping system designed for compound semiconductor metrology applications, including power control and photonics applications. The RPMBlue is its PL mapping system designed specifically for the HB-LED segment. It sells Fourier-Transform Infrared (FTIR) automated and manual systems in the QS2200/3300 and QS1200 respectively. The FTIR systems are spectrometers designed for non-destructive wafer analysis for various applications. The NanoSpec line of products includes the 3000 and 6100 supporting thin film measurement across all segments in both low volume production and research applications.

The Company competes with KLA-Tencor Corporation, Nova Measuring Instruments Ltd., Rudolph Technologies and KLA-Tencor

More Business Descriptions

Nanometrics Incorporated (Nanometrics) is a provider of advanced, high-performance process control metrology and inspection systems used primarily in the fabrication of integrated circuits, high-brightness (HB) light emitting diodes (LEDs), data storage devices and solar photovoltaics (solar PV). Its automated and integrated systems address numerous process control applications, including critical dimension and film thickness measurement, device topography, defect inspection, overlay registration and analysis of various other film properties, such as optical, electrical and material characteristics. It offer a diverse line of process control and inspection products and technologies to address the manufacturing requirements of the semiconductor (and other solid state device) manufacturing industry. On November 21, 2011, the Company acquired 100% interests in Nanda Technologies GmbH. For the 26 weeks ended 29 June 2013, Nanometrics Incorporated revenues decreased 46% to $59.1M. Net loss totaled $10.1M vs. income of $6.2M. Revenues reflect Korea segment decrease of 84% to $9.1M, Israel segment decrease of 88% to $761K. Net loss reflects Other Research and development increase from $7M to $15.1M (expense), Other Selling increase from $6.1M to $12.6M (expense).

High-Performance Process Control Metrology Systems Designer & Mfr

Establishments primarily engaged in manufacturing special industry machinery, not elsewhere classified, such as smelting and refining equipment, cement making, clayworking, cotton ginning, glass making, hat making, incandescent lamp making, leather working, paint making, rubber working, cigar and cigarette making, tobacco working, shoe making, and stone working machinery, and industrial sewing machines, and automotive maintenance machinery and equipment.

Nanometrics is a leading provider of advanced high-performance process control metrology and inspection systems used primarily in the fabrication of semiconductors high-brightness LEDs data storage devices and solar photovoltaics. Nanometrics automated and integrated systems address numerous process control applications including critical dimension and film thickness measurement device topography defect inspection overlay registration and analysis of various other film properties such as optical electrical and material characteristics. The companys process control solutions are deployed throughout the fabrication process from front-end-of-line substrate manufacturing to high-volume production of semiconductors and other devices to advanced wafer-scale packaging applications. Nanometrics 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 Select Market under the symbol NANO. Nanometrics website is http://www.nanometrics.com.

Nanometrics is a leading supplier of advanced integrated and standalone metrology equipment to the semiconductor industry. Nanometrics' product lines offer an array of proprietary technologies in optics, software and systems integration designed to meet the process control requirements of advanced semiconductor technologies. These process control solutions are implemented on common metrology platforms that can be configured with a variety of measurement technologies, or as a single technology targeted for a specific process control application. The company's metrology systems are designed to measure various thin film properties, critical circuit dimensions and layer-to-layer circuit alignment during various steps of the manufacturing process. Nanometrics maintains its headquarters in Milpitas, Calif., and it operates sales and service offices throughout the world. Nanometrics is traded on the NASDAQ under the symbol NANO.

Product Codes

Product Code	Product Description
AUT-AT-DI	Instruments for MTL characterization
AUT-AT-PI	Dimension measurement/inspection systems
AUT-AT-PW	Wafer probe measuring equipment
AUT-AT-PW	Laser-based CD (Critical Dimension) measurement systems
AUT-FM-P	Metrology characterization systems
AUT-FM-P	Metrology tools
AUT-MC-M	Process control and measurement equipment
AUT-ME	Optical metrology systems
AUT-ME	Overlay metrology equipment
MAN-SV-T	Silicon wafer testing and measuring services
PHO-LA-SA	Laser-based CD (Critical Dimension) measurement systems
TAM-ME-I	Film thickness measurement tools
TAM-ME-MP	Optical measurement/inspection systems
TAM-SC-IR	FT-IR systems
TAM-SC-IR	Lattice engineering equipment
TAM-SC-ISZ	Analytical microspectrometers

Financial Data

Financials in:	USD(mil)
Revenue:	182.9
Net Income:	4.5
Assets:	259.5
Long Term Debt:	4.4
Total Liabilities:	43.7
Working Capital:	0.1
Date of Financial Data:	29-Dec-2012

1 Year Growth

-20.5%

-84.4%

-2.9%

Market Data

Quote Symbol:	NANO
Exchange:	NASDAQ
Currency:	USD
Stock Price:	17.3
Stock Price Date:	10-18-2013
52 Week Price Change %:	34.2
Market Value (mil):	402,088.0
SEDOL:	2622220
ISIN:	US6300771051
Equity and Dept Distribution:
Common Stock $.001 Par, 05/11, 47M auth., 22,726,019 issd. Insiders own 8.56%. IPO: 11/84, 1.1Mshares @ $7.75 by Smith Barney, Harris Upham & Co. PO: 3/00, 3.5M shares (1.75M by Co.) @ $38.50 by Salomon Smith Barney. FY'00 qtrs are restated for accounting change.

Key Corporate Relationships

Auditor:	PricewaterhouseCoopers LLP
Bank:	Technology Finance Corp, Xerox Financial Services
Auditor:	PricewaterhouseCoopers LLP

Top

Additional Infomation
ABI Number:	003951712

Corporate Family	Corporate Structure News:
	Nanometrics Incorporated
Nanometrics Incorporated Total Corporate Family Members: 9

Company Name	Company Type	Location	Country	Industry	Sales (USD mil)	Employees
Nanometrics Incorporated	Parent	Milpitas, CA	United States	Electromedical and Control Instruments Manufacturing	182.9	536
Nanometrics Korea Ltd.	Subsidiary	Seoul	Korea, Republic of	Electromedical and Control Instruments Manufacturing		50
Nanometrics Japan Ltd.	Subsidiary	Tokyo	Japan	Electronics Wholesale		35
Nanometrics China Company Ltd.	Subsidiary	Shanghai	China	Machinery and Equipment Manufacturing		11
Nanometrics Inc	Branch	Hillsboro, OR	United States	Electronics Wholesale	2.6	8
Nanometrics Southeast Asia Pte. Limited	Subsidiary	Singapore	Singapore	Consulting Services	0.4	5
Nanometrics Inc	Branch	Bend, OR	United States	Semiconductor and Other Electronic Component Manufacturing	1.3	4
Nanometrics Inc	Subsidiary
Nanometrics UK Ltd	Subsidiary	York	United Kingdom	Electromedical and Control Instruments Manufacturing	4.2	41

Nanometrics Incorporated

Competitors Report

CompanyName	Location	Employees	Ownership
Applied Materials, Inc.	Santa Clara, California, United States	14,500	Public
Intel Corporation	Santa Clara, California, United States	106,000	Public
KLA-Tencor Corporation	Milpitas, California, United States	5,820	Public
Rudolph Technologies Inc	Flanders, New Jersey, United States	651	Public

Nanometrics Incorporated Milpitas, California, United States, Tel: 408-545-6000, URL: http://www.nanometrics.com, Executives Page

Executives Report

Board of Directors

Name	Title	Function
Bruce C. Rhine View Email	Independent Chairman of the Board	Chairman
Biography: Mr. Rhine has served as our Chairman of the Board of Directors since July 2007 and as a director since July 2006. From July 2006 to February 2008, Mr. Rhine served as our Chief Strategy Officer. From March 2007 to August 2007, Mr. Rhine served as our Chief Executive Officer. From 2000 to 2006, Mr. Rhine served as Chairman and Chief Executive Officer of Accent Optical Technologies, Inc. and as its President from January 2003 to April 2005 and from August 2000 to September 2001. Mr. Rhine holds a B.S. degree in Chemical Engineering and an M.B.A. in Finance from The Pennsylvania State University. In addition to his experience from his prior senior management service to Nanometrics, Mr. Rhine brings extensive industry knowledge and executive management experience to the Board. Age: 55 Education: Pennsylvania State University, MBA (Finance) Pennsylvania State University, BS (Chemical Engineering) Compensation/Salary:$19,231 Compensation Currency: USD
Howard A. Bain	Independent Director	Director/Board Member
Biography: Mr. Howard A. Bain, III, has served as a director since April 2008. He is also a director of Learning Tree International, Inc. and several private venture capital financed companies. He was previously a director of Cyberdefender, Inc. Since 2004, he has been an independent consultant in all aspects of corporate finance. He held Chief Financial Officer positions at several public companies including: Portal Software from 2001 to 2004, Vicinity Corporation in 2000, Informix from 1999 to 2000, and Symantec Corporation from 1991 to 1999. He was previously a consultant with Arthur Andersen LLP where he was a certified public accountant. Mr. Bain holds a B.S. in Business from California Polytechnic University. Mr. Bain’s significant financial expertise, including his experience as Chief Financial Officer at several public companies, as well as his experience in various technology companies in the areas of semiconductor devices and manufacturing equipment, laser-based large screen projection systems, and computer disk drives, is directly relevant to Nanometrics’ business and his responsibilities to the Board. Age: 67 Education: California Polytechnic State University, San Luis Obispo, BS (Business)
J. Thomas Bentley	Independent Director	Director/Board Member
Biography: Mr. Bentley has served as a director since April 2004. Mr. Bentley served as a Managing Director at SVB Alliant (formerly Alliant Partners), a mergers and acquisitions firm, from 1990, when he co-founded the firm, until October 2005. Mr. Bentley currently serves on the board of directors of Rambus, Inc., a chip interface technology company. Mr. Bentley holds a B.A. degree in Economics from Vanderbilt University and a Masters of Science in Management from the Massachusetts Institute of Technology. Mr. Bentley’s extensive knowledge of the capital markets, strategic planning and mergers and acquisitions from his experience at SVB Alliant provides expertise to the Board in matters regarding Nanometrics’ capital requirements and strategic direction. Age: 63 Education: Massachusetts Institute of Technology, MS (Management) Vanderbilt University, BA (Economics)
Edward J. Brown	Independent Director	Director/Board Member
Biography: Mr. Brown has served as a Independent Director since February 2013. Mr. Brown has served as president and chief operating officer of Cymer, Inc. a supplier of light sources for deep ultraviolet photolithography systems and has over three decades of experience in the semiconductor technology sector, from 2005 to the present. Prior to joining Cymer, Mr. Brown held several positions at Applied Materials, Inc., the world’s largest provider of semiconductor equipment and services. From 2003 to 2005 Mr. Brown served as the Global Vice President for Global Operations, and from 2002 to 2003 Mr. Brown held the position of Group Vice President, Senior Advisor to the President. Previously, he served as vice president and general manager for Applied Material’s Intel business unit, as well as managing director heading up global operations. Prior to Applied Materials Inc., Mr. Brown held key engineering positions at TRW Corporation and Burroughs Corporation. Mr. Brown holds a master’s degree in business administration from National University and a bachelor’s degree in industrial studies from San Diego State University. Mr. Brown’s qualifications to serve as a director include his 30 years’ experience in the semiconductor industry, and his operations expertise. Age: 55 Education: National University, M (Business Administration) San Diego State University, B
William G. Oldham	Independent Director	Director/Board Member
Biography: Dr. William G. Oldham, has served as a director since June 2000. Dr. Oldham previously served as lead independent director of the Board from May 2007 through August 2008. Dr. Oldham, now Professor Emeritus, was a faculty member at the University of California at Berkeley from 1964 to 2003. He also serves on the board of directors of Cymer, Inc., a supplier of light sources for deep ultraviolet photolithography systems. Dr. Oldham holds B.S., M.S. and Ph.D. degrees from the Carnegie Institute of Technology. Dr. Oldham’s qualifications to serve as director include his experience on public and private boards, including his consultation to numerous companies in the semiconductor industry, his scientific background and his industrial and academic experience, including expertise in semiconductor processing and metrology. Age: 74 Education: Carnegie Mellon University, PHD Carnegie Mellon University, MS Carnegie Mellon University, BS
Stephen Smith View Email	Board Member	Director/Board Member
Biography: Stephen J Smith Ph.D. 64 has served as a director since April 2004. Dr. Smith has been a professor in the Department of Molecular and Cellular Physiology at the Stanford University School of Medicine since 1989. He served on the faculty of Yale University from 1980 until 1989. Dr. Smith holds a B.A. degree from Reed College and a Ph.D. from the University of Washington. Dr. Smiths qualifications to serve as director include his scientific and academic backgrounds in the fields of optics automated microscopy and digital image analysis. He has extensive industrial consulting experience in areas pertaining to the design and marketing of optical imaging and metrology tools for biotechnology. He teaches numerous courses in microscopy and digital imaging at Stanford and other international expert teaching venues. Assuming the election of the Class I director nominees following the 2011 stockholder meeting the Board of Directors will be comprised of the following seven (7) members: Howard A. Bain III William G. Oldham Ph.D. and Stephen J Smith Ph.D. will be the Class I directors J. Thomas Bentley and Timothy J. Stultz Ph.D. will be the Class II directors and Norman V. Coates and Bruce C. Rhine will be the Class III directors.

Executives

Name	Title	Function
Timothy J. Stultz	President, Chief Executive Officer, Director	Chief Executive Officer
Biography: Dr. Timothy J. Stultz, Ph.D., is President, Chief Executive Officer, Director of Nanometrics Inc. He has served as President, Chief Executive Officer and a director since August 2007. From June 2003 to August 2007, Dr. Stultz served as the President and Chief Executive Officer and a director of Imago Scientific Instruments Corporation, a supplier of proprietary 3-D atom probe microscopes to the research materials and microelectronics industries. Prior to Imago, Dr. Stultz served as President and Chief Executive Officer for ThauMDx, a developer of diagnostic systems and technologies for the analysis of biomolecules, drugs and chemicals. Dr. Stultz also serves on the Board of Directors of Tessera Technologies, Inc. Dr. Stultz received his B.S., M.S. and Ph.D. degrees in Materials Science and Engineering from Stanford University. In addition to his institutional knowledge as the executive leader of Nanometrics, Dr. Stultz’s scientific background and significant senior executive management experience in high-tech industries is important to the Board. Age: 65 Education: Stanford University, PHD (Materials Science and Engineering) Stanford University, MS (Materials Science and Engineering) Stanford University, BS (Materials Science and Engineering) Compensation/Salary:$465,000 Compensation Currency: USD
Mark Borowicz	Senior Vice President of Silicon Solutions	Division Head Executive
Bruce A. Crawford View Email	Chief Operating Officer	Operations Executive
Biography: Mr. Bruce A. Crawford is Chief Operating Officer of Nanometrics Incorporated. From July 2005 to July 2006, Mr. Crawford served as President and Chief Operating Officer of Accent Optical Technologies, Inc., a supplier of process control and metrology systems to the global semiconductor manufacturing industry, which was acquired in July 2006. From February 2003 to July 2005, Mr. Crawford served as Accent Optical’s Chief Operating Officer and Executive Vice President and from October 2000 to February 2003, he served as Vice President of Worldwide Operations. Mr. Crawford holds an A.S. degree from De Anza College. Age: 60 Education: De Anza College, A Compensation/Salary:$346,500 Compensation Currency: USD
Norman Coates	Director	Administration Executive
Biography: Norman V. Coates 61 has served as a director since August 2009. He previously served on the Nanometrics Board of Directors from 1985 to 2006. Mr. Coates is a successful entrepreneur and businessman and has managed Gem of the River Produce and Coates Vineyards for the past 35 years. In addition to his institutional knowledge from his prior long tenure as a director of the Company Mr. Coates brings extensive management and entrepreneurial experience to the Board.
Ronald W. Kisling View Email	Chief Financial Officer, Principal Accounting Officer	Finance Executive
Biography: Mr. Ronald W. Kisling is Chief Financial Officer, Principal Accounting Officer of Nanometrics Incorporated. Prior to joining thec company, Mr. Kisling served as Chief Financial Officer of PGP Corporation (acquired by Symantec Corporation in June 2010) from May 2010 to September 2010 and Vice President of Finance from December 2006 to May 2010. Mr. Kisling has served as Chief Financial Officer of, or held other similar finance positions at, Portal Software, Inc. (acquired by Oracle Corporation in July 2006) from March 2004 to November 2006, Saba Software, Inc. from June 2001 to March 2004, SPL WorldGroup (acquired by Oracle Corporation in November 2006) from August 1998 to June 2001, and Symantec Corporation from April 1989 to August 1998. Mr. Kisling holds a B.A. in Economics from Stanford University and is an inactive Certified Public Accountant. Age: 52 Education: Stanford University, BA (Economics) Compensation/Salary:$315,000 Compensation Currency: USD
James P Moniz	Chief Financial Officer	Finance Executive
Biography: James P. Moniz has served as our Chief Financial Officer Vice President and Treasurer since October 2000. Before joining Nextest and starting in June of 1998 Jim was Vice President and Chief Financial Officer of Millennia Vision Corporation. From October 1996 until May 1998 he served as Vice President of Finance for Fairchild Imaging Systems and from November 1991 until October 1996 as Vice President of Finance and Administration and later as President of Rolm Computers. He has an MBA and two B.S. degrees one in accounting and one in marketing from San Jose State University . Education: San Jose State University, bachelor (Accounting And Marketing) San Jose State University, MBA (Finance)
Leanne Wang View Email	Internal Audit Manager	Accounting Executive
Jiangtao Hu View Email	Human Resources Manager	Human Resources Executive
Rahul Korlahalli View Email	Human Resources Manager	Human Resources Executive
Teresa Laboy View Email	Senior Director World Wide Human Resources	Human Resources Executive
Milad Tabet View Email	Human Resources Manager	Human Resources Executive
Katrina Tyler View Email	Human Resources Generalist	Human Resources Executive
Annettee Woodhouse View Email	Human Resources Director	Human Resources Executive
Diana Doherty View Email	Customer Support	Customer Service Executive
Ye Feng View Email	Director of Key Account Applications	Sales Executive
Michael Fischer	International, Sales Executive	Sales Executive
Linda Heywood View Email	Senior Account Manager	Sales Executive
Gyles Webster View Email	Director, World Wide Sales Support	Sales Executive
Rollin Kocher	Vice President, Sales Worldwide	International Sales Executive
Colleen Cruz View Email	Import, Export Analyst Ii	International Executive
Jeffrey Robertson View Email	Global Support Service Management	International Executive
Andy Davis	Marketing	Marketing Executive
Claire E. McAdams	Investor Relations Officer	Investor Relations Executive
Pam Mcculloch View Email	Senior Business Systems Analyst	Information Executive
Marcy Mckee View Email	Vice President, Information Technology	Information Executive
Cindy Mejia View Email	Business Systems Analyst	Information Executive
Konrad Sotera	Information Technology	Information Executive
Andrew Barada View Email	Director of Engineering	Engineering/Technical Executive
Claver Bickman View Email	Principal Software Engineer	Engineering/Technical Executive
Steve Caisse View Email	Senior Field Service Engineer	Engineering/Technical Executive
Aki Chiba View Email	Manufacturing Engineer	Engineering/Technical Executive
Jonathan Kaefer View Email	Electrical Engineer	Engineering/Technical Executive
Jerry Lin View Email	Applications Manager	Engineering/Technical Executive
Peter Liu View Email	Software Engineer	Engineering/Technical Executive
Ron Onaka	Manufacturing Engineering Manager	Engineering/Technical Executive
Vladimir Risko View Email	Senior Electrical Engineer	Engineering/Technical Executive
Tony Stacke View Email	Senior Electrical Engineer	Engineering/Technical Executive
Tanya Tran View Email	Database Administrator	Engineering/Technical Executive
Michael Yang View Email	Senior Automation Engineer	Engineering/Technical Executive
Kevin Heidrich	Business Development	Business Development Executive
Nancy E. Egan View Email	General Counsel	Legal Executive
Biography: Ms. Nancy E. Egan is General Counsel of Nanometrics Inc. Ms. Egan was the Associate General Counsel of Varian, Inc. from 2004 until its acquisition by Agilent Technologies in 2010. Prior to Varian, Ms. Egan held positions as the Senior Vice President of Legal Affairs for LivePlanet, and the Vice President and Associate General Counsel of Excite@Home. Ms. Egan holds a Bachelor’s degree in political science from the University of Buffalo and a juris doctor from the Notre Dame Law School. Age: 46 Education: University of Notre Dame, JD University of Buffalo, B (Political Science) Compensation/Salary:$227,346 Compensation Currency: USD
Lorena Zelaya View Email	Purchasing	Purchasing Executive
Kevin Le View Email	Senior Quality Control Inspector	Quality Executive
Cheryl Lester View Email	Fp&A Director	Other

Nanometrics Incorporated

Significant Developments

Nanometrics Inc Issues Q3 2013 Guidance Below Analysts' Estimates

Jul 30, 2013

Nanometrics Inc announced that for the third quarter of 2013, it expects total revenues to be in the range of $36 to $40 million, GAAP net loss to be $0.16 to $0.05 per share and the non-GAAP net loss to be $0.14 to $0.03 per share. According to I/B/E/S Estimates, analysts are expecting the Company to report revenue of $46 million and EPS of $0.04 for third quarter of 2013.

Nanometrics Inc Issues Q2 2013 Guidance In Line With Analysts' Estimates

Apr 30, 2013

Nanometrics Inc announced that for second quarter of 2013, it expects total revenues to be in the range of $30 to $34 million, GAAP net loss to be in the range of $0.28 to $0.17 per share and the non-GAAP net loss to be in the range of $0.26 to $0.15 per share. According to I/B/E/S Estimates, analysts are expecting the Company to report revenue of $32 million and EPS of $(0.19) for second quarter of 2013.

Faruqi & Faruqi, LLP Launches Investigation Against Nanometrics Inc For Potential Breaches Of Fiduciary Duties By Board Of Directors

Apr 20, 2013

Faruqi & Faruqi, LLP, a national securities firm headquartered in New York City, is investigating the Board of Directors of Nanometrics Incorporated for potential breaches of fiduciary duties in connection with their conduct in seeking shareholders` approval for the Company's 2005 Equity Incentive Plan, as amended. Specifically, in the Proxy Statement filed by the Company with the Securities and Exchange Commission on April 10, 2013, the Board of Directors recommends that Nanometrics' shareholders vote to approve the Company's 2005 Equity Incentive Plan, as amended. The amendment increases the aggregate number of shares of Nanometrics' common stock authorized for issuance under the 2005 Equity Incentive Plan by 2,600,000 shares. The issuance of the additional shares could have a substantial dilutive effect on the shares of Nanometrics common stock.

Nanometrics Inc Issues Q1 2013 Guidance

Feb 04, 2013

Nanometrics Inc announced that for the first quarter of 2013, it expects h total revenues expected to be in the range of $24 to $28 million, GAAP net loss to be in the range of $0.27 to $0.35 per share and non-GAAP net loss to be in the range of $0.25 to $0.33 per share (EPS).

News
		Nanometrics COO Sells $831,782 in Stock (NANO) American Banking News (447 Words)		05-Nov-2013
		Insider Selling: Nanometrics Director Sells 4,887 Shares of Stock (NANO) Zolmax News (458 Words)		05-Nov-2013
		Form 4 NANOMETRICS INC For: Nov 01 Filed by: BAIN HOWARD A III BusinessWeek (22 Words)		05-Nov-2013
		Nanometrics Defies the Rating: Up 3.9% Fails to Respond: Flat Since Last Week's Downgrade Individual.com (48 Words)		05-Nov-2013
		Potential Nanometrics (NANO) Trade Has 11.29% Downside Protection TradingCharts.com (367 Words)		04-Nov-2013
		Nanometrics reports net loss for Q3, provides outlook for Q4 Datamonitor TechnologyWire (332 Words)		04-Nov-2013
		Nanometrics Stock Rating Upgraded by Pacific Crest (NANO) Zolmax News (413 Words)		01-Nov-2013
		Potential Nanometrics (NANO) Trade Has 8.61% Downside Protection TradingCharts.com (367 Words)		01-Nov-2013
		NANOMETRICS REPORTS DISPOSITION BY CHIEF FINANCIAL OFFICER KISLING (California) U.S. Fed News (118 Words)		01-Nov-2013
		Shares of NANO Up 21.4% Since Uptrend Call on Shares Individual.com (40 Words)		31-Oct-2013
		Nanometrics PT Raised to $18.00 (NANO) American Banking News (390 Words)		31-Oct-2013
	Nanometrics Incorporated Milpitas, California, United States, Tel: 408-545-6000, URL: http://www.nanometrics.com		Annual Income Statement

Financials in: USD (mil)

Except for share items (millions) and per share items (actual units)

Financial Glossary

	29-Dec-2012	31-Dec-2011	01-Jan-2011	02-Jan-2010	27-Dec-2008
Period Length	52 Weeks	52 Weeks	52 Weeks	53 Weeks	52 Weeks
UpdateType/Date	Updated Normal 29-Dec-2012	Reclassified Normal 29-Dec-2012	Reclassified Normal 29-Dec-2012	Updated Normal 02-Jan-2010	Updated Normal 27-Dec-2008
Filed Currency	USD	USD	USD	USD	USD
Exchange Rate (Period Average)	1	1	1	1	1
Auditor	PricewaterhouseCoopers LLP	PricewaterhouseCoopers LLP	PricewaterhouseCoopers LLP	BDO USA, LLP	BDO Seidman
Auditor Opinion	Unqualified	Unqualified	Unqualified	Unqualified with Explanation	Unqualified with Explanation
Net Sales	182.9	230.1	188.1	76.7	102.1
Revenue	182.9	230.1	188.1	76.7	102.1
Total Revenue	182.9	230.1	188.1	76.7	102.1
Cost of Revenue	99.0	108.0	86.7	40.6	57.4
Cost of Revenue, Total	99.0	108.0	86.7	40.6	57.4
Gross Profit	83.9	122.1	101.4	36.1	44.7
Selling/General/Administrative Expense	48.1	49.9	39.9	30.2	37.5
Total Selling/General/Administrative Expenses	48.1	49.9	39.9	30.2	37.5
Research & Development	29.6	23.3	19.0	14.7	17.1
Amortization of Intangibles	0.8	0.6	0.7	1.5	3.5
Depreciation/Amortization	0.8	0.6	0.7	1.5	3.5
Restructuring Charge	-	-	-	1.1	1.5
Litigation	0.0	2.5	0.0	0.0	-
Impairment-Assets Held for Use	0.0	0.0	0.5	1.9	68.5
Loss (Gain) on Sale of Assets - Operating	-	-	-	0.0	0.0
Unusual Expense (Income)	0.0	2.5	0.5	3.0	70.1
Total Operating Expense	177.4	184.3	146.7	90.1	185.6
Operating Income	5.5	45.8	41.3	-13.4	-83.5
Interest Expense - Non-Operating	-1.0	-1.3	-1.6	-1.7	-0.6
Interest Expense, Net Non-Operating	-1.0	-1.3	-1.6	-1.7	-0.6
Interest Income - Non-Operating	0.1	0.2	0.1	0.1	0.2
Interest/Investment Income - Non-Operating	0.1	0.2	0.1	0.1	0.2
Interest Income (Expense) - Net Non-Operating Total	-0.9	-1.1	-1.4	-1.6	-0.5
Other Non-Operating Income (Expense)	0.0	-0.1	0.8	-1.9	1.6
Other, Net	0.0	-0.1	0.8	-1.9	1.6
Income Before Tax	4.6	44.6	40.7	-16.9	-82.3
Total Income Tax	0.2	15.9	-15.3	-0.6	0.4
Income After Tax	4.5	28.7	55.9	-16.3	-82.7
Net Income Before Extraord Items	4.5	28.7	55.9	-16.3	-82.7
Net Income	4.5	28.7	55.9	-16.3	-82.7
Income Available to Common Excl Extraord Items	4.5	28.7	55.9	-16.3	-82.7
Income Available to Common Incl Extraord Items	4.5	28.7	55.9	-16.3	-82.7
Basic/Primary Weighted Average Shares	23.4	22.7	21.9	18.6	18.5
Basic EPS Excl Extraord Items	0.19	1.26	2.56	-0.87	-4.46
Basic/Primary EPS Incl Extraord Items	0.19	1.26	2.56	-0.87	-4.46
Dilution Adjustment	-	-	-	0.0	0.0
Diluted Net Income	4.5	28.7	55.9	-16.3	-82.7
Diluted Weighted Average Shares	23.8	23.5	23.0	18.6	18.5
Diluted EPS Excl Extraord Items	0.19	1.22	2.43	-0.87	-4.46
Diluted EPS Incl Extraord Items	0.19	1.22	2.43	-0.87	-4.46
Dividends per Share - Common Stock Primary Issue	0.00	0.00	0.00	0.00	0.00
Gross Dividends - Common Stock	0.0	0.0	0.0	0.0	0.0
Interest Expense, Supplemental	1.0	1.3	1.6	1.7	0.6
Depreciation, Supplemental	8.1	5.0	4.4	4.6	4.9
Total Special Items	0.0	2.5	0.5	3.0	70.1
Normalized Income Before Tax	4.6	47.1	41.2	-13.9	-12.2
Effect of Special Items on Income Taxes	0.0	0.9	0.2	1.1	24.5
Inc Tax Ex Impact of Sp Items	0.2	16.8	-15.1	0.5	25.0
Normalized Income After Tax	4.5	30.3	56.2	-14.3	-37.2
Normalized Inc. Avail to Com.	4.5	30.3	56.2	-14.3	-37.2
Basic Normalized EPS	0.19	1.33	2.57	-0.77	-2.00
Diluted Normalized EPS	0.19	1.29	2.45	-0.77	-2.00
Amort of Intangibles, Supplemental	-	-	-	1.5	3.5
Rental Expenses	2.2	1.8	1.4	1.4	1.4
Research & Development Exp, Supplemental	29.6	23.3	19.0	14.7	17.1
Normalized EBIT	5.5	48.3	41.8	-10.3	-13.4
Normalized EBITDA	13.6	53.2	46.2	-4.2	-5.0
Current Tax - Domestic	-2.4	11.1	2.0	-0.1	-0.1
Current Tax - Foreign	0.3	0.4	0.1	-0.1	1.2
Current Tax - Local	-0.5	1.0	0.7	0.0	0.1
Current Tax - Total	-2.6	12.5	2.7	-0.2	1.2
Deferred Tax - Domestic	1.8	2.4	-14.3	0.0	-0.2
Deferred Tax - Foreign	0.6	1.2	-3.3	-0.4	-0.5
Deferred Tax - Local	0.4	-0.2	-0.5	0.0	0.0
Deferred Tax - Total	2.8	3.4	-18.0	-0.4	-0.7
Income Tax - Total	0.2	15.9	-15.3	-0.6	0.4
Interest Cost - Domestic	-	-	-	0.0	0.0
Expected Return on Assets - Domestic	-	-	-	0.0	0.0
Curtailments & Settlements - Domestic	-	-	-	-0.2	-0.1
Transition Costs - Domestic	-	-	-	0.0	0.0
Domestic Pension Plan Expense	-	-	-	-0.1	-0.1
Total Pension Expense	-	-	-	-0.1	-0.1
Discount Rate - Domestic	-	-	-	1.50%	2.00%
Expected Rate of Return - Domestic	-	-	-	2.00%	2.50%
Compensation Rate - Domestic	-	-	-	2.30%	2.50%
Total Plan Interest Cost	-	-	-	0.0	0.0
Total Plan Expected Return	-	-	-	0.0	0.0

Annual Balance Sheet

Financials in: USD (mil)

Financial Glossary

	29-Dec-2012	31-Dec-2011	01-Jan-2011	02-Jan-2010	27-Dec-2008
UpdateType/Date	Reclassified Normal 30-Mar-2013	Reclassified Normal 29-Dec-2012	Updated Normal 01-Jan-2011	Reclassified Normal 01-Jan-2011	Reclassified Normal 02-Jan-2010
Filed Currency	USD	USD	USD	USD	USD
Exchange Rate	1	1	1	1	1
Auditor	PricewaterhouseCoopers LLP	PricewaterhouseCoopers LLP	PricewaterhouseCoopers LLP	BDO USA, LLP	BDO Seidman
Auditor Opinion	Unqualified	Unqualified	Unqualified	Unqualified with Explanation	Unqualified with Explanation
Cash & Equivalents	62.9	97.7	66.5	43.5	24.0
Short Term Investments	47.0	0.0	-	-	-
Cash and Short Term Investments	109.9	97.7	66.5	43.5	24.0
Accounts Receivable - Trade, Gross	21.5	29.4	44.6	23.3	17.5
Provision for Doubtful Accounts	-0.1	-0.1	-0.1	-0.2	-0.3
Trade Accounts Receivable - Net	21.4	29.3	44.5	23.0	17.1
Total Receivables, Net	21.4	29.3	44.5	23.0	17.1
Inventories - Finished Goods	11.4	16.2	10.5	8.2	8.8
Inventories - Work In Progress	5.8	11.1	10.3	4.3	3.7
Inventories - Raw Materials	24.8	26.6	23.8	20.2	19.3
Total Inventory	41.9	53.9	44.6	32.6	31.8
Prepaid Expenses	7.5	8.1	3.0	2.2	1.8
Deferred Income Tax - Current Asset	8.6	12.4	9.6	0.2	0.4
Discontinued Operations - Current Asset	-	-	0.0	0.2	0.0
Other Current Assets, Total	8.6	12.4	9.6	0.5	0.4
Total Current Assets	189.3	201.4	168.2	101.9	75.1
Buildings	19.2	19.2	18.8	18.6	21.0
Land/Improvements	15.6	15.6	15.6	15.6	15.6
Machinery/Equipment	21.5	14.7	11.4	14.4	15.4
Construction in Progress	4.4	0.5	2.7	1.9	2.9
Other Property/Plant/Equipment	2.2	2.3	2.2	2.3	2.1
Property/Plant/Equipment - Gross	62.9	52.3	50.7	52.7	57.1
Accumulated Depreciation	-19.7	-16.7	-15.5	-16.4	-16.9
Property/Plant/Equipment - Net	43.2	35.5	35.2	36.4	40.1
Goodwill, Net	11.4	12.0	0.0	-	-
Intangibles - Gross	31.5	31.6	21.5	21.0	23.0
Accumulated Intangible Amortization	-20.5	-17.2	-15.5	-13.9	-16.1
Intangibles, Net	11.0	14.4	6.0	7.1	6.9
Deferred Income Tax - Long Term Asset	3.7	2.9	9.3	0.6	0.0
Other Long Term Assets	0.9	1.0	1.2	1.6	1.7
Other Long Term Assets, Total	4.6	3.9	10.5	2.2	1.7
Total Assets	259.5	267.2	219.9	147.5	123.9
Accounts Payable	6.4	8.0	11.5	5.8	4.8
Accrued Expenses	11.5	15.1	12.7	6.2	6.4
Notes Payable/Short Term Debt	0.0	0.0	0.0	0.0	0.0
Current Portion - Long Term Debt/Capital Leases	0.9	0.8	0.6	0.3	0.4
Customer Advances	8.6	10.7	4.5	6.8	1.7
Income Taxes Payable	0.4	0.7	0.3	0.9	1.2
Other Current Liabilities	3.0	5.5	3.0	5.1	2.7
Other Current liabilities, Total	11.9	16.9	7.8	12.8	5.6
Total Current Liabilities	30.7	40.8	32.5	25.1	17.2
Long Term Debt	4.4	6.7	9.5	12.7	13.1
Total Long Term Debt	4.4	6.7	9.5	12.7	13.1
Total Debt	5.3	7.5	10.0	13.1	13.5
Other Long Term Liabilities	8.6	9.8	7.1	2.9	0.8
Other Liabilities, Total	8.6	9.8	7.1	2.9	0.8
Total Liabilities	43.7	57.2	49.0	40.7	31.1
Common Stock	0.0	0.0	0.0	0.0	0.0
Common Stock	0.0	0.0	0.0	0.0	0.0
Additional Paid-In Capital	238.3	236.7	225.8	218.3	189.9
Retained Earnings (Accumulated Deficit)	-23.9	-28.3	-57.0	-112.9	-96.6
Unrealized Gain (Loss)	0.0	0.0	-	-	-
Translation Adjustment	1.5	1.7	2.2	-	-
Minimum Pension Liability Adjustment	-0.2	-0.2	-0.1	-	-
Other Comprehensive Income	-	-	-	1.4	-0.5
Other Equity, Total	1.3	1.5	2.1	1.4	-0.5
Total Equity	215.8	210.0	170.8	106.8	92.8
Total Liabilities & Shareholders’ Equity	259.5	267.2	219.9	147.5	123.9
Shares Outstanding - Common Stock Primary Issue	23.3	23.2	22.3	21.5	18.4
Total Common Shares Outstanding	23.3	23.2	22.3	21.5	18.4
Treasury Shares - Common Stock Primary Issue	0.0	0.0	0.0	0.0	-
Employees	536	-	456	399	465
Number of Common Shareholders	-	-	251	256	284
Accumulated Intangible Amort, Suppl.	20.5	17.2	15.5	13.9	16.1
Deferred Revenue - Current	8.6	10.7	4.5	6.8	1.7
Deferred Revenue - Long Term	4.3	-	3.2	0.6	0.2
Total Long Term Debt, Supplemental	-	-	13.7	13.1	13.5
Long Term Debt Maturing within 1 Year	-	-	1.3	0.3	0.4
Long Term Debt Maturing in Year 2	-	-	1.3	0.4	0.3
Long Term Debt Maturing in Year 3	-	-	1.1	0.4	0.4
Long Term Debt Maturing in Year 4	-	-	0.8	0.4	0.4
Long Term Debt Maturing in Year 5	-	-	0.8	0.5	0.4
Long Term Debt Maturing in 2-3 Years	-	-	2.4	0.8	0.7
Long Term Debt Maturing in 4-5 Years	-	-	1.6	0.9	0.8
Long Term Debt Matur. in Year 6 & Beyond	-	-	8.4	11.1	11.6
Total Operating Leases, Supplemental	-	-	4.2	4.2	1.7
Operating Lease Payments Due in Year 1	-	-	1.5	1.3	0.6
Operating Lease Payments Due in Year 2	-	-	1.1	0.6	0.4
Operating Lease Payments Due in Year 3	-	-	0.5	0.5	0.2
Operating Lease Payments Due in Year 4	-	-	0.4	0.4	0.2
Operating Lease Payments Due in Year 5	-	-	0.2	0.3	0.2
Operating Lease Pymts. Due in 2-3 Years	-	-	1.7	1.1	0.6
Operating Lease Pymts. Due in 4-5 Years	-	-	0.6	0.7	0.4
Oper. Lse. Pymts. Due in Year 6 & Beyond	-	-	0.4	1.0	0.0
Pension Obligation - Domestic	-	-	0.4	0.3	0.6
Plan Assets - Domestic	-	-	0.1	0.1	0.1
Funded Status - Domestic	-	-	-0.3	-0.2	-0.5
Accumulated Obligation - Domestic	-	-	0.3	0.2	0.4
Total Funded Status	-	-	-0.3	-0.2	-0.5
Discount Rate - Domestic	-	-	2.00%	2.30%	2.50%
Compensation Rate - Domestic	-	-	1.50%	1.50%	2.00%
Accrued Liabilities - Domestic	-	-	-0.3	-0.2	-0.5
Net Assets Recognized on Balance Sheet	-	-	-0.3	-0.2	-0.5
Total Plan Obligations	-	-	0.4	0.3	0.6
Total Plan Assets	-	-	0.1	0.1	0.1

Annual Cash Flows

Financials in: USD (mil)

Financial Glossary

	29-Dec-2012	31-Dec-2011	01-Jan-2011	02-Jan-2010	27-Dec-2008
Period Length	52 Weeks	52 Weeks	52 Weeks	53 Weeks	52 Weeks
UpdateType/Date	Updated Normal 29-Dec-2012	Reclassified Normal 29-Dec-2012	Reclassified Normal 29-Dec-2012	Updated Normal 02-Jan-2010	Reclassified Normal 02-Jan-2010
Filed Currency	USD	USD	USD	USD	USD
Exchange Rate (Period Average)	1	1	1	1	1
Auditor	PricewaterhouseCoopers LLP	PricewaterhouseCoopers LLP	PricewaterhouseCoopers LLP	BDO USA, LLP	BDO Seidman
Auditor Opinion	Unqualified	Unqualified	Unqualified	Unqualified with Explanation	Unqualified with Explanation
Net Income/Starting Line	4.5	28.7	55.9	-16.3	-82.7
Depreciation	8.1	5.0	4.4	6.1	8.4
Depreciation/Depletion	8.1	5.0	4.4	6.1	8.4
Deferred Taxes	2.8	3.8	-17.2	-0.4	-0.8
Unusual Items	0.3	0.1	0.3	2.0	68.5
Other Non-Cash Items	8.6	4.4	5.0	4.0	2.4
Non-Cash Items	8.9	4.5	5.3	6.0	70.8
Accounts Receivable	7.7	16.2	-21.0	-6.4	18.3
Inventories	0.6	-11.7	-14.3	1.0	0.4
Prepaid Expenses	1.1	-4.7	-0.4	-0.1	1.2
Payable/Accrued	-12.6	4.2	11.5	0.8	-12.7
Taxes Payable	0.3	5.1	1.9	-0.3	0.3
Other Liabilities	2.5	3.1	1.4	3.9	-0.8
Changes in Working Capital	-0.3	12.1	-20.8	-1.1	6.7
Cash from Operating Activities	24.0	54.0	27.6	-5.8	2.4
Purchase of Fixed Assets	-5.0	-26.7	-3.1	-0.8	-3.2
Capital Expenditures	-5.0	-26.7	-3.1	-0.8	-3.2
Acquisition of Business	-	-	-	0.0	-3.4
Sale of Fixed Assets	0.0	0.0	0.5	0.0	0.6
Sale/Maturity of Investment	11.3	0.0	0.0	-	-
Purchase of Investments	-58.6	0.0	0.0	-	-
Other Investing Cash Flow	0.5	0.0	0.0	0.2	0.0
Other Investing Cash Flow Items, Total	-46.8	0.0	0.5	0.2	-2.7
Cash from Investing Activities	-51.8	-26.7	-2.6	-0.6	-6.0
Other Financing Cash Flow	0.0	3.4	-3.0	0.0	0.0
Financing Cash Flow Items	0.0	3.4	-3.0	0.0	0.0
Sale/Issuance of Common	-	-	-	23.3	0.0
Repurchase/Retirement of Common	-8.5	-4.3	-2.1	0.0	-1.9
Common Stock, Net	-8.5	-4.3	-2.1	23.3	-1.9
Options Exercised	3.9	7.2	5.8	3.0	0.8
Issuance (Retirement) of Stock, Net	-4.6	2.9	3.7	26.3	-1.1
Short Term Debt Issued	-	-	-	7.0	0.0
Short Term Debt Reduction	-	-	-	-7.0	0.0
Short Term Debt, Net	-	-	-	0.0	0.0
Long Term Debt Issued	-	-	-	0.0	13.2
Long Term Debt Reduction	-2.2	-2.6	-3.0	-0.3	-0.2
Long Term Debt, Net	-2.2	-2.6	-3.0	-0.3	13.0
Issuance (Retirement) of Debt, Net	-2.2	-2.6	-3.0	-0.3	13.0
Cash from Financing Activities	-6.8	3.7	-2.3	26.0	11.8
Foreign Exchange Effects	-0.2	0.2	0.3	-0.1	0.8
Net Change in Cash	-34.8	31.2	22.9	19.5	9.1
Net Cash - Beginning Balance	97.7	66.5	43.5	24.0	14.9
Net Cash - Ending Balance	62.9	97.7	66.5	43.5	24.0
Cash Interest Paid	0.5	0.8	1.0	1.0	0.6
Cash Taxes Paid	5.1	11.1	1.6	0.2	0.8
Nanometrics Incorporated Milpitas, California, United States, Tel: 408-545-6000, URL: http://www.nanometrics.com			Annual Income Statement

Financials in: USD (mil)

Except for share items (millions) and per share items (actual units)

	29-Dec-2012	31-Dec-2011	01-Jan-2011	02-Jan-2010	27-Dec-2008
Period Length	52 Weeks	52 Weeks	52 Weeks	53 Weeks	52 Weeks
UpdateType/Date	Updated Normal 29-Dec-2012	Reclassified Normal 29-Dec-2012	Reclassified Normal 29-Dec-2012	Updated Normal 02-Jan-2010	Updated Normal 27-Dec-2008
Filed Currency	USD	USD	USD	USD	USD
Exchange Rate (Period Average)	1	1	1	1	1
Auditor	PricewaterhouseCoopers LLP	BDO USA, LLP	PricewaterhouseCoopers LLP	BDO USA, LLP	BDO Seidman
Auditor Opinion	Unqualified	Unqualified	Unqualified	Unqualified	Unqualified
Products	143.8	194.8	154.5	49.2	75.6
Service	39.1	35.3	33.5	27.6	26.5
Total Revenue	182.9	230.1	188.1	76.7	102.1
Amortization of intangible assets	2.5	1.1	0.9	-	-
Cost of products	75.9	88.6	66.5	26.6	38.7
Cost of Service	20.5	18.3	19.3	14.0	18.7
Research and development	29.6	23.3	19.0	14.7	17.1
Selling	26.5	27.0	21.3	15.1	17.8
General and administrative	21.6	22.9	18.6	15.2	19.7
Amortization of intangible assets	0.8	0.6	0.7	1.5	3.5
Asset impairment	0.0	0.0	0.5	1.9	68.5
Restructuring charges	-	-	-	1.1	1.5
Legal settlement	0.0	2.5	0.0	0.0	-
Gain on sale of assets	-	-	-	0.0	0.0
Total Operating Expense	177.4	184.3	146.7	90.1	185.6
Interest expense	-1.0	-1.3	-1.6	-1.7	-0.6
Interest Income	0.1	0.2	0.1	0.1	0.2
Other income (expense), net)	0.0	-0.1	0.8	-1.9	1.6
Net Income Before Taxes	4.6	44.6	40.7	-16.9	-82.3
Provision for Income Taxes	0.2	15.9	-15.3	-0.6	0.4
Net Income After Taxes	4.5	28.7	55.9	-16.3	-82.7
Net Income Before Extra. Items	4.5	28.7	55.9	-16.3	-82.7
Net Income	4.5	28.7	55.9	-16.3	-82.7
Income Available to Com Excl ExtraOrd	4.5	28.7	55.9	-16.3	-82.7
Income Available to Com Incl ExtraOrd	4.5	28.7	55.9	-16.3	-82.7
Basic Weighted Average Shares	23.4	22.7	21.9	18.6	18.5
Basic EPS Excluding ExtraOrdinary Items	0.19	1.26	2.56	-0.87	-4.46
Basic EPS Including ExtraOrdinary Items	0.19	1.26	2.56	-0.87	-4.46
Dilution Adjustment	-	-	-	0.0	0.0
Diluted Net Income	4.5	28.7	55.9	-16.3	-82.7
Diluted Weighted Average Shares	23.8	23.5	23.0	18.6	18.5
Diluted EPS Excluding ExtraOrd Items	0.19	1.22	2.43	-0.87	-4.46
Diluted EPS Including ExtraOrd Items	0.19	1.22	2.43	-0.87	-4.46
DPS-Ordinary Shares	0.00	0.00	0.00	0.00	0.00
Gross Dividends - Common Stock	0.0	0.0	0.0	0.0	0.0
Normalized Income Before Taxes	4.6	47.1	41.2	-13.9	-12.2
Inc Tax Ex Impact of Sp Items	0.2	16.8	-15.1	0.5	25.0
Normalized Income After Taxes	4.5	30.3	56.2	-14.3	-37.2
Normalized Inc. Avail to Com.	4.5	30.3	56.2	-14.3	-37.2
Basic Normalized EPS	0.19	1.33	2.57	-0.77	-2.00
Diluted Normalized EPS	0.19	1.29	2.45	-0.77	-2.00
Research and development	29.6	23.3	19.0	-	-
Research & Development Exp	-	-	-	14.7	17.1
Interest expense	1.0	1.3	1.6	-	-
Interest Expense	-	-	-	1.7	0.6
Rental Expense	2.2	1.8	1.4	1.4	1.4
BC - Depreciation of Fixed Assets	8.1	5.0	4.4	-	-
Depreciation	-	-	-	4.6	4.9
Amortization Expense	-	-	-	1.5	3.5
Current Federal	-2.4	11.1	2.0	-0.1	-0.1
Current State	-0.5	1.0	0.7	0.0	0.1
Current Foreign	0.3	0.4	0.1	-0.1	1.2
Current Tax - Total	-2.6	12.5	2.7	-0.2	1.2
Deferred Federal	1.8	2.4	-14.3	0.0	-0.2
Deferred State	0.4	-0.2	-0.5	0.0	0.0
Deferred Foreign	0.6	1.2	-3.3	-0.4	-0.5
Deferred Tax - Total	2.8	3.4	-18.0	-0.4	-0.7
Income Tax - Total	0.2	15.9	-15.3	-0.6	0.4
Interest Cost	-	-	-	0.0	0.0
Amoritzation of Transition Obligation	-	-	-	0.0	0.0
Expected return of plan Assets	-	-	-	0.0	0.0
Amortization of net loss	-	-	-	0.0	0.0
Curtailment or settlement (gain)/loss	-	-	-	-0.2	-0.1
Domestic Pension Plan Expense	-	-	-	-0.1	-0.1
Total Pension Expense	-	-	-	-0.1	-0.1
Discount Rate	-	-	-	1.50%	2.00%
Compensation Rate	-	-	-	2.30%	2.50%
Expected Rate of Return	-	-	-	2.00%	2.50%

Annual Balance Sheet

Financials in: USD (mil)

	29-Dec-2012	31-Dec-2011	01-Jan-2011	02-Jan-2010	27-Dec-2008
UpdateType/Date	Reclassified Normal 30-Mar-2013	Reclassified Normal 29-Dec-2012	Updated Normal 01-Jan-2011	Reclassified Normal 01-Jan-2011	Reclassified Normal 02-Jan-2010
Filed Currency	USD	USD	USD	USD	USD
Exchange Rate	1	1	1	1	1
Auditor	PricewaterhouseCoopers LLP	BDO USA, LLP	PricewaterhouseCoopers LLP	BDO USA, LLP	BDO Seidman
Auditor Opinion	Unqualified	Unqualified	Unqualified	Unqualified	Unqualified
Cash and cash equivalents	62.9	97.7	66.5	43.5	24.0
Marketable securities	47.0	0.0	-	-	-
Receivables	21.5	29.4	44.6	23.3	17.5
Doubtful Account	-0.1	-0.1	-0.1	-0.2	-0.3
Assets held for sale	-	-	0.0	0.2	0.0
Inventories-delivered systems	2.3	1.6	1.5	1.2	0.2
Deferred income tax assets	8.6	12.4	9.6	0.2	0.4
Prepaid expenses and other	7.5	8.1	3.0	2.2	1.8
Raw materials and sub-assemblies	22.5	25.0	22.4	19.0	19.1
Work in Process	5.8	11.1	10.3	4.3	3.7
Consignment inventory	-	-	8.3	-	-
Finished Goods	11.4	16.2	2.3	8.2	8.8
Total Current Assets	189.3	201.4	168.2	101.9	75.1
Land	15.6	15.6	15.6	15.6	15.6
Building and improvements	19.2	19.2	18.8	18.6	21.0
Machinery and equipment	21.5	14.7	11.4	14.4	15.4
Furniture and fixtures	2.2	2.3	2.2	2.3	2.1
Capital in progress	4.4	0.5	2.7	1.9	2.9
Depreciation	-19.7	-16.7	-15.5	-16.4	-16.9
Deferred income tax assets	3.7	2.9	9.3	0.6	0.0
Goodwill	11.4	12.0	0.0	-	-
Other Intangibles, Gross	-	0.3	-	-	-
Development technology	17.7	17.5	-	-	-
Customer Relationships	9.5	9.5	-	-	-
Brand Names	1.9	1.9	-	-	-
Patented Technology	2.3	2.3	-	-	-
Trademarks	0.1	0.1	-	-	-
Intangibles	-	-	21.5	21.0	23.0
Acc Amort Other Intangibles	-	0.0	-	-	-
Acc Amort Development technology	-8.3	-5.6	-	-	-
Acc Amort Customer relationships	-8.6	-8.2	-	-	-
Acc Amort Brand Names	-1.6	-1.5	-	-	-
Acc Amort Patented Technology	-1.9	-1.9	-	-	-
Acc Amort Trademarks	-0.1	-0.1	-	-	-
Accumulated Amortization	-	-	-15.5	-13.9	-16.1
Other Assets	0.9	1.0	1.2	1.6	1.7
Total Assets	259.5	267.2	219.9	147.5	123.9
Accounts payable	6.4	8.0	11.5	5.8	4.8
Accrued payroll and related expenses	6.7	8.8	8.8	4.0	3.4
Deferred revenue	8.5	5.8	4.1	5.2	1.5
Other	2.3	2.3	2.3	1.5	2.7
Legal settlement	-	2.5	0.0	-	-
Contingent consideration at fair value	0.6	0.7	0.8	3.7	-
Income taxes payable	0.4	0.7	0.3	0.9	1.2
Accrued Warranty	4.2	4.8	3.1	1.2	2.1
Accrued Professional Services	0.6	1.5	0.7	1.0	0.9
Customer deposits	0.1	4.9	0.4	1.6	0.2
Revolving line of credit	-	-	-	-	0.0
Current portion of debt obligations	0.9	0.8	0.6	0.3	0.4
Total Current Liabilities	30.7	40.8	32.5	25.1	17.2
Debt obligations	4.4	6.7	9.5	12.7	13.1
Total Long Term Debt	4.4	6.7	9.5	12.7	13.1
Other long-term liabilities	2.1	2.8	3.9	2.2	0.6
Income taxes payable, non-current	2.1	2.4	0.0	-	-
Deferred revenue, non-current	4.3	4.5	3.2	0.6	0.2
Total Liabilities	43.7	57.2	49.0	40.7	31.1
Unrealized Gain(loss) on investment	0.0	0.0	-	-	-
Common stock	0.0	0.0	0.0	0.0	0.0
Additional paid-in capital	238.3	236.7	225.8	218.3	189.9
Accumulated deficit	-23.9	-28.3	-57.0	-112.9	-96.6
Foreign Currency Translations	1.5	1.7	2.2	-	-
Defined Benefit Pension Plans	-0.2	-0.2	-0.1	-	-
Accumulated other comprehensive income (	-	-	-	1.4	-0.5
Total Equity	215.8	210.0	170.8	106.8	92.8
Total Liabilities & Shareholders' Equity	259.5	267.2	219.9	147.5	123.9
S/O-Ordinary Shares	23.3	23.2	22.3	21.5	18.4
Total Common Shares Outstanding	23.3	23.2	22.3	21.5	18.4
T/S-Ordinary Shares	0.0	0.0	0.0	0.0	-
Acc Amort Other Intangibles	-	0.0	-	-	-
Acc Amort Development technology	8.3	5.6	-	-	-
Acc Amort Customer relationships	8.6	8.2	-	-	-
Acc Amort Brand Names	1.6	1.5	-	-	-
Acc Amort Patented Technology	1.9	1.9	-	-	-
Acc Amort Trademarks	0.1	0.1	-	-	-
Accumulated Amortization	-	-	15.5	13.9	16.1
Deferred revenue	8.5	5.8	-	-	-
Customer deposits	0.1	4.9	-	-	-
Deferred Revenue - Current	-	-	4.5	6.8	1.7
Deferred Revenue - Long term	4.3	-	3.2	0.6	0.2
Full-Time Employees	536	-	456	399	465
Number of Common Shareholders	-	-	251	256	284
Long Term Debt Maturing within 1 Year	-	-	1.3	0.3	0.4
Long Term Debt Maturing within 2 Years	-	-	1.3	0.4	0.3
Long Term Debt Maturing within 3 Years	-	-	1.1	0.4	0.4
Long Term Debt Maturing within 4 Years	-	-	0.8	0.4	0.4
Long Term Debt Maturing within 5 Years	-	-	0.8	0.5	0.4
Long Term Debt Maturing after 5 Years	-	-	8.4	11.1	11.6
Total Long Term Debt, Supplemental	-	-	13.7	13.1	13.5
Operating Lease Maturing within 1 Year	-	-	1.5	1.3	0.6
Operating Lease Maturing within 2 Years	-	-	1.1	0.6	0.4
Operating Lease Maturing within 3 Years	-	-	0.5	0.5	0.2
Operating Lease Maturing within 4 Years	-	-	0.4	0.4	0.2
Operating Lease Maturing within 5 Years	-	-	0.2	0.3	0.2
Operating Lease Maturing after 5 Years	-	-	0.4	1.0	-
Total Operating Leases, Supplemental	-	-	4.2	4.2	1.7
Projected Benefit Obligation - Pension	-	-	0.4	0.3	0.6
FV of Plan Assets - Pension	-	-	0.1	0.1	0.1
Funded Status - Pension	-	-	-0.3	-0.2	-0.5
Accumulated Benefit Obligation	-	-	0.3	0.2	0.4
Total Funded Status	-	-	-0.3	-0.2	-0.5
Discount Rate	-	-	2.00%	2.30%	2.50%
Compensation Rate	-	-	1.50%	1.50%	2.00%
Accrued Benefit liability	-	-	-0.3	-0.2	-0.5
Net Assets Recognized on Balance Sheet	-	-	-0.3	-0.2	-0.5

Annual Cash Flows

Financials in: USD (mil)

	29-Dec-2012	31-Dec-2011	01-Jan-2011	02-Jan-2010	27-Dec-2008
Period Length	52 Weeks	52 Weeks	52 Weeks	53 Weeks	52 Weeks
UpdateType/Date	Updated Normal 29-Dec-2012	Reclassified Normal 29-Dec-2012	Reclassified Normal 29-Dec-2012	Updated Normal 02-Jan-2010	Reclassified Normal 02-Jan-2010
Filed Currency	USD	USD	USD	USD	USD
Exchange Rate (Period Average)	1	1	1	1	1
Auditor	PricewaterhouseCoopers LLP	BDO USA, LLP	PricewaterhouseCoopers LLP	BDO USA, LLP	BDO Seidman
Auditor Opinion	Unqualified	Unqualified	Unqualified	Unqualified	Unqualified
Net Income	4.5	28.7	55.9	-16.3	-82.7
Depreciation	8.1	5.0	4.4	6.1	8.4
Stock-based compensation	5.9	4.5	3.0	2.1	3.9
Other, net	0.0	0.0	-0.5	-	-
Excess tax benefit from equity awards	-0.9	-3.9	-0.8	0.0	0.0
Asset Impairment	0.0	0.0	0.5	1.9	68.5
Unrealized foreign exchange loss (gain)	-	-	-	0.9	-1.5
Accounts receivable reserves	-	-	-	0.4	0.0
Change in the fair value of contingent p	0.1	0.4	0.5	0.6	0.0
Inventory write down	3.5	3.4	2.9	-	-
Fixed Asset Disposal	0.3	0.1	-0.1	0.1	-0.1
Accounts receivable	7.7	16.2	-21.0	-6.4	18.3
Inventories-delivered systems	-0.8	0.4	0.2	-1.0	0.6
Inventories	1.4	-12.2	-14.5	1.9	-0.1
Prepaid expenses and other.	1.1	-4.7	-0.4	-0.1	1.2
Accounts payable, accrued and other liab	-12.6	4.2	11.5	0.8	-12.7
Deferred revenue	2.5	3.1	1.4	3.9	-0.8
Income taxes payable	0.3	5.1	1.9	-0.3	0.3
Non-cash portion of restructuring charge	-	-	-	0.0	0.0
Deferred income taxes	2.8	3.8	-17.2	-0.4	-0.8
Cash from Operating Activities	24.0	54.0	27.6	-5.8	2.4
Purchases of marketable securities	-58.6	0.0	0.0	-	-
Escrow payment received related to Nanda	0.5	0.0	0.0	-	-
Escrow payment received related to acqui	-	-	-	0.2	0.0
Maturities of marketable securities	8.3	0.0	0.0	-	-
Sales of marketable securities	3.0	0.0	0.0	-	-
Purchase of Nanda's net assets, net of c	0.0	-23.9	0.0	0.0	-
Payments to Zygo, related to acquisition	-	-	-	0.0	-
Acquisitions of businesses and assets n	-	-	-	0.0	-3.4
Purchases of property, plant and equipme	-5.0	-2.8	-3.1	-0.8	-3.2
Proceeds from sale of property, plant an	0.0	0.0	0.5	0.0	0.6
Cash from Investing Activities	-51.8	-26.7	-2.6	-0.6	-6.0
Taxes paid on net issuance of stock awar	-0.6	-0.1	-0.3	-	-
Stock offering cost	0.0	0.0	0.0	-	-
Other Financing Cash Flow	-0.3	-0.4	-3.5	-	-
Repurchases of common stock	-8.5	-4.3	-2.1	0.0	-1.9
Repayments of debt obligations	-2.2	-2.6	-3.0	-0.3	-0.2
Taxes on net issuance of stock awards	-	-	-	0.0	0.0
Excess tax benefit from equity awards	0.9	3.9	0.8	0.0	0.0
Employee Stock option.	3.9	7.2	5.8	3.0	0.8
Repayment of line of credit	-	-	-	-7.0	0.0
Borrowings from line of credit	-	-	-	7.0	0.0
Proceeds from issuance of debt obligatio	-	-	-	0.0	13.2
Proceeds from issuance of common stock o	-	-	-	23.3	0.0
Cash from Financing Activities	-6.8	3.7	-2.3	26.0	11.8
Foreign Exchange Effects	-0.2	0.2	0.3	-0.1	0.8
Net Change in Cash	-34.8	31.2	22.9	19.5	9.1
Net Cash - Beginning Balance	97.7	66.5	43.5	24.0	14.9
Net Cash - Ending Balance	62.9	97.7	66.5	43.5	24.0
Cash Interest Paid	0.5	0.8	1.0	1.0	0.6
Cash Taxes Paid	5.1	11.1	1.6	0.2	0.8

Nanometrics Incorporated Milpitas, California, United States, Tel: 408-545-6000, URL: http://www.nanometrics.com

Financial Health

Financials in: USD (mil)

Except for share items (millions) and per share items (actual units)

Key Indicators USD (mil)
Â	Quarter Ending 29-Jun-2013	Quarter Ending Yr Ago	Annual Year End 29-Dec-2012	1 Year Growth	3 Year Growth	5 Year Growth
Total Revenue (?)	34.6	-35.03%	182.9	-20.51%	33.59%	4.57%
Research & Development (?)	8.0	14.06%	29.6	27.03%	26.34%	9.75%
Operating Income (?)	-6.2	-	5.5	-88.03%	-	-
Income Available to Common Excl Extraord Items (?)	-4.6	-	4.5	-84.43%	-	-
Basic EPS Excl Extraord Items (?)	-0.20	-	0.19	-84.84%	-	-
Capital Expenditures (?)	2.0	-25.24%	5.0	-81.29%	82.42%	28.32%
Cash from Operating Activities (?)	-17.0	-	24.0	-55.56%	-	52.75%
Free Cash Flow (?)	-18.9	-	19.0	-30.49%	-	67.26%
Total Assets (?)	252.0	-7.90%	259.5	-2.91%	20.72%	4.61%
Total Liabilities (?)	47.8	-15.99%	43.7	-23.67%	2.37%	6.94%
Total Long Term Debt (?)	0.0	-	4.4	-34.59%	-29.98%	102.33%
Employees (?)	-	-	536	-	10.34%	0.49%
Total Common Shares Outstanding (?)	23.2	-0.01%	23.3	0.29%	2.63%	4.54%
Market Cap (?)	340.2	-4.50%	335.3	-21.49%	21.46%	12.80%

Key Ratios
Â	29-Dec-2012	31-Dec-2011	01-Jan-2011	02-Jan-2010	27-Dec-2008
Profitability
Gross Margin (?)	45.89%	53.07%	53.91%	47.09%	43.81%
Operating Margin (?)	3.00%	19.89%	21.97%	-17.42%	-81.75%
Pretax Margin (?)	2.53%	19.38%	21.64%	-22.02%	-80.60%
Net Profit Margin (?)	2.44%	12.47%	29.75%	-21.26%	-81.02%
Financial Strength
Current Ratio (?)	6.16	4.94	5.18	4.06	4.37
Long Term Debt/Equity (?)	0.02	0.03	0.06	0.12	0.14
Total Debt/Equity (?)	0.02	0.04	0.06	0.12	0.15
Management Effectiveness
Return on Assets (?)	1.70%	11.78%	30.46%	-12.02%	-50.00%
Return on Equity (?)	2.10%	15.06%	40.31%	-16.34%	-61.60%
Efficiency
Receivables Turnover (?)	7.22	6.23	5.57	3.82	3.93
Inventory Turnover (?)	2.07	2.19	2.24	1.26	1.74
Asset Turnover (?)	0.69	0.94	1.02	0.57	0.62

Market Valuation USD (mil)
Enterprise Value (?)	320.7	.	Price/Sales (TTM) (?)	3.02
Enterprise Value/Revenue (TTM) (?)	2.41	.	Price/Book (MRQ) (?)	1.96
Enterprise Value/EBITDA (TTM) (?)	21.85	.	Market Cap (?)	402.1

Nanometrics Incorporated

Milpitas, California, United States, Tel: 408-545-6000, URL: http://www.nanometrics.com

Ratio Comparisons

Traded: NASDAQ: NANO	Financials in: USD (actual units)
Industry: Misc. Fabricated Products	As of 18-Oct-2013
Sector: Basic Materials

	Company	Industry	Sector	S&P 500
Valuation Ratios
P/E Excluding Extraordinary (TTM) (?)	-	27.86	24.91	19.68
P/E High Excluding Extraordinary - Last 5 Yrs (?)	76.48	38.88	40.00	32.79
P/E Low Excluding Extraordinary - Last 5 Yrs (?)	5.27	6.62	8.69	10.71
Beta (?)	1.01	1.53	1.47	1.00
Price/Revenue (TTM) (?)	3.02	1.99	2.38	2.57
Price/Book (MRQ) (?)	1.96	2.68	3.90	3.67
Price to Tangible Book (MRQ) (?)	2.19	6.83	5.81	5.21
Price to Cash Flow Per Share (TTM) (?)	-	16.42	13.98	14.22
Price to Free Cash Flow Per Share (TTM) (?)	723.18	29.60	37.21	26.26
Dividends
Dividend Yield (?)	-	0.88%	1.75%	2.26%
Dividend Per Share - 5 Yr Avg (?)	0.00	0.99	2.50	1.99
Dividend 5 Yr Growth (?)	-	4.54%	1.06%	0.08%
Payout Ratio (TTM) (?)	-	20.70%	29.68%	25.98%
Growth Rates (%)
Revenue (MRQ) vs Qtr 1 Yr Ago (?)	-35.03%	21.35%	20.15%	15.58%
Revenue (TTM) vs TTM 1 Yr Ago (?)	-37.18%	19.14%	23.47%	17.69%
Revenue 5 Yr Growth (?)	4.57%	6.76%	7.38%	8.97%
EPS (MRQ) vs Qtr 1 Yr Ago (?)	-204.57%	33.62%	13.63%	19.49%
EPS (TTM) vs TTM 1 Yr Ago (?)	-189.91%	124.73%	42.74%	32.55%
EPS 5 Yr Growth (?)	-	5.77%	8.05%	9.86%
Capital Spending 5 Yr Growth (?)	28.32%	8.85%	9.93%	-2.04%
Financial Strength
Quick Ratio (MRQ) (?)	3.55	1.74	1.78	1.24
Current Ratio (MRQ) (?)	4.59	3.16	2.73	1.79
LT Debt/Equity (MRQ) (?)	0.00	0.26	0.81	0.64
Total Debt/Equity (MRQ) (?)	0.02	0.29	0.88	0.73
Interest Coverage (TTM) (?)	-19.77	10.05	11.21	13.80
Profitability Ratios (%)
Gross Margin (TTM) (?)	44.31%	26.58%	32.32%	45.21%
Gross Margin - 5 Yr Avg (?)	49.79%	25.52%	31.54%	44.91%
EBITD Margin (TTM) (?)	-8.09%	16.26%	22.23%	24.43%
EBITD Margin - 5 Yr Avg (?)	13.32%	15.46%	18.43%	22.84%
Operating Margin (TTM) (?)	-14.01%	12.93%	16.99%	20.63%
Operating Margin - 5 Yr Avg (?)	-0.55%	12.28%	13.64%	18.28%
Pretax Margin (TTM) (?)	-14.89%	12.37%	15.86%	17.95%
Pretax Margin - 5 Yr Avg (?)	-1.19%	11.83%	12.57%	17.10%
Net Profit Margin (TTM) (?)	-8.92%	8.43%	11.55%	13.65%
Net Profit Margin - 5 Yr Avg (?)	-1.27%	7.88%	8.64%	12.10%
Effective Tax Rate (TTM) (?)	-	31.50%	28.04%	28.45%
Effective Tax rate - 5 Yr Avg (?)	-	32.54%	29.65%	29.92%
Management Effectiveness (%)
Return on Assets (TTM) (?)	-4.52%	7.34%	8.05%	8.54%
Return on Assets - 5 Yr Avg (?)	-1.00%	8.99%	7.49%	8.40%
Return on Investment (TTM) (?)	-5.34%	6.14%	5.86%	7.90%
Return on Investment - 5 Yr Avg (?)	-1.17%	7.32%	5.78%	8.27%
Return on Equity (TTM) (?)	-5.65%	12.34%	18.78%	19.72%
Return on Equity - 5 Yr Avg (?)	-1.28%	16.56%	17.45%	20.06%
Efficiency
Revenue/Employee (TTM) (?)	248,716.40	330,250.78	613,510.56	927,613.77
Net Income/Employee (TTM) (?)	-22,186.57	26,934.95	82,492.56	116,121.92
Receivables Turnover (TTM) (?)	3.68	7.02	8.71	13.25
Inventory Turnover (TTM) (?)	1.67	4.69	8.16	14.53
Asset Turnover (TTM) (?)	0.51	0.96	0.82	0.93

Nanometrics Incorporated Milpitas, California, United States, Tel: 408-545-6000, URL: http://www.nanometrics.com

Annual Ratios

Financials in: USD (mil)

Except for share items (millions) and per share items (actual units)

	29-Dec-2012	31-Dec-2011	02-Jan-2010	27-Dec-2008
Financial Strength
Current Ratio (?)	6.16	4.94	4.06	4.37
Quick/Acid Test Ratio (?)	4.27	3.11	2.65	2.39
Working Capital (?)	158.6	160.6	76.8	57.9
Long Term Debt/Equity (?)	0.02	0.03	0.12	0.14
Total Debt/Equity (?)	0.02	0.04	0.12	0.15
Long Term Debt/Total Capital (?)	0.02	0.03	0.11	0.12
Total Debt/Total Capital (?)	0.02	0.03	0.11	0.13
Payout Ratio (?)	0.00%	0.00%	0.00%	0.00%
Effective Tax Rate (?)	3.33%	35.66%	-	-
Total Capital (?)	221.1	217.4	119.8	106.3
Efficiency
Asset Turnover (?)	0.69	0.94	0.57	0.62
Inventory Turnover (?)	2.07	2.19	1.26	1.74
Days In Inventory (?)	176.74	166.56	289.74	209.70
Receivables Turnover (?)	7.22	6.23	3.82	3.93
Days Receivables Outstanding (?)	50.57	58.55	95.62	92.94
Revenue/Employee (?)	341,196	412,423	192,248	219,572
Operating Income/Employee (?)	10,220	90,623	-33,481	-179,492
EBITDA/Employee (?)	25,401	100,261	-18,213	-161,366
Profitability
Gross Margin (?)	45.89%	53.07%	47.09%	43.81%
Operating Margin (?)	3.00%	19.89%	-17.42%	-81.75%
EBITDA Margin (?)	7.44%	22.06%	-9.47%	-73.49%
EBIT Margin (?)	3.00%	19.89%	-17.42%	-81.75%
Pretax Margin (?)	2.53%	19.38%	-22.02%	-80.60%
Net Profit Margin (?)	2.44%	12.47%	-21.26%	-81.02%
R&D Expense/Revenue (?)	16.18%	10.12%	19.13%	16.76%
COGS/Revenue (?)	54.11%	46.93%	52.91%	56.19%
SG&A Expense/Revenue (?)	26.30%	21.70%	39.42%	36.72%
Management Effectiveness
Return on Assets (?)	1.70%	11.78%	-12.02%	-50.00%
Return on Equity (?)	2.10%	15.06%	-16.34%	-61.60%
Valuation
Free Cash Flow/Share (?)	0.82	1.18	-0.31	-0.04
Operating Cash Flow/Share  (?)	1.03	2.33	-0.27	0.13

Current Market Multiples
Market Cap/Earnings (TTM) (?)	-33.86
Market Cap/Equity (MRQ) (?)	1.97
Market Cap/Revenue (TTM) (?)	3.02
Market Cap/EBIT (TTM) (?)	-21.52
Market Cap/EBITDA (TTM) (?)	-37.27
Enterprise Value/Earnings (TTM) (?)	-27.00
Enterprise Value/Equity (MRQ) (?)	1.57
Enterprise Value/Revenue (TTM) (?)	2.41
Enterprise Value/EBIT (TTM) (?)	-17.16
Enterprise Value/EBITDA (TTM) (?)	-29.72

Nanometrics Incorporated

Milpitas, California, United States, Tel: 408-545-6000, URL: http://www.nanometrics.com

Stock Report

Stock Snapshot

Traded: NASDAQ: NANO

As of 18-Oct-2013    US Dollars

Recent Price	$17.29	EPS	$0.19
52 Week High	$17.35	Price/Sales	2.20
52 Week Low	$12.39	Price/Book	1.86
Avg. Volume (mil)	0.09	Beta	1.01
Market Value (mil)	$402.09

	Price % Change	Rel S&P 500%
4 Week	7.19%	5.07%
13 Week	11.55%	8.20%
52 Week	34.24%	12.15%
Year to Date	19.90%	-1.98%

Source: Reuters

2 Year Weekly End Price & Volume

Stock History

Market Cap History
	29-Jun-13	% Chg	30-Mar-13	% Chg	29-Dec-12	% Chg	29-Sep-12	% Chg	30-Jun-12	% Chg
Total Common Shares Outstanding	23	0.4	23	-0.7	23	-0.6	23	0.8	23	-1.1
Market Cap	340.2	2.1	333.3	-0.6	335.3	3.8	322.9	-9.4	356.2	-17.9

Yearly Price History
	2013	% Chg	2012	% Chg	2011	% Chg	2010	% Chg	2009	% Chg
High Price	17.35	-17.3	20.99	-2.6	21.56	36.5	15.80	12.4	14.06	41.6
Low Price	13.32	7.5	12.39	4.2	11.89	80.2	6.60	528.6	1.05	31.3
Year End Price	17.29	19.9	14.42	-21.7	18.42	43.6	12.83	13.2	11.33	893.9

Monthly Price History
Price Ending Date	Open	High	Low	Close	Volume
18-Oct-13	16.12	17.35	15.64	17.29	880,172
30-Sep-13	14.46	16.37	13.88	16.12	1,712,084
30-Aug-13	15.43	16.07	13.37	14.29	2,257,115
31-Jul-13	14.65	16.02	14.11	15.36	1,581,934
28-Jun-13	14.49	15.78	14.40	14.67	2,198,985
31-May-13	14.05	14.98	13.89	14.45	2,021,255
30-Apr-13	14.42	14.48	13.32	14.03	3,056,143
28-Mar-13	14.60	16.15	14.42	14.43	2,123,126
28-Feb-13	15.65	16.19	14.13	14.75	2,736,300
31-Jan-13	14.57	15.87	14.40	15.61	2,789,616
31-Dec-12	14.55	14.95	14.23	14.42	2,288,176
30-Nov-12	13.73	14.64	13.51	14.46	2,062,418
31-Oct-12	13.83	13.88	12.39	13.76	2,297,267

Standard & Poor’s

United States of America Long-Term Rating Lowered To 'AA+' Due To Political Risks, Rising Debt Burden; Outlook Negative

Publication date: 05-Aug-2011 20:13:14 EST

---

• We have lowered our long-term sovereign credit rating on the United States of America to 'AA+' from 'AAA' and affirmed the 'A-1+' short-term rating.

· We have also removed both the short- and long-term ratings from CreditWatch negative.

· The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics.

· More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.

· Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government's debt dynamics any time soon.

· The outlook on the long-term rating is negative. We could lower the long-term rating to 'AA' within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case.

TORONTO (Standard & Poor's) Aug. 5, 2011--Standard & Poor's Ratings Services said today that it lowered its long-term sovereign credit rating on the United States of America to 'AA+' from 'AAA'. Standard & Poor's also said that the outlook on the long-term rating is negative. At the same time, Standard & Poor's affirmed its 'A-1+' short-term rating on the U.S. In addition, Standard & Poor's removed both ratings from CreditWatch, where they were placed on July 14, 2011, with negative implications.

The transfer and convertibility (T&C) assessment of the U.S.--our assessment of the likelihood of official interference in the ability of U.S.-based public- and private-sector issuers to secure foreign exchange for

debt service--remains 'AAA'.

We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process. We also believe that the fiscal consolidation plan that Congress and the Administration agreed to this week falls short of the amount that we believe is necessary to stabilize the general government debt burden by the middle of the decade.

Our lowering of the rating was prompted by our view on the rising public debt burden and our perception of greater policymaking uncertainty, consistent with our criteria (see "Sovereign Government Rating Methodology and Assumptions ," June 30, 2011, especially Paragraphs 36-41). Nevertheless, we view the U.S. federal government's other economic, external, and monetary credit attributes, which form the basis for the sovereign rating, as broadly unchanged.

We have taken the ratings off CreditWatch because the Aug. 2 passage of the Budget Control Act Amendment of 2011 has removed any perceived immediate threat of payment default posed by delays to raising the government's debt ceiling. In addition, we believe that the act provides sufficient clarity to allow us to evaluate the likely course of U.S. fiscal policy for the next few years.

The political brinksmanship of recent months highlights what we see as America's governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy. Despite this year's wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and, as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program that some proponents had envisaged until quite recently. Republicans and Democrats have only been able to agree to relatively modest savings on discretionary spending while delegating to the Select Committee decisions on more comprehensive measures. It appears that for now, new revenues have dropped down on the menu of policy options. In addition, the plan envisions only minor policy changes on Medicare and little change in other entitlements,

the containment of which we and most other independent observers regard as key to long-term fiscal sustainability.

Our opinion is that elected officials remain wary of tackling the structural issues required to effectively address the rising U.S. public debt burden in a manner consistent with a 'AAA' rating and with 'AAA' rated sovereign peers (see Sovereign Government Rating Methodology and Assumptions," June 30, 2011, especially Paragraphs 36-41). In our view, the difficulty in framing a consensus on fiscal policy weakens the government's ability to manage public finances and diverts attention from the debate over how to achieve more balanced and dynamic economic growth in an era of fiscal stringency and private-sector deleveraging (ibid). A new political consensus might (or might not) emerge after the 2012 elections, but we believe that by then, the government debt burden will likely be higher, the needed medium-term fiscal adjustment potentially greater, and the inflection point on the U.S. population's demographics and other age-related spending drivers closer at hand (see "Global Aging 2011: In The U.S., Going Gray Will Likely Cost Even More Green, Now," June 21, 2011).

Standard & Poor's takes no position on the mix of spending and revenue measures that Congress and the Administration might conclude is appropriate for putting the U.S.'s finances on a sustainable footing.

The act calls for as much as $2.4 trillion of reductions in expenditure growth over the 10 years through 2021. These cuts will be implemented in two steps: the $917 billion agreed to initially, followed by an additional $1.5 trillion that the newly formed Congressional Joint Select Committee on Deficit Reduction is supposed to recommend by November 2011. The act contains no measures to raise taxes or otherwise enhance revenues, though the committee could recommend them.

The act further provides that if Congress does not enact the committee's recommendations, cuts of $1.2 trillion will be implemented over the same time period. The reductions would mainly affect outlays for civilian discretionary spending, defense, and Medicare. We understand that this fall-back mechanism is designed to encourage Congress to embrace a more balanced mix of expenditure savings, as the committee might recommend.

We note that in a letter to Congress on Aug. 1, 2011, the Congressional Budget Office (CBO) estimated total budgetary savings under the act to be at least $2.1 trillion over the next 10 years relative to its baseline assumptions. In updating our own fiscal projections, with certain modifications outlined below, we have relied on the CBO's latest "Alternate Fiscal Scenario" of June 2011, updated to include the CBO assumptions contained in its Aug. 1 letter to Congress. In general, the CBO's "Alternate Fiscal Scenario" assumes a continuation of recent Congressional action overriding existing law.

We view the act's measures as a step toward fiscal consolidation. However, this is within the framework of a legislative mechanism that leaves open the details of what is finally agreed to until the end of 2011, and Congress and the Administration could modify any agreement in the future. Even assuming that at least $2.1 trillion of the spending reductions the act envisages are implemented, we maintain our view that the U.S. net general government debt burden (all levels of government combined, excluding liquid financial assets) will likely continue to grow. Under our revised base case fiscal scenario--which we consider to be consistent with a 'AA+' long-term rating and a negative outlook--we now project that net general government debt would rise from an estimated 74% of GDP by the end of 2011 to 79% in 2015 and 85% by 2021. Even the projected 2015 ratio of sovereign indebtedness is high in relation to those of peer credits and, as noted, would continue to rise under the act's revised policy settings.

Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act. Key macroeconomic assumptions in the base case scenario include trend real GDP growth of 3% and consumer price inflation near 2% annually over the decade.

Our revised upside scenario--which, other things being equal, we view as consistent with the outlook on the 'AA+' long-term rating being revised to stable--retains these same macroeconomic assumptions. In addition, it incorporates $950 billion of new revenues on the assumption that the 2001 and 2003 tax cuts for high earners lapse from 2013 onwards, as the Administration is advocating. In this scenario, we project that the net general government debt would rise from an estimated 74% of GDP by the end of 2011 to 77% in 2015 and to 78% by 2021.

Our revised downside scenario--which, other things being equal, we view as being consistent with a possible further downgrade to a 'AA' long-term rating--features less-favorable macroeconomic assumptions, as outlined below and also assumes that the second round of spending cuts (at least $1.2 trillion) that the act calls for does not occur. This scenario also assumes somewhat higher nominal interest rates for U.S. Treasuries. We still believe that the role of the U.S. dollar as the key reserve currency confers a government funding advantage, one that could change only slowly over time, and that Fed policy might lean toward continued loose monetary policy at a time of fiscal tightening. Nonetheless, it is possible that interest rates could rise if investors re-price relative risks. As a result, our alternate scenario factors in a 50 basis point (bp)-75 bp rise in 10-year bond yields relative to the base and upside cases from 2013 onwards. In this scenario, we project the net public debt burden would rise from 74% of GDP in 2011 to 90% in 2015 and to 101% by 2021.

Our revised scenarios also take into account the significant negative revisions to historical GDP data that the Bureau of Economic Analysis announced on July 29. From our perspective, the effect of these revisions underscores two related points when evaluating the likely debt trajectory of the U.S. government. First, the revisions show that the recent recession was deeper than previously assumed, so the GDP this year is lower than previously thought in both nominal and real terms. Consequently, the debt burden is slightly higher. Second, the revised data highlight the sub-par path of the current economic recovery when compared with rebounds following previous post-war recessions. We believe the sluggish pace of the current economic recovery could be consistent with the experiences of countries that have had financial crises in which the slow process of debt deleveraging in the private sector leads to a persistent drag on demand. As a result, our downside case scenario assumes relatively modest real trend GDP growth of 2.5% and inflation of near 1.5% annually going forward.

When comparing the U.S. to sovereigns with 'AAA' long-term ratings that we view as relevant peers--Canada, France, Germany, and the U.K.--we also observe, based on our base case scenarios for each, that the trajectory of the U.S.'s net public debt is diverging from the others. Including the U.S., we estimate that these five sovereigns will have net general government debt to GDP ratios this year ranging from 34% (Canada) to 80% (the U.K.), with the U.S. debt burden at 74%. By 2015, we project that their net public debt to GDP ratios will range between 30% (lowest, Canada) and 83% (highest, France), with the U.S. debt burden at 79%. However, in contrast with the U.S., we project that the net public debt burdens of these other sovereigns will begin to decline, either before or by 2015.

Standard & Poor's transfer T&C assessment of the U.S. remains 'AAA'. Our T&C assessment reflects our view of the likelihood of the sovereign restricting other public and private issuers' access to foreign exchange needed to meet debt service. Although in our view the credit standing of the U.S. government has deteriorated modestly, we see little indication that official interference of this kind is entering onto the policy agenda of either Congress or the Administration. Consequently, we continue to view this risk as being highly remote.

The outlook on the long-term rating is negative. As our downside alternate fiscal scenario illustrates, a higher public debt trajectory than we currently assume could lead us to lower the long-term rating again. On the other hand, as our upside scenario highlights, if the recommendations of the Congressional Joint Select Committee on Deficit Reduction--independently or coupled with other initiatives, such as the lapsing of the 2001 and 2003 tax cuts for high earners--lead to fiscal consolidation measures beyond the minimum mandated, and we believe they are likely to slow the deterioration of the government's debt dynamics, the long-term rating could stabilize at 'AA+'.

On Monday, we will issue separate releases concerning affected ratings in the funds, government-related entities, financial institutions, insurance, public finance, and structured finance sectors.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.62.73
UK Pound	1	Rs.100.92
Euro	1	Rs.84.06

INFORMATION DETAILS

Report Prepared by :

PDT

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
--	NB	New Business	--

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.