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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10-Q
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(Mark One)
_X_ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended September 30, 2002
OR
___ Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _______________ to _______________
Commission file number 0-13470
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NANOMETRICS INCORPORATED
(Exact name of registrant as specified in its charter)
California 94-2276314
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1550 Buckeye Drive, Milpitas, CA 95035
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (408) 435-9600
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
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At November 4, 2002 there were 12,006,641 shares of common stock, no par value,
issued and outstanding.
1
NANOMETRICS INCORPORATED
INDEX
Part I. Financial Information Page
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Item 1. Financial Statements
Consolidated Balance Sheets -
September 30, 2002 and December 31, 2001 ................................................... 3
Consolidated Statements of Operations -
Three months and nine months ended
September 30, 2002 and 2001 ............................................................... 4
Consolidated Statements of Cash Flows -
Nine months ended September 30, 2002 and 2001 .............................................. 5
Notes to Consolidated Financial
Statements ................................................................................. 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations .............................................. 8
Item 3. Quantitative and Qualitative Disclosures
About Market Risk .......................................................................... 10
Part II. Other Information
Item 4. Controls and Procedures .................................................................... 11
Item 5. Other Information .......................................................................... 11
Item 6. Exhibits and Reports on Form 8-K ........................................................... 11
Signatures ................................................................................................... 12
Certifications ............................................................................................... 13
2
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
NANOMETRICS INCORPORATED
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share amounts)
(Unaudited)
September 30, December 31,
2002 2001
--------- ---------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 35,428 $ 47,227
Short-term investments 1,989 --
Accounts receivable, net of
allowances of $565 and $562 8,936 9,131
Inventories 27,200 26,311
Deferred income taxes 7,053 3,974
Prepaid expenses and other 2,369 2,474
--------- ---------
Total current assets 82,975 89,117
PROPERTY, PLANT AND EQUIPMENT, Net 50,376 48,412
DEFERRED INCOME TAXES 9 225
GOODWILL 1,077 1,077
OTHER ASSETS 3,357 3,524
--------- ---------
TOTAL ASSETS $ 137,794 $ 142,355
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,112 $ 2,906
Accrued payroll and related expenses 1,465 1,148
Deferred revenue 2,261 2,261
Other current liabilities 1,401 1,981
Income taxes payable 146 272
Current portion of debt obligations 404 378
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Total current liabilities 7,789 8,946
OTHER LONG-TERM OBLIGATIONS -- 250
DEBT OBLIGATIONS 3,237 3,314
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Total liabilities 11,026 12,510
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SHAREHOLDERS' EQUITY:
Common stock, no par value; 50,000,000 shares
authorized; 11,901,235 and 11,787,033 outstanding 99,671 98,531
Retained earnings 27,676 32,743
Accumulated other comprehensive loss (579) (1,429)
--------- ---------
Total shareholders' equity 126,768 129,845
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 137,794 $ 142,355
========= =========
See Notes to Consolidated Financial Statements
3
NANOMETRICS INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
-------- -------- -------- --------
NET REVENUES:
Product sales $ 6,637 $ 9,080 $ 20,634 $ 35,550
Service 1,932 1,019 4,352 3,767
-------- -------- -------- --------
Total net revenues 8,569 10,099 24,986 39,317
-------- -------- -------- --------
COSTS AND EXPENSES:
Cost of product sales 3,063 3,676 8,884 14,628
Cost of service 1,666 1,133 4,377 3,944
Research and development 3,688 2,676 10,127 7,995
Selling 2,718 2,675 7,636 6,893
General and administrative 1,349 1,105 3,512 3,109
-------- -------- -------- --------
Total costs and expenses 12,484 11,265 34,536 36,569
-------- -------- -------- --------
INCOME (LOSS) FROM OPERATIONS (3,915) (1,166) (9,550) 2,748
-------- -------- -------- --------
OTHER INCOME (EXPENSE):
Interest income 125 582 433 2,279
Interest expense (25) (17) (72) (57)
Other, net (61) 16 57 (394)
-------- -------- -------- --------
Total other income, net 39 581 418 1,828
-------- -------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES (3,876) (585) (9,132) 4,576
PROVISION (BENEFIT) FOR INCOME TAXES (2,060) (135) (4,067) 1,866
-------- -------- -------- --------
NET INCOME (LOSS) $ (1,816) $ (450) $ (5,065) $ 2,710
======== ======== ======== ========
NET INCOME (LOSS) PER SHARE:
Basic $ (0.15) $ (0.04) $ (0.43) $ 0.23
======== ======== ======== ========
Diluted $ (0.15) $ (0.04) $ (0.43) $ 0.22
======== ======== ======== ========
SHARES USED IN PER SHARE
COMPUTATION:
Basic 11,886 11,707 11,838 11,660
======== ======== ======== ========
Diluted 11,886 11,707 11,838 12,142
======== ======== ======== ========
See Notes to Consolidated Financial Statements
4
NANOMETRICS INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Nine Months Ended
September 30,
2002 2001
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (5,065) $ 2,710
Reconciliation of net income (loss) to net cash
used in operating activities:
Depreciation and amortization 1,725 996
Deferred income taxes (2,841) (1,144)
Changes in assets and liabilities
Accounts receivable 504 2,250
Inventories (487) (9,040)
Prepaid expenses and other current assets (6) 1,158
Accounts payable accrued and other current liabilities (1,175) 701
Income taxes payable 126 839
--------- ---------
Net cash used in operating activities (7,219) (1,530)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of short-term investments (36,989) (120,546)
Sales/maturities of short-term investments 35,000 129,719
Purchases of property, plant and equipment (2,710) (9,883)
Other assets -- (2,289)
--------- ---------
Net cash used in investing activities (4,699) (2,999)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt (611) (768)
Issuance of common stock 894 876
--------- ---------
Net cash provided by financing activities 283 108
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EFFECT OF EXCHANGE RATE CHANGES ON CASH (164) 113
--------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS (11,799) (4,308)
CASH AND CASH EQUIVALENTS, beginning of period 47,227 16,933
--------- ---------
CASH AND CASH EQUIVALENTS, end of period $ 35,428 $ 12,625
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest $ 76 $ 157
========= =========
Cash paid for income taxes $ 6 $ 2,682
========= =========
See Notes to Consolidated Financial Statements
5
NANOMETRICS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Consolidated Financial Statements
The consolidated financial statements include the accounts of Nanometrics
Incorporated and its wholly owned subsidiaries. All significant inter-company
accounts and transactions have been eliminated.
While the quarterly financial statements are unaudited, the financial
statements included in this report reflect all adjustments (consisting only of
normal recurring adjustments) which the Company considers necessary for a fair
presentation of the results of operations for the interim periods covered and of
the financial condition of the Company at the date of the interim balance sheet.
The operating results for interim periods are not necessarily indicative of the
operating results that may be expected for the entire year. The information
included in this report should be read in conjunction with the information
included in Nanometrics' 2001 Annual Report on Form 10-K filed with the
Securities and Exchange Commission.
Note 2. Inventories
Inventories are stated at the lower of cost (first-in, first-out) or market
and consist of the following (in thousands):
September 30, December 31,
2002 2001
------- -------
Raw materials and subassemblies $13,886 $18,279
Work in process 8,114 2,387
Finished goods 5,200 5,645
------- -------
Total inventories $27,200 $26,311
======= =======
Note 3. Other Current Liabilities
Other current liabilities consist of the following (in thousands):
September 30, December 31,
2002 2001
------ ------
Commissions payable $ 63 $ 288
Accrued warranty 261 435
Accrued professional services 118 210
Other 959 1,048
------ ------
Total other current liabilities $1,401 $1,981
====== ======
Note 4. Shareholders' Equity
Net Income (Loss) Per Share - The reconciliation of the share denominator used
in the basic and diluted net income (loss) per share computations are as follows
(in thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
------ ------ ------ ------
Weighted average common shares
outstanding-shares used in basic
net income (loss) per share computation 11,886 11,707 11,838 11,660
Dilutive effect of common stock equivalents,
using the treasury stock method -- -- -- 482
------ ------ ------ ------
Shares used in dilutive net income (loss)
per share computation 11,886 11,707 11,838 12,142
====== ====== ====== ======
6
During the three month periods ended September 30, 2002 and September 30,
2001, respectively, diluted net loss per share excludes common equivalent shares
outstanding, as their effect is antidilutive. During the nine month period ended
Spetember 30, 2001, Nanometrics had common equivalent shares outstanding which
could potentially dilute basic net income per share in the future, but were
excluded from the computation of diluted net income per share as the common
stock options' exercise prices were greater than the average market price of the
common shares for the period. During the three and nine month periods ended
September 30, 2002, diluted net loss per share excludes common equivalent shares
outstanding, as their effect is antidilutive.
Note 5. Comprehensive Income (Loss)
Comprehensive income (loss), which consisted of net income (loss) for the
periods and changes in accumulated other comprehensive income, was a loss of
$2,182,000 and $212,000 for the three months ended September 30, 2002 and 2001,
respectively. For the nine months ended September 30, 2002, the comprehensive
loss was $4,215,000 compared to comprehensive income of $2,532,000 for the nine
months ended September 30, 2001.
Note 6. Equity
During the three months period ended September 30, 2002, Nanometrics issued
the remaining shares available under the 1986 Employee Stock Purchase Plan (the
"1986 Plan"). Nanometrics intends to cancel the 1986 Plan and does not expect to
issue further shares under the plan.
Note 7. New Accounting Pronouncement
In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 141, Business
Combinations and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No.
141 requires that all business combinations initiated after June 30, 2001 be
accounted for under the purchase method and addresses the initial recognition
and measurement of goodwill and other intangible assets acquired in a business
combination. SFAS No. 142 addresses the initial recognition and measurement of
intangible assets acquired outside of a business combination and the accounting
for goodwill and other intangible assets subsequent to their acquisition. SFAS
No. 142 provides that intangible assets with finite useful lives be amortized
and that goodwill and intangible assets with indefinite lives will not be
amortized, but will rather be tested at least annually for impairment. Effective
January 1, 2002, Nanometrics adopted SFAS No. 142. Nanometrics ceased amortizing
goodwill with a net carrying value of $1,077,000 and annual amortization of
$204,000 that resulted from business combinations completed prior to the
adoption of SFAS No. 141. The adoption of the non-amortization provisions of
SFAS No. 142 was not material for the nine months ended September 30, 2002.
Nanometrics completed its transitional impairment test and determined that no
impairment was indicated.
In June 2002, the FASB issued SFAS 146, Accounting for Costs Associated
with Exit or Disposal Activities, which addresses accounting for restructuring
and similar costs. SFAS 146 supersedes previous accounting guidance, principally
Emerging Issues Task Force Issue No. 94-3. Nanometrics will adopt the provisions
of SFAS 146 for restructuring activities initiated after December 31, 2002. SFAS
146 requires that the liability for costs associated with an exit or disposal
activity be recognized when the liability is incurred. Under Issue 94-3, a
liability for an exit cost was recognized at the date of the Company's
commitment to an exit plan. SFAS 146 also establishes that the liability should
initially be measured and recorded at fair value. Accordingly, SFAS 146 may
affect the timing of recognizing future restructuring costs as well as the
amounts recognized.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This report including the following Management's Discussion and Analysis of
Financial Condition and Results of Operations contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended and Section 21E of the Securities Exchange Act of 1934, as amended. Such
forward-looking statements are based upon current expectations and beliefs that
involve risks and uncertainties, such as our plans, objectives and intentions,
regarding, among other things: (i) customer demand for Nanometrics' products,
which may be affected by several factors including the cyclicality of the
semiconductor, magnetic recording head and flat panel display industries served
by Nanometrics, patterns of capital spending by its customers, technological
changes in the markets served by Nanometrics and its customers, and market
acceptance of products of both Nanometrics and its customers; (ii) the timing,
cancellation or delay of Nanometrics' customer orders and shipments; (iii)
competition, including competitive pressures on product prices and changes in
pricing by Nanometrics' customers or suppliers; (iv) fluctuations in foreign
currency exchange rates, particularly the Japanese yen; (v) the proportion of
sales Nanometrics makes directly to its customers versus sales through
distributors and representatives; (vi) market acceptance of new and enhanced
versions of Nanometrics' products; (vii) the timing of new product announcements
and releases of products by Nanometrics or its competitors, including our
ability to design, introduce and manufacture new products on a timely and cost
effective basis; (viii) the size and timing of acquisitions of businesses,
products or technologies and fluctuations in the availability and cost of
components and subassemblies of Nanometrics' products.
In some cases, forward-looking statements can be identified by words such
as "believe," "expect," "anticipate," "plan," "potential," "continue" or similar
expressions. Forward-looking statements also include the assumptions underlying
or relating to any of the foregoing statements. Our actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain risk factors, including those set forth in "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Factors That May Affect Future Operating Results" in Nanometrics' 2001 Annual
Report on Form 10-K. We believe that it is important to communicate our
expectations to our investors. However, there may be events in the future that
we are not able to predict accurately or over which we have no control. You
should be aware that the occurrence of the events described in such risk factors
and elsewhere in this report could materially and adversely affect our business,
operating results and financial condition.
All forward-looking statements included in this report are based on
information available to us on the date hereof. We undertake no obligation to
update forward-looking statements made in this report to reflect events or
circumstances after the date of this report or to update reasons why actual
results could differ from those anticipated in such forward-looking statements.
Results of Operations
Total net revenues for the three months ended September 30, 2002 were
$8,569,000, a decrease of $1,530,000 or 15% from the comparable period in 2001.
For the nine months ended September 30, 2002, total net revenues of $24,986,000
decreased by $14,331,000 or 36% from the comparable period in 2001. Product
sales of $6,637,000 for the three months ended September 30, 2002, decreased
$2,443,000 or 27% as compared with the same period in 2001. Product sales of
$20,634,000 for the nine months ended September 30, 2002, decreased $14,916,000
or 42% as compared with the same period in 2001. Unit sales of automated,
integrated and tabletop systems were each down from their 2001 levels. The lower
levels of product sales resulted from weaker demand for semiconductor process
control equipment, particularly in the U.S. and Far East. We believe that this
reduced demand was attributable primarily to overcapacity in the semiconductor
industry as well as the economic slowdown in the U.S. and Japan. Service revenue
of $1,932,000 and $4,352,000 for the three months and nine months ended
September 30, 2002, respectively, increased $913,000 or 90% and $585,000 or 16%,
respectively, as compared to the same periods in 2001 primarily due to higher
accessories and service sales to customers increasing their spending on the
repair and maintenance of their installed base of systems during the third
quarter of 2002.
8
Cost of product sales as a percentage of product sales increased to 46% in
the third quarter of 2002 from 40% in the third quarter of 2001 and increased to
43% in the nine months ended September 30, 2002 from 41% for the same period in
2001 primarily because of lower sales volume in 2002 resulting in higher per
unit manufacturing costs and from the cost of bringing more machine shop
capacity on line in 2002. Cost of service as a percentage of service revenue
decreased to 86% in the third quarter of 2002 from 111% in the third quarter of
2001 and decreased to 101% in the nine months ended September 30, 2002 from 105%
for the same period in 2001 primarily as a result of higher accessories and
service sales in the U.S. and the Far East.
Research and development expenses for the three month and nine month
periods ended September 30, 2002 increased $1,012,000 or 38% and $2,132,000 or
27%, respectively, compared to the same periods in 2001 resulting primarily from
increased headcount and materials expenses for the development of new and
enhanced products.
Selling expenses for the three month and nine month periods ended September
30, 2002 increased by $43,000 or 2% and $743,000 or 11%, respectively, compared
to the same periods in 2001 primarily because of increased headcount and related
expenses.
General and administrative expenses for the three month and nine month
periods ended September 30, 2002 increased $244,000 or 22% and $403,000 or 13%,
respectively, compared to the same periods in 2001 due primarily to information
technology implementation expenses and higher administrative costs.
Total other income, net for the three month and nine month periods ended
September 30, 2002 decreased $542,000 or 93% and $1,410,000 or 77%,
respectively, from the comparable periods in 2001 due primarily to lower
interest income, resulting from lower investment balances and lower interest
rates.
Benefit for income taxes for the three month period ended September 30,
2002 increased $1,925,000 or 1,426% compared to the same period in 2001. Benefit
for income taxes for the nine month period ended September 30, 2002 increased
$5,933,000 compared to the provision for income taxes for the same period in
2001. Nanometrics' effective tax rates for the three month and nine month
periods ended September 30, 2002 were 53% and 45%, respectively, as compared
with 23% and 41% for the same periods in 2001. The increase in tax benefit and
effective tax rates was due primarily to additional research and development
credits claimed on Nanometrics' 2001 Federal Income Tax Return, which was filed
on September 15, 2002, as compared with the research and development credits
estimated in the 2001 annual financial statements.
As a result of the factors discussed above, Nanometrics' loss from
operations was $3,915,000 and net loss was $1,816,000 for the third quarter of
2002 compared to a loss from operations of $1,166,000 and a net loss of $450,000
for the same period in 2001. For the first nine months of 2002, Nanometrics'
loss from operations was $9,550,000 and net loss was $5,065,000 which compared
to income from operations of $2,748,000 and net income of $2,710,000 for the
same period in 2001.
Liquidity and Capital Resources
At September 30, 2002, our cash, cash equivalents and short-term
investments totaled $37,417,000. These funds are invested primarily in U.S.
Treasury Bills. At September 30, 2002, Nanometrics had working capital of
$75,186,000 compared to $80,171,000 at December 31, 2001. The current ratio at
September 30, 2001 was 10.7 to 1. We believe working capital including cash and
short-term investments will be sufficient to meet our needs at least through the
next twelve months. Operating activities for the first nine months of 2002
9
used cash of $7,219,000 primarily from the net loss, higher deferred tax levels
and lower accounts payable. Investing activities used $4,699,000 primarily from
the net purchases of short-term investments in the amount of $1,989,000 and from
capital expenditures of $2,710,000 used to continue our efforts in improving our
facilities and expanding our manufacturing capacity. Financing activities
provided $283,000 primarily due to $894,000 generated from stock issuances,
offset by $611,000 from repayment of debt obligations related to mortgages in
Japan.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to financial market risks, which include changes in foreign
currency exchange rates and interest rates. We do not use derivative financial
instruments. Instead, we actively manage the balances of current assets and
liabilities denominated in foreign currencies to minimize currency fluctuation
risk. As a result, a hypothetical 10% change in the foreign currency exchange
rates at September 30, 2002 would not have a material impact on our results of
operations. Our investments in marketable securities are subject to interest
rate risk but due to the short-term nature of these investments, interest rate
changes would not have a material impact on their value at September 30, 2002.
We also have fixed rate yen denominated debt obligations in Japan that have no
interest rate risk. At September 30, 2002, our total debt obligation was
$3,641,000 with a long-term portion of $3,237,000. A hypothetical 10% change in
interest rates at September 30, 2002 would not have a material impact on our
results of operations.
10
NANOMETRICS INCORPORATED
PART II
OTHER INFORMATION
ITEM 4. CONTROLS AND PROCEDURES
Nanometrics maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in the periodic reports filed
by Nanometrics with the Securities and Exchange Commission (the "Commission") is
recorded, processed summarized and reported within the time periods specified in
the rules and forms of the Commission and that such information is accumulated
and communicated to Nanometrics' management. In designing and evaluating the
disclosure controls and procedures, Nanometrics' management recognized that any
controls and procedures, no matter how well designed and operated, can provide
only reasonable assurance of achieving the desired control objectives and
management necessarily was required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.
Based on their most recent evaluation, which was completed within 90 days of the
filing of this Quarterly Report on Form 10-Q, Nanometrics' Chief Executive
Officer and Chief Financial Officer believe that the Company's disclosure
controls and procedures (as defined in Rules 13a-14 and 15d-14 of the Securities
Exchange Act of 1934, as amended) are effective. There were not any significant
changes in internal controls or in other factors that could significantly affect
these internal controls subsequent to the date of their most recent evaluation.
ITEM 5. OTHER INFORMATION
In compliance with Section 202 of the Sarbanes-Oxley Act of 2002, the Audit
Committee of the Board of Driectors of Nanometrics, has preapproved the
continuing provision of certain non-audit services of Deloitte & Touche LLP,
Nanometrics' independent auditor. Such services include tax and tax-related
services.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits.
Exhibit 99.1 Certification of Chief Executive Officer and Chief Financial
Officer
B. Reports on Form 8-K.
None
11
NANOMETRICS INCORPORATED
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NANOMETRICS INCORPORATED
(Registrant)
/s/ Vincent J. Coates
- -----------------------------
Vincent J. Coates
Chairman of the Board
/s/ John Heaton
- -----------------------------
John Heaton
Chief Executive Officer
/s/ Paul B. Nolan
- -----------------------------
Paul B. Nolan
Chief Financial Officer
Dated: November 8, 2002
12
I, John D. Heaton, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Nanometrics
Incorporated;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within these entities, particularly
during the period in which this quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant 's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 8, 2002 By: /s/ John D. Heaton
---------------------------------
Name: John D. Heaton
Title: Chief Executive Officer
13
I, Paul B. Nolan, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Nanometrics
Incorporated;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within these entities, particularly
during the period in which this quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant 's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 8, 2002 By: /s/ Paul B. Nolan
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Name: Paul B. Nolan
Title: Chief Financial Officer
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