Therma-Wave Announces Fiscal First Quarter 2007 Financial Results; Net Revenues Increase 12% Sequentially to $17.9 Million

Net revenues for the fiscal first quarter 2007 were $17.9 million,up $1.9 million or 12% sequentially from $16.1 million recorded in thefiscal fourth quarter 2006. Net revenues increased $0.4 million, or2%, from the $17.5 million reported for the fiscal first quarter of2006. Total deferred revenues during the fiscal first quarter 2007were $9.0 million, up $0.5 million, or 6%, compared to $8.5 million asof fiscal year end 2006.

Net loss available to common stockholders for the fiscal firstquarter 2007 was $1.1 million, or $(0.03) per basic and diluted share,including approximately $0.3 million in stock-based compensation costsrelated to the Company's adoption of Statements of FinancialAccounting Standards (SFAS) No. 123R during the fiscal first quarterof 2007.

Sequentially, net loss available to common stockholders declinedby $2.5 million compared to a net loss available to commonstockholders of $3.6 million, or $(0.10) per diluted share, in thefiscal fourth quarter of 2006.

In the year ago period, the Company reported net income availableto common stockholders of $2.4 million, or $0.07 per diluted share,including the positive impact of a one time gain of $8.6 million, or$0.23 per diluted share, associated with the sale by the Company ofthe CCD-i product line and related assets during the fiscal firstquarter of 2006.

Boris Lipkin, Therma-Wave's president and chief executive officer,stated, "We are pleased to be starting fiscal 2007 with measurableimprovements in terms of customer orders, revenue growth and improvedbottom line performance. We believe our results this quarter providefurther evidence of the progress our operating and financialinitiatives are now yielding and the confidence our customers continueto have in our precision metrology solutions."

"While we are pleased with our financial improvements during thequarter and the success we have had with our customers, we remainfocused on a number of strategic short-term and long-term initiativesdesigned to support further gross margin expansion and ultimatelyreturning to profitability. We are particularly pleased with follow-onorders from leading fab and foundry customers this quarter, as well asour entrance into the data storage development and manufacturingmarket with our Opti-Probe thin film technology," continued Mr.Lipkin.

Gross margin for the fiscal first quarter 2007 was 38% compared to31% in the fiscal fourth quarter 2006 and 41% in the year ago period.

Cash and cash equivalents totaled $18.9 million as of July 2,2006, compared to $20.6 million as of April 2, 2006. Fiscal firstquarter 2007 cash consumption of $1.7 million was at the low end ofmanagement's stated consumption expectations for the quarter of $1.5million to $3.0 million.

Guidance

The Company's statements about its future financial performanceare based on current information and expectations and the Companyundertakes no duty to update such statements. The statements areforward-looking and actual results could differ materially due tovarious risks and uncertainties, some of which are described below.

Guidance for the fiscal second quarter of 2007 ending October 1,2006 is as follows:

-- Orders are expected to be within the range of $19.5 million to $21.5 million.

-- Revenue is expected to be within the range of $17.0 million to $19.0 million.

-- Diluted net loss per share is expected to be within the range of $(0.03) to $(0.05), including the impact of stock-based compensation expense estimated at $0.01 to $0.02 per diluted share.

-- Cash consumption is expected to be within the range of $1.5 million to $2.0 million.

Conference Call Information

Therma-Wave, Inc. will hold a conference call to review financialresults and ongoing operations at 7:00 a.m. Pacific Time, 10:00 a.m.Eastern Time, on Wednesday, July 26, 2006. Participating on the callwill be Boris Lipkin, president and chief executive officer, andJoseph Passarello, senior vice president of finance and chieffinancial officer. To participate in the call, please dial 1 (800) 374- 2501 in North America, or +1 (706) 634 - 2468 internationally,approximately five minutes prior to the scheduled call start time.

A live Web cast of the conference call, as well as a replay of thecall, may be accessed via the Internet at: www.thermawave.com. A phonebased replay will also be made available following the conclusion ofthe call through August 4th, 2006. Participants may access the phonereplay by dialing 1 (800) 642 - 1687 in North America, or +1 (706) 645- 9291 internationally, and entering the access code number 3087948.

About Therma-Wave, Inc.

Since 1982, Therma-Wave, Inc. has been revolutionizing processcontrol metrology systems through innovative proprietary products andtechnologies. The Company is a worldwide leader in the development,manufacture, marketing and service of process control metrologysystems used in the manufacture of semiconductors. Therma-Wavecurrently offers leading-edge products to the semiconductormanufacturing industry for the measurement of transparent andsemi-transparent thin films; for the measurement of criticaldimensions and profile of IC features; and for the monitoring of ionimplantation. For further information about Therma-Wave, Inc., accessthe Company's web site at: www.thermawave.com.

This press release contains forward-looking statements thatinvolve risks and uncertainties, as well as assumptions that, if theydo not fully materialize or prove incorrect, could cause our actualresults to differ materially from those expressed or implied by suchforward-looking statements. Such forward-looking statements includethose relating to our positioning to achieve profitability, financialguidance for the next quarter, our progress towards our financialgoals and the gains towards our strategic objectives, among others.Factors that could cause actual results to differ materially from theforward-looking statements include the cyclicality of our business,the loss of one or more large customers, the delay or cancellation ofa significant order, our ability to protect our intellectual property,potential lawsuits against the Company for alleged infringement ofthird-party intellectual property rights, our ability to successfullycompete against larger companies, our ability to access additionalcapital in the future, our ability to develop new and advancedproducts in the future, our ability to attract and retain keypersonnel, our ability to receive services and materials, suppliesfrom single source suppliers, possible disruptions to our business andthe impact on remaining employees of the restructuring activities,disruptions at our manufacturing facility and general political,economic and stock market conditions and events, both domestically andinternationally. These factors and others are described in more detailin our public reports filed with the Securities and ExchangeCommission, such as those discussed in the "Factors Affecting FutureResults" section of our Annual Report on Form 10-K for the fiscal yearended April 2, 2006, all subsequent current reports on Form 8-K andall of our prior press releases. All forward-looking statements inthis press release are based on information available to us as of thedate hereof, and we assume no duty to update these forward-lookingstatements.

THERMA-WAVE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

July 2, April 2,
2006 2006
--------- ---------
Assets
Current assets:
Cash and cash equivalents $ 18,943 $ 20,623
Accounts receivable, net 15,546 12,701
Inventories 26,477 22,353
Other current assets 1,498 1,621
-------- --------

Total current assets 62,464 57,298
Property and equipment, net 796 789
Other assets, net 1,177 1,291
-------- --------

Total assets $ 64,437 $ 59,378
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Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 9,802 $ 4,062
Accrued liabilities 15,242 15,820
Deferred revenues 8,360 7,874
Term loan facility, net 4,905 4,896
-------- --------

Total current liabilities 38,309 32,652
Long-term liabilities:
Non-current deferred revenues 685 662
Other long-term liabilities 951 1,076
-------- --------

Total liabilities 39,945 34,390

Series B redeemable convertible preferred stock 7,098 6,940

Stockholders' equity 17,394 18,048
-------- --------

Total liabilities and stockholders' equity $ 64,437 $ 59,378
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THERMA-WAVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)

Three months ended
July 2, July 3,
2006 2005
--------- ---------
Net revenues
Product $ 13,118 $ 12,720
Service and parts 4,792 4,819
-------- --------

Total net revenues 17,910 17,539

Cost of revenues
Product 7,598 6,419
Service and parts 3,460 4,005
-------- --------

Gross profit 6,852 7,115

Operating expenses:
Research and development 3,149 3,837
Selling, general and administrative 4,998 7,753
Restructuring, severance and other -- 1,467
-------- --------

Total operating expenses 8,147 13,057

Operating loss (1,294 ) (5,942 )
Other operating income (expense):
Gain on sale of product line -- 8,550
Interest expense (200 ) (57 )
Interest income 198 32
Other, net 312 (96 )
-------- --------

Total other income, net 310 8,429
-------- --------

Income (loss) before benefit (provision) for
income taxes (984 ) 2,487

Benefit (provision) for income taxes 173 (41 )
-------- --------

Net income (loss) (811 ) 2,446

Accretion of Series B preferred stock to
redemptive value including dividends accrued (314 ) --
-------- --------

Net income (loss) available to common
stockholders $ (1,125 ) $ 2,446
======== ========

Net income (loss) per share:
Basic $ (0.03) $ 0.07
Diluted $ (0.03) $ 0.07

Weighted average number of shares
outstanding:
Basic 36,784 36,349
Diluted 36,784 37,432

Stock-based compensation expense (benefit)
included in:
Cost of revenues $ 47 $ 4
Operating expenses:
Research and development 74 (178 )
Selling, general and administrative 219 15

Total operating expenses (benefit) 293 (163 )
-------- --------

Total stock-based compensation expense
(benefit) $ 340 $ (159 )
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