##### Table of Contents






UNITED STATES

SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549




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Form 10-Q/A



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|           |  |                                                                                                 
|---------- |  | ------------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                                 
|þ          |  | QUARTERLY REPORT PURSUANT TO SECTION 13
    OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934 
|          
|           |  | For the quarterly period ended
    September 29, 2002                                           
|          
|or        
|          
|o          |  | 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 000-26911

Therma-Wave, Inc.


(Exact Name of Registrant as Specified in Its
Charter)


|                                                                   |  |                                            
|------------------------------------------------------------------ |  | -------------------------------------------
|Delaware                                                           |  | 94-3000561                                 
|(State or Other Jurisdiction of Incorporation
    or Organization) |  | (I.R.S. Employer Identification
    Number)

1250 Reliance Way

Fremont, California 94539


(Address of Principal Executive Offices
Including Zip Code)


(510) 668-2200

(Registrants Telephone Number, Including
Area Code)


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 reports), and
(2) has been subject to such filing requirements for the
past
90 days.     Yes þ          No o

Indicate the number of shares of the
issuers class of common stock, as of the latest practical
date:

|                             |  |                                   
|---------------------------- |  | ----------------------------------
|Class                        |  | Outstanding as of October 31, 2002
|                             |  |                                   
|Common stock, $.01 par value |  | 29,012,013                        



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TABLE OF CONTENTS



|                                |                                                                                               |                                                                |  |  |  |  |  | 
|------------------------------- | --------------------------------------------------------------------------------------------- | -------------------------------------------------------------- |  |  |  |  |  | 
|PART I -- FINANCIAL INFORMATION
|                                | Item 1. Financial Statements                                                                 
|                                |                                                                                               | CONDENSED CONSOLIDATED BALANCE SHEETS                         
|                                |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS               
|                                |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS               
|                                |                                                                                               | NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|                                | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                | Item 4. Controls and Procedures                                                              
|PART II. -- OTHER INFORMATION  
|                                | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                     
|CERTIFICATIONS                 
|EXHIBIT 10.40                  
|EXHIBIT 10.41                  
|EXHIBIT 99.2                   



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##### Table of Contents



THERMA-WAVE, INC.

TABLE OF CONTENTS

PART I.     FINANCIAL
INFORMATION

|                                |  |                                                                                                                        |    |      |    | 
|------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------- | -- | ---- | -- | 
|                                |  |                                                                                                                        |    | Page
|                                |  |                                                                                                                        |    |     
|Item 1.                         |  | Financial Statements                                                                                                   |    |      | 1  | 
|                                |  | Condensed Consolidated Balance Sheets as of
    September 30, 2002 and March 31, 2002                                  |    |      | 1  | 
|                                |  | Condensed Consolidated Statements of Operations
    for the Three and Six Months Ended September 30, 2002 and
    2001 |    |      | 2  | 
|                                |  | Condensed Consolidated Statements of Cash Flows
    for the Six Months Ended September 30, 2002 and 2001               |    |      | 3  | 
|                                |  | Notes to Condensed Consolidated Financial
    Statements                                                               |    |      | 4  | 
|Item 2.                         |  | Managements Discussion and Analysis of
    Financial Condition and Results of Operations                              |    |      | 10 | 
|Item 4.                         |  | Controls and Procedures                                                                                                |    |      | 15 | 
|PART II.  OTHER
    INFORMATION
|Item 6.                         |  | Exhibits and Reports on
    Form 8-K                                                                                   |    |      | 16 | 
|Signatures                      |  |                                                                                                                        | 17 |     
|Certifications                  |  |                                                                                                                        | 18 |     

Explanatory note regarding this amendment on
Form 10-Q/ A

This quarterly report on Form 10-Q/ A is
being filed as a result of the restatement of our unaudited
condensed consolidated financial statements for the quarterly
periods ended September 30, 2001, December 31, 2001,
June 30, 2002 and September 30, 2002 and the year
ended March 31, 2002 as further described in Note
2  Restatement of Financial Results of this
Form 10-Q/ A. This report still speaks as of the original
filing date and, as expressly stated, no attempt has been made
to update this report to reflect events occurring subsequent to
the date of the original filing.

i



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##### Table of Contents






PART I  FINANCIAL
INFORMATION




Item 1.     Financial
Statements

THERMA-WAVE, INC.






CONDENSED CONSOLIDATED BALANCE
SHEETS


(in thousands)


|                                         |                                      |                                            |   |           |         |  |   |          |         | 
|---------------------------------------- | ------------------------------------ | ------------------------------------------ | - | --------- | ------- |  | - | -------- | ------- | 
|                                         |                                      | September 30,                              |   | March 31,
|                                         |                                      | 2002                                       |   | 2002     
|                                         |                                      |                                            |   |          
|                                         |                                      |                                           
|                                         |                                      | (As Restated)                             
|ASSETS                                  
|Current assets:                          |                                      |                                            |   |           |         |  |   |         
|                                         | Cash and cash equivalents            |                                            | $ | 25,979    |         |  | $ | 46,484   |        
|                                         | Short-term investments               |                                            |   | 13,565    |         |  |   | 12,575   |        
|                                         | Accounts receivable, net             |                                            |   | 14,565    |         |  |   | 15,635   |        
|                                         | Inventories                          |                                            |   | 29,719    |         |  |   | 34,677   |        
|                                         | Other current assets                 |                                            |   | 1,963     |         |  |   | 3,415    |        
|                                         |                                      |                                            |   |           |         |  |   |         
|                                         |                                      | Total current assets                       |   |           | 85,791  |  |   |          | 112,786 | 
|                                         | Property and equipment, net          |                                            |   | 11,784    |         |  |   | 14,041   |        
|                                         | Goodwill and intangible assets, net  |                                            |   | 2,538     |         |  |   | 70,096   |        
|                                         | Other assets                         |                                            |   | 4,753     |         |  |   | 4,723    |        
|                                         |                                      |                                            |   |           |         |  |   |         
|                                         |                                      | Total assets                               |   | $         | 104,866 |  |   | $        | 201,646 | 
|                                         |                                      |                                            |   |           |         |  |   |         
|LIABILITIES AND STOCKHOLDERS
    EQUITY
|Current liabilities:                     |                                      |                                            |   |           |         |  |   |         
|                                         | Accounts payable                     |                                            | $ | 7,701     |         |  | $ | 6,297    |        
|                                         | Accrued warranty costs               |                                            |   | 949       |         |  |   | 1,777    |        
|                                         | Deferred revenue                     |                                            |   | 11,911    |         |  |   | 9,493    |        
|                                         | Income tax payable                   |                                            |   | 4,892     |         |  |   | 4,903    |        
|                                         | Other current liabilities            |                                            |   | 9,469     |         |  |   | 9,303    |        
|                                         |                                      |                                            |   |           |         |  |   |         
|                                         |                                      | Total current liabilities                  |   |           | 34,922  |  |   |          | 31,773  | 
|                                         | Long term debt                       |                                            |   | 16        |         |  |   | 16       |        
|                                         | Other liabilities                    |                                            |   | 2,047     |         |  |   | 2,358    |        
|                                         |                                      |                                            |   |           |         |  |   |         
|                                         |                                      | Total liabilities                          |   |           | 36,985  |  |   |          | 34,147  | 
|                                         |                                      |                                            |   |           |         |  |   |         
|Stockholders equity:                    |                                      |                                            |   |           |         |  |   |         
|                                         | Common stock                         |                                            |   | 293       |         |  |   | 291      |        
|                                         | Treasury stock                       |                                            |   | (846      | )       |  |   |         |        
|                                         | Additional paid-in capital           |                                            |   | 322,434   |         |  |   | 321,466  |        
|                                         | Notes receivable from stockholders   |                                            |   | (196      | )       |  |   | (200     | )      
|                                         | Accumulated deficit                  |                                            |   | (250,514  | )       |  |   | (149,325 | )      
|                                         | Accumulated other comprehensive loss |                                            |   | (1,426    | )       |  |   | (1,790   | )      
|                                         | Deferred stock-based compensation    |                                            |   | (1,864    | )       |  |   | (2,943   | )      
|                                         |                                      |                                            |   |           |         |  |   |         
|                                         |                                      | Total stockholders equity                 |   |           | 67,881  |  |   |          | 167,499 | 
|                                         |                                      |                                            |   |           |         |  |   |         
|                                         |                                      | Total liabilities and stockholders equity |   | $         | 104,866 |  |   | $        | 201,646 | 
|                                         |                                      |                                            |   |           |         |  |   |         

See accompanying notes to condensed consolidated
financial statements.

1



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##### Table of Contents



THERMA-WAVE, INC.






CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS


(in thousands, except per share
data)


|                                            |                                                    |                          |         |                  |        |      |        |        |        |   |          |        |        |   |        |        |        | 
|------------------------------------------- | -------------------------------------------------- | ------------------------ | ------- | ---------------- | ------ | ---- | ------ | ------ | ------ | - | -------- | ------ | ------ | - | ------ | ------ | ------ | 
|                                            |                                                    |                          |         |                 
|                                            |                                                    | Three Months Ended       |         | Six Months Ended
|                                            |                                                    | September 30,            |         | September 30,   
|                                            |                                                    |                          |         |                 
|                                            |                                                    | 2002                     |         | 2001             |        | 2002 |        | 2001  
|                                            |                                                    |                          |         |                  |        |      |        |       
|                                            |                                                    |                          |         |                 
|                                            |                                                    | (As Restated)            |         | (As Restated)   
|Net revenues                                |                                                    |                          |         |                  |        |      |        |        |        |   |          |        |        |   |        |       
|                                            | Product                                            |                          | $       | 5,688            |        |      | $      | 16,360 |        |   | $        | 15,398 |        |   | $      | 50,060 |       
|                                            | Service and parts                                  |                          |         | 5,257            |        |      |        | 4,300  |        |   |          | 10,496 |        |   |        | 8,421  |       
|                                            |                                                    |                          |         |                  |        |      |        |        |        |   |          |        |        |   |        |       
|Total net revenues                          |                                                    |                          | 10,945  |                  |        |      | 20,660 |        |        |   | 25,894   |        |        |   | 58,481 |       
|Cost of revenues                            |                                                    |                          | 17,969  |                  |        |      | 12,739 |        |        |   | 29,840   |        |        |   | 32,888 |       
|                                            |                                                    |                          |         |                  |        |      |        |        |        |   |          |        |        |   |        |       
|Gross profit                                |                                                    |                          | (7,024  | )                |        |      | 7,921  |        |        |   | (3,946   | )      |        |   | 25,593 |       
|                                            |                                                    |                          |         |                  |        |      |        |        |        |   |          |        |        |   |        |       
|Operating expenses:                         |                                                    |                          |         |                  |        |      |        |        |        |   |          |        |        |   |        |       
|                                            | Research and development                           |                          |         | 8,108            |        |      |        | 6,533  |        |   |          | 16,103 |        |   |        | 13,514 |       
|                                            | Selling, general and administrative                |                          |         | 6,659            |        |      |        | 4,921  |        |   |          | 12,780 |        |   |        | 10,628 |       
|                                            | Impairment of goodwill and other intangible assets |                          |         | 66,977           |        |      |        |       |        |   |          | 66,977 |        |   |        |       |       
|                                            | Severance charge                                   |                          |         | 1,165            |        |      |        | 377    |        |   |          | 1,165  |        |   |        | 377    |       
|                                            | Stock-based compensation                           |                          |         | 466              |        |      |        |       |        |   |          | 1,052  |        |   |        |       |       
|                                            |                                                    |                          |         |                  |        |      |        |        |        |   |          |        |        |   |        |       
|                                            |                                                    | Total operating expenses |         |                  | 83,375 |      |        |        | 11,831 |   |          |        | 98,077 |   |        |        | 24,519 | 
|                                            |                                                    |                          |         |                  |        |      |        |        |        |   |          |        |        |   |        |       
|Operating income (loss)                     |                                                    |                          | (90,399 | )                |        |      | (3,910 | )      |        |   | (102,023 | )      |        |   | 1,074  |       
|                                            |                                                    |                          |         |                  |        |      |        |        |        |   |          |        |        |   |        |       
|Other income (expense):                     |                                                    |                          |         |                  |        |      |        |        |        |   |          |        |        |   |        |       
|                                            | Interest expense                                   |                          |         | (51              | )      |      |        | (23    | )      |   |          | (102   | )      |   |        | (107   | )     
|                                            | Interest income                                    |                          |         | 501              |        |      |        | 751    |        |   |          | 765    |        |   |        | 1,583  |       
|                                            | Other, net                                         |                          |         | 63               |        |      |        | (12    | )      |   |          | 171    |        |   |        | 27     |       
|                                            |                                                    |                          |         |                  |        |      |        |        |        |   |          |        |        |   |        |       
|                                            |                                                    | Total other income       |         |                  | 513    |      |        |        | 716    |   |          |        | 834    |   |        |        | 1,503  | 
|                                            |                                                    |                          |         |                  |        |      |        |        |        |   |          |        |        |   |        |       
|Income (loss) before income tax benefit     |                                                    |                          | (89,886 | )                |        |      | (3,194 | )      |        |   | (101,189 | )      |        |   | 2,577  |       
|Income tax benefit                          |                                                    |                          |        |                  |        |      | 346    |        |        |   |         |        |        |   |       |       
|                                            |                                                    |                          |         |                  |        |      |        |        |        |   |          |        |        |   |        |       
|Net income (loss)                           |                                                    | $                        | (89,886 | )                |        | $    | (2,848 | )      |        | $ | (101,189 | )      |        | $ | 2,577  |       
|                                            |                                                    |                          |         |                  |        |      |        |        |        |   |          |        |        |   |        |       
|Net income (loss) per share:                |                                                    |                          |         |                  |        |      |        |        |        |   |          |        |        |   |        |       
|                                            | Basic                                              |                          | $       | (3.16            | )      |      | $      | (0.12  | )      |   | $        | (3.55  | )      |   | $      | 0.11   |       
|                                            |                                                    |                          |         |                  |        |      |        |        |        |   |          |        |        |   |        |       
|                                            | Diluted                                            |                          | $       | (3.16            | )      |      | $      | (0.12  | )      |   | $        | (3.55  | )      |   | $      | 0.10   |       
|                                            |                                                    |                          |         |                  |        |      |        |        |        |   |          |        |        |   |        |       
|Weighted average common shares outstanding: |                                                    |                          |         |                  |        |      |        |        |        |   |          |        |        |   |        |       
|                                            | Basic                                              |                          |         | 28,480           |        |      |        | 23,968 |        |   |          | 28,525 |        |   |        | 23,902 |       
|                                            | Diluted                                            |                          |         | 28,480           |        |      |        | 23,968 |        |   |          | 28,525 |        |   |        | 25,188 |       

See accompanying notes to condensed consolidated
financial statements.

2



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##### Table of Contents



THERMA-WAVE, INC.






CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS


(in thousands)


|                                                         |                                                                                                         |                                                    |                                                      |          |        |         |        |        |         |       | 
|-------------------------------------------------------- | ------------------------------------------------------------------------------------------------------- | -------------------------------------------------- | ---------------------------------------------------- | -------- | ------ | ------- | ------ | ------ | ------- | ----- | 
|                                                         |                                                                                                         |                                                   
|                                                         |                                                                                                         | Six Months Ended                                  
|                                                         |                                                                                                         | September 30,                                     
|                                                         |                                                                                                         |                                                   
|                                                         |                                                                                                         | 2002                                               |                                                      | 2001    
|                                                         |                                                                                                         |                                                    |                                                      |         
|                                                         |                                                                                                         |                                                   
|                                                         |                                                                                                         | (As Restated)                                     
|Operating activities:                                    |                                                                                                         |                                                    |                                                      |          |        |         |        |       
|                                                         | Net income (loss)                                                                                       |                                                    | $                                                    | (101,189 | )      |         | $      | 2,577  |        
|                                                         | Adjustments to reconcile net income
    (loss) to net cash provided (used) by operating
    activities: |                                                    |                                                      |          |        |         |        |        |        
|                                                         |                                                                                                         | Depreciation and amortization                      |                                                      |          | 3,459  |         |        |        | 2,468   |      
|                                                         |                                                                                                         | Amortization of intangible assets                  |                                                      |          | 581    |         |        |        |        |      
|                                                         |                                                                                                         | Amortization of deferred stock-based compensation  |                                                      |          | 1,079  |         |        |        |        |      
|                                                         |                                                                                                         | Impairment of goodwill and other intangible assets |                                                      |          | 66,977 |         |        |        |        |      
|                                                         |                                                                                                         | Inventory charge                                   |                                                      |          | 7,425  |         |        |        |        |      
|                                                         | Changes in assets and liabilities:                                                                      |                                                    |                                                      |          |        |         |        |        |        
|                                                         |                                                                                                         | Accounts receivable                                |                                                      |          | 1,070  |         |        |        | 18,614  |      
|                                                         |                                                                                                         | Inventories                                        |                                                      |          | (2,467 | )       |        |        | 2,342   |      
|                                                         |                                                                                                         | Other assets                                       |                                                      |          | 1,658  |         |        |        | 441     |      
|                                                         |                                                                                                         | Liabilities                                        |                                                      |          | 2,838  |         |        |        | (24,704 | )    
|                                                         |                                                                                                         |                                                    |                                                      |          |        |         |        |       
|                                                         |                                                                                                         |                                                    | Net cash provided (used) by operating
    activities |          |        | (18,569 | )      |        |         | 1,738 | 
|                                                         |                                                                                                         |                                                    |                                                      |          |        |         |        |       
|Investing activities:                                    |                                                                                                         |                                                    |                                                      |          |        |         |        |       
|                                                         | Purchases of property and equipment                                                                     |                                                    |                                                      | (821     | )      |         |        | (1,757 | )      
|                                                         | (Purchase) sale of short-term investments                                                               |                                                    |                                                      | (990     | )      |         |        | 679    |        
|                                                         | Other                                                                                                   |                                                    |                                                      | (617     | )      |         |        | (358   | )      
|                                                         |                                                                                                         |                                                    |                                                      |          |        |         |        |       
|                                                         |                                                                                                         | Net cash used by investing activities              |                                                      |          | (2,428 | )       |        |        | (1,436  | )    
|                                                         |                                                                                                         |                                                    |                                                      |          |        |         |        |       
|Financing activities:                                    |                                                                                                         |                                                    |                                                      |          |        |         |        |       
|                                                         | Proceeds from issuance of common stock                                                                  |                                                    |                                                      | 970      |        |         |        | 2,228  |        
|                                                         | Proceeds from note receivable from stockholder                                                          |                                                    |                                                      | 4        |        |         |        |       |        
|                                                         | Purchase of treasury stock                                                                              |                                                    |                                                      | (846     | )      |         |        |       |        
|                                                         | Principal payments under capital lease obligations                                                      |                                                    |                                                      |         |        |         |        | (56    | )      
|                                                         |                                                                                                         |                                                    |                                                      |          |        |         |        |       
|Net cash provided by financing activities                |                                                                                                         |                                                    | 128                                                  |          |        |         | 2,172  |       
|                                                         |                                                                                                         |                                                    |                                                      |          |        |         |        |       
|                                                         | Effect of exchange rates on cash                                                                        |                                                    |                                                      | 364      |        |         |        | 247    |        
|                                                         |                                                                                                         |                                                    |                                                      |          |        |         |        |       
|Net increase (decrease) in cash and cash
    equivalents |                                                                                                         |                                                    | (20,505                                              | )        |        |         | 2,721  |       
|Cash and cash equivalents at beginning of period         |                                                                                                         |                                                    | 46,484                                               |          |        |         | 55,725 |       
|                                                         |                                                                                                         |                                                    |                                                      |          |        |         |        |       
|Cash and cash equivalents at end of period               |                                                                                                         | $                                                  | 25,979                                               |          |        | $       | 58,446 |       
|                                                         |                                                                                                         |                                                    |                                                      |          |        |         |        |       
|Supplementary disclosures:                               |                                                                                                         |                                                    |                                                      |          |        |         |        |       
|                                                         | Cash paid for interest                                                                                  |                                                    | $                                                    | 32       |        |         | $      | 57     |        
|                                                         |                                                                                                         |                                                    |                                                      |          |        |         |        |       
|                                                         | Cash paid for taxes                                                                                     |                                                    | $                                                    | 129      |        |         | $      | 2,453  |        
|                                                         |                                                                                                         |                                                    |                                                      |          |        |         |        |       

See accompanying notes to condensed consolidated
financial statements.

3



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##### Table of Contents



THERMA-WAVE, INC.






NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS


1.     Basis of
Presentation

The accompanying unaudited condensed consolidated
financial statements have been prepared pursuant to the rules
and regulations of the Securities and Exchange Commission and
include the accounts of Therma-Wave, Inc. and its wholly-owned
subsidiaries. Certain information and footnote disclosures,
normally included in financial statements prepared in accordance
with generally accepted accounting principles, have been
condensed or omitted pursuant to such rules and regulations. In
our opinion, the financial statements reflect all adjustments,
consisting only of normal recurring adjustments, necessary for a
fair presentation of the financial position at
September 30, 2002, and the operating results and cash
flows for the three and six months ended September 30, 2002
and 2001. These financial statements and notes should be read in
conjunction with our audited financial statements and notes
thereto for the year ended March 31, 2002.

The results of operations for the interim periods
are not necessarily indicative of the results of operations that
may be expected for any other period or for the fiscal year,
which ends on March 30, 2003. Certain costs and expenses in
the six months ended September 29, 2001 have been
reclassified to conform to the presentation in the three months
ended September 29, 2002.

The second quarters of fiscal years 2003 and 2002
and the entire fiscal year 2002 ended on September 29,
2002, September 30, 2001 and March 31, 2002,
respectively. For presentation purposes, the accompanying
financial statements have been shown as ending on the last day
of the calendar quarter closest to each of these dates.

2.     Restatement of
Financial Results

In late January 2003, management became aware of
a possible revenue recognition issue associated with the sale of
one tool through one of our foreign branches. In addition,
management became aware of potential non-compliance with the
companys expense reimbursement policies by certain
employees at the same foreign branch. While the evidence of the
revenue recognition issue was not clear at that time,
conflicting facts arose that indicated that revenue recognized
in the quarter ended September 30, 2001 from the sale of
the tool at issue potentially should have been deferred until a
later period. In early February 2003, our Audit Committee
launched an internal investigation relating to these issues.

In connection with the investigation conducted by
our Audit Committee, the Committee engaged outside legal counsel
and independent forensic accountants to assist it. The
investigation was conducted to (i) identify additional
potential revenue recognition issues, if any; and (ii) to
review the business expense practices of certain of our
employees at that foreign branch.

From February 2003 through April 2003, based on
the investigation conducted by our Audit Committee, a number of
changes to the Companys Taiwan management team and
executive management team were effected, including termination
of certain employees.

As a result of the matters noted above,
management conducted a detailed review of revenue recognition
with the assistance of the Companys independent
accountants. The additional review undertaken by management
resulted in the revenue and related costs (including associated
warranty and installation costs) for three transactions to be
restated as follows:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) Product revenues of $1,000,000 and
    related cost of goods sold of $367,000, which were originally
    recognized in the quarter ended September 30, 2001 are
    being restated to defer the recognition of the revenue and cost
    of goods sold related to this sale until the quarter ended
    March 31, 2003. Changes in the original terms of
    arrangement between the Company and its customer were made just
    subsequent to the date of original revenue recognition and
    provided for the completion of additional services. These
    services were not completed until the quarter ended
    March 31, 2003.

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THERMA-WAVE, INC.


NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) Product revenues of $760,000 and related
    cost of goods sold of $499,000 (including $10,000 of warranty
    and installation costs), related to two tools, which were
    originally recognized in the quarter ended March 31, 2002,
    are being restated to defer the recognition of the revenue and
    related cost of goods sold for one of the tools until the
    quarter ended September 30, 2002 ($360,000 of revenue and
    related inventory cost of the tool of $152,000) and for the
    other tool revenue has not been recognized ($400,000) and cost
    of the tool $(337,000) is included in inventory. This change
    relates to shipments made to a distributor that did not have the
    ability to pay independent of completing the ultimate sale to
    the end customer.

As a result of the above, we have restated our
financial reports for the quarterly periods ended
September 30, 2001, December 31, 2001, June 30,
2002 and September 30, 2002, and the year ended
March 31, 2002, all of which were affected by the above
revenue transactions. No adjustments related to non-compliance
with the Companys expense reimbursement policies were
required as unauthorized amounts were expensed at the time they
were incurred and are not deemed recoverable from the former
employees.

The three and six month periods ended
September 30, 2002 and 2001, respectively, and the balance
sheets as of September 30, 2002 and March 31, 2002
have been restated for the impact of the items above.

The following table outlines the impact of these
adjustments on operating results:

|                                        |  |                    |         |                    |  |                    |         |                    |  |            |        |             |  |            |        |             |  |   |          |   |  |   |          |   |  |   |        |  |  |   |        | 
|--------------------------------------- |  | ------------------ | ------- | ------------------ |  | ------------------ | ------- | ------------------ |  | ---------- | ------ | ----------- |  | ---------- | ------ | ----------- |  | - | -------- | - |  | - | -------- | - |  | - | ------ |  |  | - | ------ | 
|                                        |  |                    |         |                    |  |                    |         |                   
|                                        |  | Three Months Ended |         | Three Months Ended |  | Six Months Ended   |         | Six Months Ended  
|                                        |  | September 30, 2002 |         | September 30, 2001 |  | September 30, 2002 |         | September 30, 2001
|                                        |  |                    |         |                    |  |                    |         |                   
|                                        |  | As                 |         |                    |  | As                 |         |                    |  | As         |        |             |  | As         |        |            
|                                        |  | Previously         |         |                    |  | Previously         |         |                    |  | Previously |        |             |  | Previously |        |            
|                                        |  | Reported           |         | As Restated        |  | Reported           |         | As Restated        |  | Reported   |        | As Restated |  | Reported   |        | As Restated
|                                        |  |                    |         |                    |  |                    |         |                    |  |            |        |             |  |            |        |            
|                                        |  |                    |         |                    |  |                    |         |                   
|                                        |  | (In thousands)     |         | (In thousands)     |  | (In thousands)     |         | (In thousands)    
|Net revenues
    Product                |  | $                  | 5,433   |                    |  | $                  | 5,688   |                    |  | $          | 17,360 |             |  | $          | 16,360 |             |  | $ | 15,143   |   |  | $ | 15,398   |   |  | $ | 51,060 |  |  | $ | 50,060 | 
|Total net revenues                      |  |                    | 10,690  |                    |  |                    | 10,945  |                    |  |            | 21,660 |             |  |            | 20,660 |             |  |   | 25,639   |   |  |   | 25,894   |   |  |   | 59,481 |  |  |   | 58,481 | 
|Cost of revenues                        |  |                    | 17,808  |                    |  |                    | 17,969  |                    |  |            | 13,106 |             |  |            | 12,739 |             |  |   | 29,679   |   |  |   | 29,840   |   |  |   | 33,255 |  |  |   | 32,888 | 
|Gross profit                            |  |                    | (7,118  | )                  |  |                    | (7,024  | )                  |  |            | 8,554  |             |  |            | 7,921  |             |  |   | (4,040   | ) |  |   | (3,946   | ) |  |   | 26,226 |  |  |   | 25,593 | 
|Operating income (loss)                 |  |                    | (90,493 | )                  |  |                    | (90,399 | )                  |  |            | (3,277 | )           |  |            | (3,910 | )           |  |   | (102,117 | ) |  |   | (102,023 | ) |  |   | 1,707  |  |  |   | 1,074  | 
|Income (loss) before income tax benefit |  |                    | (89,980 | )                  |  |                    | (89,886 | )                  |  |            | (2,561 | )           |  |            | (3,194 | )           |  |   | (101,283 | ) |  |   | (101,189 | ) |  |   | 3,210  |  |  |   | 2,577  | 
|Net income (loss)                       |  |                    | (89,980 | )                  |  |                    | (89,886 | )                  |  |            | (2,215 | )           |  |            | (2,848 | )           |  |   | (101,283 | ) |  |   | (101,189 | ) |  |   | 3,210  |  |  |   | 2,577  | 
|Basic net income (loss) per share       |  |                    | (3.16   | )                  |  |                    | (3.16   | )                  |  |            | (0.09  | )           |  |            | (0.12  | )           |  |   | (3.55    | ) |  |   | (3.55    | ) |  |   | 0.13   |  |  |   | 0.11   | 
|Diluted net income (loss) per share     |  |                    | (3.16   | )                  |  |                    | (3.16   | )                  |  |            | (0.09  | )           |  |            | (0.12  | )           |  |   | (3.55    | ) |  |   | (3.55    | ) |  |   | 0.13   |  |  |   | 0.10   | 

5



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##### Table of Contents



THERMA-WAVE, INC.


NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

The following table outlines the balance sheet
impact of these adjustments as of September 30, 2002 and
March 31, 2002:

|                                           |  |                    |          |                |  |               |          |             |  |   |          |   |  |   |          |  
|------------------------------------------ |  | ------------------ | -------- | -------------- |  | ------------- | -------- | ----------- |  | - | -------- | - |  | - | -------- | -
|                                           |  |                    |          |               
|                                           |  | September 30, 2002 |          | March 31, 2002
|                                           |  |                    |          |               
|                                           |  | As Previously      |          |                |  | As Previously |          |            
|                                           |  | Reported           |          | As Restated    |  | Reported      |          | As Restated
|                                           |  |                    |          |                |  |               |          |            
|                                           |  |                    |          |               
|                                           |  | (In thousands)     |          | (In thousands)
|Accounts receivable, net                   |  | $                  | 15,115   |                |  | $             | 14,565   |             |  | $ | 16,585   |   |  | $ | 15,635   |  
|Inventories                                |  |                    | 29,032   |                |  |               | 29,719   |             |  |   | 33,838   |   |  |   | 34,677   |  
|Other current assets                       |  |                    | 1,970    |                |  |               | 1,963    |             |  |   | 3,427    |   |  |   | 3,415    |  
|Total current assets                       |  |                    | 85,661   |                |  |               | 85,791   |             |  |   | 112,909  |   |  |   | 112,786  |  
|Total assets                               |  |                    | 104,736  |                |  |               | 104,866  |             |  |   | 201,769  |   |  |   | 201,646  |  
|Accrued warranty costs                     |  |                    | 960      |                |  |               | 949      |             |  |   | 1,802    |   |  |   | 1,777    |  
|Deferred revenue                           |  |                    | 10,956   |                |  |               | 11,911   |             |  |   | 8,683    |   |  |   | 9,493    |  
|Total current liabilities                  |  |                    | 33,978   |                |  |               | 34,922   |             |  |   | 30,988   |   |  |   | 31,773   |  
|Total liabilities                          |  |                    | 36,041   |                |  |               | 36,985   |             |  |   | 33,362   |   |  |   | 34,147   |  
|Accumulated deficit                        |  |                    | (249,700 | )              |  |               | (250,514 | )           |  |   | (148,417 | ) |  |   | (149,325 | )
|Total stockholders equity                 |  |                    | 68,695   |                |  |               | 67,881   |             |  |   | 168,407  |   |  |   | 167,499  |  
|Total liabilities and stockholders equity |  |                    | 104,736  |                |  |               | 104,866  |             |  |   | 201,769  |   |  |   | 201,646  |  



|   |            
|-- | -----------
|3. | Inventories

Inventories are summarized as follows (in
thousands):

|                    |  |               |        |           |  |   |        | 
|------------------- |  | ------------- | ------ | --------- |  | - | ------ | 
|                    |  | September 30, |        | March 31,
|                    |  | 2002          |        | 2002     
|                    |  |               |        |          
|                    |  |              
|                    |  | (As Restated)
|Purchased materials |  | $             | 5,926  |           |  | $ | 11,172 | 
|Systems in process  |  |               | 13,524 |           |  |   | 12,657 | 
|Finished systems    |  |               | 10,269 |           |  |   | 10,848 | 
|                    |  |               |        |           |  |   |        | 
|                    |  | $             | 29,719 |           |  | $ | 34,677 | 
|                    |  |               |        |           |  |   |        | 



|   |                            
|-- | ---------------------------
|4. | Comprehensive Income (Loss)

Comprehensive income (loss) consists of net
income (loss) for the period and the change in accumulated
foreign currency translation adjustments during the period. For
the quarters ended September 30, 2002 and 2001,
comprehensive income (loss) amounted to approximately
$(89.9) million (as restated) and $(2.6) million (as
restated), respectively. For the six months ended
September 30, 2002 and 2001, comprehensive income
(loss) amounted to approximately $(100.8) million (as
restated) and $2.8 million (as restated), respectively.



|   |                               
|-- | ------------------------------
|5. | Change in Accounting Principle

In accordance with guidance provided in
SAB 101, we recorded $6.3 million (net of income tax
benefit of $0.4 million), or $0.25 per diluted share, as
the cumulative effect of the change in accounting principle as
of April 1, 2000. All periods presented are consistent with
the guidance provided in SAB 101. During the three months
ended September 30, 2002 and 2001, we recognized $0 and
$59,000, respectively, out of the $9.4 million revenue that
was included in the cumulative effect adjustment as of
April 1, 2000. During the six

6



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##### Table of Contents



THERMA-WAVE, INC.


NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

months ended September 30, 2002 and 2001, we
recognized $242,000 and $1.5 million, respectively, out of
the $9.4 million revenue that was included in the
cumulative effect adjustment as of April 1, 2000.



|   |                            
|-- | ---------------------------
|6. | Net Income (Loss) Per Share

Basic net income (loss) per share is based
on the weighted-average number of common shares outstanding
excluding contingently issuable or returnable shares such as
unvested common stock or shares that contingently convert into
common stock upon certain events. Diluted net income
(loss) per share is based on the weighted average number of
common shares outstanding and the potential dilution of
securities, by including stock options in the weighted average
number of common shares outstanding for a period if dilutive.

The following table summarizes securities
outstanding (in thousands) as of each period end which were not
included in the calculation of diluted net income
(loss) per share since their inclusion would be
anti-dilutive.

|                                              |  |               |       |      |  |  |       | 
|--------------------------------------------- |  | ------------- | ----- | ---- |  |  | ----- | 
|                                              |  |              
|                                              |  | September 30,
|                                              |  |              
|                                              |  | 2002          |       | 2001
|                                              |  |               |       |     
|Common stock subject to repurchase (unvested) |  |               |      |      |  |  | 183   | 
|Common stock held in escrow account           |  |               | 541   |      |  |  |      | 
|Stock options                                 |  |               | 5,025 |      |  |  | 1,378 | 
|Warrants                                      |  |               | 79    |      |  |  |      | 

For the three months ended September 30,
2002 and 2001, anti-dilutive stock options have a weighted
average exercise price of $12.52 and $20.13, respectively. The
warrants outstanding at September 30, 2002 that we excluded
from the above calculation had a weighted average exercise price
of $3.68.



|   |                                          
|-- | -----------------------------------------
|7. | Recently Issued Accounting
    Statements

In July 2001, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards
No. 142 (SFAS No. 142), Goodwill and Other
Intangible Assets. SFAS No. 142 supersedes Accounting
Principles Board Opinion No. 17, Intangible
Assets, and discontinues the amortization of goodwill. In
addition, SFAS No. 142 includes provisions regarding: 1)
reclassification of amounts between goodwill and identifiable
intangible assets in accordance with the new definition of
identifiable intangible assets set forth in Statement of
Financial Accounting Standards No. 141, Business
Combinations; 2) reassessment of the useful lives of
existing recognized intangibles; and 3) testing for impairment
of existing goodwill and other intangibles using the discounted
cash flows method. Our adoption of SFAS No. 142 did not result
in reclassifications between goodwill and intangible assets,
impairment charges or changes in the useful lives of amortizable
intangible assets. Intangible assets include developed
technology, development contract and trade name and are being
amortized on a straight-line basis over the original estimated
useful lives of two to five years.

7



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THERMA-WAVE, INC.


NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

The fair market value of intangible assets after
the impairment adjustments (see Note 8) will be amortized
on a straight-line basis over the remaining estimated useful
lives of 16 to 52 months. Components of intangible assets
were as follows (in thousands):

|                  |                      |                    |       |                |  |                |      |              |   |   |        |       |  |   |      |      |  
|----------------- | -------------------- | ------------------ | ----- | -------------- |  | -------------- | ---- | ------------ | - | - | ------ | ----- |  | - | ---- | ---- | -
|                  |                      |                    |       |               
|                  |                      | September 30, 2002 |       | March 31, 2002
|                  |                      |                    |       |               
|                  |                      | Gross Carrying     |       | Accumulated    |  | Gross Carrying |      | Accumulated 
|                  |                      | Amount             |       | Amortization   |  | Amount         |      | Amortization
|                  |                      |                    |       |                |  |                |      |             
|Intangible assets |                      |                    |       |                |  |                |      |              |   |   |        |       |  |   |      |     
|                  | Developed technology |                    | $     | 314            |  |                | $    | (314         | ) |   | $      | 890   |  |   | $    | (92  | )
|                  | Development contract |                    |       | 2,416          |  |                |      | (366         | ) |   |        | 2,590 |  |   |      | (107 | )
|                  | Trade name           |                    |       | 628            |  |                |      | (140         | ) |   |        | 990   |  |   |      | (40  | )
|                  |                      |                    |       |                |  |                |      |              |   |   |        |       |  |   |      |     
|Intangible assets |                      | $                  | 3,358 |                |  | $              | (820 | )            |   | $ | 4,470  |       |  | $ | (239 | )   
|                  |                      |                    |       |                |  |                |      |              |   |   |        |       |  |   |      |     
|Goodwill          |                      | $                  |      |                |  | $              |     |              |   | $ | 65,865 |       |  | $ |     |     
|                  |                      |                    |       |                |  |                |      |              |   |   |        |       |  |   |      |     

The changes in the carrying value of goodwill for
the six months ended September 30, 2002 are as follows:

|                                            |  |   |         |  
|------------------------------------------- |  | - | ------- | -
|Balance as of March 31, 2002                |  | $ | 65,865  |  
|Impairment in second quarter of fiscal 2003 |  |   | (65,865 | )
|                                            |  |   |         |  
|Balance as of September 30, 2002            |  | $ |        |  
|                                            |  |   |         |  

Amortization of intangible assets was $0.3 and
$0.6 million for the three and six months ended
September 30, 2002. Amortization expense is expected to be
$0.3 million for the remainder of fiscal 2003 (a total of
$0.9 million for fiscal 2003). Amortization expense for
fiscal 2004, 2005, 2006 and 2007 is expected to be
$0.6 million, $0.6 million, $0.6 million, and
$0.5 million, respectively.

In September 2002, SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal
Activities was issued. This statement provides guidance on
the recognition and measurement of liabilities associated with
exit or disposal activities and requires that such liabilities
be recognized when incurred. This statement is effective for
exit or disposal activities initiated on or after
January 1, 2003 and does not impact the recognition of
costs under our existing programs. Adoption of this standard is
expected to impact the timing of recognition of costs associated
with future exit and disposal activities.



|   |                                                 
|-- | ------------------------------------------------
|8. | Impairment of Goodwill and Intangible
    Assets

Due to current operating losses, the absence of
positive cash flows, recent significant declines in our common
stock price and uncertainties resulting from the duration and
severity of the industry downturn, we assessed the
recoverability of the intangible assets related to the Sensys
acquisition subject to amortization in accordance with SFAS
No. 144 and tested goodwill related to the Sensys
acquisition for impairment in accordance with SFAS No. 142
during the quarter ended September 30, 2002. Based upon our
projection of significantly reduced future cash flows related to
Sensys products, an impairment expense of $576,000 was
recognized for developed technology, $174,000 for development
contract and $362,000 for trade name intangible assets in the
quarter ended September 30, 2002. The impairment test under
SFAS No. 142 was based on a two-step process involving; 1)
comparing the estimated fair value of the related reporting unit
to its net book value, and 2) comparing the estimated implied
fair value of goodwill to its carrying value. As a result of the
test, we wrote down goodwill assets by $65.9 million in the
quarter ended September 30, 2002.

8



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##### Table of Contents



THERMA-WAVE, INC.


NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)



|   |                              
|-- | -----------------------------
|9. | Commitments and Contingencies

On December 17, 2001, we signed a definitive
agreement to acquire Sensys Instruments Corporation. On
December 28, 2001, Sensys was named in a patent
infringement suit filed by KLA-Tencor Corporation. KLA-Tencor
alleged that it patented an aspect of the integrated metrology
technology that Sensys used in their integrated product family.
KLA-Tencor was seeking damages and an injunction to stop the
sale of the equipment they alleged used this aspect. Subsequent
to the quarter ended September 29, 2002, we settled this
patent lawsuit with KLA-Tencor. As part of the settlement,
KLA-Tencor agreed that it would not assert a claim for
infringement against the product that Sensys is currently
selling.

On April 22, 2002, we filed a patent
infringement suit against Boxer Cross Inc. in the United States
District Court, Northern District of California. The suit
alleges that Boxer Cross BX-10 product infringes certain
patents held by Therma-Wave related to ion implant monitoring.
Two of the asserted patents were previously found to be valid
and infringed in a suit filed against Jenoptik, AG, in 1994. The
earlier court rulings led to Jenoptiks withdrawal from the
U.S. market. On June 7, 2002, Boxer Cross filed its amended
answer and counterclaims to Therma-Waves complaint and
asserted various affirmative defenses to Therma-Waves
claims of patent infringement. The pleading also contained
various counterclaims including allegations that
Therma-Waves Therma-Probe product infringed upon certain
patents owned by Boxer Cross and also raised claims of
misappropriation of trade secrets, tortious interference with
contract, unfair competition and unfair business practices. We
replied to Boxer Crosss counterclaims, denying the
material allegations and asserting declaratory judgment
counterclaims. At the September 16, 2002 case management
conference, the Court scheduled a Markman claim construction
hearing on our patents-in-suit for December 9, 2002. No
discovery or trial date has been set. We believe that the
outcome from this matter, even if adverse to us, would not have
a material adverse effect on our financial condition or results
of operations.

We are involved in various legal proceedings from
time to time arising in the ordinary course of business, none of
which are expected to have a material adverse effect on our
business or financial condition.



|    |                 
|--- | ----------------
|10. | Severance Charge

During the second fiscal quarter of 2003, we
announced and implemented reduction in force programs aimed at
bringing operating expenses in line with our operating
environment for the fiscal year 2003. All terminated employees
were notified of their severance and related benefits at the
time the programs were announced. The programs resulted in a
reduction of approximately 115 employees across all functional
areas.

All expenses were paid out or are expected to be
paid out in cash with the remaining balance expected to be paid
out by March 31, 2003. Changes in the accrued expenses
relating to reductions in force are summarized in thousands as
follows:

|          |  |                |     |           |  |          |       |                    |  |   |      |   |  |   |     | 
|--------- |  | -------------- | --- | --------- |  | -------- | ----- | ------------------ |  | - | ---- | - |  | - | --- | 
|          |  | Balance        |     |           |  |          |       | Balance           
|          |  | March 31, 2002 |     | Additions |  | Utilized |       | September 30, 2002
|          |  |                |     |           |  |          |       |                   
|Severance |  | $              | 301 |           |  | $        | 1,165 |                    |  | $ | (633 | ) |  | $ | 833 | 

11.     Treasury
Stock

On August 1, 2002, the Companys Board
of Directors announced a stock repurchase program for the
repurchase of up to 1 million shares of Therma-Waves
common stock. The Company has repurchased 347,400 shares of
common stock at an average price of $2.40 per share in the
quarter ended September 30, 2002.

9



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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 2. | Managements Discussion and Analysis
    of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q/A
contains forward-looking statements as that term is defined in
the Private Securities Reform Act of 1995, which are subject to
known and unknown risks and uncertainties that could cause
actual results to differ materially from those expressed or
implied by such statements. The words believe,
expect, anticipate, intend
and other similar expressions generally identify forward-looking
statements. Potential investors are cautioned not to place undue
reliance on these forward-looking statements, which speak only
as of their dates. Statements relating to our ability to manage
our costs and reduce operating expenses, sustain our operations
and cash position in an extended global economic downturn,
continue the successful development and introduction of new
products and improvement of current products and trends in our
financial performance are all based on current expectations.
Such statements are subject to risks, uncertainties, and changes
in conditions, particularly those related to industry
performance in the current severe industry and economic
downturn, political unrest, foreign currency exchange rates,
activities and potential successes of competitors and competing
products and other risks, some of which are detailed in
documents filed with the Securities and Exchange Commission,
including specifically Exhibit 99.1 to the companys
amended Annual Report on Form 10-K/A for the year ended
March 31, 2002. See also the discussion of forward-looking
statements related to market risk in the first paragraph of
Item 3 below. The company undertakes no obligation to
update the information in this Quarterly Report on
Form 10-Q/A.

General

We are a worldwide leader in the development,
manufacture, marketing and service of process control metrology
systems for use in the manufacture of semiconductors. Process
control metrology is used to monitor process parameters in order
to enable semiconductor manufacturers to maintain high yields on
the production lines, reduce feature size, increase wafer size,
increase equipment productivity and improve device performance.
Our metrology systems are used in all sections of the
semiconductor fabrication plant, or fab, to control the wafer
fabrication processes. Examples of wafer fab processes, in which
our metrology systems supply key information, are photoresist
processing to support lithography, deposition of insulator and
conductor films, patterned removal, or etching, of
insulator and conductor films, ion implantation and chemical
mechanical planarization. We currently sell four product
families of process control metrology systems:
Therma-Probe® systems, Opti-Probe® systems, Opti-Probe
Real-Time/ Critical DimensionsTM systems, and
IntegraTM and Sensys integrated metrology systems.

Therma-Probe Product Family.Therma-Probe systems utilize our
proprietary thermal wave technology and are the predominant
non-destructive process control metrology systems used to
measure the critical ion implantation process on product wafers
in the fabrication of semiconductors.

Opti-Probe Product Family.Opti-Probe Film Metrology systems
provide the industrys most powerful capability to control
and diagnose non-opaque films for semiconductor production. This
unsurpassed metrology power is achieved by successfully
integrating different measurement technologies, including
optical technologies that are proprietary to Therma-Wave, into
each Opti-Probe system.

Opti-Probe Real-Time/ Critical
DimensionsTMProduct Family.Opti-Probe Real-Time/
Critical Dimension systems measure the lateral dimensions, or
critical dimensions, or CD, using our real time
critical dimensions software and a revolutionary, nondestructive
technique based on spectroscopic ellipsometry. These systems are
capable of providing CD metrology for the smallest features of
the next several generations of integrated circuits, or
ICs.

Sensys and Integra Product Family.The Sensys and Integra line of
integrated metrology products are a broad-based family of
compact metrology modules which are installed and
function inside an IC process system, such as an etching system
or CVD deposition system, to provide metrology on each wafer
before it exits the process tool.

10



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##### Table of Contents



Restatement of Financial Results

In late January 2003, management became aware of
a possible revenue recognition issue associated with the sale of
one tool through one of our foreign branches. In addition,
management became aware of potential non-compliance with the
companys expense reimbursement policies by certain
employees at the same foreign branch. While the evidence of the
revenue recognition issue was not clear at that time,
conflicting facts arose that indicated that revenue recognized
in the quarter ended September 30, 2001 from the sale of
the tool at issue potentially should have been deferred until a
later period. In early February 2003, our Audit Committee
launched an internal investigation relating to these issues.

In connection with the investigation conducted by
our Audit Committee, the Committee engaged outside legal counsel
and independent forensic accountants to assist it. The
investigation was conducted to (i) identify additional
potential revenue recognition issues, if any; and (ii) to
review the business expense practices of certain of our
employees at that foreign branch.

From February 2003 through April 2003, based on
the investigation conducted by our Audit Committee, a number of
changes to the companys Taiwan management team and
executive management team were effected, including termination
of certain employees.

As a result of the matters noted above,
management conducted a detailed review of revenue recognition
with the assistance of the companys independent
accountants. The additional review undertaken by management
resulted in the revenue and related costs (including associated
warranty and installation costs) for three transactions to be
restated as follows:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) Product revenues of $1,000,000 and
    related cost of goods sold of $367,000, which were originally
    recognized in the quarter ended September 30, 2001 are
    being restated to defer the recognition of the revenue and cost
    of goods sold related to this sale until the quarter ended
    March 31, 2003. Changes in the original terms of
    arrangement between the company and its customer were made just
    subsequent to the date of original revenue recognition and
    provided for the completion of additional services. These
    services were not completed until the quarter ended
    March 31, 2002.                                                                                                                                                                  
|
| | (2) Product revenues of $760,000 and related
    cost of goods sold of $499,000 (including $10,000 of warranty
    and installation costs) related to two tools, which were
    originally recognized in the quarter ended March 31, 2002,
    are being restated to defer the recognition of the revenue and
    related cost of goods sold for one of the tools until the
    quarter ended September 30, 2002 ($360,000 of revenue and
    related inventory cost of the tool of $152,000) and for the
    other tool revenue has not been recognized ($400,000) and cost
    of the tool ($337,000) is included in inventory. This change
    relates to shipments made to a distributor that did not have the
    ability to pay independent of completing the ultimate sale to
    the end customer.

As a result of the above, we have restated our
financial reports for the quarterly periods ended
September 30, 2001, December 31, 2001, June 30,
2002 and September 30, 2002, and the year ended
March 31, 2002, all of which were affected by the above
revenue transactions. However, we do not believe these
adjustments have a material impact on our financial position as
of March 31, 2002. No adjustments related to non-compliance
with the companys expense reimbursement policies were
required as unauthorized amounts were expensed at the time they
were incurred and are not deemed recoverable from the former
employees.

Critical Accounting Policies and
Estimates

Managements Discussion and Analysis of
Financial Condition and Results of Operations discusses our
consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the
disclosure of contingent liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting period. On an on-going basis,
management evaluates its estimates and judgments, including
those related to revenue recognition, goodwill and intangible
assets, inventories and income taxes.

11



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##### Table of Contents



Management bases its estimates and judgments on
historical experience and on various other factors that are
believed to be reasonable under the circumstances, the results
of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these
estimates under different assumptions or conditions.


During the quarter ended September 30, 2002,
our critical accounting policies and estimates have not changed
as disclosed in the Companys Annual Report on
Form 10-K for the year ended March 31, 2002.

Results of Operations

The following table summarizes our unaudited
historical results of operations as a percentage of net revenues
for the periods indicated. The historical financial data for the
three and six months ended September 30, 2002 and 2001 were
derived from our unaudited consolidated financial statements
which, in the opinion of management, reflect all adjustments
(consisting of normal recurring adjustments) necessary for the
fair presentation of the financial condition and results of
operations for such periods.

|                                        |                                                    |                          |        |               |       |      |       |      |      |  |        |       |       |  |       |      |      | 
|--------------------------------------- | -------------------------------------------------- | ------------------------ | ------ | ------------- | ----- | ---- | ----- | ---- | ---- |  | ------ | ----- | ----- |  | ----- | ---- | ---- | 
|                                        |                                                    |                          |        |              
|                                        |                                                    | Three Months             |        | Six Months   
|                                        |                                                    | Ended                    |        | Ended        
|                                        |                                                    | September 30,            |        | September 30,
|                                        |                                                    |                          |        |              
|                                        |                                                    | 2002                     |        | 2001          |       | 2002 |       | 2001
|                                        |                                                    |                          |        |               |       |      |       |     
|                                        |                                                    |                          |        |              
|                                        |                                                    | (As Restated)            |        | (As Restated)
|Net revenues                            |                                                    |                          |        |               |       |      |       |      |      |  |        |       |       |  |       |     
|                                        | Product                                            |                          |        | 52.0          | %     |      |       | 79.2 | %    |  |        | 59.5  | %     |  |       | 85.6 | %   
|                                        | Service and parts                                  |                          |        | 48.0          |       |      |       | 20.8 |      |  |        | 40.5  |       |  |       | 14.4 |     
|                                        |                                                    |                          |        |               |       |      |       |      |      |  |        |       |       |  |       |     
|Total net revenues                      |                                                    |                          | 100.0  |               |       |      | 100.0 |      |      |  | 100.0  |       |       |  | 100.0 |     
|Cost of revenues                        |                                                    |                          | 164.2  |               |       |      | 61.7  |      |      |  | 115.2  |       |       |  | 56.2  |     
|                                        |                                                    |                          |        |               |       |      |       |      |      |  |        |       |       |  |       |     
|Gross profit                            |                                                    |                          | (64.2  | )             |       |      | 38.3  |      |      |  | (15.2  | )     |       |  | 43.8  |     
|                                        |                                                    |                          |        |               |       |      |       |      |      |  |        |       |       |  |       |     
|Operating expenses:                     |                                                    |                          |        |               |       |      |       |      |      |  |        |       |       |  |       |     
|                                        | Research and development                           |                          |        | 74.1          |       |      |       | 31.6 |      |  |        | 62.2  |       |  |       | 23.1 |     
|                                        | Selling, general and administrative                |                          |        | 60.8          |       |      |       | 23.8 |      |  |        | 49.4  |       |  |       | 18.2 |     
|                                        | Impairment of goodwill and other intangible assets |                          |        | 611.9         |       |      |       |     |      |  |        | 258.7 |       |  |       |     |     
|                                        | Severance charge                                   |                          |        | 10.7          |       |      |       | 1.8  |      |  |        | 4.5   |       |  |       | 0.6  |     
|                                        | Stock-based compensation                           |                          |        | 4.3           |       |      |       |     |      |  |        | 4.0   |       |  |       |     |     
|                                        |                                                    |                          |        |               |       |      |       |      |      |  |        |       |       |  |       |     
|                                        |                                                    | Total operating expenses |        |               | 761.8 |      |       |      | 57.2 |  |        |       | 378.8 |  |       |      | 41.9 | 
|                                        |                                                    |                          |        |               |       |      |       |      |      |  |        |       |       |  |       |     
|Operating income (loss)                 |                                                    |                          | (826.0 | )             |       |      | (18.9 | )    |      |  | (394.0 | )     |       |  | 1.9   |     
|                                        |                                                    |                          |        |               |       |      |       |      |      |  |        |       |       |  |       |     
|Other income (expense):                 |                                                    |                          |        |               |       |      |       |      |      |  |        |       |       |  |       |     
|                                        | Interest expense                                   |                          |        | (0.5          | )     |      |       | (0.1 | )    |  |        | (0.4  | )     |  |       | (0.2 | )   
|                                        | Interest income                                    |                          |        | 4.6           |       |      |       | 3.6  |      |  |        | 3.0   |       |  |       | 2.7  |     
|                                        | Other, net                                         |                          |        | 0.6           |       |      |       | (0.1 | )    |  |        | 0.6   |       |  |       |     |     
|                                        |                                                    |                          |        |               |       |      |       |      |      |  |        |       |       |  |       |     
|                                        |                                                    | Total other income       |        |               | 4.7   |      |       |      | 3.4  |  |        |       | 3.2   |  |       |      | 2.5  | 
|                                        |                                                    |                          |        |               |       |      |       |      |      |  |        |       |       |  |       |     
|Income (loss) before income tax benefit |                                                    |                          | (821.3 | )             |       |      | (15.5 | )    |      |  | (390.8 | )     |       |  | 4.4   |     
|Income tax benefit                      |                                                    |                          |       |               |       |      | 1.7   |      |      |  |       |       |       |  |      |     
|                                        |                                                    |                          |        |               |       |      |       |      |      |  |        |       |       |  |       |     
|Net income (loss)                       |                                                    |                          | (821.3 | )%            |       |      | (13.8 | )%   |      |  | (390.8 | )%    |       |  | 4.4   | %   
|                                        |                                                    |                          |        |               |       |      |       |      |      |  |        |       |       |  |       |     

Comparisons of the three and six months ended
September 30, 2002 compared to the three and six months
ended September 30, 2001, as restated.

Net Revenues.Net
revenues for the fiscal quarter ended September 30, 2002
were $10.9 million. Compared to the first quarter of fiscal
2003, net revenues decreased $4.0 million, or 26.8%, from
$14.9 million. Net revenues decreased $9.7 million, or
47.0%, from $20.7 million in the same fiscal quarter of the
prior year.

12



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For the six months ended September 30, 2002,
net revenues were $25.9 million, a decrease of
$32.6 million, or 55.7%, from $58.5 million in the
comparable period of the prior year. The decrease in revenues
was primarily the result of capital spending reductions by our
customers due to the downturn of the semiconductor industry and
the weakness of the global economy.


The following table summarizes our revenues in
different categories as a percentage of total net revenues for
the periods indicated.

|                   |                   |               |     |               |   |      |     |      |   |  |     |    |   |  |     |    |  
|------------------ | ----------------- | ------------- | --- | ------------- | - | ---- | --- | ---- | - |  | --- | -- | - |  | --- | -- | -
|                   |                   |               |     |              
|                   |                   | Three Months  |     | Six Months   
|                   |                   | Ended         |     | Ended        
|                   |                   | September 30, |     | September 30,
|                   |                   |               |     |              
|                   |                   | 2002          |     | 2001          |   | 2002 |     | 2001
|                   |                   |               |     |               |   |      |     |     
|                   |                   |               |     |              
|                   |                   | (As Restated) |     | (As Restated)
|Net revenues       |                   |               |     |               |   |      |     |      |   |  |     |    |   |  |     |   
|                   | System            |               |     | 52            | % |      |     | 79   | % |  |     | 59 | % |  |     | 86 | %
|                   | Service and parts |               |     | 48            |   |      |     | 21   |   |  |     | 41 |   |  |     | 14 |  
|                   |                   |               |     |               |   |      |     |      |   |  |     |    |   |  |     |   
|Total net revenues |                   |               | 100 | %             |   |      | 100 | %    |   |  | 100 | %  |   |  | 100 | % 
|                   |                   |               |     |               |   |      |     |      |   |  |     |    |   |  |     |   

International sales accounted for approximately
67% and 57% of our total net revenues for the three months ended
September 30, 2002 and 2001, respectively. For the six
months ended September 30, 2002 and 2001, respectively,
international sales accounted for approximately 73% and 58% of
our total net revenues. We anticipate that international sales
will continue to account for a significant portion of our net
revenues in the foreseeable future. A substantial portion of our
international sales are denominated in U.S. dollars. As a
result, changes in the values of foreign currencies relative to
the value of the U.S. dollar can render our products
comparatively more expensive. Although we have not been
negatively impacted in the past by foreign currency changes in
Taiwan, Japan, China, Korea, and Europe, such conditions could
negatively impact our international sales in future periods.

Gross Profit (Loss).Gross loss for the second quarter of
fiscal 2003 was $(7.0) million, a decrease of
$10.1 million, from a gross profit of $3.1 million in
the previous fiscal quarter. Compared to the same quarter of
fiscal 2002, gross profit decreased $14.9 million. As a
percentage of net revenues, gross margin for the current quarter
was (64.2)%, compared to 20.6% for last fiscal quarter and 38.3%
for the same quarter of last fiscal year. For the six months
ended September 30, 2002, gross loss was
$(3.9) million, a decrease of $29.5 million, or
115.4%, from $25.6 million in the comparable period of the
prior year. As a percentage of net revenues, gross margin for
the current six months was (15.2)%, compared to 43.8% in the
comparable period of the prior year. The change of gross profit
from the previous fiscal quarter is primarily due to a
$7.4 million charge associated with additional reserves for
obsolete and excess inventory and lower net revenues and
production volume. The significant decrease of gross profit from
the same quarter of fiscal 2002 is primarily due to our
substantially lower net revenues and production volume as well
as a $7.4 million charge associated with additional
reserves for obsolete and excess inventory. The change of gross
profit from the six months ended September 30, 2002 to the
six months ended September 30, 2001 is primarily due to the
above mentioned $7.4 million inventory charge and lower net
revenues and production volume.

Research and Development, or R&D,
Expenses.R&D expenses for the
second quarter of fiscal 2003 were $8.1 million, an
increase of 1.4% from the prior quarter and an increase of 24.1%
from the same quarter of last fiscal year. For the six months
ended September 30, 2002, R&D expenses were
$16.1 million, an increase of $2.6 million, or 19.2%,
from $13.5 million in the comparable period of the prior
year. The increase of R&D expenses was primarily due to
legal expenses related to patent litigation in the second
quarter of fiscal 2003 and higher depreciation expenses for the
six months ended September 30, 2002. Our reduction in force
programs during the second quarter of fiscal 2003 reduced
headcount in R&D functions but we expect to continue to
commit significant resources to the development of new advanced
metrology products of precision performance at higher wafer
throughputs.

Selling, General and Administrative, or
SG&A, Expenses.SG&A expenses
for the second quarter of fiscal 2003 were $6.7 million, an
increase of 8.8% from SG&A expenses of $6.1 million in
the prior fiscal

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quarter. Compared to the second quarter of last
fiscal year, SG&A expenses increased by 35.3%. For the six
months ended September 30, 2002, SG&A expenses were
$12.8 million, an increase of $2.2 million, or 20.2%,
from $10.6 million in the comparable period of the prior
year. The increase was primarily due to the addition of SG&A
expenses incurred by Sensys which we acquired in January 2002.


Impairment of Goodwill and Other Intangible
Assets.During the quarter ended
September 30, 2002, we completed a goodwill impairment
test, and the results of that test indicated that our goodwill
and intangible assets were impaired by $67.0 million. The
impairment test under SFAS No. 144 and No. 142 was
based on a two-step process involving; 1) comparing the
estimated fair value of the related reporting unit to its net
book value, and 2) comparing the estimated implied fair
value of goodwill to its carrying value. The circumstances
leading to the impairment of goodwill and intangible assets
primarily relate to current operating losses, the absence of
positive cash flows and uncertainties resulting from the
duration and severity of the industry downturn. We wrote down
goodwill and intangible assets by $67.0 million.

Severance Charge.During the second quarter of fiscal
2003, we announced and implemented reduction in force programs
aimed at bringing operating expenses in line with our operating
environment for the fiscal year 2003. We reduced our workforce
by 21 percent, approximately 115 employees, across all
functional areas and recorded a $1.2 million severance
charge for the three and six months ended September 30,
2002, an increase of $0.8 million, from $0.4 million
in the same periods of fiscal 2002. All terminated employees
were notified of their severance and related benefits at the
time the programs were announced. The program is expected to
improve our cash preservation and maintain a healthy balance
sheet.

Stock-Based Compensation.As part of the acquisition of Sensys,
we recorded $3.5 million of stock-based compensation to be
amortized over the vesting period of the options. The
amortization expense was $0.5 million, or 4.3% of revenue,
for the quarter ended September 30, 2002. For the six
months ended September 30, 2002, the amortization expense
was $1.1 million, or 4.0% of revenue. We had no similar
expenses for the same period of last fiscal year.

Other Income.Other
income for the second quarter of fiscal 2003 was
$0.5 million, which was 59.8% higher than other income in
the prior fiscal quarter. Compared to the same quarter of the
prior fiscal year, other income decreased 28.4%. For the six
months ended September 30, 2002, other income was
$0.8 million, a decrease of $0.7 million, or 44.5%,
from $1.5 million in the comparable period of the prior
year. We derive other income primarily from the investment of
our cash on hand. An interest refund from Internal Revenue
Service in the amount of $0.3 million was included in other
income of the second quarter of fiscal 2003.

Provision for Income Taxes.For the six months ended
September 30, 2002, the effective tax rate of 0% was based
upon our projected tax loss for fiscal 2003.

Net Income (Loss).The combination of all the factors
discussed above contributed to a net loss of $89.9 million
for the second quarter of fiscal 2003, compared with net loss of
$11.3 million in the prior fiscal quarter and net loss of
$2.8 million in the same quarter of last fiscal year. For
the six months ended September 30, 2002, net loss was
$101.2 million, a decrease of $103.8 million, from net
income of $2.6 million in the comparable period of the
prior year.

Liquidity and Capital Resources

Our principal liquidity requirements are for
working capital. Over the last three fiscal years, we have
funded our operating activities principally from funds generated
from operations and net proceeds from an initial public offering.

Cash flows provided (used) by operating
activities were $(18.6) million and $1.7 million for
the first six months of fiscal 2003 and 2002, respectively. The
decrease in cash flows provided by operating activities from
fiscal year 2002 to 2003 was mainly due to our net loss,
exclusive of non-cash charges, in the first six months of fiscal
year 2003.

Cash flows provided (used) by investing
activities were $(2.4) million and $(1.4) million for the first
six months of fiscal 2003 and 2002, respectively. The decrease
in cash flows provided by investing activities is

14



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primarily due to an increase in the purchase of
short-term investments in the first six months of fiscal year
2003. Purchases of property and equipment were $0.8 million
and $1.8 million for the first six months of fiscal 2003
and 2002, respectively.


Cash flows provided by financing activities were
$0.1 million and $2.2 million for the first six months
of fiscal 2003 and 2002, respectively. Cash was generated from
the exercise of stock options and warrants and the issuance of
common stock under our employee stock purchase plan.

In June 2001, we entered into a
$10.0 million loan and security agreement with Comerica
Bank. In December 2001, we amended this bank credit facility. As
a result of the amendment, the credit extension limit was
increased to $13.5 million. The amended bank credit
facility allows us to borrow money bearing interest either at a
floating rate per annum equal to the prime rate or at a rate per
annum equal to LIBOR plus 2.0%. We may request advances in an
aggregate outstanding amount not to exceed the lesser of
$13.5 million or the borrowing base, in each case minus the
aggregate face amount of outstanding letters of credit,
including any drawn but unreimbursed letters of credit. Our
borrowings under the Comerica bank credit facility are secured
by substantially all of our assets. The existing amended
Comerica bank credit facility matures on June 30, 2004. We
currently have a $3.5 million standby letter of credit as
required by the lessor of our building. During the quarter ended
September 30, 2002, we violated the loss covenants related
to the $10.0 million of unused bank credit facility. The
bank has provided a proposed amendment which would change the
covenants to allow the loss incurred during the quarter and
amend certain other covenants and conditions going forward. We
are currently reviewing the banks proposal.

Our other contractual obligations at
September 30, 2002 and the effect such obligations are
expected to have on our liquidity and cash flow in future
periods, have not changed materially since March 31, 2002
as described in our Form 10-K.

Our principal sources of funds are anticipated to
be cash and short-term investments on hand ($39.5 million
as of September 30, 2002), cash flows from operating
activities and, if necessary, borrowings under the bank credit
facility. We expect to limit our capital spending to essential
items. We believe that these funds will provide us with
sufficient liquidity and capital resources for us to meet our
current and future financial obligations for at least the next
twelve months. No assurance can be given, however, that this
will be the case. We may require additional equity or debt
financing to meet our working capital requirements, to fund our
research and development activities. There can be no assurance
that additional financing will be available when required or, if
available, will be on terms satisfactory to us.

Inflation

The impact of inflation on our business has not
been material for the fiscal quarter ended September 30,
2002.




Item 4.Controls
and Procedures

During the 90-day period prior to the filing date
of this report, management, including our Chief Executive
Officer and Chief Financial Officer, evaluated the effectiveness
of the design and operation of the companys disclosure
controls and procedures. Based upon that evaluation and the
investigation discussed in Note 2 of the financial
statements entitled Restatement of Financial
Results, a material weakness has been identified relating
to controls surrounding evaluating and reporting revenue
transactions, particularly in the Asia/Pacific region. As a
result, we have implemented or are in the process of
implementing the following changes or additions to our internal
controls and procedures, among others:



| |   |                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Changing our internal reporting structure to
    require branch accounting personnel to report directly to our
    finance department in the United States;  
|
| |  | Establishing audit and review procedures for each
    foreign branch consistent with each branchs exposure,
    including, as appropriate, outside auditors;

15



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| |   |                                                                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Requiring managers of foreign operations to
    attest in writing that final acceptance documents for any given
    period are valid acceptances that justify revenue recognition
    and that will result in customer payment;
|
| |  | Requiring corporate financial management
    personnel to investigate transactions where revenue has been
    recognized but the customer has not paid according to terms;                                                     
|
| |  | Re-training employees and developing an ongoing
    training program with particular focus on company policies and
    procedures related to revenue recognition, expense
    reimbursements and bank account reconciliations; 
|
| |  | Establishing yearly or twice-yearly (for larger
    branches) reviews with both internal and external accounting
    personnel and local management, to be coordinated with quarterly
    business reviews; and                
|
| |  | Establishing controls to closely monitor the
    credit status of certain customers, with emphasis on
    distributors.                                                                                                        

Management is considering additional controls as
a result of the special investigation and development is ongoing.




PART II.  OTHER
INFORMATION




Item 6. Exhibits and Reports on
Form 8-K

(a)     The following
exhibits are included herein:

|        |         |             |  |                                                                                                                                                                                                
|------- | ------- | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |         |            
|Number  |         | Description
|        |         |            
|        | 3.1     |             |  | Restated Certificate of Incorporation of
    Therma-Wave.(1)                                                                                                                                   
|        | 10.26.2 |             |  | Amendment No. 2 to the 2000 Employee Stock
    Purchase Plan.(1)                                                                                                                               
|        | 10.40   |             |  | Separation Agreement and General Release of
    Claims, dated as of August 13, 2002, by and between
    Therma-Wave, Inc. and Robert G. Ozarski.                                               
|        | 10.41   |             |  | Amendment, dated September 5, 2002, to the
    Separation Agreement and General Release of Claims, dated as of
    August 13, 2002, by and between Therma-Wave, Inc. and
    Robert G. Ozarski.
|        | 99.1    |             |  | Risk Factors.(2)                                                                                                                                                                               
|        | 99.2    |             |  | Certifications Pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002.                                                                                                                  



---



|    |                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Incorporated by reference to the same numbered
    exhibit in the Companys originally filed Quarterly Report
    on Form 10-Q for the period ended September 29, 2002, filed
    on November 13, 2002 (File No. 000-26911)
|   
|(2) | Incorporated by reference to the same numbered
    exhibit in the Companys amended Annual Report on
    Form 10-K/ A for the period ended March 31, 2002 (File
    No. 000-26911)                                         

(b)     Reports on
Form 8-K

On August 14, 2002, we reported on
Form 8-K the certification of our Form 10-Q for the
quarterly period ended June 30, 2002 by Martin M.
Schwartz, our Chief Executive Officer, and L. Ray Christie,
our Chief Financial Officer.

16



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##### Table of Contents






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.



| |                                                        
| | -------------------------------------------------------
| | THERMA-WAVE, INC.                                      
|
| | (Registrant)                                           
|
| | /s/ L. RAY CHRISTIE                                    
| |                                                        
| | L. Ray Christie                                        
| | Chief Financial Officer                                
| | (as Registrant and as Principal Accounting
    Officer)

May 5, 2003

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THERMA-WAVE, INC.

CERTIFICATION PURSUANT TO SECTION 302 OF
THE

SARBANES-OXLEY ACT OF 2002


I, Boris Lipkin, certify that:



| |                                                                                                                                                                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1.     I have reviewed
    this quarterly report on Form 10-Q/ A of Therma-Wave, Inc.;                                                                                                                                                                                                                                                                       
|
| | 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
    those 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.



| |                                          
| | -----------------------------------------
| | /s/ BORIS LIPKIN                         
| |                                          
| | Boris Lipkin                             
| | President and Chief Executive
    Officer

May 5, 2003

18



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##### Table of Contents



THERMA-WAVE, INC.

CERTIFICATION PURSUANT TO SECTION 302 OF
THE

SARBANES-OXLEY ACT OF 2002


I, L. Ray Christie, certify that:



| |                                                                                                                                                                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1.     I have reviewed
    this quarterly report on Form 10-Q/ A of Therma-Wave, Inc.;                                                                                                                                                                                                                                                                       
|
| | 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
    those 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.



| |                        
| | -----------------------
| | /s/ L. RAY CHRISTIE    
| |                        
| | L. Ray Christie        
| | Chief Financial Officer

May 5, 2003

19



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##### Table of Contents



EXHIBIT INDEX

|        |    |             |  |                                                                                                                                                                                                
|------- | -- | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|Number  |    | Description
|        |    |            
|        | 3  | .1          |  | Restated Certificate of Incorporation of
    Therma-Wave.(1)                                                                                                                                   
|        | 10 | .26.2       |  | Amendment No. 2 to the 2000 Employee Stock
    Purchase Plan.(1)                                                                                                                               
|        | 10 | .40         |  | Separation Agreement and General Release of
    Claims, dated as of August 13, 2002, by and between
    Therma-Wave, Inc. and Robert G. Ozarski.                                               
|        | 10 | .41         |  | Amendment, dated September 5, 2002, to the
    Separation Agreement and General Release of Claims, dated as of
    August 13, 2002, by and between Therma-Wave, Inc. and
    Robert G. Ozarski.
|        | 99 | .1          |  | Risk Factors.(2)                                                                                                                                                                               
|        | 99 | .2          |  | Certifications Pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002.                                                                                                                  



---



|    |                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Incorporated by reference to the same numbered
    exhibit in the Companys originally filed Quarterly Report
    on Form 10-Q for the period ended September 29, 2002,
    filed on November 13, 2002 (File No. 000-26911)
|   
|(2) | Incorporated by reference to the same numbered
    exhibit in the Companys amended Annual Report on
    Form 10-K/A for the period ended March 31, 2002 (File
    No. 000-26911)