UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Mark One)
þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended June 30, 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 July 31, 2002
Common stock, $.01 par value	29,210,621

TABLE OF CONTENTS

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
CERTIFICATION
EXHIBIT 99.2

THERMA-WAVE, INC.

TABLE OF CONTENTS

		Page No.
PART I. FINANCIAL INFORMATION
ITEM 1.	Financial Statements		1
	Condensed Consolidated Balance Sheets as of June 30, 2002 and March 31, 2002		1
	Condensed Consolidated Statements of Operations for the Three Months Ended June 30, 2002 and 2001		2
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended June 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		9
ITEM 4.	Controls and Procedures		13
PART II. OTHER INFORMATION
ITEM 6.	Exhibits and Reports on Form 8-K		14
SIGNATURES			15
CERTIFICATIONS			16

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

PART I — FINANCIAL INFORMATION

Item 1.     Financial Statements

THERMA-WAVE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(Unaudited)

			June 30,			March 31,
			2002			2002
			(As Restated)
ASSETS
Current assets:
	Cash and cash equivalents		$	27,180		$	46,484
	Short-term investments			21,572			12,575
	Accounts receivable, net			18,714			15,635
	Inventories			34,738			34,677
	Other current assets			3,444			3,415
		Total current assets		105,648			112,786
	Property and equipment, net			13,125			14,041
	Goodwill and intangible assets, net			69,806			70,096
	Other assets			4,930			4,723
		Total assets	$	193,509		$	201,646
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Accounts payable		$	4,975		$	6,297
	Accrued warranty costs			1,434			1,777
	Deferred revenue			12,022			9,493
	Income tax payable			4,985			4,903
	Other current liabilities			9,728			9,303
		Total current liabilities		33,144			31,773
	Long term debt			16			16
	Other liabilities			2,307			2,358
		Total liabilities		35,467			34,147
Stockholders’ equity:
	Common stock			293			291
	Additional paid-in capital			322,299			321,466
	Notes receivable from stockholders			(200	)		(200	)
	Accumulated deficit			(160,628	)		(149,325	)
	Accumulated other comprehensive loss			(1,380	)		(1,790	)
	Deferred stock-based compensation			(2,342	)		(2,943	)
		Total stockholders’ equity		158,042			167,499
		Total liabilities and stockholders’ equity	$	193,509		$	201,646

See accompanying notes to condensed consolidated financial statements.

1

THERMA-WAVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(Unaudited)

			Three Months Ended
			June 30,
			2002			2001
Net revenues			$	14,949		$	37,821
Cost of revenues				11,871			20,149
Gross profit				3,078			17,672
Operating expenses:
	Research and development			7,995			6,981
	Selling, general and administrative			6,121			5,707
	Stock-based compensation			586			—
		Total operating expenses		14,702			12,688
Operating income (loss)				(11,624	)		4,984
Other income (expense):
	Interest expense			(51	)		(84	)
	Interest income			264			832
	Other, net			108			39
		Total other income		321			787
Income (loss) before provision for income taxes				(11,303	)		5,771
Provision for income taxes				—			(346	)
Net income (loss)			$	(11,303	)	$	5,425
Net income (loss) per share:
	Basic		$	(0.40	)	$	0.23
	Diluted		$	(0.40	)	$	0.22
Weighted average common shares outstanding:
	Basic			28,565			23,786
	Diluted			28,565			25,133

See accompanying notes to condensed consolidated financial statements.

2

THERMA-WAVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

				Three Months Ended
				June 30,
				2002			2001
Operating activities:
	Net income (loss)			$	(11,303	)	$	5,425
	Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:
		Depreciation and amortization			1,696			1,366
		Amortization of intangible assets			290			—
		Amortization of deferred stock-based compensation			601			—
	Changes in assets and liabilities:
		Accounts receivable			(3,079	)		11,835
		Inventories			(61	)		2,483
		Other assets			(45	)		248
		Liabilities			1,320			(19,472	)
			Net cash provided (used) by operating activities		(10,581	)		1,885
Investing activities:
	Purchases of property and equipment				(593	)		(1,620	)
	(Purchase) sale of short-term investments				(8,997	)		4,340
	Other				(378	)		(130	)
			Net cash provided (used) by investing activities		(9,968	)		2,590
Financing activities:
	Proceeds from issuance of common stock				835			1,139
	Principal payments under capital lease obligations				—			(28	)
Net cash provided by financing activities					835			1,111
	Effect of exchange rates on cash				410			(59	)
Net increase (decrease) in cash and cash equivalents					(19,304	)		5,527
Cash and cash equivalents at beginning of period					46,484			55,725
Cash and cash equivalents at end of period				$	27,180		$	61,252
Supplementary disclosures:
	Cash paid for interest			$	10		$	57
	Cash paid for taxes			$	35		$	2,445

See accompanying notes to condensed consolidated financial statements.

3

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 June 30, 2002, and the operating results and cash flows for the three months ended June 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.

      The first quarters of fiscal years 2003 and 2002 and the entire fiscal year 2002 ended on June 30, 2002, July 1, 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.

      (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

4

THERMA-WAVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

inventory cost of the tool of $152,000) and for the other tool revenue has not been recognized ($400,000) and the 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 balance sheets as of June 30, 2002 and March 31, 2002 have been restated for the impact of the items above.

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

	June 30, 2002						March 31, 2002
	As Previously						As Previously
	Reported			As Restated			Reported			As Restated
	(In thousands)						(In thousands)
Accounts receivable, net	$	19,664		$	18,714		$	16,585		$	15,635
Inventories		33,899			34,738			33,838			34,677
Other current assets		3,456			3,444			3,427			3,415
Total current assets		105,771			105,648			112,909			112,786
Total assets		193,632			193,509			201,769			201,646
Accrued warranty costs		1,459			1,434			1,802			1,777
Deferred revenue		11,212			12,022			8,683			9,493
Total current liabilities		32,359			33,144			30,988			31,773
Total liabilities		34,682			35,467			33,362			34,147
Accumulated deficit		(159,720	)		(160,628	)		(148,417	)		(149,325	)
Total stockholders’ equity		158,950			158,042			168,407			167,499
Total liabilities and stockholders’ equity		193,632			193,509			201,769			201,646

3. Inventories

      Inventories are summarized as follows (in thousands):

	June 30,		March 31,
	2002		2002
	(As Restated)
Purchased materials	$	11,850	$	11,172
Systems in process		14,975		12,657
Finished systems		7,913		10,848
	$	34,738	$	34,677

5

THERMA-WAVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 June 30, 2002 and 2001, comprehensive income (loss) amounted to approximately $(10.9) million and $5.4 million, 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 June 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.

	June 30,
	2002		2001
Common stock subject to repurchase (unvested)		6		—
Common stock held in escrow account		541		—
Stock options		4,861		1,071
Warrants		110		—

      For the three months ended June 30, 2002 and 2001, anti-dilutive stock options have a weighted average exercise price of $16.81 and $21.67, respectively. The warrants outstanding at June 30, 2002 that we excluded from the above calculation had a weighted average exercise price of $3.72.

7. Recently Issued Accounting Statements

      On January 16, 2002, we adopted the non-amortization provisions of 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. We have completed the goodwill impairment test as of the beginning of fiscal 2003, and the results of that test indicated that our goodwill and other intangible assets are not impaired. Intangible assets include developed technology, development contract and trade name and are being amortized on a straight-line basis over the estimated useful lives of two to five years. No changes were made to the useful lives of amortizable intangible assets or reclassifications made in

6

THERMA-WAVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

connection with the adoption of SFAS No. 142. Components of intangible assets were as follows (in thousands):

	June 30, 2002					March 31, 2002
	Gross Carrying		Accumulated			Gross Carrying		Accumulated
	Amount		Amortization			Amount		Amortization
Intangible assets
Developed technology	$	890	$	(202	)	$	890	$	(92	)
Development contract		2,590		(237	)		2,590		(107	)
Trade name		990		(90	)		990		(40	)
Intangible assets	$	4,470	$	(529	)	$	4,470	$	(239	)
Goodwill	$	65,865	$	—		$	65,865	$	—

      Amortization of intangible assets was $0.3 million for the three months ended June 30, 2002. Amortization expense is expected to be $0.9 million for the remainder of fiscal 2003 (a total of $1.2 million for fiscal 2003). Amortization expense for fiscal 2004, 2005, 2006 and 2007 is expected to be $1.1 million, $0.7 million, $0.7 million, and $0.6 million, respectively. Net loss remains unchanged after the adoption of SFAS No. 142 as all goodwill is not subject to amortization.

8. 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 uses in their integrated product family.

      KLA-Tencor is seeking damages and an injunction to stop the sale of the equipment they allege uses this aspect. On February 25, 2002, Sensys answered KLA-Tencor’s complaints by denying the material allegations and asserting declaratory judgment counterclaims. KLA-Tencor filed its reply on March 22, 2002. A case management conference was held on July 11, 2002. Discovery cut-off was set for August 4, 2003 but a trial date has not been set. We believe none of the current Sensys products infringes any of the claims of KLA-Tencor’s patent. 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.

      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 April 26, 2002, we moved for a preliminary injunction to enjoin and prohibit Boxer Cross from making, using, importing, selling, or offering for sale its BX-10 during the pendency of the lawsuit. A hearing on Therma-Wave’s motion is scheduled for August 12, 2002, and discovery related to the motion is ongoing. 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 raising claims of misappropriation of trade secrets, tortious interference with contract, unfair competition and unfair business practices. A case management conference is scheduled for August 26, 2002. No discovery cut-off or trial dates have 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.

7

THERMA-WAVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      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.

9. Severance Charge

      During fiscal year 2002, we announced and implemented reduction in force programs aimed at bringing operating expenses in line with our operating environment for the fiscal year 2002. 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 130 employees primarily involved in customer service and manufacturing positions. All expenses were paid out or are expected to be paid out in cash with the remaining balance expected to be paid out by September 30, 2002. Changes in the accrued expenses relating to reductions in force are summarized as follows:

	Balance							Balance
	March 31, 2002		Additions		Utilized			June 30, 2002
Severance	$	184	$	—	$	(64	)	$	120
Other		117		9		(65	)		61
	$	301	$	9	$	(129	)	$	181

10. Subsequent Event

      On August 1, 2002, the Company’s Board of Directors approved a stock repurchase program for the repurchase of up to 1 million shares of Therma-Wave’s common stock. The Company has subsequently repurchased 347,400 shares of common stock at an average price of $2.40 per share.

8

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, continue to smoothly integrate Sensys into our operation 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 CD systems, and Sensys and Integra 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 CD Product Family. Opti-Probe CD systems measure the lateral dimensions, or “critical dimensions”, or CD, using 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 ICs.

      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. In January 2002, we acquired Sensys Instruments Corporation, or Sensys, a developer of integrated metrology systems. We are now merging our Integra product line with the Sensys product family.

9

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.

      (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 the 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.

10

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 months ended June 30, 2002 and 2001 were derived from our unaudited condensed 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
			Ended June 30,
			2002			2001
Net revenues				100.0	%		100.0	%
Cost of revenues				79.4			53.3
Gross profit				20.6			46.7
Operating expenses:
	Research and development			53.5			18.5
	Selling, general and administrative			40.9			15.0
	Stock-based compensation			4.0			—
		Total operating expenses		98.4			33.5
Operating income (loss)				(77.8	)		13.2
Other income (expense):
	Interest expense			(0.3	)		(0.2	)
	Interest income			1.8			2.2
	Other, net			0.7			0.1
		Total other income		2.2			2.1
Income (loss) before provision for income taxes				(75.6	)		15.3
Provision for income taxes				—			(1.0	)
Net income (loss)				(75.6	)%		14.3	%

      Comparisons of the three months ended June 30, 2002 as compared to the three months ended March 31, 2002, as restated.

      Net Revenues. Net revenues for the fiscal quarter ended June 30, 2002 were $14.9 million. Compared to the fourth quarter of fiscal 2002, net revenues increased $2.5 million, or 20.5%, from $12.4 million. Net revenues decreased $22.9 million, or 60.5%, from $37.8 million in the same fiscal quarter 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.

      During the three months ended June 30, 2002, we derived approximately 65% of our net revenues from system sales, 22% from sales of replacement and spare parts, including associated labor, and 13% from service contracts. During the three months ended June 30, 2001, we derived approximately 89% of our net revenues from system sales, 5% from sales of replacement and spare parts, including associated labor, and 6% from service contracts.

      International sales accounted for approximately 77% and 59% of our total net revenues for the three months ended June 30, 2002 and 2001, respectively. 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 Japan, Korea, Taiwan and Europe, such conditions could negatively impact our international sales in future periods.

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      Gross Profit. Gross profit for the first quarter of fiscal 2003 was $3.1 million, an increase of $13.7 million, from a loss of $10.6 million in the previous fiscal quarter. Compared to the same quarter of fiscal 2002, gross profit decreased $14.6 million or 82.6%. As a percentage of net revenues, gross margin for the current quarter was 20.6%, compared to (85.5)% for last fiscal quarter and 46.7% for the same quarter of last fiscal year. The significant change of gross profit from the previous fiscal quarter is primarily due to a $12.2 million non-recurring inventory charge recorded in the fourth quarter of fiscal 2002. The significant decrease of gross profit from the same quarter of fiscal 2002 is primarily due to our substantially lower revenue and production volume.

      Research and Development, or R&D, Expenses. R&D expenses for the first quarter of fiscal 2003 were $8.0 million, an increase of 0.4% from the prior quarter and an increase of 14.5% from the first quarter of last fiscal year. The increase from the same quarter of last fiscal year was primarily due to the R&D expenses incurred by Sensys whom we acquired in January 2002. We expect to continue to commit significant resources to the development of new products and other programs because we believe that technical leadership will strengthen our market position in the next economic upturn.

      Selling, General and Administrative, or SG&A, Expenses. SG&A expenses for the first quarter of fiscal 2003 were $6.1 million, an increase of 4.3% from SG&A expenses of $5.7 million in the prior fiscal quarter. Compared to the first quarter of last fiscal year, SG&A expenses increased by 7.3%. The increase was primarily due to the addition of SG&A expenses incurred by Sensys whom we acquired in January 2002.

      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 $0.6 million in the quarter ended June 30, 2002, or 4% of revenue for the quarter. We had no similar expenses for the same period of last fiscal year.

      Other Income. Other income for the first quarter of fiscal 2003 was $0.3 million, which was 28.7% lower than other income in the prior fiscal quarter. Compared to the first quarter of the prior fiscal year, other income decreased 59.2%. We derived other income primarily from the investment of our cash on hand. The decrease in other income was attributable to lower average interest rates as well as lower average balance of investment in the first quarter of fiscal 2003.

      Provision for Income Taxes. For the three months ended June 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 $11.3 million for the first quarter of fiscal 2003, compared with net loss of $40.8 million in the prior fiscal quarter and net income of $5.4 million in the same quarter of last fiscal 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 $(10.6) million and $1.9 million for the first quarters 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 in the first three months of fiscal year 2003.

      Cash flows provided (used) by investing activities were $(10.0) million and $2.6 million for the first quarters of fiscal 2003 and 2002, respectively. The decrease in cash flows provided by investing activities is primarily due to an increase in the purchase of short-term investments in the first three months of fiscal year 2003. Purchases of property and equipment were $0.6 million and $1.6 million for the first quarters of fiscal 2003 and 2002, respectively.

      Cash flows provided by financing activities were $0.8 million and $1.1 million for the first quarters 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.

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      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 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 and we have $10.0 million of unused borrowing capacity under the amended bank credit facility. We are in compliance with all financial covenants related to the bank credit facility.

      Our principal sources of funds are anticipated to be cash and short-term investments on hand ($48.8 million as of June 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 and 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 June 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;

•  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.

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PART II. — OTHER INFORMATION

Item 6.     Exhibits and Reports on Form 8-K

      (a) The following exhibits are included herein:

Exhibit
Number		Description
	10.39	Form of Stock Option Agreement under the 2000 Equity Incentive Plan(1)
	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 June 30, 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

           None

14

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

15

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.

May 5, 2003

/s/ BORIS LIPKIN

Boris Lipkin

President and Chief Executive Officer

16

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

17

EXHIBIT INDEX

Exhibit
Number		Description
	10.39	Form of Stock Option Agreement under the 2000 Equity Incentive Plan.(1)
	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 June 30, 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)