Filed by Nanometrics Incorporated
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Commission File No. 000-13470
Subject Company: Nanometrics Incorporated
This filing relates to a planned merger (the “Merger”) between Nanometrics Incorporated (“Nanometrics”) and Accent Technologies, Inc. (“Accent”) pursuant to the Agreement and Plan of Merger and Reorganization, dated January 25, 2006, by and among Nanometrics, Alloy Merger Corporation (a wholly-owned subsidiary of Nanometrics), Accent and, solely with respect to Article IX, Sanford S. Wadler, as Stockholder Agent.
Investor Presentation June 2006
Introduction to Nanometrics
Who is Nanometrics?
A leading provider of integrated and stand-alone metrology and process control technology to the global semiconductor manufacturing industry
What sets NANO apart?
Compelling growth story
Outstanding market position
Executing on its plan
Industry Trends Driving NANO Growth
Consumer-driven siliconization
Flash, SOC
More complicated lithography
Drives overlay and OCD spending
New opportunities emerge for integrated metrology
e.g., track: AMAT-Screen JV
Energy applications driving next wave of materials
USJ and material engineering
Adoption of APC and DFM
Requires metrology feedback loop
Greater scale becomes a necessity
SOX, 123R….Enhanced channel
Acquisitions are Key to Nanometrics’ Growth
Acquired Soluris in March
$7 million cash purchase
Created immediate impact on NANO share of Overlay market
Announced proposed acquisition of Accent Optical in January
Stock deal valued at ~$60 million * Expect to close at mid-year
Accent receives 28% of NANO equity for 37% LTM revenue contribution Strong position in Overlay, plus additional $100M+ market opportunity Complementary technology, customers, regional strengths
* Based on 5 million shares and $10.9 million debt. The transaction is subject to approval of Nanometrics and Accent shareholders.
Who is Soluris?
IVS Division of NANO
Serving several markets
Silicon, MEMS, GaAs, Inkjet and bump
Robust technology
Overlay and CD measurement in the same recipe
High reliability, low COO solution
150+ systems in the field
Strong history and financials
20 years in the business; buyout of Schlumberger subsidiary
Based in Concord, MA
37 employees
$8-10M revenue run-rate
Who is Accent Optical?
Metrology company offering several technologies
Overlay metrology
Thin film metrology (film characterization, wafer mapping)
Optical CD
Defect detection
Serving diverse markets
Semiconductor photolithography process control
Bare wafers/substrates: SSi, SOI…
Wireless/HBLEDs
Impressive history and solid financials
25 years in the business; buyout of Bio-Rad unit
HQ in Bend, Oregon with R&D/Mfg in York, England
200+ employees
Healthy revenue run-rate and strong margins
Acquisitions Complement Nanometrics Products
Stand-Alone
Integrated
Core Products with Leading Market Share
Atlas/FLX
Transparent Film Thickness
9010/BOLTS
Dielectric CMP, CVD
New Products and Expanding Markets
Orion
Advanced Overlay Control
Atlas-M
Mask and Reticle Metrology
NanoOCD
Optical CD Measurement
9010 UDI
Defect Detection
Penetration into additional process steps:
Track, Etch, Metal CMP
Combination Provides Enhanced Channel
Nanometrics Accent Soluris
NANO Today: Outstanding Market Position
Only metrology company with solutions for both integrated and stand-alone solutions
Leveraged by acquisitions
Enhanced channel
Greater scale
Unique market strengths
Memory
Complex litho apps
Wireless/HBLED
MEMS
* Japan * Korea * Taiwan
* USA * Europe
* USA
Nanometrics Addresses Large and Growing Markets
Source: Dataquest
Market Size in $millions $1,200 $1,000 $800 $600 $400 $200 $0 $340 million $600 million $800 million
51% CAGR
22% CAGR
2003 2005 2009
Non-Metal Thin Film Metrology Integrated Metrology Mask Metrology
Overlay Metrology Macro Defect Inspection OCD/Profile Measurement
Accent acquisition expected to add an additional ~$100 million to SAM
Strong Position in Core Markets
Source: Dataquest
Non-Metal Thin Film Integrated
#1 KLAC #1 NANO
#2 NANO / TWAV #2 Nova
#4 RTEC
#5 Accent RTEC, TEL, KLAC <$5M
OCD Overlay
#1 KLAC #1 KLAC
#2 NANO #2 Nikon (exiting)
#3 TWAV #3 Accent
#4 NANO-IVS
Well Positioned in Overlay Market
Source: Company data
GaAs MEMS/Inkjet Silicon ICs
2” to 6” wafers
ASP $450-600k
Accent
Nano-IVS
4” to 8” wafers
ASP $450-600k
Accent Nano-IVS
Nano-IVS Accent
200mm – 120nm +
ASP $450-600k
300mm – 110nm and under
ASP $750k-$1.1M
KLAC
Accent Nano-Orion Hitachi
Wafer Size
Double Exposure for Mainstream IC Production
Source: Semiconductor International
Attractive option for extending 193nm lithography
Companies looking to double exposure as mainstream
Had been used only on most critical layers
Timing window may be realized sooner; Less costly than implementing new technologies
Compared to EUV, immersion
Double exposure increases metrology requirements
Requires 2x overlay improvement
Requires improved CD control
Double Exposure and Metrology
Primary path for minimum feature resolution:
2002 2004 2006 2008 Scanner 248nm 193nm 193nm Immersion Mask OPC/RET Phase Shift (PSM) Double Exposure
Mask Cost $ $$ $$$$
Overlay budget 15nm 12nm 10nm
Double Exposure is in addition to the previous technology
Increases overlay measurements per layer (up to 2x)
Need to align exposed layer to underlying layer and 2nd expose to 1st exposure
Additional error budget is used in the 2nd exposure
Burden on metrology can more than double in precision and capacity requirements
Triple layer overlayer techniques and targets are emerging to hold capacity flat
Illustration of evolving mask methods and double exposure:
Resulting Wafer Pattern:
Binary Mask Binary w/ OPC
240nm pitch 210nm pitch
PSM Mask
160nm pitch
PSM Mask w/ PSM 2nd Mask
1st Expose
2nd Expose
110nm pitch
Compound Semiconductor Opportunity
Accent Business $30M $20M $10M
ZnO SiC GaN FET HD-DVD laser UV-LED Green LED Blue LED DVD laser InP Opto GaAs Opto GaAs IC
1990
1992
1994
1996
1998
2000
2002 2004
2006
2008
2010
High Speed
GaAs ICs. CD lasers.
GaAs is
“The material of the future”
Internet
Dot Com Boom Opto, Wireless.
The InP era
Fashion
Blue LEDs In Handsets.
GaN emerges
Energy Efficiency
Handset PAs, LCD backlighting 4G RF base-stations, Hybrid cars Architectural Lighting, Ambient Lighting
GaN and SiC mature
What Sets Nanometrics Apart?
Compelling growth story
Outstanding market position
Executing on its plan
Be a consolidator
Improve the team
Create operating leverage
First Quarter 2006 Financials
GAAP Net I23R
Revenue $19.0 M $19.0 M
Gross Margin 44.9% 45.4%
Operating Expenses $10.2 M $9.4 M
Operating Loss ($1.7 M) ($0.8 M)
Net Loss ($1.3 M) ($0.5 M)
EPS ($0.10) ($0.04)
Cash and S-T Investments $33.5 M
Total Debt $2.2 M
Unique Product Mix, Regional Strengths
Sales by Geography Sales by Product
Taiwan Other 11% 4%
USA 34%
Korea 25%
Japan 26%
Stand-Alone 56%
Other 6%
Integrated 38%
2005
Q1 2006
Korea 30% *
Taiwan 3%
USA 42% *
Japan 23%
Stand-Alone 49%
Other 2%
Integrated 49%
* Adjusted to reflect $4.3 million of revenue shipped to US address of Korean customer
Improving Trend Toward Profitability
Quarterly Revenue ($M)
24 22 20 18 16 14 12 10
60% 50% 40% 30% 20% 10% 0% -10% -20% -30%
% of Revenue
Q1 ‘05 Q2 ‘05 Q3 ‘05 Q4 ‘05 Q1‘06 adj
Revenue Product GM Service GM Blended GM Operating Margin
Significant Operating Leverage in the Model
GAAP Non-GAAP
2005 Q106 Target Cash Basis*
Product Gross Margin 52% 50% 58% 60%
Service Gross Margin (12%) 15% 19% 20%
Blended Gross Margin 43% 45% 53% 55%
SG&A 32% 40% 27% 23%
R&D 18% 13% 13% 12%
Operating Margin (7%) (9%) 13% 20%
* Excludes non-cash expenses from amortization of intangibles and equity-based compensation.
Final Thoughts
Several growth drivers in the business
Memory + 300mm spending
Acquisitions
Market share gains
Integrated adoption
New markets (overlay, track, wireless/HBLED, etc)
A new Nanometrics
Consolidator
Enhanced channel
Improved team
Driving operating leverage
Additional Information and Where to Find It
In connection with the planned merger (the “Merger”) between Nanometrics, Inc.
(“Nanometrics”) and Accent Optical Technologies, Inc. (“Accent”) pursuant to the Agreement and Plan of Merger and Reorganization dated January 25, 2006 (the “Merger Agreement”), by and between Nanometrics, Alloy Merger Corporation (a wholly owned subsidiary of Nanometrics) and Accent, Nanometrics and Accent filed a joint proxy statement/prospectus on April 6, 2006. The proxy statement/prospectus includes a resolution for Nanometrics shareholder approval of the issuance of Nanometrics common stock in consideration for all the outstanding shares of Accent capital stock and the rights to acquire Accent capital stock (the “Share Issuance”), and certain other matters contemplated by the Merger Agreement. The proxy statement/prospectus also includes a resolution for Accent stockholder approval of the Merger Agreement and the Merger and certain other matters contemplated by the Merger Agreement. The joint proxy statement/prospectus will be mailed to the shareholders of Accent and Nanometrics once it is finalized. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED
MERGER WHEN IT IS FINALIZED BECAUSE IT CONTAINS IMPORTANT INFORMATION ABOUT THE TRANSACTION. The joint proxy statement/prospectus was filed with the Securities and Exchange Commission (“SEC”) by Nanometrics and Accent. Investors and security holders may obtain a free copy of the joint proxy statement/prospects and other documents filed by Nanometrics with the SEC at the SEC’s web site at www.sec.gov. The joint proxy statement/prospectus and these other documents may also be obtained for free from Nanometrics by directing a request to Nanometrics, Inc., 1550 Buckeye Drive, Milpitas, California 95035, Attention: Investor Relations, Telephone: (408) 435-9600 or by sending an email request to investors@nanometrics.com.
Additional Information and Where to Find It
Nanometrics and its executive officers and directors may be deemed to be participants in the solicitation of proxies from Nanometrics’ and Accent’s shareholders with respect to the transactions contemplated by the Merger Agreement. Information regarding such officers and directors is included in the joint proxy statement/prospectus. This document is available free of charge at the SEC’s web site at www.sec.gov and from Nanometrics by directing a request to Nanometrics, Inc., 1550 Buckeye Drive, Milpitas, California 95035, Attention: Investor Relations, Telephone: (408) 435-9600 or by sending an email request to investors@nanometrics.com.
Accent and its executive officers and directors may be deemed to be participants in the solicitation of proxies from Accent’s and Nanometrics’ shareholders with respect to the transactions contemplated by the Merger Agreement. Information regarding such Accent directors and executive officers and their interests in the Merger is included in the joint proxy statement/prospectus.
This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Forward Looking Statements
This communication contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, such as statements regarding the expected cost savings, impact of the Merger on operating results of the combined company, market position of the combined company and product portfolio of the combined company. These statements are not guarantees of future performance, involve certain risks, uncertainties and assumptions that are difficult to predict, and are based upon assumptions as to future events that may not prove accurate. Therefore, actual outcomes and results may differ materially from what is expressed herein. In any forward-looking statement in which Nanometrics expresses an expectation or belief as to future results, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement or expectation or belief will result or be achieved or accomplished. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: the risk that the Nanometrics and Accent businesses will not be integrated successfully; Nanometrics’ ability to achieve the cost savings and cash earnings expected, costs related to the Merger; failure of the Nanometrics shareholders to approve the Share Issuance, failure of the parties to satisfy various closing conditions, the inability of Nanometrics to achieve the market position anticipated and other economic, business, competitive and/or regulatory factors affecting Nanometrics’ and Accent’s businesses generally, including those set forth in Nanometrics’ filings with the SEC, including its Annual Report on Form 10-K for its most recent fiscal year, especially in the Management Discussion and Analysis section, its most recent Quarterly Reports on Form 10-Q and its Current Reports on Form 8-K. All forward-looking statements included in this communication are based on information available to Nanometrics on the date hereof. Nanometrics undertakes no obligation (and expressly disclaims any such obligation) to update forward-looking statements made in this communication to reflect events or circumstances after the date of this communication or to update reasons why actual results could differ from those anticipated in such forward-looking statements.
