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
Nanometrics Growth Strategy Investor Presentation June 2006
Nanometrics’ Mission
To be the leading company providing both integrated and stand-alone metrology & process control technology to the global semiconductor industry
Nanometrics Strategy for Growth
Identify High-Growth Opportunities
Solidify Competitive Position
Leverage the Channel
Superior Growth and Profits
Memory Integrated Optical CD Overlay
Focus on key customers
Gain market share
Consolidate
Gain scale
Worldwide strength
Cross-sell integrated + standalone
Top-line growth
Operating leverage
Increased profitability
Growth Opportunity: Memory
Siliconization of consumer “consumables”
Cell phone growth unheralded
PS3, Xbox, iPod, DVDs, GPS…
Huge Flash and DRAM content
Vista OS launch to accelerate DRAM spending
1GB minimum, 2GB optimized
Option to enhance performance by employing Flash key as cache
Flash as PC storage medium becoming a reality
Instant on, reduced power consumption
Driver for true PC replacement cycle
Requires dozens and dozens of chips
Nanometrics’ Memory Strategy
Identify High-Growth Opportunities
Solidify Competitive Position
Leverage the Channel
Memory
Integrated Optical CD Overlay
70-80% of Nano sales are into memory market
Majority of sales to Korea and Japan
CapEx spending by customers less reliant on US equity markets
Strong position with key memory customers in Korea and Japan creates opportunity to sell additional metrology products
Other Secular Drivers of Semiconductor Capex Growth
Move to 450mm manufacturing a decade away
| Increased |
|
capacity achieved only from expansion and shrinks |
Dual-core MPUs require 2x silicon Lithography challenges abound
Shrinks and Litho challenges = more process control
Look beyond the “cycles” to continued areas of strength for the industry and Nanometrics
Growth Opportunity: Integrated Metrology
One of the highest-growth markets in process control
Improves production economics, accelerates production ramp and enables APC
Results in higher profits for IC manufacturers
Solid penetration of non-metal CMP thin film measurement
CVD, etch just beginning to catch on
More markets yet to be penetrated
AMAT-DNS JV creates additional opportunity in track
Integrated TF, OCD and Overlay
Metal CMP and more
Nanometrics’ Integrated Strategy
Identify High-Growth Opportunities
Solidify Competitive Position
Leverage the Channel
Memory
Integrated
Optical CD
Overlay
Became #1 player in 2005 *
$40-50M market growing to $100+M by 2009 *
Strategic benefit to supplying both standalone + integrated metrology
Huge customer cross-selling opportunities
38% of Nano product revenue in 2005
50% of Nano product revenue in Q1 2006
| * |
|
Source: Dataquest. Includes integrated systems for TF and OCD metrology. Nova #2. |
Growth Opportunity: Optical CD Measurement
CD-SEM
Running out of steam $410M
| ~$ |
|
700M * $210M |
Thin Film
Essential measurements
[Graphic Appears Here]
Optical CD
Filling in for CD-SEM
TF/Optical CD
Two key technologies in one package
CD-SEM
| * |
|
Source: Dataquest market size numbers for 2005. Dataquest predicts 50%+ CAGR for OCD through 2009. |
Nanometrics’ Optical CD Strategy
Identify High-Growth Opportunities
Solidify Competitive Position
Leverage the Channel
Memory
Integrated
Optical CD
Overlay
KLAC #1 player NANO strong #2 * TWAV #3 Accent #4 (merging)
Emerging opportunity for integrated applications
Historically strong position in TF key as OCD+TF merge
| * |
|
Source: Dataquest. |
Growth Opportunity: Overlay Metrology
Dual exposure emerges as attractive option for extending 193nm lithography Timing window may be realized sooner; Less costly than implementing new technologies
| – |
|
Compared to EUV, immersion |
Burden on overlay metrology can more than double in precision and capacity requirements
Mask evolution:
Binary Mask
Binary w/ OPC
PSM Mask
PSM Mask w/ PSM 2nd Mask
Resulting Wafer Pattern:
240nm pitch
210nm pitch
160nm pitch
110nm pitch
Nanometrics’ Overlay Strategy
Identify High-Growth Opportunities
Solidify Competitive Position
Leverage the Channel
Memory Integrated Optical CD
Overlay
KLAC
Nikon
Accent Soluris
NANO
KLAC
Nikon exiting
NANO/ IVS/Accent
Opportunity for integrated applications
Soluris added strength in US, Singapore
Accent to add strength in Europe, US
Nano already strong in Korea, Japan, Taiwan and China
| * |
|
Source: Dataquest. |
Acquisitions Accelerating Nanometrics’ Growth
Acquired Soluris in March $7 million cash purchase $8-10 million in annual Overlay revenues, 150+ systems in the field Strength in 200mm, MEMS, Inkjet, GaAs, bump
Announced proposed acquisition of Accent Optical in January
Stock deal valued at ~$60 million* closing in July
Accent receives 28% of NANO equity for 37% LTM revenue contribution Strong position in Overlay, plus additional $100M+ market opportunity 25 years in the business, a buyout of Bio-Rad unit
* Based on 5 million shares and $10.9 million net debt. The transaction is subject to approval of Nanometrics and Accent shareholders.
Combination Provides Enhanced Channel
Nanometrics
Accent
Soluris
A New Nanometrics
Yesterday’s NANO:
In 2005, represented $70M of a $465M market Used to be #2, 3 or 4 player in each segment
Today’s NANO:
Pro forma for Soluris and Accent: ~$120M of $465M market
#1 or #2 position in every core market segment
At least $200M in additional near-term market opportunities
HBLED + FTIR (Accent)
Mask metrology (new Nano product)
Enhanced channel, improved team, greater scale`
Nanometrics Strategy for Growth
Identify High-Growth Opportunities
Solidify Competitive Position
Leverage the Channel
Superior Growth and Profits
Memory Integrated Optical CD Overlay
Focus on key customers
Gain market share
Consolidate
Gain scale
Worldwide strength
Cross-sell integrated + standalone
Top-line growth
Operating leverage
Increased profitability
Improving Fundamentals
Representative GM trend –High GM in Q4’05 due to sales of highly depreciated units
| Quarterly |
|
Revenue ($M) |
25
20
15
10
| 5 |
|
0
Q1 ‘05
Q2 ‘05
Q3 ‘05
Q4 ‘05
Q1’06 adj
60%
50%
40%
30%
20% 10% 0%
-10%
-20%
-30%
-40%
| % |
|
of Revenue |
Revenue
Blended GM
Operating Margin
+ Strong balance sheet: $33.5 million in cash, $2.2 million in debt
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 secular growth trends driving the industry A new Nanometrics Well-positioned with a solid strategy for growth 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 June 12, 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.
