8-K/A

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

March 15, 2006

Date of Report (date of earliest event reported)

NANOMETRICS INCORPORATED

(Exact name of Registrant as specified in its charter)

California	000-13470	92-2276314
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification Number)

1550 Buckeye Drive

Milpitas, California 95035

(Address of principal executive offices)

(408) 435-9600

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)

EXPLANATORY NOTE

This Amendment No. 1 to the Current Report on Form 8-K is being filed for the purpose of amending the Current Report on Form 8-K of Nanometrics Incorporated, a California corporation (the “Company”) dated March 15, 2006, filed with the Securities and Exchange Commission on March 16, 2006, to include as Exhibit 99.1 the audited financial statements of Soluris Inc., a Massachusetts corporation (“Soluris”) and to include as Exhibit 99.2 the pro forma financial data that was excluded from the original filing.

Item 9.01. Financial Statements and Exhibits

(a) The financial statements of Soluris required by this item are included in this Amendment No. 1 as Exhibit 99.1.

(b) The pro forma financial data required by this item is included in this Amendment No. 1 as Exhibit 99.2.

(d) Exhibits.

The following exhibits are filed herewith:

Exhibit No.	Description
23.1	Consent of Vitale, Caturano & Company, Ltd.
99.1	Audited Financial Statements of Soluris Inc.
99.2	Pro Forma Financial Information

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 hereunto duly authorized.

	NANOMETRICS INCORPORATED
Date: May 31, 2006	By:	/s/ Douglas J. McCutcheon
		Douglas J. McCutcheon Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	Description
23.1	Consent of Vitale, Caturano & Company, Ltd.
99.1	Audited Financial Statements of Soluris Inc.
99.2	Pro Forma Financial Information

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the use of our Report, dated May 12, 2006 relating to the consolidated financial statements of Soluris, Inc. and Subsidiaries as of December 31, 2005 as a part of this Form 8-K, and to its incorporation by reference in the Amendment No. 1 to Registration Statement No. 333-133033 of Nanometrics Incorporated on Form S-4.

/s/ VITALE, CATURANO & COMPANY, LTD.

Boston, Massachusetts

May 30, 2006

EX-99.1

Exhibit 99.1

SOLURIS, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

Year Ended December 31, 2005

CONTENTS

	Page
Independent Auditor’s Report	1
Financial Statements:
Consolidated Balance Sheet	2
Consolidated Statement of Operations	3
Consolidated Statement of Stockholders’ Deficit	4
Consolidated Statement of Cash Flows	5
Notes to Consolidated Financial Statements	6-15

INDEPENDENT AUDITOR’S REPORT

Board of Directors

Soluris, Inc.

Concord, Massachusetts

We have audited the accompanying consolidated balance sheet of Soluris, Inc. and subsidiaries as of December 31, 2005, and the related consolidated statements of operations, stockholders’ deficit and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Soluris, Inc. and subsidiaries and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

VITALE, CATURANO & COMPANY, LTD.

May 12, 2006

Boston, Massachusetts

SOLURIS, INC. AND SUBSIDIARIES

Consolidated Balance Sheet

December 31, 2005

ASSETS
Current assets:
Cash and cash equivalents	$	595,504
Accounts receivable, net		1,318,094
Inventories		628,253
Prepaid expenses		83,522
Total current assets		2,625,373
Property and equipment, net		64,329
	$	2,689,702
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Lines of credit	$	2,342,180
Accounts payable		640,954
Accrued expenses		730,810
Deferred revenue		263,772
Accrued warranty		167,499
Total current liabilities		4,145,215
Stockholders’ deficit:
Common stock, $.01 par value, 1,000,000 shares authorized, 690,000 shares issued and outstanding		6,900
Additional paid-in capital		34,000
Accumulated other comprehensive loss, net of tax		(12,642	)
Accumulated deficit		(1,483,771	)
Total stockholders’ deficit		(1,455,513	)
	$	2,689,702

See notes to consolidated financial statements.

Page 2

SOLURIS, INC. AND SUBSIDIARIES

Consolidated Statement of Operations and Accumulated Deficit

Year Ended December 31, 2005

Net sales	$	8,673,071
Costs of goods sold		3,999,631
Gross profit		4,673,440
Operating expenses:
Research and development		2,777,506
Sales and marketing		2,478,816
General and administrative		1,103,318
		6,359,640
Loss from operations		(1,686,200	)
Interest income		2,680
Loss before income taxes		(1,683,520	)
Income tax provision		—
Net loss	$	(1,683,520	)

See notes to consolidated financial statements.

Page 3

SOLURIS, INC. AND SUBSIDIARIES

Consolidated Statement of Stockholders’ Deficit

Year Ended December 31, 2005

	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Income (loss)			Retained Earnings			Total Stockholders’ Equity (Deficit)
Balance, December 31, 2004	$	6,900	$	34,000	$	9,253		$	199,749		$	249,902
Comprehensive loss:
Net loss		—		—		—			(1,683,520	)		(1,683,520	)
Other comprehensive income, net of tax
Foreign currency translation income		—		—		(21,895	)		—			(21,895	)
Comprehensive loss		—		—		(21,895	)		(1,683,520	)		(1,705,415	)
Balance, December 31, 2005	$	6,900	$	34,000	$	(12,642	)	$	(1,483,520	)	$	(1,455,513	)

Page 4

SOLURIS, INC. AND SUBSIDIARIES

Consolidated Statement of Cash Flows

Year Ended December 31, 2005

Cash flow from operating activities:
Net loss	$	(1,683,520	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		49,576
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable, net		7,973
Inventories		(391,915	)
Prepaid expenses		41,351
Increase (decrease) in:
Accounts payable		343,306
Accrued expenses		31,677
Deferred revenue		(122,521	)
Accrued warranty		(74,305	)
Income taxes payable		(23,801	)
Net cash used in operating activities		(1,822,179	)
Cash flows from investing activities:
Purchase of property and equipment		(5,486	)
Net cash used in investing activities		(5,486	)
Cash flows from financing activities:
Net proceeds from lines of credit		1,542,180
Net cash provided by financing activities		1,542,180
Exchange rate effect on cash and cash equivalents		4,920
Net decrease in cash and cash equivalents		(283,565	)
Cash and cash equivalents, beginning of year		879,069
Cash and cash equivalents, end of year	$	595,504
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest	$	87
Income taxes	$	10,574

See notes to consolidated financial statements.

Page 5

SOLURIS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Year Ended December 31, 2005

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Soluris, Inc, was incorporated in the Commonwealth of Massachusetts on July 29, 2003 and began operations on September 1, 2003. The Company’s principal business activities include manufacturing, distribution and maintenance services of semiconductor metrology equipment to customers in the United States, and to various other countries in Europe and Asia through its foreign subsidiaries in the United Kingdom, France, Singapore, and Taiwan.

Principles of Consolidation

The accompanying consolidated financial statements reflect the financial position, results of operations and cash flows of Soluris, Inc. and its four wholly owned subsidiaries, Soluris UK Limited; Soluris France EURL; Soluris Singapore Pte. Limited; and Soluris Taiwan Limited, collectively referred to as the “Company.” All significant intercompany accounts and transactions are eliminated upon consolidation.

Going Concern

The accompanying financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company has a limited operating history, negative working capital, incurred losses from operations since its inception, negative cash flows and has an accumulated deficit of $1,483,771 at December 31, 2005. These circumstances raised substantial doubt about the Company’s ability to continue as a going concern.

In March 2006, the stock of the Company was acquired by Nanometrics, Inc. (Note 8). As a result the Company became a wholly owned subsidiary of Nanometrics, Inc. In conjunction with the acquisition, the $2,000,000 line of credit owed to Schlumberger Technology Corporation was repaid. Subsequently, the management of Nanometrics, Inc. made a strategic decision to discontinue the development and marketing of the Yosemite product line and implemented cost reductions in all departments. Although no assurances can be given, the Company expects that the change in ownership, the discontinuance of Yosemite product line, and the liability and cost reductions will permit the Company to continue as a going concern.

Concentration of Credit and Business Risk

The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and trade account receivables. The Company maintains its cash in bank deposit accounts, which at times may exceed insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents. The Company’s trade receivables result primarily from the distribution of metrology equipment to customers located throughout North America, Europe and Asia. The Company routinely assesses the financial strength of its customers, and consequently, believes that its trade accounts receivable credit risk exposure is limited.

Page 6

SOLURIS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Year Ended December 31, 2005

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES…continued

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.

Accounts Receivable

Accounts receivable are stated at the amount management expects to collect from outstanding balances. An allowance for doubtful accounts is provided for those accounts receivable considered to be uncollectible based upon historical experience and management’s evaluation of outstanding accounts receivable at the end of the year. Bad debts are written off against the allowance when identified. At December 31, 2005, the allowance for doubtful accounts was $102,515.

Inventories

Raw materials and work-in-progress inventories are stated at lower of cost, determined using the first-in, first-out (FIFO) method, or market. Finished goods inventory is stated at lower of standard cost which approximates cost on the FIFO method or market. At December 31, 2005, inventories consisted of raw materials, work-in-progress and finished goods.

Property and Equipment

Property and equipment are stated at cost. Depreciation of property and equipment are computed using the straight-line method over the estimated useful lives of the assets as follows:

Machinery and equipment	3-5 years
Software	3-5 years
Furniture and fixtures	5-7 years

Maintenance, repairs and renewals, which neither materially add to the value of the property, nor appreciably prolong its life, are charged to expense as incurred. Upon retirement or sale, the cost of the assets disposed of and the related accumulated depreciation are removed from the respective accounts and any resulting gain or loss is included in the results of operations.

Page 7

SOLURIS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Year Ended December 31, 2005

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES…continued

Revenue Recognition

The Company recognizes revenue from the sale of equipment when there is persuasive evidence of an arrangement, title, and risk of loss have passed, delivery has occurred or the services have been rendered, the sales price is fixed or determinable and collection of the related receivable is reasonably assured. Prepaid maintenance service contracts are recognized as deferred revenue upon receipt and revenue is then recognized over the service contract period.

Foreign Operations

Operations outside the United States include subsidiaries in the United Kingdom, France, Singapore and Taiwan. Foreign operations are subject to risks inherent in operating under different legal systems and various political and economic environments. Among the risks are changes in existing tax laws, possible limitations on foreign investment and income repatriation, government price or foreign exchange controls, and restrictions on currency exchange.

Translation of Foreign Currencies

The assets and liabilities of the Company’s foreign operations are translated at exchange rates as of the balance sheet date. Revenues and expenses are translated at average rates of exchange in effect during the year. The resulting translation adjustments are reflected as a separate component of stockholders’ equity.

Income Taxes

Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently payable plus deferred taxes. Deferred taxes are recognized for differences between the basis of assets and liabilities for financial statement and income tax purposes. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes also are recognized for operating losses that are available to offset future taxable income.

Advertising Costs

Advertising costs are expensed as incurred. The Company incurred advertising and promotion in the amount of $74,453 during the year ended December 31, 2005.

Shipping and Handling Costs

The Company classifies shipping and handling costs as a component of cost of goods sold.

Page 8

SOLURIS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Year Ended December 31, 2005

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES…continued

Product Warranty Provisions

The Company’s standard policy is to warranty all shipped systems against defects for one year by replacing failed parts. The Company’s estimate of costs to service the warranty obligations is based on historical experience and current product performance trends. These costs are included in the warranty accrual and corresponding cost of goods sold at the time the systems are sold. The provision is reduced by actual material and labor costs incurred to replace parts over the warranty period. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.

Research and Development Costs

Research and development expenses resulting from the design, development, and testing of new equipment and related enhancement costs are expensed as incurred.

Stock-Based Compensation

The Company accounts for stock-based employee compensation arrangements using the intrinsic value method of accounting prescribed in accordance with Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations rather than the alternative fair value accounting provided for under SFAS No. 123, Accounting for Stock-Based Compensation (SFAS 123), as amended by SFAS No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure. SFAS 123 encourages, but does not require companies to recognize compensation expense for grants of stock, stock options, and other equity instruments based on the fair value method of accounting. For options or other stock-based compensation issued to non-employees, the Company recognizes compensation expense under the fair value method.

Had employee compensation cost for options issued under the Company’s stock incentive plan been determined on the fair value method at the grant dates, as prescribed in SFAS No. 123, the Company’s net loss for the year ended December 31, 2005 would have been as follows:

Net loss, as reported	$	(1,683,520	)
Stock based compensation expense under fair value method		(9,263	)
Net loss, pro forma	$	(1,692,783	)

Page 9

SOLURIS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Year Ended December 31, 2005

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES…continued

Other Comprehensive Loss

Comprehensive loss consists of net loss and foreign currency translation adjustments. Comprehensive loss has been reflected in the consolidated statement of stockholders’ deficit. Accumulated other comprehensive loss was approximately $22,000 at December 31, 2005.

Recent Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board (“FASB”) issued Statements of Financial Accounting Standards No. 123R, Share-Based Payment (the “Statement” or “SFAS No. 123R”). This Statement is a revision of SFAS No. 123, Accounting for Stock-Based Compensation, and supersedes Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance. The Statement requires entities to recognize stock compensation expense for awards of equity instruments to all parties, including employees and directors, based on the grant-date fair value of those awards (with limited exceptions). SFAS No. 123R is effective for the Company on January 1, 2006, and includes transitional implementation guidance. The Company has not yet completed its evaluation of the impact this accounting will have on its financial statements when adopted.

In November 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (“SFAS”) No. 151, Inventory Costs. SFAS No. 151 amends the guidance in Accounting Research Bulletin No. 43, Chapter 4, “Inventory Pricing,” to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). SFAS No. 151 requires that those items be recognized as current-period charges regardless of whether they meet the criterion of “so abnormal.” In addition, SFAS No. 151 requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. The provisions of SFAS 151 will become effective for the Company on January 1, 2006 and the Company does not believe the adoption of SFAS No. 151 will have a material impact upon the Company’s consolidated financial statements upon adoption.

2. PROPERTY AND EQUIPMENT

Property and equipment at December 31, 2005 consisted of the following:

Machinery and equipment	$	70,708
Software		70,000
Furniture and fixtures		2,687
		143,395
Less- accumulated depreciation		79,066
	$	64,329

Depreciation expense for the year ended December 31, 2005 was $49,576.

Page 10

SOLURIS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Year Ended December 31, 2005

3. LINES OF CREDIT

The Company has a line of credit agreement with Schlumberger Technology Corporation, which was issued concurrently with the 2003 purchase of the assets from Schlumberger Technology Corporation, which provides for a $2,000,000 unsecured, revolving demand line of credit. The line of credit agreement expires August 31, 2008 and bears interest at the rate of 0%. Upon the occurrence and during the continuance of certain default events, any unpaid balance shall bear interest at a rate equal to 6% compounded daily until such event of default is cured or waived. The revolving line of credit contains certain non-financial covenants that the Company must maintain. The total borrowed under the line of credit at December 31, 2005 was $2,000,000. In March 2006, the Company repaid the line of credit in full in conjunction with the acquisition of the Company’s stock by Nanometrics, Inc. as disclosed in Note 8.

The Company has a line of credit from a bank in the amount of the lesser of $1,500,000 or 80% of the Company’s eligible receivables. The line of credit agreement expires December 15, 2006 and bears interest at the rate of prime plus 1.25% (8.5% as of December 31, 2005) and is collateralized by substantially all of the Company’s assets. The line of credit contains certain non-financial covenants that the Company must maintain. Total borrowed under the line of credit at December 31, 2005 was $342,180.

4. COMMITMENTS AND CONTINGENCIES

Lease Commitments

The Company leases its Massachusetts office space under a non-cancelable operating lease with an expiration date of March 14, 2006. In March 2006, the Massachusetts lease was extended through March 14, 2007. The Company leases two foreign offices under non-cancelable operating leases with expiration dates ranging from July 31, 2006 through September 30, 2007.

Future minimum lease payments under the non-cancelable operating leases for the years ending December 31 are as follows:

2006	$	325,062
2007		85,765
	$	410,827

Total rent expense was approximately $343,000 for the year ended December 31, 2005.

The Company subleases space at its Massachusetts location to a tenant under a non-cancelable lease expiring March 2007. During 2005, the Company also subleased space at its Massachusetts location to a tenant under a tenant-at-will basis.

Page 11

SOLURIS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Year Ended December 31, 2005

4. COMMITMENTS AND CONTINGENCIES...continued

Future minimum lease receipts under the non-cancelable leases for the years ending December 31 are as follows:

2006	$	25,536
2007		6,384
	$	31,920

For the year ended December 31, 2005, total sublease rental income was approximately $62,000.

Product Warranty

Changes in the Company’s warranty liability for the year ended December 31, 2005 were as follows:

Accrued warranty, beginning of year	$	220,000
Charged to costs and expenses		390,000
Change in reserve estimates		(40,000	)
Actual warranty expenditures		(402,501	)
Accrued warranty, end of year	$	167,499

Royalty Agreement

The Company had a contingent commitment to pay royalties to Nanometrics, Inc. on the future sales of a new product line previously under development. The terms of the agreement called for a minimum total royalty amount of $600,000 plus an annual amount equal to 10% of the outstanding amount unpaid from the original $600,000. Royalties are payable at the rate of $36,000 per unit sold until full commitment is satisfied.

At December 31, 2005, the Company had a contingent commitment to pay future royalties of approximately $856,200. In March 2006, the Company was acquired by Nanometrics, Inc. and the contingent royalty commitment was eliminated. Nanometrics also intends to cease operations related to the new product line.

Page 12

SOLURIS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Year Ended December 31, 2005

5. INCOME TAXES

The income tax provision (benefit) for the year ended December 31, 2005 is as follows:

Current income taxes:
Federal	$	—
State		—
Foreign		—
		—
Deferred income taxes:
Federal		294,000
State		242,000
		536,000
Increase in valuation allowance		(536,000	)
		—
	$	—

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2005 are presented below:

Deferred tax assets:
Allowance for doubtful accounts	$	39,000
Accrued warranty		67,000
Net operating loss carryforwards		434,000
General business tax credit carryforwards		290,000
		830,000
Deferred tax liabilities:
Property and equipment		(12,000	)
		818,000
Valuation allowance		(818,000	)
Net deferred tax asset	$	—

The amount presented as income tax provision in the statement of operations, for the year ended December 31, 2005 differs from the benefit that would result from applying statutory rates to loss before income taxes because the Company has recorded a full valuation allowance against deferred tax assets as the recoverability cannot be assured.

Management has determined that it is more likely than not that the Company will not recognize the benefits of federal and state deferred tax assets and, as a result, a full valuation allowance of approximately $818,000 has been established at December 31, 2005.

Page 13

SOLURIS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Year Ended December 31, 2005

5. INCOME TAXES...continued

At August 31, 2005, the Company’s previous tax year end, the Company has federal and state net operating loss carryforwards of approximately $870,000 and $1,460,000, respectively, available to reduce future taxable income, which expire at various dates through 2025 and 2010, respectively. The Company also has federal and state general business tax credit carryforwards of approximately $140,000 and $150,000, respectively, available to reduce future tax liabilities which expire at various dates through 2025 and 2020, respectively.

Under the provisions of the Internal Revenue Code, certain substantial changes in the Company’s ownership may limit the amount of net operating loss carryforwards and general business tax credit carryforwards which could be utilized annually to offset future taxable income and taxes payable.

6. STOCK OPTION PLAN

In December 2003, the Company adopted the Soluris 2003 Stock Option and Restricted Stock Plan (the “Plan”). The Plan provides for the grant of either incentive stock options or nonqualified stock options to key employees and consultants for the purchase of 300,000 shares of the Company’s common stock. Options shall become exercisable at a rate of 33.33% after one year, and 33.33% per year over the next two years from the date the options are granted unless otherwise specified by the Board of Directors and expire ten years from the date of grant. The exercise price shall be determined at the date of grant by the Board of Directors. The term of the option is ten years.

The following table summarizes the activity of the Company’s stock option plan:

	Number of Options		Weighted- Average Exercise Price
Options outstanding, beginning of year	260,200		$	.30
Granted	—			—
Exercised	—			—
Forfeited	(14,600	)		.30
Options outstanding at end of year	245,600		$	.30
Options exercisable at end of year	159,000		$	.30
Options available for future grant	54,400

Weighted average remaining contractual life for options outstanding at December 31, 2005 was eight years. On March 15, 2006, all then outstanding options became immediately exercisable and were exercised in conjunction with the sale of the Company’s stock as disclosed in Note 8.

Page 14

SOLURIS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Year Ended December 31, 2005

7. RETIREMENT PLAN

The Company has a defined contribution plan (the 401(k) Plan) covering substantially all employees who meet certain eligibility requirements. The 401(k) Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). Participants in the 401(k) Plan may contribute a percentage of their annual compensation. The terms of the 401(k) Plan provide for matching of the participants’ contributions at the discretion of the Company. The Company’s matching contributions under this plan aggregated to approximately $112,000 for the year ended December 31, 2005.

8. SUBSEQUENT EVENT

On March 15, 2006, 100% of the Company’s outstanding stock was acquired by Nanometrics, Inc. The sale price was $7,000,000 less amounts outstanding on the lines of credit at the date of sale and adjusted for ordinary trade payables in excess of $600,000.

Page 15

EX-99.2

Exhibit 99.2

NANOMETRICS, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

Nanometrics acquired all of the outstanding common shares and options to purchase common shares of Soluris in an all-cash transaction announced on March 15, 2006. The following unaudited pro forma condensed combined financial statements are based on the historical financial statements of Nanometrics, Inc. (“Nanometrics”) and Soluris, Inc. (“Soluris”) after giving effect to the acquisition of Soluris by Nanometrics (the “Merger”) using the purchase method of accounting and applying the assumptions and adjustments described in the accompanying notes.

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2005 are presented as if the acquisition had occurred on January 2, 2005. The unaudited pro forma condensed combined balance sheet is presented as if the acquisition had occurred on December 31, 2005. You should read this information in conjunction with the:

• accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Statements;

• separate historical financial statements of Nanometrics as of and for the fiscal year ended December 31, 2005, included in Nanometrics’s annual report on Form 10-K for the fiscal year ended December 31, 2005; and

• separate historical financial statements of Soluris as of and for the fiscal year ended December 31, 2005 which are included as Exhibit 99.1 to Nanometrics Form 8-K/A filed with the Securities and Exchange Commission on May 31, 2006.

The pro forma information presented is for illustrative purposes only and is not necessarily indicative of the financial position or results of operations that would have been realized if the Merger had been completed on the dates indicated, nor is it indicative of future operating results or financial position. The pro forma adjustments are based upon currently available information and certain assumptions that we believe are reasonable.

Further, the unaudited pro forma condensed combined financial statements do not include any adjustments for liabilities that may result from integration activities, as management of Nanometrics and Soluris are in the process of making these assessments, and estimates of these costs are not currently known. However, liabilities ultimately may be recorded for severance or relocation costs related to Soluris employees, costs of vacating some facilities of Soluris, or other costs associated with exiting activities of Soluris that would affect amounts in the pro forma financial statements. In addition, Nanometrics may incur significant restructuring charges in subsequent quarters for severance or relocation costs related to Nanometrics employees, costs of vacating some facilities of Nanometrics, or other costs associated with exiting activities of Nanometrics. Any such restructuring charges would be recorded as an expense in the consolidated statement of operations in the period in which they were incurred.

Pursuant to the purchase method of accounting, the total estimated purchase price, calculated as described in Note 1 to these unaudited pro forma condensed combined financial statements, has been preliminarily allocated to assets acquired and liabilities assumed based on their respective fair values. Nanometrics’ management, with the assistance of a third party valuation firm, has estimated the preliminary fair value of the identifiable intangible assets and tangible assets acquired and liabilities assumed. Any differences between the fair value of the consideration issued and the fair value of the assets acquired and liabilities assumed will be recorded as goodwill. Since these unaudited pro forma condensed combined financial statements have been prepared based on preliminary estimates of fair values attributable to the Merger, the actual amounts recorded for the Merger may differ materially from the information presented. These allocations are subject to change pending further review of the fair value of the assets acquired and liabilities assumed as well as the actual transaction costs.

UNAUDITED PROFORMA CONDENSED COMBINED BALANCE SHEET

AS OF DECEMBER 31, 2005

(in thousands)

	Nanometrics		Soluris			Reclass					Pro Forma Adjustments				Proforma Combined
Current Assets
Cash and cash equivalents	$	40,445	$	595		$	—				$	(6,592	)	(b)	$	34,448
Short term investments		4,949		—			—					—				4,949
Accounts receivable, net		18,983		1,318			—					—				20,301
Inventories		25,656		628			—					474		(e)		26,758
Prepaid expenses and other current assets		1,259		84			—					(27	)	(j)		1,316
Total current assets		91,292		2,625			—					(6,145	)			87,772
Property, plant and equipment, net		42,928		64			—					—				42,992
Purchased technology, net		—		—			—					—				—
Intangibles		639		—			—					4,200		(d)		4,839
Goodwill		—		—			—					1,868		(c)		1,868
Other assets		1,441		—			—					—				1,441
Total assets	$	136,300	$	2,689		$	—				$	(77	)		$	138,912
Current Liabilities
Revolving line of credit	$	1,186	$	2,342		$	—				$	(2,342	)	(i)		1,186
Accounts payable		3,348		641			—					—				3,989
Accrued compensation		1,540		—			—					—				1,540
Customer deposits and deferred revenue		3,448		264			—					—				3,712
Other current liabilities		3,869		731			167		(B	)		268		(f)		5,336
												301		(g)
Accrued warranty		—		167			(167	)	(B	)						—
Income taxes payable		770		—			—					—				770
Current portion of debt obligations		400		—			—					—				400
Total current liabilities		14,561		4,145			—					(1,773	)			16,933
Deferred income taxes		—		—			—					240		(h)		240
Debt obligations		1,396		—			—					—				1,396
		15,957		4,145			—					(1,533	)			18,569
Shareholders’ equity
Common stock		107,294		7			—					(7	)	(a)		107,294
Additional paid-in-capital		—		34			—					(34	)	(a)		—
Retained earnings (Accumulated deficit)		12,218		(1,484	)		—					1,484		(a)		12,218
Accumulated other comprehensive income (loss)		831		(13	)		—					13		(a)		831
Total shareholders’ equity		120,343		(1,456	)		—					1,456				120,343
Total liabilities and shareholders’ equity	$	136,300	$	2,689		$	—				$	(77	)		$	138,912

UNAUDITED PROFORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2005

(in thousands, except per share amounts)

	Nanometrics			Soluris			Reclass				Pro Forma Adjustments				Proforma Combined
Product revenues	$	61,012		$	8,673		$	(2,494	)	(A)	$	—			$	67,191
Service		9,531			—			2,494		(A)		—				12,025
Total revenue		70,543			8,673			—				—				79,216
Cost of product sales		29,173			4,000			(1,110	)	(A)		70		(k)		32,133
Cost of service		10,695			—			1,110		(A)		—				11,805
Research and development		12,533			2,778			—				—				15,311
Selling and marketing		10,945			2,479			—				290		(k)		13,714
General and administrative		11,882			1,103			—				—				12,985
Merger termination fee		(8,300	)		—			—				—				(8,300	)
Asset impairment		2,232			—			—				—				2,232
Operating expenses		69,160			10,360			—				360				79,880
Operating income (loss)		1,383			(1,687	)		—				(360	)			(664	)
Interest income		998			3			—				—				1,001
Interest expense		(73	)		—			—				—				(73	)
Other expense		(579	)		—			—				—				(579	)
Income before provision for income taxes		1,729			(1,684	)		—				(360	)			(315	)
Provision for income taxes		218			—			—				—				218
Net income (loss)	$	1,511		$	(1,684	)	$	—			$	(360	)		$	(533	)
Shares used in per share computation
Basic		12,760			690											12,760
Diluted		13,471			690											12,760
Net income (loss) per share
Basic	$	0.12		$	(2.44	)									$	(0.04	)
Diluted	$	0.11		$	(2.44	)									$	(0.04	)

NOTES TO UNAUDITED PRO FORMA

CONDENSED COMBINED BALANCE SHEET

1. Basis of Pro Forma Presentation

On March 15, 2006, Nanometrics announced it had acquired Soluris Inc., (“Soluris”) a privately held corporation focused on overlay and CD measurement technology and headquartered in Concord, Massachusetts. The acquisition of Soluris will enhance the Company’s line of overlay products and provide access to various new customers. Its flagship product, the IVS 155, is a tool for use in the 200mm and smaller semiconductor overlay and CD measurement market. Under the terms of the merger agreement relating to the acquisition, the total consideration to purchase all the outstanding stock of Soluris was $6.6 million in an all-cash transaction. The Company also incurred $0.3 million in transaction fees, including legal, valuation and accounting fees. The merger has been accounted for under the purchase method of accounting in accordance with SFAS No. 141, Business Combinations. Under the purchase method of accounting, the total estimated purchase price is allocated to the net tangible and identifiable intangible assets of Soluris acquired in connection with the merger, based on their respective estimated fair values.

There were no significant intercompany balances and transactions between Nanometrics and Soluris as of the dates and for the periods of these pro forma condensed combined financial statements. Certain reclassification adjustments have been made to conform Nanometrics’ and Soluris’ historical reported balances to the pro forma condensed combined financial statement basis of presentation.

The total preliminary estimated purchase price of the Soluris merger is as follows:

	Amount
Cash paid for all outstanding stock of Soluris	$	6,591,912
Estimated direct transaction fees and expenses		267,580
Total preliminary estimated purchase price	$	6,859,492

The total preliminary estimated purchase price is allocated as follows (in thousands):

	Amount			First Year Charges		Estimated Useful Life
Net assets assumed	$	1,031,765		$	N/A	N/A
Deferred income tax liabilities		(240,000	)		N/A	N/A
Goodwill and other intangible assets:
Goodwill		1,867,727			N/A	N/A
Customer relationships		2,900,000			290,000	10 Years
Patented technology		700,000			70,000	10 Years
Trademark		600,000			N/A	Indefinite
Total goodwill and other intangible assets		6,067,727			360,000
	$	6,859,492		$	360,000

In accordance with SFAS No. 142, the Company will not amortize the goodwill, but will evaluate it annually for impairment or whenever events or circumstances occur which indicate that goodwill might be impaired.

NOTES TO UNAUDITED PRO FORMA

CONDENSED COMBINED BALANCE SHEET—(Continued)

A final determination of fair values may differ materially from the preliminary estimates and will include management’s final valuation of the fair values of assets acquired and liabilities assumed. This final valuation will be based on the actual net tangible assets of Soluris that exist as of the date of the completion of the Merger. The final valuation may change the allocations of purchase price, which could affect the fair value assigned to the assets and liabilities and could result in a change to the unaudited pro forma condensed combined financial statements data.

A preliminary estimate of $1.0 million has been allocated to net tangible assets acquired and $3.6 million has been allocated to amortizable intangible assets acquired. The amortization related to the amortizable intangible assets are reflected as pro forma adjustments to the unaudited pro forma condensed combined statement of operations.

Identifiable intangible assets. Of the total estimated purchase price, $3.6 million has been allocated to customer relationships and purchased technology. This adjustment is preliminary and is based on Nanometrics management’s estimates. The amount ultimately allocated to identifiable intangible assets may differ materially from this preliminary allocation. A ten percent increase or decrease in value allocated to the amortizable intangible assets would increase or decrease annual amortization by approximately $36,000.

Identification and allocation of value to the identified intangible assets was based on the provisions of SFAS No. 141. The fair value of the identified intangible assets was estimated by performing a discounted cash flow analysis using the “income” approach. This method includes a forecast of direct revenues and costs associated with the respective intangible assets and charges for economic returns on tangible and intangible assets utilized in cash flow generation. Net cash flows attributable to the identified intangible assets are discounted to their present value at a rate commensurate with the perceived risk. The projected cash flow assumptions considered contractual relationships, customer attrition, eventual development of new technologies and market competition.

Amounts allocated to the identifiable intangible assets are expected to be amortized over a life of 10 years with the exception of the trademark, which has indefinite life and will not be amortized. The estimates of expected useful lives are based on guidance from SFAS No. 141 and take into consideration the effects of competition, product lives and possible obsolescence. The useful lives of customer relationships and purchased technology are based on the number of years in which net cash flows have been projected. The useful lives of customer relationships was estimated based upon Soluris’ established and long-standing customer relationships with its major customers. Management considers the “IVS” trademark to be recognized throughout the worldwide community of semiconductor manufactures. As management intends to continue to use the IVS trademark indefinitely, an indefinite life was assigned.

Assumptions used in forecasting cash flows for each of the identified intangible assets included consideration of the following:

• Soluris historical operating margins;

• Soluris market share and growth;

• Trends in technology; and

• The nature and expected timing of new product introductions by Soluris and its competitors.

NOTES TO UNAUDITED PRO FORMA

CONDENSED COMBINED BALANCE SHEET—(Continued)

Goodwill. Goodwill represents the excess of the purchase price over the fair value of the underlying net tangible and intangible assets. In accordance with SFAS No. 142, goodwill will not be amortized but instead will be tested for impairment at least annually (more frequently if certain indicators are present). In the event the management of the combined company determines that the value of goodwill has become impaired, the combined company will incur an accounting charge for the amount of impairment during the fiscal quarter in which the determination is made.

Net Deferred Tax Liability. The deferred tax liability reflects the estimated tax effect of deferred tax liabilities associated with purchase accounting that were not offset by preexisting deferred tax assets. Such deferred tax liabilities are associated with intangible assets with indefinite lives. This determination is preliminary and subject to change based upon management’s final valuation of the fair values of identifiable intangible assets acquired.

The preliminary allocation of the Soluris purchase price to the tangible and identifiable intangible assets acquired and liabilities assumed was based on an independent appraisal and management’s estimates of fair value at the date of acquisition. The preliminary allocation of the purchase price was based, in part, upon a valuation and estimates, and assumptions which are subject to change. The primary areas of the purchase price allocation that are not yet finalized relate to valuation allowances of certain tangible assets acquired, deferred income taxes and residual goodwill. We expect the valuation process to be completed during the fourth quarter of fiscal 2006.

2. Pro Forma Adjustments

Certain reclassification adjustments have been made to conform Nanometrics’ and Soluris’ historical reported balances to the pro forma combined condensed financial statement basis of presentation. The reclassifications are as follows:

(A) To reclassify Soluris’ service revenue and related cost of service revenue to align with Nanometrics’ presentation,

(B) To reclassify Soluris’ warranty accrual to align with Nanometrics’ presentation.

Pro forma adjustments are necessary to reflect the estimated purchase price, to reflect amounts related to Soluris’ net tangible and intangible assets at an amount equal to the preliminary estimate of their fair values, to reflect the amortization expense related to the estimated amortizable intangible assets, to reflect changes in amortization expense resulting from the estimated fair value adjustments to net tangible assets and to reflect the income tax effect related to the pro forma adjustments. The pro forma combined provision for income taxes does not necessarily reflect the amounts that would have resulted had Nanometrics and Soluris filed consolidated income tax returns during the periods presented.

There were no significant intercompany balances and transactions between Nanometrics and Soluris as of and for the year ended December 31, 2005.

The pro forma adjustments included in the unaudited pro forma condensed combined financial statements are as follows:

(a) To eliminate Soluris’ equity

(b) To reflect the amount of cash paid by Nanometrics for the outstanding shares of stock of Soluris

(c) To record goodwill

(d) To record the fair value of Soluris’ identifiable intangible assets

NOTES TO UNAUDITED PRO FORMA

CONDENSED COMBINED BALANCE SHEET—(Continued)

(e) To adjust Soluris’ inventory to fair value. This adjustment will result in an increase in cost of products upon the sale of the related inventory. The increase in costs is non-recurring and, as such, is not reflected in the pro forma condensed combined statement of operations.

(f) To accrue the remaining Nanometrics direct costs of the transaction

(g) To accrue the remaining Soluris direct costs of the transaction

(h) To record the deferred tax liability associated with the difference in basis of a certain intangible asset between book and tax

(i) Under terms of the Merger, proceeds from the purchase price received by Soluris are used first to reduce external debt and the remainder is distributed to the Soluris shareholders

(j) To eliminate Soluris’ certain deferred charges

(k) To record amortization of intangible assets

3. Pro Forma Net Loss Per Share

The pro forma basic net loss per share is based on the number of Nanometrics shares used in computing basic net income per share as no new shares were issued in conjunction with the Soluris merger.

The pro forma diluted net loss per share is based on the number of Nanometrics shares used in computing diluted net income per share excluding the potential dilution from assumed dilutive stock options (using the treasury stock method) as the combined company incurred a loss from operations.