8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

November 2, 2006

Date of Report (date of earliest event reported)

Nanometrics Incorporated

(Exact name of Registrant as specified in charter)

Delaware	0-13470	94-2276314
(State or other jurisdiction of incorporation)	(Commission File Number)	(I. R. S. Employer Identification No.)

1550 Buckeye Drive, Milpitas, California 95035

(Address of principal executive offices)

Registrant’s telephone number, including area code: (408) 435-9600

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:

¨ 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))

Item 2.02 – Results of Operations and Financial Condition.

On November 2, 2006, Nanometrics Incorporated (the “Company”) issued a press release announcing preliminary financial results for the third quarter ended September 30, 2006. The press release is attached as Exhibit 99.1 to this report and is incorporated herein by reference.

The information in this current report on Form 8-K and the exhibit attached hereto shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) nor otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, or the Exchange Act, regardless of any general incorporation language in such filing.

Item 9.01 – Financial Statements and Exhibits.

(d) Exhibits.

99.1 Press Release issued by Nanometrics Incorporated dated November 2, 2006.

Signature

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.

Dated: November 2, 2006	NANOMETRICS INCORPORATED
	/s/ Douglas J. McCutcheon
	Douglas J. McCutcheon Chief Financial Officer

Exhibit Index

Exhibit Number	Exhibit Title
99.1	Press Release issued by Nanometrics Incorporated dated November 2, 2006.

EX-99.1

Exhibit 99.1

Nanometrics Incorporated    
1550 Buckeye Drive
Milpitas, CA 95035
www.nanometrics.com Tel: 408.435.9600
Fax: 408.232.5910

News Release

Agency Contact: Bruce Hokanson Loomis Group 360.574.4000, 360.574.4447 fax email: hokansonb@loomisgroup.com Company Contact: Douglas McCutcheon Nanometrics Incorporated 408.435.9600 , 408.232.5910 fax email: dmccutcheon@nanometrics.com

Nanometrics Reports Financial Results for the Third Quarter of 2006

MILPITAS, California, November 2, 2006 — Nanometrics Incorporated (Nasdaq: NANO), a leading supplier of advanced integrated and standalone metrology equipment to the semiconductor industry, today announced its results for the third quarter ended September 30, 2006.

Revenues for the third quarter were $29.1 million, representing a 24 percent increase over second quarter 2006 revenues of $23.4 million and a 104 percent increase over revenues of $14.2 million for the third quarter of 2005. Net loss for the third quarter of 2006 was $6.6 million or $0.39 per share. This compares to a net loss of $2.2 million or $0.16 per share for the second quarter of 2006 and a net loss of $3.4 million or $0.26 per share for the third quarter of 2005.

Included in the net loss for the third quarter of 2006 are non-cash charges of $2.3 million for amortization of acquired identifiable intangible assets and $1.4 million for stock-based compensation expenses as required with the adoption of Financial Accounting Standard 123R.

“While the integration is well underway, it will take a few quarters to fully integrate Nanometrics and Accent Optical Technologies into a single company and realize the financial benefits of the combination, including reduced manufacturing and overhead costs,” commented John Heaton, president and chief executive officer of Nanometrics. “I am satisfied with the progress and pleased that we are exiting 2006 a larger, more competitive company than we were at the beginning of the year. In addition, the overlay metrology market has emerged as a promising opportunity for Nanometrics, and our recently-announced cross-licensing agreement is an example of our expanding leadership in patterning-related metrology.”

“The third quarter of 2006 represents the first period of combined results following our acquisition of Accent Optical on July 21, 2006,” added Douglas J. McCutcheon, chief financial officer of Nanometrics. “The results for the quarter are affected by acquisition accounting adjustments, which will continue to impact our results for the remainder of 2006. At the same time, the fact that we have more than doubled quarterly revenues in the last year is indicative of our increased scale as a company.”

About Nanometrics: Nanometrics is a leader in the design, manufacture and marketing of high-performance process control metrology systems used in semiconductor manufacturing. Nanometrics metrology systems measure various thin film properties, critical dimensions, overlay control and optical, electrical and material properties, including the structural composition of silicon and compound semiconductor devices, during various steps of the manufacturing process. These systems enable semiconductor manufacturers to improve yields, increase productivity and lower their manufacturing costs. The Company maintains its headquarters in Milpitas, California, with sales and service offices worldwide. Nanometrics is traded on the NASDAQ Global Market under the symbol NANO. Nanometrics’ website is http://www.nanometrics.com.

A conference call to discuss results for the third quarter of 2006 will be held today, November 2, 2006, at 5:30 p.m. ET (2:30 p.m. PT). To participate in the earnings conference call, the dial-in numbers are 800-798-2864 for domestic callers and 617-614-6206 for international callers. The passcode is 97729996. If you are unable to participate during the live conference call, a webcast will be made available on the Nanometrics website at www.nanometrics.com.

Forward Looking Statements

This press release contains forward-looking statements including, but not limited to, statements regarding Nanometrics’ expected results for its most recently completed fiscal quarter, which may be subject to adjustment in our quarterly report on Form 10-Q, as well as statements made by our CEO and CFO concerning the Company’s expected operating performance in future periods. These statements relate to future events and involve known and unknown risks, uncertainties and other factors that may cause Nanometrics’ actual financial results, levels of activity, performance or achievements to differ materially from those expressed or implied by the forward-looking statements. Forward-looking statements are only predictions and actual events or results may differ materially. Nanometrics cannot provide any assurance that its future results will meet expectations. For additional information and considerations regarding the risks faced by Nanometrics, see its annual report on Form 10-K for the year ended December 31, 2005 as filed with the Securities and Exchange Commission, as well as other periodic reports filed with the SEC from time to time including its quarterly reports on Form 10-Q. Other factors that may impact our reported results include challenges in integrating the operations of recently- acquired companies such as Accent Optical and Soluris, purchase accounting adjustments to our earnings related to acquired businesses and compliance with changes in accounting rules, such as FAS 123R. Although Nanometrics believes that the expectations reflected in the forward-looking statements are reasonable, Nanometrics cannot guarantee future results, levels of activity, performance or achievements. In addition, neither Nanometrics nor any other person assumes responsibility for the accuracy or completeness of these forward-looking statements. Nanometrics disclaims any obligation to update information contained in any forward-looking statement.

NANOMETRICS INCORPORATED

CONSOLIDATED BALANCE SHEETS

(In thousands except share amounts)

(Unaudited)

	September 30, 2006		December 31, 2005
ASSETS
Current assets:
Cash and cash equivalents	$	15,126	$	40,445
Short-term investments		—		4,949
Accounts receivable, net of allowances of $778 and $592		27,533		18,983
Inventories		47,916		25,656
Prepaid expenses and other		4,710		1,259
Total current assets		95,285		91,292
Property, plant and equipment, net		43,247		42,928
Goodwill		51,993		—
Intangible assets		30,727		639
Other assets		2,168		1,441
Total assets	$	223,420	$	136,300
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Revolving line of credit	$	—	$	1,186
Accounts payable		9,254		3,060
Accounts payable to related party		534		288
Accrued payroll and related expenses		4,609		1,540
Deferred revenue		12,743		3,448
Other current liabilities		10,112		3,869
Income taxes payable		958		770
Current portion of debt obligations		354		400
Total current liabilities		38,564		14,561
Deferred income taxes		160		—
Debt obligations		1,136		1,396
Total liabilities		39,860		15,957
Shareholders’ equity
Common stock, no par value; 50,000,000 shares authorized; 18,026,167 and 12,990,894 outstanding		176,347		107,294
Additional paid-in capital		3,355		—
Retained earnings		2,174		12,218
Accumulated other comprehensive income		1,684		831
Total shareholders’ equity		183,560		120,343
Total liabilities and shareholders’ equity	$	223,420	$	136,300

NANOMETRICS INCORPORATED

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30, 2006			October 1, 2005			September 30, 2006			October 1, 2005
Net revenues:
Products	$	24,772		$	11,772		$	60,865		$	49,317
Service		4,319			2,459			10,592			7,000
Total net revenues		29,091			14,231			71,457			56,317
Costs and expenses:
Cost of product sales		14,599			6,234			33,220			24,429
Cost of service		4,780			2,629			11,340			7,810
Research and development		4,208			3,291			9,798			10,126
Selling		5,850			2,395			12,892			8,389
General and administrative		5,447			3,348			14,303			7,746
Asset impairment		—			—			—			2,232
Merger termination fee		—			—			—			(8,300	)
Total costs and expenses		34,884			17,897			81,553			52,432
Income (loss) from operations		(5,793	)		(3,666	)		(10,096	)		3,885
Other income (expense):
Interest income		156			288			787			611
Interest expense		(13	)		—			(44	)		(35	)
Other, net		(648	)		(18	)		(375	)		(494	)
Total other income (expense), net		(505	)		270			368			82
Income (loss) before income taxes		(6,298	)		(3,396	)		(9,728	)		3,967
Provision for income taxes		268			7			316			398
Net income (loss)	$	(6,566	)	$	(3,403	)	$	(10,044	)	$	3,569
Net income (loss) per share:
Basic	$	(0.39	)	$	(0.26	)	$	(0.70	)	$	0.28
Diluted	$	(0.39	)	$	(0.26	)	$	(0.70	)	$	0.27
Shares used in per share computation:
Basic		16,957			12,854			14,354			12,686
Diluted		16,957			12,854			14,354			13,448