Filed Pursuant to Rule 425
Filing Person: Credence Systems Corporation
Commission File No.: 0-22366
Subject Company: NPTest Holding Corporation
Commission File No.: 0-50503
February 23, 2004
To: All Credence Employees
This morning Credence announced it has entered into an agreement to acquire NPTest Holdings Corporation, a leading provider of test and diagnostic products and services for the semiconductor industry. NPTest, headquartered in San Jose, California, employs a workforce of approximately 900 people worldwide with product development sites in California, Japan, France and the UK.
This acquisition will mark the latest move in our ongoing commitment to deliver compelling technology that lowers the cost-of-test. As a combined Company, we will be able to offer a highly synergistic product portfolio from high-end SoC, mixed-signal, RF and flash test to a full suite of debug, characterization and validation tools. Credence now is the only ATE company to offer a complete design-to-test portfolio that accelerates time-to-volume production while lowering total cost-of-test.
We are working to obtain shareholder approval and regulatory clearance by end of June 2004. Upon approval, we will move forward with the integration of both companies. Ashok Belani, currently President and Chief Executive Officer, NPTest, will become Vice Chairman of Credence and work with me to ensure a successful and timely integration of both companies. Jean-Luc Pelissier, currently the President of SoC Products, NPTest, will become Senior Vice President of Credence with responsibility for NPTest’s day-to-day operations, reporting directly to Dave Ranhoff, President and Chief Operating Officer.
As we move towards a new and stronger Credence, our corporate mission remains unchanged. Until we receive final approval from Credence and NPTest shareholders and granted regulatory clearance, it is imperative that we remain focused on meeting our corporate and divisional objectives, and go about business as usual. Upon approval, we will form integration teams to develop plans for functional group and divisional integration as well as other activities such as communications and support plans for strategic sales accounts. There will be integration teams for each functional area, including HR, IT, field operations, customer service, corporate marketing, finance and manufacturing. It is vital that while going through this integration process we remain focused on our customers with the primary objective of meeting their test requirements.
We realize that this letter may not fully answer your questions or address your concerns. However I promise that the management team will be proactive in keeping all employees informed of the progress of the acquisition and about any major decisions that may impact product roadmaps, functional groups or the organization as a whole. During this process, should you have any additional inquiries or questions, please forward them to Glyn Davies, Fred Hall or Judy Dale. Thank you in advance for your support, cooperation and patience.
Kind Regards,
Dr. Graham J. Siddall
Chairman and Chief Executive Officer
Credence Systems Corporation
—COMPANY CONFIDENTIAL—
Forward-Looking Statements
This document contains forward-looking statements that involve risks, uncertainties and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. For example, statements of expected synergies, timing of closing, industry leadership, execution of integration plans, customer solutions and management and organizational structure are all forward-looking statements. Risks, uncertainties and assumptions include the possibility that the market for the sale of certain products and services may not develop as expected; that development of these products and services may not proceed as planned; that the merger does not close or that the companies may be required to modify aspects of the transaction to achieve regulatory approval; or that prior to the closing of the proposed merger, the businesses of the companies suffer due to uncertainty; that the parties are unable to successfully execute their integration strategies or achieve planned synergies; other risks that are described from time to time in Credence’s Securities and Exchange Commission reports (including, but not limited to Credence’s annual report on Form 10-K for the year ended October 31, 2003). If any of these risks or uncertainties materializes or any of these assumptions proves incorrect, Credence’s results could differ materially from Credence’s expectations in these statements. Credence assumes no obligation and does not intend to update these forward-looking statements.
Additional Information and Where to Find It
Credence and NPTest will file a joint proxy statement/prospectus with the SEC in connection with the proposed merger. Investors and security holders are urged to read the joint proxy statement/prospectus when it becomes available and any other relevant documents filed with the SEC because they will contain important information. Investors and security holders will be able to obtain these documents free of charge at the website maintained by the SEC at www.sec.gov. In addition, documents filed with the SEC by Credence are available free of charge by contacting Credence Investor Relations, 1421 California Circle, Milpitas, California 95035, (408) 635-4300, and documents filed with the SEC by NPTest are available free of charge by contacting NPTest Investor Relations, 150 Baytech Drive, San Jose, California 95134, (408) 586-8200.
Participants in Solicitation
Credence and NPTest, and their respective directors, executive officers and employees may be deemed to be participants in the solicitation of proxies from the stockholders of Credence and NPTest in connection with the merger and related items. Information regarding the directors and executive officers of Credence and their ownership of Credence shares is set forth in the proxy statement for Credence’s 2003 annual meeting of shareholders. Information regarding the directors and executive officers of NPTest and their ownership of NPTest stock is set forth in NPTest’s Form S-1, which was filed with the SEC on December 4, 2003. Investors may obtain additional information regarding the interests of those participants by reading the proxy statement/prospectus when it becomes available.
—COMPANY CONFIDENTIAL—
CREDENCE SYSTEMSTO ACQUIRE NPTEST
EMPLOYEE FAQS
1. What are the reasons for doing this acquisition?
To our customers: The powerful combination of Credence’s proven ability to deliver the lowest cost of test and NPTest’s recognized technological leadership will give our customers the most cost effective solutions from design-to-test. Additionally, the complementary diagnostic products of the two companies strengthen our unique position as the design to test leader in the industry, delivering significant time-to-yield advantages to our customers.
To our employees: There are currently three very large competitors in the ATE space – Teradyne, Agilent, and Advantest. The combination of our two companies will increase our ability to compete effectively against these competitors. Additionally, the acquisition doubles the size of the company, gives us critical mass in Europe and Asia, and forms the world’s premier and most diversified semiconductor ATE company.
To our investors: We believe this acquisition is accretive immediately and will generate more revenue and more profit per share than Credence would have on its own and in turn, this should increase shareholder value.
2. Who is NPTest?
NPTest provides advanced test and diagnostic systems as well as engineering services to the semiconductor industry, helping customers bring today’s high performance devices to market more quickly. These devices range from microprocessors, graphics processors, chipsets, devices for high-speed data transfer and communication applications to those used in increasingly complex consumer electronics such as DVDs and set-top boxes.
NPTest customers include the world’s leading semiconductor manufacturers, fabless companies, foundries and assembly contractors worldwide. Some of these customers include AMD, Atmel, Intel, ST Microelectronics, Sony, IBM, Sun Microsystems and MediaTek.
NPTest is headquartered in San Jose, California. It has product development sites in San Jose, the UK, France and Japan, and a manufacturing facility in Simi Valley, California, with approximately 900 employees in 36 locations worldwide.
3. What does the new organization look like?
Upon closing, NPTest will become a product group of Credence. Ashok Belani, currently the President and CEO of NPTest, will become Vice Chairman of Credence and work with Graham Siddall over the next several months to promote the new Credence worldwide and to ensure a timely and successful integration of the two companies. Jean-Luc Pelissier, currently President, SoC Products at NPTest, will Senior Vice President, NPTest Product Group and assume responsibility for the day-to-day operations of the NPTest organization and report directly to Dave Ranhoff. Dave will continue to serve as Credence President and Chief Operating Officer.
—COMPANY CONFIDENTIAL—
CREDENCE SYSTEMSTO ACQUIRE NPTEST
EMPLOYEE FAQS
4. Will jobs be eliminated as a result of the acquisition?
We will appoint a third party group, such as McKinsey & Company, to assist both companies in the integration process to ensure that we form a strong and effective organization. We will evaluate all of the overlap positions over the next several weeks and determine the best way to move forward. We believe the overlap will be minimal.
5. Will this acquisition affect where I go to work?
As part of the integration project during the six months after closing, we will review the consolidation of these facilities wherever practical.
6. When will the acquisition close?
Two things must happen before the acquisition can close:
a) | Shareholders of both companies must vote to approve the acquisition; and |
b) | Various government regulatory agencies need to approve the acquisition. |
The earliest time these actions could be completed is the end of May, and more likely will take until the end of June.
7. What do we do during the interim period?
Until the acquisition closes, you should continue to conduct business as usual, meaning both companies will continue to operate independently and as competitors. The senior management team will need to conduct business-planning meetings throughout the integration process and should not affect the day-to-day business operations of the two companies.
8. What if the acquisition does not go through?
There is a remote chance that the acquisition would not be approved. In that event, the two companies would go their separate ways. That is why the two companies need to continue to operate independently until the acquisition is approved and closes.
9. Who can I contact with additional questions?
Glyn Davies, Credence vice president of corporate marketing
GLYN_DAVIES@CREDENCE.COM
408-635-4520
Fred Hall, Credence senior vice president of human resources
FRED_HALL@CREDENCE.COM
503-466-7343
Judy Dale, Credence senior director, marketing communications
JUDY_DALE@CREDENCE.COM
408-635-4309
—COMPANY CONFIDENTIAL—
CREDENCE SYSTEMSTO ACQUIRE NPTEST
EMPLOYEE FAQS
Forward-Looking Statements
This document contains forward-looking statements that involve risks, uncertainties and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. For example, statements of expected synergies, accretion, increased stockholder value, timing of closing and workforce reductions, industry leadership, execution of integration plans, customer solutions and management and organizational structure are all forward-looking statements. Risks, uncertainties and assumptions include the possibility that the market for the sale of certain products and services may not develop as expected; that development of these products and services may not proceed as planned; that the merger does not close or that the companies may be required to modify aspects of the transaction to achieve regulatory approval; or that prior to the closing of the proposed merger, the businesses of the companies suffer due to uncertainty; that the parties are unable to successfully execute their integration strategies or achieve planned synergies; other risks that are described from time to time in Credence’s Securities and Exchange Commission reports (including, but not limited to Credence’s annual report on Form 10-K for the year ended October 31, 2003). If any of these risks or uncertainties materializes or any of these assumptions proves incorrect, Credence’s results could differ materially from Credence’s expectations in these statements. Credence assumes no obligation and does not intend to update these forward-looking statements.
Additional Information and Where to Find It
Credence and NPTest will file a joint proxy statement/prospectus with the SEC in connection with the proposed merger. Investors and security holders are urged to read the joint proxy statement/prospectus when it becomes available and any other relevant documents filed with the SEC because they will contain important information. Investors and security holders will be able to obtain these documents free of charge at the website maintained by the SEC at www.sec.gov. In addition, documents filed with the SEC by Credence are available free of charge by contacting Credence Investor Relations, 1421 California Circle, Milpitas, California 95035, (408) 635-4300, and documents filed with the SEC by NPTest are available free of charge by contacting NPTest Investor Relations, 150 Baytech Drive, San Jose, California 95134, (408) 586-8200.
Participants in Solicitation
Credence and NPTest, and their respective directors, executive officers and employees may be deemed to be participants in the solicitation of proxies from the stockholders of Credence and NPTest in connection with the merger and related items. Information regarding the directors and executive officers of Credence and their ownership of Credence shares is set forth in the proxy statement for Credence’s 2003 annual meeting of shareholders. Information regarding the directors and executive officers of NPTest and their ownership of NPTest stock is set forth in NPTest’s Form S-1, which was filed with the SEC on December 4, 2003. Investors may obtain additional information regarding the interests of those participants by reading the proxy statement/prospectus when it becomes available.
—COMPANY CONFIDENTIAL—
February 23, 2004
To: All Credence Sales Representatives and Distributors
This morning Credence announced it has entered into an agreement to acquire NPTest Holding Corporation, a leading provider of test and diagnostic products and services for the semiconductor industry. NPTest, headquartered in San Jose, California, employs a workforce of approximately 900 people worldwide with product development sites in California, Japan, France and the UK. This acquisition will mark the latest move in our ongoing commitment to deliver compelling technology that lowers the cost-of-test. As a combined Company, we will be able to offer a highly synergistic product portfolio, from high-end digital to mixed-signal, RF and flash as well as a full suite of debug, characterization and validation tools. Credence now has the most complete design-to-test portfolio that accelerates time-to-volume production while lowering total cost-of-test.
We are working to obtain shareholder approval and regulatory clearance by June 2004. Upon approval, we will move forward with the integration of both companies. Ashok Belani, currently President and Chief Executive Officer, NPTest, will become Vice Chairman of Credence and work with me to ensure a successful and timely integration of both companies. Jean-Luc Pelissier, currently the President of SoC Products, NPTest, will assume responsibility for the organization’s day-to-day operations and become Senior Vice President of Credence, reporting directly to Dave Ranhoff, President and Chief Operating Officer of Credence. As the new and stronger Credence moves forward, our primary objective to deliver the most cost-effective products and services to move our customers’ devices from concept through production remains unchanged.
You may receive questions regarding our product portfolio from your customer base, however, until we complete the acquisition, both companies will operate as separate entities and continue to compete vigorously in the marketplace. If you have any specific questions or need further clarification, please contact Bart Freedman or Dave Ranhoff. Also it is important to note that we have scheduled a customer road tour over the next two-three weeks. Members of our executive and senior management team will visit key customer accounts to discuss the synergies and benefits the two companies bring to our extended customer base.
Additionally, it is important that our customers understand that we remain fully committed to providing them with the highest level of service and sales coverage. As you know, Credence has always placed a high priority on customer satisfaction and product quality. It is our intention to uphold our customers’ service and support expectations and we would like you to reiterate this message to our customer base. As I have mentioned, we will begin the process of integrating NPTest with Credence only after shareholder and regulatory clearance have been granted and acquisition has been completed. In the meantime, you should go about business as usual. Thank you in advance for your support, cooperation and patience.
Kind Regards,
Dr. Graham J. Siddall
Chairman and Chief Executive Officer
Credence Systems Corporation
Forward-Looking Statements
This document contains forward-looking statements that involve risks, uncertainties and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. For example, statements of expected synergies, timing of closing, industry leadership, execution of integration plans, customer solutions and management and organizational structure are all forward-looking statements. Risks, uncertainties and assumptions include the possibility that the market for the sale of certain products and services may not develop as expected; that development of these products and services may not proceed as planned; that the merger does not close or that the companies may be required to modify aspects of the transaction to achieve regulatory approval; or that prior to the closing of the proposed merger, the businesses of the companies suffer due to uncertainty; that the parties are unable to successfully execute their integration strategies or achieve planned synergies; other risks that are described from time to time in Credence’s Securities and Exchange Commission reports (including, but not limited to Credence’s annual report on Form 10-K for the year ended October 31, 2003). If any of these risks or uncertainties materializes or any of these assumptions proves incorrect, Credence’s results could differ materially from Credence’s expectations in these statements. Credence assumes no obligation and does not intend to update these forward-looking statements.
Additional Information and Where to Find It
Credence and NPTest will file a joint proxy statement/prospectus with the SEC in connection with the proposed merger. Investors and security holders are urged to read the joint proxy statement/prospectus when it becomes available and any other relevant documents filed with the SEC because they will contain important information. Investors and security holders will be able to obtain these documents free of charge at the website maintained by the SEC at www.sec.gov. In addition, documents filed with the SEC by Credence are available free of charge by contacting Credence Investor Relations, 1421 California Circle, Milpitas, California 95035, (408) 635-4300, and documents filed with the SEC by NPTest are available free of charge by contacting NPTest Investor Relations, 150 Baytech Drive, San Jose, California 95134, (408) 586-8200.
Participants in Solicitation
Credence and NPTest, and their respective directors, executive officers and employees may be deemed to be participants in the solicitation of proxies from the stockholders of Credence and NPTest in connection with the merger and related items. Information regarding the directors and executive officers of Credence and their ownership of Credence shares is set forth in the proxy statement for Credence’s 2003 annual meeting of shareholders. Information regarding the directors and executive officers of NPTest and their ownership of NPTest stock is set forth in NPTest’s Form S-1, which was filed with the SEC on December 4, 2003. Investors may obtain additional information regarding the interests of those participants by reading the proxy statement/prospectus when it becomes available.
February 23, 2004
Dear Valued Credence and NPTest Customer,
We are pleased to announce that Credence Systems Corporation has entered an agreement to acquire NPTest Holding Corporation of San Jose, California. This acquisition will mark the latest move in Credence’s ongoing commitment to deliver compelling technology that lowers the cost-of-test for our market-leading customers. As a combined Company, we will be able to offer a highly synergistic product portfolio, from high-end digital to mixed-signal, RF and flash as well as a full suite of debug, characterization and validation tools. We are proud to be the only ATE Company in the industry today to offer the most complete design-to-test portfolio that helps accelerate time-to-volume production while lowering total cost-of-test.
We are working to obtain shareholder approval and regulatory clearance by June 2004. Upon approval, we will move forward with the integration of both companies. This will include the formation of a new product group in which Jean-Luc Pelissier, currently the President of SoC Products, NPTest, will become Senior Vice President of Credence with responsibility for NPTest’s day-to-day operations, reporting directly to Dave Ranhoff, President and Chief Operating Officer of Credence. Ashok Belani, currently President and Chief Executive Officer, NPTest, will become Vice Chairman of Credence and work with me to ensure a successful integration of both companies. As the new Credence moves forward, our primary objective remains unchanged, and that is to deliver the most cost-effective products and services to move our customers’ devices from concept through production. With this acquisition, we believe that design and production test organizations worldwide will realize the benefit from Credence’s immediate increased sales channel and large technical support base.
We want to reaffirm our commitment to providing you with the highest level of sales coverage, product quality and customer service. Over the past three years Credence has placed tremendous focus and effort around implementing programs that quickly respond and support our customers’ requirements. As a result, Credence and NPTest were the highest-ranking ATE companies in the world’s 10 BEST Test & Material Handling Equipment category. Customer satisfaction will continue to be a top priority for the new Credence company.
Your current Credence or NPTest sales representative will continue working with you and will be contacting you shortly to discuss any questions that you might have regarding this agreement to acquire NPTest. We would like to thank you for your past and current business, and look forward to the opportunity to helping you meet the challenging design-to-test requirements in the future with Credence’s comprehensive product portfolio.
Kind Regards,
Dr. Graham J. Siddall | Ashok Belani | |||
Chairman and Chief Executive Officer Credence Systems Corporation | President and Chief Executive Officer NPTest Corporation |
Forward-Looking Statements
This document contains forward-looking statements that involve risks, uncertainties and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. For example, statements of expected synergies, timing of closing, industry leadership, execution of integration plans, customer solutions and management and organizational structure are all forward-looking statements. Risks, uncertainties and assumptions include the possibility that the market for the sale of certain products and services may not develop as expected; that development of these products and services may not proceed as planned; that the merger does not close or that the companies may be required to modify aspects of the transaction to achieve regulatory approval; or that prior to the closing of the proposed merger, the businesses of the companies suffer due to uncertainty; that the parties are unable to successfully execute their integration strategies or achieve planned synergies; other risks that are described from time to time in Credence and NPTest’s Securities and Exchange Commission reports (including, but not limited to Credence’s annual report on Form 10-K for the year ended October 31, 2003 and NPTest’s Form S-1 filed on December 4, 2003, and subsequently filed reports). If any of these risks or uncertainties materializes or any of these assumptions proves incorrect, Credence’s or NPTest’s results could differ materially from Credence’s or NPTest’s expectations in these statements. Credence or NPTest assume no obligation and do not intend to update these forward-looking statements.
Additional Information and Where to Find It
Credence and NPTest will file a joint proxy statement/prospectus with the SEC in connection with the proposed merger. Investors and security holders are urged to read the joint proxy statement/prospectus when it becomes available and any other relevant documents filed with the SEC because they will contain important information. Investors and security holders will be able to obtain these documents free of charge at the website maintained by the SEC at www.sec.gov. In addition, documents filed with the SEC by Credence are available free of charge by contacting Credence Investor Relations, 1421 California Circle, Milpitas, California 95035, (408) 635-4300, and documents filed with the SEC by NPTest are available free of charge by contacting NPTest Investor Relations, 150 Baytech Drive, San Jose, California 95134, (408) 586-8200.
Participants in Solicitation
Credence and NPTest, and their respective directors, executive officers and employees may be deemed to be participants in the solicitation of proxies from the stockholders of Credence and NPTest in connection with the merger and related items. Information regarding the directors and executive officers of Credence and their ownership of Credence shares is set forth in the proxy statement for Credence’s 2003 annual meeting of shareholders. Information regarding the directors and executive officers of NPTest and their ownership of NPTest stock is set forth in NPTest’s Form S-1, which was filed with the SEC on December 4, 2003. Investors may obtain additional information regarding the interests of those participants by reading the proxy statement/prospectus when it becomes available.
Creating an Industry Leader
Forward-Looking Statements
This presentation contains forward-looking statements that involve risks, uncertainties and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. For example, statements of expected synergies, accretion, timing of the transaction, industry leadership, execution of integration plans, customer solutions, profitability, distribution channels, and management and organizational structure are all forward-looking statements. Please see the risks that are described from time to time in Credence’s Securities and Exchange Commission reports (including, but not limited to Credence’s annual report on Form 10-K for the year ended October 31, 2003). If any of these risks or uncertainties materializes or any of these assumptions proves incorrect, Credence’s results could differ materially from Credence’s expectations in these statements. Credence assumes no obligation and does not intend to update these forward-looking statements.
Transaction Summary Overview
Consideration
0.800 Credence shares for each NPTest share $5.75 in cash
NPTest shareholder pro forma ownership of approximately 30%
Timeline
Target closing end of June 2004
Financial Impact
Accretive to Credence’s earnings in FY2005
Identity
Combined company to be called “Credence Systems Corporation”
Will continue to trade on the NASDAQ National Market under the ticker “CMOS”
Key Conditions
Credence and NPTest shareholder approval
Regulatory approval and other customary conditions
Transaction Summary Overview
Key Metrics
Critical mass: Pro forma revenue run rate of approximately $500 million
Financial flexibility: Pro forma cash balance of approximately $200 million
Global presence: Approximately 2,000 employees worldwide
Leadership
Chairman and CEO: Graham Siddall
Vice Chairman: Ashok Belani
President and COO: David Ranhoff
CFO: John Detwiler
Sr. Vice President: Jean-Luc Pelissier
Board of Directors
Existing Credence Board of Directors
Dipanjan Deb (NPTest Board member)
Ashok Belani, President and CEO, NPTest
Strategic Rationale
Position
Responding to the challenge of consolidation
Leading pure play in Non-DRAM semiconductor test
Technology
Leading technologies in debug, characterization and production test
- Proven technology in SoC, RF, analog/mixed signal and NVM
- Proven technology in photon probe and FIB circuit edit
- Applied technology to reduce the cost of test
Products
Comprehensive product portfolio
- Expands served market in production test
- Increases TAM in Engineering, Debug and Characterization market
Channel
Enhanced sales and distribution
- Critical mass in key geographies and strategic accounts
Financial
Accretive to Credence’s earnings in FY2005
Significant financial synergies
-$ 25M cost reduction opportunity in FY2005
Combining Strength
Founded in 1978 Established by Fairchild in 1965
Headquarters in Milpitas, CA Headquarters in San Jose, CA
1100 employees 900 employees
Strength in OSATs Strength in IDMs
RF, analog, mixed signal, automotive and flash expertise High-end SoC and MPU expertise
Photon probe and X-Ray detection technology for engineering debug Electron beam/laser voltage probe and FiB circuit edit technology for engineering debug
Strong worldwide sales, service and support channel Strong services business
141 Patents 153 Patents
High Growth End-User Market
Communications
Wired – SONET (10-40 Gbps) Wireless (2.4-2.8 Gbps)
Satellite
Mobile
Cellular & Wireless Devices
Consumer
Games
PC
Global Positioning System
Computer
Enterprise Node -WAN
Market Opportunity – $3.5B in 2004
Design and prototyping
Design, Simulation & DFT
Mask set generation
Prototype wafer lot
Design Validation
Device Characterization
Redesign Loop
High volume production
Front End
Wafer Manuf.
Back End
Assembly Burn in and Final Test
Process Characterization
Failure Analysis
Yield Improvement Loop
IC Validation, Debug Functional & Structural
and Characterization Test Equipment
Equipment Wafer & Final test
Product & Test Engineering Services
Serving Growth Market Segments
Growth Segments: Data Processing
Quartet
Kalos
Sapphire
ASL 1000/3000
Octet
Quartet
EmiScope
EXA 3000
Vanguard
Sapphire
Growth Segments: Communications
Source: Dataquest 11/03
Products in Growth Segments
Growth Segments: Consumer Electronics
Falcon
Octet
Kalos
Sapphire
ASL 1000/3000
Quartet
Growth Segments: Automotive
Source: Dataquest 11/03
Complementary Technologies
Silicon debug software
Air Cooling
Analog tools
Test Program Development
IR Photon Probing
Highly Parallel Test
Power supplies
MVNA RF
Flash
High Speed Buses
Design
Production Test
Structural Test
FiB
High speed, accuracy digital
Mixed Signal Instruments
Electron beam probing
Laser voltage probing
High Speed Buses
Liquid Cooling
Expanding Production Test Portfolio
Major Market SAM Total Credence NPTest
Segments Approx. $3B
Flash Memory Kalos $440M
Digital/Logic $600M DeFT
Sapphire
Analog/Linear/Discrete ASL 1000
$118M
Automotive Falcon
$100M
Mixed Signal ASL 3000 EXA 3000
$920M
Octet Sapphire
RF/Microwave ASL 3000RF
$203M
SoC Octet EXA 3000 Sapphire
$495M
Source: Dataquest 11/03
Extending Customer Base
NPTest Strength in Large IDMs
Penetrating Key IDMs
Increased Penetration of Common Customers
Penetrating Key OSATs
Credence Strength in Leading OSATs
Delivering Customer Satisfaction
Top two ATE companies in VLSI survey
Customers’ satisfaction vital in aggressive market conditions
Financials
Current Financial Performance
Quarter Ended Quarter Ended
January 31, 2004 December 31, 2003
Revenue $68M $55M $123M
Gross Margin 47% = $32M 34% = $19M 41% = $51M
R&D 22% = $15M 19% = $10M 20% = $25M
SG&A 35% = $24M 21% = $12M 29% = $36M
Operating Profit (10%) = ($7M) 1 (6%) = ($3M) 2 (8%) =($10M)
The New Credence – Creating a top tier test company
Note:
1 Excludes amortization expense of $2.6M and restructuring expense of $0.6M
2 Reflects “non GAAP” financials, which exclude amortization expenses and IPO recapitalization expenses
Proposed Transaction Timeline
February 2004 March 2004 April 2004 May 2004 June 2004
2 9 16 23 1 8 15 22 29 5 12 19 26 3 10 17 24 31 7 14 17 28
Announce Merger
Commence Roadshow
File Form S-4 / Proxy Statement with SEC
HSR Waiting Period Expires
SEC Filings Declared Effective1
Credence and NPTest Special Shareholder Meetings
Announce acquisition close
Note:
1 Assumes SEC comments. If no SEC comments, closing is projected to occur at the end of May
Strength Through the Cycle
Q200 Q300 Q400 Q101 Q201 Q301 Q401 Q102 Q202 Q302 Q402 Q103 Q203 Q303 Q403 Q104
NPTT 53 74 77 82 69 50 39 63 68 63 64 50 59 59 58 55
CMOS 154 204 225 136 76 53 37 34 39 48 43 37 43 46 58 68
Winning Combination
Leading pure play in non-DRAM semiconductor test Highly synergistic products in growth markets
- Expands served markets
- Cost of Test leadership
- Complete design-to-test solution
Strong technology portfolio
- High-end SoC, RF, analog/mixed signal, flash, debug and diagnostic
Complementary customer bases
Enhanced sales and distribution channels Proven management team
Strong earnings growth driven by scale and synergies
- Strength in both upturns and downturns
Forward-Looking Statements
This document contains forward-looking statements that involve risks, uncertainties and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. For example, statements of expected synergies, earnings accretion and growth, timing of the transaction, market growth estimates, estimates of served available market, industry leadership, customer solutions, profitability, distribution channels, revenue and management and organizational structure are all forward-looking statements. Risks, uncertainties and assumptions include the possibility that the market for the sale of certain products and services may not develop as expected; that development of these products and services may not proceed as planned; that the merger does not close or that the companies may be required to modify aspects of the transaction to achieve regulatory approval; or that prior to the closing of the proposed merger, the businesses of the companies suffer due to uncertainty; that the parties are unable to successfully execute their integration strategies or achieve planned synergies; other risks that are described from time to time in Credence’s Securities and Exchange Commission reports (including, but not limited to Credence’s annual report on Form 10-K for the year ended October 31, 2003). If any of these risks or uncertainties materializes or any of these assumptions proves incorrect, Credence’s results could differ materially from Credence’s expectations in these statements. Credence assumes no obligation and does not intend to update these forward-looking statements.
Additional Information and Where to Find It
Credence and NPTest will file a joint proxy statement/prospectus with the SEC in connection with the proposed merger. Investors and security holders are urged to read the joint proxy statement/prospectus when it becomes available and any other relevant documents filed with the SEC because they will contain important information. Investors and security holders will be able to obtain these documents free of charge at the website maintained by the SEC at www.sec.gov. In addition, documents filed with the SEC by Credence are available free of charge by contacting Credence Investor Relations, 1421 California Circle, Milpitas, California 95035, (408) 635-4300, and documents filed with the SEC by NPTest are available free of charge by contacting NPTest Investor Relations, 150 Baytech Drive, San Jose, California 95134, (408) 586-8200.
Participants in Solicitation
Credence and NPTest, and their respective directors, executive officers and employees may be deemed to be participants in the solicitation of proxies from the stockholders of Credence and NPTest in connection with the merger and related items. Information regarding the directors and executive officers of Credence and their ownership of Credence shares is set forth in the proxy statement for Credence’s 2003 annual meeting of shareholders. Information regarding the directors and executive officers of NPTest and their ownership of NPTest stock is set forth in NPTest’s Form S-1, which was filed with the SEC on December 4, 2003. Investors may obtain additional information regarding the interests of those participants by reading the proxy statement/prospectus when it becomes available.
Creating an Industry Leader
Forward-Looking Statements
All statements other than statements of and Credence Forward-Looking Statements For example, statements of expected synergies, accretion, management and organizational structure are all forward-looking Please see the risks that are described from time to time in not limited to Credence’s annual report on Form 10-K for the year ended October 31, 2003). If any of these risks or uncertainties materializes or any assumes no obligation and does not intend to update these forward-This presentation contains forward-looking statements that involve risks, uncertainties and assumptions. historical fact are statements that could be deemed forward-looking statements. timing of the transaction, industry leadership, execution of integration plans, customer solutions, profitability, distribution channels, statements. Credence’s Securities and Exchange Commission reports (including, but of these assumptions proves incorrect, Credence’s results could differ materially from Credence’s expectations in these statements. Forward-looking statements.
We have signed a definitive agreement to acquire NPTest
Transaction Overview
. 0.8 Credence shares + $5.75 in cash for each NPTest share, (approx $660M)
Consideration
. Target closing in first half 2004
Timeline
. “CMOS” on Accretive to earnings in the next 6 months and in fiscal year 2005
. Enhances two financially sound companies
. After closing, combined company will trade as NASDAQ
Financial Impact
Transaction Overview—Cont
. NPTest and Credence shareholder approval Regulatory approval and other customary conditions
Closing Requirements
. Creates over a half billion revenue run rate
. Strong balance sheet with excellent liquidity
. Critical mass with approximately 2,000 employees worldwide
Key Metrics
Transaction Overview – Cont
Post-closing Leadership Chairman & CEO: Graham Siddall
Vice Chairman: AshokBelani
President & COO: David Ranhoff
CFO: John Detwiler
Sr. Vice President: Jean-Luc Pelissier
Board Composition AshokBelaniand DipanjanDeb from the
NPTest Board
Existing Credence Board of Directors
Creating an Industry Leader
Position The worldfs premier and most diversified pure-play semiconductor
test company
Products Complementary products across the full spectrum of Test
- Expands served market in production test
- Strengthens presence in Engineering, Debug and
Characterization Test
Technology Leading technologies for low cost of Test solutions
- Proven technology in analog, high speed digital, RF and non-
volatile memory
- Proven technology in device debug
. The world’s premier and most diversified pure-play semiconductor test company
Position
Complementary products across the full spectrum of Test—-
. Expands served market in production test \
. Strengthens presence in Engineering, Debug and Characterization Test
Products
Leading technologies for low cost of Test solutions - -
. Proven technology in analog, high speed digital, RF and non- volatile memory Proven technology in device debug.
Technology
Why We Will Win—Employees
. Shared vision
. Great employees
. Global presence
. Synergistic management teams
. Comprehensive product portfolio
. Strong through the cycles
Why We Will Win—Business
. More profitable operations
. Enhanced distribution channels
. Critical mass of applications resources
. Combines best in class customer support organizations
. Delivers the most complete test solutions
. Strong customer portfolio with IDM’s, Fabless Subcontractors
. Delivers both technology and capacity buys
Combining Strengths
. Founded in 1978
. Headquarters in Milpitas, CA
. 1100 employees
. RF, analog, mixed signal, SoC, automotive, flash expertise
. Photon probe and X-Ray detection technology
. Lowest cost of test
. Strong OSAT installed base
. Proven ability to ramp manufacturing in upturn
Established by Fairchild in 1965
Headquarters in San Jose, CA
900 employees
High performance, high accuracy
digital, SoC and MPU expertise
Electron beam/laser voltage probe
and FiB circuit edit
Technology leader
Strong IDM installed base
. Established Fairchild
. Headquarters 900
. High
• 1965 CA probe in Jose, accuracy expertise voltage high San MPU edit in by and beam/laser circuit leader installed performance, SoC IDM employees digital, Electron and Technology Strong FiB base
Extending Customer Base
Strength in Large IDMs NPTest
Penetrating Key OSATs
Penetrating Key IDMs
Credence Strength in Leading OSATs
Strength Through the Cycle
Q104 55 68
Q403 58 58
Q303 59 46
Q203 59 43
Q103 50 37
Q402 64 43
Q302 63 48 NPTT
Q202 68 39
Q102 63 34
Q401 39 37 CMOS
Q301 50 53
Q201 69 76
Q101 82 136
Q400 77 225
Q300 74 204
Q200 53 154
0 NPTT CMOS
Complementary Technologies
Silicon debug software
Test Program Development
IR Photon Probing
Air Cooling
Highly Parallel Test
MVNA RF
Analog tools
Power supplies
Flash
High Speed Buses
Design
Production Test
Electron beam probing
FiB
Laser voltage probing
Structural Test
High speed, accuracy digital
Mixed Signal Instruments
High Speed Buses
Liquid Cooling
Technology Advantage
Strong patent portfolio—-
. Credence with 141 patents
. NPTest with 153 issued and 314 pending
.
Best in Customer Satisfaction
Combined Results
Quarter Ended January 31, 2004
Quarter Ended December 31, 2003
Revenue
Gross Margin
R&D
SG&A
Operating Profit
32M 15M 24M 7M)
$
68M $ $ $
$ 47% = 22% = 35% = (10%) = (
19M 10M 12M 3M)
55M $ $ $ $
$ 34% = 19% = 21% = (6%) = (
51M 25M 36M 10M)
123M $ $ $ $
$ 41% = 20% = 29% = (8%) =(
Creating a top tier Test Company
Transaction Timeline
F e b ru a r y 2 0 0 4
2 9 1 6 2 3
M a rc h 2 0 0 4
1 8 1 5 2 2 2 9
A p ril 2 0 0 4
5 1 2 1 9 2 6
M a y 2 0 0 4
3 1 0 1 7 2 4 3 1
J u n e 2 0 0 4
7 1 4 1 7 2 8
Announce Merger
Commence Roadshow
Proxy Statement with SEC
HSR Waiting Period Expires
SEC Filings Declared Effective 1
Credence and NPTest Special Shareholder Meetings
Announce acquisition close
Note:
1 Assumes SEC comments. If no SEC comments, closing is projected to occur at the end of May
What Does This Mean to Me.
Operate as independent companies and as competitors until closing
Maintain focus and execute
- Support our customers
- Complete engineering projects
- Meet customer commitments
Formal integration process
- Planning has begun
- An external 3rd Party facilitator will be engaged
- Frequent communication of progress
Winning Combination
Leading pure play in non-DRAM semiconductor test
Highly synergistic products in growth markets
- Expands served markets
- Cost of Test leadership
- Complete design-to-test solution
Strong technology portfolio
- High-end SoC, RF, analog/mixed signal, flash, debug and diagnostic
Complementary customer bases Enhanced sales and distribution channels
Proven management team
Strong earnings growth driven by synergies
Conclusion
This is an exciting step
Remain focused and execute
With your support we will create a great new company
Forward-Looking Statements
This document contains forward-looking statements that involve risks, uncertainties and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. For example, statements of expected synergies, accretion, timing of closing, industry leadership, execution of integration plans, customer solutions, profitability, distribution channels, and management and organizational structure are all forward-looking statements. Risks, uncertainties and assumptions include the possibility that the market for the sale of certain products and services may not develop as expected; that development of these products and services may not proceed as planned; that the merger does not close or that the companies may be required to modify aspects of the transaction to achieve regulatory approval; or that prior to the closing of the proposed merger, the businesses of the companies suffer due to uncertainty; that the parties are unable to successfully execute their integration strategies or achieve planned synergies; other risks that are described from time to time in Credence’s Securities and Exchange Commission reports (including, but not limited to Credence’s annual report on Form 10-K for the year ended October 31, 2003). If any of these risks or uncertainties materializes or any of these assumptions proves incorrect, Credence’s results could differ materially from Credence’s expectations in these statements. Credence assumes no obligation and does not intend to update these forward-looking statements.
Additional Information and Where to Find It
Credence and NPTest will file a joint proxy statement/prospectus with the SEC in connection with the proposed merger. Investors and security holders are urged to read the joint proxy statement/prospectus when it becomes available and any other relevant documents filed with the SEC because they will contain important information. Investors and security holders will be able to obtain these documents free of charge at the website maintained by the SEC at www.sec.gov. In addition, documents filed with the SEC by Credence are available free of charge by contacting Credence Investor Relations, 1421 California Circle, Milpitas, California 95035, (408) 635-4300, and documents filed with the SEC by NPTest are available free of charge by contacting NPTest Investor Relations, 150 Baytech Drive, San Jose, California 95134, (408) 586-8200.
Participants in Solicitation
Credence and NPTest, and their respective directors, executive officers and employees may be deemed to be participants in the solicitation of proxies from the stockholders of Credence and NPTest in connection with the merger and related items. Information regarding the directors and executive officers of Credence and their ownership of Credence shares is set forth in the proxy statement for Credence’s 2003 annual meeting of shareholders. Information regarding the directors and executive officers of NPTest and their ownership of NPTest stock is set forth in NPTest’s Form S-1, which was filed with the SEC on December 4, 2003. Investors may obtain additional information regarding the interests of those participants by reading the proxy statement/prospectus when it becomes available.