Nova Announces Record Net Income in the Third Quarter of 2009

64% Sequential Revenue Increase to $11.4 Million and Record Quarterly Net Income of $1.7 Million; Company Expects Trend to Continue

• Press Release
• Source: Nova Measuring Instruments Ltd
• On 4:30 am EST, Tuesday November 3, 2009

REHOVOT, Israel, November 3 /PRNewswire-FirstCall/ -- Nova Measuring Instruments Ltd. (Nasdaq: NVMI - News), provider of leading edge stand alone metrology and the market leader of integrated metrology solutions to the semiconductor process control market, today reported its 2009 third quarter financial results.

    Highlights for the Third Quarter of 2009
    - Total revenues of $11.4 million, up 64% sequentially and 29% from the
      third quarter of 2008
    - Gross margins of 48%, up from 41% in the second quarter of 2009 and 24%
      in the third quarter of 2008
    - Record high quarterly GAAP net income of $1.7 million, or $0.08 per
      diluted share
    - Continued market share gains

2009 Third Quarter Results

Total revenues for the third quarter of 2009 were $11.4 million, an increase of 29% relative to the third quarter of 2008, and an increase of 64% relative to the second quarter of 2009.

Gross margin for the third quarter of 2009 was 48%, compared with 24% in the third quarter of 2008 and 41% in the second quarter of 2009.

Operating expenses in the third quarter of 2009 were $4.0 million, compared with $4.7 million in the third quarter of 2008, and $3.0 million in the second quarter of 2009.

On a GAAP basis, the company reported record net income of $1.7 million in the third quarter of 2009, or $0.08 per diluted share. This compares to a GAAP net loss of $2.6 million, or $0.14 per share, for the third quarter of 2008, and a net loss of $0.1 million for the second quarter of 2009.

On a non-GAAP basis, which excludes stock-based compensation and inventory write-off charges, the company reported record net income of $1.8 million in the third quarter of 2009, or $0.09 per diluted share. This compares with a non-GAAP net loss of $1.7 million, or $0.09 per share, in the third quarter of 2008, and breakeven results in the second quarter of 2009.

The company generated $1.9 million in cash from operating activities during the third quarter of 2009. Total cash reserves increased to $16.1 million at the end of the third quarter of 2009.

Management Comments

"As anticipated, third quarter results showed excellent sequential improvement and a real turnaround compared to the third quarter of last year", commented Gabi Seligsohn, President and CEO of Nova. "We doubled our gross margins and reported a swing of over $4 million from a net loss of $2.6 million in the third quarter of 2008 to a net profit of $1.7 million in the third quarter of 2009, on improved revenues which grew 29%. In addition, our order patterns remain strong and we expect this trend to continue".

"Looking forward, sales of both our Integrated and Stand Alone solutions are well-positioned for further growth, because they enable cost-effective migration to lower technology nodes, while still using existing process equipment. Another positive sign is that we have begun to receive orders related to capacity expansions, driven by consumer demand for mobile computing devices such as netbooks and high end cellular devices. Given the significant increase we are continuing to see in our bookings, we expect to continue and show strong financial performance in the coming quarters".

The Company will host a conference call today, November 3, 2009, at 8:30am ET. To participate, please dial in the US: 1-888-668-9141; or internationally: +972-3-918-0609. A recording of the call will be available on Nova's website, within 24 hours following the end of the call.

In addition, the conference call will also be webcast live from a link on Nova's website at http://www.nova.co.il.

This press release provides financial measures that exclude non-cash charges for stock-based compensation, inventory write-off and impairment charges and are therefore not calculated in accordance with generally accepted accounting principles (GAAP). Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding Nova's performance because they reflect our operational results and enhances management's and investors' ability to evaluate Nova's performance before charges considered by management to be outside Nova's ongoing operating results.

The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management believes that it is in the best interest of its investors to provide financial information that will facilitate comparison of both historical and future results and allows greater transparency to supplemental information used by management in its financial and operational decision making. A reconciliation of each GAAP to non-GAAP financial measure discussed in this press release is contained in the accompanying financial tables.

About Nova

Nova Measuring Instruments Ltd. develops, produces and markets advanced integrated and stand alone metrology solutions for the semiconductor manufacturing industry. Nova is traded on the NASDAQ & TASE under the symbol NVMI. The Company's website is www.nova.co.il.

This press release contains forward-looking statements within the meaning of safe harbor provisions of the Private Securities Litigation Reform Act of 1995 relating to future events or our future performance, such as statements regarding trends, demand for our products, expected deliveries, transaction, expected revenues, operating results, earnings and profitability. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied in those forward looking statements. These risks and other factors include but are not limited to: unanticipated consequences of the global economic crisis, our dependency on a single integrated process control product line; the highly cyclical nature of the markets we target; our inability to reduce spending during a slowdown in the semiconductor industry; our ability to respond effectively on a timely basis to rapid technological changes; risks associated with our dependence on a single manufacturing facility; our ability to expand our manufacturing capacity or marketing efforts to support our future growth; our dependency on a small number of large customers and small number of suppliers; risks related to our intellectual property; changes in customer demands for our products; new product offerings from our competitors; changes in or an inability to execute our business strategy; unanticipated manufacturing or supply problems; changes in tax requirements; changes in customer demand for our products; risks related to currency fluctuations; and risks related to our operations in Israel. We cannot guarantee future results, levels of activity, performance or achievements. The matters discussed in this press release also involve risks and uncertainties summarized under the heading "Risk Factors" in Nova's Annual Report on Form 20-F for the year ended December 31,2008 filed with the Securities and Exchange Commission on March 30, 2009. These factors are updated from time to time through the filing of reports and registration statements with the Securities and Exchange Commission. Nova Measuring Instruments Ltd. does not assume any obligation to update the forward-looking information contained in this press release.

                         NOVA MEASURING INSTRUMENTS LTD.
                           CONSOLIDATED BALANCE SHEET
                           (U.S. dollars in thousands)

                                                  As of            As of
                                               September 30,   December 31,
                                                   2009             2008

    CURRENT ASSETS
    Cash and cash equivalents                     15,546          19,325
    Short-term interest-bearing bank
    deposits                                          47              97
    Trade accounts receivable                      5,602           2,783
    Inventories                                    4,709           6,862
    Other current assets                           1,212           1,086
                                                  27,116          30,153
    LONG-TERM ASSETS
    Long-term interest-bearing bank
    deposits                                         525             544
    Other Long-term assets                           170             157
    Severance pay funds                            2,266           2,141
                                                   2,961           2,842
    FIXED ASSETS, NET                              2,196           2,796
    Total assets                                  32,273          35,791
    CURRENT LIABILITIES
    Trade accounts payable                         1,516           3,480
    Deferred income                                  699           2,385
    Other current liabilities                      3,357           4,042
                                                   5,572           9,907
    LONG-TERM LIABILITIES
    Liability for employee severance pay           3,238           3,152
    Deferred income                                  242             351
    Other long-term liability                         38              40
                                                   3,518           3,543
    SHAREHOLDERS' EQUITY                          23,183          22,341
    Total liabilities and shareholders' equity    32,273          35,791



                         NOVA MEASURING INSTRUMENTS LTD.
                 QUARTERLY CONSOLIDATED STATEMENTS OF OPERATIONS
               (U.S. dollars in thousands, except per share data)

                                          Three months ended
                               September 30,     June 30,    September 30,
                                   2009           2009            2008

    REVENUES
    Product sales                 8,717          4,631           5,535
    Services                      2,677          2,333           3,305
                                 11,394          6,964           8,840
    COST OF REVENUES
    Product sales                 3,699          2,050           2,872
    Inventory write-off              --             --             850
    Services                      2,191          2,091           2,956
                                  5,890          4,141           6,678
    GROSS PROFIT                  5,504          2,823           2,162
    OPERATING EXPENSES
    Research & Development
    expenses, net                 1,850          1,183           2,301
    Sales & Marketing
    expenses                      1,523          1,293           1,631
    General & Administration
    Expenses                        594            484             760
                                  3,967          2,960           4,692
    OPERATING PROFIT (LOSS)       1,537           (137)         (2,530)
    INTEREST INCOME (EXPENSES),
    NET                             153             43             (94)
    NET INCOME (LOSS) FOR THE
    PERIOD                        1,690            (94)         (2,624)
    Net income (loss) per share:
    Basic                          0.09          (0.00)          (0.14)
    Diluted                        0.08          (0.00)          (0.14)

    Shares used for calculation
    of net income(loss) per share:
    Basic                        19,417         19,378          19,378
    Diluted                      19,942         19,378          19,378



                         NOVA MEASURING INSTRUMENTS LTD.
               YEAR TO DATE CONSOLIDATED STATEMENTS OF OPERATIONS
               (U.S. dollars in thousands, except per share data)

                                                   Nine-months ended
                                            September 30,     September 30,
                                                  2009              2008

    REVENUES
    Product sales                               16,993            22,645
    Services                                     7,085            10,096
                                                24,078            32,741
    COST OF REVENUES
    Product sales                                7,333            10,884
    Inventory write-off                             --               850
    Services                                     6,554             9,363
                                                13,887            21,097
    GROSS PROFIT                                10,191            11,644
    OPERATING EXPENSES
    Research & Development expenses, net         4,816             6,383
    Sales & Marketing expenses                   3,989             6,113
    General & Administration expenses            1,581             2,461
    Impairment loss on equipment related
    to Hypernex assets and liabilities
    acquisition                                     --               633
                                                10,386            15,590
    OPERATING LOSS                                (195)           (3,946)
    INTEREST INCOME, NET                           132                96
    NET LOSS FOR THE PERIOD                        (63)           (3,850)
    Basic net loss per share                     (0.00)            (0.20)
    Shares used for calculation of basic
    net loss per share                          19,391            19,366



                         NOVA MEASURING INSTRUMENTS LTD.
                 QUARTERLY CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (U.S. dollars in thousands)

                                               Three months ended
                                        September 30,  June 30, September 30,
                                            2009         2009       2008

    CASH FLOW - OPERATING ACTIVITIES
    Net income (loss) for the period       1,690         (94)      (2,624)
    Adjustments to reconcile net loss
    to net cash
    used in operating activities:
    Depreciation and amortization            311         276          323
    Amortization of deferred
    stock-based compensation                 130         100          123
    Increase (decrease) in liability
    for employee                              (2)        144          (33)
    termination benefits, net
    Net recognized losses (gains) on
    Investments                                4          (4)           4
    Increase in trade accounts
    Receivables                             (622)     (2,441)        (208)
    Decrease in inventories                  790         636        1,703
    Decrease (increase) in other
    current and long term assets              45        (608)         314
    Decrease in trade accounts
    payables                                (662)       (102)        (494)
    Increase (decrease) in current
    liabilities                            1,039          (2)      (1,918)
    Increase (decrease) in short and
    long term deferred income               (857)        (44)         526
    Net cash from (used in) operating
    activities                             1,866      (2,139)      (2,284)
    CASH FLOW - INVESTMENT ACTIVITIES
    Increase in short-term                    --          --          (46)
    interest-bearing bank deposits
    Decrease (increase) in short-term
    investments                            4,595          --       (4,243)
    Proceeds from held to maturity
    securities                                --          --        1,506
    Proceeds (investments) in
    long-term deposits                        (2)        141            9
    Additions to fixed assets                (72)        (24)        (165)
    Net cash from (used in) investment
    Activities                             4,521         117       (2,939)
    CASH FLOW - FINANCING ACTIVITIES
    Shares issued under employee
    share-based plans                        142          --           --
    Net cash from investment activities      142          --           --
    Increase (decrease) in cash and
    cash equivalents                       6,529      (2,022)      (5,223)
    Cash and cash equivalents -
    beginning of period                    9,017      11,039       13,744
    Cash and cash equivalents - end of
    period                                15,546       9,017        8,521



                         NOVA MEASURING INSTRUMENTS LTD.
               YEAR TO DATE CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (U.S. dollars in thousands)

                                                       Nine months ended
                                               September 30,    September 30,
                                                    2009          2008
    CASH FLOW - OPERATING ACTIVITIES
    Net loss for the period                         (63)         (3,850)
    Adjustments to reconcile net loss to net cash
    used in operating activities:
    Depreciation and amortization                   907           1,005
    Amortization of deferred stock-based
    Compensation                                    336             442
    Increase in liability for employee
    termination benefits, net                        28              94
    Impairment loss on equipment                     --             633
    Net recognized losses on investments             --              17
    Decrease (increase) in trade accounts
    Receivables                                  (2,819)          3,898
    Decrease in inventories                       1,946             571
    Decrease in other current and long term
    assets                                          134             207
    Decrease in trade accounts payables and
    other long term liabilities                  (1,964)         (3,561)
    Decrease in current liabilities                (600)         (3,117)
    Increase (decrease) in short and long term
    deferred income                              (1,795)          1,079
    Net cash used in operating activities        (3,890)         (2,582)
    CASH FLOW - INVESTMENT ACTIVITIES
    Decrease (increase) in short-term
    interest-bearing bank deposits                   50            (118)
    Increase in short-term and long-term
    investments                                      --          (8,554)
    Proceeds from held to maturity securities        --           3,700
    Proceeds from long-term deposits                 19           1,643
    Additions to fixed assets                      (100)           (904)
    Net cash used in investment activities          (31)         (4,233)
    CASH FLOW - FINANCING ACTIVITIES
    Shares issued under employee share-based plans  142              12
    Net cash from financing activities              142              12
    Decrease in cash and cash equivalents        (3,779)         (6,803)
    Cash and cash equivalents - beginning of
    period                                       19,325          15,324
    Cash and cash equivalents - end of period    15,546           8,521



                         NOVA MEASURING INSTRUMENTS LTD.
                    DISCLOSURE OF NON-GAAP NET INCOME (LOSS)
               (U.S. dollars in thousands, except per share data)

                                                  Three months ended
                                        September 30, June 30,  September 30,
                                             2009        2009        2008

    GAAP Net income (loss) for the period   1,690         (94)     (2,624)
    Non-GAAP Adjustments:
    Stock based compensation expenses         130         100         123
    Inventory write-off                        --          --         850

    Non-GAAP Net income (loss) for the
    period                                  1,820           6      (1,651)
    Non-GAAP net income (loss) per
    share:
    Basic                                    0.09        0.00       (0.09)
    Diluted                                  0.09        0.00       (0.09)
    Shares used for calculation of
    non-GAAP net income (loss) per share:
    Basic                                  19,417      19,378      19,378
    Diluted                                19,942      19,378      19,378



                                                 Nine months ended
                                            September 30, September 30,
                                                2009          2008

    GAAP Net loss for the period                (63)         (3,850)

    Non-GAAP Adjustments:
    Stock based compensation expenses           336             442
    Inventory write-off                          --             850
    Impairment loss on equipment related to
    Hypernex assets and liabilities acquisition  --             633
    Non-GAAP Net income (loss) for the period   273          (1,925)
    Non-GAAP net income (loss) per share:
    Basic                                      0.01           (0.10)
    Diluted                                    0.01           (0.10)
    Shares used for calculation of non-GAAP
    net income (loss) per share
    Basic                                    19,391          19,366
    Diluted                                  19,749          19,433



    Company Contact:
    Dror David, Chief Financial Officer
    Nova Measuring Instruments Ltd.
    Tel: +972-8-938-7505
    E-mail: info@nova.co.il

    Investor relations Contacts:
    Ehud Helft / Kenny Green
    GK Investor Relations
    Tel: +1-646-201-9246
    E-mail: nova@gkir.com

    http://www.nova.co.il

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