Nova Announces Record Quarterly Financial Results for the Third Quarter Of 2010

Record Bookings Reflect Strong Business Momentum Across all Product Lines; Accelerating Standalone Customer Penetration Further Strengthens Market Position and Outlook

REHOVOT, Israel, November 2, 2010 — (PRNewswire) — Nova Measuring Instruments Ltd. (Nasdaq: NVMI), provider of leading edge stand alone metrology and the market leader of integrated metrology solutions to the semiconductor process control market, today reported its 2010 third quarter financial results.

    Highlights for the Third Quarter of 2010

    - Record revenues of $24.2 million
    - Record gross margins of 56%
    - Record net income of $7.3 million, or $0.27 per diluted share; net
      margin of 30%
    - $7.9 million positive operating cash flow; strong balance sheet with
      cash reserves of $54.8 million

Management Comments

"Q3 was another excellent quarter, with record performance achieved in all aspects of our business", said Gabi Seligsohn, President and CEO of Nova. "During the quarter we also continued to execute on our strategy of expanding our customer base with the stand alone metrology product line, adding two new foundry customers and one new memory customer. We expect to recognize most of the related revenues at the beginning of 2011."

"On the integrated metrology front, we continued to enjoy record business volumes with many fabs ordering and installing dozens of tools per fab. Given the significant challenges experienced in design rule shrink in all our served markets, the extent by which integrated metrology is being deployed is the highest it has ever been. Meanwhile, we successfully started the proliferation of our latest integrated metrology product, the Nova i500, and continued the delivery of the Nova T500 stand alone tool. We believe that the combination of new products and the recent customer design wins will support further growth in the future."

2010 Fourth Quarter and Annual Guidance

For the fourth quarter of 2010, management expects revenues of $24.5-$26 million, with net profitability of 26%-29%.

In terms of the company's existing 2010 annual guidance, of revenues of $78-$85 million and net profitability of 21%-24%, management expects to reach or slightly exceed the top-end of this guidance.

2010 Third Quarter Results

Total revenues for the third quarter of 2010 were $24.2 million, an increase of 112% relative to the third quarter of 2009, and an increase of 25% relative to the second quarter of 2010.

Gross margin for the third quarter of 2010 was 56%, compared with 48% in the third quarter of 2009, and 54% in the second quarter of 2010.

Operating expenses in the third quarter of 2010 were $6.4 million, compared with $4.0 million in the third quarter of 2009, and $5.8 million in the second quarter of 2010.

The company reported net income of $7.3 million, or $0.27 per diluted share, in the third quarter of 2010. This compares to a net income of $1.7 million, or $0.08 per share, in the third quarter of 2009, and a net income of $4.7 million, or $0.18 per diluted share, in the second quarter of 2010.

The company generated $7.9 million in cash from operating activities during the third quarter of 2010, and total cash reserves at the end of the third quarter of 2010 were $54.8 million.

The Company will host a conference call today, November 2, 2010, at 10:00am ET. To participate, please dial in the US: 1 866 850 2201; in Israel: 03 721 9510 or internationally: +1 212 444 0482. A recording of the call will be available on Nova's website, within 24 hours following the end of the call. In addition, a presentation to accompany the conference call will be available together with a live webcast of the conference call. This will be accessible from a link on Nova's website at http://www.nova.co.il.

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 http://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: our dependency on two integrated process control product lines; 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; our dependency on OEM suppliers; 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, 2009 filed with the Securities and Exchange Commission on March 26, 2010. 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,


                                               2010          2009

    CURRENT ASSETS
    Cash and cash equivalents                10,977         9,861
    Short-term interest-bearing bank
    deposits                                            43,228                  8,607
        Trade  accounts  receivable                                12,523                11,545
        Inventories                                                            10,041                  3,949
        Other  current  assets                                          3,088                    1,728
                                                                                          79,857                35,690
        LONG-TERM  ASSETS
        Long-term  interest-bearing  bank
        deposits                                                                        570                      561
        Other  Long-term  assets                                            167                      142
        Severance  pay  funds                                              2,525                  2,368
                                                                                            3,262                  3,071

        FIXED  ASSETS,  NET                                                  2,422                  2,163

        Total  assets                                                          85,541                40,924

        CURRENT  LIABILITIES
        Trade  accounts  payable                                        8,644                  3,715
        Deferred  income                                                      5,115                  1,671
        Other  current  liabilities                                  6,801                  5,237
                                                                                          20,560                10,623

        LONG-TERM  LIABILITIES
        Liability  for  employee  severance  pay            3,478                  3,168
        Deferred  income                                                      1,502                      183
        Other  long-term  liability                                        26                        35
                                                                                            5,006                  3,386

        SHAREHOLDERS'  EQUITY                                          59,975                26,915

        Total  liabilities  and  shareholders'
        equity                                                                      85,541                40,924



                                                  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,
                                                                                      2010                    2010                      2009

        REVENUES
        Product  sales                                                20,350                15,889                    8,717
        Services                                                            3,860                  3,551                    2,677
                                                                                  24,210                19,440                  11,394

        COST  OF  REVENUES
        Products                                                            8,182                  6,554                    3,699
        Services                                                            2,542                  2,452                    2,191
                                                                                  10,724                  9,006                    5,890

        GROSS  PROFIT                                                  13,486                10,434                    5,504

        OPERATING  EXPENSES
        Research  &  Development  expenses,
        net                                                                      2,783                  2,828                    1,850
        Sales  &  Marketing  expenses                        2,810                  2,242                    1,523
        General  &  Administration  expenses              795                      679                        594
                                                                                    6,388                  5,749                    3,967

        OPERATING  PROFIT                                            7,098                  4,685                    1,537

        Interest  income,  net                                        176                        24                        153

        NET  INCOME  FOR  THE  PERIOD                          7,274                  4,709                    1,690

        Net  income  per  share:
        Basic                                                                    0.29                    0.19                      0.09
        Diluted                                                                0.27                    0.18                      0.08

        Shares  used  for  calculation  of
        net  income  per  share:
        Basic                                                                25,008                24,808                  19,417
        Diluted                                                            26,478                26,406                  19,942


                                                  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,
                                                                                                    2010                            2009

        REVENUES
        Product  sales                                                              49,140                        16,993
        Services                                                                        10,491                          7,085
                                                                                                59,631                        24,078

        COST  OF  REVENUES
        Product  sales                                                              20,214                          7,333
        Services                                                                          7,383                          6,554
                                                                                                27,597                        13,887

        GROSS  PROFIT                                                                32,034                        10,191

        OPERATING  EXPENSES
        Research  &  Development  expenses,  net                  8,165                          4,816
        Sales  &  Marketing  expenses                                      7,248                          3,989
        General  &  Administration  expenses                        2,125                          1,581
                                                                                                17,538                        10,386

        OPERATING  PROFIT  (LOSS)                                          14,496                            (195)

        INTEREST  INCOME,  NET                                                      186                              132

        NET  INCOME  (LOSS)  FOR  THE  PERIOD                        14,682                              (63)

        Net  income  (loss)  per  share:
        Basic                                                                                  0.61                          (0.00)
        Diluted                                                                              0.57

        Shares  used  for  calculation  of  net
        income  (loss)  per  share:
        Basic                                                                              24,182                        19,391
        Diluted                                                                          25,540



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

                                                                                              Three  months  ended
                                                                                  September  30,  June  30,  September  30,
                                                                                                  2010          2010                    2009

        CASH  FLOW  -  OPERATING  ACTIVITIES

        Net  income  for  the  period                                      7,274        4,709                  1,690
        Adjustments  to  reconcile  net  loss  to
        net  cash

        used  in  operating  activities:

        Depreciation  and  amortization                                  354            323                      311
        Amortization  of  deferred  stock-based
        compensation                                                                    215            122                      130
        Increase  (decrease)  in  liability  for
        employee  termination  benefits,  net                        (10)          105                        (2)

        Net  recognized  gains  on  investments                        --              --                          4
        Decrease  (increase)  in  trade                              (1,670)            67                    (622)
        accounts  receivables
        Decrease  (increase)  in  inventories                  (2,065)    (1,855)                    790
        Decrease  (Increase)  in  other  short
        and  long  term  assets                                                  (776)        (388)                      45
        Increase  (decrease)  in  trade
        accounts  payables                                                      2,095            289                    (662)
        Increase  in  other  current  and
        long-term  liabilities                                              1,738        1,130                  1,039
        Increase  (decrease)  in  short  and
        long  term  deferred  income                                          746        1,769                    (857)
        Net  cash  from  operating  activities                    7,901        6,271                  1,866

        CASH  FLOW  -  INVESTMENT  ACTIVITIES

        Increase  in  short-term
        interest-bearing  bank  deposits                          (3,934)  (10,701)                      --
        Proceeds  from  long-term
        interest-bearing  bank  deposits                                  --              --                  4,595
        Investments  in  long-term  deposits                            --              --                        (2)
        Additions  to  fixed  assets                                        (453)        (307)                    (72)
        Net  cash  from  (used  in)  investment
        Activities                                                                  (4,387)  (11,008)                4,521


        CASH  FLOW  -  FINANCING  ACTIVITIES

        Shares  issued  under  employee
        share-based  plans                                                          625              51                        --
        Shares  issued  in  public  offering                              --              --                      142
        Net  cash  from  financing  activities                        625              51                      142

        Increase  (decrease)  in  cash  and  cash
        Equivalents                                                                  4,139      (4,686)                6,529
        Cash  and  cash  equivalents  -
        beginning  of  period                                                  6,838      11,524                  9,017
        Cash  and  cash  equivalents  -  end  of
        period                                                                          10,977        6,838                15,546


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

                                                                                                                Nine  months  ended
                                                                                                      September          September
                                                                                                        30,  2010            30,  2009
        CASH  FLOW  -  OPERATING  ACTIVITIES

        Net  income  (loss)  for  the  period                                    14,682                      (63)
        Adjustments  to  reconcile  net  loss  to  net
        cash  used  in  operating  activities:

        Depreciation  and  amortization                                            1,001                      907
        Amortization  of  deferred  stock-based                                  453                      336
        compensation
        Increase  in  liability  for  employee
        termination  benefits,  net                                                        143                        28

        Increase  in  trade  accounts  receivables                            (978)              (2,819)
        Decrease  (increase)  in  inventories                                (6,187)                1,946
        Decrease  (increase)  in  other  current  and
        long  term  assets                                                                    (1,423)                    134
        Increase  (decrease)  in  trade  accounts
        payables  and  other  long
        term  liabilities                                                                      4,929                (1,964)
        Increase  (decrease)  in  current  liabilities                  1,762                    (600)
        Increase  (decrease)  in  short  and  long  term
        deferred  income                                                                        4,763                (1,795)
        Net  cash  from  (used  in)  operating  activities            19,145                (3,890)

        CASH  FLOW  -  INVESTMENT  ACTIVITIES

        Decrease  (increase)  in  short-term
        interest-bearing  bank  deposits                                      (34,621)                      50
        Proceeds  from  (investment  in)  long-term
        Deposits                                                                                            (9)                      19
        Additions  to  fixed  assets                                                  (1,165)                  (100)
        Net  cash  used  in  investment  activities                      (35,795)                    (31)

        CASH  FLOW  -  FINANCING  ACTIVITIES

        Shares  issued  under  employee  share-based
        Plans                                                                                                798                      142
        Shares  issued  in  public  offering                                    16,968                        --
        Net  cash  from  financing  activities                                17,766                      142

        Increase  (decrease)  in  cash  and  cash
        Equivalents                                                                                1,116                (3,779)
        Cash  and  cash  equivalents  -  beginning  of
        Period                                                                                          9,861                19,325
        Cash  and  cash  equivalents  -  end  of  period                  10,977                15,546



        Company  Contact:

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

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

 

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