Nova Ltd. — Interim / Quarterly Report 2012

Feb 19, 2013

==> picture [142 x 42] intentionally omitted <==

Company Contact: Dror David, Chief Financial Officer Nova Measuring Instruments Ltd. Tel: 972-73-229-5833 E-mail: info@novameasuring.com http://www.novameasuring.com

Investor Relations Contacts:

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

Company Press Release

NOVA ANNOUNCES 2012 FOURTH QUARTER AND FULL YEAR RESULTS

Rehovot, Israel – February 19, 2013 - 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 2012 fourth quarter and full year results.

Highlights for the Fourth Quarter of 2012

• Quarterly revenues of $22.1 million

• Gross margin of 50%

• GAAP Net income of $2.5 million, or $0.09 per diluted share

• Non-GAAP Net income of $1.0 million, or $0.04 per diluted share

Highlights for the Full Year of 2012

• Annual revenues of $96.2 million

• Gross margin of 53%

• GAAP Net income of $11.8 million, or $0.43 per diluted share

• Non-GAAP Net income of $14.2 million, or $0.52 per diluted share

Management Comments

“Results for the fourth quarter were at the high end of our revenues guidance range and we were able to capitalize on improving demand late in the quarter,” commented Gabi Seligsohn, President and CEO of Nova. “Despite the weakness during most of the second half of the year, we managed to generate positive operating cash flow in 2012. We achieved this even after stepping up our

==> picture [156 x 63] intentionally omitted <==

investment in research and development, and we ended the year with over $90 million in cash reserves. Our ability to invest ahead of important technology transitions continues to be an important element of our long-term strategy. Past investment, followed by multiple new products and strong execution, has enabled us to significantly outperform the industry during 2012.”

“With foundry demand returning toward the end of Q4, our bookings increased and we ended the year with a significant improvement in our backlog, providing strong momentum as we enter 2013. Demand for memory remains weak, but continues to represent future upside potential. As expected, we are benefitting from the need for additional foundry capacity and yield improvements at 28nm, augmented by plans for ramping at the 20nm technology node soon. Process control requirements will continue to increase as process nodes shrink. We believe that optical metrology will continue to account for a higher share of overall capital expenditures, increasing our available market. Continuing our close collaboration with process equipment manufacturers and end customers, we are focused on increasing our footprint within each fab, expanding our customer base, and growing in exciting new market segments such as 3D interconnect technology. Coupled with continued reinvestment in next generation projects, these are the primary elements of our strategy for achieving sustainable long term growth.”

Nova will discuss the results for its fiscal year 2012, along with its outlook and guidance for the first quarter of 2013, on a conference call today, February 19, 2013, beginning at 5:00pm ET. A webcast of the call will be available at: http://ir.novameasuring.com.

2012 Fourth Quarter Results

Total revenues for the fourth quarter of 2012 were $22.1 million, an increase of 15% relative to the fourth quarter of 2011, and a decrease of 10% relative to the third quarter of 2012.

Gross margin for the fourth quarter of 2012 was 50%, compared with 55% in the fourth quarter of 2011 and 53% in the third quarter of 2012.

Operating expenses in the fourth quarter of 2012 were $11.4 million, compared with $8.3 million in the fourth quarter of 2011 and $9.9 million in the third quarter of 2012.

On a GAAP basis, the company reported net income of $2.5 million, or $0.09 per diluted share, in the fourth quarter of 2012. This compares to a net income of $5.0 million, or $0.18 per diluted share, in the fourth quarter of 2011, and a net income of $2.9 million, or $0.11 per diluted share, in the third quarter of 2012.

On a Non-GAAP basis, which excludes adjustments related to tax assets, stock based compensation expenses and loss related to equipment and inventory damage, the company reported net income of $1.0 million, or $0.04 per diluted share, in the fourth quarter of 2012. This compares to a net income of $3.0 million, or $0.11 per diluted share, in the fourth quarter of 2011, and a net income of $3.7 million, or $0.14 per diluted share, in the third quarter of 2012.

Total cash reserves at the end of the fourth quarter of 2012 were $91.4 million.

2012 Full Year Results

Total revenues for 2012 were $96.2 million, compared to total revenues of $102.8 million for 2011.

Gross margin in 2012 was 53%, compared to 56% in 2011.

Operating expenses in 2012 were $40.6 million, compared to $33.3 million in 2011.

On a GAAP basis, the company reported net income of $11.8 million in 2012, or $0.43 per diluted share. This compares to a net income of $28.1 million, or $1.04 per diluted share, in 2011.

On a Non-GAAP basis, which excludes adjustments related to tax assets, stock based compensation expenses and loss related to equipment and inventory damage, the company reported net income $14.2 million in 2012, or $0.52 per diluted share. This compares to a net income of $27.1 million, or $1.00 per diluted share, in 2011.

During 2012, the company generated $7.7 million in cash flow from operating activities, as compared to $25.1 million cash flow generated from operating activities in 2011.

Total cash reserves at the end of 2012 were $91.4 million, compared to $87.1 million at the end of 2011.

Conference call details

To attend the conference call today, February 19, 2013, at 5:00pm ET, please dial in the US: 1 877 249 9037; or internationally +972 3 763 0145 or +1 212 444 0481.

To attend the conference call in Hebrew, on February 20, 2013, at 11:00am Israel Time, please dial +972 3 918 0609.

Both of the Nova financial results conference calls will be webcast live from a link on Nova’s website at http://ir.novameasuring.com, together with a presentation to accompany the conference calls.

For those unable to participate in the conference calls, there will be replays available from the same links.

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.novameasuring.com.

This press release provides financial measures that exclude non-cash charges for stock-based compensation, loss related to equipment and inventory damage as well as adjustments related to tax assets 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 or benefits 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.

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 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; cyber security risks; risks related to open source technologies; our ability to retain our competitive position despite the ongoing consolidation in our industry; 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; our dependency on our key employees; risks related to changes in our order backlog; risks related to the financial, political and environmental instabilities in Asia; 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, 2011 filed with the Securities and Exchange Commission on March 28, 2012. 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.

(Tables to Follow)

NOVA MEASURING INSTRUMENTS LTD. CONSOLIDATED BALANCE SHEET

(U.S. dollars in thousands)

CURRENT ASSETSCash and cash equivalentsShort-term interest-bearing bank depositsHeld to maturity securitiesTrade accounts receivableInventoriesDeferred income tax assetsOther current assetsLONG-TERM ASSETSLong-term interest-bearing bank depositsOther long-term assetsSeverance pay fundsFIXED ASSETS, NETTOTAL ASSETSCURRENT LIABILITIESTrade accounts payableDeferred incomeOther current liabilitiesLONG-TERM LIABILITIESLiability for employee severance payDeferred incomeOther long-term liabilitySHAREHOLDERS' EQUITYTOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		As ofDecember 31,As ofDecember 31,20122011 15,96318,71675,03966,247--1,58217,36213,40217,8279,6081,8502,5002,5491,173130,590113,2284055455162911,8732,8852,7943,7218,6605,998142,044122,94710,8198,3054,7752,1728,4448,08224,03818,5592,8063,851159611270203,2354,482114,77199,906142,044122,947	As ofDecember 31,As ofDecember 31,20122011 15,96318,71675,03966,247--1,58217,36213,40217,8279,6081,8502,5002,5491,173130,590113,2284055455162911,8732,8852,7943,7218,6605,998142,044122,94710,8198,3054,7752,1728,4448,08224,03818,5592,8063,851159611270203,2354,482114,77199,906142,044122,947
			2011
			18,71666,2471,58213,4029,6082,5001,173
			113,228
			5452912,885
			3,721
			5,998
			122,947
			8,3052,1728,082
			18,559
			3,85161120
			4,482
			99,906
			122,947

NOVA MEASURING INSTRUMENTS LTD. QUARTERLY CONSOLIDATED STATEMENTS OF OPERATIONS

(U.S. dollars in thousands, except per share data)

REVENUESProductsServicesCOST OF REVENUESProductsServicesGROSS PROFITOPERATING EXPENSESResearch and Development expenses, netSales and Marketing expensesGeneral and Administration expensesOPERATING PROFIT (LOSS)INTEREST INCOME, NETINCOME (LOSS) BEFORE INCOME TAXESINCOME TAX BENEFIT (EXPENSES)NET INCOME FOR THE PERIODEarnings per share:BasicDilutedShares used for calculation of earnings per share:BasicDiluted	Three months endedDecember 31,2012September 30,2012December 31,201117,01619,35915,2735,0825,0593,91922,09824,41819,1927,3907,9995,9723,6443,4832,69311,03411,4828,66511,06412,93610,5277,1176,0034,5673,1022,9672,9511,19197374611,4109,9438,264(346)2,9932,263337283207(9)3,2762,4702,481(381)2,5002,4722,8954,9700.090.110.190.090.110.1826,67926,64626,42527,31727,48527,007	Three months endedDecember 31,2012September 30,2012December 31,201117,01619,35915,2735,0825,0593,91922,09824,41819,1927,3907,9995,9723,6443,4832,69311,03411,4828,66511,06412,93610,5277,1176,0034,5673,1022,9672,9511,19197374611,4109,9438,264(346)2,9932,263337283207(9)3,2762,4702,481(381)2,5002,4722,8954,9700.090.110.190.090.110.1826,67926,64626,42527,31727,48527,007	Three months endedDecember 31,2012September 30,2012December 31,201117,01619,35915,2735,0825,0593,91922,09824,41819,1927,3907,9995,9723,6443,4832,69311,03411,4828,66511,06412,93610,5277,1176,0034,5673,1022,9672,9511,19197374611,4109,9438,264(346)2,9932,263337283207(9)3,2762,4702,481(381)2,5002,4722,8954,9700.090.110.190.090.110.1826,67926,64626,42527,31727,48527,007	Three months endedDecember 31,2012September 30,2012December 31,201117,01619,35915,2735,0825,0593,91922,09824,41819,1927,3907,9995,9723,6443,4832,69311,03411,4828,66511,06412,93610,5277,1176,0034,5673,1022,9672,9511,19197374611,4109,9438,264(346)2,9932,263337283207(9)3,2762,4702,481(381)2,5002,4722,8954,9700.090.110.190.090.110.1826,67926,64626,42527,31727,48527,007	Three months endedDecember 31,2012September 30,2012December 31,201117,01619,35915,2735,0825,0593,91922,09824,41819,1927,3907,9995,9723,6443,4832,69311,03411,4828,66511,06412,93610,5277,1176,0034,5673,1022,9672,9511,19197374611,4109,9438,264(346)2,9932,263337283207(9)3,2762,4702,481(381)2,5002,4722,8954,9700.090.110.190.090.110.1826,67926,64626,42527,31727,48527,007
		September 30,201219,3595,05924,4187,9993,48311,48212,9366,0032,9679739,9432,9932833,276(381)2,8950.110.1126,64627,485
					19,192
					5,9722,693
					8,66510,527
					4,5672,951746
					8,264
					2,263207
					2,4702,500
					4,970
					0.19
					0.18
					26,425
					27,007

NOVA MEASURING INSTRUMENTS LTD. ANNUAL CONSOLIDATED STATEMENTS OF OPERATIONS

(U.S. dollars in thousands, except per share data)

REVENUESProductsServicesCOST OF REVENUESProductsServicesGROSS PROFITOPERATING EXPENSESResearch & Development expenses, netSales & Marketing expensesGeneral & Administration expensesOPERATING PROFIT INTEREST INCOME, NETINCOME BEFORE INCOME TAXESINCOME TAX BENEFIT (EXPENSES)NET INCOME FOR THE PERIODNet income per share:BasicDilutedShares used for calculation of net income per share:BasicDiluted	Year endedDecember 31, 2012December 31, 201177,21285,56218,95617,26696,168102,82831,73433,78913,28011,04345,01444,83251,15457,99624,59418,67711,99811,3733,9783,22940,57033,27910,58424,7171,36890111,95225,618(124)2,50011,82828,1180.441.070.431.0426,61926,23227,27726,931	Year endedDecember 31, 2012December 31, 201177,21285,56218,95617,26696,168102,82831,73433,78913,28011,04345,01444,83251,15457,99624,59418,67711,99811,3733,9783,22940,57033,27910,58424,7171,36890111,95225,618(124)2,50011,82828,1180.441.070.431.0426,61926,23227,27726,931	Year endedDecember 31, 2012December 31, 201177,21285,56218,95617,26696,168102,82831,73433,78913,28011,04345,01444,83251,15457,99624,59418,67711,99811,3733,9783,22940,57033,27910,58424,7171,36890111,95225,618(124)2,50011,82828,1180.441.070.431.0426,61926,23227,27726,931
			85,56217,266102,82833,78911,04344,83257,99618,67711,3733,22933,27924,71790125,6182,50028,1181.071.0426,23226,931

NOVA MEASURING INSTRUMENTS LTD. QUARTERLY CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. dollars in thousands)

CASH FLOW – OPERATING ACTIVITIESNet income for the periodAdjustments to reconcile net income to net cashprovided by operating activities:Depreciation and amortizationLoss related to equipment and inventory damageAmortization of deferred stock-basedcompensationIncrease (decrease) in liability for employeetermination benefits, netDecrease (increase) in deferred income tax assets, netDecrease (increase) in trade accounts receivablesDecrease (increase) in inventoriesDecrease (increase) in other current and long termAssetsIncrease (decrease) in trade accounts payablesand other long-term liabilitiesIncrease in other current liabilitiesIncrease (decrease) in short and long termdeferred incomeNet cash provided by (used in) operating activitiesCASH FLOW – INVESTMENT ACTIVITIESDecrease (increase) in short-term interest-bearingbank depositsDecrease in long-term interest-bearing bank depositsProceeds from (investments in) short-term held tomaturity securitiesAdditions to fixed assetsNet cash provided by (used in) investment activitiesCASH FLOW – FINANCING ACTIVITIESShares issued under employee share-based plansNet cash provided by financing activitiesIncrease (decrease) in cash and cash equivalentsCash and cash equivalents – beginning of periodCash and cash equivalents – end of period	December 31,	December 31,	Three months endedSeptember 30,20122,895771-489(80)3492,619(3,770)(64)(5)4855724,26111,100-(5)(896)10,19910410414,56420,40834,972	Three months endedSeptember 30,20122,895771-489(80)3492,619(3,770)(64)(5)4855724,26111,100-(5)(896)10,19910410414,56420,40834,972	December 31,	December 31,
		20122,472858509609104(1,806)(2,461)143250(2,392)414207(1,093)(18,110)1401,554(1,512)(17,928)1212(19,009)34,97215,963				20114,970541-476(60)(2,500)(1,281)95485332625(287)3,8558,04486(482)(632)7,01616316311,0347,68218,716

NOVA MEASURING INSTRUMENTS LTD. ANNAUL CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. dollars in thousands)

CASH FLOW – OPERATING ACTIVITIESNet income for the periodAdjustments to reconcile net income to net cashprovided by operating activities:Depreciation and amortizationLoss related to equipment and inventory damageAmortization of deferred stock-based compensationIncrease (decrease) in liability for employeetermination benefits, netDecrease (increase) in deferred income tax assets, netIncrease in trade accounts receivablesIncrease in inventoriesIncrease in other current and long term assetsIncrease (decrease) in trade accounts payablesand other long term liabilitiesIncrease in other current liabilitiesIncrease (decrease) in short and long term deferred incomeNet cash provided by operating activitiesCASH FLOW – INVESTMENT ACTIVITIESIncrease in short-term interest-bearing bank depositsDecrease in long-term interest-bearing bank depositsProceeds from (investments in) short-term held to maturitysecuritiesAdditions to fixed assetsNet cash used in investment activitiesCASH FLOW – FINANCING ACTIVITIESShares issued under employee share-based plansNet cash provided by financing activitiesDecrease in cash and cash equivalentsCash and cash equivalents – beginning of periodCash and cash equivalents – end of period

Year endedDecember 31,2012December 31,201111,82828,1182,7831,700509-1,9271,435(27)43694(2,500)(3,960)(240)(10,513)(1,056)(467)(305)2,510(1,639)2831592,151(614)7,71825,101(8,792)(30,685)140861,582(1,582)(3,660)(2,307)(10,730)(34,488)2592,7092592,709(2,753)(6,678)18,71625,39415,96318,716

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

December 31,2012GAAP Net income for the period2,472Non-GAAP Adjustments:Stock based compensation expenses609Adjustments related to tax assets(2,553)Loss related to equipment and inventory damage509Non-GAAP Net income for the period1,037Non-GAAP Net income per share:Basic0.04Diluted0.04Shares used for calculation of Non-GAAP netincome per share:Basic26,679Diluted27,317 GAAP Net income for the periodNon-GAAP Adjustments:Stock based compensation expensesAdjustments related to tax assetsLoss related to equipment and inventory damageNon-GAAP Net income for the periodNon-GAAP Net income per share:BasicDilutedShares used for calculation of Non-GAAP net income per share:BasicDiluted	Three months endedSeptember 30,December 31,201220112,8954,970489476349(2,500)--3,7332,9460.140.110.140.1126,64626,42527,48527,007Year endedDecember 31,December 31,2012201111,82828,1181,9271,435(53)(2,500)509-14,21127,0530.531.030.521.0026,61926,23227,27726,931	Three months endedSeptember 30,December 31,201220112,8954,970489476349(2,500)--3,7332,9460.140.110.140.1126,64626,42527,48527,007Year endedDecember 31,December 31,2012201111,82828,1181,9271,435(53)(2,500)509-14,21127,0530.531.030.521.0026,61926,23227,27726,931	Three months endedSeptember 30,December 31,201220112,8954,970489476349(2,500)--3,7332,9460.140.110.140.1126,64626,42527,48527,007Year endedDecember 31,December 31,2012201111,82828,1181,9271,435(53)(2,500)509-14,21127,0530.531.030.521.0026,61926,23227,27726,931	December 31,
		31,
	201211,8281,927(53)509
	14,211
	0.53
	0.52
	26,619
	27,277