Nova Ltd. — Earnings Release 2010

Nov 2, 2010

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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

Company Press Release

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 - 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

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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 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 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.

(Tables to Follow)

NOVA MEASURING INSTRUMENTS LTD. CONSOLIDATED BALANCE SHEET

(U.S. dollars in thousands)

CURRENT ASSETSCash and cash equivalentsShort-term interest-bearing bank depositsTrade accounts receivableInventoriesOther 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 ofSeptember 30,As ofDecember 31,2010200910,9779,86143,2288,60712,52311,54510,0413,9493,0881,72879,85735,6905705611671422,5252,3683,2623,0712,4222,16385,54140,9248,6443,7155,1151,6716,8015,23720,56010,6233,4783,1681,50218326355,0063,38659,97526,91585,54140,924	As ofSeptember 30,As ofDecember 31,2010200910,9779,86143,2288,60712,52311,54510,0413,9493,0881,72879,85735,6905705611671422,5252,3683,2623,0712,4222,16385,54140,9248,6443,7155,1151,6716,8015,23720,56010,6233,4783,1681,50218326355,0063,38659,97526,91585,54140,924
		20099,8618,60711,5453,9491,72835,6905611422,3683,0712,16340,9243,7151,6715,23710,6233,168183353,38626,91540,924

NOVA MEASURING INSTRUMENTS LTD. QUARTERLY CONSOLIDATED STATEMENTS OF OPERATIONS

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

REVENUESProduct salesServicesCOST OF REVENUESProductsServicesGROSS PROFITOPERATING EXPENSESResearch & Development expenses, netSales & Marketing expensesGeneral & Administration expensesOPERATING PROFITInterest income, netNET INCOME FOR THE PERIODNet income per share:BasicDilutedShares used for calculation of net income per share:BasicDiluted	Three months endedSeptember 30,2010June 30,2010September 30,200920,35015,8898,7173,8603,5512,67724,21019,44011,3948,1826,5543,6992,5422,4522,19110,7249,0065,89013,48610,4345,5042,7832,8281,8502,8102,2421,5237956795946,3885,7493,9677,0984,6851,537176241537,2744,7091,6900.290.190.090.270.180.0825,00824,80819,41726,47826,40619,942	Three months endedSeptember 30,2010June 30,2010September 30,200920,35015,8898,7173,8603,5512,67724,21019,44011,3948,1826,5543,6992,5422,4522,19110,7249,0065,89013,48610,4345,5042,7832,8281,8502,8102,2421,5237956795946,3885,7493,9677,0984,6851,537176241537,2744,7091,6900.290.190.090.270.180.0825,00824,80819,41726,47826,40619,942	Three months endedSeptember 30,2010June 30,2010September 30,200920,35015,8898,7173,8603,5512,67724,21019,44011,3948,1826,5543,6992,5422,4522,19110,7249,0065,89013,48610,4345,5042,7832,8281,8502,8102,2421,5237956795946,3885,7493,9677,0984,6851,537176241537,2744,7091,6900.290.190.090.270.180.0825,00824,80819,41726,47826,40619,942	Three months endedSeptember 30,2010June 30,2010September 30,200920,35015,8898,7173,8603,5512,67724,21019,44011,3948,1826,5543,6992,5422,4522,19110,7249,0065,89013,48610,4345,5042,7832,8281,8502,8102,2421,5237956795946,3885,7493,9677,0984,6851,537176241537,2744,7091,6900.290.190.090.270.180.0825,00824,80819,41726,47826,40619,942	Three months endedSeptember 30,2010June 30,2010September 30,200920,35015,8898,7173,8603,5512,67724,21019,44011,3948,1826,5543,6992,5422,4522,19110,7249,0065,89013,48610,4345,5042,7832,8281,8502,8102,2421,5237956795946,3885,7493,9677,0984,6851,537176241537,2744,7091,6900.290.190.090.270.180.0825,00824,80819,41726,47826,40619,942
			June 30,201015,8893,55119,4406,5542,4529,00610,4342,8282,2426795,7494,685244,7090.190.1824,80826,406
					20098,7172,67711,3943,6992,1915,8905,5041,8501,5235943,9671,5371531,6900.090.0819,41719,942

NOVA MEASURING INSTRUMENTS LTD. YEAR TO DATE CONSOLIDATED STATEMENTS OF OPERATIONS

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

REVENUESProduct salesServicesCOST OF REVENUESProduct salesServicesGROSS PROFITOPERATING EXPENSResearch & DevelopmSales & Marketing exGeneral & AdministraOPERATING PROFITINTEREST INCOME,NET INCOME (LOSS)Net income (loss) perBasic	REVENUESProduct salesServicesCOST OF REVENUESProduct salesServicesGROSS PROFITOPERATING EXPENSResearch & DevelopmSales & Marketing exGeneral & AdministraOPERATING PROFITINTEREST INCOME,NET INCOME (LOSS)Net income (loss) perBasic	(U.S. d	ollars in t	housands	, except p	, except p	er share d	er share d	ata)
	REVENUESProduct salesServicesCOST OF REVENUESProduct salesServicesGROSS PROFITOPERATING EXPENSResearch & DevelopmSales & Marketing exGeneral & AdministraOPERATING PROFITINTEREST INCOME,NET INCOME (LOSS)Net income (loss) perBasic	ESent expenses, netpensestion expenses(LOSS)NETFOR THE PERIODshare:				Nine-montSeptember 30, 201049,14010,49159,63120,2147,38327,59732,0348,1657,2482,12517,53814,49618614,682061				hs endedSeptember 30, 200916,9937,08524,0787,3336,55413,88710,1914,8163,9891,58110,386(195)132(63)(000)
								49,110,4
	DilutedShares used for calculation of net income (loss) per share:BasicDiluted							.0.5724,18225,540			.19,391

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 loss to net cashused in operating activities:Depreciation and amortizationAmortization of deferred stock-based compensationIncrease (decrease) in liability for employeetermination benefits, netNet recognized gains on investmentsDecrease (increase) in trade accounts receivablesDecrease (increase) in inventoriesDecrease (Increase) in other short and long termassetsIncrease (decrease) in trade accounts payablesIncrease in other current and long-term liabilitiesIncrease (decrease) in short and long term deferredincomeNet cash from operating activitiesCASH FLOW – INVESTMENT ACTIVITIESIncrease in short-term interest-bearing bank depositsProceeds from long-term interest-bearing bank depositsInvestments in long-term depositsAdditions to fixed assetsNet cash from (used in) investment activitiesCASH FLOW – FINANCING ACTIVITIESShares issued under employee share-based plansShares issued in public offeringNet cash from financing activitiesIncrease (decrease) in cash and cash equivalentsCash and cash equivalents – beginning of periodCash and cash equivalents – end of period	ThreeSeptember 30,20107,274354215(10)--(1,670)(2,065)(776)2,0951,7387467,901(3,934)----(453)(4,387)625--6254,1396,83810,977	Three	months ended	September 30,20091,690311130(2)4(622)79045(662)1,039(857)1,866--4,595(2)(72)4,521--1421426,5299,01715,546
			June 30,20104,709323122105--67(1,855)(388)2891,1301,7696,271(10,701)----(307)(11,008)51--51(4,686)11,5246,838

NOVA MEASURING INSTRUMENTS LTD. YEAR TO DATE CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. dollars in thousands)

CASH FLOW – OPERATING ACTIVITIESNet income (loss) for the periodAdjustments to reconcile net loss to net cashused in operating activities:Depreciation and amortizationAmortization of deferred stock-based compensationIncrease in liability for employee termination benefits, netIncrease in trade accounts receivablesDecrease (increase) in inventoriesDecrease (increase) in other current and long term assetsIncrease (decrease) in trade accounts payables and other longterm liabilitiesIncrease (decrease) in current liabilitiesIncrease (decrease) in short and long term deferred incomeNet cash from (used in) operating activitiesCASH FLOW – INVESTMENT ACTIVITIESDecrease (increase) in short-term interest-bearing bank depositsProceeds from (investment in) long-term depositsAdditions to fixed assetsNet cash used in investment activitiesCASH FLOW – FINANCING ACTIVITIESShares issued under employee share-based plansShares issued in public offeringNet cash from financing activitiesIncrease (decrease) in cash and cash equivalentsCash and cash equivalents – beginning of periodCash and cash equivalents – end of period	Nine months endedSeptember 30,2010September 30,200914,682(63)1,00190745333614328(978)(2,819)(6,187)1,946(1,423)1344,929(1,964)1,762(600)4,763(1,795)19,145(3,890)(34,621)50(9)19(1,165)(100)(35,795)(31)79814216,968--17,7661421,116(3,779)9,86119,32510,97715,546	Nine months endedSeptember 30,2010September 30,200914,682(63)1,00190745333614328(978)(2,819)(6,187)1,946(1,423)1344,929(1,964)1,762(600)4,763(1,795)19,145(3,890)(34,621)50(9)19(1,165)(100)(35,795)(31)79814216,968--17,7661421,116(3,779)9,86119,32510,97715,546	Nine months endedSeptember 30,2010September 30,200914,682(63)1,00190745333614328(978)(2,819)(6,187)1,946(1,423)1344,929(1,964)1,762(600)4,763(1,795)19,145(3,890)(34,621)50(9)19(1,165)(100)(35,795)(31)79814216,968--17,7661421,116(3,779)9,86119,32510,97715,546
			2009(63)90733628(2,819)1,946134(1,964)(600)(1,795)(3,890)5019(100)(31)142--142(3,779)19,32515,546