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Nova Announces 2012 Third Quarter Results

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REHOVOT, Israel, October 31, 2012 /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 2012 third quarter results.

Highlights for the Third Quarter of 2012

  • Quarterly revenues of $24.4 million
  • Blended gross margin of 53%
  • GAAP Net income of $2.9 million, or $0.11 per diluted share
  • Non-GAAP Net income of $3.7 million, or $0.14 per diluted share
  • Positive cash flow from operations of $4.3 million

Management Comments

"Revenues for the third quarter were in line with our expectations, and continue to reflect our exposure to market segments where demand is highest," said Gabi Seligsohn, President and CEO of Nova. "Earnings per share exceeded the high end of our guidance, due to tighter expense control in light of recent market conditions. We are following our plan to prudently increase our research and development commitment in order to execute on next generation projects and remain in the forefront of our sector. In the current environment, we are being especially selective in adding resources, which is causing the ramp in expenses to be slightly slower than originally anticipated.

"We were very pleased to announce multiple orders from multiple customers for our recently announced new product, the Nova V2600. We are in the process of adding a few additional customers and expect this product to gain significant momentum as the industry transitions to high volume manufacturing using 3D interconnect technology.

"Recent booking trends have exhibited softness in both the memory and foundry segments. Nevertheless, we believe there is a seasonal element to the order pattern and we expect to see foundry momentum resume and continue well into 2013. Recent checks with our customers confirm that there is a need for additional foundry capacity and yield improvements at 28nm and that plans are in place to initiate a ramp up in the 20nm technology node. We believe that during these technology transitions, optical metrology will continue to account for a higher share of overall capital expenditures, as foundries cope with the challenges of process complexity and yield requirements at the advanced nodes."

2012 Fourth Quarter Guidance

For the fourth quarter of 2012, management expects revenues of $18.5-$22.0 million, with GAAP diluted earnings per share of $0.01-$0.10.

On a Non-GAAP basis, which excludes adjustments of deferred income tax assets and stock based compensation expenses, management expects diluted earnings per share of $0.00-$0.08 for the fourth quarter of 2012.

2012 Third Quarter Results

Total revenues for the third quarter of 2012 were $24.4 million, a decrease of 5% relative to the third quarter of 2011, and a decrease of 10% relative to the second quarter of 2012.

Gross margin for the third quarter of 2012 was 53%, compared with 55% in the third quarter of 2011 and 54% in the second quarter of 2012.

Operating expenses in the third quarter of 2012 were $9.9 million, compared with $8.4 million in the third quarter of 2011 and $9.9 million in the second quarter of 2012.

On a GAAP basis, the company reported net income of $2.9 million, or $0.11 per diluted share, in the third quarter of 2012. This compares to a net income of $5.9 million, or $0.22 per diluted share, in the third quarter of 2011, and a net income of $3.7 million, or $0.14 per diluted share, in the second quarter of 2012.

On a Non-GAAP basis, which excludes deferred income tax expenses and stock based compensation expenses, the company reported net income of $3.7 million, or $0.14 per diluted share, in the third quarter of 2012. This compares to a net income of $6.4 million, or $0.23 per diluted share, in the third quarter of 2011, and a net income of $5.4 million, or $0.20 per diluted share, in the second quarter of 2012.

Total cash reserves at the end of the third quarter of 2012 were $94.0 million.

The Company will host a conference call today, October 31, 2012, at 10:00am ET. To participate, please dial in the US: 1 877 249 9037; or internationally: +972 3 763 0145 or 1 646 254 3361. 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://ir.nova.co.il/webcast.

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 provides financial measures that exclude non-cash charges for stock-based compensation and deferred income taxes expenses 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.

 

NOVA MEASURING INSTRUMENTS LTD.

CONSOLIDATED BALANCE SHEET

(U.S. dollars in thousands)

                                          As of September 30,   As of December 31,
                                                  2012              2011
 
    CURRENT ASSETS
    Cash and cash equivalents                   34,972            18,716
    Short-term interest-bearing bank deposits   56,929            66,247
    Held to maturity securities                  1,554             1,582
    Trade accounts receivable                   14,901            13,402
    Inventories                                 19,434             9,608
    Deferred income tax assets                      --             2,500
    Other current assets                         2,227             1,173
                                               130,017           113,228
    LONG-TERM ASSETS
    Long-term interest-bearing bank deposits       545               545
    Other long-term assets                         319               291
    Severance pay funds                          3,086             2,885
                                                 3,950             3,721
 
    FIXED ASSETS, NET                            7,051             5,998
 
    TOTAL ASSETS                               141,018           122,947
 
    CURRENT LIABILITIES
    Trade accounts payable                      13,209             8,305
    Deferred income                              4,065             2,172
    Other current liabilities                    7,912             8,082
                                                25,186            18,559
 
    LONG-TERM LIABILITIES
    Liability for employee severance pay         3,973             3,851
    Deferred income                                662               611
    Other long-term liability                        8                20
                                                 4,643             4,482
 
    SHAREHOLDERS' EQUITY                       111,189            99,906
 
    TOTAL LIABILITIES AND SHAREHOLDERS'
    EQUITY                                     141,018           122,947
 


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,
                                               2012        2012      2011
 
    REVENUES
    Products                                19,359        22,070    21,382
    Services                                 5,059         4,980     4,438
                                            24,418        27,050    25,820
 
    COST OF REVENUES
    Products                                 7,999         9,150     8,921
    Services                                 3,483         3,324     2,782
                                            11,482        12,474    11,703
 
    GROSS PROFIT                            12,936        14,576    14,117
 
    OPERATING EXPENSES
    Research and Development
    expenses, net                            6,003         5,893     4,627
    Sales and Marketing expenses             2,967         3,048     2,933
    General and Administration
    expenses                                   973           972       809
                                             9,943         9,913     8,369
 
    OPERATING PROFIT                         2,993         4,663     5,748
 
    INTEREST INCOME, NET                       283           339       189
 
    INCOME BEFORE INCOME TAXES               3,276         5,002     5,937
 
    INCOME TAX EXPENSES                        381         1,278        --
 
    NET INCOME FOR THE PERIOD                2,895         3,724     5,937
 
    Earnings per share:
    Basic                                     0.11          0.14      0.23
    Diluted                                   0.11          0.14      0.22
 
    Shares used for calculation of earnings
    per share:
    Basic                                   26,646        26,610    26,334
    Diluted                                 27,485        27,299    27,079


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,
                                                 2012              2011
 
    REVENUES
    Product sales                               60,196            70,289
    Services                                    13,874            13,347
                                                74,070            83,636
 
    COST OF REVENUES
    Product sales                               24,344            27,817
    Services                                     9,636             8,350
                                                33,980            36,167
 
    GROSS PROFIT                                40,090            47,469
 
    OPERATING EXPENSES
    Research & Development expenses, net        17,477            14,110
    Sales & Marketing expenses                   8,896             8,422
    General & Administration expenses            2,787             2,483
                                                29,160            25,015
 
    OPERATING PROFIT                            10,930            22,454
 
    INTEREST INCOME, NET
                                                 1,031               694
 
    INCOME BEFORE INCOME TAXES
                                                11,961            23,148
 
    INCOME TAX EXPENSES                          2,605                --
 
    NET INCOME FOR THE PERIOD                    9,356            23,148
 
    Net income per share:
    Basic                                         0.35              0.88
    Diluted                                       0.34              0.86
 
    Shares used for calculation of net
    income per share:
    Basic                                       26,598            26,182
    Diluted                                     27,260            27,010


NOVA MEASURING INSTRUMENTS LTD.

QUARTERLY CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. dollars in thousands)

                                               
                                               Three months ended
                                     September 30,    June 30,  September 30,
                                          2012          2012         2011
    CASH FLOW - OPERATING ACTIVITIES
 
    Net income for the period            2,895         3,724        5,937
    Adjustments to reconcile net
    income to net cash provided by 
    operating activities:
 
    Depreciation and amortization          771           577          420
    Amortization of deferred
    stock-based compensation               489           409          421
    Decrease in liability for
    employee termination benefits, net     (80)          (41)         (94)
    Deferred income taxes                  349         1,241            -
    Decrease in trade accounts
    receivables                          2,619           971        7,554
    Decrease (increase) in
    inventories                         (3,770)       (3,282)       1,499
    Decrease (increase) in other
    current and long term assets           (64)         (122)         726
    Increase (decrease) in trade
    accounts payables and other 
    long-term liabilities                   (5)        1,170       (3,967)
    Increase (decrease) in other
    current liabilities                    485          (375)        (642)
    Increase (decrease) in short
    and long term deferred income          572           212       (5,966)
    Net cash provided by operating
    activities                           4,261         4,484        5,888
 
    CASH FLOW - INVESTMENT ACTIVITIES
 
    Decrease (increase) in
    short-term interest-bearing
    bank deposits                       11,100       (10,150)      (9,000)
    Proceeds from (investments in)
    short-term held to
    maturity securities                     (5)           87           86
    Additions to fixed assets             (896)         (679)        (460)
    Net cash provided by (used in)
    investment activities               10,199       (10,742)      (9,374)
 
    CASH FLOW - FINANCING ACTIVITIES
 
    Shares issued under employee
    share-based plans                      104            72          104
    Net cash provided by financing
    activities                             104            72          104
 
    Increase (decrease) in cash and
    cash equivalents                    14,564        (6,186)      (3,382)
    Cash and cash equivalents -
    beginning of period                 20,408        26,594       11,064
    Cash and cash equivalents - end
    of period                           34,972        20,408        7,682
 


NOVA MEASURING INSTRUMENTS LTD.

YEAR TO DATE CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. dollars in thousands)

                                                       
                                                       Nine-months ended
                                                  September 30,    September 30,
                                                       2012          2011
    CASH FLOW - OPERATING ACTIVITIES
 
    Net income for the period                         9,356          23,148
    Adjustments to reconcile net income to net
    cash provided by operating activities:
 
    Depreciation and amortization                     1,925           1,159
    Amortization of deferred stock-based
    compensation                                      1,318             959
    Increase (decrease) in liability for
    employee termination benefits, net                 (131)            103
    Deferred income taxes                             2,500              --
    Increase in trade accounts receivables           (1,499)          1,041
    Increase in inventories                         (10,656)         (2,010)
    Increase in other current and long term
    assets                                             (717)           (390)
    Increase (decrease) in trade accounts
    payables and other long term liabilities          4,902          (1,971)
    Decrease in other current liabilities              (131)           (466)
    Increase (decrease) in short and long term
    deferred income                                   1,944            (327)
    Net cash provided by operating activities         8,811          21,246
 
    CASH FLOW - INVESTMENT ACTIVITIES
 
    Decrease (increase) in short-term
    interest-bearing bank deposits                    9,318         (38,729)
    Proceeds from (investments in) short-term
    held to maturity securities                          28          (1,100)
    Additions to fixed assets                        (2,148)         (1,675)
    Net cash used in investment activities            7,198         (41,504)
 
    CASH FLOW - FINANCING ACTIVITIES
 
    Shares issued under employee share-based
    plans                                               247           2,546
    Net cash provided by financing activities           247           2,546
 
    Increase (decrease) in cash and cash
    equivalents                                      16,256         (17,712)
    Cash and cash equivalents - beginning of
    period                                           18,716          25,394
    Cash and cash equivalents - end of period        34,972           7,682


DISCLOSURE OF NON-GAAP NET INCOME

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

                                                  
                                                  Three months ended
                                        September 30,  June 30,  September 30,
                                            2012         2012        2011
 
    GAAP Net income for the period          2,895       3,724        5,937
 
    Non-GAAP Adjustments:
    Stock based compensation expenses         489         409          421
    Deferred income taxes expenses            349       1,241           --
 
    Non-GAAP Net income for the period      3,733       5,374        6,358
 
    Non-GAAP Net income per share:
    Basic                                    0.14        0.20         0.24
    Diluted                                  0.14        0.20         0.23
 
    Shares used for calculation of
    Non-GAAP net income per share:
    Basic                                  26,646      26,610       26,334
    Diluted                                27,485      27,299       27,079
 


                                                        
                                                        Nine-months ended
                                                   September 30, September 30,
                                                       2012          2011
 
    GAAP Net income for the period                     9,356        23,148
 
    Non-GAAP Adjustments:
    Stock based compensation expenses                  1,318           959
    Deferred income taxes expenses                     2,500            --
 
    Non-GAAP Net income for the period                13,174        24,107
 
    Non-GAAP Net income per share:
    Basic                                               0.50          0.92
    Diluted                                             0.49          0.89
 
    Shares used for calculation of Non-GAAP net
    income per share:
    Basic                                             26,598        26,182
    Diluted                                           27,260        27,010


Company Contact:
Dror David, Chief Financial Officer                    
Nova Measuring Instruments Ltd.                                        
Tel: +972-73-229-5833
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: info@ccgisrael.com

SOURCE Nova Measuring Instruments Ltd



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