Operating expenses in the third quarter of 2008 were $4.7 million, compared with $9.2 million in the third quarter of 2007, and $5.7 million in the second quarter of 2008. Operating expenses for the third quarter of 2007 and for the second quarter of 2008 included non-cash one-time impairment charges related to the Hypernex acquisition, of $3.8 million and $0.6 million, respectively.

On a GAAP basis, the company reported $2.6 million net loss in the third quarter of 2008, or $0.14 per share, as compared to a net loss of $3.7 million, or $0.19 per share, for the third quarter of 2007, and net loss of $1.3 million, or $0.07 per share, for the second quarter of 2008.

On a non-GAAP basis, which excludes stock-based compensation, amortization of intangibles, impairment charges and inventory write-off, the company reported net loss of $1.7 million, or $0.09 per share, for the third quarter of 2008. This compares with a non-GAAP net income of $0.8 million, or $0.04 per diluted share, in the third quarter of 2007, and a non-GAAP net loss of $0.5 million, or $0.02 per share, for the second quarter of 2008.

During the quarter, the company used $2.3 million in cash for operating activities. Total cash reserves at the end of the third quarter of 2008 were $18.5 million.

Subsequent to the quarter end, the company announced full recovery of its Auction Rate Securities investments, increasing its available cash reserves to $20.7 million at the end of the third quarter of 2008. In addition, the company has implemented a cost reduction plan which included a reduction in force in all regions, and which is expected to reduce operational expenses by approximately $5 million in year 2009. The company reported that the reduction in force included all parts of the organization except research and development, in which the company will continue to aggressively invest in order to increase its competitive advantage.

Management Comments

“The impact of the global economic crisis on our industry and on the company is significant, and in recent quarters we have taken necessary measures in order to realign our operational run rate to this environment. The effectiveness of these ongoing efforts is evident in our strong cash position, which enables us to be selectively aggressive in executing our business goals,” said Gabi Seligsohn, President and CEO of Nova. “While further reducing our costs in most parts of the organization, we have decided to maintain the pace of our new and existing product development plans, and we are confident that our continued successful penetrations with the Stand Alone OCD tools, lay the foundation for increased market share and improving gross margins once demand improves.”

The Company will host a conference call today, November 5, 2008, at 9:00am ET. To participate, please dial in the US: 1-888-281-1167; or internationally: +972 3 918 0650. 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 www.nova.co.il.

This press release provides financial measures that exclude non-cash charges for inventory write-off, stock-based compensation, impairment charges and amortization of intangible 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 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: 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; anticipated consequences of the global economic crisis 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, 2007 filed with the Securities and Exchange Commission on March 28, 2008, as amended.  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)

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

			As of September 30,			As of December 31,
			2008			2007
CURRENT ASSETS
Cash and cash equivalents				8,521			15,324
Short-term interest-bearing bank deposits				118			--
Short-term investments				8,577			--
Held to maturity securities				--			2,251
Trade accounts receivable				5,248			9,146
Inventories				7,621			8,524
Other current assets				1,570			1,703
				31,655			36,948
LONG-TERM ASSETS
Long-term interest-bearing bank deposits				602			2,245
Long-term investments				642			1,562
Held to maturity securities				--			1,489
Other Long-term assets				155			169
Severance pay funds				2,708			2,488
				4,107			7,953
FIXED ASSETS, NET				3,081			3,484
Total assets				38,843			48,385
CURRENT LIABILITIES
Trade accounts payable				3,921			7,482
Deferred income				2,355			1,496
Other current liabilities				4,481			7,310
				10,757			16,288
LONG-TERM LIABILITIES
Liability for employee severance pay				3,766			3,561
Deferred income				1,121			901
Other long-term liability				51			51
				4,938			4,513
SHAREHOLDERS' EQUITY				23,148			27,584
Total liabilities and shareholders' equity				38,843			48,385

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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,
			2008			2008			2007
REVENUES
Product sales				5,535			7,496			10,202
Services				3,305			3,594			2,924
IP Licensing				--			--			766
				8,840			11,090			13,892
COST OF REVENUES
Product sales				2,872			3,524			5,558
Inventory write-off				850			--			303
Services				2,956			3,250			2,695
				6,678			6,774			8,556
GROSS PROFIT				2,162			4,316			5,336
OPERATING EXPENSES
Research & Development expenses, net				2,301			2,177			2,197
Sales & Marketing expenses				1,631			2,042			2,553
General & Administration expenses				760			797			615
Impairment loss on equipment and intangibles related to
Hypernex assets and liabilities acquisition				--			633			3,831
				4,692			5,649			9,196
OPERATING LOSS				(2,530	)		(1,333	)		(3,860	)
INTEREST INCOME (EXPENSES), NET				(94	)		66			190
NET LOSS FOR THE PERIOD				(2,624	)		(1,267	)		(3,670	)
Basic and diluted net loss per share				(0.14	)		(0.07	)		(0.19	)
Shares used for calculation of loss per share				19,378			19,378			19,026

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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, 2008			September 30, 2007
REVENUES
Product sales				22,645			32,773
Services				10,096			8,530
IP licensing				--			766
				32,741			42,069
COST OF REVENUES
Product sales				10,884			15,948
Inventory write-off				850			303
Services				9,363			7,908
				21,097			24,159
GROSS PROFIT				11,644			17,910
OPERATING EXPENSES
Research & Development expenses, net				6,383			6,733
Sales & Marketing expenses				6,113			7,279
General & Administration expenses				2,461			3,886
Impairment loss on equipment and intangibles related to Hypernex
assets and liabilities acquisition				633			3,831
				15,590			21,729
OPERATING LOSS				(3,946	)		(3,819	)
INTEREST INCOME, NET				96			579
NET LOSS FOR THE PERIOD				(3,850	)		(3,240	)
Basic and diluted net loss per share				(0.20	)		(0.18	)
Shares used for calculation of net loss per share				19,366			18,390

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

			Three months ended
			September 30,			June 30,			September 30,
			2008			2008			2007
CASH FLOW - OPERATING ACTIVITIES
Net loss for the period				(2,624	)		(1,267	)		(3,670	)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization				323			316			484
Amortization of deferred stock-based compensation				123			155			246
Increase (decrease) in liability for employee termination benefits, net				(33	)		68			32
Impairment loss on equipment and intangibles				--			633			3,918
Net recognized losses (gains) on investments				4			2			(8	)
Decrease (increase) in trade accounts receivables				(208	)		3,331			(1,526	)
Decrease in inventories				1,703			228			855
Decrease in other current and long term assets				314			758			378
Increase (decrease) in trade accounts payables and other long term liabilities				(494	)		(2,415	)		223
Increase (decrease) in current liabilities				(1,918	)		(974	)		4,664
Increase (decrease) in short and long term deferred income				526			722			(4,997	)
Net cash from (used in) operating activities				(2,284	)		1,557			599
CASH FLOW - INVESTMENT ACTIVITIES
Decrease (Increase) in short-term interest-bearing bank deposits				(46	)		(72	)		117
Decrease (Increase) in short-term and long-term investments				(4,243	)		--			4,249
Investment in short term held to maturity securities				--			(9,654	)		(491	)
Investment in long-term held to maturity securities				--			--			(34	)
Proceeds from held to maturity securities				1,506			11,068			490
Proceeds from long-term interest-bearing bank deposits				9			696			--
Additions to fixed assets				(165	)		(183	)		(569	)
Net cash from (used in) investment activities				(2,939	)		1,855			3,762
CASH FLOW - FINANCING ACTIVITIES
Shares issued under employee share-based plans				--			--			89
Net cash from financing activities				--			--			89
Increase (decrease) in cash and cash equivalents				(5,223	)		3,412			4,450
Cash and cash equivalents - beginning of period				13,744			10,332			6,254
Cash and cash equivalents - end of period				8,521			13,744			10,704

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

			Nine months ended
			September 30,			September 30,
			2008			2007
CASH FLOW - OPERATING ACTIVITIES
Net loss for the period				(3,850	)		(3,240	)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization				1,005			1,376
Amortization of deferred stock-based compensation				442			769
Increase in liability for employee termination benefits, net				94			103
Impairment loss on equipment and intangibles				633			3,918
Net recognized losses (gains) on investments				17			(4	)
Decrease (increase) in trade accounts receivables				3,898			(3	)
Decrease in inventories				571			57
Decrease in other current and long term assets				207			449
Decrease in trade accounts payables and other long term liabilities				(3,561	)		(1,107	)
Decrease in current liabilities				(3,117	)		(85	)
Increase (decrease) in short and long term deferred income				1,079			(1,676	)
Net cash from (used in) operating activities				(2,582	)		557
CASH FLOW - INVESTMENT ACTIVITIES
Decrease (Increase) in short-term interest-bearing bank deposits				(118	)		466
Increase in short-term and long-term investments				(8,554	)		(528	)
Investment in short term held to maturity securities				--			(491	)
Investment in long term held to maturity securities				--			(1,491	)
Proceeds from held to maturity securities				3,700			2,305
Proceeds from long-term interest-bearing bank deposits				1,643			971
Additions to fixed assets				(904	)		(819	)
Net cash from (used in) investment activities				(4,233	)		413
CASH FLOW - FINANCING ACTIVITIES
Shares issued in private placement				--			4,982
Shares issued under employee share-based plans				12			576
Net cash from financing activities				12			5,558
Increase (decrease) in cash and cash equivalents				(6,803	)		6,528
Cash and cash equivalents - beginning of period				15,324			4,176
Cash and cash equivalents - end of period				8,521			10,704

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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,
			2008			2008			2007
GAAP Net loss for the quarter				(2,624	)		(1,267	)		(3,670	)
Non-GAAP Adjustments:
Amortization of intangible assets				--			--			110
Stock based compensation expenses				123			155			246
Inventory write-off				850			--			303
Impairment loss on equipment and intangibles related
to Hypernex assets and liabilities acquisition				--			633			3,831
Non-GAAP Net income (loss) for the quarter				(1,651	)		(479	)		820
Non-GAAP net income (loss) per share:
Basic				(0.09	)		(0.02	)		0.04
Diluted				(0.09	)		(0.02	)		0.04
Shares used for calculation of non-GAAP net income
(loss) per share:
Basic				19,378			19,378			19,026
Diluted				19,378			19,378			19,632

			Nine months ended
			September 30,			September 30,
			2008			2007
GAAP Net loss for the quarter				(3,850	)		(3,240	)
Non-GAAP Adjustments:
Stock based compensation expenses				442			769
Amortization of intangible assets				--			326
Inventory write-off				850			303
Impairment loss on equipment and intangibles related to Hypernex assets and
liabilities acquisition				633			3,831
Non-GAAP Net income (loss) for the quarter				(1,925	)		1,989
Non-GAAP net income (loss) per share:
Basic				(0.10	)		0.10
Diluted				(0.10	)		0.10
Shares used for calculation of non-GAAP net income (loss) per share:
Basic				19,366			18,390
Diluted				19,366			19,068

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