LOD, Israel--July 20, 2006-- NUR Macroprinters Ltd., a leading supplier of wide-format inkjet production printing systems for the out-of-home advertising market, reported its financial results for the full year ended December 31, 2005, which are also reflected in the annual report on Form 20-F filed with the Securities and Exchange Commission on July 17, 2006. Revenues from product sales and services were approximately $71.4 million in the year ended December 31, 2005, a 6.9% decrease compared to approximately $76.7 million in the year ended December 31, 2004. The decrease in revenues of $5.3 million is primarily due to a decrease in sales in North and South America and partly due to a decline in sales in Europe. The gross margin in the year ended December 31, 2005 was 27.2% compared to 21.1% in the year ended December 31, 2004. The increase in the gross margin is primarily due to a higher inventory write-off of $9.7 million in the year ended December 31, 2004 (or 12.6% of the total revenues in 2004) compared to the inventory write-off of $2.7 million in the year ended December 31, 2005 (or 3.8% of the total revenues in 2005). In 2005, the effect of the decrease in inventory write-off was offset by the high overhead charges that resulted from lower production activities during the second half of 2005, decrease in revenues-services and the impact of fixed cost components in the form of labor and labor related expenses. Operating loss in the year ended December 31, 2005 was $9.8 million and net loss was $14.7 million, or $0.46 net loss per share. Operating loss and net loss in the year ended December 31, 2004, were $19.3 million and $22 million, respectively, or $0.91 net loss per share. As a result of an infusion of funds by a group of investors led by Fortissimo Capital Fund GP, LP ("Fortissimo") and the restructuring of NUR's outstanding bank debt, NUR's balance sheet as of December 31, 2005 reflects an improvement in NUR's financial strength in comparison to the balance sheet as of December 31, 2004. As previously reported, during the fourth quarter of 2005 NUR secured funding in the amount of $12 million from a group of investors led by Fortissimo through the private placement of ordinary shares, of which $5 million was paid during 2005 and additional $5 million was paid during the first calendar quarter of 2006. The remaining $2 million is expected to be paid by the investors in October 2006. The net effect of the Fortissimo investment on the shareholders' equity as of December 31, 2005 reflects only the first payment of $5 million. In addition, as previously reported, during the third quarter of 2005 NUR entered into a debt restructuring agreement with its lender banks, whereby NUR's outstanding bank debt of approximately $41 million was restructured as follows: $14.5 million was converted into five-year warrants to purchase up to 8,000,000 ordinary shares at an exercise price of $0.35 per ordinary share; $5 million was converted into non-interest bearing three-year subordinated notes, which are payable only on occurrence of certain events of liquidation; and the remaining $22 million was refinanced under new loan agreements. Under the terms of the debt restructuring agreement, NUR also agreed to extend the expiration period of 1,340,000 warrants that were previously issued to its lender banks. The value of the 8,000,000 warrants issued to NUR's lender banks together with the value of the extension of expiration of the previously issued warrants amounted to $4 million, which is recorded as an increase in NUR's additional paid-in capital. Under Statement of Financial Accounting Standard No. 15, "Accounting by Debtors and Creditors for Troubled Debt Restructuring," the balance between (a) the $14.5 converted into 8,000,000 warrants, and (b) the sum of the additional paid-in capital related to the lender banks' warrants, is attributed to NUR's long-term bank debt and is deemed to be accrued interest on the restructured bank debt. Future interest on the restructured debt will be recorded as a reduction to accrued interest and not as an interest expense. As of December 31, 2005, this accrued interest aggregates to $10.4 million. "The restructuring of our bank debt and the Fortissimo investment improved our financial strength," said David Reis, president and chief executive officer of NUR. David Reis continued, "Our outstanding bank debt was reduced by $19.5 million, leaving us with refinanced loans of approximately $22 million; however, our reported bank debt is approximately $38 million due to accounting standards." NUR's concentration in securing additional funding in 2005 resulted in low level of sales and manufacturing activities in the second half of 2005. This slowed activity is reflected in a significant decrease in accounts receivable, inventories and accounts payable in December 31, 2005.