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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 20-F

(MARK ONE)

/ / REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF
THE SECURITIES EXCHANGE ACT OF 1934

/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 0-26498
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NUR MACROPRINTERS LTD.
(Exact Name of Registrant as specified in its charter)

ISRAEL
(Jurisdiction of incorporation or organization)

12 ABBA HILEL SILVER ST.
P.O. BOX 1281, LOD 71111, ISRAEL
(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:
None

Securities registered or to be registered pursuant to Section 12(g) of the Act:

ordinary shares,
NIS 1.0 par value
Title of Class

Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act:

ordinary shares,
NIS 1.0 par value
Title of Class

Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of December 31, 2000:

ordinary shares,
NIS 1.0 par value, 14,497,185 shares
Title of Class Number of Shares

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /

Indicate by check mark which financial statement item the registrant has
elected to follow. Item 17 / / Item 18 /X/

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IN ADDITION TO HISTORICAL INFORMATION, THIS ANNUAL REPORT ON FORM 20-F
CONTAINS FORWARD-LOOKING STATEMENTS. THE FORWARD-LOOKING STATEMENTS CONTAINED
HEREIN ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE REFLECTED IN THE FORWARD-LOOKING
STATEMENTS. FACTORS THAT MIGHT CAUSE SUCH DIFFERENCE INCLUDE, BUT ARE NOT
LIMITED TO, THOSE DISCUSSED IN "ITEM 3: KEY INFORMATION--RISK FACTORS" AND
"ITEM 5: OPERATING AND FINANCIAL REVIEW AND PROSPECTS." READERS ARE CAUTIONED
NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH REFLECT
MANAGEMENT'S ANALYSIS AS OF THE DATE HEREOF. WE UNDERTAKE NO OBLIGATION TO
PUBLICLY REVISE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR
CIRCUMSTANCES THAT ARISE AFTER THE DATE HEREOF. IN ADDITION TO THE DISCLOSURE
CONTAINED HEREIN, READERS SHOULD CAREFULLY REVIEW ANY DISCLOSURE OF RISKS AND
UNCERTAINTIES CONTAINED IN OTHER DOCUMENTS THAT WE FILE FROM TIME TO TIME WITH
THE SECURITIES AND EXCHANGE COMMISSION.

PART I

ITEM 1: IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

Not Applicable.

ITEM 2: OFFER STATISTICS AND EXPECTED TIMETABLE

Not Applicable.

ITEM 3: KEY INFORMATION

Not Applicable except ITEMS 3.A and 3.D, which are detailed below.

SELECTED FINANCIAL DATA

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS OF U.S. DOLLARS EXCEPT PER SHARE AND SHARE DATA)

1996(1) 1997(1) 1998(1) 1999(2) 2000(3)(4)
---------- ---------- ----------- ----------- -----------

Revenues:
Sales of printers and related products......... $ 13,639 $ 18,874 $ 31,905 $ 58,259 $ 121,924
Sales of printed materials..................... 2,998 3,085 4,540 2,460 --
---------- ---------- ----------- ----------- -----------
16,637 21,959 36,445 60,719 121,924
---------- ---------- ----------- ----------- -----------
Cost of revenues:
Cost of sales of printers and related
products..................................... 11,528 9,627 16,368 30,440 64,107
Cost of sales of printed materials............. 2,008 1,684 2,579 1,344 --
---------- ---------- ----------- ----------- -----------
13,536 11,311 18,947 31,784 64,107
---------- ---------- ----------- ----------- -----------
Gross profit................................... 3,101 10,648 17,498 28,935 57,817
---------- ---------- ----------- ----------- -----------
Research and development expenses.............. 1,530 1,726 5,027 5,530 15,077
Less royalty-bearing grants.................... 372 43 818 721 451
---------- ---------- ----------- ----------- -----------
Research and development expenses, net......... 1,158 1,683 4,209 4,809 14,626
---------- ---------- ----------- ----------- -----------
Selling and marketing expenses, net............ 4,823 4,620 6,111 9,485 17,385
General and administrative expenses............ 2,560 3,439 4,802 6,275 12,765
Amortization of goodwill and other intangible
assets resulting from the acquisition of
Salsa Group.................................. 1,452
---------- ---------- ----------- ----------- -----------
Write-off of debts from related parties........ 3,757 -- -- -- --
---------- ---------- ----------- ----------- -----------
11,140 8,059 10,913 15,760 31,602
---------- ---------- ----------- ----------- -----------
Operating income (loss)........................ (9,197) 906 2,376 8,366 11,589
Financial expenses, net........................ (567) (320) (592) (616) (1,423)
Other income (expenses), net................... 76 (8) (20) 176 25
---------- ---------- ----------- ----------- -----------
Income (loss) before taxes on income........... (9,688) 578 1,764 7,926 10,191
Taxes on income................................ 400 67 264 798 1,244
---------- ---------- ----------- ----------- -----------
Income (loss) after taxes on income............ (10,088) 511 1,500 7,128 8,947
Minority interest in earnings of a
subsidiary................................... -- (26) (43) (28) --
Equity in gains (losses) of affiliates,
net(5)....................................... -- -- -- 75 (454)
---------- ---------- ----------- ----------- -----------
Net income (loss).............................. $ (10,088) $ 485 $ 1,457 $ 7,175 $ 8,493
---------- ---------- ----------- ----------- -----------
Basic net earnings (loss) per share............ $ (1.47) $ 0.07 $ 0.13 $ 0.64 $ 0.65
---------- ---------- ----------- ----------- -----------
Diluted net earnings (loss) per share.......... $ (1.47) $ 0.07 $ 0.13 $ 0.56 $ 0.57
========== ========== =========== =========== ===========
Weighted average number of shares used in
computing basic net earnings (loss) per
share........................................ 6,880,000 7,293,640 10,880,000 11,181,137 13,150,110
========== ========== =========== =========== ===========
Weighted average number of shares used in
computing diluted net earnings (loss) per
share........................................ 6,880,000 7,293,640 11,451,389 12,722,600 14,793,327
========== ========== =========== =========== ===========

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(1) Represents financial information for NUR together with our subsidiaries NUR
Media Solutions, NUR America, NUR Europe and NUR Germany.

(2) Represents financial information for NUR together with our subsidiaries NUR
Media Solutions, NUR America, NUR Europe, NUR Shanghai, NUR Asia Pacific and
NUR Germany (first 6 months). We owned 84% of NUR Germany; this subsidiary
was sold during the third quarter of 1999.

(3) Represents financial information for NUR together with our subsidiaries NUR
Media Solutions, NUR America, NUR Europe, NUR Shanghai, NUR Asia Pacific,
Salsa Digital Printers, NUR Hungary Trading and Software Licensing Limited
Liability Company, NUR DO Brazil Ltda., Encre Consumables B.V. and Signtech
Japan.

(4) In July 2000, we purchased substantially all of the assets and assumed
specified liabilities of Salsa Digital, Ltd. and related entities. As part
of the asset purchase transaction, we also acquired all of the outstanding
capital stock of Signtech Japan.

(5) Represents equity in Stillachem and NUR Pro Engineering.

CONSOLIDATED BALANCE SHEET DATA
(IN THOUSANDS U.S. DOLLARS)

1996(1) 1997(1) 1998(1) 1999(2) 2000(3)(4)
-------- -------- -------- -------- ----------

Working capital....................................... $ 690 $ 4,674 $ 5,441 $15,791 $ 55,186
Total assets.......................................... 12,161 13,783 21,995 39,648 120,006
Total liabilities..................................... 10,325 7,998 14,565 21,785 72,081
Total shareholders' equity............................ $ 1,836 $ 5,785 $ 7,430 $17,863 $ 47,925

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(1) Represents financial information for NUR together with our subsidiaries NUR
Media Solutions, NUR America, NUR Europe and NUR Germany.

(4) In July 2000, we purchased substantially all of the assets and assumed
specified liabilities of Salsa Digital, Ltd. and related entities. As part
of the transaction, we also acquired all of the outstanding capital stock of
Signtech Japan.

RISK FACTORS

INVESTING IN OUR SECURITIES IS VERY RISKY. YOU SHOULD BE ABLE TO BEAR A
COMPLETE LOSS OF YOUR INVESTMENT. TO UNDERSTAND THE LEVEL OF RISK, YOU SHOULD
CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS, AS WELL AS THE OTHER INFORMATION
FOUND IN THIS FORM.

WE DEPEND ON A FEW KEY PRODUCTS IN A BUSINESS SUBJECT TO RAPID TECHNOLOGICAL
CHANGE. We are highly dependent upon the sale of our principal products -- the
NUR Blueboard printers, the NUR Fresco printers and the NUR Salsa printers.
Rapid changes in technology, customer preferences and evolving industry
standards increasingly characterize the market for our printers. Our growth and
future financial performance will depend upon our ability to update our current
products and develop and market new products to keep pace with technological
advances in the industry. During 1998, 1999 and 2000, we invested approximately
$5.0 million, $5.5 million and $15.0 million, respectively, in research and
development projects of which, in 1998, $1.95 million was related to the
acquisition of technology that caused a one-time write-off assigned to research
and development and, of which, in 2000, $4.3 million was related to the Salsa
Digital asset purchase transaction that caused a one-time write-off assigned to
research and development. Salsa Digital invested toward research and development
approximately $0.7 million, $1.8 million and $0.6 million in 1998, 1999 and the
first six months of 2000, respectively. Our business could seriously suffer if
we fail to anticipate or respond adequately to changes in technology and
customer preferences, or if our products are delayed in their development or
introduction. We cannot assure you that we will successfully develop any new
products. If our competitors introduce new products, the sales of our existing
products and our financial results could be harmed.

WE MAY NOT BE ABLE TO SUCCESSFULLY MANAGE AND INTEGRATE RECENTLY ACQUIRED
ASSETS FROM SALSA DIGITAL, WHICH COULD INTERRUPT OUR BUSINESS OR HARM OUR
FINANCIAL RESULTS. We acquired substantially all assets and assumed related
liabilities of Salsa Digital, Ltd. and related entities in July 2000. We could
have difficulty in assimilating the acquired business or technologies into our
operations. These difficulties could disrupt our ongoing business, distract our
management and employees, increase our expenses and adversely affect our
financial results.

WE CURRENTLY HAVE NO COMMITMENTS FOR ADDITIONAL FINANCING. We believe our
revenue from operations, capital resources and credit facilities will be enough
to fund our business activities at their current rate. We will need additional
funds, however, if we seek to expand our operations. If we are unable to raise
funds through public or private financing of debt or equity, we will be unable
to increase expenditures that could ultimately hurt our financial results, such
as research and development or production and marketing of our products. The
amount of money we will need depends on numerous factors, including the success
of our marketing and customer service efforts, our research and development
activities and the demand for our products and services. We currently have no
commitments for additional financing. We cannot guarantee that additional
financing will be available or that, if available, will be obtained on terms we
find favorable.

WE DEPEND ON A SINGLE INK AND INK-JET PRINTHEADS SUPPLIER FOR EACH OF OUR
PRINTERS. We currently purchase all of the ink and ink-jet printheads used in
our NUR Blueboard printers from one supplier. We also purchase all of the ink
and ink-jet printheads used in the NUR Fresco printers and the NUR Salsa
printers from single suppliers. If any of these sole suppliers experience
problems that result in production delays, our sales to new customers and
existing customers that rely on our ink and/or ink-jet components to operate
their printers could be hurt. Because the success of our business depends on the
sale of our printers, such a supply problem could have a severe effect on our
financial results. Also, if our sole suppliers reduce or change the credit or
payment terms they extend to us, our business could be harmed.

WE RELY ON SUBCONTRACTORS TO HELP US MANUFACTURE OUR PRODUCTS. We employ a
limited number of unaffiliated subcontractors to manufacture components for our
printers. For example, components for our NUR Salsa printers are manufactured
mainly by an unaffiliated subcontractor. In addition, the assembly of our NUR
Blueboard and NUR Fresco printers is currently conducted by an affiliate of NUR.
Our subcontractors have, in the past, been late in delivering components. We
have, however, been able to obtain adequate supplies of the components and raw
materials necessary to produce our printers and we have not had any serious
problems with our subcontractors. Because we rely on subcontractors, we cannot
be sure that we will be able to maintain an adequate supply of components.
Moreover, we cannot be sure that any of the components we purchase will satisfy
our quality standards and be delivered on time. Our business could suffer if we
fail to maintain our relationships with our subcontractors or fail to develop
alternative sources for our printer components. Also, as our business grows, we
will need to purchase greater quantities of components on a timely basis and any
delay in supply could hurt our sales. We cannot guarantee that we will develop
alternative sources of production for our products.

THE MARKET FOR OUR PRINTERS AND OUR BUSINESS IS VERY COMPETITIVE. The
printing equipment industry is extremely competitive and many of our competitors
have greater management, financial, technical, manufacturing, marketing, sales,
distribution and other resources than we do. We compete against several
companies that market digital printing systems based on electrostatic,
drop-on-demand inkjet, airbrush and other technologies. Some of our principal
competitors in this market include Vutek, Scitex 3M Image Graphics and Raster
Graphics Inc. Our ability to compete depends on factors both within and outside
of our control, including the performance and acceptance of our current printers
and any products we develop in the future. We also face competition from
existing conventional wide-format and super-wide format printing methods,
including hand painting, screen printing and offset printing. Our competitors
could develop new products, with existing or new technology, that could be more
competitive in our market than our printers. We can not assure you that we can
compete effectively with any such products.

WE FACE STRONG COMPETITION IN THE MARKET FOR PRINTING SUPPLIES. We also
compete with independent manufacturers in the market for printer supplies. In
1998, 1999 and 2000, ink sales accounted for 23.6%, 23.13% and 20.0% of our
total sales, respectively. We cannot guarantee that we will be able to remain
the exclusive or even principal ink manufacturer for our printers. We also
operate in the substrate business, which is also highly competitive and
characterized by a large number of suppliers worldwide. We are developing
substrates through subcontractors that we believe have a high added-value when
used with our printers. In 1998, 1999 and 2000 substrate sales accounted for 2%,
12% and 10% of our total sales, respectively. We cannot assure you that we will
be able to compete effectively or achieve significant revenues in the substrate
business.

WE DEPEND ON EREZ SHACHAR, OUR PRESIDENT AND CHIEF EXECUTIVE OFFICER SINCE
1997, AND OTHER KEY EMPLOYEES. Our success depends to a significant extent upon
the contributions of key personnel and our senior executives, especially Erez
Shachar, our President and Chief Executive Officer. Our business could seriously
suffer if one or more of our key personnel or senior executives were to leave
our company. In addition, we do not have, and do not contemplate getting,
"key-man" life insurance for any of our key employees. Our future success will
also depend in part on our continuing ability to retain our key personnel and
senior executives and to attract other highly qualified employees. We cannot
assure our continued success in attracting or retaining highly qualified
personnel.

WE RELY ON TRADE SECRETS, PATENTS AND PROPRIETARY RIGHTS. We rely on a
combination of trade secrets, licenses, patents and non-disclosure and
confidentiality agreements to establish and protect our proprietary rights in
our products. We cannot guarantee that our existing patents or any future
patents will not be challenged, invalidated, or circumvented, or that our
competitors will not independently develop or patent technologies that are
substantially equivalent or superior to our technology. We

cannot be sure that we will receive further patent protection in Israel, the
United States, or elsewhere, for existing or new products or applications. Even
if we do secure further patent protection, we cannot guarantee it will be
effective. Also, although we take precautionary measures to protect our trade
secrets, we cannot guarantee that others will not acquire equivalent trade
secrets or steal our exclusive technology. For example, in some countries,
meaningful patent protection is not available. We are not aware of any
infringement claims against us involving our proprietary rights. Third parties
may assert infringement claims against us in the future, and the cost of
responding to such assertions, regardless of their validity, could be
significant. In addition, such claims could be found to be valid and result in
large judgments against us. Even if such claims are not valid, the cost could be
substantial to protect our patent rights.

WE MAY BE SUBJECT TO ENVIRONMENTAL RELATED LIABILITIES DUE TO OUR USE OF
HAZARDOUS MATERIALS SUCH AS METHYL ETHYL-KETONE SOLVENT. We mix the ink used in
some of our printers with a methyl ethyl-ketone solvent. Methyl ethyl-ketone
solvent is a hazardous substance and is subject to various government
regulations relating to its transfer, handling, packaging, use and disposal. We
store the ink at warehouses in Europe, the United States and Israel, and a
shipping company ships it at our direction. We face potential responsibility for
problems that may arise when we ship the ink to customers. We believe that we
are in material compliance with all applicable environmental laws and
regulations. If we fail to comply with these laws or an accident involving our
ink waste or methyl ethyl-ketone solvent occurs then our business and financial
results could be harmed.

WE RELY ON GOVERNMENT GRANTS, TAX BENEFITS AND OTHER FUNDING FROM THIRD
PARTIES. We have been favorably affected by certain Israeli and Belgian
Government programs and tax legislation principally related to research and
development and sales and marketing grants and capital investment incentives.
Our operations could be adversely affected if these programs or tax benefits are
reduced or eliminated and not replaced with equivalent programs or benefits, or
if our ability to participate in these programs were significantly reduced. We
cannot assure you that such programs and tax legislation will continue in the
future or that the available benefits will not be reduced or that we will
continue to meet the conditions to benefit from such programs and legislation.

WE MUST COMPLY WITH CONDITIONS TO RECEIVE GRANTS AND TAX BENEFITS. To
receive grants and tax benefits under Israeli law, we must comply with a number
of conditions. If we fail to comply with these conditions, the grants and tax
benefits that we receive could be partially or fully canceled and we would be
forced to refund the amount of the canceled benefits received, in whole or in
part, adjusted for inflation and interest. We believe that we have operated and
will continue to operate in compliance with the required conditions, although we
cannot be sure.

POLITICAL INSTABILITY IN ISRAEL MAY DISRUPT OUR MOST IMPORTANT OPERATIONS
AND OUR BUSINESS. Some of our facilities, operations and subcontractors are
located in the State of Israel. Political and military conditions in Israel may
affect our operations. A state of hostility has existed in Israel since it was
established in 1948, varying in degree and intensity, between Israel and certain
Arab countries. Although Israel has entered into agreements with some of these
countries, the Palestine Liberation Organization and the Palestinian Authority,
and the feuding parties have signed various declarations in hopes of resolving
some of the hostilities, we cannot predict the future political situation in
this volatile region. To date, Israel has not entered into a peace treaty with
Lebanon or Syria, with whom Israel shares its northern borders, or with certain
other Arab countries with whom a state of hostility exists. Any major
hostilities involving Israel, the Palestinian Authority, or Arab countries in
the Middle East could have a serious negative impact on our operations. All
nonexempt male adult citizens of Israel, including some of our officers and
employees, are obligated to perform military reserve duty and are subject to
being called for active duty under emergency circumstances. We cannot predict
the full impact of such conditions on us in the future, particularly if
emergency circumstances occur. If many of

our employees are called for active duty, our operations in Israel may be slowed
and our business may be harmed.

YOU MAY HAVE DIFFICULTY ENFORCING U.S. JUDGMENTS AGAINST US IN ISRAEL. We
are organized under the laws of Israel and our headquarters are in Israel. Most
of our officers and directors reside outside of the United States. Therefore,
you may not be able to enforce any judgment obtained in the U.S. against us or
any of such persons. You may not be able to enforce civil actions under U.S.
securities laws if you file a lawsuit in Israel. However, we have been advised
by our Israeli counsel that subject to certain limitations, Israeli courts may
enforce a final judgment of a U.S. court for liquidated amounts in civil matters
after a hearing in Israel. If a foreign judgment is enforced by an Israeli
court, it will be payable in Israeli currency.

OUR OPERATING RESULTS FLUCTUATE FROM PERIOD-TO-PERIOD. The results of our
operations for any quarter are not necessarily indicative of results to be
expected in future periods. Our operating results have in the past been, and
will continue to be, subject to quarterly fluctuations as a result of factors
such as the integration of people, operations and products from acquired
businesses and/or technologies, increased competition in the printing equipment
industry, the introduction and market acceptance of new technologies and
standards, changes in general economic conditions and changes in economic
conditions specific to our industry. Further, our revenues may vary
significantly from quarter to quarter as a result of, among other factors, the
timing of new product announcements and releases by our competitors and us. We
do not typically have a material backlog of orders at the beginning of each
quarter. We generally ship and record a significant portion of our revenues for
orders placed within the same quarter, primarily in the last month of the
quarter. We may not learn of shortfalls in sales until late in, or shortly after
the end of, such fiscal period. As a result, our quarterly earnings may be
subject to significant variations.

OUR BUSINESS IS SUBJECT TO RISKS FROM INTERNATIONAL OPERATIONS. We conduct
business globally. Accordingly, our future results could be materially adversely
affected by a variety of uncontrollable and changing factors including, among
others, foreign currency exchange rates; regulatory, political, or economic
conditions in a specific country or region; trade protection measures and other
regulatory requirements; business and government spending patterns; and natural
disasters. Any or all of these factors could have a material adverse impact on
our future international business.

CURRENCY FLUCTUATIONS ARE A RISK WE FACE ON A DAILY BASIS. Because we
generate revenues and expenses in various currencies, including the U.S. dollar,
the NIS and certain European currencies, our financial results are subject to
the effects of fluctuations of currency exchange rates. We cannot predict,
however, when exchange or price controls or other restrictions on the conversion
of foreign currencies could impact our business. Currency fluctuations could
hurt our profitability.

OUR STOCK PRICE MAY BE VOLATILE. Our ordinary shares have experienced
substantial price volatility, particularly as a result of variations between our
actual or anticipated financial results, the published expectations of analysts,
and as a result of announcements by our competitors and us. In addition, the
stock market has experienced extreme price and volume fluctuations that have
affected the market price of many technology and manufacturing companies, in
particular, and that have often been unrelated to the operating performance of
these companies. These factors, as well as general economic and political
conditions, may materially adversely affect the market price of our ordinary
shares in the future. Additionally, volatility or a lack of positive performance
in our stock price may adversely affect our ability to retain key employees, all
of whom have been granted stock options.

ITEM 4: INFORMATION ON NUR

HISTORY AND DEVELOPMENT OF NUR

The company's legal and commercial name is NUR Macroprinters Ltd. The main
office is located at 12 Abba Hilel Silver St., P.O. Box 1281, Lod 71111, Israel.
The telephone number is (011) 972-8-914-5555. NUR's registered agent in the
United States is CT Corporation System located at 1633 Broadway, New York, New
York 10019.

NUR was incorporated as an Israeli corporation on July 29, 1987 and our
corporate governance is controlled by the Israeli Companies Law. Our ordinary
shares have been traded on the Nasdaq National Market since October 1995 and are
currently traded under the symbol "NURM." NUR is a leading supplier of wide
format and super wide format digital printing systems worldwide.

In September 1998, we purchased certain piezo drop-on-demand technology from
Meital Technologies Ltd. We purchased Meital's technology for an aggregate
amount of $3.0 million. The Meital acquisition resulted in the recognition by us
of a one-time charge involving a write-off of technology assigned to research
and development of $1.95 million in the third quarter of 1998. As part of the
purchase price, NUR has paid to Meital $0.75 million to date and has future
royalty obligations of up to $0.55 million which have been provided for. If the
provision amount of $0.55 million is not paid, Meital has the option to buy back
the technology in the aggregate amount of royalties paid by us. We intend to pay
such amounts in 2001.

In September 1999, we sold our 84% interest in M.NUR Marketing &
Communications GmbH, (NUR Germany). This subsidiary engaged in the printing of
super wide format digital graphics.

In October 1999, we established NUR Pro Engineering Ltd., a joint venture in
which we hold 50%. We manufacture and assemble the NUR Blueboard printers and
NUR Fresco printers through NUR Pro Engineering.

In July 2000, we acquired substantially all assets and assumed specified
liabilities of Salsa Digital, Ltd. and related entities, previously one of our
competitors in the digital printing market. Under the terms of our agreement, we
acquired the assets for $30 million, which consisted of $20 million in cash and
666,667 ordinary shares valued at approximately $10 million, based upon the
closing price of the ordinary shares on the Nasdaq National Market on May 15,
2000. In 1997, 1998 and 1999, the business we acquired from Salsa Digital had
revenues of $13 million, $25 million and $33 million, respectively, compared
with our revenues during the same periods of $22 million, $36 million and
$61 million.

In December 2000, we relocated our main facilities in Israel to a high-tech
industrial zone in Lod, Israel to a building consisting of approximately 50,000
square feet. We use this facility as our headquarters and for research and
development. We have invested a total of approximately $2 million in building
out these facilities. The initial five-year lease of the Lod facility, which
commenced November 20, 2000, provides for monthly rent of approximately $63,000.
The lease agreement grants NUR an option to continue the lease term for two
consecutive periods of 2.5 years.

In April 2001, NUR announced and commenced implementation of a restructuring
plan, in order to align its cost structure to more conservative growth rates.
The restructuring actions are primarily related to the reorganization of
operating activities, such as the centralization of certain manufacturing
operations, the relocation of activities, a reduction in workforce and a
reduction in other administrative costs. The restructuring costs accrued for in
the first quarter of 2001 were $2,500,000. In addition, NUR incurred one-time
inventory write-offs of approximately $4 million. NUR associates the inventory
write-offs with more efficient product rationalization.

For a historical view of our financing activities, including capital
expenditures and divestitures, please refer to "ITEM 5: Operating and Financial
Review and Prospects."

BUSINESS OVERVIEW

NUR Macroprinters Ltd. is a leading supplier of wide format and super wide
format digital printing systems worldwide. We develop, manufacture, sell and
service digital color printers for the printing of large images such as
billboards, posters and banners, point of purchase displays, exhibition and
trade show displays as well as decorations and backdrops for construction
scaffolding covers, showrooms, television and film studios, museums and
exhibits. We also supply our customers with inks and solvents for use with our
printers and print substrates for use with all brands of wide and super wide
format digital printers.

In July 2000, we purchased substantially all of the assets and assumed
certain liabilities of Salsa Digital, Ltd. and related entities, previously one
of our competitors in the digital printing market. As part of this asset
purchase transaction, we acquired the rights to manufacture and sell their line
of printers--the NUR Salsa-TM- printers. These printers complement the NUR line
of products by offering a full range of entry level printers.

The newly integrated company consists of three research and development
centers, including facilities for research and development of printing equipment
in Lod, Israel and San Antonio, TX (USA), and a facility for the development of
inks in Charleroi, Belgium. We have worldwide marketing, sales and service
subsidiaries in Europe, North America, Brazil and the Asia Pacific regions.

Our super wide products are headed by the NUR Blueboard-TM- family of super
wide format printers. The NUR Blueboard-TM- printer, a second generation of
super wide format printers, was introduced by NUR in early 1997. The Blueboard
printer can print on substrates of variable widths from 0.9 to 5.0 meters
(approximately 3 to 16.4 feet). The Blueboard printer is based on continuous
inkjet digital printing technology and is designed for high throughput, high
print quality, reliability and ease of use.

In April 1998, we introduced a faster version of the Blueboard printer, the
Blueboard 2-TM-, in response to demand from its customers for increased
productivity. In February 1999, we introduced the Blueboard HiQ-TM-, which
produces higher quality prints with higher resolution than the Blueboard and the
Blueboard 2 printers. In April 2000, we introduced the latest version of the
Blueboard printers,--the NUR Blueboard HIQ+-TM-. The NUR Blueboard HIQ+ offers
two optional packages for multiple roll printing or double-sided printing for
outdoor backlight applications and a digital calibration system providing for
ease of use. The NUR Salsa 5000-TM- is also a cost-effective super wide digital
printer. The NUR Salsa 5000 offers production flexibility by allowing for both
super wide print jobs (up to 5 meters or approximately 16 feet) and wide format
jobs. Its piezo drop-on-demand technology provides the photorealistic printing
quality needed for both super wide and wide jobs that require up-close viewing.

Our wide format printers are headed by the NUR Fresco-TM- printer, which was
commercially released in February 2000. The NUR Fresco is a new printing system,
targeted at the wide format screen printing environment and capable of printing
on substrates of variable widths up to 1.83 meters (approximately 6 feet). The
NUR Fresco is the first of our printers to use drop-on-demand technology
involving the intermittent firing of ink drops when needed on the substrate
while the printing head travels across the substrate. We also offer NUR Salsa
wide format printers. The NUR Salsa wide format digital printers include the NUR
Salsa line of 32-head, piezo technology digital printing systems. These systems
are capable of printing on variable widths from 1.5 to 3.2 meters (approximately
5 to 10 feet).

The NUR Blueboard printers, the NUR Fresco and the NUR Salsa printers are
sometimes referred to collectively herein as the "Company's Printers."

We also sell specialized inks and substrates for use with the Company's
Printers. The inks sold by NUR to our customers for use with the NUR Blueboard,
NUR Fresco and NUR Salsa printers are resistant to water and ultraviolet rays
and are well suited for indoor and outdoor use without

lamination. The substrates we sell to our customers are also suitable for indoor
and outdoor use and are made of vinyl, PVC and various textiles.

We sell our printers and related products primarily to commercial printers,
design and service firms, screen printers, outdoor media companies and trade
shops. The Company's Printers are installed in more than 600 sites throughout
Europe, North and South America, Africa and Asia.

INDUSTRY BACKGROUND

The market for printed applications requiring wide format and super wide
format printing has expanded during the last few years. Wide format and super
wide format printing applications include billboards, posters and banners;
special event and trade show displays; point of purchase displays; fleet
graphics; decorations and backdrops. For example, the retail, automotive,
restaurant, travel and gasoline industries use outdoor advertising to promote
their products in numerous locations including roadside billboards and posters
displayed on streets and buildings, as well as the outside of buses, vans,
trucks and trains, so-called vehicular graphics. Wide format and super wide
format prints can also be found in theaters as stage decorations, in museums and
exhibitions as backdrops or displays and on construction sites as building site
coverings. Prior to the introduction of digital printing systems, wide format
and super wide format short-run prints were produced either by hand painting,
which is relatively slow and expensive, and produces lesser quality images, or
by screen or offset printing, both of which are relatively expensive and time
consuming processes.

With the cost of digital printing expected to decrease and the ability of
digital technology expected to produce shorter runs more economically, we
believe that the use of wide format and super wide format prints, such as those
produced by the Company's Printers, should grow, and that the portion of the
market serviced by digital printing will continue to increase. The ability to
produce wide format and super wide format images digitally has also opened new
media opportunities for advertisers, such as mural printing, carpet printing and
new forms of fleet graphics printing. The growth in demand for wide format and
super wide format digital printers is fueled by both the replacement of
conventional print methods and the development of new printing applications.

TRADITIONAL WIDE FORMAT AND SUPER WIDE FORMAT PRINTING METHODS

Conventional methods of wide format and super wide format printing have
included hand painting, screen printing and offset printing. Generally,
producing wide format and super wide format color prints by traditional methods
in relatively short runs from a few copies to a few hundred copies, depending on
the application, has either been relatively slow and expensive or of limited
quality. Because of the inherent limitations of the traditional wide format and
super wide format printing methods, quality wide format and super wide format
prints produced by these methods are generally limited to long runs of identical
prints, designed and prepared well in advance or, in the case of hand painting,
to single print applications. As a result, traditional methods of producing wide
format and super wide format prints have not provided timely and economic
solutions for the needs of the short run printing market.

HAND PAINTING. Hand painting involves either the projection of an image
onto a substrate, which is then drawn onto the substrate and subsequently
painted by hand, or the spraying of paint onto material covered by a template
that has been cut to the desired shape. The process of hand painting is an
alternative mainly in developing countries where labor costs are significantly
lower and where the significantly lower image quality is tolerated by the local
market.

SCREEN PRINTING. The screen printing process is distinguished by its
ability to print finely detailed images on practically any surface, including
paper, plastics, metals and three-dimensional surfaces. However, the process
requires significant set-up time and materials cost before the image can be sent
to press. This cost constrains the minimum number of copies the screen printer
can produce

economically. As screen-printing is a highly labor-intensive process; it is best
suited for run lengths between 20 to 400 copies. Hence, this market is a clear
target in which we believe our digital printers can be highly competitive.

OFFSET PRINTING. Offset color printing generally produces very high quality
images compared to hand painting or screen printing. However, because of the
complex steps involved in offset color printing, each printing job, whether
small or large, involves substantial setup time and costs. In addition, much
like hand painting and screen printing, alterations and customizations are not
economically feasible unless the entire offset color printing process is
repeated. Another drawback is that the variety of substrate materials and widths
suitable for use with offset printing machinery is limited. In general, offset
color printing is best suited for long print runs.

WIDE FORMAT AND SUPER WIDE FORMAT DIGITAL PRINTING

The introduction of digital printing is aiding in the transformation of the
wide format and super wide format printing industry by lowering setup costs,
shortening turnaround time and reducing labor requirements. We believe that the
availability of wide format and super wide format digital printing should lead
to an increase in demand for limited runs for customized and localized
advertising campaigns. In addition, we believe that single use applications,
such as the use of banners, displays and backdrops for trade shows, theme parks,
entertainment and special events, should become more popular. We believe that
the market for wide format and super wide format printing should increase as
current applications gain market acceptance and as new applications are
developed.

Digital printing involves the production of hard-copy images and text from
digital data that is either generated on a computer at the printing site or
originated by a customer on the customer's computer system. The digital data is
then transferred directly from an electronic pre-press or desktop publishing
system to the digital printer. There are currently several digital printing
technologies available, including electrostatic, airbrush, drop-on-demand,
thermal transfer and continuous inkjet printing.

ELECTROSTATIC PRINTING. Electrostatic printing is a non-impact printing
technique that employs an array of metal styli, selectively pulsed to a high
potential to generate a charged latent image on dielectric-coated paper, which
is then toned to develop the latent image into a visible image. The achievable
printing resolution is up to 400 dots per square inch. The main drawback of the
technology is the need for special and expensive substrates and toners. This
requirement inflates the cost of consumables considerably.

THERMAL TRANSFER PRINTING. Thermal transfer printing is a contact printing
technology that employs arrays of heated needles and pressure to melt and
transfer wax based inks from a carrier roll onto a restricted variety of
substrates. Like electrostatic printing, thermal transfer printing requires
relatively expensive consumables.

AIRBRUSH PRINTING. Airbrush printing is accomplished by forcing a low
viscosity colored fluid through small aperture nozzles, thus creating a spray
jet. Computer driven modulation of the spray jets deposits an image-wise colored
layer deposited onto the substrate. The strongest feature of airbrush technology
is the printer's ability to cover large areas with uniform color. One
manufacturer of airbrush printers produces a printer that can also print on both
sides of a poster at the same time, which is important for signs that are
rear-illuminated.

PIEZO CONTINUOUS INKJET PRINTING. Continuous inkjet printing technology
involves the continuous flow of electrically conductive ink within a closed loop
that is deflected to a specific location on a sheet of paper or other medium.
The ink is separated into uniform micro-drops and the micro-drops are
electronically directed to be printed onto a selected area of the medium.
Continuous inkjet printing technology allows for high speed printing and
produces images with good resolutions sufficient for

viewing from distances of beyond five feet. Continuous inkjet printers also
produce multiple copies with consistent color quality, unlike airbrush printers.
The cost of equipment using continuous inkjet printing technology is relatively
high in comparison to printers using electrostatic technology. However, the cost
of the output produced with continuous inkjet printers is lower than that of
electrostatic printers. Although the printer and printing costs of continuous
inkjet printing and airbrush technology are comparable, continuous inkjet
printers produce higher quality prints at higher speeds and with more consistent
color. NUR's Blueboard printers all use piezo continuous inkjet printing
technology.

PIEZO DROP-ON-DEMAND INKJET PRINTING. Drop-on-demand technology involves
the intermittent firing of ink drops when needed on the substrate. It provides
high resolution and enables use of a variety of inks, for home, office and
industrial use. In September 1998, we acquired from Meital Technologies Ltd. all
rights (including all related assets) to Meital's piezo drop-on-demand inkjet
technologies for application in wide format digital printers. To address the
needs of the wide format market for higher resolution images for use with
shorter viewing distances, we utilize drop-on-demand technology in the NUR
Fresco printer.

While drop-on-demand is still a relatively new and evolving technology,
continuous inkjet printing is a well-established and reliable technology.
Drop-on-demand technology was primarily developed for office use and is
characterized by a relatively higher resolution and a selected range of
substrates while continuous inkjet printing technology was developed mainly for
use in industrial applications and therefore, shows a more uniform and stable
color output, including the ability to print on a wide selection of substrates.

We believe that our NUR Blueboard printers are currently the only
commercially available super wide format digital printers using piezo continuous
inkjet technology. Although not the only drop-on-demand printer available for
the wide format market, we believe that the NUR Fresco's productivity makes it
particularly attractive to screen printers. Our NUR Salsa printers complement
our product line by offering a full-range of printers at entry level prices. We
believe that the Company's Printers have been designed and engineered to fit the
overall needs of their respective wide format and super wide format printing
markets.

NUR's strategy is to:

- strengthen our position as a world leader in the wide format and super
wide format digital printing markets by supplying the most productive and
cost-effective wide format and super wide format digital printers and
totally digitally-based printing solutions for the out-of-home advertising
market;

- replace a significant portion of existing large format screen printers
with our large format digital inkjet printers;

- be our customers' vendor of choice for all of their ink and substrate
needs;

- enable our customers to develop new ways to profit from our printing
systems; and

- provide our customers with highly responsive and capable support, service
and supplies.

PRODUCTS

NUR's revenues are derived primarily from the sale and service of the
Company's Printers and the sale of consumables used with the Company's Printers.
The consumables consist primarily of ink and substrates. See "ITEM 5: Operating
and Financial Review and Prospects--Geographic Breakdown of Revenues" for more
information on the breakdown of revenues by category of activity and into
geographic markets.

PRINTERS

SUPER WIDE FORMAT DIGITAL PRINTERS

Since the beginning of 1997, NUR has been marketing and selling the NUR
Blueboard printer, a second-generation super wide format printer that is capable
of producing prints of up to 5 meters in width with practically no limit on the
length of the print. The NUR Blueboard is designed for high throughput, high
print quality, reliability and ease of use. When wider widths of prints are
required, the NUR Blueboard printer, as is the case with the other Company's
Printers, creates a print layout in sections that, when seamed and placed
together, create a continuous image due to the NUR Blueboard printer's high
level of color consistency and accuracy.

In April 1998, we introduced a faster version of the NUR Blueboard printer,
the NUR Blueboard 2 printer, in response to demand in the super wide format
printing industry for increased productivity. In February 1999, we introduced
the NUR Blueboard HiQ as part of the NUR Blueboard family of products, with ever
higher print quality and higher resolution than the existing NUR Blueboard
printers. In April 2000, we introduced the latest of the NUR Blueboard
printers--the NUR Blueboard HIQ+. The NUR Blueboard HIQ+ offers a digital
calibration system that provides ease of use and two optional packages for
multiple roll printing or double-sided printing for outdoor backlight
applications. The NUR Blueboard HiQ and HIQ+ are available both as an upgrade to
existing NUR Blueboard printers and as new products delivered from the
manufacturer.

The NUR Blueboard printers are all based on piezo continuous inkjet
technology, which is particular suitable for the super wide format market due to
our outdoor durable inks, color consistency, high reliability and adaptability
for use with a variety of substrate materials including vinyl, carpet, canvas,
tarpaulin and mesh. The NUR Blueboard printers accept a wide variety of rolled
substrates, differing in types and sizes, with a new design feeding mechanism
that allows for ease of loading and unloading of substrate rolls weighing 330
pounds or more. The NUR Blueboard printers are unique in that they are able to
print at their respective top speeds (up to 320 square feet per hour for the NUR
Blueboard and up to 650 square feet per hour for the NUR Blueboard 2, and the
NUR Blueboard HiQ and HiQ+) while printing at their respective highest visual
resolutions (70 dots per square inch for the NUR Blueboard and NUR Blueboard 2
and 150 dots per square inch for the NUR Blueboard HiQ and HiQ+). They print
directly from digital data, using no printing plates. The NUR Blueboard
printers' software accepts many popular types of image formats and images with
various resolutions and converts them automatically for printing. In addition,
the NUR Blueboard printers' software can be connected to any communication
configuration supported by the operating system, which enables smooth
integration of the printers in the pre-press environment for higher
productivity. The NUR Blueboard printers' operating software is based on
Microsoft Corporation's Windows NT multitasking operating system which enables
printing while preparing the next job for print. The software has sophisticated
color correction tables that enable the printers to match color output according
to substrate characteristics.

The NUR Blueboard printers are marketed primarily to commercial printers,
design and service firms, screen printers, outdoor media companies and trade
shops for shorter run, wide format and super wide format printing. Our NUR
Blueboard printers reproduce images with visual resolutions of 70-150 dots per
square inch, which allows for superior viewing from distances of 5-10 feet or
more, depending on the image file resolution. The NUR Blueboard printers are
capable of producing millions of distinctive colors. Thanks to the constant ink
monitoring and control built into its continuous inkjet printing technology, the
NUR Blueboard printers achieve a high level of color consistency for copies
printed at different times and under different environmental conditions in the
shop. Generally, depending upon the required print resolution, the NUR Blueboard
printer operates at speeds of up to 320 square feet per hour. The NUR Blueboard
2, the NUR Blueboard HiQ and the NUR Blueboard HIQ+ operate at speeds of up to
650 square feet per hour.

The NUR Salsa 5000 is a cost-effective super wide digital printer. NUR Salsa
5000 offers production flexibility by allowing for both super wide print jobs
(up to 5 meters or approximately 16 feet wide) and wide format jobs. Its piezo
drop-on-demand technology provides the photorealistic printing quality needed
for both super wide and wide jobs that require up-close viewing. We believe the
NUR Salsa 5000 complements our product line, by offering a cost-effective super
wide format, photo realistic digital printer at entry level prices.

WIDE FORMAT DIGITAL PRINTERS

Our NUR Fresco 1800 printer, commercially released in February 2000, was
first introduced in February 1999. In August 1999, we began an extensive beta
testing program with the NUR Fresco 1800 printer, which included installation in
beta sites throughout the world and testing the machine in real time
environment.

The NUR Fresco printer is a digital production press specifically aimed at
the wide format market. Offering throughput of up to 900 square feet per hour,
we believe that the NUR Fresco printer offers a digital alternative to screen
printing for short to medium length prints, eliminating the high set up cost
associated with films and screen preparation costs which are the basis of screen
printing. With emphasis on ease of use and operational flexibility, the NUR
Fresco printer is designed to fit any workflow, whether of a digital printing or
of screen printing. The NUR Fresco printer produces full color images from up to
1.8 meters (or approximately 6 feet) wide with virtually no length limitations
on a wide variety of substrates at a resolution of up to 360 dots per square
inch.

The NUR Fresco printer is suitable for a wide range of applications such as
point of purchase displays, indoor and outdoor banners, bus shelters, fleet
graphics displays, shopping mall displays and more. Operating both in roll to
roll and roll to sheet modes, the NUR Fresco printer offers operational
flexibility to choose the handling method suitable for each job. The NUR
Fresco's small foot print is made possible due to a built-in drying system that
produces a fully dry and ready to use print, in any print speed. The built-in
drying system is based on state-of-the-art control mechanism. The NUR Fresco
printer accepts most popular graphics file format, offering full integration to
the already existing processes of the printing business. The NUR Fresco printer
is designed for ease of use and can be run by one operator.

The Fresco media program is developed by NUR in tandem with leading
substrate manufacturers in the market to offer NUR Fresco users variety of media
choice suitable for all types of applications range and price range. By
developing this open media system NUR Fresco printer offers low operating costs
without binding the user to a specific provider of expensive consumables.

We believe the NUR Fresco printer complements the our product line by
expanding the Company's Printers coverage into a more complete and full range of
indoor and outdoor wide format and super wide format application graphics.

The NUR Salsa wide format printers include the NUR Salsa line of 32-head,
piezo technology digital printing systems. Various NUR Salsa models print up to
eight colors at up to 600 dots per square inch, in print widths of 5 feet, 8
feet and 10 feet, offering production, enhanced photo realistic and photo high
quality modes of operation. With speeds up to 40 square meters (or approximately
410 square feet) per hour for commercial output, the NUR Salsa series makes both
one-offs and short-run jobs profitable. This series of printers uses low-cost
consumables and prints on a wide selection of substrates, ensuring low operating
costs. We believe the NUR Salsa series complements our product line, by offering
a full a range of cost-effective wide format, photo realistic digital printers
at entry level prices.

The Company's Printers can be operated in a standalone mode or in
conjunction with pre-press and desktop publishing systems. When configured with
a pre-press system, the pre-press workstation prepares the digital file
containing the specifications for the output to be produced. The Company's
Printers require little operator supervision, enabling one operator to run
several machines at once.

While an operator must be specifically trained in the operation of a printer, no
special color mixing skills are required unlike conventional methods such as
offset printing.

The Company's Printers can significantly reduce the setup costs associated
with each print job, the skill level of the personnel required and the number of
skilled personnel required as compared to traditional methods of wide format and
super wide format printing. These advantages make wide format and super wide
format short-run color printing significantly more economical than conventional
printing methods. Additionally, the relatively quick turnaround for the printed
product enables the Company's Printers to produce more output in a given period,
thereby lowering the costs of labor per print.

Unlike hand painting, screen or offset printing, the layout can be viewed
through the pre-press workstation prior to printing, permitting last minute
fine-tuning. By running a single copy of the print, corrections of text,
enhancements of images, and additions of color can all be accomplished with
minimal time, effort and cost. Additionally, since the format can readily be
changed, the Company's Printers allow the end-user to make each print in the run
different, with little time, effort, or additional cost. For example, if so
desired, different languages, graphics and text can be added to each print in a
run.

During the years ended December 31, 1998, 1999 and 2000, sales of the
Company's Printers accounted for approximately 52%, 55% and 65%, respectively,
of NUR's total consolidated sales. Sales of spare parts used in the Company's
Printers accounted for approximately 4.6%, 2.4% and 2.3% of total sales in the
years ended December 31, 1998, 1999 and 2000, respectively. Currently, the
retail prices of the Company's Printers generally range from $169,000 to
$499,000 per machine.

CONSUMABLES

NUR sells consumables (inks and printing substrates) primarily to the users
of the Company's Printers.

INKS

The NUR Blueboard printers use specialized solvent-based pigmented ink
designed for the needs of the super wide format market. The ink is resistant to
water and ultraviolet rays, making it fairly durable and thus well suited for
outdoor conditions. The Company's Printers, through the utilization of the ink,
can print on almost an unlimited variety of substrates, including numerous types
of paper, vinyl, cloth, textiles, mesh and metals. The ink enables the output of
the Company's Printers to be used both for indoor and outdoor advertising.
During the years ended December 31, 1998, 1999 and 2000, sales of the ink
accounted for approximately 23.6%, 23.1% and 20.0%, respectively, of NUR's total
sales.

This ink used by the Blueboard printers, was developed with our
participation by Imaje S.A., a French ink manufacturer, specifically for use in
the Company's Printers. We have an exclusive distribution and manufacturing
agreement with Imaje for the use of the ink in the super wide format printers.
We have an exclusive distribution agreement for the ink with Imaje. The
agreement between NUR and Imaje calls for mutual exclusivity to be kept for as
long as both parties abide by the agreement.

The NUR Fresco printers and NUR Salsa series use specialized solvent-based
pigmented ink designed for the needs of the wide format market and suited for
drop-on-demand technology printers. It also is highly resistant to water and UV
and imparts more vibrant colors in the images printed using the NUR Fresco or
NUR Salsa printers.

Inks for the NUR Fresco printers are manufactured by Stillachem, a wholly
owned subsidiary of NUR, and are sold to the customers by our sale, marketing
and service subsidiaries. Stillachem focuses on the development and manufacture
of specialized inks for drop-on-demand digital printing systems and inks for
other digital printers, including clear-coat varnishes for wide format and super
wide format

printers. In August 1999, shortly after its incorporation, Stillachem acquired
from Techno-Ink Manufacturing Pty. Ltd., a South African based company involved
in the manufacture of digital production inks, certain know-how and equipment
required for the manufacture of digital inks and ink related products.

Inks for the NUR Salsa printers are developed and manufactured by our wholly
owned subsidiary Salsa Digital Printers in San Antonio, TX (USA) and are sold to
customers by our sales, marketing and service subsidiaries.

SUBSTRATES

As of June 1998, NUR also began supplying, through our wholly owned
subsidiary in Belgium, NUR Media Solutions, specialized substrates designed to
work with the Company's Printers and our ink. NUR sells substrates under the NUR
brand name that are manufactured by several different suppliers for us. The
substrates are made of vinyl, PVC, paper and mesh and are suited for indoor and
outdoor use. The substrates are distributed worldwide by our sales and service
subsidiaries. All NUR-branded materials are manufactured exclusively for NUR
Media Solutions.

NUR Media Solutions, with other leading manufacturers, introduced the Fresco
media program, which offers users of the NUR Fresco specially endorsed
substrates. These are tested to work with the NUR Fresco and the NUR Fresco ink
for a total printing solution that provides a high quality performance,
reliability and durability

SALES AND MARKETING

We distribute and sell our products through the following wholly owned
subsidiaries: NUR Europe (including the Middle East & Africa division), NUR
America, NUR Asia Pacific, NUR Shanghai, NUR DO Brazil Ltda. and Signtech Japan.

In July 2000, we purchased substantially all of the assets and specified
liabilities of Salsa Digital, Ltd. and related entities, previously one of our
competitors in the digital printing market. We have fully integrated the former
Salsa Digital sales and marketing force into our own existing and recently
formed marketing, sales and service subsidiaries in Europe, North America,
Brazil and the Asia Pacific regions. Our marketing activities include
participating in relevant tradeshows worldwide, advertising in trade
publications, marketing directly to a target base, as well as publishing our own
newsletters, participating in services and industry forums and maintaining an
internet site.

Through NUR Media Solutions, we are working to develop and market a wide
range of advanced consumables for our wide format and super wide format
printers. Included in such consumables are our specialized substrates, which are
designed to work with our existing range of printers and inks. These consumables
are distributed worldwide by our sales and service organizations.

The Israeli Government, through the Fund for the Encouragement of Marketing
Activities of the Ministry of Industry and Trade, awards participation grants
for marketing expenses incurred overseas. In 1998, 1999 and 2000, we received
$0.11 million, $0.13 million and $0.14 million, respectively, for the promotion
of our exportation of our printers. NUR is obligated to pay a royalty of 3-4% of
the export added value to the Marketing Fund until 100% of the grants have been
repaid. The value of the grants received (including grants received in previous
years) are linked to the U.S. dollar. As of December 31, 2000, we had made
royalty payments in respect of such grants to the Marketing Fund totaling
approximately $0.18 million.

PRODUCTION AND SOURCES OF SUPPLY

Until September 1999, NUR manufactured and assembled the NUR Blueboard
printers through a subcontractor. As of October 1999, NUR began manufacturing
and assembling the NUR Blueboard printers through NUR Pro Engineering, a 50%
owned affiliate of NUR. The NUR Fresco printer is also manufactured through NUR
Pro Engineering. Full system integration and acceptance and quality

control testing of the printers are conducted by us at an NUR Pro Engineering
facility located near our operations in Israel. Product quality control tests
and inspections are performed at various steps throughout the manufacturing
process, and each product is subjected to a final test prior to delivery.

We believe that, to meet increases in sales, we can expand NUR Pro
Engineering's production capabilities or engage subcontractors to carry out
certain of the manufacturing or the assembly of our printers. NUR supplies NUR
Pro Engineering with the inkjet heads used in the NUR Blueboard printers, which
we acquire from Imaje, the sole manufacturer and supplier of these components.
With the NUR Fresco printer, most of the components are available from several
sources; however, the drop-on-demand inkjet printheads used in the NUR Fresco
printer, are currently purchased exclusively from Modular Ink Technology, a
Swedish company. We have contracted with Modular Ink Technology to ensure the
supply of printheads, though this company is our sole supplier. The NUR Salsa
line of printers is assembled by our wholly owned subsidiary Salsa Digital
Printers. Frames for the NUR Salsa printers are manufactured, primarily, by an
unaffiliated subcontractor, Acradigital Corp., and the inkjet printheads for the
NUR Salsa are purchased exclusively from Modular Ink Technology.

To date, we have been able to obtain adequate supplies of the components and
raw materials necessary to produce our printers and have not had any serious
problems with our subcontractors. As our business grows, however, we will need
to purchase greater quantities of components on a timely basis. Any delay in
supply could ultimately hurt our business.

As of June 1998, NUR also began supplying, through our wholly owned
subsidiary in Belgium, NUR Media Solutions, specialized substrates designed to
work with the Company's Printers and our ink. NUR sells substrates under the NUR
brand name that are manufactured by several different suppliers for us. The
substrates are made of vinyl, PVC, paper and mesh and are suited for indoor and
outdoor use. To date, we have not experienced any material supply problems with
the substrates.

SERVICE AND SUPPORT

Installation, post sale support and warranty services of our products, are
provided by NUR America, NUR Europe, (including the Middle East & Africa
division), NUR Asia Pacific, NUR Shanghai, NUR DO Brazil Ltda. and Signtech
Japan. In most cases, our warranty to our direct customers and distributors
covers defects in the Company's Printers for a period of six months after
installation. And, in most cases, NUR has a parallel warranty from our
subcontractors or from their suppliers with respect to most of the components
covered by our warranty. NUR is also committed to maintaining sufficient spare
parts and materials necessary for the operation of the Company's Printers for a
period of five years after the manufacturing date of the last NUR printer.

RESEARCH AND DEVELOPMENT

NUR's research and development efforts, which currently engage approximately
80 employees, are focused on developing new products and technologies, enhancing
the quality and performance relative to price of our existing products, reducing
manufacturing costs, upgrading and expanding our product line through the
development of additional features and improving functionality in response to
market demand.

We have three research and development facilities, including a facility
located at our headquarters in Lod, Israel, a facility located in San Antonio,
TX (USA) and another smaller facility in Charleroi, Belgium.

Total research and development expenses, before royalty bearing grants, were
approximately $5.03 million, $5.53 million and $15 million in the years ended
December 31, 1998, 1999 and 2000, respectively. In the year ended December 31,
1998, $1.95 million of these expenses were related to the acquisition of
technology from Meital Technologies Ltd., resulting in a one-time write-off of
technology assigned to research and development. In the year ended December 31,
2000, $4.3 million of these

expenses were due to a one-time write-off of in-process research and development
related to the Salsa Digital asset purchase transaction.

Research and development expenditures are composed principally of salaries
for employees, the hiring of subcontractors, capital investment in
infrastructure for software and electronic designs and prototype material costs.
Initially, NUR relied on outside research and development. We began our own
research and development operations in early 1994. NUR Europe, one of our
subsidiaries, received a grant from local authorities in Belgium for
reimbursement of up to 70% of its total research and development investment,
which it carries out in Belgium, up to approximately $1 million. NUR Media
Solutions markets and sells the products developed under the grant, and
reimburses the Belgium authorities at a rate of 3%-6% of the revenue generated
from the sale of the products. NUR Media Solutions has established a research
and development center in Belgium dedicated to the research and development of
print substrates and inks for use with the Company's Printers. Between May 1999
and April 2000, NUR Media Solutions received a grant from the Belgium
authorities for reimbursement of up to 50% of its total research and development
investment, which it carries out in Belgium, up to approximately $0.3 million.
NUR Media Solutions will reimburse the grant, as of January 2001 at a rate of 6%
of the revenue generated from the products developed under the grant. As of
December 31, 2000, the maximum royalty obligation of NUR and NUR Media Solutions
is in the amount of $0.95 million.

In September 1998, we purchased certain piezo drop-on-demand technology from
Meital Technologies Ltd. We purchased Meital's technology for an aggregate
amount of $3.0 million. The Meital acquisition resulted in the recognition by us
of a one-time charge involving a write-off of technology assigned to research
and development of $1.95 million in the third quarter of 1998. As part of the
purchase price, NUR has paid to Meital $0.75 million to date and has future
royalty obligations of up to $0.55 million which have been provided for. If the
provision amount of $0.55 million is not paid, Meital has to option to buy back
the technology in the aggregate amount of royalties paid by us. We intend to pay
such amounts in 2001.

In July 2000, we purchased all of the assets and assumed specified
liabilities of Salsa Digital, Ltd. and related entities, previously one of our
competitors in the digital printing market. The Salsa Digital asset purchase
transaction resulted in the recognition by us of a one-time write-off of
$4.3 million assigned to in-process research and development.

In the past, NUR has received grants from the Government of Israel, through
the Office of the Chief Scientist, for the development of our systems and
products, including the Outboard printer. NUR received approximately
$0.04 million, $0.82 million, $0.74 million and $0.26 million in research and
development grants from the Office of the Chief Scientist in the years ended
December 31, 1997, 1998, 1999 and 2000, respectively. The Office of the Chief
Scientist awards grants of up to 50% (and in certain circumstances up to 66%) of
a project's approved expenditures in return for royalties. Under the terms of
funding, royalties are payable generally at a rate of 2% to 3% on sales of
products developed from the funded project and ending when 100% to 150% of the
dollar value of the grant is repaid. No payments of royalties for such grant
were made to the Office of the Chief Scientist in the years ended December 31,
1997 through 2000. As of December 31, 2000, we had a contingent liability to pay
$0.4 million in future royalty payments. NUR expects to make royalty payments to
the Office of the Chief Scientist on sales of the NUR Fresco printers. The terms
of the grants prohibit the manufacture of products developed with government
grants to be performed outside of Israel or the transfer out of Israel of the
technology developed pursuant to these grants without the prior consent of the
Office of the Chief Scientist. These restrictions do not bar exports from Israel
of products developed with such technologies. In addition, the know-how from the
research and development that is used to produce the product may not be
transferred to third parties or out of Israel without the approval of the Office
of the Chief Scientist.

COMPETITION

The principal competitive factors affecting NUR's sales of our products are
their performance relative to price, productivity and throughput, product
features and technology, quality, reliability, cost of operation and
consumables, the quality and costs of training, support and service as well as
the flexibility of adapting to customers' applications of the products. Other
competitive factors include the ability to provide access to product financing,
NUR's reputation and customer confidence in NUR to continually develop new
products and product accessories that will help them maintain and grow their
business.

Our main competitors in the super wide format arena are Vutek, Signtech and
Scitex. All three companies have introduced products that directly compete with
the NUR Blueboard printers. In the wide format market, the main competitors are
Scitex, through its subsidiary, Scitex Wide Format Printing Ltd., formerly
Idanit Technologies Ltd., 3M Image Graphics, Vutek and Raster Graphics Inc.
These companies have introduced products that compete with the NUR Fresco
printer.

The printing industry is large, and many of our competitors possess greater
management, financial, technical, manufacturing, marketing, sales, distribution
and other resources than those of NUR. As a result, there can be no assurance
that competitors will not develop and market products utilizing new technology
that are competitive in price and performance with the Company's Printers, and
there can be no assurance that we can compete effectively with such products.

TRADE SECRETS, PATENTS AND PROPRIETARY RIGHTS

We currently rely on a combination of trade secrets, licenses and patents,
together with non-disclosure and confidentiality agreements, to establish and
protect our proprietary rights in our products. No assurance can be given that
NUR's existing patents or any future patents by NUR will not be challenged,
invalidated, or circumvented, or that our competitors will not independently
develop or patent technologies that are substantially equivalent or superior to
our technology. There can be no assurance that further patent protection will be
obtained in Israel, the United States, or elsewhere, for existing or new
products or applications, or that such further protection, if obtained, will be
effective. In some countries, meaningful patent protection is not available. We
are not aware of any material claim that our products infringe upon the
proprietary rights of third parties. However, there can be no assurance that
third parties will not assert infringement claims against NUR in the future, and
the cost of responding to such assertions, regardless of their validity, could
be significant. In addition, such claims may be found to be valid and could
result in awards against NUR, which could have a material effect on our
business. As a result, the cost to NUR of protecting our patent rights could be
substantial. We believe that our success is less dependent upon the legal
protection afforded by patent and other proprietary rights than on the
knowledge, ability, experience and technological expertise of our employees and
our key suppliers. It is NUR's policy to have employees sign confidentiality
agreements, to have selected parties, including key suppliers, subcontractors
and distributors, sign non-competition agreements, and to have third parties
sign non-disclosure agreements. Although the NUR takes precautionary measures to
maintain our trade secrets, no assurance can be given that others will not
acquire equivalent trade secrets or otherwise gain access to or disclose NUR's
proprietary technology, or that we can meaningfully protect our rights to such
proprietary technology not subject to patent protection.

EMPLOYEES AND LABOR RELATIONS

As of December 31, 2000, we employed 528 persons worldwide, about fifteen
percent of which work in research and development. Approximately one-fifth of
these employees are employed by NUR in Israel and the remainder are employed by
our subsidiaries worldwide. All of the NUR's employees who have access to
confidential information are required to sign a non-disclosure agreement
covering all of our confidential information that they might possess or to which
they might have access.

We believe our labor relations are satisfactory. We have never experienced a
strike or work stoppage. We believe our future success will depend, in part, on
our ability to continue to attract, retain, motivate and develop highly
qualified technical, marketing and sales as well as management personnel.

Israeli law generally requires severance pay equal to one month's salary for
each year of employment upon the termination of employment. NUR's liability for
future severance pay obligations is fully provided for by payments equal to
8.33% of an employee's salary each month made to various managers' insurance
policies and by accrual. The employees of NUR are usually provided with an
additional contribution toward their retirement that amounts to 10% of wages, of
which the employee and the employer each contributes half. Furthermore, Israeli
employees and employers are required to pay predetermined sums to the National
Insurance Institute, which is similar to the United States Social Security
Administration, and additional sums towards compulsory health insurance.

INSURANCE

We believe that the insurance coverage for our business is in accordance
with industry standards and is adequate and appropriate in light of our
businesses and the risks to which they are subject.

LEGAL PROCEEDINGS

In December 1999, Poalim Capital Markets Ltd., an Israeli company engaged in
the business of mediation and assistance in securities transactions, filed suit
in the District Court of Tel Aviv, Israel, against NUR and Isal Amlat
Investments (1993) Ltd. Poalim Capital Markets claimed that NUR, in executing a
private placement agreement with Isal Amlat Investments (1993) Ltd. and
Dovrat & Co. Ltd. in September 1999, breached an agency agreement with Poalim
Capital Markets. Poalim Capital Markets seeks enforcement and monetary relief up
to approximately $0.33 million. NUR believes that the claims are without merit
and is defending itself vigorously against the action.

In September 2000, Abudi Signage Industry Ltd., an Israeli Company, and
Abudi Printing Technology Ltd., a wholly owned subsidiary of Abudi Signage
Industry Ltd. (collectively, the "Abudi Parties"), filed suit in the District
Court of Tel Aviv, Israel, against Meital Technologies Ltd., Mr. Kobi Markovitz
(the major shareholder of Meital), who is currently a consultant to NUR in the
field of technologies development, NUR and Erez Shachar, our President and Chief
Executive Officer. The Abudi Parties claim that Meital, in selling its peizo
drop-on demand technology to NUR breached agreements between the Abudi Parties
and Meital pursuant to which: (i) Meital was to develop, manufacture and sell to
the Abudi Parties an upgrade for Abudi's Vutek airbrush digital printers and
Abudi was to receive the exclusive right to market, distribute and sell these
upgrades, and (ii) Abudi was provided an option to purchase up to 20% of Meital
shares upon terms and conditions no less favorable than other investors. The
Abudi Parties claim that NUR knowingly purchased the Meital technology and
therefore caused Meital to breach its option agreements with the Abudi Parties.
The Abudi Parties seek consequential and indemnification monetary damages up to
approximately $4.95 million. NUR believes that the claims are without merit and
plans to defend itself vigorously against the action.

The Poalim Capital Markets' litigation and the Abudi Parties' litigation,
whether or not determined in our favor or settled by us, may be costly and may
divert the efforts and attention of our management from normal business
operations.

We are not currently subject to any other material legal proceedings. We may
from time to time become a party to various legal proceedings in the ordinary
course of our business.

ORGANIZATIONAL STRUCTURE

As of December 31, 2000, the following chart presents our corporate
structure, the jurisdiction of incorporation of our subsidiaries and the
percentage of shares that we hold in those subsidiaries.

SUBSIDIARIES PERCENTAGE JURISDICTION OF INCORPORATION
- ------------ ---------- -----------------------------

Encre Consumables B.V................................ 100% Amsterdam, Netherlands
NUR America Inc. (NUR America)....................... 100% Massachusetts, United States*
NUR Asia Pacific (Hong Kong) Ltd. (NUR Asia
Pacific)........................................... 100% Hong Kong, China
NUR DO Brazil Ltda................................... 100% Sao Paulo, Brazil
NUR Europe S.A. (NUR Europe)......................... 100% Brussels, Belgium
NUR Hungary Trading and Software Licensing Limited
Liability Company.................................. 100% Budapest, Hungary
NUR Macroprinters (Shanghai) Ltd. (NUR Shanghai)..... 100% Shanghai, China
NUR Media Solutions S.A. (NUR Media Solutions)....... 100% Brussels, Belgium
Salsa Digital Printers Ltd. (Salsa Digital
Printers).......................................... 100% Texas, United States**
Signtech Japan Ltd. (Signtech Japan)................. 100% Tokyo, Japan
NUR Pro Engineering Ltd.............................. 50% Rosh Ha'ain, Israel
Stillachem S.A. (Stillachem)......................... 50.1% Charleroi, Belgium***

- ------------------------

* NUR America has recently relocated to San Antonio, TX.

** Salsa Digital Printers is now doing business as NUR Engineering USA.

*** NUR acquired the remaining outstanding capital stock of Stillachem in
May 2001. As a result, Stillachem is now a wholly owned subsidiary of NUR.

ISRAEL

We recently relocated NUR's main facilities to a high-tech industrial zone
in Lod, Israel that consists of approximately 50,000 square feet. We use this
facility as our headquarters and for research and development. The initial
five-year lease of the Lod facility, which commenced November 20, 2000, provides
for monthly rent of $63,000. The lease agreement grants NUR an option to
continue the lease term for two consecutive periods of 2.5 years.

NUR Pro Engineering Ltd., a 50% owned affiliate, leases approximately 10,023
square feet in Rosh Ha'ain, Israel, for the manufacture and assembly of the NUR
Blueboard and the NUR Fresco printers. The Rosh Ha'ain lease expires in
October 2002.

UNITED STATES

NUR America leases office space in Newton, MA consisting of 26,500 square
feet that it has used as the subsidiary's headquarters, sales and marketing
offices and demonstration and service center. The Newton lease expires in
January 2011. In addition, NUR America leases and sub-leases an additional 4,500
square feet of office space in Newton, MA that served in the past as NUR
America's headquarters. This lease expires in October 2008. As part of our
recently announced plan to streamline and consolidate our U.S. operations, we
plan to relocate all of our American operations to the San Antonio, TX facility.
We are currently evaluating options with respect to the leases on the Newton, MA
offices.

Salsa Digital Printers leases 61,350 square feet in San Antonio, TX for use
as Salsa Digital Printers' headquarters, manufacturing facility and research
center. The San Antonio, TX lease expires in June 2001. Salsa Digital Printers
is negotiating an extension of the lease agreement. As noted above, the San
Antonio, TX facility will also become the headquarters for NUR America and NUR
America's sales and marketing offices. Salsa Digital currently leases office
space in San Antonio, TX, on behalf of Nur America, consisting of 5,900 square
feet for use as Nur America's training and service center.

EUROPE

NUR Europe leases approximately 1,970 square feet of office space in
Louvain-la-Neuve, Belgium for use as the subsidiary's headquarters and sales
office, demonstration and service center. The Louvain-la-Neuve lease expires in
September 2011. In 2000, NUR Europe expanded its headquarters space at the above
address by an additional 2,460 square feet. The lease for the additional space
expires in March 2012.

NUR Media Solutions leases approximately 1,920 square feet office space in
Louvain-la-Neuve, Belgium for use as office space. The Louvain-la-Neuve lease
expires in November 2009.

Stillachem leases temporary office space in Belgium of approximately 853
square feet. The lease expires in November 2002. Stillachem intends to rent
additional office space of approximately 800 square feet at the same location.

ASIA PACIFIC

NUR Shanghai leases approximately 7872 square feet of space for use as a
warehouse and as a demonstration center in a free trade zone in Shanghai, China
and occupies approximately 482 square feet office space in a separate location
in Shanghai, China. The leases will expire on January 2002 and December 2001,
respectively.

NUR Asia Pacific leases office space of approximately 1,254 square feet in
Hong Kong. The lease expires on September 2002. NUR Asia Pacific leases office
space of approximately 685.5 square feet in Singapore. The lease expires on
December 2001. NUR Asia Pacific also leases an office of approximately 425
square feet in Guangzhou. The Guangzhou lease expires on October 2001.

JAPAN

Signtech Japan leases approximately 660 square feet of office space in
Tokyo. The lease expires February 2002.

ITEM 5: OPERATING AND FINANCIAL REVIEW AND PROSPECTS

OPERATING RESULTS

GENERAL

NUR is a world leader in the market for the sale of wide format and super
wide format digital printing systems. NUR develops, manufactures, sells and
services digital, inkjet color printing systems for on demand, production, wide
format and super wide format printing. NUR also supplies inks and substrates
that are consumable products for the operation of the Company's Printers. In
July 2000, we purchased all of the assets and assumed specified liabilities of
Salsa Digital, Ltd. and related entities, previously one of our competitors in
the digital printing market. NUR's total revenues grew from $36.4 million in the
year ended December 31, 1998 to $60.7 million in the year ended December 31,
1999 and $121.9 million in the year ended December 31, 2000. Salsa Digital's
total revenues grew from $24.9 million in the year ended December 31, 1998 to
$33.0 million in the year ended December 31, 1999 and $17.5 million for the
first six months of 2000.

We carry out our research and development activities at three locations,
including our facilities in Lod, Israel, our facilities in San Antonio, TX (USA)
and in our facilities in Belgium. NUR's main sales and service activities are
carried out through our wholly owned subsidiaries, NUR Europe, located in
Brussels, Belgium, NUR America, located in Newton, MA (USA), NUR Asia Pacific
located in Hong Kong, NUR Shanghai located in Shanghai, China, NUR DO
Brazil Ltda., located in Sao Paulo, Brazil, Signtech Japan located in Tokyo,
Japan and through NUR Europe's division of Middle East & Africa located in
Belgium. NUR America will be relocating to San Antonio, TX as part of our
recently announced U.S. consolidation plan. The former Salsa Digital business is
currently operated through Salsa Digital Printers Ltd. and NUR Hungary Trading
and Software Licensing Limited Liability

Company, both of which are wholly owned subsidiaries. NUR wholly owns NUR Media
Solutions, located in Brussels, Belgium, which develops advanced consumables for
the Company's Printers. NUR wholly owns Stillachem, located in Charleroi,
Belgium, which is a digital ink factory producing inks for the NUR Fresco
printers, and 50% of NUR Pro Engineering Ltd. located at Rosh Ha'ain Israel
which is our main subcontractor for the assembly of the NUR Blueboard and NUR
Fresco printers.

NUR was incorporated as an Israeli corporation on July 29, 1987 and began
operations in June 1991. Since October 1995, NUR's ordinary shares have been
traded on the Nasdaq National Market. NUR is currently quoted on Nasdaq National
Market under the symbol "NURM."

Revenues are derived from the sale of the Company's Printers, which include
the NUR Blueboard printers, the NUR Fresco printer and the NUR Salsa printers,
inks, substrates, spare parts and related services.

Cost of sales of printers and related materials includes materials, labor,
overhead, and other direct or allocated costs involved in the manufacture,
warehousing, delivery, support, and maintenance of products. Research and
development expenses include mainly labor, materials consumed, expenses by
subcontractors, consultants, and others. In 2000, $4.3 million of research and
development expenses were due to a one-time write-off of in-process research and
development related to the Salsa Digital asset purchase. Research and
development expenses are carried to the statement of operations as incurred.
Grants are netted from research and development costs on an accrual basis as the
related expenses are incurred.

The sales and marketing expenses include the costs associated with the staff
of the sales and marketing force of NUR and our subsidiaries, advertising and
promotion of existing and new products, trade shows, commissions, and other
marketing activities. During 2000, NUR expended significant financial and
management resources to expand our business and product offerings. Grants are
netted from sales and marketing costs on an accrual basis as the related
expenses are incurred. NUR invested in the integration of the Salsa Digital and
the NUR worldwide sales and service organizations, strengthening the service and
sales organizations of NUR Europe, (including the Middle East & Africa
division), NUR America, NUR Asia Pacific, NUR Shanghai and NUR DO Brazil and
Signtech Japan. NUR also invested in the continuation of the development of NUR
Media Solutions, a subsidiary dedicated to the development and marketing of
consumables, mainly substrates, inks and clear coat varnishes for the use with
NUR's products, and of Stillachem, an ink factory located in Belgium.

CERTAIN ACCOUNTING POLICIES

NUR's consolidated financial statements have been prepared in accordance
with generally accepted accounting principles in the U.S. For more information
on NUR's financial statements, please see NUR's consolidated financial
statements as of December 31, 2000, which are included as a part of this annual
report on Form 20F.

The main sources of revenues for NUR are sales of the Company's Printers and
related consumable products. Revenues from sales of products are recognized upon
delivery provided that the collection of the resulting receivable is probable,
there is persuasive evidence of an arrangement, no significant obligations in
respect of installation remain and the price is fixed or determinable. NUR does
not grant a right of return.

The accompanying consolidated financial statements have been prepared in
U.S. dollars. The U.S. dollar is the currency of the primary economic
environment in which the operations of NUR, NUR America, NUR Salsa, NUR Hungary
and NUR Pro Engineering are conducted. The majority of sales are made in U.S.
dollars and the majority of purchases of materials and components are invoiced
and paid in U.S. dollars. In addition, a substantial portion of costs are
incurred outside Israel in U.S. dollars or paid in U.S. dollars or in New
Israeli Shekels (NIS) linked to the exchange rate of the U.S. dollar. The U.S.
dollar is the functional and reporting currency of NUR.

See Note 2 to NUR's consolidated financial statements, which are included as
a part of this annual report, for a discussion of NUR's accounting policy for
determining rate of exchange and linkage based amounts.

NUR's transactions and balances denominated in U.S. dollars are presented in
their original amounts. Non-dollar transactions and balances have been
remeasured into U.S. dollars in accordance with Statement No. 52 of the
Financial Accounting Standards Board (FASB), "Foreign Currency Translation." All
transaction gains and losses from remeasurement of monetary balance sheet items
denominated in non-dollar currencies are reflected in the statement of
operations as financial income or expenses, as appropriate.

The financial statements of other subsidiaries and an affiliate, whose
functional currency is not the U.S. dollar, have translated into dollars. All
balance sheet accounts have been translated using the exchange rates in effect
at the balance sheet date. Statement of operations amounts have been translated
using the average exchange rate for the period. The resulting translation
adjustments are reported as a component of accumulated other comprehensive
income (loss) in shareholders' equity.

NUR accounts for stock-based compensation in accordance with the
requirements of Accounting Principles Board Opinion No. 25 ("APB 25")
"Accounting for Stock Issued to Employees" and Interpretation No. 44 "Accounting
for Certain Transactions Involving Stock Compensation" ("FIN 44") in accounting
for its employee stock option plans. Under APB 25, when the exercise price of
NUR's employee options is less than the fair market value of the underlying
shares on the date of grant, compensation expense is recognized.

In accounting for options granted to persons other than employees, the
provisions of Financial Accounting Standards Board Statement No. 123,
"Accounting for Stock Based Compensation" and EITF 96-18 "Accounting for Equity
Instruments that are Issued to Other than Employees for Acquiring, or in
Conjunction with Selling, Goods or Services" with respect to options issued to
non-employees were applied. According to FASB 123, the fair market value of
these options was estimated at the grant date using Black-Scholes options
pricing model.

In June 1998, FASB issued Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (SFAS 133), which is required to be adopted
in years beginning after June 15, 2000. Based on NUR's derivative positions at
December 31, 2001, we do not expect the impact of this new statement on our
consolidated balance sheets or results of operations to be material.

GEOGRAPHIC BREAKDOWN OF REVENUES

We sell our products and services throughout the world. Revenues are
generally attributed to the location of the sale of the product or service to
the end-user. The table below shows the breakdown of revenues (dollars in
thousands) by categories of activities and into geographic markets in the years
ended December 31, 2000, 1999 and 1998. The "Others" category, below, includes,
among other things, revenues generated by the service of the Company's Printers.
With the sale of NUR Germany in the third quarter of 1999, NUR no longer derives
significant revenues from the sale of printed materials.

PRINTED
PRINTERS INK SUBSTRATES MATERIALS OTHERS
YEAR ENDED (65.3%) (19.8%) (9.8%) (0%) (5.1%)
DECEMBER 31, 2000 ------------------- ------------------- ------------------- ------------------- --------
REGION $ % $ % $ % $ % $
- ----------------- -------- -------- -------- -------- -------- -------- -------- -------- --------

Middle-East & Africa....... 4,081 5.2% 1,059 4.3% 979 8.2% -- -- 513
Asia....................... 18,120 22.8% 5,238 21.6% 365 3.0% -- -- 2,500
Europe..................... 27,802 35% 5,932 24.5% 5,922 49.3% -- -- 1,633
North & Latin America...... 29,518 37% 11,872 49.6% 4,747 39.5% -- -- 1,643
------ ---- ------ ---- ------ ---- ----- --- -----
Total Revenues............. 79,521 100% 24,101 100% 12,013 100% -- -- 6,289
====== ==== ====== ==== ====== ==== ===== === =====

OTHERS TOTAL
YEAR ENDED (5.1%) (100%)
DECEMBER 31, 2000 -------- -------------------
REGION % $ %
- ----------------- -------- -------- --------

Middle-East & Africa....... 8.2% 6,632 5.4%
Asia....................... 39.7% 26,223 21.6%
Europe..................... 26.0% 41,289 33.9%
North & Latin America...... 26.1% 47,780 39.1%
---- ------- ----
Total Revenues............. 100% 121,924 100%
==== ======= ====

PRINTED
PRINTERS INK SUBSTRATES MATERIALS OTHERS
YEAR ENDED (55.1%) (23.1%) (12.1%) (4%) (5.7%)
DECEMBER 31, 1999 ------------------- ------------------- ------------------- ------------------- --------
REGION $ % $ % $ % $ % $
- ----------------- -------- -------- -------- -------- -------- -------- -------- -------- --------

Middle-East & Africa....... 2,408 7.2% 1,428 10.2% 785 10.8% -- -- 330
Asia....................... 6,357 19% 2,792 19.9% 468 6.4% -- -- 378
Europe..................... 11,017 32.9% 3,533 25.1% 2,898 39.8% 2,460 100% 1,540
North & Latin America...... 13,692 40.9% 6,291 44.8% 3,123 43% -- -- 1,219
------ ---- ------ ---- ------ ---- ----- --- -----
Total Revenues............. 33,474 100% 14,044 100% 7,274 100% 2,460 100% 3,467
====== ==== ====== ==== ====== ==== ===== === =====

OTHERS TOTAL
YEAR ENDED (5.7%) (100%)
DECEMBER 31, 1999 -------- -------------------
REGION % $ %
- ----------------- -------- -------- --------

Middle-East & Africa....... 9.5% 4,951 8.2%
Asia....................... 10.9% 9,995 16.5%
Europe..................... 44.4% 21,448 35.3%
North & Latin America...... 35.2% 24,325 40%
---- ------- ----
Total Revenues............. 100% 60,719 100%
==== ======= ====

PRINTED
PRINTERS INK SUBSTRATES MATERIALS OTHERS
YEAR ENDED (52.3%) (23.6%) (2.4%) (12.5%) (9.2%)
DECEMBER 31, 1998 ------------------- ------------------- ------------------- ------------------- --------
REGION $ % $ % $ % $ % $
- ----------------- -------- -------- -------- -------- -------- -------- -------- -------- --------

Middle-East & Africa....... 916 4.8% 858 9.9% 156 17.5% -- -- 308
Asia....................... 1,762 9.2% 1,286 15.1% -- -- -- -- 278
Europe..................... 7,369 39% 2,388 28% 460 51.5% 4,540 100% 1,484
North & Latin America...... 9,005 47% 4,087 47% 278 31% -- -- 1,270
------ ---- ------ ---- ------ ---- ----- --- -----
Total Revenues............. 19,052 100% 8,619 100% 894 100% 4,540 100% 3,340
====== ==== ====== ==== ====== ==== ===== === =====

OTHERS TOTAL
YEAR ENDED (9.2%) (100%)
DECEMBER 31, 1998 -------- -------------------
REGION % $ %
- ----------------- -------- -------- --------

Middle-East & Africa....... 9.2% 2,238 6.1%
Asia....................... 8.3% 3,326 9.1%
Europe..................... 44.4% 16,241 44.6%
North & Latin America...... 38.1% 14,640 40.2%
---- ------- ----
Total Revenues............. 100% 36,445 100%
==== ======= ====

RESULTS OF OPERATIONS

The following table sets forth for the periods indicated certain line items
from NUR's statement of operations as a percentage of NUR's sales:

YEARS ENDED DECEMBER 31,
----------------------------------------------------
1996 1997(1) 1998(1) 1999(2) 2000(3)
-------- -------- -------- -------- --------
(IN PERCENTS)

REVENUES................................................ 100% 100% 100% 100% 100%
Cost of sales of printers and related products........ 69 43.9 44.9 50.1 52.6
Cost of sales of printed materials.................... 12 7.6 7.1 2.2 --
Gross profit.......................................... 19 48.5 48 47.7 47.4
Research and development expenses..................... 9 7.8 13.8 9.1 12.3
Research and development expenses net................. 7 7.7 11.5 7.9 12.0
Selling expenses, net................................. 29 21 16.8 15.6 14.3
General and administrative expenses................... 15 15.7 13.2 10.3 10.5
Amortization of goodwill and other intangible
assets.............................................. 1.1
Write-off debts of related parties.................... 23 -- -- --
Operating income (loss)............................... (55) 4.1 6.5 13.8 9.5
Financial expenses, net............................... 4 1.5 1.6 1 1.1
Other income (expense), net........................... -- -- 0.05 0.3 --
Taxes on income (tax benefit)......................... 2 0.3 0.7 1.3 1.0
Minority interest in earnings of a subsidiary......... -- 0.1 0.1 0.05 --
Equity in earnings (losses) of affiliates, net........ -- -- -- 0.1 0.4
Net income (loss)..................................... (61) 2.2 4 11.8 7.0

- ------------------------

(1) Represents NUR on a consolidated basis with our subsidiaries NUR Media
Solutions, NUR America, NUR Europe and NUR Germany.

(2) Represents NUR on a consolidated basis with our subsidiaries NUR Media
Solutions, NUR America, NUR Europe, NUR Shanghai, NUR Asia Pacific and NUR
Germany (6 months). We owned 84% of NUR Germany; this subsidiary was sold
during the third quarter of 1999.

(3) Represents financial information for NUR together with our subsidiaries NUR
Media Solutions, NUR America, NUR Europe, NUR Shanghai, NUR Asia Pacific,
Salsa Digital Printers Ltd. (6 months), NUR Hungary Trading and Software
Licensing Limited Liability Company, NUR DO Brazil Ltda., Encre Consumables
B.V. and Signtech Japan.

YEAR ENDED DECEMBER 31, 2000 COMPARED WITH YEAR ENDED DECEMBER 31, 1999

REVENUES. Total revenues increased by 100.8% to approximately
$121.9 million in the year ended December 31, 2000, from approximately
$60.7 million in the year ended December 31, 1999, both as a result of the
purchase of substantially all of the assets of Salsa Digital, Ltd. in July 2000
and internally generated growth. Excluding NUR Germany results from the year
ended December 31, 1999 (a subsidiary that was sold during the third quarter of
1999), total revenues in 2000 increased by 109.5% compared to $58.2 million in
1999. NUR's total revenues, including Salsa Digital on a pro forma basis
(assuming the Salsa Digital acquisition had been consummated as of January 1,
1999), increased by 48.6% to approximately $139.4 million in the year ended
December 31, 2000, from approximately $93.8 million in the year ended
December 31, 1999.

GROSS PROFIT. Gross profit was approximately $57.8 million in the year
ended December 31, 2000, an increase of 100.0% from $28.9 million in the year
ended December 31, 1999. Gross profit as a percentage of revenues was 47.4% in
the year ended December 31, 2000 compared to 47.7% in the year ended
December 31, 1999. Excluding NUR Germany, (a subsidiary that was sold during the
third quarter of 1999), gross profits from the year ended December 31, 2000
increased by 107.9%, $57.8 million in the year ended December 31, 2000 as
compared to $27.8 million in 1999. Gross profits on a pro forma basis were
approximately $65.2 million in the year ended December 31, 2000 compared to
$42.4 million in the year ended December 31, 1999, an increase of 53.8%.

EXPENSES. Research and development costs, net of government grants, were
approximately $14.6 million in the year ended December 31, 2000, compared to
$4.8 million in the year ended December 31, 1999, an increase of 204.2%. The
increase occurred as a result of NUR's internal growth and the purchase of
substantially all of the assets of Salsa Digital, Ltd. in July 2000 and included
a one time $4.3 million write-off of research and development in-process due to
the Salsa Digital asset purchase transaction. NUR expects to continue to invest
significant resources in our research and development programs for new products
and enhancements of existing products. NUR expects that research and development
expenses will continue to increase in absolute dollar terms as compared to
previous years. Net research and development costs on a pro forma basis were
approximately $9.6 million in the year ended December 31, 2000 compared to
$6.7 million in the year ended December 31, 1999, an increase of 43.3%.

Selling and marketing expenses were approximately $17.3 million in the year
ended December 31, 2000 compared to approximately $9.5 million in the year ended
December 31, 1999, an increase of 82.1%. The increase is due to NUR's internal
growth and the purchase of substantially all of the assets of Salsa
Digital, Ltd. in July 2000. NUR received $0.14 million in the year ended
December 31, 2000 from the Marketing Fund for selling and marketing expenses as
compared to $0.13 million in the year ended December 31, 1999. NUR is no longer
eligible for support from the Marketing Fund due to NUR reaching the maximum
allowed export revenues. The majority of sales and marketing expenses are
incurred by the following distribution subsidiaries, NUR Europe, NUR America,
NUR Shanghai and NUR Asia Pacific. Selling and marketing expenses on a pro forma
basis were approximately $22.7 million in the year ended December 31, 2000
compared to $14.5 million in the year ended December 31, 1999, an increase of
56.6%.

General and administrative expenses were approximately $14.2 million,
including amortization of goodwill and other intangible assets in the year ended
December 31, 2000, compared to approximately $6.3 million in the year ended
December 31, 1999, representing an approximately 125% increase.

General and administrative expenses on a pro forma basis were approximately
$17.2 million in the year ended December 31, 2000 compared to $15.9 million in
the year ended December 31, 1999, an increase of 8.2%. This increase is a result
of both the purchase of substantially all of the assets of Salsa Digital, Ltd.
in July 2000 and approximately $0.6 million of integration costs and
$1.4 million of intangibles assets amortization costs, both related to the Salsa
Digital asset purchase transaction.

Financial expenses, net increased to $1.4 million in the year ended
December 31, 2000 from $0.6 million in the year ended December 31, 1999, a 133%
increase. This increase is mainly due to interest expenses taken to finance the
cash portion of the Salsa Digital asset purchase.

TAXES. Taxes on income were $1.2 million in the year ended December 31,
2000 as compared to $0.8 million in the year ended December 31, 1999, an
increase of 50.0%. Taxes on a pro forma basis were approximately $1.2 million in
the year ended December 31, 2000 compared to $0.8 million in the year ended
December 31, 1999, an increase of 50%.

YEAR ENDED DECEMBER 31, 1999 COMPARED WITH YEAR ENDED DECEMBER 31, 1998

REVENUES. Total revenues increased by 66.8%, to approximately
$60.7 million in the year ended December 31, 1999 from approximately
$36.4 million in the year ended December 31, 1998, mainly as a result of the
introduction of the NUR Blueboard HiQ and market acceptance of the NUR Blueboard
printers and as a result of the continued move to direct distribution by NUR of
NUR's products in the Middle East, Africa and Asia. Growth was also fueled by
the growth of sales of the ink as a result of the growth of the installed base
of the Company's Printers and substrates a new business started in the third
quarter of 1999. Excluding NUR Germany's results from the year ended
December 31, 1998 (a company that was sold during the third quarter of 1999),
revenues in 1999 were $58.3 million, an increase of 82.8% compared to
$31.9 million in 1998.

GROSS PROFIT. Gross profit was approximately $28.9 million in the year
ended December 31, 1999, an increase of 65.1% from $17.5 million in the year
ended December 31, 1998. Gross profit as a percentage of sales was 47.6% in the
year ended December 31, 1999 compared to 48% in the year ended December 31,
1998. Excluding NUR Germany's results from the year ended December 31, 1998
gross profit increased to $27.8 million (47.8% as percentage of sales) from
$15.5 million (48.7% as percentage of sales) in 1998, an increase of 79.4%.

EXPENSES. Research and development costs, net of government grants, were
approximately $4.8 million in the year ended December 31, 1999, compared to
$4.2 million in the year ended December 31, 1998, an increase of 14.3%. The
increase is mainly as a result of increased efforts in developing new products.
NUR expects to continue to invest significant resources in our research and
development programs for new products and enhancements of existing products. NUR
expects that research and development expenses will continue to increase in
absolute dollar terms as compared to previous years.

Selling and marketing expenses were approximately $9.5 million in the year
ended December 31, 1999 compared to approximately $6.1 million in the year ended
December 31, 1998, an increase of 55.7%. NUR received $0.13 million in the year
ended December 31, 1999 from the Marketing Fund for selling and marketing
expenses as compared to $0.11 million in the year ended December 31, 1998. NUR
will not be eligible for support from the Marketing Fund commencing in 2000 due
to NUR reaching the maximum allowed export revenues. The majority of sales and
marketing expenses are incurred by the distribution subsidiaries, NUR Europe,
NUR America, NUR Shanghai and NUR Asia Pacific.

General and administrative expenses were approximately $6.3 million in the
year ended December 31, 1999, compared to approximately $4.8 million in the year
ended December 31, 1998, representing an approximately 31.3% increase. This
increase was due primarily to building of the

financial and administrative infrastructures of NUR and the opening of the new
subsidiaries in the Far East.

Financial expenses, net increased to $0.61 million in the year ended
December 31, 1999 from $0.59 million in the year ended December 31, 1998.

TAXES. Taxes on income were $0.8 million in the year ended December 31,
1999 as compared to $0.3 million in the year ended December 31, 1998, an
increase of 166.7%.

YEAR ENDED DECEMBER 31, 1998 COMPARED WITH YEAR ENDED DECEMBER 31, 1997

REVENUES. Total revenues increased by 65.5%, to approximately
$36.4 million in the year ended December 31, 1998 from approximately
$22.0 million in the year ended December 31, 1997, mainly as a result of the
introduction of the NUR Blueboard 2 and market acceptance of the NUR Blueboard
printers and as a result of the continued move to direct distribution by NUR of
NUR's products in Europe and the United States, NUR's two major markets. Growth
was also fueled by the growth of sales of the ink as a result of the growth of
the installed base of the Company's Printers.

GROSS PROFIT. Gross profit was approximately $17.5 million in the year
ended December 31, 1998, an increase of 65.1% from $10.6 million in the year
ended December 31, 1997. Gross profit as percentage of sales was 48% in the year
ended December 31, 1998 compared to 48.5% in the year ended December 31, 1997.

SALES. Sales of the Company's Printers and related products increased by
68.8% to approximately $31.9 million in the year ended December 31, 1998 from
approximately $18.9 million in the year ended December 31, 1997. This increase
was attributed primarily to the introduction and market acceptance of the NUR
Blueboard and to increased revenues due to the move from sales through
distributors to direct sales to end users through NUR's subsidiaries in Europe
and the United States.

EXPENSES. Research and development costs, net of government grants, were
approximately $4.2 million in the year ended December 31, 1998, compared to
$1.7 million in the year ended December 31, 1997, an increase of 147.1%. The
increase is mainly due to a one-time write-off of technology in the amount of
$1.95 million and as a result of increased efforts in developing new products.
NUR expects to continue to invest significant resources in our research and
development programs for new products and enhancements of existing products. NUR
expects that research and development expenses will continue to increase in
absolute dollar terms as compared to previous years.

Selling and marketing expenses were approximately $6.1 million in the year
ended December 31, 1998 compared to approximately $4.6 million in the year ended
December 31, 1997, an increase of 32.6%. NUR received $0.11 million in the year
ended December 31, 1998 from the Marketing Fund for selling and marketing
expenses as compared to $0.2 million in the year ended December 31, 1997. NUR
will not be eligible for support from the Marketing Fund commencing in 1999 due
to NUR reaching the maximum allowed export revenues. The majority of sales and
marketing expenses are incurred by the distribution subsidiaries, NUR Europe and
NUR America.

General and administrative expenses were approximately $4.8 million in the
year ended December 31, 1998, compared to approximately $3.4 million in the year
ended December 31, 1997, representing an approximately 41.2% increase. This
increase was due primarily to legal and extra-ordinary audit costs resulting
from the change in control and management of NUR, and to the re-building of the
financial and administrative infrastructures of NUR.

Financial expenses, net increased to $0.59 million in the year ended
December 31, 1998 from $0.32 million in the year ended December 31, 1997.

TAXES. Taxes on income were $0.3 million in the year ended December 31,
1998 as compared to $0.1 million in the year ended December 31, 1997, an
increase of 200.0%.

LIQUIDITY AND CAPITAL RESOURCES

During the past several years, we have funded our operations primarily
through the private sale of our equity securities as well as through cash
generated from operations.

NUR has future royalty obligations to Meital Technologies Ltd., which will
not exceed $0.55 million, payable by September 2001. Such commitment is part of
the purchase price for technology acquired by NUR for Meital.

As part of the Matan Settlement Agreement, NUR was obligated to pay a total
of $0.9 million, plus interest and tax, assuming timely payments, to the Matan
Parties. During 1999 and 2000, NUR paid $0.6 million to Matan. The remaining sum
of $0.3 million has been fully reserved and is payable by NUR to the Matan
Parties in equal quarterly installments ending December 2001.

OPERATING ACTIVITIES

In the year ended December 31, 2000, NUR had net income of $8.5 million. Net
cash used in operating activities was approximately $10.2 million. The main
changes in NUR's working capital were (i) an increase of approximately
$25.7 million in trade accounts receivable, (ii) an increase of approximately
$9.4 million in inventories, (iii) an increase of approximately $7.2 million in
trade payables, and (iv) an increase of approximately $4.7 million in accrued
expenses and other liabilities.

In the year ended December 31, 1999, NUR had net income of $7.2 million. Net
cash provided by operating activities was approximately $4.0 million. The main
changes in NUR's working capital were (i) an increase of approximately
$3.6 million in trade accounts receivable, (ii) an increase of approximately
$6.7 million in inventories, (iii) an increase of approximately $2.6 million in
trade payables, and (iv) an increase of approximately $3.1 million in accrued
expenses and other liabilities.

In the year ended December 31, 1998, NUR had net income of $1.5 million. Net
cash provided by operating activities was approximately $2.9 million. The main
changes in NUR's working capital were (i) an increase of approximately
$3.0 million in trade accounts receivable, (ii) an increase of approximately
$1.4 million in inventories, and (iii) an increase of approximately
$2.9 million in trade payables.

INVESTING ACTIVITIES

Net cash used in investing activities was approximately $21.8 million in the
year ended December 31, 2000, consisting mainly of $18.7 million in respect of
the purchase of the Salsa Digital assets and liabilities, and $3.2 million for
equipment. Net cash used in investing activities was approximately $1.4 million
in the year ended December 31, 1999, including $0.7 million provided by
realization of investment in a subsidiary, and $3.6 million in the year ended
December 31, 1998, consisting mainly of $2.5 million for equipment and
$1.3 million for the acquisition of technology.

FINANCING ACTIVITIES

Net cash provided by financing activities in the year ended December 31,
2000 was approximately $42.1 million. In July and December 2000, we took
long-term commercial bank loans of $25 million and $10 million, respectively,
primarily to finance the cash portion of the Salsa Digital purchase and other
acquisition costs. In September 2000, we finalized a private placement through
Investec Investment Banking--Israel. Several investors acquired 748,223 shares
at a price of $13.365 per share raising net $9.4 million in cash.

NUR maintains long and short-term credit facilities in an aggregate amount
of approximately $35.4 million at December 31, 2000. At December 31, 2000, NUR
had approximately $34.7 million in long-term loans from banks and others,
$0.9 million of which is payable within 12 months and $0.7 in short term loans.
NUR's long term loans are linked to the U.S. dollar and the Belgian Franc
bearing interest at a rate ranging between 6% and 7.4%.

As of December 31, 2000, total current assets of NUR amounted to
approximately $92.2 million, out of which $19.2 million was in cash, cash
equivalents and marketable securities, compared with total current liabilities
of approximately $37.0 million. The increase in current assets is attributable
primarily to NUR's internal growth as well as the growth generated by the Salsa
Digital asset purchase transaction.

In the year ended December 31, 1999, net cash provided by financing
activities was approximately $4.4 million. In September 1999, NUR raised
$3.3 million through a private placement of 600,000 ordinary shares and warrants
to purchase 150,000 of our ordinary shares, in the aggregate to ISAL Amlat
Investment (1993) Ltd. and Dovrat & Co. Ltd. In February 2000, ISAL and Dovrat
exercised the warrants issued under the investment agreement at an exercise
price of $8.00 per share resulting in the payment of an additional $1.2 million
to NUR.

Net cash provided by financing activities in the years ended December 31,
1998 was approximately $1.8 million.

We have granted several security interests in our assets to various banks
and leasing companies to secure bank credit lines and lease facilities.

IMPACT OF INFLATION, DEVALUATION AND FLUCTUATION OF CURRENCIES

Most of NUR's sales are in U.S. dollars. In addition, a substantial portion
of costs are incurred outside Israel in U.S. dollars or paid in U.S. dollars or
in NIS linked to the exchange rate of the U.S. dollar. Costs not effectively
denominated in U.S. dollars are translated to U.S. dollars, when recorded, at
prevailing exchange rates for the purposes of NUR's consolidated financial
statements, and will increase if the rate of inflation in Israel exceeds the
devaluation of the Israeli currency against the U.S. dollar or if the timing of
such devaluations were to lag considerably behind inflation. Consequently, NUR
is and will be affected by changes in the prevailing NIS/U.S. dollar exchange
rate.

NUR might also be affected by the U.S. dollar exchange rate to the Euro.

During 1992 and 1993, the value of the U.S. dollar increased relative to
major currencies and the rate of inflation in Israel exceeded the rate in the
United States. In 1995, 1996 and 1997 the value of the U.S. dollar decreased
relative to major currencies, and the rate of inflation in Israel exceeded the
rate in the United States. The annual rate of inflation in Israel in 1998 was
8.6% and decreased to 1.3% in the year ended December 31, 1999 and to 0% in
2000. The NIS was devalued against the U.S. dollar by approximately 17.6% in
1998, by approximately 0.16% in 1999 and by approximately 2.7% in 2000. NUR
cannot predict whether the rate of devaluation of the NIS against the U.S.
dollar will continue to exceed the rate of inflation in the future and whether
these conditions will have a material adverse effect on NUR.

The representative dollar exchange rate for converting the NIS to dollars,
as reported by the Bank of Israel, was NIS 4.041 for one dollar U.S. on
December 31, 2000. The representative dollar exchange rate was NIS 4.153 on
December 31, 1999 and NIS 4.16 on December 31, 1998.

NUR's transactions and balances denominated in U.S. dollars are presented at
their original amounts. Non-dollar transactions and balances have been measured
into U.S. dollars in accordance with Statement 52 of the FASB. All transaction
gains and losses from remeasurement of monetary balance sheet items denominated
in non-dollar currencies are reflected in the statement of operations

as financial income or expenses, as appropriate. The average exchange rates
during the years ended December 31, 1998, 1999 and 2000 were NIS 3.8, 4.077 and
4.024 for one dollar U.S., respectively. The exchange rate as of March 31, 2001
was NIS 4.1920 for one dollar.

CURRENT AND FUTURE CAPITAL NEEDS

NUR is currently implementing a plan to improve operational efficiencies
worldwide. As part of this plan, we have recently begun consolidating the
operations of our two wholly owned subsidiaries in North America -- NUR America
and Salsa Digital Printers -- into a single facility. NUR's restructuring
actions are primarily related to the reorganization of operating activities,
such as the centralization of certain manufacturing operations, the relocation
of activities, a reduction in workforce and a reduction in other administrative
costs. The one-time charge in respect of the restructuring plan was $2,500,000.
In addition, NUR incurred one-time inventory write-offs of approximately $4
million, which were associated with more efficient product rationalization.

We believe that our revenues from operations together with existing capital
resources and credit facilities will be sufficient to fund NUR's current
activities at their present rate. NUR will require additional funds, to be
raised through public or private financing of debt or equity, if we seek to
expand our operations. If such funds are not raised, we may be unable to
increase expenditures for research and development, production, or marketing of
our products, any one of which could have an adverse effect on NUR's business.
There can be no assurance that such additional financing will be available or
that, if available, it will be obtained on terms favorable to NUR. We currently
have no commitments for additional financing and are exploring the possibility
of raising additional capital.

In this regard, NUR's capital requirements and level of expenses depend upon
numerous factors, including the scope and success of our marketing and customer
service efforts, and of our research and development activities, as well as the
demand for NUR's products and services. Moreover, in the course of the
bankruptcy proceedings of Moshe Nur and the companies controlled by him, NUR in
the future may be exposed to claims arising from the actions of Moshe Nur
despite the settlement of all material claims related to such persons and
entities. Liabilities arising from any such claims may be material.

RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES

NUR's research and development efforts, which currently engage approximately
80 employees, are focused on developing new products and technologies; enhancing
the quality and performance relative to price of our existing products; reducing
manufacturing costs; upgrading and expanding our product line through the
development of additional features; and improving functionality in response to
market demand.

There are three research and development facilities, including a facility at
our headquarters in Lod, Israel, a facility in San Antonio, TX (USA) and another
smaller facility in Charleroi, Belgium.

Total research and development expenses, before royalty bearing grants, were
approximately $5.0 million, $5.5 million and $15.0 million in the years ended
December 31, 1998, 1999 and 2000, respectively. In the year ended December 31,
1998, $1.95 million of these expenses were related to the acquisition of
technology from Meital Technologies Ltd. resulting in a one-time write-off of
technology assigned to research and development. In the year ended December 31,
2000, $4.3 million of these expenses were related to the purchase of assets from
Salsa Digital, resulting in a one time $4.3 million write-off assigned to
research and development. Salsa Digital invested approximately $0.7 million,
$1.8 million and $0.6 million for the years ended December 31, 1998, 1999 and
the first six months of 2000, respectively. Research and development
expenditures are composed principally of salaries for employees, the hiring of
subcontractors, capital investment in infrastructure for software and electronic
designs and prototype material costs. See "ITEM 4: Information on NUR--Research
and Development."

TREND INFORMATION

PRINTERS SALES

NUR has estimated based on our internal market research that the super wide
format industry has grown at a rate of approximately 10-15% during 2000 and is
expected to continue growing at a rate of 5-10% during 2001. Originally the
super wide format market was created for print billboard. Currently the main
drive for growth is coming from the introduction of new application such as
mural coverings, truck side printing and exhibition graphics. NUR's growth
during 1998, 1999 and 2000 has exceeded this growth rate, mainly as a result of
NUR's increased market share in the super wide format market and the
introduction of new products. There can be no assurance, however, that NUR will
continue to increase market share in the super wide format market.

NUR started to sell the first NUR Fresco printers to the wide format
professional market in February 2000, and the NUR Salsa wide format series in
July 2000. We believe we will see most of our growth in 2001 in this format
coming from the introduction of our wide format products to the wide format
professional print market.

CONSUMABLES SALES

During the past few years, NUR focused on a recurring revenues strategy for
consumables. Revenues from consumables grew by 69% in 2000 compared to 1999
revenues. The consumable business is made of two families of products --
specialized inks and specialized substrates. NUR believes that during 2001 the
growth rate in the sale of the consumables will be less than in previous years
and will roughly reflect the growth rate of the installed base of the Company's
Printers.

GROSS MARGINS

We expect our gross margins to be at levels in 2001 that are similar to
those realized in 2000. Although there is a downward price pressure on NUR's
existing products, there have been certain reductions in the manufacturing cost
of these products. NUR is currently implementing a plan to improve operational
efficiencies worldwide. For example, as part of this plan, we have recently
begun consolidating the operations of our two wholly owned subsidiaries in North
America -- NUR America and Salsa Digital Printers -- into a single facility.

NUR anticipates a launch of our new products at gross margins similar to our
existing products.

INDUSTRY

The out-of-home digital printing industry has undergone significant changes
in the past few years, and additional change is anticipated in the future. The
most noticeable change in the industry has been the adoption of inkjet
technologies by all major competitors in the industry. NUR's major competitors
have each introduced an inkjet-based printer to replace their existing airbrush
printers. The new printers, introduced since the end of 1997, are based on the
drop-on-demand technology. NUR believes it is the only manufacturer with
printers that use all three printing technologies: the continuous inkjet
printing, drop-on-demand printing and continuous drop-on-demand printing. Though
no assurance can be given for the future, NUR has been successful to date in
maintaining and increasing our growth in revenues from the Company's Printers.

With the cost of digital printing expected to decrease and the ability of
digital technology expected to produce shorter runs more economically, we
believe that the use of wide format and super wide format printing, such as that
produced by the Company's Printers, should grow, and that the portion of the
market serviced by digital printing should continue to increase. The ability to
produce wide format and super wide format images digitally has also opened new
media opportunities for advertisers, such as mural printing, carpet printing,
new forms of fleet graphics printing. The growth in demand for wide

format digital printers is fueled both by the replacement of conventional print
methods and the development of new printing applications.

Although we expect the above trends to continue worldwide, the digital
printing penetration rate to new markets may differ geographically.

RESTRUCTURING PLAN

ITEM 6: DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

DIRECTORS AND SENIOR MANAGEMENT

The executive officers, senior managers and directors of NUR are as follows:

NAME AGE POSITION WITH NUR
- ---- -------- ------------------------------------------

Dan Purjes(2)............................. 51 Chairman of the Board of Directors
President, Chief Executive Officer and
Erez Shachar(3)........................... 37 Director
Hilel E. Kremer........................... 39 Chief Financial Officer
Miriam Tal................................ 33 Vice President of Logistics and Operations
Eliahu Shalev............................. 51 Vice President of Research and Development
Ron Michael............................... 33 Vice President of Marketing
Hugo R. Chaufan(1)(2)..................... 57 Director
Robert F. Hussey(1)(2).................... 52 Director
Orit Leitman(1)(4)........................ 42 Director
Gideon Shenholz(1)(4)..................... 47 Director

- ------------------------

(1) Member of NUR's Audit Committee.

(2) Member of NUR's Stock Option and Compensation Committee.

(3) Member of the NUR's Non-Employee Director Share Option Plan Committee.

(4) External Director.

The address of each of our executive officers, senior managers and directors
is c/o NUR Macroprinters Ltd., 12 Abba Hilel Silver St., P.O. Box 1281, Lod
71111, Israel.

DAN PURJES has served as the Chairman of the Board of NUR since April 1997.
Mr. Purjes is Chairman and Chief Executive Officer of Josephthal
Holdings, Inc., the parent company of Josephthal & Co., Inc., an investment
banking and brokerage firm which is a member of the New York Stock Exchange.
Prior to joining Josephthal in 1985, Mr. Purjes was a Vice President with a
number of securities firms, including Bear Stearns & Co. and L.F. Rothschild
Unterberg Towbin, in their corporate finance and brokerage sales divisions. He
began his Wall Street career at Morgan Stanley & Co. in 1978 as a director of
their computer systems department. Prior to that, Mr. Purjes was a manager at
Citibank and at Philip Morris International in their computer systems areas.
Mr. Purjes earned B.S. and M.S. degrees in Computer Science from the City
College of New York School of Engineering.

EREZ SHACHAR has served as NUR's President and Chief Executive Officer since
July 1997 and as a Director of NUR since October 1997. Mr. Shachar has also
served as a Director of NUR Europe and NUR America since October 1997, of NUR
Media Solutions since January 1998, of NUR Asia Pacific since January 1999, and
of NUR Pro Engineering since September 1999 and of Salsa Digital Printers since
May 2000. Prior to joining NUR, from 1989 to 1997, Mr. Shachar served in various
research and development, marketing, sales, and senior management positions with
Scitex Corporation. Mr. Shachar's last position with Scitex was Vice President
of Sales and Marketing of Scitex Europe, and prior thereto, Mr. Shachar held
several positions in the marketing organization of Scitex Europe. Prior to
joining Scitex Europe, Mr. Shachar was a software developer within the research
and development group of Scitex. Mr. Shachar holds a B.Sc. in Mathematics and
Computer Science from Tel Aviv University, and an M.B.A. degree from INSEAD,
France. Mr. Shachar is also a director of Eltek Ltd., a publicly held
corporation.

HILEL E. KREMER has served as the Chief Financial Officer and Secretary of
NUR since December 1998. Mr. Kremer has also served as a Director of NUR Europe,
NUR America and NUR Media Solutions since December 1998, as a Director of NUR
Asia Pacific since April 1999, as Director of NUR Pro Engineering since
September 1999 and as a Director of Encre Consumables B.V., of NUR Hungary
Trading and Software Licensing Limited Liability Company and of Salsa Digital
Printers since April 2000 and May 2000, respectively. As of January 2001,
Mr. Kremer has also served as a Director of Signtech Japan. Prior to joining
NUR, from 1993 to 1998, Mr. Kremer served in various management positions with
Scitex Corporation. Mr. Kremer's last position with Scitex was Vice President of
Finance and Chief Financial Officer of Scitex Asia Pacific, and prior thereto
Mr. Kremer held several positions in the finance organization of Scitex Europe.
Prior to joining Scitex, Mr. Kremer held various positions in the budgeting
department of the Israeli Finance ministry. Mr. Kremer holds a B.A. in Economics
from Hebrew University, Jerusalem, and an M.B.A. degree from INSEAD, France.

MIRIAM TAL has served as NUR's Vice President of Logistics and Operations
since March 2000. Ms. Tal has also served as Director of NUR Pro Engineering
since September 2000. Prior to becoming Chief of Operations, Mrs. Tal served at
NUR as Corporate Logistics Manager since March 2000. Prior to joining NUR, from
1996 to 2000, Ms. Tal served as Director of Operations at Neuromedical
Systems Inc. From 1991 to 1996, Mrs. Tal served in various positions in the
Manufacturing Support and Purchasing Divisions of Comverse Network
Systems, Inc. and Intel Corporation. Ms. Tal holds a B.A. in Business and
Economics from Hebrew University, Jerusalem, and an M.B.A. degree from Bar-Ilan
University, Ramat-Gan, Israel.

ELIAHU SHALEV has served as Vice President of Research and Development since
March 2001. Prior to joining NUR, from April 2000 to February 2001, Mr. Shalev
served as corporate Vice President of CreoScitex, heading the Output Division in
Herslia and Vancouver. From May 1981 to March 2000, Mr. Shalev served in various
research and development management positions with Scitex Corporation Ltd.
Mr. Shalev holds a BSC in Electrical Engineering from Ben Gurion University in
Israel and an MSC in Electrical Engineering from Technion Haifa. He also holds
an M.B.A. degree from Tel Aviv University.

RON MICHAEL has served as NUR's Vice President of Marketing since
June 1999. Prior to joining NUR, from 1997 to 1999, Mr. Michael served as
Managing Director of Hygiene Products Ltd., a McCarthy Group company. Prior to
that he held several positions within Strategic Business Development ("SBD"), an
Israeli strategy consulting firm. The last position he held at SBD was Senior
Project Manager, specializing in structural business moves. Prior to that, he
founded and served as Managing Director of Esprit Promotion Systems Ltd., a
company specializing in the development and sales of direct marketing data
bases. Mr. Michael holds a B.A. in Business Administration from Tel-Aviv College
of Administration, an LL.B. degree in Law from Tel-Aviv University and an M.B.A.
degree from INSEAD France.

HUGO R. CHAUFAN has served as a Director of NUR since September 1999. Until
December 31, 2000, Dr. Chaufan was President of ISAL Amlat Investments
(1993) Ltd., Managing Director and co-founder of Isal Investments Co. N.V., Isal
Holland B.V. and Isal Nadlan (1994) Ltd. Dr. Chaufan is Chairman of the Board of
Directors of Project Glilot Ltd., Poster Media (Israel) Ltd., Ain Pei Arutzei
pirsum Ltd., Shnapp Industries Ltd., Sivan Plastic Industries 1991 Ltd.,
Cargal Ltd. and Chemipal Ltd. Prior to becoming Managing Director of Isal Amlat
Investments Co. N.V. in 1987, Dr. Chaufan held the position of Chief Executive
Officer of Israel Chemical Industries Ltd., after holding senior management
positions, including Deputy Director of the Budget Department of the Ministry of
Finance. Dr. Chaufan holds degrees in Accountancy and Certified Accountancy, and
a Ph.D. in Economics.

ROBERT F. HUSSEY has served as a Director of NUR since September 1997.
Mr. Hussey is a private investor. From June 1991 to April 1997, Mr. Hussey
served as the President and Chief Executive Officer of Metrovision of North
America Inc. Prior thereto, from 1984 to 1991, Mr. Hussey served as the
President, Chief Executive Officer and Director of POP Radio Corp., a company
which he helped form. From 1979 to 1984, Mr. Hussey served as the Vice
President/Management Supervisor for Grey Advertising, Inc. Mr. Hussey holds a
B.S. in Finance from Georgetown University and an M.B.A. in International
Finance from George Washington University. Mr. Hussey is also a director of
Digital Data Networks, Inc., The New World Power Corporation, Digital Lightwave,
Inc. and TheNetDigest.com, Inc., all of which are publicly held corporations.

ORIT LEITMAN has served as an External Director of NUR since November 2000.
Ms. Leitman has served as V.P. Finance of Paradigm Geophysical Ltd. since
April 1999. From 1992 to 1999, Ms. Leitman served as Corporate Treasurer of
Scitex Corporation Ltd. Ms. Leitman holds a B.A. in Economics from Tel-Aviv
University and an M.B.A. from the Tel-Aviv University.

GIDEON SHENHOLZ has served as an External Director of NUR since
November 2000. Mr. Shenholz has served as the Managing Director of Pegasus
Technologies Ltd. since October 1995. Mr. Shenholz is one of the two founders of
Pegasus Technologies Ltd., established in 1991, and one of the major
shareholders in Pegasus Technologies Ltd. Prior thereto, from 1988 to 1991,
Mr. Shenholz was a consultant in electronic warfare (EW), mainly to Tadiran
Systems Ltd (EW division). From 1981 to 1988, Mr. Shenholz served as a senior
manager in Tadiran Systems Ltd (EW division). Mr. Shenholz holds a B.Sc. Degree
in Electronic Engineering from Technion, Haifa (1976) and a B.A. degree in
Psychology from Tel-Aviv University (1982).

COMPENSATION OF OFFICERS AND DIRECTORS

In the year ended December 31, 2000, the aggregate compensation paid by NUR
to the executive officers and directors of NUR (a total of 10 persons) amounted
to approximately $1.2 million. This amount includes the amount of compensation
paid and benefits in kind granted to these persons by NUR and our subsidiaries.

The executive officers of NUR received part of the compensation set forth
above under NUR's Management by Objectives (MBO) Compensation Plan. The MBO sets
annual individual goals to be achieved by the executive officers throughout the
year. The percentage of individual achievement determines the percent of the MBO
bonus paid to each executive officer. The MBO plan for the benefit of NUR's
Chief Executive Officer is administered by the Stock Option and Compensation
Committee. The MBO plan for the benefit of the other executive officers is
administered by the Chief Executive Officer. A portion of the bonus amounts is
paid in cash in the year for which they are awarded and the balance is paid in
cash in the year following the financial year for which they are awarded.

In addition, a total of 599,167 options have been granted to executive
officers and directors to purchase ordinary shares. The options granted had a
weighted average exercise price of $7.04 and have expiration dates ranging from
2007 to 2011.

Pursuant to an employment agreement, Mr. Erez Shachar, in his capacity as
President and Chief Executive officer of NUR, earned an annual salary of
$210,000 from January through June 2000. On July 1, 2000, pursuant to the terms
of the employment agreement, Mr. Shachar's annual salary was increased to
$240,000. Mr. Shachar also received a bonus in the year 2000 of $50,000 in
recognition of his contribution to the acquisition of the business of Salsa
Digital, Ltd. In addition, Mr. Shachar received a bonus of $26,000 in the year
2000 for on target performance based on NUR's MBO plan. For the year 2000, under
the 1997 Stock Option Plan, Mr. Shachar was granted options to purchase 30,000
ordinary shares at an exercise price of $10.875 per share. The options will be
exercisable until 2010 and will vest as follows: 10,000 on October 10, 2001,
10,000 on October 10, 2002 and 10,000 on October 10, 2003. In addition, for
various services rendered to NUR Europe S.A. and NUR Media Solutions S.A. by
Sorly Ltd., a company wholly owned by Erez Shachar, NUR Europe S.A. and NUR
Media Solutions S.A. each paid Sorly Ltd. the sum of $9,250 per quarter during
2000.

We pay our non-employee and external Board members remuneration for their
services as directors. This remuneration includes an annual payment of $8,000
and additional payments of approximately $500 per meeting and $250 per committee
meeting. The Chairman of the Board and Chairman of any committee are also
entitled to receive an additional annual fee of $5,000. Each non-employee and
non-external Board member also receives an annual grant of options to purchase
10,000 ordinary shares under the conditions set forth in NUR's 1998 Non-Employee
Director Share Option Plan. Directors who are also employees do not receive
additional compensation for serving as directors. The members of the Board do
not receive any additional remuneration upon termination of their services as
directors.

OUTSTANDING OPTIONS AND WARRANTS

As of December 31, 2000, NUR had outstanding options under NUR's stock
option plans to purchase a total of 2,403,199 of our ordinary shares. Of such
options, 95,900 have been issued under the 1995 Flexible Stock Incentive Plan,
1,521,766 have been issued under the 1997 Stock Option Plan, 108,333 have been
issued under the 1998 Non-Employee Director Share Option Plan and 677,200 have
been issued under the 2000 Stock Option Plan. The options granted under the 1995
Plan, the 1997 and the 2000 Plan are subject to various vesting requirements and
have been issued at exercise prices ranging from $1 to $14.25 per share with
various expiration dates. The options granted under the 1998 Plan have an
exercise price ranging from $2.75 to $13.50 per share, are not subject to
vesting requirements, with various expiration dates. See Note 16 to NUR's
consolidated financial statements included as a part of this annual report on
Form 20-F.

As of December 31, 2000, NUR had outstanding warrants exercisable into a
total of 132,411 ordinary shares. Of such warrants, (i) 55,000 were issued to
Josephthal & Co., Inc. as placement agent in connection with NUR's private
placement between September and December 1997, (ii) 25,000 were issued to
Cruttenden Roth Incorporated in connection with its role as "qualified
independent underwriter" in a registration of ordinary shares on behalf of
certain selling security holders, (iii) 15,000 were issued to Zamir & Barak in
partial consideration for legal services rendered on behalf of NUR and
(iv) 37,411 were issued to Investec Clali Trust Company Ltd. as placement agent
in connection with NUR's private placement in September 2000. The Josephthal
private placement warrants are exercisable at $1.00 per share no later than
September and December 2002. The Cruttenden Roth warrants are exercisable at
$4.50 per share from February 2000 to February 2004. The Zamir & Barak warrants
are exercisable at $2.75 per share from January 2000 to January 2004. The
Investec Clali warrants are exercisable at $13.365 no later than
September 2005. Dan Purjes, the Chairman of NUR,

is also the Chairman of Josephthal. See "ITEM 7: Major Shareholders and Related
Party Transactions."

Of the options and warrants described above, directors and executive
officers of NUR hold options and warrants to purchase an aggregate of 599,167
ordinary shares called for by such securities.

1995 FLEXIBLE STOCK INCENTIVE PLAN

In 1995, NUR adopted the 1995 Flexible Stock Incentive Plan which provides
for grants of stock options to employees of and consultants to NUR. Options to
purchase an aggregate of 500,000 ordinary shares were originally available for
grant under the 1995 Flexible Stock Incentive Plan, as amended, including
service options for future services, options for performance, and options to
consultants for service or performance.

NUR's 1995 Flexible Stock Incentive Plan provides that it may be
administered by the Board or by a committee appointed by the Board and is
currently administered by the Stock Option and Compensation Committee subject to
Board approval. The Board determines the employees and consultants who are
granted options under the 1995 Flexible Stock Incentive Plan, the timing of such
grants, the terms thereof and the number of shares to be covered thereby. The
Board also determines the exercise price for ordinary shares subject to the
performance and consultants options under the 1995 Flexible Stock Incentive Plan
and the exercise price for the service options; provided that in no case shall
the exercise price of any service option be less than 80% of the fair market
value of such ordinary shares at the date of grant. Service options usually vest
over a four-year period. One-third of the service options vest after the second
annual anniversary of the date of grant with an additional one-third vesting on
the third and fourth anniversary of the date of grant, respectively. Performance
options vest under the same terms as applicable to the service options.
Consultants options vest over a specified period of time based on past or future
services rendered or performance targets to be achieved by NUR as determined by
the Board. Notwithstanding the foregoing, the consultants options expire ten
years following the date of grant. No option may be assigned or transferred
except by will or the laws of descent and distribution.

Under the 1995 Flexible Stock Incentive Plan, for Israeli employees, options
and ordinary shares issuable upon the exercise of options granted to Israeli
employees of NUR can be held in a trust until the payment of all taxes due with
respect to the grant and exercise (if any) of such options.

1997 STOCK OPTION PLAN

In 1997, NUR adopted the 1997 Stock Option Plan which provides for grants of
stock options to employees, directors of NUR and consultants to NUR. Options to
purchase an aggregate of 2,200,000 ordinary shares were originally available for
grant under the 1997 Stock Option Plan, as amended.

The 1997 Stock Option Plan provides that it is to be administered by the
Board or by a committee appointed by the Board and is currently administered by
the Stock Option and Compensation Committee subject to Board approval. The Board
has broad discretion to determine the persons entitled to receive options under
the 1997 Stock Option Plan, the terms and conditions on which options are
granted, and the number of ordinary shares subject thereto, up to the maximum
aggregate amount permitted under the 1997 Stock Option Plan. The Board also has
discretion to determine the purchase price to be paid upon the exercise of an
option granted under the 1997 Stock Option Plan.

The exercise price of the option shares under the 1997 Stock Option Plan is
determined by the Board; provided, however, that the exercise price of any
option granted shall not be less than eighty percent (80%) of the stock value at
the date of grant of such options. The stock value at any time is equal to the
then current fair market value of NUR's ordinary shares. For purposes of the
1997 Stock Option Plan, the fair market value means, as of any date, the last
reported sale price, on such date, of

the ordinary shares on such principal securities exchange of the most recent
prior date on which a sale of the ordinary shares took place.

The Board determines the term of each option granted under the 1997 Stock
Option Plan; provided, however, that the term of an option shall not be for more
than ten (10) years. Upon termination of employment, all unvested options lapse.
Pursuant to the 1997 Stock Option Plan, options shall vest over a three-year
period, provided that the Board may determine different vesting schedules.

The options granted are subject to restrictions on transfer, sale, or
hypothecation. All options and ordinary shares issuable upon the exercise of
options granted to Israeli employees of NUR are held in trust for a minimum of
two years in accordance with Section 102 of the Israel Income Tax Ordinance.

1998 NON-EMPLOYEE DIRECTOR SHARE OPTION PLAN

In 1998, NUR adopted the 1998 Non-Employee Director Share Option Plan to
provide for grants of options to purchase ordinary shares to non-employee
directors of NUR. The 1998 Plan is administered by the Non-Employee Directors
Share Option Committee subject to Board approval. An aggregate amount of not
more than 250,000 ordinary shares is reserved for grants under the 1998 Plan.
The 1998 Plan will expire on December 8, 2008 (10 years after adoption), unless
earlier terminated by the Board.

Under the 1998 Non-Employee Director Share Option Plan, each non-employee
director that served on the 1998 "Grant Date," as defined below, automatically
received an option to purchase 10,000 ordinary shares on such Grant Date and
will receive an option to purchase an additional 10,000 ordinary shares on each
subsequent Grant Date thereafter provided that he or she is a non-employee
director on the Grant Date and has served as such for the entire period since
the last Grant Date. The "Grant Date" means, with respect to 1998, October 26,
1998, and with respect to each subsequent year, August 1. Directors first
elected or appointed after the 1998 Grant Date, will automatically receive on
such director's first day as a director an option to purchase up to 10,000
ordinary shares prorated based on the number of full months of service between
the prior Grant Date and the next Grant Date. Each such non-employee director
would also automatically receive, as of each subsequent Grant Date, an option to
purchase 10,000 ordinary shares provided he or she is a non-employee director on
the Grant Date and has served for the entire period since the last Grant Date.

The exercise price of the option shares under the 1998 Plan is 100% of the
fair market of such ordinary shares at the date of grant of such options. The
fair market value means, as of any date, the average closing bid and sale prices
of the ordinary shares for the date in question as furnished by the National
Association of Securities Dealers, Inc. through Nasdaq or any similar
organization if Nasdaq is no longer reporting such information, or such other
market on which the ordinary shares are then traded, or if not then traded, as
determined in good faith (using customary valuation methods) by resolution of
the members of the Board of Directors of NUR, based on the best information
available to it. The exercise price is required to be paid in cash.

The term of each option granted under the 1998 Non-Employee Director Share
Option Plan is ten (10) years from the applicable Date of Grant. All options
granted vest immediately after issuance.

The options granted would be subject to restrictions on transfer, sale or
hypothecation. All options and ordinary shares issuable upon the exercise of
options granted to the non-employee directors of NUR could be withheld until the
payment of taxes due with respect to the grant and exercise (if any) of such
options.

2000 STOCK OPTION PLAN

In 2000, NUR adopted the 2000 Stock Option Plan to provide for grants of
service and non-employee options to purchase ordinary shares to officers,
employees, directors and consultants of NUR. The 2000 Stock Option Plan provides
that it may be administered by the Board or by a committee appointed by the
Board and is currently administered by the Stock Option and Compensation
Committee subject to the Board approval. An aggregate amount of not more than
1,000,000 ordinary shares is reserved for grants under the 2000 Stock Option
Plan. The 2000 Stock Option Plan will expire on August 31, 2008, unless
previously terminated or extended by the Board.

The Board has broad discretion to determine the persons entitled to receive
options under the 2000 Stock Option Plan, the terms and conditions on which
options are granted, and the number of ordinary shares subject thereto. The
exercise price of the option shares under the 2000 Stock Option Plan is
determined by the Board; provided, however, that the exercise price of any
option granted shall not be less than eighty percent (80%) of the stock value at
the date of grant of such options. The stock value at any time is equal to the
then current fair market value of NUR's ordinary shares. For purposes of the
2000 Stock Option Plan, the fair market value means, as of any date, the last
reported sale price, on such date, of the ordinary shares on such principal
securities exchange of the most recent prior date on which a sale of the
ordinary shares took place.

The Board determines the term of each option granted under the 2000 Stock
Option Plan; provided, however, that the term of an option shall not be for more
than ten (10) years. Upon termination of employment, all unvested options lapse.
All options granted vest over a three to four-year period at the discretion of
the Board. One third of such options vest after the first or second anniversary
of the date of grant, one third after the second or third anniversary, and the
final third after the third or fourth anniversary of the date of grant.
Notwithstanding the foregoing, the Board may determine different vesting
schedules for consultant options in special circumstances.

The options granted are subject to restrictions on transfer, sale or
hypothecation. Under the 2000 Stock Option Plan, for Israeli employees, options
and ordinary shares issuable upon the exercise of options granted to Israeli
employees of NUR can be held in a trust until the payment of all taxes due with
respect to the grant and exercise (if any) of such options.

INDEMNIFICATION OF EXECUTIVE OFFICERS AND DIRECTORS

The Israeli Companies Law, 5759-1999, authorizes NUR to indemnify an officer
or director for (a) monetary liability imposed upon him or her in favor of other
persons pursuant to a court judgment, including a compromise judgment or an
arbitrator's decision approved by a court, and (b) reasonable litigation
expenses, including attorneys' fees, actually incurred by him or her imposed
upon him or her by a court, in an action, suit or proceeding brought against him
or her by or on behalf of the company or other persons, or in connection with a
criminal action that does not require criminal intent in which he or she was
convicted, in each case in connection with his or her activities as an office
holder.

In addition, a policy of directors' and officers' liability insurance is
maintained by us that insures our directors and officers and those of our
subsidiaries against liability incurred by, arising from or against them for
certain of their acts, errors or omissions.

BOARD PRACTICES

TERMS OF DIRECTORS

The Board of Directors currently consists of six members, including two
external directors. Unless otherwise prescribed by resolution, the Board shall
consist of not less than four (4) nor more than twelve (12) directors. The
members of the Board are elected annually at NUR's general meeting and remain in
office until the next annual general meeting of NUR, unless the director has
previously

resigned, vacated his office, or was removed in accordance with NUR's Articles
of Association. In addition, the Board may elect additional members to the
Board. The members of the Board do not receive any additional remuneration upon
termination of their services as directors.

Pursuant to the Companies Law, the two external directors of the Board serve
for a period of three (3) years unless their office is vacated earlier in
accordance with NUR's then current Articles of Association and the Companies
Law.

ALTERNATE DIRECTORS

The Articles of Association provide that, subject to the Board's approval, a
director may appoint an individual, by written notice to NUR, to serve as an
alternate director. The following persons may not be appointed nor serve as an
alternate director: (i) a person not qualified to be appointed as a director,
(ii) an actual director, or (iii) another alternate director. Any alternate
director shall have all of the rights and obligations of the director appointing
him or her, except the power to appoint an alternate (unless the instrument
appointing him or her expressly provides otherwise). The alternate director may
not act at any meeting at which the director appointing him or her is present.
Unless the appointing director limits the time period or scope of any such
appointment, such appointment is effective for all purposes and for an
indefinite time, but will expire upon the expiration of the appointing
director's term. There are currently no alternate directors.

COMMITTEES OF THE BOARD OF DIRECTORS

APPROVAL OF CERTAIN TRANSACTIONS UNDER THE ISRAELI COMPANIES LAW; AUDIT
COMMITTEE

The Companies Law requires disclosure by an "Office Holder" (as defined
below) to NUR in the event that an Office Holder has a direct or indirect
personal interest in a transaction to which NUR intends to be a party, and
codifies the duty of care and fiduciary duties which an Office Holder has to
NUR. An "Office Holder" is defined in the Companies Law as a director, general
manager, chief business manager, vice general manager, other manager directly
subordinate to the general manager and any other person assuming the
responsibilities of any of the foregoing positions without regard to such
person's title.

The Companies Law requires that certain transactions, actions and
arrangements must be approved by the Audit Committee, by the Board and, in
certain circumstances, by the shareholders of NUR. NUR is also required to
maintain the Audit Committee as a result of the inclusion for quotation of the
ordinary shares on the Nasdaq National Market. The Audit Committee must be
composed of members of the Board who are not employees of NUR, the external
directors and the majority of members of the Audit Committee may not be holders,
directly or indirectly through family members, of more than five percent of the
ordinary shares.

NUR's Audit Committee currently consists of Orit Leitman, Gideon Shenholz,
Hugo Chaufan and Robert F. Hussey. Approval by the Audit Committee and the Board
is required for (i) proposed transactions to which NUR intends to be a party in
which an Office Holder has a direct or indirect personal interest, (ii) actions
or arrangements which may otherwise be deemed to constitute a breach of
fiduciary duty or of the duty of care of an Office Holder to NUR,
(iii) arrangements with directors as to the terms of office or compensation, and
(iv) indemnification of Office Holders. Arrangements with directors as to the
terms of their service or compensation also require shareholder approval. All
arrangements as to compensation of Office Holders who are not directors require
approval of the Board. In certain circumstances, the matters referred to in (i),
(ii), and (iv) may also require shareholder approval.

Office Holders (including directors) who have a personal interest in a
matter which is considered at a meeting of the Board or the Audit Committee may
not be present at such meeting, may not

participate in the discussion, and may not vote on any such matter, except that
such Office Holders may consent in writing to resolutions adopted by the Board
and/or the Audit Committee by unanimous consent.

The requirements of The Nasdaq Stock Market, Inc. provide that the Audit
Committee reports, among other things, that it has reviewed and discussed the
consolidated financial statements for the year ended December 31, 2000 with the
management of NUR.

The Audit Committee has discussed with the independent auditor the matters
covered by Statement on Auditing Standards No. 61, as well as the independence
of the independent auditor and was satisfied as to the independent auditor's
compliance with said standards.

STOCK OPTION AND COMPENSATION COMMITTEE

In March 1998, NUR established a Stock Option and Compensation Committee to
administer NUR's stock option plans, other than the 1998 Non-Employee Director
Share Option Plan. The Stock Option and Compensation Committee is charged with
administering and overseeing the allocation and distribution of stock options
under the approved stock option plans of NUR and the approval of the NUR's
executive officer's annual compensation. The Companies Law provides that the
Board is not entitled to delegate to Board committees its power, among other
things, to allocate shares or securities convertible into shares of NUR.
Accordingly, all recommendations of the Stock Option and Compensation Committee
are subject to the Board approval. The Stock Option and Compensation Committee
is presently composed of three members: Dan Purjes, Hugo Chaufan and Robert F.
Hussey.

NON-EMPLOYEE DIRECTOR SHARE OPTION PLAN COMMITTEE

In February 1999, NUR established a committee to administer the NUR's 1998
Non-Employee Director Share Option Plan (the "NEDSOP Committee"). The NEDSOP
Committee is charged with administering and overseeing the allocation and
distribution of stock options under the 1998 Non-Employee Director Share Option
Plan. The Companies Law provides that the Board is not entitled to delegate to
Board committees its power, among other things, to allocate shares or securities
convertible into shares of NUR. Accordingly, the Non-Employee Director Share
Option Plan Committee recommendations are subject to the Board's approval. The
NEDSOP Committee is presently composed of one member: Erez Shachar.

EMPLOYEES

As of December 31, 2000, we had 528 employees and independent contractors
devoting substantially all of their time to us. Of these individuals, 106 were
in sales and marketing, 80 were in research and development, 111 were in
customer support and, 135 were in operations and production and 96 were in
finance and administration. During the 12-month period ended December 31, 2000,
we added approximately 300 employees. Approximately 110 of these individuals
were previously employed by Salsa Digital, Ltd. and moved to NUR when we
acquired substantially all of the assets and related liabilities of Salsa
Digital, Ltd. in July 2000. As of December 31, 2000, we had 122 employees
located in Israel, 99 employees located in Belgium, 215 employees located in the
U.S. and 92 employees located in Asia Pacific. NUR has recently announced a
restructuring plan of its U.S. operations that is anticipated to result in a
reduction in its workforce. See "ITEM 5: Operating and Financial Review and
Prospects--Restructuring Plan." We believe our relations with employees are
satisfactory.

SHARE OWNERSHIP

The following table sets forth certain information regarding the beneficial
ownership of NUR's ordinary shares as of March 31, 2001 of (i) each director of
NUR and (ii) each executive officer of NUR. All of the information with respect
to beneficial ownership of the ordinary shares is given to the best of NUR's
knowledge and has been furnished in part by the respective directors and
executive officers.

NUMBER OF SHARES
NAME OF BENEFICIAL OWNER BENEFICIALLY HELD(1) PERCENT OF CLASS
- ------------------------ --------------------------------------- ----------------

Dan Purjes(2)......................... 4,733,171 32.4%
Erez Shachar(3)....................... 229,067 1.5%
Hilel E. Kremer....................... * *
Miriam Tal............................ * *
Eliahu Shalev......................... * *
Ron Michael........................... * *
Hugo R. Chaufan....................... * *
Robert F. Hussey...................... * *
Orit Leitman.......................... * *
Gideon Shenholz....................... * *

- ------------------------

- - Less than one percent of the outstanding ordinary shares.

(1) As used in this table, "beneficial ownership" means the sole or shared power
to vote or direct the voting or to dispose or direct the disposition of any
security. For purposes of this table, a person is deemed to be the
beneficial owner of securities that can be acquired within 60 days from
March 31, 2001 through the exercise of any option or warrant. Ordinary
shares subject to options or warrants that are currently exercisable or
exercisable within 60 days are deemed outstanding for computing the
ownership percentage of the person holding such options or warrants, but are
not deemed outstanding for computing the ownership percentage of any other
person. The amounts and percentages are based upon 14,593,452 ordinary
shares outstanding as of March 31, 2001.

(2) Mr. Purjes beneficially owned 4,536,263 ordinary shares of NUR, or
35.8 percent of the NUR's ordinary shares, as of April 5, 2000. Mr. Purjes
beneficially owned 4,285,151 ordinary shares of NUR, or 37.3 percent of
NUR's ordinary shares, as of April 16, 1999.

(3) Includes 196,067 options that are exercisable within 60 days of March 31,
2001.

The directors and officers of NUR hold, in the aggregate, options and
warrants exercisable into 599,167 ordinary shares. Under the 1998 Non-Employee
Director Share Option Plan, each of Messrs. Robert Hussey and Dan Purjes, both
of whom are directors of NUR, were granted on October 26, 1998 an option to
purchase 10,000 ordinary shares, and on August 1, 1999, they were granted an
additional option to purchase 10,000 ordinary shares. Mr. Hugo Chaufan, a
director, was granted an option to purchase 8,333 ordinary shares of NUR on
October 1, 1999. Messrs. Robert Hussey, Dan Purjes and Hugo Chaufan were granted
on August 1, 2000 an option to purchase 10,000 ordinary shares. The exercise
price for the underlying shares of such options is the fair market value (as
defined in the 1998 Non-Employee Director Share Option Plan) of the ordinary
shares of NUR at the date of grant. These options expire ten (10) years from the
date of grant.

ITEM 7: MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

MAJOR SHAREHOLDERS

The following table sets forth information regarding the beneficial
ownership of NUR's ordinary shares as of March 31, 2001, by each person known by
NUR to be the beneficial owner of more than

5% of our outstanding ordinary shares. Each of our shareholders has identical
voting rights with respect to its shares. All of the information with respect to
beneficial ownership of the ordinary shares is given to the best of NUR's
knowledge and has been furnished in part by the beneficial owner.

ORDINARY SHARES PERCENTAGE OF ORDINARY SHARES
BENEFICIALLY OWNED BENEFICIALLY OWNED (1)
------------------ -----------------------------

Dan Purjes(2)....................................... 4,733,171 32.4%
Isal Amlat Investment (1993) Ltd.................... 759,600 5.2%

- ------------------------

(1) Based on a total of 14,593,452 ordinary shares outstanding as of March 31,
2001.

(2) Dan Purjes is Chairman of NUR. Mr. Purjes beneficially owned 4,536,263
ordinary shares of NUR, or 35.8 percent of NUR's ordinary shares, as of
April 5, 2000. Mr. Purjes beneficially owned 4,285,151 ordinary shares of
NUR, or 37.3 percent of NUR's ordinary shares, as of April 16, 1999.

As of May 7, 2001, there were 106 record holders of ordinary shares, of
which 61 represented United States record holders holding approximately 89.2% of
the outstanding ordinary shares of NUR.

RELATED PARTY TRANSACTIONS

For various services rendered to NUR Europe S.A. and NUR Media Solutions
S.A. by Sorly Ltd., a company wholly owned by Erez Shachar, NUR Europe S.A. and
NUR Media Solutions S.A. each paid Sorly Ltd. the sum of $9,250 per quarter
during 2000.

See "ITEM 10: Additional Information--Material Contracts" and Note 15 to
NUR's consolidated financial statements, which are included as a part of this
annual report, for a further discussion of transactions and balances with
related parties.

INTERESTS OF EXPERTS AND COUNSEL

Not Applicable.

ITEM 8: FINANCIAL INFORMATION

See pages F-1 to F-39.

ITEM 9: THE OFFER AND LISTING

Not Applicable, except for ITEMS 9A(4) and Item 9C, which are detailed
below.

NUR's ordinary shares are quoted on the Nasdaq National Market under the
symbol "NURM." NUR's ordinary shares have been traded on the Nasdaq National
Market since October 1995.

The prices set forth below are high and low closing bid prices for the
ordinary shares of NUR as reported by Nasdaq National Market for the fiscal year
ended December 31 of each year indicated below, as of the end of each fiscal
quarter indicated below, and for each month for the six-month period ending
April 30, 2001. Such quotations reflect inter-dealer prices, without retail
markup, markdown, or commission and may not necessarily represent actual
transactions.

YEAR HIGH LOW
- ---- -------- --------

1996...................................................... 5.125 1.5
1997...................................................... 2.25 1
1998...................................................... 4.5 1.625
1999...................................................... 13 2.375
2000...................................................... 21 7.3125

QUARTER HIGH LOW
- ------- -------- --------

1999:
First Quarter............................................. 3.75 2.37
Second Quarter............................................ 6.625 2.75
Third Quarter............................................. 9.5 5.4375
Fourth Quarter............................................ 13 7.125

2000:
First Quarter............................................. 21 10.25
Second Quarter............................................ 17.25 11.5
Third Quarter............................................. 15.9375 12.6875
Fourth Quarter............................................ 15 7.3125

2001:
First Quarter............................................. 9 5.9375

MOST RECENT SIX MONTHS HIGH LOW
- ---------------------- -------- --------

April 2001................................................ 5.7812 3.75
March 2001................................................ 9 5.9375
February 2001............................................. 9.75 7.375
January 2001.............................................. 9.625 6.25
December 2000............................................. 12.5 7.3125
November 2000............................................. 15 10.875

NUR does not anticipate that it will pay any cash dividend on its ordinary
shares in the foreseeable future. Dividends, if any, will be paid in NIS.
Dividends paid to shareholders outside Israel will be converted to U.S. dollars,
on the basis of the exchange rate prevailing at the date of payment. NUR has
determined that it will not distribute dividends out of tax-exempt profits.

ITEM 10: ADDITIONAL INFORMATION

SHARE CAPITAL

Not applicable.

MEMORANDUM OF ASSOCIATION AND AMENDED AND RESTATED ARTICLES OF ASSOCIATION

Set forth below is a brief description of certain provisions contained in
the Memorandum of Association, the Amended and Restated Articles of Association
as well as certain statutory provisions of Israeli law. The Memorandum of
Association and the Articles have been filed as exhibits to this annual report
or incorporated by reference herein. The description of certain provisions does
not purport to be a complete summary of these provisions and is qualified in its
entirety by reference to such exhibits.

AUTHORIZED SHARE CAPITAL

The authorized share capital of NUR is NIS fifty million (50,000,000),
divided into fifty million ordinary shares.

PURPOSE AND OBJECTIVE

Pursuant to Section 3.1 of NUR's Articles, our objective is to undertake any
lawful activity, including any objective set forth in our Memorandum of
Association. Pursuant to Section 3.2 of our Articles, our purpose is to operate
in accordance with commercial considerations with the intentions of generating
profits.

BOARD OF DIRECTORS

Under the Israeli Companies Law, 5759-1999, the Board is authorized to set
NUR's strategy and supervise the performance of the duties and actions of NUR's
Chief Executive Officer. The Board may not delegate to a committee of the Board
or the Chief Executive Officer the right to decide on certain of the authorities
vested with it, including determination of NUR's strategy, distributions,
issuances of securities and approval of financial reports. The powers conferred
upon the Board are vested in the Board as a collective body and not in each one
or more of the directors individually. Unless otherwise set forth in a
resolution of the shareholders, the Board shall consist of not less than four
(4) nor more than twelve (12) directors (including any external directors whose
appointment is mandated under the Companies Law).

The directors are elected annually at a general meeting of shareholders and
remain in office until the next annual meeting at which time they shall retire,
unless their office is previously vacated as provided in the Articles. A
retiring director may be reelected. If no directors are elected at the annual
meeting, all of the retiring directors remain in office pending their
replacement at a general meeting. Holders of the ordinary shares do not have
cumulative voting rights in the election of directors. Consequently, the holders
of ordinary shares in the aggregate conferring more than 50% of the voting power
represented in person or by proxy will have the power to elect all the
directors. Pursuant to the Israeli Companies Law, publicly traded companies must
appoint two external directors to serve on their Board of Directors and Audit
Committee. The external directors are appointed for a 3-year term. The election
of external directors requires the vote of the majority of the voting power
represented at the meeting, provided that either (i) such a majority includes at
least one third of the shareholders present who do not qualify as controlling
shareholders (as such term is defined in the Israeli Companies Law) or (ii) the
aggregate number of shares held by non-controlling shareholders voting at the
meeting against such election does not exceed one percent of the outstanding
voting rights of the company.

Subject to the provisions of Israeli Companies Law, the Board may approve
each of the following transactions that are not detrimental to the best interest
of NUR: (i) a transaction to which NUR is a party to, and in which an officer of
NUR has an interest; (ii) a transaction between NUR and an officer of NUR;
(iii) a private offer of NUR's securities to a holder of five percent (5%) or
more of NUR's shares; or (iv) such other transactions that require special
approval pursuant to the Companies Law. In the event of an extraordinary
transaction or the approval of the terms of service or employment (including any
waiver, insurance or indemnification) of an officer of NUR, such

transaction shall require additional approvals of the Audit Committee, or of the
Audit Committee and of a meeting of shareholders, by regular or special
majority, all as stipulated by the Companies Law. Any officer who has an
interest in a transaction shall not participate in the meeting of the Board or
Audit Committee in which such transaction is considered and shall not vote in
such meeting, provided that if the majority of the members of the Board or the
Audit Committee have an interest in the transaction, they may attend and vote at
the meeting and then the transaction must also be approved by a general meeting.

No person shall be disqualified to serve as a director by reason of his not
holding shares in NUR. Additionally, there is no age limit for the retirement of
directors.

RIGHTS OF SHAREHOLDERS

No preemptive rights are granted to holders of ordinary shares under the
Articles or the Israeli Companies Law. Each ordinary share is entitled to one
vote on all matters to be voted on by shareholders, including the election of
directors. Non-residents of Israel may freely hold and trade the ordinary shares
pursuant to general and specific permits issued under Israel's Currency Control
Law, 1978. Neither the Memorandum of Association nor the Articles make any
distinction between residents and non-residents of Israel with respect to the
ownership of ordinary shares. The Memorandum of Association, the Articles and
Israeli law do not make any distinction between residents and non-residents of
Israel with respect to the voting rights related thereto.

An annual meeting of shareholders must be held once in every calendar year
at such time (within a period of not more than fifteen months after the last
preceding annual meeting) and at such place as may be determined by the Board.
The Board may, at any time, convene general meetings of shareholders, and shall
be obligated to do so upon receipt of a requisition in writing in accordance
with Israeli law. Prior to any general meeting a written notice thereof shall be
delivered to all registered holders and to all other persons entitled to attend,
and shall be otherwise made public as required by Israeli law.

Two or more members present in person or by proxy and holding shares
conferring in the aggregate more than 33 1/3% of the total voting power attached
to our shares shall constitute a quorum at general meetings. If a meeting is
adjourned due to the lack of a quorum, one or more shareholders, holding not
less than 33 1/3% of all the outstanding voting power attached to the ordinary
shares, present in person or by proxy at the subsequent adjourned meeting, will
constitute a quorum. Unless provided otherwise by the terms of issue of the
shares, no member shall be entitled to be present or vote at a general meeting
(or to be counted as part of the quorum) unless all amounts due as of the date
designated for same general meeting with respect to his shares were paid. To be
deemed adopted, a resolution requires the affirmative vote of shareholders
present and holding in person or by proxy a majority of the shares present.
Certain resolutions (for example, a resolution to amend the Articles or the
Memorandum of Association) require the affirmative vote of shareholders present
in person or by proxy and holding shares conferring at least 75% of the votes to
be deemed adopted.

DIVIDENDS AND PROFITS

The Board may from time to time, subject to the provisions of Israeli
Companies Law, declare and order the payment of a dividend from NUR's accrued
profits at the rate it may deem, provided that there is no reasonable concern
that payment of such dividend may prevent NUR from meeting its current and
expected liabilities when they become due. Subject, if any, to special or
restricted rights conferred upon the holders of shares as to dividends, the
dividends shall be distributed in accordance with the paid-up capital of the
company attributable to the shares for which the dividend has been declared. Our
obligation to pay dividends or any other amount in respect of shares, may be
set-off against any indebtedness, however arising, liquidated or non-liquidated,
of the person entitled to receive the dividend. Any dividend unclaimed within
the period of seven years from the date stipulated

for their payment, shall be forfeited and returned to us, unless otherwise
directed by the Board. In the event of the winding up of the company, then,
subject to provisions of any applicable law and to any special or restricted
rights attached to a share, our assets in excess of our liabilities will be
distributed among the stockholders in proportion to the paid-up capital
attributable to the shares in respect of which the distribution is being made.

MATERIAL CONTRACTS

LOD LEASE AGREEMENT

We entered into a lease agreement with A. Barzilai Investments and Assets
Ltd. and Kamim Investments and Assets Ltd., commencing on November 1, 2000, that
provides for monthly rent payments of $63,750, with each rent payment to be paid
three months in advance. The lease agreement has an initial term of five years.
We have two separate two and one-half year options to extend the lease. The rent
for the first option period will increase 6% from the current rental payment.
The rent for the second option period will increase 7% from the current rental
payment.

NUR PRO ENGINEERING FOUNDERS AGREEMENT

On September 30, 1999, we entered into a Founders Agreement with Gera Eiron
and Ogen DialogiX Ltd. ("Ogen") to form NUR Pro Engineering Ltd., a company
established to assemble the NUR Blueboard and NUR Fresco printers, execute
development works and, subject to a future agreement, assemble additional
printers. Pursuant to the Founders Agreement, NUR Pro Engineering agreed to
assemble the first one hundred Fresco printers exclusively and, subject to
certain conditions, was provided a right of first refusal with respect to
additional assembly of NUR Fresco printers. In order to execute on the assembly
of the printers, NUR Pro Engineering engaged in an agreement with ITS Machine
Development Ltd. pursuant to which, among other things, NUR Pro Engineering
purchased from ITS for $450,000 the fixed assets that ITS previously used in
executing the assembly of the Blueboard printers.

We and Ogen each loaned NUR Pro Engineering $175,000, bearing an annual
interest rate of 3%, to be repaid out of NUR Pro Engineering's profits from time
to time in such a way that will not harm its management and operations. In
addition, we loaned NUR Pro Engineering an additional $100,000, interest free,
which is due upon the earlier of 20 years from the grant date or upon the
liquidation of NUR Pro Engineering.

We own fifty percent of the outstanding capital stock of NUR Pro
Engineering, and Ogen owns the other fifty percent. Transfer of NUR Pro
Engineering's shares by any shareholder is subject to a right of first refusal
to the other shareholder as well as tag-along rights. Each shareholder has
certain preemptive rights as to the issuance of additional equity of NUR Pro
Engineering. Finally, we have the option to purchase the shares owned by Ogen
under certain circumstances, and Ogen may force our purchase of such shares
under other circumstances.

NUR PRO ENGINEERING ASSEMBLY AGREEMENT

On October 4, 1999, we entered into an Assembly Agreement with NUR Pro
Engineering pursuant to which NUR Pro Engineering has agreed to act as an
independent contractor to assemble the NUR Blueboard printers, NUR Fresco
printers, machines for laminating wide formats and, if agreed to in the future,
other machines. NUR Pro Engineering is entitled to certain payments for the
assembly of the NUR Blueboard printers. The consideration for the work on the
NUR Fresco Printers, laminating machine or other printers is to be determined by
agreement of the parties by adding the direct and indirect costs to NUR Pro
Engineering in implementing the work, plus an amount equal to a percentage of
such costs. Under the terms of the Agreement, NUR Pro Engineering grants an
18 month warranty for its work, including the mechanical operations of the
printers, the functioning of all elements of the printers it supplies, and the
assembly of the printers.

Pursuant to the agreement, we have granted NUR Pro Engineering the exclusive
right to assemble the Blueboard printers, including other printers based on the
engineering design of such printers. We also granted NUR Pro Engineering the
exclusive right to execute the work on the first one hundred NUR Fresco
printers, including other printers based on the engineering design of such
printers. NUR Pro Engineering has right of first refusal on the additional
assembly of NUR Fresco printers upon certain conditions. The agreement remains
in force until the later of (a) the termination of the Blueboard work, (b) the
termination of the execution of the first one hundred Fresco printers and
(c) the termination of the execution of any additional work given to NUR Pro
Engineering. We are entitled to terminate the agreement immediately upon a
fundamental violation of the agreement by NUR Pro Engineering, as further set
forth in the agreement.

SALSA ASSET PURCHASE AGREEMENT

On May 17, 2000, we entered into an Asset Purchase Agreement by and among
Salsa Digital, Ltd. ("Salsa Digital") and Signtech Japan, Ltd., Salsa Digital DO
Brasil, Ltda., Salsa Digital (Guangzhou) Ltd., Salsa Dubai Corp., Salsa
Technology Pte Ltd. (collectively, the "Selling Subsidiaries"), and NUR and
Salsa Digital Printers Ltd. and Nur Hungary Trading and Software Licensing
Limited Liability Company (together the "Purchasing Subsidiaries"). The Asset
Purchase Agreement was amended as of June 30, 2000, to, among other things, add
NUR Asia Pacific Ltd., NUR Europe S.A. and Encre Consumables B.V. as Purchasing
Subsidiaries.

Pursuant to the Asset Purchase Agreement, the Purchasing Subsidiaries
acquired all of the rights, title and interests in Salsa Digital's purchased
assets, and acquired an option to purchase the rights, title and interests in
all or a portion of the purchased assets held by each Selling Subsidiary, or at
our or the Purchasing Subsidiaries' option, 100% of the outstanding capital
stock of some or all of the Selling Subsidiaries in lieu thereof. Purchased
assets included, without limitation, all cash and cash equivalents, all
furniture, fixtures, improvements, equipment and all other tangible personal
property, all accounts receivable, all claims and rights relating to the
purchased assets, all intellectual property relating to the business of Salsa
Digital, all rights and interests under all contracts, leases or permits which
the Purchasing Subsidiaries elected to assume, and all other assets except for
the excluded assets. Excluded assets included, without limitation, all bank
accounts held by Salsa Digital (with certain enumerated exceptions) and certain
deposits and prepaid expenses. NUR and the Purchasing Subsidiaries are solely
liable for the liabilities related to trade payables, operational liabilities
directly relating to the business of Salsa Digital and/or the purchased assets,
and as further set forth in the Asset Purchase Agreement. All other liabilities
remain the responsibility of Salsa Digital. The purchase price paid was
$30,000,005, which consisted of a cash payment of $20,000,000 and the delivery
of 666,667 NUR ordinary shares to Salsa Digital. The Purchasing Subsidiaries did
not elect to exercise the option to purchase any of the purchased assets or
outstanding capital stock of the Selling Subsidiaries. NUR filed a registration
statement on Form F-3, which became effective on December 22, 2000, to permit
the resale of the shares sold as described above.

EXCHANGE CONTROLS

Israeli law places limitations on foreign currency transactions and
transactions between Israeli and non-Israeli residents, including payment of
dividends. The Controller of Foreign Exchange at the Bank of Israel, through
permits, may regulate or waive these limitations. As of May 1998, foreign
currency transactions are generally permitted, although certain restrictions
still apply. Restricted transactions include foreign currency transactions by
institutional investors, including futures contracts by foreign residents for
periods of more than one month, and investments outside of Israel by pension
funds and insurers. Under the permit, all foreign currency transactions must be
reported to the Bank of Israel.

TAXATION

CAPITAL GAINS AND INCOME TAXES APPLICABLE TO NON-ISRAELI SHAREHOLDERS

The following is a summary of the current tax laws of the State of Israel as
they relate to NUR and our shareholders. This summary does not discuss all
aspects of Israeli tax law that may be relevant to a particular investor in
light of his personal investment circumstances or to certain types of investors
subject to special treatment under Israeli law (for example, traders in
securities, businesses in Israel or persons that own, directly or indirectly,
10% or more of NUR's outstanding voting stock). The following also includes a
discussion of certain Israeli government programs benefiting various Israeli
businesses such as NUR. To the extent that the discussion is based on new
legislation yet to be subject to judicial or administrative interpretation,
there can be no assurance that the views expressed herein will accord with any
such interpretation in the future. This discussion is not intended and should
not be construed as legal or professional tax advice, and does not cover all
possible tax considerations.

GENERAL CORPORATE TAX STRUCTURE

NUR is subject to corporate tax in Israel. Commencing in the tax year 1993
through and including 1996, the regular rate of corporate tax to which Israeli
companies are subject decreased by 1% each year, i.e., from 39% in 1993 down to
36% in 1996 and thereafter. However, the effective rate payable by a company
which derives income from an "Approved Enterprise" (as further discussed below)
may be considerably less. See "--Law for the Encouragement of Capital
Investments, 1959."

TAXATION UNDER INFLATIONARY CONDITIONS

The Income Tax Law (Adjustment for Inflation), 1985 (the "Adjustment for
Inflation Law") attempts to overcome some of the problems experienced in a
traditional tax system by an economy experiencing rapid inflation, which was the
case in Israel at the time the Adjustment for Inflation Law was enacted.
Generally, the Adjustment for Inflation Law was designed to neutralize for
Israeli tax purposes the erosion of capital investments in businesses and to
prevent unintended tax benefits resulting from the deduction of inflationary
financing expenses. The Adjustment for Inflation Law applies a supplementary set
of inflationary adjustments to taxable profit computed according to regular
historical cost principles.

The Adjustment for Inflation Law introduced a special tax adjustment for the
preservation of equity based on changes in the Israeli CPI whereby certain
corporate assets are classified broadly into fixed (inflation resistant) assets
and non-fixed assets. Where shareholders' equity, as defined in the Adjustment
for Inflation Law, exceeds the depreciated cost of fixed assets, a corporate tax
deduction which takes into account the effect of inflationary change on such
excess is allowed (up to a ceiling of 70% of taxable income for companies in any
single tax year, with the unused portion permitted to be carried forward on a
linked basis with no ceiling). If the depreciated cost of fixed assets exceeds
shareholders' equity, then such excess multiplied by the annual rate of
inflation is added to taxable income. Due to the zero inflation that prevailed
in Israel in 2000, such adjustments to taxable income will not be required for
the year 2000.

In addition, subject to certain limitations, depreciation on fixed assets
and losses carried forward are adjusted for inflation based on changes in the
Israeli CPI. The net effect of the Adjustment for Inflation Law on NUR might be
that NUR's taxable income, as determined for Israeli corporate tax purposes,
will be different than NUR's U.S. dollar income, as reflected in our
consolidated financial statements, due to the difference between the annual
changes in the CPI and in the NIS exchange rate with respect to the U.S. Dollar,
causing changes in the effective tax rate.

LAW FOR THE ENCOURAGEMENT OF INDUSTRY (TAXES), 1969

NUR currently qualifies as an "Industrial Company" within the definition of
the Law for the Encouragement of Industry (Taxes), 1969 (the "Industry
Encouragement Law"). According to the Industry Encouragement Law, an "Industrial
Company" is a company resident in Israel, which at least 90% of its income of
which in any tax year (exclusive of income from any defense loans, capital
gains, interest and dividends), is derived from an "Industrial Enterprise" owned
by it. An "Industrial Enterprise" is defined by that law as an enterprise whose
major activity in a given tax year is industrial production activity.

Included among the tax benefits for an Industrial Company are deductions of
12.5% per annum of the purchase price of a good-faith acquisition of a patent or
of know-how, an election under certain conditions to file a consolidated return
and accelerated depreciation rates on equipment and buildings.

Eligibility for the benefits under the Industry Encouragement Law is not
subject to receipt of prior approval from any governmental authority. No
assurance can be given that NUR will continue to qualify as an "Industrial
Company" or that the benefits described above will be available in the future.

LAW FOR THE ENCOURAGEMENT OF CAPITAL INVESTMENTS, 1959

The Law for the Encouragement of Capital Investments, 1959, as amended (the
"Investment Law"), provides that a capital investment in production facilities
(or other eligible facilities) may, upon application to the Israel Investment
Center, be designated as an Approved Enterprise. Each certificate of approval
for an Approved Enterprise relates to a specific program delineated both by its
financial scope, including its capital sources, and its physical
characteristics, I.E., the equipment to be purchased and utilized pursuant to
the program. The tax benefits derived from any such certificate of approval
relate only to taxable profits attributable to the specific Approved Enterprise.

Taxable income of a company derived from an Approved Enterprise designated
as such is subject to corporate tax at the rate of 25% or less based on the
percentage of foreign ownership of the company (rather than the regular
corporate tax rate of 36%) throughout the "Benefit Period"--a period of seven
years commencing with the year in which the Approved Enterprise first generated
taxable income (limited to the earlier of twelve years from the commencement of
production or fourteen years from the date of approval) and under certain
circumstances, extending to a maximum of ten years therefrom. In the event a
company operates under more than one approved plan or only part of its capital
investments are approved (a "Mixed Enterprise"), its effective corporate tax
rate is the result of a weighted combination of the various applicable rates.

In addition, a company owning an Approved Enterprise approval may elect to
forego certain government grants for its Approved Enterprise in exchange for an
"alternative package" of tax benefits (the "Alternative Package"). Under the
Alternative Package, a company's undistributed income derived from an Approved
Enterprise will be exempt from corporate tax for a period of between two and ten
years, depending on the geographic location of the Approved Enterprise within
Israel, and such company will be eligible for the tax benefits under the
Investment Law described above for the remainder of the Benefits Period.

Part of NUR's production facilities have been granted the status of
"Approved Enterprise" under the Investment Law, under three separate investment
plans. The implementation of the investments under the first plan was completed
in 1993. The implementation of the second plan was finalized in 1999. NUR's
application for a third plan was approved in 2000.

According to the provisions of the Investment Law, NUR chose to enjoy
"alternative benefits"--waiver of grants in return for tax benefits.
Accordingly, NUR's income from the Approved Enterprise will be tax-exempt for a
period of two years for the first and the third plans and for a period of four
years for the second plan, commencing with the year it first earns taxable
income, and subject to corporate tax at the rate of 20% (or less based on the
percentage of foreign ownership of the

company), for additional periods of five, six and eight years, for the first,
second and third plans, respectively.

The period of tax benefits, detailed above, is subject to limits of twelve
years from the commencement of production, or fourteen years from receiving the
approval, whichever is earlier. Given the above mentioned conditions, the period
of benefits for the first plan commenced in the year 1994 and terminated in the
year 2000, and the period of benefits for the second plan commenced in the year
1999 and will terminate in the year 2006. The period of benefits for the third
plan has not yet been determined.

If dividends are distributed out of profits derived from "Approved
Enterprise", NUR will be liable for corporate tax at the rate, which would have
been applied if it had not chosen the alternative tax benefits (currently 15% to
20% based on the percentage of foreign ownership of NUR for an "Approved
Enterprise"). Therefore, income derived from NUR's "Approved Enterprise"
tax-exempt profits, is not available for distribution to shareholders as a
dividend. See Note 17(a) to NUR's consolidated financial statements, which are
included as a part of this annual report on Form 20-F.

The dividend recipient is taxed at the reduced rate applicable to dividends
from Approved Enterprises (15%), if the dividend is distributed during the tax
benefits period or within a twelve years period thereafter, or for an unlimited
period in the case of a "Foreign Investors' Company"--a company over 25%
foreign-owned with an approved enterprise. This tax must be withheld by the
company at source, regardless of whether the dividend is converted into foreign
currency. See "--Capital Gains and Income Taxes Applicable to Non-Israeli
Shareholders."

Subject to certain provisions concerning income subject to the Alternative
Package, all dividends are considered to be attributable to the entire
enterprise, and the effective tax rate is the result of a weighted combination
of the various applicable tax rates.

The Investment Law also provides that an Approved Enterprise is entitled to
accelerated depreciation on its property and equipment that are included in an
approved investment program.

Grants and certain other incentives received by a company in accordance with
the Investment Law remain subject to final ratification by the Israel Investment
Center, such ratification being conditional upon fulfillment of all terms of the
approved program. Failure to comply with all such terms may require the return
of such grants and incentives (inclusive of interest as of the date of the
grant).

NUR's existing "Approved Enterprise" status and any new programs, if and
when approved, are subject to various conditions. The tax benefits derived from
NUR's "Approved Enterprise" status are conditioned upon fulfillment of the
conditions stipulated by the Investment Law, the regulations promulgated
thereunder and the criteria set forth in the certificate of approval issued
pursuant to the Investment Law. In the event of a failure by NUR to comply with
these conditions and criteria, the grants and tax benefits could be canceled, in
whole or in part, and NUR would be required to refund the amount of the canceled
benefits, adjusted for inflation, interest and penalties. Management believes
that NUR has operated and will continue to operate in compliance with all the
"Approved Enterprise" conditions and criteria applicable to us from the Office
of Chief Scientist, the Marketing Fund and our "Approved Enterprise" status,
although there can be no assurance of this, and that the likelihood is remote
that we will be required to refund grants or tax benefits that we derive from
the Office of Chief Scientist, the Marketing Fund and under our "Approved
Enterprise" status. There can be no assurance that the funding and tax benefits
will continue. See "ITEM 4: Information on NUR--Research and Development" and
"ITEM 3: Key Information--Risk Factors--We rely upon government grants, tax
benefits, and other funding from third parties."

CAPITAL GAINS AND INCOME TAXES APPLICABLE TO NON-ISRAELI SHAREHOLDERS

Under existing regulations, any capital gain realized by a shareholder with
respect to the ordinary shares acquired on or after the registration of such
shares will be exempt from Israeli Capital Gains

Tax if the ordinary shares are listed on an approved foreign securities market
(which term includes the Nasdaq in the United States) and provided that NUR
continues to qualify as an Industrial Company under Israeli law, and provided
the shareholder does not hold such shares for business purposes.

Proposals exist to impose capital gains tax on individuals at a rate of 25%
and on companies at up to 36%, subject to any applicable tax treaty. Under the
U.S.-Israel tax treaty, U.S. residents may be exempt from Israeli capital gains
tax, if they held under 10% of the voting stock throughout the twelve months
preceding a sale or disposition of stock in an Israeli company.

Upon a distribution of dividends other than bonus shares (stock dividends),
income tax is generally withheld at source at the rate of 25% (or the lower rate
payable with respect to Approved Enterprises, see "--Law for the Encouragement
of Capital Investments, 1959"), unless a double taxation treaty is in effect
between Israel and the shareholder's country of residence that provides for a
lower tax rate in Israel on dividends.

A tax treaty between the United States and Israel (the "Treaty"), effective
since January 1, 1995, provides for a maximum tax of 25% on dividends paid to a
resident of the United States (as defined in the Treaty). Dividends distributed
by an Israeli company and derived from the income of an approved enterprise are
subject to a 15% dividend withholding tax. The Treaty further provides that a
12.5% Israeli dividend withholding tax would apply to dividends paid to a United
States corporation owning 10% or more of an Israeli company's voting stock. The
12.5% rate applies only on dividends from a company that does not have an
"Approved Enterprise" in the applicable period.

A non-resident of Israel who has had dividend income derived or accrued in
Israel from which tax was withheld at source is currently exempt from the duty
to file an annual Israeli tax return with respect to such income, provided such
income was not derived from a business carried on in Israel by such non-resident
and that such non-resident does not derive other non-passive income from sources
in Israel.

TAX BENEFITS FOR RESEARCH AND DEVELOPMENT

Israeli tax law allows under certain conditions a tax deduction in the year
incurred for expenditures (including non-depreciable capital expenditures) in
scientific research and development projects, if the expenditures are approved
by the relevant Israeli Government Ministry (determined by the field of
research) and the research and development is for the promotion of the
enterprise and is carried out by or on behalf of the company seeking such
deduction. Expenditures not so approved are deductible over a three-year period.
However, according to Israeli Supreme Court decisions, expenditures made out of
the proceeds of government grants are not deductible, i.e., NUR will be able to
deduct the unfunded portion of the research and development expenditures and not
the gross amount.

U.S. TAX CONSIDERATIONS REGARDING ORDINARY SHARES

The following summary describes certain of the principal United States
federal income tax consequences relating to an investment in ordinary shares as
of the date hereof. The summary is based on the Internal Revenue Code of 1986
(the "Code"), and existing final, temporary and proposed Treasury Regulations,
Revenue Rulings and judicial decisions, all of which are subject to prospective
and retroactive changes. NUR will not seek a ruling from the Internal Revenue
Service (the "IRS") with regard to the United States federal income tax
treatment relating to an investment in ordinary shares and, therefore, there can
be no assurance that the IRS will agree with the conclusions set forth below.
The summary does not purport to address all federal income tax consequences that
may be relevant to particular investors. For example, the summary applies only
to holders who hold ordinary shares as a capital asset within the meaning of
Section 1221 of the Code, and does not address the tax consequences that may be
relevant to investors in special tax situations (including, for example,
insurance companies, tax-exempt organizations, corporations owning ten percent
or more (by vote or value) of the Company's ordinary shares, dealers in
securities or currency, banks or other financial

institutions, or investors that hold ordinary shares as part of a hedge,
straddle or conversion transaction). Further, it does not address the
alternative minimum tax consequences of an investment in ordinary shares or the
indirect consequences to holders of equity interests in investors in ordinary
shares. ACCORDINGLY, PERSONS CONSIDERING THE PURCHASE OF ORDINARY SHARES SHOULD
CONSULT THEIR OWN TAX ADVISORS CONCERNING THE APPLICATION OF UNITED STATES
FEDERAL INCOME TAX LAWS, AS WELL AS THE LAWS OF ANY STATE, LOCAL OR FOREIGN
TAXING JURISDICTION, TO THEIR PARTICULAR SITUATIONS.

For purposes of this discussion, "Company" refers to NUR
Macroprinters Ltd., and "U.S. Holder" means a holder of ordinary shares that is
a citizen or resident of the United States, a partnership or corporation created
or organized in the United States or any State thereof (including the District
of Columbia), or an estate or trust the income of which is subject to United
States federal income tax on a net income basis with respect to ordinary shares.
The term "non-U.S. Holder" refers to any holder of ordinary shares other than a
U.S. Holder.

TAXATION OF U.S. HOLDERS

DISTRIBUTIONS ON ORDINARY SHARES. Distributions made by NUR with respect to
ordinary shares generally will constitute dividends for federal income tax
purposes and will be taxable to a U.S. Holder as ordinary income to the extent
of NUR's undistributed current or accumulated earnings and profits (as
determined for United States federal income tax purposes). Distributions in
excess of NUR's current or accumulated earnings and profits will be treated
first as a nontaxable return of capital reducing the U.S. Holder's tax basis in
the ordinary shares, thus increasing the amount of any gain (or reducing the
amount of any loss) which might be realized by such Holder upon the sale or
exchange of such ordinary shares. Any such distributions in excess of the U.S.
Holder's tax basis in the ordinary shares will be treated as capital gain to the
U.S. Holder and will be either long term or short term capital gain depending
upon the U.S. Holder's federal income tax holding period for the ordinary
shares. Dividends paid by NUR generally will not be eligible for the dividends
received deduction available to certain United States corporate shareholders
under Code Sections 243 and 245. The amount of any cash distribution paid in a
foreign currency will equal the U.S. dollar value of the distribution,
calculated by reference to the exchange rate in effect at the time the dividends
are received. A U.S. Holder should not recognize any foreign currency gain or
loss if such foreign currency is converted into U.S. dollars on the day
received. If a U.S. Holder does not convert the foreign currency into U.S.
dollars on the date of receipt, however, such Holder may recognize gain or loss
upon a subsequent sale or other disposition of the foreign currency (including
an exchange of the foreign currency for U.S. dollars). Such gain or loss, if
any, will be ordinary income or loss for United States federal income tax
purposes.

Subject to certain conditions and limitations, any Israeli withholding tax
imposed upon distributions which constitute dividends under United States income
tax law will be eligible for credit against a U.S. Holder's federal income tax
liability. Alternatively, a U.S. Holder may claim a deduction for such amount,
but only for a year in which a U.S. Holder elects to do so with respect to all
foreign income taxes. The overall limitation on foreign taxes eligible for
credit is calculated separately with respect to specific classes of income. For
this purpose, dividends distributed by NUR with respect to ordinary shares will
generally constitute "passive income."

SALE OR EXCHANGE OF ORDINARY SHARES. A. U.S. Holder of ordinary shares
generally will recognize capital gain or loss upon the sale or exchange of the
ordinary shares measured by the difference between the amount realized and the
U.S. Holder's tax basis in the ordinary shares. Gain or loss will be computed
separately for each block of shares sold (shares acquired separately at
different times and prices). The deductibility of capital losses is restricted
and generally may only be used to reduce capital gains to the extent thereof.
However, individual taxpayers generally may deduct annually $3,000 of capital
losses in excess of their capital gains.

PASSIVE FOREIGN INVESTMENT COMPANY. A foreign corporation generally will be
treated as a "passive foreign investment company" ("PFIC") if, after applying
certain "look-through" rules, either (i) 75% or more of its gross income is
passive income or (ii) 50% or more of the average value of its assets is
attributable to assets that produce or are held to produce passive income.
Passive income for this purpose generally includes dividends, interest, rents,
royalties and gains from securities and commodities transactions. The
look-through rules require a foreign corporation that owns at least 25%, by
value, of the stock of another corporation to treat a proportionate amount of
assets and income as held or received directly by the foreign corporation.

NUR does not believe that it is currently a PFIC nor does it anticipate that
it will be a PFIC in the future because it expects that less than 75% of its
annual gross income will be passive income and less than 50% of its assets will
be passive assets, based on the look-through rules, the current income and
assets of NUR and its subsidiaries, and the manner in which NUR and its
subsidiaries are anticipated to conduct their businesses in the future. However,
there can be no assurance that NUR is not or will not be treated as a PFIC in
the future. If NUR were to be treated as a PFIC, all U.S. Holders may be
required, in certain circumstances, to pay an interest charge together with tax
calculated at maximum rates on certain "excess distributions," including any
gain on the sale of ordinary shares. In order to avoid this tax consequence, a
U.S. Holder (i) may be permitted to make a "qualified electing fund" election,
in which case, in lieu of such treatment, such holder would be required to
include in its taxable income certain undistributed amounts of NUR's income or
(ii) may elect to mark-to-market the ordinary shares and recognize ordinary
income (or possible ordinary loss) each year with respect to such investment and
on the sale or other disposition of the ordinary shares. Neither NUR nor its
advisors have the duty to or will undertake to inform U.S. Holders of changes in
circumstances that would cause NUR to become a PFIC. U.S. Holders should consult
their own tax advisors concerning the status of NUR as a PFIC at any point in
time after the date of this Form. NUR does not currently intend to take the
action necessary for a U.S. Holder to make a "qualified electing fund" election
in the event NUR is determined to be a PFIC.

FOREIGN PERSONAL HOLDING COMPANY. A foreign corporation may be classified
as a foreign personal holding company (a "FPHC") for federal income tax purposes
if both of the following tests are satisfied: (i) at any time during the taxable
year five or fewer individuals who are United States citizens or residents own
or are deemed to own (under certain attribution rules) more than 50% of its
stock (vote or value) and (ii) at least 60% (50% for years subsequent to the
year in which it becomes a FPHC) of its gross income (regardless of its source),
as specifically adjusted, "is foreign personal holding company income," which
includes dividends, interest, rents, royalties and gain from the sale of stock
or securities.

NUR does not believe that it is currently a FPHC nor does it anticipate that
it will be a FPHC in the future; however, no assurance can be given that NUR is
not or will not become a FPHC as a result of future changes of ownership or
changes in the nature of the income of NUR. If NUR were to be classified as a
FPHC, each U.S. Holder would be required to include in income as a taxable
constructive dividend its pro rata share of NUR's undistributed foreign personal
holding company income.

CONTROLLED FOREIGN CORPORATION. If more than 50% of the ordinary shares
(vote or value) of NUR is owned, directly or indirectly, by U.S. Holders that
own or are deemed to own under certain attribution rules 10% or more of the
total combined voting power of all classes of stock of NUR ("10% Shareholder"),
NUR could be treated as a "controlled foreign corporation" (a "CFC") under
Subpart F of the Code. It is unclear how controlling blocks of stock will be
valued for these purposes. Accordingly, NUR may be treated as a CFC for United
States federal income tax purposes even though 10% Shareholders do not own more
than 50% of the outstanding ordinary shares.

NUR does not believe that it is currently a CFC; however, no assurance can
be given that NUR will not become a CFC as a result of future changes in its
ownership. If NUR were to be treated as a CFC, each 10% Shareholder would be
required to include in its taxable income as a constructive dividend its pro
rata share of certain undistributed income of NUR, and all or a portion of the
gain from the sale or exchange of the ordinary shares may be treated under
Section 1248 of the Code as dividend income. Neither NUR nor its advisors have
the duty to or will undertake to inform U.S. Holders of changes in circumstances
that would cause NUR to become a CFC. U.S. Holders should consult their own tax
advisors concerning the status of NUR as a CFC.

INFORMATION REPORTING. For taxable years beginning after February 5, 1999,
U.S. Holders are required to report certain acquisitions of ordinary shares from
NUR to the IRS on IRS Form 926, and that nonreporting may subject the U.S.
Holder to substantial penalties. Potential investors of the ordinary shares
should consult with their own tax advisors regarding the necessity of filing
information returns.

TAXATION OF NON-U.S. HOLDERS

DISTRIBUTIONS ON ORDINARY SHARES. Distributions made by NUR with respect to
the ordinary shares to non-U.S. Holders who are not engaged in the conduct of a
trade or business within the United States will be subject to United States
federal income tax only if 25% or more of the gross income of NUR (from all
sources for the three-year period ending with the close of the taxable year
preceding the declaration of the distribution) was effectively connected with
the conduct of a trade or business in the United States by NUR. NUR does not
anticipate engaging in the conduct of a trade or business within the United
States, except through its subsidiaries. However, if the 25% threshold for such
period is exceeded, a portion of any distribution paid by NUR to a non-U.S.
Holder could be subject to federal income tax withholding at the rate of 30%;
the portion of the distribution that could be subject to withholding would
correspond to the portion of NUR's gross income for the period that is
effectively connected to its conduct of a trade or business within the United
States.

SALE OR EXCHANGE OF ORDINARY SHARES. A non-U.S. Holder will not be subject
to United States federal income tax on any gain realized upon the sale or
exchange of ordinary shares if such Holder has no connection with the United
States other than holding the ordinary shares and in particular (i) such gain is
not effectively connected with a trade or business in the United States of the
non-U.S. Holder and (ii) in the case of a non-U.S. Holder who is an individual,
such non-U.S. Holder is not present in the United States for 183 days or more in
the taxable year of such disposition.

UNITED STATES BUSINESS. A non-U.S. Holder engaged in a trade or business in
the United States whose income from the ordinary shares (including gain from the
sale or exchange thereof) is effectively connected with the conduct of such
trade or business will generally be subject to regular United States federal
income tax on such income in the same manner as if it were a U.S. Holder. In
addition, if such a Holder is a foreign corporation, it may be subject to a
branch profits tax equal to 30% of its effectively connected earnings and
profits for the taxable year, subject to adjustments.

BACKUP WITHHOLDING

Distributions made by NUR with respect to the ordinary shares and the gross
proceeds received from the disposition of the ordinary shares may be subject to
certain information reporting to the IRS and to a 31% backup withholding tax.
However, backup withholding generally will not apply to payments made to certain
exempt recipients (such as a corporation or financial institution) or to a
Holder who furnishes a correct taxpayer identification number or provides a
certificate of foreign status and provides certain other required information.
If backup withholding applies, the amount withheld is not an additional tax, but
is credited against such Holder's United States federal income tax liability.

DIVIDENDS AND PAYING AGENTS

Not Applicable.

STATEMENT BY EXPERTS

Not Applicable.

DOCUMENTS ON DISPLAY

Any statement in this annual report about any of our contracts or other
documents is not necessarily complete. If the contract or document is filed as
an exhibit to a registration statement, the contract or document is deemed to
modify the description contained in this annual report. You must review the
exhibits themselves for a complete description of the contract or document.

You may review a copy of our filings with the SEC, including exhibits and
schedules, at the SEC's public reference facilities in Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional
offices of the SEC located at 7 World Trade Center, 13th Floor, New York, New
York 10048 and at the Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. You may also obtain copies of such
materials from the Public Reference Section of the SEC, Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at proscribed rates. You
may call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. The SEC maintains a web site (http://www.sec.gov) that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the SEC. Although we make many of our
filings with the SEC electronically, as a foreign private issuer we are not
obligated to do so.

You may read and copy any reports, statements or other information that we
file with the SEC at the addresses indicated above and you may also access them
electronically at the web site set forth above. These SEC filings are also
available to the public from commercial document retrieval services.

SUBSIDIARY INFORMATION

See ITEM 4.C. of this annual report.

ITEM 11: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See "ITEM 5: Operating and Financial Review and Prospects--Impact of
Inflation, Deflation and Fluctuation of Currencies." NUR does not otherwise
believe the disclosure required by ITEM 11 of this annual report to be material
to NUR.

ITEM 12: DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not Applicable.

PART II

ITEM 13: DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not Applicable.

ITEM 14: MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS

Not Applicable.

ITEM 15: RESERVED

ITEM 16: RESERVED

PART III

ITEM 17: FINANCIAL STATEMENTS

Not Applicable.

ITEM 18: FINANCIAL STATEMENTS

See pages F-1 to F-39.

ITEM 19: EXHIBITS

NUMBER DESCRIPTION
- ------ -----------

3.1 Memorandum of Association of the Registrant, in Hebrew with
a translation to English(1)

3.2 Amended and Restated Articles of Association of the
Registrant

3.3 Certificate of Name Change(2)

4.1 Specimen Certificate for Ordinary Shares(1)

4.2 Representative's Warrant Agreement dated October 12, 1995(1)

4.3 Form of Representative's Warrant Certificate(1)

4.4 Forms of Placement Agent's Warrant Agreement and
Certificate(3)

4.5 Forms of Qualified Independent Underwriter's Warrant
Agreement and Certificate(3)

4.6 Form of Warrant Agreement between the Registrant and Barak
Zamir, Advocates(4)

10.1 1995 Stock Option / Stock Purchase Plan(1)

10.2 Amendment to the 1995 Stock Option / Stock Purchase Plan(3)

10.3 1997 Stock Option Plan(5)

10.4 1998 Non-Employee Director Share Option Plan(6)

10.5 Lease Agreement between the Registrant and Mr. Moshe Nur
dated October 4, 1993, as amended on May 29, 1995, in Hebrew
with a translation to English(1)

10.6 Lease Agreement for office space in Brussels, Belgium
between Nivellease, S.A. and the Registrant dated
November 25, 1996(3)

10.7 Lease Agreement for office space in Newton Centre,
Massachusetts between WHTR Real Estate Limited Partnership
and the Registrant dated July 10, 1998(3)

10.8 Distribution Agreement between Imaje S.A. and the Registrant
dated June 26, 1995(1)

10.9 Settlement Agreements relating to Moshe Nur and his
affiliated companies(3)

10.10 Bank Hapoalin revolving loan agreement(3)(7)

10.11 Agreement between I.T.S. Machinery Development Ltd. and the
Registrant dated February 10, 1997(3)

10.12 Form of confidentiality agreement(3)

10.13 Agreement dated September 13, 1998 between "Meital"
Electronic Technology Ltd. and Markowitz Yaakov and the
Registrant(3)

10.14 The Founders Agreement dated September 30, 1999 among Gera
Eiron, Ogen Dialogix Ltd. and the Registrant

10.15 Assembly Agreement dated October 4, 1999 between NUR Pro
Engineering and the Registrant

10.16 Lod Lease Agreement dated January 11, 2000 between A.
Barzilai Investments and Assets Ltd. and Kamim Investments
and Assets Ltd. and the Registrant

NUMBER DESCRIPTION
- ------ -----------

10.17 Asset Purchase Agreement dated May 17, 2000 by and among
Salsa Digital, Ltd., Signtech Japan, Ltd., Salsa Digital DO
Brasil, Ltda., Salsa Digital (Guangzhou) Ltd., Salsa Dubai
Corp., Salsa Technology Pte Ltd., as sellers, and NUR
Macroprinters Ltd., Salsa Digital Printing Ltd. and Nur
Hungary Trading and Software Licensing Limited Liability
Company, as puchasers(8)

10.18 Amendment No. 1 to Asset Purchase Agreement dated as of
June 30, 2000(9)

21.1 List of Subsidiaries of the Registrant

23.1 Consent of Kost Forer & Gabbay (S-8)

23.2 Consent of Kost Forer & Gabbay (F-3)

27.5 Financial Data Schedule as of and for the year ended
December 31, 2000

- ------------------------

(1) Previously filed with NUR's F-1 (File No. 33-93160) and incorporated by
reference herein.

(2) Previously filed with NUR's Form 6-K dated January 7, 1998 and incorporated
by reference herein.

(3) Previously filed with NUR's Form F-1 (File No. 333-66103) and incorporated
by reference herein.

(4) Previously filed with NUR's Form 20-F for the year ended December 31, 1999
and incorporated by reference herein.

(5) Previously filed with NUR's Form 20-F for the year ended December 31, 1997
and incorporated by reference herein.

(6) Previously filed with NUR's Form 6-K dated November 13, 1998 and
incorporated by reference herein.

(7) Filed in summary form. Original filed in paper format pursuant to Form SE.

(8) Previously filed with NUR's Form 6-K/A dated May 22, 2000 and incorporated
by reference herein.

(9) Previously filed with NUR's Form 6-K/A dated July 7, 2000 and incorporated
by reference herein.

FINANCIAL STATEMENT SCHEDULES

Other than as set forth below, all schedules have been omitted as the
required information is either not applicable or presented in the financial
statements or notes thereto.

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant certifies that it meets all of the requirements for filing
on Form 20-F and has duly caused this annual report to be signed on its behalf
by the undersigned, thereunto duly authorized.

NUR MACROPRINTERS LTD.

By: /s/ EREZ SHACHAR
-----------------------------------------
Erez Shachar
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Dated: May 10, 2001

EXHIBIT INDEX

B. EXHIBITS

NUMBER DESCRIPTION
- ------ -----------

3.1 Memorandum of Association of the Registrant, in Hebrew with
a translation to English(1)

3.2 Amended and Restated Articles of Association of the
Registrant

3.3 Certificate of Name Change(2)

4.1 Specimen Certificate for Ordinary Shares(1)

4.2 Representative's Warrant Agreement dated October 12, 1995(1)

4.3 Form of Representative's Warrant Certificate(1)

4.4 Forms of Placement Agent's Warrant Agreement and
Certificate(3)

4.5 Forms of Qualified Independent Underwriter's Warrant
Agreement and Certificate(3)

4.6 Form of Warrant Agreement between the Registrant and Barak
Zamir, Advocates(4)

10.1 1995 Stock Option / Stock Purchase Plan(1)

10.2 Amendment to the 1995 Stock Option / Stock Purchase Plan(3)

10.3 1997 Stock Option Plan(5)

10.4 1998 Non-Employee Director Share Option Plan(6)

10.5 Lease Agreement between the Registrant and Mr. Moshe Nur
dated October 4, 1993, as amended on May 29, 1995, in Hebrew
with a translation to English(1)

10.6 Lease Agreement for office space in Brussels, Belgium
between Nivellease, S.A. and the Registrant dated
November 25, 1996(3)

10.7 Lease Agreement for office space in Newton Centre,
Massachusetts between WHTR Real Estate Limited Partnership
and the Registrant dated July 10, 1998(3)

10.8 Distribution Agreement between Imaje S.A. and the Registrant
dated June 26, 1995(1)

10.9 Settlement Agreements relating to Moshe Nur and his
affiliated companies(3)

10.10 Bank Hapoalin revolving loan agreement(3)(7)

10.11 Agreement between I.T.S. Machinery Development Ltd. and the
Registrant dated February 10, 1997(3)

10.12 Form of confidentiality agreement(3)

10.13 Agreement dated September 13, 1998 between "Meital"
Electronic Technology Ltd. and Markowitz Yaakov and the
Registrant(3)

10.14 The Founders Agreement dated September 30, 1999 among Gera
Eiron, Ogen Dialogix Ltd. and the Registrant

10.15 Assembly Agreement dated October 4, 1999 between NUR Pro
Engineering and the Registrant

10.16 Lod Lease Agreement dated January 11, 2000 between
A. Barzilai Investments and Assets Ltd. and Kamim
Investments and Assets Ltd. and the Registrant