Press Releases

NOVELLUS SYSTEMS REPORTS FIRST QUARTER RESULTS

San Jose, Calif. -- Apr. 20, 1998 -- Novellus Systems, Inc. (Nasdaq NM: NVLS) today reported net sales and results of operations for its first quarter ended March 28, 1998. Net sales for the quarter were $163.2 million, an increase of 61 percent over first quarter 1997 net sales of $101.7 million. Net income of $21.0 million or $0.60 per share was recorded for the quarter, an increase of 35 percent as compared to the first quarter 1997 net income of $15.6 million or $0.46 per share. The per share amounts are stated on a diluted basis and are adjusted for the 2-for-1 split that was announced on September 22, 1997 and was effective on October 13, 1997.

Cash and short term investments at March 28, 1998 were $100.7 million, up 3 percent over year-end 1997 balances of $98.1 million. Bookings fell short of achieving a 1:1 book to bill ratio for the first quarter of 1998.

Robert Smith, Executive Vice President and CFO noted, "While Novellus experienced an expected slowdown in new orders and sequentially flat net sales over the prior quarter, we were pleased that we were able to generate a positive cash flow during the quarter. With the current uncertainty surrounding the semiconductor capital equipment industry, we will continue to control S,G&A expenditures and prudently manage assets while continuing our strong commitment to invest in research and development."

Richard Hill, Chairman and CEO said, "Given the current industry-wide slowdown, I am pleased with our result of sequentially flat net sales for the quarter. As the slowdown continues, however, I am cautious in my expectations for net sales and net income over the next two quarters."

Hill continued, "The long-term growth potential for the thin film deposition market continues to be good. In the short term, however, our new product developments will have to help dampen the effect of the slowdown. Fortunately, our patented SPEED High Density Plasma (HDP) solution for sub-0.35 micron inter-metal dielectric applications has attained a reputation for high reliability, superior film quality and cost of ownership performance since its introduction in 1996. The market leadership of SPEED has been extended by our recent announcement of a unique fluorine-doped process for advanced logic devices in production. Our engineers and scientists have not stopped there as we have expanded the SPEED product into the Shallow Trench Isolation (STI) market, demonstrating the cost-effective fill of 0.12 micron trenches at five-to-one aspect ratios. Our Concept Two Sequel continues to expand its process portfolio as well, with the introduction of PEARL^TM, a plasma-enhanced anti-reflective layer targeted at extending i-line and deep UV lithography. "

"Our PVD acquisition completed in June 1997 has also contributed to our success," Hill added. "Our new INOVA platform has been seen to produce superior advanced barrier and aluminum fill capability for sub-0.35 micron geometries."

Hill also noted, "Going forward, our continuing commitment to investment in new product development will be a key for providing growth for our Company's shareholders and customers. At Semicon West in July, Novellus will introduce advanced products to enable the transition to dual damascene copper processing, maintaining our position as the industry innovation leader."

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: The statements regarding (i) the uncertainty surrounding the semiconductor capital equipment industry, (ii) the Company's ability to control certain expenditures, (iii) the long-term growth prospects for the thin film deposition market, (iv) the Company's ability to lead market transitions in sub-0.35 micron and dual damascene copper processing, (v) the anticipated growth resulting from investment in new product development, (vi) the introduction of dual damascene copper processing products, and (vii) the Company's ability to continue to invest in new product development, as well as other matters discussed in the news release that are not purely historical data, are forward-looking statements. The forward-looking statements involve risks and uncertainties including, but not limited to, a possible continuing slowdown in new orders and the inability of the Company's product development efforts to continue its position as an industry leader in deposition technologies, and other risks indicated in filings with the Securities and Exchange Commission (SEC). Actual results may differ materially. Novellus assumes no obligation to update this information. For more details, please refer to Novellus' SEC filings, including its most recent Annual Report on Form 10-K and quarterly reports on Form 10-Q.

Novellus Systems, Inc. manufactures, markets, and services advanced automated wafer fabrication systems for the deposition of thin films. Novellus deposition systems are designed for high-volume production of advanced semiconductors at the lowest overall cost. The Company's stock trades on the Nasdaq Stock Market's National Market under the symbol "NVLS". Additional information about the company is available on the Novellus Systems home page on the World Wide Web, located at http://www.novellus.com.

Note: the earnings per share amounts have been adjusted for the 2-for-1 split effective October 1997