Press Releases

NOVELLUS SYSTEMS REPORTS SECOND QUARTER RESULTS

San Jose, Calif. -- Jul. 19, 1999 -- Novellus Systems, Inc. (Nasdaq NM: NVLS) today reported net sales and results of operations for its second quarter ended June 26, 1999. Net sales for the quarter were $130.9 million, up nearly 14 percent from $115.2 million for the first quarter of 1999 and down 8.3 percent from second quarter 1998 net sales of $142.8 million. Net income for the second quarter of 1999 was $12.4 million or $0.31 per share, up 32 percent from $9.4 million or $0.25 per share, for the first quarter of 1999 and down 23 percent as compared to net income posted in the second quarter of 1998 of $16.1 million and $0.46 per share. The per share amounts are stated on a fully diluted basis.

Cash and short term investments at June 26, 1999 were $345.3 million, up from first quarter 1999 balances of $340.0 million. Bookings exceeded a 1:1 book to bill ratio for the third consecutive quarter.

"The continued improvement in revenue, net income, bookings and cash generation, reflect our ability to provide the advanced equipment our customers require to continue their transition to finer geometries," said Richard Hill, Chairman and Chief Executive Officer. "The semiconductor industry continues to show significant signs of improvement, as it benefits from continued economic strengthening worldwide. Our portfolio of advanced technology products positions Novellus to benefit from the growing demand for leading edge semiconductors."

Hill continued, "Novellus' new product momentum continued with the introduction of the SEQUEL Express^TM and the CORAL^TM family of production — worthy low dielectric constant (low-k) films for advanced devices. SEQUEL Express is the only CVD tool that can handle the full range of PECVD dielectric films for both damascene and subtractive aluminum technology while using a common chamber configuration. This feature reduces the number of CVD tools required in the fab by providing an unmatched level of process flexibility for all film types. The CORAL family of films expands the company's offerings of dielectric films. The combination of these low-k dielectrics and thin film barrier technologies enables the manufacture of advanced devices down to the sub-0.1 micron node. This technology is integral to the development and production of powerful electronic products designed to meet consumer demands."

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: The statements regarding (i) the Company's ability to provide advanced equipment required by its customers, (ii) the improving economic conditions of the industry, (iii) the continued worldwide economic strength of the industry, (iv) Novellus being positioned to benefit from growing demand for leading edge semiconductors, (v) the Company's products reducing the number of required CVD tools and (vi) continuing integral need for combining low-k dielectrics and thin film barrier technologies, 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 slowdown in new orders as a result of changing worldwide or industry economic conditions; the inability of the Company's product development efforts to continue its position as an industry leader in deposition technologies, the Company's product configuration strategy being different from its customers' needs and other risks indicated in filings with the Securities and Exchange Commission (SEC). Actual results could 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 for the year ended 1998 and quarterly reports on Form 10-Q for the first and second quarters of 1999.

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, leading-edge 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.