Press Releases

NOVELLUS SYSTEMS REPORTS THIRD QUARTER RESULTS AND RECORD BOOKINGS

San Jose, Calif. -- Oct. 11, 1999 -- Novellus Systems, Inc. (Nasdaq NM: NVLS) today reported net sales and results of operations for its third quarter ended September 25, 1999. Net sales for the quarter were $154.9 million, an increase of 45 percent over third quarter 1998 net sales of $106.7 million, and were 18 percent higher than the $130.9 million reported for the second quarter 1999. Net income of $21.8 million was recorded for the quarter, up 185 percent compared to the third quarter 1998 of $7.6 million and 75 percent higher than second quarter 1999 net income of $12.4 million. Consequently, earnings per share of $0.54 in the third quarter 1999 rose 145 percent from $0.22 in the third quarter of 1998 and increased 74 percent from the $0.31 per share reported for the second quarter 1999. The per share amounts are stated on a fully diluted basis.

Cash and short-term investments at September 25, 1999 increased to $354.2 million, up from second quarter 1999 balances of $345.3 million. Bookings in the third quarter of 1999 were the highest recorded in the Company’s history and exceeded a 1:1 book-to-bill ratio for the fourth consecutive quarter.

"Record bookings highlighted the quarter in which revenue, net income and cash generation showed continued improvement," said Richard Hill, Chairman and Chief Executive Officer. "The semiconductor industry appears to be in the early stages of a broad-based recovery, inventories are low and demand is seen across all product types, especially telecommunications and consumer electronics. Bookings and earnings strength are attributable to both capacity and technology buys of our core products."

Hill continued, "We have realigned our corporate structure to increase focus on our customers’ critical process integration issues and provide a framework for future corporate growth. The reorganization established a new unit, Integration and Advanced Development, aimed at unit process integration issues and developing risk minimization strategies for fabs working with new metals and low-k dielectric materials. We also combined the existing dielectrics and metals product lines into a focused Business Operations Group, and merged the Company’s engineering and manufacturing functions into a single organization, Systems Development, Engineering and Operations, which will help accelerate new products’ time-to-market."

During the quarter Novellus was awarded the Texas Instruments’ Supplier Excellence Award, in recognition of a supplier who has demonstrated outstanding performance and continuous improvement in supporting TI. This award was received on the heels of the Intel Preferred Quality Supplier award and followed by the NEC Outstanding Equipment Supplier award.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: The statements regarding (i) the broad-based recovery of the semiconductor industry, (ii) the demand across all product types, especially telecommunications and consumer electronics, and (iii) the Company’s ability to provide a framework for future corporate growth, 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 overall slowdown in new orders or a slowdown in certain product areas, the costs involved in providing a framework for growth may not be justified if that growth is not realized, 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 December 31, 1998 and quarterly reports on Form 10-Q for the quarters ended March 27 and June 26, 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.