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Novellus Reports Q3

SAN JOSE, Calif. — Novellus Systems, Inc. (Nasdaq: NVLS) today reported operating results for its third quarter ended September 25, 2010. Net sales for the third quarter were $367.2 million, up $45.8 million or 14.3 percent from second quarter net sales of $321.4 million, and up $190.3 million or 107.6 percent from third quarter 2009 net sales of $176.9 million. Net income for the third quarter was $76.3 million, or $0.82 per diluted share, up $13.0 million from second quarter net income of $63.3 million, or $0.66 per diluted share. The third quarter 2009 net loss was $4.0 million, or $(0.04) per diluted share.

Third quarter 2010 net income includes charges of $5.1 million, net of tax, primarily related to the consolidation of our Industrial Applications Group manufacturing facilities in Germany. Net income excluding these charges was $81.3 million, or $0.88 per diluted share. Excluding certain charges, second quarter 2010 net income was $63.5 million, or $0.66 per diluted share, and third quarter 2009 net loss was $2.5 million, or $(0.03) per diluted share. A reconciliation of our non-GAAP operating results to U.S. generally accepted accounting principles (“GAAP”) is included below.

Bookings in the third quarter of 2010 were $406.9 million, up $22.0 million or 5.7 percent from second quarter bookings of $384.9 million. Third quarter shipments of $363.3 million were up by $31.2 million or 9.4 percent from $332.1 million in the second quarter. Deferred revenue as of the end of the quarter was $47.4 million, an increase of $3.0 million or 6.8 percent from $44.4 million at the end of the second quarter. Deferred revenue in the second and third quarters included $30.6 million and $32.4 million, respectively, related to system sales.

Cash, cash equivalents, and short-term investments as of the end of the third quarter were $594.5 million, an increase of $39.5 million or 7.1 percent from the second quarter ending balance of $555.0 million. Long-term investments and restricted cash and cash equivalents as of the end of the third quarter were $191.3 million, an increase of $3.6 million or 1.9 percent from the second quarter ending balance of $187.7 million. During the third quarter, we repurchased 1.6 million shares of our common stock at an average price of $24.00 per share, for $37.9 million. Cash flow from operations during the third quarter of 2010 was $81.8 million, down $22.4 million or 21.5 percent from $104.2 million in the second quarter of 2010.

Richard S. Hill, Chairman and Chief Executive Officer said, “It is a pleasure to announce another strong quarter of financial results. Our operational execution on manufacturing, product development and customer service continues to improve. We have had very strong profitability and cash flow which we feel will help us continue to grow and strengthen our market position.”

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