Novellus Systems Inc (NVLS) SEC Filing 10-K Annual report for the fiscal year ending Saturday, December 31, 2005

Exhibit 99.1

Contacts:		William H. Kurtz		Robin Yim
		Executive Vice President and Chief Financial Officer		Vice President, Treasurer
		Novellus Systems, Inc.		Novellus Systems, Inc.
		Phone: (408) 943-9700		Phone: (408) 943-9700

FOR IMMEDIATE RELEASE

NOVELLUS SYSTEMS REPORTS FOURTH QUARTER AND YEAR-END RESULTS

SAN JOSE, Calif., January 25, 2006—Novellus Systems, Inc. (Nasdaq: NVLS) today reported net sales and results of operations for its fourth quarter and year ended December 31, 2005. Net sales for the fourth quarter were $332.3 million, down $6.6 million or 2.0 percent from the third quarter 2005 net sales of $338.9 million and down $8.0 million or 2.4 percent from the fourth quarter 2004 net sales of $340.3 million. Net income for the fourth quarter was $23.0 million or $0.17 per diluted share, similar to net income for the third quarter 2005 of $23.4 million or $0.17 per diluted share. Net income for the fourth quarter 2005 decreased by $14.5 million or 38.8 percent from the fourth quarter 2004 net income of $37.5 million or $0.27 per diluted share.

The fourth quarter results reflect net pre-tax restructuring and other charges of $5.9 million. These charges include a pre-tax restructuring of $8.8 million related to the relocation of certain operations activities from Chandler, Arizona to San Jose, California, which was partially offset by a $2.9 million pre-tax reversal of a previously recorded restructuring accrual resulting from a change in estimated sublease income over the remaining lease term. Without the restructuring charges, net income would have been $26.6 million, or $0.20 per diluted share. The third quarter 2005 results included net pre-tax restructuring and other charges of $3.4 million and, within cost of sales, a pre-tax inventory write-down of $5.2 million. Without these charges, the third quarter 2005 net income would have been $28.7 million, or $0.21 per diluted share.

Net sales for the fiscal year 2005 were $1.34 billion, down $16.8 million or 1.2 percent compared with net sales of $1.36 billion in fiscal year 2004. Net income for the year was $110.1 million, or $0.80 per diluted share, compared with the fiscal year 2004 net income of $156.7 million, or $1.06 per diluted share.

The fiscal year 2005 results include net pre-tax restructuring and other charges of $9.2 million and, within cost of sales, a pre-tax inventory write-down of $5.2 million. Without the restructuring charges and inventory write-down, net income for fiscal year 2005 would have been $118.9 million, or $0.86 per diluted share. In comparison, the fiscal year 2004 results include net pre-tax restructuring and other charges of $1.5 million, pre-tax acquired in-process research and development write-offs of $6.1 million, net pre-tax recovery from legal settlements of $2.6 million and the pre-tax reversal of previously accrued royalty payments of $8.1 million. Without these charges and benefits, net income for fiscal year 2004 would have been $156.3 million, or $1.06 per diluted share.