Exhibit 99.1

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

FOR IMMEDIATE RELEASE

NOVELLUS SYSTEMS REPORTS SECOND QUARTER 2006 RESULTS

SAN JOSE, Calif., July 19, 2006—Novellus Systems, Inc. (NASDAQ: NVLS) today reported net sales and results of operations for its second quarter ended July 1, 2006. Net sales for the second quarter were $410.1 million, up $44.2 million or 12.1 percent from first quarter 2006 net sales of $365.9 million and up $80.5 million or 24.4 percent from second quarter 2005 net sales of $329.6 million. Net income for the second quarter was $52.7 million, or $0.42 per diluted share, up $28.0 million or 113.2 percent from first quarter 2006 net income of $24.7 million and up $19.5 million or 58.6 percent from second quarter 2005 net income of $33.2 million.

The first quarter results include net pre-tax restructuring and other charges of $12.6 million. Also included in the first quarter results were a charge of $3.3 million for a legal settlement and a benefit of $0.9 million, net of tax, from the cumulative effect of a change in accounting principle due to the adoption of SFAS 123(R). Without these charges and benefits, net income for the first quarter would have been $33.5 million, or $0.25 per diluted share. The second quarter results included no such charges or benefits.

Bookings in the second quarter were $457.5 million, up 9.8 percent over first quarter 2006 bookings of $416.7 million. Shipments of $457.3 million in the second quarter represent an increase of $103.2 million or 29.1 percent from $354.2 million reported for the first quarter. Deferred revenue at the end of the second quarter was $178.5 million, an increase of $47.3 million or 36.0 percent from $131.2 million at the end of the first quarter of 2006.

The financial measures set forth above that present net income excluding certain charges and benefits, revenue on a shipments basis and bookings, are not in accordance with U.S. generally accepted accounting principles (GAAP). The Company believes that these non-GAAP financial measures provide further insight into the results of operations and enhance the comparability of those results to results in prior periods because they assist shareholder understanding of the effects of certain charges and benefits on the quarter’s results.

Cash, cash equivalents, restricted cash and short-term investments as of July 1, 2006 were $671.1 million, a decrease of $82.8 million or 11.0 percent from the first quarter of 2006 ending balance of $753.9 million. During the second quarter, approximately $171.8 million was used to repurchase shares of Novellus common stock.

“We are pleased with our strong results in Q2, which continue to demonstrate our improving operational and financial performance,” said Richard S. Hill, chairman of the board and CEO. “We are also making solid progress in strengthening our product portfolio. At last week’s Semicon West show we announced new SABRE Extreme and GAMMA Express products for the 45nm technology node, and have internally qualified a new 45nm barrier-seed process on our INOVA PVD system, which we will now begin to implement with our customers. We are continuing to focus on further improvements in our product portfolio and our financial performance.”

“Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995:

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including the statements regarding (i) our improving operational and financial performance; (ii) our solid progress in our product portfolio; and (iii) implementation of a new 45nm barrier-seed process on our INOVA PVD system; (iv) our expectation of further improvements in our product position and financial performance, as well as other matters discussed in this news release that are not purely historical data, are forward-looking statements. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those contemplated by such statements. These risks and uncertainties include, but are not limited to, inaccurate assessment of the performance metrics’ usefulness in understanding the Company’s ongoing operations; quarterly fluctuations in customer demand and the timing and volume of orders and shipments, whether due to economic and geopolitical conditions, competition, pricing pressures, or other factors; inaccurate projections regarding future capacity expansion in the semiconductor industry; unanticipated economic downturns; weakening demand for our products; unanticipated difficulties associated with implementation of the new 45nm barrier-seed process on our INOVA PVD system; failure of our products to effectively and timely respond to industry developments and customer demands, and other risks indicated in our filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2005, our Quarterly Report on Form 10-Q for the quarter ended April 1, 2006 and our Current Reports on Form 8-K and amendments to such reports. Forward-looking statements are made and based on information available to us on the date of this press release. We do not assume, and expressly disclaim, any obligation to update this information.

About Novellus:

Novellus Systems, Inc. (NASDAQ: NVLS) is a leading provider of advanced process equipment for the global semiconductor industry. The company’s products deliver value to customers by providing innovative technology backed by trusted productivity. An S&P 500 company, Novellus is headquartered in San Jose, Calif. with subsidiary offices across the globe. For more information please visit www.novellus.com

NOVELLUS SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

		Three Months Ended												Six Months Ended
(In thousands, except per share amounts)		July 1				April 1				July 2				July 1				July 2
(Unaudited)		2006				2006				2005				2006				2005
Net sales		$	410,073			$	365,906			$	329,585			$	775,979			$	669,325
Cost of sales			205,309				198,366				172,023				403,675				357,894
Gross profit			204,764				167,540				157,562				372,304				311,431
%			49.9	%			45.8	%			47.8	%			48.0	%			46.5	%
Operating expenses:
Selling, general and administrative			66,311				58,482				50,325				124,793				102,085
Research and development			63,298				63,783				63,512				127,081				125,560
Restructuring and other charges (benefits)			—				12,629				(74	)			12,629				(74	)
Legal settlement			—				3,250				—				3,250				—
Total operating expenses			129,609				138,144				113,763				267,753				227,571
%			31.6	%			37.8	%			34.5	%			34.5	%			34.0	%
Income from operations			75,155				29,396				43,799				104,551				83,860
%			18.3	%			8.0	%			13.3	%			13.5	%			12.5	%
Other income, net			7,611				6,079				3,674				13,690				7,143
Income before income taxes and cumulative effect of a change in accounting principle			82,766				35,475				47,473				118,241				91,003
Provision for income taxes			30,061				11,706				14,242				41,767				27,301
Income before cumulative effect of a change in accounting principle			52,705				23,769				33,231				76,474				63,702
Cumulative effect of a change in accounting principle, net of tax			—				948				—				948				—
Net income		$	52,705			$	24,717			$	33,231			$	77,422			$	63,702
Net income per share:
Basic
Income before cumulative effect of a change in accounting principle		$	0.42			$	0.18			$	0.24			$	0.60			$	0.46
Cumulative effect of a change in accounting principle, net of tax			—				0.01				—				0.01				—
Basic net income per share		$	0.42			$	0.19			$	0.24			$	0.61			$	0.46
Diluted
Income before cumulative effect of a change in accounting principle		$	0.42			$	0.18			$	0.24			$	0.59			$	0.45
Cumulative effect of a change in accounting principle, net of tax			—				0.01				—				0.01				—
Diluted net income per share		$	0.42			$	0.19			$	0.24			$	0.60			$	0.45
Shares used in basic per share calculation			125,124				131,102				138,068				128,113				138,979
Shares used in diluted per share calculation			125,910				132,264				138,944				129,087				140,022

NOVELLUS SYSTEMS, INC.
RECONCILIATION OF THE STATEMENTS OF OPERATIONS
(EXCLUDING CERTAIN CHARGES AND BENEFITS) ⁽¹⁾

		Three Months Ended												Six Months Ended
(In thousands, except per share amounts)		July 1				April 1				July 2				July 1				July 2
(Unaudited)		2006				2006				2005				2006				2005
Net income excluding certain charges and benefits		$	52,705			$	33,535			$	33,179			$	86,240			$	63,650
Charges and benefits:
Cumulative effect of a change in accounting principle			—				1,542				—				1,542				—
Restructuring and other charges benefits			—				(12,629	)			74				(12,629	)			74
Legal settlement			—				(3,250	)			—				(3,250	)			—
Total charges and benefits			—				(14,337	)			74				(14,337	)			74
Adjustments on provision for income taxes			—				5,519				(22	)			5,519				(22	)
Net income		$	52,705			$	24,717			$	33,231			$	77,422			$	63,702
Net income per diluted share excluding certain charges and benefits		$	0.42			$	0.25			$	0.24			$	0.67			$	0.45
Charges and benefits:
Cumulative effect of a change in accounting principle			—				0.01				—				0.01				—
Restructuring and other charges benefits			—				(0.09	)			0.00				(0.10	)			0.00
Legal settlement			—				(0.02	)			—				(0.02	)			—
Adjustments on provision for income taxes			—				0.04				(0.00	)			0.04				(0.00	)
Net income per diluted share		$	0.42			$	0.19			$	0.24			$	0.60			$	0.45

NOVELLUS SYSTEMS, INC.
SCHEDULE OF SHARE-BASED COMPENSATION

		Three Months Ended												Six Months Ended
		July 1				April 1				July 2				July 1				July 2
(In thousands)		2006				2006				2005				2006				2005
(Unaudited)		(1)				(3)				(2)				(1)				(2)
Cost of sales		$	538			$	308			$	184			$	846			$	396
Selling, general and administrative			5,590				5,439				540				11,029				1,165
Research and development			2,664				3,061				325				5,725				701
Total share-based compensation expenses			8,792				8,808				1,049				17,600				2,262
Benefit from income taxes			3,385				3,391				404				6,776				871
Net share-based compensation expenses		$	5,407			$	5,417			$	645			$	10,824			$	1,391

NOVELLUS SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

		July 1,				December 31,
		2006				2005
(In thousands)		(Unaudited)				*
ASSETS
Current assets:
Cash and short-term investments		$	523,492			$	649,240
Accounts receivable, net			439,521				397,534
Inventories			213,827				193,787
Deferred taxes and other current assets			128,033				122,951
Total current assets			1,304,873				1,363,512
Property and equipment, net			399,678				423,749
Restricted cash			147,595				140,212
Goodwill			259,553				255,584
Intangible and other assets			105,434				107,192
Total assets		$	2,217,133			$	2,290,249
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities		$	266,402			$	253,984
Deferred profit			80,220				68,718
Income taxes payable			22,474				5,898
Current obligations under lines of credit			16,456				15,744
Total current liabilities			385,552				344,344
Long-term debt			127,911				124,858
Other liabilities			43,146				41,764
Total liabilities			556,609				510,966
Shareholders’ equity:
Common stock			1,330,001				1,393,805
Retained earnings and accumulated other comprehensive income			330,523				385,478
Total shareholders’ equity			1,660,524				1,779,283
Total liabilities and shareholders’ equity		$	2,217,133			$	2,290,249