EX-99.1 2 f00204exv99w1.txt EXHIBIT 99.1 Exhibit 99.1 CONTACTS: Kevin S. Royal Robin S. Yim 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 SECOND QUARTER 2004 RESULTS SAN JOSE, Calif., July 12, 2004 -- Novellus Systems, Inc. (Nasdaq NM: NVLS) today reported net sales and results of operations for its second quarter ended June 26, 2004. Net sales for the quarter were $338.2 million, up 28.7 percent from $262.9 million in the first quarter of 2004 and up 41.5 percent from the second quarter 2003 net sales of $239.1 million. Net income for the quarter was $37.8 million or $0.25 per diluted share, up $21.1 million or 126.7 percent from the first quarter 2004 net income of $16.7 million or $0.11 per diluted share and up $30.4 million or 408.9 percent from the second quarter 2003 net income of $7.4 million or $0.05 per diluted share. The quarter results include a $6.1 million charge for acquired in-process research and development associated with the acquisition of Angstron Systems, Inc. Without this charge, second quarter net income would have been $43.9 million, or $0.29 per diluted share. In comparison, the first quarter 2004 results included a $2.5 million pre-tax charge for litigation settlement. Excluding this charge, first quarter net income would have been $18.5 million, or $0.12 per diluted share. The second quarter 2003 results did not include any unusual charges or benefits. Shipments of $366.1 million in the quarter represent an increase of $55.1 million or 17.7 percent from $311.0 million reported in the first quarter of 2004. Deferred revenue at the end of the quarter was $181.1 million, an increase of $27.9 million or 18.2 percent from $153.2 million at the end of the first quarter of 2004. The financial measures set forth above, which present net income excluding an unusual charge and revenue on a shipments basis, 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 ongoing operations and enhance the comparability of those results to results in prior periods because they assist shareholder understanding of the effect of an unusual charge on the quarter's results and allow comparability to revenue recognition on a shipments basis. Cash, cash equivalents and short-term investments as of June 26, 2004 were $878.4 million, a decrease of $154.3 million or 14.9 percent from the first quarter 2004 ending balance of $1,032.7 million. During the second quarter of 2004, approximately $167.1 million was used to repurchase common shares. On June 28, 2004, the Company completed the acquisition of Peter Wolters AG, a privately held manufacturer of high-precision machine manufacturing tools headquartered in Rendsburg, Germany. "Bookings are strong and we continue to experience operating leverage to drive superior financial results for our shareholders," said Richard S. Hill, chairman and chief executive officer of Novellus Systems, Inc. "Novellus is experiencing further strengthening of its 300 millimeter market penetration, particularly in advanced copper applications, due to our technological excellence and a continued focus on productivity," added Hill. "SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: The statements regarding (i) strength of bookings, (ii) continued operating leverage, (iii) and further strengthening of the Company's 300 millimeter market penetration, particularly in advanced copper applications, due to technological excellence and focus on productivity, as well as other matters discussed in this 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, decreased customer demand, increased operating expenses, technological difficulties with the Company's 300 millimeter advanced copper tools, and other risks indicated in our filings with the Securities and Exchange Commission (SEC). Actual results could differ materially. We assume no obligation to update this information. For more details, please refer to our SEC filings, including our Annual Report on Form 10-K for the year ended December 31, 2003 and our Quarterly Report on Form 10-Q for the quarter ended March 27, 2004. ABOUT NOVELLUS: Novellus Systems, Inc., an S&P 500 company, manufactures, markets and services advanced deposition, surface preparation and chemical mechanical planarization equipment for today's advanced integrated circuits. Our products are designed for high-volume production of advanced, leading-edge semiconductor devices at the lowest possible cost. Headquartered in San Jose, Calif., with subsidiaries throughout the United States, as well as in the United Kingdom, France, Germany, the Netherlands, Ireland, Italy, Israel, India, China, Japan, Korea, Malaysia, Singapore and Taiwan, we are a publicly traded company on the Nasdaq stock exchange (Nasdaq: NVLS) and a component of the Nasdaq-100 Index(R). Additional information about Novellus is available on our home page at www.novellus.com. NOVELLUS SYSTEMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts) THREE MONTHS ENDED SIX MONTHS ENDED ------------------------------------ ---------------------- (Unaudited) JUNE 26 MARCH 27 JUNE 28 JUNE 26 JUNE 28 2004 2004 2003 2004 2003 -------- -------- -------- -------- -------- Net sales $338,219 $262,862 $239,050 $601,081 $477,460 Cost of sales 168,539 138,257 133,728 306,796 262,324 -------- -------- -------- -------- -------- Gross profit 169,680 124,605 105,322 294,285 215,136 % 50.2% 47.4% 44.1% 49.0% 45.1% Operating expenses: Selling, general and administrative 47,225 42,403 44,444 89,628 87,075 Research and development 63,471 58,957 56,509 122,428 113,515 Acquired in-process research and development 6,124 -- -- 6,124 -- Legal settlement -- 2,500 -- 2,500 -- -------- -------- -------- -------- -------- Total operating expenses 116,820 103,860 100,953 220,680 200,590 % 34.5% 39.5% 42.2% 36.7% 42.0% Income from operations 52,860 20,745 4,369 73,605 14,546 % 15.6% 7.9% 1.8% 12.2% 3.0% Other income, net 2,896 2,749 5,537 5,645 11,189 -------- -------- -------- -------- -------- Income before income taxes 55,756 23,494 9,906 79,250 25,735 Provision for income taxes 17,945 6,813 2,476 24,758 6,433 -------- -------- -------- -------- -------- Net income $ 37,811 $ 16,681 $ 7,430 $ 54,492 $ 19,302 ======== ======== ======== ======== ======== Net income per share: Basic net income per share $ 0.25 $ 0.11 $ 0.05 $ 0.36 $ 0.13 ======== ======== ======== ======== ======== Diluted net income per share $ 0.25 $ 0.11 $ 0.05 $ 0.35 $ 0.13 ======== ======== ======== ======== ======== Shares used in basic per share calculation 149,112 152,911 149,950 151,012 149,692 ======== ======== ======== ======== ======== Shares used in diluted per share calculation 151,386 156,100 153,034 153,743 152,631 ======== ======== ======== ======== ========

NOVELLUS SYSTEMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (EXCLUDING CERTAIN UNUSUAL CHARGES)

(In thousands, except per share amounts) THREE MONTHS ENDED SIX MONTHS ENDED ------------------------------------ ---------------------- (Unaudited) JUNE 26 MARCH 27 JUNE 28 JUNE 26 JUNE 28 2004 2004 2003 2004 2003 -------- -------- -------- -------- -------- Net sales $338,219 $262,862 $239,050 $601,081 $477,460 Cost of sales 168,539 138,257 133,728 306,796 262,324 -------- -------- -------- -------- -------- Gross profit 169,680 124,605 105,322 294,285 215,136 % 50.2% 47.4% 44.1% 49.0% 45.1% Operating expenses: Selling, general and administrative 47,225 42,403 44,444 89,628 87,075 Research and development 63,471 58,957 56,509 122,428 113,515 -------- -------- -------- -------- -------- Total operating expenses 110,696 101,360 100,953 212,056 200,590 % 32.7% 38.6% 42.2% 35.3% 42.0% Income from operations 58,984 23,245 4,369 82,229 14,546 % 17.4% 8.8% 1.8% 13.7% 3.0% Other income, net 2,896 2,749 5,537 5,645 11,189 -------- -------- -------- -------- -------- Income before income taxes 61,880 25,994 9,906 87,874 25,735 Provision for income taxes 17,945 7,538 2,476 25,483 6,433 -------- -------- -------- -------- -------- Net income $ 43,935 $ 18,456 $ 7,430 $ 62,391 $ 19,302 ======== ======== ======== ======== ======== Net income per share: Basic net income per share $ 0.29 $ 0.12 $ 0.05 $ 0.41 $ 0.13 ======== ======== ======== ======== ======== Diluted net income per share $ 0.29 $ 0.12 $ 0.05 $ 0.41 $ 0.13 ======== ======== ======== ======== ======== Shares used in basic per share calculation 149,112 152,911 149,950 151,012 149,692 ======== ======== ======== ======== ======== Shares used in diluted per share calculation 151,386 156,100 153,034 153,743 152,631 ======== ======== ======== ======== ========

A reconciliation of our net income excluding certain unusual charges and benefits to our net income under accounting principles generally accepted in the United States of America is presented below: NET INCOME EXCLUDING UNUSUAL (CHARGES) AND BENEFITS $ 43,935 $ 18,456 $ 7,430 $ 62,391 $ 19,302 UNUSUAL (CHARGES) AND BENEFITS: Acquired in-process research and development (6,124) -- -- (6,124) -- Legal settlement -- (2,500) -- (2,500) -- -------- -------- -------- -------- -------- Total charges (6,124) (2,500) -- (8,624) -- Adjustments on provision for income taxes -- 725 -- 725 -- -------- -------- -------- -------- -------- NET INCOME $ 37,811 $ 16,681 $ 7,430 $ 54,492 $ 19,302 ======== ======== ======== ======== ======== (1) The condensed consolidated statements of operations (excluding certain unusual charges) are intended to present our operating results, excluding certain unusual charges, benefits and related adjustments on provisions for income taxes. These condensed consolidated statements of operations are not in accordance with or an alternative for U.S. generally accepted accounting principles and may be different from similar measures by other companies. NOVELLUS SYSTEMS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands) JUNE 26 DECEMBER 31 2004 2003 ---------- ---------- (Unaudited) * ASSETS Current assets: Cash and short-term investments $ 878,445 $1,002,132 Accounts receivable, net 330,190 231,760 Inventories 220,747 199,100 Deferred taxes and other current assets 160,633 138,996 ---------- ---------- Total current assets 1,590,015 1,571,988 Property and equipment, net 479,592 506,567 Goodwill 173,267 173,267 Intangible and other assets 95,590 87,078 ---------- ---------- TOTAL ASSETS $2,338,464 $2,338,900 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 198,654 $ 150,945 Deferred profit 84,238 46,821 Income taxes payable 39,078 10,293 Current obligations under lines of credit 8,056 13,023 ---------- ---------- Total current liabilities 330,026 221,082 Other liabilities 42,304 45,958 ---------- ---------- Total liabilities 372,330 267,040 ---------- ---------- Shareholders' equity: Common stock 1,527,955 1,565,926 Retained earnings and accumulated other comprehensive income 438,179 505,934 ---------- ---------- Total shareholders' equity 1,966,134 2,071,860 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,338,464 $2,338,900 ========== ==========

* The December 31, 2003 condensed consolidated balance sheet was derived from our audited consolidated financial statements.