EXHIBIT 99.1

SAN JOSE, Calif., January 26, 2004—Novellus Systems, Inc. (Nasdaq NM: NVLS) today reported the results of operations for its fourth quarter and year ended December 31, 2003. Fourth quarter 2003 net sales were $226.5 million, up 2.4 percent from $221.1 million in the previous quarter, and up 4.1 percent from fourth quarter 2002 net sales of $217.6 million. The net income for the quarter was $10.5 million, or $0.07 per diluted share, compared with third quarter 2003 net loss of $97.6 million, or $0.64 per basic share, and fourth quarter 2002 net income of $3.0 million, or $0.02 per diluted share.

The fourth quarter 2003 results do not include any unusual charges or benefits. The third quarter 2003 results include restructuring and other charges of $62.5 million and a non-cash charge of $62.8 million, net of taxes, as a cumulative effect of a change in accounting principle from the consolidation of properties previously accounted for as synthetic leases. Without these charges, the third quarter 2003 net income would have been $6.1 million, or $0.04 per diluted share. The fourth quarter 2002 results include an in-process research and development charge of $9.0 million and restructuring charges of $3.2 million. Without these charges, the fourth quarter 2002 net income would have been $13.0 million, or $0.09 per diluted share.

Net sales for fiscal year 2003 were $925.1 million, up 10.1 percent from $840.0 million in fiscal year 2002. The net loss for the year was $67.8 million, or $0.45 per basic share, compared with fiscal year 2002 net income of $22.9 million, or $0.15 per diluted share.

Without the restructuring and other charges of $62.5 million and the non-cash charge of $62.8 million referred to above, net income for fiscal year 2003 would have been $35.9 million, or $0.23 per diluted share, compared to fiscal year 2002 net income of $37.9 million, or $0.25 per diluted share. The fiscal year 2002 net income of $37.9 million excludes a charge for unamortized debt issuance costs of $17.0 million, restructuring charges of $6.5 million, an in-process research and development charge of $9.0 million, a benefit for bad debt recovery of $7.7 million, and a gain on the sale of an equity investment of $4.6 million.

NOVELLUS SYSTEMS REPORTS FOURTH QUARTER AND YEAR-END RESULTS ... PAGE 2 of 3

The financial measures presented above, which exclude certain unusual charges, are not in accordance with Accounting Principles Generally Accepted in the United States of America (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.

Shipments for the fourth quarter 2003 were $228.1 million, up $17.8 million, or 8.5 percent, from $210.3 million reported in the prior quarter. Deferred revenue at the end of the fourth quarter was $105.1 million, an increase of $1.6 million, or 1.5 percent, from $103.5 million at the end of the third quarter.

Cash, cash equivalents and short-term investments as of December 31, 2003 were $1.0 billion, an increase of $24.6 million, or 2.5 percent, from the third quarter 2003 ending balance of $977.5 million.

“We weathered this long downturn in the semiconductor industry and I am pleased to report positive fourth quarter results. Our continued investment in R & D during the downturn will serve us well for the current upturn in business. Our product portfolio is robust, our technology pipeline is full, and our customers are beginning a new investment cycle. Novellus is well-positioned with the right products to serve our customers’ needs,” said Richard S. Hill, chairman and chief executive officer of Novellus Systems, Inc. “We enter 2004 with optimism and the commitment to long term results for our customers, employees and shareholders,” said Hill.

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

The statements regarding (i) continued investment in research and development during the downturn benefiting the Company in the current upturn, (ii) the positive status of the Company’s product portfolio and technology pipeline, (iii) the beginnings of a new customer investment cycle, and (iv) the Company’s commitment to long term results for its customers, employees and shareholders, as well as other matters discussed in this news release that do not concern purely historical data, are forward-looking statements. The forward-looking statements involve risks and uncertainties, including, but not limited to, unanticipated difficulties in achieving timely and efficient completion of product design and development, the Company’s lack of success in selecting, manufacturing and marketing new products and product enhancements, a reversal or slowing in the rate of capital investment by semiconductor manufacturers, unexpected problems in achieving long term results for customers, employees and shareholders, and other risks and uncertainties discussed 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 relating to risks and uncertainties that could cause actual results to differ from those anticipated in our forward-looking statements, and risks to our business in general, please refer to our SEC filings, including our Annual Report on Form 10-K for the year ended December 31, 2002 and our Quarterly Report on Form 10-Q for the quarter ended September 27, 2003.

NOVELLUS SYSTEMS REPORTS FOURTH QUARTER AND YEAR-END RESULTS ... PAGE 3 of 3

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, 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®. Additional information about Novellus is available on our home page at www.novellus.com.


(In thousands, except per share amounts)				Three Months Ended									Year Ended
(Unaudited)
				December 31			September 27			December 31			December 31			December 31
				2003			2003			2002			2003			2002

Net sales				$	226,511		$	221,099		$	217,637		$	925,070		$	839,958
Cost of sales					120,424			162,323			121,589			545,070			461,435

		Gross profit			106,087			58,776			96,048			380,000			378,523
		%			46.8	%		26.6	%		44.1	%		41.1	%		45.1	%
Operating expenses:
		Selling, general and administrative			38,422			40,123			36,868			165,618			154,172
		Research and development			54,064			59,858			51,323			227,439			222,344
		In-process research and development			—			—			9,003			—			9,003
		Restructuring and other charges (benefits)			—			18,529			3,194			18,529			(1,195	)

Total operating expenses					92,486			118,510			100,388			411,586			384,324
		%			40.8	%		53.6	%		46.1	%		44.5	%		45.8	%
Income (loss) from operations					13,601			(59,734	)		(4,340	)		(31,586	)		(5,801	)
		%			6.0	%		-27.0	%		-2.0	%		-3.4	%		-0.7	%
Other income, net					2,356			2,722			7,328			16,266			28,721

Income (loss) before income taxes and cumulative effect of a change in accounting principle					15,957			(57,012	)		2,988			(15,320	)		22,920
Provision (benefit) for income taxes					5,505			(22,224	)		—			(10,286	)		—

Income (loss) before cumulative effect of a change in accounting principle					10,452			(34,788	)		2,988			(5,034	)		22,920
Cumulative effect of a change in accounting principle, net of tax					—			(62,780	)		—			(62,780	)		—

Net income (loss)				$	10,452		$	(97,568	)	$	2,988		$	(67,814	)	$	22,920

Net income (loss) per share:
	Basic
		Income (loss) before cumulative effect of a change in accounting principle		$	0.07		$	(0.23	)	$	0.02		$	(0.03	)	$	0.16
		Cumulative effect of a change in accounting principle			—			(0.41	)		—			(0.42	)		—

			Basic net income (loss) per share	$	0.07		$	(0.64	)	$	0.02		$	(0.45	)	$	0.16

	Diluted
		Income (loss) before cumulative effect of a change in accounting principle		$	0.07		$	(0.23	)	$	0.02		$	(0.03	)	$	0.15
		Cumulative effect of a change in accounting principle			—			(0.41	)		—			(0.42	)		—

			Diluted net income (loss) per share	$	0.07		$	(0.64	)	$	0.02		$	(0.45	)	$	0.15

Shares used in basic per share calculation					152,057			151,280			144,416			150,680			144,371

Shares used in diluted per share calculation					156,580			151,280			147,219			150,680			148,748

NOVELLUS SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(EXCLUDING CERTAIN UNUSUAL CHARGES AND BENEFITS) (1)


(In thousands, except per share amounts)		Three Months Ended									Year Ended
(Unaudited)
		December 31			September 27			December 31			December 31			December 31
		2003			2003			2002			2003			2002

Net sales		$	226,511		$	221,099		$	217,637		$	925,070		$	839,958
Cost of sales			120,424			118,371			121,589			501,118			461,435

	Gross profit		106,087			102,728			96,048			423,952			378,523
	%		46.8	%		46.5	%		44.1	%		45.8	%		45.1	%
Operating expenses:
	Selling, general and administrative		38,422			40,123			36,868			165,618			154,172
	Research and development		54,064			59,858			51,323			227,439			222,344

Total operating expenses			92,486			99,981			88,191			393,057			376,516
	%		40.8	%		45.2	%		40.5	%		42.5	%		44.8	%
Income from operations			13,601			2,747			7,857			30,895			2,007
	%		6.0	%		1.2	%		3.6	%		3.3	%		0.2	%
Other income, net			2,356			2,722			7,328			16,266			41,166

Income before income taxes			15,957			5,469			15,185			47,161			43,173
Provision (benefit) for income taxes			5,505			(668	)		2,208			11,270			5,310

Net income		$	10,452		$	6,137		$	12,977		$	35,891		$	37,863

Net income per share:
	Basic net income per share	$	0.07		$	0.04		$	0.09		$	0.24		$	0.26

	Diluted net income per share	$	0.07		$	0.04		$	0.09		$	0.23		$	0.25

Shares used in basic per share calculation			152,057			151,280			144,416			150,680			144,371

Shares used in diluted per share calculation			156,580			155,452			147,219			154,324			148,748


A reconciliation of our net income excluding certain unusual charges and benefits to our net income (loss) under accounting principles generally accepted in the United States of America is presented below:

Net income excluding unusual charges and benefits		$	10,452		$	6,137		$	12,977		$	35,891		$	37,863
Unusual (charges) benefits:
	Cumulative effect of a change in accounting principle		—			(62,780	)		—			(62,780	)		—
	Inventory write-down		—			(43,952	)		—			(43,952	)		—
	Restructuring and other charges		—			(18,529	)		(3,194	)		(18,529	)		(6,467	)
	In-process research and development		—			—			(9,003	)		—			(9,003	)
	Write-off debt issuance costs		—			—			—			—			(17,047	)
	Bad debt recovery		—			—			—			—			7,662
	Gain on a sale of investment		—			—			—			—			4,602

	Total charges		—			(125,261	)		(12,197	)		(125,261	)		(20,253	)
	Adjustments on provision for income taxes		—			21,556			2,208			21,556			5,310

Net income (loss)		$	10,452		$	(97,568	)	$	2,988		$	(67,814	)	$	22,920

(1)

The condensed consolidated statements of operations (excluding certain unusual charges and benefits) 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 accounting principles generally accepted in the United States of America and may be different from similar measures presented by other companies.


(In thousands)			December 31		December 31
			2003		2002
			(Unaudited)		*

ASSETS
Current assets:
	Cash and short-term investments		$	1,002,132	$	1,019,652
	Accounts receivable, net			231,760		192,862
	Inventories			199,100		257,358
	Deferred taxes and other current assets			138,996		164,062

		Total current assets		1,571,988		1,633,934
Property and equipment, net				506,567		179,926
Notes receivable				—		397,429
Goodwill				173,267		163,136
Intangible and other assets				87,078		119,569

Total assets			$	2,338,900	$	2,493,994

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
	Accounts payable and accrued liabilities		$	150,945	$	192,691
	Deferred profit			46,821		55,613
	Income taxes payable			10,293		14,070
	Short-term obligations			13,023		2,799
	Convertible subordinated debentures			—		116,437

		Total current liabilities		221,082		381,610
Deferred income tax liabilities				—		19,502
Other liabilities				45,958		37,194

Total liabilities				267,040		438,306

Shareholders’ equity:
	Common stock			1,565,926		1,487,281
	Retained earnings and accumulated other comprehensive income			505,934		568,407

		Total shareholders’ equity		2,071,860		2,055,688

Total liabilities and shareholders’ equity			$	2,338,900	$	2,493,994

The December 31, 2002 condensed consolidated balance sheet was derived from our audited consolidated financial statements.


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