424B3 1 f76451b3e424b3.txt 424(B)(3) PROSPECTUS SUPPLEMENT NO. 1 (To Prospectus Dated October 12, 2001) Filed Pursuant to Rule 424(b)(3) Registration Statement No. 333-70140 $880,000,000 NOVELLUS SYSTEMS, INC. LIQUID YIELD OPTION (TM) NOTES DUE 2031 (ZERO COUPON - SUBORDINATED) This prospectus supplement relates to the resale by the selling securityholders of Liquid Yield Option (TM) Notes (Zero Coupon - Subordinated) due 2031 (the "LYONs") of Novellus Systems, Inc. and the shares of common stock issuable upon the conversion and/or redemption of the LYONs. This prospectus supplement should be read in conjunction with the prospectus dated October 12, 2001, which is to be delivered with this prospectus supplement. All capitalized terms used but not defined in the prospectus supplement shall have the meanings given them in the prospectus. The following information replaces in its entirety the information provided in the prospectus under the caption "Selling Security Holders." SELLING SECURITY HOLDERS The LYONs were originally issued by us and sold to Merrill Lynch, Pierce, Fenner & Smith Incorporated in a transaction exempt from the registration requirements of the Securities Act. Merrill Lynch resold the LYONs to persons believed by Merrill Lynch to be "qualified institutional buyers" (as defined by Rule 144A under the Securities Act) in a transaction also exempt from the registration requirements of the Securities Act. The selling security holders (which term includes their transferees, pledgees, donees or successors) may from time to time offer and sell pursuant to this prospectus any and all of the LYONs and the shares of common stock issuable upon conversion and/or redemption of the LYONs. Any or all of the LYONs or common stock issuable upon conversion and/or redemption of the LYONs may be offered for sale pursuant to this prospectus by the selling security holders from time to time. Accordingly, no estimate can be given as to the amounts of LYONs or common stock that will be held by the selling security holders upon consummation of any such sales. The names of each selling security holder, the principal amount of LYONs that may be offered by such selling security holder pursuant to this prospectus and the number of shares of common stock into which such LYONs are convertible will be set forth in a prospectus supplement, if required. Unless described in the prospectus supplement, none of the selling security holders has had a material relationship with us or any of our predecessors or affiliates within the past three years. Because the selling security holders may offer all, some or none of their LYONs or the underlying common stock from time to time, we cannot estimate the amount of the LYONs or the underlying common stock that will be held by the selling security holders upon the termination of any particular offering. See "Plan of Distribution."

AGGREGATE PRINCIPAL AMOUNT OF LYONS AT PERCENTAGE COMMON STOCK COMMON STOCK NAME OF MATURITY THAT OF LYONS BENEFICIALLY OWNED REGISTERED BENEFICIAL OWNER MAY BE SOLD(1) OUTSTANDING PRIOR TO CONVERSION HEREBY(2) ---------------- ---------------- ----------- ------------------- ------------ KBC Financial Products (Cayman Islands) $65,140,000 7.40% -- 853,011 Wilmington Trust Company as Owner Trustee for the Forrestal Funding Master 65,000,000 7.39% -- 851,178 TD Securities (USA) Inc. 50,000,000 5.68% -- 654,752 Amaranth Securities LLC 53,500,000 6.08% -- 700,585 MLQA Convertible Securities Arbitrage Ltd. 25,000,000 2.84% -- 327,376 D.E. Shaw Valence, L.P. 20,000,000 2.27% -- 261,901 Susquehanna Capital Group 20,000,000 2.27% -- 261,901 Continental Casualty Company 13,000,000 1.48% -- 170,236 Continental Assurance Company on Behalf of its Separate Account(E) 12,000,000 1.36% -- 157,140 JMG Triton Offshore Fund, LTD. 11,300,000 1.28% -- 147,974 KBC Financial Products USA Inc. 10,000,000 1.14% -- 130,950 Paloma Securities LLC 9,000,000 1.02% -- 117,855 St. Albans Partners Ltd. 8,000,000 * -- 104,760 Peoples Benefit Life Insurance Company (Teamsters Separate Account) 7,000,000 * -- 91,665 Allstate Insurance Company 6,000,000(3) * 245,100(4) 78,570(5) HBK Master Fund L.P. 5,000,000 * 73,200 65,475 D.E. Shaw Investments, L.P. 5,000,000 * -- 65,475 Morgan Stanley 5,000,000 * -- 65,475 Yield Strategies Fund II, L.P. 4,000,000 * -- 52,380 Allstate Life Insurance Company 4,000,000 * 5,100 52,380 Zola Partners, LP 2,000,000 * -- 26,190 Retail Clerks Pension Trust #2 2,000,000 * -- 26,190 Bank of America Pension Plan 2,000,000 * -- 26,190 General Motors Welfare Benefit Trust (VEBA) 2,000,000 * -- 26,190 Retail Clerks Pension Trust 2,000,000 * -- 26,190 HSBC Trustee Zola Managed Trust 1,200,000 * -- 15,714 Yield Strategies Fund I, L.P. 1,000,000 * -- 13,095 Circlet (IMA) Limited 1,000,000 * -- 13,095 Duckbill & Co. 1,000,000 * -- 13,095 Lyxor Master Fund 800,000 * -- 10,476

AGGREGATE PRINCIPAL AMOUNT OF LYONS AT PERCENTAGE COMMON STOCK COMMON STOCK NAME OF MATURITY THAT OF LYONS BENEFICIAL OWNED REGISTERED BENEFICIAL OWNER MAY BE SOLD(1) OUTSTANDING PRIOR TO CONVERSION HEREBY(2) ---------------------------------- ---------------- ----------- ------------------- ------------ All other holders of LYONs or future transferees, pledgees, donees or successors of any such holders(6)(7) 471,060,000 53.53% -- 6,168,550 Total $880,000,000 100% 318,300 11,523,635

-------------- * Less than 1% (1) Assumes none of the holder's LYONs are converted into shares of Common Stock. (2) Assumes conversion of all of the holder's LYONs at a conversion rate of 13.09504 shares of common stock per $1,000 principal amount at maturity of the LYONs. However, this conversion rate will be subject to adjustment as described under "Description of the LYONs -- Conversion Rights." As a result, the amount of common stock issuable upon conversion of the LYONs may increase or decrease in the future. (3) Includes $4,000 beneficially owned by Allstate Life Insurance Company ("ALIC"), a subsidiary of Allstate Insurance Company ("AIC"), and $2,000,000 beneficially owned by AIC. (4) Includes (1) 5,100 shares of common stock held by ALIC; (2) 7,000 shares of common stock held by Allstate New Jersey Insurance Company, an indirect subsidiary of AIC; and (3) 24,900 shares of common stock and 59,200 shares of common stock held by Agents Pension Plan and Allstate Retirement Plan, respectively, each of which are employer sponsored plans maintained for Allstate employees and agents. (5) Includes 52,380 shares of common stock beneficially owned by ALIC and 26,190 shares of common stock beneficially owned by AIC. (6) Information about other selling security holders will be set forth in prospectus supplements, if required. (7) Assumes that any other holders of LYONs, or any future transferees, pledgees, donees or successors of or from any such other holders of LYONs, do not beneficially own any common stock other than the common stock issuable upon conversion of the LYONs at the initial conversion rate. The preceding table has been prepared based upon information furnished to us by the selling security holders named in the table. Information about the selling security holders may change from time to time. Any changed information will be set forth in prospectus supplements, if required. The date of this Prospectus Supplement is October 23, 2001.