<?xml version="1.0"?>
<ownershipDocument>

    <schemaVersion>X0305</schemaVersion>

    <documentType>4</documentType>

    <periodOfReport>2012-06-04</periodOfReport>

    <notSubjectToSection16>1</notSubjectToSection16>

    <issuer>
        <issuerCik>0000836106</issuerCik>
        <issuerName>NOVELLUS SYSTEMS INC</issuerName>
        <issuerTradingSymbol>NVLS</issuerTradingSymbol>
    </issuer>

    <reportingOwner>
        <reportingOwnerId>
            <rptOwnerCik>0001185708</rptOwnerCik>
            <rptOwnerName>NISHI YOSHIO</rptOwnerName>
        </reportingOwnerId>
        <reportingOwnerAddress>
            <rptOwnerStreet1>4000 NORTH FIRST STREET</rptOwnerStreet1>
            <rptOwnerStreet2></rptOwnerStreet2>
            <rptOwnerCity>SAN JOSE</rptOwnerCity>
            <rptOwnerState>CA</rptOwnerState>
            <rptOwnerZipCode>95134</rptOwnerZipCode>
            <rptOwnerStateDescription></rptOwnerStateDescription>
        </reportingOwnerAddress>
        <reportingOwnerRelationship>
            <isDirector>1</isDirector>
            <isOfficer>0</isOfficer>
            <isTenPercentOwner>0</isTenPercentOwner>
            <isOther>0</isOther>
        </reportingOwnerRelationship>
    </reportingOwner>

    <nonDerivativeTable>
        <nonDerivativeTransaction>
            <securityTitle>
                <value>Common Stock</value>
            </securityTitle>
            <transactionDate>
                <value>2012-06-04</value>
            </transactionDate>
            <transactionCoding>
                <transactionFormType>4</transactionFormType>
                <transactionCode>D</transactionCode>
                <equitySwapInvolved>0</equitySwapInvolved>
            </transactionCoding>
            <transactionAmounts>
                <transactionShares>
                    <value>30000</value>
                    <footnoteId id="F2"/>
                </transactionShares>
                <transactionPricePerShare>
                    <value>0.00</value>
                    <footnoteId id="F1"/>
                </transactionPricePerShare>
                <transactionAcquiredDisposedCode>
                    <value>D</value>
                </transactionAcquiredDisposedCode>
            </transactionAmounts>
            <postTransactionAmounts>
                <sharesOwnedFollowingTransaction>
                    <value>0</value>
                </sharesOwnedFollowingTransaction>
            </postTransactionAmounts>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>D</value>
                </directOrIndirectOwnership>
            </ownershipNature>
        </nonDerivativeTransaction>
    </nonDerivativeTable>

    <footnotes>
        <footnote id="F1">Disposed of in connection with the merger of BLMS Inc. (&quot;Merger Sub&quot;), a wholly owned subsidiary of Lam Research Corporation (&quot;Lam Research&quot;), with and into Novellus Systems, Inc. (&quot;Novellus&quot;),  pursuant to the terms of the Agreement and Plan of Merger by and among Merger Sub, Lam Research and Novellus dated December 14, 2011 (the &quot;Merger&quot;).  In connection with the Merger, each outstanding share of Novellus common stock was exchanged for 1.125 shares of Lam Research common stock having a market value of $35.99 per share based on the closing price of Lam Research's common stock on June 4, 2012.</footnote>
        <footnote id="F2">Includes 1,667 shares of Restricted Stock which vested in full at the effective time of the merger.</footnote>
    </footnotes>

    <ownerSignature>
        <signatureName>Yoshio Nishi by Gina Corrales, Attorney-in-Fact</signatureName>
        <signatureDate>2012-06-06</signatureDate>
    </ownerSignature>
</ownershipDocument>
