KLA-Tencor Reports Second Quarter Operating Results
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San Jose, CA - January 13, 2000 - KLA-Tencor Corporation today announced operating results for its second quarter ended December 31, 1999. Revenues were $331 million, a 71% increase from the $193 million of the December, 1998 quarter. Net income also increased to $49 million or $0.52 per share compared to $10 million or $0.11 per share in the same period one year ago, excluding the impact of non-recurring acquisition, restructuring and other charges during the quarter. Net loss for the prior fiscal year period including the non-recurring charges was $18 million or $0.20 per share.

The Company had record bookings during the quarter with all regions contributing to the increase. Backlog increased substantially with most product lines ending the quarter with higher backlog. Share of bookings by region returned to historical patterns except for Taiwan, which had higher than historical percentage share, and Japan, which had lower.

Surfscan, AIT, 2100 Series, overlay and film measurement products all experienced record order levels for the quarter. Orders for wafer systems were driven by capacity expansions and by new yield management investments in existing fabs. The Company now has multiple wafer inspection units installed or booked in over 200 fabs.

Gross margins increased to 54% during the December quarter from 50% in the September quarter. Gross margin improvement occurred as the result of a mix shift towards higher gross margin products and as higher shipped volumes absorbed more fixed manufacturing costs. Operating costs increased as the Company invested more in engineering development programs addressing advanced inspection and metrology requirements and as the Company spent more in sales and marketing infrastructure to address higher business levels. In aggregate, these increases were lower than the sales increase, reducing operating costs to 35% of revenue.

During the quarter, cash and investments increased by $100 million to $854 million and the Company continued to have no long-term debt.

Actual results could differ materially from those anticipated in forward-looking statements in this release as a result of certain factors, including those set forth in the risk factors described in the Company's SEC filings.

Click here to view Consolidated Statement of Income and Consolidated Balance Sheets

KLA-Tencor Corporation is the world leader in yield management and process control solutions for semiconductor manufacturing and related industries. The Company offers a broad portfolio of systems for inspection, metrology, and data analysis, as well as yield management services. KLA-Tencor is traded on the Nasdaq National Market under the symbol KLAC.

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