"We had a quarter of strong financial results, as semiconductor manufacturers continue to make investments in our leading-edge process control solutions in order to reduce the time and costs associated with producing next-generation devices, " stated Rick Wallace, chief executive officer of KLA-Tencor. "W e remain focused on investing in the solutions our customers will need in order to remain competitive as next-generation applications enter production."

KLA-Tencor reported ending the quarter with approximately nine months of product-related shipment and revenue backlog. On a geographic basis, U.S. was 33 percent of orders, higher than its historical average of 25 percent; Japan was 26 percent of orders, higher than its historical average of 20 percent; Taiwan was 14 percent of orders, lower than its historical average of 20 percent; Korea, China and Singapore were 16 percent of orders, below their combined historical average of 20 percent; and Europe was 11 percent of orders, lower than its historical average of 15 percent.

KLA-Tencor's financial position remained strong with cash, cash equivalents and marketable securities of $2.3 billion and no long term debt. Inventory increased by $27 million compared to the prior quarter to $438 million as build plans ramp to meet increased customer demand. Accounts receivable increased by $84 million compared to the prior quarter to $456 million on higher shipments.

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Forward Looking Statements: Statements in this press release regarding the benefit to customers of KLA-Tencor's products, demand for KLA-Tencor's products and its future financial performance are forward-looking statements, and are subject to the Safe Harbor provisions created by the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current information and expectations, and involve a number of risks and uncertainties. Actual results may differ materially from those projected in such statements due to various factors, including but not limited to: the demand for semiconductors and new and enhanced product offerings by competitors, cancellation of orders by customers and changing customer demands. For other factors that may cause actual results to differ materially from those projected, please refer to the company's Form 10-K, Forms 10-Q and other filings with the Securities and Exchange Commission. 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.

For comparison purposes, the company makes reference to certain net income and earnings per share results that were consistent with GAAP when presented in prior quarters, but are now inconsistent with GAAP due to changes in accounting standards. These results were reached by excluding non-cash, equity-based compensation expenses. We reference those results to allow a better comparison of results in the current period to those in prior periods. Our reference to these results from prior periods should be considered in addition to results that are prepared under current accounting standards but should not be considered a substitute for results that are presented as consistent with GAAP .

About KLA-Tencor: KLA-Tencor is the world leader in yield management and process control solutions for semiconductor manufacturing and related industries. Headquartered in San Jose, Calif., the company has sales and service offices around the world. An S&P 500 company, KLA-Tencor was named one of the Best Managed Companies in America for 2005 by Forbes Magazine and is the only company in the semiconductor industry to receive the accolade for this year. KLA-Tencor is traded on the Nasdaq National Market under the symbol KLAC. Additional information about the company is available on the Internet at http://www.kla-tencor.com

Contact:
Meggan Powers
Director Corporate Communications