September 30, 2005. Taiwan was 27 percent of orders, above its historical average of 20 percent; Japan was 23 percent of orders, higher than its historical average of 20 percent; U.S. was 25 percent of orders, and consistent with its historical average of 25 percent; Europe was 13 percent of orders, lower than its historical average of 15 percent; and Korea, China and Singapore combined were 12 percent of orders, below their combined historical average of 20 percent.

KLA-Tencor’s financial position remained strong with cash, cash equivalents and marketable securities of $2.2 billion and no long term debt. Inventory increased by $38 million to $396 million as a result of higher shipments to Japanese customers that remain in inventory until customer acceptance, and higher field inventory to support customer service requirements of new products. Accounts receivable decreased by $26 million to $307 million.

Forward Looking Statements: Statements in this press release regarding the benefit to customers of KLA-Tencor’s products and our 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., with operations around the world, KLA-Tencor ranked #6 on S&P’s 2002 index of the top 500 companies in the U.S. 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.

 

KLA-Tencor Corporation
CONDENSED CONSOLIDATED UNAUDITED BALANCE SHEETS

		September 30,				June 30,
		2005				2005
(In thousands)
ASSETS
Cash, short-term investments and marketable securities		$	2,182,746			$	2,195,186
Accounts receivable, net			307,194				333,218
Inventories			396,006				358,339
Land, property and equipment, net			382,713				385,222
Other assets			761,939				714,407
Total assets		$	4,030,598			$	3,986,372
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	58,001			$	67,717
Deferred system profit			180,347				209,899
Unearned revenue			75,003				80,122
Other current liabilities			543,039				574,124
Total current liabilities			856,390				931,862
Minority interest in subsidiary			10,086				9,253
Stockholders’ equity:
Common stock and capital in excess of par value			1,015,660				943,322
Retained earnings			2,136,607				2,083,638
Accumulated other comprehensive income			11,855				18,297
Total stockholders’ equity			3,164,122				3,045,257
Total liabilities and stockholders’ equity		$	4,030,598			$	3,986,372

		*includes the following amounts related to equity awards (in thousands)