Press Release

Exhibit 99.1

LOGO


Company Contacts:		Ed Lockwood
		Sr. Director of Investor Relations
		(408) 875-9529
		Ed.lockwood@kla-tencor.com

		Meggan Powers
		Sr. Director of Corporate Communications
		(408) 875-8733
		Meggan.powers@kla-tencor.com

FOR IMMEDIATE RELEASE

KLA-TENCOR REPORTS FISCAL 2008 FOURTH QUARTER AND FULL YEAR RESULTS

MILPITAS, Calif., July 31, 2008— KLA-Tencor Corporation (NASDAQ: KLAC) today announced operating results for its fourth quarter and fiscal year ended on June 30, 2008. The Company reported GAAP net income of $76 million and GAAP earnings per diluted share of $0.43 on revenue of $591 million for the fourth quarter of fiscal 2008. For the year ended June 30, 2008, the Company reported GAAP net income of $359 million and GAAP earnings per diluted share of $1.95 on revenue of $2.5 billion.

“This was a year of solid execution for KLA-Tencor in a tough overall market environment. We expanded our potential market opportunity through the acquisition of ICOS Vision Systems, and delivered good operating performance in a very challenging demand environment. Our strong performance in the face of these challenges reflects the strength of our market leadership, the superior value we deliver to our customers in helping them meet their yield demands, and the resilience of the KLA-Tencor team,” said Rick Wallace, CEO of KLA-Tencor.

GAAP Results


	Q4 FY 2008		Q3 FY 2008		Q4 FY 2007
Revenues	$	591 million	$	602 million	$	736 million
Net Income	$	76 million	$	111 million	$	147 million
Diluted Earnings per Share	$	0.43	$	0.61	$	0.75

Non-GAAP Results

	Q4 FY 2008		Q3 FY 2008		Q4 FY 2007
Net Income	$	107 million	$	121 million	$	179 million
Diluted Earnings per Share	$	0.60	$	0.67	$	0.91

A reconciliation between GAAP net income and non-GAAP net income is provided following the financial statements that are part of this release. Non-GAAP results include the impact of stock-based compensation, but exclude the impact of acquisition, restatement or restructuring related items.

Highlights for the fourth quarter of fiscal 2008

•

Completed the acquisition of ICOS Vision Systems Corporation NV, a leading supplier of packaging and interconnect inspection solutions for the semiconductor industry, as well as a leader in the inspection of photovoltaic solar technologies and LED lighting products.

•

Completed the issuance of $750 million aggregate principal amount of Senior Notes due May 1, 2018, with a coupon of 6.90%.

•

Declared and paid dividends of $26 million and repurchased 2.9 million shares for $122 million under the previously authorized repurchase program

•

Announced that the Company’s Board of Directors authorized the repurchase of an additional 15 million shares of the Company’s common stock.

•

Generated cash flow from operations of $188 million.

•

Introduced Wafer Plane Inspection (WPI), a mask inspection technology that provides the unique versatility in a single system to find defects on a mask and also show the defects that will print on the wafer. WPI is able to overcome yield-critical 32nm mask defect challenges and can also operate up to 40% faster than previous inspection systems, potentially reducing the percentage of total mask manufacturing time devoted to inspection.

•

Introduced Archer 200^TM, the Company’s latest overlay metrology system featuring an enhanced optical system that provides significant performance improvements that are critical to help customers meet the much tighter overlay requirements for double-patterning lithography at the 32nm design rule node.

KLA-Tencor will discuss its fiscal 2008 fourth quarter results, along with its outlook for the first quarter of fiscal 2009, on a conference call today beginning at 2:00 p.m. Pacific Daylight Time. A webcast of the call will be available at: www.kla-tencor.com

Forward-Looking Statements:

Statements in this press release other than historical facts, such as statements regarding the benefit to customers of KLA-Tencor’s products, anticipated performance of the Company’s products, anticipated market conditions, potential market opportunities for KLA-Tencor, benefits anticipated to be realized in connection with KLA-Tencor’s acquisition of ICOS Vision Systems Corporation NV and demand for KLA-Tencor’s products, 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; new and enhanced product offerings by competitors; cancellation of orders by customers; our inability to successfully integrate and manage businesses that we acquire, including ICOS Vision Systems Corporation NV; and changing customer demands. For other factors that may cause actual results to differ materially from those projected and anticipated in forward-looking statements in this release, please refer to the Company’s Annual Report on Form 10-K for the year ended June 30, 2007, subsequently filed Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission (including, but not limited to, the risk factors described therein).

About KLA-Tencor:

KLA-Tencor is the world’s leading supplier of process control and yield management solutions for the semiconductor and related microelectronics industries. Headquartered in Milpitas, California, the Company has sales and service offices around the world. An S&P 500 Company, KLA-Tencor is traded on the NASDAQ Global Select Market under the symbol KLAC. Additional information about the Company is available on the Internet at http://www.kla-tencor.com

Use of Non-GAAP financial information:

The non-GAAP and supplemental information provided in this press release is a supplement to, and not a substitute for, our financial results presented in accordance with GAAP.

To supplement our condensed consolidated financial statements presented in accordance with GAAP, we provide non-GAAP financial information, which is adjusted from results based on GAAP to exclude certain costs and expenses, as well as other supplemental information. The non-GAAP and supplemental information is provided to enhance the user’s overall understanding of our operating performance and our prospects in the future. Specifically, we believe the non-GAAP information provides useful measures to both management and investors regarding financial and business trends relating to our financial performance by excluding certain costs and expenses that we believe are not indicative of our core operating results. The non-GAAP information is among the budgeting and planning tools that management uses for future forecasting. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with United States GAAP.

KLA-Tencor Corporation

Condensed Consolidated Unaudited Balance Sheets


*(In thousands)*	June 30, 2008		June 30, 2007
ASSETS
Cash and short- and long-term investments	$	1,579,383	$	1,710,629
Accounts receivable, net		492,488		581,500
Inventories, net		459,449		535,370
Other current assets		546,591		425,272
Land, property and equipment, net		355,474		382,240
Goodwill		601,882		311,856
Purchased intangibles, net		297,778		175,432
Other long-term assets		515,345		500,950

Total assets	$	4,848,390	$	4,623,249

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	104,315	$	92,165
Deferred system profit		150,797		201,747
Unearned revenue		56,692		52,304
Other current liabilities		638,528		659,346

Total current liabilities		950,332		1,005,562
Non-current liabilities:
Income tax payable		63,634		—
Unearned revenue		31,745		46,950
Other non-current liabilities		76,288		20,695
Long-term debt		744,661		—

Total liabilities		1,866,660		1,073,207
Stockholders’ equity:
Common stock and capital in excess of par value		729,629		967,886
Retained earnings		2,204,417		2,570,751
Accumulated other comprehensive income		47,684		11,405

Total stockholders’ equity		2,981,730		3,550,042

Total liabilities and stockholders’ equity	$	4,848,390	$	4,623,249

KLA-Tencor Corporation

Condensed Consolidated Unaudited Statements Of Operations


	Three months ended					Twelve months ended
*(In thousands except per share data)*	June 30, 2008			June 30, 2007		June 30, 2008		June 30, 2007
Revenues:
Product	$	462,069		$	626,323	$	2,030,224	$	2,308,942
Service		128,625			110,065		491,492		422,287

Total revenues		590,694			736,388		2,521,716		2,731,229
Costs and operating expenses:
Costs of revenues		268,868			315,681		1,145,416		1,190,323
Engineering, research and development		116,470			123,854		409,973		437,513
Selling, general and administrative		101,945			121,989		466,951		513,525

Total costs and operating expenses		487,283			561,524		2,022,340		2,141,361

Income from operations		103,411			174,864		499,376		589,868
Interest income and other, net		(5,894	)		21,436		60,858		87,367

Income before income taxes and minority interest		97,517			196,300		560,234		677,235
Provision for income taxes		21,507			48,958		201,151		150,509

Income before minority interest		76,010			147,342		359,083		526,726
Minority interest		—			—		—		1,372

Net income	$	76,010		$	147,342	$	359,083	$	528,098

Net income per share:
Basic	$	0.43		$	0.77	$	1.99	$	2.68

Diluted	$	0.43		$	0.75	$	1.95	$	2.61

Cash dividend paid per share	$	0.15		$	0.12	$	0.60	$	0.48

Weighted average number of shares:
Basic		175,143			191,370		180,594		197,126
Diluted		178,090			197,062		184,259		202,204

KLA-Tencor Corporation

Condensed Consolidated Unaudited Statements of Cash Flows


	Three months ended June 30,
*(In thousands)*	2008			2007
Cash flows from operating activities:
Net income	$	76,010		$	147,342
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		46,469			36,138
Impairment charges		7,522			10,720
Non-cash, stock-based compensation		29,279			26,394
Tax benefit from employee stock options		(924	)		1,570
Excess tax benefit from stock-based compensation		(354	)		(3,224	)
Net (gain) loss on sale of marketable securities and other investments		12,813			(3,473	)
Net gain on sale of real estate		(2,480	)		—
Changes in assets and liabilities:
(Increase) decrease in accounts receivable, net		93,081			(67,608	)
Decrease in inventories		13,059			40,690
Increase in other assets		(73,548	)		(6,336	)
Decrease in accounts payable		(5,730	)		(34,564	)
Decrease in deferred system profit		(37,503	)		(15,485	)
Increase in other liabilities		30,680			23,306

Net cash provided by operating activities		188,374			155,470

Cash flows from investing activities:
Proceeds from restricted cash		581,540			—
Acquisitions of businesses, net of cash received		(488,545	)		(82,503	)
Capital expenditures, net		(9,629	)		(29,141	)
Proceeds from sale of real estate		5,497			—
Purchase of available-for-sale securities		(406,210	)		(387,615	)
Proceeds from sale of available-for-sale securities		87,008			343,606
Proceeds from maturity of available-for-sale securities		—			34,345

Net cash used in investing activities		(230,339	)		(121,308	)

Cash flows from financing activities:
Issuance of long-term debt, net of discounts		744,570			—
Issuance of common stock		24,607			140,449
Common stock repurchases		(121,510	)		(44,879	)
Payment of dividends to stockholders		(26,354	)		(23,037	)
Excess tax benefit from stock-based compensation		354			3,224
Debt issuance costs		(7,351	)		—

Net cash provided by financing activities		614,316			75,757

Effect of exchange rate changes on cash and cash equivalents		(7,727	)		8,177

Net increase (decrease) in cash and cash equivalents		564,624			118,096
Cash and cash equivalents at beginning of period		563,482			604,415

Cash and cash equivalents at end of period	$	1,128,106		$	722,511

Supplemental cash flow disclosures:
Income taxes paid, net	$	59,720		$	46,988
Interest paid	$	417		$	658

KLA-Tencor Corporation

Condensed Consolidated Unaudited Supplemental Information

(In thousands except per share data)

Reconciliation of GAAP Net Income to Non-GAAP Net Income


		Three months ended									Twelve months ended
		June 30, 2008			March 31, 2008			June 30, 2007			June 30, 2008			June 30, 2007
GAAP net income		$	76,010		$	110,980		$	147,342		$	359,083		$	528,098
Adjustments to reconcile GAAP net income to non-GAAP net income
Acquisition related charges	a		50,377			(2,174	)		37,875			82,473			74,790
Restructuring, severance and other	b		(1,391	)		13,477			10,808			8,379			77,988
Restatement related charges	c		2,660			5,169			1,179			76,940			34,328
Income tax effect of non-GAAP adjustments	d		(12,038	)		(6,210	)		(18,555	)		(53,315	)		(68,058	)
Non recurring tax item	e		(8,438	)		—			—			38,175			—

Non-GAAP net income		$	107,180		$	121,242		$	178,649		$	511,735		$	647,146

GAAP net income per diluted share		$	0.43		$	0.61		$	0.75		$	1.95		$	2.61

Non-GAAP net income per diluted share		$	0.60		$	0.67		$	0.91		$	2.78		$	3.20

Shares used in diluted shares calculation			178,090			180,617			197,062			184,259			202,204

Impact of items included in Condensed Consolidated Unaudited Statements of Operations:


	Acquisition related charges			Restructuring, severance and other			Restatement related charges		Total pre-tax GAAP to non- GAAP adjustment
Costs of revenues	$	12,822		$	(121	)	$	—	$	12,701
Engineering, research and development		19,151			101			—		19,252
Sales, general and administrative		5,404			(1,371	)		2,660		6,693
Interest income and other, net		13,000			—			—		13,000

Total in three months ended June 30, 2008	$	50,377		$	(1,391	)	$	2,660	$	51,646

Total in three months ended March 31, 2008	$	(2,174	)	$	13,477		$	5,169	$	16,472

Total in three months ended June 30, 2007	$	37,875		$	10,808		$	1,179	$	49,862


	Three months ended
	June 30, 2008			March 31, 2008			June 30, 2007
Stock-based compensation
Costs of revenues	$	5,418		$	5,670		$	5,965
Engineering, research and development		8,870			8,052			8,447
Sales, general and administrative		14,992			12,133			11,982
Provision for income taxes		(9,077	)		(7,757	)		(8,182	)

Total	$	20,203		$	18,098		$	18,212

To supplement our condensed consolidated financial statements presented in accordance with GAAP, we provide certain non-GAAP financial information, which is adjusted from results based on GAAP to exclude certain costs and expenses, as well as other supplemental information. The non-GAAP and supplemental information is provided to enhance the user’s overall understanding of our operating performance and our prospects in the future. Specifically, we believe the non-GAAP information provides useful measures to both management and investors regarding financial and business trends relating to our financial performance by excluding certain costs and expenses that we believe are not indicative of our core operating results. The non-GAAP information is among budgeting and planning tools that management uses for future forecasting. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with United States GAAP.

Acquisition related charges include impairment and amortization of intangible assets, inventory fair value adjustments, in-process research and development associated with acquisitions, asset impairment from discontinuing acquired products as well as making acquired products available for sale, and realized and unrealized gains and losses resulting from the Euro call option contracts related to the Company’s acquisition of ICOS Vision Systems Corporation NV. Management believes that the expense associated with the impairment and amortization of acquisition related intangible assets is appropriate to be excluded because a significant portion of the purchase price for acquisitions may be allocated to intangible assets that have short lives, and exclusion of the amortization expense allows comparisons of operating results that are consistent over time for both the Company’s newly acquired and long-held business. Management believes that it is appropriate to exclude asset impairment from discontinuing acquired products as well as gains and losses on foreign exchange contracts associated with business acquisitions as they are not indicative of ongoing operating results and therefore limit comparability. Management believes excluding these items helps investors compare our operating performance with our results in prior periods as well as with the performance of other companies.

Restructuring, severance and other includes gains and costs associated with facilities divestment program, worldwide reduction in force, gains from sale of facilities and one-time inventory write-off associated with the disposal of service inventory in excess of future needs. Management believes that it is appropriate to exclude those items as they are not indicative of ongoing operating results and therefore limit comparability. Management believes excluding these items helps investors compare our operating performance with our results in prior periods as well as with the performance of other companies.

Restatement related charges include compensation related to reimbursement of non-executive employees for penalty taxes under section 409A of the Internal Revenue Code, as well as legal and other expenses related to the stock option investigation, shareholder litigation and related matters. Management believes that it is appropriate to exclude those items as they are not indicative of ongoing operating results and therefore limit comparability. Management believes excluding these items helps investors compare our operating performance with our results in prior periods as well as with the performance of other companies.

d	Income tax effect of non-GAAP adjustments includes the income tax effects of the excluded items noted above. Management believes that it is appropriate to exclude the tax effects of the items noted above in order to present a more meaningful measure of non-GAAP net income.

Non recurring tax items includes the U.S. tax impact associated with the implementation of our global manufacturing strategy and a benefit from revision of the amount of undistributed earnings of foreign subsidiaries considered to be permanently reinvested outside the United States. Management believes that it is appropriate to exclude these items as it limits comparability. Management believes excluding these items helps investors compare our operating performance with our results in prior periods as well as with the performance of other companies.