Text of press release

Exhibit 99.1


FOR IMMEDIATE RELEASE

Investor Relations:		Media Relations:

Ed Lockwood		Meggan Powers
Sr. Director, Investor Relations		Sr. Director, Corporate Communications
(408) 875-9529		(408) 875-8733
ed.lockwood@kla-tencor.com		meggan.powers@kla-tencor.com

KLA-TENCOR REPORTS FISCAL 2009 FOURTH QUARTER AND FULL YEAR RESULTS

MILPITAS, Calif., July 23, 2009—KLA-Tencor Corporation (NASDAQ: KLAC) today announced operating results for its fourth quarter and fiscal year ended on June 30, 2009. KLA-Tencor reported GAAP net loss of $26 million and GAAP loss per share of $0.15 on revenue of $282 million for the fourth quarter of fiscal year 2009. For the year ended June 30, 2009, the company reported GAAP net loss of $523 million and GAAP loss per diluted share of $3.07 on revenue of $1.5 billion.

“We are encouraged by investments in technology development programs by customers at the leading edge as well as improved demand from our foundry customers,” commented Rick Wallace, president and CEO of KLA-Tencor. “We continue to manage our business to align our cost structure with projected revenue levels and are focused on achieving non-GAAP breakeven by the end of calendar year 2009, while at the same time maintaining a high level of R&D investment to support our customers’ next-generation process control needs.”

GAAP Results


	Q4 FY 2009			Q3 FY 2009			Q4 FY 2008
Revenues	$	282 million		$	310 million		$	591 million
Net (Loss) Income	$	(26) million		$	(83) million		$	76 million
(Loss) Earnings per Share	$	(0.15	)	$	(0.49	)	$	0.43

Non-GAAP Results


	Q4 FY 2009			Q3 FY 2009			Q4 FY 2008
Net (Loss) Income	$	(15) million		$	(58) million		$	107 million
(Loss) Earnings per Share	$	(0.09	)	$	(0.34	)	$	0.60

A reconciliation between GAAP operating results and non-GAAP operating results 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, goodwill and intangible asset impairment, restatement, and restructuring related items.

KLA-Tencor will discuss the results for its fourth quarter and fiscal year 2009, along with its outlook, 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 encouragement derived from the investment in technology development programs witnessed in the June quarter (including without limitation the potential success of such technology development programs and whether such programs will result in future sales for KLA-Tencor) and from the improved demand seen in the June quarter from foundry customers (including without limitation the possibility that such improved demand will be sustained in future

periods); the company’s ability to align its cost structure with projected revenue levels so as to achieve non-GAAP breakeven operating results by the end of the calendar year; future levels of investment in research and development by KLA-Tencor; and KLA-Tencor’s ability to successfully innovate, develop and sell new technologies and products that meet customer demands, 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; the financial condition of the global capital markets and the general macroeconomic environment; new and enhanced product offerings by competitors; cancellation of orders by customers; the ability of KLA-Tencor’s research and development teams to successfully innovate and develop technology that is responsive to customer demands; the impact of local labor and employment laws on KLA-Tencor’s ability to complete, and realize the anticipated cost savings from, its recent global workforce reductions; unanticipated delays in the completion of KLA-Tencor’s facilities consolidation efforts or the implementation of other cost-reduction efforts; KLA-Tencor’s ability to successfully integrate and manage businesses that it acquires; 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 KLA-Tencor’s Annual Report on Form 10-K for the year ended June 30, 2008, 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). KLA-Tencor assumes no obligation to, and does not currently intend to, update these forward-looking statements.

About KLA-Tencor:

KLA-Tencor Corporation (NASDAQ: KLAC), a leading provider of process control and yield management solutions, partners with customers around the world to develop state-of-the-art inspection and metrology technologies. These technologies serve the semiconductor, data storage, compound semiconductor, photovoltaic, and other related nanoelectronics industries. With a portfolio of industry-standard products and a team of world-class engineers and scientists, the company has created superior solutions for its customers for over 30 years. Headquartered in Milpitas, California, KLA-Tencor has dedicated customer operations and service centers around the world. Additional information may be found at www.kla-tencor.com. (KLAC-F)

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, KLA-Tencor’s financial results presented in accordance with United States GAAP.

To supplement KLA-Tencor’s condensed consolidated financial statements presented in accordance with GAAP, the company provides 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 KLA-Tencor’s operating performance and its prospects in the future. Specifically, KLA-Tencor believes the non-GAAP information provides useful measures to both management and investors regarding financial and business trends relating to KLA-Tencor’s financial performance by excluding certain costs and expenses that the company believes are not indicative of its core operating results. The non-GAAP information is among the budgeting and planning tools that management uses for future forecasting. The presentation of non-GAAP and supplemental information is not meant to be considered in isolation or as a substitute for results prepared and presented in accordance with United States GAAP.

KLA-Tencor Corporation

Condensed Consolidated Unaudited Balance Sheets


*(In thousands)*	June 30, 2009			June 30, 2008
ASSETS
Cash and short- and long-term investments	$	1,329,884		$	1,579,383
Accounts receivable, net		210,143			492,488
Inventories, net		370,206			459,449
Other current assets		488,384			546,591
Land, property and equipment, net		291,878			355,474
Goodwill		329,379			601,882
Purchased intangibles, net		149,080			297,778
Other long-term assets		440,584			515,345

Total assets	$	3,609,538		$	4,848,390


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	63,485		$	104,315
Deferred system profit		95,820			150,797
Unearned revenue		63,237			56,692
Other current liabilities		341,441			638,528

Total current liabilities		563,983			950,332

Non-current liabilities:
Income tax payable		49,738			63,634
Unearned revenue		6,058			31,745
Other non-current liabilities		60,163			76,288
Long-term debt		745,204			744,661

Total liabilities		1,425,146			1,866,660

Stockholders’ equity:
Common stock and capital in excess of par value		835,477			729,629
Retained earnings		1,370,132			2,204,417
Accumulated other comprehensive income (loss)		(21,217	)		47,684

Total stockholders’ equity		2,184,392			2,981,730

Total liabilities and stockholders’ equity	$	3,609,538		$	4,848,390

KLA-Tencor Corporation

Condensed Consolidated Unaudited Statements of Operations


	Three months ended						Twelve months ended
*(In thousands, except per share data)*	June 30, 2009			June 30, 2008			June 30, 2009			June 30, 2008
Revenues:
Product	$	176,226		$	462,069		$	1,062,126		$	2,030,224
Service		105,276			128,625			458,090			491,492

Total revenues		281,502			590,694			1,520,216			2,521,716

Costs and operating expenses:
Costs of revenues		164,621			264,146			864,824			1,134,856
Engineering, research and development		79,227			116,470			371,463			409,973
Selling, general and administrative		72,621			100,209			415,126			464,890
Goodwill and intangible asset impairment		—			6,458			446,744			12,621

Total costs and operating expenses		316,469			487,283			2,098,157			2,022,340
Income (loss) from operations		(34,967	)		103,411			(577,941	)		499,376

Interest income and other, net		(11,409	)		(5,894	)		(24,590	)		60,858

Income (loss) before income taxes		(46,376	)		97,517			(602,531	)		560,234
Provision (benefit) for income taxes		(20,800	)		21,507			(79,163	)		201,151

Net income (loss)	$	(25,576	)	$	76,010		$	(523,368	)	$	359,083


Net income (loss) per share:
Basic	$	(0.15	)	$	0.43		$	(3.07	)	$	1.99

Diluted	$	(0.15	)	$	0.43		$	(3.07	)	$	1.95


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


Weighted average number of shares:
Basic		169,981			175,143			170,253			180,594
Diluted		169,981			178,090			170,253			184,259

KLA-Tencor Corporation

Condensed Consolidated Unaudited Statements of Cash Flows


	Three months ended June 30,
*(In thousands)*	2009			2008
Cash flows from operating activities:
Net income (loss)	$	(25,576	)	$	76,010
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		25,732			46,469
Goodwill, intangible assets and long-lived asset impairment		638			7,522
Provision for doubtful accounts		(818	)		—
Non-cash, stock-based compensation		26,092			29,279
Tax benefit from stock-based compensation		(13,223	)		(924	)
Excess tax benefit from stock-based compensation		—			(354	)
Net loss on sale of marketable securities and other investments		160			12,813
Net gain on sale of real estate assets		(353	)		(2,480	)
Changes in assets and liabilities, net of assets acquired and liabilities assumed in business combinations:
Decrease in accounts receivable, net		37,261			93,081
Decrease in inventories		53,111			13,059
Increase in other assets		(40,943	)		(73,548	)
Increase (decrease) in accounts payable		6,720			(5,730	)
Increase (decrease) in deferred system profit		21,632			(37,503	)
Increase (decrease) in other liabilities		(16,995	)		29,121

Net cash provided by operating activities		73,438			186,815

Cash flows from investing activities:
Proceeds from restricted cash		—			581,540
Acquisition of business, net of cash received		—			(488,545	)
Capital expenditures, net		(1,980	)		(9,629	)
Proceeds from sale of real estate assets		—			5,497
Purchase of available-for-sale securities		(349,358	)		(406,210	)
Proceeds from sale and maturity of available-for-sale securities		137,127			87,008
Purchase of trading securities		(20,402	)		(33,618	)
Proceeds from sale of trading securities		27,525			35,177

Net cash used in investing activities		(207,088	)		(228,780	)

Cash flows from financing activities:
Issuance of common stock		12,971			24,607
Tax withholding payments related to released restricted stock units		(549	)		—
Common stock repurchases		—			(121,510	)
Issuance of long term debt, net of discount		—			744,570
Debt issuance costs		—			(7,351	)
Payment of dividends to stockholders		(25,490	)		(26,354	)
Excess tax benefit from stock-based compensation		—			354

Net cash provided by (used in) financing activities		(13,068	)		614,316

Effect of exchange rate changes on cash and cash equivalents		6,756			(7,727	)


Net increase (decrease) in cash and cash equivalents		(139,962	)		564,624

Cash and cash equivalents at beginning of period		664,929			563,482

Cash and cash equivalents at end of period	$	524,967		$	1,128,106


Supplemental cash flow disclosures
Income taxes paid, net	$	(5,274	)	$	59,720

Interest paid	$	26,474		$	417

KLA-Tencor Corporation

Condensed Consolidated Unaudited Supplemental Information

(In thousands, except per share data)

Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (Loss)


		Three months ended									Twelve months ended
		June 30, 2009			March 31, 2009			June 30, 2008			June 30, 2009			June 30, 2008
GAAP net income (loss)		$	(25,576	)	$	(82,827	)	$	76,010		$	(523,368	)	$	359,083
Adjustments to reconcile GAAP net income (loss) to non-GAAP net income (loss)

Acquisition related charges	a		11,561			16,718			43,919			79,287			69,852
Restructuring, severance and other	b		7,007			19,330			(1,391	)		54,119			8,379
Restatement related charges	c		(1,731	)		2,018			2,660			13,261			76,940
Goodwill and intangible asset impairment	d		—			—			6,458			446,744			12,621
Income tax effect of non-GAAP adjustments	e		(5,883	)		(13,524	)		(12,038	)		(107,503	)		(53,315	)
Non-recurring tax item	f		—			—			(8,438	)		—			38,175

Non-GAAP net income (loss)		$	(14,622	)	$	(58,285	)	$	107,180		$	(37,460	)	$	511,735


GAAP net income (loss) per diluted share		$	(0.15	)	$	(0.49	)	$	0.43		$	(3.07	)	$	1.95

Non-GAAP net income (loss) per diluted share		$	(0.09	)	$	(0.34	)	$	0.60		$	(0.22	)	$	2.78

Shares used in diluted shares calculation			169,981			169,934			178,090			170,253			184,259

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


	Acquisition related charges		Restructuring, severance and other			Restatement related charges			Goodwill and intangible asset impairment		Total pre-tax GAAP to non-GAAP adjustment
Costs of revenues	$	9,314	$	3,662		$	—		$	—	$	12,976
Engineering, research and development		742		4			—			—		746
Selling, general and administrative		1,505		3,341			(1,731	)		—		3,115
Goodwill and intangible asset impairment		—		—			—			—		—

Total in three months ended June 30, 2009	$	11,561	$	7,007		$	(1,731	)	$	—	$	16,837


Total in three months ended March 31, 2009	$	16,718	$	19,330		$	2,018		$	—	$	38,066


Total in three months ended June 30, 2008	$	43,919	$	(1,391	)	$	2,660		$	6,458	$	51,646


	Three months ended
	June 30, 2009		March 31, 2009		June 30, 2008
Stock-based compensation
Costs of revenues	$	5,091	$	4,706	$	5,417
Engineering, research and development		8,650		7,524		8,870
Selling, general and administrative		12,351		10,528		14,992

Total	$	26,092	$	22,758	$	29,279

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 the budgeting and planning tools that management uses for future forecasting. The presentation of non-GAAP and supplemental information is not meant to be considered in isolation or as a substitute for results prepared and presented in accordance with United States GAAP.

Acquisition related charges include amortization of intangible assets, inventory fair value adjustments, in-process research and development associated with acquisitions, and realized and unrealized gains resulting from Euro call option contracts entered into in connection with our acquisition of ICOS Vision Systems Corporation NV. Management believes that the expense associated with the 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 KLA-Tencor’s newly acquired and long-held businesses. Management believes that it is appropriate to exclude inventory fair value adjustments, in-process research and development and 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 the company’s facilities divestment and consolidation program, reductions in force, entry into a severance and consulting agreement with the company’s former president/chief operating officer, and gains from sale of facilities, one-time inventory write off associated with the disposal of service inventory in excess of future need, and asset impairment (other than impairment of goodwill and intangible assets, which is included within the category described in note (d) below) from discontinuing or making available for sale certain acquired product lines. 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 payments by KLA-Tencor to 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.

Goodwill and intangible asset impairment includes non-cash expense recognized as a result of the company’s annual testing for goodwill impairment performed in the second quarter of every fiscal year and testing for intangible asset impairment driven by certain macroeconomic and company-specific triggering events, as well as the impairment of goodwill and intangible assets as a result of discontinuing acquired products and making acquired products available for sale. 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.

e	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 item 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 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.