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 YEAR 2010 FIRST QUARTER RESULTS

MILPITAS, Calif., October 29, 2009—KLA-Tencor Corporation (NASDAQ: KLAC) today announced operating results for its first quarter of fiscal year 2010, which ended on September 30, 2009. KLA-Tencor reported GAAP net income of $20 million and GAAP earnings per diluted share of $0.12 on revenues of $343 million for the first quarter of fiscal year 2010.

“KLA-Tencor delivered stronger-than-expected results and returned to profitability in the first quarter of fiscal 2010, led by a sharp increase in demand from foundry customers. Our results were also favorably impacted by a one-time non-operating gain and by a lower than normal tax rate,” commented Rick Wallace, President and Chief Executive Officer of KLA-Tencor. “We announced several new products targeted at addressing our customers’ next-generation wafer and reticle inspection requirements. As our customers increase their technology investments at the leading edge, we are advancing our market leadership while remaining focused on cost discipline.”

GAAP Results

 

     Q1 FY 2010     Q4 FY 2009     Q1 FY 2009  

Revenues

   $ 343  million    $ 282  million    $ 533  million 

Net Income (Loss)

   $ 20  million    $ (26 ) million    $ 19  million 

Earnings (Loss) per Diluted Share

   $ 0.12      $ (0.15   $ 0.11   

 

Non-GAAP Results

 

  

     Q1 FY 2010     Q4 FY 2009     Q1 FY 2009  

Net Income (Loss)

   $ 26  million    $ (15 ) million    $ 55  million 

Earnings (Loss) per Diluted Share

   $ 0.15      $ (0.09   $ 0.32   

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 fiscal year 2010 first quarter, 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 next-generation requirements of the company’s customers and KLA-Tencor’s ability to successfully innovate, develop and sell new technologies and products that meet customer demands, future business levels, expected increases in customer investments in technology at the leading edge, anticipated gains in market leadership, and the company’s ability to continue to control its cost structure, 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; unanticipated delays in the completion or implementation of KLA-Tencor’s recent 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, 2009 and other subsequent 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)    September 30, 2009     June 30, 2009  

ASSETS

    

Cash and short-term investments

   $ 1,387,232      $ 1,329,884   

Accounts receivable, net

     243,924        210,143   

Inventories, net

     347,199        370,206   

Other current assets

     503,106        488,384   

Land, property and equipment, net

     283,160        291,878   

Goodwill

     338,318        329,379   

Purchased intangibles, net

     140,879        149,080   

Other non-current assets

     432,452        440,584   
                

Total assets

   $ 3,676,270      $ 3,609,538   
                

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

Current liabilities:

    

Accounts payable

   $ 75,561      $ 63,485   

Deferred system profit

     114,722        95,820   

Unearned revenue

     59,025        63,237   

Other current liabilities

     355,746        341,441   
                

Total current liabilities

     605,054        563,983   

Non-current liabilities:

    

Income tax payable

     50,631        49,738   

Unearned revenue

     5,837        6,058   

Other non-current liabilities

     63,013        60,163   

Long-term debt

     745,339        745,204   
                

Total liabilities

     1,469,874        1,425,146   

Stockholders’ equity:

    

Common stock and capital in excess of par value

     855,830        835,477   

Retained earnings

     1,360,941        1,370,132   

Accumulated other comprehensive loss

     (10,375     (21,217
                

Total stockholders’ equity

     2,206,396        2,184,392   
                

Total liabilities and stockholders’ equity

   $ 3,676,270      $ 3,609,538   
                


KLA-Tencor Corporation

Condensed Consolidated Unaudited Statements of Operations

 

     Three months ended
(In thousands, except per share data)    September 30, 2009    September 30, 2008

Product

   $ 229,251    $ 405,496

Service

     113,436      127,017
             

Total revenues

     342,687      532,513

Costs and operating expenses:

     

Costs of revenues

     171,892      252,813

Engineering, research and development

     78,209      114,361

Selling, general and administrative

     77,636      118,490

Goodwill and intangible asset impairment

     —        11,911
             

Total costs and operating expenses

     327,737      497,575

Income from operations

     14,950      34,938

Interest income and other, net

     7,842      4,177
             

Income before income taxes

     22,792      39,115

Provision for income taxes

     2,387      19,826
             

Net income

   $ 20,405    $ 19,289
             

Net income per share:

     

Basic

   $ 0.12    $ 0.11
             

Diluted

   $ 0.12    $ 0.11
             

Cash dividend paid per share

   $ 0.15    $ 0.15
             

Weighted average number of shares:

     

Basic

     170,698      172,088

Diluted

     172,718      174,386


KLA-Tencor Corporation

Condensed Consolidated Unaudited Statements of Cash Flows

 

     Three months ended
September 30,
 
(In thousands)    2009     2008  

Cash flows from operating activities:

    

Net income

   $ 20,405      $ 19,289   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization

     23,134        42,708   

Impairment charges

     —          12,358   

Non-cash, stock-based compensation

     20,199        34,382   

Tax charge from equity awards

     (5,133     (618

Excess tax benefit from equity awards

     —          (1,689

Net gain on sale of marketable securities and other investments

     (1,292     (128

Gain on sale of real estate

     (2,824     (1,368

Changes in assets and liabilities:

    

Decrease (increase) in accounts receivable, net

     (28,279     131,364   

Decrease (increase) in inventories

     26,971        (16,739

Decrease (increase) in other assets

     (46,368     50,623   

Increase (decrease) in accounts payable

     11,288        (9,881

Increase (decrease) in deferred system profit

     18,902        (68,667

Increase (decrease) in other liabilities

     36,246        (110,277
                

Net cash provided by operating activities

     73,249        81,357   

Cash flows from investing activities:

    

Acquisitions of businesses, net of cash received

     —          (127,023

Capital expenditures, net

     (3,635     (10,132

Proceeds from sale of real estate

       2,466   

Purchase of available-for-sale securities

     (263,646     (394,378

Proceeds from sale and maturity of available-for-sale securities

     221,588        269,235   

Purchase of trading securities

     (23,573     (8,939

Proceeds from sale of trading securities

     29,145        11,704   
                

Net cash used in investing activities

     (40,121     (257,067

Cash flows from financing activities:

    

Issuance of common stock

     2,917        5,967   

Tax withholding payments related to released restricted stock units

     (1,833     (10,342

Common stock repurchases

     —          (177,469

Payment of dividends to stockholders

     (25,606     (25,840

Excess tax benefit from equity awards

     —          1,689   
                

Net cash used in financing activities

     (24,522     (205,995

Effect of exchange rate changes on cash and cash equivalents

     7,266        (12,942
                

Net increase (decrease) in cash and cash equivalents

     15,872        (394,647

Cash and cash equivalents at beginning of period

     524,967        1,128,106   
                

Cash and cash equivalents at end of period

   $ 540,839      $ 733,459   
                

Supplemental cash flow disclosures:

    

Income taxes paid, net

   $ 10,591      $ 11,042   

Interest paid

   $ 246      $ 424   


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  
          Sept. 30,
2009
    June 30,
2009
    Sept. 30,
2008
 

GAAP net income (loss)

      $ 20,405      $ (25,576   $ 19,289   

Adjustments to reconcile GAAP net income (loss) to non-GAAP net income (loss):

         

Acquisition related charges

   a      8,095        11,561        28,419   

Restructuring, severance and other related charges

   b      (4,409     7,007        4,161   

Restatement related charges

   c      5,188        (1,731     3,784   

Goodwill and intangible asset impairment

   d      —          —          11,911   

Income tax effect of non-GAAP adjustments

   e      (3,121     (5,883     (12,214
                           

Non-GAAP net income (loss)

      $ 26,158      $ (14,622   $ 55,350   
                           

GAAP net income (loss) per diluted share

      $ 0.12      $ (0.15   $ 0.11   
                           

Non-GAAP net income (loss) per diluted share

      $ 0.15      $ (0.09   $ 0.32   
                           

Shares used in diluted shares calculation

        172,718        169,981        174,386   
                           

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

 

     Acquisition
related
charges
   Restructuring,
severance and
other related
charges
    Restatement
related
charges
    Goodwill
and
intangible
asset
impairment
   Total pre-tax
GAAP to
non-GAAP
adjustment

Costs of revenues

   $ 5,721    $ (104   $ —        $ —      $ 5,617

Engineering, research and development

     897      (213     —          —        684

Selling, general and administrative

     1,477      (4,092     5,188        —        2,573
                                    

Total in three months ended Sept. 30, 2009

   $ 8,095    $ (4,409   $ 5,188      $ —      $ 8,874
                                    

Total in three months ended June 30, 2009

   $ 11,561    $ 7,007      $ (1,731   $ —      $ 16,837
                                    

Total in three months ended Sept. 30, 2008

   $ 28,419    $ 4,161      $ 3,784      $ 11,911    $ 48,275
                                    

 

     Three months ended
     September 30, 2009    June 30, 2009    September 30, 2008

Stock-based compensation

        

Costs of revenues

   $ 3,288    $ 5,091    $ 5,456

Engineering, research and development

     6,603      8,650      9,971

Selling, general and administrative

     10,308      12,351      18,955
                    

Total

   $ 20,199    $ 26,092    $ 34,382
                    


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.

 

 

a Acquisition related charges include amortization of intangible assets, inventory fair value adjustments, and in-process research and development associated with acquisitions. 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, and in-process research and development 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.
b Restructuring, severance and other related charges include 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, gains from sale of facilities, 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.
c Restatement related charges include 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 Goodwill and intangible asset impairment includes non-cash expense recognized as a result of the testing for intangible asset impairment driven by certain 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.