SAN JOSE, Calif., July 28, 2005--KLA-Tencor Corporation (NASDAQ: KLAC) today announced operating results for its fourth quarter and 2005 fiscal year ended June 30, 2005. The company realized strong gains for the full 2005 fiscal year, and reported net income of $467 million or $2.32 per diluted share on revenues of $2.1 billion versus net income of $244 million or $1.21 per diluted share on revenues of $1.5 billion in its 2004 fiscal year. For the quarter ended June 30, 2005, the company reported net income of $105 million and earnings per diluted share of $0.52 on revenues of $492 million compared to net income of $96 million or $0.48 per diluted shares on revenue of $450 million in the fourth quarter of fiscal 2004, and net income of $123 million or $0.61 per diluted shares on revenue of $542 million in the third quarter of fiscal 2005.

"KLA-Tencor realized another strong quarter of performance, in addition to delivering healthy gains in sales and profits for the full fiscal year," stated Ken Schroeder, chief executive officer of KLA-Tencor. "Our sales growth reflects the continued demand for our leading-edge yield management solutions, which enable leading IC manufacturers to speed time to market and profit on their next-generation devices. Along with rising sales, our success in controlling costs and improving our own internal efficiencies propelled strong gains in profitability."

KLA-Tencor reported ending the quarter with approximately 9 months of product-related shipment and revenue backlog. On a geographic basis, Japan continued to post strong bookings for the quarter ended June 30, 2005. Japan was 36 percent of orders, higher than its historical average of 20 percent; U.S. was 29 percent of orders, higher than its historical average of 25 percent; Taiwan was 11 percent, below its historical average of 20 percent; Korea, China and Singapore combined were 15 percent of orders, below their combined historical average of 20 percent; and Europe was 9 percent, lower than its historical average of 15 percent.

Cash, cash equivalents and marketable securities increased by $87 million to $2.2 billion compared to the end of the prior quarter. Inventory increased by $5 million to $358 million, on higher field inventory to support customer service requirements. Accounts receivable decreased by $112 million to $333 million on strong collections.

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Forward Looking Statements: Statements in this press release regarding KLA-Tencor's use of its operating cash, the benefit to our 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.


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