SAN JOSE, Calif., October 25, 2007 -- KLA-Tencor Corporation (NASDAQ: KLAC) today announced operating results for its first quarter of fiscal 2008, which ended on September 30, 2007. The Company reported GAAP net income of $88 million and GAAP earnings per diluted share of $0.46 on revenue of $693 million for the quarter ended September 30, 2007, which included stock-based compensation and other charges discussed below, compared to GAAP net income of $147 million or $0.75 per diluted share on revenue of $736 million in the fourth quarter of fiscal 2007, and GAAP net income of $136 million or $0.67 per diluted share on revenue of $629 million in the first quarter of fiscal 2007.

Net income for the first quarter of fiscal 2008 reflects $91 million in charges, as follows:

• Stock-based compensation related charges of $28 million, compared to $26 million for the fourth quarter of fiscal 2007 and $37 million for the first quarter of fiscal 2007.
• Discrete tax expenses of $47 million for US tax associated with implementation of our global manufacturing strategy. There were no such charges associated with our manufacturing strategy in either the fourth quarter of fiscal 2007 or the first quarter of fiscal 2007.
• Acquisition-related charges of $12 million for amortization of intangible assets relating to the acquisitions completed by the Company in fiscal 2007. Acquisition-related charges, including impairment of intangibles and in-process R&D, were $38 million for the fourth quarter of fiscal 2007 and $1 million for the first quarter of fiscal 2007.
• Severance charges of $2 million related to a worldwide reduction in force, compared to $11 million for the fourth quarter of fiscal 2007. There were no severance charges for the first quarter of fiscal 2007.
• Restatement-related charges of $2 million for shareholder litigation and related matters. Restatement-related charges were $1 million for the fourth quarter of fiscal 2007 and $3 million for the first quarter of fiscal 2007.

"KLA-Tencor delivered solid operational execution and extended our market leadership position in the quarter," said Rick Wallace, CEO of KLA-Tencor. "We continued to reduce costs and improve operating leverage, while maintaining our aggressive pace of investment and innovation in delivering the next-generation yield management solutions our customers require to meet their mission-critical production challenges as they invest in new technologies."

KLA-Tencor ended the first quarter of fiscal year 2008 with approximately eight months of product-related shipment and revenue backlog. The geographic breakdown of system orders in the quarter was:

KLA-Tencor's financial position remained strong with cash and investments of $1.3 billion. Accounts receivable increased by $37 million compared to the prior quarter to $619 million on strong shipments.

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

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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 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; 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 San Jose, Calif., 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

Contact:
Meggan Powers
Director Corporate Communications