KLA (KLAC) 8-K Kla-tencor Reports Earnings of $467 Million on Revenues of $2.1 Billion for Fiscal Year 2005

Exhibit 99.1

Company Contacts: John Kispert
Chief Financial Officer
(408) 875-6224
john.kispert@kla-tencor.com

Cary Halsted (Investment Community)
Vice President, Investor Relations
(408) 875-2406
cary.halsted@kla-tencor.com

Uma Subramaniam (Media)
Director, Corporate Communications
(408) 875-5473
uma.subramaniam @kla-tencor.com

FOR IMMEDIATE RELEASE

KLA-TENCOR REPORTS EARNINGS OF $467 MILLION ON
REVENUES OF $2.1 BILLION FOR FISCAL YEAR 2005

Earnings and Revenues Increase Significantly For Fiscal Year 2005

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.

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KLA-TENCOR REPORTS RESULTS FOR Q4/FISCAL YEAR 2005 Page 2 of 2

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.

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 byForbes Magazineand 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

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KLA-Tencor Corporation
CONDENSED CONSOLIDATED UNAUDITED BALANCE SHEETS

	June 30,		June 30,
	2005		2004
(In thousands)
ASSETS
Cash, short-term investments and marketable securities	$	2,195,186	$	1,876,356
Accounts receivable, net		333,218		372,773
Inventories		358,339		337,414
Land, property and equipment, net		385,222		376,052
Other assets		714,407		576,584
Total assets	$	3,986,372	$	3,539,179
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	67,717	$	63,991
Deferred system profit		209,899		284,813
Unearned revenue		80,122		57,318
Other current liabilities		574,124		505,507
Total current liabilities		931,862		911,629
Minority interest in subsidiary		9,253		—
Stockholders’ equity:
Common stock and capital in excess of par value		943,322		984,804
Retained earnings		2,083,638		1,640,587
Accumulated other comprehensive income		18,297		2,159
Total stockholders’ equity		3,045,257		2,627,550
Total liabilities and stockholders’ equity	$	3,986,372	$	3,539,179

KLA-Tencor Corporation
CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS

	Three months ended				Fiscal year ended
	June 30,				June 30,
	2005		2004		2005		2004
(In thousands, except per share data)
Revenues:
Product	$	409,888	$	372,546	$	1,770,300	$	1,200,160
Service		82,028		77,892		314,853		296,558
Total revenues		491,916		450,438		2,085,153		1,496,718
Costs and operating expenses:
Costs of revenues		207,311		187,498		862,353		670,013
Engineering, research and development		87,157		77,110		340,277		280,641
Selling, general and administrative		82,208		64,255		299,961		248,706
Total costs and operating expenses		376,676		328,863		1,502,591		1,199,360
Income from operations		115,240		121,575		582,562		297,358
Interest income and other, net		15,701		6,716		37,755		27,358
Income before income taxes and minority interest		130,941		128,291		620,317		324,716
Provision for income taxes		26,945		32,124		157,000		81,015
Income before minority interest		103,996		96,167		463,317		243,701
Minority interest		1,054		—		3,378		—
Net income	$	105,050	$	96,167	$	466,695	$	243,701
Net income per share:
Basic	$	0.53	$	0.49	$	2.38	$	1.25
Diluted	$	0.52	$	0.48	$	2.32	$	1.21
Weighted average number of shares:
Basic		196,653		196,529		196,346		194,976
Diluted		200,923		201,669		201,014		201,799