KLA (KLAC) 8-K Kla-tencor Reports Third Quarter of Fiscal 2006 Earnings Per Share of $0.48 ($0.63 Excluding Equity Based Compensation) on Revenue of $518 Million

Exhibit 99.1

News Release

Company Contacts:	Jeff Hall
	Chief Financial Officer
	(408) 875-6800
	jeff.hall@kla-tencor.com
	Charlie Webster (Investment Community)
	Vice President, Finance & Treasury
	(408) 875-5061
	charlie.webster@kla-tencor.com
	Kyra Whitten (Media)
	Senior Director, Corporate Communications
	(408) 875-7819
	kyra.whitten @kla-tencor.com

FOR IMMEDIATE RELEASE

KLA-TENCOR REPORTS THIRD QUARTER OF FISCAL 2006 EARNINGS PER SHARE OF $0.48
($0.63 EXCLUDING EQUITY BASED COMPENSATION) ON REVENUE OF $518 MILLION

SAN JOSE, Calif., April 27, 2006—KLA-Tencor Corporation (NASDAQ: KLAC) today announced operating results for its third quarter of fiscal 2006, ended March 31, 2006. The company reported net income of $98 million and earnings per diluted share of $0.48 on revenues of $518 million compared to net income of $77 million or $0.38 per diluted share on revenue of $488 million in the second quarter of fiscal 2006, and net income of $123 million or $0.61 per diluted share on revenue of $542 million in the third quarter of fiscal 2005. The results for the fiscal 2006 quarters include the impact from adoption of SFAS 123 (R) “Stock Based Compensation”. The company recorded after tax equity based compensation expenses of $31 million during the third quarter of fiscal 2006 and $25 million during the second quarter of fiscal 2006, in its costs and operating expenses. Excluding the impact of equity based compensation, net income would have been $129 million or $0.63 per diluted share for the third quarter of fiscal 2006 and $102 million or $0.50 per diluted share in the second quarter of fiscal 2006.

“We had a quarter of strong financial results, as semiconductor manufacturers continue to make investments in our leading-edge process control solutions in order to reduce the time and costs associated with producing next-generation devices,” stated Rick Wallace, chief executive officer of KLA-Tencor. “We remain focused on investing in the solutions our customers will need in order to remain competitive as next-generation applications enter production.”

KLA-Tencor reported ending the quarter with approximately nine months of product-related shipment and revenue backlog. On a geographic basis, U.S. was 33 percent of orders, higher than its historical average of 25 percent; Japan was 26 percent of orders, higher than its historical average of 20 percent; Taiwan was 14 percent of orders, lower than its historical average of 20 percent; Korea, China and Singapore were 16 percent of orders, below their combined historical average of 20 percent; and Europe was 11 percent of orders, lower than its historical average of 15 percent.

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KLA-TENCOR REPORTS RESULTS FOR Q3/FISCAL YEAR 2006 Page 2 of 2

KLA-Tencor’s financial position remained strong with cash, cash equivalents and marketable securities of $2.3 billion and no long term debt. Inventory increased by $27 million compared to the prior quarter to $438 million as build plans ramp to meet increased customer demand. Accounts receivable increased by $84 million compared to the prior quarter to $456 million on higher shipments.

Forward Looking Statements:Statements in this press release regarding the benefit to customers of KLA-Tencor’s products, demand for KLA-Tencor’s products and its 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.

For comparison purposes, the company makes reference to certain net income and earnings per share results that were consistent with GAAP when presented in prior quarters, but are now inconsistent with GAAP due to changes in accounting standards. These results were reached by excluding non-cash, equity-based compensation expenses. We reference those results to allow a better comparison of results in the current period to those in prior periods. Our reference to these results from prior periods should be considered in addition to results that are prepared under current accounting standards but should not be considered a substitute for results that are presented as consistent with GAAP.

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 athttp://www.kla-tencor.com

KLA-Tencor Corporation
CONDENSED CONSOLIDATED UNAUDITED BALANCE SHEETS

(in thousands)	March 31, 2006		June 30, 2005
ASSETS
Cash and marketable securities	$	2,285,295	$	2,195,186
Accounts receivable, net		456,288		333,218
Inventories		438,443		358,339
Land, property and equipment, net		395,123		385,222
Other assets		786,169		714,407
Total assets	$	4,361,318	$	3,986,372
LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	97,709	$	67,717
Deferred system profit		219,868		209,899
Unearned revenue		73,924		80,122
Other current liabilities		545,601		574,124
Total current liabilities		937,102		931,862
Minority interest in subsidiary	$	11,069	$	9,253
Stockholders’ equity:
Common stock and capital in excess of par value		1,142,015		943,322
Retained earnings		2,263,647		2,083,638
Accumulated other comprehensive income		7,485		18,297
Total stockholders’ equity		3,413,147		3,045,257
Total liabilities and stockholders’ equity	$	4,361,318	$	3,986,372

KLA-Tencor Corporation
CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS

	Three months ended				Nine months ended
	March 31,				March 31,
(in thousands except per share data)	2006		2005		2006		2005
Revenues:
Product	$	427,676	$	463,171	$	1,229,346	$	1,360,412
Service		90,580		78,440		260,740		232,825
Total revenues		518,256		541,611		1,490,086		1,593,237
Costs and operating expenses:
Costs of revenues*		226,620		221,838		657,943		655,042
Engineering, research and development* development		95,927		88,812		291,005		253,120
Selling, general and administrative*		108,364		76,114		296,440		217,753
Total costs and operating expenses		430,911		386,764		1,245,388		1,125,915
Income from operations		87,345		154,847		244,698		467,322
Interest income and other, net		17,225		7,292		48,686		22,054
Income before income taxes and minority interest		104,570		162,139		293,384		489,376
Provision for income taxes*		7,347		40,065		44,834		130,055
Income before minority interest		97,223		122,074		248,550		359,321
Minority interest		920		1,089		2,920		2,324
Net income	$	98,143	$	123,163	$	251,470	$	361,645
Net income per share:
Basic	$	0.49	$	0.63	$	1.27		1.84
Diluted	$	0.48	$	0.61	$	1.23		1.80
Weighted average number of shares:
Basic		199,876		196,883		198,498		196,244
Diluted		204,818		202,329		203,696		201,058

*includes the following amounts related to equity awards

Costs of revenues	$	6,243		$	—		$	19,666		$	—
Engineering, research and development		10,782			25			33,815			523
Selling, general and administrative		27,526			773			62,152			1,394
Provision for income taxes		(13,763	)		(295	)		(34,861	)		(709	)
Total	$	30,788			503		$	80,772		$	1,208