MILPITAS, Calif., July 29 /PRNewswire-FirstCall/ -- KLA-Tencor Corporation® (Nasdaq: KLAC) today announced operating results for its fourth quarter and fiscal year ended June 30, 2010. KLA-Tencor reported GAAP net income of $113 million and GAAP earnings per diluted share of $0.66 on revenues of $559 million for the fourth quarter of fiscal year 2010. For the year ended June 30, 2010, the company reported GAAP net income of $212 million and GAAP earnings per diluted share of $1.23 on revenues of $1.8 billion.

"Robust product demand in each of our major end markets, geographies and product offerings, coupled with solid execution by the KLA-Tencor team resulted in strong financial results in the fourth quarter," said Rick Wallace, KLA-Tencor's president and chief executive officer. "These results reflect our team's commitment to helping customers solve complex yield challenges at the leading edge, as well as KLA-Tencor's ability to execute against our strategic objectives in order to maintain our market and technology leadership."

                               GAAP Results
                               Q4 FY 2010    Q3 FY 2010    Q4 FY 2009
    Revenues                   $559 million  $478 million   $282 million
    Net Income (Loss)          $113 million   $57 million  $(26) million
    Earnings (Loss) per
     Diluted Share                    $0.66         $0.33         $(0.15)

                            Non-GAAP Results
                               Q4 FY 2010    Q3 FY 2010   Q4 FY 2009
    Net Income (Loss)          $120 million  $71 million  $(15) million
    Earnings (Loss) per
     Diluted Share                    $0.70        $0.41         $(0.09)

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, restatement and restructuring related items, goodwill and intangible asset impairment, and certain discrete tax items.

KLA-Tencor will discuss the results for its fiscal year 2010 fourth quarter and full year, 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 KLA-Tencor's position as a market and technology leader and the company's ability to successfully innovate, develop and sell new technologies and products that meet customer needs, 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 and technology offerings by competitors; cancellation of orders by customers; the ability of KLA-Tencor's research and development teams to successfully innovate and develop technologies and products that are responsive to customer demands; KLA-Tencor's ability to successfully integrate and manage businesses that it acquires; market acceptance of the company's existing and newly issued products; 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, 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). 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, LED, 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 that 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. However, because there are no standardized or generally accepted definitions for most non-GAAP financial metrics, definitions of non-GAAP financial metrics (for example, determining which costs and expenses to exclude when calculating such a metric) are inherently subject to significant discretion. As a result, non-GAAP financial metrics may be defined very differently from company to company, or even from period to period within the same company, which can potentially limit the usefulness of such information to an investor. 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)                       June 30, 2010 June 30, 2009
                                         ------------- -------------

    ASSETS
    Cash and short-term investments       $1,534,044    $1,329,884
    Accounts receivable, net                   440,125       210,143
    Inventories, net                           401,730       370,206
    Other current assets                       459,566       488,384
    Land, property and equipment, net          236,752       291,878
    Goodwill                                   328,006       329,379
    Purchased intangibles, net                 117,336       149,080
    Other non-current assets                 389,497       440,584
                                             -------       -------
    Total assets                          $3,907,056    $3,609,538


    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
    Accounts payable                        $107,938       $63,485
    Deferred system profit                   204,764        95,820
    Unearned revenue                          37,026        46,236
    Other current liabilities                422,059       341,441
                                             -------       -------
    Total current liabilities                771,787       546,982

    Non-current liabilities:
    Income tax payable                        53,492        49,738
    Unearned revenue                          20,354        23,059
    Other non-current liabilities             69,065        60,163
    Long-term debt                           745,747       745,204
    Total liabilities                      1,660,445     1,425,146

    Stockholders' equity:
    Common stock and capital in excess
     of par value                            921,460       835,477
    Retained earnings                      1,356,454     1,370,132
    Accumulated other comprehensive
     income (loss)                           (31,303)      (21,217)
                                             -------       -------
    Total stockholders' equity             2,246,611     2,184,392
                                           ---------     ---------
    Total liabilities and
     stockholders' equity                 $3,907,056    $3,609,538

    KLA-Tencor Corporation
    Condensed Consolidated Unaudited Statements of Operations

                                                Three months ended
                                                ------------------
    (In thousands, except per               June 30,
     share data)                              2010        June 30, 2009
                                           ---------      -------------

    Revenues:
    Product                                  $430,286          $176,226
    Service                                   129,133           105,276
                                              -------           -------
    Total revenues                            559,419           281,502

    Costs and operating expenses:
    Costs of revenues                         227,919           164,621
    Engineering, research and
     development                               83,309            79,227
    Selling, general and
     administrative                            87,349            72,621
    Goodwill and purchased
     intangible asset impairment                    -                 -
                                                  ---               ---
    Total costs and operating
     expenses                                 398,577           316,469
    Income (loss) from operations             160,842           (34,967)

    Interest expense and other,
     net                                      (10,740)          (11,409)
                                              -------           -------
    Income (loss) before income
     taxes                                    150,102           (46,376)
    Provision for (benefit from)
     income taxes                              37,017           (20,800)


    Net income (loss)                        $113,085          $(25,576)
                                             ========          ========

    Net income (loss) per share:
    Basic                                       $0.67            $(0.15)
                                                -----            ------
    Diluted                                     $0.66            $(0.15)
                                                -----            ------

    Cash dividend paid per share                $0.15             $0.15
                                                -----             -----

    Weighted average number of
     shares:
    Basic                                     168,986           169,981
                                              =======           =======
    Diluted                                   171,275           169,981
                                              =======           =======

                                             Twelve months ended
                                             -------------------
    (In thousands, except per            June 30,         June 30,
     share data)                           2010             2009
                                        ---------        ---------

    Revenues:
    Product                             $1,324,270       $1,062,126
    Service                                496,490          458,090
                                           -------          -------
    Total revenues                       1,820,760        1,520,216

    Costs and operating expenses:
    Costs of revenues                      815,662          864,824
    Engineering, research and
     development                           329,560          371,463
    Selling, general and
     administrative                        361,372          415,126
    Goodwill and purchased
     intangible asset impairment                 -          446,744
                                               ---          -------
    Total costs and operating
     expenses                            1,506,594        2,098,157
    Income (loss) from operations          314,166         (577,941)

    Interest expense and other,
     net                                   (22,985)         (24,590)
                                           -------          -------
    Income (loss) before income
     taxes                                 291,181         (602,531)
    Provision for (benefit from)
     income taxes                           78,881          (79,163)


    Net income (loss)                     $212,300        $(523,368)
                                          ========        =========

    Net income (loss) per share:
    Basic                                    $1.24           $(3.07)
                                             -----           ------
    Diluted                                  $1.23           $(3.07)
                                             -----           ------

    Cash dividend paid per share             $0.60            $0.60
                                             -----            -----

    Weighted average number of
     shares:
    Basic                                  170,652          170,253
                                           =======          =======
    Diluted                                173,034          170,253
                                           =======          =======

    KLA-Tencor Corporation
    Condensed Consolidated Unaudited Statements of Cash Flows

                                                      Three months ended
                                                            June 30
    (In thousands)                                       2010            2009
                                                         ----            ----
    Cash flows from operating
     activities:
        Net income (loss)                            $113,085        $(25,576)
        Adjustments to reconcile net income
         (loss) to net cash provided by
         operating activities:
           Depreciation and amortization               19,554          25,732
           Long-lived asset impairment
            charges                                     4,557             638
           Provision for doubtful accounts             (2,888)           (818)
           Non-cash stock-based compensation           23,459          26,092
           Tax charge from equity awards                    -         (13,223)
           Net loss (gain) on sale of
            marketable securities and other
            investments                                (1,388)            160
           Net gain on sale of real estate
            assets                                          -            (353)
             Changes in assets and liabilities,
              net of assets acquired and
              liabilities assumed in business
              combinations:
                Decrease (increase) in accounts
                 receivable, net                     (113,496)         37,261
                Decrease (increase) in inventories    (26,461)         53,111
                Decrease (increase) in other assets    26,734         (40,943)
                Increase in accounts payable           15,922           6,720
                Increase in deferred system profit     37,807          21,632
                Decrease in other liabilities         (13,607)        (16,995)
                                                      -------         -------
                      Net cash provided by operating
                       activities                      83,278          73,438

    Cash flows from investing
     activities:
        Capital expenditures, net                      (5,791)         (1,980)
        Purchase of available-for-sale
         securities                                  (217,123)       (349,358)
        Proceeds from sale of available-
         for-sale securities                          187,900         116,127
        Proceeds from maturity of
         available-for-sale securities                 23,108          21,000
        Purchase of trading securities                (22,740)        (20,402)
        Proceeds from sale of trading
         securities                                    35,622          27,525
                                                       ------          ------
                      Net cash provided by (used in)
                       investing activities               976        (207,088)

    Cash flows from financing
     activities:
        Issuance of common stock                       12,054          12,971
        Tax withholding payments related to
         vested and released restricted
         stock units                                     (601)           (549)
        Common stock repurchases                      (81,645)              -
        Payment of dividends to
         stockholders                                 (25,386)        (25,490)
                                                      -------         -------
                      Net cash used in financing
                       activities                     (95,578)        (13,068)

    Effect of exchange rate changes on
     cash and cash equivalents                         (2,263)          6,756


    Net decrease in cash and cash
     equivalents                                      (13,587)       (139,962)

    Cash and cash equivalents at
     beginning of period                              543,505         664,929


    Cash and cash equivalents at end of
     period                                          $529,918        $524,967
                                                     ========        ========

    Supplemental cash flow disclosures:
           Income tax paid (refunds received),
            net                                       $28,982         $(5,274)
                                                      =======         =======
           Interest paid                              $26,006         $26,474
                                                      =======         =======

    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           Twelve months ended
                            ------------------           -------------------
                       June 30,   March 31,   June 30,   June 30,    June 30,
                           2010        2010       2009       2010        2009
                      ---------  ----------  ---------  ---------   ---------
    GAAP net income
     (loss)            $113,085     $57,016   $(25,576)  $212,300   $(523,368)
    Adjustments to
     reconcile GAAP
     net income
     (loss) to non-
     GAAP net
     income (loss)
    ---------------
    Acquisition
     related
     charges        a     8,280       8,370     11,561     32,849      79,287
    Restructuring,
     severance and
     other related
     charges        b     3,311       4,426      7,007     17,778      54,119
    Restatement
     related
     charges        c      (866)      4,750     (1,731)    16,149      13,261
    Goodwill and
     purchased
     intangible
     asset
     impairment     d         -           -          -       -     446,744
    Income tax
     effect of non-
     GAAP
     adjustments    e    (3,824)     (6,417)    (5,883)   (24,124)   (107,503)
    Discrete tax
     items          f         -       3,165          -     11,858           -
                            ---       -----        ---     ------         ---
    Non-GAAP net
     income (loss)     $119,986     $71,310   $(14,622)  $266,810    $(37,460)
                       ========     =======   ========   ========    ========

    GAAP net income
     (loss) per
     diluted share        $0.66       $0.33     $(0.15)     $1.23      $(3.07)
                          =====       =====     ======      =====      ======
    Non-GAAP net
     income (loss)
     per diluted
     share                $0.70       $0.41     $(0.09)     $1.54      $(0.22)
                          =====       =====     ======      =====      ======
    Shares used in
     diluted shares
     calculation        171,275     173,357    169,981    173,034     170,253
                        =======     =======    =======    =======     =======

    Pre-tax impact of items included in Condensed Consolidated Unaudited
    Statements of Operations
    --------------------------------------------------------------------

                                                                Total pre-tax
                     Acquisition  Restructuring,   Restatement      GAAP to
                                   severance and
                       related         other         related       non-GAAP
                       charges   related charges     charges      adjustment
                       -------   ---------------     -------      ----------
    Three months
     ended June 30,
     2010
    ---------------
    Costs of
     revenues             $5,790             $(57)          $-          $5,733
    Engineering,
     research and
     development             898                -            -             898
    Selling, general
     and
     administrative        1,592            3,368         (866)          4,094
    Total in three
     months ended
     June 30, 2010        $8,280           $3,311        $(866)        $10,725
                          ======           ======        =====         =======

    Three months
     ended March 31,
     2010
    ----------------
    Costs of
     revenues             $5,908             $345         $(98)         $6,155
    Engineering,
     research and
     development             898               11         (260)            649
    Selling, general
     and
     administrative        1,564            4,070        5,108          10,742
    Total in three
     months ended
     March 31, 2010       $8,370           $4,426       $4,750         $17,546
                          ======           ======       ======         =======

    Three months
     ended June 30,
     2009
    ---------------
    Costs of
     revenues             $9,314           $3,662           $-         $12,976
    Engineering,
     research and
     development             742                4            -             746
    Selling, general
     and
     administrative        1,505            3,341       (1,731)          3,115
    Total in three
     months ended
     June 30, 2009       $11,561           $7,007      $(1,731)        $16,837
                         =======           ======      =======         =======

                                             Three months ended
                                             ------------------
                              June 30, 2010     March 31, 2010  June 30, 2009
                              -------------     --------------  -------------
    Stock-based compensation
    ------------------------
    Costs of revenues                 $3,869             $3,793         $5,091
    Engineering, research and
     development                       7,176              6,843          8,650
    Selling, general and
     administrative                   12,414             10,833         12,351
    Total                            $23,459            $21,469        $26,092
                                     =======            =======        =======

    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 that 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. However, because there are no standardized or
     generally accepted definitions for most non-GAAP financial
     metrics, definitions of non-GAAP financial metrics (for example,
     determining which costs and expenses to exclude when calculating
     such a metric) are inherently subject to significant discretion.
     As a result, non-GAAP financial metrics may be defined very
     differently from company to company, or even from period to period
     within the same company, which can potentially limit the usefulness
     of such information to an investor. 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 charges 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 acquisition related inventory fair value adjustments and in-
      process research and development charges 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 during the fiscal year ended June 30, 2009, gains and
      losses from sales of facilities, and asset impairment (other than
      impairment of goodwill and purchased 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 investigation regarding the company's historical stock option
      granting process and related shareholder litigation and other matters,
      including an expense accrual  reflecting the net amount paid by KLA-
      Tencor during the fiscal year ended June 30, 2010 in connection with
      settlements of various separate litigation 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 purchased intangible asset impairment includes non-cash
      expense recognized as a result of the company's annual evaluation of
      goodwill or 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.

    f Discrete tax items include the tax impact of shortfalls in excess of
      cumulative windfall tax benefits recorded as provision for income taxes
      during the period. Windfall tax benefits arise when a company's tax
      deduction for employee stock activity exceeds book compensation for the
      same activity.  A shortfall arises when the tax deduction is less than
      book compensation.  Windfalls are recorded as increases to capital in
      excess of par value.  Shortfalls are recorded as decreases to capital
      in excess of par value to the extent that cumulative windfalls exceed
      cumulative shortfalls.  Shortfalls in excess of cumulative windfalls
      are recorded as provision for income taxes.  Management believes that
      it is appropriate to exclude these 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.

SOURCE KLA-Tencor Corporation