SAN JOSE, Calif., October 24, 2006 -- KLA-Tencor Corporation (NASDAQ: KLAC) today announced that its revenue for the quarter ended September 30, 2006, the first quarter of fiscal 2007, was $630 million, compared to $579 million for the fourth quarter of fiscal 2006 and revenue of $484 million for the first quarter of fiscal 2006.

As previously announced, the Company is in the process of restating its historical financial statements to correct the accounting for retroactively priced stock options, granted principally during the period July 1, 1997 through June 30, 2002, and the Company anticipates that the total additional non-cash charges for stock-based compensation expenses will not exceed $400 million. As a result, the Company is unable to provide detailed GAAP or non-GAAP financials for the fiscal quarter ended September 30, 2006 or the fiscal year ended June 30, 2006 at this time.

" We had strong performance this quarter as semiconductor manufacturers continue to invest in process control for 65nm production and 45nm development " stated Rick Wallace, chief executive officer of KLA-Tencor. "Our products and services deliver the most advanced process control technology to help our customers shorten their development, ramp faster and increase their yields ."

KLA-Tencor reported ending the quarter with more than eight months of product-related shipment and revenue backlog. On a geographic basis, Taiwan was 10 percent of orders, lower than its historical average of 20 percent; Korea, China and Singapore were 22 percent of orders, slightly higher than their combined historical average of 20 percent; U.S. was 20 percent of orders, lower than its historical average of 25 percent; Japan was 35 percent of orders, higher than its historical average of 25 percent; and Europe was 13 percent of orders, higher than its historical average of 10 percent.

KLA-Tencor's financial position remained strong with cash, cash equivalents and marketable securities of $2.4 billion and no long term debt. Accounts receivable decreased by $25 million compared to the prior quarter to $415 million on strong collections.

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Forward Looking Statements: Statements in this press release regarding KLA-Tencor's business outlook, future financial and operating results, and overall future prospects, as well as statements regarding KLA-Tencor's pending restatement of historical financial statements, the anticipated amount of additional expenses and related matters, 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 risk factors and other disclosures contained in the Company's previously filed Form 10-K, Forms 10-Q, and other filings with the Securities and Exchange Commission.

The restatement activities referred to above are affecting KLA-Tencor's ability to file required reports with the SEC on a timely basis, its ability to meet the requirements of The Nasdaq Stock Market for continued listing of its shares, and potential claims and proceedings against KLA-Tencor including shareholder litigation and action by the SEC and/or other governmental agencies. KLA-Tencor will continue to work diligently to complete the restatement process and to file its Annual Report on Form 10-K for the fiscal year ended June 30, 2006 and its Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2006 as soon as practicable.

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 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