KLA admits discrepancy in stock option grants

June 30, 2006 – KLA Tencor Corp., San Jose, CA, says that an internal investigation by a committee of independent directors has reached a preliminary conclusion that actual measurement dates for financial accounting purposes of certain stock options granted to members of senior management and employees “likely differ” from the recorded grant dates of such awards.

Based on preliminary results, the company now anticipates that it may have to record additional noncash charges for the stock-based compensation expenses, although it has not determined the amount or resulting tax impact. If those items are deemed material, KLA-Tencor may be required to restate financial statements for the relevant prior fiscal periods.

KLA-Tencor is one of several semiconductor industry companies, and dozens of US technology firms, that are under scrutiny for allegedly tweaking the timing of stock option grants to increase their value for recipients. It received notice from the SEC in late May that it was part of an informal probe. The company stressed that the investigation is ongoing, and that it has not yet determined whether any resulting compensation charges are material or whether restatements of previous financial results will be required.


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