October 17, 2006 – KLA-Tencor Corp. says it anticipates the impact of its historical stock option practices could reach an eye-popping final tally of $400 million in noncash charges, for incorrect measurement dates for certain stock option grants issued as far back as 1997.

Amid the repercussions, company founder and chairman Kenneth Levy is retiring as director and employee effective immediately, replaced by nonexecutive chairman Edward Barnholt. Levy will be named Chairman Emeritus. All of Levy’s outstanding retroactively priced options, as well as those owned by certain other former and current executives of the company, will be repriced to “fair market value on the corrected measurement date.”

Also, the company “has terminated all aspects of its employment relationship” with former top exec Ken Schroeder, who was president/COO from 1991-1999 and CEO from 1999-2005, and will cancel all outstanding retroactively priced stock options held by him. Also resigning is KLA-Tencor’s general counsel, Stuart Nichols, who likewise will see retroactively priced stock options repriced

John Kispert, who was CFO at KLA-Tencor during the period in question, was deemed to have been uninvolved in the improper stock option practices, but his retroactively priced options also will be re-priced. Current CEO Rick Wallace, who replaced Schroeder at the beginning of the year, as well as the rest of current company management, were also absolved by a special committee investigation conducted by the board of directors.