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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ________________ TO ________________
COMMISSION FILE NO. 0-9992
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KLA-TENCOR CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 04-2564110
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
160 RIO ROBLES SAN JOSE, CALIFORNIA 95134
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (408) 875-4200
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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NONE NONE
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SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, $0.001 PAR VALUE
COMMON STOCK PURCHASE RIGHTS
(TITLE OF CLASS)
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Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of
the registrant based upon the closing price of the registrant's stock, as of
August 31, 1997, was $5,095,010,757. Shares of common stock held by each
officer and director and by each person or group who owns 5% or more of the
outstanding common stock have been excluded in that such persons or groups may
be deemed to be affiliates. This determination of affiliate status is not
necessarily a conclusive determination for other purposes.
The registrant had 84,318,173 shares of Common Stock outstanding as of
August 31, 1997.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Stockholders for the fiscal year ended
June 30, 1997 ("1997 Annual Report to Stockholders" ) are incorporated by
reference into Parts I, II and IV of this Report. Portions of the Proxy
Statement for the Annual Meeting of Stockholders ("Proxy Statement" ) to be held
on November 18, 1997, and to be filed pursuant to Regulation 14A within 120 days
after registrant's fiscal year ended June 30, 1997, are incorporated by
reference into Part III of this Report.
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
THE COMPANY
Merger. Effective April 30, 1997, Tencor Instruments ("Tencor") merged
into a wholly-owned subsidiary of KLA Instruments Corporation ("KLA"). Following
the Merger, KLA changed its name to KLA-Tencor Corporation (the "Company"). In
the Merger, shares and options for Tencor common stock were exchanged on a
one-for-one basis for the common stock of KLA. The transaction was accounted for
as a pooling of interests for financial reporting purposes and structured to
qualify as a tax-free reorganization. The stockholders of each of KLA and Tencor
approved the transaction and the transaction was effective April 30, 1997.
The Merger brought together two companies with largely complementary
product lines which provide customers with yield management solutions and
process monitoring products throughout the semiconductor manufacturing process.
As the complexity of the sub-micron semiconductor manufacturing process
increases, the need for more, and more effective, process monitors also
increases. Quickly attaining and then maintaining high yields is one of the most
important determinants of profitability in the semiconductor industry. The
importance of high yields from the manufacturing process has grown dramatically
as wafer sizes increase and process geometries decrease. Total yield management
solutions have taken on a significance which has not been experienced in the
past. The Company, as a result of the Merger, is in a unique position to be the
single source for total yield management solutions with a portfolio of
applications-focused technologies and dedicated yield consulting expertise.
General. The Company was incorporated in Delaware in July 1975. Its
headquarters are located at 160 Rio Robles, San Jose, California, 95134,
telephone (408) 875-4200.
The Company is the leader in the design, manufacture, marketing and
service of yield management and process monitoring systems for the semiconductor
industry. The Company uses its technical expertise and understanding of customer
needs to supply unique yield management solutions and one of the broadest lines
of wafer inspection, thin film measurement, metrology and reticle inspection
systems available in the semiconductor industry. The Company's systems are used
to analyze product and process quality at critical steps in the manufacturing
process for integrated circuits and to provide feedback to our customers in
order that fabrication problems can be identified, addressed and contained. This
understanding of defect sources and how to contain them enables semiconductor
manufacturers to increase yields.
Semiconductor fabrication facilities are increasingly expensive to build
and equip. Yield management and process monitoring systems, which typically
represent a small percentage of the total investment required to build and equip
a fabrication facility, enable integrated circuit manufacturers to leverage
these expensive facilities and improve their returns on investment.
The Company's principal market is the semiconductor industry, marketing
and selling products worldwide to virtually all of the major semiconductor
manufacturers. The Company's revenues are derived primarily from product sales,
principally through its direct sales force, and to a lesser extent, through
distributors. The Company's technological strength has enabled it to develop and
introduce major new product families in each of its business units during the
last year.
YIELD MANAGEMENT SOLUTIONS
Maximizing yields, or the number of good die per wafer, is a key goal of
modern semiconductor manufacturing. Higher yields increase the revenue a
manufacturer can obtain for each semiconductor wafer processed. As geometry
linewidths decrease, yields become more sensitive to the size and density of
defects. Semiconductor manufacturers use yield management and process monitoring
systems to improve yields by identifying defects, by analyzing them to determine
process problems, and, after corrective action has been taken, by monitoring
subsequent results to ensure that the problem has been contained. Monitoring and
analysis often takes place at various points in the fabrication process as
wafers move through a production cycle consisting of hundreds of separate
process steps.
The following are some of the methods used to manage yield, all of which
require the capture and analysis of data gathered through many measurements:
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- Engineering analysis is performed off the manufacturing line to
identify and analyze defect sources. Engineering analysis
equipment operates with very high sensitivity to enable
comprehensive analysis of wafers. Because they operate off-line,
engineering analysis systems do not require high speeds of
operation.
- In-line monitoring is used to review the status of circuits
during production steps. Information generated is used to
determine whether the fabrication process steps are within
required tolerances and to make any necessary process
adjustments in real-time before wafer lots move to subsequent
process stations. Because the information is needed quickly to
be of greatest value, in-line monitoring requires both high
throughput and high sensitivity.
- Pass/fail tests are used at several steps in the manufacturing
process to evaluate products. For example, a pass/fail test is
used to determine whether reticles used in photolithography are
defect-free; electrical pass/fail testing is performed at the
end of the manufacturing process to determine whether products
meet performance specifications.
The most significant opportunities for yield improvement generally occur
when production is started at new factories and when new products are first
built. Equipment that helps a manufacturer quickly increase new product yields
enables the manufacturer to offer these new products in volume at a time when
they are likely to generate the greatest profits.
WAFER INSPECTION SYSTEMS
The Company created the market for automated inspection of semiconductor
wafers over 12 years ago. The wafer inspection group product offerings include
unpatterned wafer inspection and patterned wafer inspection tools which are used
to find, count and characterize particles and pattern defects on wafers both in
engineering applications and in-line at various stages during the semiconductor
and wafer manufacturing processes. Semiconductor manufacturers use wafer
inspection systems to monitor their manufacturing processes and to refine those
processes to increase the yield of acceptable integrated circuits. Accordingly,
semiconductor manufacturers base their purchase of wafer inspection systems on a
variety of criteria, including sensitivity, throughput, total cost of ownership,
ease of use, degree of automation, system repeatability and correlation and its
ability to be integrated into overall yield management systems. The Company
offers two primary product families in the wafer inspection area.
In 1992, the Company introduced the 2130 inspection required for
microprocessors and other logic devices as well as both the logic and repeating
array portions of memory devices. The 2130 was subsequently upgraded with each
new model having greater sensitivity and greater maximum speed compared to its
predecessor. The 2135 was introduced in 1996 with twice the throughput and
higher sensitivity compared to its predecessor. In 1997, the Company introduced
the 2138, a new patterned wafer inspection system specifically designed to
address chemical mechanical planarization (CMP) and other demanding inspection
applications. The 2138 is based on the 2135 inspection platform and combines an
ultra- broadband illumination source and significantly improved bright field
optics with Segmented Auto Thresholding. This combination significantly
increases defect sensitivity and capture, while reducing or eliminating false
defect counts in semiconductor processes. The 2138 extends the Company's full
line of intelligent in-line monitoring solutions.
The Company's Surfscan(R) family of laser-scanning products are widely
used for wafer qualification, process monitoring and equipment monitoring. They
provide the high sensitivity, fast throughput and low cost of ownership required
in a production environment and are used in virtually all semiconductor
manufacturing processes. Surfscans are key components of the defect reduction
strategies of many leading semiconductor manufacturers. The systems use a
standardized file format that allow defect location data to be easily
transferred to off-line review stations for defect classification. The latest
patterned Surfscan, the Surfscan AIT, is the cost/performance leader for in-line
monitoring of deposited films and CMP layers.
The Surfscan AIT and the 2138 are part of the Company's Intelligent Line
Monitoring solution, which includes the full line of patterned wafer inspection
systems, as well as the IMPACT/Online, ADC, CRS/Offline ADC and Quest defect
data analysis systems. This integrated yield management approach provides
semiconductor device manufacturers with a comprehensive tool set which enables
the acceleration of time-to-yield enhancements and yield goals.
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The SP1 is the Company's first system to address the unique unpatterned
inspection requirements of 300mm wafers. It performs rapid, highly sensitive
inspection of unpatterned 300mm wafers, providing capabilities critical to wafer
and equipment manufacturers who are developing products for emerging 0.25 micron
process technologies and below. It combines a stationary illumination beam,
uniform axi-symmetric collection optics and an optional bright field channel
with a rotating wafer scheme and allows detection of surface defects and
contaminants at speeds of 100 wafers per hour on 300mm wafers, and 150 wafers
per hour on 200mm wafers. The Surfscan 6420 detects submicron defects on metal
films and rough surfaces but still provides sensitivity down to 0.1 micron on
polished silicon. It is effective for detecting defects on non-uniform films, a
critical requirement for CMP applications.
As feature sizes of semiconductor circuits continue to decrease for
leading edge semiconductor products, the Company believes that conventional
optical technologies ultimately will begin to reach physical limits imposed by
the wavelength of light and fail to provide the necessary inspection resolution.
Working closely with those customers with the most advanced inspection
requirements, the Company has developed the SemSPEC, the industry's only fully
automatic electron beam inspection system. This system, comprised of the
industry's fastest scanning electron-optical column and a high speed image
computer, are used for wafer and x-ray mask inspection. The development of these
systems was funded in part by customer-sponsored research and development
programs. The Company expects the market for these inspection systems to emerge
slowly.
The Company offers analysis systems comprised of database management
hardware and software to translate raw inspection data into patterns which
reveal process problems. The Company's software productivity and analysis
systems collect, store and analyze data collected by test equipment manufactured
by both the Company and others to provide semiconductor manufacturers with an
integrated yield management application. The software systems identify data
sources, show defect trends and help semiconductor manufacturers develop
long-term yield improvement strategies. In 1997, the Company introduced IMPACT,
its automated defect classification (ADC) tool, which will enable semiconductor
manufacturers to match automated defect classification schemes both within and
between fabrication facilities to accelerate the ramp to higher process yields.
With ADC matching, semiconductor manufacturers can develop a defect
classification recipe on one system and then export it to any other system or
fabrication facility running identical processes. The Company has an OEM
agreement with Uniphase Corporation to sell Uniphase Corporation's confocal
review station (CRS) ADC. The CRS interfaces with the Company's inspection
systems to collect, store and analyze defect data generated by the Surfscan
systems.
The PRISM group, formed in April 1994 to address the market for software
products that can be utilized in semiconductor fabrication applications for
yield management and productivity improvement, has developed and is marketing
two software product lines - Discovery and CIMA. Discovery is an enterprise-wide
yield management system that collects, stores and correlates yield information
from multiple data sources in a fabrication facility. This product was the
result of a cooperative development project with Motorola. CIMA is a test floor
automation product that collects test data from, and automates the operation of,
the wafer floor.
OPTICAL METROLOGY
Lithography for sub-micron semiconductor fabrication requires
increasingly stringent overlay and critical dimension tolerances. In particular,
decreasing linewidths, larger die sizes, and additional layers have made overlay
mis-registration errors a crucial cause of yield loss. To address these
challenges, the Company offers the 5000 series metrology systems: the 5100 for
overlay, and the 5105 for both overlay and critical dimension measurement. In
1996, the Company introduced the 5200 overlay system, which has performance and
usability enhancements compared to the 5100.
The Company, utilizing its expertise in digital image processing, has
developed sophisticated measurement algorithms that are more tolerant of process
variations. Using coherence probe microscopy, the system scans the image-forming
coherence region through the wafer plane, only gathering information from
in-focus surfaces. As a result, measurements are more tolerant of process and
substrate reflectivity variations than those from ordinary optical systems. The
precision measurements from the 5000 series identify the magnitude and direction
of overlay mis-registration errors arising from the stepping process and from
optical distortion inherent in the stepper lens. Based upon these measurements,
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users can fine-tune the stepper program to compensate for these errors, and
improve process yield.
E-BEAM METROLOGY
The Company broadened its portfolio of metrology products in December
1994 with the acquisition of Metrologix, Inc., a manufacturer of advanced
electron beam measurement equipment. With this acquisition, the Company's E-Beam
metrology business gained an established position in the Critical Dimension
Scanning Electron Microscope (CD-SEM) inspection market, a market which the
Company believes is larger than the optical overlay market, and one which it
believes will grow as semiconductor manufacturers continue to produce more
complex semiconductor devices.
The Company's first generation E-Beam metrology system features high
throughput and automated setup. One major U.S. memory manufacturer and two major
U.S. microprocessor manufacturers have purchased multiple systems for use in
both production and research and development. The Company has made substantial
investments in engineering and manufacturing to bring to market the
next-generation tool, the 8100-R CD-SEM. Production shipments of this product
began in June 1996.
FILM MEASUREMENT
The Company's film measurement division produces both film thickness and
resistivity measurement tools. The film thickness products are used to measure a
variety of optical properties of thin films, while the resistivity products
measure the resistivity of the various layers used to make integrated circuits.
These products are used to control a wide range of wafer fabrication steps,
where within-wafer and wafer-to-wafer uniformity of the process is of paramount
importance to semiconductor manufacturers achieving high yields at the lowest
possible cost.
The Company has been a leader in the thin film market since entering it
over 12 years ago. In 1995, the Company introduced the UV-1250SE, which brought
a powerful new technology, spectroscopic ellipsometry, to production. Continuing
innovations resulted in the UV-1280SE with one of the most robust measurement
capabilities in the industry. Thin film systems are used throughout the
manufacturing facility which creates significant challenges in measurement
flexibility, recipe management and factory floor computer automation. The
Company's UV product line, which has an installed base of over 500 systems has
addressed these requirements by delivering powerful measurement engines in
reliable, easy to use system designs. The systems also incorporate software
which enables extensive use of host computer operation to control the equipment,
analyze the data and feedback to the process equipment, all steps which are
critical for effective process control and maintaining high yields.
The Company's resistivity products have lead their markets since the
Company first entered this market in 1983. The high end product, the RS75te, is
used today in diffusion, implant and metal deposition for equipment monitoring
and control.
SURFACE METROLOGY
Stylus profilers are used to measure the surface topography of films
and etched surfaces and are used in basic research and development as well as
production and quality control areas. In addition, the Company produces stress
measurement systems which detect reliability related problems such as film
cracking, voiding and lifting. The Company recently introduced a new
high-resolution profiler (HRP) product which significantly increased the
potential applications for surface profilers. The HRP-200 is the first metrology
system to offer the combined monitoring capability traditionally achieved by two
different instruments, an in-line profiler for measuring wide spatial problems
such as dishing and erosion and the off-line atomic force microscope for the
nanoscale problem of plug recess. The data storage industry is an emerging
market for the Company's metrology systems. Recent achievements in utilization
efficiencies in this industry have increased the need to monitor surface
topography.
RETICLE INSPECTION SYSTEMS
RAPID, the Company's first business unit, created the market for
automated inspection of reticles and photomasks
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for the semiconductor manufacturing industry over 19 years ago and continues to
have a predominant share of this market. The Company has delivered over 800
reticle and photomask inspection systems worldwide. During photolithography, a
stepper projects a circuit pattern from a reticle onto a wafer. Error-free
reticles are the first step in ensuring high yields in the manufacturing process
because defects in reticles can translate into millions of ruined die.
The Company's 351 product incorporates a reference database generator
and data preparation system which gives full die-to-database functionality to
the inspection, permitting inspection against the ideal reticle pattern as
specified by the user's CAD program. The Company is continuing to develop
enhancements to the 351 inspection system to improve performance, serviceability
and reliability. In 1995, the Company introduced a new reticle inspection
product, STARlight, which uses reflected and transmitted light detection
techniques simultaneously to identify reticle contaminants, including particles.
STARlight permits users to identify defects which previously had not been
detectable. The Company believes STARlight will be used by mask manufacturers
and semiconductor manufacturers. STARlight is offered as an option on the KLA
351 inspection system and as a stand-alone unit. In 1997, the Company introduced
two new reticle and photomask inspection enhancements, the Advanced Performance
Algorithm (APA) and the STARlight High Resolution option. These enhancements
enable highly accurate and reliable inspection of next-generation 0.25 micron
reticles, including reticles with complex optical proximity correction
geometries.
CUSTOMERS
The Company sells its systems to virtually all of the world's
semiconductor manufacturers. In fiscal 1997, 1996 and 1995, no single customer
accounted for more than 10% of the Company's revenues.
INTERNATIONAL REVENUES
The Company has wholly-owned foreign subsidiaries or foreign branches of
domestic subsidiaries in Japan, Korea, Taiwan, Europe, Israel, Singapore and
Malaysia for marketing, sales and service of products. In addition, the Company
has manufacturing operations in Israel for its metrology products. International
sales accounted for approximately 65% of the Company's revenues for each of
1997, 1996 and 1995. For information regarding the Company's revenues from
foreign operations for the Company's last three fiscal years, see Note 9 of
Notes to Consolidated Financial Statements incorporated herein by reference to
Exhibit 13.1 hereto.
The Company believes that foreign sales will continue to be a
significant percentage of revenues. The future performance of the Company will
be dependent upon, in part, its ability to continue to compete successfully in
Asia, one of the largest areas for the sale of yield management services in
process monitoring equipment. The Company's ability to compete in this area in
the future is dependent upon the continuation of favorable trading relationships
between the region (especially Japan and Korea) and the United States and the
continuing ability of the Company to maintain satisfactory relationships with
leading semiconductor companies in the region. International sales and
operations may be adversely affected by imposition of governmental controls,
restrictions on export technology, political instability, trade restrictions,
changes in tariffs and the difficulties associated with staffing and managing
international operations. In addition, international sales may be adversely
affected by the economic conditions in each country. The revenues from the
Company's international business may be affected by fluctuations in currency
exchange rates. Although the Company attempts to manage near term currency risks
through "hedging," there can be no assurance that such efforts will be adequate.
These factors could have a material adverse effect on the Company's future
business and financial results.
SALES, SERVICE AND MARKETING
The Company believes that the size and location of its field sales,
service and applications engineering organization represents a competitive
advantage in its served markets. In the United States, Europe, Asia Pacific and
Japan the Company has a direct sales force although in the past it has used a
mix of direct sales and distributor/sales representative arrangements. The
Company maintains an export compliance program that fully meets the requirements
of the U.S. Department of Commerce and the Department of State. The Company does
not consider its business to be seasonal in nature, but it is cyclical with
respect to the capital equipment procurement practices of major semiconductor
manufacturers and is impacted by the investment patterns of such manufacturers
in different global markets.
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The Company's sales, service and applications facilities throughout the
world employ over 1500 sales, service and applications engineers. The Company
maintains sales and service offices throughout the United States and in Japan,
Korea, Taiwan, Singapore, Europe and Israel.
RESEARCH AND DEVELOPMENT
The market for yield management and process monitoring systems is
characterized by rapid technological development and product innovation. The
Company believes that continued and timely development of new products and
enhancements to existing products are necessary to maintain its competitive
position. Accordingly, the Company devotes a significant portion of its
personnel and financial resources to research and development programs and seeks
to maintain close relationships with customers to remain responsive to their
needs. In order to meet continuing developments in the semiconductor industry
and to broaden the applications for its image processing technology, the Company
is committed to significant engineering efforts for product improvement and new
product development. New product introductions may contribute to fluctuations in
operating results, since customers may defer ordering products from existing
product lines. If new products have reliability or quality problems, reduced
orders, higher manufacturing costs, delays in acceptance of and payment for new
products and additional service and warranty expense may result. On occasion,
the Company has experienced reliability and quality problems in connection with
certain product introductions, resulting in some of these consequences. There
can be no assurance that the Company will successfully develop and manufacture
new hardware and software products or that new hardware and software products
introduced by the Company will be accepted in the marketplace. If the Company
does not successfully introduce new products, its results of operations will be
affected adversely.
The Company typically receives some external funding from customers,
industry groups, and government sources to augment its engineering, research and
development efforts. The Company reports engineering, research and development
expense net of this funding. Amounts for engineering, research and development
expense were 13.0%, 10.6% and 10.6% of sales in fiscal 1997, 1996 and 1995,
respectively. For information regarding the Company's research and development
expense during the last three fiscal years, see Management's Discussion and
Analysis of Results of Operations and Financial Condition incorporated herein by
reference to Exhibit 13.1 hereto.
MANUFACTURING
The Company's principal manufacturing activities take place in San Jose
and Milpitas, California and Migdal Ha'Emek, Israel, and consist primarily of
manufacturing, assembling and testing components and subassemblies which are
acquired from third party vendors and then integrated into the Company's
finished products. The Company employs over 1800 manufacturing and engineering
personnel and also cross-trains personnel in order to respond to changes in
product mix. This reallocation of personnel is in addition to new hires.
Many of the components and subassemblies are standard products, although
certain items are made to Company specifications. Certain of the components and
subassemblies included in the Company's systems are obtained from a single
source or a limited group of suppliers. Those parts subject to single or limited
source supply are routinely monitored by management and the Company endeavors to
ensure that adequate supplies are available to maintain manufacturing schedules,
should supply for any part be interrupted. Although the Company seeks to reduce
its dependence on sole and limited source suppliers, in some cases the partial
or complete loss of certain of these sources could disrupt scheduled deliveries
to customers and have a material adverse effect on the Company's results of
operations and damage customer relationships.
COMPETITION
The worldwide market for yield management and process control systems is
highly competitive. In each of the markets it serves, the Company faces
competition from established and potential competitors, some of which may have
greater financial, engineering, manufacturing and marketing resources than the
Company. The Company believes that to remain competitive it will require
significant financial resources in order to offer a broad range of products, to
maintain customer service and support centers worldwide, and to invest in
product and process research and development. The
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semiconductor equipment industry is becoming increasingly dominated by large
manufacturers such as Applied Materials, Inc. which recently entered the wafer
defect inspection market, Hitachi Electronics Engineering Co., Ltd. and Tokyo
Electron Limited, who have the resources to support customers on a worldwide
basis. Many of these competitors have substantially greater financial resources
and more extensive engineering, manufacturing, marketing and customer service
and support capabilities than the Company. The Company expects its competitors
to continue to improve the design and performance of their current products and
processes and to introduce new products and processes with improved price and
performance characteristics. No assurance can be given that the Company will be
able to continue to compete successfully against its competitors.
Significant competitive factors in the market for yield management and
process control systems include system performance, ease of use, reliability,
installed base and technical service and support. The Company believes that,
while price and delivery are important competitive factors, the customers'
overriding requirement is for systems which easily and effectively incorporate
automated, highly accurate inspection capabilities into their existing
manufacturing processes, thereby enhancing productivity. The Company's yield
management and process control systems for the semiconductor industry are
generally higher priced than those of its present competitors and are intended
to compete based upon performance and technical capabilities. These systems also
compete with less expensive, more labor-intensive manual inspection devices.
In addition, in configuring their fabrication plants, semiconductor
manufacturers increasingly tend to select specific items of manufacturing
equipment for all of the fabrication facilities used to produce each generation
of integrated circuits. As a result of this process, the Company's failure to
have one or more of its products selected by a semiconductor manufacturer for
use in its facilities for a particular generation of integrated circuits may
effectively eliminate sales of that product for all of that manufacturer's
fabrication plants used for that generation of integrated circuits. The failure
to have one or more of the Company's products selected by a major semiconductor
manufacturer, especially one that is a significant customer of the Company, for
a particular generation of its integrated circuit products could have a
significant and long-term adverse effect on the Company's results of operations.
Although the Company has been relatively successful to date in these selection
decisions, not all of the Company's products have been selected by each of its
customers for fabrication facilities for each generation of integrated circuits.
Further, there can be no assurance that the Company's products will be selected
in the future, or that the Company will continue to be as successful in
connection with selection processes as it has been to date.
PATENTS AND OTHER PROPRIETARY RIGHTS
The Company protects its proprietary technology through a variety of
intellectual property laws including patent, copyright and trade secrets law;
however, the Company believes that, due to the rapid pace of innovation within
the yield management and process control systems industry, its protection of
patent and other intellectual property rights is less important than factors
such as its technological expertise, continuing development of new systems,
market penetration and installed base and the ability to provide comprehensive
support and service to customers. There can be no assurance that the Company
will be able to protect its technology or that competitors will not be able to
develop similar technology independently.
The Company currently holds 106 U.S. patents and has applied for 33
additional patents in the United States. In addition, the Company has 24 foreign
patents and applied for 75 additional foreign patents. From time to time the
Company acquires license rights under U.S. and foreign patents and other
proprietary rights of third parties. No assurance can be given that patents will
be issued on any of the Company's applications, that license assignments will be
made as anticipated or that the Company's patents, licenses or other proprietary
rights will be sufficiently broad to protect its technology. In addition, no
assurance can be given that any patents issued to or licensed by the Company
will not be challenged, invalidated or circumvented or that the rights granted
thereunder will provide a competitive advantage to the Company.
BACKLOG
At June 30, 1997, the Company's backlog for systems totaled $573
million, compared to $385 million at June 30, 1996. In general, systems ship
within six months to a year after receipt of a customer's purchase order. The
Company expects to fill the present backlog of orders during fiscal 1998. All
orders are subject to cancellation or delay by the customer
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with limited or no penalty. The Company's backlog is not necessarily indicative
of actual sales for any succeeding period.
EMPLOYEES
As of June 30, 1997, the Company employed a total of approximately 3,600
persons. None of the Company's employees are represented by a labor union. The
Company has experienced no work stoppages and believes that its employee
relations are good.
Competition in the recruiting of personnel in the semiconductor and
semiconductor equipment industry is intense. The Company believes that its
future success will depend in part on its continued ability to hire and retain
qualified management, marketing and technical employees.
ITEM 2. PROPERTIES
Certain information concerning the Company's properties at June 30, 1997
is set forth below:
Location Type Principal use Footage Ownership
- -------- ---- ------------- ------- ---------
San Jose, CA Office, Corporate Headquarters 711,667 lease
plant, Research and Engineering,
warehouse Marketing, Manufacturing,
Sales and Service and
Sales Administration
Milpitas, CA Office, Research and Engineering, 563,565 lease
plant, Marketing, Manufacturing,
warehouse Sales and Service and
Sales Administration
Austin, TX office Sales and Service, Training 27,424 lease
Naruse, Japan office Sales and Service 29,107 lease
Yokohama, Japan office Sales and Service 23,057 lease
Seoul, Korea office Sales and Service 17,558 lease
Hsinchu, Taiwan office Sales and Service 14,892 lease
Migdal Ha'Emek, office Research and Engineering, 53,800 lease
Israel Marketing, Manufacturing,
Sales and Service and
Sales Administration
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The Company leases several other facilities under operating leases that
expire at various times through June 30, 2012 with renewal options at the fair
market value for additional periods up to five years. See Note 4 to Notes to
Consolidated Financial Statements in Exhibit 13.1 hereto.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On April 30, 1997 a Special Meeting of the Stockholders was held. At
that meeting, the Company's stockholders approved the following three proposals:
1. Proposal to issue shares of the common stock to the shareholders
of Tencor Instruments in accordance with a merger agreement
among the Company, Tencor Instruments and a wholly-owned
subsidiary of the Company:
FOR: 37,673,729
ABSTAIN: 65,188
AGAINST: 58,776
2. Proposal to amend the Company's Certificate of Incorporation to
change the name of the Company to KLA-Tencor Corporation:
FOR: 38,368,617
ABSTAIN: 73,058
AGAINST: 78,877
3. Proposal to amend the Company's Certificate of Incorporation to
increase the number of authorized shares of the Company from
175,000,000 to 250,000,000 and to eliminate the designation of a
class of junior common stock:
FOR: 37,435,273
ABSTAIN: 79,605
AGAINST: 533,500
9
11
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The information required by this Item is incorporated herein by
reference to Exhibit 13.1 hereto.
ITEM 6. SELECTED FINANCIAL DATA
FIVE YEAR FINANCIAL HIGHLIGHTS
In thousands, except per share data
Year ended June 30, 1993 1994 1995 1996 1997
- ------------------- ---------- ---------- ---------- ---------- ----------
Revenues $ 261,105 $ 376,454 $ 695,950 $1,094,492 $1,031,824
Net income $ 11,507 $ 40,443 $ 104,811(1) $ 196,634 $ 105,396(2)
Net income per share $ 0.19 $ 0.59 $ 1.34(1) $ 2.34 $ 1.24(2)
Weighted average number
of common shares 60,841 69,076 78,427 84,195 85,203
As of June 30,
Cash, cash equivalents and
marketable securities $ 70,044 $ 174,305 $ 385,040 $ 468,475 $ 687,249
Working capital $ 133,084 $ 277,791 $ 452,350 $ 591,397 $ 535,256
Total assets $ 260,485 $ 430,453 $ 850,406 $1,157,919 $1,343,307
Stockholders equity $ 165,379 $ 307,334 $ 652,222 $ 870,999 $1,014,613
(1) Includes a net charge of $16.2 million, or $0.33 per share, for
write-off of acquired in-process technology. Net income and net income
per share would have been $121 million and $1.54, respectively,
excluding this charge.
(2) Includes merger, restructuring and other costs of $60.6 million. Net
income and net income per share would have been $151.3 million and
$1.78, respectively, excluding these costs.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Management's Discussion and Analysis of Results of Operations and
Financial Condition is incorporated herein by reference to Exhibit 13.1 hereto.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this item is incorporated herein by
reference to Exhibit 13.1 hereto.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements are incorporated herein by
reference to Exhibit 13.1 hereto.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not Applicable.
10
12
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below are the names of the present directors and executive
officers of the Company, their ages and positions held with the Company.
Additional information required by Item 405 of Regulation S-K of the Securities
Act of 1933, as amended, is incorporated herein by reference to the Company's
Proxy Statement.
Name Age Position
- ---- --- --------
Kenneth Levy 55 Chairman of the Board of Directors
Jon D. Tompkins 57 Chief Executive Officer and Director
Kenneth L. Schroeder 51 President, Chief Operating Officer and Director
Robert J. Boehlke 56 Executive Vice President, Chief Financial Officer and
Assistant Secretary
Frederick A. Ball 35 Vice President Finance and Accounting
Lisa C. Berry 39 Vice President, General Counsel and Assistant Secretary
Gary E. Dickerson 40 Executive Vice President Yield Management Group
Samuel A. Harrell 57 Senior Vice President, Strategic Business Development
Neil Richardson 42 Executive Vice President Metrology Group
Magnus O. W. Ryde 42 Vice President Worldwide Field Operations
Arthur P. Schnitzer 54 Executive Vice President Human Resources
Graham J. Siddall 51 Executive Vice President Wafer Group
James W. Bagley 58 Director
Edward W. Barnholt 54 Director
Leo J. Chamberlain 67 Director
Richard J. Elkus, Jr. 62 Director
Dean O. Morton 65 Director
Yoshio Nishi 57 Director
Samuel Rubinovitz 67 Director
Dag Tellefsen 55 Director
Lida Urbanek 54 Director
Kenneth Levy is a co-founder of the Company and is Chairman of the
Board. From 1975 until April 30, 1997 he was Chairman of the Board and Chief
Executive Officer. He currently serves on the boards of directors of Ultratech
Stepper, Inc., Network Peripherals, Inc., Integrated Process Equipment
Corporation and Trikon Technologies, Inc.
Jon D. Tompkins has been Chief Executive Officer of the Company since
April 30, 1997. From April 1991 until April 30, 1997 he was president and chief
executive officer of Tencor Instruments, a manufacturer of wafer inspection,
film measurement and metrology systems for the semiconductor industry. He was a
director of Tencor Instruments from 1991 until 1997 and was appointed chairman
of the board of directors of Tencor Instruments in November 1993. He currently
serves on the board of directors of Varian Corporation as well as SEMI/SEMATECH,
a private research and development consortium of U.S. semiconductor equipment
and materials companies.
Kenneth L. Schroeder has been President, Chief Operating Officer and
Director of the Company since November 1991. He currently serves on the board of
directors of GaSonics International.
Robert J. Boehlke has been Vice President and Chief Financial Officer of
the Company since July 1990. In April 1997 he was promoted to Executive Vice
President. He currently serves on the board of directors of LTX Corporation.
Frederick A. Ball became Vice President Finance and Accounting of the
Company on April 30,1997. He joined Tencor Instruments, a manufacturer of wafer
inspection, film measurement and metrology systems for the semiconductor
industry, as corporate controller in March 1995 and was promoted to corporate
vice president and appointed corporate secretary in January of 1996. Prior to
Tencor Instruments, Mr. Ball was with Price Waterhouse LLP for ten years.
11
13
Lisa C. Berry joined the Company in September 1996 as Vice President and
General Counsel. Ms. Berry joined the Company from LSI Logic Corporation, a
manufacturer of application specific integrated circuits, where she held the
positions of associate general counsel from October 1994 until September 1996
and assistant general counsel from August 1991 until October 1994.
Gary E. Dickerson joined the Company in January 1986 and has held a
series of positions. In July 1990 he was promoted to Director of Marketing and
Vice President of Marketing in July 1992. In July 1993, he was promoted to Vice
President and Director of the Wafer Inspection Group. In January 1996, he was
promoted to Group Vice President. In 1997, Mr. Dickerson became Executive Vice
President of the newly formed Yield Management Solutions Group.
Dr. Samuel A. Harrell joined the Company in September 1995 as Senior
Vice President of Strategic Business Development. Dr. Harrell is responsible for
strategic corporate development. Dr. Harrell served from October 1992 to
December 1995 as the senior vice president and chief strategy officer of
SEMATECH. From August 1987 to September 1992 he served as president of
SEMI/SEMATECH.
Dr. Neil Richardson joined the Company in June 1993 as Vice President
and General Manager of the Metrology Division. He became Executive Vice
President of the Metrology Group (of the combined operations of the Company and
Tencor Instruments as a result of the Merger) in 1997. He served as vice
president and general Manager of the Diagnostic Systems Group of Schlumberger
Technologies from September 1985 to November 1991, and was the corporate
technology adviser for Schlumberger Ltd., a manufacturer of electronic test
equipment, from November 1991 to May 1993.
Magnus O.W. Ryde joined the Company in June 1980 and has held a series
of positions. In 1991, Mr. Ryde became Vice President of Operations for the
Company's ATS division. He was promoted to Vice President and General Manager of
the Customer Support division in July 1992. In July 1995, he became Vice
President for the United States and European Sales Organizations. In July 1997
he was promoted to Vice President of Worldwide Field Operations.
Arthur P. Schnitzer joined the Company in July 1978 and has held a
series of positions. In 1989 he was promoted to Vice President and General
Manager of the Wisard division. In July 1993, he became Group Vice President
responsible for RAPID, SEMSPEC, PRISM and manufacturing for WISARD and RAPID. In
June 1997 he became Executive Vice President, Human Resources.
Dr. Graham J. Siddall was appointed Executive Vice President of the
Wafer Group (of the combined operations of the Company and Tencor as a result of
the Merger) in April 1997. In December 1995, he was appointed executive vice
president and chief operating officer of Tencor Instruments, a manufacturer of
wafer inspection, film measurement and metrology systems for the semiconductor
industry. Previously Dr. Siddall served as senior vice president for the Tencor
Instruments Wafer Inspection Division from November 1994 to December 1995 and
has been a vice president since joining Tencor Instruments in 1988.
James W. Bagley has been a Director of the Company since April 30, 1997.
He was a director of Tencor Instruments, a manufacturer of wafer inspection,
film measurement and metrology systems for the semiconductor industry, from June
1993 until April 30, 1997. He has been chief executive officer and a director of
Lam Research Corporation, a manufacturer of semiconductor processing equipment,
since August 1997. From May 1996 until August 1997 he was chairman of the board
and chief executive officer of OnTrak Systems, Inc. until its merger with Lam
Research Corporation in August 1997. From December 1987 until December 1993 Mr.
Bagley was president and chief operating officer for Applied Materials, Inc.,
a manufacturer of wafer fabrication systems to the semiconductor industry.
From January 1994 until October 1995 he was vice chairman and chief operating
officer of Applied Materials, Inc., and vice chairman from November 1995 until
May 1996. Mr. Bagley currently serves on the boards of directors of Teradyne,
Inc., Kulicke & Soffa Industries, Inc., Micron Technology, Inc. and
Semi/SEMATECH.
Edward W. Barnholt has been a Director of the Company since 1995. Mr.
Barnholt joined Hewlett-Packard Company, a manufacturer of electronic and
computer equipment in December 1966. From 1988 to 1990 he was general manager of
the Electronics Instruments Group of the Hewlett Packard Company. In July 1988,
he was elected vice president and in November 1993 was elected senior vice
president. Mr. Barnholt is currently executive vice president and general
manager of the Test and Measurement Organization of the Hewlett Packard Company.
Leo J. Chamberlain has been a Director of the Company since 1982. He is
a private investor. Mr. Chamberlain currently serves on the board of directors
of Octel Communications Corporation.
Richard J. Elkus, Jr. has been a Director of the Company since April 30,
1997. He was executive vice president and vice chairman of the board of
directors of Tencor Instruments, a manufacturer of wafer inspection, film
measurement and metrology systems for the semiconductor industry, from February
1994 until April 30, 1997. Previously, he was with Prometrix Corporation from
September 1983 until February 1994 where he held the positions of chairman and
chief executive
12
14
officer until its merger with Tencor Instruments in February 1994. He currently
serves on the boards of directors of Voyan Technology and Lam Research
Corporation.
Dean O. Morton has been a Director of the Company since April 30, 1997.
From June 1993 until April 30, 1997 he was director of Tencor Instruments, a
manufacturer of wafer inspection, film measurement and metrology systems for the
semiconductor industry. In October 1992 Mr. Morton retired as executive vice
president and chief operating officer and as a director of the Hewlett Packard
Company, a manufacturer of electronic and computer equipment, where he held
various positions from 1960 until his retirement. Mr. Morton currently serves as
chairman of the board of Centigram Communications Corporation and as a director
of ALZA Corporation, The Clorox Company, BEA Systems Inc. and Raychem
Corporation. Mr. Morton is also a trustee of the Metropolitan Series Fund and
State Street Research Funds Group and Portfolio, Inc.
Yoshio Nishi has been a Director since 1989. Since May 1995 he has been
director of research and development and senior vice president of the
Semiconductor Group of Texas Instruments Incorporated, a manufacturer of
integrated circuits and electronic equipment. From January 1986 to April 1995 he
was director of Silicon Process Laboratory for Hewlett-Packard Laboratories, a
semiconductor technology research facility affiliated with the Hewlett-Packard
Company.
Samuel Rubinovitz has been a Director since 1990. He previously served
as a Director of the Company from October 1979 to January 1989. From April 1989
to January 1994 he was executive vice president of EG&G, Inc., a diversified
manufacturer of scientific instruments and electronic, optical and mechanical
equipment. He currently serves on the boards of directors of Richardson
Electronics, Inc., LTX Corporation and Kronos, Inc.
Dag Tellefsen has been a Director of the Company since 1978. He is the
general partner of the Investment Manager of Glenwood Ventures I and II, venture
capital funds. He currently serves on the boards of directors of Iwerks
Entertainment Corporation, Aptix and Metorex International.
Lida Urbanek has been a Director of the Company since April 30, 1997.
She is a private investor. She was a director of Tencor Instruments, a
manufacturer of wafer inspection, film measurement and metrology systems for the
semiconductor industry, from August 1991 until April 30, 1997.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference to
"EXECUTIVE COMPENSATION" in the Company's Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated by reference to
"SECURITY OWNERSHIP -- Principal Stockholders and Security Ownership of
Management" in the Company's Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information regarding "Certain Relationships and Related
Transactions" as it appears in the Proxy Statement is incorporated herein by
reference.
13
15
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORT ON FORM 8-K
(a) FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES.
1. FINANCIAL STATEMENTS.
Consolidated Balance Sheets - As of June 30, 1997 and 1996
Consolidated Statements of Operations - For the Three Years Ended June 30, 1997
Consolidated Statement of Stockholders' Equity - For the Three Years Ended
June 30, 1997
Consolidated Statements of Cash Flows - For the Three Years Ended June 30, 1997
Notes to Consolidated Financial Statements
Report of Independent Accountants
2. FINANCIAL STATEMENT SCHEDULES.
All schedules are omitted because they are either not applicable or the
required information is shown in the consolidated financial statements or notes
thereto.
3. EXHIBITS.
Exhibit No. Description
- ----------- -----------
3.1 Certificate of Incorporation as amended(1)
3.2 Bylaws, as amended(1)
4.1 Amended and Restated Rights Agreement dated as of August 26, 1995,
between the Company and First National Bank of Boston, as Rights
Agent. The Rights Agreement includes as Exhibit A, the form of Right
Certificate and as Exhibit B, the summary of transactions of
Rights.(2)
10.1 Form of Retention and Non-Competition Agreement(3)
10.2 Form of KLA-Tencor Corporation Corporate Officers Retention Plan(3)
10.3 Form of Indemnification Agreement
10.4 1990 Outside Directors Stock Option Plan(4)
10.5 Second Amended and Restated 1981 Employee Stock Purchase Plan, as
amended on November 18, 1996(5)
10.6 1982 Stock Option Plan, as amended on November 18, 1996(6)
10.7 Tencor Instruments Second Amended and Restated 1984 Stock Option
Plan (7)
10.8 Tencor Instruments Amended and Restated 1993 Equity Incentive Plan
(7)
10.9 Tencor Instruments 1993 Nonemployee Directors Stock Option Plan(7)
10.10 1983 Employee Incentive Stock Option Plan of Prometrix Corporation
(7)
10.11 1993 Employee Incentive Stock Option Plan of Prometrix Corporation
(7)
10.12 Lease Agreement, Ground Lease Agreement and Purchase Agreement dated
June 5, 1995, between BNP Leasing Corporation and the Company(8)
10.13 Lease Agreement and Purchase Agreement dated August 10, 1995,
between BNP Leasing Corporation and the Company(8)
10.14 Phase IIA and Phase IIB Leases for Milpitas Facilities dated
December 29, 1995(9)
13.1 1997 Annual Report to Stockholders (deemed to be filed except to
the extent that the information is specifically incorporated by
reference)
21.1 List of Subsidiaries of KLA-Tencor Corporation
14
16
23.1 Consent of Independent Accountants
27.1 Financial Data Schedule
(1) Previously filed, with the same exhibit number, to the Registrant's Form
10-Q for the quarter ended March 31, 1997
(2) Previously filed as exhibit 1 to the Registrant's report on Form 8-A/A
Amendment No. 1 to the Registration Statement on Form 8-A (filed September
24, 1996, SEC File No. 0-9992)
(3) Previously filed, with the same exhibit number, to the Registrant's
Registration Statement on Form S-4 (filed March 11, 1997, SEC File No.
333-23075)
(4) Previously filed as exhibit 4.6 to the Registrant's Annual Report on Form
10-K for the year ended June 30, 1997
(5) Previously filed as exhibit 10.75 to the Registrant's Registration
Statement on Form S-8 (filed March 7, 1997, SEC File No. 333-22939)
(6) Previously filed as exhibit 10.74 to the Registrant's Registration
Statement on Form S-8 (filed March 7, 1997, SEC File No. 333-22941)
(7) Previously filed as exhibits 10.1, 10.2, 10.3, 10.6 and 10.7,
respectively, to the Registrant's Registration Statement on Form S-8
(filed May 8, 1997, SEC File No. 333-26681)
(8) Previously filed, with the same exhibit number, to the
Registrant's Form 10-Q for the quarter ended December 31, 1995
(9) Previously filed as exhibit 10.27 to Tencor Instruments
Annual Report on Form 10-K for the fiscal year ended December
31, 1995
(b) REPORT ON FORM 8-K.
The Company filed a Current Report on Form 8-K on April 15, 1997 which
incorporated the Company's earnings release for the third quarter of fiscal 1997
ended March 31, 1997. The Company amended that Form 8-K by filing an Amendment
to Current Report on Form 8-K setting forth financial statements reflecting 30
days of combined earnings of the Company and Tencor Instruments to reflect the
Merger using the pooling of interests method of accounting.
15
17
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on September 25, 1997.
KLA-Tencor Corporation
By: /s/ Kenneth Levy
------------------------------------
Kenneth Levy, Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Kenneth Levy
- -------------------------------- Chairman of the Board and September 25, 1997
Kenneth Levy Director
/s/ Jon D. Tompkins
- -------------------------------- Chief Executive Officer and September 25, 1997
Jon D. Tompkins Director
(Principal Executive Officer)
/s/ Kenneth L. Schroeder
- -------------------------------- President, Chief Operating September 25, 1997
Kenneth L. Schroeder Officer and Director
/s/ Robert J. Boehlke
- -------------------------------- Executive Vice President and September 25, 1997
Robert J. Boehlke Chief Financial Officer
(Principal Accounting Officer)
/s/ James W. Bagley
- -------------------------------- Director September 25, 1997
James W. Bagley
/s/ Edward W. Barnholt
- -------------------------------- Director September 25, 1997
Edward W. Barnholt
/s/ Leo J. Chamberlain
- -------------------------------- Director September 25, 1997
Leo J. Chamberlain
/s/ Richard J. Elkus, Jr.
- -------------------------------- Director September 25, 1997
Richard J. Elkus, Jr.
/s/ Dean O. Morton
- -------------------------------- Director September 25, 1997
Dean O. Morton
/s/ Yoshio Nishi
- -------------------------------- Director September 25, 1997
Yoshio Nishi
/s/ Samuel Rubinovitz
- -------------------------------- Director September 25, 1997
Samuel Rubinovitz
/s/ Dag Tellefsen
- -------------------------------- Director September 25, 1997
Dag Tellefsen
/s/ Lida Urbanek
- -------------------------------- Director September 25, 1997
Lida Urbanek
16
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EXHIBIT INDEX
-------------
Exhibit No. Description
- ----------- -----------
3.1 Certificate of Incorporation as amended(1)
3.2 Bylaws, as amended(1)
4.1 Amended and Restated Rights Agreement dated as of August 26, 1995,
between the Company and First National Bank of Boston, as Rights
Agent. The Rights Agreement includes as Exhibit A, the form of Right
Certificate and as Exhibit B, the summary of transactions of
Rights.(2)
10.1 Form of Retention and Non-Competition Agreement(3)
10.2 Form of KLA-Tencor Corporation Corporate Officers Retention Plan(3)
10.3 Form of Indemnification Agreement
10.4 1990 Outside Directors Stock Option Plan(4)
10.5 Second Amended and Restated 1981 Employee Stock Purchase Plan, as
amended on November 18, 1996(5)
10.6 1982 Stock Option Plan, as amended on November 18, 1996(6)
10.7 Tencor Instruments Second Amended and Restated 1984 Stock Option
Plan (7)
10.8 Tencor Instruments Amended and Restated 1993 Equity Incentive Plan
(7)
10.9 Tencor Instruments 1993 Nonemployee Directors Stock Option Plan(7)
10.10 1983 Employee Incentive Stock Option Plan of Prometrix Corporation
(7)
10.11 1993 Employee Incentive Stock Option Plan of Prometrix Corporation
(7)
10.12 Lease Agreement, Ground Lease Agreement and Purchase Agreement dated
June 5, 1995, between BNP Leasing Corporation and the Company(8)
10.13 Lease Agreement and Purchase Agreement dated August 10, 1995,
between BNP Leasing Corporation and the Company(8)
10.14 Phase IIA and Phase IIB Leases for Milpitas Facilities dated
December 29, 1995(9)
13.1 1997 Annual Report to Stockholders (deemed to be filed except to
the extent that the information is specifically incorporated by
reference)
21.1 List of Subsidiaries of KLA-Tencor Corporation
19
23.1 Consent of Independent Accountants
27.1 Financial Data Schedule
(1) Previously filed, with the same exhibit number, to the Registrant's Form
10-Q for the quarter ended March 31, 1997
(2) Previously filed as exhibit 1 to the Registrant's report on Form 8-A/A
Amendment No. 1 to the Registration Statement on Form 8-A (filed September
24, 1996, SEC File No. 0-9992)
(3) Previously filed, with the same exhibit number, to the Registrant's
Registration Statement on Form S-4 (filed March 11, 1997, SEC File No.
333-23075)
(4) Previously filed as exhibit 4.6 to the Registrant's Annual Report on Form
10-K for the year ended June 30, 1997
(5) Previously filed as exhibit 10.75 to the Registrant's Registration
Statement on Form S-8 (filed March 7, 1997, SEC File No. 333-22939)
(6) Previously filed as exhibit 10.74 to the Registrant's Registration
Statement on Form S-8 (filed March 7, 1997, SEC File No. 333-22941)
(7) Previously filed as exhibits 10.1, 10.2, 10.3, 10.6 and 10.7,
respectively, to the Registrant's Registration Statement on Form S-8
(filed May 8, 1997, SEC File No. 333-26681)
(8) Previously filed, with the same exhibit number, to the
Registrant's Form 10-Q for the quarter ended December 31, 1995
(9) Previously filed as exhibit 10.27 to Tencor Instruments
Annual Report on Form 10-K for the fiscal year ended December
31, 1995