1. Presented by: Saravanan Velrajan Daisy Mae Go Allan Phan Parvathi Natarajan Acc/539 Richie Wong

2. Scope Major provisions of SOA Regulations and authorities in guiding SOA Kla- Tencor in compliance with SOA Methodologies in use to comply with SOA Pain points in compliance with SOA Conclusion

3. To perform a comprehensive examination of the processes and controls used to safeguard assets, conduct business, and report results. To ensure that KLA-Tencor satisfies all of the requirements imposed by US legislation.

4. Certification of financial reports by CEOs and CFOs Ban on personal loans to any Executive Officer and Director Accelerated reporting of trades by insiders Independent annual audit reports on the existence and condition of internal controls Must have an internal audit function

5. Pre-approval Requirements (Section 202) All auditing services should be pre-approved by audit committee of the issuer Management Assessment of Internal Controls (Section 404) Annual reports should include report by management on company’s internal control over financial reporting

6. Cash/ST Investments Receivables Inventories Other Current Current Assets Plant and Equipment Other Total Assets Debt Equity DSO’s = 77 days No Long Term Debt Prod. Turns = 3.1 Mar ‘05 Unusual Liquidity, Cash Generator $2,108 445 354 361 $3,268 $393 299 $3,960 $0 $2,975 Sep ‘04 Dec ‘04 $1,886 366 373 345 $2,970 $380 239 $3,590 $0 $2,685 $1,925 446 351 343 $3,065 $398 303 $3,766 $0 $2,838

7. Wafer Inspection 2365, 2371, AIT XUV, SP2, eS31, 2430, Klarity Defect/ACE/SSA Photomask SL3UV, TeraStar, TeraScan Service iSupport Metrology SpectraFx 200, eCD-2, SpectraCD 100, MetriX 100, Archer AIM, Quantox XP, RS-100, HRP-240/340, P-15, AS-IQ, PROLITH, ProDATA Data Storage Wafer, Head, and Media Test Products

8. Complete extensive documentation of controls Controls are working as documented Maintain required evidence that the controls are being performed

9. Mega Process Audit Testing (Two test phases) Internal control

11. Revenue cycle is key control process, anti-fraud assessment target SEC Enforcement Action on Fraud and irregularities Revenue process testing goes beyond Finance function

12. R&D SG&A 0 5 10 15 20 25 30 35 40 45 50 Percent 34% 3Q04 31% 4Q04 28% 1Q05 30% 2Q05 30.5% 3Q05

13. Percent 0 10 20 30 40 50 60 48.9% 50.1% 53.6% 56.1% 57.1% 52.2% 2Q03 1Q002Q003Q004Q001Q01 56.9% 2Q01 56.4% 3Q01 55.3% 4Q01 SAB101 51.4% 1Q02 50.1% 2Q02 3Q02 49.0% 50.1% 4Q02 50.4% 1Q03 48.5% 3Q03 49.0% 4Q03 51.1% 1Q04 53.8% 2Q04 56.2% 3Q04 58.4% 4Q04 58.5% 1Q05 59.1% 2Q05 59.0% 3Q05

14. CEOs and CFOs must certify their financial statements on a quarterly and annual basis under Section 302 of SOA Require to certify the effectiveness of their internal controls on a quarterly and annual basis under Section 404 of SOA Tighter SEC filings deadlines for 10-Ks,10-Qs, and 8-Ks Real-Time Disclosure

15. Sarbanes-Oxley was signed into law on July 30, 2002 in response to corporate scandals CEO/CFO Sign-off Internal Controls Accelerated Filings Real-Time Disclosure