$65 Million Settlement Reached in Stock Options Backdating Shareholder Lawsuit Against KLA-Tencor

City of Philadelphia Board of Pensions and Retirement was co-lead plaintiff

Three Philadelphia law firms were among co-lead counsel

PHILADELPHIA, Jan. 28 /PRNewswire/ -- The Philadelphia law firms of Berger & Montague, P.C., Trujillo Rodriguez & Richards LLC, and Kohn, Swift & Graf, P.C., along with the San Francisco office of Berman DeValerio Pease Tabacco Burt & Pucillo are pleased to announce the resolution of a class action securities fraud lawsuit against KLA-Tencor Corporation ("KLA-Tencor" or the "Company") (NASDAQ: KLAC) . KLA-Tencor has agreed in principle to pay $65 million in cash to settle a shareholder lawsuit, which alleged that the Company and certain of its officers illegally backdated stock option grants.

The agreement in principle, which is subject to court approval, documentation, and notice, would settle all claims against KLA-Tencor and the individual defendants.

"This settlement is an extraordinary achievement and is a highly significant recovery for the Class," said Sherrie R. Savett of Berger & Montague. "It resolves fraud claims against all defendants, eliminates all risks to the Class, and ensures that Class members will enjoy the proceeds in the not too distant future," said Savett. "These are exactly the kinds of claims institutional investors should pursue," added Kenneth I. Trujillo of Trujillo Rodriguez & Richards LLC. Joseph C. Kohn of Kohn Swift & Graf, P.C. noted that the complex case was resolved in an expeditious manner and added that "the settlement is an excellent result that will compensate KLA shareholders and allow KLA to move forward."

The City of Philadelphia and the other Lead Plaintiffs played prominent roles in achieving this settlement. In addition to the three Philadelphia based law firms, the City of Philadelphia's Board of Pensions and Retirement served as a Co-Lead plaintiff in the case, along with the Louisiana Municipal Police Employees' Retirement System, and the Police and Fire Retirement System of the City of Detroit.

The action, captioned In re KLA-Tencor Securities Litigation, 06-cv-04065 (N.D. Cal.) was pending in San Francisco, where KLA-Tencor is headquartered. Lead attorneys for the Class included Ms. Savett, Mr. Trujillo and Ira Neil Richards (co-counsel for the City of Philadelphia), Mr. Kohn, and Joseph J. Tabacco, Jr.

The proposed settlement provides that investors who purchased KLA-Tencor securities from June 30, 2001, through and including January 29, 2007 (the "Settlement Class Period"), may be eligible to file proofs of claim.

The lawsuit, which was brought in U.S. District Court for the Northern District of California, alleged that the Company backdated stock option grants to the individual defendants and/or other directors or executives to provide the recipients with a more profitable exercise price. In particular, the complaint says that: (a) contrary to statements made by the Company, the option grants were not made at the fair market value or the NASDAQ closing price on the date of the grant; (b) KLA-Tencor improperly understated its expenses and overstated its earnings as a result of improper option backdating; and (c) KLA-Tencor failed to prepare its financial statements in accordance with Generally Accepted Accounting Principles. The defendants denied the allegations in the lawsuit and, as part of the proposed terms of settlement, continue to deny all claims and liability.

Berger & Montague, P.C., Trujillo Rodriguez & Richards LLC, Kohn, Swift & Graf, P.C., and Berman DeValerio Pease Tabacco Burt & Pucillo each prosecute class actions nationwide on behalf of institutions and individuals, primarily in the areas of securities fraud and antitrust.