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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED JUNE 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM___TO ___ COMMISSION FILE NO. 0-9992
KLA INSTRUMENTS 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 95134
SAN JOSE, CALIFORNIA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (408) 434-4200
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
-------------------- -----------------------------------------
NONE NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, $0.001 PAR VALUE
COMMON STOCK PURCHASE RIGHTS
(TITLE OF CLASS)
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 average bid and asked prices of the registrant's
stock, as of August 31, 1994, was $994,164,000. 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 22,974,230 shares of Common Stock outstanding as of
August 31, 1994.
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DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Stockholders for the fiscal year ended June
30, 1994 ("1994 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 16, 1994, and to be filed pursuant
to Regulation 14A within 120 days after registrant's fiscal year ended June 30,
1994, are incorporated by reference into Part III of this Report.
PART I
Item 1. DESCRIPTION OF BUSINESS
THE COMPANY AND ITS PRODUCTS
The Company was incorporated under the laws of the State of Delaware in July
1975. The Company's headquarters are located at 160 Rio Robles, San Jose,
California, 95134, telephone (408) 434-4200. Unless the text requires
otherwise, the "Company" or "KLA" refers to KLA Instruments Corporation and its
subsidiaries.
KLA is the leader in design, manufacture, marketing and service of yield
management and process monitoring systems for the semiconductor industry. KLA
believes that it is the world's largest supplier to the wafer, reticle and
metrology inspection equipment markets. The Company sells to virtually all of
the world's semiconductor manufacturers and has achieved very high market
shares in its principal businesses. KLA's systems are used to analyze product
and process quality at critical steps in the manufacture of integrated
circuits, providing feedback so 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. Quickly
attaining and then maintaining high yields is one of the most important
determinants of profitability in the semiconductor industry. The Company
believes that its customers typically experience rapid paybacks on their
investments in the Company's systems.
The growing complexity of semiconductor devices, including shrinking feature
dimensions, has substantially increased the cost to manufacture semiconductors,
making yield loss more expensive. This trend has increased semiconductor
manufacturers' demand for systems which permit the detection and containment of
process problems. The sensitivity of fabrication yields to defect densities
increases as devices become more complex. Further, the escalating capital
investments necessary for the construction of semiconductor fabrication
facilities heighten manufacturers' need for yield enhancing systems which can
leverage their returns on these investments.
Several years ago, the Company recognized the industry's need for in-line
monitoring to provide real-time process management capability. In response,
the Company devoted substantial resources to developing systems with the
throughput, reliability and associated data analysis capabilities for
in-process inspection. During the past several years, customers' use of the
Company's wafer inspection systems began evolving from single system, off-line
engineering analysis applications to multiple systems monitoring critical steps
directly on advanced fabrication lines. Positive customer evaluation of the
Company's in-line production monitoring systems led to record order levels for
the Company's 1993 and 1994 fiscal years . The Company believes that the
potential market for in-line monitoring systems is several times larger than
its traditional market for engineering analysis systems.
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YIELD MANAGEMENT
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 line width
geometries 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 may take place at many points in the fabrication
process as wafers move through a production cycle consisting of hundreds of
separate process steps.
Semiconductor factories are increasingly expensive to build and equip.
Yield management and process monitoring systems, which typically represent a
fraction 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 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 to increase yields quickly when
products are new enables the manufacturer to offer products in volume at the
time when they are likely to generate the greatest profits.
The following are some of the methods used to manage yield; they all require
the capture and analysis of data gathered through many measurements:
o 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.
o 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.
o 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.
KLA STRATEGY
KLA is the premier supplier of yield management and process monitoring
systems to the semiconductor manufacturing industry. Key elements of KLA's
strategy are as follows:
o Leadership in Yield Management. The Company believes that yield
management requires both the ability to identify defects and the ability
to use defect data: (i) to recognize patterns which reveal process
problems; and (ii) to resolve and contain process flaws which are causing
reduced yields. The Company has developed yield management solutions that
consist of sophisticated defect detection sensors located at key steps in
the production process, as well as analysis stations with relational
database software that enable isolation of defect sources, identification
of problem causes and implementation of corrective action.
The Company believes that its world-wide organization of more than 50
applications engineers provides an important competitive advantage. These
applications engineers serve
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as yield management consultants to the Company's customers, assisting
in applying KLA's systems to accelerate yield improvement and achieve
real-time process control.
o Development of In-Line Monitoring Market. KLA has introduced a family of
wafer inspection systems with the wafer throughput and sensitivity
necessary for in-line monitoring. Prior to the introduction of KLA's 2100
series, no suppliers' products were capable of both the speed and the
sensitivity needed for in-line inspection for all defect types at critical
process steps. In-line inspection is a critical yield enhancement and
cost reduction technique because it allows defect detection in real-time
rather than waiting until after final test results become available to
discover problems that have a significant yield impact. As a result of
these advantages, the Company believes that its customers will install
multiple systems directly monitoring critical steps in the integrated
circuit manufacturing process.
o Technology Leadership. The Company believes that it is the technological
leader in integrated circuit yield management and process control
monitoring. To maintain its leadership position, KLA is committed to
state-of-the-art multidisciplinary technologies. See "-Technology" on
page 8.
The Company's long range objective is to develop an integrated yield
management network which spans the semiconductor fabrication process.
YIELD MANAGEMENT AND PROCESS MONITORING SYSTEMS
KLA's systems are developed to work together to offer its customers not just
tools, but integrated yield management solutions. KLA offers inspection
systems for key steps in the semiconductor manufacturing process and analysis
systems comprised of database management hardware and software to translate raw
inspection data into patterns which reveal process problems. The Company's
wafer inspection and metrology systems are used for engineering analysis and
in-line monitoring, and its reticle inspection systems and wafer probers are
used for pass/fail tests.
WISARD - Wafer Inspection Systems. KLA's WISARD business unit created the
market for automated inspection of semiconductor wafers with the introduction
of the KLA 2000 series over nine years ago. KLA continues to have a
predominant market share with its current generation of wafer inspection
systems, the 2100 series.
KLA's 2100 series, combined with a dedicated defect data gathering and
analysis workstation, the KLA 2551, and an off-line Review Station, the KLA
2608, provide semiconductor manufacturers with a yield management system
sensitive enough for engineering analysis and fast enough for in-line
monitoring of the semiconductor manufacturing process. The 2100 series of
inspection systems offers an increase in inspection speed of up to 2,000 times
over that of KLA's original wafer inspection system. This marked increase in
speed and sensitivity allows customers to obtain very prompt feedback on
process status by placing wafer inspection systems on the production line.
The selection of the technology architecture for the 2100 series was made to
allow the base unit to support a family of products capable of performance
enhancements through upgrades of various subsystems. The first model, the KLA
2110, was introduced in 1991 with sufficient speed and sensitivity to enable
in-line inspection of repeating arrays typical in memory devices. One year
later, in 1992, KLA introduced a new repeating array model, the KLA 2111, which
operates at up to five times the speed of the KLA 2110 and has improved
sensitivity.
Shortly thereafter in 1992, KLA introduced the KLA 2130 which is capable of
"all pattern" inspection required for microprocessors and other logic devices
as well as both the logic and repeating array portions of memory devices. In
late 1993, KLA introduced the new 2131 model for all pattern inspection which
operates at up to twice the speed of the KLA 2130 and with higher
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sensitivity. The Company believes that there are further opportunities to
expand the 2100 series family of systems and has several new models under
development.
To manage defect data, KLA offers the KLA 2551 Analysis Station, a
multi-user work station using a relational database for storing defect
coordinates and digitized images. Defect analysis and image review operates
through a WindowsTM -based interface. The KLA 2551 incorporates an open
architecture which consolidates data from inspection systems, review stations,
wafer sort electrical testers, host computers, and scanning electron
microscopes (SEMs). The data analysis software provides statistical process
control reports, defect source analysis, and automated correlation of in-line
process defects to bit failures. The graphical software combines both data and
image to produce wafer maps, trend charts, and video review. When coupled with
an optional remote terminal, the KLA 2551 permits process engineers in remote
locations to link to the database of defect records and images to perform
further analyses or compare data from different wafer fabrication facilities.
The KLA 2608 Review Station provides a platform for reviewing and
classifying defects detected on KLA and non-KLA wafer inspection systems. An
operator may append classification codes to the defect record, a record which
also includes wafer number, die coordinates, defect location, and defect size.
The average selling prices of KLA's 2100 series of wafer inspection systems
range from approximately $1 million to approximately $2 million.
RAPID - Reticle Inspection Systems. RAPID, KLA's first business unit, created
the market for automated inspection of reticles and photomasks for the
semiconductor manufacturing industry over 16 years ago, and continues to have a
predominant market share. KLA has delivered over 700 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.
In 1992, KLA introduced its new generation of reticle inspection systems,
the 300 series. The KLA 301 Reticle Inspection System and the KLA 30 Reference
Data Computer together form the KLA 331 Inspection System which represents a
major advance in speed, sensitivity and flexibility. The KLA 331 offers the
highest inspection sensitivity available in the market place, which the Company
believes is vital to meet reticle inspection requirements for today's more
complex microprocessors and larger DRAMs.
During fiscal 1993 and 1994, delays in completing all features of the KLA
331 systems caused a decline in RAPID's business as many customers waited for
the new model. Certain ease-of-use and performance enhancements to the KLA 331
which are yet to be completed will be required before some customers will order
systems.
The average selling prices of KLA's 331 inspection systems range from
approximately $1.7 million to approximately $2.6 million.
Metrology - Overlay and Critical Dimension Measurement Systems. Lithography
for sub-micron semiconductor fabrication requires increasingly stringent
overlay and critical dimension tolerances. In particular, decreasing line
widths, larger die sizes, and additional layers have made overlay
mis-registration errors a crucial cause of yield loss. To address these
challenges, KLA offers the KLA 5000 series metrology systems: the 5100 for
overlay; and the 5015 for both overlay and critical dimension measurement. KLA
estimates that during its fiscal 1993 and 1994, it had the leading share in the
worldwide market for overlay registration systems.
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The KLA 5000 series uses a patented coherence probe microscopy technology
which permits fast autofocus and precision critical dimension measurements.
Applying its expertise in digital image processing, KLA has developed
sophisticated measurement algorithms that are tolerant of process variations.
With 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 KLA 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, users can fine-tune the stepper program to compensate for
these errors, and improve process yield.
The average selling prices of KLA's metrology systems for the semiconductor
industry range from approximately $300,000 to approximately $550,000.
The disk drive manufacturing industry is an emerging market for KLA's
metrology systems. Disk drive manufacturers use a semiconductor
photolithography process to produce thin film heads. The Company's coherence
probe technology is particularly well-suited to handle the complex topography
characteristics encountered in the thin film head process. The Company
believes that its solution to these requirements has allowed it to achieve the
major share of the thin film head metrology market.
Wafer Probing Systems. The ATS division sells and services a family of
automated wafer probers and network controllers which position individual
semiconductor devices still in wafer form under electrical test probes. The
probers work in conjunction with electronic parametric and functional testers
to perform fully automated tests of the performance of completed die before the
wafers are diced and packaged. The electrical test procedure also identifies
failed die, classifies die by performance and generates a database of test
results for use in process control.
KLA develops, manufactures and markets these products in cooperation
with Tokyo Electron, Limited ("TEL"), the leading distributor of semiconductor
equipment in Japan. KLA develops and manufactures the prober's image processing
electronics and optical subsystems. TEL manufactures the prober's mechanical
chassis and incorporates the KLA electronics and subsystems. The ATS division
sells the integrated prober systems in the United States and Europe with its own
control software and custom interfaces. TEL sells and services the integrated
prober systems in Japan and the rest of Asia.
The WATCHER business unit develops the image processing subsystems used in
ATS' and TEL's wafer prober systems. This image processing computer performs a
number of steps: (i) optical character recognition (OCR) to identify the wafer;
(ii) precise wafer alignment and positioning to the probe head; and (iii) probe
process inspection to monitor prober performance.
The average selling prices of KLA's basic wafer prober systems range from
approximately $150,000 to approximately $350,000.
PRISM-Software Productivity and Analysis Systems. The PRISM division was
formed in June 1994 to enter the software market with a family of standard
software packages for the global semiconductor industry. PRISM, which stands
for PRocess Information SysteMs, has adopted a charter to offer software
products that enhance yield and maximize factory productivity.
PRISM's first products to market are a set of probe floor networking
products that provide an open architecture for prober and tester automation.
These were originally developed within the ATS division as an enhancement to
ATS prober systems. Within PRISM they have been integrated into an architecture
called CIMA, or Control and Information Management
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Architecture, and are being marketed as an open architecture probe floor
product suite that will integrate with most any prober and tester regardless of
manufacturer.
SEMSpec-Scanning Electron Microscope Inspection Systems. 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, KLA has
developed the world's only fully automatic electron beam inspection systems.
These systems, comprised of the world's fastest scanning electron-optical
column and a high speed image computer, are used for reticle and wafer
inspection. The development of these systems was funded in part by
customer-sponsored research and development programs. KLA has sold four of
these systems to customers. KLA expects the market for these inspection
systems to emerge slowly.
KLA Acrotec Ltd. The Company has an 8% equity investment in KLA Acrotec, a
Japanese company that develops optical systems that inspect flat panel displays
utilizing technology developed by the Company. The Company has a research and
development agreement with KLA Acrotec to provide research, development and
engineering, on a best efforts cost reimbursement basis. The Company believes
that KLA Acrotec is the leading supplier of flat screen inspection systems.
CUSTOMERS AND APPLICATIONS
The Company believes that it is one of the few suppliers which sells its
systems to virtually all of the world's semiconductor manufacturers. In fiscal
1992 and 1994, no single customer accounted for more than 10% of the Company's
revenues. During fiscal 1993, Motorola accounted for approximately 11% of the
Company's revenues.
SALES, SERVICE AND MARKETING
The Company sells products through a combination of direct sales and
distribution channels. The Company believes that the size and location of its
field sales, service and applications engineering organization represents a
significant competitive advantage in its served markets. In the United States
and Europe, the Company has a direct sales force located in major geographical
markets. Sales, service and applications facilities throughout the world
employ over 400 sales, service and applications engineers.
In Japan, the Company sells systems for the semiconductor market through
TEL. TEL has been the Company's distributor to the Japanese semiconductor
market since 1978. The sales effort in Japan is supported by KLA Japan, which
provides marketing, applications support, technical support and service to
Japanese customers. Over the last two years, the Company significantly
increased its customer service organization in Japan in order to assume service
and support responsibilities from TEL. KLA Japan has over 100 local employees
and occupies facilities at Tachikawa, Osaka and Fukuoka.
In Singapore and Taiwan, the Company sells its systems through local sales
representatives. In Korea, the Company will convert, in October 1994, from a
local sales representative to a direct sales force.
KLA maintains an export compliance program that fully meets the requirements
of the U.S. Department of Commerce. KLA has never been denied approval to ship
against a purchase order.
For information regarding the Company's revenues from foreign operations for
the Company's last three fiscal years, see Note 3 on page 20 of the 1994 Annual
Report to Stockholders, incorporated herein by reference.
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TECHNOLOGY
KLA's inspection and metrology systems precisely capture trillions of
features on wafers and reticles that are as small as 10 millionths of an inch
on a side and analyze each of these features for possible defects through the
use of the following technologies:
Image Acquisition. KLA's systems acquire images of sub-micron features on
wafers and reticles. The quality and brightness of the images greatly
influence the speed and sensitivity of the final inspection system. KLA has
developed a wide range of optical imaging systems, such as laser scanners,
interference microscope systems, and conventional white light and deep UV
optical systems. To satisfy the future sensitivity requirements of advanced
lithography, KLA has already developed an electron beam system which
incorporates the world's fastest scanning electron-optical column.
Image Conversion. The Company's equipment converts the photon or electron
image to an electronic digital format. KLA has pioneered the use of
time-delay-integration sensors that convert as many as 100 million pixels
(picture elements) to 256-level gray scale images each second. KLA also
utilizes other image conversion technologies such as avalanche diode detectors,
photo multiplier systems, and fixed frame pickups.
Precision Mechanics. In the most common configuration of an inspection
system, the reticle or the wafer is moved at a constant speed through the field
of the imaging system. Since areas of interest are as small as 5 millionths of
an inch, and vibrations in the scanning system of one-tenth of the area of
interest can degrade system performance, the mechanical stage must be extremely
smooth and precise. To address these requirements, KLA has eight years
experience in the design and manufacture of air-bearing linear drive stages.
Proprietary Algorithms. To perform the inspection or measurement task, the
Company's equipment examines the properties of the digitized images using a set
of logical steps (algorithms) which measure the desired image property. KLA's
engineers develop sets of algorithms that are specifically tailored to obtain
optimum performance for its wafer, reticle and metrology systems. These
algorithms are largely responsible for the state-of-the-art performance of
KLA's systems.
Image Computers. The combination of proprietary algorithms and special
purpose computers allows KLA's equipment to have a high performance to cost
ratio. While general purpose computers are capable of executing KLA's
algorithms, very few computer architectures can sustain the computing speed
that is required in KLA's systems (as high as 72,000 MIPS). To address this
requirement, KLA develops and builds special purpose image computers designed
to execute its algorithms.
Database Analysis. Many of the inspections that KLA reticle inspection
systems perform require a digital image representation of the ideal pattern
obtained from the data used to manufacture the reticle. This capability allows
inspection systems to compare the actual circuit with its design
specifications. KLA has been developing database systems for over 14 years to
satisfy this objective. Its present generation of special purpose database
computers is capable of generating simulated images at the same high speeds at
which KLA's image conversion systems generate the digital image from the actual
reticle.
Statistical Process Control. Integrated circuit yield management and
process monitoring systems generate hundreds of thousands of data items each
day. To enhance the utility of these data, KLA has a team of software
engineers who build systems containing statistical process control software to
simplify data and present these data in a useful manner. KLA is continuing to
work on new software to enhance its statistical process control systems.
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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. Approximately 18% of the Company's workforce is engaged in
engineering, research and development. For information regarding the Company's
research and development expense during the last three fiscal years, see page
18 and 21 of the 1994 Annual Report to Stockholders herein incorporated by
reference.
KLA typically receives some external funding from customers, from industry
groups, and from government sources to augment its engineering, research and
development efforts. In addition, KLA capitalizes some software development
costs. Although the timing and the level of these external funds cannot be
predicted, the level of such funding and capitalization has been approximately
4%, 4% and 2% of sales for fiscal 1992, 1993 and 1994, respectively. The
Company reports engineering, research and development expense net of this
funding and capitalization. Thus, recorded amounts for engineering, research
and development expense were 17%, 10% and 9% of sales in fiscal 1992, 1993 and
1994, respectively.
MANUFACTURING
The Company's principal manufacturing activities take place in San Jose,
California; Bevaix, Switzerland; and Migdal Ha'Emek, Israel; and consist
primarily of assembling and testing components and subassemblies which are
acquired from third party vendors and then integrated into the Company's
finished products. Subsequent to June 30, 1994, the Company began planning the
construction of one or two additional buildings on undeveloped land at its
San Jose campus facility. The Company is also cross-training personnel, so that
it can respond to changes in product mix by reallocating personnel in addition
to hiring.
The Company has been working with key vendors to improve inventory
management. Volume purchase agreements and just-in-time delivery schedules
have reduced both inventory levels and costs. The Company's manufacturing
engineers, in conjunction with key vendors, are improving the manufacturability
and reliability of the new wafer and reticle inspection systems.
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 have at least a temporary adverse effect on the Company's results
of operations and damage customer relationships.
COMPETITION
The 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.
Significant competitive factors in the market for yield
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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.
The Company's wafer and reticle inspection systems have a predominant share
of their markets. The Company is the leading provider of overlay registration
systems. The Company believes it is the second largest supplier of wafer
prober systems in the U.S. and Europe.
Many of the Company's competitors are investing in the development of new
products aimed at applications currently served by the Company. The Company's
competitors in each product area can be expected to continue to improve the
design and performance of their products and to introduce new products with
competitive price/performance characteristics. Competitive pressures often
necessitate price reductions which can adversely affect operating results.
Although the Company believes that it has certain technical and other
advantages over its competitors, maintaining such advantages will require a
continued high level of investment by the Company in research and development
and sales and marketing. There can be no assurance that the Company will have
sufficient resources to continue to make such investments or that the Company
will be able to make the technological advances necessary to maintain these
competitive advantages.
The yield management and process control industry is characterized by
rapidly changing technology and a high rate of technological obsolescence.
Development of new technologies that have price/performance characteristics
superior to the Company's technologies could adversely affect the Company's
results of operations. In order to remain competitive, the Company believes
that it will be necessary to expend substantial effort on continuing product
improvement and new product development. There can be no assurance that the
Company will be able to develop and market new products successfully or that
the products introduced by others will not render the Company's products or
technologies non-competitive or obsolete.
PATENTS AND OTHER PROPRIETARY RIGHTS
The Company believes that, due to the rapid pace of innovation within the
yield management and process control systems industry, the Company's 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.
The Company protects its proprietary technology through a variety of
intellectual property laws including patents, copyrights and trade secrets.
The Company's source code is protected as a trade secret and as an unpublished
copyright work. The Company has a number of United States and foreign patents
and patent applications. The Company's effort to protect its intellectual
property rights through trade secret and copyright protection may be impaired
if third parties are able to copy or otherwise obtain and use the Company's
technology without authorization. Effective intellectual property protection
may be unavailable or limited in certain foreign countries. In addition, the
semiconductor industry is characterized by frequent litigation regarding patent
and other intellectual property rights. No assurance can be given that any
patent held by the Company will be sufficient to protect the Company.
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BACKLOG
Backlog orders for systems were $125 million as of June 30, 1994, with 99%
shippable in one year, as compared with $52 million as of June 30, 1993, with
98% shippable in one year. The Company generally ships systems within six
months after receipt of a customer's purchase order.
EMPLOYEES
As of August 31, 1994, KLA employed a total of approximately 1,135 persons.
None of KLA's employees is represented by a labor union. KLA has experienced
no work stoppages and believes that its employee relations are excellent.
Competition in the recruiting of personnel in the semiconductor and
semiconductor equipment industry is intense. KLA 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
KLA owns a corporate facility which houses engineering, manufacturing and
administrative functions in San Jose, California, occupying approximately
232,000 square feet. The Company purchased this facility in 1990 at a total
cost of approximately $30 million, including improvements. The Company leases
additional office space for manufacturing, engineering, sales and service
activities, including seven locations in the U.S., four in Europe, three in
Japan, and one each in Malaysia, Korea, Taiwan and Israel. Subsequent to June
30, 1994, the Company entered into two leases, for two year terms commencing
August 10, 1994 and November 1, 1994, for two buildings adjacent to its campus
facility, consisting of an aggregate of approximately 73,000 square feet.
Capital expenditures for fiscal 1995 are expected to approximate depreciation;
however, this assessment could change if demand continues to exceed estimates
and additional manufacturing capacity is required. No estimate can be made of
the size or cost of any such additional capacity. In addition, subsequent to
June 30, 1994, the Company began planning the construction of one or two
additional buildings on undeveloped land at its campus facility .
Item 3. LEGAL PROCEEDINGS
In June 1990, the Company filed a lawsuit in the U.S. Federal District
Court in San Jose, California, against Orbot Systems Ltd. and Orbot, Inc., now
Orbotech ("Orbot") for patent infringement. Orbot has since counter-sued for
interference with normal business. If the Company were to lose, Orbot would be
allowed to continue to sell products using its present illuminator. The Company
believes that the outcome of this suit will most likely be determined based
upon the validity of KLA's patent, U.S. Patent No. 4,877,326. The case is
scheduled to go to trial in early 1995. Management believes the results of
this lawsuit will not have a significant adverse effect on the Company.
In November 1993 KLA filed suit, in U.S. District Court in San Jose, CA,
against Orbot Instruments Inc. for infringing a KLA patent on die- to-database
inspection. Orbot Instruments filed a cross-complaint alleging interference
with business. This case is in the early phase of discovery.
The Company is also the defendant in three suits resulting from the
discontinuance of the printed circuit inspection business. In one case the
trial court denied the plaintiff's demand for damages. This case is under
appeal. The other two cases are in early discovery. Management does not
believe that these suits will have a significant adverse effect on the Company.
Beginning in August 1992 Jerome Lemelson, an independent inventor, filed
suit in U.S. District Court in Reno, NV, against the three U.S. automobile
companies, Motorola and several Mitsubishi subsidiaries for the infringement of
Lemelson's patents on machine vision. Recently Motorola settled with Lemelson.
However, Lemelson has put other semiconductor companies on
11
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notice . In the event that Lemelson prevails in his suit against other
semiconductor companies, KLA may be liable as a potential indemnitor.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
"Common Stock" on page 24 of the 1994 Annual Report to Stockholders is
incorporated herein by reference.
Item 6. SELECTED FINANCIAL DATA
"Selected Financial Data" on page 14 of the 1994 Annual Report to
Stockholders is incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
"Management's Financial Commentary" on pages 12 and 13 of the 1994 Annual
Report to Stockholders is incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements, together with the report thereon of
Price Waterhouse LLP dated July 26, 1994, appearing on pages 14 through 24 of
the aforementioned 1994 Annual Report to Stockholders are incorporated herein
by reference in this Form 10-K Annual Report. With the exception of the
information incorporated by reference in Items 1, 5, 6, 7 and 8, the 1994
Annual Report to Stockholders is not to be deemed filed as part of this Form
10-K Annual Report.
Item 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
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PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below are the names of the present executive officers of the
Company, their ages and positions held with the Company.
Name Age Position
- - ---- --- --------
Kenneth Levy 51 Chairman of the Board of Directors and
Chief Executive Officer
Kenneth L. Schroeder 48 President, Chief Operating Officer and Director
Robert J. Boehlke 53 Vice President of Finance and Administration,
Chief Financial Officer, and Assistant Secretary
Ben Tsai 36 Vice President, Chief Technical Officer
Gary E. Dickerson 36 Vice President, Wafer Inspection
Michael D. McCarver 48 Vice President, Corporate Sales
Neil Richardson 39 Vice President, Metrology
Magnus O. W. Ryde 38 Vice President, Customer Support
Arthur P. Schnitzer 51 Group Vice President, Wafer and Reticle Inspection
William Turner 38 Vice President, Corporate Controller
Virginia J. DeMars 52 Vice President, Human Resources
Christopher Stoddart 38 Treasurer
Leo J. Chamberlain 64 Director
Robert E. Lorenzini 57 Director
Yoshio Nishi 54 Director
Samuel Rubinovitz 64 Director
Dag Tellefsen 52 Director
Mr. Levy co-founded the Company in July 1975 and served as President and
Chief Executive Officer and a Director of the Company until November 1991, when
he became Chairman of the Board of Directors and Chief Executive Officer.
Since May 1993, Mr. Levy has been a Director of Ultratech Stepper, Inc., a
manufacturer of photolithography equipment, and since April 1993 a director of
Network Peripherals, Inc., a supplier of high-performance client-server
networking solutions.
Mr. Schroeder rejoined the Company in November 1991 as President, Chief
Operating Officer and Director. Mr. Schroeder had worked previously at KLA
from 1979 through 1987, during which time he held the positions of Vice
President of Operations (1979); Vice President and General Manager, RAPID
(1982); Vice President and General Manager, WISARD (1983); and Senior Vice
President (1985). In July 1988, he became President and Chief Executive
Officer of Photon Dynamics, Inc., a manufacturer of electro-optic test
equipment. In mid-1989, he was appointed President, Chief Operating Officer,
and Director of Genus, Inc., a manufacturer of CVD chemical vapor deposition
and ion implant equipment. He left Genus in October 1991, to rejoin KLA
Instruments Corporation.
Mr. Boehlke joined the Company in April 1983 as Vice President and General
Manager of the RAPID Division. Subsequently, he was General Manager of several
divisions and groups of divisions at KLA. In June 1985, Mr. Boehlke was
elected to Senior Vice President and to Executive Vice President in January
1989, and to Chief Operating Officer in August 1989 until July 1990, when he
became Chief Financial Officer.
Dr. Tsai joined the Company in June 1984 as a member of the WISARD Technical
Staff and was promoted to Manager of Algorithm Development for the WISARD
Division. From August 1989 until September 1990 he served as Director of
Engineering for WISARD. In October 1990, he
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was promoted to Vice President of Engineering for KLA Acrotec, and in July 1994
he was elected Vice President of the Company and promoted to Chief Technical
Officer.
Mr. Dickerson joined KLA in January 1986 as a Senior Applications Engineer
in the Wafer Inspection Division. In July 1987 he was promoted to Manager of
Applications Engineering for the Wafer Inspection Division, followed by Manager
of Product Planning in July 1989, Director of Marketing in July 1990, and Vice
President of Marketing in July 1992. In July 1993, he was promoted to Vice
President and Director of the Wafer Inspection Business Unit. In July 1994, he
was elected to Vice President of the Company.
Mr. McCarver joined the Company in October 1985 as Vice President of Sales
for the RAPID Division, was promoted to General Manager in July 1987, and was
additionally elected to Vice President of the Company in August 1989. In
August 1993, he became Vice President of Corporate Sales.
Dr. Richardson joined KLA in June 1993 as Vice President and General Manager
of the Metrology Division, and was elected Vice President of the Company in
July 1994. He served as Vice President and General Manager of 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.
Mr. Ryde joined KLA in June 1980 as Production Control Manager. In May 1981
he was promoted to Materials Manager, followed by Production Manager in January
1982 and Manager, Advance Manufacturing - KLA208 in May 1984. In March 1985 he
became Product Marketing Manager for the RAPID Division. In December 1988,
after leaving KLA for 6 months to pursue other interests, he returned as
Director of EMMI Business within the ATS Division. In January 1989 he was
promoted to Director of Operations - Europe, and in March 1991 became Vice
President of Operations for the ATS Division. He was promoted to Vice President
and General Manager of the Customer Support Division in July 1992 and was
elected to Vice President of the Company in July 1994.
Mr. Schnitzer joined the Company in July 1978 as Software Engineering
Manager and was promoted to Director of Engineering of the RAPID Division in
July 1982, and was promoted to Vice President in July 1983. He became Vice
President of Technology and Marketing of RAPID in May 1987, and Vice President
of Advanced Inspection in January 1989. In October 1989, he was promoted to
General Manager of the WISARD Division and, additionally, was elected to Vice
President of the Company in July 1990. In July 1993, he became Group Vice
President of the Wafer and Reticle Inspection Group ("WRInG"), composed of the
former RAPID and WISARD divisions.
Mr. Turner joined the Company in September 1983 as a Corporate Financial
Analyst, transferred to be the Field Service Financial Administrator of the
RAPID Division in August 1984, was promoted to RAPID Division Controller in
February 1986, transferred to International Division Controller in July 1988,
was promoted to Corporate Controller in December 1989, and was elected Vice
President of the Company in July 1990.
Ms. DeMars joined KLA in 1988 as Director of Human Resources after a 13 year
career in Employee Relations at Monolithic Memories, Inc. and Advanced Micro
Devices. In November 1991, KLA promoted Ms. DeMars to Vice President of Human
Resources, worldwide.
Mr. Stoddart joined the Company in December 1991 as Treasurer. Prior to
joining the Company, Mr. Stoddart was Treasurer of General Cellular
Corporation, a cellular telephone service provider, from October 1989 to
September 1991 and previously with The Cooper Companies, Inc., a manufacturer
of pharmaceuticals and medical equipment and implant equipment, as Assistant
Treasurer from August 1986 to July 1988, and then Treasurer from July 1988 to
September 1989.
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Mr. Chamberlain has served as a Director of the Company since 1982. He has
served as a Director of Octel Communications Corporation, a manufacturer of
high performance voice processing systems since March 1989.
Mr. Lorenzini has served as a Director of the Company since 1976. He has
served since January 1993 as Chairman of SunPower Corporation, a manufacturer
of optoelectronic devices, and from October 1988 to January 1993, he served as
President and Chief Executive Officer. Since July 1993, he has also been a
Principal in Dalton Partners, a turn-around management company. He was a
founder and, until December 1986, Chairman of the Board of Siltec Corporation,
a manufacturer of semiconductor materials and manufacturing equipment. Since
October 1986, Mr. Lorenzini has also served as a Director of FSI International,
a semiconductor process equipment manufacturer.
Mr. Nishi has served as a Director of the Company since 1989. He is the
Director of ULSI Research Laboratory, Hewlett-Packard Laboratories, and also a
consultant professor in the Stanford University Department of Electrical
Engineering.
Mr. Rubinovitz previously served as a Director of the Company from October
1979 to January 1989, and rejoined the Company as a Director in 1990. From
April 1989 through December 1993, he served as Executive Vice President of
EG&G, Inc., a diversified manufacturer of scientific instruments and
electronic, optical and mechanical equipment, and previously as Senior Vice
President of EG&G, Inc. between April 1986 and April 1989. Since April 1989,
Mr. Rubinovitz has served as a Director of EG&G. Since October 1984, he has
served as Director of Richardson Electronics, Inc., a manufacturer and
distributor of electron tubes and semiconductors and, since October 1986,
Director of Kronos, Inc., a manufacturer of electronic time keeping systems.
Mr. Tellefsen has served as a Director of the Company since 1978. He is
General Partner of the investment manager of Glenwood Ventures I and II,
venture capital funds. Since January 1983, he has served as a Director of
Iwerks Entertainment, a producer of movie-based specialty theaters, and since
1982, as a director of Octel Communications Corporation.
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Item 11. EXECUTIVE COMPENSATION
The information regarding Executive Compensation as it appears in the Proxy
Statement is incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information regarding Security Ownership of Certain Beneficial Owners
and Management as it appears in the Proxy Statement is incorporated herein by
reference.
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.
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PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORT ON FORM 8-K
(a) (1) Financial Statements: See Index to Financial Statements, page 19.
(2) Financial Statement Schedules: See Index to Financial Statement
Schedules, page 19. (3) Exhibits: See Index to Exhibits, pages
23, 24 and 25.
(b) No reports on Form 8-K were filed during the quarter ended June 30,
1994.
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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 in the City of San Jose,
State of California, on the 27th day of September 1994.
KLA INSTRUMENTS CORPORATION
By WILLIAM TURNER
-----------------------------------
William Turner
Vice President/Corporate Controller
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of this
registrant and in the capacities and on the dates indicated.
Signature Title Date
KENNETH LEVY Director, Chairman of the Board, and September 27, 1994
- - ---------------------------------- Chief Executive Officer
Kenneth Levy
KENNETH L. SCHROEDER Director, President September 27, 1994
- - ------------------------------ And Chief Operating Officer
Kenneth L. Schroeder
ROBERT J. BOEHLKE Vice President Finance September 27, 1994
- - ---------------------------------- and Administration,
Robert J. Boehlke Chief Financial Officer,
and Assistant Secretary
Director September 27, 1994
- - ----------------------------------
Leo J. Chamberlain
ROBERT E. LORENZINI Director September 27, 1994
- - ----------------------------------
Robert E. Lorenzini
DR. YOSHIO NISHI Director September 27, 1994
- - ----------------------------------
Dr. Yoshio Nishi
SAMUEL RUBINOVITZ Director September 27, 1994
- - ----------------------------------
Samuel Rubinovit
DAG TELLEFSEN Director September 27, 1994
- - ----------------------------------
Dag Tellefsen
18
19
KLA INSTRUMENTS CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
Page(s) in
1994 Annual
Report*
------------------
Consolidated Statement of Operations for the three years ended June 30, 1994 ..................... 14
Consolidated Balance Sheet at June 30, 1993 and 1994 ............................................. 15
Consolidated Statement of Stockholders' Equity for the three years ended June 30, 1994 .......... 16
Consolidated Statement of Cash Flows for the three years ended June 30, 1994 ..................... 17
Notes to the Consolidated Financial Statements ................................................... 18-23
Report of Independent Accountants ................................................................ 24
INDEX TO FINANCIAL STATEMENT SCHEDULES
Page
----
Report of Independent Accountants on Financial Statement Schedules
For the three years ended June 30, 1994: ................................................... 20
Schedule VIII - Valuation and Qualifying Accounts ................................... 21
Schedule IX - Short-Term Borrowings ............................................... 22
*Incorporated by reference from the indicated pages of the 1994 Annual Report
to Stockholders.
Financial Statement Schedules not included in this Form 10-K Annual Report
have been omitted because they are not applicable or the required information
is shown in the consolidated financial statements or notes thereto.
19
20
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES
To the Board of Directors
of KLA Instruments Corporation
Our audits of the consolidated financial statements referred to in our
report dated July 26, 1994, appearing on page 24 of the 1994 Annual Report to
Stockholders of KLA Instruments Corporation (which report and consolidated
financial statements are incorporated by reference in this Annual Report on
Form 10-K) also included an audit of the Financial Statement Schedules listed
in the index on page 19 of this Form 10-K. In our opinion, these Financial
Statement Schedules present fairly, in all material respects, the information
set forth therein when read in conjunction with the related consolidated
financial statements.
Price Waterhouse LLP
San Jose, California
July 26, 1994
20
21
SCHEDULE VIII
KLA INSTRUMENTS CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END OF
DESCRIPTION OF PERIOD EXPENSES DEDUCTIONS PERIOD
----------- ------------ ----------- ---------- -----------
YEAR ENDED JUNE 30, 1992
Provision for loss on
investments $ 3,108,000 $ 333,000 $ - $ 3,441,000
============ ============ ========== ============
Allowance for doubtful
accounts $ 641,000 $ 1,011,000 $ - $ 1,652,000
============ =========== ========== ============
YEAR ENDED JUNE 30, 1993
Provision for loss on
investments $ 3,441,000 $ 94,000 $ - $ 3,535,000
============ ============ ========== ============
Allowance for doubtful
accounts $ 1,652,000 ($ 183,000) $ - $ 1,469,000
============ ============ ========== ============
YEAR ENDED JUNE 30, 1994
Provision for loss on
investments $ 3,535,000 $ - $ - $ 3,535,000
============ ============ ========== ===========
Allowance for doubtful
accounts $ 1,469,000 $ 285,000 $ - $ 1,754,000
============ ============ ========== ============
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SCHEDULE IX
KLA INSTRUMENTS CORPORATION
SHORT TERM BORROWINGS
MAXIMUM AVERAGE WEIGHTED
WEIGHTED AMOUNT AMOUNT AVERAGE
BALANCE AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE
AT END OF INTEREST DURING THE DURING THE DURING THE
DESCRIPTION PERIOD RATE PERIOD PERIOD 1 PERIOD 2
- - ----------- ----------- -------- ------------ ------------ ------------
YEAR ENDED JUNE 30, 1992
Notes Payable3 $4,957,000 6.72% $ 8,345,000 $5,705,000 7.77%
========== ============ ==========
YEAR ENDED JUNE 30, 1993
Notes Payable4 $2,532,000 4.51% $ 7,742,000 $3,651,000 5.82%
========== ============ ==========
YEAR ENDED JUNE 30, 1994
Notes Payable5 $4,673,000 4.10% $ 6,770,000 $2,958,000 4.95%
========== ============ ==========
_________________
1The average borrowings were determined based on the amounts outstanding at
each month-end.
2The weighted average interest rate during the year was computed by dividing
the interest expense on these borrowings by the average short-term
borrowings outstanding during the year.
3Short-term borrowings at June 30, 1992 include $1.3 million local currency
borrowings by one of the Company's foreign subsidiaries under the Company's
$15 million multicurrency line of credit and $3.7 million of local currency
borrowings by certain of the Company's foreign subsidiaries.
4Short-term borrowings at June 30, 1993 include $1.2 million local currency
borrowings by one of the Company's foreign subsidiaries under the Company's
$15 million multicurrency line of credit and $1.4 million of local currency
borrowings by certain of the Company's foreign subsidiaries.
5Short-term borrowings at June 30, 1994 include $4.2 million local currency
borrowings by one of the Company's foreign subsidiaries under the Company's
$10 million multicurrency line of credit and $0.5 million of local currency
borrowings by certain of the Company's foreign subsidiaries.
22
23
INDEX TO EXHIBITS
(I) EXHIBITS INCORPORATED BY REFERENCE:
3.1 Certificate of Incorporation, as amended11
3.2 Bylaws, as amended8
4.3 Rights Agreement dated as of March 15, 1989, 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 form of Summary of Rights to Purchase Common
Stock2
10.15 Statement of Partnership to Triangle Partners dated April 12, 19833
10.16 Lease Agreement and Addendum thereto dated January 10, 1983, between
BBK Partnership and the Company3
10.18 Purchase and Sale Agreement dated January 10, 1983, between BBK
Partnership, Triangle Partners and the Company3
10.23 Research and Development Agreement, Cross License and Technology
Transfer Agreement and Agreement for Option to License and Purchase
Resulting Technology, all dated February 21, 1985, by and between
KLA Development No. 3, Ltd., and the Company4
10.24 Research and Development Agreement dated February 21, 1985, by and
between KLA Development No. 3, Ltd., and the Company4
10.25 Agreement for Option to License and Purchase Resulting Technology
dated February 21, 1985, by and between KLA Development No. 3,
Ltd., and the Company4
10.33 (Research and Development) Agreement dated as of February 1, 1987, by
and between IBM Corporation and the Company5
10.35 Research and Development Agreement, Cross License and Technology
Transfer Agreement and Agreement for Option to License and Purchase
Resulting Technology, all dated September 30, 1986 and between
KLA Development No. 4, Ltd., and the Company5
10.43 Amendment to the Exclusive Marketing Agreement dated February 23,
1989, by and between Micrion Limited Partnership and the Company6
10.44 Bank Loan Guarantee dated June 29, 1989, by the Company in favor of
The First National Bank of Boston for the Micrion Limited
Partnership6
10.45 Distribution Agreement, dated July 1990, by and between Tokyo Electron
Limited, a Japanese Corporation, and the Company7
10.46 Principal facility Purchase Agreement dated July 1990, including all
exhibits and amendments; Lease Agreement, Termination of Lease,
Lot line adjustment, rights of first refusal, Deeds of Trust7
10.47 Joint Venture Agreement between the Company and Nippon Mining Company,
Limited, dated September 18, 19908
10.48 Exercise of Option to Purchase Technology made effective as of
September 30, 1989, by and between KLA Development No. 3, and the
Company8
10.49 Exercise of Option to Purchase Technology made effective as of January
1, 1990, by and between KLA Development No. 4, and the Company8
10.51 Guarantee Agreement between First National Bank of Boston and the
Company, dated June 29, 19898
10.52 Amendment to the Guarantee Agreement between First National Bank of
Boston and the Company, dated April 19, 19918
10.53 Secured Installment Note between Micrion and First National Bank of
Boston, dated April 19, 19918
10.54 Micrion Corporation Series E Preferred Stock Purchase Agreement,
dated September 13, 19918
10.55 Micrion Corporation Guaranty and Warrant Agreement, dated December 8,
19898
10.57 Stock repurchase and option grant agreement between Bob Boehlke and
the Company, dated April 22, 19918
10.58 Purchase Agreement between the Company and Ono Sokki Co., Ltd., dated
October 18, 1991 with
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certain portions for which confidential treatment has been
requested, excise9
10.59 Credit Agreement between Bank of America NT & SA and the Company,
dated November 15, 1991, as amended July 29, 19929
10.60 Employment agreement between the Company and Kenneth L. Schroeder
dated October 4, 19919
10.61 Amendment of Credit Agreement between Bank of America NT & SA and
theCompany, dated October 28, 199210
10.62 Amendment of Credit Agreement between Bank of America NT & SA and
the Company, dated December 31, 199210
10.63 Amendment of Credit Agreement between Bank of America NT & SA and
the Company, dated February 28, 199310
10.64 Amendment of Credit Agreement between Bank of America NT & SA and
the Company, dated March 31, 199310
10.65 Amendment of Credit Agreement between Bank of America NT & SA and
the Company, dated June 1, 199310
10.69 1982 Stock Option Plan, as amended by the Board of Directors on
July 20, 199012
10.70 1981 Employee Stock Purchase Plan, as amended by the Board of
Directors on July 20, 199013
10.71 1990 Outside Directors Stock Option Plan14
10.72 1993 Employee Stock Purchase Plan, as amended by the Board of
Directors on September 14, 1992.15
(II) EXHIBITS INCLUDED HEREWITH:
10.66 Amendment of Credit Agreement between Bank of America NT & SA and
the Company, dated December 31, 1993
10.67 Amendment of Credit Agreement between Bank of America NT & SA and
the Company, dated March 31, 1994
10.68 Credit Agreement between Bank of America NT & SA and the
Company, dated April 30, 1994
13 1994 Annual Report to Stockholders. This Annual Report shall not be
deemed to be filed except to the extent that the information is
specifically incorporated by reference
21 List of Subsidiaries of KLA Instruments Corporation
23.1 Consent of Independent Accountants
____________________________________________________________
1Filed as the same exhibit number as set forth herein to Form S-8, File
No. 33-15784, effective August 2, 1987
2Filed as exhibit number 1 to Form 8-A, filed effective March 23, 1989
3Filed as the same exhibit number as set forth herein to Registrant's
Form 10-K for the year ended June 30, 1983
4Filed as the same exhibit number as set forth herein to Registrant's
Form 10-K for the year ended June 30, 1985
5Filed as the same exhibit number as set forth herein to Registrant's
Form 10-K for the year ended June 30, 1987
6Filed as the same exhibit number as set forth herein to Registrant's
Form 10-K for the year ended June 30, 1989
7Filed as the same exhibit number as set forth herein to Registrant's
Form 10-K for the year ended June 30, 1990
8Filed as the same exhibit number as set forth herein to Registrant's
Form 10-K for the year ended June 30, 1991
9Filed as the same exhibit number as set forth herein to Registrant's
Form 10-K for the year ended June 30, 1992
10Filed as the same exhibit number as set forth herein to Registrant's
Form 10-K for the year ended June 30, 1993
24
25
11Filed as the same exhibit number to Registrant's registration
statement no. 33-51819 on Form S-3, dated February 2, 1994
12Filed as exhibit number 4.4 as set forth herein to Registrant's
Form 10-K for the year ended June 30, 1990
13Filed as exhibit number 4.5 as set forth herein to Registrant's
Form 10-K for the year ended June 30, 1990
14Filed as exhibit number 4.6 as set forth herein to Registrant's
Form 10-K for the year ended June 30, 1991
15Filed as exhibit number 4.7 as set forth herein to Registrant's
Form 10-K for the year ended June 30, 1993
25