Good afternoon. My name is Amanda and I will be your conference operator today. At this time, I would like to welcome everyone to the KLA-Tencor Fourth Quarter Fiscal Year 2012 Conference Call. [Operator Instructions] I would now like to turn the call over to Mr. Ed Lockwood of KLA-Tencor Investor Relations. You may begin your conference.

Thank you, Amanda. Good afternoon, everyone, and welcome to KLA-Tencor's fourth quarter fiscal year 2012 earnings conference call. Joining me on our call today are Rick Wallace, our President and Chief Executive Officer; and Mark Dentinger, our Chief Financial Officer. We're here today to discuss fourth quarter results for the period ended June 30, 2012. We released these results this afternoon at 1:15 p.m. Pacific Time. If you haven't seen the release, you can find it on our website at www.klatencor.com or call (408) 875-3600 to request a copy. A simulcast of this call will be accessible on demand following its completion on the Investor section of our website. There, you'll also find a calendar of future investor events, presentations and conferences, as well as links to KLA-Tencor's SEC filings, including our annual report on Form 10-K for the year ended June 30, 2011, and our subsequently filed 10-Q report. In these filings, you'll also find descriptions of risk factors that could impact our future results. As you know, our future results are subject to risks. Any forward-looking statements, including those we make on this call today, are subject to those risks, and KLA-Tencor cannot guarantee those forward-looking statements will come true. Our actual results may differ significantly from those projected in our forward-looking results. More information regarding factors that could cause those differences is contained in the filings we make with the SEC from time to time, including our fiscal year 2011 Form 10-K and our current reports on Form 8-K. We assume no obligation and do not intend to update these forward-looking statements. However, you can be assured any updates we do provide will be broadly disseminated and available over the web. With that, I'll turn the call over to Rick.

Thanks, Ed. Thank you, all, for joining us for our call today. Given that we provided a thorough update just 2 weeks ago at SEMICON West, I'll focus my commentary today on summary highlights of our results and provide guidance for September. Then Mark will follow with a more detailed review of the Q4 and fiscal year '12 financials. Let's begin with a quick review of Q4. Gross bookings for the June quarter were $827 million, slightly down from March. Foundry was 65% of semiconductor system orders in Q4, continuing the strong foundry demand trend over the past several quarters. Logic was steady at 20% and memory was 15% of new orders. June quarter revenue grew 6% to a revenue record $892 million, coming in at the upper end of the range of guidance. And non-GAAP earnings per share was $1.49 in Q4. Our EPS was above the range of guidance, partially due to a 19% tax rate for the quarter. If our tax rate had been 26% as expected, our EPS would have been $1.36 at the high end of the range of guidance. Mark will provide more detail on this tax commentary. Finally, cash flow from operations was $273 million in Q4. We were active in returning value to stockholders, repurchasing 1.35 million shares in the quarter for $67 million and of course, paying our regular quarterly dividend. Also, as we announced on July 10, our Board of Directors has authorized an increase in the level of the company's quarterly dividend of $0.40 per share. This is the fourth increase in the quarterly dividend level since it was first instituted in 2005 and reflects our confidence in the long-term outlook for the company. KLA-Tencor's strong performance in Q4 and for fiscal year 2012 showcases the company's market technology…

Thanks, Rick, and good afternoon, everyone. I'll note that we present our income statement in 2 formats, one under U.S. GAAP and the other in a non-GAAP format, which excludes amortization and write-down of intangible assets associated with acquisitions, restructuring-related charges and credits and any cost of credits which are outside of our core operations including unusual tax items. There was a $0.03 per share difference between this quarter's GAAP and non-GAAP earnings. Our balance sheet and cash flow statements are presented in GAAP format only. Most of my prepared remarks on operations will refer to non-GAAP information, but where I mention GAAP numbers, I'll make the distinction. A reconciliation of our GAAP to non-GAAP income statement is attached to our press release and available at our website. Q4 new orders were $827 million, down slightly from $833 million in Q3. Net orders were $787 million, down about 4% from last quarter. The regional distribution of new systems orders and the quarter-to-quarter change in distribution were as follows: the U.S. was 26% of new systems orders in Q4, up from about 22% in the March quarter; Europe was 3% of new systems orders, down from 8% in Q3; Japan was 6%, down from 11% last quarter; Korea was 8%, down from 39% last quarter; Taiwan was 55%, up from 13% last quarter; and the rest of Asia was 2%, down from 7% in Q3. The distribution in new orders by product family and the quarter-to-quarter change in distribution were as follows: wafer inspection was 48% compared with 54% last quarter; reticle inspection was 9%, up from 6% last quarter; metrology was 22%, up from 19% in the prior quarter; solar, storage, LED and other non-semi was 3%, down from 4% last quarter; and service was 18% of new orders in…

Okay. Thank you, Mark. At this point, we'd like to open up the call to Q&A and we do once again request that you limit yourself to one question given the limited time we have for today's call. Feel free to re-queue for your follow-up your questions and we'll do our best to give everyone a chance for follow-ups in today's call as time permits. So Amanda, we're ready for your first question.

[Operator Instructions] Your first question comes from the line of Satya Kumar with Credit Suisse. Satya Kumar - Crédit Suisse AG, Research Division: I was wondering if you could give a sense of what the order mix by segment would look like in the September quarter? And at this time, if you have any thoughts on how the orders would shape up for December with a view on trying to get a sense is there a smooth track up close into [ph] the sort of revenue this year?

Satya, yes, it's Rick. Memory forecast is not that different, percentage-wise. We think probably about 17% of orders is what we're currently looking at. Logic, down a little, 15% off of the 20% for the quarter we just finished. And it looks like foundry would be about 68%. So that's how we're currently modeling it, not a big change. As far as the rest of the year, and it's very hard, we don't guide out for the December quarter, but we do see the overall picture softening, as we said in our guide, for the September quarter and then we'd expect some resumed investment coming back in the December quarter as we talked at SEMICON West.

Your next question comes from the line of Terence Whalen with Citi.

This question is a little bit of a qualitative commentary on how you see your customer's behavior changing. It certainly feels a lot like last year in terms of the 3Q order pause. And if I think about last year, that order pause in some ways got us into the 20-nanometer shortage that we experienced in the first half of this year. I wanted to understand, do you observe your customers responding any differently to macro uncertainty this year around versus last year around, especially considering some of the foundry shortages that we experienced so far this year?

Terence, it does have that feeling. It does look pretty similar. I think it is perhaps for different causes, but a similar sense of headwinds that are causing, I think, the pause that we're seeing from our customer base. Whether that will result in any shortages, it's very hard to tell. I can say that as our customers work on 28, they haven't made progress. They haven't made it as fast as they'd hoped, and there are plenty more challenges. And the early look at 20, makes it look even more challenging than what they experienced in 28. So I don't know if it will create shortages or not, but I do see some conservative behavior on our customer base in the short term.

Your next question comes from the line of C.J. Muse with Barclays.

I guess I was hoping, I guess first off, to get what your ending backlog and deferred revenues were for June? And what I'm getting at is that it seems like your revenues are a little bit light for September, so curious if you're building backlog or what's going on there?

Yes, the ending backlog, C.J., was $1.2 billion, about $300 million in revenue backlog and about $900-million-plus in shipped backlog. And if I could just scroll forward to see what the deferred revenue was, the ending position in deferred revenue, well there's about $150 million deferred systems profit, which is a netted down number. You can probably gross that up against our average gross margins and figure that there's at least $450 million to $500 million in, if you will, true deferred revenue related to systems business. That's a rough approximation.

Your next question comes from the line of Raj Seth from Cowen.

Rick, I'm curious, will the followers in the foundry space likely have the same inspection intensity as we saw at TSM, the leader, or do they in some way benefit by following and maybe learn an industry sense from the leader and is the trailblazer in any way disadvantaged?

Raj, that's a good question. I wouldn't -- history would not necessarily play that out. I do think it's a function of experience on advanced nodes. I think it's a function of the exact process people are running and the experience they've had with prior nodes but we have seen more variation, I would say, across different companies in terms of intensity than you might expect given the notion that the first guy might trail-blaze it. It just hasn't worked that way. And in some cases, you get followers later in the cycle that invest more heavily, and there are dependencies on process, which do change. And philosophy, frankly, there are some customers that might orient themselves more toward a certain kind of inspection tool based on the philosophy that they have. And the result varies as we go across the board. And even from customers from cycle to cycle, it can vary, too, the same players.

Your next question comes from the line of Krish Sankar with Bank of America Merrill Lynch.

This is Thomas Yeh calling in for Krish. I just wanted to get a bit more granularity into your outlook. ASML recently said that foundry spending should moderate near-term, which is in line with what you guided, but they also said they expect 20-nanometer production to start ramping at foundry starting in mid-2013. Can we get your sentiment on the timing around that and just what confidence do you have in the improvement in the order trajectory after September?

Well, I think that it's always hard to predict as we look out, because as you know, we're subject to many factors, not the least of which is uncertainty in the macro environment, which does influence our customer's behaviors. But relative to the technology, I think a lot of confidence that the investment that we saw in 28 will be followed with increased investment on 20 and we get that from 2 ways: one, when we look at the process itself and identify the exact number of inspection points and the tools that will be needed and the throughputs associated with those and how we model the factory, we do a pretty good job of modeling that. But we also have some experience now on 20 and even sub-20 of what people are seeing in their comfort level with the information that they have and how they're pushing us for later generation tools. So exact timing is always hard to predict in this industry as you know, but we're certainly seeing early indications on 20 that we think there'll be a lot of pressure on the inspection and measurement space in terms of opportunity and installation at increased number of layers with increasing complex -- complexity in their process and in our tools. I can't speak to the exact timing, but even in historically slow periods, our customers tend to move forward on technology.

And your next question comes from the line of Mark Heller with CLSA.

First, a clarification. I'm just wondering if you still expect, I think at SEMICON West you'd indicated orders for the calendar year to be down only slightly, and so I'm just wondering if that's still the case? And I'm also wondering if you could comment on sort of customer behavior since SEMICON West. Has it gotten sort of softer or is it sort of fairly consistent?

Right. We updated our guide for the year for CapEx, was I think many people had going in to West or prior to that, the last update was flattish. And I think along with others, what you'd now see us modeling the year to be down 10% to 15%. We, however, will outperform that as we model our revenue going forward, which is really the right metric against industry CapEx. And so we anticipate, given our view of the quarter we just guided and in general, the overall expectations for the year that, that will continue. As to whether it's gotten worse since SEMICON West, I don't think so. I think it's in line with what we saw. There were many -- and what came up with this down 10% to 15% were -- have been, I guess, further confirmation of that. But on the other hand, there has been increased conversation about '13, which has been more positive. So I feel reasonably confident that what we're seeing is a softening or a pause and we'll see resumed growth. I think the caveat in all this, the obvious caveat is the macro, which nobody really has a good way to predict at this point.

Your next question comes from the line of Christopher Blansett with JPMorgan. Christopher Blansett - JP Morgan Chase & Co, Research Division: Rick, I had a question related to your -- within the product mix outperformance, underperformance. Where do you see that with this 28-nanometer foundry node and what different types of equipment are really being adopted at a faster rate or I guess more aggressively to enable that?

I think if you look at some of the material we talked about in SEMICON West, we gave an example of our leading edge brightfield tool, the 29xx, which we were seeing ramping up in the first 4 quarters, approximately 3x the revenue of the prior 4 quarters compare for the prior generation. And you know, really that was an example in the inspection space. We have seen similar -- a better way [ph] for a similar push on new technology. I think that the other end of the spectrum is on metrology and a good example there would be what happened with our overlay tool, the one the optical metrology Archer tool, and that has really had strong demand for that and we have a very strong position in that product line. That's driven heavily by multi-patterning. I think an area where you've seen less performance in general would be in an area like reticle inspection, and that has been driven largely by the fact that there's a lot of capability when we introduced our latest generation. We really have served that market well with that product. But due to the -- its capability and capacity, we have not seen subsequent demand increasing in line with what we've seen for the tools that are directly in the fab line. The other area I would say has been slower, has been associated with directly with wafer manufacturing, where wafer guys went through a heavy investment phase and are -- still have still not worked off all the capacity that they had. So in that area, we are more like people that are selling directly into -- associated with the process equipment in terms of ramping with capacity. So our strength has really been in the product lines that are more tied to the complexity of manufacturing process directly and less with things like reticle and bare wafer.

Your next question comes from the line of Vishal Shah with Deutsche Bank.

Rick, I wanted to just understand, in your foundry segment revenues or bookings, what percentage of those bookings or revenues would be associated with either 28-nanometer or capacity buyer then what percentage would be 20-nanometer technology buyer?

Well, that's a good question. I'd say that at this point, probably 75% are associated with 28, maybe 80% 28 and some is on the -- the rest would be on the development associated with 20. But there is somewhat of a blurring in that because there -- it is true that they might buy them for 20-nanometer development, but be utilizing them in 28. But I'd say right now, we're probably somewhere along that split.

Your next question comes from the line of Jagadish Iyer from Piper Jaffray.

Rick, you talked about outperformance. How much was related to the spending mix for this year and how much was really share gain?

Well, I think that the mix certainly, being in foundry and having a strong footprint of foundry has been a good place to be, and I believe will be a good place to be as we go forward. Also, we're strong in logic, the place where we had struggled would be in the place that's not been investing heavily and where we have not performed as well. Although we have very strong indications, technology buys and memory are -- will come our way when they happen. I do think there's been some share gain in some product lines in particular like in medium review [ph] where we've brought on really a strong product line and I think clearly have the best product in the market today. We're definitely seeing benefit from that. So I think it's a combination. But I would say, 70% associated with the fact that our core business in foundry continues to expand through adoption and then maybe 30% of our gains have been associated with market share.

Your next question comes from the line of Ben Pang with Caris & Company. Benedict Pang - Caris & Company, Inc., Research Division: In terms of the reticle inspection, I think you commented on an answer to an earlier question, the capability is already sufficient for the 20-nanometer. Does the additional overlay steps, does that drive any additional capacity requirements for reticle inspection?

Not as much. And partly is, a lot of those design rules are not -- they're not as advanced. And so part of what you get away with multi-patterning is, you don't push as much on the very leading edge. So we do have capacity with 6xx. And part of the capabilities of 6xx has been EUV-related and there are some customers that purchased for that, and that development has been slower than our customers anticipated. So there's just been less in terms of EUV. But, no, the -- most of the benefit of multi- patterning goes towards our overlay business as opposed to toward our reticle business.

[Operator Instructions] Your next question comes from the line of Mahesh Sanganeria with RBC Capital Markets.

Rick, I just want to follow-up on that, on the EUV. I know the industry is focused entirely on the power, but I suppose there are lots of challenges with the mask of blank operation and you have the advantage of looking at the masks through your inspection -- relevant inspection tools. Do you have a sense of where the industry is in terms of mask, defect rate for mask? And could that be an issue in adoption of EUV?

I think that there's no question that right now, most of the energy is focused, as you said, on power and throughput and getting the run rate of the EUV scanners up. There is progress that's been made, but of course a lot more progress has to go. I have been saying for some period of time that I think then we will get into the next challenge, which is contamination-related in the entire sense, not just what happens in the reticle but the entire system. And there's going to be a lot of work to do there But frankly, right now, it's kind of hard. You have to do one before the other. And I think that there is going to be a learning curve associated with it, which is why I do think that the production volume of EUV will be delayed as a result of some of those challenges, the technical challenges. But I -- there's nothing, showstopper-wise, that I have heard of anyone seeing on the contamination work, which is a lot of work, and I don't want to minimize it by saying it's just engineering, but there's a lot of work that has to go into it because I think the more fundamental challenge is going to be associated with power. We do expect the reticle opportunity to be significant, but at this point delayed because of the challenges with ramping EUV.

And your last question comes from the line of Mehdi Hosseini with Susquehanna International.

Rick, I'm looking at the -- your booking guidance for the past couple of quarters. And for the March and June quarter, you have been coming at the low end. I'm just wondering, is that because your foundry customers have consolidated and there is only, maybe one or very few that have been able to ramp 28? Or is there something else that is impacting your forecasting? And I have a follow-up.

Yes, I wouldn't want to drive a trend line through 2 points. I'd take it back to December last year where we missed wildly on the other side. We were up 85% and we guided way under that. I think it speaks a little bit more to the challenge associated when you have, maybe to your point, you have a smaller number of customers. And I think in many cases, they don't even know and so they make decisions very late in the process as they are moving things around to try to figure out where they have needs and what the time frame is for those needs. So I wouldn't draw any conclusions where we back up from and look at how are we doing relative to the overall industry and we're pretty happy with our performance. I would say it is true. If you want to find an area of criticism, our forecasting accuracy is not very good, but we also don't think it's an area that is of particular value in terms of long-term success with the company. So we don't tend to run it on our ability to accurately forecast. We're still building backlog and we're still supporting the needs of our next-generation products and customers.

That's fair. And then I think I may have missed it, what did you comment or what did you say about booking trend into the December quarter?

Well, we anticipate a strengthening out of September for a couple of reasons. One, this is an area we do have some history on. As 8 out of 10 years, we do tend to see a softening in the September quarter followed by strength in December. And then as we talk with our customers, there seems to be a narrative around the overall industry dynamic that would support that, that we would see increase. And if you go back to last year, that was when we had -- we finished the second half of the year basically where we thought, but certainly not how we thought in terms of September, is very soft followed by an outstanding quarter in December. So it's those trends, and then we just -- you do bottoms up and you see all the projects that are on the books and what people are talking about. And that's kind of how it works out for us.

We have one further question from Satya Kumar, Credit Suisse. Satya Kumar - Crédit Suisse AG, Research Division: Just wondering if there was any pre-bookings, cancellations or backlog adjustments in the June quarter? And in following up to C.J.'s question earlier on, when I go back and look at quarters where your orders have declined, in some occasions, the backlog goes down and the revenue guidance is a bit higher and in some occasions it's not. And I guess the surprise here is that the September revenue guidance is a bit below where people thought. Could you provide a little bit more clarity as to how to think about that?

Yes. Satya, I can take the question on the revenue guidance for September. You actually have to go deal by deal, and I would emphasize that, what the business emphasis inside the company is getting orders in, getting the orders shipped, getting installations done and making sure that the customer's set with the tool. And once we get all of those things done, the revenue recognition process moves to a different side of the house, including the finance side of the house, and goes through customer acceptance, sign-offs and another set of processes, which doesn't always follow necessarily linearly the booking and the shipment rhythm of the company. It's close, so if you look at it over a long period of time, sooner or later, the revenue passes through the system. But it is, I would emphasize, it is a different process and you can't necessarily draw those correlations, at least very, very tightly quarter-to-quarter. So we go through and basically do a bottoms up forecast. We know what we've taken in for orders over the last 2 to 3 quarters. We know what is shipped over the last 1 to 2 quarters, and we take all of that information and go on a case-by-case basis, what do we expect to turn to revenue, but the exact timing of when it turns to revenue is a function of when the customer does his final sign-off and so on and so forth. So I wouldn't read too much into it. But the revenue range that we did give, it's a penciled-out detail analysis of exactly what we think will turn in September. And by the way, as you know, because some of the average selling prices of our tools are pretty big, a few going either way can change the outcome.

Satya, just to add a little color for you. Mark did allude to and said that we did have some de-bookings, if you will. And your question on that, I'll tell you what -- how that works, is one of the -- it's related to EUV because some of the capability we have for EUV, as I've mentioned before on blank, is in our Teron tools. And when a tool delivery gets pushed out beyond the 12-month horizon even though there's customer interest in demand and a desire to get it, we then take it out of the system. And that's what we saw and that's a fairly sizable -- we're very confident the customer wants it, but frankly, based on their initial modeling and demand for EUV and what they're seeing now, they don't feel compelled to get additional capacity. They already have some capacity. But the EUV ramp is going slower than they anticipated, so as a result, we make an adjustment, and that's part of what the change in backlog by the gross bookings and the net bookings were different. So that there's this specific example on a delay we're seeing in our customers on EUV.

And you can do the backwards math, that for the selling price of the tool, that's about most of the adjustment in the backlog. Satya Kumar - Crédit Suisse AG, Research Division: And that's one tool, right?

Yes.

And presenters, we have a few follow-up questions. The first is from the line of Patrick Ho, Stifel, Nicolaus. Patrick J. Ho - Stifel, Nicolaus & Co., Inc., Research Division: Rick, in terms of the outlook for September in orders and your projected uptick in December, could you just give a little color in terms of, do you see the decline in September being kind of offset by the same uptick in the December quarter? Or is it a magnitude, just kind of depend on when the customers come back?

Well, Patrick, as we said, we have enough trouble guiding 1 quarter, let alone 2. But that being said, I don't think that's an unfair way to characterize it. But I might've said that a year ago and been very wrong on December. It very much goes to our customers' behavior around our equipment tends to be more volatile than it might be about process equipment because of their perceived need. Patrick J. Ho - Stifel, Nicolaus & Co., Inc., Research Division: Okay, fair enough. Just looking at big picture and just some of the industry trends that we've talked a lot about EUV 450 out there, advanced wafer level of packaging. What are some of the opportunities you see for process control in that emerging market place?

Yes, a great question. We have a business there where we're seeing good performance out of that. That's in the business we acquired a few years ago, ICOS, where we do participate in that business and we have seen some strength recently, and I think there is some good opportunity for that for us going forward. There are some other opportunities, technology-wise, that are under investigation where there are technical challenge, but it's not as evident as if they provide a really sustained business opportunities for us such in things like TSV for inspection and measurement. But definitely, in general around packaging, we have good performance there.

And your last question comes from the line of C.J. Muse with Barclays.

Curious on the foundry side, and I know it's going to be hard to predict, but I was hoping to get your sense of where are we in 28 for you guys, and maybe you want to talk baseball speak, what inning?. And then, how you see 20 adoption in 2013? And I guess as part of that, what the linearity could look like. Would it be similar to what we've seen with the last 2 years, front-half loaded or I guess, what are your conversations today suggesting?

So I'm going to turn to football, C.J. because -- I'll tell you the conversations. We try to break it down like that, but I'll give you another way we're talking to our customers about it. We don't have that many big customers at this point and the conversation we have often is around 2013 and a lot of them recently, because of their frustration with not getting deliveries from us, have been talking very clearly about what they believe their needs are going to be in 2013 relative to 2012. And when we go through all that conversation, we feel pretty good about how 2013 looks. And for them, it's driven by whether it's by 28 final buildout or a 20 ramp. It's not as obvious exactly what the deployment is, but they are being very clear about what they think in terms of the kind of tools, the number of tools and the timing of those tools. And so, I would say that if they then were to map it on to 28 versus 20, that's something they're doing. The conversations they're having with us are actually -- are at a higher level, and it goes something like, "We really need you to continue to support us as you have this year and we just want to give you a heads-up. We believe next year will be strong or stronger in many cases, when we look at it and we think the timing over the next year will give you more clarity when we get it." But those are more of the conversations we have with them. It gets less about the specific timing and the phase of their node. Does that make sense?

Yes. No, actually that's very helpful.

And we have no further questions at this time. I'll turn the call back over to the presenters for any closing remarks.

Well, thank you, Amanda. And we'd like to thank everyone for joining us this afternoon and for your continued interest in KLA-Tencor.

This concludes today's conference call. You may now disconnect.