Ed Lockwood - Senior Director, Investor Relations Richard P. Wallace - President, Chief Executive Officer & Director Bren D. Higgins - Chief Financial Officer & Executive Vice President

Timothy M. Arcuri - Cowen & Co. LLC Harlan L. Sur - JPMorgan Securities LLC Krish Sankar - Bank of America Merrill Lynch C.J. Muse - Evercore ISI Romit J. Shah - Nomura Securities International, Inc. Mehdi Hosseini - Susquehanna International Group Mahesh Sanganeria - RBC Capital Markets LLC Edwin Mok - Needham & Co. LLC Jagadish Iyer - Redstone Technology Research Patrick J. Ho - Stifel, Nicolaus & Co., Inc. Farhan Ahmad - Credit Suisse Securities (USA) LLC (Broker) Mark J. Heller - CLSA Americas LLC Stephen Chin - UBS Securities LLC

Good afternoon. My name is Connor and I'll be your conference operator today. At this time, I would like to welcome everyone to KLA-Tencor's Fourth Quarter Fiscal Year 2015 Earnings Conference Call. Thank you. Ed Lockwood with KLA-Tencor Investor Relations, you may begin your conference. Ed Lockwood - Senior Director, Investor Relations: Thank you, Connor. Good afternoon, everyone, and welcome to our conference call. Joining me on our call today are Rick Wallace, our President and Chief Executive Officer; and Bren Higgins, our Chief Financial Officer. We're here to discuss fourth quarter results for the period ended June 30, 2015. 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.kla-tencor.com or call 408-875-3000 to request a copy. A simulcast of this call will be accessible on demand following its completion on the Investor Relations section of our website. This quarter we prepared a brief slide presentation to supplement our earnings call including a reconciliation of our GAAP and non-GAAP financial measures. These slides can be found on KLA-Tencor's Investor Relations 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, 2014, and our subsequently filed 10-Q reports. In those filings, you'll 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 that we make on the 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 statements. With that, I'll turn the call over to Rick. Richard P. Wallace - President, Chief Executive Officer & Director: Thanks, Ed. Thank you all for joining us for our call today. I'll focus my commentary on summary highlights of the quarter and our view of the demand environment in the second half of calendar year 2015, and provide guidance for the September quarter. Then Bren will follow with a more detailed review of the Q4 financials. KLA-Tencor executed well in Q4, delivering bookings and revenue just above the midpoint of guidance and non-GAAP earnings per share at the upper end of the guided range, reflecting our market leadership, strong gross margin performance, and focused cost discipline. New orders for June were in line with our expectations at $672 million, driven by stronger than expected demand from memory customers focused on 3D NAND capacity expansion which was offset by weaker logic and foundry orders in the quarter. Looking ahead to the overall industry demand environment for the second half of calendar 2015, memory investments focused primarily on 3D NAND capacity additions and is expected to increase and broaden out among the market leaders in the second half of the year. Capacity investment in DRAM is expected to moderate in the second half of the year, with customers focused on technology conversions and process migration. In foundry and logic, investment in the second half of the year is expected to be focused on FinFET capacity additions by the market leaders as well as incremental new capacity expansion for 28-nanometer foundry. However, uncertainty over the timing and magnitude of leading-edge capacity ramps for two major foundries continues to create headwinds for foundry CapEx and the remainder of calendar year 2015. With the recently announced reduction in logic CapEx budget for 2015, leading-edge logic investment is seen to remain at low level for the rest of the year. Our current expectation is for KLA-Tencor to begin shipping process control equipment for 10-nanometer development in the first half of calendar year 2016. For KLA-Tencor, our mission is to help our customers navigate the ever-changing landscape of increasing device complexity and yield challenges that accompany each major node transition. The focus of our strategy is on a long-term revenue growth objective of 5% to 7% per year, driven by leading technologies and differentiated solutions, and fueled by a high level of R&D investment in one of the industry's leading business models. At SEMICON West this year, we discussed some of the structural changes we have implemented in our global organization to streamline our go-to-market strategies, and focus product development efforts on the best opportunities in pursuit of these strategies. We expect these actions to begin to produce results over the next few quarters. And we plan to receive initial orders for our latest generation flagship optical inspection platform and see the benefit of our recent OpEx reductions reflected in our earnings in the second half of fiscal year 2016. Turning now to our outlook for the first quarter of fiscal year 2016. We expect September quarter bookings to be in the range of $450 million to $650 million. Guidance for revenue in the September quarter is in the range of $595 million to $655 million and non-GAAP earnings per share is projected to be in the range of $0.46 to $0.66 in the quarter. With our current backlog and the anticipated order profile for the second half of the year, we expect bookings shipment and revenue growth to resume in the fourth quarter of calendar year 2015. And with that, I'll turn the call over to Bren Higgins for his review of the numbers. Bren D. Higgins - Chief Financial Officer & Executive Vice President: Thanks, Rick, and good afternoon. My remarks today will focus on highlights of the financial results for Q4, my perspective on current trends in the marketplace, and our outlook for the second half of calendar year 2015. Revenue for Q4 was $756 million above the midpoint of guidance and fully diluted GAAP earnings per share was $0.89. Non-GAAP earnings per share finished the quarter at the top end of the guided range in $0.99 per share. In our press release and in our supplemental financial data accompanying our results, you will find a GAAP to non-GAAP reconciliation of the difference in EPS of $0.10. My comments on the quarter will be focused on the non-GAAP results which exclude the adjustments covered in today's press release. Turning now to customer segment commentary for the June quarter. New orders in Q4 were $672 million, also above the midpoint of the guided bookings range for the quarter of $550 million to $750 million as we saw strength in NAND flash orders in the period. Memory was 62% of new system orders in June, up strongly on a sequential basis both in terms of percentage of total orders and absolute dollars compared with the March quarter. Memory demand in the June quarter featured strong NAND flash demand with orders from multiple customers supporting 3D NAND expansion projects highlighting the results. Foundry demand was 33% of new orders for Q4 and moderately below our expectations for the quarter. Logic was 5% of new orders in June, down sequentially and down compared with our original forecast. Turning now to the distribution of orders by product group. This breakdown by product group now reflects the new organization structure we introduced two weeks ago at SEMICON West. For the purpose of comparison, the wafer inspection group is largely comparable to the order breakdown previously categorized under the same name and the patterning group now includes both the former metrology and reticle inspection categories. In the fourth quarter of fiscal year 2015, wafer inspection was approximately 47%, patterning was approximately 24%, service was 27%, and non-semi was 2%. Total shipments in Q4 were $739 million and below the guided range, principally due to a delay in buyout timing of a high ASP leading-edge mask inspection system, changing customer requirements for sub-20-nanometer shipments to a foundry customer that occurred late in Q4, and an accident in a customer fab that led to shipment delays into the September quarter. Although current shipment backlog is strong at $984 million, the scheduled backlog is concentrated among a few customers who have recently been adjusting their scheduled delivery dates, impacting our visibility on a quarter-to-quarter basis and leading to shipment delays of tools originally expected to ship in the June and September quarters to later in our fiscal year. In total, we ended Q4 with over $1.2 billion of total backlog comprised of $984 million of shipment backlog, orders that have not yet shipped to customers and expect to ship over the six months to nine months, and $221 million of revenue backlog for products that have shipped and invoiced but have not yet been signed off by customers. Looking forward, we are modeling September quarter shipments in the range of $610 million to $690 million. Turning to the income statement. Revenue for the quarter was $756 million, up 2% sequentially compared with the March quarter and above the midpoint of guidance. We expect revenue in the range of $595 million to $655 million in the September quarter, driven by the lower shipments forecast resulting from certain customer shipment delays and timing of customer product acceptances required for certain tools in the quarter. Gross margin was 58.5%, a 150 basis point improvement compared with the March quarter, benefiting from a more favorable product mix and service mix than originally modeled. We expect gross margin to be in the range of 56% to 57% in September, largely a function of the lower expected revenue levels for the quarter but in the range of our targeted 60% to 70% incremental gross margin model. Total operating expenses were $214 million, down $4 million compared with the March quarter and down approximately $17 million on a year-over-year basis compared with the June 2014 level. Operating margin in the June quarter was 30.2%. The lower operating expense levels in Q4 reflected some of the benefit of the actions we have taken to adjust our global operations to match a consolidated customer environment, and to focus our R&D investments on our best opportunities, while maintaining our incremental operating margin model of 50% to 60%. As Rick mentioned, our long-term objective is to grow revenue in the range of 5% to 7% per year through cycle over the long-term with a focus on market leadership, strengthening our position in our core markets, and continuing to drive opportunities for growth in our service business. Accompanying that goal is the objective to grow operating income at twice the rate of revenue growth over time. Results of the June quarter demonstrate good cost discipline and strong execution towards our long-term profitability growth objective. Accordingly, we are currently forecasting a $2 million sequential decline in quarterly operating expense to the $212 million level in the September quarter. This would represent a $28 million reduction in operating expenses compared with the first quarter of fiscal year 2015 at similar revenue levels. Our effective tax rate was 21% in the quarter, in line with our long-term planning rate of 22%. In fiscal year 2016, you should continue to use 22% as a long-term planning rate for KLA-Tencor. The planning rate does not include any benefit from the R&D tax credit in the United States. In the event that this tax credit is extended, we'll modify our planning rate assumption. Finally, net income for the June quarter was $159 million or $0.99 per fully diluted share and we ended the quarter just under 160 million fully diluted shares outstanding. I'll turn now to the highlights from the balance sheet and our cash flow statement. Cash and investments ended the quarter at $2.4 billion, an increase of $47 million compared with March. Cash from operations was $317 million in the quarter, up $75 million sequentially over the March quarter and free cash flow was $308 million. In the quarter, we paid $80 million in dividends and repurchased $168 million of shares of our common stock in the period. We also made a supplemental payment beyond the required loan amortization of approximately $20 million towards our outstanding term loans in Q4. Additionally in July, we announced that our Board of Directors had authorized an increase in the level of our quarterly dividend to $0.52 per share, the seventh increase in our regular dividend since it was first instituted in 2005. We believe this reflects the board and management's confidence in our long-term growth strategies and target business model and is consistent with our ongoing focus of returning value and rewarding our long-term stockholders for their commitment to KLA-Tencor. With that, to reiterate, our guidance for the September quarter is bookings are expected to be within a range of $450 million to $650 million but our current view that the second half of calendar year 2015 is roughly flat with the first half, shipments of $610 million to $690 million, revenue between $595 million and $655 million, and non-GAAP EPS of $0.46 to $0.66 per share. This concludes our remarks on the quarter. I will now turn the call back over to Ed to begin the Q&A. Ed Lockwood - Senior Director, Investor Relations: Okay. Thank you, Bren. At this point, we'd like to open up the call to questions. We do once again request that you limit yourself to one question and one follow up, given the limited time we have for today's call. Please feel free to re-queue for your follow up questions and we'll do our best to give everyone a chance for follow-ups in today's call as time permit. So, Connor, we're ready for the first question.

Your first question comes from the line of Timothy Arcuri with Cowen & Co. Your line is open. Timothy M. Arcuri - Cowen & Co. LLC: Thanks a lot. I guess first thing, Bren, just to clarify something you just said. You said calendar second half flat with calendar first half. You mean shipments, is that right? So that would imply that shipments in December are like $800 million? Bren D. Higgins - Chief Financial Officer & Executive Vice President: No, I meant orders, Tim. Timothy M. Arcuri - Cowen & Co. LLC: Orders? Okay. Bren D. Higgins - Chief Financial Officer & Executive Vice President: The order profile for the second half of the year is in line with the first half of the year. Obviously, we're seeing the seasonal effects in September with strengthening. Timothy M. Arcuri - Cowen & Co. LLC: Okay. Then I guess just a big picture question for Rick. So I'm just looking back at, if I strip out the service number, if I just assume that service grows a bit and I look at just your systems revenue for September, it's as low as it's really ever been since the 2009 downturn. Nobody else is really anywhere close to that. So I guess from a strategic point of view, obviously, right now, you guys aren't super exposed to some of the 3D NAND things that are happening. And whenever in the past we've talked about maybe getting exposure to that area, maybe via partnership with a films company, at the time the argument was that you wanted to remain independent process neutral third-party. But does that logic hold anymore? Do you think that now given some of the changes in device architecture that maybe it does makes sense for a process control company to work together or merge or combine with a films company? Thanks. Richard P. Wallace - President, Chief Executive Officer & Director: I think there's definitely benefit in working closely with process equipment providers in terms of helping create products and processes and solutions that support some of the challenges customers face. But it's actually a pretty broad spectrum. I think that, as a company, we actually do partner with a number of players both in etch and dep, and have found ways to create value. I think that's very different than putting two companies together and so we still don't see the value or the strategic – the way you get the investment back if you were to pursue that path. So the M&A front hasn't changed but definitely there is interest in people using metrology and inspection to leverage their process equipment. And to your point, this is a very soft spot for us given the foundry and logic exposure we have and the fact that there's just not a lot of investment going on with those customers right now. We do anticipate that that will come back when we get into the 10-nanometer ramp which we think happens in calendar 2016 but certainly right now it's a soft spot for us. Timothy M. Arcuri - Cowen & Co. LLC: Okay, guys. Thanks so much.

Your next question comes from the line of Harlan Sur with JPMorgan. Your line is open. Harlan L. Sur - JPMorgan Securities LLC: Good afternoon. Thanks for taking my question. You talked about second half orders equivalent to first half orders. Last call, you articulated a view of shipments and revenue second half being relatively balanced. Based on your commentary today, it seems like second half is going be lower now even with December quarter inflection. So I guess first question is, is that a fair statement? And it sounds like most of this is foundry push-outs. So if you could just help us, is this more 14-nanometer, 16-nanometer FinFET push-outs or is it more the legacy 28-nanometer technology? Bren D. Higgins - Chief Financial Officer & Executive Vice President: Yeah, Harlan, it's Bren. Your assessment is correct. From an order perspective, we think it lines up fairly consistent with what we had seen last quarter. But certainly, shipments and revenue, we did have some sizable shipments that pushed out of the revenue forecast in the second half of the year for sub-20-nanometer foundry activity that is the largely responsible for the reduced outlook in terms of our views on shipments and revenue into the second half of the year. Harlan L. Sur - JPMorgan Securities LLC: Okay. And then your one large logic customer pushed out the timing of their 10-nanometer high volume production ramp by about a year. On the flipside, though, it does seem like the other two major foundry suppliers are still aggressively going to try and rollout 10-nanometer next year. How has this sort of changed your view on 2016, and the 10-nanometer contribution to the business? You mentioned 10-nanometer development tools shipping in the first half. Is this going to be more foundry or logic biased? Bren D. Higgins - Chief Financial Officer & Executive Vice President: I think it's a little early to call 2016 at this point. I mean, clearly, our view is, is that we'll see the 10-nanometer ramp again in the first half of the 2016, so you'll start to see activity there. Order timing is always a question in when you'd see those orders. On the logic side, we tend to get a little bit more lead-time than we do on the foundry. So in terms of how we're looking at how the shipments roll out, I think the shipments roll out largely consistent across both segments but it's a little bit early at this point. But I don't think our view is – we talked a lot about it at SEMICON a couple weeks ago, I don't think our views around 10-nanometer interest and timing have changed all that much. It's just that's hard for me to see how you see any of that activity begin in this calendar year from a – you might start to see some orders at the tail end but certainly don't expect to see any shipments in 2015 for that. Harlan L. Sur - JPMorgan Securities LLC: Okay. Great. Thanks a lot.

Your next question comes from the line of Krish Sankar with Bank of America. Your line is open. Krish Sankar - Bank of America Merrill Lynch: Yeah, hi. Thanks for taking my question. Two of them. First one, did you guys say that you expect some of your gen five optical inspection orders in the second half or is it more tied to 10-nanometer? Bren D. Higgins - Chief Financial Officer & Executive Vice President: Yeah, Krish, it's Bren. I don't know if it's tied exactly to 10-nanometer. It's really tied to the timing of those introductions. Typically, new products create their own weather in terms of timing of interest by customers. We would expect to see orders in the – toward the end of our fiscal year. And perhaps we'll see some revenue, too, towards the tail end. I don't think you fully see full scale sort of ramp and adoption until you move into the second half of 2016 but we should see some activity in the first half. Richard P. Wallace - President, Chief Executive Officer & Director: And, Krish, as you know, with a new product it's often the case that that is shipped and it's under contingency provision that when it achieves the milestones that you both recognize the revenue and the bookings. So less likely to see the bookings in the first half of the fiscal year because of that. Krish Sankar - Bank of America Merrill Lynch: Got you. And then a follow up for Bren. If I took at your June quarter, over the last six months your OpEx is down 7% from December. I mean you guys have done a 10% head count. The June quarter numbers look similar to your target model. So is it fair to assume that you already started seeing the benefits of the restructuring or is there still more room to cut cost here? Bren D. Higgins - Chief Financial Officer & Executive Vice President: I think it's fair to assume we're starting to see some of it. Part of our assessment of where we were on a normalized basis, we were trending before we started the actions. And when I say normalized, I mean in terms of how you think about variable compensation adjustments and so on, somewhere around $225 million a quarter. And we see that trending down in terms of a fully loaded operating level of about $205 million to $210 million and we should see that progression across the fiscal year from here. So I think there's still room from where we're at now as we start to see those – some of those costs come off the books over the next quarter or so. And then we expect it to stay in that ballpark with some of the other actions that we have planned and are in process of executing. Krish Sankar - Bank of America Merrill Lynch: Got it. Thank you.

Your next question comes from the line of C.J. Muse with Evercore. Your line is open. C.J. Muse - Evercore ISI: Yeah, good afternoon. Thank you for taking my question. And apologies for the voice. Curious your thoughts on 10-nanometer. We heard from one of your competitors talking about capacity being brought online in 2016 through 2018. And roughly 150,000 wafer starts versus, call it, 250,000 at 16, 14, 20, and 300,000 wafer 28. And would love to hear your thoughts on the puts and takes in terms of rising intensity but elongation of the node and smaller amount of wafer starts and what that means for annualized spend at the next node. Bren D. Higgins - Chief Financial Officer & Executive Vice President: So, C.J., we haven't done the work on how we're looking at 10-nanometer starts. I mean, clearly, what we've seen so far in the sub-20-nanometer is not a lot of end-market movement towards 20-nanometer, 16-nanometer, 14-nanometer, which obviously impacts that start level. So depending on the level of adoption that you do see obviously will impact what customers are able to do as they move to 10-nanometer. But so far at 20-nanometer outside of a couple high volume products, haven't seen a lot of activity which has enabled customers to use some of those tools at 14-nanometer and 16-nanometer. So a lot of it, I think, depends on not only the end-market activity but also the competitive dynamics at that node that drives ultimately the overall size of it. So we think 10-nanometer will be a bigger node, given that it's – you have a full shrink to that node and that the ability to reuse tools if – is not the same as it was at 20-nanometer and 16-nanometer given that you had effectively the same back end process is at 20-nanometer down to 16-nanometer, 14-nanometer. So we're optimistic about 10-nanometer both from a competitive dynamic front but also from an end-market front at this point. Richard P. Wallace - President, Chief Executive Officer & Director: Yeah, just to add a little color. The one thing we have seen is more starts in our work with the mask shops, we've seen more 10-nanometer designs than we might have thought at this time. And it does appear to be true that the fabless guys view 10-nanometer, kind of to Bren's point, because it's more of a shrink, it's actually being more of a real node and more advantageous to go to. And I think that that was part of what happened to 20-nanometer and 16-nanometer. So we see that. The negative of course is people have not yet really determined how difficult it's going be in terms of the ability to get yield and the impact that will have on all the cost per wafer. So I think you might see cost per transistor come down if people can figure out the yield challenges. But the negative to that is we saw an earlier player push it out and partly due to some of those challenges. So we think there's going to be interest in getting designs going and hence a bigger node but the timing is harder to predict. And we know there's been push lately. C.J. Muse - Evercore ISI: That's very helpful. And as a quick follow up, I guess, a short term question, given the lower utilization at many foundries, how do you think about your service revenue trajectory into the back half of the year? Bren D. Higgins - Chief Financial Officer & Executive Vice President: Yeah, C.J., that tends to be pretty linear. I don't expect to see an acceleration there. I expect to see it continue along the trajectory that we've seen, somewhere between 6% and 8% per year and growing quarter-on-quarter generally. Richard P. Wallace - President, Chief Executive Officer & Director: Yeah, part of what's happening of course, as you know is some of the fabs being extended longer that aren't at the leading edge. So if you look at the contribution that the service business from the very leading-edge and even some places where the utilization is slightly lower, it's actually to Bren's point, it responds slower. So we're seeing pretty good signs out of our service and our interactions with customers. Plus, we've identified a number of places where we can do upgrades and give more productivity to those customers to give us some upward pressure on the growth rate. C.J. Muse - Evercore ISI: Thank you.

Your next question comes from the line of Romit Shah with Nomura Securities. Your line is open. Romit J. Shah - Nomura Securities International, Inc.: Yes. Thank you. If you look at gross margin relative to your competitors, your margins are about 10 to 15 points higher. And your competitors are saying, while true, their revenue growth is better. So sort of implying that there's a direct relationship between margins and top line growth. And I'm curious what your take is. Do you feel that gross margins at these levels are holding back the revenue growth to a certain extent? Richard P. Wallace - President, Chief Executive Officer & Director: Yeah, it's a great question and one that we've reviewed over time. I think the challenge is it doesn't appear to be the case that demand for process control is elastic. So if you were to offer – if you were to reduce prices, there's no evidence to support that there'd be more business there. I think people find the level they want to be at in terms of investing to get their process to ramp and to keep it under control. And they're going to pay for that with based on the returns they get. Whereas in a process situation, if I'm getting designed in at a node and the customer has a very strong view of how many they're going buy, they're in a very good position to negotiate that price over the life of that particular node. And I think that's why you don't see the expansion, margin expansion for process equipments near the same way that we have it. And it's harder for them to get that beneficial pricing. With us, it's really a question of, if you need it. And if you don't need it, you're not going to buy it. And if you do need it, it's going to be a value exchange and that's where we see the strength in our business model. Romit J. Shah - Nomura Securities International, Inc.: Rick, on that point, you have talked about market share which you ceded a couple points last year. And I know the expectation internally is that you'd like to grow share. So does margins and pricing play a role in improving your share in process control at the time? Richard P. Wallace - President, Chief Executive Officer & Director: It hasn't historically. And the reason I say that is we've never been tool for tool low cost and competed on price. What we have to do is differentiate on performance and if the performance is there, we can typically, we can have higher productivity than the alternative but since we don't really make the same tools, when we look at our tool compared with our competitors, they're not the same tools. They are different approaches, different technologies. The most extreme example would be gen five against the e-beam alternative that's out there. So if we can demonstrate capability and higher productivity, it's again not a function of price. So what we're not going to do is chase the markets where it's based on a pricing decision because that's not consistent with our model. So this is why we invest heavily in R&D to have that differentiation. So two things we say. One, you got to have differentiation and the differentiation has to matter to the customers in a way that they see benefit in buying it and we think there are those opportunities for us. Romit J. Shah - Nomura Securities International, Inc.: Okay. Terrific. Thank you.

Your next question comes from the line of Mehdi Hosseini with Susquehanna International. Your line is open. Mehdi Hosseini - Susquehanna International Group: Yes. Thanks for letting me ask a question. Rick, I want to go back to the 10-nanometer commentary. There seems to be some confusion out there as to how the die size, not so much of the cost per transistor is going to change. Based on the tape-outs you've seen, do you have any color, anything you can share with us as how the die size is going be impacted by adverse impact of multi-patterning? And I'm referring to over-provisioning that limits the die size shrink? And is there a factor that is going to somewhat reduce the scaling that we're all hoping to have in the 10-nanometer? And I have a follow-up. Richard P. Wallace - President, Chief Executive Officer & Director: We've seen a range. As you know, when you think about advanced design roles for logic or for the foundry market, often one of the biggest drivers for those tends to be, it has been historically FPGAs, which tend to utilize large die. And I think that for those they're still going to be pushing performance and wanting scaling but there are a number of other chips of course that are going to drive various ranges of die size. So we've not heard that. I think it's an astute insight but we have not heard that as being a limiter for the 10-nanometer rollout as we've seen these increased number of designs. But to your point, it's also pretty early. So we haven't. I think it's still early days. Mehdi Hosseini - Susquehanna International Group: And this is my follow up question. The reason I ask is, when we migrated from 28 to 20-, there was some yield challenges and despite lower wafer start, you were actually able to do relatively okay. And it was much better environment than converting, than migrating to sub-20. And now that we're a year or so away from 10-nanometer, is it true shrink? And I'm just wondering if some of the opportunities would go away? Is this something that we're going to learn more about the impact of die size at 10-nanometer? Are we going to learn that when wafers come out of the pilot line in the spring timeframe? Or are you going to be able to provide some color by October timeframe? Richard P. Wallace - President, Chief Executive Officer & Director: I don't know how much color we'll have by October but I can give you my take on the last migration. I think a lot of what happened was, as we know now, looking back, 20-nanometer, we did do reasonably well going to 20-nanometer but it didn't carry over to 16-nanometer because as we went to 16-nanometer, of course we were left with reuse. I think the challenge in 10-nanometer is for customers it is a full shrink so they're going be challenged by that. But then as we think about 7-nanometer, the question is, are they going to have reuse opportunities there? And so part of the way we plan on addressing that is with new products. And I think the new products will give us this catalyst for driving new capability and creating more of an opportunity for us to grow. Mehdi Hosseini - Susquehanna International Group: Got it. Thank you.

Your next question comes from the line of Mahesh Sanganeria with RBC Capital Markets. Your line is open. Mahesh Sanganeria - RBC Capital Markets LLC: Yes. Thanks very much. Rick, a question on your December outlook. You're looking for a pretty substantial increase in order in December. Can you give us a little bit of color on what's driving that? Is it order for the new product you're looking at or is there segment specifically that's driving the order growth because we kind of know that 10-nanometer is a little bit far out. Bren D. Higgins - Chief Financial Officer & Executive Vice President: Yeah, Mahesh, it's Bren. So in terms of how we're sizing, I mean I'm not really guiding the December quarter as I said. It looks roughly flat in terms of half to half, so strengthening into December. We think obviously memory continues to be solid but we do expect to see some foundry activity start to pick up in the December quarter as well. There's some timing of some trailing edge projects that are out there that looks like we might see some of that activity start to book in the December timeframe. So, a combination of things across a couple of segments that gives us confidence around December being a solid increase versus September at this time. Mahesh Sanganeria - RBC Capital Markets LLC: And then a follow up on that, the – usually you have a much longer lead-time but it has been shrinking for a while. If you see order pickup in December, I would say the – is the shipment pickup – significant shipment pickup happens in March or is it something that can happen in December? Bren D. Higgins - Chief Financial Officer & Executive Vice President: It tends to be customer-specific. So harder to say at this point. I'm not sure I can guide the second half shipment profile right now. Mahesh Sanganeria - RBC Capital Markets LLC: All right. Thank you.

Your next question comes from the line of Edwin Mok with Needham & Co. Your line is open. Edwin Mok - Needham & Co. LLC: Hey, thanks for taking my question. Just, I guess, follow up question on the memory order, very strong this quarter and you guys attributed that to 3D NAND. But I understand some of your customers might be looking to convert planar NAND fab to 3D NAND rather than doing greenfield. To the extent that they do that, is that a lot of reuse can happen and would that kind of limit your opportunity on the NAND side? Bren D. Higgins - Chief Financial Officer & Executive Vice President: In the quarter, we had – 3D NAND was solid. Also we had some DRAM activity that was good as well. I think you're going to see some conversions but most of the activity that we're seeing so far is more greenfield focused. Richard P. Wallace - President, Chief Executive Officer & Director: It also has more variation. I mean 3D NAND inherently doesn't necessarily have a lot more process control intensity but the decision by our customers to upgrade or try to reuse often depends more on the age of the fleet and what's out there and when they did their last process control buys. So memory was pretty soft for a while so there'd become more opportunities and when they're spending we're on the list of opportunities that they're looking at. So it's not quite as simple as their reuse because in those cases, the memory guys have invested at a lower level historically than we saw in foundry. Edwin Mok - Needham & Co. LLC: Great. That was good color. And then my follow up question is on 10-nanometer. Our understanding is that there's a change – and obviously when you go to 10-nanometer we have more multi-patterning steps and I understand there's a pretty big step-up in the number of patterning steps. How are you guys capitalizing on that opportunity with this new organization focusing on patterning? Richard P. Wallace - President, Chief Executive Officer & Director: Well I think that part of what customers are looking at as they look ahead is the metrology challenges both the – and really starting with the definition of the patterns with mask, and the interactions that you see on multi-patterning, how much the pressure there is on the overlay budget and film controls budget is they're really looking for the ability to synthesize and integrate the different tools in the portfolio. We're now organizationally set up in a much better way to support that because it's really aligning with our customers and many of our customers you'll find someone who is the exact counterpart to the new organizations that we've set up. So we're in a better position to support that as opposed to them having to deal with three or four different representatives from different divisions. So the customer response to our reorg has been just flat out either very good or really good. Because I think, from their standpoint, it's just better. It's easier for them to deal with. So I think that gives us opportunity. And then of course we have the products in place but we're pretty well aligned with the 10-nanometer challenges. And there is a huge push for increase overlay control as they go down to 10-nanometer and the fear of what that is going to look like in terms of some of the errors induced starting with how the mask look. Edwin Mok - Needham & Co. LLC: Great. That's good color. Thank you. Appreciate it.

Your next question comes from the line of Jagadish Iyer with Redstone Research. Your line is open. Jagadish Iyer - Redstone Technology Research: Yeah, thanks so much for taking my question, Rick. It's two questions. First, I just wanted to understand ASML has been pushing its EUV to its logic customers and several customers, just wanted to understand what is the status of the EUV mask inspection as ASML plans to ship several tools over the next 18 months to a major logic customer. I know you had kind of scaled back a little bit on the EUV. Just wanted to get your latest thoughts on that. Richard P. Wallace - President, Chief Executive Officer & Director: Well, we think we have a pretty compelling answer to reticle verification for EUV but it doesn't require an EUV reticle tool. It requires the 6xx platform that we have and our ability to do print check on devices once they're printed. And so, from our perspective, that is the answer to support the customers as they go through and the degree with which they adopt EUV. We're already supporting that in terms of the work that's going on in the reticle tool. And then we can support it when they printed on the actual wafer, so that is our answer. Jagadish Iyer - Redstone Technology Research: Okay. Thank you. And just a follow up, I just wanted to understand fundamentally if you look at all the patterning opportunities that your competitors, like, Lam and Applied have laid out in terms of their growth in the patterning step, you would imagine that etch and deposition which are intensive for several of these applications would definitely need process control. Just wanted to get your thoughts into why the process control market hasn't really grown as one would have imagined? Is there anything that we are missing something like that? I'd appreciate your input on that. Richard P. Wallace - President, Chief Executive Officer & Director: Well, I think it's much more a function right now of the mix between memory and what we're seeing in terms of customers investing in memory versus investing in logic. In logic and foundry, our intensities are pretty good. It's just those customers are in a bit of an air pocket right now for us whereas the most of the investment has been along memory where there's also multi-patterning opportunities but that's – when you breakdown our process control intensities by different technologies, whether it's memory, logic, or foundry, that shift to higher percentage of memory is really explains the shift in our demand environment. Bren D. Higgins - Chief Financial Officer & Executive Vice President: Yeah, we're pretty comfortable with what we're seeing on foundry, logic intensity changes node to node. I think the biggest issue right now is, is that you are dealing with very similar tool sets at 20-nanometer and below and so the ability to migrate the capacity that was acquired for 20-nanometer down to 16-nanometer, 14-nanometer with no backfill of design tape-outs where that capacity has enabled customers to reuse some of that equipment. But in terms of the intensity that we've seen on those purchases, it is in line with what we were expecting to see at 1x. Jagadish Iyer - Redstone Technology Research: Thank you.

Your next question comes from the line of Patrick Ho with Stifel. Your line is open. Patrick J. Ho - Stifel, Nicolaus & Co., Inc.: Thank you very much. Yes. Sorry about that. Rick, kind of a bigger question in terms of multiple patterning and traditionally where you get process control intensity. Do you ever see more and more double, multiple patterning steps that should drive increasing I guess process control intensity that you've seen the foundry, logic space? I guess why hasn't the DRAM space or the memory guys adopted more process control, I guess in line with that transition? Richard P. Wallace - President, Chief Executive Officer & Director: Well, so there's two things if you think about process control. One is around the metrology space and the other one is around the defectivity space. And if you remember our SEMICON West presentation, we talked about in patterning, our market share's probably in the 40% range. So the capital intensity is higher in patterning and our share is not particularly strong and it hasn't actually gone up that much in memory for process control intensity. The other side though is defectivity, and defectivity for multi-patterning doesn't really depend so much on multi-patterning as much as it does on the device type. So you're making memory. These guys are almost at 100% repair when it comes to DRAM. And so you're not going to see as much and we haven't for many, many years see the adoption as high in DRAM. And then 3D is a different decision because, for them, because there they really want 3D capability to look through the stacks and that technology just doesn't exist. So it's more a function of the process control intensity on defectivity and our market share in terms of the patterning and the relatively lower level of intensity and patterning as well in terms of what we see in memory. So really those combination of factors. Does that make sense? Patrick J. Ho - Stifel, Nicolaus & Co., Inc.: No, that's actually really helpful. And maybe again a bigger picture question for you. There's been a lot of chatter and one of your largest customers talked about Moore's Law cadence being kind of pushed out. From your perspective, maybe both for KLA specific and process control, how does that change where they've talked about 2 to 2.5 years potentially impact you guys? Richard P. Wallace - President, Chief Executive Officer & Director: Well, we're pretty dependent on node transition. So obviously if that pushes out, then we end up in a soft spot like we're in right now. Really the question is when, for us, the real question coming up is the 10-nanometer adoption because our belief is we're going to be in a relatively softer position for the next quarter and then we'll start seeing some improvement in the December timeframe. But what we're going to have to depend on is the 10-nanometer is going to happen in calendar 2016. Then the question is how much of a stretch is it from 10 to 7 and what's beyond that. It's pretty hard to say at this point. Patrick J. Ho - Stifel, Nicolaus & Co., Inc.: Great. Thank you.

Your next question comes from the line of Farhan Ahmad from Credit Suisse. Your line is open. Farhan Ahmad - Credit Suisse Securities (USA) LLC (Broker): Thanks for taking my question. I wanted to understand a little bit of the shipment profile of the 3D NAND orders that you received in the June quarter. Is it pretty much timed in September quarter or is it going to be spread out over next few quarters? Bren D. Higgins - Chief Financial Officer & Executive Vice President: I think around that segment most of those orders will ship in the next, over the course of September and into December. So lead times being three to six months on those tools. Farhan Ahmad - Credit Suisse Securities (USA) LLC (Broker): Got it. And then one high level question, like if we just look at like the yield problems that are going on, in whatever segment we look at there are yield challenges that are kind of slowing down the ramp plans, like we hear about DRAM 20-nanometer being like an issue for a lot of customers. And 3D NAND obviously is having issues and in foundry, since it doesn't seem like yields are progressing as well as people would like. So the question really is like despite the yields being challenged, why are we not seeing like an increase in process control intensity as one would have imagined like a few years ago? It seems to me like whenever you have yield challenges, process control used to benefit. Is there some change going on here? And is there a different way that we need to think about when yield challenges are there and not just in the process control segments that KLA is serving here? Richard P. Wallace - President, Chief Executive Officer & Director: Yeah well, I think if you recall, we laid out the process control intensity model over a year ago at SEMICON and talked about the difference between what we'd see at foundry and logic and what we'd see in memory. And the biggest change in terms of our demand environment has really been associated with the shift toward an increase in memory concentration, which inherently, although the new nodes have more process control intensity than the prior nodes, they're almost half of what you see in logic and foundry. The logic and foundry intensities have been in general okay, but what we've seen recently is logic is almost at a historic low in terms of at least for the last 10 years, their investment right now is they're on pause. The other thing that happens is in foundries they might have a big focus on yield, but if then the business isn't won then what we see is the investment then stops altogether because it went somewhere else. So we have experienced some of that as well. Bren D. Higgins - Chief Financial Officer & Executive Vice President: Yeah, Farhan, the only other thing I would add to that is, is that so far, the process control intensity in a high mix foundry is higher than, let's say, a high volume logic fab. And given the level of activity we've seen with design starts at so far 20, 14, 16, most of the behavior has been more in line with high volume logic-like adoption levels where customers are running high volume products. And so end market activity is a driver of process control adoption. And the limited end-market activity so far has had an impact on the intensity for sure. Farhan Ahmad - Credit Suisse Securities (USA) LLC (Broker): Thank you.

Your next question comes from the line of Mark Heller with CLSA. Your line is open. Mark J. Heller - CLSA Americas LLC: Thanks for taking my question. I was wondering if you have any view on the order mix for calendar 3Q? Bren D. Higgins - Chief Financial Officer & Executive Vice President: Yes, so for September, it looks like 43% memory and foundry 35%, logic 22%. Mark J. Heller - CLSA Americas LLC: Got it. And then where do we stand on the buyback and when do you expect to complete that authorization? Bren D. Higgins - Chief Financial Officer & Executive Vice President: Well, we've got in excess of 8 million shares remaining on the authorization. We repurchased $168 million in the June quarter. So we see a continuation over the course of the year, now approach is to do, what we call, a dollar cost average-like approach towards that over time. And so we'll continue to do it quarter in, quarter out. Certainly, we – as we manage our overall cash relative to our U.S. target, it does have an impact in terms of cash needs and in terms of where we ultimately end up around share repurchases. And we are going to start to pay down the debt. We've started to do that in the last quarter and so that will be an aspect to the cash management going forward as well. So we're about halfway through, a little over halfway through and we'll see it continue over the course of the next 12 months or so. Mark J. Heller - CLSA Americas LLC: Thank you.

Your next question comes from the line of Stephen Chin of UBS. Your line is open. Stephen Chin - UBS Securities LLC: Yeah, thanks. Just a follow up question on the impact of Intel's CapEx cadence change. It wasn't clear to me, does this impact how you run KLA at all? Do you maybe throttle back manufacturing output? Or is the impact just not that meaningful since logic has been, I think you said, a smaller part of your orders recently? Thanks. Richard P. Wallace - President, Chief Executive Officer & Director: Well, obviously if anyone is reducing their CapEx and our sensitivity to process control intensity is higher in foundry and in logic than it is in memory, that's we don't consider that a great thing, so that dials us back a little bit. If you think about the restructuring that we did, we talked about two motivators. One was to position the company better to deal with our customer challenges to get to market and be easier for our customers to deal with us. But the other side of that was to reduce our cost base, and we've done that. And if you look at where we are from the peak, we're down pretty significantly. So our view is that, in the event that this continues, we want to be positioned appropriately for our investments to support it. But we never know how long these things are going to go. There are many examples in the past where customers give one direction and then change directions based on the way things go. And we're prepared for either one. But I think that we have taken actions to deal with, for us, what was a lower end market demand environment than we would have hoped for a couple years ago, but we also think that, in 2016, we will see a resumption of the investment. Stephen Chin - UBS Securities LLC: Okay. Thanks for sharing that, Rick.

There are no further questions at this time. I will turn the call back over to Mr. Ed Lockwood. Ed Lockwood - Senior Director, Investor Relations: Thank you, Connor. On behalf of the management team, I'd like to thank everyone for joining us here today. An audio replay of today's call will be available on our website later this afternoon. And again, we appreciate your interest in KLA-Tencor. Thank you.

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