Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

v3.7.0.1
Income Taxes (Tables)
 12 Months Ended
Jun. 30, 2017
Income Tax Disclosure [Abstract]  
Schedule of Income before Income Taxes, Domestic and Foreign
The components of income before income taxes are as follows: 
 
Year ended June 30,
(In thousands)
2017
 
2016
 
2015
Domestic income before income taxes
$
615,906

 
$
417,803

 
$
157,251

Foreign income before income taxes
557,340

 
440,389

 
276,880

Total income before income taxes
$
1,173,246

 
$
858,192

 
$
434,131

Schedule of Components of Income Tax Expense (Benefit)
The provision for income taxes is comprised of the following: 
(In thousands)
Year ended June 30,
2017
 
2016
 
2015
Current:
 
 
 
 
 
Federal
$
200,831

 
$
94,088

 
$
63,123

State
4,660

 
6,123

 
3,655

Foreign
38,208

 
37,680

 
25,438

 
243,699

 
137,891

 
92,216

Deferred:
 
 
 
 
 
Federal
444

 
15,645

 
(22,390
)
State
2,852

 
3,583

 
409

Foreign
175

 
(3,349
)
 
(2,262
)
 
3,471

 
15,879

 
(24,243
)
Provision for income taxes
$
247,170

 
$
153,770

 
$
67,973

Schedule of Deferred Tax Assets and Liabilities
The significant components of deferred income tax assets and liabilities are as follows:
(In thousands)
As of June 30,
2017
 
2016
Deferred tax assets:
 
 
 
Tax credits and net operating losses
$
134,052

 
$
116,277

Employee benefits accrual
106,637

 
109,524

Stock-based compensation
15,252

 
13,607

Inventory reserves
95,200

 
94,783

Non-deductible reserves
43,140

 
34,484

Depreciation and amortization
3,415

 
15,857

Unearned revenue
15,757

 
14,375

Other
26,538

 
26,877

Gross deferred tax assets
439,991

 
425,784

Valuation allowance
(120,708
)
 
(104,968
)
Net deferred tax assets
$
319,283

 
$
320,816

Deferred tax liabilities:
 
 
 
Unremitted earnings of foreign subsidiaries not indefinitely reinvested
$
(13,213
)
 
$
(11,571
)
Deferred profit
(13,657
)
 
(10,346
)
Unrealized gain on investments
(2,707
)
 
(604
)
Total deferred tax liabilities
(29,577
)
 
(22,521
)
Total net deferred tax assets
$
289,706

 
$
298,295

Schedule of Effective Income Tax Rate Reconciliation
The reconciliation of the United States federal statutory income tax rate to KLA-Tencor’s effective income tax rate is as follows: 
 
Year ended June 30,
 
2017
 
2016
 
2015
Federal statutory rate
35.0
 %
 
35.0
 %
 
35.0
 %
State income taxes, net of federal benefit
0.4
 %
 
0.9
 %
 
0.7
 %
Effect of foreign operations taxed at various rates
(12.2
)%
 
(13.0
)%
 
(15.3
)%
Research and development tax credit
(1.1
)%
 
(1.9
)%
 
(3.7
)%
Net change in tax reserves
1.3
 %
 
(2.2
)%
 
1.5
 %
Domestic manufacturing benefit
(1.5
)%
 
(1.5
)%
 
(2.1
)%
Effect of stock-based compensation
(0.2
)%
 
0.3
 %
 
0.8
 %
Other
(0.6
)%
 
0.3
 %
 
(1.2
)%
Effective income tax rate
21.1
 %
 
17.9
 %
 
15.7
 %
Summary of Income Tax Contingencies
A reconciliation of gross unrecognized tax benefits is as follows: 
 
Year ended June 30,
(In thousands)
2017
 
2016
 
2015
Unrecognized tax benefits at the beginning of the year
$
50,365

 
$
69,018

 
$
59,575

Increases for tax positions taken in prior years
6,788

 
4,245

 
1,245

Decreases for tax positions taken in prior years
(246
)
 
(1,209
)
 
(7
)
Increases for tax positions taken in current year
14,696

 
13,636

 
11,634

Decreases for settlements with taxing authorities
—

 
(8,762
)
 
—

Decreases for lapsing of statutes of limitations
(3,164
)
 
(26,563
)
 
(3,429
)
Unrecognized tax benefits at the end of the year
$
68,439

 
$
50,365

 
$
69,018