Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

v3.10.0.1
Income Taxes (Tables)
 12 Months Ended
Jun. 30, 2018
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)
2018
 
2017
 
2016
Domestic income before income taxes
$
716,015

 
$
615,906

 
$
417,803

Foreign income before income taxes
739,916

 
557,340

 
440,389

Total income before income taxes
$
1,455,931

 
$
1,173,246

 
$
858,192

Schedule of Components of Income Tax Expense (Benefit)
(In thousands)
Year ended June 30,
2018
 
2017
 
2016
Current:
 
 
 
 
 
Federal
$
504,758

 
$
200,831

 
$
94,088

State
6,422

 
4,660

 
6,123

Foreign
41,414

 
38,208

 
37,680

 
552,594

 
243,699

 
137,891

Deferred:
 
 
 
 
 
Federal
98,702

 
444

 
15,645

State
1,526

 
2,852

 
3,583

Foreign
844

 
175

 
(3,349
)
 
101,072

 
3,471

 
15,879

Provision for income taxes
$
653,666

 
$
247,170

 
$
153,770

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,
2018
 
2017
Deferred tax assets:
 
 
 
Tax credits and net operating losses
$
171,701

 
$
134,052

Employee benefits accrual
64,707

 
106,637

Stock-based compensation
8,902

 
15,252

Inventory reserves
62,232

 
95,200

Non-deductible reserves
29,841

 
43,140

Depreciation and amortization
701

 
3,415

Unearned revenue
11,104

 
15,757

Unrealized loss on investments
956

 
—

Other
25,602

 
26,538

Gross deferred tax assets
375,746

 
439,991

Valuation allowance
(163,570
)
 
(120,708
)
Net deferred tax assets
$
212,176

 
$
319,283

Deferred tax liabilities:
 
 
 
Unremitted earnings of foreign subsidiaries not indefinitely reinvested
$
(7,146
)
 
$
(13,213
)
Deferred profit
(13,027
)
 
(13,657
)
Unrealized gain on investments
—

 
(2,707
)
Total deferred tax liabilities
(20,173
)
 
(29,577
)
Total net deferred tax assets
$
192,003

 
$
289,706

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,
 
2018
 
2017
 
2016
Federal statutory rate
28.1
 %
 
35.0
 %
 
35.0
 %
State income taxes, net of federal benefit
0.5
 %
 
0.4
 %
 
0.9
 %
Effect of foreign operations taxed at various rates
(11.0
)%
 
(12.2
)%
 
(13.0
)%
Tax Cuts and Jobs Act of 2017
30.3
 %
 
—
 %
 
—
 %
Research and development tax credit
(1.4
)%
 
(1.1
)%
 
(1.9
)%
Net change in tax reserves
(0.4
)%
 
1.3
 %
 
(2.2
)%
Domestic manufacturing benefit
(1.1
)%
 
(1.5
)%
 
(1.5
)%
Effect of stock-based compensation
(0.1
)%
 
(0.2
)%
 
0.3
 %
Other
—
 %
 
(0.6
)%
 
0.3
 %
Effective income tax rate
44.9
 %
 
21.1
 %
 
17.9
 %
Summary of Income Tax Contingencies
A reconciliation of gross unrecognized tax benefits is as follows: 
 
Year ended June 30,
(In thousands)
2018
 
2017
 
2016
Unrecognized tax benefits at the beginning of the year
$
68,439

 
$
50,365

 
$
69,018

Increases for tax positions taken in prior years
4,642

 
6,788

 
4,245

Decreases for tax positions taken in prior years
(6,045
)
 
(246
)
 
(1,209
)
Increases for tax positions taken in current year
16,812

 
14,696

 
13,636

Decreases for settlements with taxing authorities
(9,666
)
 
—

 
(8,762
)
Decreases for lapsing of statutes of limitations
(10,188
)
 
(3,164
)
 
(26,563
)
Unrecognized tax benefits at the end of the year
$
63,994

 
$
68,439

 
$
50,365