Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

v2.4.0.8
Income Taxes (Tables)
12 Months Ended
Jun. 30, 2013
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)
2013
 
2012
 
2011
Domestic income before income taxes
$
420,862

 
$
607,146

 
$
752,163

Foreign income before income taxes
269,759

 
366,948

 
357,903

Total income before income taxes
$
690,621

 
$
974,094

 
$
1,110,066

Schedule of Components of Income Tax Expense (Benefit)
The provision for income taxes is comprised of the following: 
(In thousands)
Year ended June 30,
2013
 
2012
 
2011
Current:
 
 
 
 
 
Federal
$
118,888

 
$
(699
)
 
$
225,192

State
4,404

 
51

 
2,095

Foreign
25,112

 
24,383

 
31,578

 
$
148,404

 
$
23,735

 
$
258,865

Deferred:
 
 
 
 
 
Federal
$
(2,552
)
 
$
188,882

 
$
40,908

State
(1,036
)
 
3,721

 
26,458

Foreign
2,656

 
1,741

 
(10,653
)
 
(932
)
 
194,344

 
56,713

Provision for income taxes
$
147,472

 
$
218,079

 
$
315,578

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,
2013
 
2012
Deferred tax assets:
 
 
 
Tax credits and net operating losses
$
77,512

 
$
66,392

Employee benefits accrual
83,391

 
78,112

Stock-based compensation
37,091

 
37,300

Capitalized R&D expenses
34,791

 
57,192

Inventory reserves
79,866

 
57,736

Non-deductible reserves
42,256

 
45,682

Unearned revenue
12,010

 
9,991

Other
36,795

 
57,464

Gross deferred tax assets
403,712

 
409,869

Valuation allowance
(57,097
)
 
(40,479
)
Net deferred tax assets
$
346,615

 
$
369,390

Deferred tax liabilities:
 
 
 
Unremitted earnings of foreign subsidiaries not permanently reinvested
$
(20,636
)
 
$
(22,746
)
Depreciation and amortization
(13,204
)
 
(10,202
)
Deferred profit
(10,351
)
 
(37,906
)
Unrealized gain on investments
(572
)
 
(1,070
)
Total deferred tax liabilities
(44,763
)
 
(71,924
)
Total net deferred tax assets
$
301,852

 
$
297,466

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,
 
2013
 
2012
 
2011
Federal statutory rate
35.0
 %
 
35.0
 %
 
35.0
 %
State income taxes, net of federal benefit
0.3
 %
 
0.4
 %
 
2.5
 %
Effect of foreign operations taxed at various rates
(9.6
)%
 
(9.9
)%
 
(9.0
)%
Research and development tax credit
(3.1
)%
 
(1.1
)%
 
(1.2
)%
Net change in tax reserves
1.7
 %
 
(2.8
)%
 
2.1
 %
Domestic manufacturing benefit
(1.6
)%
 
(0.7
)%
 
(1.9
)%
Effect of stock-based compensation
(0.3
)%
 
1.3
 %
 
1.4
 %
Other
(1.0
)%
 
0.2
 %
 
(0.5
)%
Effective income tax rate
21.4
 %
 
22.4
 %
 
28.4
 %
Summary of Income Tax Contingencies
A reconciliation of gross unrecognized tax benefits is as follows: 
 
Year ended June 30,
(In thousands)
2013
 
2012
 
2011
Unrecognized tax benefits at the beginning of the period
$
50,839

 
$
78,337

 
$
53,492

Increases for tax positions taken in prior years
2,701

 
4,172

 
5,228

Decreases for tax positions taken in prior years
(905
)
 
(1,002
)
 

Increases for tax positions taken in current year
12,709

 
15,663

 
32,152

Decreases for settlements with taxing authorities
(3,907
)
 
(43,464
)
 
(11,786
)
Decreases for lapsing of statutes of limitations
(1,943
)
 
(2,867
)
 
(749
)
Unrecognized tax benefits at the end of the period
$
59,494

 
$
50,839

 
$
78,337