Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

v3.2.0.727
Income Taxes (Tables)
 12 Months Ended
Jun. 30, 2015
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)
2015
 
2014
 
2013
Domestic income before income taxes
$
157,251

 
$
434,336

 
$
420,862

Foreign income before income taxes
276,880

 
300,125

 
269,759

Total income before income taxes
$
434,131

 
$
734,461

 
$
690,621

Schedule of Components of Income Tax Expense (Benefit)
The provision for income taxes is comprised of the following: 
(In thousands)
Year ended June 30,
2015
 
2014
 
2013
Current:
 
 
 
 
 
Federal
$
63,123

 
$
98,937

 
$
118,888

State
3,655

 
8,580

 
4,404

Foreign
25,438

 
27,867

 
25,112

 
92,216

 
135,384

 
148,404

Deferred:
 
 
 
 
 
Federal
(22,390
)
 
22,904

 
(2,552
)
State
409

 
(334
)
 
(1,036
)
Foreign
(2,262
)
 
(6,248
)
 
2,656

 
(24,243
)
 
16,322

 
(932
)
Provision for income taxes
$
67,973

 
$
151,706

 
$
147,472

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,
2015
 
2014
Deferred tax assets:
 
 
 
Tax credits and net operating losses
$
108,615

 
$
95,492

Employee benefits accrual
99,472

 
97,308

Stock-based compensation
18,722

 
17,676

Capitalized R&D expenses
47

 
12,051

Inventory reserves
92,649

 
83,783

Non-deductible reserves
47,176

 
41,469

Depreciation and amortization
13,267

 
2,572

Unearned revenue
16,150

 
13,937

Other
28,784

 
29,483

Gross deferred tax assets
424,882

 
393,771

Valuation allowance
(91,350
)
 
(76,328
)
Net deferred tax assets
$
333,532

 
$
317,443

Deferred tax liabilities:
 
 
 
Unremitted earnings of foreign subsidiaries not permanently reinvested
$
(12,775
)
 
$
(17,334
)
Deferred profit
(7,372
)
 
(16,358
)
Unrealized gain on investments
(2,673
)
 
(1,168
)
Total deferred tax liabilities
(22,820
)
 
(34,860
)
Total net deferred tax assets
$
310,712

 
$
282,583

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,
 
2015
 
2014
 
2013
Federal statutory rate
35.0
 %
 
35.0
 %
 
35.0
 %
State income taxes, net of federal benefit
0.7
 %
 
0.7
 %
 
0.3
 %
Effect of foreign operations taxed at various rates
(15.3
)%
 
(11.5
)%
 
(9.6
)%
Research and development tax credit
(3.7
)%
 
(1.5
)%
 
(3.1
)%
Net change in tax reserves
1.5
 %
 
0.3
 %
 
1.7
 %
Domestic manufacturing benefit
(2.1
)%
 
(1.4
)%
 
(1.6
)%
Effect of stock-based compensation
0.8
 %
 
0.4
 %
 
(0.3
)%
Other
(1.2
)%
 
(1.3
)%
 
(1.0
)%
Effective income tax rate
15.7
 %
 
20.7
 %
 
21.4
 %
Summary of Income Tax Contingencies
A reconciliation of gross unrecognized tax benefits is as follows: 
 
Year ended June 30,
(In thousands)
2015
 
2014
 
2013
Unrecognized tax benefits at the beginning of the year
$
59,575

 
$
59,494

 
$
50,839

Increases for tax positions taken in prior years
1,245

 
551

 
2,701

Decreases for tax positions taken in prior years
(7
)
 
(764
)
 
(905
)
Increases for tax positions taken in current year
11,634

 
11,585

 
12,709

Decreases for settlements with taxing authorities
—

 
(3,601
)
 
(3,907
)
Decreases for lapsing of statutes of limitations
(3,429
)
 
(7,690
)
 
(1,943
)
Unrecognized tax benefits at the end of the year
$
69,018

 
$
59,575

 
$
59,494