Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

v2.4.0.8
Income Taxes (Tables)
12 Months Ended
Jun. 30, 2014
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)
2014
 
2013
 
2012
Domestic income before income taxes
$
434,336

 
$
420,862

 
$
607,146

Foreign income before income taxes
300,125

 
269,759

 
366,948

Total income before income taxes
$
734,461

 
$
690,621

 
$
974,094

Schedule of Components of Income Tax Expense (Benefit)
The provision for income taxes is comprised of the following: 
(In thousands)
Year ended June 30,
2014
 
2013
 
2012
Current:
 
 
 
 
 
Federal
$
98,937

 
$
118,888

 
$
(699
)
State
8,580

 
4,404

 
51

Foreign
27,867

 
25,112

 
24,383

 
135,384

 
148,404

 
23,735

Deferred:
 
 
 
 
 
Federal
22,904

 
(2,552
)
 
188,882

State
(334
)
 
(1,036
)
 
3,721

Foreign
(6,248
)
 
2,656

 
1,741

 
16,322

 
(932
)
 
194,344

Provision for income taxes
$
151,706

 
$
147,472

 
$
218,079

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,
2014
 
2013
Deferred tax assets:
 
 
 
Tax credits and net operating losses
$
95,492

 
$
77,512

Employee benefits accrual
97,308

 
83,391

Stock-based compensation
17,676

 
37,091

Capitalized R&D expenses
12,051

 
34,791

Inventory reserves
83,783

 
79,866

Non-deductible reserves
41,469

 
42,256

Depreciation and amortization
2,572

 

Unearned revenue
13,937

 
12,010

Other
29,483

 
25,454

Gross deferred tax assets
393,771

 
392,371

Valuation allowance
(76,328
)
 
(57,097
)
Net deferred tax assets
$
317,443

 
$
335,274

Deferred tax liabilities:
 
 
 
Unremitted earnings of foreign subsidiaries not permanently reinvested
$
(17,334
)
 
$
(20,636
)
Depreciation and amortization

 
(1,863
)
Deferred profit
(16,358
)
 
(10,351
)
Unrealized gain on investments
(1,168
)
 
(572
)
Total deferred tax liabilities
(34,860
)
 
(33,422
)
Total net deferred tax assets
$
282,583

 
$
301,852

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,
 
2014
 
2013
 
2012
Federal statutory rate
35.0
 %
 
35.0
 %
 
35.0
 %
State income taxes, net of federal benefit
0.7
 %
 
0.3
 %
 
0.4
 %
Effect of foreign operations taxed at various rates
(11.5
)%
 
(9.6
)%
 
(9.9
)%
Research and development tax credit
(1.5
)%
 
(3.1
)%
 
(1.1
)%
Net change in tax reserves
0.3
 %
 
1.7
 %
 
(2.8
)%
Domestic manufacturing benefit
(1.4
)%
 
(1.6
)%
 
(0.7
)%
Effect of stock-based compensation
0.4
 %
 
(0.3
)%
 
1.3
 %
Other
(1.3
)%
 
(1.0
)%
 
0.2
 %
Effective income tax rate
20.7
 %
 
21.4
 %
 
22.4
 %
Summary of Income Tax Contingencies
A reconciliation of gross unrecognized tax benefits is as follows: 
 
Year ended June 30,
(In thousands)
2014
 
2013
 
2012
Unrecognized tax benefits at the beginning of the period
$
59,494

 
$
50,839

 
$
78,337

Increases for tax positions taken in prior years
551

 
2,701

 
4,172

Decreases for tax positions taken in prior years
(764
)
 
(905
)
 
(1,002
)
Increases for tax positions taken in current year
11,585

 
12,709

 
15,663

Decreases for settlements with taxing authorities
(3,601
)
 
(3,907
)
 
(43,464
)
Decreases for lapsing of statutes of limitations
(7,690
)
 
(1,943
)
 
(2,867
)
Unrecognized tax benefits at the end of the period
$
59,575

 
$
59,494

 
$
50,839