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Income Taxes
 12 Months Ended
Jun. 30, 2020
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income before provision for income taxes consists of the following:
 
Year Ended June 30,
 
2020
 
2019
 
2018
 
 
 
As Adjusted
 
As Adjusted
 
(Dollars in Thousands)
Domestic
$
274,066

 
$
297,002

 
$
218,452

Foreign
5,291

 
4,525

 
7,901

Income before provision for income taxes
$
279,357

 
$
301,527

 
$
226,353


The provision for income taxes shown in the accompanying consolidated statements of operations is composed of the following:
 
Year Ended June 30,
 
2020
 
2019
 
2018
 
 
 
As Adjusted
 
As Adjusted
 
(Dollars in Thousands)
Federal—
 

 
 

 
 

Current
$
17,048

 
$
64,194

 
$
47,734

Deferred
28,101

 
(27,267
)
 
(107,588
)
State—
 

 
 

 
 

Current
1,367

 
3,246

 
1,471

Deferred
500

 
(1,033
)
 
939

Foreign—
 

 
 

 
 

Current
2,797

 
1,549

 
2,296

Deferred
(127
)
 
(524
)
 
267

 
$
49,686

 
$
40,165

 
$
(54,881
)

Our tax expense for fiscal 2020 was unfavorably impacted by the recognition of $6.4 million tax expense due to an accounting method change election when we filed our fiscal 2019 federal tax return as a result of a change in tax regulations during this fiscal year, to defer the acceleration of income for tax purposes as a result of adopting Topic 606. Fiscal 2020 was favorably impacted by the FDII deduction and tax credits.
The provision for income taxes differs from that based on the federal statutory rate due to the following:
 
Year Ended June 30,
 
2020
 
2019
 
2018
 
 
 
As Adjusted
 
As Adjusted
 
(Dollars in Thousands)
Federal tax provision at statutory rate
$
58,665

 
$
63,321

 
$
63,515

State income taxes
1,225

 
1,533

 
1,411

Remeasurement of deferred taxes
—

 
—

 
(110,986
)
Foreign-derived intangible income (FDII)
(13,581
)
 
(20,326
)
 
—

Global intangible low-taxed income (GILTI)
404

 
797

 
—

Effect of foreign operations
6,148

 
7,395

 
4,700

Impact of tax accounting method change
6,433

 
—

 
—

Foreign taxes and rate differences
404

 
514

 
(164
)
Stock-based compensation
33

 
(3,774
)
 
(2,951
)
Tax credits
(7,969
)
 
(9,677
)
 
(7,913
)
Uncertain tax positions
(3,236
)
 
1,055

 
(185
)
Domestic production activity deduction
—

 
—

 
(4,869
)
Valuation allowance
504

 
(550
)
 
2,326

Other, net
656

 
(123
)
 
235

Provision for income taxes
$
49,686

 
$
40,165

 
$
(54,881
)

Net deferred tax liabilities consist of the following at June 30, 2020 and 2019:
 
Year Ended June 30,
 
2020
 
2019
 
 
 
As Adjusted
 
(Dollars in Thousands)
Deferred tax assets:
 

 
 

State and foreign credits
$
4,922

 
$
4,055

Net operating loss carryforwards
1,200

 
906

Deferred revenue
4,596

 
5,252

Other reserves and accruals
7,465

 
6,082

Intangible assets
982

 
1,020

Property, leasehold improvements, and other basis differences
5,514

 
1,433

Other temporary differences
925

 
453

 
25,604

 
19,201

Deferred tax liabilities:
 

 
 

Contract assets and costs
(158,538
)
 
(147,619
)
Deferred revenue
(27,066
)
 
(8,610
)
Intangible assets
(6,815
)
 
(5,635
)
Property, leasehold improvements, and other basis differences
(5,223
)
 
(1,146
)
 
(197,642
)
 
(163,010
)
Valuation allowance
(6,205
)
 
(4,866
)
Net deferred tax liabilities
$
(178,243
)
 
$
(148,675
)

Reflected in the deferred tax assets above at June 30, 2020, we have foreign net operating loss carryforwards of $1.2 million, with unlimited carryforwards, and state and foreign research and development credits of $5.4 million which begin to expire in 2025.
Our valuation allowance for deferred tax assets was $6.2 million and $4.9 million as of June 30, 2020 and 2019, respectively. The most significant portion of the valuation allowance as of June 30, 2020 is attributable to a reserve against state R&D tax credits of $4.8 million.
For fiscal 2020, our income tax provision included amounts determined under the provisions of ASC 740 intended to satisfy additional income tax assessments, including interest and penalties, that could result from any tax return positions for which the likelihood of sustaining the position on audit does not meet a threshold of "more likely than not." Tax liabilities were recorded as a component of our income taxes payable and other non-current liabilities. The ultimate amount of taxes due will not be known until examinations are completed and settled or the audit periods are closed by statutes.
A reconciliation of the reserve for uncertain tax positions is as follows:
 
Year Ended June 30,
 
2020
 
2019
 
2018
 
(Dollars in Thousands)
Uncertain tax positions, beginning of year
$
5,380

 
$
3,931

 
$
3,921

Gross increases (decreases) —tax positions in prior period
(2,216
)
 
407

 
544

Gross increases—tax positions in current period
—

 
1,789

 
—

Gross decreases—lapse of statutes
(1,032
)
 
(740
)
 
(637
)
Currency translation adjustment
(26
)
 
(7
)
 
103

Uncertain tax positions, end of year
$
2,106

 
$
5,380

 
$
3,931


At June 30, 2020, the total amount of unrecognized tax benefits is $2.1 million. Upon being recognized, $1.9 million would reduce the effective tax rate. Our policy is to recognize interest and penalties related to income tax matters as provision for (benefit from) income taxes. At June 30, 2020, we had approximately $0.3 million of accrued interest and $0.1 million of penalties related to uncertain tax positions. We recorded a benefit for interest and penalties of approximately $0.3 million during fiscal 2020.
We are subject to income tax in many jurisdictions outside the U.S. Our operations in certain jurisdictions remain subject to examination for tax years 2009 to 2019, some of which are currently under audit by local tax authorities. The resolutions of these audits are not expected to be material to our consolidated financial statements.