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Income Taxes | 12 Months Ended
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Oct. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Effective Tax Rate The effective tax rates for fiscal 2021 and 2020 were (499.1)% and 10.6%, respectively. The decrease was primarily due to an intra-group transfer of intellectual property, as discussed below, and remeasurement of the related deferred tax assets caused by the UK enactment of a 25% corporate tax rate. The effective tax rate otherwise increased due to changes in the geographical composition of pre-tax earnings, partially offset by changes in foreign earnings subject to US tax. The effective tax rate for fiscal 2021 was lower than the US federal statutory tax rate primarily due to the intra-group transfer, the remeasurement of deferred tax assets, and earnings in foreign jurisdictions with lower tax rates partially offset by foreign earnings subject to US tax. The effective tax rate for fiscal 2020 was lower than the US federal statutory rate primarily due to foreign earnings in jurisdictions with lower tax rates partially offset by foreign earnings subject to US tax. In November 2020, the Company completed an intra-group transfer of certain intellectual property and related assets of the CooperVision business to a UK subsidiary as part of a group restructuring to establish headquarters operations in the UK. Determining fair value involved significant judgment related to future revenue growth, operating margins and discount rates. Income before income taxes resulting from this transfer is eliminated upon consolidation. The transfer resulted in a step-up of the UK tax-deductible basis in the intellectual property and goodwill, creating a temporary difference between the book basis and the tax basis of these assets. As a result, the Company recognized a deferred tax asset of $1,987.9 million, with a corresponding income tax benefit, during the three months ended January 31, 2021. Components of income before income taxes:
Years Ended October 31, (In millions) | 2021 |  | 2020 |  | 2019
Income before income taxes: |  |  |  |  |
United States | $ | (31.0) |  |  | $ | (88.0) |  |  | $ | (32.8) |
Foreign | 522.5 |  |  | 354.5 |  |  | 510.2 |
| $ | 491.5 |  |  | $ | 266.5 |  |  | $ | 477.4 |
Components of provision for income taxes:
Years Ended October 31, (In millions) | 2021 |  | 2020 |  | 2019
Current: |  |  |  |  |
Federal | $ | 21.0 |  |  | $ | 1.4 |  |  | $ | 9.2 |
State | 1.3 |  |  | 1.1 |  |  | 1.6 |
Foreign | 26.7 |  |  | 26.5 |  |  | 15.8 |
| 49.0 |  |  | 29.0 |  |  | 26.6 |
Deferred: |  |  |  |  |
Federal | (8.8) |  |  | 3.2 |  |  | (8.1) |
State | (0.5) |  |  | 0.8 |  |  | (0.9) |
Foreign | (2,492.9) |  |  | (4.9) |  |  | (6.9) |
| (2,502.2) |  |  | (0.9) |  |  | (15.9) |
Provision for income taxes | $ | (2,453.2) |  |  | $ | 28.1 |  |  | $ | 10.7 |
Reconciliation between the expected provision for income taxes at the US federal statutory rate and the provision for income taxes:
Years Ended October 31, (In millions) | 2021 |  | 2020 |  | 2019
Provision for income taxes at United States statutory tax rate | $ | 103.2 |  |  | $ | 56.0 |  |  | $ | 100.3 |
(Decrease) increase in taxes resulting from: |  |  |  |  |
Foreign income subject to different tax rates | (43.6) |  |  | (54.7) |  |  | (85.6) |
Foreign income subject to United States tax | 25.4 |  |  | 32.0 |  |  | 16.1 |
United States tax reform | — |  |  | — |  |  | (5.8) |
Employee compensation | (9.9) |  |  | (4.4) |  |  | (7.8) |
Deferred tax asset step-up | 3.2 |  |  | (9.0) |  |  | (6.7) |
United States provision-to-return | (1.2) |  |  | 7.0 |  |  | 4.4 |
Intra-group transfer to UK subsidiary | (1,987.9) |  |  | — |  |  | — |
Remeasurement of deferred tax assets from UK rate change | (536.7) |  |  | — |  |  | — |
Change in unrecognized tax benefits | (7.6) |  |  | (0.1) |  |  | (1.5) |
Other, net | 1.9 |  |  | 1.3 |  |  | (2.7) |
Actual provision for income taxes | $ | (2,453.2) |  |  | $ | 28.1 |  |  | $ | 10.7 |
Components of deferred tax assets and liabilities:
Years Ended October 31, (In millions) | 2021 |  | 2020
Deferred tax assets: |  |  |
Accounts receivable, principally due to allowances for doubtful accounts | $ | 3.4 |  |  | $ | 2.6 |
Inventories | 6.1 |  |  | 5.8 |
Accrued liabilities, reserves and compensation accruals | 78.1 |  |  | 77.1 |
Foreign deferred tax assets | 2,531.5 |  |  | 90.9 |
Share-based compensation | 28.6 |  |  | 21.4 |
Net operating loss carryforwards | 18.5 |  |  | 9.6 |
Intangible assets | 7.5 |  |  | 19.6 |
Research and experimental expenses - Section 59(e) | 13.5 |  |  | 9.2 |
Tax credit carryforwards | 0.8 |  |  | 1.5 |
Total gross deferred tax assets | 2,688.0 |  |  | 237.7 |
Less: valuation allowance | (51.8) |  |  | (45.3) |
Deferred tax assets | 2,636.2 |  |  | 192.4 |
Deferred tax liabilities: |  |  |
Tax deductible goodwill | (34.0) |  |  | (29.7) |
Plant and equipment | (46.5) |  |  | (39.2) |
Deferred tax on foreign earnings | (8.4) |  |  | (7.5) |
Transaction costs | (0.7) |  |  | (0.7) |
Foreign deferred tax liabilities | (24.1) |  |  | (61.0) |
Total gross deferred tax liabilities | (113.7) |  |  | (138.1) |
Net deferred tax assets | $ | 2,522.5 |  |  | $ | 54.3 |
In assessing the realizability of deferred tax assets, the Company analyzes whether some or all deferred tax assets will not be realized. This analysis considers historical taxable income, the projected reversal of deferred tax liabilities, projected taxable income and tax planning strategies. Based upon this analysis, it is more likely than not the deferred tax assets, net of valuation allowance, will be realized. The increase in valuation allowance is primarily due to foreign tax credits. At October 31, 2021, we had federal net operating loss carryforwards of $63.7 million, state net operating loss carryforwards of $19.7 million, and $1.0 million of California research credit carryforwards. Federal net operating loss carryforwards of $47.5 million expire on various dates between 2025 and 2037 and $16.2 million do not expire. The state net operating loss carryforwards expire on various dates between 2025 through 2043, and the California research credit carryforwards do not expire. The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized from such positions are estimated based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Changes in unrecognized tax benefits:
(In millions) |
Balance at October 31, 2019 | $ | 49.7 |
Increase from prior year's UTB's | 3.4 |
Increase from current year's UTB's | 7.6 |
UTB (decrease) from expiration of statute of limitations | (2.2) |
Balance at October 31, 2020 | $ | 58.5 |
Decrease from prior year's UTB's | (8.3) |
Increase from current year's UTB's | 307.2 |
Increase (decrease) from settlements | (1.9) |
UTB (decrease) from expiration of statute of limitations | (1.7) |
Balance at October 31, 2021 | $ | 353.8 |
As of October 31, 2021, 2020 and 2019 there were unrecognized tax benefits of $353.8 million, $58.5 million, and $49.7 million, respectively. If recognized, these tax benefits would affect our effective tax rates for 2021, 2020 and 2019, by $336.5 million, $46.0 million, and $41.7 million, respectively. Interest and penalties related to unrecognized tax benefits are recognized as income tax expense. As of October 31, 2021, 2020 and 2019, we had accrued gross interest and penalties related to unrecognized tax benefits of $6.4 million, $7.3 million, and $3.9 million, respectively. Included in the balance of unrecognized tax benefits at October 31, 2021 is $4.2 million related to tax positions for which it is reasonably possible that the total amounts could significantly change during the next twelve months. Filed tax returns are subject to examination by tax authorities in major tax jurisdictions after fiscal 2014, including the UK and the US.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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