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Income Taxes | 12 Months Ended
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Oct. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Note 6. Income Taxes Effective Tax Rate The effective tax rates for fiscal 2022 and 2021 were 18.8% and (499.1)%, respectively. The increase was primarily due to an intra-group transfer of intellectual property in fiscal 2021 and UK tax rate change in fiscal 2021, as discussed below. The increase was also due to changes in the geographic composition of pre-tax earnings and changes in excess tax benefits from share-based compensation. The effective tax rate for fiscal 2022 was lower than the US federal statutory rate primarily due to foreign earnings in jurisdictions with lower tax rates and changes in unrecognized tax benefits, partially offset by 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, UK tax rate change, and earnings in foreign 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 CooperVision 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. 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 first quarter of fiscal 2021. During the third quarter of fiscal 2021, the Company recognized a $536.7 million tax benefit related primarily to the remeasurement of this deferred tax asset caused by the UK enactment of a 25% corporate tax rate. Components of income before income taxes:
Years Ended October 31, (In millions) | 2022 |  | 2021 |  | 2020
Income before income taxes: |  |  |  |  |
United States | $ | 31.4 |  |  | $ | (31.0) |  |  | $ | (88.0) |
Foreign | 443.9 |  |  | 522.5 |  |  | 354.5 |
| $ | 475.3 |  |  | $ | 491.5 |  |  | $ | 266.5 |
Components of provision for income taxes:
Years Ended October 31, (In millions) | 2022 |  | 2021 |  | 2020
Current: |  |  |  |  |
Federal | $ | 10.2 |  |  | $ | 21.0 |  |  | $ | 1.4 |
State | 3.8 |  |  | 1.3 |  |  | 1.1 |
Foreign | 21.7 |  |  | 26.7 |  |  | 26.5 |
| 35.7 |  |  | 49.0 |  |  | 29.0 |
Deferred: |  |  |  |  |
Federal | 10.5 |  |  | (8.8) |  |  | 3.2 |
State | (2.2) |  |  | (0.5) |  |  | 0.8 |
Foreign | 45.6 |  |  | (2,492.9) |  |  | (4.9) |
| 53.9 |  |  | (2,502.2) |  |  | (0.9) |
Provision for income taxes | $ | 89.5 |  |  | $ | (2,453.2) |  |  | $ | 28.1 |
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) | 2022 |  | 2021 |  | 2020
Provision for income taxes at United States statutory tax rate | $ | 99.8 |  |  | $ | 103.2 |  |  | $ | 56.0 |
(Decrease) increase in taxes resulting from: |  |  |  |  |
Foreign earnings in jurisdictions with lower tax rates | (22.3) |  |  | (43.6) |  |  | (54.7) |
Foreign earnings subject to United States tax | 20.7 |  |  | 25.4 |  |  | 32.0 |
Excess tax benefits from share-based compensation | (2.6) |  |  | (13.0) |  |  | (6.2) |
Deferred tax asset step-up | (3.4) |  |  | 3.2 |  |  | (9.0) |
United States provision-to-return | 0.5 |  |  | (1.2) |  |  | 7.0 |
Intra-group transfer to UK subsidiary | — |  |  | (1,987.8) |  |  | — |
Remeasurement of deferred tax assets from UK rate change | — |  |  | (536.7) |  |  | — |
Change in unrecognized tax benefits | (12.7) |  |  | (7.6) |  |  | (0.1) |
State tax provision | 5.0 |  |  | 0.8 |  |  | 1.9 |
Other, net | 4.5 |  |  | 4.1 |  |  | 1.2 |
Provision for income taxes | $ | 89.5 |  |  | $ | (2,453.2) |  |  | $ | 28.1 |
Components of deferred tax assets and liabilities:
Years Ended October 31, (In millions) | 2022 |  | 2021
Deferred tax assets: |  |  |
Accounts receivable | $ | 4.9 |  |  | $ | 3.4 |
Inventories | 6.3 |  |  | 6.1 |
Accrued liabilities, reserves and compensation accruals | 79.9 |  |  | 78.1 |
Foreign deferred tax assets | 2,500.5 |  |  | 2,531.5 |
Share-based compensation | 14.5 |  |  | 28.6 |
Net operating loss and tax credit carryforwards | 19.6 |  |  | 19.3 |
Intangible assets | — |  |  | 6.8 |
Capitalized research and experimental expenses | 15.4 |  |  | 13.5 |
Total gross deferred tax assets | 2,641.1 |  |  | 2,687.3 |
Less: valuation allowance | (60.1) |  |  | (51.8) |
Deferred tax assets | 2,581.0 |  |  | 2,635.5 |
Deferred tax liabilities: |  |  |
Tax deductible goodwill | (39.7) |  |  | (34.0) |
Intangible assets | (153.8) |  |  | — |
Plant and equipment | (48.8) |  |  | (46.5) |
Foreign deferred tax liabilities | (45.5) |  |  | (32.5) |
Total gross deferred tax liabilities | (287.8) |  |  | (113.0) |
Net deferred tax assets | $ | 2,293.2 |  |  | $ | 2,522.5 |
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 related to foreign tax attributes. At October 31, 2022, the Company had federal net operating loss carryforwards of $65.4 million and state net operating loss carryforwards of $97.3 million. Federal net operating loss carryforwards of $17.1 million expire on various dates between 2025 and 2037 and $48.3 million do not expire. The state net operating loss carryforwards expire on various dates between 2026 through 2042. A tax benefit is recognized if it is more likely than not that a tax position will be sustained on its technical merits, based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority. Changes in unrecognized tax benefits:
(In millions) |
Balance at October 31, 2020 | $ | 58.5 |
Decrease based on tax positions in prior fiscal years | (8.3) |
Increase based on tax positions in current fiscal year | 307.2 |
Settlements | (1.9) |
Lapses of statutes of limitations | (1.7) |
Balance at October 31, 2021 | $ | 353.8 |
Decrease based on tax positions in prior fiscal years | (12.5) |
Settlements | (0.2) |
Lapses of statutes of limitations | (4.2) |
Balance at October 31, 2022 | $ | 336.9 |
These tax benefits, if recognized, would reduce provision for income taxes for 2022, 2021 and 2020, by $324.3 million, $336.5 million, and $46.0 million, respectively. Interest and penalties related to unrecognized tax benefits are recognized in provision for income taxes. As of October 31, 2022, 2021 and 2020, accrued gross interest and penalties related to unrecognized tax benefits was $5.4 million, $6.4 million, and $7.3 million, respectively. Included in the balance of unrecognized tax benefits at October 31, 2022 is $9.1 million related to tax positions for which it is reasonably possible that the total amounts could change during the next twelve months. Filed tax returns are subject to examination by tax authorities in major tax jurisdictions after fiscal 2016, 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 https://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 https://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 https://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 https://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 https://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 https://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 https://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 https://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 https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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