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Income Taxes
 12 Months Ended
Sep. 30, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The significant components of income before income taxes and the consolidated income tax provision were as follows:
(In millions)Year Ended September 30
 202120202019
Income before income taxes:   
Domestic$145.0 $137.0 $122.5 
Foreign157.8 134.2 86.1 
Total$302.8 $271.2 $208.6 
Income tax expense:   
Current provision   
U.S. Federal$55.5 $38.1 $51.0 
State13.1 10.8 6.0 
Foreign17.7 18.3 18.2 
Total current provision86.3 67.2 75.2 
Deferred provision:   
U.S. Federal(25.5)(15.6)(12.0)
State(4.8)(2.8)(2.5)
Foreign(1.7)(0.6)(4.3)
Total deferred provision(32.0)(19.0)(18.8)
Income tax expense$54.3 $48.2 $56.4 
Differences between income tax expense reported for financial reporting purposes and that computed based upon the application of the statutory U.S. Federal tax rate to the reported income before income taxes were as follows:
(In millions)Year Ended September 30
 202120202019
Amount% of
Pretax
Income		Amount% of
Pretax
Income		Amount% of
Pretax
Income
U.S. Federal income tax 1
$63.6 21.0 %$57.0 21.0 %$43.8 21.0 %
State income tax 2
7.3 2.4 4.1 1.5 3.3 1.6 
Foreign income tax 3
(17.9)(5.9)(15.0)(5.5)(10.1)(4.9)
Application of federal research tax credits(7.7)(2.6)(6.2)(2.3)(5.6)(2.7)
Application of foreign tax credits(9.5)(3.2)(11.6)(4.3)(0.1)— 
Valuation of tax attributes1.2 0.4 5.0 1.9 2.2 1.1 
Foreign inclusions10.3 3.5 7.7 2.9 — — 
Excess tax benefits from share based awards(1.5)(0.5)(4.7)(1.7)(5.2)(2.5)
U.S. tax reform transition tax— — — — (1.0)(0.5)
Foreign-derived intangible income deduction(9.9)(3.4)(7.8)(2.9)(4.3)(2.0)
Global intangible low-taxed income inclusion7.6 2.6 12.6 4.6 9.6 4.6 
Disposition of subsidiary— — 4.1 1.5 18.2 8.7 
Current period change in uncertain tax positions— — — — 4.6 2.2 
Non-deductible transaction costs 4
6.8 2.3 — — — — 
Other, net4.0 1.3 3.0 1.1 1.0 0.4 
Income tax expense$54.3 17.9 %$48.2 17.8 %$56.4 27.0 %
1 At statutory rate.
2 Net of U.S. Federal benefit.
3 U.S. Federal tax rate differential.
4 Non-deductible costs related to the acquisition of Bardy, including the indemnity claim settlement and accrued interest. See Note 3. Business Combinations for further information.
The tax effect of temporary differences that gave rise to the deferred tax assets and liabilities were as follows:
(In millions)September 30, 2021September 30, 2020
Deferred tax assets:  
Employee benefit accruals$58.1 $48.3 
Inventory15.2 14.7 
Net operating loss carryforwards93.3 69.7 
Tax credit carryforwards26.4 26.4 
Lease liabilities18.3 18.8 
Other, net36.5 36.2 
 247.8 214.1 
Less: Valuation allowance(53.0)(50.8)
Total deferred tax assets194.8 163.3 
Deferred tax liabilities:  
Depreciation(14.6)(19.2)
Amortization(190.5)(201.0)
Lease Assets(17.1)(17.6)
Other, net(5.6)(5.6)
Total deferred tax liabilities(227.8)(243.4)
Deferred tax liability - net$(33.0)$(80.1)

As of September 30, 2021, we had $40.7 million of deferred tax assets related to operating loss carryforwards in foreign jurisdictions that are subject to various carryforward periods with the majority eligible to be carried forward for an unlimited period. Additionally, we had $43.1 million of deferred tax assets related to U.S. Federal net operating loss (“NOL”) carryforwards, some of which will be carried forward for an unlimited period and some of which will expire between 2022 and 2036 and $9.5 million of deferred tax assets related to state NOL carryforwards, some of which will be carried forward for an unlimited period and some of which expire between 2022 and 2041. We had $24.3 million of deferred tax assets related to state tax credits, some of which will be carried forward for an unlimited period and some of which will expire between 2022 and 2031. We had $1.1 million of deferred tax assets related to capital loss carryforwards which will expire in 2025. We had $1.7 million of deferred tax assets related to foreign tax credit carryforwards which will expire between 2030 and 2031. We are considering carryback opportunities for the capital loss carryforward and the foreign tax credit carryforward.

The gross deferred tax assets as of September 30, 2021 were reduced by valuation allowances of $53.0 million primarily related to certain foreign deferred tax attributes and state tax credit carryforwards as it is more likely than not that some portion or all of these tax attributes will not be realized. In evaluating whether it is more likely than not that we would recover our deferred tax assets, future taxable income, the reversal of existing temporary differences and tax planning strategies were considered. We believe that our estimates for the valuation allowances recorded against deferred tax assets are appropriate based on current facts and circumstances.  During fiscal year ended September 30, 2021, the valuation allowance increased by $2.2 million. The increase related primarily to foreign net operating losses, state net operating losses, and state tax credits and that more likely that not will not be realized.

We operate under tax holidays in both Singapore and Puerto Rico. The Singapore tax holiday is effective through 2024. The Puerto Rico tax holiday is effective through 2025, but we disposed of this operation in fiscal 2019 and thus will not recognize any benefit in the future. Both incentives are conditional on meeting certain employment and/or investment thresholds. The impact of these tax holidays decreased foreign taxes by $3.9 million for the fiscal year ended September 30, 2021, $3.3 million for the fiscal year ended September 30, 2020 and $5.2 million for the fiscal year ended September 30, 2019. The benefit of the tax holidays on net income per diluted share was $0.06, $0.05 and $0.08 during fiscal years ended September 30, 2021, 2020 and 2019.

With regard to our non-U.S. subsidiaries, it is our practice and intention to reinvest the earnings in those businesses, to fund capital expenditures and other operating cash needs. Because the undistributed earnings of non-U.S. subsidiaries are considered to be permanently reinvested, no U.S. deferred income taxes or foreign withholding taxes have been provided on earnings subsequent to the enactment of the Tax Act. As of September 30, 2021, we have approximately $83.5 million of undistributed
earnings in our non-U.S. subsidiaries that are considered to be permanently reinvested. If such earnings were repatriated, we do not anticipate incurring a significant amount of additional tax expense.

We file a consolidated federal income tax return as well as multiple state, local and foreign jurisdiction tax returns. In the normal course of business, we are subject to examination by the taxing authorities in each of the jurisdictions where we file tax returns. During fiscal year ended September 30, 2021, the U.S. Internal Revenue Service (“IRS”) concluded its audit of fiscal year ended September 30, 2019 and initiated its post-filing examination of the fiscal year ended September 30, 2020 consolidated federal return. We continue to participate in the IRS Compliance Assurance Program (“CAP”) for fiscal year ended September 30, 2021 and fiscal year end September 30, 2022. We are in the application process to remain in the CAP for fiscal year end September 30, 2023. The CAP provides the opportunity for the IRS to review certain tax matters prior to us filing our tax return for the year, thereby reducing the time it takes to complete the post-filing examination. We are also subject to state and local or foreign income tax examinations by taxing authorities for years back to fiscal year ended September 30, 2016.

We also have on-going audits in various stages of completion in several state and foreign jurisdictions, one or more of which may conclude within the next 12 months. Such settlements could involve some or all of the following: the payment of additional taxes and related penalties, the adjustment of certain deferred taxes and/or the recognition of unrecognized tax benefits. The resolution of these matters, in combination with the expiration of certain statutes of limitations in various jurisdictions, make it reasonably possible that our unrecognized tax benefits may decrease as a result of either payment or recognition by up to $2.0 million in the next 12 months, excluding interest.

The total amount of gross unrecognized tax benefits as of September 30, 2021, 2020 and 2019 were $2.7 million, $3.9 million and $9.6 million, which includes $2.5 million, $3.5 million and $9.3 million that, if recognized, would impact the effective tax rate in future periods. The remaining amount relates to items which, if recognized, would not impact our effective tax rate.

A rollforward of the beginning and ending amount of unrecognized tax benefits is as follows:
(In millions)Year Ended September 30
 202120202019
Balance as of October 1$3.9 $9.6 $6.2 
Increases in tax position of prior years0.2 — 5.8 
Settlements with taxing authorities— (5.8)(1.1)
Lapse of applicable statute of limitations(1.4)(0.2)(1.0)
Foreign currency adjustments— 0.3 (0.3)
Total change(1.2)(5.7)3.4 
Balance as of September 30$2.7 $3.9 $9.6 

We recognize accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. Accrued interest and penalties, which are not presented in the rollforward table above, were $1.2 million, $1.4 million and $1.7 million as of September 30, 2021, 2020 and 2019. Related to interest and penalties, we recognized an income tax benefit of $0.3 million, $0.4 million, and $0.4 million as of September 30, 2021, 2020 and 2019.