Income Taxes (Tables)

12 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense

Income tax expense consisted of the following for the years ended September 30:

(In millions)	2019		2018		2017
Current
Federal (a)	$	10	$	(2)	$	47
State	5		6		8
Non-U.S.	19		17		14
	34		21		69
Deferred
Federal	24		136		106
State	—		9		12
Non-U.S.	(1)		—		(1)
	23		145		117
Income tax expense	$	57	$	166	$	186

(a)Benefit from favorable settlement with tax authorities in fiscal 2018.

Schedule and Reconciliation of the Statutory Federal Income Tax

The following table presents pre-tax income and the principal components of the reconciliation between the effective tax rate and the U.S. federal statutory income tax rate in effect for the years ended September 30:

(In millions)	2019			2018			2017
Income before income taxes
United States	$	212		$	282		$	433
Non-U.S.	53			50			57
Total income before income taxes	$	265		$	332		$	490
U.S. statutory tax rate (a)	21.0		%	24.5		%	35.0		%
Income taxes computed at U.S. statutory tax rate	$	56		$	81		$	171
Increase (decrease) in amount computed resulting from:
Unrecognized tax benefits	5			—			2
State taxes, net of federal benefit	9			14			21
International rate differential	2			—			(7)
Permanent items	(3)			(3)			(8)
Remeasurement of net deferred taxes	(4)			73			—
Return-to-provision adjustments	(6)			—			1
Deemed repatriation	—			4			—
Change in valuation allowance	(4)			1			(4)
Tax Matters Agreement activity	1			(2)			10
Other	1			(2)			—
Income tax expense	$	57		$	166		$	186
Effective tax rate	21.5		%	50.0		%	38.0		%

(a)As a result of U.S. tax reform legislation which generally became effective January 1, 2018, the federal corporate income tax rate was lowered from 35% to 21%. Based on the effective date of the rate reduction, the Company's federal corporate statutory income tax rate was a blended rate of 24.5% for fiscal 2018.

Components of Income Before Income Taxes

The following table presents pre-tax income and the principal components of the reconciliation between the effective tax rate and the U.S. federal statutory income tax rate in effect for the years ended September 30:

(In millions)	2019			2018			2017
Income before income taxes
United States	$	212		$	282		$	433
Non-U.S.	53			50			57
Total income before income taxes	$	265		$	332		$	490
U.S. statutory tax rate (a)	21.0		%	24.5		%	35.0		%
Income taxes computed at U.S. statutory tax rate	$	56		$	81		$	171
Increase (decrease) in amount computed resulting from:
Unrecognized tax benefits	5			—			2
State taxes, net of federal benefit	9			14			21
International rate differential	2			—			(7)
Permanent items	(3)			(3)			(8)
Remeasurement of net deferred taxes	(4)			73			—
Return-to-provision adjustments	(6)			—			1
Deemed repatriation	—			4			—
Change in valuation allowance	(4)			1			(4)
Tax Matters Agreement activity	1			(2)			10
Other	1			(2)			—
Income tax expense	$	57		$	166		$	186
Effective tax rate	21.5		%	50.0		%	38.0		%

(a)As a result of U.S. tax reform legislation which generally became effective January 1, 2018, the federal corporate income tax rate was lowered from 35% to 21%. Based on the effective date of the rate reduction, the Company's federal corporate statutory income tax rate was a blended rate of 24.5% for fiscal 2018.

Schedule of Deferred Tax Assets and Liabilities

A summary of the deferred tax assets and liabilities included in the Consolidated Balance Sheets follows as of September 30:

(In millions)	2019		2018
Deferred tax assets
Non-U.S. net operating loss carryforwards (a)	$	2	$	2
State net operating loss carryforwards (b)	19		19
Employee benefit obligations	98		86
Compensation accruals	21		21
Credit carryforwards (c)	19		36
Other (d)	22		9
Valuation allowances (e)	(2)		(7)
Net deferred tax assets	179		166
Deferred tax liabilities
Goodwill and other intangibles	9		3
Property, plant and equipment	46		23
Undistributed earnings	2		2
Total deferred tax liabilities	57		28
Total net deferred tax assets	$	122	$	138

(a)Gross non-U.S. net operating loss carryforwards of $2 million expire in fiscal years 2020 to 2033, with $4 million that has no expiration.

(b)Apportioned gross state net operating loss carryforwards of $233 million expire in fiscal years 2022 through 2037.

(c)Credit carryforwards consist primarily of U.S. tax credits that generally expire in fiscal years 2025 through 2029.

(d)Due to netting of deferred tax assets and liabilities by jurisdiction, a $1 million liability included in this deferred tax asset balance is included in Other noncurrent liabilities on the Consolidated Balance Sheet as of September 30, 2019.

(e)Valuation allowances primarily relate to non-U.S. net operating loss carryforwards and certain other deferred tax assets that are not expected to be realized or realizable.

Schedule of Gross Unrecognized Tax Benefits

The aggregate changes in the balance of gross unrecognized tax benefits were as follows for the years ended September 30:

(In millions)	2019		2018		2017
Gross unrecognized tax benefits as of October 1	$	10	$	10	$	8
Increases related to tax positions from prior years	5		2		—
Increases related to tax positions taken during the current year	—		1		2
Settlements with tax authorities	—		(2)		—
Lapses of statutes of limitation	(1)		(1)		—
Gross unrecognized tax benefits as of September 30 (a)	$	14	$	10	$	10

(a)These unrecognized tax benefits would favorably impact the effective income tax rate if recognized. Accruals for interest and penalties were $2 million and $1 million as of September 30, 2019 and 2018, respectively.