Discontinued Operations (Notes)

9 Months Ended

Jun. 30, 2019

On November 13, 2018, the Company entered into a Stock and Asset Purchase Agreement (“Purchase Agreement”) with BCP Acquisitions LLC (“Purchaser”). The Purchaser is a newly-formed entity controlled by investment funds managed by Brookfield Capital Partners LLC. Pursuant to the Purchase Agreement, on the terms and subject to the conditions therein, the Company agreed to sell, and Purchaser agreed to acquire, the Company’s Power Solutions business for a purchase price of $13.2 billion. The transaction closed on April 30, 2019 with net cash proceeds of $11.6 billion after tax and transaction-related expenses.

During the first quarter of fiscal 2019, the Company determined that its Power Solutions business met the criteria to be classified as a discontinued operation and, as a result, Power Solutions' historical financial results are reflected in the Company's consolidated financial statements as a discontinued operation, and assets and liabilities were retrospectively reclassified as assets and liabilities held for sale. The Company did not allocate any general corporate overhead to discontinued operations.

The following table summarizes the results of Power Solutions reclassified as discontinued operations for the three and nine month periods ended June 30, 2019 and 2018 (in millions). As the Power Solutions sale occurred on April 30, 2019, there is only one month of Power Solutions results included in the three month period ended June 30, 2019, and only seven months included in the nine month period ended June 30, 2019.



	Three Months Ended June 30,						Nine Months Ended June 30,
	2019			2018			2019			2018

Net sales	$	562		$	1,838		$	5,001		$	5,813

Income from discontinued operations before income taxes	5,315			303			6,039			978
Provision for income taxes on discontinued operations	(1,264		)	(45		)	(1,441		)	(137		)
Income from discontinued operations attributable to noncontrolling interests, net of tax	—			(9		)	(24		)	(33		)
Income from discontinued operations	$	4,051		$	249		$	4,574		$	808

For the three months ended June 30, 2019, income from discontinued operations before income taxes included a gain on sale of the Power Solutions business, net of transaction and other costs, of $5.2 billion and a favorable impact of $21 million for ceasing depreciation and amortization expense as the business was held for sale. For the nine months ended June 30, 2019, income from discontinued operations before income taxes included a gain on sale of the Power Solutions business, net of transaction and other costs, of $5.2 billion and a favorable impact of $117 million for ceasing depreciation and amortization expense as the business was held for sale.

For the three and nine months ended June 30, 2019, the effective tax rate was more than the Irish statutory rate of 12.5% primarily due to the tax impacts of the divestiture of the Power Solutions business and tax rate differentials. For the three and nine months ended June 30, 2018, the effective tax rate was more than the Irish statutory rate of 12.5% primarily due to tax rate differentials.

Assets and Liabilities Held for Sale

The following table summarizes the carrying value of the Power Solutions assets and liabilities held for sale at September 30, 2018 (in millions):



	September 30, 2018

Cash	$	15
Accounts receivable - net	1,443
Inventories	1,405
Other current assets	152
Assets held for sale	$	3,015

Property, plant and equipment - net	$	2,871
Goodwill	1,092
Other intangible assets - net	161
Investments in partially-owned affiliates	453
Other noncurrent assets	611
Noncurrent assets held for sale	$	5,188

Short-term debt	$	9
Current portion of long-term debt	25
Accounts payable	1,237
Accrued compensation and benefits	125
Other current liabilities	395
Liabilities held for sale	$	1,791

Long-term debt	$	31
Pension and postretirement benefits	101
Other noncurrent liabilities	75
Noncurrent liabilities held for sale	$	207

During the third quarter of fiscal 2019, the Company determined that a business within its Global Products segment met the criteria to be classified as held for sale. The assets and liabilities of this business are presented as held for sale in the consolidated statements of financial position as of June 30, 2019. Assets and liabilities held for sale are required to be recorded at the lower of carrying value or fair value less any costs to sell. Accordingly, the Company recorded an impairment charge of $235 million within restructuring and impairment costs in the consolidated statements of income in the third quarter of fiscal 2019 to write down the carrying value of the assets held for sale to fair value less any costs to sell. Refer to Note 17, "Impairment of Long-Lived Assets" of the notes to consolidated financial statements for further information regarding the impairment charge. The divestiture of the business held for sale could result in a gain or loss on sale to the extent the ultimate selling price differs from the current carrying value of the net assets recorded. The business did not meet the criteria to be classified as a discontinued operation as the divestiture of the business will not have a major effect on the Company's operations and financial results.