3. Discontinued Operations

During the six months ended March 29, 2019, we sold our Subsea Communications (“SubCom”) business for net cash proceeds of $297 million and incurred a pre-tax loss on sale of $86 million, related primarily to the recognition of cumulative translation adjustment losses of $67 million and the guarantee liabilities discussed below. The SubCom business met the held for sale and discontinued operations criteria and was reported as such in all periods presented on the Condensed Consolidated Financial Statements. Prior to reclassification to discontinued operations, the SubCom business was included in the Communications Solutions segment.

In connection with the sale, we contractually agreed to continue to honor performance guarantees and letters of credit related to the SubCom business’ projects that existed as of the date of sale. These guarantees had a combined value of approximately $1.7 billion as of March 29, 2019 and are expected to expire at various dates through fiscal 2025; however, the majority are expected to expire within two years. At the time of sale, we determined that the fair value of these guarantees was $12 million, which we recognized by a charge to pre-tax loss on sale. Also, under the terms of the definitive agreement, we are required to issue up to $300 million of new performance guarantees, subject to certain limitations, for projects entered into by the SubCom business following the sale for a period of up to three years. During the six months ended March 29, 2019, we issued a guarantee of $70 million for a new project. We have contractual recourse against the SubCom business if we are required to perform on any SubCom guarantees; however, based on historical experience, we do not anticipate having to perform.

The following table presents the summarized components of income (loss) from discontinued operations, net of income taxes, for the SubCom business and prior divestitures:


		For the			For the
		Quarters Ended			Six Months Ended
	March 29,		March 30,		March 29,		March 30,
	2019		2018		2019		2018
	(in millions)
Net sales	$	—	$	183	$	41	$	326
Cost of sales		—		(151)		(50)		(283)
Selling, general, and administrative expenses		(1)		(16)		(5)		(23)
Research, development, and engineering expenses		—		(10)		(3)		(20)
Restructuring and other charges, net		—		(4)		(3)		(4)
Pre-tax income (loss) from discontinued operations		(1)		2		(20)		(4)
Pre-tax gain (loss) on sale of discontinued operations		10		(1)		(86)		(1)
Income tax (expense) benefit		1		(1)		9		(2)
Income (loss) from discontinued operations, net of income taxes	$	10	$	—	$	(97)	$	(7)

The following table presents balance sheet information for assets and liabilities held for sale at September 28, 2018; there were no such balances at March 29, 2019:


	September 28,
	2018
	(in millions)
Accounts receivable, net	$	72
Inventories		130
Other current assets		32
Property, plant, and equipment, net		221
Other assets		17
Total assets held for sale	$	472

Accounts payable	$	63
Accrued and other current liabilities		26
Deferred revenue		60
Other liabilities		39
Total liabilities held for sale	$	188