NOTE 2. BUSINESSES HELD FOR SALE AND DISCONTINUED OPERATIONS

ASSETS AND LIABILITIES OF BUSINESSES HELD FOR SALE

On November 13, 2017, the Company announced its intention to exit approximately $20 billion of assets over the next one to two years. Since this announcement, GE has classified various businesses across our Power, Lighting, Aviation and Healthcare segments as held for sale. As these businesses met the criteria for held for sale, we presented these businesses as a single asset and liability in our financial statements and recognized a valuation allowance, if necessary, to recognize the net carrying amount at the lower of cost or fair value, less cost to sell. To date, we have recorded a cumulative pre-tax loss on the planned disposals of $1,132 million ($1,087 million after-tax), that was primarily recorded in the fourth quarter of 2017. In the first half of 2018, we closed certain of these transactions within our Power and Lighting segments for total net proceeds of $2,420 million, recognized a pre-tax gain of $238 million in the caption “Other income” in our consolidated Statement of Earnings (Loss) ($13 million after-tax) and liquidated $546 million of our previously recorded valuation allowance. These transactions are subject to customary working capital and other post-close adjustments.

While we announced the strategic portfolio actions for Transportation, GE Healthcare and BHGE, these businesses have not met the accounting criteria for held for sale classification. That classification will depend on the nature and timing of the transaction.



FINANCIAL INFORMATION FOR ASSETS AND LIABILITIES OF BUSINESSES HELD FOR SALE
(In millions)	June 30, 2018			December 31, 2017

Assets
Current receivables(a)	$	414		$	612
Inventories	687			931
Property, plant, and equipment – net	709			931
Goodwill	2,410			1,619
Other intangible assets – net	403			403
Contract assets	741			619
Valuation allowance on disposal group classified as held for sale (b)	(530		)	(1,000		)
Other assets	71			49
Assets of businesses held for sale	$	4,905		$	4,164

Liabilities
Accounts payable	$	498		$	602
Progress collections and deferred income	349			179
Non-current compensation and benefits	46			162
Other liabilities	304			305
Liabilities of businesses held for sale	$	1,198		$	1,248

(a)

Included transactions in our industrial businesses that were made on an arms-length basis with GE Capital, including GE current receivables sold to GE Capital of $332 million and $366 million at June 30, 2018 and December 31, 2017, respectively. These intercompany balances included within our held for sale businesses are reported in the GE and GE Capital columns of our financial statements, but are eliminated in deriving our consolidated financial statements.


(b)	We adjusted the carrying value to fair value less cost to sell for certain held for sale businesses.

DISCONTINUED OPERATIONS

Discontinued operations primarily relate to our financial services businesses. Discontinued operations primarily comprise residual assets and liabilities related to our exited U.S. mortgage business (WMC), our mortgage portfolio in Poland, and trailing liabilities associated with the sale of our GE Capital businesses as a result of the GE Capital Exit Plan (our plan announced in 2015 to reduce the size of our financial services businesses). Results of operations, financial position and cash flows for these businesses are separately reported as discontinued operations for all periods presented. See Note 19 for further information about indemnifications and further discussion on WMC.



FINANCIAL INFORMATION FOR DISCONTINUED OPERATIONS
	Three months ended June 30						Six months ended June 30
(In millions)	2018			2017			2018			2017

Operations
Total revenues and other income (loss)	$	4		$	9		$	(1,468	)	$	88

Earnings (loss) from discontinued operations before income taxes	$	(156	)	$	(216	)	$	(1,730	)	$	(412	)
Benefit (provision) for income taxes(a)	35			66			54			128
Earnings (loss) from discontinued operations, net of taxes	$	(121	)	$	(150	)	$	(1,676	)	$	(284	)

Disposal
Gain (loss) on disposal before income taxes	$	—		$	8		$	4		$	(19	)
Benefit (provision) for income taxes(a)	—			(3		)	(1		)	(81		)
Gain (loss) on disposal, net of taxes	$	—		$	4		$	3		$	(100	)

Earnings (loss) from discontinued operations, net of taxes(b)(c)	$	(121	)	$	(146	)	$	(1,673	)	$	(385	)

(a)

GE Capital's total tax benefit (provision) for discontinued operations and disposals included current tax benefit (provision) of $132 million and $253 million for the three months ended June 30, 2018 and 2017, respectively, and $123 million and $(323) million for the six months ended June 30, 2018 and 2017, respectively, including current U.S. Federal tax benefit (provision) of $37 million and $68 million for the three months ended June 30, 2018 and 2017, respectively and $61 million and $(519) million for the six months ended June 30, 2018 and 2017, respectively. The deferred tax benefit (provision) was $(97) million and $(190) million for the three months ended June 30, 2018 and 2017, respectively and $(70) million and $370 million for the six months ended June 30, 2018 and 2017, respectively.

(b)

The sum of GE Industrial earnings (loss) from discontinued operations, net of taxes, and GE Capital earnings (loss) from discontinued operations, net of taxes, after adjusting for earnings (loss) attributable to noncontrolling interests related to discontinued operations, is reported within earnings (loss) from discontinued operations, net of taxes, in the GE Industrial column of the Consolidated Statement of Earnings (Loss).


(c)	Earnings (loss) from discontinued operations attributable to the Company, before income taxes, was $(156) million and $(215) million for the three months ended June 30, 2018 and 2017, respectively, and $(1,726) million and $(438) million for the six months ended June 30, 2018 and 2017, respectively.



(In millions)	June 30, 2018		December 31, 2017

Assets
Cash, cash equivalents and restricted cash	$	615	$	757
Investment securities	425		647
Deferred income taxes	885		951
Financing receivables held for sale	2,912		3,215
Other assets	217		342
Assets of discontinued operations	$	5,053	$	5,912

Liabilities
Accounts payable	47		51
Borrowings	—		1
Other liabilities	1,903		654
Liabilities of discontinued operations	$	1,949	$	706