NOTE 2. BUSINESSES HELD FOR SALE AND DISCONTINUED OPERATIONS

ASSETS AND LIABILITIES OF BUSINESSES HELD FOR SALE

On February 25, 2019, we announced an agreement to sell our BioPharma business within our Healthcare segment to Danaher

Corporation for total consideration of approximately $21.4 billion. In the first quarter of 2019, we classified assets of $8,388 million (including goodwill of $5,548) and liabilities of $1,091 million of this business as held for sale. We expect to complete the sale of the business in the fourth quarter of 2019.

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, Aviation, and Healthcare segments, and Corporate 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. In the first quarter of 2019, we closed certain of these transactions within Corporate and our Power segment for total net proceeds of $572 million, recognized a pre-tax gain of $212 million in the caption “Other income” in our consolidated Statement of Earnings (Loss) and liquidated $46 million of our previously recorded valuation allowance. These transactions are subject to customary working capital and other post-close adjustments.

While we previously announced an orderly separation of ownership of BHGE over time, this business has not met the accounting criteria for held for sale classification as of March 31, 2019. That classification will depend on the nature and timing of the sale transactions.



FINANCIAL INFORMATION FOR ASSETS AND LIABILITIES OF BUSINESSES HELD FOR SALE (In millions)	March 31, 2019			December 31, 2018

Assets
Investment securities	$	28		$	—
Current receivables(a)	506			184
Inventories	953			529
Property, plant, and equipment – net and Operating lease right-of-use assets	1,075			423
Goodwill and Other intangible assets - net	6,601			884
Valuation allowance on disposal group classified as held for sale(b)	(935		)	(1,013		)
Deferred tax asset	942			—
Other assets	739			623
Assets of businesses held for sale	$	9,910		$	1,630

Liabilities
Accounts payable and Progress collections and deferred income(a)	$	927		$	428
Non-current compensation and benefits	539			152
Other liabilities	334			128
Liabilities of businesses held for sale	$	1,801		$	708

(a)

Includes GE current receivables sold to GE Capital of $308 million and $105 million at March 31, 2019 and December 31, 2018, respectively, and GE accounts payable for material procurement with GE Capital of $38 million and $40 million at March 31, 2019 and December 31, 2018, respectively. These intercompany balances, included within our held for sale businesses, are reported in the GE and GE Capital columns of our financial statements, and are eliminated in deriving our consolidated financial statements.


(b)	In the first quarter of 2019, we reduced the valuation allowance for certain held for sale businesses by $32 million.

DISCONTINUED OPERATIONS

Discontinued operations primarily relate to our Transportation segment and certain financial services businesses.

On February 25, 2019, we completed the spin-off and subsequent merger of our Transportation business with Wabtec, a U.S. rail equipment manufacturer. In the transaction, GE shareholders received shares of Wabtec common stock representing an approximate 24.3% ownership interest in Wabtec common stock. GE received $2,865 million in cash (net of certain deal related costs) as well as shares of Wabtec common stock and Wabtec non-voting convertible preferred stock that, together, represent approximately 24.9% ownership interest in Wabtec. In addition, GE is entitled to additional cash consideration up to $470 million for tax benefits that Wabtec realizes from the transaction. We reclassified our Transportation segment to discontinued operations in the first quarter of 2019.

As part of the transaction, we recorded a gain of $3,471 million ($2,508 million after-tax) in discontinued operations and a net after-tax decrease of $852 million in additional paid in capital in connection with the spin-off of approximately 49.4% of Transportation to our shareholders. The fair value of our interest in Wabtec’s common and preferred shares was $3,513 million based on the opening share price of $73.45 at the date of the transaction and was recorded in the caption “Investment securities” in our consolidated Statement of Financial Position. Any subsequent changes in fair value will be recognized in earnings in continuing operations. See Note 3 for further information. This interest is subject to certain trading restrictions and must be sold before the third anniversary of the transaction closing date.

Discontinued operations for our financial services businesses primarily relate to the GE Capital Exit Plan (our plan announced in 2015 to reduce the size of our financial services businesses) and were previously reported in the Capital segment. These 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.

During the first quarter of 2018, we recorded a reserve of $1,500 million in discontinued operations in connection with the United States Department of Justice (DOJ) ongoing investigation regarding potential violations of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) by WMC and GE Capital.

In January 2019, we announced an agreement in principle with the United States to settle this matter, and in April 2019, the parties entered into a definitive settlement agreement. Under the agreement, which concludes this investigation, GE, without admitting liability or wrongdoing, paid the United States a civil penalty of $1,500 million on behalf of itself and WMC.

Results of operations, financial position and cash flows for these businesses are reported as discontinued operations for all periods presented.



FINANCIAL INFORMATION FOR DISCONTINUED OPERATIONS (In millions)	Three months ended March 31
	2019			2018

Operations
Sales of goods and services	$	549		$	872
GE Capital revenues and other income (loss)	39			(1,472		)	(a)
Cost of goods and services sold	(478		)	(615		)
Other costs and expenses	(84		)	(224		)

Earnings (loss) of discontinued operations before income taxes	$	26		$	(1,439	)
Benefit (provision) for income taxes	13			(5		)
Earnings (loss) of discontinued operations, net of taxes	$	39		$	(1,444	)

Disposal
Gain (loss) on disposal before income taxes	$	3,518		$	4
Benefit (provision) for income taxes	(964		)	(1		)
Gain (loss) on disposal, net of taxes	$	2,553		$	3

Earnings (loss) from discontinued operations, net of taxes	$	2,592		$	(1,441	)

Gains (loss) on disposals, net of taxes - Transportation	2,508			—
Gains (loss) on disposals, net of taxes - Capital	45			3
Earnings (loss) from discontinued operations, net of taxes - Transportation	2,557			112
Earnings (loss) from discontinued operations, net of taxes - Capital	35			(1,553		)


(a)	Included a $1,500 million charge related to the DOJ investigation of potential violations of FIRREA by WMC and GE Capital.



FINANCIAL INFORMATION FOR ASSETS AND LIABILITIES OF DISCONTINUED OPERATIONS (In millions)	March 31, 2019		December 31, 2018

Assets
Cash, cash equivalents and restricted cash	$	598	$	701
Investment securities	204		195
Current receivables	149		389
Inventories	—		832
Financing receivables held for sale	2,656		2,745
Property, plant and equipment - net and Operating lease right-of-use assets	152		910
Goodwill and Intangible assets - net	—		1,146
Deferred income taxes	513		1,175
All other assets	188		1,163
Assets of discontinued operations	$	4,459	$	9,257	(a)

Liabilities
Accounts payable and Progress collections and deferred income	$	53	$	1,248
Operating lease liabilities	250		0
Other GE current liabilities	125		590
All other liabilities	1,215		1,909
Liabilities of discontinued operations	$	1,643	$	3,747	(a)


(a)	Included $4,573 million of assets and $1,871 million of liabilities related to our Transportation business as of December 31, 2018, which we classified as discontinued operations in the first quarter of 2019.