Discontinued Operations (Notes)

6 Months Ended

Mar. 31, 2017

Discontinued Operations [Abstract]

Discontinued Operations

Discontinued Operations

As discussed in Note 1, "Financial Statements," of the notes to consolidated financial statements, on October 31, 2016, the Company completed the spin-off of its Automotive Experience business by way of the transfer of the Automotive Experience Business from Johnson Controls to Adient plc. The Company did not retain any equity interest in Adient plc. During the first quarter of fiscal 2017, the Company determined that Adient met the criteria to be classified as a discontinued operation and, as a result, Adient’s 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 Adient, reclassified as discontinued operations for the six month period ended March 31, 2017, and the three and six month periods ended March 31, 2016 (in millions). As the Adient spin-off occurred on October 31, 2016, there is only one month of Adient results included in the six month period ended March 31, 2017.

	Three Months Ended March 31,			Six Months Ended March 31,
	2016			2017			2016
Net sales	$	4,298		$	1,434		$	8,531
Income from discontinued operations before income taxes	102			1			335
Provision for income taxes on discontinued operations	827			35			873
Income from discontinued operations attributable to noncontrolling      interests, net of tax	23			9			40
Loss from discontinued operations	$	(748	)	$	(43	)	$	(578	)

For the six months ended March 31, 2017, the income from discontinued operations before income taxes included separation costs of $79 million. For the three and six months ended March 31, 2016, the income from discontinued operations before income taxes included separation costs of $90 million and $160 million, respectively.

For the six months ended March 31, 2017, the effective tax rate was more than the U.S. federal statutory rate of 35% primarily due to the tax impacts of separation costs and Adient spin-off related tax expense, partially offset by non-U.S. tax rate differentials. For the three and six months ended March 31, 2016, the effective tax rate was more than the U.S. federal statutory rate of 35% primarily due to $780 million of income tax expense recorded on foreign undistributed earnings of certain non-U.S. subsidiaries, the jurisdictional mix of restructuring and impairment costs, and the tax impacts of separation costs, partially offset by non-U.S. tax rate differentials.

Assets and Liabilities Held for Sale

The following table summarizes the carrying value of Adient, reclassified as assets and liabilities held for sale at September 30, 2016 (in millions):

	September 30, 2016
Cash	$	105
Cash in escrow related to Adient debt	2,034
Accounts receivable - net	2,071
Inventories	672
Other current assets	756
Assets held for sale	$	5,638
Property, plant and equipment - net	$	2,240
Goodwill	2,385
Other intangible assets - net	113
Investments in partially-owned affiliates	1,745
Other noncurrent assets	891
Noncurrent assets held for sale	$	7,374
Short-term debt	$	41
Current portion of long-term debt	38
Accounts payable	2,764
Accrued compensation and benefits	430
Other current liabilities	975
Liabilities held for sale	$	4,248
Long-term debt	$	3,441
Pension and postretirement benefits	188
Other noncurrent liabilities	259
Noncurrent liabilities held for sale	$	3,888

The following table summarizes depreciation and amortization, capital expenditures, and significant operating and investing noncash items related to Adient for the six month period ended March 31, 2017, and the three and six month periods ended March 31, 2016 (in millions):

	Three Months Ended March 31,			Six Months Ended March 31,
	2016			2017			2016
Depreciation and amortization	$	85		$	29		$	171
Equity in earnings of partially-owned affiliates	(77		)	(31		)	(171		)
Deferred income taxes	769			562			765
Non-cash restructuring and impairment charges	14			—			14
Equity-based compensation	4			1			7
Accrued income taxes	—			(808		)	—
Capital expenditures	(75		)	(91		)	(175		)

During the second quarter of fiscal 2017, the Company completed the divestiture of its ADT security business in South Africa within the Tyco segment. The assets and liabilities of this business were presented as held for sale in the consolidated statements of financial position as of September 30, 2016. The business did not meet the criteria to be classified as a discontinued operation.

During the second quarter of fiscal 2017, the Company signed a definitive agreement to sell its Scott Safety business of the Tyco segment to 3M Company. The transaction is expected to close in the second half of calendar 2017, subject to customary closing conditions including required regulatory approval. The assets and liabilities of this business were presented as held for sale in the consolidated statements of financial position as of March 31, 2017. The business did not meet the criteria to be classified as a discontinued operation as the divestiture of the Scott Safety business will not have a major effect on the Company’s operations and financial results.

The following table summarizes the carrying value of the Tyco segment assets and liabilities held for sale at March 31, 2017 and September 30, 2016 (in millions):

	March 31, 2017		September 30, 2016
Accounts receivable - net	$	93	$	9
Inventories	66		7
Other current assets	10		3
Property, plant and equipment - net	74		15
Goodwill	1,261		89
Other intangible assets - net	533		30
Other noncurrent assets	—		4
Assets held for sale	$	2,037	$	157
Accounts payable	$	33	$	9
Accrued compensation and benefits	9		—
Other current liabilities	22		19
Other noncurrent liabilities	173		—
Liabilities held for sale	$	237	$	28

At September 30, 2016, $17 million of certain Corporate assets were classified as held for sale. The assets were sold during the second quarter of fiscal 2017.