Discontinued Operations (Notes)

6 Months Ended

Mar. 31, 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 has agreed to sell, and Purchaser has 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 six month periods ended March 31, 2019 and 2018 (in millions):



	Three Months Ended March 31,						Six Months Ended March 31,
	2019			2018			2019			2018

Net sales	$	2,012		$	1,845		$	4,439		$	3,975

Income from discontinued operations before income taxes	334			307			724			675
Provision for income taxes on discontinued operations	(50		)	(42		)	(177		)	(92		)
Income from discontinued operations attributable to noncontrolling interests, net of tax	(9		)	(11		)	(24		)	(24		)
Income from discontinued operations	$	275		$	254		$	523		$	559

For the three months ended March 31, 2019, income from discontinued operations before income taxes included transaction costs of $18 million and a favorable impact of $64 million for ceasing depreciation and amortization expense as the business was held for sale. For the six months ended March 31, 2019, income from discontinued operations before income taxes included transaction costs of $46 million and a favorable impact of $96 million for ceasing depreciation and amortization expense as the business was held for sale. The increase in net sales for the three and six months ended March 31, 2019 was primarily due to the impact of the adoption of the New Revenue Standard. Refer to Note 2, "New Accounting Standards," of the notes to consolidated financial statements for further information.

For the three months ended March 31, 2019, the effective tax rate was more than the Irish statutory rate of 12.5% primarily due to tax rate differentials. For the six months ended March 31, 2019, the effective tax rate was more than the Irish statutory rate of 12.5% primarily due to establishment of a deferred tax liability on the outside basis difference of the Company’s investment in certain subsidiaries related to the planned divestiture of the business and tax rate differentials. For the three and six months ended March 31, 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 March 31, 2019 and September 30, 2018 (in millions):



	March 31, 2019		September 30, 2018

Cash	$	45	$	15
Accounts receivable - net	1,228		1,443
Inventories	1,524		1,405
Other current assets	202		152
Assets held for sale	$	2,999	$	3,015

Property, plant and equipment - net	$	2,981	$	2,871
Goodwill	1,081		1,092
Other intangible assets - net	156		161
Investments in partially-owned affiliates	476		453
Other noncurrent assets	535		611
Noncurrent assets held for sale	$	5,229	$	5,188

Short-term debt	$	6	$	9
Current portion of long-term debt	8		25
Accounts payable	1,128		1,237
Accrued compensation and benefits	99		125
Deferred revenue	23		—
Other current liabilities	294		395
Liabilities held for sale	$	1,558	$	1,791

Long-term debt	$	28	$	31
Pension and postretirement benefits	94		101
Other noncurrent liabilities	63		75
Noncurrent liabilities held for sale	$	185	$	207