Discontinued Operations (Notes)

3 Months Ended

Dec. 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 agreed to sell, and Purchaser 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 month period ended December 31, 2018 (in millions).



	Three Months Ended December 31,
	2018

Net sales	$	2,427

Income from discontinued operations before income taxes	390
Provision for income taxes on discontinued operations	(127		)
Income from discontinued operations attributable to noncontrolling interests, net of tax	(15		)
Income from discontinued operations	$	248

For the three months ended December 31, 2018, income from discontinued operations before income taxes included transaction costs of $28 million and a favorable impact of $32 million for ceasing depreciation and amortization expense as the business was held for sale.

For the three months ended December 31, 2018, the effective tax rate was more than the Irish statutory rate of 12.5% primarily due the 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.

Assets and Liabilities Held for Sale

During the third quarter of fiscal 2019, the Company determined that a business within its Global Products segment met the criteria to be classified as held for sale. The assets and liabilities of this business are presented as held for sale in the consolidated statements of financial position as of December 31, 2019 and September 30, 2019. Assets and liabilities held for sale are required to be recorded at the lower of carrying value or fair value less any costs to sell. Accordingly, the Company has recorded total impairment charges of $250 million within restructuring and impairment costs in the consolidated statements of income to write down the carrying value of the assets held for sale to fair value less any costs to sell. Of the $250 million total impairment charges, $235 million was recorded during the third quarter of fiscal 2019, and $15 million was recorded during the first quarter of fiscal 2020. Refer to Note 18, "Impairment of Long-Lived Assets" of the notes to consolidated financial statements for further information regarding the impairment charges. The divestiture of the business held for sale could result in a gain or loss on sale to the extent the ultimate selling price differs from the current carrying value of the net assets recorded. The business did not meet the criteria to be classified as a discontinued operation as the divestiture of the business will not have a major effect on the Company's operations and financial results.