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Discontinued operations

How a spun-off or sold business is removed from continuing results, with 3M's Solventum separation, Johnson & Johnson's Kenvue transaction and FedEx Freight.

The short answer

When a company spins off or sells a business that qualifies as a discontinued operation, it pulls that business out of its continuing results. The income statement shows continuing operations on one line and discontinued operations on another, and earlier years are recast the same way so the comparison is like for like. The idea is to show what remains after the departure.

What gets separated

Not every sale or spin-off is presented this way. The accounting rules require a discontinued operation when the business is a component that has been (or will be) disposed of and the disposal represents a strategic shift that has a major effect on the company's operations and financial results, such as a whole segment or a major line of business. Day-to-day product exits often stay inside continuing operations.

The income statement then reports income or loss from discontinued operations, net of tax, separately from continuing operations. Earnings per share is often shown both ways. Comparative years in the same 10-K are recast so the spun-off or sold business is discontinued in those years too.

A spin-off: 3M and Solventum

3M's 10-K for 2025 states that on April 1, 2024, it completed the separation of its Health Care business through a pro rata distribution of 80.1% of the outstanding shares of Solventum Corporation to 3M stockholders. As a result, Solventum became an independent public company, 3M no longer consolidated Solventum, and the historical net income of Solventum and the assets and liabilities included in the separation were reported as discontinued operations. Spin-offs covers how the shares reach stockholders; this page is about how the 10-K is recast afterward.

A consumer business: Johnson & Johnson and Kenvue

Johnson & Johnson's 10-K for 2025 says the historical results of its Consumer Health business, which had been a segment, are reflected as discontinued operations through the date of the exchange offer that completed most of the separation of Kenvue. The 2025 income statement still shows a line for "Net earnings from discontinued operations, net of tax": a dash for 2025 and 2024, and a large figure for 2023, the year that still included the disposed business. FedEx's fiscal 2026 10-K describes the same treatment for FedEx Freight after its spin-off, including earlier periods.

Source: 3M 10-K for fiscal 2025, filed Feb 3, 2026 · Johnson & Johnson 10-K for fiscal 2025, filed Feb 11, 2026 · FedEx 10-K for fiscal 2026, filed Jul 20, 2026

How to read the two columns

Continuing operations is the business that remains. Trends in revenue, margins and cash flow should be read here if you want the ongoing company.
Discontinued operations is the business that left, through the disposal date, plus any gain or loss on the disposal.
The notes describe the transaction, the percentage distributed or sold, and any stake the parent still holds.

A year in which discontinued operations dwarf continuing earnings, as in Johnson & Johnson's 2023 net earnings, can look extraordinary until the two lines are read separately.

Common questions

What is a discontinued operation?

A business, usually a segment or a major line, that has been sold or spun off (or is being sold) and is presented separately from the company's continuing results in the financial statements.

Why recast earlier years?

So the comparison between years is the continuing business against the continuing business, not a company that still included a division it has since given up.

Is every spin-off a discontinued operation?

A spin-off of a major business usually is, as with 3M and Solventum. Smaller disposals may stay in continuing operations. The notes say which treatment the company applied.

Where do I find it in the 10-K?

On the income statement, as a line below continuing operations, and in a note titled discontinued operations or the note that describes the separation.

What about a stake the parent still owns?

After 3M distributed 80.1% of Solventum, the remaining stake is no longer consolidated. The note describes how any leftover holding is accounted for.

Disclosures

Editor holdings: The editor holds no position in any company named on this page. As of Nov 11, 2026.
Compensation: Nobody paid for this page. No affiliate links on this page.
Sources: Each company's own SEC filings, linked next to each number.
Last updated: Nov 10, 2026

General education, the same for every reader. Not a recommendation to buy, sell or hold any security, and it doesn't consider your situation.

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