diff --git a/compiler/frontend/src/org/jetbrains/jet/lang/cfg/pseudocode/pseudocodeUtil.kt b/compiler/frontend/src/org/jetbrains/jet/lang/cfg/pseudocode/pseudocodeUtil.kt
index 27881877d6a..0ed2f3f9655 100644
--- a/compiler/frontend/src/org/jetbrains/jet/lang/cfg/pseudocode/pseudocodeUtil.kt
+++ b/compiler/frontend/src/org/jetbrains/jet/lang/cfg/pseudocode/pseudocodeUtil.kt
@@ -31,6 +31,7 @@ import org.jetbrains.jet.lang.resolve.scopes.receivers.ReceiverValue
 import org.jetbrains.jet.lang.resolve.OverridingUtil
 import org.jetbrains.jet.lang.types.TypeUtils
 import org.jetbrains.jet.lang.types.JetType
+import org.jetbrains.jet.lang.cfg.pseudocode.instructions.special.LocalFunctionDeclarationInstruction
 
 fun JetExpression.isStatement(pseudocode: Pseudocode): Boolean =
         pseudocode.getUsages(pseudocode.getElementValue(this)).isEmpty()
@@ -129,6 +130,13 @@ fun getExpectedTypePredicate(value: PseudoValue, bindingContext: BindingContext)
     return and(typePredicates.filterNotNull())
 }
 
+public fun Instruction.getPrimaryDeclarationDescriptorIfAny(bindingContext: BindingContext): DeclarationDescriptor? {
+    return when (this) {
+        is CallInstruction -> return resolvedCall.getResultingDescriptor()
+        else -> PseudocodeUtil.extractVariableDescriptorIfAny(this, false, bindingContext)
+    }
+}
+
 private fun Pseudocode.collectValueUsages(): Map<PseudoValue, List<Instruction>> {
     val map = HashMap<PseudoValue, MutableList<Instruction>>()
     traverseFollowingInstructions(getEnterInstruction(), HashSet(), TraversalOrder.FORWARD) {
diff --git a/idea/src/org/jetbrains/jet/plugin/debugger/evaluate/extractFunctionForDebuggerUtil.kt b/idea/src/org/jetbrains/jet/plugin/debugger/evaluate/extractFunctionForDebuggerUtil.kt
index a932c5024db..2b28584d04d 100644
--- a/idea/src/org/jetbrains/jet/plugin/debugger/evaluate/extractFunctionForDebuggerUtil.kt
+++ b/idea/src/org/jetbrains/jet/plugin/debugger/evaluate/extractFunctionForDebuggerUtil.kt
@@ -58,7 +58,7 @@ fun getFunctionForExtractedFragment(
                 ErrorMessage.DECLARATIONS_OUT_OF_SCOPE,
                 ErrorMessage.OUTPUT_AND_EXIT_POINT,
                 ErrorMessage.MULTIPLE_EXIT_POINTS,
-                ErrorMessage.VARIABLES_ARE_USED_OUTSIDE -> "Cannot perform an action for this expression"
+                ErrorMessage.DECLARATIONS_ARE_USED_OUTSIDE -> "Cannot perform an action for this expression"
             }
             if (errorMessage.additionalInfo == null) message else "$message: ${errorMessage.additionalInfo?.makeString(", ")}"
         }.makeString(", ")
diff --git a/idea/src/org/jetbrains/jet/plugin/intentions/declarations/DeclarationUtils.java b/idea/src/org/jetbrains/jet/plugin/intentions/declarations/DeclarationUtils.java
index f87bae2a74a..e771141ef15 100644
--- a/idea/src/org/jetbrains/jet/plugin/intentions/declarations/DeclarationUtils.java
+++ b/idea/src/org/jetbrains/jet/plugin/intentions/declarations/DeclarationUtils.java
@@ -130,6 +130,18 @@ public class DeclarationUtils {
         return newInitializer;
     }
 
+    @NotNull
+    public static JetProperty changePropertyInitializer(@NotNull JetProperty property, @Nullable JetExpression initializer) {
+        //noinspection ConstantConditions
+        return JetPsiFactory.createProperty(
+                property.getProject(),
+                property.getNameIdentifier().getText(),
+                JetPsiUtil.getNullableText(property.getTypeRef()),
+                property.isVar(),
+                JetPsiUtil.getNullableText(initializer)
+        );
+    }
+
     // Returns joined property
     @NotNull
     public static JetProperty joinPropertyDeclarationWithInitializer(
@@ -141,14 +153,7 @@ public class DeclarationUtils {
         JetBinaryExpression assignment = propertyAndInitializer.second;
         assertNotNull(assignment);
 
-        //noinspection ConstantConditions
-        JetProperty newProperty = JetPsiFactory.createProperty(
-                property.getProject(),
-                property.getNameIdentifier().getText(),
-                JetPsiUtil.getNullableText(property.getTypeRef()),
-                property.isVar(),
-                JetPsiUtil.getNullableText(assignment.getRight())
-        );
+        JetProperty newProperty = changePropertyInitializer(property, assignment.getRight());
 
         property.getParent().deleteChildRange(property.getNextSibling(), assignment);
         return (JetProperty) property.replace(newProperty);
diff --git a/idea/src/org/jetbrains/jet/plugin/refactoring/JetRefactoringBundle.properties b/idea/src/org/jetbrains/jet/plugin/refactoring/JetRefactoringBundle.properties
index 6a6f680b914..b77fbf79a3e 100644
--- a/idea/src/org/jetbrains/jet/plugin/refactoring/JetRefactoringBundle.properties
+++ b/idea/src/org/jetbrains/jet/plugin/refactoring/JetRefactoringBundle.properties
@@ -10,7 +10,7 @@ extract.function=Extract Function
 cannot.extract.method=Cannot find statements to extract
 cannot.find.class.to.extract=Cannot find class to extract method
 selected.code.fragment.has.multiple.output.values=Selected code fragment has multiple output values:
-variables.are.used.outside.of.selected.code.fragment=Following variables are used outside of selected code fragment:
+declarations.are.used.outside.of.selected.code.fragment=Following declarations are used outside of selected code fragment:
 selected.code.fragment.has.multiple.exit.points=Selected code fragment has multiple exit points
 selected.code.fragment.has.output.values.and.exit.points=Selected code fragment has output values as well as alternative exit points
 parameter.types.are.not.denotable=Cannot extract method since following types are not denotable in the target scope:
diff --git a/idea/src/org/jetbrains/jet/plugin/refactoring/extractFunction/ExtractionDescriptor.kt b/idea/src/org/jetbrains/jet/plugin/refactoring/extractFunction/ExtractionDescriptor.kt
index bb2ad696078..a524a03a57a 100644
--- a/idea/src/org/jetbrains/jet/plugin/refactoring/extractFunction/ExtractionDescriptor.kt
+++ b/idea/src/org/jetbrains/jet/plugin/refactoring/extractFunction/ExtractionDescriptor.kt
@@ -35,6 +35,8 @@ import org.jetbrains.jet.plugin.refactoring.extractFunction.AnalysisResult.Statu
 import org.jetbrains.jet.plugin.refactoring.JetRefactoringBundle
 import org.jetbrains.jet.plugin.refactoring.extractFunction.AnalysisResult.ErrorMessage
 import org.jetbrains.jet.lang.descriptors.DeclarationDescriptor
+import org.jetbrains.jet.lang.psi.JetProperty
+import org.jetbrains.jet.lang.psi.JetDeclaration
 
 trait Parameter {
     val argumentText: String
@@ -96,9 +98,13 @@ class FqNameReplacement(val fqName: FqName): Replacement {
 
 trait ControlFlow {
     val returnType: JetType
+    val declarationsToCopy: List<JetDeclaration>
 }
 
-class DefaultControlFlow(override val returnType: JetType = DEFAULT_RETURN_TYPE): ControlFlow
+class DefaultControlFlow(
+        override val returnType: JetType = DEFAULT_RETURN_TYPE,
+        override val declarationsToCopy: List<JetDeclaration>
+): ControlFlow
 
 trait JumpBasedControlFlow : ControlFlow {
     val elementsToReplace: List<JetElement>
@@ -107,26 +113,43 @@ trait JumpBasedControlFlow : ControlFlow {
 
 class ConditionalJump(
         override val elementsToReplace: List<JetElement>,
-        override val elementToInsertAfterCall: JetElement
+        override val elementToInsertAfterCall: JetElement,
+        override val declarationsToCopy: List<JetDeclaration>
 ): JumpBasedControlFlow {
     override val returnType: JetType get() = KotlinBuiltIns.getInstance().getBooleanType()
 }
 
 class UnconditionalJump(
         override val elementsToReplace: List<JetElement>,
-        override val elementToInsertAfterCall: JetElement
+        override val elementToInsertAfterCall: JetElement,
+        override val declarationsToCopy: List<JetDeclaration>
 ): JumpBasedControlFlow {
     override val returnType: JetType get() = KotlinBuiltIns.getInstance().getUnitType()
 }
 
-class ExpressionEvaluation(override val returnType: JetType): ControlFlow
+class ExpressionEvaluation(
+        override val returnType: JetType,
+        override val declarationsToCopy: List<JetDeclaration>
+): ControlFlow
 
-class ExpressionEvaluationWithCallSiteReturn(override val returnType: JetType): ControlFlow
+class ExpressionEvaluationWithCallSiteReturn(
+        override val returnType: JetType,
+        override val declarationsToCopy: List<JetDeclaration>
+): ControlFlow
 
-class ParameterUpdate(val parameter: Parameter): ControlFlow {
+class ParameterUpdate(
+        val parameter: Parameter,
+        override val declarationsToCopy: List<JetDeclaration>
+): ControlFlow {
     override val returnType: JetType get() = parameter.parameterType
 }
 
+class Initializer(
+        val initializedDeclaration: JetProperty,
+        override val returnType: JetType,
+        override val declarationsToCopy: List<JetDeclaration>
+): ControlFlow
+
 data class ExtractionDescriptor(
         val extractionData: ExtractionData,
         val name: String,
@@ -157,7 +180,7 @@ class AnalysisResult (
         MULTIPLE_OUTPUT
         OUTPUT_AND_EXIT_POINT
         MULTIPLE_EXIT_POINTS
-        VARIABLES_ARE_USED_OUTSIDE
+        DECLARATIONS_ARE_USED_OUTSIDE
         DECLARATIONS_OUT_OF_SCOPE
 
         var additionalInfo: List<String>? = null
@@ -176,7 +199,7 @@ class AnalysisResult (
                 MULTIPLE_OUTPUT -> "selected.code.fragment.has.multiple.output.values"
                 OUTPUT_AND_EXIT_POINT -> "selected.code.fragment.has.output.values.and.exit.points"
                 MULTIPLE_EXIT_POINTS -> "selected.code.fragment.has.multiple.exit.points"
-                VARIABLES_ARE_USED_OUTSIDE -> "variables.are.used.outside.of.selected.code.fragment"
+                DECLARATIONS_ARE_USED_OUTSIDE -> "declarations.are.used.outside.of.selected.code.fragment"
                 DECLARATIONS_OUT_OF_SCOPE -> "declarations.will.move.out.of.scope"
             })!!
             if (additionalInfo != null) {
diff --git a/idea/src/org/jetbrains/jet/plugin/refactoring/extractFunction/extractFunctionUtils.kt b/idea/src/org/jetbrains/jet/plugin/refactoring/extractFunction/extractFunctionUtils.kt
index a72994e7634..f7ba32d51ee 100644
--- a/idea/src/org/jetbrains/jet/plugin/refactoring/extractFunction/extractFunctionUtils.kt
+++ b/idea/src/org/jetbrains/jet/plugin/refactoring/extractFunction/extractFunctionUtils.kt
@@ -66,6 +66,7 @@ import org.jetbrains.jet.lang.resolve.bindingContextUtil.getTargetFunctionDescri
 import com.intellij.psi.PsiWhiteSpace
 import org.jetbrains.jet.lang.resolve.OverridingUtil
 import org.jetbrains.jet.lang.psi.psiUtil.isAncestor
+import org.jetbrains.jet.plugin.intentions.declarations.DeclarationUtils
 import org.jetbrains.jet.lang.resolve.DescriptorToSourceUtils
 
 private val DEFAULT_FUNCTION_NAME = "myFun"
@@ -76,7 +77,7 @@ private fun JetType.isDefault(): Boolean = KotlinBuiltIns.getInstance().isUnit(t
 
 private fun List<Instruction>.getModifiedVarDescriptors(bindingContext: BindingContext): Set<VariableDescriptor> {
     return this
-            .map {if (it is WriteValueInstruction) PseudocodeUtil.extractVariableDescriptorIfAny(it, true, bindingContext) else null}
+            .map {if (it is WriteValueInstruction) PseudocodeUtil.extractVariableDescriptorIfAny(it, false, bindingContext) else null}
             .filterNotNullTo(HashSet<VariableDescriptor>())
 }
 
@@ -115,9 +116,30 @@ private fun JetType.isMeaningful(): Boolean {
     return KotlinBuiltIns.getInstance().let { builtins -> !builtins.isUnit(this) && !builtins.isNothing(this) }
 }
 
-private fun List<Instruction>.analyzeControlFlow(
+private fun ExtractionData.getLocalDeclarationsWithNonLocalUsages(
+        pseudocode: Pseudocode,
+        localInstructions: List<Instruction>,
+        bindingContext: BindingContext
+): List<JetNamedDeclaration> {
+    val declarations = HashSet<JetNamedDeclaration>()
+    pseudocode.traverse(TraversalOrder.FORWARD) { instruction ->
+        if (instruction !in localInstructions) {
+            instruction.getPrimaryDeclarationDescriptorIfAny(bindingContext)?.let { descriptor ->
+                val declaration = DescriptorToDeclarationUtil.getDeclaration(project, descriptor)
+                if (declaration is JetNamedDeclaration && declaration.isInsideOf(originalElements)) {
+                    declarations.add(declaration)
+                }
+            }
+        }
+    }
+    return declarations.sortBy { it.getTextRange()!!.getStartOffset() }
+}
+
+private fun ExtractionData.analyzeControlFlow(
+        localInstructions: List<Instruction>,
         pseudocode: Pseudocode,
         bindingContext: BindingContext,
+        modifiedVarDescriptors: Set<VariableDescriptor>,
         options: ExtractionOptions,
         parameters: Set<Parameter>
 ): Pair<ControlFlow, ErrorMessage?> {
@@ -127,7 +149,7 @@ private fun List<Instruction>.analyzeControlFlow(
         return currentDescriptor == functionDescriptor
     }
 
-    val exitPoints = getExitPoints()
+    val exitPoints = localInstructions.getExitPoints()
 
     val valuedReturnExits = ArrayList<ReturnValueInstruction>()
     val defaultExits = ArrayList<Instruction>()
@@ -173,27 +195,40 @@ private fun List<Instruction>.analyzeControlFlow(
         }
     }
 
+    val nonLocallyUsedDeclarations = getLocalDeclarationsWithNonLocalUsages(pseudocode, localInstructions, bindingContext)
+    val (declarationsToCopy, declarationsToReport) = nonLocallyUsedDeclarations.partition { it is JetProperty && it.isLocal() }
+
     val typeOfDefaultFlow = defaultExits.getResultType(pseudocode, bindingContext, options)
     val returnValueType = valuedReturnExits.getResultType(pseudocode, bindingContext, options)
-    val defaultControlFlow = DefaultControlFlow(if (returnValueType.isMeaningful()) returnValueType else typeOfDefaultFlow)
+    val defaultControlFlow = DefaultControlFlow(if (returnValueType.isMeaningful()) returnValueType else typeOfDefaultFlow, declarationsToCopy)
+
+    if (declarationsToReport.isNotEmpty()) {
+        val localVarStr = declarationsToReport.map { it.getName()!! }.sort()
+        return Pair(defaultControlFlow, ErrorMessage.DECLARATIONS_ARE_USED_OUTSIDE.addAdditionalInfo(localVarStr))
+    }
+
+    val outDeclarations =
+            declarationsToCopy.filter { bindingContext[BindingContext.DECLARATION_TO_DESCRIPTOR, it] in modifiedVarDescriptors }
 
     val outParameters = parameters.filterTo(HashSet<Parameter>()) { it.mirrorVarName != null }
+    val outValuesCount = outDeclarations.size + outParameters.size
     when {
-        outParameters.size > 1 -> {
-            val outValuesStr = outParameters.map { it.argumentText }.sort()
-
-            return Pair(
-                    defaultControlFlow,
-                    ErrorMessage.MULTIPLE_OUTPUT.addAdditionalInfo(outValuesStr)
-            )
+        outValuesCount > 1 -> {
+            val outValuesStr = (outParameters.map { it.argumentText } + outDeclarations.map { it.getName()!! }).sort()
+            return Pair(defaultControlFlow, ErrorMessage.MULTIPLE_OUTPUT.addAdditionalInfo(outValuesStr))
         }
 
-        outParameters.size == 1 -> {
+        outValuesCount == 1 -> {
             if (returnValueType.isMeaningful() || typeOfDefaultFlow.isMeaningful() || jumpExits.isNotEmpty()) {
                 return Pair(defaultControlFlow, ErrorMessage.OUTPUT_AND_EXIT_POINT)
             }
 
-            return Pair(ParameterUpdate(outParameters.first()), null)
+            val controlFlow =
+                    outDeclarations.firstOrNull()?.let {
+                        val descriptor = bindingContext[BindingContext.DECLARATION_TO_DESCRIPTOR, it] as? CallableDescriptor
+                        Initializer(it as JetProperty, descriptor?.getReturnType() ?: DEFAULT_PARAMETER_TYPE, declarationsToCopy)
+                    } ?: ParameterUpdate(outParameters.first(), declarationsToCopy)
+            return Pair(controlFlow, null)
         }
     }
 
@@ -202,7 +237,7 @@ private fun List<Instruction>.analyzeControlFlow(
     if (typeOfDefaultFlow.isMeaningful()) {
         if (valuedReturnExits.isNotEmpty() || jumpExits.isNotEmpty()) return multipleExitsError
 
-        return Pair(ExpressionEvaluation(typeOfDefaultFlow), null)
+        return Pair(ExpressionEvaluation(typeOfDefaultFlow, declarationsToCopy), null)
     }
 
     if (valuedReturnExits.isNotEmpty()) {
@@ -212,19 +247,19 @@ private fun List<Instruction>.analyzeControlFlow(
             if (valuedReturnExits.size != 1) return multipleExitsError
 
             val element = valuedReturnExits.first!!.element
-            return Pair(ConditionalJump(listOf(element), element), null)
+            return Pair(ConditionalJump(listOf(element), element, declarationsToCopy), null)
         }
 
         if (!valuedReturnExits.checkEquivalence(false)) return multipleExitsError
-        return Pair(ExpressionEvaluationWithCallSiteReturn(valuedReturnExits.getResultType(pseudocode, bindingContext, options)), null)
+        return Pair(ExpressionEvaluationWithCallSiteReturn(returnValueType, declarationsToCopy), null)
     }
 
     if (jumpExits.isNotEmpty()) {
         if (!jumpExits.checkEquivalence(true)) return multipleExitsError
 
         val elements = jumpExits.map { it.element }
-        if (defaultExits.isNotEmpty()) return Pair(ConditionalJump(elements, elements.first!!), null)
-        return Pair(UnconditionalJump(elements, elements.first!!), null)
+        if (defaultExits.isNotEmpty()) return Pair(ConditionalJump(elements, elements.first!!, declarationsToCopy), null)
+        return Pair(UnconditionalJump(elements, elements.first!!, declarationsToCopy), null)
     }
 
     return Pair(defaultControlFlow, null)
@@ -364,8 +399,8 @@ private class DelegatingParameter(
 private fun ExtractionData.inferParametersInfo(
         commonParent: PsiElement,
         pseudocode: Pseudocode,
-        localInstructions: List<Instruction>,
         bindingContext: BindingContext,
+        modifiedVarDescriptors: Set<VariableDescriptor>,
         replacementMap: MutableMap<Int, Replacement>,
         parameters: MutableSet<Parameter>,
         typeParameters: MutableSet<TypeParameter>,
@@ -376,7 +411,6 @@ private fun ExtractionData.inferParametersInfo(
             originalElements.first,
             JetNameValidatorImpl.Target.PROPERTIES
     )
-    val modifiedVarDescriptors = localInstructions.getModifiedVarDescriptors(bindingContext)
 
     val extractedDescriptorToParameter = HashMap<DeclarationDescriptor, MutableParameter>()
 
@@ -481,33 +515,6 @@ private fun ExtractionData.inferParametersInfo(
     return null
 }
 
-private fun ExtractionData.checkLocalDeclarationsWithNonLocalUsages(
-        pseudocode: Pseudocode,
-        localInstructions: List<Instruction>,
-        bindingContext: BindingContext
-): ErrorMessage? {
-    // todo: non-locally used declaration can be turned into the output value
-
-    val declarations = ArrayList<JetNamedDeclaration>()
-    pseudocode.traverse(TraversalOrder.FORWARD) { instruction ->
-        if (instruction !in localInstructions) {
-            PseudocodeUtil.extractVariableDescriptorIfAny(instruction, true, bindingContext)?.let { descriptor ->
-                val declaration = DescriptorToDeclarationUtil.getDeclaration(project, descriptor)
-                if (declaration is JetNamedDeclaration && declaration.isInsideOf(originalElements)) {
-                    declarations.add(declaration)
-                }
-            }
-        }
-    }
-
-    if (declarations.isNotEmpty()) {
-        val localVarStr = declarations.map { it.getName()!! }.sort()
-        return ErrorMessage.VARIABLES_ARE_USED_OUTSIDE.addAdditionalInfo(localVarStr)
-    }
-
-    return null
-}
-
 private fun ExtractionData.checkDeclarationsMovingOutOfScope(controlFlow: ControlFlow): ErrorMessage? {
     val declarationsOutOfScope = HashSet<JetNamedDeclaration>()
     if (controlFlow is JumpBasedControlFlow) {
@@ -571,12 +578,14 @@ fun ExtractionData.performAnalysis(): AnalysisResult {
     val pseudocode = PseudocodeUtil.generatePseudocode(pseudocodeDeclaration, bindingContext)
     val localInstructions = getLocalInstructions(pseudocode)
 
+    val modifiedVarDescriptors = localInstructions.getModifiedVarDescriptors(bindingContext)
+
     val replacementMap = HashMap<Int, Replacement>()
     val parameters = HashSet<Parameter>()
     val typeParameters = HashSet<TypeParameter>()
     val nonDenotableTypes = HashSet<JetType>()
     val parameterError = inferParametersInfo(
-            commonParent, pseudocode, localInstructions, bindingContext, replacementMap, parameters, typeParameters, nonDenotableTypes
+            commonParent, pseudocode, bindingContext, modifiedVarDescriptors, replacementMap, parameters, typeParameters, nonDenotableTypes
     )
     if (parameterError != null) {
         return AnalysisResult(null, Status.CRITICAL_ERROR, listOf(parameterError))
@@ -584,7 +593,8 @@ fun ExtractionData.performAnalysis(): AnalysisResult {
 
     val messages = ArrayList<ErrorMessage>()
 
-    val (controlFlow, controlFlowMessage) = localInstructions.analyzeControlFlow(pseudocode, bindingContext, options, parameters)
+    val (controlFlow, controlFlowMessage) =
+            analyzeControlFlow(localInstructions, pseudocode, bindingContext, modifiedVarDescriptors, options, parameters)
     controlFlowMessage?.let { messages.add(it) }
 
     controlFlow.returnType.processTypeIfExtractable(typeParameters, nonDenotableTypes)
@@ -598,7 +608,6 @@ fun ExtractionData.performAnalysis(): AnalysisResult {
         )
     }
 
-    checkLocalDeclarationsWithNonLocalUsages(pseudocode, localInstructions, bindingContext)?.let { messages.add(it) }
     checkDeclarationsMovingOutOfScope(controlFlow)?.let { messages.add(it) }
 
     val functionNameValidator =
@@ -659,7 +668,7 @@ fun ExtractionDescriptor.validate(): ExtractionDescriptorWithConflicts {
         && !ErrorUtils.isError(currentDescriptor)
         && !comparePossiblyOverridingDescriptors(currentDescriptor, resolveResult.descriptor))) {
             conflicts.putValue(
-                    currentRefExpr,
+                    resolveResult.originalRefExpr,
                     JetRefactoringBundle.message(
                             "0.will.no.longer.be.accessible.after.extraction",
                             RefactoringUIUtil.getDescription(resolveResult.declaration, true)
@@ -670,7 +679,7 @@ fun ExtractionDescriptor.validate(): ExtractionDescriptorWithConflicts {
 
         diagnostics.firstOrNull { it.getFactory() == Errors.INVISIBLE_MEMBER }?.let {
             conflicts.putValue(
-                    currentRefExpr,
+                    resolveResult.originalRefExpr,
                     JetRefactoringBundle.message(
                             "0.will.become.invisible.after.extraction",
                             RefactoringUIUtil.getDescription(resolveResult.declaration, true)
@@ -823,6 +832,9 @@ fun ExtractionDescriptor.generateFunction(
             is ParameterUpdate ->
                 body.appendElement(JetPsiFactory.createReturn(project, controlFlow.parameter.nameForRef))
 
+            is Initializer ->
+                body.appendElement(JetPsiFactory.createReturn(project, controlFlow.initializedDeclaration.getName()!!))
+
             is ConditionalJump ->
                 body.appendElement(JetPsiFactory.createReturn(project, "false"))
 
@@ -854,7 +866,12 @@ fun ExtractionDescriptor.generateFunction(
         }
     }
 
-    fun insertCall(anchor: PsiElement, wrappedCall: JetExpression) {
+    fun insertCall(anchor: PsiElement, wrappedCall: JetExpression?) {
+        if (wrappedCall == null) {
+            anchor.delete()
+            return
+        }
+
         val firstExpression = extractionData.getExpressions().firstOrNull()
         val enclosingCall = firstExpression?.getParent() as? JetCallExpression
         if (enclosingCall == null || firstExpression !in enclosingCall.getFunctionLiteralArguments()) {
@@ -879,16 +896,26 @@ fun ExtractionDescriptor.generateFunction(
         val anchor = extractionData.originalElements.first
         if (anchor == null) return function
 
+        val anchorParent = anchor.getParent()!!
+
         anchor.getNextSibling()?.let { from ->
             val to = extractionData.originalElements.last
             if (to != anchor) {
-                anchor.getParent()!!.deleteChildRange(from, to);
+                anchorParent.deleteChildRange(from, to);
             }
         }
 
         val callText = parameters
                 .map { it.argumentText }
                 .joinToString(separator = ", ", prefix = "$name(", postfix = ")")
+
+        val copiedDeclarations = HashMap<JetDeclaration, JetDeclaration>()
+        for (decl in controlFlow.declarationsToCopy) {
+            val declCopy = JetPsiFactory.createDeclaration(project, decl.getText(), javaClass<JetDeclaration>())
+            copiedDeclarations[decl] = anchorParent.addBefore(declCopy, anchor) as JetDeclaration
+            anchorParent.addBefore(JetPsiFactory.createNewLine(project), anchor)
+        }
+
         val wrappedCall = when (controlFlow) {
             is ExpressionEvaluationWithCallSiteReturn ->
                 JetPsiFactory.createReturn(project, callText)
@@ -896,11 +923,16 @@ fun ExtractionDescriptor.generateFunction(
             is ParameterUpdate ->
                 JetPsiFactory.createExpression(project, "${controlFlow.parameter.argumentText} = $callText")
 
+            is Initializer -> {
+                val newDecl = copiedDeclarations[controlFlow.initializedDeclaration] as JetProperty
+                newDecl.replace(DeclarationUtils.changePropertyInitializer(newDecl, JetPsiFactory.createExpression(project, callText)))
+                null
+            }
+
             is ConditionalJump ->
                 JetPsiFactory.createExpression(project, "if ($callText) ${controlFlow.elementToInsertAfterCall.getText()}")
 
             is UnconditionalJump -> {
-                val anchorParent = anchor.getParent()!!
                 anchorParent.addAfter(
                         JetPsiFactory.createExpression(project, controlFlow.elementToInsertAfterCall.getText()),
                         anchor
diff --git a/idea/src/org/jetbrains/jet/plugin/refactoring/extractFunction/ui/KotlinExtractFunctionDialog.java b/idea/src/org/jetbrains/jet/plugin/refactoring/extractFunction/ui/KotlinExtractFunctionDialog.java
index 5719c659f45..a61580d2f76 100644
--- a/idea/src/org/jetbrains/jet/plugin/refactoring/extractFunction/ui/KotlinExtractFunctionDialog.java
+++ b/idea/src/org/jetbrains/jet/plugin/refactoring/extractFunction/ui/KotlinExtractFunctionDialog.java
@@ -195,7 +195,11 @@ public class KotlinExtractFunctionDialog extends DialogWrapper {
 
         ControlFlow controlFlow = descriptor.getControlFlow();
         if (controlFlow instanceof ParameterUpdate) {
-            controlFlow = new ParameterUpdate(oldToNewParameters.get(((ParameterUpdate) controlFlow).getParameter()));
+            ParameterUpdate parameterUpdate = (ParameterUpdate) controlFlow;
+            controlFlow = new ParameterUpdate(
+                    oldToNewParameters.get(parameterUpdate.getParameter()),
+                    parameterUpdate.getDeclarationsToCopy()
+            );
         }
 
         Map<Integer, Replacement> replacementMap = ContainerUtil.newHashMap();
diff --git a/idea/testData/refactoring/extractFunction/basic/localClassExtraction.kt b/idea/testData/refactoring/extractFunction/basic/localClassExtraction.kt
new file mode 100644
index 00000000000..dc5662c77e9
--- /dev/null
+++ b/idea/testData/refactoring/extractFunction/basic/localClassExtraction.kt
@@ -0,0 +1,5 @@
+fun test(): Int {
+    <selection>class A(val n: Int = 1)</selection>
+
+    return A().n + 1
+}
\ No newline at end of file
diff --git a/idea/testData/refactoring/extractFunction/basic/localClassExtraction.kt.conflicts b/idea/testData/refactoring/extractFunction/basic/localClassExtraction.kt.conflicts
new file mode 100644
index 00000000000..bda13e9b848
--- /dev/null
+++ b/idea/testData/refactoring/extractFunction/basic/localClassExtraction.kt.conflicts
@@ -0,0 +1 @@
+Following declarations are used outside of selected code fragment:  final class A value-parameter val n: Int = ...
\ No newline at end of file
diff --git a/idea/testData/refactoring/extractFunction/basic/localFunExtraction.kt b/idea/testData/refactoring/extractFunction/basic/localFunExtraction.kt
new file mode 100644
index 00000000000..6b3c6882881
--- /dev/null
+++ b/idea/testData/refactoring/extractFunction/basic/localFunExtraction.kt
@@ -0,0 +1,5 @@
+fun test(): Int {
+    <selection>fun bar(): Int = 1</selection>
+
+    return bar() + 1
+}
\ No newline at end of file
diff --git a/idea/testData/refactoring/extractFunction/basic/localFunExtraction.kt.conflicts b/idea/testData/refactoring/extractFunction/basic/localFunExtraction.kt.conflicts
new file mode 100644
index 00000000000..621332af095
--- /dev/null
+++ b/idea/testData/refactoring/extractFunction/basic/localFunExtraction.kt.conflicts
@@ -0,0 +1 @@
+Following declarations are used outside of selected code fragment:  local final fun bar(): Int
\ No newline at end of file
diff --git a/idea/testData/refactoring/extractFunction/controlFlow/conditionalJumps/conditionalBreakWithIfAndExtraVars.kt b/idea/testData/refactoring/extractFunction/controlFlow/conditionalJumps/conditionalBreakWithIfAndExtraVars.kt
new file mode 100644
index 00000000000..2ae36919ed7
--- /dev/null
+++ b/idea/testData/refactoring/extractFunction/controlFlow/conditionalJumps/conditionalBreakWithIfAndExtraVars.kt
@@ -0,0 +1,18 @@
+// PARAM_TYPES: kotlin.Int
+// PARAM_TYPES: kotlin.Int
+// PARAM_DESCRIPTOR: value-parameter val a: kotlin.Int defined in foo
+// PARAM_DESCRIPTOR: val b: kotlin.Int defined in foo
+// SIBLING:
+fun foo(a: Int): Int {
+    val b: Int = 1
+    for (n in 1..a) {
+        <selection>if (a + b > 0) break
+        val c: Int
+        println(a - b)
+        if (a - b > 0) break
+        println(a + b)</selection>
+        c = 1
+        println(c)
+    }
+    return 1
+}
\ No newline at end of file
diff --git a/idea/testData/refactoring/extractFunction/controlFlow/conditionalJumps/conditionalBreakWithIfAndExtraVars.kt.after b/idea/testData/refactoring/extractFunction/controlFlow/conditionalJumps/conditionalBreakWithIfAndExtraVars.kt.after
new file mode 100644
index 00000000000..40aa83df2cc
--- /dev/null
+++ b/idea/testData/refactoring/extractFunction/controlFlow/conditionalJumps/conditionalBreakWithIfAndExtraVars.kt.after
@@ -0,0 +1,24 @@
+// PARAM_TYPES: kotlin.Int
+// PARAM_TYPES: kotlin.Int
+// PARAM_DESCRIPTOR: value-parameter val a: kotlin.Int defined in foo
+// PARAM_DESCRIPTOR: val b: kotlin.Int defined in foo
+// SIBLING:
+fun foo(a: Int): Int {
+    val b: Int = 1
+    for (n in 1..a) {
+        val c: Int
+        if (b(a, b)) break
+        c = 1
+        println(c)
+    }
+    return 1
+}
+
+fun b(a: Int, b: Int): Boolean {
+    if (a + b > 0) return true
+    val c: Int
+    println(a - b)
+    if (a - b > 0) return true
+    println(a + b)
+    return false
+}
\ No newline at end of file
diff --git a/idea/testData/refactoring/extractFunction/controlFlow/default/defaultCFWithExtraVars.kt b/idea/testData/refactoring/extractFunction/controlFlow/default/defaultCFWithExtraVars.kt
new file mode 100644
index 00000000000..aae00c677f6
--- /dev/null
+++ b/idea/testData/refactoring/extractFunction/controlFlow/default/defaultCFWithExtraVars.kt
@@ -0,0 +1,17 @@
+// PARAM_TYPES: kotlin.Int, Comparable<Int>
+// PARAM_TYPES: kotlin.Int, Number, Comparable<Int>, Any
+// PARAM_DESCRIPTOR: value-parameter val a: kotlin.Int defined in foo
+// PARAM_DESCRIPTOR: val b: kotlin.Int defined in foo
+// SIBLING:
+fun foo(a: Int) {
+    val b: Int = 1
+
+    <selection>if(a > 0) {
+        println(a)
+    }
+    val c: Int
+    println(b)</selection>
+
+    c = 1
+    println(c)
+}
\ No newline at end of file
diff --git a/idea/testData/refactoring/extractFunction/controlFlow/default/defaultCFWithExtraVars.kt.after b/idea/testData/refactoring/extractFunction/controlFlow/default/defaultCFWithExtraVars.kt.after
new file mode 100644
index 00000000000..83018b34df5
--- /dev/null
+++ b/idea/testData/refactoring/extractFunction/controlFlow/default/defaultCFWithExtraVars.kt.after
@@ -0,0 +1,22 @@
+// PARAM_TYPES: kotlin.Int, Comparable<Int>
+// PARAM_TYPES: kotlin.Int, Number, Comparable<Int>, Any
+// PARAM_DESCRIPTOR: value-parameter val a: kotlin.Int defined in foo
+// PARAM_DESCRIPTOR: val b: kotlin.Int defined in foo
+// SIBLING:
+fun foo(a: Int) {
+    val b: Int = 1
+
+    val c: Int
+    unit(a, b)
+
+    c = 1
+    println(c)
+}
+
+fun unit(a: Int, b: Int) {
+    if (a > 0) {
+        println(a)
+    }
+    val c: Int
+    println(b)
+}
\ No newline at end of file
diff --git a/idea/testData/refactoring/extractFunction/controlFlow/initializer/propertyWithInitializer.kt b/idea/testData/refactoring/extractFunction/controlFlow/initializer/propertyWithInitializer.kt
new file mode 100644
index 00000000000..5a2778de487
--- /dev/null
+++ b/idea/testData/refactoring/extractFunction/controlFlow/initializer/propertyWithInitializer.kt
@@ -0,0 +1,5 @@
+// SIBLING:
+fun foo() {
+    <selection>val a = 10</selection>
+    println(a)
+}
\ No newline at end of file
diff --git a/idea/testData/refactoring/extractFunction/controlFlow/initializer/propertyWithInitializer.kt.after b/idea/testData/refactoring/extractFunction/controlFlow/initializer/propertyWithInitializer.kt.after
new file mode 100644
index 00000000000..29251260dba
--- /dev/null
+++ b/idea/testData/refactoring/extractFunction/controlFlow/initializer/propertyWithInitializer.kt.after
@@ -0,0 +1,10 @@
+// SIBLING:
+fun foo() {
+    val a = i()
+    println(a)
+}
+
+fun i(): Int {
+    val a = 10
+    return a
+}
\ No newline at end of file
diff --git a/idea/testData/refactoring/extractFunction/controlFlow/initializer/propertyWithInitializerAndExtraVars.kt b/idea/testData/refactoring/extractFunction/controlFlow/initializer/propertyWithInitializerAndExtraVars.kt
new file mode 100644
index 00000000000..89bfe55b107
--- /dev/null
+++ b/idea/testData/refactoring/extractFunction/controlFlow/initializer/propertyWithInitializerAndExtraVars.kt
@@ -0,0 +1,10 @@
+// SIBLING:
+fun foo() {
+    <selection>val a: Int
+    val b = 10
+    val c: Int
+    </selection>
+    a = 1
+    c = 2
+    println(a + b + c)
+}
\ No newline at end of file
diff --git a/idea/testData/refactoring/extractFunction/controlFlow/initializer/propertyWithInitializerAndExtraVars.kt.after b/idea/testData/refactoring/extractFunction/controlFlow/initializer/propertyWithInitializerAndExtraVars.kt.after
new file mode 100644
index 00000000000..206b9589fb5
--- /dev/null
+++ b/idea/testData/refactoring/extractFunction/controlFlow/initializer/propertyWithInitializerAndExtraVars.kt.after
@@ -0,0 +1,17 @@
+// SIBLING:
+fun foo() {
+    val a: Int
+    val b = i()
+    val c: Int
+
+    a = 1
+    c = 2
+    println(a + b + c)
+}
+
+fun i(): Int {
+    val a: Int
+    val b = 10
+    val c: Int
+    return b
+}
\ No newline at end of file
diff --git a/idea/testData/refactoring/extractFunction/controlFlow/initializer/propertyWithInitializerAndUnusedVars.kt b/idea/testData/refactoring/extractFunction/controlFlow/initializer/propertyWithInitializerAndUnusedVars.kt
new file mode 100644
index 00000000000..04a23b80c44
--- /dev/null
+++ b/idea/testData/refactoring/extractFunction/controlFlow/initializer/propertyWithInitializerAndUnusedVars.kt
@@ -0,0 +1,9 @@
+// SIBLING:
+fun foo() {
+    <selection>val a: Int
+    val b = 10
+    val c: Int = 1
+    </selection>
+    a = 2
+    println(a + b)
+}
\ No newline at end of file
diff --git a/idea/testData/refactoring/extractFunction/controlFlow/initializer/propertyWithInitializerAndUnusedVars.kt.after b/idea/testData/refactoring/extractFunction/controlFlow/initializer/propertyWithInitializerAndUnusedVars.kt.after
new file mode 100644
index 00000000000..ad5c5686642
--- /dev/null
+++ b/idea/testData/refactoring/extractFunction/controlFlow/initializer/propertyWithInitializerAndUnusedVars.kt.after
@@ -0,0 +1,15 @@
+// SIBLING:
+fun foo() {
+    val a: Int
+    val b = i()
+
+    a = 2
+    println(a + b)
+}
+
+fun i(): Int {
+    val a: Int
+    val b = 10
+    val c: Int = 1
+    return b
+}
\ No newline at end of file
diff --git a/idea/testData/refactoring/extractFunction/controlFlow/initializer/propertyWithSeparateInitializer.kt b/idea/testData/refactoring/extractFunction/controlFlow/initializer/propertyWithSeparateInitializer.kt
new file mode 100644
index 00000000000..0b8d532a956
--- /dev/null
+++ b/idea/testData/refactoring/extractFunction/controlFlow/initializer/propertyWithSeparateInitializer.kt
@@ -0,0 +1,6 @@
+// SIBLING:
+fun foo() {
+    <selection>val a: Int
+    a = 10</selection>
+    println(a)
+}
\ No newline at end of file
diff --git a/idea/testData/refactoring/extractFunction/controlFlow/initializer/propertyWithSeparateInitializer.kt.after b/idea/testData/refactoring/extractFunction/controlFlow/initializer/propertyWithSeparateInitializer.kt.after
new file mode 100644
index 00000000000..b0f7df39a91
--- /dev/null
+++ b/idea/testData/refactoring/extractFunction/controlFlow/initializer/propertyWithSeparateInitializer.kt.after
@@ -0,0 +1,11 @@
+// SIBLING:
+fun foo() {
+    val a: Int = i()
+    println(a)
+}
+
+fun i(): Int {
+    val a: Int
+    a = 10
+    return a
+}
\ No newline at end of file
diff --git a/idea/testData/refactoring/extractFunction/controlFlow/unextractable/valueUsedInAnonymousObject.kt b/idea/testData/refactoring/extractFunction/controlFlow/initializer/valueUsedInAnonymousObject.kt
similarity index 100%
rename from idea/testData/refactoring/extractFunction/controlFlow/unextractable/valueUsedInAnonymousObject.kt
rename to idea/testData/refactoring/extractFunction/controlFlow/initializer/valueUsedInAnonymousObject.kt
diff --git a/idea/testData/refactoring/extractFunction/controlFlow/initializer/valueUsedInAnonymousObject.kt.after b/idea/testData/refactoring/extractFunction/controlFlow/initializer/valueUsedInAnonymousObject.kt.after
new file mode 100644
index 00000000000..b872eef2275
--- /dev/null
+++ b/idea/testData/refactoring/extractFunction/controlFlow/initializer/valueUsedInAnonymousObject.kt.after
@@ -0,0 +1,16 @@
+// SIBLING:
+fun main(args: Array<String>) {
+    val a = i()
+    val t = object: T {
+        override fun foo(n: Int) = n + a
+    }
+}
+
+fun i(): Int {
+    val a = 1
+    return a
+}
+
+trait T {
+    fun foo(n: Int): Int
+}
\ No newline at end of file
diff --git a/idea/testData/refactoring/extractFunction/controlFlow/unextractable/valueUsedInLambda.kt b/idea/testData/refactoring/extractFunction/controlFlow/initializer/valueUsedInLambda.kt
similarity index 100%
rename from idea/testData/refactoring/extractFunction/controlFlow/unextractable/valueUsedInLambda.kt
rename to idea/testData/refactoring/extractFunction/controlFlow/initializer/valueUsedInLambda.kt
diff --git a/idea/testData/refactoring/extractFunction/controlFlow/initializer/valueUsedInLambda.kt.after b/idea/testData/refactoring/extractFunction/controlFlow/initializer/valueUsedInLambda.kt.after
new file mode 100644
index 00000000000..c2601d65dac
--- /dev/null
+++ b/idea/testData/refactoring/extractFunction/controlFlow/initializer/valueUsedInLambda.kt.after
@@ -0,0 +1,14 @@
+// SIBLING:
+fun main(args: Array<String>) {
+    val a = i()
+    lambda {
+        a
+    }
+}
+
+fun i(): Int {
+    val a = 1
+    return a
+}
+
+fun lambda(f: () -> Unit) {}
\ No newline at end of file
diff --git a/idea/testData/refactoring/extractFunction/controlFlow/unextractable/valueUsedInLocalFunction.kt b/idea/testData/refactoring/extractFunction/controlFlow/initializer/valueUsedInLocalFunction.kt
similarity index 100%
rename from idea/testData/refactoring/extractFunction/controlFlow/unextractable/valueUsedInLocalFunction.kt
rename to idea/testData/refactoring/extractFunction/controlFlow/initializer/valueUsedInLocalFunction.kt
diff --git a/idea/testData/refactoring/extractFunction/controlFlow/initializer/valueUsedInLocalFunction.kt.after b/idea/testData/refactoring/extractFunction/controlFlow/initializer/valueUsedInLocalFunction.kt.after
new file mode 100644
index 00000000000..7bbff1dcba1
--- /dev/null
+++ b/idea/testData/refactoring/extractFunction/controlFlow/initializer/valueUsedInLocalFunction.kt.after
@@ -0,0 +1,10 @@
+// SIBLING:
+fun main(args: Array<String>) {
+    val a = i()
+    fun foo() = a
+}
+
+fun i(): Int {
+    val a = 1
+    return a
+}
\ No newline at end of file
diff --git a/idea/testData/refactoring/extractFunction/controlFlow/unextractable/multipleInitalizersWithNonLocalUsages.kt b/idea/testData/refactoring/extractFunction/controlFlow/unextractable/multipleInitalizersWithNonLocalUsages.kt
new file mode 100644
index 00000000000..2cb993c53cb
--- /dev/null
+++ b/idea/testData/refactoring/extractFunction/controlFlow/unextractable/multipleInitalizersWithNonLocalUsages.kt
@@ -0,0 +1,6 @@
+// SIBLING:
+fun foo() {
+    <selection>val a = 1
+    val b = 2</selection>
+    println(a + b)
+}
\ No newline at end of file
diff --git a/idea/testData/refactoring/extractFunction/controlFlow/unextractable/multipleInitalizersWithNonLocalUsages.kt.conflicts b/idea/testData/refactoring/extractFunction/controlFlow/unextractable/multipleInitalizersWithNonLocalUsages.kt.conflicts
new file mode 100644
index 00000000000..a4c58b33e7a
--- /dev/null
+++ b/idea/testData/refactoring/extractFunction/controlFlow/unextractable/multipleInitalizersWithNonLocalUsages.kt.conflicts
@@ -0,0 +1 @@
+Selected code fragment has multiple output values: a b
\ No newline at end of file
diff --git a/idea/testData/refactoring/extractFunction/controlFlow/unextractable/valueUsedInAnonymousObject.kt.conflicts b/idea/testData/refactoring/extractFunction/controlFlow/unextractable/valueUsedInAnonymousObject.kt.conflicts
deleted file mode 100644
index 87517ea9e65..00000000000
--- a/idea/testData/refactoring/extractFunction/controlFlow/unextractable/valueUsedInAnonymousObject.kt.conflicts
+++ /dev/null
@@ -1 +0,0 @@
-Following variables are used outside of selected code fragment: a
\ No newline at end of file
diff --git a/idea/testData/refactoring/extractFunction/controlFlow/unextractable/valueUsedInLambda.kt.conflicts b/idea/testData/refactoring/extractFunction/controlFlow/unextractable/valueUsedInLambda.kt.conflicts
deleted file mode 100644
index 87517ea9e65..00000000000
--- a/idea/testData/refactoring/extractFunction/controlFlow/unextractable/valueUsedInLambda.kt.conflicts
+++ /dev/null
@@ -1 +0,0 @@
-Following variables are used outside of selected code fragment: a
\ No newline at end of file
diff --git a/idea/testData/refactoring/extractFunction/controlFlow/unextractable/valueUsedInLocalFunction.kt.conflicts b/idea/testData/refactoring/extractFunction/controlFlow/unextractable/valueUsedInLocalFunction.kt.conflicts
deleted file mode 100644
index 87517ea9e65..00000000000
--- a/idea/testData/refactoring/extractFunction/controlFlow/unextractable/valueUsedInLocalFunction.kt.conflicts
+++ /dev/null
@@ -1 +0,0 @@
-Following variables are used outside of selected code fragment: a
\ No newline at end of file
diff --git a/idea/tests/org/jetbrains/jet/plugin/refactoring/introduce/introduceVariable/JetExtractionTestGenerated.java b/idea/tests/org/jetbrains/jet/plugin/refactoring/introduce/introduceVariable/JetExtractionTestGenerated.java
index 8d9e8f1bcdd..71a0a0e78f2 100644
--- a/idea/tests/org/jetbrains/jet/plugin/refactoring/introduce/introduceVariable/JetExtractionTestGenerated.java
+++ b/idea/tests/org/jetbrains/jet/plugin/refactoring/introduce/introduceVariable/JetExtractionTestGenerated.java
@@ -230,6 +230,11 @@ public class JetExtractionTestGenerated extends AbstractJetExtractionTest {
                 doExtractFunctionTest("idea/testData/refactoring/extractFunction/basic/fragmentWithMultilineComment.kt");
             }
             
+            @TestMetadata("localClassExtraction.kt")
+            public void testLocalClassExtraction() throws Exception {
+                doExtractFunctionTest("idea/testData/refactoring/extractFunction/basic/localClassExtraction.kt");
+            }
+            
             @TestMetadata("localClassFunctionRef.kt")
             public void testLocalClassFunctionRef() throws Exception {
                 doExtractFunctionTest("idea/testData/refactoring/extractFunction/basic/localClassFunctionRef.kt");
@@ -245,6 +250,11 @@ public class JetExtractionTestGenerated extends AbstractJetExtractionTest {
                 doExtractFunctionTest("idea/testData/refactoring/extractFunction/basic/localExtraction.kt");
             }
             
+            @TestMetadata("localFunExtraction.kt")
+            public void testLocalFunExtraction() throws Exception {
+                doExtractFunctionTest("idea/testData/refactoring/extractFunction/basic/localFunExtraction.kt");
+            }
+            
             @TestMetadata("localFunctionRef.kt")
             public void testLocalFunctionRef() throws Exception {
                 doExtractFunctionTest("idea/testData/refactoring/extractFunction/basic/localFunctionRef.kt");
@@ -288,7 +298,7 @@ public class JetExtractionTestGenerated extends AbstractJetExtractionTest {
         }
         
         @TestMetadata("idea/testData/refactoring/extractFunction/controlFlow")
-        @InnerTestClasses({ControlFlow.ConditionalJumps.class, ControlFlow.Default.class, ControlFlow.DefiniteReturns.class, ControlFlow.EvaluateExpression.class, ControlFlow.OutputValues.class, ControlFlow.Throws.class, ControlFlow.Unextractable.class})
+        @InnerTestClasses({ControlFlow.ConditionalJumps.class, ControlFlow.Default.class, ControlFlow.DefiniteReturns.class, ControlFlow.EvaluateExpression.class, ControlFlow.Initializer.class, ControlFlow.OutputValues.class, ControlFlow.Throws.class, ControlFlow.Unextractable.class})
         public static class ControlFlow extends AbstractJetExtractionTest {
             public void testAllFilesPresentInControlFlow() throws Exception {
                 JetTestUtils.assertAllTestsPresentByMetadata(this.getClass(), "org.jetbrains.jet.generators.tests.TestsPackage", new File("idea/testData/refactoring/extractFunction/controlFlow"), Pattern.compile("^(.+)\\.kt$"), true);
@@ -305,6 +315,11 @@ public class JetExtractionTestGenerated extends AbstractJetExtractionTest {
                     doExtractFunctionTest("idea/testData/refactoring/extractFunction/controlFlow/conditionalJumps/conditionalBreakWithIf.kt");
                 }
                 
+                @TestMetadata("conditionalBreakWithIfAndExtraVars.kt")
+                public void testConditionalBreakWithIfAndExtraVars() throws Exception {
+                    doExtractFunctionTest("idea/testData/refactoring/extractFunction/controlFlow/conditionalJumps/conditionalBreakWithIfAndExtraVars.kt");
+                }
+                
                 @TestMetadata("conditionalBreakWithIfElse.kt")
                 public void testConditionalBreakWithIfElse() throws Exception {
                     doExtractFunctionTest("idea/testData/refactoring/extractFunction/controlFlow/conditionalJumps/conditionalBreakWithIfElse.kt");
@@ -358,6 +373,11 @@ public class JetExtractionTestGenerated extends AbstractJetExtractionTest {
                     doExtractFunctionTest("idea/testData/refactoring/extractFunction/controlFlow/default/defaultCF.kt");
                 }
                 
+                @TestMetadata("defaultCFWithExtraVars.kt")
+                public void testDefaultCFWithExtraVars() throws Exception {
+                    doExtractFunctionTest("idea/testData/refactoring/extractFunction/controlFlow/default/defaultCFWithExtraVars.kt");
+                }
+                
                 @TestMetadata("defaultCFWithJumps.kt")
                 public void testDefaultCFWithJumps() throws Exception {
                     doExtractFunctionTest("idea/testData/refactoring/extractFunction/controlFlow/default/defaultCFWithJumps.kt");
@@ -481,6 +501,49 @@ public class JetExtractionTestGenerated extends AbstractJetExtractionTest {
                 
             }
             
+            @TestMetadata("idea/testData/refactoring/extractFunction/controlFlow/initializer")
+            public static class Initializer extends AbstractJetExtractionTest {
+                public void testAllFilesPresentInInitializer() throws Exception {
+                    JetTestUtils.assertAllTestsPresentByMetadata(this.getClass(), "org.jetbrains.jet.generators.tests.TestsPackage", new File("idea/testData/refactoring/extractFunction/controlFlow/initializer"), Pattern.compile("^(.+)\\.kt$"), true);
+                }
+                
+                @TestMetadata("propertyWithInitializer.kt")
+                public void testPropertyWithInitializer() throws Exception {
+                    doExtractFunctionTest("idea/testData/refactoring/extractFunction/controlFlow/initializer/propertyWithInitializer.kt");
+                }
+                
+                @TestMetadata("propertyWithInitializerAndExtraVars.kt")
+                public void testPropertyWithInitializerAndExtraVars() throws Exception {
+                    doExtractFunctionTest("idea/testData/refactoring/extractFunction/controlFlow/initializer/propertyWithInitializerAndExtraVars.kt");
+                }
+                
+                @TestMetadata("propertyWithInitializerAndUnusedVars.kt")
+                public void testPropertyWithInitializerAndUnusedVars() throws Exception {
+                    doExtractFunctionTest("idea/testData/refactoring/extractFunction/controlFlow/initializer/propertyWithInitializerAndUnusedVars.kt");
+                }
+                
+                @TestMetadata("propertyWithSeparateInitializer.kt")
+                public void testPropertyWithSeparateInitializer() throws Exception {
+                    doExtractFunctionTest("idea/testData/refactoring/extractFunction/controlFlow/initializer/propertyWithSeparateInitializer.kt");
+                }
+                
+                @TestMetadata("valueUsedInAnonymousObject.kt")
+                public void testValueUsedInAnonymousObject() throws Exception {
+                    doExtractFunctionTest("idea/testData/refactoring/extractFunction/controlFlow/initializer/valueUsedInAnonymousObject.kt");
+                }
+                
+                @TestMetadata("valueUsedInLambda.kt")
+                public void testValueUsedInLambda() throws Exception {
+                    doExtractFunctionTest("idea/testData/refactoring/extractFunction/controlFlow/initializer/valueUsedInLambda.kt");
+                }
+                
+                @TestMetadata("valueUsedInLocalFunction.kt")
+                public void testValueUsedInLocalFunction() throws Exception {
+                    doExtractFunctionTest("idea/testData/refactoring/extractFunction/controlFlow/initializer/valueUsedInLocalFunction.kt");
+                }
+                
+            }
+            
             @TestMetadata("idea/testData/refactoring/extractFunction/controlFlow/outputValues")
             public static class OutputValues extends AbstractJetExtractionTest {
                 public void testAllFilesPresentInOutputValues() throws Exception {
@@ -588,6 +651,11 @@ public class JetExtractionTestGenerated extends AbstractJetExtractionTest {
                     doExtractFunctionTest("idea/testData/refactoring/extractFunction/controlFlow/unextractable/jumpsAndReturns.kt");
                 }
                 
+                @TestMetadata("multipleInitalizersWithNonLocalUsages.kt")
+                public void testMultipleInitalizersWithNonLocalUsages() throws Exception {
+                    doExtractFunctionTest("idea/testData/refactoring/extractFunction/controlFlow/unextractable/multipleInitalizersWithNonLocalUsages.kt");
+                }
+                
                 @TestMetadata("multipleJumps.kt")
                 public void testMultipleJumps() throws Exception {
                     doExtractFunctionTest("idea/testData/refactoring/extractFunction/controlFlow/unextractable/multipleJumps.kt");
@@ -608,21 +676,6 @@ public class JetExtractionTestGenerated extends AbstractJetExtractionTest {
                     doExtractFunctionTest("idea/testData/refactoring/extractFunction/controlFlow/unextractable/outputValueWithReturn.kt");
                 }
                 
-                @TestMetadata("valueUsedInAnonymousObject.kt")
-                public void testValueUsedInAnonymousObject() throws Exception {
-                    doExtractFunctionTest("idea/testData/refactoring/extractFunction/controlFlow/unextractable/valueUsedInAnonymousObject.kt");
-                }
-                
-                @TestMetadata("valueUsedInLambda.kt")
-                public void testValueUsedInLambda() throws Exception {
-                    doExtractFunctionTest("idea/testData/refactoring/extractFunction/controlFlow/unextractable/valueUsedInLambda.kt");
-                }
-                
-                @TestMetadata("valueUsedInLocalFunction.kt")
-                public void testValueUsedInLocalFunction() throws Exception {
-                    doExtractFunctionTest("idea/testData/refactoring/extractFunction/controlFlow/unextractable/valueUsedInLocalFunction.kt");
-                }
-                
                 @TestMetadata("variablesOutOfScope.kt")
                 public void testVariablesOutOfScope() throws Exception {
                     doExtractFunctionTest("idea/testData/refactoring/extractFunction/controlFlow/unextractable/variablesOutOfScope.kt");
@@ -637,6 +690,7 @@ public class JetExtractionTestGenerated extends AbstractJetExtractionTest {
                 suite.addTestSuite(Default.class);
                 suite.addTestSuite(DefiniteReturns.class);
                 suite.addTestSuite(EvaluateExpression.class);
+                suite.addTestSuite(Initializer.class);
                 suite.addTestSuite(OutputValues.class);
                 suite.addTestSuite(Throws.class);
                 suite.addTestSuite(Unextractable.class);