Discontinued Operations

9 Months Ended

Sep. 30, 2014

Discontinued Operations And Disposal Groups [Abstract]

Discontinued Operations

2. Discontinued Operations

Downstream businesses reported as discontinued operations in the Statement of Consolidated Income include the retail, energy marketing and terminal businesses as well as the Port Reading refining operations.

Sales and other operating revenues and Income from discontinued operations were as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
	(In millions)
Sales and other operating revenues	$	3,029	$	5,354	$	9,163	$	18,359
Income from discontinued operations before income taxes	$	1,024	$	96	$	979	$	292
Provision for income taxes		381		34		367		103
Income from discontinued operations, net of income taxes	$	643	$	62	$	612	$	189

In September 2014, the Corporation completed the sale of its retail business for cash proceeds of approximately $2.8 billion. This transaction resulted in a pre-tax gain of $954 million ($602 million after income taxes) after deducting the net book value of assets, including $115 million of goodwill. The Corporation recorded pre-tax gains of $183 million ($114 million after income taxes) and $228 million ($143 million after income taxes) in the third quarter of 2014 and 2013, respectively relating to the liquidation of last‑in, first‑out (LIFO) inventories. In addition, the Corporation recorded charges totaling $173 million pre-tax ($110 million after income taxes) in the third quarter of 2014 and $191 million pre‑tax ($120 million after income taxes) in the third quarter of 2013 for impairment, environmental, severance and exit-related activities associated with the divestiture of downstream operations.

During the nine months ended September 30, 2014 and 2013, the Corporation recognized pre-tax gains of $247 million ($154 million after income taxes) and $446 million pre-tax ($280 million after income taxes), respectively, relating to the liquidation of LIFO inventories. Total charges for impairment, environmental, Port Reading refinery shutdown costs, severance, and exit-related activities associated with the divestiture of downstream operations for the nine month periods ended September 30, 2014 and 2013, were $254 million pre-tax ($161 million after income taxes) and $390 million pre-tax ($245 million after income taxes), respectively. In addition, the Corporation recognized a pre-tax charge of $115 million ($72 million after income taxes) in the second quarter of 2014, related to the termination of lease contracts and the purchase of 180 retail gasoline stations.

In January 2014, the Corporation’s retail business acquired its partners’ 56% interest in WilcoHess, a retail gasoline joint venture, for approximately $290 million and the settlement of liabilities. In connection with this business combination, the Corporation recorded a pre-tax gain of $39 million ($24 million after income taxes) to remeasure the carrying value of the Corporation’s equity interest in WilcoHess to fair value and recorded goodwill of $115 million. Effective from the acquisition date, Hess consolidated the results of WilcoHess’ operations, which have been included in the results of the discontinued operations reported above. The assets and liabilities acquired from WilcoHess were included in the sale of the retail business in September 2014.