Hess 2014 Annual Report Download - page 75

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HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
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2. Discontinued Operations
The results of operations for the Corporation’s divested retail, energy marketing and terminal operations, the Port Reading refining
facility which ceased operations in 2013, and the energy trading joint venture, HETCO, which was classified as held for sale at
December 31, 2014, have been reported as discontinued operations in the Statement of Consolidated Income for all periods presented.
These businesses were previously included in the M&R segment.
Sales and other operating revenues and Income from discontinued operations were as follows:
2014 2013 2012
(In millions)
Sales and other operating revenues .............................................................................................. $ 9,576 $ 22,652 $ 25,517
Income from discontinued operations before income taxes ......................................................... $ 1,071 $ 1,835 $ 400
Current tax provision (benefit)* ................................................................................................... — — 7
Deferred tax provision (benefit) ................................................................................................... 389 649 138
Provision for income taxes ...................................................................................................... 389 649 145
Income (loss) from discontinued operations, net of income taxes ............................................... $ 682 $ 1,186 $ 255
Less: Net income (loss) attributable to noncontrolling interests ............................................. 57 (6) 20
Income from discontinued operations attributable to Hess Corporation ................................. $ 625 $ 1,192 $ 235
* Substantially all current tax expense relates to foreign taxes on energy trading operations.
2014: In September, 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. During the year, the Corporation recorded pre-tax gains of $275 million ($171 million after
income taxes) relating to the liquidation of last-in, first-out (LIFO) inventories associated with the divested downstream operations. In
addition, the Corporation recorded pre-tax charges totaling $308 million ($202 million after income taxes) for impairments,
environmental matters, severance and exit related activities associated with the divestiture of downstream operations. The
Corporation also recognized a pre-tax charge of $115 million ($72 million after income taxes) related to the termination of lease
contracts and the purchase of 180 retail gasoline stations in preparation for the sale of the retail operations. In January, 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 original 44% equity interest in
WilcoHess to fair value, including recognition of goodwill in the amount of $115 million. Effective from the acquisition date, the
Corporation consolidated the results of WilcoHess’ operations, which have been included in the results of discontinued operations
reported above. The assets and liabilities acquired from WilcoHess were included in the sale of the retail business in September 2014.
2013: In December, the Corporation sold its U.S. East Coast terminal network, St. Lucia terminal and related businesses for cash
proceeds of approximately $1.0 billion. The transaction resulted in a pre-tax gain of $739 million ($531 million after income taxes).
In November, the Corporation sold its energy marketing business for cash proceeds of approximately $1.2 billion, which resulted in a
pre-tax gain of $761 million ($464 million after income taxes). During the year the Corporation recognized pre-tax gains of $678
million ($414 million after income taxes) relating to the liquidation of LIFO inventories. In addition, the Corporation recorded pre-tax
charges totaling $523 million ($334 million after income taxes) for impairments, severance, Port Reading refinery shutdown costs,
environmental matters, and exit related activities associated with the divestiture of downstream operations.
2012: In 2012, the Corporation recorded pre-tax income of $165 million ($104 million after income taxes) from the partial
liquidation of LIFO inventories. The Corporation also recorded pre-tax charges totaling $43 million ($33 million after income taxes)
for asset impairments to certain marketing properties and other charges.