3. Discontinued Operations and Related Items
In September 2011, we reported that the management of certain of our indirect subsidiaries intended to initiate consultations with their works councils on the probable cessation of refinery operations at our refinery in Berre and of the associated refined products business. In connection with the intended closure, we recorded pre-tax charges totaling $136 million in the fourth quarter of 2011, primarily related to the estimated cost of the social plan for the affected employees. In 2013 and 2012, we reduced the estimated cost of the social plan by $5 million and $25 million, respectively.
On January 4, 2012, these operations were suspended in accordance with an agreement with the relevant works councils. Notwithstanding the suspension of the operations and the recording of the charges related to the costs of the social plan for employees and inventory write-downs, we began reporting the Berre refinery as a discontinued operation in the second quarter of 2012. Our determination that the Berre refinery met the definition of a “discontinued operation” in the second quarter of 2012 was based on (i) the ongoing cash flows of the refinery, which became insignificant in the second quarter of 2012 as residual inventory from the refinery was liquidated and (ii) we and our subsidiaries ceasing to have any significant continuing involvement in the operations of the refinery during the second quarter of 2012.
The amounts included in Loss from discontinued operations of the Berre refinery are summarized as follows:
| Year Ended December 31, | ||||||||||||
| Millions of dollars | 2013 | 2012 | 2011 | |||||||||
| Sales and other operating revenues | $ | 9 | $ | 278 | $ | 2,852 | ||||||
| Loss from discontinued operations | ||||||||||||
| before income taxes | $ | (13) | $ | (24) | $ | (343) | ||||||
| Benefit from income taxes | (6) | 0 | (11) | |||||||||
| Loss from discontinued operations, | ||||||||||||
| net of tax | $ | (7) | $ | (24) | $ | (332) | ||||||
Losses from discontinued operations for 2013 and 2012 include benefits related to the liquidation of LIFO-valued inventory of $9 million and $73 million, respectively.
The following table summarizes the assets and liabilities of the Berre refinery that are included in the Consolidated Balance Sheets. These amounts were derived from historical financial information and adjusted to exclude intercompany receivables and payables between the Berre refinery and other subsidiaries of the Company.
| December 31, | |||||||||
| Millions of dollars | 2013 | 2012 | |||||||
| Current assets related to discontinued operations: | |||||||||
| Accounts receivable trade, net | $ | 1 | $ | 16 | |||||
| Inventories | 4 | 34 | |||||||
| Total current assets related to discontinued operations | $ | 5 | $ | 50 | |||||
| Current liabilities related to discontinued operations: | |||||||||
| Accounts payable trade | $ | 2 | $ | 19 | |||||
| Accrued liabilities | 11 | 21 | |||||||
| Total current liabilities related to discontinued operations | $ | 13 | $ | 40 | |||||
| Long-term liabilities related to discontinued operations: | |||||||||
| Other liabilities | $ | 38 | $ | 48 | |||||
| Total long-term liabilities related to discontinued operations | $ | 38 | $ | 48 | |||||
Future cash out flows will occur for activities associated with exit and disposal and for payments made to severed employees. Exit and disposal costs are expected to be incurred through the end of 2017. Payments to the affected employees are expected to be substantially complete by 2019. There is uncertainty in the manner, scope and timing of potential future asset disposal or dismantlement activities and their related cash flows. Although some dismantling and remediation activities may be considered or required at a future date, the amounts associated with such activities are not determinable at this time due to such uncertainties.
The following table summarizes the changes in the accrual for the social plan for employees affected by the closure of the Berre refinery:
| Millions of dollars | 2013 | 2012 | ||||
| Beginning balance | $ | 59 | $ | 130 | ||
| Accretion expense | 5 | 0 | ||||
| Cash payments | (20) | (44) | ||||
| Adjustment for change in estimates | (5) | (25) | ||||
| Effect of exchange rate changes | 3 | (2) | ||||
| Ending balance | $ | 42 | $ | 59 | ||