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PBF Energy Inc. 2014 Annual Report

Table of contents

  • Page 1
    PBF Energy Inc. 2014 Annual Report

  • Page 2
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  • Page 3
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  • Page 4
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  • Page 6
    WÄ,ƵůƐďŽƌŽZĞĮŶĞƌLJ

  • Page 7
    ...35764 PBF ENERGY INC. (Exact name of registrant as specified in its charter) DELAWARE (State or other jurisdiction of incorporation or organization) 45-3763855 (I.R.S. Employer Identification No.) One Sylvan Way, Second Floor Parsippany, New Jersey (Address of principal executive offices) 07054...

  • Page 8
    ... reporting company Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No The aggregate market value of the Common Stock of PBF Energy Inc. held by non-affiliates as of June 30, 2014 was $2,336,427,673 based upon the New York Stock...

  • Page 9
    ... Statement Schedules SIGNATURES Explanatory Note This Annual Report on Form 10-K is filed by PBF Energy Inc. ("PBF Energy") which is a holding company whose primary asset is an equity interest in PBF Energy Company LLC ("PBF LLC"). PBF Energy is the sole managing member of, and owner of an equity...

  • Page 10
    ...PBF Services Company LLC, PBF Power Marketing LLC, PBF Energy Limited, Toledo Refining Company LLC ("Toledo Refining"), Paulsboro Natural Gas Pipeline Company LLC, Paulsboro Refining Company LLC ("Paulsboro Refining"), Delaware Pipeline Company LLC, Delaware City Refining Company LLC ("Delaware City...

  • Page 11
    ... Ohio, Delaware City, Delaware and Paulsboro, New Jersey. Our MidContinent refinery at Toledo processes light, sweet crude, has a throughput capacity of 170,000 bpd and a Nelson Complexity Index of 9.2. The majority of Toledo's WTI-based crude is delivered via pipelines that originate in both Canada...

  • Page 12
    ... Canada for PBF Energy in support of its three refineries. All of PBFX's revenue is derived from long-term, fee-based commercial agreements with PBF Holding, which include minimum volume commitments, for receiving, handling and transferring crude oil and storing crude oil and refined products. PBF...

  • Page 13
    ...: PBFX) (PBF Logistics) PBF Holding Company LLC (PBF Holding) ABL Revolving Credit Facility 8.25% Senior Secured Notes due 2020 Operating Subsidiaries Refining and Other Operating Subsidiaries Rail Facility Catalyst Leases _____ * On February 6, 2015, PBF Energy completed a public offering of...

  • Page 14
    ...consolidation. Prior to the PBFX Offering, PBFX's assets were operated within the refining operations of the Company's Delaware City and Toledo refineries. The assets did not generate third party or intraentity revenue and were not considered to be a separate reportable segment. See Note 20 "Segment...

  • Page 15
    ... by PBF employees in our corporate headquarters, at the Delaware City refinery and in our field offices in Calgary, Alberta and Oklahoma City, Oklahoma, are responsible for crude procurement, logistics via rail and monitoring crude-by-rail offloading. Overview. The Delaware City refinery is located...

  • Page 16
    ... market or through term agreements. Inventory Intermediation Agreement. On June 26, 2013, the Company entered into an Inventory Intermediation Agreement with J. Aron ("Inventory Intermediation Agreement") to support the operations of the Delaware City refinery, which commenced upon the termination...

  • Page 17
    ... is located on approximately 950 acres on the Delaware River in Paulsboro, New Jersey, just south of Philadelphia and approximately 30 miles away from Delaware City. Paulsboro receives crude and feedstocks via its marine terminal on the Delaware River. Paulsboro is one of two operating refineries on...

  • Page 18
    ... to crude oil storage with the remaining 5.4 million barrels allocated to finished products, intermediates and other products. Energy and Other Utilities. Under normal operating conditions, the Paulsboro refinery consumes approximately 30,000 MMBTU per day of natural gas. The Paulsboro refinery is...

  • Page 19
    ... post-acquisition earnings of the refinery, of which $103.6 million was paid in 2012 and the balance paid in 2013. Overview. Toledo has a throughput capacity of approximately 170,000 bpd and a Nelson Complexity Index of 9.2. Toledo primarily processes a slate of light, sweet crudes from Canada, the...

  • Page 20
    ... to crude oil and finished products was transferred to PBFX in conjunction with its acquisition of the Toledo Storage Facility in December 2014. Energy and Other Utilities. Under normal operating conditions, the Toledo refinery consumes approximately 17,000 MMBTU per day of natural gas. The Toledo...

  • Page 21
    ...oil rail unloading terminal which commenced operations in February 2013 and serves PBF Energy's Delaware City and Paulsboro refineries. The DCR West Rack - A 40,000 bpd heavy crude oil unloading rack which commenced operations in August 2014 and serves PBF Energy's Delaware City refinery. The Toledo...

  • Page 22
    ... with major oil companies. For the years ended December 31, 2014, 2013 and 2012, gasoline and distillates accounted for 86.0%, 88.6% and 88.8% of our revenues, respectively. Customers We sell a variety of refined products to a diverse customer base. The majority of our refined products are primarily...

  • Page 23
    ... Young Jeffrey Dill Thomas L. O'Connor Todd O'Malley Herman Seedorf Paul Davis 73 63 41 37 53 42 41 63 52 Executive Chairman of the Board of Directors Chief Executive Officer President Senior Vice President, Chief Financial Officer Senior Vice President, General Counsel Senior Vice President, Co...

  • Page 24
    ...in corporate finance, strategic planning and mergers and acquisitions roles across a variety of industries. He began his career in investment banking before joining J.F. Lehman & Company, a private equity investment firm, in 2001. Jeffrey Dill has served as our Senior Vice President, General Counsel...

  • Page 25
    ... joined PBF Energy in February of 2011 as the Delaware City Refinery Plant Manager and became Senior Vice President, Eastern Region Refining, in September of 2013. Prior to 2011, Mr. Seedorf served as the refinery manager of the Wood River Refinery in Roxana, Illinois, and also as an officer of...

  • Page 26
    ...These new ...operations or cash flows. The federal Comprehensive Environmental Response, Compensation...owner or operator of the disposal site or sites where the release occurred and companies...natural resource damages. It is not uncommon for neighboring landowners and other third parties to file...

  • Page 27
    ... the fourth quarter of 2014, this financial requirement was...Delaware City and Paulsboro acquisitions, we purchased two individual tenyear, $75.0 million environmental insurance policies to insure against unknown environmental liabilities at each refinery. In connection with the acquisition of Toledo...

  • Page 28
    ... Annual Report on Form 10-K have the following meanings: "ASCI" refers to the Argus Sour Crude Index, a pricing index used to approximate market prices for sour, heavy crude oil. "Bakken" refers to both a crude oil production region generally covering North Dakota, Montana and Western Canada, and...

  • Page 29
    ... and viscosity. Heavy crude oils require greater levels of processing to produce high value products such as gasoline and diesel. "IPO" refers to the initial public offering of PBF Energy's Class A common stock which closed on December 18, 2012. "J.Aron" refers to J. Aron & Company, a subsidiary of...

  • Page 30
    ... and maintain a refinery unit or units that involves the inspection of such units and occurs generally on a periodic cycle. "ULSD" refers to ultra-low-sulfur diesel. "Valero" refers to Valero Energy Corporation. "WCS" refers to Western Canadian Select, a heavy, sour crude oil blend typically...

  • Page 31
    ... been cheaper than benchmark crude oils, such as the heavy, sour crude oils processed at our Delaware City and Paulsboro refineries and the WTI-based crude oils processed at our Toledo refinery and delivered by rail to our East Coast refineries. These crude oil differentials vary significantly from...

  • Page 32
    ... capacity, however, favorable market conditions due to, among other things, geographic location, crude and refined product slates, and customer demand, may cause an individual refinery to contribute more significantly to our earnings than others for a period of time. For example, our Toledo, Ohio...

  • Page 33
    ... impact our results of operations and cash flows. Our Toledo refinery receives a substantial portion of its crude oil and delivers a portion of its refined products through pipelines. The Enbridge system is our primary supply route for crude oil from Canada, the Bakken region and Michigan, and...

  • Page 34
    ...in its obligations, our crude oil pricing costs may increase as the number of days between when we pay for the crude oil and when the crude oil is delivered to us increases. Termination of our Inventory Intermediation Agreements with J. Aron would require us to finance our refined products inventory...

  • Page 35
    ... downturns in that region. These refineries are located within a relatively limited geographic area and we primarily market our refined products in that area. As a result, we are more susceptible to regional conditions than the operations of more geographically diversified competitors and any...

  • Page 36
    ...produce the anticipated benefits or may have adverse effects on our business and operating results. We may selectively consider strategic acquisitions in the future within the refining and mid-stream sector based on performance through the cycle, advantageous access to crude oil supplies, attractive...

  • Page 37
    ... would interfere with our operations. At Delaware City and Toledo, most hourly employees are covered by a collective bargaining agreement through the United Steel Workers (USW). While the contracts at these sites were scheduled to expire in February 2015, the Company successfully negotiated early...

  • Page 38
    ... volumes of our crude oil or refined products may have more or less variability than the cost or price for such crude oil or refined products. We may... processing systems and other communications and information systems, including our enterprise resource planning tools. We process a large number of...

  • Page 39
    ...appeals allege that both the loading of crude oil onto barges and the operation of the Delaware City rail unloading terminal violate Delaware's Coastal Zone Act. The first appeal is Number 2013-1 before the State Coastal Zone Industrial Control Board (the "CZ Board"), and the second appeal is before...

  • Page 40
    underway in accordance with regulatory requirements at the Paulsboro and Delaware City refineries. In connection with the acquisitions of our refineries, the prior owners have retained certain liabilities or indemnified us for certain liabilities, including those relating to pre-acquisition soil and...

  • Page 41
    ... data could materially and adversely affect our ability to produce financial statements in a timely manner. Changes in our credit profile could adversely affect our business. Changes in our credit profile could affect the way crude oil suppliers view our ability to make payments and induce them to...

  • Page 42
    ... business, financial condition and results of operations. Furthermore, our Delaware City refinery and our light crude oil unloading terminal (which we refer to as our "Delaware City Rail Terminal" or "DCR Rail Terminal") are located in Delaware's coastal zone where certain activities are regulated...

  • Page 43
    ...appeals allege that both the loading of crude oil onto barges and the operation of the Delaware City rail unloading terminal violate Delaware's Coastal Zone Act. The first appeal is Number 2013-1 before the State Coastal Zone Industrial Control Board (the "CZ Board"), and the second appeal is before...

  • Page 44
    ... to generate sufficient cash flow from operations, we may be required to sell assets, to refinance all or a portion of our ...number of qualifications and exceptions, and the indebtedness incurred in compliance with these restrictions could be substantial. To the extent new... the date of repurchase. 37

  • Page 45
    ... -IPO Related Agreements" in our 2015 Proxy Statement. We will be required to pay the former and current holders of PBF LLC Series A Units and PBF LLC Series B Units for certain tax benefits we may claim arising in connection with our prior offerings and future exchanges of PBF LLC Series...

  • Page 46
    ... under the tax receivable agreement. The foregoing numbers are merely estimates based on assumptions that are subject to change due to various factors, including, among other factors, the timing of exchanges of PBF LLC Series A Units for shares of PBF Energy's Class A common stock as contemplated...

  • Page 47
    ... owners or otherwise to declare or pay any dividends or other distributions (other than the obligations of PBF LLC to make tax distributions to its members). Our board of directors may take into account, among other things, general economic conditions, our financial condition and operating results...

  • Page 48
    ... operating results or dividends, if any, to stockholders; changes in, or failure to meet, earnings estimates of securities analysts; market conditions in the oil refining industry and volatility in commodity prices; the impact of disruptions to crude or feedstock supply to any of our refineries...

  • Page 49
    ... We depend on PBFX to receive, handle, store and transfer crude oil and petroleum products for us from our operations and sources located throughout the United States and Canada in support of our three refineries under longterm, fee-based commercial agreements with our subsidiaries. These commercial...

  • Page 50
    ... of the amount of cash distributions PBF Energy receives from PBF LLC. The holders of limited liability company interests in PBF LLC, including PBF Energy, generally have to include for purposes of calculating their U.S. federal, state and local income taxes their share of any taxable income...

  • Page 51
    ...appeals allege that both the loading of crude oil onto barges and the operation of the Delaware City rail unloading terminal violate Delaware's Coastal Zone Act. The first appeal is Number 2013-1 before the State Coastal Zone Industrial Control Board (the "CZ Board"), and the second appeal is before...

  • Page 52
    ... 24, 2013, the Delaware Department of Natural Resources and Environmental Control ("DNREC") issued a Notice of Administrative Penalty Assessment and Secretary's Order to Delaware City Refining Company LLC for alleged air emission violations that occurred during the re-start of the refinery in 2011...

  • Page 53
    ... any contractual agreements with PBF LLC's existing owners or otherwise to declare or pay any dividends or other distributions (other than the obligations of PBF LLC to make tax distributions to its members). PBF Energy's board of directors may take into account, among other things, general economic...

  • Page 54
    ... policy and the decision to make any distribution is determined by its general partner, taking into consideration the terms of PBFX's partnership agreement. Based upon our operating results for the year ended December 31, 2014, PBF Holding was permitted under its Revolving Loan and indenture to pay...

  • Page 55
    ...30 per share of Class A common stock on November 25, 2014, August 27, 2014, May 29, 2014, and March 14, 2014. PBF LLC used the remaining $246.4 million from PBF Holding's distribution to make tax distributions to its members, including $185.0 million to PBF Energy. In addition, PBFX made aggregate...

  • Page 56
    ..., 2014. Our peer group consists of the following companies that are engaged in refining operations in the U.S.: Alon USA Energy, Inc.; CVR Energy Inc.; Delek US Holdings, Inc.; HollyFrontier Corporation; Marathon Petroleum Corporation; Phillips 66; Tesoro Corporation; Valero Energy Corporation; and...

  • Page 57
    ... made by any of our directors, executive officers or entities affiliated with Blackstone or First Reserve. Share Repurchase Program The following table summarizes the Company's Class A common stock share repurchase activity during the fourth quarter of 2014: Total number of shares purchased as part...

  • Page 58
    ...the audited financial statements of PBF Energy and PBF LLC not included in this Annual Report on Form 10-K. As a result of the Paulsboro and Toledo acquisitions, the historical consolidated financial results of PBF LLC only includes the results of operations for Paulsboro and Toledo from December 17...

  • Page 59
    2014 Statement of operations data: Revenues (1) Costs and expenses: Cost of sales, excluding depreciation Operating expenses, excluding depreciation General and administrative expenses Gain on sale of asset Acquisition-related expenses (2) Depreciation and amortization expense Income (loss) from ...

  • Page 60
    ... to Paulsboro as PBF LLC's "Predecessor" or "Predecessor Paulsboro," as prior to its acquisition PBF LLC generated substantially no revenues and prior to the acquisition of Paulsboro and the Delaware City assets, was a new company formed to pursue acquisitions of crude oil refineries and downstream...

  • Page 61
    PAULSBORO REFINING BUSINESS-PBF LLC'S PREDECESSOR Period from January 1, 2010 through December 16, 2010 (in thousands) Statement of operations data: Operating revenues (1) Cost and expenses: Cost of sales (2) Operating expenses General and administrative expenses (3) Asset impairment loss ...

  • Page 62
    ... J. Aron all volumes of products located at the Paulsboro and Delaware City refineries' storage tanks upon termination of these agreements; • restrictive covenants in our indebtedness that may adversely affect our operational flexibility; • payments to the current and former holders of PBF LLC...

  • Page 63
    ... transfer crude through the Delaware City refinery's dock; • the impact of disruptions to crude or feedstock supply to any of our refineries, including disruptions due to problems at PBFX or with third party logistics infrastructure or operations, including pipeline, marine and rail transportation...

  • Page 64
    ... This Annual Report on Form 10-K is filed by PBF Energy which is a holding company whose primary asset is an equity interest in PBF LLC. PBF Energy is the sole managing member of, and owner of an equity interest representing approximately 89.9% of the outstanding economic interests in, PBF LLC as...

  • Page 65
    ... of crude oil refineries and downstream assets in North America. We currently own and operate three domestic oil refineries and related assets located in Delaware City, Delaware, Paulsboro, New Jersey, and Toledo, Ohio, which we acquired in 2010 and 2011. Our refineries have a combined processing...

  • Page 66
    ... of crude oil, refined products and intermediates from sources located throughout the United States and Canada for PBF Energy in support of its three refineries. PBFX's initial assets consist of the Delaware City Rail Terminal, and a crude oil truck unloading terminal at the Toledo refinery (which...

  • Page 67
    ... had collateralized the PBFX Term Loan. Crude Oil Acquisition Agreement Termination Effective July 31, 2014, PBF Holding terminated the Amended and Restated Crude Oil Acquisition Agreement, dated as of March 1, 2012 as amended (the "Toledo Crude Oil Acquisition Agreement") with MSCG. Under the terms...

  • Page 68
    ... company agreement of PBF LLC. PBF Energy did not receive any proceeds from the 2014 secondary offerings. As of December 31, 2014, we owned 81,981,119 PBF LLC Series C Units and Blackstone, First Reserve and our executive officers and directors and certain employees beneficially owned 9,170,696 PBF...

  • Page 69
    ... in connection with our IPO, 2013 secondary offering and 2014 secondary offerings (herein, "secondary offerings"). Our estimate of the tax receivable agreement liability is based, in part, on forecasts of future taxable income over the anticipated life of our future business operations, assuming no...

  • Page 70
    ... fluctuate with movements in the price of energy to meet the power needs of our refineries. In addition, the effect of changes in crude oil prices on our operating results is influenced by how the prices of refined products adjust to reflect such changes. Crude oil and other feedstock costs and the...

  • Page 71
    ... our Paulsboro and Delaware City refineries access their crude slates from the Delaware River via ship or barge and through our rail facilities at Delaware City, these refineries have the flexibility to purchase crude oils from the Mid-Continent and Western Canada, as well as a number of different...

  • Page 72
    ...per barrel basis has historically differed from the Dated Brent (NYH) 2-1-1 benchmark refining margin due to the following factors: • the Paulsboro refinery has generally processed a slate of primarily medium and heavy, and sour crude oil, which has historically constituted approximately 65% to 70...

  • Page 73
    ...WTI crude oil; the Toledo refinery is connected to its distribution network through a variety of third party product pipelines. While lower in cost when compared to barge or rail transportation, the inclusion of transportation costs increases our overall cost relative to the 4-3-1 benchmark refining...

  • Page 74
    ... Logistics segment. Prior to the PBFX Offering, DCR West Rack Acquisition and Toledo Storage Facility Acquisition, PBFX's assets were operated within the refining operations of our Delaware City and Toledo refineries and were not considered to be a separate reportable segment. We did not analyze our...

  • Page 75
    ...Highlights Year Ended December 31, 2014 2013 2012 Key Operating Information Production (barrels per day in thousands) Crude oil and feedstocks throughput (barrels per day in thousands) Total crude oil and feedstocks throughput (millions of barrels) Gross refining margin, excluding special items per...

  • Page 76
    ... Brent less Maya (heavy, sour) Dated Brent less WTS (sour) Dated Brent less ASCI (sour) WTI less WCS (heavy, sour) WTI less Bakken (light, sweet) WTI less Syncrude (light, sweet) Natural gas (dollars per MMBTU) 2014 Compared to 2013 Overview- Net income for PBF Energy was $78.3 million for the year...

  • Page 77
    ... WTI-based crudes from the Bakken and Western Canada, which had the overall effect of reducing the cost of crude oil processed at our East Coast refineries and increasing our gross refining margin and gross margin. Additionally, the increase in the Dated Brent/Maya crude differential, our proxy for...

  • Page 78
    ... the expansion of the Delaware City heavy crude rail unloading terminal and additional unloading spots to the dual-loop track light crude rail unloading facility. We also completed turnarounds in late 2013 and early 2014 and other refinery optimization projects at Toledo. Change in Fair Value...

  • Page 79
    ... The net income attributable to PBF Energy represents PBF Energy's equity interest in PBF LLC's pre-tax income, less applicable income taxes, of approximately 24.4% prior to the 2013 secondary offering and approximately 40.9% subsequent to the 2013 secondary offering. Our throughput rates during the...

  • Page 80
    ... shipments of WTI-based crudes from the Bakken and Western Canada. A reduction in the Dated Brent/Maya crude differential, our proxy for the light/heavy crude differential, has a negative impact on our East Coast refineries, which can process a large slate of medium and heavy, sour crude oil that is...

  • Page 81
    ... of PBF Energy, we recognize an income tax expense or benefit in our consolidated financial statements based on PBF Energy's allocable share of PBF LLC's pre-tax income (loss), which was approximately 24.4% prior to the 2013 secondary offering and 40.9% subsequent to the 2013 secondary offering. We...

  • Page 82
    ... in clause 1 above that all PBF LLC Series A Units are exchanged for shares of PBF Energy Class A common stock, as the assumed exchange would change the amount of our earnings that is subject to corporate income tax. Elimination of Certain Initial Public Offering-Related Expenses. Adjusted Fully...

  • Page 83
    ... members of PBF LLC other than PBF Energy as if such members had fully exchanged their PBF LLC Series A Units for shares of PBF Energy's Class A common stock. Represents an adjustment to apply PBF Energy's statutory tax rate of approximately 40.2% for the years ended December 31, 2014 and 2013, and...

  • Page 84
    ... margin benchmarks do not include a charge for refinery operating expenses and depreciation. In order to assess our operating performance, we compare our gross refining margin (revenue less cost of sales) to industry refining margin benchmarks and crude oil prices as described in the table above...

  • Page 85
    ... not presented as, and should not be considered, an alternative to cash flows from operations as a measure of liquidity. Adjusted EBITDA is defined as EBITDA before equity-based compensation expense, gains (losses) from certain derivative activities and contingent consideration, the non-cash change...

  • Page 86
    ...of EBITDA to Adjusted EBITDA: EBITDA...$ Add: Stock based compensation ...335,005 7,181 $ 436,029 3,753 8,540 - (4,691) - (12,985) (31,329) 399,317 $ 1,006,179 2,954 - - 3,724 2,768 9,271 19,177 $ 1,044,073 (2,990) Add: Change in tax receivable agreement liability ...Add: LCM adjustment...690,110...

  • Page 87
    ... and amortization of $118.0 million, change in deferred income taxes of $16.7 million, pension and other post retirement benefits of $16.7 million, change in the tax receivable agreement liability of $8.5 million and stock-based compensation of $3.8 million, partially offset by change in the fair...

  • Page 88
    ... our Toledo refinery and ..., 2013. For the year ended December 31, 2014, ...stock in our initial public offering of $579.1 million, proceeds of $9.5 million from the Paulsboro catalyst lease and proceeds of $13.1 million from the exercise of PBF LLC warrants and options. Credit and Debt Agreements...

  • Page 89
    ... with this covenant as of December 31, 2014. PBF Holding's obligations under the Revolving Loan (a) are guaranteed by PBF LLC, PBF Finance, and each of our domestic operating subsidiaries, and (b) are secured by a lien on (x) PBF LLC's equity interest in PBF Holding and (y) certain assets of...

  • Page 90
    ... Facility which is available to PBFX to fund working capital, acquisitions, distributions and capital expenditures and for other general corporate purposes. In addition, PBF Energy has borrowing capacity of $212.7 million under the Rail Facility to fund the acquisition of Eligible Railcars. 83

  • Page 91
    ... have acquired crude oil for our Paulsboro and Delaware City refineries under supply agreements whereby Statoil generally purchased the crude oil requirements for each refinery on our behalf and under our direction. Our agreement with Statoil for Paulsboro was terminated effective March 31, 2013, at...

  • Page 92
    ...(or other locations outside the refineries as agreed upon by both parties). We currently market and sell the finished products independently to third parties. We entered into the Inventory Intermediation Agreements for the purpose of managing the Products inventory at the Delaware City and Paulsboro...

  • Page 93
    ... Delaware Economic Development Authority Loan (b) Operating Leases (c) Purchase obligations (d): Crude Supply and Inventory Intermediation Agreements Other Supply and Capacity Agreements Construction obligations Environmental obligations (e) Pension and post-retirement obligations (f) Tax receivable...

  • Page 94
    ...the Employee Benefit Plans footnote to our financial statements, "Item 8. Financial Statements and Supplementary Data." (g) Tax Receivable Agreement Obligations We used a portion of the proceeds from our IPO to purchase PBF LLC Series A Units from the the members of PBF LLC other than PBF Energy. In...

  • Page 95
    ... benefits that are subject to the tax receivable agreement as of December 31, 2014. In addition, in February 2015, Blackstone and First Reserve completed a secondary offering which is estimated to increase our tax receivable agreement liability to $727.6 million as a result of exchanges of PBF LLC...

  • Page 96
    ... in accordance with their respective agreements. Revenue for services is recorded when the services have been provided. Prior to July 1, 2013, the Company's Paulsboro and Delaware City refineries sold light finished products, certain intermediates and lube base oils to MSCG under product offtake...

  • Page 97
    ... in value based on changes in commodity prices. Such changes are included in our cost of sales. Our agreement with Statoil for Paulsboro terminated effective March 31, 2013, at which time we began to source crude oil and feedstocks internally. Prior to July 31, 2014, our Toledo refinery acquired...

  • Page 98
    ... significant impact on earnings. Income Taxes and Tax Receivable Agreement As PBF LLC is a limited liability company treated as a "flow-through" entity for income tax purposes, there is no benefit or provision for federal or state income tax in the accompanying financial statements for periods prior...

  • Page 99
    ... of changes in tax laws or rates on the date of enactment. Pursuant to the tax receivable agreement we entered into at the time of our initial public offering, we are required to pay the current and former PBF LLC Series A Unit holders, who exchange their units for PBF Energy stock or whose units...

  • Page 100
    ... Toledo refinery that was terminated effective July 31, 2014 allowed us to price and pay for our crude oil as it was processed at that refinery. In addition, the products offtake agreements with MSCG for our Delaware City and Paulsboro refineries that were terminated effective July 1, 2013, allowed...

  • Page 101
    ... operating cost is energy, which is comprised primarily of natural gas and electricity. We are therefore sensitive to movements in natural gas prices. Assuming normal operating conditions, we annually consume a total of approximately 37 million MMBTUs of natural gas amongst our three refineries...

  • Page 102
    ... total trade accounts receivable as of December 31, 2014. Sunoco accounted for 10% of accounts receivables as of December 31, 2013. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by this item is set forth beginning on page F-1 of this Annual Report on Form 10-K. ITEM...

  • Page 103
    ... be disclosed on the Company's website. See also Executive Officers of the Registrant under "Item 1. Business" of this Annual Report on Form 10-K. ITEM 11. EXECUTIVE COMPENSATION The information required under this Item will be contained in our 2015 Proxy Statement, incorporated herein by reference...

  • Page 104
    ... with PBF Energy Inc.'s Amendment No. 2 to Registration Statement on Form S-1 (Registration No. 333-177933)) Third Amended and Restated Revolving Credit Agreement, dated as of August 15, 2014, among PBF Holding Company LLC, Delaware City Refining Company LLC, Paulsboro Refining Company LLC, Toledo...

  • Page 105
    ... LLC, PBF Holding Company LLC, Delaware City Refining Company LLC, Delaware City Terminaling Company LLC and Toledo Refining Company LLC (Incorporated by reference to Exhibit 10.1 filed with PBF Energy Inc.'s Current Report on Form 8-K dated May 14, 2014 (File No. 001-35764)) Delaware City Rail...

  • Page 106
    ... PBF Energy Inc.'s Current Report on Form 8-K dated December 15, 2014 (File No. 001-35764)) Second Amended and Restated Operation and Management Services and Secondment Agreement, dated as of December 12, 2014 among PBF Holding Company LLC, Delaware City Refining Company LLC, Toledo Refining Company...

  • Page 107
    ...2014 between PBF Investments LLC and Paul Davis. (Incorporated by reference to Exhibit 10.4 filed with PBF Energy Inc.'s March 31, 2014 Form 10-Q (File No. 001-35764)) Form of Indemnification Agreement, dated December 12, 2012, between PBF Energy Inc. and each of the executive officers and directors...

  • Page 108
    ....CAL 101.DEF 101.LAB 101.PRE Certification by Chief Financial Officer of PBF Energy Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant ... the SEC as to certain portions, which portions have been omitted and filed separately with the SEC. This exhibit should not be deemed to be "filed" for...

  • Page 109
    PBF ENERGY INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Reports of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of December 31, 2014 and 2013 Consolidated Statements of Operations For the Years Ended December 31, 2014, 2013 and 2012 Consolidated Statements of ...

  • Page 110
    ... of Directors of PBF Energy Inc. and subsidiaries We have audited the accompanying consolidated balance sheets of PBF Energy Inc. and subsidiaries (the "Company") as of December 31, 2014 and 2013, and the related consolidated statements of operations, comprehensive (loss) income, changes in equity...

  • Page 111
    ... and the Board of Directors of PBF Energy Inc. and subsidiaries We have audited the internal control over financial reporting of PBF Energy Inc. and subsidiaries (the "Company") as of December 31, 2014, based on criteria established in Internal Control - Integrated Framework (2013) issued by...

  • Page 112
    ... outstanding at December 31, 2014 and 2013 ...Treasury stock, at cost ...Additional paid in capital ...Retained earnings ...Accumulated other comprehensive loss ...Total PBF Energy Inc. equity ...Noncontrolling interest ...Total equity ...Total liabilities and equity ...$ 88 - - (142,731) 1,508...

  • Page 113
    ... ENERGY INC. CONSOLIDATED STATEMENTS OF OPERATIONS (COMBINED AND CONSOLIDATED WITH PBF ENERGY COMPANY LLC AND SUBSIDIARIES) (in thousands, except share and per share data) 2014 Revenues Cost and expenses: Cost of sales, excluding depreciation...Operating expenses, excluding depreciation.. General...

  • Page 114
    PBF ENERGY INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (COMBINED AND CONSOLIDATED WITH PBF ENERGY COMPANY LLC AND SUBSIDIARIES) (in thousands) 2014... interests...Comprehensive (loss) income attributable to PBF Energy Inc...$ Year Ended December 31, 2013 $ 214,085 $ 2012 804,037 ...

  • Page 115
    ... based compensation Dividends Record effect of Secondary Offering on deferred tax assets and liabilities and tax receivable agreement obligation Effects of secondary offering Exchange of PBF Energy Company LLC Series A Units for Class A common stock Noncontrolling Interest Balance, December 31, 2013...

  • Page 116
    ... LLC warrants and options Distributions to PBF Energy Company LLC members Distributions to PBF Logistics LP public unit holders Stock based compensation Dividends Effects of secondary offerings Record effects of Secondary Offering on deferred tax assets and liabilities and tax receivable agreement...

  • Page 117
    ... CONSOLIDATED WITH PBF ENERGY COMPANY LLC AND SUBSIDIARIES) (in thousands) Year Ended December 31, 2014 Cash flows from operating activities: Net income ...$ Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization...Stock-based compensation...Change in...

  • Page 118
    ... Loan borrowings...Proceeds from sale of Class A common stock, net of underwriters' discount of $33,702...Purchase of PBF Energy Company LLC Series A units from existing unit holders...Payment of costs associated with initial public offering ...Proceeds from Senior Secured Notes...Proceeds from long...

  • Page 119
    ... of PBF Holding. Delaware City Refining Company LLC ("Delaware City Refining"), Delaware Pipeline Company LLC, PBF Power Marketing LLC, PBF Energy Limited, Paulsboro Refining Company LLC, Paulsboro Natural Gas Pipeline Company LLC and Toledo Refining Company LLC are PBF LLC's principal operating...

  • Page 120
    ...include certain executive officers of PBF Energy, had the right to receive a portion of the proceeds of the sale of the PBF Energy Class A common stock by Blackstone and First Reserve. PBF Energy did not receive any proceeds from the 2013 secondary offering. On January 10, 2014, PBF Energy completed...

  • Page 121
    ... officers of PBF Energy, received a portion of the proceeds of the sale of the PBF Energy Class A common stock by Blackstone and First Reserve in accordance with the amended and restated limited liability company agreement of PBF LLC. PBF Energy did not receive any proceeds from the 2014 secondary...

  • Page 122
    ... of PBF Energy and subsidiaries in which PBF Energy has a controlling interest. All intercompany accounts and transactions have been eliminated in consolidation. Reclassification Certain amounts previously reported in the Company's consolidated financial statements for the year-end December 31, 2013...

  • Page 123
    ... Toledo refinery also sells its products through short-term contracts or on the spot market. Prior to July 1, 2013, the Company's Paulsboro and Delaware City refineries sold light finished products, certain intermediates and lube base oils to MSCG under products offtake agreements with each refinery...

  • Page 124
    ...Delaware City refinery via rail independent of Statoil. Prior to July 31, 2014, the Company's Toledo refinery acquired substantially all of its crude oil from MSCG under a crude oil acquisition agreement (the "Toledo Crude Oil Acquisition Agreement"). Under the Toledo Crude Oil Acquisition Agreement...

  • Page 125
    PBF ENERGY INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA) use, including the costs of software, materials, consultants and payroll-related costs for employees incurred in the application development stage. Depreciation is ...

  • Page 126
    ...over the vesting period and included in general and administration expense. Additionally, stock-based compensation also includes unit-based compensation provided to certain officers, nonemployee directors and seconded employees of PBFX's general partner, PBF GP, or its affiliates, consisting of PBFX...

  • Page 127
    ... interest and the assumed income tax expense thereon, by the weighted average number of PBF Energy Class A common shares outstanding during the period adjusted to include the assumed exchange of all PBF LLC Series A units outstanding for PBF Energy Class A common stock, if applicable under the if...

  • Page 128
    ... using Level 2 inputs on a recurring basis, based on observable market prices for similar instruments. Derivative Instruments The Company is exposed to market risk, primarily related to changes in commodity prices for the crude oil and feedstocks used in the refining process as well as the prices of...

  • Page 129
    ... "Toledo Truck Terminal") that are integral components of the crude oil delivery operations at all three of PBF Energy's refineries. September 2014 Drop-down Transaction Effective September 30, 2014, PBF Holding distributed to PBF LLC all of the equity interests of Delaware City Terminaling Company...

  • Page 130
    ... Agreements and stored in the Paulsboro and Delaware City refineries' storage facilities. In the fourth quarter of 2014, the Company recorded an additional expense to cost of sales for an inventory lower of cost or market write-down of $690,110 due to the declining crude oil and refined...

  • Page 131
    ... during 2014 and 2013, respectively, in connection with construction in progress. In connection with the Company's annual capital budgeting process and review of its long-lived assets for impairment, the Company determined that it would abandon a capital project at the Delaware City refinery. The...

  • Page 132
    PBF ENERGY INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA) 6. DEFERRED CHARGES AND OTHER ASSETS, NET Deferred charges and other assets, net consisted of the following: December 31, 2014 Deferred turnaround costs, net ...$ ...

  • Page 133
    ... and restarting of the Delaware City refinery, expend at least $125,000 in qualified capital expenditures, commence refinery operations, and maintain certain employment levels, all as defined in the agreement. In February 2013, October 2013 and August 2014, the Company received confirmation from the...

  • Page 134
    PBF ENERGY INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA) 9. CREDIT FACILITY AND LONG-TERM DEBT PBF Holding Revolving Loan On August 15, 2014, PBF Holding amended and restated the terms of its asset based revolving credit ...

  • Page 135
    ... first priority lien on PBFX's assets (including PBFX's equity interests in Delaware City Terminaling Company LLC) and those of PBFX's restricted subsidiaries other than excluded assets and a guaranty of collection from PBF LLC. The maturity date of the PBFX Revolving Credit Facility may be extended...

  • Page 136
    ...are guaranteed by each of Delaware City Refining, Paulsboro Refining Company LLC, and Toledo Refining Company LLC. At December 31, 2014, there was $37,270 outstanding under the Rail Facility. Senior Secured Notes On February 9, 2012, PBF Holding completed the offering of $675,500 aggregate principal...

  • Page 137
    ..., payable quarterly. In July 2014, the Company completed a new three-year lease of the Platinum catalyst at the Toledo Refinery. The annual fixed interest rate is 1.99% and the annual lease expense is approximately $326. Additionally, in November 2013, the Company entered into an eight month...

  • Page 138
    PBF ENERGY INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA) Senior Secured Notes Revolving Loan PBFX Revolving Credit Facility PBFX Term Loan Rail facility Catalyst leases Less-Current maturities Long-term debt Debt Maturities ...

  • Page 139
    ... company agreement of PBF LLC, the holders of PBF LLC Series B Units are entitled to an interest in the amounts received by Blackstone and First Reserve in excess of their original investment in the form of PBF LLC distributions and from the shares of PBF Energy Class A Common Stock issuable...

  • Page 140
    ... and other assets, net as of December 31, 2013. As of December 31, 2014, this liability is self-guaranteed by the Company and the trust was released. In connection with the acquisition of the Delaware City assets, Valero Energy Corporation ("Valero") remains responsible for certain pre-acquisition...

  • Page 141
    ... an air permit Delaware City Refining obtained to allow loading of crude oil onto barges. The appeals allege that both the loading of crude oil onto barges and the operation of the Delaware City Rail Terminal violate Delaware's Coastal Zone Act. The first appeal is Number 2013-1 before the State...

  • Page 142
    ... position, results of operations or cash flows. PBF LLC Limited Liability Company Agreement The holders of limited liability company interests in PBF LLC, including PBF Energy, generally have to include for purposes of calculating their U.S. federal, state and local income taxes their share of any...

  • Page 143
    ...Tax Receivable Agreement are obligations of PBF Energy and not of PBF LLC, PBF Holding or PBFX. In general, PBF Energy expects to obtain funding for these annual payments from PBF LLC, primarily through tax distributions, which PBF LLC makes on a pro-rata basis to its owners. Such owners include PBF...

  • Page 144
    ... 31, 2013 Secondary offering transaction Issuances of restricted stock Exercise of warrants and options ...Exchange of Series A Units for Class A common stock of PBF Energy Inc. Redemption of C Units in connection with stock repurchase Surrender for tax withholding Balance-December 31, 2014 92,257...

  • Page 145
    ... LLC, PBF Energy operates and controls all of the business and affairs of PBF LLC and its subsidiaries. In connection with the 2013 secondary offering and the 2014 secondary offerings, Blackstone and First Reserve exchanged an aggregate 63,950,000 Series A Units of PBF LLC for an equivalent number...

  • Page 146
    ... the general partner of PBFX. PBF Energy, through its ownership of PBF LLC, consolidates the financial results of PBFX, and records a noncontrolling interest for the economic interest in PBFX held by the public common unit holders. Noncontrolling interest on the consolidated statements of operations...

  • Page 147
    ... Inc. Equity Noncontrolling Interest in PBF LLC Noncontrolling Interest in PBFX Total Equity Balance at January 1, 2014 Comprehensive income Dividends and distributions Record deferred tax asset and liabilities and tax receivable agreement associated with secondary offerings Record allocation of...

  • Page 148
    ... FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA) Attributable to PBF Energy Inc....allocation of total comprehensive income of PBF Energy between the controlling and noncontrolling interests for the year ended December 31, 2013: Attributable to PBF Energy...

  • Page 149
    ...-BASED COMPENSATION Stock-based compensation expense included in general and administrative expenses consisted of the following: Years Ended December 31, 2014 2013 2012 PBF LLC Series A Unit compensatory warrants and options PBF LLC Series B Units PBF Energy options PBFX Phantom Units $ $ PBF LLC...

  • Page 150
    PBF ENERGY INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA) The following table summarizes activity for PBF LLC Series A compensatory warrants and options for the years ended December 31, 2014, 2013 and 2012: Number of PBF LLC ...

  • Page 151
    ... shares of PBF Energy Class A common stock were granted to certain employees and management of the Company in the years ended December 31, 2014 and 2013, respectively. The PBF Energy options vest in equal annual installments on each of the first four anniversaries of the grant date subject to...

  • Page 152
    ... Units PBF GP's board of directors adopted the PBF Logistics LP 2014 Long-Term Incentive Plan (the "PBFX LTIP ") in connection with the completion of the PBFX Offering. The PBFX LTIP is for the benefit of employees, consultants, service providers and non-employee directors of the general partner and...

  • Page 153
    ... employees with their prior service under Valero which resulted in the recognition of a liability for the projected benefit obligation. The Post Retirement Medical Plan was amended during 2013 to include all corporate employees and amended in 2014 to include Delaware City and Toledo employees...

  • Page 154
    PBF ENERGY INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA) The changes in the benefit obligation, the changes in fair value of plan assets, and the funded status of the Company's Pension and Post Retirement Medical Plans as of ...

  • Page 155
    ...of the plans, tax consequences, the cash flow generated by the Company and other factors. The Company plans to contribute approximately $17,550 to the Company's Pension Plans during 2015. The components of net periodic benefit cost were as follows for the years ended December 31, 2014, 2013 and 2012...

  • Page 156
    PBF ENERGY INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA) The pre-tax amounts in accumulated other comprehensive loss as of December 31, 2014, and 2013 that have not yet been recognized as components of net periodic costs were...

  • Page 157
    ... by the U.S. government and its agencies, corporate bonds, and mortgage-backed securities. The aggregate asset allocation is reviewed on an annual basis. The overall expected long-term rate of return on plan assets for the Qualified Plan is based on the Company's view of long-term expectations and...

  • Page 158
    ... TAXES For periods following PBF Energy's IPO, PBF Energy is required to file federal and applicable state corporate income tax returns and recognizes income taxes on its pre-tax income, which to-date has consisted primarily of its share (approximately 24.4% prior to the 2013 secondary offering...

  • Page 159
    ... 0.2% respectively. A summary of the components of deferred tax assets and deferred tax liabilities follows: December 31, 2014 December 31, 2013 Deferred tax assets Purchase interest step-up Inventory Pension, employee benefits and compensation Net operating loss carry forwards Other Total deferred...

  • Page 160
    ... financial statements and are included in Eliminations. Refining The Company 's Refining Segment includes the operations of its three refineries which are located in Toledo, Ohio, Delaware City, Delaware and Paulsboro, New Jersey. The refineries produce unbranded transportation fuels, heating oil...

  • Page 161
    ... receivables and other assets directly associated with the segment's operations. Corporate assets consist primarily of deferred tax assets, property, plant and equipment and other assets not directly related to our refinery and logistic operations. Year Ended December 31, 2014 Refining Revenues...

  • Page 162
    PBF ENERGY INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA) Balance at December 31, 2014 Refining Total assets $ 4,329,996 $ Logistics 393,951 $ Corporate 483,971 Eliminations $ Consolidated Total 5,196,288 (11,630) $ Balance ...

  • Page 163
    ... outstanding PBF LLC Series A Units to Class A common stock of PBF Energy as of the date of the IPO. The net income attributable to PBF Energy, used in the numerator of the diluted earnings per share calculation is adjusted to reflect the net income, as well as the corresponding income tax (based on...

  • Page 164
    PBF ENERGY INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA) 22. FAIR VALUE MEASUREMENTS The tables below present information about the Company's financial assets and liabilities measured and recorded at fair value on a recurring...

  • Page 165
    ...a market approach based upon future commodity prices for similar instruments quoted in active markets. The commodity contracts categorized in Level 3 of the fair value hierarchy consist of commodity price swap contracts that relate to forecasted purchases of crude oil for which quoted forward market...

  • Page 166
    PBF ENERGY INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA) The table below summarizes the changes in fair value measurements of contingent consideration for refinery acquisition categorized in Level 3 of the fair value ...

  • Page 167
    ... is based on market prices of the underlying crude oil and refined products. The level of activity for these derivatives is based on the level of operating inventories. As of December 31, 2014, there were 662,579 barrels of crude oil and feedstocks (838,829 barrels at December 31, 2013) outstanding...

  • Page 168
    PBF ENERGY INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE..., 2014: Crude oil and feedstock inventory...Intermediate and refined product inventory ...For the year ended December 31, 2013: Crude oil and feedstock inventory...Intermediate and refined product...

  • Page 169
    ... liability company agreement of PBF LLC. PBF Energy did not receive any proceeds from the February 2015 secondary offering. Immediately following the February 2015 secondary offering, PBF Energy owns 85,768,077 PBF LLC Series C Units and our executive officers and directors and certain employees...

  • Page 170
    ... the years ended December 31, 2014 and 2013 (in thousands, except per share amounts). 2014 Quarter Ended March 31 June 30 September 30 December 31 Revenues Income (loss) from operations Net income (loss) Net income (loss) attributable to PBF Energy Inc. Earnings per common share - assuming dilution...

  • Page 171
    ... Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PBF ENERGY INC. (Registrant) By: /s/ Thomas J. Nimbley (Thomas J. Nimbley) Chief Executive Officer (Principal Executive Officer) Date: February 26, 2015

  • Page 172
    ... of Erik Young, Matthew Lucey and Jeffrey Dill, and each of them, his true and lawful attorneys-in-fact, with full power and substitution, for him in any and all capacities, to execute and cause to be filed with the SEC any and all amendments to this Annual Report on Form 10-K, with exhibits thereto...

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  • Page 175
    ..., and address changes should be directed to: AMERICAN STOCK TRANSFER & TRUST COMPANY Operations Center 6201 15th Avenue Brooklyn, NY 11219 (800) 937-5449 www.amstock.com AUDITORS Deloitte CORPORATE OFFICERS Thomas J. Nimbley Chief Executive Officer BOARD OF DIRECTORS Thomas D. O'Malley Executive...

  • Page 176