PBF Energy 2012 Annual Report Download - page 100

PBF ENERGY INC. AND SUBSIDIARIES
(COMBINED AND CONSOLIDATED WITH PBF ENERGY COMPANY LLC AND SUBSIDIARIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE, UNIT AND BARREL DATA)
1- ORGANIZATION AND BASIS OF PRESENTATION
PBF Energy Inc. (“PBF Energy”) was formed as a Delaware corporation on November 7, 2011 for the purpose of
facilitating an initial public offering (“IPO”) of its common equity and to become the sole managing member of
PBF Energy Company LLC (“PBF LLC”). Prior to completion of its IPO and the reorganization transactions
described below under “IPO—Related Reorganization Transactions”, PBF Energy had not engaged in any
business or other activities except in connection with its formation and the IPO. On December 12, 2012, PBF
Energy completed an IPO of 23,567,686 shares of its Class A common stock at a public offering price of $26.00
per share. The IPO subsequently closed on December 18, 2012. PBF Energy used the net proceeds of the offering
to acquire approximately 24.4% of the membership interests in PBF LLC and to pay offering expenses. As a
result of the initial public offering and related reorganization transactions, PBF Energy became the sole
managing member of PBF LLC with a controlling voting interest in PBF LLC and its subsidiaries. PBF Energy
consolidates the financial results of PBF LLC and its subsidiaries and records a noncontrolling interest in its
consolidated financial statements representing the economic interests of PBF LLC Series A Unit holders. The
financial statements and results of operations for periods prior to the completion of PBF Energy’s IPO and the
related reorganization transactions are those of PBF LLC. Collectively, PBF Energy and PBF LLC are referred to
hereinafter as the “Company”.
Effective with the completion of the PBF Energy IPO and related reorganization transactions, PBF LLC is a
minority-owned, controlled and consolidated subsidiary of the PBF Energy. PBF LLC, a Delaware limited
liability company, together with its consolidated subsidiaries, owns and operates oil refineries and related
facilities in North America. Delaware City Refining Company LLC, Delaware Pipeline Company LLC, PBF
Power Marketing LLC, Paulsboro Refining Company LLC, Paulsboro Natural Gas Pipeline Company LLC and
Toledo Refining Company LLC are PBF LLC’s principal operating subsidiaries and are all wholly-owned
subsidiaries of PBF Holding Company LLC (“PBF Holding”), which is a wholly-owned subsidiary of PBF LLC.
Substantially all of the Company’s operations are in the United States. The Company’s three oil refineries are all
engaged in the refining of crude oil and other feedstocks into petroleum products, and have been aggregated to
form one reportable segment. To generate earnings and cash flows from operations, the Company is primarily
dependent upon processing crude oil and selling refined petroleum products at margins sufficient to cover fixed
and variable costs and other expenses. Crude oil and refined petroleum products are commodities and factors
largely out of the Company’s control can cause prices to vary over time. The potential margin volatility can have
a material effect on the Company’s financial position, earnings and cash flow.
2010 Reorganization
PBF Investments LLC (“PBFI”) was formed effective March 1, 2008 and served as the sole member of PBF GP
LLC (the “General Partner”) and owner of Class B Units in PBF Energy Partners LP (the “Partnership”). The
members of PBFI also owned Class A units of the Partnership, which was presented as a noncontrolling interest
by PBFI. The entities were formed to pursue acquisitions of crude oil refineries in North America. During 2010,
the entities were reorganized (the “2010 Reorganization”). In March 2010, PBF Holding was formed as a
subsidiary of the Partnership. Effective June 1, 2010, the Partnership was converted to a limited liability
company and renamed PBF Energy Company LLC. Also on June 1, 2010, the Partnership Class B Units owned
by the members of PBFI were contributed to PBF LLC and the Partnership Class B Units were cancelled. The
Partnership Class A Units were also cancelled and the members of PBFI received Series A Units in PBF LLC
equal to the value of their original Class A and B Units in the Partnership. PBFI was then contributed by PBF
LLC to PBF Holding and PBFI became a subsidiary of PBF Holding. The reorganization represents a series of
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