PBF Energy 2012 Annual Report Download - page 105

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 (Continued)
Tax Receivable Agreement (Continued)
an amount equal to 85% of the amount of the benefits, if any, that PBF Energy is deemed to realize as a result of
(i) these increases in tax basis and (ii) certain other tax benefits related to entering into the Tax Receivable
Agreement, including tax benefits attributable to payments under the Tax Receivable Agreement. For purposes of
the Tax Receivable Agreement, the benefit deemed realized by PBF Energy will be computed by comparing the
actual income tax liability of PBF Energy (calculated with certain assumptions) to the amount of such taxes that
PBF Energy would have been required to pay had there been no increase to the tax basis of the assets of PBF
LLC as a result of the purchase or exchanges of PBF LLC Series A Units and had PBF Energy not entered into
the Tax Receivable Agreement. The term of the Tax Receivable Agreement will continue until all such tax
benefits have been utilized or expired, unless PBF Energy exercises its right to terminate the Tax Receivable
Agreement, PBF Energy breaches any of its material obligations under the Tax Receivable Agreement or certain
changes of control occur, in which case all obligations will generally be accelerated and due as calculated under
certain assumptions.
The payment obligations under the Tax Receivable Agreement are obligations of PBF Energy and not of PBF LLC.
However, as PBF Energy is a holding company with limited operations of its own, its ability to make payments
under the Tax Receivable Agreement is dependent upon PBF LLC’s ability to make future distributions.
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Presentation
These consolidated financial statements include the accounts of PBF Energy and subsidiaries in which PBF
Energy has a controlling interest. All intercompany accounts and transactions have been eliminated in
consolidation. The accompanying consolidated financial statements include the accounts of PBFI, the General
Partner, and the Partnership until June 1, 2010, the date of the 2010 Reorganization and the accounts of PBF LLC
and its wholly-owned subsidiaries subsequent to the 2010 Reorganization. For the period from March 1, 2008 to
December 16, 2010, PBF LLC was considered to be in the development stage. With the acquisition of the
Paulsboro refinery and commencement of refining operations on December 17, 2010, it ceased to be a
development stage company.
Use of Estimates
The preparation of the financial statements in conformity with U.S. generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses and the related disclosures. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities of three months or less to be cash
equivalents. The carrying amount of the cash equivalents approximates fair value due to the short-term maturity
of those instruments.
Concentrations of Credit Risk
For the year ended December 31, 2012, Morgan Stanley Capital Group Inc. (“MSCG”) and Sunoco, Inc. (R&M)
(“Sunoco”) accounted for 57% and 10% of the Company’s revenues, respectively. As of December 31, 2012,
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