PBF Energy 2012 Annual Report Download - page 106

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)
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Concentrations of Credit Risk (Continued)
Statoil Marketing and Trading (US) Inc. (“Statoil”) and Sunoco accounted for 28% and 10% of accounts
receivables, respectively.
For the year ended December 31, 2011, MSCG and Sunoco accounted for 52% and 12% of the Company’s
revenues, respectively. As of December 31, 2011, Sunoco and Statoil accounted for 19% and 11% of accounts
receivables, respectively.
MSCG accounted for 90% of total sales for the year ended December 31, 2010.
Revenue, Deferred Revenue and Accounts Receivable
The Company sells various refined products primarily through its refinery subsidiaries and recognizes revenue
related to the sale of products when there is persuasive evidence of an agreement, the sales prices are fixed or
determinable, collectability is reasonably assured and when products are shipped or delivered in accordance with
their respective agreements. Revenue for services is recorded when the services have been provided. The
Company’s Toledo refinery has a products offtake agreement with Sunoco under which Sunoco purchases
approximately one-third of the refinery’s daily gasoline production. The Toledo refinery also sells its products
through short-term contracts or on the spot market.
The Company’s Paulsboro and Delaware City refineries sell light finished products, certain intermediates and
lube base oils to MSCG under products offtake agreements with each refinery (the “Offtake Agreements”). On a
daily basis, MSCG purchases and pays for the refineries’ production of light finished products as they are
produced, delivered to the refineries’ storage tanks, and legal title passes to MSCG. Revenue on these product
sales is deferred until they are shipped out of the storage facility by MSCG.
Under the Offtake Agreements, the Company’s Paulsboro and Delaware City refineries also enter into purchase
and sale transactions of certain intermediates and lube base oils whereby MSCG purchases and pays for the
refineries’ production of certain intermediates and lube products as they are produced and legal title passes to
MSCG. The intermediate products are held in the refineries’ storage tanks until they are needed for further use in
the refining process. The intermediates may also be sold to third parties. The refineries have the right to
repurchase lube products and do so to supply other third parties with that product. When the refineries need
intermediates or repurchase lube products, the products are drawn out of the storage tanks, title passes back to the
refineries and MSCG is paid for those products. These transactions occur at the daily market price for the related
products. These transactions are considered to be made in contemplation of each other and, accordingly, do not
result in the recognition of a sale when title passes from the refineries to MSCG. Inventory remains at cost and
the net cash receipts result in a liability that is recorded at market price for the volumes held in storage with any
change in the market price being recorded in costs of sales. The liability represents the amount the Company
expects to pay to repurchase the volumes held in storage.
While MSCG has legal title, it has the right to encumber and/or sell these products and any such sales by MSCG
result in sales being recognized by the refineries when products are shipped out of the storage facility. As the
exclusive vendor of intermediate products to the refineries, MSCG has the obligation to provide the intermediate
products to the refineries as they are needed. Accordingly, sales by MSCG to others have been limited and are
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