PBF Energy 2012 Annual Report Download - page 41

companies. In addition, sustaining our growth also will require us to commit additional management, operational
and financial resources to identify new professionals to join our firm and to maintain appropriate operational and
financial systems to adequately support expansion. These activities may divert management’s attention from
other business concerns, which could have a material adverse effect on our business, financial condition, results
of operations and cash flows. We expect to incur significant additional annual expenses related to these steps and
other public company expenses.
Our internal controls over financial reporting have not been audited and may not meet all of the standards
contemplated by Section 404 of the Sarbanes-Oxley Act, and failure to achieve and maintain effective internal
controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could have a
material adverse effect on our business and Class A common stock price.
Beginning with the year ending December 31, 2013, pursuant to Section 404 of the Sarbanes-Oxley Act, we
will be required to furnish a report by our management on our internal control over financial reporting, and our
auditors will be required to deliver an attestation report on the operating effectiveness of our internal control over
financial reporting. The report by our management must contain, among other things, an assessment of the
effectiveness of our internal control over financial reporting as of the end of our fiscal year. This assessment
must include disclosure of any material weaknesses in our internal control over financial reporting identified by
management.
As an organization that recently exited the development stage and has grown rapidly through the acquisition of
significant operations, we are currently in the process of developing our internal controls over financial reporting
and establishing formal policies, processes and practices related to financial reporting and to the identification of
key financial reporting risks, assessment of their potential impact and linkage of those risks to specific areas and
activities within our organization. Our internal controls over financial reporting have not been audited and we may
not meet all of the standards contemplated by Section 404 of the Sarbanes-Oxley Act that we will eventually be
required to meet.
In connection with the preparation of our financial statements during 2012, we identified significant
deficiencies regarding the design and implementation of certain commercial transaction controls and
management review controls as part of our financial closing process. Management continues to take steps to
remediate these issues. We retained a nationally recognized certified public accounting firm to assist us with
designing, documenting and implementing our internal control procedures to satisfy the requirements of Section
404 of the Sarbanes-Oxley Act. In addition, we intend to hire a Director of Internal Audit and continue to invest
in information technology systems in order to support and enhance our internal control environment.
We may not be able to successfully remediate these matters on or before December 31, 2013, the date by
which we must comply with Section 404 of the Sarbanes-Oxley Act, and we may have additional deficiencies or
material weaknesses in the future. We have not yet determined the costs directly associated with these
remediation activities, but they could be substantial.
If we are not able to complete our initial assessment of our internal controls and otherwise implement the
requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner or with adequate compliance,
management may not be able to certify as to the adequacy of our internal controls over financial reporting.
Matters impacting our internal controls may cause us to be unable to report our financial information on a timely
basis and thereby subject us to adverse regulatory consequences, including sanctions by the SEC or violations of
applicable stock exchange listing rules, and result in a breach of the covenants under our debt agreements. There
also could be a negative reaction in the financial markets due to a loss of investor confidence in us and the
reliability of our financial statements. Confidence in the reliability of our financial statements also could suffer if
our independent registered public accounting firm were to report a material weakness in our internal controls
over financial reporting in the future. This could materially adversely affect us and lead to a decline in our
Class A common stock price.
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