PBF Energy 2012 Annual Report Download - page 67

to having Toledo for a full twelve months in the 2012 period versus ten months in 2011, and the restart of the
Delaware City refinery. During the first nine months of the 2011 period, our Delaware City refinery was
undergoing a turnaround and reconfiguration. It was fully operational during the full year ended December 31,
2012. The decrease in operating expenses per barrel of throughput is mainly attributable to a reduction in energy
and utilities costs, primarily driven by lower natural gas prices, and the increase in throughput barrels. Our
operating expenses principally consist of salaries and employee benefits, maintenance, energy and catalyst and
chemicals costs.
General and Administrative Expenses—General and administrative expenses totaled $120.4 million for the
year ended December 31, 2012 compared to $86.2 million for the year ended December 31, 2011, an increase of
$34.3 million or 40.0%. The increase in general and administrative expenses primarily relates to higher
information technology expenses for the implementation of accounting and commercial software in 2012 and
higher compensation expense related to headcount increases in 2012. Our general and administrative expenses
are comprised of the personnel, facilities and other infrastructure costs necessary to support our refineries.
Acquisition-related Expenses—Acquisition-related expenses for the year ended December 31, 2011 were
$0.7 million and related to our acquisition of Toledo.
Gain on Sale of Assets—Gain on sale of assets for the year ended December 31, 2012 was $2.3 million and
related to sales of certain equipment at Paulsboro and Delaware City.
Depreciation and Amortization Expense—Depreciation and amortization expense totaled $92.2 million for
the year ended December 31, 2012 compared to $53.7 million for the year ended December 31, 2011, an increase
of $38.5 million. The increase was principally due to the acquisition of Toledo in March 2011, commencement of
depreciation in July 2011 related to the restart of Delaware City, and capital expenditure and turnaround activity.
Change in Fair Value of Catalyst Leases—Change in the fair value of catalyst leases represented a loss of
$3.7 million for the year ended December 31, 2012 compared to a gain of $7.3 million for the year ended
December 31, 2011. This gain or loss relates to the change in value of the precious metals underlying the sale and
leaseback of our refineries’ precious metals catalyst, which we are obligated to repurchase at fair market value
lease termination dates.
Change in Fair Value of Contingent Consideration—Change in the fair value of contingent consideration
was an expense of $2.8 million for the year ended December 31, 2012, compared to $5.2 million for the 2011
period. This change represents the increase in the estimated fair value of the total contingent consideration we
expect to pay in connection with our acquisition of the Toledo refinery.
Interest (Expense) Income—Interest expense totaled $108.6 million for the year ended December 31, 2012
compared to $65.1 million for the year ended December 31, 2011, an increase of $43.5 million. Interest expense
includes interest on long-term debt, costs related to the sale and leaseback of our precious metals catalyst, interest
expense incurred in connection with our crude and feedstock supply agreements with Statoil and MSCG, letter of
credit fees associated with the purchase of certain crude oils, and the amortization of deferred financing fees. The
increase in interest expense primarily relates to an increase in letter of credit fees attributable to all refineries
operating for the full year in 2012, financing costs associated with the expanded capacity under the ABL
Revolver, interest expense associated with the Statoil agreement related to the Delaware City restart and the write
off of $4.4 million in deferred financing costs on debt that was repaid from the proceeds of our senior secured
notes offering.
Income Tax Expense—As a limited liability company, the members of PBF LLC are required to include
their proportionate share of PBF LLC’s taxable income or loss on their respective tax returns. Accordingly, our
consolidated financial statements do not include a benefit or provision for income taxes for periods prior to the
completion of our initial public offering on December 18, 2012. However, we generally made distributions to our
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