PBF Energy 2012 Annual Report Download - page 70

Delaware City, and capital expenditure activity. In the comparable period in 2010, depreciation expense related
primarily to our Paulsboro refinery for the period from December 17, 2010 to December 31, 2010.
Change in Fair Value of Catalyst Leases—Change in the fair value of catalyst leases represented a gain of
$7.3 million for the year ended December 31, 2011 compared to a loss of $1.2 million for the year ended
December 31, 2010. This gain or loss relates to the change in value of the precious metals underlying the sale
leaseback of the Delaware City refinery and Toledo refinery precious metals catalyst, which we are obligated to
repurchase at fair market value at the lease termination date.
Change in Fair Value of Contingent Consideration—Change in the fair value of contingent consideration
was $5.2 million for the year ended December 31, 2011, compared to zero in 2010. This change represents the
increase in the estimated fair value of the contingent consideration we expect to pay in connection with our
acquisition of the Toledo refinery.
Interest (Expense) Income—Interest expense totaled $65.1 million for the year ended December 31, 2011
compared to $1.4 million for the year ended December 31, 2010. We incurred long-term debt in connection with
our acquisitions of Delaware City, Paulsboro and Toledo, giving rise to interest expense. We also incurred
interest expense in connection with our crude and feedstock supply agreements with Statoil and MSCG and letter
of credit fees associated with the purchase of certain crude oils.
Non-GAAP Financial Measures
Management uses certain financial measures to evaluate our operating performance that are calculated and
presented on the basis of methodologies other than in accordance with U.S. GAAP. These measures should not
be considered a substitute for, or superior to, measures of financial performance prepared in accordance with
U.S. GAAP, and our calculations thereof may not be comparable to similarly entitled measures reported by other
companies.
Adjusted Pro forma Net Income (Loss)
We utilize results presented on an Adjusted Pro Forma basis that exclude certain items relating to our initial
public offering and also reflects an assumed exchange of all PBF LLC Series A Units for shares of Class A
common stock of PBF Energy. We believe that these Adjusted Pro Forma measures, when presented in
conjunction with comparable U.S. GAAP measures, are useful to investors to compare our results across
different periods and to facilitate an understanding of our operating results. The differences between Adjusted
Pro Forma and U.S. GAAP results are as follows:
1. Assumed Exchange of PBF LLC Series A Units for shares of PBF Energy Class A common stock. As a
result of the assumed exchange of PBF LLC Series A Units, the noncontrolling interest related to these
units is converted to controlling interest. Management believes that it is useful to provide the per-share
effect associated with the assumed exchange of all PBF LLC Series A Units.
2. Income Taxes. Prior to the initial public offering we were organized as a limited liability company
treated as a “flow-through” entity for income tax purposes, and even after our IPO, not all of our
earnings are subject to corporate-level income taxes. Adjustments have been made to the Adjusted Pro
Forma tax provisions and earnings to assume that we had adopted our post-IPO corporate tax structure
for all periods presented and are taxed as a C corporation in the U.S. at the prevailing corporate rates.
These assumptions are consistent with the assumption in clause 1 above that all PBF LLC Series A
Units are exchanged for shares of PBF Energy Class A common stock, as the assumed exchange would
change the amount of our earnings that is subject to corporate income tax.
3. Elimination of Certain Initial Public Offering-Related Expenses. Adjusted Pro Forma results for 2012,
also exclude one-time charges relating to our initial public offering. Management believes that this
adjustment results in a more meaningful comparison with prior and succeeding period results.
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