PBF Energy 2013 Annual Report Download - page 68

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million in higher regulatory costs and taxes. Our operating expenses principally consist of salaries and employee
benefits, maintenance, energy and catalyst and chemicals costs at our refineries.
General and Administrative Expenses— General and administrative expenses totaled $104.3 million for the
year ended December 31, 2013, compared to $120.4 million for the year ended December 31, 2012, an decrease
of $16.1 million or 13.4%. The decrease in general and administrative expenses primarily relates to lower employee
compensation expense of $30.1 million, which is partially offset by $8.5 million of expense associated with the
change in our tax receivable agreement liability and $7.6 million in costs associated with being a public company.
Our general and administrative expenses are comprised of the personnel, facilities and other infrastructure costs
necessary to support our refineries.
General and administrative expenses for PBF Holding, which do not include the $8.5 million expense
associated with PBF Energy's tax receivable agreement liability, totaled $95.8 million for the year ended
December 31, 2013, compared to $120.4 million for the year ended December 31, 2012.
Gain on Sale of Assets— Gain on sale of assets for the year ended December 31, 2013 was $183.0 thousand
which related to the sale of railcars which were subsequently leased back, compared to a gain of $2.3 million for
the year ended December 31, 2012, for the sale of certain equipment at Paulsboro and Delaware City.
Depreciation and Amortization Expense— Depreciation and amortization expense totaled $111.5 million
for the year ended December 31, 2013, compared to $92.2 million for the year ended December 31, 2012, an
increase of $19.3 million. The increase was principally due to capital projects including the expansion of the crude
rail unloading facility completed in the first quarter of 2013 as well as new system implementations at the corporate
level during 2012.
Change in Fair Value of Catalyst Leases— Change in the fair value of catalyst leases represented a gain of
$4.7 million for the year ended December 31, 2013, compared to a loss of $3.7 million for the year ended
December 31, 2012. This gain 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 return or repurchase at fair market value on
the lease termination dates.
Change in Fair Value of Contingent Consideration— In 2013, there was no change in the fair value of
contingent consideration related to the Toledo refinery acquisition and the liability was paid in full in April 2013.
Interest Expense, net— Interest expense totaled $93.8 million for the year ended December 31, 2013,
compared to $108.6 million for the year ended December 31, 2012, a decrease of $14.8 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, financing
cost associated with the Inventory Intermediation Agreements, letter of credit fees associated with the purchase of
certain crude oils, and the amortization of deferred financing fees. The decrease in interest expense primarily relates
to lower interest costs associated with our credit facilities reflecting lower average outstanding borrowings, reduced
financing costs related to the termination of the Paulsboro Statoil supply agreement, and the $4.4 million write-
off of deferred financing costs in the first quarter of 2012 on debt that was repaid from the proceeds of our 2012
senior secured notes offering.
Income Tax Expense— As PBF LLC is a limited liability company treated as a "flow-through" entity for
income tax purposes, 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, PBF Energy’s consolidated financial statements
do not include a benefit or provision for income taxes for periods prior to the closing of our initial public offering
on December 18, 2012. However, PBF LLC generally made distributions to its members, per the terms of the PBF
LLC limited liability agreement, related to such taxes. Effective with the completion of the initial public offering
of PBF Energy, we recognize an income tax expense or benefit in our consolidated financial statements based on