PBF Energy 2013 Annual Report Download - page 84

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Tax distributions
PBF LLC is required to make periodic tax distributions to the members of PBF LLC, including PBF
Energy, pro rata in accordance with their respective percentage interests for such period (as determined under the
amended and restated limited liability company agreement of PBF LLC), subject to available cash and applicable
law and contractual restrictions (including pursuant to our debt instruments) and based on certain assumptions.
Generally, these tax distributions will be an amount equal to our estimate of the taxable income of PBF LLC for
the year multiplied by an assumed tax rate equal to the highest effective marginal combined U.S. federal, state and
local income tax rate prescribed for an individual or corporate resident in New York, New York (taking into account
the nondeductibility of certain expenses). If, with respect to any given calendar year, the aggregate periodic tax
distributions were less than the actual taxable income of PBF LLC multiplied by the assumed tax rate, PBF LLC
will make a “true up” tax distribution, no later than March 15 of the following year, equal to such difference, subject
to the available cash and borrowings of PBF LLC. As these distributions are conditional they have been excluded
from the table above.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements as of December 31, 2013, other than outstanding letters of credit
in the amount of approximately $441.4 million.
Critical Accounting Policies
The following summary provides further information about our critical accounting policies that involve
critical accounting estimates and should be read in conjunction with Note 2 to our financial statements, “Item 8.
Financial Statements and Supplementary Data.”
Use of Estimates
The preparation of financial statements in accordance with GAAP requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities and the reported revenues and expenses. Actual results could differ from those estimates.
Revenue and Deferred Revenue
We sell various refined products and recognize 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.
Prior to July 1, 2013, the Company’s Paulsboro and Delaware City refineries sold light finished products,
certain intermediates and lube base oils to MSCG under product offtake agreements with each refinery (the “Offtake
Agreements”). On a daily basis, MSCG purchased and paid for the refineries’ production of light finished products
as they were produced, delivered to the refineries’ storage tanks, and legal title passes to MSCG. Revenue on these
product sales was deferred until they were shipped out of the storage facility by MSCG.
Under the Offtake Agreements, the Company’s Paulsboro and Delaware City refineries also entered into
purchase and sale transactions of certain intermediates and lube base oils whereby MSCG purchased and paid for
the refineries’ production of certain intermediates and lube products as they were produced and legal title passed
to MSCG. The intermediate products were held in the refineries’ storage tanks until they were needed for further
use in the refining process. The intermediates may also have been sold to third parties. The refineries had the right
to repurchase lube products and do so to supply other third parties with that product. When the refineries needed
intermediates or repurchase lube products, the products were drawn out of the storage tanks, title passed back to
the refineries and MSCG was paid for those products. These transactions occurred at the daily market price for
the related products. These transactions were considered to be made in contemplation of each other and, accordingly,
did not result in the recognition of a sale when title passed from the refineries to MSCG. Inventory remained at