10-Q


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
(Mark one)
 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2016
Or
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to             
Commission File Number: 001-36446
 
PBF LOGISTICS LP
(Exact name of registrant as specified in its charter)
 
DELAWARE
 
35-2470286
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
One Sylvan Way, Second Floor
Parsippany, New Jersey
 
07054
(Address of principal executive offices)
 
(Zip Code)
(973) 455-7500
(Registrant’s telephone number, including area code)
 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer o
 
Accelerated filer þ
 
Non-accelerated filer o
 
Smaller reporting company o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
As of May 2, 2016, there were 21,399,216 common units and 15,886,553 subordinated units outstanding.




PBF LOGISTICS LP

TABLE OF CONTENTS

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

EXPLANATORY NOTE

PBF Logistics LP (“PBFX” or the “Partnership”) is a Delaware limited partnership formed in February 2013. PBF Logistics GP LLC (“PBF GP” or “our general partner”) serves as the general partner of PBFX. PBF GP is wholly-owned by PBF Energy Company LLC (“PBF LLC”). PBF Energy Inc. (“PBF Energy”) is the sole managing member of PBF LLC and, as of March 31, 2016, owned 95.2% of the total economic interest in PBF LLC. In addition, PBF LLC is the sole managing member of PBF Holding Company LLC (“PBF Holding”), a Delaware limited liability company and affiliate of PBFX. On May 14, 2014, PBFX completed its initial public offering (the “Offering”). PBF LLC holds a 53.7% limited partner interest in PBFX and owns all of PBFX’s incentive distribution rights (“IDR”), with the remaining 46.3% limited partner interest owned by public unitholders as of March 31, 2016.
Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q (this “Form 10-Q”) to “Predecessor,” and “we,” “our,” “us,” or like terms, when used in the context of periods prior to May 14, 2014, refer to PBF MLP Predecessor, our predecessor for accounting purposes, which includes assets, liabilities and results of operations of certain crude oil and refined product transportation, terminaling and storage assets, previously operated and owned by PBF Holding's subsidiaries, Delaware City Refining Company LLC (“DCR”), Toledo Refining Company LLC (“TRC”), and PBF Holding's previously held subsidiary, Delaware Pipeline Company (“DPC”). As of March 31, 2016, PBF Holding, together with its subsidiaries, owns and operates four oil refineries and related facilities in North America. PBF Energy, through its ownership of PBF LLC, controls all of the business and affairs of PBFX and PBF Holding.


2


PBFX's initial assets consisted of the Delaware City Rail Unloading Terminal (“DCR Rail Terminal”), which was part of PBF Holding’s Delaware City, Delaware refinery, and the Toledo Truck Unloading Terminal (“Toledo Truck Terminal”), which was part of PBF Holding’s Toledo, Ohio refinery, which together with the DCR Rail Terminal, we refer to as the “IPO Assets”. On September 30, 2014, the Partnership acquired from PBF LLC the Delaware City West Heavy Unloading Rack (the “DCR West Rack”), a heavy crude oil rail unloading facility at the Delaware City refinery with total throughput capacity of at least 40,000 barrels per day (“bpd”). In addition, on December 11, 2014, the Partnership acquired from PBF LLC a tank farm and related facilities located at PBF Holding's Toledo refinery, including a propane storage and loading facility (the “Toledo Storage Facility”). Furthermore, on May 14, 2015, the Partnership acquired from PBF LLC a 23.4 mile, 16-inch interstate petroleum products pipeline with capacity in excess of 125,000 bpd (the “Delaware City Products Pipeline”) and a 15-lane, 76,000 bpd capacity truck loading rack (the “Delaware City Truck Rack”) located at PBF Holding's Delaware City, Delaware refinery. The Delaware City Products Pipeline and the Delaware City Truck Rack are collectively referred to as the “Delaware City Products Pipeline and Truck Rack.” The transactions entered into after the Offering are collectively referred to as “Acquisitions from PBF.” The Acquisitions from PBF were transfers between entities under common control. Accordingly, the financial information of the Predecessor and the Partnership contained herein have been retrospectively adjusted to include the historical results of the Acquisitions from PBF for all periods presented prior to the effective date of each transaction.
References in this Form 10-Q to “PBF Logistics LP,” “PBFX,” the “Partnership” and “we,” “our,” “us,” or like terms used in the context of periods on or after May 14, 2014, refer to PBF Logistics LP and its subsidiaries.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Form 10-Q (including information incorporated by reference) contains certain “forward-looking statements,” as defined in the Private Securities Litigation Reform Act of 1995, of expected future developments that involve risks and uncertainties. You can identify forward-looking statements because they contain words such as “believes,” “expects,” “may,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” or “anticipates” or similar expressions that relate to our strategy, plans or intentions. All statements we make relating to our estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates and financial results or to our expectations regarding future industry trends are forward-looking statements. In addition, we, through our senior management, from time to time make forward-looking public statements concerning our expected future operations and performance and other developments. These forward-looking statements are subject to risks and uncertainties that may change at any time, and, therefore, our actual results may differ materially from those that we expected. We derive many of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and, of course, it is impossible for us to anticipate all factors that could affect our actual results.
Important factors that could cause actual results to differ materially from our expectations, which we refer to as “cautionary statements,” are disclosed under “Item 1A. Risk Factors”, “Management's Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Form 10-Q, in our Annual Report on Form 10-K for the year ended December 31, 2015, which we refer to as our 2015 Form 10-K, and in our other filings with the U.S. Securities and Exchange Commission (“SEC”). All forward-looking information in this Form 10-Q and subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements. Some of the factors that we believe could affect our results include:
•
our limited operating history as a separate public partnership;
•
changes in general economic conditions;
•
our ability to make, complete and integrate acquisitions from affiliates or third parties;
•
our ability to have sufficient cash from operations to enable us to pay the minimum quarterly distribution;


3


•
competitive conditions in our industry;
•
actions taken by our customers and competitors;
•
the supply of, and demand for, crude oil, refined products and logistics services;
•
our ability to successfully implement our business plan;
•
our dependence on PBF Energy for all of our revenues and, therefore, we are subject to the business risks of PBF Energy;
•
all of our revenue is generated at two of PBF Energy’s facilities, and any adverse development at either facility could have a material adverse effect on us;
•
our ability to complete internal growth projects on time and on budget;
•
our ability to complete the successful integration of the Plains Asset Purchase into our business and to realize the benefits from such acquisition;
•
the price and availability of debt and equity financing;
•
operating hazards and other risks incidental to handling crude oil and petroleum products;
•
natural disasters, weather-related delays, casualty losses and other matters beyond our control;
•
interest rates;
•
labor relations;
•
changes in the availability and cost of capital;
•
the effects of existing and future laws and governmental regulations, including those related to the shipment of crude oil by trains;
•
changes in insurance markets impacting costs and the level and types of coverage available;
•
the timing and extent of changes in commodity prices and demand for PBF Energy’s refined products and the differential in the prices of different crude oils;
•
the suspension, reduction or termination of PBF Energy’s obligations under our commercial agreements;
•
disruptions due to equipment interruption or failure at our facilities, PBF Energy’s facilities or third-party facilities on which our business is dependent;
•
incremental costs as a separate public partnership;
•
our general partner and its affiliates, including PBF Energy, have conflicts of interest with us and limited duties to us and our unitholders, and they may favor their own interests to the detriment of us and our other common unitholders;
•
our partnership agreement restricts the remedies available to holders of our common units for actions taken by our general partner that might otherwise constitute breaches of fiduciary duty;
•
holders of our common units have limited voting rights and are not entitled to elect our general partner or its directors;
•
our tax treatment depends on our status as a partnership for U.S. federal income tax purposes, as well as our not being subject to a material amount of entity level taxation by individual states;
•
changes at any time (including on a retroactive basis) in the tax treatment of publicly traded partnerships or an investment in our common units;
•
our unitholders will be required to pay taxes on their share of our taxable income even if they do not receive any cash distributions from us;
•
the effects of future litigation; and
•
other factors discussed elsewhere in this Form 10-Q.
We caution you that the foregoing list of important factors may not contain all of the material factors that are important to you. In addition, in light of these risks and uncertainties, the matters referred to in the forward-


4


looking statements contained in this Form 10-Q may not in fact occur. Accordingly, investors should not place undue reliance on those statements.
Our forward-looking statements speak only as of the date of this Form 10-Q. Except as required by applicable law, including the securities laws of the United States, we undertake no obligation to update or revise any forward-looking statements. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing.



5

PART 1 - FINANCIAL INFORMATION

PBF LOGISTICS LP
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except unit data)
 
 
March 31,
2016
 
December 31,
2015
 
 
 
 
 
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
29,264

 
$
18,678

Accounts receivable - affiliates
 
24,454

 
23,949

Prepaid expenses and other current assets
 
1,090

 
469

Total current assets
 
54,808

 
43,096

Property, plant and equipment, net
 
144,363

 
145,548

Marketable securities
 
234,408

 
234,258

Total assets
 
$
433,579

 
$
422,902

LIABILITIES AND EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable - affiliates
 
$
3,197

 
$
3,438

Accounts payable and accrued liabilities
 
10,981

 
5,504

Total current liabilities
 
14,178

 
8,942

Long-term debt
 
600,058

 
599,635

Total liabilities
 
614,236

 
608,577

 
 
 
 
 
Commitments and contingencies (Note 7)
 

 

 
 
 
 
 
Equity:
 
 
 
 
Common unitholders - Public (15,924,676 units issued and outstanding, as of March 31, 2016 and December 31, 2015, respectively)
 
342,340

 
340,317

Common unitholder - PBF LLC (2,572,944 units issued and outstanding, as of March 31, 2016 and December 31, 2015, respectively)
 
(248,113
)
 
(248,363
)
Subordinated unitholder - PBF LLC (15,886,553 units issued and outstanding, as of March 31, 2016 and December 31, 2015, respectively)
 
(275,641
)
 
(277,094
)
IDR holder - PBF LLC
 
757

 
(535
)
Total equity
 
(180,657
)
 
(185,675
)
Total liabilities and equity
 
$
433,579

 
$
422,902


 



See notes to condensed consolidated financial statements.
6



PBF LOGISTICS LP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except unit and per unit data)
 
 
Three Months Ended March 31,
 
 
2016
 
2015
 
 
 
 
 
 
 
 
 
 
Revenue from affiliates
 
$
36,549

 
$
32,846

 
 
 
 
 
Costs and expenses:
 
 
 
 
Operating and maintenance expenses
 
6,021

 
8,434

General and administrative expenses
 
2,565

 
3,062

Depreciation and amortization
 
1,640

 
1,633

Total costs and expenses
 
10,226

 
13,129

 
 
 
 
 
Income from operations
 
26,323

 
19,717

 
 
 
 
 
Other expense:
 
 
 
 
Interest expense, net
 
(6,806
)
 
(1,793
)
Amortization of loan fees
 
(423
)
 
(162
)
Net income
 
19,094

 
17,762

Less: Net income attributable to Predecessor
 
—

 
1,053

Net income attributable to the Partnership
 
$
19,094

 
$
16,709

 
 
 
 
 
Net income per limited partner unit:
 
 
 
 
Common units - basic
 
$
0.53

 
$
0.51

Common units - diluted
 
0.53

 
0.51

Subordinated units- basic and diluted
 
0.53

 
0.51

Weighted average limited partner units outstanding:
 
 
 
 
Common units - basic
 
18,497,620

 
17,097,024

Common units - diluted
 
18,497,997

 
17,117,261

Subordinated units- basic and diluted
 
15,886,553

 
15,886,553

 
 
 
 
 
Cash distributions declared per unit
 
$
0.42

 
$
0.35







See notes to condensed consolidated financial statements.
7



PBF LOGISTICS LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
 
 
Three Months Ended March 31,
 
 
2016
 
2015
 
 
 
 
 
Cash flows from operating activities:
 
 
 
 
Net income
 
$
19,094

 
$
17,762

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
1,640

 
1,633

Amortization of deferred financing fees
 
423

 
162

Unit-based compensation expense
 
729

 
930

Changes in operating assets and liabilities:
 
 
 
 
Accounts receivable - affiliates
 
(505
)
 
(2,320
)
Prepaid expenses and other current assets
 
(621
)
 
94

Accounts payable - affiliates
 
(241
)
 
(301
)
Accounts payable and accrued liabilities
 
5,312

 
(46
)
Other assets and liabilities
 
14

 
(15
)
Net cash provided by operations
 
25,845

 
17,899

 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
Expenditures for property, plant and equipment
 
(439
)
 
(76
)
Purchase of marketable securities
 
(690,000
)
 
(689,693
)
Maturities of marketable securities
 
689,860

 
689,697

Net cash used in investing activities
 
(579
)
 
(72
)
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
Distributions to unitholders
 
(14,680
)
 
(10,885
)
Distribution to PBF LLC
 
—

 
(928
)
Net cash used in financing activities
 
(14,680
)
 
(11,813
)
 
 
 
 
 
Net change in cash and cash equivalents
 
10,586

 
6,014

Cash and cash equivalents at beginning of year
 
18,678

 
14,165

Cash and cash equivalents at end of period
 
$
29,264

 
$
20,179

 
 
 
 
 
Supplemental disclosure of non-cash investing and financing activities:
 
 
 
 
Contribution of net assets from PBF LLC
 
$
16

 
$
1,628



See notes to condensed consolidated financial statements.
8

PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, PER BARREL, UNIT AND PER UNIT DATA)


1. DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION
PBF Logistics LP (“PBFX” or the “Partnership”) is a Delaware limited partnership formed in February 2013. PBF Logistics GP LLC (“PBF GP” or “our general partner”) serves as the general partner of PBFX. PBF GP is wholly-owned by PBF Energy Company LLC (“PBF LLC”). PBF Energy Inc. (“PBF Energy”) is the sole managing member of PBF LLC and, as of March 31, 2016, owned 95.2% of the total economic interest in PBF LLC. In addition, PBF LLC is the sole managing member of PBF Holding Company LLC (“PBF Holding”), a Delaware limited liability company and affiliate of PBFX. PBF LLC holds a 53.7% limited partner interest in PBFX and owns all of PBFX’s incentive distribution rights (“IDR”), with the remaining 46.3% limited partner interest owned by public unitholders as of March 31, 2016.
PBFX engages in the receiving, handling and transferring of crude oil and the receipt, storage and delivery of crude oil, refined products and intermediates. The Partnership does not take ownership of or receive any payments based on the value of the crude oil or products that it handles and does not engage in the trading of any commodities. PBFX's assets are integral to the operations of PBF Holding's refineries located in Toledo, Ohio, Delaware City, Delaware and Paulsboro, New Jersey. Subsequent to the Offering and the Acquisitions from PBF (as defined below), PBFX generates all of its revenues from transactions with PBF Holding.
In connection with the Offering, PBF LLC contributed the assets, liabilities and results of operations of certain crude oil terminaling assets to the Partnership. The assets were owned and operated by PBF Holding’s subsidiaries, Delaware City Refining Company LLC (“DCR”) and Toledo Refining Company LLC (“TRC”), and were contributed to the Partnership in connection with the Offering. PBF Holding, together with its subsidiaries, owns and operates four oil refineries and related facilities in North America. PBF Energy, through its ownership in PBF LLC, controls all of the business affairs of PBFX and PBF Holding.
PBFX's initial assets consisted of the Delaware City Rail Unloading Terminal (“DCR Rail Terminal”), which was part of PBF Holding’s Delaware City, Delaware refinery, and the Toledo Truck Unloading Terminal (“Toledo Truck Terminal”), which was part of PBF Holding’s Toledo, Ohio refinery, which together with the DCR Rail Terminal, we refer to as the “IPO Assets”. In connection with the Offering, the IPO Assets were distributed from PBF Holding to PBF LLC. The DCR Rail Terminal consists of a double loop track and ancillary pumping and unloading equipment, and the Toledo Truck Terminal consists of six lease automatic custody transfer (“LACT”) units. The IPO Assets operate within the totality of the Toledo refinery and adjacent to the Delaware City refinery. The IPO Assets did not generate third party or affiliate revenue prior to the Offering. However, subsequent to the Offering, both of the IPO Assets have generated affiliate revenue.
On September 30, 2014, the Partnership acquired from PBF LLC the Delaware City West Heavy Unloading Rack (the “DCR West Rack”), a heavy crude oil rail unloading facility at the Delaware City refinery. In addition, on December 11, 2014, the Partnership acquired from PBF LLC a tank farm and related facilities located at PBF Holding's Toledo refinery, including a propane storage and loading facility (the “Toledo Storage Facility”). Furthermore, on May 14, 2015, the Partnership acquired from PBF LLC an interstate petroleum products pipeline (the “Delaware City Products Pipeline”) and a truck loading rack (the “Delaware City Truck Rack”) located at PBF Holding's Delaware City, Delaware refinery. The Delaware City Products Pipeline and the Delaware City Truck Rack are collectively referred to as the “Delaware City Products Pipeline and Truck Rack.” These transactions are collectively referred to as “Acquisitions from PBF.” Subsequent to the Acquisitions from PBF, the DCR Rail Terminal, the Toledo Truck Terminal, the DCR West Rack, the Toledo Storage Facility and the Delaware City Products Pipeline and Truck Rack are collectively referred to as the “Contributed Assets.”
The Acquisitions from PBF were transfers of assets between entities under common control. Accordingly, the accompanying financial statements and related notes of PBF MLP Predecessor (the “Predecessor”), our predecessor for accounting purposes, and the Partnership have been retrospectively adjusted to include the historical results of the DCR West Rack, the Toledo Storage Facility and the Delaware City Products Pipeline and Truck Rack for all periods presented prior to the effective date of each transaction. The financial statements of our Predecessor, the DCR West Rack, the Toledo Storage Facility and the Delaware City Products Pipeline and Truck Rack have been prepared from the separate records maintained by subsidiaries of PBF Energy and may not


9
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, PER BARREL, UNIT AND PER UNIT DATA)


necessarily be indicative of the conditions that would have existed or the results of operations if they were operated as an unaffiliated company. Portions of certain expenses represent allocations made from corporate expenses applicable to PBF Energy as a whole. See our Annual Report on Form 10-K for the year ended December 31, 2015 (our “2015 Form 10-K”) for additional information regarding the Acquisitions from PBF and the commercial agreements and amendments to other agreements with related parties in connection with these acquisitions.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, PBFX has included all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position and the results of operations and cash flows of PBFX and the Predecessor, as applicable, for the periods presented. The results of operations for the three months ended March 31, 2016 and 2015 are not necessarily indicative of the results that may be expected for the full year.
The financial statements presented in this Quarterly Report on Form 10-Q (this “Form 10-Q”) include the condensed consolidated financial results of PBFX for the period beginning May 14, 2014, the completion date of the Offering. The Predecessor did not historically operate its respective assets for the purpose of generating revenues independent of other PBF Energy businesses prior to the Offering or for assets acquired in the Acquisitions from PBF, with the exception of the Delaware City Products Pipeline, prior to the effective dates of each transaction. All intercompany accounts and transactions have been eliminated.

Recent Accounting Pronouncements
In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”), which amends how entities measure equity investments that do not result in consolidation and are not accounted for under the equity method and how they present changes in the fair value of financial liabilities measured under the fair value option that are attributable to their own credit. ASU 2016-01 also changes certain disclosure requirements and other aspects of current US GAAP but does not change the guidance for classifying and measuring investments in debt securities and loans. Under ASU 2016-01, this guidance becomes effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted in certain circumstances. The Partnership is currently evaluating the impact of this new standard on its consolidated financial statements and related disclosures.
In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), to increase the transparency and comparability about leases among entities. The new guidance requires lessees to recognize a lease liability and a corresponding lease asset for virtually all lease contracts.  It also requires additional disclosures about leasing arrangements. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018, and requires a modified retrospective approach to adoption. Early adoption is permitted. The Partnership is currently evaluating the impact of this new standard on its consolidated financial statements and related disclosures.
In March 2016, the FASB issued ASU No. 2016-06, “Derivatives and Hedging (Topic 815) Contingent Put and Call Options in Debt Instruments a consensus of the FASB Emerging Issues Task Force” (“ASU 2016-06”), to increase consistency in practice in applying guidance on determining if an embedded derivative is clearly and closely related to the economic characteristics of the host contract, specifically for assessing whether call (put) options that can accelerate the repayment of principal on a debt instrument meet the clearly and closely related criterion. The guidance in ASU 2016-06 applies to all entities that are issuers of or investors in debt instruments (or hybrid financial instruments that are determined to have a debt host) with embedded call (put) options. ASU 2016-06 is effective for interim and annual periods beginning after December 15, 2016, and requires a modified retrospective approach to adoption. Early adoption is permitted. The Partnership is currently evaluating the impact of this new standard on its consolidated financial statements and related disclosures.




10
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, PER BARREL, UNIT AND PER UNIT DATA)


2. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment, net consisted of the following:
 
 
March 31,
2016
 
December 31,
2015
 
 
 
Land
 
$
2,417

 
$
2,417

Terminals and equipment
 
80,718

 
80,718

Storage equipment
 
60,959

 
60,959

Pipeline Assets
 
18,567

 
18,546

Construction in progress
 
439

 
5

 
 
163,100

 
162,645

Accumulated depreciation
 
(18,737
)
 
(17,097
)
Property, plant and equipment, net
 
$
144,363

 
$
145,548


3. DEBT

Total debt was comprised of the following:
 
 
March 31,
2016
 
December 31,
2015
 
 
 
6.875% Senior Notes due 2023
 
$
350,000

 
$
350,000

Term Loan
 
234,200

 
234,200

Revolving Credit Facility (a)
 
24,500

 
24,500

Total debt outstanding
 
608,700

 
608,700

Unamortized debt issuance costs
 
(8,642
)
 
(9,065
)
Net carrying value of debt
 
$
600,058

 
$
599,635


(a) PBFX had $2,110 outstanding letters of credit and $298,390 available under our five year $325,000 revolving credit facility (“Revolving Credit Facility”) as of March 31, 2016.

Fair Value Measurement
A fair value hierarchy (Level 1, Level 2, or Level 3) is used to categorize fair value amounts based on the quality of inputs used to measure fair value. Accordingly, fair values derived from Level 1 inputs utilize quoted prices in active markets for identical assets or liabilities. Fair values derived from Level 2 inputs are based on quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are either directly or indirectly observable for the asset or liability. Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.
Debt or equity securities are classified into the following reporting categories: held-to-maturity, trading or available-for-sale securities. While PBFX does not routinely sell marketable securities prior to their scheduled maturity dates, some of PBFX's investments may be held and restricted for the purpose of funding future capital expenditures and acquisitions. Such investments are classified as available-for-sale marketable securities as they may occasionally be sold prior to their scheduled maturity dates due to the unexpected timing of cash needs. The carrying value of these marketable securities approximates fair value and is measured using Level 1 inputs. The terms of the marketable securities range from one to three months and are classified on the balance sheet as non-current assets. The gross unrecognized holding gains and losses as of March 31, 2016 and December 31, 2015 were not material. As of March 31, 2016, these investments are used as collateral to secure the Partnership's obligations under its three year $300,000 term loan facility with Wells Fargo Bank, National Association, as


11
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, PER BARREL, UNIT AND PER UNIT DATA)


administrative agent, and a syndicate of lenders (the “Term Loan”) and are intended to be used only to fund future capital expenditures.
The estimated fair values of the Revolving Credit Facility and Term Loan approximate their carrying values, categorized as a Level 2 measurement, as these borrowings bear interest based upon short-term floating market interest rates. The estimated fair value of the Partnership’s 6.875% Senior Notes due 2023 (“2023 Notes”), categorized as a Level 2 measurement, was calculated based on the present value of future expected payments utilizing implied current market interest rates based on quoted prices of the 2023 Notes and was approximately $339,216 and $321,722 at March 31, 2016 and December 31, 2015, respectively. The carrying value and fair value of PBFX's debt, exclusive of unamortized debt issuance costs, was approximately $608,700 and $597,916 as of March 31, 2016 and $608,700 and $580,422 as of December 31, 2015, respectively.

4. EQUITY
PBFX had 15,924,676 common units held by the public outstanding as of March 31, 2016. PBF Energy owns 2,572,944 of PBFX's common units and 15,886,553 of PBFX's subordinated units constituting an aggregate of 53.7% of PBFX's limited partner interest. In accordance with PBFX's partnership agreement, PBF Energy's subordinated units will convert into common units on a one-for-one basis once PBFX has met specified distribution targets and successfully completed other tests set forth in PBFX's partnership agreement.

Issuance of Additional Interests
PBFX's partnership agreement authorizes PBFX to issue an unlimited number of additional partnership interests for consideration and on the terms and conditions determined by PBFX's general partner without the approval of the unitholders. In addition, on May 14, 2015, PBFX partially funded the Delaware City Products Pipeline and Truck Rack acquisition with $30,500 of Partnership common units, or 1,288,420 common units. It is possible that PBFX will fund future acquisitions through the issuance of additional common units, subordinated units or other partnership interests.
Holders of any additional common units PBFX issues will be entitled to share equally with the then-existing common unitholders in PBFX's distributions of available cash. 

Equity Activity
The summarized changes in the carrying amount of our equity during the three months ended March 31, 2016 are as follows:
 
 
Common Units -
Public
 
Common Units - PBF
 
Subordinated Units - PBF
 
IDR
 
Total
Balance at December 31, 2015
 
$
340,317

 
$
(248,363
)
 
$
(277,094
)
 
$
(535
)
 
$
(185,675
)
Quarterly distributions to unitholders (including IDRs)
 
(6,694
)
 
(1,055
)
 
(6,513
)
 
(583
)
 
(14,845
)
Net income attributable to Partnership
 
8,493

 
1,372

 
8,472

 
757

 
19,094

Contributions from PBF LLC
 
—

 
15

 
—

 
—

 
15

Unit-based compensation expense
 
729

 
—

 
—

 
—

 
729

Other
 
(505
)
 
(82
)
 
(506
)
 
1,118

 
25

Balance at March 31, 2016
 
$
342,340

 
$
(248,113
)
 
$
(275,641
)
 
$
757

 
$
(180,657
)






12
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, PER BARREL, UNIT AND PER UNIT DATA)


Allocations of Net Income
PBFX's partnership agreement contains provisions for the allocation of net income and loss to the unitholders. For purposes of maintaining partner capital accounts, PBFX's partnership agreement specifies that items of income and loss shall be allocated among the partners in accordance with their respective percentage interest. Normal allocations according to percentage interests are made after giving effect, if any, to priority income allocations in an amount equal to incentive cash distributions allocated 100% to PBF LLC.

Cash distributions
PBFX's partnership agreement, as amended, sets forth the calculation to be used to determine the amount and priority of cash distributions that the common and subordinated unitholders and general partner will receive. On March 8, 2016, the Partnership paid a quarterly cash distribution, based on the results of the fourth quarter of 2015, totaling $14,680, or $0.41 per unit, to unitholders of record on February 22, 2016.
The allocation of total quarterly cash distributions to general and limited partners, in the table below, for the three months ended March 31, 2016 and 2015, is as follows. The Partnership's distributions are declared subsequent to quarter end (distributions of $0.42 and $0.35 per unit declared in April 2016 and 2015, respectively, for the three months ended March 31, 2016 and 2015, respectively); therefore, the table represents total cash distributions applicable to the period in which the distributions are earned:
 
 
Three Months Ended March 31,
 
 
2016
 
2015
 
 
 
 
 
IDR - PBF LLC
 
$
757

 
$
29

Limited partners’ distributions:
 
 
 
 
Common – public
 
8,065

 
5,631

Common – PBF LLC
 
1,081

 
450

Subordinated – PBF LLC
 
6,672

 
5,560

Total distributions
 
16,575

 
11,670

Total cash distributions (1)
 
$
16,429

 
$
11,574

____________________
(1) Excludes phantom unit distributions which are accrued and paid upon vesting.  

5. UNIT-BASED COMPENSATION
PBF GP's board of directors adopted the PBF Logistics LP 2014 Long Term Incentive Plan ("LTIP") in connection with the completion of the Offering. The LTIP is for the benefit of employees, consultants, service providers and non-employee directors of the general partner and its affiliates.
In the three months ended March 31, 2016 and 2015, PBFX issued phantom unit awards under the LTIP to certain directors, officers and seconded employees of our general partner or its affiliates as compensation. The fair value of each phantom unit on the grant date is equal to the market price of PBFX's common units on that date. The estimated fair value of PBFX's phantom units is amortized over the vesting period of four years, using the straight-line method.
In the three months ended March 31, 2015, upon retirement of certain of PBF GP's officers, phantom units held by these individuals accelerated vesting pursuant to the terms of their grant agreements. There was no acceleration of units in the three months ended March 31, 2016.
Unit-based compensation expense related to the Partnership that was included in general and administrative expense in the Partnership's condensed consolidated statements of operations was $729 and $930, inclusive of $0


13
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, PER BARREL, UNIT AND PER UNIT DATA)


and $510 associated with the accelerated vesting of certain phantom units described above, for the three months ended March 31, 2016 and 2015.

6. NET INCOME PER UNIT
Earnings in excess of distributions are allocated to the limited partners based on their respective percentage interests. Payments made to PBFX's unitholders are determined in relation to actual distributions declared and are not based on the net income (loss) allocations used in the calculation of net income (loss) per unit.
Diluted net income per unit includes the effects of potentially dilutive units of PBFX's common units that consist of unvested phantom units. For the three months ended March 31, 2016, there were 398,485 anti-dilutive phantom units. For the three months ended March 31, 2015, there were no anti-dilutive phantom units. Basic and diluted net income per unit applicable to subordinated limited partners are the same because there are no potentially dilutive subordinated units outstanding.
In addition to the common and subordinated units, PBFX has also identified the general partner interest and incentive distribution rights as participating securities and uses the two-class method when calculating the net income per unit applicable to limited partners that is based on the weighted-average number of common units outstanding during the period. The Partnership issued 1,288,420 common units in 2015 to PBF LLC in conjunction with the Delaware City Products Pipeline and Truck Rack acquisition.
When calculating basic earnings per unit under the two-class method for a master limited partnership, net income for the current reporting period is reduced by the amount of available cash that has been or will be distributed to the general partner, limited partners, and IDR holders for that reporting period. The following table shows the calculation of earnings less distributions:
 
 
Three Months Ended March 31,
 
 
2016
 
2015
Net income (loss)
 
$
19,094

 
$
17,762

Less distributions declared on:
 
 
 
 
Limited partner common units - public
 
8,065


5,631

Limited partner common units - PBF LLC
 
1,081


450

Limited partner subordinated units - PBF LLC
 
6,672


5,560

IDR holder - PBF LLC
 
757


29

Total distributions declared
 
16,575


11,670

Earnings less distributions
 
$
2,519

 
$
6,092



14
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, PER BARREL, UNIT AND PER UNIT DATA)


 
 
Three Months Ended March 31, 2016
 
 
Limited Partner Common Units – Public
 
Limited Partner Common
Units – PBF LLC
 
Limited Partner Subordinated Units –
PBF LLC
 
Incentive Distribution Rights - PBF LLC
 
Total
Net income (loss):
 
 
 
 
 
 
 
 
 
 
Distributions declared
 
$
8,065

 
$
1,081

 
$
6,672

 
$
757

 
$
16,575

Earnings less distributions
 
428

 
291

 
1,800

 
—

 
2,519

Net income (loss)
 
$
8,493

 
$
1,372

 
$
8,472

 
$
757

 
$
19,094

 
 
 
 
 
 
 
 
 
 
 
Weighted-average units outstanding - basic
 
15,924,676

 
2,572,944

 
15,886,553

 
 
 
 
Weighted-average units outstanding - diluted
 
15,925,053

 
2,572,944

 
15,886,553

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income per limited partner unit - basic
 
$
0.53

 
$
0.53

 
$
0.53

 
 
 
 
Net income per limited partner unit - diluted
 
$
0.53

 
$
0.53

 
$
0.53

 
 
 
 
 
 
Three Months Ended March 31, 2015
 
 
Limited Partner Common Units – Public
 
Limited Partner Common
Units – PBF LLC
 
Limited Partner Subordinated Units –
PBF LLC
 
Incentive Distribution Rights - PBF LLC
 
Total
Net income (loss):
 
 
 
 
 
 
 
 
 
 
Distributions declared
 
$
5,631

 
$
450

 
$
5,560

 
$
29

 
$
11,670

Earnings less distributions
 
2,379

 
201

 
2,488

 
1,024

 
6,092

Net income (loss)
 
$
8,010

 
$
651

 
$
8,048

 
$
1,053

 
$
17,762

 
 
 
 
 
 
 
 
 
 
 
Weighted-average units outstanding - basic
 
15,812,500

 
1,284,524

 
15,886,553

 
 
 
 
Weighted-average units outstanding - diluted
 
15,832,737

 
1,284,524

 
15,886,553

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income per limited partner unit - basic
 
$
0.51

 
$
0.51

 
$
0.51

 
 
 
 
Net income per limited partner unit - diluted
 
$
0.51

 
$
0.51

 
$
0.51

 
 
 
 

7. COMMITMENTS AND CONTINGENCIES

Environmental Matters
PBFX’s assets, along with PBF Energy’s refineries, are subject to extensive and frequently changing federal, state and local laws and regulations, including, but not limited to, those relating to the discharge of materials into the environment or that otherwise relate to the protection of the environment, waste management and the characteristics and the composition of fuels. Compliance with existing and anticipated laws and regulations can


15
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, PER BARREL, UNIT AND PER UNIT DATA)


increase the overall cost of operating the Partnership’s assets, including remediation, operating costs and capital costs to construct, maintain and upgrade equipment and facilities.
In connection with PBF Holding’s acquisition of the DCR assets, Valero Energy Corporation (“Valero”) remains responsible for certain pre-acquisition environmental obligations up to $20,000 and the predecessor to Valero in ownership of the refinery retains other historical obligations.
In connection with its acquisition of the DCR assets and the Paulsboro refinery, PBF Holding and Valero purchased ten year, $75,000 environmental insurance policies to insure against unknown environmental liabilities at each site. In connection with PBF Holding's Toledo refinery acquisition, Sunoco Inc. (R&M) remains responsible for environmental remediation for conditions that existed on the closing date for twenty years from March 1, 2011, subject to certain limitations.

8. RELATED PARTY TRANSACTIONS

Commercial Agreements
PBFX currently derives all of its revenue from long-term, fee-based agreements with PBF Holding, supported by fee escalations for inflation adjustments and certain increases in operating costs. PBFX believes the terms and conditions under these agreements, as well as the omnibus and services agreements with PBF Holding described below, are generally no less favorable to either party than those that could have been negotiated with unaffiliated parties with respect to similar services. 
The commercial agreements entered into during the year ended December 31, 2015 and 2014 with PBF Holding have initial terms ranging from approximately seven to ten years and include: 
•a rail terminaling services agreement with PBF Holding, with an initial term of approximately seven years, under which the Partnership provides terminaling services at the DCR Rail Terminal. Pursuant to the rail terminaling services agreement, and based on the change in the U.S. Producer Price Index (the “PPI”), effective January 1, 2016, the terminaling service fee was decreased to $2.014 per barrel up to the minimum throughput commitment and $0.503 per barrel for volumes that exceed the minimum throughput commitment;
•a truck unloading and terminaling services agreement with PBF Holding, with an initial term of approximately seven years, under which the Partnership provides terminaling services at the Toledo Truck Terminal. Pursuant to the truck unloading and terminaling services agreement, and based on the change in the PPI, effective January 1, 2016, the terminaling service fee was decreased to $1.007 per barrel;
•a terminaling services agreement, with an initial term of approximately seven years, under which the Partnership provides rail terminaling services to PBF Holding at the DCR West Rack;
•a storage and terminaling services agreement, with an initial term of ten years, under which the Partnership provides storage and terminaling services to PBF Holding at the Toledo Storage Facility;
•a pipeline service agreement with PBF Holding, with an initial term of approximately ten years, under which the Partnership, through Delaware Pipeline Company (“DPC”), provides pipeline services to PBF Holding at the Delaware City Products Pipeline; and
•a truck loading service agreement with PBF Holding, with an initial term of approximately ten years, under which the Partnership, through Delaware City Logistics Company LLC (“DCLC”), provides terminaling services to PBF Holding at the Delaware City Truck Rack.
Each of these commercial agreements contain minimum volume commitments. Additionally, the storage and terminaling services agreement contains minimum requirements for the amount of storage contracted by PBF Holding. The fees under each commercial agreement are indexed for inflation and the agreements give PBF Holding the option to renew for two additional five year terms following the expiration of the initial term.


16
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, PER BARREL, UNIT AND PER UNIT DATA)


Other Agreements
In addition to the commercial agreements described above, the Partnership also entered into an omnibus agreement with PBF GP, PBF LLC and PBF Holding, which addresses the payment of an annual fee, in the amount of $2,350 per year, for the provision of various general and administrative services, among other matters, and an operations and management services and secondment agreement with PBF Holding and certain of its subsidiaries under which PBFX reimburses PBF Holding for the provision of certain operational services to the Partnership in support of its operations, including operational services performed by certain of PBF Holding's field-level employees.

Predecessor Transactions
Related-party transactions of the Predecessor were settled through division of equity.

Summary of Transactions
A summary of revenue and expense transactions with our affiliates, including expenses directly charged and allocated to PBFX and our Predecessor, is as follows:
 
 
Three Months Ended March 31,
 
 
2016
 
2015
Revenues
 
$
36,549

 
$
32,846

Operating and maintenance expenses
 
1,122

 
1,155

General and administrative expenses
 
844

 
1,235


9. SEGMENT INFORMATION
The Partnership's operations are organized into two reportable segments, Transportation and Terminaling; and Storage. Operations that are not included in the Transportation and Terminaling and Storage segments are included in Corporate. Intersegment transactions are eliminated in the consolidated financial statements and are included in Eliminations.
Prior to the acquisition of the Delaware City Products Pipeline and Truck Rack, the Transportation and Terminaling segment was referred to as the Terminaling segment.
Our Transportation and Terminaling segment consists of the following assets:
•the DCR Rail Terminal, which serves PBF Holding’s Delaware City and Paulsboro refineries;
•the DCR West Rack, which serves PBF Holding’s Delaware City refinery;
•the Toledo Truck Terminal, which serves PBF Holding’s Toledo refinery, comprised of LACT units;
•a propane truck loading facility, located within the Toledo Storage Facility, which is part of PBF Holding's Toledo, Ohio refinery;
•the Delaware City Products Pipeline, which consists of an interstate petroleum products pipeline located at PBF Holding's Delaware City refinery; and
•the Delaware City Truck Rack, which consists of a truck loading rack utilized to distribute gasoline, distillates and LPGs located at PBF Holding's Delaware City refinery.



17
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, PER BARREL, UNIT AND PER UNIT DATA)


Our Storage segment consists of the following asset:
•the Toledo Storage Facility, excluding the propane truck loading facility, which services the Toledo refinery and consists of tanks for storing crude oil, refined products and intermediates.
Revenues are generated from commercial agreements entered into with PBF Holding under which PBF Holding pays the Partnership fees for transportation, terminaling and storage of crude oil and refined products. The commercial agreements with PBF Holding are described in Note 8 of the Condensed Consolidated Financial Statements in this Form 10-Q. The Partnership does not have any foreign operations.
The operating segments adhere to the accounting polices used for the consolidated financial statements, as described in our 2015 Form 10-K Note 2 “Summary of Accounting Policies” of the Notes to Consolidated Financial Statements. The Partnership's operating segments are strategic business units that offer different services in different geographical locations. PBFX has evaluated the performance of each operating segment based on its respective operating income. Certain general and administrative expenses and interest and financing costs are included in Corporate as they are not directly attributable to a specific operating segment. Identifiable assets are those used by the operating segment, whereas assets included in Corporate are principally cash, deposits and other assets that are not associated with a specific operating segment.

 
 
Three Months Ended March 31, 2016
 
 
Transportation and Terminaling
 
Storage
 
Corporate
 
Consolidated Total
Revenues
 
$
31,067

 
$
5,482

 
$
—

 
$
36,549

Depreciation and amortization expense
 
991

 
649

 
—

 
1,640

Income (loss) from operations
 
25,947

 
2,941

 
(2,565
)
 
26,323

Interest expense, net and amortization of loan fees
 
—

 
—

 
7,229

 
7,229

Capital expenditures
 
—

 
439

 
—

 
439

 
 
Three Months Ended March 31, 2015
 
 
Transportation and Terminaling
 
Storage
 
Corporate
 
Consolidated Total
Revenues
 
$
27,320

 
$
5,526

 
$
—

 
$
32,846

Depreciation and amortization expense
 
991

 
642

 
—

 
1,633

Income (loss) from operations
 
19,802

 
2,977

 
(3,062
)
 
19,717

Interest expense, net and amortization of loan fees
 
(10
)
 
—

 
1,965

 
1,955

Capital expenditures
 
76

 
—

 
—

 
76

 
 
Balance at March 31, 2016
 
 
Transportation and Terminaling
 
Storage
 
Corporate
 
Consolidated Total
Total assets
 
$
112,408

 
$
57,143

 
$
264,028

 
$
433,579

 
 
Balance at December 31, 2015
 
 
Transportation and Terminaling
 
Storage
 
Corporate
 
Consolidated Total
Total assets
 
$
112,826

 
$
56,846

 
$
253,230

 
$
422,902








18
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, PER BARREL, UNIT AND PER UNIT DATA)


10. SUBSEQUENT EVENTS

April 2016 Equity Offering
On April 5, 2016, the Partnership completed a public offering of an aggregate of 2,875,000 common units, including 375,000 common units that were sold pursuant to the exercise of an over-allotment option, for net proceeds of $51,400, after deducting underwriting discounts and commissions and other offering expenses (the “April 2016 Equity Offering”).
As a result of the April 2016 Equity Offering, PBF LLC holds a 49.5% limited partner interest in PBFX and owns all of PBFX’s IDRs, with the remaining 50.5% limited partner interest owned by public unitholders.

Cash distribution
On April 28, 2016, PBF GP's board of directors declared a cash distribution, based on the results of the first quarter of 2016, of $0.42 per unit. The distribution is payable on May 31, 2016 to PBFX unitholders of record at the close of business on May 13, 2016.

Plains Asset Purchase
On April 29, 2016, the Partnership's wholly-owed subsidiary, PBF Logistics Products Terminals LLC, completed the purchase of four refined product terminals located in the greater Philadelphia region (the “East Coast Terminals”) from an affiliate of Plains All American Pipeline, L.P. for total cash consideration of approximately $100,000 (the “Plains Asset Purchase”).


19
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, PER BARREL, UNIT AND PER UNIT DATA)


11. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF LOGISTICS
DCLC, DPC, Delaware City Terminaling Company LLC and Toledo Terminaling Company LLC are 100% owned subsidiaries of the Partnership and serve as guarantors of the obligations under the 2023 Notes. These guarantees are full and unconditional and joint and several. For purposes of the following footnote, the Partnership is referred to as “Issuer.” The indenture dated May 12, 2015, among the Partnership, PBF Logistics Finance, the guarantors party thereto and Deutsche Bank Trust Company Americas, as Trustee, governs subsidiaries designated as “Guarantor Subsidiaries.”
The 2023 Notes were co-issued by PBF Logistics Finance. For purposes of the following footnote, PBF Logistics Finance is referred to as “Co-Issuer.” The Co-Issuer has no independent assets or operations.
The following supplemental combining and condensed consolidating financial information reflects the Issuer’s separate accounts, the combined accounts of the Guarantor Subsidiaries, the combining and consolidating adjustments and eliminations and the Issuer’s consolidated accounts for the dates and periods indicated. For purposes of the following combining and consolidating information, the Issuer’s investment in its subsidiaries and the Guarantor Subsidiaries’ investment in its subsidiaries are accounted for under the equity method of accounting.



20
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, PER BARREL, UNIT AND PER UNIT DATA)


11. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF LOGISTICS
CONDENSED CONSOLIDATING BALANCE SHEET


 
March 31, 2016
 
Issuer
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Combining and Consolidating Adjustments
 
Total
ASSETS
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
29,264

 
$
—

 
$
—

 
$
—

 
$
29,264

Accounts receivable - affiliates
34

 
24,420

 
—

 
—

 
24,454

Prepaid expense and other current assets
319

 
771

 
—

 
—

 
1,090

Due from related parties
1,802

 
157,652

 
—

 
(159,454
)
 
—

Total current assets
31,419

 
182,843

 
—

 
(159,454
)
 
54,808

 
 
 
 
 
 
 
 
 
 
Property, plant and equipment, net
—

 
144,363

 
—

 
—

 
144,363

Investment in subsidiaries
322,268

 
—

 
—

 
(322,268
)
 
—

Marketable securities
234,408

 
—

 
—

 
—

 
234,408

Total assets
$
588,095

 
$
327,206

 
$
—

 
$
(481,722
)
 
$
433,579

 
 
 
 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Accounts payable - affiliates
$
260

 
$
2,937

 
$
—

 
$
—

 
$
3,197

Accounts payable and accrued liabilities
10,782

 
199

 
—

 
—

 
10,981

Due to related parties
157,652

 
1,802

 
—

 
(159,454
)
 
—

Total current liabilities
168,694

 
4,938

 
—

 
(159,454
)
 
14,178

 
 
 
 
 
 
 
 
 
 
Long-term debt
600,058

 
—

 
—

 
—

 
600,058

Total liabilities
768,752

 
4,938

 
—

 
(159,454
)
 
614,236

 
 
 
 
 
 
 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity:
 
 
 
 
 
 
 
 
 
Net investment
—

 
322,268

 
—

 
(322,268
)
 
—

Common unitholders - Public
342,340

 
—

 
—

 
—

 
342,340

Common unitholder - PBF LLC
(248,113
)
 
—

 
—

 
—

 
(248,113
)
Subordinated unitholder - PBF LLC
(275,641
)
 
—

 
—

 
—

 
(275,641
)
IDR holder - PBF LLC
757

 
—

 
—

 
—

 
757

Total equity
(180,657
)
 
322,268

 
—

 
(322,268
)
 
(180,657
)
Total liabilities and equity
$
588,095

 
$
327,206

 
$
—

 
$
(481,722
)
 
$
433,579



21
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, PER BARREL, UNIT AND PER UNIT DATA)


11. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF LOGISTICS
CONDENSED CONSOLIDATING BALANCE SHEET

 
December 31, 2015
 
Issuer
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Combining and Consolidating Adjustments
 
Total
ASSETS
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
18,678

 
$
—

 
$
—

 
$
—

 
$
18,678

Accounts receivable - affiliates
—

 
23,949

 
—

 
—

 
23,949

Prepaid expense and other current assets
290

 
179

 
—

 
—

 
469

Due from related parties
1,287

 
127,373

 
—

 
(128,660
)
 
—

Total current assets
20,255

 
151,501

 
—

 
(128,660
)
 
43,096

 
 
 
 
 
 
 
 
 
 
Property, plant and equipment, net
—

 
145,548

 
—

 
—

 
145,548

Investment in subsidiaries
292,411

 
—

 
—

 
(292,411
)
 
—

Marketable securities
234,258

 
—

 
—

 
—

 
234,258

Total assets
$
546,924

 
$
297,049

 
$
—

 
$
(421,071
)
 
$
422,902

 
 
 
 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Accounts payable - affiliates
$
574

 
$
2,864

 
$
—

 
$
—

 
$
3,438

Accounts payable and accrued liabilities
5,017

 
487

 
—

 
—

 
5,504

Due to related parties
127,373

 
1,287

 
—

 
(128,660
)
 
—

Total current liabilities
132,964

 
4,638

 
—

 
(128,660
)
 
8,942

 
 
 
 
 
 
 
 
 
 
Long-term debt
599,635

 
—

 
—

 
—

 
599,635

Total liabilities
732,599

 
4,638

 
—

 
(128,660
)
 
608,577

 
 
 
 
 
 
 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity:
 
 
 
 
 
 
 
 
 
Net investment
—

 
292,411

 
—

 
(292,411
)
 
—

Common unitholders - Public
340,317

 
—

 
—

 
—

 
340,317

Common unitholder - PBF LLC
(248,363
)
 
—

 
—

 
—

 
(248,363
)
Subordinated unitholder - PBF LLC
(277,094
)
 
—

 
—

 
—

 
(277,094
)
IDR holder - PBF LLC
(535
)
 
—

 
—

 
—

 
(535
)
Total equity
(185,675
)
 
292,411

 
—

 
(292,411
)
 
(185,675
)
Total liabilities and equity
$
546,924

 
$
297,049

 
$
—

 
$
(421,071
)
 
$
422,902



22
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, PER BARREL, UNIT AND PER UNIT DATA)


11. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF LOGISTICS
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

 
Three Months Ended March 31, 2016
 
Issuer
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Combining and Consolidated Adjustments
 
Total
 
 
 
 
 
 
 
 
 
 
Revenues from affiliates
$
—

 
$
36,549

 
$
—

 
$
—

 
$
36,549

 
 
 
 
 
 
 
 
 
 
Operating costs and expenses
 
 
 
 
 
 
 
 
 
Operating and maintenance expenses
—

 
6,021

 
—

 
—

 
6,021

General and administrative expenses
2,565

 
—

 
—

 
—

 
2,565

Depreciation and amortization expense
—

 
1,640

 
—

 
—

 
1,640

Total operating costs and expenses
2,565

 
7,661

 
—

 
—

 
10,226

 
 
 
 
 
 
 
 
 
 
Operating income (loss)
(2,565
)
 
28,888

 
—

 
—

 
26,323

 
 
 
 
 
 
 
 
 
 
Other income (expenses)
 
 
 
 
 
 
 
 
 
Equity in earnings (loss) of subsidiaries
28,888

 
—

 
—

 
(28,888
)
 
—

Interest expenses net
(6,806
)
 
—

 
—

 
—

 
(6,806
)
Amortization of loan fees
(423
)
 
—

 
—

 
—

 
(423
)
Net income (loss)
19,094

 
28,888

 
—

 
(28,888
)
 
19,094

Less: Net income attributable to Predecessor
—

 
—

 
—

 
—

 
—

Net income (loss) attributable to the Partnership
$
19,094

 
$
28,888

 
$
—

 
$
(28,888
)
 
$
19,094
















23
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, PER BARREL, UNIT AND PER UNIT DATA)


11. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF LOGISTICS
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS


 
Three Months Ended March 31, 2015
 
Issuer
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Combining and Consolidated Adjustments
 
Total
 
 
 
 
 
 
 
 
 
 
Revenues from affiliates
$
—

 
$
32,846

 
$
—

 
$
—

 
$
32,846

 
 
 
 
 
 
 
 
 
 
Operating costs and expenses
 
 
 
 
 
 
 
 
 
Operating and maintenance expenses
—

 
8,434

 
—

 
—

 
8,434

General and administrative expenses
2,953

 
109

 
—

 
—

 
3,062

Depreciation and amortization expense
—

 
1,633

 
—

 
—

 
1,633

Total operating costs and expenses
2,953

 
10,176

 
—

 
—

 
13,129

 
 
 
 
 
 
 
 
 
 
Operating income (loss)
(2,953
)
 
22,670

 
—

 
—

 
19,717

 
 
 
 
 
 
 
 
 
 
Other income (expenses)
 
 
 
 
 
 
 
 
 
Equity in earnings (loss) of subsidiaries
22,680

 
—

 
—

 
(22,680
)
 
—

Interest expenses net
(1,803
)
 
10

 
—

 
—

 
(1,793
)
Amortization of loan fees
(162
)
 
—

 
—

 
—

 
(162
)
Net income (loss)
17,762

 
22,680

 
—

 
(22,680
)
 
17,762

Less: Net income attributable to Predecessor
—

 
1,053

 
—

 
—

 
1,053

Net income (loss) attributable to the Partnership
$
17,762

 
$
21,627

 
$
—

 
$
(22,680
)
 
$
16,709




24
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, PER BARREL, UNIT AND PER UNIT DATA)


11. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF LOGISTICS
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOW

 
Three Months Ended March 31, 2016
 
Issuer
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Combining and Consolidating Adjustments
 
Total
Cash flows from operating activities:
 
 
 
 
 
 
 
 
 
Net income (loss)
$
19,094

 
$
28,888

 
$
—

 
$
(28,888
)
 
$
19,094

Adjustments to reconcile net income to net
 
 
 
 
 
 
 
 
 
cash provided by operating activities:
 
 
 
 
 
 
 
 
 
Depreciation and amortization
—

 
1,640

 
—

 
—

 
1,640

Amortization of deferred financing fees
423

 
—

 
—

 
—

 
423

Unit-based compensation expense
729

 
—

 
—

 
—

 
729

Equity in earnings
(28,888
)
 
—

 
—

 
28,888

 
—

Changes in current assets and current liabilities:
 
 
 
 
 
 
 
 
 
Accounts receivable - affiliates
(34
)
 
(471
)
 
—

 
—

 
(505
)
Prepaid expenses and other current assets
(29
)
 
(592
)
 
—

 
—

 
(621
)
Accounts payable - affiliates
(314
)
 
73

 
—

 
—

 
(241
)
Accounts payable and accrued liabilities
5,600

 
(288
)
 
—

 
—

 
5,312

Amounts due to/from related parties
29,764

 
(29,764
)
 
—

 
—

 
—

Other assets and liabilities
15

 
(1
)
 
—

 
—

 
14

Net cash provided by (used in) operating activities
26,360

 
(515
)
 
—

 
—

 
25,845

 
 
 
 
 
 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
Expenditures for property, plant and equipment
—

 
(439
)
 
—

 
—

 
(439
)
Purchase of marketable securities
(690,000
)
 
—

 
—

 
—

 
(690,000
)
Maturities of marketable securities
689,860

 
—

 
—

 
—

 
689,860

Investment in subsidiaries
(954
)
 
—

 
—

 
954

 
—

Net cash provided by (used in) investing activities
(1,094
)
 
(439
)
 
—

 
954

 
(579
)
 
 
 
 
 
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
Distribution to unitholders
(14,680
)
 
—

 
—

 
—

 
(14,680
)
Contribution from Issuer
—

 
954

 
—

 
(954
)
 
—

Net cash provided by (used in) financing activities
(14,680
)
 
954

 
—

 
(954
)
 
(14,680
)
 
 
 
 
 
 
 
 
 
 
Net increase in cash and cash equivalents
10,586

 
—

 
—

 
—

 
10,586

Cash and equivalents, beginning of period
18,678

 
—

 
—

 
—

 
18,678

Cash and equivalents, end of period
$
29,264

 
$
—

 
$
—

 
$
—

 
$
29,264



25
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, PER BARREL, UNIT AND PER UNIT DATA)


11. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF LOGISTICS
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOW
 
Three Months Ended March 31, 2015
 
Issuer
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Combining and Consolidating Adjustments
 
Total
Cash flows from operating activities:
 
 
 
 
 
 
 
 
 
Net income (loss)
$
17,762

 
$
22,680

 
$
—

 
$
(22,680
)
 
$
17,762

Adjustments to reconcile net income to net
 
 
 
 
 
 
 
 
 
cash provided by operating activities:
 
 
 
 
 
 
 
 
 
Depreciation and amortization
—

 
1,633

 
—

 
—

 
1,633

Amortization of deferred financing fees
162

 
—

 
—

 
—

 
162

Unit-based compensation expense
930

 
—

 
—

 
—

 
930

Equity in earnings
(22,680
)
 
—

 
—

 
22,680

 
—

Changes in current assets and current liabilities:
 
 
 
 
 
 
 
 
 
Accounts receivable - affiliates
—

 
(2,320
)
 
—

 
—

 
(2,320
)
Prepaid expenses and other current assets
100

 
(6
)
 
—

 
—

 
94

Accounts payable - affiliates
9

 
(310
)
 
—

 
—

 
(301
)
Accounts payable and accrued liabilities
257

 
(303
)
 
—

 
—

 
(46
)
Amounts due to/from related parties
20,534

 
(20,534
)
 
—

 
—

 
—

Other assets and liabilities
(15
)
 
—

 
—

 
—

 
(15
)
Net cash provided by operating activities
17,059

 
840

 
—

 
—

 
17,899

 
 
 
 
 
 
 
 
 
 
Cash flows from investing activities: