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: September 30, ~~2017~~2019

Oror



¨☐	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: 001-35764

Commission File Number: 333-206728-02

PBF ENERGY INC.

PBF ENERGY COMPANY LLC

(Exact name of registrant as specified in its charter)



~~DELAWARE~~Delaware			45-3763855
Delaware		61-1622166
(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)~~ (973) 455-7500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act.



Title of each class		Trading Symbol	Name of each exchange on which registered
Common Stock	par value $.001	PBF	New York Stock Exchange

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.

PBF Energy Inc. Yes [x] No [ ]

PBF Energy Company LLC Yes [x] No [ ]

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).

PBF Energy Inc. Yes [x] No [ ]

PBF Energy Company LLC Yes [x] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.



PBF Energy Inc.	Large accelerated filerþ	☑	Accelerated filer o	Non-accelerated filer	☐	Smaller reporting company	☐	Emerging growth company	☐
PBF Energy Company LLC	Large accelerated filer	☐	Accelerated filer o	Non-accelerated filero	☑	Smaller reporting companyo	☐	Emerging growth companyo	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.o

PBF Energy Inc. ☐

PBF Energy Company LLC ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

PBF Energy Inc. Yes ~~[ ]~~☐ No ~~[x]~~☑

PBF Energy Company LLC Yes ☐ No ☑

As of October ~~31, 2017,~~28, 2019, PBF Energy Inc. had outstanding ~~110,036,773~~119,843,868 shares of Class A common stock and 2720 shares of Class B common stock. PBF Energy Inc. is the sole managing member of, and owner of an equity interest representing approximately 99.0% of the outstanding economic interest in PBF Energy Company LLC as of September 30, 2019. There is no trading in the membership interest of PBF Energy Company LLC and therefore an aggregate market value based on such is not determinable. PBF Energy Company LLC has 0 common stock outstanding.

PBF ENERGY INC. AND PBF ENERGY COMPANY LLC

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, ~~2017~~2019

TABLE OF CONTENTS



CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS			34

PART I – FINANCIAL INFORMATION

	ITEM 1.	Financial Statements (Unaudited)
	PBF Energy Inc.
		Condensed Consolidated Balance Sheets as of September 30, ~~2017~~2019 and December 31, ~~2016~~2018	57
		Condensed Consolidated Statements of Operations for the three and nine months ended September 30, ~~2017~~2019 and ~~2016~~2018	68
		Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, ~~2017~~2019 and ~~2016~~2018	79
		Condensed Consolidated Statements of Changes in Equity for the three and nine months ended September 30, 2019 and 2018	10
		Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2017~~2019 and ~~2016~~2018	812
	PBF Energy Company LLC
		Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018	14
		Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2019 and 2018	15
		Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2019 and 2018	16
		Condensed Consolidated Statements of Changes in Equity for the three and nine months ended September 30, 2019 and 2018	17
		Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018	19

Notes to PBF Energy Inc. and PBF Energy Company LLC Condensed Consolidated Financial Statements			1021
	ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4252
	ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	6984
	ITEM 4.	Controls and Procedures	7186

PART II – OTHER INFORMATION

	ITEM 1.	Legal Proceedings	7287
	ITEM 1A.	Risk Factors	91
	ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	7591
	ITEM 6.	Exhibits	7692
SIGNATURES			7793

This combined Quarterly Report on Form 10-Q is filed by PBF Energy Inc. (“PBF Energy”) ~~which~~and PBF Energy Company LLC (“PBF LLC”). Each Registrant hereto is filing on its own behalf all of the information contained in this report that relates to such Registrant. Each Registrant hereto is not filing any information that does not relate to such Registrant, and therefore makes no representation as to any such information. PBF Energy is a holding company whose primary asset is an equity interest in PBF ~~Energy Company LLC (“PBF LLC”).~~LLC. PBF Energy is the sole managing member of, and owner of an equity interest representing approximately ~~96.6%~~99.0% of the outstanding economic interests in PBF LLC as of September 30, ~~2017.~~2019. PBF Energy operates and controls all of the business and affairs and consolidates the financial results of PBF LLC and its subsidiaries. PBF LLC is a holding company for the companies that directly and indirectly own and operate our business. PBF Holding Company LLC (“PBF Holding”) is a wholly-owned subsidiary of PBF LLC and PBF Finance Corporation (“PBF Finance”) is a wholly-owned subsidiary of PBF Holding. As of September 30, ~~2017,~~2019, PBF LLC also holds a ~~44.1%~~48.2% limited partner interest and a non-economic general partner interest ~~and all of the incentive distribution rights~~ in PBF Logistics LP (“PBFX” or the “Partnership”), a publicly traded master limited partnership. PBF Energy, through its ownership of PBF LLC, consolidates the financial results of PBFX and its subsidiaries and records a noncontrolling interest in its consolidated financial statements representing the economic interests of PBFX’s ~~unit holders~~unitholders other than PBF LLC. Collectively, PBF Energy and its consolidated subsidiaries, including PBF LLC, PBF Holding, and PBFX are referred to hereinafter as the “Company” unless the context otherwise requires. Discussions or areas of this report that either apply only to PBF Energy or PBF LLC are clearly noted in such sections. Unless the context indicates otherwise, the terms “we,” “us,” and “our” refer to both PBF Energy and PBF LLC and its consolidated subsidiaries.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains certain “forward-looking statements”, as defined in the Private Securities Litigation Reform Act of 1995 (“PSLRA”), 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 strategies, objectives, intentions, resources and expectations regarding future industry trends are forward-looking statements made under the safe harbor provisions of the PSLRA except to the extent such statements relate to the operations of a partnership or limited liability company. 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~~on 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 “Management's Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Form 10-Q, ~~and~~ the Annual Report on Form 10-K for the year ended December 31, ~~2016~~2018 of PBF Energy ~~Inc.,~~and PBF LLC, which we refer to as our ~~2016~~2018 Annual Report on Form 10-K, and in our other filings with the ~~SEC.~~U.S. Securities and Exchange Commission (“SEC”). All forward-looking information in this Quarterly Report on 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:

•supply, demand, prices and other market conditions for our products, including volatility in commodity prices;

•the effects of competition in our markets;

•changes in currency exchange rates, interest rates and capital costs;

•adverse developments in our relationship with both our key employees and unionized employees;

•our ability to operate our businesses efficiently, manage capital expenditures and costs (including general and administrative expenses) and generate earnings and cash flow;

•our ~~substantial~~ indebtedness;

•our expectations with respect to our capital improvement and turnaround projects;

•our supply and inventory intermediation arrangements expose us to counterparty credit and performance risk;

•termination of our ~~A&R~~Inventory Intermediation Agreements with J. Aron, which could have a material adverse effect on our liquidity, as we would be required to finance our crude oil, intermediate and refined products inventory covered by the agreements. Additionally, we are obligated to repurchase from J. Aron certain crude, intermediates and finished products located at the Company’s storage tanks at the Paulsboro and Delaware City ~~refineries’ storage tanks~~refineries and at the PBFX East Coast Storage Assets upon termination of these ~~agreements;~~agreements (all terms as defined in “Note 3 - Acquisitions” and “Note 4 - Inventories” of our Notes to Condensed Consolidated Financial Statements);

•restrictive covenants in our indebtedness that may adversely affect our operational flexibility;

•payments by PBF Energy to the current and former holders of PBF LLC Series A Units and PBF LLC Series B Units under PBF Energy’s Tax Receivable Agreement (as defined in “Note 7 - Commitments and Contingencies” of our ~~tax receivable agreement~~Notes to Condensed Consolidated Financial Statements) for certain tax benefits we may claim;

•our assumptions regarding payments arising under PBF Energy’s ~~tax receivable agreement~~Tax Receivable Agreement and other arrangements relating to our organizational structure are subject to change due to various factors, including, among other factors, the timing of exchanges of PBF LLC Series A Units for shares of ~~our~~PBF Energy Class A common

stock as contemplated by the ~~tax receivable agreement,~~Tax Receivable Agreement, the price of ~~our~~PBF Energy Class A common stock at the time of such exchanges, the extent to which such exchanges are taxable, and the amount and timing of our income;

•our expectations and timing with respect to our acquisition activity and whether such acquisitions are accretive or dilutive to shareholders;

•~~our expectations with respect to our capital improvement and turnaround projects;~~

•~~the status of an air permit to transfer crude through the Delaware City refinery’s dock;~~

•the impact of disruptions to crude or feedstock supply to any of our refineries, including disruptions due to problems at PBFX or with ~~third party~~third-party logistics infrastructure or operations, including pipeline, marine and rail transportation;

•the possibility that we might reduce or not make further dividend payments;

•the inability of our subsidiaries to freely pay dividends or make distributions to us;

•the impact of current and future laws, rulings and governmental regulations, including the implementation of rules and regulations regarding transportation of crude oil by rail;

•the impact of the recently enacted federal income tax legislation on our business;

•the effectiveness of our crude oil sourcing strategies, including our crude by rail strategy and related commitments;

•adverse impacts related to legislation by the federal government lifting the restrictions on exporting U.S. crude oil;

•adverse impacts from changes in our regulatory environment, such as the effects of compliance with the California Global Warming Solutions Act (also referred to as “AB32”), or from actions taken by environmental interest groups;

•market risks related to the volatility in the price of Renewable Identification Numbers (“RINs”) required to comply with the Renewable Fuel Standards and greenhouse gas (“GHG”) emission credits required to comply with various GHG emission programs, such as AB32;

•our ability to ~~successfully integrate~~consummate the ~~completed~~pending Martinez Acquisition (as defined in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations”), the timing for the closing of such acquisition and our plans for financing such acquisition;

•our ability to complete the successful integration of the ~~Torrance refinery~~Martinez Acquisition and ~~related logistics assets (collectively, the “Torrance Acquisition”)~~any other acquisitions into our business and to realize the benefits from such ~~acquisition;~~acquisitions;

•unforeseen liabilities ~~arising from~~associated with the ~~Torrance~~Martinez Acquisition ~~that are unforeseen or exceed our expectations;~~and any other acquisitions;

•risk associated with the operation of PBFX as a separate, publicly-traded entity;

•potential tax consequences related to our investment in PBFX; and

•any decisions we continue to make with respect to our energy-related ~~logistical~~logistics assets that may be transferred to PBFX.

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-looking statements contained in this Quarterly Report on 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 Quarterly Report on Form 10-Q. Except as required by applicable law, including the securities laws of the United States, we do not intend 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.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

PBF ENERGY INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in ~~thousands,~~millions, except share and per share data)


	September 30, 2017			December 31, 2016			September 30, 2019			December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents (PBFX: $39,420 and $64,221, respectively)	$	300,891		$	746,274
Cash and cash equivalents (PBFX: $52.6 and $19.9, respectively)							$	536.3		$	597.3
Accounts receivable	776,013			620,175			879.8			718.2
Inventories	2,310,692			1,863,560			2,130.4			1,865.8
Marketable securities - current (PBFX: $0 and $40,024, respectively)	—			40,024
Prepaid expense and other current assets	58,277			137,222
Prepaid and other current assets							56.4			55.6
Total current assets	3,445,873			3,407,255			3,602.9			3,236.9
Property, plant and equipment, net (PBFX: $675,793 and $608,802, respectively)	3,480,922			3,328,770
Property, plant and equipment, net (PBFX: $856.2 and $862.1, respectively)							3,975.6			3,820.9
Deferred tax assets	268,622			379,306			—			48.5
Operating lease right of use assets							331.3			—
Deferred charges and other assets, net	804,040			506,596			1,007.6			899.1
Total assets	$	7,999,457		$	7,621,927		$	8,917.4		$	8,005.4
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	447,623		$	535,907		$	521.2		$	488.4
Accrued expenses	1,833,555			1,467,684			1,699.6			1,623.6
Deferred revenue	4,287			13,292			13.1			20.1
Notes payable	6,831			—
Current portion of long-term debt (PBFX: $0 and $39,664, respectively)	—			39,664
Current operating lease liabilities							78.2			—
Current debt							—			2.4
Total current liabilities	2,292,296			2,056,547			2,312.1			2,134.5
Long-term debt (PBFX: $533,136 and $532,011, respectively)	2,158,337			2,108,570
Payable to related parties pursuant to tax receivable agreement	610,827			611,392
Long-term debt (PBFX: $801.7 and $673.3, respectively)							2,064.3			1,931.3
Payable to related parties pursuant to Tax Receivable Agreement							373.5			373.5
Deferred tax liabilities	46,340			45,699			81.5			40.4
Long-term operating lease liabilities							252.1			—
Other long-term liabilities	216,295			229,035			279.6			277.2
Total liabilities	5,324,095			5,051,243			5,363.1			4,756.9
Commitments and contingencies (Note 10)
Commitments and contingencies (Note 7)
Equity:
Class A common stock, $0.001 par value, 1,000,000,000 shares authorized, 109,747,548 shares outstanding at September 30, 2017, 109,204,047 shares outstanding at December 31, 2016	94			94
Class B common stock, $0.001 par value, 1,000,000 shares authorized, 27 shares outstanding at September 30, 2017, 28 shares outstanding at December 31, 2016	—			—
Preferred stock, $0.001 par value, 100,000,000 shares authorized, no shares outstanding at September 30, 2017 and December 31, 2016	—			—
Treasury stock, at cost, 6,104,609 shares outstanding at September 30, 2017 and 6,087,963 shares outstanding at December 31, 2016	(151,547		)	(151,547		)
PBF Energy Inc. equity
Class A common stock, $0.001 par value, 1,000,000,000 shares authorized, 119,902,824 shares outstanding at September 30, 2019, 119,874,191 shares outstanding at December 31, 2018							0.1			0.1
Class B common stock, $0.001 par value, 1,000,000 shares authorized, 20 shares outstanding at September 30, 2019, 20 shares outstanding at December 31, 2018							—			—
Preferred stock, $0.001 par value, 100,000,000 shares authorized, no shares outstanding at September 30, 2019 and December 31, 2018							—			—
Treasury stock, at cost, 6,317,628 shares outstanding at September 30, 2019 and 6,274,261 shares outstanding at December 31, 2018							(162.2		)	(160.8		)
Additional paid in capital	2,259,338			2,245,788			2,806.8			2,633.8
Retained earnings/(Accumulated deficit)	27,952			(44,852		)
Retained earnings							384.3			225.8
Accumulated other comprehensive loss	(23,539		)	(24,439		)	(21.3		)	(22.4		)
Total PBF Energy Inc. equity	2,112,298			2,025,044			3,007.7			2,676.5
Noncontrolling interest	563,064			545,640			546.6			572.0
Total equity	2,675,362			2,570,684			3,554.3			3,248.5
Total liabilities and equity	$	7,999,457		$	7,621,927		$	8,917.4		$	8,005.4

PBF ENERGY INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in ~~thousands,~~millions, except share and per share data)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016			2019			2018			2019			2018
Revenues	$	5,478,951		$	4,513,204		$	15,250,649		$	11,171,856		$	6,430.5		$	7,646.3		$	18,206.7		$	20,893.2

Cost and expenses:
Cost of products and other	4,352,061			3,862,580			13,154,521			9,524,119			5,700.2			6,816.1			15,865.2			18,400.7
Operating expenses (excluding depreciation and amortization expense as reflected below)	402,910			412,699			1,267,136			989,296			436.5			424.4			1,348.7			1,268.2
Depreciation and amortization expense	75,948			54,694			197,800			158,612			107.7			90.8			314.9			263.8
Cost of sales	4,830,919			4,329,973			14,619,457			10,672,027			6,244.4			7,331.3			17,528.8			19,932.7
General and administrative expenses (excluding depreciation and amortization expense as reflected below)	58,275			44,020			143,195			124,975			64.7			69.9			175.9			191.4
Depreciation and amortization expense	2,572			1,342			10,355			4,417			2.1			2.6			7.8			7.9
Loss on sale of assets	28			8,159			940			11,381
Gain on sale of assets													(32.6		)	(43.8		)	(31.8		)	(43.1		)
Total cost and expenses	4,891,794			4,383,494			14,773,947			10,812,800			6,278.6			7,360.0			17,680.7			20,088.9

Income from operations	587,157			129,710			476,702			359,056			151.9			286.3			526.0			804.3

Other income (expenses):
Change in tax receivable agreement liability	565			(3,143		)	565			(3,143		)
Other income (expense):
Change in Tax Receivable Agreement liability													—			7.8			—			7.8
Change in fair value of catalyst leases	473			77			(1,011		)	(4,556		)	(3.8		)	1.7			(6.4		)	5.8
Debt extinguishment costs	—			—			(25,451		)	—
Interest expense, net	(36,990		)	(38,527		)	(114,871		)	(111,994		)	(39.7		)	(42.3		)	(121.3		)	(128.9		)
Other non-service components of net periodic benefit cost													(0.1		)	0.3			(0.2		)	0.8
Income before income taxes	551,205			88,117			335,934			239,363			108.3			253.8			398.1			689.8
Income tax expense	203,979			31,673			112,889			85,607			22.0			61.3			92.0			167.8
Net income	347,226			56,444			223,045			153,756			86.3			192.5			306.1			522.0
Less: net income attributable to noncontrolling interests	32,861			14,333			49,420			37,503			16.8			12.9			39.7			39.9
Net income attributable to PBF Energy Inc. stockholders	$	314,365		$	42,111		$	173,625		$	116,253		$	69.5		$	179.6		$	266.4		$	482.1

Weighted-average shares of Class A common stock outstanding
Basic	109,724,595			97,825,357			109,634,921			97,823,708			119,921,346			117,029,486			119,897,504			113,597,970
Diluted	113,882,240			103,135,799			113,791,542			103,210,917			121,589,179			120,405,315			121,871,864			117,375,170
Net income available to Class A common stock per share:
Basic	$	2.86		$	0.43		$	1.58		$	1.19		$	0.58		$	1.53		$	2.22		$	4.24
Diluted	$	2.85		$	0.43		$	1.57		$	1.19		$	0.57		$	1.50		$	2.20		$	4.16

Dividends per common share	$	0.30		$	0.30		$	0.90		$	0.90

PBF ENERGY INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited, in ~~thousands)~~millions)


	Three Months Ended September 30,						Nine Months Ended September 30,				Three Months Ended September 30,					Nine Months Ended September 30,
	2017			2016			2017		2016		2019		2018			2019		2018
Net income	$	347,226		$	56,444		$	223,045	$	153,756	$	86.3	$	192.5		$	306.1	$	522.0
Other comprehensive income:
Unrealized (loss) gain on available for sale securities	(1		)	(76		)	69		329
Other comprehensive income (loss):
Unrealized gain (loss) on available for sale securities											0.2		(0.1		)	0.5		(0.3		)
Net gain on pension and other post-retirement benefits	288			502			862		1,134		0.2		0.3			0.6		0.8
Total other comprehensive income	287			426			931		1,463		0.4		0.2			1.1		0.5
Comprehensive income	347,513			56,870			223,976		155,219		86.7		192.7			307.2		522.5
Less: comprehensive income attributable to noncontrolling interests	32,871			14,354			49,452		37,574		16.8		12.9			39.7		39.9
Comprehensive income attributable to PBF Energy Inc. stockholders	$	314,642		$	42,516		$	174,524	$	117,645	$	69.9	$	179.8		$	267.5	$	482.6

PBF ENERGY INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(unaudited, in millions, except share and per share data)



	Class A Common Stock				Class B Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock				Noncontrolling Interest			Total Equity
	Shares		Amount		Shares	Amount											Shares	Amount
Balance, June 30, 2019	119,894,441		$	0.1	20	$	—	$	2,800.4		$	350.8		$	(21.7	)	6,315,761	$	(162.2	)	$	545.7		$	3,513.1
Comprehensive Income	—		—		—	—		—			69.5			0.4			—	—			16.8			86.7
Exercise of warrants and options	—		—			—		—			—			—			—	—			—			—
Taxes paid for net settlement of equity-based compensation	—		—		—	—		—			—			—			—	—			—			—
Distributions to PBF Energy Company LLC members	—		—		—	—		—			—			—			—	—			(0.4		)	(0.4		)
Distributions to PBF Logistics LP public unitholders	—		—		—	—		—			—			—			—	—			(17.0		)	(17.0		)
Stock-based compensation	10,250		—		—	—		6.4			—			—			—	—			1.2			7.6
Dividends ($0.30 per common share)	—		—		—	—		—			(36.0		)	—			—	—			—			(36.0		)
Issuance of additional PBFX common units	—		—		—	—		—			—			—			—	—			—			—
Treasury stock purchases	(1,867	)	—		—	—		—			—			—			1,867	—			—			—
Other	—		—		—	—		—			—			—			—	—			0.3			0.3
Balance, September 30, 2019	119,902,824		$	0.1	20	$	—	$	2,806.8		$	384.3		$	(21.3	)	6,317,628	$	(162.2	)	$	546.6		$	3,554.3

Balance, June 30, 2018	113,829,728		0.1		20	—		2,308.4			472.0			(25.1		)	6,171,898	(153.6		)	570.5			3,172.3
Comprehensive Income	—		—		—	—		—			179.6			0.2			—	—			12.9			192.7
Exercise of warrants and options	88,370		—			—		2.3			—			—			—	—			—			2.3
Distributions to PBF Energy Company LLC members	—		—		—	—		—			—			—			—	—			(0.3		)	(0.3		)
Distributions to PBF Logistics LP public unitholders	—		—		—	—		—			—			—			—	—			(12.9		)	(12.9		)
Stock-based compensation	23,567		—		—	—		4.6			—			—			—	—			1.0			5.6
Dividends ($0.30 per common share)	—		—		—	—		—			(36.1		)	—			—	—			—			(36.1		)
Issuance of additional PBFX common units	—		—		—	—		28.6			—			—			—	—			6.3			34.9
Effects of exchanges of PBF LLC Series A Units on deferred tax assets and liabilities and tax receivable agreement obligation	—		—		—	—		(0.4		)	—			—			—	—			—			(0.4		)
Exchange of PBF Energy Company LLC Series A Units for PBF Energy Class A common stock	10,584		—		—	—		—			—			—			—	—			—			—
August 2018 Equity Offering	6,000,000		—		—	—		287.3			—			—			—	—			—			287.3
Treasury stock purchases	(530	)	—		—	—		0.4			—			—			530	(0.4		)	—			—
Other	—		—		—	—		—			—			—			—	—			(0.1		)	(0.1		)
Balance, September 30, 2018	119,951,719		$	0.1	20	$	—	$	2,631.2		$	615.5		$	(24.9	)	6,172,428	$	(154.0	)	$	577.4		$	3,645.3

PBF ENERGY INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (continued)

(unaudited, in millions, except share and per share data)



	Class A Common Stock				Class B Common Stock				Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock				Noncontrolling Interest			Total Equity
	Shares		Amount		Shares		Amount		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Shares	Amount			Noncontrolling Interest			Total Equity
Balance, December 31, 2018	119,874,191		$	0.1	20		$	—	$	2,633.8		$	225.8		$	(22.4	)	6,274,261	$	(160.8	)	$	572.0		$	3,248.5
Comprehensive Income	—		—		—		—		—			266.4			1.1			—	—			39.7			307.2
Exercise of warrants and options	7,525		—		—		—		0.2			—			—			—	—			—			0.2
Taxes paid for net settlement of equity-based compensation	—		—		—		—		(1.0		)	—			—			—	—			—			(1.0		)
Distributions to PBF Energy Company LLC members	—		—		—		—		—			—			—			—	—			(2.7		)	(2.7		)
Distributions to PBF Logistics LP public unitholders	—		—		—		—		—			—			—			—	—			(47.0		)	(47.0		)
Stock-based compensation	54,475		—		—		—		20.3			—			—			—	—			5.6			25.9
Dividends ($0.90 per common share)	—		—		—		—		—			(107.9		)	—			—	—			—			(107.9		)
Issuance of additional PBFX common units	—		—		—		—		152.0			—			—			—	—			(19.5		)	132.5
Exchange of PBF Energy Company LLC Series A Units for PBF Energy Class A common stock	10,000		—		—		—		0.1			—			—			—	—			—			0.1
Treasury stock purchases	(43,367	)	—		—		—		1.4			—			—			43,367	(1.4		)	—			—
Other	—		—		—		—		—			—			—			—	—			(1.5		)	(1.5		)
Balance, September 30, 2019	119,902,824		$	0.1	20		$	—	$	2,806.8		$	384.3		$	(21.3	)	6,317,628	$	(162.2	)	$	546.6		$	3,554.3

Balance, December 31, 2017	110,565,531		$	0.1	25		$	—	$	2,277.7		$	236.8		$	(25.4	)	6,132,884	$	(152.6	)	$	566.3		$	2,902.9
Comprehensive Income	—		—		—		—		—			482.1			0.5			—	—			39.9			522.5
Exercise of warrants and options	691,286		—		—		—		14.0			—			—			—	—			—			14.0
Taxes paid for net settlement of equity-based compensation	—		—		—		—		—			—			—			—	—			(0.3		)	(0.3		)
Distributions to PBF Energy Company LLC members	—		—		—		—		—			—			—			—	—			(1.7		)	(1.7		)
Distributions to PBF Logistics LP public unitholders	—		—		—		—		—			—			—			—	—			(36.5		)	(36.5		)
Stock-based compensation	35,811		—		—		—		14.1			—			—			—	—			4.5			18.6
Dividends ($0.90 per common share)	—		—		—		—		—			(103.4		)	—			—	—			—			(103.4		)
Issuance of additional PBFX common units	—		—		—		—		28.6			—			—			—	—			6.3			34.9
Effects of exchanges of PBF LLC Series A Units on deferred tax assets and liabilities and tax receivable agreement obligation	—		—		—		—		(2.8		)	—			—			—	—			—			(2.8		)
Exchange of PBF Energy Company LLC Series A Units for PBF Energy Class A common stock	2,698,635		—		(5	)	—		—			—			—			—	—			—			—
August 2018 Equity Offering	6,000,000		—		—		—		287.3			—			—			—	—			—			287.3
Treasury stock purchases	(39,544	)	—		—		—		1.4			—			—			39,544	(1.4		)	—			—
Other	—		—		—		—		10.9			—			—			—	—			(1.1		)	9.8
Balance, September 30, 2018	119,951,719		$	0.1	20		$	—	$	2,631.2		$	615.5		$	(24.9	)	6,172,428	$	(154.0	)	$	577.4		$	3,645.3

PBF ENERGY INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in ~~thousands)~~millions)


	Nine Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2019			2018
Cash flows from operating activities:
Net income	$	223,045		$	153,756		$	306.1		$	522.0
Adjustments to reconcile net income to net cash (used in) provided by operations:
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	215,052			170,911			331.3			277.7
Stock-based compensation	18,064			16,331			28.4			18.6
Change in fair value of catalyst leases	1,011			4,556			6.4			(5.8		)
Deferred income taxes	111,325			194,431			89.6			167.0
Change in tax receivable agreement liability	(565		)	3,143
Change in Tax Receivable Agreement liability							—			(7.8		)
Non-cash change in inventory repurchase obligations	(26,659		)	29,317			11.4			10.7
Non-cash lower of cost or market inventory adjustment	(97,943		)	(320,833		)	(277.0		)	(300.5		)
Debt extinguishment costs	25,451			—
Pension and other post-retirement benefit costs	31,682			25,894			33.6			35.6
Loss on sale of assets	940			11,381
Gain on sale of assets							(31.8		)	(43.1		)

Changes in operating assets and liabilities:
Accounts receivable	(155,838		)	(198,879		)	(161.6		)	(115.3		)
Inventories	(349,189		)	54,052			12.4			(46.9		)
Prepaid expense and other current assets	78,838			(99,127		)
Prepaid and other current assets							(2.0		)	2.1
Accounts payable	(102,471		)	51,390			56.8			(109.8		)
Accrued expenses	415,862			309,194			85.0			318.8
Deferred revenue	(9,005		)	8,918			(7.0		)	4.2
Other assets and liabilities	(57,377		)	(26,223		)	(49.4		)	(7.3		)
Net cash provided by operations	322,223			388,212
Net cash provided by operating activities							$	432.2		$	720.2

Cash flows from investing activities:
Acquisition of Torrance refinery and related logistics assets	—			(971,932		)
Expenditures for property, plant and equipment	(267,151		)	(194,625		)	(309.0		)	(192.2		)
Expenditures for deferred turnaround costs	(341,598		)	(138,936		)	(282.6		)	(201.0		)
Expenditures for other assets	(31,096		)	(27,735		)	(38.2		)	(16.9		)
Expenditures for PBFX Plains Asset Purchase	—			(98,373		)
Expenditures for acquisition of Toledo Terminal by PBFX	(10,097		)	—
Chalmette Acquisition working capital settlement	—			(2,659		)
Purchase of marketable securities	(75,036		)	(1,779,997		)
Maturities of marketable securities	115,060			1,954,274
Acquisition of Knoxville Terminals by PBFX							—			(58.0		)
Proceeds from sale of assets	—			13,030			36.3			48.3
Net cash used in investing activities	$	(609,918	)	$	(1,246,953	)	$	(593.5	)	$	(419.8	)

PBF ENERGY INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ~~(Continued)~~(continued)

(unaudited, in ~~thousands)~~millions)


	Nine Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2019			2018
Cash flows from financing activities:
Proceeds from issuance of PBFX common units, net of underwriters’ discount and commissions	$	—		$	138,255
Net proceeds from issuance of Class A common stock							$	—		$	287.3
Net proceeds from issuance of PBFX common units							132.5			34.9
Distributions to PBF Energy Company LLC members other than PBF Energy	(3,448		)	(4,460		)	(2.7		)	(1.7		)
Distributions to PBFX public unit holders	(32,261		)	(22,563		)
Distributions to PBFX public unitholders							(45.8		)	(35.5		)
Dividend payments	(98,723		)	(88,043		)	(107.6		)	(103.0		)
Proceeds from 2025 7.25% Senior Notes	725,000			—
Cash paid to extinguish 2020 8.25% Senior Secured Notes	(690,209		)	—
Proceeds from revolver borrowings							1,350.0			—
Repayments of revolver borrowings							(1,350.0		)	—
Repayment of note payable							—			(5.6		)
Proceeds from PBFX revolver borrowings	—			174,700			228.0			64.0
Repayments of PBFX revolver borrowings	—			(30,000		)	(101.0		)	(43.7		)
Repayments of PBFX Term Loan borrowings	(39,664		)	(174,536		)
Repayments of PBF Rail Term Loan	(4,959		)	—			(5.2		)	(5.1		)
Repayments of Rail Facility revolver borrowings	—			(11,457		)
Proceeds from revolver borrowings	490,000			550,000
Repayments of revolver borrowings	(490,000		)	—
Additional catalyst lease	—			7,927
Catalyst lease settlements							(3.5		)	(9.5		)
Proceeds from insurance premium financing							7.5			7.0
Proceeds from stock options exercised							0.2			14.0
Purchase of treasury stock							(1.5		)	(1.4		)
Deferred financing costs and other	(13,424		)	—			(0.6		)	(15.9		)
Net cash (used in) provided by financing activities	(157,688		)	539,823
Net cash provided by financing activities							$	100.3		$	185.8

Net decrease in cash and cash equivalents	(445,383		)	(318,918		)
Net (decrease) increase in cash and cash equivalents							(61.0		)	486.2
Cash and cash equivalents, beginning of period	746,274			944,320			597.3			573.0
Cash and cash equivalents, end of period	$	300,891		$	625,402		$	536.3		$	1,059.2

Supplemental cash flow disclosures
Non-cash activities:
Accrued and unpaid capital expenditures	$	36,172		$	16,813		$	34.9		$	48.5
Note payable issued for purchase of property, plant and equipment	6,831			—
Assets acquired under operating leases							407.5			—
Assets acquired under finance leases							14.6			—
Cash paid during the period for:
Interest (net of capitalized interest of $13.8 and $6.5 in 2019 and 2018, respectively)							$	81.9		$	94.7
Income taxes							1.9			0.3

PBF ENERGY COMPANY LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in millions, except unit and per unit data)



	September 30, 2019			December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents (PBFX: $52.6 and $19.9, respectively)	$	536.3		$	596.0
Accounts receivable	878.7			718.2
Inventories	2,130.4			1,865.8
Prepaid and other current assets	56.4			55.1
Total current assets	3,601.8			3,235.1

Property, plant and equipment, net (PBFX: $856.2 and $862.1, respectively)	3,975.6			3,820.9
Operating lease right of use assets	331.3			—
Deferred charges and other assets, net	1,006.6			897.1
Total assets	$	8,915.3		$	7,953.1
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	521.2		$	488.4
Accrued expenses	1,725.0			1,642.7
Deferred revenue	13.1			20.1
Current operating lease liabilities	78.2			—
Current debt	—			2.4
Total current liabilities	2,337.5			2,153.6

Long-term debt (PBFX: $801.7 and $673.3, respectively)	2,064.3			1,931.3
Affiliate note payable	378.4			326.1
Deferred tax liabilities	32.9			40.4
Long-term operating lease liabilities	252.1			—
Other long-term liabilities	279.6			277.2
Total liabilities	5,344.8			4,728.6

Commitments and contingencies (Note 7)

Series B Units, 1,000,000 issued and outstanding, no par or stated value	5.1			5.1
PBF Energy Company LLC equity:
Series A Units, 1,206,325 and 1,206,325 issued and outstanding at September 30, 2019 and December 31, 2018, no par or stated value	20.2			20.2
Series C Units, 119,924,055 and 119,895,422 issued and outstanding at September 30, 2019 and December 31, 2018, no par or stated value	2,182.7			2,009.8
Treasury stock, at cost	(162.2		)	(160.8		)
Retained earnings	1,114.0			914.3
Accumulated other comprehensive loss	(22.8		)	(23.9		)
Total PBF Energy Company LLC equity	3,131.9			2,759.6
Noncontrolling interest	433.5			459.8
Total equity	3,565.4			3,219.4
Total liabilities, Series B units and equity	$	8,915.3		$	7,953.1

PBF ENERGY COMPANY LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in millions)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Revenues	$	6,430.5		$	7,646.3		$	18,206.7		$	20,893.2

Cost and expenses:
Cost of products and other	5,700.2			6,816.1			15,865.2			18,400.7
Operating expenses (excluding depreciation and amortization expense as reflected below)	436.5			424.4			1,348.7			1,268.2
Depreciation and amortization expense	107.7			90.8			314.9			263.8
Cost of sales	6,244.4			7,331.3			17,528.8			19,932.7
General and administrative expenses (excluding depreciation and amortization expense as reflected below)	64.3			69.6			174.8			190.4
Depreciation and amortization expense	2.1			2.6			7.8			7.9
Gain on sale of assets	(32.6		)	(43.8		)	(31.8		)	(43.1		)
Total cost and expenses	6,278.2			7,359.7			17,679.6			20,087.9

Income from operations	152.3			286.6			527.1			805.3

Other income (expense):
Change in fair value of catalyst leases	(3.8		)	1.7			(6.4		)	5.8
Interest expense, net	(42.3		)	(44.5		)	(128.3		)	(135.1		)
Other non-service components of net periodic benefit cost	(0.1		)	0.3			(0.2		)	0.8
Income before income taxes	106.1			244.1			392.2			676.8
Income tax benefit	(2.0		)	(0.8		)	(7.4		)	(5.5		)
Net income	108.1			244.9			399.6			682.3
Less: net income attributable to noncontrolling interests	16.0			10.5			36.1			30.1
Net income attributable to PBF Energy Company LLC	$	92.1		$	234.4		$	363.5		$	652.2

PBF ENERGY COMPANY LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited, in millions)



	Three Months Ended September 30,					Nine Months Ended September 30,
	2019		2018			2019		2018
Net income	$	108.1	$	244.9		$	399.6	$	682.3
Other comprehensive income (loss):
Unrealized gain (loss) on available for sale securities	0.2		(0.1		)	0.5		(0.3		)
Net gain on pension and other post-retirement benefits	0.2		0.3			0.6		0.8
Total other comprehensive income	0.4		0.2			1.1		0.5
Comprehensive income	108.5		245.1			400.7		682.8
Less: comprehensive income attributable to noncontrolling interests	16.0		10.5			36.1		30.1
Comprehensive income attributable to PBF Energy Company LLC	$	92.5	$	234.6		$	364.6	$	652.7

PBF ENERGY COMPANY LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(unaudited, in millions, except unit data)



	Series A					Series C					Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Noncontrolling Interest			Treasury Stock			Total Member’s Equity
	Units		Amount			Units		Amount
Balance, June 30, 2019	1,206,325		$	20.2		119,915,672		$	2,176.4		$	(23.2	)	$	1,058.2		$	433.0		$	(162.2	)	$	3,502.4
Comprehensive Income	—		—			—		—			0.4			92.1			16.0			—			108.5
Exercise of Series A warrants and options, net	—		—			—		(0.1		)	—			—			—			—			(0.1		)
Distribution to members	—		—			—		—			—			(36.3		)	(17.0		)	—			(53.3		)
Stock-based compensation	—		—			10,250		6.4			—			—			1.2			—			7.6
Treasury stock purchases	—		—			(1,867	)	—			—			—			—			—			—
Other	—		—			—		—			—			—			0.3			—			0.3
Balance, September 30, 2019	1,206,325		$	20.2		119,924,055		$	2,182.7		$	(22.8	)	$	1,114.0		$	433.5		$	(162.2	)	$	3,565.4

Balance, June 30, 2018	1,206,325		19.5			113,850,959		1,682.8			(26.6		)	1,266.8			454.6			(153.6		)	3,243.5
Comprehensive Income	—		—			—		—			0.2			234.4			10.5			—			245.1
Exercise of Series A warrants and options, net	10,584		(0.5		)	88,370		—			—			—			—			—			(0.5		)
Exchange of Series A units for PBF Energy Class A common stock	(10,584	)	—			10,584		—			—			—			—			—			—
Distribution to members	—		—			—		—			—			(36.4		)	(12.9		)	—			(49.3		)
Issuance of additional PBFX common units	—		—			—		28.6			—			—			6.3			—			34.9
Stock-based compensation	—		—			23,567		4.6			—			—			1.0			—			5.6
Issuance of Series C units in connection with the August 2018 Equity Offering	—		—			6,000,000		287.3			—			—			—			—			287.3
Treasury stock purchases	—		—			(530	)	0.4			—			—			—			(0.4		)	—
Other	—		—			—		0.4			—			—			(0.1		)	—			0.3
Balance, September 30, 2018	1,206,325		$	19.0		119,972,950		$	2,004.1		$	(26.4	)	$	1,464.8		$	459.4		$	(154.0	)	$	3,766.9

PBF ENERGY COMPANY LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (continued)

(unaudited, in millions, except unit data)



	Series A					Series C					Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Noncontrolling Interest			Treasury Stock			Total Member’s Equity
	Units		Amount			Units		Amount
Balance, December 31, 2018	1,206,325		$	20.2		119,895,422		$	2,009.8		$	(23.9	)	$	914.3		$	459.8		$	(160.8	)	$	3,219.4
Comprehensive Income	—		—			—		—			1.1			363.5			36.1			—			400.7
Exercise of Series A warrants and options, net	10,000		0.1			7,525		(0.9		)	—			—			—			—			(0.8		)
Exchange of Series A units for PBF Energy Class A common stock	(10,000	)	(0.1		)	10,000		0.1			—			—			—			—			—
Distribution to members	—		—			—		—			—			(163.8		)	(47.0		)	—			(210.8		)
Issuance of additional PBFX common units	—		—			—		152.0			—			—			(19.5		)	—			132.5
Stock-based compensation	—		—			54,475		20.3			—			—			5.6			—			25.9
Treasury stock purchases	—		—			(43,367	)	1.4			—			—			—			(1.4		)	—
Other	—		—			—		—			—			—			(1.5		)	—			(1.5		)
Balance, September 30, 2019	1,206,325		$	20.2		119,924,055		$	2,182.7		$	(22.8	)	$	1,114.0		$	433.5		$	(162.2	)	$	3,565.4

Balance, December 31, 2017	3,767,464		40.1			110,586,762		1,655.0			(26.9		)	906.8			456.1			(152.6		)	2,878.5
Comprehensive Income	—		—			—		—			0.5			652.2			30.1			—			682.8
Exercise of Series A warrants and options, net	137,496		(3.8		)	691,286		—			—			—			—			—			(3.8		)
Exchange of Series A units for PBF Energy Class A common stock	(2,698,635	)	(17.3		)	2,698,635		17.3			—			—			—			—			—
Distribution to members	—		—			—		—			—			(105.1		)	(36.5		)	—			(141.6		)
Issuance of additional PBFX common units	—		—			—		28.6			—			—			6.3			—			34.9
Stock-based compensation	—		—			35,811		14.1			—			—			4.5			—			18.6
Issuance of Series C units in connection with the August 2018 Equity Offering	—		—			6,000,000		287.3			—			—			—			—			287.3
Treasury stock purchases	—		—			(39,544	)	1.4			—			—			—			(1.4		)	—
Other	—		—			—		0.4			—			10.9			(1.1		)	—			10.2
Balance, September 30, 2018	1,206,325		$	19.0		119,972,950		$	2,004.1		$	(26.4	)	$	1,464.8		$	459.4		$	(154.0	)	$	3,766.9

PBF ENERGY COMPANY LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in millions)



	Nine Months Ended September 30,
	2019			2018
Cash flows from operating activities:
Net income	$	399.6		$	682.3
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	331.3			277.7
Stock-based compensation	28.4			18.6
Change in fair value of catalyst leases	6.4			(5.8		)
Deferred income taxes	(7.5		)	(5.5		)
Non-cash change in inventory repurchase obligations	11.4			10.7
Non-cash lower of cost or market inventory adjustment	(277.0		)	(300.5		)
Pension and other post-retirement benefit costs	33.6			35.5
Gain on sale of assets	(31.8		)	(43.1		)

Changes in operating assets and liabilities:
Accounts receivable	(160.5		)	(115.3		)
Inventories	12.4			(46.9		)
Prepaid and other current assets	(2.6		)	(9.7		)
Accounts payable	56.8			(110.0		)
Accrued expenses	91.3			317.2
Deferred revenue	(7.0		)	4.2
Other assets and liabilities	(50.5		)	(10.4		)
Net cash provided by operating activities	$	434.3		$	699.0

Cash flows from investing activities:
Expenditures for property, plant and equipment	(309.0		)	(192.2		)
Expenditures for deferred turnaround costs	(282.6		)	(201.0		)
Expenditures for other assets	(38.2		)	(16.9		)
Acquisition of Knoxville Terminals by PBFX	—			(58.0		)
Proceeds from sale of assets	36.3			48.3
Net cash used in investing activities	$	(593.5	)	$	(419.8	)

~~See notes to condensed consolidated financial statements.~~

9PBF ENERGY COMPANY LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(unaudited, in millions)



	Nine Months Ended September 30,
	2019			2018
Cash flows from financing activities:
Proceeds from issuance of PBF LLC Series C units	$	—		$	287.3
Net proceeds from issuance of PBFX common units	132.5			34.9
Distributions to PBF Energy Company LLC members	(110.3		)	(104.7		)
Distributions to PBFX public unitholders	(45.8		)	(35.5		)
Proceeds from revolver borrowings	1,350.0			—
Repayments of revolver borrowings	(1,350.0		)	—
Repayment of note payable	—			(5.6		)
Proceeds from PBFX revolver borrowings	228.0			64.0
Repayments of PBFX revolver borrowings	(101.0		)	(43.7		)
Repayments of PBF Rail Term Loan	(5.2		)	(5.1		)
Catalyst lease settlements	(3.5		)	(9.5		)
Proceeds from insurance premium financing	7.5			7.0
Affiliate note payable with PBF Energy Inc.	(0.8		)	44.1
Proceeds from stock options exercised	0.1			0.2
Repurchase of treasury stock	(1.5		)	(1.4		)
Deferred financing costs and other	(0.5		)	(15.9		)
Net cash provided by financing activities	$	99.5		$	216.1

Net (decrease) increase in cash and cash equivalents	(59.7		)	495.3
Cash and cash equivalents, beginning of period	596.0			562.0
Cash and cash equivalents, end of period	$	536.3		$	1,057.3

Supplemental cash flow disclosures
Non-cash activities:
Accrued and unpaid capital expenditures	$	34.9		$	48.5
Assets acquired under operating leases	407.5			—
Assets acquired under finance leases	14.6			—
Affiliate note payable related to PBF LLC member distributions	53.2			—
Cash paid during the period for:
Interest (net of capitalized interest of $13.8 and $6.5 in 2019 and 2018, respectively)	$	81.9		$	94.7
Income taxes	1.0			0.3

PBF ENERGY INC. AND PBF ENERGY COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA)~~

1. DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION

Description of the Business

PBF Energy Inc. (“PBF Energy”) was formed as a Delaware corporation on November 7, 2011 and is the sole managing member of PBF Energy Company LLC (“PBF LLC”), a Delaware limited liability company, with a controlling interest in PBF LLC and its subsidiaries. PBF Energy consolidates the financial results of PBF LLC and its subsidiaries and records a noncontrolling interest in its ~~consolidated financial statements~~Condensed Consolidated Financial Statements representing the economic interests of PBF LLC’s members other than PBF Energy (refer to “Note 9 - Equity”).

PBF Energy holds a 99.0% economic interest in PBF LLC as of September 30, 2019 through its ownership of PBF LLC Series C Units, which are held solely by PBF Energy. Holders of PBF LLC Series A Units, which are held by parties other than PBF Energy (“the members of PBF LLC other than PBF Energy”), hold the remaining 1.0% economic interest in PBF LLC. The PBF LLC Series C Units rank on parity with the PBF LLC Series A Units as to distribution rights, voting rights and rights upon liquidation, winding up or dissolution. In addition, the amended and restated limited liability company agreement of PBF LLC provides that any PBF LLC Series A Units acquired by PBF Energy will automatically be reclassified as PBF LLC Series C Units in connection with such acquisition. As of September 30, 2019, PBF Energy held 119,924,055 PBF LLC Series C Units and the members of PBF LLC other than PBF Energy held 1,206,325 PBF LLC Series A Units.

PBF LLC, together with its consolidated subsidiaries, owns and operates oil refineries and related facilities in North America. PBF Holding Company LLC (“PBF Holding”) is a wholly-owned subsidiary of PBF LLC. PBF Investments LLC (“PBF Investments”), Toledo Refining Company LLC (“Toledo Refining” or “TRC”), Paulsboro Refining Company LLC (“Paulsboro Refining” or “PRC”), Delaware City Refining Company LLC (“Delaware City Refining” or “DCR”), Chalmette Refining, L.L.C. (“Chalmette Refining”), PBF Western Region LLC (“PBF Western Region”), Torrance Refining Company LLC (“Torrance Refining”) and Torrance Logistics Company LLC are PBF LLC’s principal operating subsidiaries and are all wholly-owned subsidiaries of PBF Holding. Discussions or areas of the Notes to Condensed Consolidated Financial Statements that either apply only to PBF Energy or PBF LLC are clearly noted in such footnotes.

As of September 30, ~~2017,~~2019, PBF LLC also ~~holds~~held a ~~44.1%~~48.2% limited partner interest ~~and all of the incentive distribution rights~~ in PBF Logistics LP (“PBFX”), a ~~publicly traded~~publicly-traded master limited partnership (“MLP”) (refer to “Note 2 - PBF Logistics LP”). PBF Logistics GP LLC (“PBF GP”) owns the noneconomic general partner interest and serves as the general partner of PBFX and is wholly-owned by PBF LLC. PBF Energy, through its ownership of PBF LLC, consolidates the financial results of PBFX and its subsidiaries and records a noncontrolling interest in its consolidated financial statements representing the economic interests of PBFX’s ~~unit holders~~unitholders other than PBF ~~LLC.~~LLC (refer to “Note 9 - Equity”). Collectively, PBF Energy and its consolidated subsidiaries, including PBF LLC, PBF Holding, PBF GP and PBFX are referred to hereinafter as the “Company” unless the context otherwise requires.

As of September 30, 2017, the Company owns 109,747,548 PBF LLC Series C Units and the Company’s current and former executive officers and directors and certain employees and others beneficially own 3,825,508 PBF LLC Series A Units. As of September 30, 2017, the holders of the Company’s issued and outstanding shares of Class A common stock have 96.6% of the voting power in the Company and the members of PBF LLC other than PBF Energy through their holdings of Class B common stock have the remaining 3.4% of the voting power in the Company.

Substantially all of the Company’s operations are in the United States. The Company operates in ~~two~~2 reportable business segments: Refining and Logistics. The Company’s oil refineries are all engaged in the refining of crude oil and other feedstocks into petroleum products, and are aggregated into the Refining segment. PBFX is a publicly traded ~~master limited partnership~~MLP that was formed to operate ~~logistical~~logistics assets such as crude oil and refined petroleum products terminals, pipelines and storage facilities. The Logistics segment consists solely of PBFX’s ~~operations are aggregated into the Logistics segment.~~operations. To generate earnings and cash flows from operations, the Company is primarily dependent upon processing crude oil and selling refined petroleum products at margins sufficient to cover fixed and variable costs and other expenses. Crude oil and refined petroleum products are commodities; and factors that are largely out of the Company’s control can cause prices to vary over time. The resulting potential margin volatility can have a material effect on the Company’s financial position, earnings and cash ~~flow.~~flows.

PBF ENERGY INC. AND PBF ENERGY COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Basis of Presentation

The unaudited condensed consolidated financial information furnished herein reflects all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, considered necessary for a fair presentation of the financial position and the results of operations and cash flows of the Company for the periods presented. All intercompany accounts and transactions have been eliminated in consolidation. These unaudited ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Accordingly, they

~~PBF ENERGY INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA)~~

do not include all of the information and notes required by GAAP for complete financial statements. These interim ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements should be read in conjunction with the PBF Energy Inc. and PBF Energy Company LLC financial statements included in the Annual Report on Form 10-K for the year ended December 31, ~~2016 of PBF Energy.~~2018. The results of operations for the three and nine months ended September 30, ~~2017~~2019 are not necessarily indicative of the results to be expected for the full year.

~~Change in Presentation~~In 2019, the Company has changed its presentation from thousands to millions, as applicable, and as a result, any necessary rounding adjustments have been made to prior year disclosed amounts.

Torrance Land Sale

During the third quarter of 2017, the Company determined that it would revise the presentation of certain line items on its consolidated statements of operations to enhance its disclosure under the requirements of Rule 5-03 of Regulation S-X. The revised presentation is comprised of the inclusion of a subtotal within costs and expenses referred to as “Cost of sales” and the reclassification of total depreciation and amortization expense between such amounts attributable to cost of sales and other operating costs and expenses. The amount of depreciation and amortization expense that is presented separately within the “Cost of Sales” subtotal represents depreciation and amortization of refining and logistics assets that are integral to the refinery production process.

The historical comparative information has been revised to conform to the current presentation. This revised presentation does not have an effect on the Company’s historical consolidated income from operations or net income, nor does it have any impact on its consolidated balance sheets, statements of comprehensive income or statements of cash flows. Presented below is a summary of the effects of this revised presentation on the Company’s historical statements of operations for the three ~~and nine~~ months ended September 30, ~~2016 (in thousands):~~

Three Months Ended September 30, 2016
As Previously Reported Adjustments As Reclassified
Cost and expenses:
Cost of products and other $ 3,862,580
—
$ 3,862,580
Operating expenses (excluding depreciation and amortization expense as reflected below) 412,699
—
412,699
Depreciation and amortization expense —
54,694
54,694
Cost of sales 4,329,973
General and administrative expenses (excluding depreciation and amortization expense as reflected below) 44,020
—
44,020
Depreciation and amortization expense 56,036
(54,694)
1,342
Loss on sale of assets 8,159
—
8,159
Total cost and expenses $ 4,383,494
$ 4,383,494

Nine Months Ended September 30, 2016
As Previously Reported Adjustments As Reclassified
Cost and expenses:
Cost of products and other $ 9,524,119
—
$ 9,524,119
Operating expenses (excluding depreciation and amortization expense as reflected below) 989,296
—
989,296
Depreciation and amortization expense —
158,612
158,612
Cost of sales 10,672,027
General and administrative expenses (excluding depreciation and amortization expense as reflected below) 124,975
—
124,975
Depreciation and amortization expense 163,029
(158,612)
4,417
Loss on sale of assets 11,381
—
11,381
Total cost and expenses $ 10,812,800
$ 10,812,800

~~PBF ENERGY INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA)~~

~~Cost Classifications~~

~~Cost~~2019, the Company closed on a third party sale of ~~products and other consists~~a parcel of real property acquired as part of the ~~cost~~Torrance refinery, but not part of ~~crude oil, other feedstocks, blendstocks and purchased refined products and the related in-bound freight and transportation costs.~~

Operating expenses (excluding depreciation and amortization) consists of direct costs of labor, maintenance and services, utilities, property taxes, environmental compliance costs and other direct operating costs incurred in connection with our refining operations. Such expenses exclude depreciation related to refining and logistics assets that are integral to the refinery ~~production process, which is presented separately as Depreciation and amortization expense as~~itself. The sale resulted in a ~~component~~gain of ~~Cost~~approximately $33.1 million included within Gain on sale of ~~sales on the Company’s condensed consolidated statements of operations.~~

~~Reclassification~~

~~Certain amounts previously reported~~assets in the Company's condensed consolidated financial statements for prior periods have been reclassified to conform to the 2017 presentation. These reclassifications, in addition to the changes in “Cost and expenses” described above, include certain details about accrued expenses and equity in those respective footnotes.Condensed Consolidated Statements of Operations.

Recently Adopted Accounting Guidance

Effective January 1, 2017, the Company adopted Accounting Standard Update (“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”). ASU 2016-6 was issued in March 2016 by the Financial Accounting Standards Board (“FASB”) 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 Company’s adoption of this guidance did not materially impact its consolidated financial statements.

Effective January 1, 2017, the Company adopted ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). ASU 2016-09 was issued by the FASB in March 2016 to simplify certain aspects of the accounting for share-based payments to employees. The guidance in ASU 2016-09 requires all income tax effects of awards to be recognized in the income statement when the awards vest or are settled rather than recording excess tax benefits or deficiencies in additional paid-in capital. The guidance in ASU 2016-09 also allows an employer to repurchase more of an employee’s shares than it could prior to its adoption for tax withholding purposes without triggering liability accounting and to make a policy election to account for forfeitures as they occur. The Company’s adoption of this guidance did not materially impact its consolidated financial statements.

Effective January 1, 2017, the Company adopted ASU No. 2016-17, “Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control” (“ASU 2016-17”). ASU 2016-17 was issued by the FASB in October 2016 to amend the consolidation guidance on how a reporting entity that is the single decision maker of a variable interest entity (“VIE”) should treat indirect interests in the entity held through related parties that are under common control with the reporting entity when determining whether it is the primary beneficiary of that VIE. The amendments in this ASU do not change the characteristics of a primary beneficiary in current GAAP. The amendments in this ASU require that a reporting entity, in determining whether it satisfies the second characteristic of a primary beneficiary, include all of its direct variable interests in a VIE and, on a proportionate basis, its indirect variable interests in a VIE held through related parties, including related parties that are under common control with the reporting entity. The Company’s adoption of this guidance did not materially impact its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business” (“ASU 2017-01”), which provides guidance to assist entities with evaluating when a set of transferred assets and activities is a business. Under ASU 2017-01, it is expected that the definition of a business will be narrowed and more consistently applied. ASU 2017-01 is effective for annual periods beginning after

~~PBF ENERGY INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA)~~

December 15, 2017, including interim periods within those periods. The amendments in this ASU should be applied prospectively on or after the effective date. Early adoption of ASU 2017-01 is permitted and the Company early adopted the new standard in its consolidated financial statements and related disclosures effective January 1, 2017. The Company’s adoption of this guidance did not materially impact its consolidated financial statements.

~~Recent Accounting Pronouncements~~

In August 2015, the FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date” (“ASU 2015-14”), which defers the effective date of ASU 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”) for all entities by one year. Additional ASUs have been issued in 2016 and 2017 that provide certain implementation guidance related to ASU 2014-09 (collectively, the Company refers to ASU 2014-09 and these additional ASUs as the “Updated Revenue Recognition Guidance”). The Updated Revenue Recognition Guidance will replace most existing revenue recognition guidance in GAAP when it becomes effective. Under ASU 2015-14, this guidance becomes effective for interim and annual periods beginning after December 15, 2017 and permits the use of either the retrospective or modified retrospective transition method. Under ASU 2015-14, early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company has established a working group to assess the Updated Revenue Recognition Guidance, including its impact on the Company’s business processes, accounting systems, controls and financial statement disclosures. The Company will adopt this new standard effective January 1, 2018, using the modified retrospective application. Under that method, the cumulative effect of initially applying the standard is recognized as an adjustment to the opening balance of retained earnings, and revenues reported in the periods prior to the date of adoption are not changed. The working group is progressing through its implementation plan and continues to evaluate the impact of this new standard on the Company’s consolidated financial statements and related disclosures. Additionally, the Company has begun training the relevant staff at its corporate headquarters and refineries on the Updated Revenue Recognition Guidance, including the potential impacts on internal reporting and disclosure requirements. Although the Company’s analysis of the new standard is still in process and interpretative and industry specific guidance is still developing, based on the results to date, we have reached tentative conclusions for most contract types and do not believe revenue recognition patterns will change materially. However, it is expected that the new standard will have some impact on presentation and disclosures in its financial statements and internal controls.

In February 2016, the ~~FASB~~Financial Accounting Standard Board (“FASB”) issued ~~ASU~~Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842)” ~~(“ASU 2016-02”),~~(Accounting Standards Codification “ASC” 842) to increase the transparency and comparability ~~about leases among entities. The new~~of leases. ASC 842 supersedes the lease accounting guidance in ASC 840 - “Leases” (“ASC 840”). ASC 842 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 Company elected to utilize the “package” of three expedients, as defined in ASC 842, which retains the lease classification and initial direct costs for any leases that existed prior to adoption of the standard. The Company also has ~~established a working group~~elected to ~~study and lead implementation~~not evaluate land easements that existed as of, or expired before, adoption of the new ~~guidance~~standard. The Company’s Condensed Consolidated Financial Statements for the periods prior to the adoption of ASC 842 are not adjusted and are reported in ~~ASU 2016-02. This working group was formed during 2016 and has begun~~accordance with the ~~process~~Company’s historical accounting policy. As of ~~compiling a central repository for all leases entered into by~~ the ~~Company and its subsidiaries for further analysis as the~~date of implementation ~~project progresses. The Company will not early adopt this new guidance. The working group continues to evaluate~~on January 1, 2019, the impact of this new standard on its consolidated financial statements and related disclosures. At this time, the Company has identified that the most significant impacts of this new guidance will be to bring nearly all leases on its balance sheet with “right of use assets” and “lease obligation liabilities” as well as accelerating the interest expense component of financing leases. While the assessment of the impacts arising from this standard is progressing, it remains in its early stages. Accordingly, the Company has not fully determined the impacts on its business processes, controls or financial statement disclosures.

In March 2017, the FASB issued ASU No. 2017-07, “Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” (“ASU 2017-07”), which provides guidance to improve the reporting of net benefit cost in the income statement and on the components eligible for capitalization in assets. Under the new guidance, employers will present the service cost component of net periodic benefit cost in the same income statement line item(s) as other employee compensation costs arising from services rendered during the period. Only the service cost component will be eligible for capitalization in

~~PBF ENERGY INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA)~~

assets. Additionally, under this guidance, employers will present the other components of the net periodic benefit cost separately from the line item(s) that includes the service cost and outside of any subtotal of operating income, if one is presented. These components will not be eligible for capitalization in assets. Employers will apply the guidance on the presentation of the components of net periodic benefit cost in the income statement retrospectively. The guidance limiting the capitalization of net periodic benefit cost in assets to the service cost component will be applied prospectively. The guidance includes a practical expedient allowing entities to estimate amounts for comparative periods using the information previously disclosed in their pension and other postretirement benefit plan note to the financial statements. The amendments in this ASU are effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. The Company does not expect the adoption of ~~this new standard to have a material impact on its consolidated financial statements and related disclosures.~~

~~In May 2017,~~ASC 842 resulted in the FASB issued ASU No. 2017-09, “Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting” (“ASU 2017-09”), which provides guidance to increase clarity and reduce both diversity in practice and cost and complexity when applying the existing accounting guidance on changes to the terms or conditionsrecognition of a ~~share-based payment award. The amendments in ASU 2017-09 require an entity to account for~~right of use asset and lease payable obligation on the ~~effects~~Company’s Condensed Consolidated Balance Sheets of ~~a modification unless all~~approximately $250.0 million. As the ~~following are met: (i)~~right of use asset and the ~~fair value of the modified award is~~lease payable obligation were the same asupon adoption of ASC 842, there was no cumulative effect on the fair value of the original award immediately before the original award is modified; (ii) the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and (iii) the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The guidance in ASU 2017-09 should be applied prospectively. The amendments in this ASU are effectiveCompany’s retained earnings. See “Note 8 - Leases” for annual periods beginning after December 15, 2017, including interim periods within those annual periods. The Company will apply the guidance prospectively for any modifications to its stock compensation plans occurring after the effective date of the new standard.further details.

In August 2017, the FASB issued ASU No. 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities” (“ASU 2017-12”). The amendments in ASU 2017-12 more closely align the results of cash flow and fair value hedge accounting with risk management activities ~~through changes to both~~in the ~~designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results in the~~consolidated financial statements. The amendments ~~in ASU 2017-12 address specific limitations in current GAAP by expanding~~expand the ability to hedge ~~accounting for both~~ nonfinancial and financial risk components, and by refining the measurement of hedge results to better reflect an entity’s hedging strategies. Thus, the amendments in ASU 2017-12 will enable an entity to better portray the economic results of hedging activities for certain fair value and cash flow hedges and will avoid mismatches in earnings by allowing for greater precision when measuring changesreduce complexity in fair value hedges of interest rate risk, eliminate the ~~hedged item for~~requirement to separately measure and report hedge ineffectiveness, and eases certain ~~fair value hedges. Additionally, by aligning the timing of recognition of~~ hedge results with the earnings effect of the hedged item for cash flow and net investment hedges, and by including the earnings effect of the hedging instrument in the same income statement line item in which the earnings effect of the hedged item is presented, the results of an entity’s hedging program and the cost of executing that program will be more visible to users of financial statements. The guidance in ASU 2017-12 concerning amendments to cash flow and net investment hedge relationships that exist on the date of adoption should be applied using a modified retrospective approach (i.e., with a cumulative effect adjustment recorded to the opening balance of retained earnings as of the initial application date).effectiveness assessment requirements. The guidance in ASU 2017-12 also ~~provides~~provided transition relief to make it easier for entities to apply certain amendments to existing hedges (including fair value hedges) where the hedge documentation needs to be modified. The presentation and disclosure requirements of ASU 2017-12 were applied prospectively. The Company adopted the amendments in this ASU effective January 1, 2019, which did not have a material impact on its Condensed Consolidated Financial Statements and related disclosures.

PBF ENERGY INC. AND PBF ENERGY COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In June 2018, the FASB issued ASU No. 2018-07, “Compensation - Stock Compensation (Topic 718): Targeted Improvements to Non-employee Share-Based Payment Accounting” (“ASU 2018-07”). ASU 2018-07 expands the scope of Topic 718, Compensation - Stock Compensation, to include share-based payment transactions for acquiring goods and services from non-employees. As a result, non-employee share-based transactions will be measured by estimating the fair value of the equity instruments at the grant date, taking into consideration the probability of satisfying performance conditions. In addition, ASU 2018-07 also clarifies that any share-based payment awards issued to customers should be evaluated under ASC 606, Revenues from Contracts with Customers (“ASC 606”). The Company adopted the amendments in this ASU effective January 1, 2019, which did not have a material impact on its Condensed Consolidated Financial Statements and related disclosures.

In August 2018, the FASB issued ASU 2018-15, “Intangibles-Goodwill and Other-Internal-Use Software” (Subtopic 350-40) (“ASU 2018-15”). This guidance addresses a customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in such arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This guidance is effective for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years, with early adoption permitted. This guidance should be applied ~~prospectively.~~on either a retrospective or prospective basis. The Company has elected to early adopt this guidance in the second quarter of 2019 on a prospective basis. The Company’s adoption of ASU 2018-15 did not have a material impact on its Condensed Consolidated Financial Statements and related disclosures.

Recently Issued Accounting Pronouncements

In August 2018, the FASB issued ASU No. 2018-14, “Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20)”, to improve the effectiveness of benefit plan disclosures in the notes to financial statements by facilitating clear communication of the information required by GAAP that is most important to users of each entity’s financial statements. The amendments in this ASU modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. Additionally, the amendments in this ASU remove disclosures that no longer are considered cost beneficial, clarify the specific requirements of disclosures, and add disclosure requirements identified as relevant. The amendments in this ASU are effective for ~~annual periods~~fiscal years ending after December 15, 2020, for public business entities and early adoption is permitted for all entities.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses” (Topic 326), Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This guidance amends the guidance on measuring credit losses on financial assets held at amortized cost. ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This guidance is effective for fiscal years beginning after December 15, ~~2018,~~2019, including interim periods within those ~~annual periods.~~fiscal years. The Company ~~is currently evaluating~~does not expect that the ~~impact~~adoption of this ~~new standard~~guidance will have a material impact on its ~~consolidated~~ financial statements and related disclosures.

PBF ENERGY INC. AND PBF ENERGY COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2. PBF LOGISTICS LP

PBFX is a fee-based, growth-oriented, publicly traded Delaware ~~master limited partnership~~MLP formed by PBF Energy to own or lease, operate, develop and acquire crude oil and refined petroleum products terminals, pipelines, storage facilities

~~PBF ENERGY INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA)~~

and similar logistics assets. PBFX engages in the receiving, handling, storage and transferring of crude oil, refined products, natural gas and intermediates from sources located throughout the United States and Canada for PBF Energy in support of ~~certain of~~ its refineries, as well as for third party customers. As of September 30, ~~2017,~~2019, a substantial majority of PBFX’s ~~revenue is~~revenues are derived from long-term, fee-based commercial agreements with PBF Holding, which include minimum volume commitments for receiving, handling, storing and transferring crude oil, refined products and natural gas. PBF Energy also has agreements with PBFX that establish fees for certain general and administrative services and operational and maintenance services provided by PBF Holding to PBFX. These transactions, other than those with third parties, are eliminated by PBF Energy and PBF LLC in consolidation.

PBFX, a variable interest entity, is consolidated by PBF Energy through its ownership of PBF LLC. PBF LLC, through its ownership of PBF GP, has the sole ability to direct the activities of PBFX that most significantly impact its economic performance. PBF LLC is considered to be the primary beneficiary of PBFX for accounting purposes.

As of September 30, ~~2017,~~2019, PBF LLC ~~holds~~held a ~~44.1%~~48.2% limited partner interest in PBFX ~~consisting~~(consisting of ~~18,459,497~~29,953,631 common ~~units,~~units) with the remaining ~~55.9%~~51.8% limited partner interest held by the public ~~unit holders.~~unitholders. PBF LLC also ~~owns all of the incentive distribution rights (“IDRs”) and~~ indirectly owns a non-economic general partner interest in PBFX through its wholly-owned subsidiary, PBF GP, the general partner of PBFX. ~~The IDRs entitle~~On February 28, 2019, PBFX closed on the transaction contemplated by the Equity Restructuring Agreement (the “IDR Restructuring Agreement”) with PBF LLC and PBF GP, pursuant to receive increasing percentages, up to a maximum of 50.0%, of the cash PBFX distributes from operating surplus in excess of $0.345 per unit per quarter. As a result of the payment on May 31, 2017 by PBFX of itswhich PBFX’s incentive distribution for the first quarter of 2017, the financial tests required for conversion of all of PBFX’s outstanding subordinated units into common units have been satisfied. As a result, all of PBFX’s subordinated units, which were ownedrights (the “IDRs”) held by PBF LLC were canceled and converted ~~on a one-for-one basis~~ into 10,000,000 newly issued PBFX common units ~~effective June 1, 2017. The conversion~~(the “IDR Restructuring”). Subsequent to the closing of the ~~subordinated~~IDR Restructuring, no distributions were made to PBF LLC with respect to the IDRs and the newly issued PBFX common units ~~did not impact the amount of cash~~are entitled to normal distributions ~~paid~~ by PBFX.

PBFX ~~or the total number of its outstanding units. The subordinated units were issued by PBFX in connection with its initial public offering in May 2014.~~

~~PBFX Plains Asset Purchase~~Registered Direct Offering

On April ~~29, 2016,~~24, 2019, PBFX ~~purchased four refined product terminals located~~entered into subscription agreements to sell an aggregate of 6,585,500 common units to certain institutional investors in ~~the greater Philadelphia region (the “East Coast Terminals”) from an affiliate of Plains All American Pipeline, L.P. for total cash consideration of $100,000~~a registered direct public offering (the “PBFX ~~Plains Asset Purchase”~~Registered Direct Offering”). for gross proceeds of approximately $135.0 million. The PBFX Registered Direct Offering closed on April 29, 2019.

TVPC ~~Contribution Agreement~~Acquisition

On ~~August 31, 2016,~~April 24, 2019, PBFX entered into a contribution agreement with PBF LLC (the “TVPC Contribution Agreement”) ~~between PBFX and PBF LLC. Pursuant~~, pursuant to the TVPC Contribution Agreement, PBFX acquired from PBF LLC 50% of the issued and outstanding limited liability company interests of Torrance Valley Pipeline Company LLC (“TVPC”), whose assets consist of the San Joaquin Valley Pipeline system (which was acquired as a part of the Torrance Acquisition, as defined in “Note 3 - Acquisitions”), including the M55, M1 and M70 pipeline systems including pipeline stations with storage capacity and truck unloading capability (collectively, the “Torrance Valley Pipeline”).

~~PNGPC Contribution Agreement~~

~~On February 15, 2017, PBFX entered into a contribution agreement (the “PNGPC Contribution Agreement”) between PBFX and PBF LLC. Pursuant to the PNGPC Contribution Agreement,~~which PBF LLC contributed to ~~PBFX’s wholly owned subsidiary~~ PBFX ~~Operating Company LLC (“PBFX Op Co”)~~ all of the issued and outstanding limited liability company interests of ~~Paulsboro Natural Gas~~TVP Holding Company LLC (“TVP Holding”) for total consideration of $200.0 million (the “TVPC Acquisition”). Prior to the TVPC Acquisition, TVP Holding owned a 50% membership interest in Torrance Valley Pipeline Company LLC (“~~PNGPC”~~TVPC”). ~~PNGPC~~Subsequent to the closing of the TVPC Acquisition on May 31, 2019, PBFX owns ~~and operates an existing interstate natural gas pipeline that originates~~100% of the membership interests in Delaware County, Pennsylvania, at an interconnection with Texas Eastern pipeline that runs under the Delaware River and terminates at the delivery point to PBF Holding’s Paulsboro refinery, and is subject to regulation by the Federal Energy Regulatory Commission (“FERC”). In connection with the PNGPC Contribution Agreement, PBFX constructed a new pipeline to replace the existing pipeline, which commenced services in August 2017. In consideration for the PNGPC limited liability company interests, PBFX delivered to PBF LLC (i) an $11,600 intercompany promissory note in favor of Paulsboro Refining Company LLC, a wholly owned subsidiary of PBF Holding (the “Promissory Note”), (ii) an expansionTVPC.

PBF ENERGY INC. AND PBF ENERGY COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA)~~

rights and right of first refusal agreement in favor of PBF LLC with respect to the New Pipeline and (iii) an assignment and assumption agreement with respect to certain outstanding litigation involving PNGPC and the existing pipeline.

~~Chalmette Storage Tank Lease~~

Effective February 2017, PBF Holding and PBFX Op Co entered into a ten-year storage services agreement (the “Chalmette Storage Agreement”) under which PBFX, through PBFX Op Co, assumed construction of a crude oil storage tank at PBF Holding's Chalmette Refinery (the “Chalmette Storage Tank”), commencing upon the earlier of November 1, 2017 or the completion of construction of the Chalmette Storage Tank which is currently expected to be completed in November 2017. PBFX Op Co and Chalmette Refining have entered into a twenty-year lease for the premises upon which the tank is located and a project management agreement pursuant to which Chalmette Refining is managing the construction of the tank.

~~Toledo Terminal Acquisition~~

On April 17, 2017, PBFX’s wholly-owned subsidiary, PBF Logistics Products Terminals LLC, acquired the Toledo, Ohio refined products terminal assets (the “Toledo Terminal”) from Sunoco Logistics L.P. for an aggregate purchase price of $10,000, plus working capital. The Toledo Terminal is directly connected to, and currently supplied by, PBF Holding’s Toledo Refinery.

3. ACQUISITIONS

~~Torrance~~East Coast Storage Assets Acquisition

On ~~July~~October 1, ~~2016,~~2018, PBFX closed the ~~Company acquired from ExxonMobil Oil Corporation~~acquisition of CPI Operations LLC (“CPI”), whose assets include a storage facility with multi-use storage capacity, an Aframax-capable marine facility, a rail facility, a truck terminal, equipment, contracts and ~~its subsidiary, Mobil Pacific Pipe Line Company, the Torrance refinery and related logistics~~certain other idled assets (collectively, the ~~“Torrance~~“East Coast Storage Assets”) located on the Delaware River near Paulsboro, New Jersey (the “East Coast Storage Assets Acquisition”), which had been contemplated by a purchase and sale agreement dated as of July 16, 2018 between PBFX and Crown Point International, LLC (“Crown Point”). The Torrance refinery, located in Torrance, California, is a high-conversion, delayed-coking refinery. The facility is strategically positioned in Southern California with advantaged logistics connectivity that offers flexible raw material sourcing and product distribution opportunities primarily inAdditionally, the ~~California, Las Vegas and Phoenix area markets. The Torrance~~East Coast Storage Assets Acquisition ~~provided the Company~~includes an earn-out provision related to an existing commercial agreement with a ~~broader more diversified asset base and increased~~third-party, based on the ~~number~~future results of ~~operating refineries from four to five and expanded the Company’s combined crude oil throughput capacity. The acquisition also provided the Company with a presence in the PADD 5 market.~~

In addition to refining assets, the transaction included a number of high-quality logistics assets including a sophisticated network of crude and products pipelines, product distribution terminals and refinery crude and product storage facilities. The most significantcertain of the ~~logistics~~acquired idled assets ~~is a crude gathering and transportation system~~(the “Contingent Consideration”), which delivers San Joaquin Valley crude oil directly from the field to the refinery. Additionally, included in the transaction were several pipelines which provide access to sources of crude oil including the Ports of Long Beach and Los Angeles, as well as clean product outlets with a direct pipeline supplying jet fuel to the Los Angeles airport.recommenced operations on October 25, 2019.

The aggregate purchase price for the ~~Torrance~~East Coast Storage Assets Acquisition was ~~$521,350 in cash after post-closing purchase price adjustments, plus final~~$127.0 million, including working capital and Contingent Consideration, which was comprised of ~~$450,582. In addition,~~an initial payment at closing of $75.0 million with a remaining balance of $32.0 million that was paid one year after closing on October 1, 2019. The residual purchase consideration consists of the ~~Company assumed certain pre-existing environmental and regulatory emission credit obligations in connection with the Torrance Acquisition.~~Contingent Consideration. The ~~transaction~~consideration was financed through a combination of cash on hand ~~including proceeds from certain equity offerings,~~ and borrowings under ~~PBF Holding’s asset based~~the amended and restated PBFX revolving credit ~~agreement~~facility (the ~~“Revolving Loan”~~“PBFX Revolving Credit Facility”).

The Company accounted for the Torrance Acquisition as a business combination under GAAP whereby the Company recognizes assets acquired and liabilities assumed in an acquisition at their estimated fair values as of the date of acquisition. The final purchase price and fair value allocation were completed as of ~~June~~September 30, ~~2017. During~~2019.

PBFX accounted for the ~~measurement period, which ended~~East Coast Storage Assets Acquisition as a business combination in ~~June 2017, adjustments were made to the Company’s preliminary~~accordance with GAAP whereby PBFX recognizes assets acquired and liabilities assumed at their estimated fair ~~value estimates related primarily to Property, plant and equipment and Other long-term liabilities reflecting the finalization~~values as of the ~~Company’s assessment~~date of ~~the costs and duration of certain assumed pre-existing environmental obligations.~~

~~PBF ENERGY INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA)~~

acquisition.

The total purchase consideration and the fair values of the assets and liabilities at the acquisition date were as follows:

Purchase Price
Gross purchase price $ 537,500
Working capital 450,582
Post close purchase price adjustments (16,150 )
Total consideration $ 971,932



(in millions)	Purchase Price
Gross purchase price*	$	105.9
Working capital adjustments	—
Contingent Consideration**	21.1
Total consideration	$	127.0

* Includes $30.9 million net present value payable of $32.0 million due to Crown Point one year after closing, which is included in “Accrued expenses” on the Condensed Consolidated Balance Sheets. The remaining $32.0 million payment was paid in full on October 1, 2019.

** The Contingent Consideration is included in “Other long-term liabilities” in the Condensed Consolidated Balance Sheets.

The following table summarizes the final amounts recognized for assets acquired and liabilities assumed as of the acquisition date:


	Fair Value Allocation
Inventories	$	404,542
Prepaid expenses and other current assets	982
(in millions)				Fair Value Allocation
Accounts receivable				$	0.4
Prepaid and other current assets				0.6
Property, plant and equipment	704,633			115.6
Deferred charges and other assets, net	68,053
Intangible assets*				13.3
Accounts payable	(2,688		)	(0.9		)
Accrued expenses	(64,137		)	(1.3		)
Other long-term liabilities	(139,453		)	(0.7		)
Fair value of net assets acquired	$	971,932		$	127.0

* Intangible assets are included in “Deferred charges and other assets” on the Condensed Consolidated Balance Sheets.

PBF ENERGY INC. AND PBF ENERGY COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The East Coast Storage Asset Acquisition includes consideration in the form of the Contingent Consideration. Pursuant to the purchase and sale agreement, PBFX and Crown Point will share equally in the future operating profits of the restarted assets, as defined in the purchase and sale agreement, over a contractual term of up to three years starting in 2019. PBFX recorded the Contingent Consideration based on its estimated fair value of $21.1 million at acquisition date, which was recorded within “Other long-term liabilities” on the Condensed Consolidated Balance Sheets.

The Company’s ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements for the ~~three and~~ nine months ended September 30, ~~2017~~2019 include the results of operations of the ~~Torrance refinery and related logistics assets~~East Coast Storage Assets subsequent to the ~~Torrance~~East Coast Storage Assets Acquisition. The ~~Company’s condensed consolidated financial statements for the prior year~~same period in 2018 does not include the results of operations of such assets from the date of the Torrance Acquisition on July 1, 2016 to September 30, 2016 during which period the Torrance refinery and related logistics assets contributed revenues of $928,225 and net income of $51,457.assets. On an unaudited pro forma basis, the revenues and net income of the Company, assuming the ~~Torrance Acquisition~~acquisition had occurred on January 1, ~~2015,~~2017, for the period indicated, are shown below. The unaudited pro forma information does not purport to present what the Company’s actual results would have been had the ~~acquisition~~East Coast Storage Assets Acquisition occurred on January 1, ~~2015,~~2017, nor is the financial information indicative of the results of future operations. The unaudited pro forma financial information includes the depreciation and amortization expense ~~attributable~~related to the ~~Torrance~~East Coast Storage Assets Acquisition and interest expense associated with the related financing.



	Nine Months Ended September 30, 2018
(Unaudited, in millions)	Nine Months Ended September 30, 2018
PBF Energy
Pro forma revenues	$	20,910.6
Pro forma net income attributable to PBF Energy Inc. stockholders	479.6

PBF LLC
Pro forma revenues	$	20,910.6
Pro forma net income attributable to PBF LLC	648.8

Nine Months Ended September 30, 2016
Pro forma revenues $ 12,250,867
Pro forma net loss attributable to PBF Energy Inc. stockholders $ (3,704 )
Pro forma net loss available to Class A common stock per share:
Basic $ (0.04 )
Diluted $ (0.04 )
Acquisition Expenses

The ~~unaudited amount~~Company incurred acquisition-related costs of ~~revenues~~$4.2 million and ~~net loss above have been calculated after conforming accounting policies of the Torrance refinery and related logistics assets to those of the Company and certain one-time adjustments.~~

~~PBF ENERGY INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA)~~

~~Chalmette Acquisition~~

On November 1, 2015, the Company acquired from ExxonMobil, Mobil Pipe Line Company and PDV Chalmette, L.L.C., 100% of the ownership interests of Chalmette Refining, which owns the Chalmette refinery and related logistics assets (collectively, the “Chalmette Acquisition”). While the Company’s condensed consolidated financial statements$7.5 million for ~~both~~ the three and nine months ended September 30, 2017 and 2016 include the results of operations of Chalmette Refining, the final working capital settlement for the Chalmette Acquisition was finalized in the first quarter of 2016. Additionally, certain acquisition related costs for the Chalmette Acquisition were recorded in the first quarter of 2016.

~~Acquisition Expenses~~

2019, respectively. The Company incurred ~~acquisition related~~acquisition-related costs ~~consisting~~of $0.8 million and $2.0 million for the three and nine months ended September 30, 2018, respectively. Acquisition-related costs consist primarily of consulting and legal expenses related to completed, pending and non-consummated acquisitions. These costs ~~were $50 and $1,021 in the three and nine months ended September 30, 2017, respectively, and $5,222 and $17,510 in three and nine months ended September 30, 2016, respectively. These costs~~ are included ~~in the condensed consolidated statements of operations~~ in General and administrative ~~expenses.~~expenses within the Condensed Consolidated Statements of Operations.

~~4. EQUITY~~

~~Noncontrolling Interest in PBF LLC~~

PBF Energy is the sole managing member of, and has a controlling interest in, PBF LLC. As the sole managing member of PBF LLC, PBF Energy operates and controls all of the business and affairs of PBF LLC and its subsidiaries. As of September 30, 2017 and December 31, 2016, PBF Energy’s equity interest in PBF LLC represented approximately 96.6% and 96.5%, respectively, of the outstanding interests.

PBF Energy consolidates the financial results of PBF LLC and its subsidiaries, and records a noncontrolling interest for the economic interest in PBF Energy held by the members of PBF LLC other than PBF Energy. Noncontrolling interest on the consolidated statements of operations includes the portion of net income or loss attributable to the economic interest in PBF Energy held by the members of PBF LLC other than PBF Energy. Noncontrolling interest on the consolidated balance sheets represents the portion of net assets of PBF Energy attributable to the members of PBF LLC other than PBF Energy.

~~The noncontrolling interest ownership percentages of PBF Energy as of September 30, 2017 and December 31, 2016 are calculated as follows:~~

Holders of PBF LLC Series A Units Outstanding Shares of PBF Energy Class A Common Stock Total *
December 31, 2016 3,920,902
109,204,047
113,124,949
3.5 % 96.5 % 100.0 %
September 30, 2017 3,825,508
109,747,548
113,573,056
3.4 % 96.6 % 100.0 %

~~——————————~~


*	~~Assumes all of the holders of PBF LLC Series A Units exchange their PBF LLC Series A Units for shares of PBF Energy’s Class A common stock on a one-for-one basis.~~

~~Noncontrolling Interest in PBFX~~

PBF LLC holds a 44.1% limited partner interest in PBFX and owns all of PBFX’s IDRs, with the remaining 55.9% limited partner interest owned by public common unit holders as of September 30, 2017. PBF LLC is also the sole member of PBF GP, the general partner of PBFX.

PBF ENERGY INC. AND PBF ENERGY COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA)~~

PBF Energy, through its ownership of PBF LLC, consolidates the financial results of PBFX, and records a noncontrolling interest for the economic interest in PBFX held by the public common unit holders. Noncontrolling interest on the consolidated statements of operations includes the portion of net income or loss attributable to the economic interest in PBFX held by the public common unit holders of PBFX other than PBF Energy (through its ownership in PBF LLC). Noncontrolling interest on the condensed consolidated balance sheets includes the portion of net assets of PBFX attributable to the public common unit holders of PBFX.

~~The noncontrolling interest ownership percentages of PBFX as of September 30, 2017 and December 31, 2016, are calculated as follows:~~

Units of PBFX Held by the Public
Units of PBFX Held by PBF LLC (Including Subordinated Units)
Total
December 31, 2016 23,271,174
18,459,497
41,730,671

55.8 % 44.2 % 100.0 %
September 30, 2017 23,435,349
18,459,497
41,894,846
55.9 % 44.1 % 100.0 %

~~Noncontrolling Interest in PBF Holding~~

In connection with the Chalmette Acquisition, PBF Holding recorded noncontrolling interests in two subsidiaries of Chalmette Refining. PBF Holding, through Chalmette Refining, owns an 80% ownership interest in both Collins Pipeline Company and T&M Terminal Company. For the three months ended September 30, 2017 and 2016 the Company recorded a noncontrolling interest in the (loss) earnings of these subsidiaries of $(6) and $45, respectively. For the nine months ended September 30, 2017 and 2016 the Company recorded a noncontrolling interest in the earnings of these subsidiaries of $374 and $438, respectively.

~~Changes in Equity and Noncontrolling Interests~~

~~The following tables summarize the changes in equity for the controlling and noncontrolling interests of PBF Energy for the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2017~~ ~~and 2016:~~

PBF Energy Inc. Equity Noncontrolling
Interest in PBF LLC
Noncontrolling Interest in PBF Holding Noncontrolling
Interest in PBFX Total Equity
Balance at January 1, 2017 $ 2,025,044
$ 98,671
$ 12,513
$ 434,456
$ 2,570,684
Comprehensive income 174,524
9,701
374
39,377
223,976
Dividends and distributions (98,723 ) (3,448 ) —
(33,090 ) (135,261 )
Equity-based compensation awards 13,549
—
—
4,515
18,064
Exercise of PBF LLC options and warrants, net —
—
—
—
—
Other (2,096 ) —
—
(5 ) (2,101 )
Balance at September 30, 2017 $ 2,112,298
$ 104,924
$ 12,887
$ 445,253
$ 2,675,362

~~PBF ENERGY INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA)~~

PBF Energy Inc. Equity Noncontrolling
Interest in PBF LLC Noncontrolling
Interest in PBF Holding Noncontrolling
Interest in PBFX Total Equity
Balance at January 1, 2016 $ 1,647,297
$ 91,018
$ 17,225
$ 340,317
$ 2,095,857
Comprehensive income 117,645
10,386
438
26,750
155,219
Dividends and distributions (88,043 ) (4,460 ) —
(23,234 ) (115,737 )
Issuance of additional PBFX common units 54,944
—
—
83,311
138,255
Equity-based compensation awards 12,658
—
—
3,673
16,331
Exercise of PBF LLC options and warrants, net 1,058
(232 ) —
—
826
Other (5,438 ) (30 ) (4,943 ) (980 ) (11,391 )
Balance at September 30, 2016 $ 1,740,121
$ 96,682
$ 12,720
$ 429,837
$ 2,279,360

~~Share Activity~~

~~The following table presents the changes in PBF Energy Class A common stock and treasury stock outstanding:~~

Nine Months Ended September 30,
2017 2016
Class A Common Stock Treasury Stock Class A Common Stock Treasury Stock
Balance at beginning of period 109,204,047
6,087,963
97,781,933
6,056,719
Treasury stock purchases (1) (16,646 ) 16,646
(26,379 ) 26,379
Stock based compensation 429,825
—
28,987
—
Exercise of options and warrants 12,500
—
1,650
—
Exchange of PBF LLC Series A units for shares of Class A common stock 117,822
—
38,957
—
Balance at end of period 109,747,548
6,104,609
97,825,148
6,083,098

~~_____~~

~~(1) Includes shares repurchased from participants in connection with the vesting of equity awards granted under the Company’s stock compensation plans to cover employee income tax liabilities.~~

~~PBF ENERGY INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA)~~

5.4. INVENTORIES

Inventories consisted of the following:


September 30, 2017
	Titled Inventory			Inventory Intermediation Arrangements			Total
September 30, 2019										September 30, 2019
(in millions)										Titled Inventory			Inventory Intermediation Agreements			Total
Crude oil and feedstocks	$	1,302,162		$	—		$	1,302,162		$	1,065.6		$	20.4		$	1,086.0
Refined products and blendstocks	1,065,608			343,904			1,409,512			1,034.0			266.8			1,300.8
Warehouse stock and other	97,063			—			97,063			118.4			—			118.4
	$	2,464,833		$	343,904		$	2,808,737		$	2,218.0		$	287.2		$	2,505.2
Lower of cost or market adjustment	(404,227		)	(93,818		)	(498,045		)	(292.4		)	(82.4		)	(374.8		)
Total inventories	$	2,060,606		$	250,086		$	2,310,692		$	1,925.6		$	204.8		$	2,130.4


December 31, 2016
	Titled Inventory			Inventory Intermediation Arrangements			Total
December 31, 2018										December 31, 2018
(in millions)										Titled Inventory			Inventory Intermediation Agreements			Total
Crude oil and feedstocks	$	1,102,007		$	—		$	1,102,007		$	1,044.8		$	—		$	1,044.8
Refined products and blendstocks	915,397			352,464			1,267,861			1,026.9			334.8			1,361.7
Warehouse stock and other	89,680			—			89,680			111.1			—			111.1
	$	2,107,084		$	352,464		$	2,459,548		$	2,182.8		$	334.8		$	2,517.6
Lower of cost or market adjustment	(492,415		)	(103,573		)	(595,988		)	(557.2		)	(94.6		)	(651.8		)
Total inventories	$	1,614,669		$	248,891		$	1,863,560		$	1,625.6		$	240.2		$	1,865.8

Inventory under inventory intermediation ~~arrangements included~~agreements includes crude oil, intermediate and certain ~~light~~ finished products ~~sold to counterparties and stored in~~purchased or produced by the Paulsboro and Delaware City ~~refineries’ storage facilities~~refineries and sold to counterparties in connection with the amended and restated inventory intermediation agreements (as amended in the ~~second~~first quarter of 2019 and amended and restated in the third ~~quarters~~quarter of ~~2017,~~2019, the ~~“A&R~~“Inventory Intermediation Agreements”) with J. Aron & Company, a subsidiary of The Goldman Sachs Group, Inc. (“J. Aron”). This inventory is held in the Company’s storage tanks at the Delaware City and Paulsboro refineries and at PBFX’s East Coast Storage Assets, (collectively the “Storage Tanks”).

During the three months ended September 30, ~~2017,~~2019, the Company recorded an adjustment to value its inventories to the lower of cost or market ~~(“LCM”)~~ which ~~increased operating~~decreased income ~~and net income~~from operations by ~~$265,077 and $160,743, respectively,~~$47.0 million, reflecting the net change in the lower of cost or market (“LCM”) inventory reserve from ~~$763,122~~$327.8 million at June 30, ~~2017~~2019 to ~~$498,045~~$374.8 million at September 30, ~~2017.~~2019. During the nine months ended September 30, ~~2017,~~2019, the Company recorded an adjustment to value its inventories to the lower of cost or market which increased ~~operating~~ income ~~and net income~~from operations by ~~$97,943 and $59,393, respectively,~~$277.0 million, reflecting the net change in the ~~lower of cost or market~~LCM inventory reserve from ~~$595,988~~$651.8 million at December 31, ~~2016~~2018 to ~~$498,045~~$374.8 million at September 30, ~~2017.~~2019.

At September 30, 2018 the replacement value of inventories exceeded the LIFO carrying value by approximately $12.0 million. During the three months ended September 30, ~~2016,~~2018, the Company recorded an adjustment to value its inventories to the lower of cost or market which increased ~~operating~~ income ~~and net income~~from operations by ~~$103,990 and $62,810, respectively,~~$54.8 million, reflecting ~~the net change~~0 LCM reserve as of September 30, 2018 in ~~the lower~~comparison to an LCM reserve of ~~cost or market inventory reserve from $900,493~~$54.8 million at June 30, ~~2016 to $796,503 at September 30, 2016.~~2018. During the nine months ended September 30, ~~2016,~~2018, the Company recorded an adjustment to value its inventories to the lower of cost or market which increased ~~operating~~ income ~~and net income~~from operations by ~~$320,833 and $193,783, respectively,~~$300.5 million, reflecting ~~the net change~~0 LCM reserve as of September 30, 2018 in ~~the lower~~comparison to an LCM reserve of ~~cost or market inventory reserve from $1,117,336~~$300.5 million at December 31, ~~2015 to $796,503 at September 30, 2016.~~2017.

PBF ENERGY INC. AND PBF ENERGY COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA)~~

6.5. ACCRUED EXPENSES

Accrued expenses consisted of the following:


	September 30, 2017		December 31, 2016
PBF Energy (in millions)					September 30, 2019		December 31, 2018
Inventory-related accruals	$	984,702	$	810,027	$	993.5	$	846.3
Inventory intermediation arrangements	282,640		225,524
Renewable energy credit and emissions obligations	138,717		70,158
Inventory intermediation agreements					241.5		249.4
Excise and sales tax payable	91,042		86,046		116.7		149.4
Accrued transportation costs	90,933		89,830		66.6		53.6
Customer deposits	45,548		9,215
Renewable energy credit and emissions obligations					46.2		27.1
Accrued interest	40,689		28,570		43.1		12.1
Accrued utilities	36,274		44,190		38.9		49.8
Deferred payment - East Coast Storage Assets Acquisition					32.0		30.9
Accrued capital expenditures					29.3		60.6
Accrued salaries and benefits					26.3		89.8
Accrued refinery maintenance and support costs	36,098		28,670		23.4		19.0
Accrued salaries and benefits	32,709		17,466
Accrued capital expenditures	21,985		35,149
Environmental liabilities	8,545		9,434		9.3		7.0
Customer deposits					4.1		5.6
Other	23,673		13,405		28.7		23.0
Total accrued expenses	$	1,833,555	$	1,467,684	$	1,699.6	$	1,623.6



PBF LLC (in millions)	September 30, 2019		December 31, 2018
Inventory-related accruals	$	993.5	$	846.3
Inventory intermediation agreements	241.5		249.4
Excise and sales tax payable	116.7		149.4
Accrued interest	67.9		29.9
Accrued transportation costs	66.6		53.6
Renewable energy credit and emissions obligations	46.2		27.1
Accrued utilities	38.9		49.8
Deferred payment - East Coast Storage Assets Acquisition	32.0		30.9
Accrued capital expenditures	29.3		60.6
Accrued salaries and benefits	26.3		89.8
Accrued refinery maintenance and support costs	23.4		19.0
Environmental liabilities	9.3		7.0
Customer deposits	4.1		5.6
Other	29.3		24.3
Total accrued expenses	$	1,725.0	$	1,642.7

PBF ENERGY INC. AND PBF ENERGY COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company has the obligation to repurchase certain ~~intermediates~~crude oil, intermediate and finished products (the “Products”) that are held in the Company’s ~~refinery storage tanks at the Delaware City and Paulsboro refineries~~Storage Tanks in accordance with the ~~A&R~~Inventory Intermediation Agreements with J. Aron. As of September 30, ~~2017~~2019 and December 31, ~~2016,~~2018, a liability is recognized for the ~~inventory intermediation arrangements~~Inventory Intermediation Agreements and is recorded at market price for the J. Aron owned inventory held in the Company’s ~~storage tanks~~Storage Tanks under the ~~A&R~~Inventory Intermediation Agreements, with any change in the market price being recorded in Cost of products and other.

The Company is subject to obligations to purchase Renewable Identification Numbers (“RINs”) required to comply with the Renewable Fuels Standard. The Company’s overall RINs obligation is based on a percentage of domestic shipments of on-road fuels as established by ~~the~~ Environmental Protection Agency (“EPA”). To the degree the Company is unable to blend the required amount of biofuels to satisfy its RINs obligation, RINs must be purchased on the open market to avoid penalties and fines. The Company records its RINs obligation on a net basis in Accrued expenses when its RINs liability is greater than the amount of RINs earned and purchased in a given period and in Prepaid ~~expenses~~ and other current assets when the amount of RINs earned and purchased is greater than the RINs liability. In addition, the Company is subject to obligations to comply with federal and state legislative and regulatory measures, including regulations in the state of California pursuant to Assembly Bill 32 (“AB32”), to address environmental compliance and greenhouse gas and other ~~emissions, including AB32 in California.~~emissions. These requirements include incremental costs to operate and maintain our facilities as well as to implement and manage new emission controls and ~~programs, which have contributed to the increase in accrued environmental liabilities and emission obligations following the Torrance Acquisition.~~programs. Renewable energy credit and emissions obligations fluctuate with the volume of applicable product sales and timing of credit purchases.

~~7. DEBT~~6. AFFILIATE NOTE PAYABLE - PBF LLC

~~Senior Notes~~

~~On May~~As of September 30, ~~2017,~~2019 and December 31, 2018, PBF ~~Holding entered into~~LLC had an ~~Indenture (the “Indenture”) among PBF Holding and PBF Holding’s wholly-owned subsidiary, PBF Finance Corporation (“PBF Finance” and, together~~outstanding note payable with PBF ~~Holding, the “Issuers”), the guarantors named therein (collectively the “Guarantors”) and Wilmington Trust, National Association, as Trustee, under which the Issuers issued $725,000 in~~Energy for an aggregate principal amount of ~~7.25% senior~~

~~PBF ENERGY INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA)~~

~~notes due 2025 (the “2025 Senior Notes”). The Issuers received net proceeds of approximately $711,576 from~~$378.4 million and $326.1 million, respectively. During the offering after deducting the initial purchasers’ discount and estimated offering expenses. The Company used the net proceeds to fund the cash tender offer (the “Tender Offer”) for any and all of its outstanding 8.25% senior secured notes due 2020 (the “2020 Senior Secured Notes”), to pay the related redemption price and accrued and unpaid interest for any 2020 Senior Secured Notes that remained outstanding after the completion of the Tender Offer, and for general corporate purposes. The difference between the carrying value of the 2020 Senior Secured Notes on the date they were reacquired and the amount for which they were reacquired has been classified as debt extinguishment costs in the condensed consolidated statements of operations.

The 2025 Senior Notes included a registration rights arrangement whereby the Company agreed to file with the SEC and use commercially reasonable efforts to consummate an offer to exchange the 2025 Senior Notes for an issue of registered notes with terms substantially identical to the notes not later than 365 days after the date of the original issuance of the notes. This registration statement was declared effective on October 18, 2017 and it is anticipated that the exchange will be consummated during the fourthsecond quarter of ~~2017. As such,~~2019, the ~~Company does not anticipate it will have~~note payable was amended to ~~transfer~~extend the maturity date from April 2020 to April 2030. The note has an annual interest rate of 2.5% and may be prepaid in whole or in part at any ~~consideration as a result of~~time, at the ~~registration rights agreement and thus no loss contingency was recorded.~~

~~The 2025 Senior Notes are guaranteed on a senior unsecured basis by substantially all~~option of PBF Holding’s subsidiaries. The 2025 Senior Notes and guarantees are senior unsecured obligations and rank equal in right of payment with all of the Issuers’ and the Guarantors’ existing and future senior indebtedness, including PBF Holding’s Revolving Loan and the Issuers’ 7.00% senior notes due 2023 (the “2023 Senior Notes”). The 2025 Senior Notes and the guarantees rank senior in right of payment to the Issuers’ and the Guarantors’ existing and future indebtedness that is expressly subordinated in right of payment thereto. The 2025 Senior Notes and the guarantees are effectively subordinated to any of the Issuers’ and the Guarantors’ existingLLC without penalty or future secured indebtedness (including the Revolving Loan) to the extent of the value of the collateral securing such indebtedness. The 2025 Senior Notes and the guarantees are structurally subordinated to any existing or future indebtedness and other obligations of the Issuers’ non-guarantor subsidiaries.premium.

PBF Holding has optional redemption rights to repurchase all or a portion of the 2025 Senior Notes at varying prices no less than 100% of the principal amounts of the notes plus accrued and unpaid interest. The holders of the 2025 Senior Notes have repurchase options exercisable only upon a change in control, certain asset sale transactions, or in event of a default as defined in the Indenture. In addition, the 2025 Senior Notes contain customary terms, events of default and covenants for an issuer of non-investment grade debt securities that limit certain types of additional debt, equity issuances, and payments. Many of these covenants will cease to apply or will be modified if the 2025 Senior Notes are rated investment grade.

Upon the satisfaction and discharge of the 2020 Senior Secured Notes in connection with the closing of the Tender Offer and the redemption described above, a Collateral Fall-Away Event under the indenture governing the 2023 Senior Notes occurred on May 30, 2017, and the 2023 Senior Notes became unsecured and certain covenants were modified, as provided for in the indenture governing the 2023 Senior Notes and related documents.

~~Notes Payable~~

In connection with the purchase of a waste water treatment facility servicing the Toledo refinery completed on September 28, 2017, the Company issued a short-term promissory note payable in the amount of $6,831 due June 30, 2018. Payments of $403 on the note will be made monthly with a balloon payment of $3,200 due at maturity.

~~8. MARKETABLE SECURITIES~~7. COMMITMENTS AND CONTINGENCIES

~~The U.S. Treasury securities purchased by~~In the ordinary conduct of the Company’s business, the Company ~~with~~is from time to time subject to lawsuits, investigations and claims, including class action proceedings, mass tort actions, tort actions, environmental claims and employee-related matters. The outcome of these matters cannot always be predicted accurately, but the ~~proceeds from~~Company accrues liabilities for these matters if the ~~PBFX initial public offering are used as collateral to secure~~Company has determined that it is probable a ~~three-year, $300,000 term loan facility entered into by PBFX (the “PBFX Term Loan”). As necessary and at the discretion of PBFX, these securities are expected to be liquidated~~loss has been incurred and the ~~proceeds used~~loss can be reasonably estimated. For such ongoing matters for which we have not recorded a liability but losses are reasonably possible, we are unable to ~~fund future capital expenditures. While PBFX does not routinely sell marketable securities prior to their scheduled maturity dates, some~~estimate a range of ~~PBFX’s investments may be held and restricted for the purpose of funding future~~

~~PBF ENERGY INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA)~~

~~capital expenditures and acquisitions, so these investments are classified as available-for-sale marketable securities as they may occasionally be sold prior to their scheduled maturity dates~~possible losses at this time due to various reasons that may include but are not limited to, matters being in an early stage and not fully developed through pleadings, discovery or court proceedings, number of potential claimants being unknown or uncertainty regarding a number of different factors underlying the ~~unexpected timing~~potential claims. However, the ultimate resolution of ~~cash needs. The carrying value~~one or more of these ~~marketable securities approximates fair value and are measured using Level 1 inputs. The marketable securities were fully liquidated as of September 30, 2017 and the PBFX Term Loan~~contingencies could result in an adverse outcome that ~~they collateralized was repaid in full.~~

As of December 31, 2016, the Company held $40,024 in marketable securities. The gross unrecognized holding gains and losses as of September 30, 2017 and December 31, 2016 were not material. The net realized gains or losses from the sale of marketable securities were notmay have a material ~~for the three and nine months ended September 30, 2017 and 2016.~~

~~9. INCOME TAXES~~

~~PBF Energy files federal and applicable state corporate income tax returns and recognizes income taxes~~effect on its pre-tax income, which to-date has consisted primarily of its share of PBF LLC’s pre-tax income (approximately 96.6% as of September 30, 2017 and approximately 96.5% as of December 31, 2016). PBF LLC is organized as a limited liability company and PBFX is a master limited partnership, both of which are treated as “flow-through” entities for federal income tax purposes and therefore are not subject to income taxes apart from the income tax attributable to two subsidiaries of Chalmette Refining and one subsidiary of PBF Holding that are treated as C-Corporations for income tax purposes. As a result, PBF Energy’s condensed consolidatedour financial statements do not reflect any benefit or provision for income taxes on the pre-tax income or loss attributable to PBF LLC or PBFX apart from the income tax expense (benefit) of $(4,258) and $2,083 for the three and nine months ended September 30, 2017, respectively, and $2,291 and $29,287 for the three and nine months ended September 30, 2016, respectively, attributable to the C-Corporation subsidiaries of Chalmette Refining and the subsidiary of PBF Holding.

~~The income tax provision (benefit) in the PBF Energy condensed consolidated financial statements~~position, results of operations ~~consists of the following:~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Current income tax expense (benefit) $ 190
$ (69,406 ) $ 1,564
$ (108,824 )
Deferred income tax expense 203,789
101,079
111,325
194,431
Total income tax expense $ 203,979
$ 31,673
$ 112,889
$ 85,607

~~PBF ENERGY INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA)~~

Income tax (benefit) expense is based on income before taxes attributable to PBF Energy and excludes income before taxes attributable to noncontrolling interests as such interests are generally not subject to income taxes except as noted above. The difference between the Company’s effective income tax rate and the United States statutory rate is reconciled below:

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Provision at Federal statutory rate 35.0 % 35.0 % 35.0 % 35.0 %
Increase (decrease) attributable to flow-through of certain tax adjustments:
State income taxes (net of federal income tax) 4.5 % 4.6 % 4.3 % 4.6 %
Nondeductible/nontaxable items (0.2 )% (0.1 )% 0.2 % 0.1 %
Manufacturer’s benefit deduction — % 7.9 % — % 2.9 %
Rate differential from foreign jurisdictions 0.3 % (1.3 )% (0.1 )% 1.1 %
Provision to return adjustment (0.1 )% (1.8 )% (0.2 )% (0.7 )%
Foreign tax rate change — % — % 0.3 % — %
Other (0.1 )% (1.2 )% (0.1 )% (0.5 )%
Effective tax rate 39.4 % 43.1 % 39.4 % 42.5 %

The Company’s effective income tax rate for the three and nine months ended September 30, 2017, including the impact of income attributable to noncontrolling interests of $32,861 and $49,420, respectively, was 37.0% and 33.6%, respectively. The Company’s effective income tax rate for the three and nine months ended September 30, 2016, including the impact of income attributable to noncontrolling interests of $14,333 and $37,503, respectively, was 35.9% and 35.8%, respectively.

~~PBF Energy has determined there are no material uncertain tax positions as of September 30, 2017. PBF Energy does not have any unrecognized tax benefits.~~

~~10. COMMITMENTS AND CONTINGENCIES~~or cash flows.

Environmental Matters

The Company’s refineries, pipelines and related operations 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 compositions of fuels. Compliance with existing and anticipated laws and regulations can increase the overall cost of operating the refineries, including remediation, operating costs and capital costs to construct, maintain and upgrade equipment and facilities.

In connection with the Paulsboro refinery acquisition, the Company assumed certain environmental remediation obligations. The Paulsboro environmental liability of $10,809 recorded as of September 30, 2017 ($10,792 as of December 31, 2016) represents the present value of expected future costs discounted at a rate of 8.0%. The current portion of the environmental liability is recorded in Accrued expenses and the non-current portion is recorded in Other long-term liabilities. This liability is self-guaranteed by the Company.

In connection with the acquisition of the Delaware City 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 the acquisition of the Delaware City assets and the Paulsboro refinery, the Company and Valero purchased ten year, $75,000 environmental insurance policies to insure against unknown environmental liabilities

PBF ENERGY INC. AND PBF ENERGY COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA)~~

~~at each site. In connection with the Toledo refinery acquisition, Sunoco, Inc. (R&M) (“Sunoco”) remains responsible for~~These laws and permits raise potential exposure to future claims and lawsuits involving environmental ~~remediation for conditions that existed on the closing date for twenty years from March 1, 2011, subject to certain limitations.~~

~~In connection with the acquisition of the Chalmette refinery,~~and safety matters which could include soil and water contamination, air pollution, personal injury and property damage allegedly caused by substances which the Company ~~obtained $3,936~~manufactured, handled, used, released or disposed of, transported, or that relate to pre-existing conditions for which the Company has assumed responsibility. The Company believes that our current operations are in ~~financial assurance (in the form of a surety bond) to cover estimated potential site remediation costs associated~~substantial compliance with ~~an agreed to Administrative Order of Consent with the EPA. The estimated cost assumes remedial activities~~existing environmental and safety requirements. However, there have been and will continue ~~for a minimum of 30 years. Further, in connection with the acquisition of the Chalmette refinery,~~to be ongoing discussions about environmental and safety matters between the Company ~~purchased a ten year, $100,000~~and federal and state authorities, including notices of violations, citations and other enforcement actions, some of which have resulted or may result in changes to operating procedures and in capital expenditures. While it is often difficult to quantify future environmental ~~insurance policy to insure against unknown environmental liabilities at~~or safety related expenditures, the ~~refinery.~~

~~In connection with the PBFX Plains Asset Purchase, PBFX is responsible~~Company anticipates that continuing capital investments and changes in operating procedures will be required for the ~~environmental remediation costs for conditions that existed on the closing date up~~foreseeable future to ~~a maximum of $250 per year for 10 years,~~comply with ~~Plains All American Pipeline, L.P. remaining responsible for any~~existing and all additional costs above such amounts during such period. The environmental liability of $2,049 recorded as of September 30, 2017 ($2,173 as of December 31, 2016) represents the present value of expected future costs discounted at a rate of 1.83%. The current portion of the environmental liability is recorded in Accrued expenses and the non-current portion is recorded in Other long-term liabilities.

As of November 1, 2015, the Company acquired Chalmette Refining, which was in discussions with the Louisiana Department of Environmental Quality (“LDEQ”) to resolve self-reported deviations from refinery operations relating to certain Clean Air Act Title V permit conditions, limits and other requirements. LDEQ commenced an enforcement action against Chalmette Refining on November 14, 2014 by issuing a Consolidated Compliance Order and Notice of Potential Penalty (the “Order”) covering deviations from 2009 and 2010. Chalmette Refining and LDEQ subsequently entered into a dispute resolution agreement, the enforcement of which has been suspended while negotiations are ongoing, which may include the resolution of deviations outside the periods covered by the Order. In February 2017, Chalmette Refining and the LDEQ met to resolve the issues under the Order, including the assessment of an administrative penalty against Chalmette Refining. Although a resolution has not been finalized, the administrative penalty is anticipated to be approximately $700, including beneficial environmental projects. To the extent the administrative penalty exceeds such amount, it is not expected to be material to the Company.

On December 23, 2016, the Delaware City refinery received a Notice of Violation (“NOV”) from DNREC concerning a potential violation of the DNREC order authorizing the shipment of crude oil by barge from the refinery. The NOV alleges that DCR made shipments to locations other than the Paulsboro refinery in violation of the order and requests certain additional information. On February 7, 2017, DCR responded to the NOV. On March 10, 2017, DNREC issued a $150 fine in a Notice of Penalty Assessment and Secretary’s Order to the Delaware City refinery for violating the 2013 Secretary’s Order. DNREC determined that the Delaware City refinery had violated the order by failing to make timely and full disclosure to DNREC about the nature and extent of those shipments, and had misrepresented the number of shipments that went to other facilities. The penalty assessment and Secretary’s Order conclude that the 2013 Secretary’s Order was violated by the Delaware City refinery by shipping crude oil from the Delaware City terminal to three locations other than the Paulsboro refinery, on 15 days in 2014, making a total of 17 separate barge shipments containing approximately 35.7 million gallons of crude oil in total. On April 28, 2017, DCR appealed the Notice of Penalty Assessment and Secretary’s Order. The hearing of the appeal is scheduled for February 2018. To the extent that the penalty and Secretary’s Order are upheld, there will not be a material adverse effect on the Company’s financial position, results of operations or cash flows.

On December 28, 2016, DNREC issued a Coastal Zone Act permit (the “Ethanol permit”) to DCR allowing the utilization of existing tanks and existing marine loading equipment at their existing facilities to enable denatured ethanol to be loaded from storage tanks to marine vessels and shipped to offsite facilities. On January 13, 2017, the issuance of the Ethanol Permit was appealed by two environmental groups. On February 27, 2017, the Coastal Zone Industrial Board held a public hearing and dismissed the appeal, determining that the appellants did not have standing. The final opinion and order of the Board was issued March 16, 2017. The appellants filed an appeal of the Board’s decision with the Delaware Superior Court on March 30, 2017. On September 28, 2017, the Delaware

~~PBF ENERGY INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA)~~

Superior Court issued it scheduling order governing briefing in the appeal of the Coastal Zone Board’s decision to sustain the permit issued for the ethanol project. The filing of briefs has been scheduled for October and November 2017.

On October 19, 2017, the Delaware City Refinery received approval from DNREC for the construction and operation of the ethanol marketing project to allow for a combined total loading of up to 10,000 bpd, on an annual average basis, of ethanol on to marine vessels at the marine piers and the terminal truck loading rack, subject to certain operational and emissions limitationsnew requirements, as well as ~~other conditions. On the same date, Delaware City Logistics Company LLC received DNREC approval for the construction~~evolving interpretations and more strict enforcement of ~~(i) four additional loading arms for each of lanes 4, 10~~existing laws and 11 for purposes of loading ethanol at its truck loading rack and (ii) a vapor vacuum control system for loading lanes connected to the existing vapor recovery unit located at its terminal in Delaware City. This approval is also subject to certain operational and emission limitations as well as other conditions.

On February 3, 2011, EPA sent a request for information pursuant to Section 114 of the Clean Air Act to the Paulsboro refinery with respect to compliance with EPA standards governing flaring. The refinery and the EPA have reached agreement on settlement, which includes a civil penalty of $180. On July 13, 2017, the U.S. Department of Justice filed with the Court the motion to enter the consent decree. On September 19, 2017, the Court approved the consent decree and in connection therewith the Paulsboro refinery has paid a penalty of $180.regulations.

In connection with the acquisition of the Torrance refinery and related logistics assets, the Company assumed certain pre-existing environmental liabilities totaling ~~$138,511~~$123.2 million as of September 30, ~~2017~~2019 ($~~142,456~~130.8 million as of December 31, ~~2016)~~2018), related to certain environmental remediation obligations to address existing soil and groundwater contamination and monitoring activities and other clean-up activities, which reflects the current estimated cost of the remediation obligations. The current portion of the environmental liability is recorded in Accrued expenses and the non-current portion is recorded in Other long-term liabilities. ~~In addition,~~

The accrued environmental liability reflected in connection with the acquisition of the Torrance refinery and related logistics assets, the Company purchased a ten year, $100,000 environmental insurance policy to insure against unknown environmental liabilities. Furthermore, in connection with the acquisition, the Company assumed responsibility for certain specified environmental matters that occurred prior to the Company’s ~~ownership of the refinery~~Condensed Consolidated Balance Sheets was $136.7 million and the logistics assets, including specified incidents and/or NOVs issued by regulatory agencies in various years before the Company’s ownership, including the Southern California Air Quality Management District (“SCAQMD”)$144.2 million at September 30, 2019 and ~~the Division of Occupational Safety and Health of the State of California (“Cal/OSHA”).~~

Additionally, subsequent to the acquisition, further NOVs were issued by the SCAQMD, Cal/OSHA, the City of Torrance and the City of Torrance Fire Department related to alleged operational violations, emission discharges and/or flaring incidents at the refinery and the logistics assets before and after the Company’s acquisition. With the exception of one NOV for which a proposed settlement is less than $100, no settlement or penalty demands have been received to date with respect to the other NOVs. As the ultimate outcomes are uncertain, the Company cannot currently estimate the final amount or timing of their resolution. It is reasonably possible that SCAQMD, Cal/OSHA and/or the City of Torrance will assess penalties in the other matters in excess of $100 but any such amount is not expected to have a material impact on the Company’s financial position, results of operations or cash flows, individually or in the aggregate.

The Company’s operations and many of the products it manufactures are subject to certain specific requirements of the Clean Air Act (the “CAA”) and related state and local regulations. The CAA contains provisions that require capital expenditures for the installation of certain air pollution control devices at the Company’s refineries. Subsequent rule making authorized by the CAA or similar laws or new agency interpretations of existing rules, may necessitate additional expenditures in future years.

In 2010, New York State adopted a Low-Sulfur Heating Oil mandate that, beginning July 1, 2012, requires all heating oil sold in New York State to contain no more than 15 parts per million (“PPM”) sulfur. Since July 1, 2012, other states in the Northeast market began requiring heating oil sold in their state to contain no more than 15 PPM sulfur. Currently, all of the Northeastern states and Washington DC have adopted sulfur controls on heating oil. Most of the Northeastern states will now require heating oil with 15 PPM or less sulfur by July 1,December 31, 2018, ~~(except~~

~~PBF ENERGY INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA)~~

for Pennsylvania and Maryland - where less than 500 ppm sulfur is required). All of the heating oil the Company currently produces meets these specifications. The mandate and other requirements do not currently have a material impact on the Company’s financial position, results of operations or cash flows.

The EPA issued the final Tier 3 Gasoline standards on March 3, 2014 under the CAA. This final rule establishes more stringent vehicle emission standards and further reduces the sulfur content of gasoline starting in January 2017. The new standard is set at 10 PPM sulfur in gasoline on an annual average basis starting January 1, 2017, with a credit trading program to provide compliance flexibility. The EPA responded to industry comments on the proposed rule and maintained the per gallon sulfur cap on gasoline at the existing 80 PPM cap. The refineries are complying with these new requirements as planned, either directly or using flexibility provided by sulfur credits generated or purchased in advance as an economic optimization. The standards set by the new rule are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

The EPA published the final 2014-2016 standards under the Renewable Fuels Standard (“RFS”) late in 2015 and issued final 2017 RFS standards in November 2016. In July 2017, the EPA issued proposed 2018 RFS standards that, while the Company is still reviewing, appear to slightly reduce renewable volume standards from final 2017 levels. It is not clear that renewable fuel producers will be able to produce the volumes of these fuels required for blending in accordance with the 2017 standards. The final 2017 cellulosic standard is at approximately 135% of the 2016 standard. It is likely that cellulosic RIN production will be lower than needed forcing obligated parties, such as the Company, to purchase cellulosic “waiver credits” to comply in 2017 (the waiver credit option by regulation is only available for the cellulosic standard). The advanced and total RIN requirements were raised (by 7% and 3%, respectively) above the original proposed level in May 2016. Production of advanced RINs has been below what is needed for compliance in 2016. Obligated parties, such as the Company, will likely be relying on the nesting feature of the biodiesel RIN to comply with the advanced standard in 2017. While the Company believes that total RIN production will be adequate for 2016 needs, the new 2017 standard will put obligated parties up against the E10 blendwall leaving little flexibility. Compliance in 2017 will likely rely on obligated parties drawing down the supply of excess RINs collectively known as the “RIN bank” and could tighten the RIN market potentially raising RIN prices further. The Company is supporting a proposal to change the point of obligation under the RFS program to the “blender” of renewable fuels,respectively, of which ~~the new presidential administration may be supportive. Depending on how the new administration addresses this proposal~~$127.4 million and ~~any future changes to the RFS 2 program, there could be a material impact on the Company’s cost of compliance with RFS 2.~~

In addition, on December 1, 2015 the EPA finalized revisions to an existing air regulation concerning Maximum Achievable Control Technologies (“MACT”) for Petroleum Refineries. The regulation requires additional continuous$137.2 million, respectively, were classified as Other long-term liabilities. These accruals include remediation and monitoring systems for eligible process safety valves relieving to atmosphere, minimum flare gas heat (Btu) content, and delayed coke drum vent controls to be installed by January 30, 2019. In addition, a program for ambient fence line monitoring for benzene will need to be implemented by January 30, 2018. The Company is currently evaluating the final standards to evaluate the impact of this regulation, and at this time does not anticipate it will have a material impact on the Company’s financial position, results of operations or cash flows.

The EPA published a Final Rule to the Clean Water Act (“CWA”) Section 316(b) in August 2014 regarding cooling water intake structures, which includes requirements for petroleum refineries. The purpose of this rule is to prevent fish from being trapped against cooling water intake screens (impingement) and to prevent fish from being drawn through cooling water systems (entrainment). Facilities will be required to implement Best Technology Available (“BTA”) as soon as possible, but state agencies have the discretion to establish implementation time lines. The Company continues to evaluate the impact of this regulation, and at this time does not anticipate it having a material impact on the Company’s financial position, results of operations or cash flows.

As a result of the Torrance Acquisition, the Company is subject to greenhouse gas emission control regulations in the state of California pursuant to Assembly Bill 32 (“AB32”). AB32 imposes a statewide cap on greenhouse gas emissions, including emissions from transportation fuels, with the aim of returning the state to 1990 emission levels by 2020. AB32 is implemented through two market mechanisms including the Low Carbon Fuel Standard (“LCFS”) and Cap and Trade, which was extended for an additional 10 years to 2030 in July 2017. The Company is responsible for the AB32 obligationscosts, related to the Torrance refinery, ~~beginning~~as discussed above, and other operating assets, expected to be incurred over an extended period of time. Estimated liabilities could increase in the future when the results of ongoing investigations become known, are considered probable and can be reasonably estimated.

During the first quarter of 2019, PBFX notified certain agencies of an oil sheen present in the Schuylkill River near one of its facilities. Clean-up, identification and mitigation of the source was immediately initiated. PBFX is working on ~~July 1, 2016~~a remedial investigation and ~~must purchase emission~~

~~PBF ENERGY INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA)~~

~~credits to comply~~action plan with ~~these obligations. Additionally, in September 2016,~~ the state ~~of California enacted Senate Bill 32 (“SB32”) which further reduces greenhouse gas emissions targets to 40 percent below 1990 levels by 2030.~~

~~However, subsequent to the acquisition, the Company is recovering the majority of these~~agency. Although response activities are nearly complete, remediation costs from its customers, and as such does not expect this obligation to materially impact the Company’s financial position, results of operations, or cash flows. To the degree there are unfavorable changes to AB32 or SB32 regulations or the Company is unable to recover such compliance costs from customers, these regulations could have a material adverse effect on our financial position, results of operations and cash flows.

On February 15, 2017, the Company received a notification that EPA records indicated that PBF Holding used potentially invalid RINs that were in fact verified under the EPA’s RIN Quality Assurance Program (“QAP”) by an independent auditor as QAP A RINs. Under the regulations, use of potentially invalid QAP A RINs provided the user with an affirmative defense from civil penalties provided certain conditions are met. The Company has asserted the affirmative defense and if accepted by the EPA will not be ~~required to replace these RINs and will not be subject to civil penalties under~~finalized until the ~~program. It~~action plan is ~~reasonably possible that the EPA will not accept the Company’s defense and may assess penalties in these matters but any such amount is~~complete. Incremental costs are not expected to ~~have a~~be material ~~impact on the Company’s financial position, results of operations or cash flows.~~

The Company is also currently subject to certain other existing environmental claims and proceedings. The Company believes that there is only a remote possibility that future costs related to any of these other known contingent liability exposures would have a material impact on its financial position, results of operations or cash flows.

~~PBF LLC Limited Liability Company Agreement~~

The holders of limited liability company interests in PBF LLC, including PBF Energy, generally have to include for purposes of calculating their U.S. federal, state and local income taxes their share of any taxable income of PBF LLC, regardless of whether such holders receive cash distributions from PBF LLC. PBF Energy ultimately may not receive cash distributions from PBF LLC equal to its share of such taxable income or even equal to the actual tax due with respect to that income. For example, PBF LLC is required to include in taxable income PBF LLC’s allocable share of PBFX’s taxable income and gains (such share to be determined pursuant to the partnership agreement of PBFX), regardless of the amount of cash distributions received by PBF LLC from PBFX, and such taxable income and gains will flow-through to PBF Energy to the extent of its allocable share of the taxable income of PBF LLC. As a result, at certain times, the amount of cash otherwise ultimately available to PBF Energy on account of its indirect interest in PBFX may not be sufficient for PBF Energy to pay the amount of taxes it will owe on account of its indirect interests in PBFX.

Taxable income of PBF LLC generally is allocated to the holders of PBF LLC units (including PBF Energy) pro-rata in accordance with their respective share of the net profits and net losses of PBF LLC. In general, 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 are required to be in 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 is required to 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. PBF LLC generally obtains funding to pay its tax distributions by causing PBF Holding to distribute cash to PBF LLC and from distributions it receives from PBFX.

~~PBF ENERGY INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA)~~

Company.

Tax Receivable Agreement

PBF Energy entered into a tax receivable agreement with the PBF LLC Series A and PBF LLC Series B ~~Unit holders~~unitholders (the “Tax Receivable Agreement”) that provides for the payment by PBF Energy to such persons of an amount equal to 85% of the amount of the benefits, if any, that PBF Energy is deemed to realize as a result of (i) increases in tax basis, as described below, and (ii) certain other tax benefits related to entering into the Tax Receivable Agreement, including tax benefits attributable to payments under the Tax Receivable Agreement. For purposes of the Tax Receivable Agreement, the benefits deemed realized by PBF Energy will be computed by comparing the actual income tax liability of PBF Energy (calculated with certain assumptions) to the amount of such taxes that PBF Energy would have been required to pay had there been no increase to the tax basis of the assets of PBF LLC as a result of purchases or exchanges of PBF LLC Series A Units for shares of PBF ~~Energy’s~~Energy Class A common stock and had PBF Energy not entered into the Tax Receivable Agreement. The term of the Tax Receivable Agreement will continue until all such tax benefits have been utilized or expired unless: (i) PBF Energy exercises its right to terminate the Tax Receivable Agreement, (ii) PBF Energy breaches any of its material obligations under the Tax Receivable Agreement or (iii) certain changes of control occur, in which case all obligations under the Tax Receivable Agreement will generally be accelerated and due as calculated under certain assumptions.

PBF ENERGY INC. AND PBF ENERGY COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The payment obligations under the Tax Receivable Agreement are obligations of PBF Energy and not of PBF LLC, PBF Holding or PBFX. In general, PBF Energy expects to obtain funding for these annual payments from PBF LLC, primarily through tax distributions, which PBF LLC makes on a pro-rata basis to its owners. Such owners include PBF Energy, which holds a ~~96.6%~~99.0% interest in PBF LLC as of September 30, ~~2017 (96.5%~~2019 (99.0% as of December 31, ~~2016)~~2018). PBF LLC generally obtains funding to pay its tax distributions by causing PBF Holding to distribute cash to PBF LLC and from distributions it receives from PBFX.

As of September 30, ~~2017, the Company~~2019, PBF Energy has recognized a liability for the ~~tax receivable agreement~~Tax Receivable Agreement of ~~$610,827~~$373.5 million ($~~611,392~~373.5 million as of December 31, ~~2016)~~2018) reflecting the estimate of the undiscounted amounts that the Company expects to pay under the agreement.

~~11.~~

8. LEASES

The Company leases office space, office equipment, refinery facilities and equipment, railcars and other logistics assets primarily under non-cancelable operating leases, with terms typically ranging from one to twenty years, subject to certain renewal options as applicable. The Company considers those renewal or termination options that are reasonably certain to be exercised in the determination of the lease term and initial measurement of lease liabilities and right-of-use assets. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. Interest expense for finance leases is incurred based on the carrying value of the lease liability. Leases with an initial term of 12 months or less are not recorded on the balance sheet.

The Company determines whether a contract is or contains a lease at inception of the contract and whether that lease meets the classification criteria of a finance or operating lease. When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of the Company’s leases do not provide a readily determinable implicit rate. Therefore, the Company must discount lease payments based on an estimate of its incremental borrowing rate.

The Company does not separate lease and nonlease components of contracts for any of its asset classes. There are no material residual value guarantees associated with any of the Company’s leases. There are no significant restrictions or covenants included in the Company’s lease agreements other than those that are customary in such arrangements. Certain of the Company’s leases, primarily for the Company’s commercial and logistics asset classes, include provisions for variable payments. These variable payments are typically determined based on a measure of throughput or actual days the asset is operated during the contract term or another measure of usage and are not included in the initial measurement of lease liabilities and right-of-use assets.

PBF ENERGY INC. AND PBF ENERGY COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Lease Position as of September 30, 2019

The table below presents the lease related assets and liabilities recorded on the Company’s Condensed Consolidated Balance Sheets as of September 30, 2019:



(in millions)	Classification on the Balance Sheet	September 30, 2019
Assets
Operating lease assets	Operating lease right of use assets	$	331.3
Finance lease assets	Deferred charges and other assets, net	13.8
Total lease right of use assets		$	345.1

Liabilities
Current liabilities:
Operating lease liabilities	Current operating lease liabilities	$	78.2
Finance lease liabilities	Accrued expenses	1.1
Noncurrent liabilities:
Operating lease liabilities	Long-term operating lease liabilities	252.1
Finance lease liabilities	Other long-term liabilities	13.1
Total lease liabilities		$	344.5

Lease Costs

The table below presents certain information related to costs for the Company’s leases for the three and nine months ended September 30, 2019:



Lease Costs (in millions)	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Components of total lease cost:
Finance lease cost
Amortization of right of use assets	$	0.3	$	0.7
Interest on lease liabilities	0.3		0.5
Operating lease cost	28.4		80.6
Short-term lease cost	22.4		70.8
Variable lease cost	2.0		5.5
Total lease cost	$	53.4	$	158.1

There were no net gains or losses on any sale-leaseback transactions for the three and nine months ended September 30, 2019.

PBF ENERGY INC. AND PBF ENERGY COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Other Information

The table below presents supplemental cash flow information related to leases for the nine months ended September 30, 2019 (in millions):



Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	81.3
Operating cash flows for finance leases	0.5
Financing cash flows for finance leases	0.4
Supplemental non-cash amounts of lease liabilities arising from obtaining right-of-use assets	172.1

Lease Term and Discount Rate

The table below presents certain information related to the weighted average remaining lease term and weighted average discount rate for the Company’s leases as of September 30, 2019:



Weighted average remaining lease term - operating leases	12.5 years
Weighted average remaining lease term - finance leases	9.5 years

Weighted average discount rate - operating leases	7.43	%
Weighted average discount rate - finance leases	6.83	%

Undiscounted Cash Flows

The table below reconciles the fixed component of the undiscounted cash flows for each of the periods presented to the lease liabilities recorded on the Condensed Consolidated Balance Sheets as of September 30, 2019:



Amounts due within twelve months of September 30, (in millions)	Finance Leases		Operating Leases
2019	$	2.0	$	100.1
2020	2.0		69.2
2021	2.0		42.8
2022	2.0		35.3
2023	2.0		30.6
Thereafter	9.4		242.3
Total minimum lease payments	19.4		520.3
Less: effect of discounting	5.2		190.0
Present value of future minimum lease payments	14.2		330.3
Less: current obligations under leases	1.1		78.2
Long-term lease obligations	$	13.1	$	252.1

As of September 30, 2019, the Company has entered certain leases that have not yet commenced. Such leases include a 15-year lease for hydrogen supply, with future lease payments estimated to total approximately $212.6 million, expected to commence in the second quarter of 2020. No other such pending leases, either individually or in the aggregate, are material. There are no material lease arrangements in which the Company is the lessor.

PBF ENERGY INC. AND PBF ENERGY COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

9. EQUITY

Noncontrolling Interest in PBF LLC

PBF Energy is the sole managing member of, and has a controlling interest in, PBF LLC. As the sole managing member of PBF LLC, PBF Energy operates and controls all of the business and affairs of PBF LLC and its subsidiaries. PBF Energy’s equity interest in PBF LLC was approximately 99.0% as of September 30, 2019 and December 31, 2018, respectively.

PBF Energy consolidates the financial results of PBF LLC and its subsidiaries, and records a noncontrolling interest for the economic interest in PBF Energy held by the members of PBF LLC other than PBF Energy. Noncontrolling interest on the Condensed Consolidated Statements of Operations includes the portion of net income or loss attributable to the economic interest in PBF Energy held by the members of PBF LLC other than PBF Energy. Noncontrolling interest on the Condensed Consolidated Balance Sheets represents the portion of net assets of PBF Energy attributable to the members of PBF LLC other than PBF Energy.

The noncontrolling interest ownership percentages in PBF LLC as of September 30, 2019 and December 31, 2018 are calculated as follows:



	Holders of PBF LLC Series A Units		Outstanding Shares of PBF Energy Class A Common Stock		Total *
December 31, 2018	1,206,325		119,874,191		121,080,516
	1.0	%	99.0	%	100.0	%
September 30, 2019	1,206,325		119,902,824		121,109,149
	1.0	%	99.0	%	100.0	%

——————————


*	Assumes all of the holders of PBF LLC Series A Units exchange their PBF LLC Series A Units for shares of PBF Energy’s Class A common stock on a 1-for-one basis.

Noncontrolling Interest in PBFX

PBF LLC held a 48.2% limited partner interest in PBFX with the remaining 51.8% limited partner interest owned by the public common unitholders as of September 30, 2019. PBF LLC is also the sole member of PBF GP, the general partner of PBFX. As noted in “Note 2 - PBF Logistics LP”, pursuant to the IDR Restructuring, the IDRs held by PBF LLC were canceled and converted into newly issued common units. In addition, PBFX issued 6,585,500 common units to certain institutional investors in connection with the PBFX Registered Direct Offering on April 29, 2019.

PBF Energy, through its ownership of PBF LLC, consolidates the financial results of PBFX, and records a noncontrolling interest for the economic interest in PBFX held by the public common unitholders. Noncontrolling interest on the Condensed Consolidated Statements of Operations includes the portion of net income or loss attributable to the economic interest in PBFX held by the public common unitholders of PBFX other than PBF Energy (through its ownership in PBF LLC). Noncontrolling interest on the Condensed Consolidated Balance Sheets includes the portion of net assets of PBFX attributable to the public common unitholders of PBFX.

PBF ENERGY INC. AND PBF ENERGY COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The noncontrolling interest ownership percentages in PBFX as of December 31, 2018, the closing of the PBFX Registered Direct Offering and September 30, 2019 are calculated as follows:



	Units of PBFX Held by the Public		Units of PBFX Held by PBF LLC		Total
December 31, 2018	25,395,032		19,953,631		45,348,663
	56.0	%	44.0	%	100.0	%
April 29, 2019 - PBFX Registered Direct Offering	32,047,718		29,953,631		62,001,349
	51.7	%	48.3	%	100.0	%
September 30, 2019	32,157,201		29,953,631		62,110,832
	51.8	%	48.2	%	100.0	%

Noncontrolling Interest in PBF Holding

In connection with the Chalmette Acquisition, PBF Holding recorded noncontrolling interests in 2 subsidiaries of Chalmette Refining. PBF Holding, through Chalmette Refining, owns an 80% ownership interest in both Collins Pipeline Company and T&M Terminal Company. In both the three and nine months ended September 30, 2019 and 2018 the Company recorded noncontrolling interest in the earnings of these subsidiaries of less than $0.2 million.

PBF ENERGY INC. AND PBF ENERGY COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Changes in Equity and Noncontrolling Interests

The following tables summarize the changes in equity for the controlling and noncontrolling interests of PBF Energy for the nine months ended September 30, 2019 and 2018, respectively:



PBF Energy (in millions)	PBF Energy Inc. Equity			Noncontrolling Interest in PBF LLC			Noncontrolling Interest in PBF Holding		Noncontrolling Interest in PBFX			Total Equity
Balance at January 1, 2019	$	2,676.5		$	112.2		$	10.9	$	448.9		$	3,248.5
Comprehensive income	267.5			3.6			0.1		36.0			307.2
Dividends and distributions	(107.9		)	(2.7		)	—		(47.0		)	(157.6		)
Issuance of additional PBFX common units	152.0			—			—		(19.5		)	132.5
Stock-based compensation	20.3			—			—		5.6			25.9
Exercise of PBF LLC and PBF Energy options and warrants, net	0.2			—			—		—			0.2
Other	(0.9		)	—			—		(1.5		)	(2.4		)
Balance at September 30, 2019	$	3,007.7		$	113.1		$	11.0	$	422.5		$	3,554.3



PBF Energy (in millions)	PBF Energy Inc. Equity			Noncontrolling Interest in PBF LLC			Noncontrolling Interest in PBF Holding		Noncontrolling Interest in PBFX			Total Equity
Balance at January 1, 2018	$	2,336.6		$	110.2		$	10.8	$	445.3		$	2,902.9
Comprehensive income	482.6			9.8			—		30.1			522.5
Dividends and distributions	(103.4		)	(1.7		)	—		(36.5		)	(141.6		)
Effects of exchanges of PBF LLC Series A Units on deferred tax assets and liabilities and Tax Receivable Agreement obligation	(2.8		)	—			—		—			(2.8		)
Stock-based compensation	14.1			—			—		4.5			18.6
Issuance of additional PBFX common units	28.6			—			—		6.3			34.9
August 2018 Equity Offering	287.3			—			—		—			287.3
Exercise of PBF LLC and PBF Energy options and warrants, net	14.0			(0.3		)	—		—			13.7
Other	10.9			—			—		(1.1		)	9.8
Balance at September 30, 2018	$	3,067.9		$	118.0		$	10.8	$	448.6		$	3,645.3

PBF ENERGY INC. AND PBF ENERGY COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following tables summarize the changes in equity for the controlling and noncontrolling interests of PBF LLC for the nine months ended September 30, 2019 and 2018, respectively:



PBF LLC (in millions)	PBF Energy Company LLC Equity			Noncontrolling Interest in PBF Holding		Noncontrolling Interest in PBFX			Total Equity
Balance at January 1, 2019	$	2,759.6		$	10.9	$	448.9		$	3,219.4
Comprehensive income	364.6			0.1		36.0			400.7
Dividends and distributions	(163.8		)	—		(47.0		)	(210.8		)
Exercise of PBF LLC options and warrants, net	(0.8		)	—		—			(0.8		)
Issuance of additional PBFX common units	152.0			—		(19.5		)	132.5
Stock-based compensation	20.3			—		5.6			25.9
Other	—			—		(1.5		)	(1.5		)
Balance at September 30, 2019	$	3,131.9		$	11.0	$	422.5		$	3,565.4



PBF LLC (in millions)	PBF Energy Company LLC Equity			Noncontrolling Interest in PBF Holding		Noncontrolling Interest in PBFX			Total Equity
Balance at January 1, 2018	$	2,422.4		$	10.8	$	445.3		$	2,878.5
Comprehensive income	652.7			—		30.1			682.8
Dividends and distributions	(105.1		)	—		(36.5		)	(141.6		)
Issuance of Series C units in connection with the August 2018 Equity Offering	287.3			—		—			287.3
Issuance of additional PBFX common units	28.6			—		6.3			34.9
Stock-based compensation	14.1			—		4.5			18.6
Exercise of PBF LLC and PBF Energy options and warrants, net	(3.8		)	—		—			(3.8		)
Other	11.3			—		(1.1		)	10.2
Balance at September 30, 2018	$	3,307.5		$	10.8	$	448.6		$	3,766.9

10. DIVIDENDS AND DISTRIBUTIONS

With respect to dividends and distributions paid during the nine months ended September 30, ~~2017,~~2019, PBF LLC made an aggregate non-tax quarterly ~~distributions~~distribution of ~~$0.90~~$109.0 million, or $0.30 per unit to its members, of which ~~$98,723~~$107.9 million was distributed pro-rata to PBF Energy and the balance was distributed to its other members. PBF Energy used this ~~$98,723~~$107.9 million to pay a quarterly cash ~~dividends~~dividend of $0.30 per share of Class A common stock on March ~~13, 2017,~~14, 2019, May ~~31, 2017~~30, 2019 and August ~~31, 2017.~~30, 2019. In addition, during the nine months ended September 30, 2019, PBF LLC made aggregate tax distributions to its members of $54.8 million, of which $53.2 million was made to PBF Energy.

With respect to distributions paid during the nine months ended September 30, ~~2017,~~2019, PBFX paid a distribution on outstanding common ~~and subordinated~~ units of ~~$0.45~~$0.505 per unit on March ~~13, 2017, $0.46~~14, 2019, $0.510 per unit on May ~~31, 2017~~30, 2019 and ~~$0.47~~0.515 per unit on August ~~31, 2017,~~30, 2019, of which ~~$30,533~~$45.8 million was distributed to PBF LLC and the balance was distributed to its public ~~unit holders.~~unitholders.

PBF ENERGY INC. AND PBF ENERGY COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA)~~

~~12.~~11. EMPLOYEE BENEFIT PLANS

The components of net periodic benefit cost related to the Company’s defined benefit plans consisted of the following:


	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)													Three Months Ended September 30,						Nine Months Ended September 30,
Pension Benefits	2017			2016			2017			2016			2019			2018			2019			2018
Components of net periodic benefit cost:
Service cost	$	10,142		$	10,064		$	30,429		$	24,743		$	10.9		$	11.9		$	32.7		$	35.5
Interest cost	1,084			772			3,252			2,323			2.0			1.5			6.2			4.3
Expected return on plan assets	(1,441		)	(1,234		)	(4,325		)	(3,447		)	(2.3		)	(2.2		)	(7.1		)	(6.4		)
Amortization of prior service cost	13			13			39			39
Amortization of actuarial loss (gain)	113			328			339			716
Amortization of prior service cost and actuarial loss													0.1			0.1			0.2			0.3
Net periodic benefit cost	$	9,911		$	9,943		$	29,734		$	24,374		$	10.7		$	11.3		$	32.0		$	33.7



(in millions)	Three Months Ended September 30,				Nine Months Ended September 30,
Post-Retirement Medical Plan	2019		2018		2019		2018
Components of net periodic benefit cost:
Service cost	$	0.2	$	0.4	$	0.7	$	0.9
Interest cost	0.2		0.1		0.5		0.5
Amortization of prior service cost and actuarial loss	0.1		0.2		0.4		0.5
Net periodic benefit cost	$	0.5	$	0.7	$	1.6	$	1.9

Three Months Ended
September 30, Nine Months Ended
September 30,
Post-Retirement Medical Plan 2017 2016 2017 2016
Components of net periodic benefit cost:
Service cost $ 316
$ 304
$ 948
$ 743
Interest cost 172
131
516
398
Amortization of prior service cost 162
161
484
379
Amortization of actuarial loss (gain) —
—
—
—
Net periodic benefit cost $ 650
$ 596
$ 1,948
$ 1,520

PBF ENERGY INC. AND PBF ENERGY COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT~~

12. REVENUES

Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

As described in “Note 16 - Segment Information”, the Company’s business consists of the Refining Segment and Logistics Segment. The following table provides information relating to the Company’s revenues for each product or group of similar products or services by segment for the periods presented.



	Three Months Ended September 30,
(in millions)	2019			2018
Refining Segment:
Gasoline and distillates	$	5,658.6		$	6,227.5
Asphalt and blackoils	321.3			544.9
Feedstocks and other	188.1			552.3
Chemicals	183.0			243.1
Lubricants	71.1			74.1
Total	6,422.1			7,641.9
Logistics Segment:
Logistics	86.4			70.6
Total revenues prior to eliminations	6,508.5			7,712.5
Elimination of intercompany revenues	(78.0		)	(66.2		)
Total Revenues	$	6,430.5		$	7,646.3



	Nine Months Ended September 30,
(in millions)	2019			2018
Refining Segment:
Gasoline and distillates	$	15,662.3		$	17,563.6
Asphalt and blackoils	1,206.1			1,251.0
Feedstocks and other	592.7			1,193.7
Chemicals	512.3			621.8
Lubricants	209.3			250.5
Total	18,182.7			20,880.6
Logistics Segment:
Logistics	248.0			203.4
Total revenues prior to eliminations	18,430.7			21,084.0
Elimination of intercompany revenues	(224.0		)	(190.8		)
Total Revenues	$	18,206.7		$	20,893.2

PBF ENERGY INC. AND ~~BARREL DATA)~~PBF ENERGY COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The majority of the Company’s revenues are generated from the sale of refined petroleum products reported in the Refining segment. These revenues are largely based on the current spot (market) prices of the products sold, which represent consideration specifically allocable to the products being sold on a given day, and the Company recognizes those revenues upon delivery and transfer of title to the products to our customers. The time at which delivery and transfer of title occurs is the point when the Company’s control of the products is transferred to the Company’s customers and when its performance obligation to its customers is fulfilled. Delivery and transfer of title are specifically agreed to between the Company and customers within the contracts. The Refining segment also has contracts which contain fixed pricing, tiered pricing, minimum volume features with makeup periods, or other factors that have not materially been affected by ASC 606.

The Company’s logistics segment revenues are generated by charging fees for crude oil and refined products terminaling, storage and pipeline services based on the greater of contractual minimum volume commitments, as applicable, or the delivery of actual volumes based on contractual rates applied to throughput or storage volumes. A majority of the Company’s logistics revenues are generated by intercompany transactions and are eliminated in consolidation.

Deferred Revenues

The Company records deferred revenues when cash payments are received or are due in advance of performance, including amounts which are refundable. Deferred revenue was $13.1 million and $20.1 million as of September 30, 2019 and December 31, 2018, respectively. Fluctuations in the deferred revenue balance are primarily driven by the timing and extent of cash payments received or due in advance of satisfying the Company’s performance obligations.

The Company’s payment terms vary by type and location of customers and the products offered. The period between invoicing and when payment is due is not significant (i.e. generally within two months). For certain products or services and customer types, the Company requires payment before the products or services are delivered to the customer.

13. INCOME TAXES

PBF Energy files federal and applicable state corporate income tax returns and recognizes income taxes on its pre-tax income, which to date has consisted primarily of its share of PBF LLC’s pre-tax income (approximately 99.0% as of September 30, 2019 and December 31, 2018, respectively). PBF LLC is organized as a limited liability company and PBFX is an MLP, both of which are treated as “flow-through” entities for federal income tax purposes and therefore are not subject to income taxes apart from the income tax attributable to the 2 subsidiaries acquired in connection with the acquisition of Chalmette Refining and PBF Holding’s wholly-owned Canadian subsidiary, PBF Ltd, that are treated as C-Corporations for income tax purposes.

The reported income tax provision in the PBF Energy Condensed Consolidated Statements of Operations consists of the following:



	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2019		2018		2019		2018
Current income tax expense	$	0.6	$	—	$	2.4	$	0.8
Deferred income tax expense	21.4		61.3		89.6		167.0
Total income tax expense	$	22.0	$	61.3	$	92.0	$	167.8

PBF ENERGY INC. AND PBF ENERGY COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The income tax provision is based on earnings before taxes attributable to PBF Energy and excludes earnings before taxes attributable to noncontrolling interests as such interests are generally not subject to income taxes except as noted above. The difference between PBF Energy’s effective income tax rate and the United States statutory rate is reconciled below:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Provision at Federal statutory rate	21.0	%	21.0	%	21.0	%	21.0	%
Increase (decrease) attributable to flow-through of certain tax adjustments:
State income taxes (net of federal income tax)	5.4	%	5.6	%	5.5	%	5.9	%
Nondeductible/nontaxable items	—	%	(0.5	)%	0.5	%	(0.1	)%
Rate differential from foreign jurisdictions	(0.6	)%	(0.2	)%	(0.7	)%	(0.2	)%
Other	(1.8	)%	(0.4	)%	(0.6	)%	(0.8	)%
Effective tax rate	24.0	%	25.5	%	25.7	%	25.8	%

PBF Energy’s effective income tax rate for the three and nine months ended September 30, 2019, including the impact of income attributable to noncontrolling interests of $16.8 million and $39.7 million, respectively, was 20.3% and 23.1%, respectively. PBF Energy’s effective income tax rate for the three and nine months ended September 30, 2018, including the impact of income attributable to noncontrolling interests of $12.9 million and $39.9 million, respectively, was 24.2% and 24.3%, respectively.

The reported income tax provision in the PBF LLC Condensed Consolidated Statements of Operations consists of the following:



	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2019			2018			2019			2018
Current income tax expense	$	0.2		$	—		$	0.1		$	—
Deferred income tax benefit	(2.2		)	(0.8		)	(7.5		)	(5.5		)
Total income tax benefit	$	(2.0	)	$	(0.8	)	$	(7.4	)	$	(5.5	)

The Company has determined there are 0 material uncertain tax positions as of September 30, 2019. The Company does not have any unrecognized tax benefits.

PBF ENERGY INC. AND PBF ENERGY COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

14. FAIR VALUE MEASUREMENTS

The tables below present information about the Company’s financial assets and liabilities measured and recorded at fair value on a recurring basis and indicate the fair value hierarchy of the inputs utilized to determine the fair values as of September 30, ~~2017~~2019 and December 31, ~~2016~~2018.

~~We have~~The Company has elected to offset the fair value amounts recognized for multiple derivative contracts executed with the same counterparty; however, fair value amounts by hierarchy level are presented on a gross basis in the tables below. ~~We have~~The Company has posted cash margin with various counterparties to support hedging and trading activities. The cash margin posted is required by counterparties as collateral deposits and cannot be offset against the fair value of open contracts except in the event of default. ~~We have~~The Company has no derivative contracts that are subject to master netting arrangements that are reflected gross on the ~~balance sheet.~~Condensed Consolidated Balance Sheets.


	As of September 30, 2017												As of September 30, 2019
	Fair Value Hierarchy						Total Gross Fair Value		Effect of Counter-party Netting		Net Carrying Value on Balance Sheet		Fair Value Hierarchy						Total Gross Fair Value			Effect of Counter-party Netting			Net Carrying Value on Balance Sheet
	Level 1		Level 2		Level 3
(in millions)													Level 1		Level 2		Level 3		Total Gross Fair Value			Effect of Counter-party Netting			Net Carrying Value on Balance Sheet
Assets:
Money market funds	$	24,829	$	—	$	—	$	24,829	N/A		$	24,829	$	17.6	$	—	$	—		$	17.6			N/A		$	17.6
Commodity contracts	18,257		4,248		—		22,505		(22,505	)	—		8.4		5.5		—		13.9			(11.3	)		2.6
Derivatives included with inventory intermediation agreement obligations													—		12.7		—		12.7			—			12.7
Liabilities:
Commodity contracts	11,671		15,850		—		27,521		(22,505	)	5,016		9.2		2.1		—		11.3			(11.3	)		—
Catalyst lease obligations	—		46,981		—		46,981		—		46,981		—		47.2		—		47.2			—			47.2
Derivatives included with inventory intermediation agreement obligations	—		20,601		—		20,601		—		20,601



	As of December 31, 2018
	Fair Value Hierarchy						Total Gross Fair Value		Effect of Counter-party Netting		Net Carrying Value on Balance Sheet
(in millions)	Level 1		Level 2		Level 3		Total Gross Fair Value		Effect of Counter-party Netting		Net Carrying Value on Balance Sheet
Assets:
Money market funds	$	16.7	$	—	$	—	$	16.7	N/A		$	16.7
Commodity contracts	1.2		8.9		—		10.1		(2.9	)	7.2
Derivatives included with inventory intermediation agreement obligations	—		24.1		—		24.1		—		24.1
Liabilities:
Commodity contracts	2.7		0.2		—		2.9		(2.9	)	—
Catalyst lease obligations	—		44.3		—		44.3		—		44.3

As of December 31, 2016
Fair Value Hierarchy Total Gross Fair Value Effect of Counter-party Netting Net Carrying Value on Balance Sheet
Level 1 Level 2 Level 3
Assets:
Money market funds $ 342,837
$ —
$ —
$ 342,837
N/A
$ 342,837
Marketable securities 40,024
—
—
40,024
N/A
40,024
Commodity contracts 948
35
—
983
(983 ) —
Derivatives included with inventory intermediation agreement obligations —
6,058
—
6,058
—
6,058
Liabilities:
Commodity contracts 859
3,548
84
4,491
(983 ) 3,508
Catalyst lease obligations —
45,969
—
45,969
—
45,969

PBF ENERGY INC. AND PBF ENERGY COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA)~~

The valuation methods used to measure financial instruments at fair value are as follows:

Money market funds categorized in Level 1 of the fair value hierarchy are measured at fair value based on quoted market prices and included within Cash and cash equivalents.

~~Marketable securities, consisting primarily of US Treasury securities, categorized in Level 1 of the fair value hierarchy are measured at fair value based on quoted market prices.~~

The commodity contracts categorized in Level 1 of the fair value hierarchy are measured at fair value based on quoted prices in an active market. The commodity contracts categorized in Level 2 of the fair value hierarchy are measured at fair value using a market approach based upon future commodity prices for similar instruments quoted in active markets.

~~The commodity contracts categorized in Level 3 of the fair value hierarchy consist of~~commodity price swap contracts that relate to forecasted purchases of crude oil for which quoted forward market prices are not readily available due to market illiquidity. The forward prices used to value these swaps were derived using broker quotes, prices from other third party sources and other available market based data.

The derivatives included with inventory intermediation agreement obligations and the catalyst lease obligations are categorized in Level 2 of the fair value hierarchy and are measured at fair value using a market approach based upon commodity prices for similar instruments quoted in active markets.

Non-qualified pension plan assets are measured at fair value using a market approach based on published net asset values of mutual funds as a practical expedient. As of September 30, ~~2017~~2019 and December 31, ~~2016, $9,642~~2018, $10.4 million and ~~$9,440,~~$9.7 million, respectively, were included within Deferred charges and other assets, net for these non-qualified pension plan assets.

~~The table below summarizes the changes in fair value measurements of commodity contracts categorized in Level 3 of the fair value hierarchy:~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Balance at beginning of period $ —
$ 493
$ (84 ) $ 3,543
Purchases —
—
—
—
Settlements —
(90 ) 45
(1,093 )
Unrealized gain (loss) included in earnings —
(21 ) 39
(2,068 )
Transfers into Level 3 —
—
—
—
Transfers out of Level 3 —
—
—
—
Balance at end of period $ —
$ 382
$ —
$ 382

There were no0 transfers between levels during the three and nine months ended September 30, ~~2017~~2019 or ~~2016~~.

~~PBF ENERGY INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA)~~

2018.

Fair value of debt

The table below summarizes the ~~fair~~carrying value and ~~carrying~~fair value of debt as of September 30, ~~2017~~2019 and December 31, ~~2016~~.2018.

September 30, 2017 December 31, 2016

Carrying
value

Fair
value

Carrying
value

Fair
value
Senior secured notes due 2020 (a) $ —
$ —
$ 670,867
$ 696,098
Senior notes due 2023 (a) (d) 500,000
514,575
500,000
498,801
Senior notes due 2025 (a) 725,000
740,982
—
—
PBFX Senior Notes (a) 350,000
362,148
350,000
346,135
PBFX Term Loan (b) —
—
39,664
39,664
PBF Rail Term Loan (b) 30,041
30,041
35,000
35,000
Catalyst leases (c) 46,981
46,981
45,969
45,969
PBFX Revolving Credit Facility (b) 189,200
189,200
189,200
189,200
Revolving Loan (b) 350,000
350,000
350,000
350,000
2,191,222
2,233,927
2,180,700
2,200,867
Less - Current maturities —
—
39,664
39,664
Less - Unamortized deferred financing costs 32,885
n/a
32,466
n/a
Long-term debt $ 2,158,337
$ 2,233,927
$ 2,108,570
$ 2,161,203



	September 30, 2019					December 31, 2018
(in millions)	Carrying value			Fair value		Carrying value			Fair value
2025 Senior Notes (a)	$	725.0		$	753.2	$	725.0		$	688.4
2023 Senior Notes (a)	500.0			518.5		500.0			479.4
PBFX 2023 Senior Notes (a)	527.4			543.1		527.8			515.3
PBF Rail Term Loan (b)	16.3			16.3		21.6			21.6
Catalyst leases (c)	47.2			47.2		44.3			44.3
PBFX Revolving Credit Facility (b)	283.0			283.0		156.0			156.0
	2,098.9			2,161.3		1,974.7			1,905.0
Less - Current debt	—			—		(2.4		)	(2.4		)
Less - Unamortized deferred financing costs	(34.6		)	n/a		(41.0		)	n/a
Long-term debt	$	2,064.3		$	2,161.3	$	1,931.3		$	1,902.6

(a) The estimated fair value, 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 ~~senior secured notes,~~7.00% senior notes due 2023, the 7.25% senior notes due 2025 (collectively with the senior notes due 2023, the “Senior Notes”), and the PBFX 6.875% senior notes due 2023 (the “PBFX 2023 Senior ~~Notes.~~Notes”).

(b) The estimated fair value approximates carrying value, categorized as a Level 2 measurement, as these borrowings bear interest based upon short-term floating market interest rates.

(c) Catalyst leases are valued using a market approach based upon commodity prices for similar instruments quoted in active markets and are categorized as a Level 2 measurement. The Company has elected the fair value option for accounting for its catalyst lease repurchase obligations as the Company’s liability is directly impacted by the change in fair value of the underlying catalyst.

~~(d) As discussed in “Note 7 - Debt”, these notes became unsecured following the Collateral Fall-Away Event on May 30, 2017.~~

~~14.~~

PBF ENERGY INC. AND PBF ENERGY COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

15. DERIVATIVES

The Company uses derivative instruments to mitigate certain exposures to commodity price risk. The Company entered into ~~the A&R~~Inventory Intermediation Agreements that contain purchase obligations for certain volumes of crude oil, intermediates and refined products. The purchase obligations related to crude oil, intermediates and refined products under these agreements are derivative instruments that have been designated as fair value hedges in order to hedge the commodity price volatility of certain refinery inventory. The fair value of these purchase obligation derivatives is based on market prices of the underlying crude oil, intermediates and refined products. The level of activity for these derivatives is based on the level of operating inventories.

As of September 30, ~~2017,~~2019, there were ~~3,306,154~~200,894 barrels of crude oil and feedstocks (0 barrels at December 31, 2018) outstanding under these derivative instruments designated as fair value hedges. As of September 30, 2019, there were 2,851,543 barrels of intermediates and refined products ~~(2,942,348~~(3,350,166 barrels at December 31, ~~2016)~~2018) outstanding under these derivative instruments designated as fair value hedges. These volumes represent the notional value of the contract.

~~PBF ENERGY INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA)~~

The Company also enters into economic hedges primarily consisting of commodity derivative contracts that are not designated as hedges and are used to manage price volatility in certain crude oil and feedstock inventories as well as crude oil, feedstock, and refined product sales or purchases. The objective in entering into economic hedges is consistent with the objectives discussed above for fair value hedges. As of September 30, ~~2017,~~2019, there were ~~37,496,000~~3,997,000 barrels of crude oil and ~~8,163,000~~4,500,000 barrels of refined products ~~(5,950,000~~(5,801,000 and ~~2,831,000,~~1,609,000, respectively, as of December 31, ~~2016)~~2018), outstanding under short and long term commodity derivative contracts not designated as hedges representing the notional value of the contracts.

The following tables provide information about the fair values of these derivative instruments as of September 30, ~~2017~~2019 and December 31, ~~2016~~2018 and the line items in the ~~condensed consolidated balance sheet~~Condensed Consolidated Balance Sheets in which the fair values are reflected.



Description	Balance Sheet Location	Fair Value Asset/(Liability)
		(in millions)
Derivatives designated as hedging instruments:
September 30, 2019:
Derivatives included with the inventory intermediation agreement obligations	Accrued expenses	$	12.7
December 31, 2018:
Derivatives included with the inventory intermediation agreement obligations	Accrued expenses	$	24.1

Derivatives not designated as hedging instruments:
September 30, 2019:
Commodity contracts	Accounts receivable	$	2.6
December 31, 2018:
Commodity contracts	Accounts receivable	$	7.2

Description

Balance Sheet Location
Fair Value
Asset/(Liability)
Derivatives designated as hedging instruments:
September 30, 2017:
Derivatives included with the inventory intermediation agreement obligations Accrued expenses $ (20,601 )
December 31, 2016:
Derivatives included with the inventory intermediation agreement obligations Accrued expenses $ 6,058

Derivatives not designated as hedging instruments:
September 30, 2017:
Commodity contracts Accrued expenses $ (5,016 )
December 31, 2016:
Commodity contracts Accrued expenses $ 3,508

PBF ENERGY INC. AND PBF ENERGY COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA)~~

The following table provides information about the gains or losses recognized in income on these derivative instruments and the line items in the ~~condensed consolidated statements~~Condensed Consolidated Statements of ~~operations~~Operations in which such gains and losses are reflected.



Description	Location of Gain or (Loss) Recognized in Income on Derivatives	Gain or (Loss) Recognized in Income on Derivatives
		(in millions)
Derivatives designated as hedging instruments:
For the three months ended September 30, 2019:
Derivatives included with the inventory intermediation agreement obligations	Cost of products and other	$	23.6
For the three months ended September 30, 2018:
Derivatives included with the inventory intermediation agreement obligations	Cost of products and other	$	(8.2	)
For the nine months ended September 30, 2019:
Derivatives included with the inventory intermediation agreement obligations	Cost of products and other	$	(11.4	)
For the nine months ended September 30, 2018:
Derivatives included with the inventory intermediation agreement obligations	Cost of products and other	$	(10.7	)

Derivatives not designated as hedging instruments:
For the three months ended September 30, 2019:
Commodity contracts	Cost of products and other	$	2.2
For the three months ended September 30, 2018:
Commodity contracts	Cost of products and other	$	(9.5	)
For the nine months ended September 30, 2019:
Commodity contracts	Cost of products and other	$	34.8
For the nine months ended September 30, 2018:
Commodity contracts	Cost of products and other	$	(55.9	)

Hedged items designated in fair value hedges:
For the three months ended September 30, 2019:
Crude oil, intermediate and refined product inventory	Cost of products and other	$	(23.6	)
For the three months ended September 30, 2018:
Intermediate and refined product inventory	Cost of products and other	$	8.2
For the nine months ended September 30, 2019:
Crude oil, intermediate and refined product inventory	Cost of products and other	$	11.4
For the nine months ended September 30, 2018:
Intermediate and refined product inventory	Cost of products and other	$	10.7

Description
Location of Gain or (Loss) Recognized in
Income on Derivatives
Gain or (Loss)
Recognized in
Income on Derivatives
Derivatives designated as hedging instruments:
For the three months ended September 30, 2017:
Derivatives included with the inventory intermediation agreement obligations
Cost of products and other

$ (29,766 )
For the three months ended September 30, 2016:
Derivatives included with the inventory intermediation agreement obligations
Cost of products and other

$ (3,145 )
For the nine months ended September 30, 2017:
Derivatives included with the inventory intermediation agreement obligations
Cost of products and other

$ (26,659 )
For the nine months ended September 30, 2016:
Derivatives included with the inventory intermediation agreement obligations
Cost of products and other

$ (29,317 )

Derivatives not designated as hedging instruments:
For the three months ended September 30, 2017:
Commodity contracts
Cost of products and other

$ (17,291 )
For the three months ended September 30, 2016:
Commodity contracts
Cost of products and other

$ (15,559 )
For the nine months ended September 30, 2017:
Commodity contracts
Cost of products and other

$ (2,606 )
For the nine months ended September 30, 2016:
Commodity contracts
Cost of products and other

$ (54,646 )

Hedged items designated in fair value hedges:
For the three months ended September 30, 2017:
Intermediate and refined product inventory
Cost of products and other

$ 29,766
For the three months ended September 30, 2016:
Intermediate and refined product inventory
Cost of products and other

$ 3,145
For the nine months ended September 30, 2017:
Intermediate and refined product inventory
Cost of products and other

$ 26,659
For the nine months ended September 30, 2016:
Intermediate and refined product inventory
Cost of products and other

$ 29,317

The Company had no0 ineffectiveness related to the ~~Company’s~~ fair value hedges for the three and nine months ended September 30, ~~2017~~2019 or ~~2016.~~2018.

PBF ENERGY INC. AND PBF ENERGY COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA)~~

~~15.~~16. SEGMENT INFORMATION

The Company’s operations are organized into ~~two~~2 reportable segments, Refining and Logistics. Operations that are not included in the Refining and Logistics segments are included in Corporate. Intersegment transactions are eliminated in the ~~consolidated financial statements~~Condensed Consolidated Financial Statements and are included in Eliminations.

Refining

The Company’s Refining ~~Segment~~segment includes the operations of its ~~five~~5 refineries, including certain related logistics assets that are not owned by PBFX. The Company’s refineries are located in ~~Toledo, Ohio,~~ Delaware City, Delaware, Paulsboro, New Jersey, Toledo, Ohio, New Orleans, Louisiana and Torrance, California. The refineries produce unbranded transportation fuels, heating oil, petrochemical feedstocks, lubricants and other petroleum products in the United States. The Company purchases crude oil, other feedstocks and blending components from various third-party suppliers. The Company sells products throughout the Northeast, Midwest, Gulf Coast and West Coast of the United States, as well as in other regions of the United States and Canada, and is able to ship products to other international destinations.

Logistics

The ~~Company formed~~Company’s Logistics segment is comprised of PBFX, a ~~publicly traded master limited partnership,~~publicly-traded MLP, formed to own or lease, operate, develop and acquire crude oil and refined petroleum products terminals, pipelines, storage facilities and similar logistics assets. PBFX’s assets primarily consist of rail and truck terminals and unloading racks, tank farms and pipelines that were acquired from or contributed by PBF LLC and are located at, or nearby, the Company’s refineries. PBFX provides various rail, truck and marine terminaling services, pipeline transportation services and storage services to PBF Holding and/or its subsidiaries and ~~third party~~third-party customers through fee-based commercial agreements. PBFX currently does not generate significant ~~third party revenue~~third-party revenues and intersegment related-party revenues are eliminated in consolidation. From a PBF Energy and PBF LLC perspective, the Company’s chief operating decision maker evaluates the Logistics segment as a whole without regard to any of PBFX’s individual operating segments.

The Company evaluates the performance of its segments based primarily on income from operations. Income from operations includes those revenues and expenses that are directly attributable to management of the respective segment. The Logistics segment’s revenues include intersegment transactions with the Company’s Refining segment at prices the Company believes are substantially equivalent to the prices that could have been negotiated with unaffiliated parties with respect to similar services. Activities of the Company’s business that are not included in the ~~two~~2 operating segments are included in Corporate. Such activities consist primarily of corporate staff operations and other items that are not specific to the normal operations of the ~~two~~2 operating segments. The Company does not allocate non-operating income and expense items, including income taxes, to the individual segments. The Refinery segment’s operating subsidiaries and PBFX are primarily pass-through entities with respect to income taxes.

Total assets of each segment consist of property, plant and equipment, inventories, cash and cash equivalents, accounts receivables and other assets directly associated with the segment’s operations. Corporate assets consist primarily of deferred tax assets, property, plant and equipment and other assets not directly related to the Company’s refinery and ~~logistic~~logistics operations.

Disclosures regarding the Company’s reportable segments with reconciliations to consolidated totals for the three and nine months ended September 30, ~~2017~~2019 and September 30, ~~2016~~2018 are presented below. In connection with ~~the contribution~~certain contributions by PBF LLC ~~of the limited liability interests of PNGPC~~ to PBFX in 2018, the accompanying segment information has been retrospectively adjusted to include the historical results of ~~PNGPC~~those assets in the Logistics segment for all periods presented prior to such ~~contribution.~~contributions.

PBF ENERGY INC. AND PBF ENERGY COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA)~~


	Three Months Ended September 30, 2017												Three Months Ended September 30, 2019
	Refining		Logistics		Corporate			Eliminations			Consolidated Total
PBF Energy - (in millions)													Refining			Logistics		Corporate			Eliminations			Consolidated Total
Revenues	$	5,475,815	$	65,494	$	—		$	(62,358	)	$	5,478,951	$	6,422.1		$	86.4	$	—		$	(78.0	)	$	6,430.5
Depreciation and amortization expense	70,338		5,610		2,572			—			78,520		98.7			9.0		2.1			—			109.8
Income (loss) from operations ~~(1)~~	607,848		40,420		(57,312		)	(3,799		)	587,157		169.8			44.4		(62.3		)	—			151.9
Interest expense, net	1,180		7,748		28,062			—			36,990		(0.7		)	13.4		27.0			—			39.7
Capital expenditures	165,659		15,056		562			—			181,277		117.2			8.0		2.7			—			127.9


	Three Months Ended September 30, 2016												Three Months Ended September 30, 2018
	Refining		Logistics		Corporate			Eliminations			Consolidated Total		Refining		Logistics		Corporate			Eliminations			Consolidated Total
Revenues	$	4,508,613	$	48,433	$	—		$	(43,842	)	$	4,513,204	$	7,641.9	$	70.6	$	—		$	(66.2	)	$	7,646.3
Depreciation and amortization expense	49,347		5,347		1,342			—			56,036		83.3		7.5		2.6			—			93.4
Income (loss) from operations ~~(1)~~(2)	149,282		25,763		(43,714		)	(1,621		)	129,710		321.3		37.6		(67.9		)	(4.7		)	286.3
Interest expense, net	713		7,696		30,118			—			38,527		2.1		10.5		29.7			—			42.3
Capital expenditures ~~(2)~~	1,084,579		4,603		4,337			—			1,093,519		79.8		20.9		2.2			—			102.9


	Nine Months Ended September 30, 2017												Nine Months Ended September 30, 2019
	Refining		Logistics		Corporate			Eliminations			Consolidated Total		Refining		Logistics		Corporate			Eliminations			Consolidated Total
Revenues	$	15,239,264	$	188,300	$	—		$	(176,915	)	$	15,250,649	$	18,182.7	$	248.0	$	—		$	(224.0	)	$	18,206.7
Depreciation and amortization expense	181,128		16,672		10,355			—			208,155		288.3		26.6		7.8			—			322.7
Income (loss) from operations (1)	517,045		111,478		(140,603		)	(11,218		)	476,702
Income (loss) from operations (1) (2)													583.0		116.4		(165.5		)	(7.9		)	526.0
Interest expense, net	3,433		23,618		87,820			—			114,871		0.7		38.0		82.6			—			121.3
Capital expenditures ~~(3)~~	575,530		71,441		2,971			—			649,942		600.2		23.2		6.4			—			629.8


	Nine Months Ended September 30, 2016												Nine Months Ended September 30, 2018
	Refining		Logistics		Corporate			Eliminations			Consolidated Total		Refining		Logistics		Corporate			Eliminations			Consolidated Total
Revenues	$	11,164,571	$	125,641	$	—		$	(118,356	)	$	11,171,856	$	20,880.6	$	203.4	$	—		$	(190.8	)	$	20,893.2
Depreciation and amortization expense	149,069		9,543		4,417			—			163,029		242.6		21.2		7.9			—			271.7
Income (loss) from operations ~~(1)~~(2)	403,630		75,317		(118,270		)	(1,621		)	359,056		895.9		105.3		(183.8		)	(13.1		)	804.3
Interest expense, net	2,827		22,559		86,608			—			111,994		6.5		30.9		91.5			—			128.9
Capital expenditures ~~(2)~~(3)	1,311,248		106,416		16,596			—			1,434,260		376.8		86.6		4.7			—			468.1

Balance at September 30, 2017
Refining Logistics Corporate Eliminations Consolidated Total
Total assets (4) $ 6,953,916
$ 754,477
$ 327,109
$ (36,045 ) $ 7,999,457

Balance at December 31, 2016
Refining Logistics Corporate Eliminations Consolidated Total
Total assets (4) $ 6,419,950
$ 756,861
$ 482,979
$ (37,863 ) $ 7,621,927



	Balance at September 30, 2019
	Refining		Logistics		Corporate		Eliminations			Consolidated Total
Total assets (1)	$	7,921.4	$	1,010.3	$	52.1	$	(66.4	)	$	8,917.4



	Balance at December 31, 2018
	Refining		Logistics		Corporate		Eliminations			Consolidated Total
Total assets (4)	$	6,988.0	$	956.4	$	98.1	$	(37.1	)	$	8,005.4

PBF ENERGY INC. AND PBF ENERGY COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



	Three Months Ended September 30, 2019
PBF LLC - (in millions)	Refining			Logistics		Corporate			Eliminations			Consolidated Total
Revenues	$	6,422.1		$	86.4	$	—		$	(78.0	)	$	6,430.5
Depreciation and amortization expense	98.7			9.0		2.1			—			109.8
Income (loss) from operations (1) (2)	169.8			44.4		(61.9		)	—			152.3
Interest expense, net	(0.7		)	13.4		29.6			—			42.3
Capital expenditures	117.2			8.0		2.7			—			127.9



	Three Months Ended September 30, 2018
	Refining		Logistics		Corporate			Eliminations			Consolidated Total
Revenues	$	7,641.9	$	70.6	$	—		$	(66.2	)	$	7,646.3
Depreciation and amortization expense	83.3		7.5		2.6			—			93.4
Income (loss) from operations (2)	321.3		37.6		(67.6		)	(4.7		)	286.6
Interest expense, net	2.1		10.5		31.9			—			44.5
Capital expenditures	79.8		20.9		2.2			—			102.9



	Nine Months Ended September 30, 2019
	Refining		Logistics		Corporate			Eliminations			Consolidated Total
Revenues	$	18,182.7	$	248.0	$	—		$	(224.0	)	$	18,206.7
Depreciation and amortization expense	288.3		26.6		7.8			—			322.7
Income (loss) from operations (1) (2)	583.0		116.4		(164.4		)	(7.9		)	527.1
Interest expense, net	0.7		38.0		89.6			—			128.3
Capital expenditures	600.2		23.2		6.4			—			629.8



	Nine Months Ended September 30, 2018
	Refining		Logistics		Corporate			Eliminations			Consolidated Total
Revenues	$	20,880.6	$	203.4	$	—		$	(190.8	)	$	20,893.2
Depreciation and amortization expense	242.6		21.2		7.9			—			271.7
Income (loss) from operations (2)	895.9		105.3		(182.8		)	(13.1		)	805.3
Interest expense, net	6.5		30.9		97.7			—			135.1
Capital expenditures (3)	376.8		86.6		4.7			—			468.1



	Balance at September 30, 2019
	Refining		Logistics		Corporate		Eliminations			Consolidated Total
Total assets (1)	$	7,921.4	$	1,010.3	$	50.0	$	(66.4	)	$	8,915.3



	Balance at December 31, 2018
	Refining		Logistics		Corporate		Eliminations			Consolidated Total
Total assets (4)	$	6,988.0	$	956.4	$	45.8	$	(37.1	)	$	7,953.1

PBF ENERGY INC. AND PBF ENERGY COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1)

~~The~~On April 24, 2019, PBFX entered into the TVPC Contribution Agreement, pursuant to which PBF LLC contributed to PBFX all of the issued and outstanding limited liability company interests of TVP Holding. Prior to the TVPC Acquisition, TVP Holding owned a 50% membership interest in TVPC. Subsequent to the closing of the TVPC Acquisition on May 31, 2019, PBFX owns 100% of the membership interests in TVPC.

(2)

Prior to the TVPC Contribution Agreement, the Logistics segment ~~includes~~included 100% of the income from operations of TVPC, as TVPC iswas consolidated by PBFX. PBFX ~~records~~recorded net income attributable to noncontrolling interest for the 50% equity interest in TVPC held by PBF Holding. PBF Holding (included in the Refining segment) ~~records~~recorded equity income in investee related to its 50% noncontrolling ownership interest in TVPC. For ~~the~~ purposes of the ~~consolidated PBF Energy financial statements,~~Company’s Condensed Consolidated Financial Statements, PBF Holding’s equity income in investee and PBFX’s net income attributable to noncontrolling interest ~~eliminate~~eliminated in consolidation.

~~PBF ENERGY INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA)~~

~~(2)~~

The Refining segment includes capital expenditures of $971,932 related to the acquisition of the Torrance refinery and related logistic assets that was completed in the third quarter of 2016. Additionally, the Refining segment includes capital expenditures of $2,659 for the working capital settlement related to the acquisition of the Chalmette refinery that was finalized in the first quarter of 2016.


(3)	The Logistics segment includes capital expenditures of ~~$10,097~~$58.0 million for the acquisition of the ~~Toledo Terminal~~Knoxville Terminals by PBFX on April ~~17, 2017.~~16, 2018.

(4)

~~The~~Prior to the TVPC Contribution Agreement, the Logistics segment ~~includes~~included 100% of the assets of TVPC, as TVPC iswas consolidated by PBFX. PBFX ~~records a~~recorded noncontrolling interest for the 50% equity interest in TVPC held by PBF Holding. PBF Holding (included in the Refining segment) ~~records~~recorded an equity investment in TVPC reflecting its noncontrolling ownership interest. For ~~the~~ purposes of the ~~consolidated PBF Energy financial statements,~~Company’s Condensed Consolidated Financial Statements, PBFX’s noncontrolling interest in TVPC and PBF Holding’s equity investment in TVPC ~~eliminate~~eliminated in consolidation.

PBF ENERGY INC. AND PBF ENERGY COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA)~~

~~16.~~17. NET INCOME PER SHARE OF PBF ENERGY

The Company grants certain equity-based compensation awards to employees and non-employee directors that are considered to be participating securities. Due to the presence of participating securities, the Company has calculated net income per share of PBF Energy Class A common stock using the two-class method.

The following table sets forth the computation of basic and diluted net income per share of PBF Energy Class A common stock attributable to PBF ~~Energy:~~Energy for the periods presented:


	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions, except share and per share amounts)													Three Months Ended September 30,						Nine Months Ended September 30,
Basic Earnings Per Share:	2017			2016			2017			2016			2019			2018			2019			2018
Allocation of earnings:
Net income attributable to PBF Energy Inc. stockholders	$	314,365		$	42,111		$	173,625		$	116,253		$	69.5		$	179.6		$	266.4		$	482.1
Less: Income allocated to participating securities	272			—			811			—			0.2			0.2			0.4			0.6
Income available to PBF Energy Inc. stockholders - basic	$	314,093		$	42,111		$	172,814		$	116,253		$	69.3		$	179.4		$	266.0		$	481.5
Denominator for basic net income per Class A common share - weighted average shares	109,724,595			97,825,357			109,634,921			97,823,708			119,921,346			117,029,486			119,897,504			113,597,970
Basic net income attributable to PBF Energy per Class A common share	$	2.86		$	0.43		$	1.58		$	1.19		$	0.58		$	1.53		$	2.22		$	4.24

Diluted Earnings Per Share:
Numerator:
Income available to PBF Energy Inc. stockholders - basic	$	314,093		$	42,111		$	172,814		$	116,253		$	69.3		$	179.4		$	266.0		$	481.5
Plus: Net income attributable to noncontrolling interest ⁽¹⁾	18,137			3,797			9,677			10,755			0.9			2.4			3.6			9.8
Less: Income tax expense on net income attributable to noncontrolling interest ⁽¹⁾	(7,139		)	(1,504		)	(3,809		)	(4,259		)	(0.3		)	(0.7		)	(0.9		)	(2.6		)
Numerator for diluted net income per Class A common share - net income attributable to PBF Energy Inc. stockholders ⁽¹⁾	$	325,091		$	44,404		$	178,682		$	122,749
Numerator for diluted net income per PBF Energy Class A common share - net income attributable to PBF Energy Inc. stockholders ⁽¹⁾													$	69.9		$	181.1		$	268.7		$	488.7

Denominator⁽¹⁾:
Denominator for basic net income per Class A common share-weighted average shares	109,724,595			97,825,357			109,634,921			97,823,708
Denominator:⁽¹⁾
Denominator for basic net income per PBF Energy Class A common share-weighted average shares													119,921,346			117,029,486			119,897,504			113,597,970
Effect of dilutive securities:(2)
Conversion of PBF LLC Series A Units ⁽¹⁾	3,825,508			4,966,632			3,832,464			4,956,853			1,206,325			1,206,326			1,206,325			2,184,690
Common stock equivalents ⁽²⁾	332,137			343,810			324,157			430,356			461,508			2,169,503			768,035			1,592,510
Denominator for diluted net income per Class A common share-adjusted weighted average shares	113,882,240			103,135,799			113,791,542			103,210,917
Diluted net income attributable to PBF Energy Inc. stockholders per Class A common share	$	2.85		$	0.43		$	1.57		$	1.19
__________
Denominator for diluted net income per PBF Energy Class A common share-adjusted weighted average shares													121,589,179			120,405,315			121,871,864			117,375,170
Diluted net income attributable to PBF Energy Inc. stockholders per PBF Energy Class A common share													$	0.57		$	1.50		$	2.20		$	4.16

(1)

The diluted earnings per share calculation generally assumes the conversion of all outstanding PBF LLC Series A Units to PBF Energy Class A common ~~stock of PBF Energy.~~stock. The net income attributable to PBF Energy used in the numerator of the diluted earnings per share calculation is adjusted to reflect the net income, as well as the corresponding income tax expense (based on a ~~39.4%~~26.5% estimated annualized statutory corporate tax rate for the three and nine months ended September 30, 2019 and a 26.4% estimated annualized statutory corporate tax rate for the three and nine months ended September 30, 2018), attributable to the converted units.

PBF ENERGY INC. AND PBF ENERGY COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA)~~

~~both the three and nine months ended September 30, 2017 and 39.6% statutory tax rate for both the three and nine months ended September 30, 2016) attributable to the converted units.~~

(2)

Represents an adjustment to weighted-average diluted shares outstanding to assume the full exchange of common stock equivalents, including options and warrants for PBF LLC Series A Units and performance share units and options for shares of PBF Energy Class A common stock as calculated under the treasury stock method (to the extent the impact of such exchange would not be anti-dilutive). Common stock equivalents exclude the effects of options, warrants and ~~warrants~~performance share units to purchase ~~6,484,650~~7,739,275 and ~~6,554,650~~6,003,867 shares of PBF Energy Class A common stock and PBF LLC Series A units because they are anti-dilutive for the three and nine months ended September 30, ~~2017,~~2019, respectively. Common stock equivalents ~~excludes~~exclude the effects of options and warrants to purchase ~~5,161,125~~15,000 and ~~4,364,250~~25,000 shares of PBF Energy Class A common stock and PBF LLC Series A units because they ~~are~~were anti-dilutive for the three and nine months ended September 30, ~~2016,~~2018, respectively. For periods showing a net loss, all common stock equivalents and unvested restricted stock are considered anti-dilutive.

~~17.~~18. SUBSEQUENT EVENTS

Dividend Declared

PBFX Distributions

On ~~November 2, 2017,~~October 31, 2019, the Board of Directors of PBF GP announced a distribution of ~~$0.48~~$0.52 per unit on outstanding common units of PBFX. The distribution is payable on November ~~29, 2017~~26, 2019 to PBFX ~~unit holders~~unitholders of record at the close of business on November ~~13, 2017.~~14, 2019.

~~PBFX Senior Notes Offering~~

On October 6, 2017, PBFX issued $175,000 in aggregate principal amount of 6.875% Senior Notes due 2023 (the “new PBFX 2023 Senior Notes”). These new PBFX 2023 Senior Notes were issued under the indenture governing the 6.875% Senior Notes issued on May 12, 2015 (the “existing PBFX 2023 Senior Notes” and, together with the new PBFX 2023 Senior Notes, the “PBFX 2023 Senior Notes”). The new PBFX 2023 Senior notes are expected to be treated as a single series with the existing PBFX 2023 Senior Notes and will have the same terms as those existing notes except that (i) the new PBFX 2023 Senior Notes are subject to a separate registration rights agreement and (ii) the new PBFX 2023 Senior Notes were issued initially under CUSIP numbers different from the existing PBFX 2023 Senior Notes. PBFX used the net proceeds of the new PBFX 2023 Senior Notes to repay a portion of its existing revolving credit facility and for general partnership purposes.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the audited financial statements of PBF Energy Inc. and PBF LLC included in the Annual Report on Form 10-K for the year ended December 31, ~~2016 and the unaudited financial statements and related notes included in this report.~~2018. The following discussion contains “forward-looking statements” that reflect our future plans, estimates, beliefs and expected performance. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of a number of factors. We caution that assumptions, expectations, projections, intentions or beliefs about future events may, and often do, vary from actual results and the differences can be material. Please see “Cautionary Note Regarding Forward-Looking Statements.”

PBF Energy is the sole managing member of, and owner of an equity interest representing approximately 99.0% of the outstanding economic interests in PBF LLC as of September 30, 2019. PBF LLC is a holding company for the companies that directly and indirectly own and operate our business. PBF Holding Company LLC (“PBF Holding”) is a wholly-owned subsidiary of PBF LLC and PBF Finance Corporation (“PBF Finance”) is a wholly-owned subsidiary of PBF Holding. As of September 30, 2019, PBF LLC also holds a 48.2% limited partner interest and a non-economic general partner interest in PBF Logistics LP (“PBFX” or the “Partnership”), a publicly-traded master limited partnership (“MLP”).

Unless the context indicates otherwise, the terms “we,” “us,” and “our” refer to PBF Energy and its consolidated subsidiaries, including PBF LLC, PBF Holding and its subsidiaries and PBFX and its subsidiaries. Discussions on areas that either apply only to PBF Energy or PBF LLC are clearly noted in such sections.

Overview

We are one of the largest independent petroleum refiners and suppliers of unbranded transportation fuels, heating oil, petrochemical feedstocks, lubricants and other petroleum products in the United States. We sell our products throughout the Northeast, Midwest, Gulf Coast and West Coast of the United States, as well as in other regions of the United States, Canada and ~~Canada,~~Mexico and are able to ship products to other international destinations. As of September 30, ~~2017,~~2019, we own and operate five domestic oil refineries and related assets with a combined processing capacity, known as throughput, of approximately 900,000 barrels per day (“bpd”), and a weighted-average Nelson Complexity Index of 12.2. We operate in two reportable business segments: Refining and Logistics. Our five oil refineries are all engaged in the refining of crude oil and other feedstocks into petroleum products, and are aggregated into the Refining segment. PBFX operates certain ~~logistical~~logistics assets such as crude oil and refined petroleum products terminals, pipelines, and storage facilities, which are aggregated into the Logistics segment.

Our five refineries are located in Delaware City, Delaware, Paulsboro, New Jersey, Toledo, Ohio, New Orleans, Louisiana and Torrance, California. Each ~~of these refineries~~refinery is briefly described in the table below:

Refinery

Region

Nelson Complexity

Throughput Capacity (in barrels per day)

PADD

Crude Processed (1)

Source (1)

Region

Nelson Complexity Index

Throughput Capacity (in barrels per day)

PADD

Crude Processed ⁽¹⁾

Source ⁽¹⁾

Delaware City

East Coast

11.3

190,000

medium and heavy sour crude

water, rail

East Coast

11.3

190,000

light sweet through heavy sour

water, rail

Paulsboro

East Coast

13.2

180,000

medium and heavy sour crude

water, rail

East Coast

13.2

180,000

light sweet through heavy sour

water

Toledo

Mid-Continent

9.2

170,000

light, sweet crude

pipeline, truck, rail

Mid-Continent

9.2

170,000

light sweet

pipeline, truck, rail

Chalmette

Gulf Coast

12.7

189,000

light and heavy crude

water, pipeline

Gulf Coast

12.7

189,000

light sweet through heavy sour

water, pipeline

Torrance

West Coast

14.9

155,000

heavy and medium crude

pipeline, water, truck

West Coast

14.9

155,000

medium and heavy

pipeline, water, truck

________

⁽¹⁾ Reflects the typical crude and feedstocks and related sources utilized under normal operating conditions and prevailing market environments.

As of September 30, ~~2017, we~~2019, PBF Energy owned ~~109,747,548~~119,924,055 PBF LLC Series C Units and our current and former executive officers and directors and certain employees and others held ~~3,825,508~~1,206,325 PBF LLC Series A Units (we refer to all of the holders of the PBF LLC Series A Units as “the members of PBF LLC other than PBF Energy”) ~~(109,204,047 PBF LLC Series C Units and 3,920,902 PBF LLC Series A Units as of December 31, 2016, respectively)~~. As a result, the holders of our issued and outstanding shares of our PBF Energy Class A common stock have approximately ~~96.6%~~99.0% of the voting power in us, and

the members of PBF LLC other than PBF Energy through their holdings of Class B common stock have approximately ~~3.4%~~1.0% of the voting power in us ~~(96.5%~~(99.0% and ~~3.5%~~1.0% as of December 31, ~~2016,~~2018, respectively).

Business Developments

Recent significant business developments affecting us are discussed below.

Pending Martinez Acquisition

On June 11, 2019 (the “Execution Date”), PBF Holding entered into a definitive Sale and Purchase Agreement (the “Sale and Purchase Agreement”) with Equilon Enterprises LLC d/b/a Shell Oil Products US (the "Seller"), to purchase the Martinez refinery and related logistics assets (collectively, the “Martinez Acquisition”). The obligations of PBF Holding under the Sale and Purchase Agreement have been guaranteed by the Company. The Martinez refinery is located on an 860-acre site in the City of Martinez, 30 miles northeast of San Francisco, California. The refinery is a high-conversion 157,000 bpd, dual-coking facility with a Nelson Complexity Index of 16.1, making it one of the most complex refineries in the United States. The facility is strategically positioned in Northern California and provides for operating and commercial synergies with the Torrance refinery located in Southern California. The Martinez Acquisition is expected to further increase our total throughput capacity to over 1,000,000 bpd.

In addition to refining assets, the Martinez Acquisition includes a number of high-quality onsite logistics assets including a deep-water marine facility, product distribution terminals and refinery crude and product storage facilities with approximately 8.8 million barrels of shell capacity.

The purchase price for the Martinez Acquisition will range from $900.0 million to $1.0 billion in cash, based on the date the transaction closes, plus inventory and working capital to be valued at closing. In addition, PBF Holding also has an obligation to make certain post-closing payments to the Seller if certain conditions are met including earn-out payments based on certain earnings thresholds of the Martinez refinery (as set forth in the Sale and Purchase Agreement), for a period of up to four years following the closing. The purchase price is also subject to other customary purchase price adjustments. The Martinez Acquisition is expected to close in the first quarter of 2020, subject to satisfaction of customary closing conditions, including the absence of legal impediments prohibiting the Martinez Acquisition, receipt of regulatory approvals and required consents and absence of a material adverse effect. Additionally, as a condition of closing, the assets must be operational in all material respects and in substantially the same condition and repair, ordinary wear and tear excepted, as of the Execution Date. We expect to finance the transaction with a combination of cash on hand and debt.

Factors Affecting Comparability Between Periods

Our results have been affected by the following events, the understanding of which will aid in assessing the comparability of our period to period financial performance and financial condition.

~~Senior Notes Offering~~Torrance Land Sale

On ~~May 30, 2017, PBF Holding~~August 1, 2019 and ~~PBF Finance issued $725.0~~August 7, 2018, we closed on third-party sales of parcels of real property acquired as part of the Torrance refinery, but not part of the refinery itself. The sales resulted in a gain of approximately $33.1 million and $43.8 million in ~~aggregate principal amount~~the third quarter of ~~7.25% Senior Notes due 2025 (the “2025 Senior Notes”). The Company used the net proceeds to fund the cash tender offer (the “Tender Offer”) for any~~2019 and ~~all~~2018, respectively, included within Gain on sale of its outstanding 8.25% senior secured notes due 2020 (the “2020 Senior Secured Notes”), to pay the related redemption price and accrued and unpaid interest for any 2020 Senior Secured Notes that remained outstanding after the completion of the Tender Offer, and for general corporate purposes. As described in “Note 7 - Debt”, upon the satisfaction and discharge of the 2020 Senior Secured Notes in connection with the closing of the Tender Offer and the redemption, the 2023 Senior Notes became unsecured and certain covenants were modified, as provided forassets in the ~~indenture governing the 2023 Senior Notes and related documents.~~Condensed Consolidated Statements of Operations.

Inventory Intermediation Agreements

On ~~May 4, 2017~~certain dates subsequent to the inception of the Inventory Intermediation Agreements, we and ~~September 8, 2017, PBF Holding and its~~our subsidiaries, DCR and PRC, entered into amendments to the ~~inventory intermediation agreements~~Amended and Restated Inventory Intermediation Agreements (as amended in the ~~second~~first quarter of 2019 and amended and restated in the third ~~quarters~~quarter of ~~2017,~~2019, the ~~"A&R~~“Inventory Intermediation ~~Agreements"~~Agreements”) with J. Aron & Company, a subsidiary of The Goldman Sachs Group, Inc. (“J. Aron”), pursuant to which certain terms of the ~~existing inventory intermediation agreements~~Inventory Intermediation Agreements were amended, including, among other things, ~~pricing and an extension of~~ the ~~terms. As a result of~~maturity date. On August 29, 2019 the ~~amendments (i) the A&R~~Inventory Intermediation Agreement by and among J. Aron, PBF Holding and PRC ~~relating to the Paulsboro refinery extends the term~~was extended to December 31, ~~2019,~~2021, which term may be further extended by mutual consent of the parties to December 31, ~~2020~~2022 and ~~(ii)~~ the ~~A&R~~Inventory Intermediation Agreement by and among J. Aron, PBF Holding and DCR ~~relating~~was extended to ~~the Delaware City refinery extends the term to July 1, 2019,~~June 30, 2021, which term may be further extended by mutual consent of the parties to ~~July 1, 2020.~~

~~Torrance Acquisition~~

June 30, 2022. On ~~July 1, 2016, we acquired from ExxonMobil Oil Corporation (“ExxonMobil”)~~March 29, 2019 the Inventory Intermediation Agreement by and ~~its subsidiary, Mobil Pacific Pipeline Company (together,~~among J. Aron, PBF Holding and DCR was amended to add the ~~“Torrance Sellers”), the Torrance refinery~~PBFX East Coast Storage Assets (as defined in “Note 3 - Acquisitions” of our Notes to Condensed Consolidated Financial Statements) as a location and related logistics assets (collectively, the “Torrance Acquisition”). The Torrance refinery is strategically positioned in Southern California with advantaged logistics connectivity that offers flexible raw material sourcing and product distribution opportunities primarily in the California, Las Vegas and Phoenix area markets.

In addition to refining assets, the Torrance Acquisition included a number of high-quality logistics assets consisting of a sophisticated network of crude and products pipelines, product distribution terminals and refinery crude and product storage facilities. The most significant of the logistics assets is a 189-mile crude gathering and transportation system which delivers San Joaquin Valley crude oil ~~directly from the field~~as a new product type to ~~the refinery. Additionally,~~be included in the ~~transaction were several pipelines which provide access~~Products (as defined in “Note 5 - Accrued Expenses” of our Notes to ~~sources of crude oil including the Ports of Long Beach~~Condensed Consolidated Financial Statements) sold to J. Aron by DCR.

Pursuant to each Inventory Intermediation Agreement, J. Aron continues to purchase and ~~Los Angeles, as well as clean product outlets with a direct pipeline supplying jet fuel~~hold title to the ~~Los Angeles airport. The Torrance refinery also~~Products produced by the Paulsboro and Delaware City refineries (the “Refineries”), and delivered into the Storage Tanks (as defined in “Note 4 - Inventories” of our Notes to Condensed Consolidated Financial Statements). Furthermore, J. Aron agrees to sell the Products back to the Refineries as the Products are discharged out of the Storage Tanks. J. Aron has ~~crude~~the right to store the Products purchased in storage tanks under the Inventory Intermediation Agreements and ~~product~~will retain these storage ~~facilities with approximately 8.6 million barrels of shell capacity.~~

~~The purchase price~~rights for the ~~assets was~~term of the agreements. PBF Holding continues to market and sell the Products independently to third parties.

PBFX Registered Direct Offering

On April 24, 2019, PBFX entered into subscription agreements to sell an aggregate of 6,585,500 common units to certain institutional investors in a registered direct public offering (the “PBFX Registered Direct Offering”) for gross proceeds of approximately ~~$521.4 million in cash after post-closing purchase price adjustments, plus final working capital of $450.6~~$135.0 million. The ~~final purchase price~~PBFX Registered Direct Offering closed on April 29, 2019.

PBFX IDR Restructuring

On February 28, 2019, PBFX closed on the transaction contemplated by the Equity Restructuring Agreement (the “IDR Restructuring Agreement”) with PBF LLC and ~~fair value allocation~~PBF GP, pursuant to which PBFX’s incentive distribution rights (the “IDRs”) held by PBF LLC were ~~completed as~~canceled and converted into 10,000,000 newly issued PBFX common units (the “IDR Restructuring”). Subsequent to the closing of ~~June 30, 2017. During~~ the ~~measurement period, which ended in June 2017, adjustments~~IDR Restructuring, no distributions were made to PBF LLC with respect to the ~~Company’s preliminary fair value estimates related primarily~~IDRs and the newly issued PBFX common units are entitled to ~~Property, plant~~normal distributions by PBFX.

Adoption of Accounting Standards Codification (“ASC”) Topic 842, “Leases”

As disclosed in “Note 8 - Leases” of our Notes to Condensed Consolidated Financial Statements, prior to January 1, 2019, we accounted for leases under ASC 840 and ~~equipment~~did not record a right of use asset or corresponding lease liability for operating leases on our Condensed Consolidated Balance Sheets. We adopted ASC 842 using a modified retrospective approach, and ~~Other long-term liabilities reflecting~~elected the ~~finalization~~transition method to apply the new standard at the adoption date of January 1, 2019. As such, financial information for prior periods has not been adjusted and continues to be reported under ASC 840. Refer to “Note 8 - Leases” of our Notes to Condensed Consolidated Financial Statements.

Early Return of Railcars

On September 30, 2018, we agreed to voluntarily return a portion of railcars under an operating lease in order to rationalize certain components of our railcar fleet based on prevailing market conditions in the crude oil by rail market. Under the terms of the ~~Company’s assessment~~lease amendment, we agreed to pay amounts in lieu of satisfaction of return conditions (the “early termination penalty”) and a reduced rental fee over the remaining term of the ~~costs~~lease. Certain of these railcars were idle as of September 30, 2018 and ~~duration~~the remaining railcars were taken out of ~~certain assumed pre-existing environmental obligations. The transaction was financed through~~service during the fourth quarter of 2018 and subsequently fully returned to the lessor. As a ~~combination~~result, we recognized an expense of ~~cash on hand, including proceeds from certain equity offerings,~~$44.6 million for the three months ended September 30, 2018 included within Cost of sales consisting of (i) a $40.3 million charge for the early termination penalty and ~~borrowings under our asset based revolving credit agreement (“Revolving Loan”).~~(ii) a $4.3 million charge related to the remaining lease payments associated with the railcars identified within the amended lease, all of which were idled and out of service as of December 31, 2018.

~~2016 PBFX Equity Offerings~~PBF Energy Inc. Public Offering

On ~~April 5, 2016, PBFX~~August 14, 2018, PBF Energy completed a public offering of an aggregate of ~~2,875,000~~6,000,000 shares of Class A common ~~units, including 375,000 common units that were sold pursuant to the full exercise by the underwriter of its option to purchase additional common units,~~stock for net proceeds of $51.6 million, after deducting underwriting discounts and commissions and other offering expenses (the “April 2016 PBFX Equity Offering”). In addition, on August 17, 2016, PBFX completed a public offering of an aggregate of 4,000,000 common units, and granted the underwriter an option to purchase an additional 600,000 common units, of which 375,000 units were subsequently purchased on September 14, 2016, for total net proceeds of $86.8$287.3 million, after deducting underwriting discounts and commissions and other offering expenses (the “August ~~2016~~ 2018 Equity Offering”).

PBFX Equity ~~Offering” and, together with the April 2016~~Offering

On July 30, 2018, PBFX ~~Offering, the “2016 PBFX Equity Offerings”). As of September 30, 2017, PBF LLC holds~~closed on a ~~44.1% limited partner interest in PBFX and owns all of PBFX’s IDRs, with the remaining 55.9% limited partner interest owned by public~~ common unit ~~holders.~~purchase agreement with certain funds managed by Tortoise Capital Advisors, L.L.C. providing for the issuance and sale in a registered direct offering (the “Registered Direct Offering”) of an aggregate of 1,775,750 common units for net proceeds of approximately $34.8 million.

PBFX Assets and Transactions

PBFX is a fee-based, growth-oriented, Delaware master limited partnership formed by PBF Energy to own or lease, operate, develop and acquire crude oil and refined petroleum products terminals, pipelines, storage facilities and similarPBFX’s assets consist of various logistics assets. ~~PBFX engages in the receiving, handling, storage and transferring of crude oil, refined products, natural gas and intermediates~~Apart from ~~sources located throughout the United States and Canada. A substantial majority of~~business associated with certain third-party acquisitions, PBFX’s ~~revenue is~~revenues are derived from long-term, fee-based commercial agreements with subsidiaries of PBF ~~Energy,~~Holding, which include minimum volume commitments, for receiving, handling, ~~storing~~transferring and ~~transferring~~storing crude oil, refined products and natural ~~gas and~~gas. These transactions are eliminated by PBF Energy and PBF LLC in consolidation.

Since the inception of PBFX ~~Assets:~~ ~~PBFX’s assets consist~~in 2014, PBF LLC and PBFX have entered into a series of ~~light~~drop-down transactions. Such transactions and ~~heavy crude oil rail unloading terminals and a refined products pipeline and truck rack at~~third-party acquisitions made by PBFX in the Delaware City refinery, a crude oil truck unloading terminal and storage facility at the Toledo refinery, a crude oil pipeline system supplying the Torrance refinery, a natural gas pipeline supplying the Paulsboro refinery, the East Coast Terminals (as defined below) and a products terminal at the Toledo refinery.current or prior period are discussed below.

~~PBFX Transactions:~~TVPC Acquisition

On ~~February 15, 2017,~~April 24, 2019, PBFX entered into a contribution agreement with PBF LLC (the ~~“PNGPC~~“TVPC Contribution Agreement”) ~~between PBFX and PBF LLC,~~, pursuant to which ~~PBFX’s wholly~~PBF LLC contributed to PBFX all of the issued and outstanding limited liability company interests of TVP Holding Company LLC (“TVP Holding”) for total consideration of $200.0 million (the “TVPC Acquisition”). Prior to the TVPC Acquisition, TVP Holding owned a 50% membership interest in the Torrance Valley Pipeline Company LLC (“TVPC”). Subsequent to the closing of the TVPC Acquisition on May 31, 2019, PBFX owns 100% of the membership interests in TVPC. The transaction was financed through a

combination of proceeds from the PBFX Registered Direct Offering and borrowings under the PBFX Revolving Credit Facility (as defined below).

East Coast Storage Assets Acquisition

On July 16, 2018, PBFX entered into an agreement with Crown Point to purchase its wholly-owned subsidiary, CPI Operations LLC (“CPI”) for total consideration of approximately $127.0 million, including working capital and the Contingent Consideration, comprised of an initial payment at closing of $75.0 million with a remaining balance of $32.0 million that was paid one year after closing on October 1, 2019. The residual purchase consideration consists of the Contingent Consideration. The consideration was financed through a combination of cash on hand and borrowings under the PBFX ~~Operating Company LP (“~~Revolving Credit Facility (as defined below). The East Coast Storage Assets Acquisition (all terms as defined in “Note 3 - Acquisitions” of our Notes to Condensed Consolidated Financial Statements) closed on October 1, 2018.

Development Assets Acquisition

On July 16, 2018, PBFX ~~Op Co”~~entered into four contribution agreements with PBF LLC (the “Development Assets Contribution Agreements”), pursuant to which PBFX acquired from PBF LLC all of the issued and outstanding limited liability company interests ~~of Paulsboro Natural Gas Pipeline~~of: Toledo Rail Logistics Company LLC (“PNGPC”). PNGPC owns and operates an existing interstate natural gas pipeline that runs under the Delaware River and terminates at the delivery point to our Paulsboro refinery. In August 2017, PBFX Op Co completed the construction of a new pipeline which replaced the existing pipeline and commenced services.

On February 15, 2017, we entered into a ten-year storage services agreement with PBFX Op Co (the “Chalmette Storage Agreement”) under which PBFX, through PBFX Op Co, assumed construction of a crude oil storage tank at PBF Holding's Chalmette Refinery (the “Chalmette Storage Tank”), commencing upon the earlier of November 1, 2017 or the completion of construction of the Chalmette Storage Tank which is currently expected to be completed in November 2017. PBFX Op Co and Chalmette Refining, L.L.C. (“Chalmette Refining”) have entered into a twenty-year lease for the premises upon which the tank will be located (the “Lease”) and a project management agreement pursuant to which Chalmette Refining has managed the construction of the tank. The Chalmette Storage Agreement can be extended by PBF Holding for two additional five-year periods. Under the Chalmette Storage Agreement, PBFX will provide PBF Holding with storage services in return for storage fees. The storage services require PBFX to accept, redeliver and store all products tendered by PBF Holding in the tank and PBF Holding will pay a monthly fee of $0.60 per barrel of shell capacity. The Lease can be extended by PBFX Op Co for two additional ten year periods.

On August 31, 2016, PBFX entered into a contribution agreement (the “TVPC Contribution Agreement”) between PBFX and PBF LLC, pursuant to which PBFX acquired from PBF LLC 50% of the issued and outstanding limited liability company interests of Torrance Valley Pipeline Company LLC (“TVPC”TRLC”), whose assets consist of

a loading and unloading rail facility located at PBF Holding’s Toledo refinery (the “Toledo Rail Products Facility”); Chalmette Logistics Company LLC (“CLC”), whose assets consist of a truck loading rack facility (the “Chalmette Truck Rack”) and a rail yard facility (the “Chalmette Rosin Yard”), both of which are located at PBF Holding’s Chalmette refinery; Paulsboro Terminaling Company LLC (“PTC”), whose assets consist of a lube oil terminal facility located at PBF Holding’s Paulsboro refinery (the “Paulsboro Lube Oil Terminal”); and DCR Storage and Loading Company LLC (“DSLC”), whose assets consist of an ethanol storage facility located at PBF Holding’s Delaware City refinery (the “Delaware Ethanol Storage Facility” and collectively with the ~~189-mile San Joaquin Valley Pipeline system, including~~Toledo Rail Products Facility, the ~~M55, M1~~Chalmette Truck Rack, the Chalmette Rosin Yard, and ~~M70 pipeline systems, including 11 pipeline stations with storage capacity and truck unloading capability at two~~the Paulsboro Lube Oil Terminal, the “Development Assets”). The acquisition of the ~~stations (collectively, the “Torrance Valley Pipeline”~~Development Assets closed on July 31, 2018 for total consideration of $31.6 million consisting of 1,494,134 common units representing limited partner interests in PBFX, issued to PBF LLC (the “Development Assets Acquisition”).

Knoxville Terminal Acquisition

On April ~~29, 2016, PBFX’s wholly-owned subsidiary, PBF Logistics Products Terminals LLC,~~16, 2018, PBFX completed the purchase of Knoxville Terminals from Cummins Terminals, Inc. for total cash consideration of $58.0 million, excluding working capital adjustments (the “Knoxville Terminals Purchase”). The transaction was financed through a combination of cash on hand and borrowings under the assets 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. The East Coast Terminals include a total of 57 product tanks with a total shell capacity of approximately 4.2 million barrels, pipeline connections to the Colonial Pipeline Company, Buckeye Partners, Sunoco Logistics Partners and other proprietary pipeline systems, 26 truck loading lanes and marine facilities capable of handling barges and ships.PBFX Revolving Credit Facility.

~~Amended and Restated Asset Based~~PBFX Revolving Credit Facility

On July 30, 2018, PBFX entered into an amended and restated credit facility (as amended, the “PBFX Revolving Credit Facility”) with Wells Fargo, National Association, as administrative agent, and a syndicate of lenders. The ~~Third Amended~~PBFX Revolving Credit Facility amended and ~~Restated~~restated the May 2014 PBFX Revolving ~~Loan is~~Credit Facility to, among other things, increase the maximum commitment available to ~~be used~~PBFX from $360.0 million to $500.0 million and extend the maturity date to July 2023. PBFX has the ability to increase the maximum amount of the PBFX Revolving Credit Facility by an aggregate amount of up to $250.0 million, to a total facility size of $750.0 million, subject to receiving increased commitments from lenders or other financial institutions and satisfaction of certain conditions. The commitment fees on the unused portion, the interest rate on advances and the fees for letters of credit are consistent with the May 2014 PBFX Revolving Credit Facility. The PBFX Revolving Credit Facility is guaranteed by a limited guaranty of collection from PBF LLC.

The outstanding borrowings under the PBFX Revolving Credit Facility were $283.0 million and $156.0 million as of September 30, 2019 and December 31, 2018, respectively.

PBF Holding Revolving Credit Facility

On May 2, 2018, PBF Holding and certain of its wholly-owned subsidiaries, as borrowers or subsidiary guarantors, replaced our existing asset-based revolving credit agreement dated as of August 15, 2014 (the “August 2014 Revolving Credit Agreement”) with a new asset-based revolving credit agreement (the “Revolving Credit Facility"). Among other things, the Revolving Credit Facility increases the maximum commitment available to PBF Holding from $2.6 billion to $3.4 billion, extends the maturity date to May 2023 and redefines certain components of the Borrowing Base, as defined in the agreement governing the Revolving Credit Facility (the “Revolving Credit Agreement”), to make more funding available for working capital and other general corporate purposes. ~~As noted in “Note 3 - Acquisitions”, we took down~~In addition, an ~~advance~~accordion feature allows for commitments of up to $3.5 billion. The commitment fees on the unused portion, the interest rate on advances and the fees for letters of credit are consistent with the August 2014 Revolving Credit Agreement.

There were no outstanding borrowings under ~~our~~the Revolving ~~Loan to partially fund the Torrance Acquisition in 2016. The outstanding balance under our Revolving Loan was $350.0 million, $350.0 million and $550.0 million~~Credit Facility as of September 30, ~~2017, December 31, 2016 and September 30, 2016, respectively.~~

~~Rail Facility Revolving Credit Facility~~

Effective March 25, 2014, PBF Rail Logistics Company LLC (“PBF Rail”), an indirect wholly-owned subsidiary of PBF Holding, entered into a $250.0 million secured revolving credit agreement (the “Rail Facility”). The primary purpose of the Rail Facility was to fund the acquisition by PBF Rail of crude tank cars (the “Eligible Railcars”) before December 2015.

~~On December 22, 2016, the Rail Facility was terminated and replaced with the PBF Rail Term Loan (as described below).~~

~~PBF Rail Term Loan~~

On December 22, 2016, PBF Rail entered into a $35.0 million term loan (the “PBF Rail Term Loan”) with a bank previously party to the Rail Facility. The PBF Rail Term Loan amortizes monthly over its five year term and bears interest at the one month LIBOR plus the margin as defined in the credit agreement. As security for the PBF Rail Term Loan, PBF Rail pledged, among other things: (i) certain Eligible Railcars; (ii) the debt service reserve account; and (iii) PBF Holding’s member interest in PBF Rail. Additionally, the PBF Rail Term Loan contains customary terms, events of default and covenants for a transaction of this nature. PBF Rail may at any time repay the PBF Rail Term Loan without penalty in the event that railcars collateralizing the loan are sold, scrapped or otherwise removed from the collateral pool.

~~The outstanding balance of the PBF Rail Term Loan was $30.0 million and $35.0 million as of September 30, 2017~~2019 and December 31, ~~2016,~~2018, respectively.

~~PBF Energy Inc. Public Offerings~~

As a result of the initial public offering and related reorganization transactions, PBF Energy became the sole managing member of PBF LLC with a controlling voting interest in PBF LLC and its subsidiaries. Effective with completion of the initial public offering, PBF Energy consolidates the financial results of PBF LLC and its subsidiaries and records a noncontrolling interest in its consolidated financial statements representing the economic interests of noncontrolling PBF LLC unit holders.

On December 19, 2016, we completed a public offering of an aggregate of 10,000,000 shares of Class A common stock (the “December 2016 Equity Offering”) for net proceeds of $274.3 million, after deducting underwriting discounts and commissions and other offering expenses.

~~Change in Presentation~~

As discussed in “Note 1 - Description of Business and Basis of Presentation,” during the third quarter of 2017, we determined that we would revise the presentation of certain line items on our consolidated statements of operations to enhance our disclosure under the requirements of Rule 5-03 of Regulation S-X. The revised presentation is comprised of the inclusion of a subtotal within costs and expenses referred to as “Cost of sales” and the reclassification of total depreciation and amortization expense between such amounts attributable to cost of sales and other operating costs and expenses. The amount of depreciation and amortization expense that is presented separately within the “Cost of Sales” subtotal represents depreciation and amortization of refining and logistics assets that are integral to the refinery production process.

The historical comparative information has been revised to conform to the current presentation. This revised presentation does not have an effect on our historical consolidated income from operations or net income, nor does it have any impact on our consolidated balance sheets, statements of comprehensive income or statements of cash flows.

Results of Operations

The tables below reflect our consolidated financial and operating highlights for the three and nine months ended September 30, ~~2017~~2019 and ~~2016~~2018 (amounts in ~~thousands,~~millions, except per share data). Differences between the results of operations of PBF Energy and PBF LLC primarily pertain to income taxes, interest expense and noncontrolling interest as shown below. Earnings per share information applies only to the financial results of PBF Energy. We operate in two reportable business segments: Refining and Logistics. Our oil refineries, excluding the assets owned by PBFX, are all engaged in the refining of crude oil and other feedstocks into petroleum products, and are aggregated into the Refining segment. PBFX is a ~~publicly traded master limited partnership~~publicly-traded MLP that operates certain ~~logistical~~logistics assets such as crude oil and refined petroleum products terminals, pipelines and storage facilities. PBFX’s operations are aggregated into the Logistics segment. We do not separately discuss our results by individual segments as, apart from PBFX’s third-party acquisitions, our Logistics segment did not have any significant ~~third party revenue~~third-party revenues and a significant portion of its operating results eliminate in consolidation.


	Three Months Ended September 30,						Nine Months Ended September 30,
PBF Energy													Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016			2019			2018			2019			2018
Revenues	$	5,478,951		$	4,513,204		$	15,250,649		$	11,171,856		$	6,430.5		$	7,646.3		$	18,206.7		$	20,893.2
Cost and expenses:
Cost of products and other	4,352,061			3,862,580			13,154,521			9,524,119			5,700.2			6,816.1			15,865.2			18,400.7
Operating expenses (excluding depreciation and amortization expense as reflected below)	402,910			412,699			1,267,136			989,296			436.5			424.4			1,348.7			1,268.2
Depreciation and amortization expense	75,948			54,694			197,800			158,612			107.7			90.8			314.9			263.8
Cost of sales	4,830,919			4,329,973			14,619,457			10,672,027			6,244.4			7,331.3			17,528.8			19,932.7
General and administrative expenses (excluding depreciation and amortization expense as reflected below)	58,275			44,020			143,195			124,975			64.7			69.9			175.9			191.4
Depreciation and amortization expense	2,572			1,342			10,355			4,417			2.1			2.6			7.8			7.9
Loss on sale of assets	28			8,159			940			11,381
Gain on sale of assets													(32.6		)	(43.8		)	(31.8		)	(43.1		)
Total cost and expenses	4,891,794			4,383,494			14,773,947			10,812,800			6,278.6			7,360.0			17,680.7			20,088.9

Income from operations	587,157			129,710			476,702			359,056			151.9			286.3			526.0			804.3
Other income (expenses):
Change in tax receivable agreement liability	565			(3,143		)	565			(3,143		)
Other income (expense):
Change in Tax Receivable Agreement liability													—			7.8			—			7.8
Change in fair value of catalyst leases	473			77			(1,011		)	(4,556		)	(3.8		)	1.7			(6.4		)	5.8
Debt extinguishment costs	—			—			(25,451		)	—
Interest expense, net	(36,990		)	(38,527		)	(114,871		)	(111,994		)	(39.7		)	(42.3		)	(121.3		)	(128.9		)
Other non-service components of net periodic benefit cost													(0.1		)	0.3			(0.2		)	0.8
Income before income taxes	551,205			88,117			335,934			239,363			108.3			253.8			398.1			689.8
Income tax expense	203,979			31,673			112,889			85,607			22.0			61.3			92.0			167.8
Net income	347,226			56,444			223,045			153,756			86.3			192.5			306.1			522.0
Less: net income attributable to noncontrolling interests	32,861			14,333			49,420			37,503			16.8			12.9			39.7			39.9
Net income attributable to PBF Energy Inc. stockholders	$	314,365		$	42,111		$	173,625		$	116,253		$	69.5		$	179.6		$	266.4		$	482.1

Gross margin	$	666,961		$	195,242		$	689,876		$	524,041
Consolidated gross margin													$	186.1		$	315.0		$	677.9		$	960.5

Gross refining margin ⁽¹⁾	$	1,064,007		$	604,355		$	1,912,869		$	1,529,582		$	647.6		$	765.8		$	2,106.6		$	2,304.1

Net income available to Class A common stock per share:
Basic	$	2.86		$	0.43		$	1.58		$	1.19		$	0.58		$	1.53		$	2.22		$	4.24
Diluted	$	2.85		$	0.43		$	1.57		$	1.19		$	0.57		$	1.50		$	2.20		$	4.16

(1) See Non-GAAP Financial Measures.



PBF LLC	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Revenues	$	6,430.5		$	7,646.3		$	18,206.7		$	20,893.2
Cost and expenses:
Cost of products and other	5,700.2			6,816.1			15,865.2			18,400.7
Operating expenses (excluding depreciation and amortization expense as reflected below)	436.5			424.4			1,348.7			1,268.2
Depreciation and amortization expense	107.7			90.8			314.9			263.8
Cost of sales	6,244.4			7,331.3			17,528.8			19,932.7
General and administrative expenses (excluding depreciation and amortization expense as reflected below)	64.3			69.6			174.8			190.4
Depreciation and amortization expense	2.1			2.6			7.8			7.9
Gain on sale of assets	(32.6		)	(43.8		)	(31.8		)	(43.1		)
Total cost and expenses	6,278.2			7,359.7			17,679.6			20,087.9

Income from operations	152.3			286.6			527.1			805.3

Other income (expense):
Change in fair value of catalyst leases	(3.8		)	1.7			(6.4		)	5.8
Interest expense, net	(42.3		)	(44.5		)	(128.3		)	(135.1		)
Other non-service components of net periodic benefit cost	(0.1		)	0.3			(0.2		)	0.8
Income before income taxes	106.1			244.1			392.2			676.8
Income tax benefit	(2.0		)	(0.8		)	(7.4		)	(5.5		)
Net income	108.1			244.9			399.6			682.3
Less: net income attributable to noncontrolling interests	16.0			10.5			36.1			30.1
Net income attributable to PBF Energy Company LLC	$	92.1		$	234.4		$	363.5		$	652.2



Operating Highlights	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Key Operating Information
Production (bpd in thousands)	863.0			896.7			817.9			854.0
Crude oil and feedstocks throughput (bpd in thousands)	850.9			888.4			816.4			851.8
Total crude oil and feedstocks throughput (millions of barrels)	78.3			81.7			222.9			232.5
Consolidated gross margin per barrel of throughput	$	2.38		$	3.86		$	3.04		$	4.13
Gross refining margin, excluding special items, per barrel of throughput ⁽¹⁾	$	8.87		$	9.25		$	8.21		$	8.80
Refinery operating expense, per barrel of throughput	$	5.26		$	5.01		$	5.72		$	5.26

Crude and feedstocks (% of total throughput) ⁽²⁾
Heavy	32		%	35		%	31		%	36		%
Medium	30		%	28		%	30		%	30		%
Light	25		%	23		%	25		%	21		%
Other feedstocks and blends	13		%	14		%	14		%	13		%
Total throughput	100		%	100		%	100		%	100		%

Yield (% of total throughput)
Gasoline and gasoline blendstocks	50		%	49		%	48		%	49		%
Distillates and distillate blendstocks	33		%	32		%	32		%	32		%
Lubes	1		%	1		%	1		%	1		%
Chemicals	2		%	2		%	2		%	2		%
Other	15		%	17		%	17		%	16		%
Total yield	101		%	101		%	100		%	100		%


(1)	See Non-GAAP Financial ~~Measures below.~~

~~Operating Highlights~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Key Operating Information
Production (bpd in thousands) 852.6
799.1
781.6
717.6
Crude oil and feedstocks throughput (bpd in thousands) 849.7
786.3
786.1
711.8
Total crude oil and feedstocks throughput (millions of barrels) 78.2
72.3
214.6
195.1
Gross margin per barrel of throughput $ 8.54
$ 2.70
$ 3.22
$ 2.69
Gross refining margin, excluding special items, per barrel of throughput ⁽¹⁾
$ 10.22
$ 6.92
$ 8.46
$ 6.20
Refinery operating expenses, excluding depreciation, per barrel of throughput $ 4.98
$ 5.59
$ 5.71
$ 4.98

Crude and feedstocks (% of total throughput) ⁽²⁾

Heavy crude 33 % 34 % 34 % 23 %
Medium crude 30 % 32 % 30 % 38 %
Light crude 22 % 23 % 21 % 28 %
Other feedstocks and blends 15 % 11 % 15 % 11 %
Total throughput 100 % 100 % 100 % 100 %

Yield (% of total throughput)
Gasoline and gasoline blendstocks 50 % 51 % 50 % 49 %
Distillates and distillate blendstocks 29 % 31 % 29 % 31 %
Lubes 1 % 1 % 1 % 1 %
Chemicals 2 % 3 % 2 % 4 %
Other 18 % 14 % 17 % 15 %
Total yield 100 % 100 % 99 % 100 %


~~(1)~~	~~See Non-GAAP Financial Measures below.~~Measures.


(2)	We define heavy crude oil as crude oil with American Petroleum Institute (API) gravity less than 24 degrees. We define medium crude oil as crude oil with API gravity between 24 and 35 degrees. We define light crude oil as crude oil with API gravity higher than 35 degrees.

The table below summarizes certain market indicators relating to our operating results as reported by Platts.


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016			2019			2018			2019			2018
	(dollars per barrel, except as noted)												(dollars per barrel, except as noted)
Dated Brent Crude	$	52.16		$	45.90		$	51.79		$	42.05
Dated Brent crude oil													$	61.86		$	75.07		$	64.71		$	72.19
West Texas Intermediate (WTI) crude oil	$	48.18		$	44.88		$	49.32		$	41.41		$	56.40		$	69.63		$	57.08		$	66.90
Light Louisiana Sweet (LLS) crude oil	$	51.67		$	46.52		$	51.73		$	43.20		$	60.60		$	74.15		$	63.35		$	71.11
Alaska North Slope (ANS) crude oil	$	52.04		$	44.65		$	52.15		$	41.58		$	62.98		$	75.26		$	65.23		$	72.19
Crack Spreads
Dated Brent (NYH) 2-1-1	$	18.12		$	12.94		$	14.84		$	13.18		$	14.72		$	14.62		$	12.73		$	14.15
WTI (Chicago) 4-3-1	$	18.82		$	13.64		$	14.70		$	13.07		$	16.51		$	18.05		$	16.69		$	15.84
LLS (Gulf Coast) 2-1-1	$	16.69		$	11.51		$	13.75		$	10.35		$	14.32		$	13.38		$	12.32		$	13.26
ANS (West Coast) 4-3-1	$	20.66		$	15.61		$	18.78		$	17.22		$	18.81		$	14.84		$	18.49		$	16.67
Crude Oil Differentials
Dated Brent (foreign) less WTI	$	3.97		$	1.02		$	2.47		$	0.64		$	5.46		$	5.44		$	7.63		$	5.29
Dated Brent less Maya (heavy, sour)	$	8.75		$	6.87		$	6.77		$	7.57		$	6.36		$	9.12		$	5.58		$	10.21
Dated Brent less WTS (sour)	$	4.96		$	2.50		$	3.63		$	1.48		$	6.01		$	19.79		$	8.76		$	13.41
Dated Brent less ASCI (sour)	$	3.82		$	4.14		$	3.58		$	4.02		$	2.98		$	4.42		$	3.11		$	4.69
WTI less WCS (heavy, sour)	$	10.03		$	13.28		$	10.83		$	12.15		$	12.79		$	29.30		$	11.78		$	24.55
WTI less Bakken (light, sweet)	$	(0.69	)	$	1.41		$	0.18		$	1.13		$	0.74		$	1.08		$	0.53		$	0.87
WTI less Syncrude (light, sweet)	$	(1.95	)	$	(0.95	)	$	(1.86	)	$	(2.67	)	$	(0.89	)	$	5.59		$	(0.30	)	$	3.00
WTI less LLS (light, sweet)	$	(3.49	)	$	(1.65	)	$	(2.41	)	$	(1.79	)	$	(4.20	)	$	(4.52	)	$	(6.27	)	$	(4.21	)
WTI less ANS (light, sweet)	$	(3.86	)	$	0.23		$	(2.82	)	$	(0.17	)	$	(6.58	)	$	(5.63	)	$	(8.15	)	$	(5.29	)
Natural gas (dollars per MMBTU)	$	2.95		$	2.79		$	3.05		$	2.35		$	2.33		$	2.86		$	2.56		$	2.85

Three Months Ended September 30, ~~2017~~2019 Compared to the Three Months Ended September 30, ~~2016~~2018

Overview— ~~Net~~ PBF Energy net income was ~~$347.2~~$86.3 million for the three months ended September 30, ~~2017~~2019 compared to ~~$56.4~~net income of $192.5 million for the three months ended September 30, ~~2016.~~2018. PBF LLC net income was $108.1 million for the three months ended September 30, 2019 compared to net income of $244.9 million for the three months ended September 30, 2018. Net income attributable to PBF Energy was ~~$314.4~~$69.5 million, or ~~$2.85~~$0.57 per diluted share, for the three months ended September 30, ~~2017~~2019 ($~~2.85~~0.57 per share on a fully-exchanged, fully-diluted basis based on adjusted fully-converted net income, or ~~$1.44~~$0.66 per share on a fully-exchanged, fully-diluted basis based on adjusted fully-converted net income excluding special items, as described below in Non-GAAP Financial Measures) compared to net income attributable to PBF Energy of ~~$42.1~~$179.6 million, or ~~$0.43~~$1.50 per diluted share, for the three months ended September 30, ~~2016~~2018 ($~~0.43~~1.50 per share on a fully-exchanged, fully-diluted basis based on adjusted fully-converted net income, or ~~$(0.16)~~$1.13 per share on a fully-exchanged, fully-diluted basis based on adjusted fully-converted net ~~loss~~income excluding special items, as described below in Non-GAAP Financial Measures). The net income ~~or loss~~ attributable to PBF Energy represents PBF Energy’s equity interest in PBF LLC’s pre-tax income, less applicable income tax expense. PBF Energy’s weighted-average equity interest in PBF LLC was ~~96.6% and 95.2%~~99.0% for both the three months ended September 30, ~~2017~~2019 and ~~2016, respectively.~~2018.

Our results for the three months ended September 30, ~~2017~~2019 were ~~positively~~negatively impacted by a special ~~items~~item consisting of a non-cash, pre-tax lower of cost or market (“LCM”) inventory adjustment of approximately ~~$265.1~~$47.0 million, or ~~$160.7~~$34.6 million net of tax, ~~and~~partially offset by a pre-tax ~~change in~~gain on the ~~tax receivable agreement liability~~sale of ~~$0.6~~land at our Torrance refinery of $33.1 million, or ~~$0.3~~$24.3 million net of tax. Our results for the three months ended September 30, ~~2016~~2018 were positively impacted by special items consisting of a pre-tax LCM inventory adjustment of approximately ~~$104.0~~$54.8 million, or ~~$62.8~~$40.3 million net of tax, a pre-tax change in the Tax Receivable Agreement liability (as defined in “Note 7 - Commitments and Contingencies” of our Notes to Condensed Consolidated Financial Statements) of $7.8 million, or $5.7 million net of tax, and a pre-tax gain on the sale of land at our Torrance refinery of $43.8 million, or $32.2 million net of tax, partially offset by a special item related to the early return of certain leased railcars resulting in a pre-tax ~~change in the tax receivable agreement liability~~charge of ~~$3.1~~$44.6 million, or ~~$1.9~~$32.8 million net of tax. The LCM

inventory adjustments were recorded due to movements in the price of crude oil and refined products in the periods presented.

Excluding the impact of these special items, our results were ~~positively~~negatively impacted by ~~higher~~unfavorable movements in crude differentials and overall lower throughput volumes atacross the majority of our ~~refineries and higher crack spreads~~refineries. Refining margins for the current quarter compared to the prior quarter in 2018 were mixed with stronger margins realized ~~at each of our refineries, which were impacted by the hurricane-related reduction in refining throughput~~ in the Gulf Coast ~~region~~ and ~~tightening product inventories, specifically distillates. Notably, we benefited from~~West Coast offset by weaker margins in the ~~improved~~Mid-Continent. Our results for the three months ended September 30, 2019 were also negatively impacted by higher operating ~~performance of~~expenses and increased depreciation and amortization expense associated with our ~~Chalmette and Torrance refineries.~~continued investment in our refining assets.

Revenues—Revenues totaled ~~$5.5~~$6.4 billion for the three months ended September 30, ~~2017~~2019 compared to ~~$4.5~~$7.6 billion for the three months ended September 30, ~~2016, an increase~~2018, a decrease of approximately ~~$1.0~~$1.2 billion, or ~~21.4%~~15.9%. Revenues per barrel were ~~$63.79~~$69.85 and ~~$62.39~~$83.55 for the three months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively, ~~an increase~~a decrease of ~~2.2%~~16.4% directly related to ~~higher~~lower hydrocarbon commodity prices. For the three months ended September 30, ~~2017,~~2019, the total throughput rates at our East Coast, Mid-Continent, Gulf Coast and West Coast refineries averaged approximately ~~343,700~~357,200 bpd, ~~160,600~~151,100 bpd, ~~200,400~~178,000 bpd and ~~145,000~~164,600 bpd, respectively. For the three months ended September 30, ~~2016,~~2018, the total throughput rates at our East Coast, Mid-Continent, Gulf Coast and West Coast refineries averaged approximately ~~315,900~~354,600 bpd, ~~165,300~~172,100 bpd, ~~165,600~~195,500 bpd and ~~139,500~~166,200 bpd, respectively. ~~Our~~The throughput rates at our East Coast and West Coast refineries were in line with the same quarter of the prior year, whereas the throughput rates at our Mid-Continent and Gulf Coast ~~refineries’ throughput rates increased in~~refineries were lower during the ~~third~~ quarter ~~of 2017 as compared~~due to ~~the same period of 2016 as a result of improved operational performance following the completion of planned turnarounds~~unplanned downtime at our ~~Delaware City~~Toledo and Chalmette refineries in the first and second quarters of 2017, respectively. Our West Coast refinery underwent its first major turnaround under PBF ownership for a majority of the second quarter in 2017, following which its throughput rates in the third quarter of 2017 were significantly above the same period of 2016.refineries. For the three months ended September 30, ~~2017,~~2019, the total barrels sold at our East Coast, Mid-Continent, Gulf Coast and West Coast refineries averaged approximately ~~359,700~~413,900 bpd, ~~167,300~~163,300 bpd, ~~233,400~~223,700 bpd and ~~173,300~~199,600 bpd, respectively. For the three months ended September 30, ~~2016,~~2018, the total barrels sold at our East Coast, Mid-Continent, Gulf Coast and West Coast refineries averaged approximately ~~345,800~~380,200 bpd, ~~177,200~~175,800 bpd, ~~209,300~~242,800 bpd and ~~177,100~~196,000 bpd, respectively. Total refined product barrels sold were higher than throughput rates, reflecting sales from inventory as well as sales and purchases of refined products outside ~~the refinery.~~our refineries.

Consolidated Gross Margin— ~~Gross~~Consolidated gross margin ~~including refinery operating expenses and depreciation,~~ totaled ~~$667.0~~$186.1 million ~~or $8.54 per barrel of throughput,~~ for the three months ended September 30, ~~2017~~2019 compared to ~~$195.2~~$315.0 million ~~or $2.70 per barrel of throughput,~~ for the three months ended September 30, ~~2016, an increase~~2018, a decrease of approximately ~~$471.7~~$128.9 million. Gross refining margin (as described below in Non-GAAP Financial Measures) totaled ~~$1,064.0~~$647.6 million, or ~~$13.61~~$8.27 per barrel of throughput ~~($798.9 million or $10.22 per barrel of throughput excluding the impact of special items),~~ for the three months ended September 30, ~~2017~~2019 compared to ~~$604.4~~$765.8 million, or ~~$8.36~~$9.37 per barrel of throughput ~~($500.4 million or $6.92 per barrel of throughput excluding the impact of special items),~~ for the three months ended September 30, ~~2016, an increase~~2018, a decrease of approximately ~~$459.7~~$118.2 million. Gross refining margin excluding special items totaled $694.6 million or ~~$298.6 million excluding special items.~~

~~Excluding the impact~~$8.87 per barrel of ~~special items, gross margin and gross refining margin increased due to improved crack spreads and higher~~ throughput ~~rates in the East Coast, Gulf Coast and West Coast and reduced costs to comply with the RFS. Costs to comply with our obligation under the RFS totaled $83.4 million~~ for the three months ended September 30, ~~2017~~2019 compared to ~~$94.7~~$755.6 million or $9.25 per barrel of throughput for the three months ended September 30, ~~2016. In addition,~~2018, a decrease of $61.0 million.

Consolidated gross margin and gross refining margin were ~~positively~~negatively impacted by a non-cash LCM ~~inventory~~ adjustment of approximately ~~$265.1~~$47.0 million on a net basis, resulting from ~~an increase~~the decrease in crude oil and refined product prices in comparison to the prices at the end of the second quarter of ~~2017.~~2019. The non-cash LCM inventory adjustment increased consolidated gross margin and gross refining margin by approximately ~~$104.0~~$54.8 million on a net basis in the third quarter of ~~2016.~~2018. Gross refining margin excluding the impact of special items decreased due to unfavorable movements in crude differentials in the East Coast and Mid-Continent, weaker refining margins in

the Mid-Continent, and reduced throughput rates in the Mid-Continent and Gulf Coast, partially offset by higher crack spreads in the Gulf Coast and West Coast.

Additionally, our results continue to be impacted by significant costs to comply with the Renewable Fuel Standard (“RFS”), although at a reduced level from the prior year. Total RFS costs were $31.6 million for the three months ended September 30, 2019 in comparison to $33.9 million for the three months ended September 30, 2018.

Average industry ~~refining~~ margins ~~in the Mid-Continent~~ were ~~stronger~~mixed during the three months ended September 30, ~~2017 as compared~~2019 in comparison to the same period in ~~2016. The WTI (Chicago) 4-3-1 industry crack spread was $18.82 per barrel, or 38.0% higher,~~2018, primarily as a result of varying regional product inventory levels and unplanned refining downtime issues impacting product margins. Crude oil differentials were generally unfavorable in ~~the three months ended September 30, 2017 as compared~~comparison to ~~$13.64 per barrel in~~ the same period in ~~2016. Our margins were unfavorably impacted by~~2018, with notable light-heavy crude differential compression negatively impacting our ~~refinery specific~~refining gross margin and moving our overall crude slate ~~in the Mid-Continent which was impacted by a declining WTI/Bakken differential and a declining WTI/Syncrude~~

~~differential, which averaged a premium of $1.95 per barrel during the three months ended September 30, 2017 as compared to a premium of $0.95 per barrel in the same period of 2016.~~lighter.

On the East Coast, the Dated Brent (NYH) 2-1-1 industry crack spread was approximately ~~$18.12~~$14.72 per barrel, or ~~40.0%~~0.7% higher, in the three months ended September 30, ~~2017,~~2019, as compared to ~~$12.94~~$14.62 per barrel in the same period in ~~2016. The Dated Brent/WTI differential and~~2018. Our margins were negatively impacted from our refinery specific slate on the East Coast by tightening in the Dated Brent/Maya and WTI/Bakken differentials, which decreased by $2.76 per barrel and $0.34 per barrel, respectively, in comparison to the same period in 2018. In addition, the WTI/WCS differential ~~were $2.95 and $1.88 higher, respectively,~~decreased significantly to $12.79 per barrel in the three months ended September 30, ~~2017 as~~2019 compared to $29.30 in the same period in ~~2016, partially offset by adverse movements in~~2018, which unfavorably impacted our cost of heavy Canadian crude.

Across the ~~WTI/Bakken differential, which~~Mid-Continent, the WTI (Chicago) 4-3-1 industry crack spread was ~~approximately $2.10~~$16.51 per barrel, ~~less favorable (a premium of $0.69 in 2017 as compared to a discount of $1.41 in 2016)~~or 8.5% lower, in the three months ended September 30, ~~2017~~2019 as compared to $18.05 per barrel in the same period in ~~2016.~~

~~Gulf Coast industry refining~~2018. Our margins ~~improved significantly during~~were negatively impacted from our refinery specific slate in the ~~three months ended September 30, 2017 as compared to the same period in 2016. The LLS (Gulf Coast) 2-1-1 industry crack spread was $16.69~~Mid-Continent by a decreasing WTI/Bakken differential, which averaged $0.74 per barrel ~~or 45.0% higher,~~ in the three months ended September 30, ~~2017~~2019, as compared to ~~$11.51~~$1.08 per barrel in the same period in ~~2016. Crude differentials weakened with~~2018. Additionally, the WTI/~~LLS~~Syncrude differential ~~averaging~~averaged a premium of ~~$3.49~~$0.89 per barrel during the three months ended September 30, ~~2017~~2019 as compared to a ~~premium~~discount of ~~$1.65~~$5.59 per barrel in the same period of ~~2016.~~2018.

~~Additionally, we benefited from improvements in~~On the ~~West~~Gulf Coast, ~~industry refining margins during~~ the ~~three months ended September 30, 2017 as compared to the same period in 2016. The ANS (West~~LLS (Gulf Coast) ~~4-3-1~~2-1-1 industry crack spread was ~~$20.66~~$14.32 per barrel, or ~~32.4%~~7.0% higher, in the three months ended September 30, ~~2017~~2019 as compared to ~~$15.61~~$13.38 per barrel in the same period in ~~2016. Partially offsetting~~2018. Margins on the ~~improved crack spreads, crude differentials weakened with the~~Gulf Coast were positively impacted from our refinery specific slate by an increasing WTI/~~ANS~~LLS differential, ~~averaging~~which averaged a premium of ~~$3.86~~$4.20 per barrel during the three months ended September 30, ~~2017~~2019 as compared to a ~~discount~~premium of ~~$0.23~~$4.52 per barrel in the same period of ~~2016.~~2018.

On the West Coast the ANS (West Coast) 4-3-1 industry crack spread was $18.81 per barrel, or 26.8% higher, in the three months ended September 30, 2019 as compared to $14.84 per barrel in the same period in 2018. Margins on the West Coast were negatively impacted from our refinery specific slate by a weakening WTI/ANS differential, which averaged a premium of $6.58 per barrel during the three months ended September 30, 2019 as compared to a premium of $5.63 per barrel in the same period of 2018.

Favorable movements in these benchmark crude differentials typically result in lower crude costs and positively impact our earnings while reductions in these benchmark crude differentials typically result in higher crude costs and negatively impact our earnings.

Operating Expenses— Operating expenses totaled ~~$402.9~~$436.5 million for the three months ended September 30, ~~2017~~2019 compared to ~~$412.7~~$424.4 million for the three months ended September 30, ~~2016, a decrease~~2018, an increase of ~~$9.8~~$12.1 million, or ~~2.4%~~2.9%. Of the total ~~$402.9~~$436.5 million of operating expenses for the three months ended September 30, ~~2017, $389.6~~2019, $411.8 million, or ~~$4.98~~$5.26 per barrel of throughput, related to expenses incurred by the Refining segment, while the remaining ~~$13.3~~$24.7 million related to expenses incurred by the Logistics segment ($~~404.0~~409.7 million, or ~~$5.59~~$5.01 per barrel, and ~~$8.7~~$14.7 million of operating expenses for the three months ended September 30, ~~2016~~2018 related to the Refining and Logistics segments, respectively). ~~The decrease~~Increases in operating expenses ~~was~~were mainly ~~attributable~~attributed to ~~lower outside services costs as compared to the same period~~higher employee related expenses and increased operating expenses in ~~2016 across all of~~ our ~~refineries partially offset by higher maintenance costs~~Logistics segment, which were primarily due to ~~increased throughput. The operating~~ expenses related to the ~~Logistics segment consists of costs related to the operation and maintenance~~

operations of PBFX’s recently acquired assets which were higher primarily as a result of current period expenses related to certain assets including the Toledo Terminal and Torrance Valley Pipeline, which were not in service for the full comparable period in 2016, and higher ~~operating expenses associated with the East Coast Terminals.~~environmental clean-up costs and product contamination remediation costs.

General and Administrative Expenses— General and administrative expenses totaled ~~$58.3~~$64.7 million for the three months ended September 30, ~~2017~~2019 compared to ~~$44.0~~$69.9 million for the three months ended September 30, ~~2016, an increase~~2018, a decrease of approximately ~~$14.3~~$5.2 million or ~~32.4%~~7.4%. The ~~increase~~decrease in general and administrative expenses for the three months ended September 30, ~~2017 over the same period of 2016 primarily relates to increases~~2019 in ~~employee related expenses of $21.5 million driven by higher incentive compensation in the third quarter of 2017 as compared~~comparison to the ~~third quarter of 2016. This increase was partially offset by~~three months ended September 30, 2018 is primarily related to lower ~~costs associated with acquisition and integration related activities which were approximately $7.0 million lower in the current quarter as compared to the same quarter of 2016.~~employee-related expenses, including incentive compensation. Our general and administrative expenses are comprised of ~~the~~ personnel, facilities and other infrastructure costs necessary to support our refineries and related ~~logistical~~logistics assets.

~~Loss~~Gain on Sale of Assets— There was a ~~de minimis loss~~gain of $32.6 million and $43.8 million on the sale of assets for the three months ended September 30, ~~2017 relating~~2019 and September 30, 2018, respectively, mainly attributed to ~~non-operating refinery assets. There was a loss of $8.2 million on~~ the sale of ~~non-operating refinery assets for the three months ended September 30, 2016.~~two separate parcels of land at our Torrance refinery.

Depreciation and Amortization Expense— Depreciation and amortization expense totaled ~~$78.5~~$109.8 million for the three months ended September 30, ~~2017~~2019 (including ~~$75.9~~$107.7 million recorded within Cost of sales) compared to ~~$56.0~~$93.4 million for the three months ended September 30, ~~2016~~2018 (including ~~$54.7~~$90.8 million recorded within Cost of sales), an increase of ~~$22.5~~$16.4 million. The increase was a result of additional depreciation expense associated with a general increase in our fixed asset base due to capital projects and turnarounds completed since the third quarter ~~2016, including~~of 2018, as well as accelerated amortization related to the Delaware City and Torrance refinery turnarounds, which were completed in the first ~~significant turnaround under our ownership at our Torrance refinery, which was completed early in the third quarter~~half of ~~2017.~~2019.

Change in Tax Receivable Agreement Liability— ~~Change~~There was no change in the ~~tax receivable agreement~~Tax Receivable Agreement liability for the three months ended September 30, ~~2017 represented a gain of $0.6 million~~2019 as compared to a ~~loss~~gain of ~~$3.1~~$7.8 million in the three months ended September 30, ~~2016.~~2018.

Change in Fair Value of Catalyst Leases— Change in the fair value of catalyst leases represented a ~~gain~~loss of ~~$0.5~~$3.8 million for the three months ended September 30, ~~2017~~2019 compared to a gain of ~~$0.1~~$1.7 million for the three months ended September 30, ~~2016.~~2018. These gains and losses relate 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 on the lease termination dates.

Interest Expense, net— ~~Interest~~PBF Energy interest expense totaled ~~$37.0~~$39.7 million for the three months ended September 30, ~~2017~~2019 compared to ~~$38.5~~$42.3 million for the three months ended September 30, ~~2016,~~2018, a decrease of approximately ~~$1.5~~$2.6 million. This net decrease is ~~primarily~~mainly attributable to lower ~~interest expense on a portion of our senior notes that were refinanced in May 2017 (see “Note 7 - Debt” for additional details).~~outstanding revolver borrowings during the three months ended September 30, 2019. Interest expense includes interest on long-term debt including the PBFX credit facilities, costs related to the sale and leaseback of our precious metals catalyst, financing costs associated with the ~~A&R~~Inventory Intermediation Agreements with J. Aron, letter of credit fees associated with the purchase of certain crude oils and the amortization of deferred financing costs. PBF LLC interest expense totaled $42.3 million and $44.5 million for the three months ended September 30, 2019 and September 30, 2018, respectively (inclusive of $2.6 million and $2.2 million, respectively, of incremental interest expense on the affiliate note payable with PBF Energy that eliminates in consolidation at the PBF Energy level).

2019 and ~~2016, respectively.~~2018. PBF Energy’s ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements do not reflect any benefit or provision for income taxes on the pre-tax income or loss attributable to the noncontrolling interests in PBF LLC or PBFX (although, as described above, PBF LLC must make tax distributions to all its members on a pro-rata basis). PBF Energy’s effective tax rate, excluding the impact of noncontrolling interest, for the three months ended September 30, ~~2017~~2019 and ~~2016~~2018 was ~~39.4%~~24.0% and ~~43.1%~~25.5%, respectively, reflecting tax adjustments for discrete items ~~and~~during the ~~impact of earnings in foreign tax jurisdictions.~~quarters.

a 20% noncontrolling interest for the ownership interests in two subsidiaries of Chalmette Refining held by a third party. The total noncontrolling interest on the ~~consolidated statements~~Condensed Consolidated Statements of ~~operations~~Operations represents the portion of the Company’s earnings or loss attributable to the economic interests held by members of PBF ~~Energy~~LLC other than PBF Energy, by the public common ~~unit holders~~unitholders of PBFX and by the ~~third party stockholder in~~third-party stockholders of certain of Chalmette Refining’s subsidiaries. The total noncontrolling interest on the ~~balance sheet~~Condensed Consolidated Balance Sheets represents the portion of the Company’s net assets attributable to the economic interests held by the members of PBF LLC other than PBF Energy, by the public common ~~unit holders~~unitholders of PBFX and by the ~~third party stockholder~~third-party stockholders of ~~T&M Terminal Company and Collins Pipeline Company.~~the two Chalmette Refining subsidiaries. PBF Energy’s weighted-average equity noncontrolling interest ownership percentage in PBF LLC for the three months ended September 30, ~~2017~~2019 and ~~2016~~2018 was approximately ~~3.4% and 4.8%, respectively.~~1.0% for both periods. The carrying amount of the noncontrolling interest on our ~~consolidated balance sheet~~Condensed Consolidated Balance Sheets attributable to the noncontrolling interest is not equal to the noncontrolling interest ownership percentage due to the effect of income taxes and related agreements that pertain solely to PBF Energy.

Nine Months Ended September 30, ~~2017~~2019 Compared to the Nine Months Ended September 30, ~~2016~~2018

Overview— ~~Net~~ PBF Energy net income was ~~$223.0~~$306.1 million for the nine months ended September 30, ~~2017~~2019 compared to ~~$153.8~~net income of $522.0 million for the nine months ended September 30, ~~2016.~~2018. PBF LLC net income was $399.6 million for the nine months ended September 30, 2019 compared to net income of $682.3 million for the nine months ended September 30, 2018. Net income attributable to PBF Energy stockholders was ~~$173.6~~$266.4 million, or ~~$1.57~~$2.20 per diluted share, for the nine months ended September 30, ~~2017~~2019 ($~~1.57~~2.20 per share on a fully-exchanged, fully-diluted basis based on adjusted fully-converted net income, or ~~$1.18~~$0.33 per share on a fully-exchanged, fully-diluted basis based on adjusted fully-converted net income excluding special items, as described below in Non-GAAP Financial Measures) compared to net income attributable to PBF Energy stockholders of ~~$116.3~~$482.1 million, or ~~$1.19~~$4.16 per diluted share, for the nine months ended September 30, ~~2016~~2018 ($~~1.19~~4.16 per share on a fully-exchanged, fully-diluted basis based on adjusted fully-converted net income, or ~~a loss of $0.67~~$2.24 per share on a fully-exchanged, fully-diluted basis based on adjusted fully-converted net ~~loss~~income excluding special items, as described below in Non-GAAP Financial Measures). The net income ~~or loss~~ attributable to PBF Energy stockholders represents PBF Energy’s equity interest in PBF LLC’s pre-tax income, less applicable income tax expense. PBF Energy’s weighted-average equity interest in PBF LLC was ~~96.6%~~99.0% and ~~95.2%~~98.1% for the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively.

Our results for the nine months ended September 30, ~~2017~~2019 were ~~net~~ positively impacted by ~~special items. During the nine months ended September 30, 2017, we incurred positive special items in the form of~~ a non-cash, pre-tax LCM inventory adjustment of approximately ~~$97.9~~$277.0 million, or ~~$59.4~~$203.7 million net of tax and a pre-tax ~~change in~~gain on the ~~tax receivable agreement liability~~sale of ~~$0.6~~land at our Torrance refinery of $33.1 million, or $0.3 million net of tax, which were partially offset by a special item related to pre-tax debt extinguishment costs associated with the early retirement of our 2020 Senior Secured Notes of $25.5 million, or $15.4$24.3 million net of tax. Our results for the nine months ended September 30, ~~2016~~2018 were positively impacted by special items consisting of a pre-tax LCM inventory adjustment of approximately ~~$320.8~~$300.5 million, or ~~$193.8~~$221.1 million net of tax, a pre-tax change in the Tax Receivable Agreement liability of $7.8 million, or $5.7 million net of tax, and a pre-tax gain on the sale of land at our Torrance refinery of $43.8 million, or $32.2 million net of tax, partially offset by a ~~change~~special item related to the early return of certain leased railcars, resulting in ~~the tax receivable agreement liability~~a pre-tax charge of ~~$3.1~~$44.6 million, or ~~$1.9~~$32.8 million net of tax. The LCM inventory adjustments were recorded due to movements in the price of crude oil and refined products in the periods presented.

Excluding the impact of these special items, our results were ~~positively~~negatively impacted by ~~higher~~unfavorable movements in crude differentials and overall lower throughput volumes atand barrels sold across our refineries. Refining margins for the ~~majority of our refineries~~nine months ended September 30, 2019 compared to the nine months ended September 30, 2018 were mixed with stronger margins realized in the Mid-Continent and ~~higher crack spreads realized at each of our refineries, which~~West Coast offset by weaker margins in the East Coast and Gulf Coast refineries. Our results for the nine months ended September 30, 2019 were also negatively impacted by increased depreciation and amortization expense associated with our continued investment in our refining assets and the ~~hurricane-related reduction in refining throughput in~~effect of significant turnaround activity during the ~~Gulf Coast region and tightening product inventories, specifically distillates, as well as lower costs to comply with the RFS. Notably, we benefited from the improved operating performance~~first nine months of ~~our Chalmette and Torrance refineries.~~2019.

Revenues—Revenues totaled ~~$15.3~~$18.2 billion for the nine months ended September 30, ~~2017~~2019 compared to ~~$11.2~~$20.9 billion for the nine months ended September 30, ~~2016, an increase~~2018, a decrease of approximately ~~$4.1~~$2.7 billion, or ~~36.5%~~12.9%. Revenues per barrel were ~~$62.38~~$70.23 and ~~$57.28~~$78.96 for the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively, ~~an increase~~a decrease of ~~8.9%~~11.1% directly related to ~~higher~~lower hydrocarbon commodity prices. For the nine months ended September 30, ~~2017,~~2019, the total throughput rates at our East Coast, Mid-Continent, Gulf Coast and West Coast refineries averaged approximately ~~330,100~~329,500 bpd, ~~146,500~~154,100 bpd, ~~182,600~~181,400 bpd and ~~126,900~~151,400 bpd, respectively. For the nine months ended September 30, ~~2016,~~2018, the total throughput rates at our East Coast, Mid-Continent, Gulf Coast and West Coast refineries averaged approximately ~~327,900~~349,200 bpd, ~~165,700~~149,500 bpd, ~~171,300~~184,400 bpd and ~~139,600~~168,700 bpd, respectively. The throughput rates at our East Coast and West Coast refineries were ~~substantially unchanged~~lower in ~~2017~~the nine months ended September 30, 2019 compared to ~~2016. Our West Coast refinery was not acquired until~~ the ~~beginning of the third quarter of 2016. The decrease~~same period in

~~throughput rates at our West Coast refinery in 2017 compared to 2016 is primarily~~ 2018 due to planned downtime associated with turnarounds of the coker and associated units at our Delaware City and Torrance refineries and the crude unit at our Paulsboro refinery, ~~for its first significant turnaround under our ownership,~~all of which ~~was~~were completed ~~early~~ in the ~~third~~first half of 2019, and unplanned downtime at our Delaware City refinery in the first quarter of ~~2017.~~2019. Throughput rates at our Mid-Continent refinery were higher in the nine months ended September 30, 2019 compared to the same period in 2018 due to a planned turnaround at our Toledo refinery in the first half of the prior year. Throughput rates at our Gulf Coast refinery were in line with the prior year. For the nine months ended September 30, ~~2017,~~2019, the total barrels sold at our East Coast, Mid-Continent, Gulf Coast and West Coast refineries averaged approximately ~~358,000~~374,200 bpd, ~~160,600~~164,400 bpd, ~~221,700~~227,700 bpd and ~~155,200~~183,300 bpd, respectively. For the nine months ended September 30, ~~2016,~~2018, the total barrels sold at our East Coast, Mid-Continent, Gulf Coast and West Coast refineries averaged approximately ~~366,000~~378,700 bpd, ~~175,700~~158,300 bpd, ~~209,000~~235,900 bpd and ~~177,100~~196,500 bpd, respectively. Total refined product barrels sold were higher than throughput rates, reflecting sales from inventory as well as sales and purchases of refined products outside ~~the refinery.~~our refineries.

Consolidated Gross Margin— ~~Gross~~Consolidated gross margin ~~including refinery operating expenses and depreciation,~~ totaled ~~$689.9~~$677.9 million ~~or $3.22 per barrel of throughput,~~ for the nine months ended September 30, ~~2017~~2019, compared to ~~$524.0~~$960.5 million ~~or $2.69 per barrel of throughput,~~ for the nine months ended September 30, ~~2016, an increase~~2018, a decrease of ~~$165.8~~approximately $282.6 million. Gross refining margin (as described below in Non-GAAP Financial Measures) totaled ~~$1,912.9~~$2,106.6 million, or ~~$8.91~~$9.45 per barrel of throughput ~~($1,814.9 million or $8.46 per barrel of throughput excluding the impact of special items),~~ for the nine months ended September 30, ~~2017~~2019 compared to ~~$1,529.6~~$2,304.1 million, or ~~$7.85~~$9.90 per barrel of throughput ~~($1,208.7 million or $6.20 per barrel of throughput excluding the impact of special items),~~ for the nine months ended September 30, ~~2016, an increase~~2018, a decrease of approximately ~~$383.3~~$197.5 million. Gross refining margin excluding special items totaled $1,829.6 million or ~~$606.2 million excluding special items.~~

~~Excluding the impact~~$8.21 per barrel of special items, gross margin and gross refining margin increased due to improved crack spreads for each of our refineries, reduced costs to comply with the RFS and positive margin contributions from our Torrance refinery following its first significant turnaround under our ownership, which was completed early in the third quarter of 2017. Costs to comply with our obligation under the RFS totaled $203.2 millionthroughput for the nine months ended September 30, ~~2017~~2019 compared to ~~$251.9~~$2,048.2 million or $8.80 per barrel of throughput for the nine months ended September 30, ~~2016. In addition,~~2018, a decrease of $218.6 million.

Consolidated gross margin and gross refining margin were positively impacted by a non-cash LCM adjustment of approximately $277.0 million on a net basis resulting from the increase in crude oil and refined product prices from the year ended 2018 to the end of the third quarter of 2019. Gross refining margin excluding the impact of special items decreased due to unfavorable movements in certain crude differentials and refining margins and reduced throughput rates in the East Coast and West Coast, partially offset by higher throughput rates in the Mid-Continent and stronger crack spreads in the Mid-Continent and West Coast. For the nine months ended September 30, 2018, special items impacting our margin calculations included a non-cash LCM inventory adjustment of approximately ~~$97.9~~$300.5 million on a net basis, resulting from an increase in crude oil and refined product prices, ~~in comparison~~partially offset by a $44.6 million charge resulting from costs associated with the early return of certain leased railcars.

Additionally, our results continue to be impacted by significant costs to comply with the ~~prices~~RFS, although at ~~year end. The non-cash LCM inventory adjustment increased gross margin and gross refining margin by approximately $320.8~~a reduced level from the prior year. Total RFS costs were $92.0 million for the nine months ended September 30, ~~2016.~~2019 in comparison to $117.0 million for the nine months ended September 30, 2018.

Average industry ~~refining~~ margins ~~in the Mid-Continent~~ were ~~stronger~~mixed during the nine months ended September 30, ~~2017 as compared~~2019 in comparison to the same period in ~~2016. The WTI (Chicago) 4-3-1 industry crack spread was $14.70 per barrel, or 12.5% higher,~~2018, primarily as a result of varying regional product inventory levels and seasonal and unplanned refining downtime issues impacting product margins. Crude oil differentials were generally unfavorable in ~~the nine months ended September 30, 2017 as compared~~comparison to ~~$13.07 per barrel in~~ the same period in ~~2016. Our margins were unfavorably impacted by~~2018, with notable light-heavy crude differential compression negatively impacting our ~~refinery specific~~gross refining margin and moving our overall crude slate in the Mid-Continent which was impacted by a declining WTI/Bakken differential partially offset by an improving WTI/Syncrude differential, which averaged a premium of $1.86 per barrel during the nine months ended September 30, 2017 as compared to a premium of $2.67 per barrel in the same period of 2016.lighter.

On the East Coast, the Dated Brent (NYH) 2-1-1 industry crack spread was approximately ~~$14.84~~$12.73 per barrel, or ~~12.6%~~10.0% lower, in the nine months ended September 30, 2019, as compared to $14.15 per barrel in the same period in 2018. Our margins were negatively impacted from our refinery specific slate on the East Coast by tightening in the Dated Brent/Maya and WTI/Bakken differentials, which decreased by $4.63 per barrel and $0.34 per barrel, respectively, in comparison to the same period in 2018. In addition, the WTI/WCS differential decreased significantly to $11.78 per barrel in 2019 compared to $24.55 in 2018, which unfavorably impacted our cost of heavy Canadian crude.

Across the Mid-Continent, the WTI (Chicago) 4-3-1 industry crack spread was $16.69 per barrel, or 5.4% higher, in the nine months ended September 30, ~~2017,~~2019 as compared to ~~$13.18~~$15.84 per barrel in the same period in ~~2016. The Dated Brent/Maya~~2018. Our margins were negatively impacted from our refinery specific slate in the Mid-Continent by a decreasing WTI/Bakken differential, ~~was $0.80 lower~~which averaged a discount of $0.53 per barrel in the nine months ended September 30, ~~2017~~2019, as compared to ~~the same period in 2016. The Dated Brent/WTI differential was $1.83 higher in the nine months ended September 30, 2017 as compared to the same period in 2016, partially offset by~~ a ~~narrowing WTI/Bakken differential, which was approximately $0.95 per barrel less favorable in the nine months ended September 30, 2017 as compared to the same period in 2016.~~

Gulf Coast industry refining margins improved during the nine months ended September 30, 2017 as compared to the same period in 2016. The LLS (Gulf Coast) 2-1-1 industry crack spread was $13.75 per barrel, or 32.9% higher, in the nine months ended September 30, 2017 as compared to $10.35discount of $0.87 per barrel in the same period in ~~2016. Crude differentials slightly decreased with~~2018. Additionally, the WTI/~~LLS~~Syncrude differential ~~averaging~~averaged a premium of ~~$2.41~~$0.30 per barrel during the nine months ended September 30, ~~2017~~2019 as compared to a ~~premium~~discount of ~~$1.79~~$3.00 per barrel in the same period of ~~2016.~~2018.

~~Additionally, we benefited from improvements in~~On the ~~West~~Gulf Coast, the LLS (Gulf Coast) 2-1-1 industry ~~refining margins during the nine months ended September 30, 2017 as compared to the same period in 2016. The ANS (West Coast) 4-3-1 industry~~

crack spread was ~~$18.78~~$12.32 per barrel, or ~~9.1% higher,~~7.1% lower, in the nine months ended September 30, ~~2017~~2019 as compared to ~~$17.22~~$13.26 per barrel in the same period in ~~2016. Partially offsetting~~2018. Margins on the ~~improved crack spreads, crude differentials weakened with the~~Gulf Coast were negatively impacted from our refinery specific slate by a weakening WTI/~~ANS~~LLS differential, ~~averaging~~which averaged a premium of ~~$2.82~~$6.27 per barrel during the nine months ended September 30, ~~2017~~2019 as compared to a premium of ~~$0.17~~$4.21 per barrel in the same period of ~~2016. As~~2018.

On the ~~Torrance refinery~~West Coast the ANS (West Coast) 4-3-1 industry crack spread was ~~not acquired until~~$18.49 per barrel, or 10.9% higher, in the ~~beginning of the third quarter of 2016, we did not benefit from the contribution of this refinery for the full~~ nine months ended September 30, 2019 as compared to $16.67 per barrel in the same period in 2018. Margins on the West Coast were negatively impacted from our refinery specific slate by a weakening WTI/ANS differential, which averaged a premium of $8.15 per barrel during the ~~prior year.~~nine months ended September 30, 2019 as compared to a premium of $5.29 per barrel in the same period of 2018.

Operating Expenses— Operating expenses totaled ~~$1,267.1~~$1,348.7 million for the nine months ended September 30, ~~2017~~2019 compared to ~~$989.3~~$1,268.2 million for the nine months ended September 30, ~~2016,~~2018, an increase of ~~$277.8~~approximately $80.5 million, or ~~28.1%~~6.3%. Of the total ~~$1,267.1~~$1,348.7 million of operating expenses for the nine months ended September 30, ~~2017, $1,225.0~~2019, $1,274.9 million or ~~$5.71~~$5.72 per barrel of throughput, related to expenses incurred by the Refining segment, while the remaining ~~$42.1~~$73.8 million related to expenses incurred by the Logistics segment ($~~972.2~~1,223.8 million or ~~$4.98~~$5.26 per barrel, and ~~$17.1~~$44.4 million of operating expenses for the nine months ended September 30, ~~2016~~2018 related to the Refining and Logistics segments, respectively). ~~The increase~~Increases in operating expenses ~~was~~were mainly attributable to an increase of $237.3 million in costs associated with the Torrance refinery and related logistics assets. Total operating expenses for the nine months ended September 30, 2017, excluding our Torrance refinery, increased dueattributed to higher outside service costs attributed to turnaround and maintenance ~~an utility costs across all~~activity. Operating expenses related to our ~~other refineries. The operating~~Logistics segment increased when compared to the same period in 2018 due to expenses related to the ~~Logistics segment consists of costs related to the operation and maintenance~~operations of PBFX’s recently acquired assets ~~which were~~and higher ~~primarily due to acquisitions by PBFX during 2016~~environmental clean-up and ~~2017.~~product contamination remediation costs.

General and Administrative Expenses— General and administrative expenses totaled ~~$143.2~~$175.9 million for the nine months ended September 30, ~~2017~~2019 compared to ~~$125.0~~$191.4 million for the nine months ended September 30, ~~2016, an increase~~2018, a decrease of approximately ~~$18.2~~$15.5 million or ~~14.6%~~8.1%. The ~~increase~~decrease in general and administrative expenses for the nine months ended September 30, ~~2017 over the same period of 2016 primarily relates~~2019 in comparison to ~~increased employee related expenses of $28.3 million driven by higher incentive compensation costs in~~ the nine months ended September 30, ~~2017 as compared~~2018 primarily related to ~~the same period in 2016 as well as higher employee headcount. These increases were~~lower employee-related expenses, including incentive compensation, partially offset by lower costs associated with acquisition and integration related activities which were approximately $10.1 million lower in the nine months ended September 30, 2017 as compared to the same period in 2016.higher legal settlement costs. Our general and administrative expenses are comprised of ~~the~~ personnel, facilities and other infrastructure costs necessary to support our refineries and related ~~logistical~~logistics assets.

~~Loss~~Gain on Sale of Assets— ~~There was a loss of $0.9 million~~Gain on sale of assets ~~for the nine months ended September 30, 2017 relating to non-operating refinery assets. There~~ was ~~a loss of $11.4~~$31.8 million ~~on sale of assets for the nine months ended September 30, 2016 relating to the sale of non-operating refining assets.~~

~~Depreciation~~ and ~~Amortization Expense— Depreciation and amortization expense totaled $208.2~~$43.1 million for the nine months ended September 30, ~~2017~~2019 and September 30, 2018, respectively, mainly attributed to the sale of two separate parcels of land at our Torrance refinery.

Depreciation and Amortization Expense— Depreciation and amortization expense totaled $322.7 million for the nine months ended September 30, 2019 (including ~~$197.8~~$314.9 million recorded within Cost of sales) compared to ~~$163.0~~$271.7 million for the nine months ended September 30, ~~2016~~2018 (including ~~$158.6~~$263.8 million recorded within Cost of sales), an increase of approximately ~~$45.1~~$51.0 million. The increase was a result of additional depreciation expense associated with ~~the assets acquired in the Torrance Acquisition and~~ a general increase in our fixed asset base due to capital projects and turnarounds completed since the third quarter of ~~2016.~~2018, as well as accelerated amortization related to the Delaware City and Torrance refinery turnarounds, which were completed in the first half of 2019.

Change in Tax Receivable Agreement Liability— ~~Change~~There was no change in the ~~tax receivable agreement~~Tax Receivable Agreement liability for the nine months ended September 30, ~~2017 represented a gain of $0.6 million~~2019 as compared to a ~~loss~~gain of ~~$3.1~~$7.8 million ~~for~~in the ~~same period of 2016.~~nine months ended September 30, 2018.

Change in Fair Value of Catalyst Leases— Change in the fair value of catalyst leases represented a loss of ~~$1.0~~$6.4 million for the nine months ended September 30, ~~2017~~2019 compared to a ~~loss~~gain of ~~$4.6~~$5.8 million for the nine months ended September 30, ~~2016.~~2018. These gains and losses relate 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 on the lease termination dates.

~~Debt extinguishment costs~~ - Debt extinguishment costs of $25.5 million incurred in the nine months ended September 30, 2017 relate to nonrecurring charges associated with debt refinancing activity calculated based on the difference between the carrying value of the 2020 Senior Secured Notes on the date that they were reacquired and the amount for which they were reacquired. There were no such costs in the same period of 2016.

Interest Expense, net— ~~Interest~~PBF Energy interest expense totaled ~~$114.9~~$121.3 million for the nine months ended September 30, ~~2017~~2019 compared to ~~$112.0~~$128.9 million for the nine months ended September 30, ~~2016, an increase~~2018, a decrease of approximately ~~$2.9~~$7.6 million. This net ~~increase~~decrease is mainly attributable to ~~higher~~lower outstanding revolver borrowings ~~under our Revolving Loan partially offset by lower interest expense on a portion of our senior notes that were refinanced in May 2017 (see “Note 7 - Debt” for additional details).~~during the nine months ended September 30, 2019. Interest expense includes interest on long-term debt including the PBFX credit facilities, costs related to the sale and leaseback of our precious metals catalyst, financing costs associated with the ~~A&R~~Inventory Intermediation Agreements with J. Aron, letter of credit fees associated with the purchase of certain crude oils and the amortization of deferred financing costs. PBF LLC interest expense totaled $128.3 million and $135.1 million for the nine months ended September 30, 2019 and September 30, 2018, respectively (inclusive of $7.0 million and $6.2 million, respectively, of incremental interest expense on the affiliate note payable with PBF Energy that eliminates in consolidation at the PBF Energy level).

Income Tax Expense— PBF LLC is organized as a limited liability company and PBFX is ~~a master limited partnership,~~an MLP, both of which are treated as “flow-through” entities for federal income tax purposes and therefore are not subject to income tax. However, two subsidiaries of Chalmette Refining and ~~one~~our Canadian subsidiary ~~of PBF Holding that~~ are treated as C-Corporations for income tax purposes and may incur income taxes with respect to their earnings, as applicable. The members of PBF LLC are required to include their proportionate share of PBF LLC’s taxable income or loss, which includes PBF LLC’s allocable share of PBFX’s pre-tax income or loss, on their respective tax returns. PBF LLC generally makes distributions to its members, per the terms of PBF LLC’s amended and restated limited liability company agreement, related to such taxes on a pro-rata basis. PBF Energy recognizes an income tax expense or benefit in our consolidated financial statements based on PBF Energy’s allocable share of PBF LLC’s pre-tax income or loss, which was approximately ~~96.6%~~99.0% and ~~95.2%~~98.1%, on a weighted-average basis for the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively. PBF Energy’s ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements do not reflect any benefit or provision for income taxes on the pre-tax income or loss attributable to the noncontrolling interests in PBF LLC or PBFX (although, as described above, PBF LLC must make tax distributions to all its members on a pro-rata basis). PBF Energy’s effective tax rate, excluding the impact of noncontrolling ~~interest,~~interests, for the nine months ended September 30, ~~2017~~2019 and ~~2016~~2018 was ~~39.4%~~25.7% and ~~42.5%~~25.8%, ~~respectively, reflecting tax adjustments for discrete items and the impact of earnings in foreign tax jurisdictions.~~respectively.

Noncontrolling Interest— PBF Energy is the sole managing member of, and has a controlling interest in, PBF LLC. As the sole managing member of PBF LLC, PBF Energy operates and controls all of the business and affairs of PBF LLC and its subsidiaries. PBF Energy consolidates the financial results of PBF LLC and its subsidiaries, including PBFX. With respect to the consolidation of PBF LLC, the Company records a noncontrolling interest for the economic interest in PBF LLC held by members other than PBF Energy, and with respect to the consolidation of PBFX, the Company records a noncontrolling interest for the economic interests in PBFX held by the public ~~unit holders~~unitholders of PBFX, and with respect to the consolidation of PBF Holding, the Company records a 20% noncontrolling interest for the ownership interests in two subsidiaries of Chalmette Refining held by a third party. The total noncontrolling interest on the ~~consolidated statements~~Condensed Consolidated Statements of ~~operations~~Operations represents the portion of the Company’s earnings or loss attributable to the economic interests held by members of PBF ~~Energy~~LLC other than PBF Energy, by the public common ~~unit holders~~unitholders of PBFX and by the ~~third party stockholder in~~third-party stockholders of certain of Chalmette Refining’s subsidiaries. The total noncontrolling interest on the ~~balance sheet~~Condensed Consolidated Balance Sheets represents the portion of the Company’s net assets attributable to the economic interests held by the members of PBF LLC other than PBF Energy, by the public common ~~unit holders~~unitholders of PBFX and by the ~~third party stockholder~~third-party stockholders of ~~T&M Terminal Company and Collins Pipeline Company.~~the two Chalmette Refining subsidiaries. PBF Energy’s weighted-average equity noncontrolling interest ownership percentage in PBF LLC for the nine months ended September 30, ~~2017~~2019 and ~~2016~~2018 was approximately ~~3.4%~~1.0% and ~~4.8%~~1.9%, respectively. The carrying amount of the noncontrolling interest on our Condensed Consolidated Balance Sheets attributable to the noncontrolling interest is not equal to the noncontrolling interest ownership percentage due to the effect of income taxes and related agreements that pertain solely to PBF Energy.

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 GAAP (“~~non-GAAP”~~Non-GAAP”). These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP, and our calculations thereof may not be comparable to similarly entitled measures reported by other companies. Such Non-GAAP financial measures are presented only in the context of PBF Energy’s results and are not presented or discussed in respect to PBF LLC.

Special Items

The ~~non-GAAP~~Non-GAAP measures presented include Adjusted Fully-Converted Net Income excluding special items, EBITDA excluding special items and gross refining margin excluding special items. ~~The special~~Special items for the periods presented relate to an LCM inventory ~~adjustment,~~adjustments, gains on sale of assets at our Torrance refinery, changes in the ~~tax receivable agreement~~Tax Receivable Agreement liability and ~~debt extinguishment costs (as further explained in “Notes~~charges associated with the early return of certain leased railcars. See “Notes to Non-GAAP Financial Measures” below for more details on ~~page 63).~~all special items disclosed. Although we believe that ~~non-GAAP~~Non-GAAP financial measures, excluding the impact of special items, provide useful supplemental information to investors regarding the results and performance of our business and allow for helpful period-over-period comparisons, such ~~non-GAAP~~Non-GAAP measures should only be considered as a supplement to, and not as a substitute for, or superior to, the financial measures prepared in accordance with GAAP.

Adjusted Fully-Converted Net Income ~~(Loss)~~ and Adjusted Fully-Converted Net Income ~~(Loss)~~ Excluding Special Items

PBF Energy utilizes results presented on an Adjusted Fully-Converted basis that reflects an assumed exchange of all PBF LLC Series A Units for shares of PBF Energy Class A common ~~stock of PBF Energy.~~stock. In addition, we present results on an Adjusted Fully-Converted basis excluding special items as described above. We believe that these Adjusted Fully-Converted measures, when presented in conjunction with comparable GAAP measures, are useful to investors to compare PBF Energy results across different periods and to facilitate an understanding of our operating results. Neither Adjusted Fully-Converted Net Income ~~(Loss)~~ nor Adjusted Fully-Converted Net Income ~~(Loss)~~ excluding special items should be considered an alternative to net income ~~(loss)~~ presented in accordance with GAAP. Adjusted Fully-Converted Net Income ~~(Loss)~~ and Adjusted Fully-Converted Net Income ~~(Loss)~~ excluding special items presented by other companies may not be comparable to our presentation, since each company may define these terms differently. The differences between Adjusted Fully-Converted and GAAP results are as follows:


1.	Assumed exchange of all PBF LLC Series A Units for shares of PBF Energy Class A common stock. As a result of the assumed exchange of all 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.

Income Taxes. Prior to PBF Energy’s initial public offering (“IPO”), ~~we were~~PBF Energy was organized as a limited liability company treated as a “flow-through” entity for income tax purposes, and even after PBF Energy’s IPO, not all of ~~our~~its earnings are subject to corporate-level income taxes. Adjustments have been made to the Adjusted Fully-Converted tax provisions and earnings to assume that wePBF Energy had adopted ~~our~~its post-IPO corporate tax structure for all periods presented and ~~are~~is 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~~PBF Energy’s earnings that isare subject to corporate income tax.

The following table reconciles ~~our~~the Adjusted Fully-Converted results of PBF Energy with ~~our~~its results presented in accordance with GAAP for the three and nine months ended September 30, ~~2017~~2019 and ~~2016:~~2018 (in millions, except share and per share amounts):


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016			2019			2018			2019			2018
Net income attributable to PBF Energy Inc. stockholders	$	314,365		$	42,111		$	173,625		$	116,253		$	69.5		$	179.6		$	266.4		$	482.1
Less: Income allocated to participating securities	272			—			811			—			0.2			0.2			0.4			0.6
Income available to PBF Energy Inc. stockholders - basic	314,093			42,111			172,814			116,253			69.3			179.4			266.0			481.5
Add: Net income attributable to the noncontrolling interest ⁽¹⁾	18,137			3,797			9,677			10,755
Add: Net income attributable to noncontrolling interest ⁽¹⁾													0.9			2.4			3.6			9.8
Less: Income tax expense ⁽²⁾	(7,139		)	(1,504		)	(3,809		)	(4,259		)	(0.3		)	(0.7		)	(0.9		)	(2.6		)
Adjusted fully-converted net income	$	325,091		$	44,404		$	178,682		$	122,749		$	69.9		$	181.1		$	268.7		$	488.7
Special Items:(3)
Add: Non-cash LCM inventory adjustment ⁽³⁾	(265,077		)	(103,990		)	(97,943		)	(320,833		)	47.0			(54.8		)	(277.0		)	(300.5		)
Add: Change in tax receivable agreement liability ⁽³⁾	(565		)	3,143			(565		)	3,143
Add: Debt extinguishment costs ⁽³⁾	—			—			25,451			—
Add: Recomputed income taxes on special items ⁽³⁾	104,556			39,935			28,755			125,805
Adjusted fully-converted net income (loss) excluding special items	$	164,005		$	(16,508	)	$	134,380		$	(69,136	)
Add: Change in Tax Receivable Agreement liability													—			(7.8		)	—			(7.8		)
Add: Gain on Torrance land sale													(33.1		)	(43.8		)	(33.1		)	(43.8		)
Add: Early railcar return expense													—			44.6			—			44.6
Add: Recomputed income taxes on special items													(3.7		)	16.3			82.0			81.2
Adjusted fully-converted net income excluding special items													$	80.1		$	135.6		$	40.6		$	262.4

Weighted-average shares outstanding of PBF Energy Inc.	109,724,595			97,825,357			109,634,921			97,823,708			119,921,346			117,029,486			119,897,504			113,597,970
Conversion of PBF LLC Series A Units ⁽⁴⁾	3,825,508			4,966,632			3,832,464			4,956,853			1,206,325			1,206,326			1,206,325			2,184,690
Common stock equivalents ⁽⁵⁾	332,137			343,810			324,157			430,356			461,508			2,169,503			768,035			1,592,510
Adjusted fully-converted shares outstanding-diluted	113,882,240			103,135,799			113,791,542			103,210,917
Fully-converted shares outstanding-diluted													121,589,179			120,405,315			121,871,864			117,375,170

Diluted net income per share	$	2.85		$	0.43		$	1.57		$	1.19		$	0.57		$	1.50		$	2.20		$	4.16
Adjusted fully-converted net income (per fully exchanged, fully diluted shares outstanding)	$	2.85		$	0.43		$	1.57		$	1.19
Adjusted fully-converted net income (loss) excluding special items (per fully exchanged, fully diluted shares outstanding)	$	1.44		$	(0.16	)	$	1.18		$	(0.67	)
Adjusted fully-converted net income per fully exchanged, fully diluted shares outstanding ⁽⁵⁾													$	0.57		$	1.50		$	2.20		$	4.16
Adjusted fully-converted net income excluding special items per fully exchanged, fully diluted shares outstanding ^{(3) (5)}													$	0.66		$	1.13		$	0.33		$	2.24

——————————

See Notes to Non-GAAP Financial ~~Measures on page 63~~Measures.

Gross Refining Margin and Gross Refining Margin Excluding Special Items

Gross refining margin is defined as consolidated gross margin excluding refinery depreciation, refinery operating ~~expenses,~~expense, and gross margin of PBFX. We believe both gross refining margin and gross refining margin excluding special items are important measures of operating performance and provide useful information to investors because they are helpful metric comparisons to the industry refining margin benchmarks, as the refining margin benchmarks do not include a charge for refinery operating expenses and depreciation. In order to assess our operating performance,

we compare our gross refining margin ~~(revenue~~(revenues less cost of products and other) to industry refining margin benchmarks and crude oil prices as defined in the table below.

Neither gross refining margin nor gross refining margin excluding special items should be considered an alternative to consolidated gross margin, ~~operating~~ income from operations, net cash flows from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Gross refining margin and gross refining margin excluding special items presented by other companies may not be comparable to our presentation, since each company may define these terms differently. The following table presents our GAAP calculation of gross margin and a reconciliation of gross refining margin to the most directly comparable GAAP financial measure, consolidated gross margin, on a historical basis, as applicable, for each of the periods indicated (in ~~thousands,~~millions, except per barrel amounts):

Three Months Ended September 30,
2017 2016
$ per barrel of throughput $ per barrel of throughput
Calculation of gross margin:
Revenues $ 5,478,951
$ 70.09
$ 4,513,204
$ 62.39
Less: Cost of products and other 4,352,061
55.67
3,862,580
53.39
Less: Refinery operating expenses 389,591
4.98
404,045
5.59
Less: Refinery depreciation expenses 70,338
0.90
51,337
0.71
Gross margin $ 666,961
$ 8.54
$ 195,242
$ 2.70
Reconciliation of gross margin to gross refining margin:
Gross margin $ 666,961
$ 8.54
$ 195,242
$ 2.70
Less: Revenues of PBFX (65,494 ) (0.84 ) (48,433 ) (0.67 )
Add: Affiliate cost of sales of PBFX 2,611
0.03
2,164
0.03
Add: Refinery operating expenses 389,591
4.98
404,045
5.59
Add: Refinery depreciation expense 70,338
0.90
51,337
0.71
Gross refining margin $ 1,064,007
$ 13.61
$ 604,355
$ 8.36
Special items:

Add: Non-cash LCM inventory adjustment ⁽³⁾
(265,077 ) (3.39 ) (103,990 ) (1.44 )
Gross refining margin excluding special items $ 798,930
$ 10.22
$ 500,365
$ 6.92



	Three Months Ended September 30,
	2019						2018
	$			per barrel of throughput			$			per barrel of throughput
Calculation of consolidated gross margin:
Revenues	$	6,430.5		$	82.15		$	7,646.3		$	93.56
Less: Cost of sales	6,244.4			79.77			7,331.3			89.70
Consolidated gross margin	$	186.1		$	2.38		$	315.0		$	3.86
Reconciliation of consolidated gross margin to gross refining margin:
Consolidated gross margin	$	186.1		$	2.38		$	315.0		$	3.86
Add: PBFX operating expense	28.4			0.36			20.3			0.25
Add: PBFX depreciation expense	9.0			0.11			7.4			0.09
Less: Revenues of PBFX	(86.4		)	(1.10		)	(70.0		)	(0.86		)
Add: Refinery operating expense	411.8			5.26			409.7			5.01
Add: Refinery depreciation expense	98.7			1.26			83.4			1.02
Gross refining margin	$	647.6		$	8.27		$	765.8		$	9.37
Special items:
Add: Non-cash LCM inventory adjustment ⁽³⁾	47.0			0.60			(54.8		)	(0.67		)
Add: Early railcar return expense	—			—			44.6			0.55
Gross refining margin excluding special items	$	694.6		$	8.87		$	755.6		$	9.25



	Nine Months Ended September 30,
	2019						2018
	$			per barrel of throughput			$			per barrel of throughput
Calculation of consolidated gross margin:
Revenues	$	18,206.7		$	81.69		$	20,893.2		$	89.84
Less: Cost of sales	17,528.8			78.65			19,932.7			85.71
Consolidated gross margin	$	677.9		$	3.04		$	960.5		$	4.13
Reconciliation of consolidated gross margin to gross refining margin:
Consolidated gross margin	$	677.9		$	3.04		$	960.5		$	4.13
Add: PBFX operating expense	86.9			0.39			57.4			0.25
Add: PBFX depreciation expense	26.6			0.12			20.8			0.09
Less: Revenues of PBFX	(248.0		)	(1.11		)	(201.4		)	(0.87		)
Add: Refinery operating expense	1,274.9			5.72			1,223.8			5.26
Add: Refinery depreciation expense	288.3			1.29			243.0			1.04
Gross refining margin	$	2,106.6		$	9.45		$	2,304.1		$	9.90
Special items:⁽³⁾
Add: Non-cash LCM inventory adjustment	(277.0		)	(1.24		)	(300.5		)	(1.29		)
Add: Early railcar return expense	—			—			44.6			0.19
Gross refining margin excluding special items	$	1,829.6		$	8.21		$	2,048.2		$	8.80

——————————

See Notes to Non-GAAP Financial ~~Measures on page 63~~

Nine Months Ended September 30,
2017 2016
$ per barrel of throughput $ per barrel of throughput
Calculation of gross margin:
Revenues $ 15,250,649
$ 71.07
$ 11,171,856
$ 57.28
Less: Cost of products and other 13,154,521
61.30
9,524,119
48.83
Less: Refinery operating expenses 1,225,014
5.71
972,223
4.98
Less: Refinery depreciation expenses 181,238
0.84
151,473
0.78
Gross margin $ 689,876
$ 3.22
$ 524,041
$ 2.69
Reconciliation of gross margin to gross refining margin:
Gross margin $ 689,876
$ 3.22
$ 524,041
$ 2.69
Less: Revenues of PBFX (188,300 ) (0.88 ) (125,641 ) (0.64 )
Add: Affiliate cost of sales of PBFX 5,041
0.02
7,486
0.04
Add: Refinery operating expenses 1,225,014
5.71
972,223
4.98
Add: Refinery depreciation expense 181,238
0.84
151,473
0.78
Gross refining margin $ 1,912,869
$ 8.91
$ 1,529,582
$ 7.85
Special items:
Add: Non-cash LCM inventory adjustment ⁽³⁾
(97,943 ) (0.45 ) (320,833 ) (1.65 )
Gross refining margin excluding special items $ 1,814,926
$ 8.46
$ 1,208,749
$ 6.20

~~——————————~~

~~See Notes to Non-GAAP Financial Measures on page 63~~Measures.

EBITDA, EBITDA Excluding Special Items and Adjusted EBITDA

Our management uses EBITDA (earnings before interest, income taxes, depreciation and amortization), EBITDA excluding special items and Adjusted EBITDA as measures of operating performance to assist in comparing performance from period to period on a consistent basis and to readily view operating trends, as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations, and in communications with our board of directors, creditors, analysts and investors concerning our financial performance. Our outstanding indebtedness for borrowed money and other contractual obligations also include similar measures as a basis for certain covenants under those agreements which may differ from the Adjusted EBITDA definition described below.

EBITDA, EBITDA excluding special items and Adjusted EBITDA are not presentations made in accordance with GAAP and our computation of EBITDA, EBITDA excluding special items and Adjusted EBITDA may vary from others in our industry. In addition, Adjusted EBITDA contains some, but not all, adjustments that are taken into account in the calculation of the components of various covenants in the agreements governing our senior notes and other credit facilities. EBITDA, EBITDA excluding special items and Adjusted EBITDA should not be considered as alternatives to ~~operating~~ income ~~(loss)~~from operations or net income ~~(loss)~~ as measures of operating performance. In addition, EBITDA, EBITDA excluding special items and Adjusted EBITDA are not presented as, and should not be considered, an alternative to cash flows from operations as a measure of liquidity. Adjusted EBITDA is defined as EBITDA before adjustments for items such as ~~equity-based~~stock-based compensation expense, ~~gains (losses) from certain derivative activities and contingent consideration,~~ the non-cash change in the ~~deferral~~fair value of ~~gross profit related to the sale of certain finished products,~~catalyst leases, the write down of inventory to the LCM, changes in the liability for ~~tax receivable agreement~~Tax Receivable Agreement due to factors out of ~~our~~PBF Energy’s control such as changes in tax rates, debt extinguishment costs related to refinancing activities, and certain other non-cash items. Other companies, including other companies in

our industry, may calculate EBITDA, EBITDA excluding special items and Adjusted EBITDA differently than we do, limiting their usefulness as comparative measures. EBITDA, EBITDA excluding special items and Adjusted EBITDA also have limitations as analytical tools and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations include that EBITDA, EBITDA excluding special items and Adjusted EBITDA:

do not reflect depreciation expense or our cash expenditures, or future requirements, for capital expenditures or contractual commitments;

do not reflect changes in, or cash requirements for, our working capital needs;

do not reflect our interest expense, or the cash requirements necessary to service interest or principal payments, on our debt;

do not reflect realized and unrealized gains and losses from certain hedging activities, which may have a substantial impact on our cash flow;

do not reflect certain other non-cash income and expenses; and

exclude income taxes that may represent a reduction in available cash.

The following tables reconcile net income as reflected in ~~our~~PBF Energy’s results of operations to EBITDA, EBITDA excluding special items and Adjusted EBITDA for the periods presented (in ~~thousands)~~millions):


		Three Months Ended September 30,						Nine Months Ended September 30,								Three Months Ended September 30,								Nine Months Ended September 30,

			2017			2016					2017				2016				2019				2018				2019				2018
Reconciliation of net income to EBITDA and EBITDA excluding special items:	Reconciliation of net income to EBITDA and EBITDA excluding special items:														Reconciliation of net income to EBITDA and EBITDA excluding special items:
Net income	Net income	$	347,226		$	56,444		$	223,045			$	153,756		Net income	$	86.3			$	192.5			$	306.1			$	522.0
Add: Depreciation and amortization expense	Add: Depreciation and amortization expense	78,520			56,036			208,155				163,029			Add: Depreciation and amortization expense	109.8				93.4				322.7				271.7
Add: Interest expense, net	Add: Interest expense, net	36,990			38,527			114,871				111,994			Add: Interest expense, net	39.7				42.3				121.3				128.9
Add: Income tax (benefit) expense		203,979			31,673			112,889				85,607
Add: Income tax expense															Add: Income tax expense	22.0				61.3				92.0				167.8
EBITDA	EBITDA	$	666,715		$	182,680		$	658,960			$	514,386		EBITDA	$	257.8			$	389.5			$	842.1			$	1,090.4
Special Items:
Special Items⁽³⁾															Special Items⁽³⁾
Add: Non-cash LCM inventory adjustment ⁽³⁾	Add: Non-cash LCM inventory adjustment ⁽³⁾	$	(265,077	)	$	(103,990	)	$	(97,943	)		$	(320,833	)	Add: Non-cash LCM inventory adjustment ⁽³⁾	47.0				(54.8		)		(277.0		)		(300.5		)
Add: Change in tax receivable agreement liability ⁽³⁾		(565		)	3,143			(565		)		3,143
Add: Debt extinguishment costs ⁽³⁾		—			—			25,451				—
Add: Change in Tax Receivable Agreement liability															Add: Change in Tax Receivable Agreement liability	—				(7.8		)		—				(7.8		)
Add: Gain on Torrance land sale															Add: Gain on Torrance land sale	(33.1		)		(43.8		)		(33.1		)		(43.8		)
Add: Early railcar return expense															Add: Early railcar return expense	—				44.6				—				44.6
EBITDA excluding special items	EBITDA excluding special items	$	401,073		$	81,833		$	585,903			$	196,696		EBITDA excluding special items	$	271.7			$	327.7			$	532.0			$	782.9

Reconciliation of EBITDA to Adjusted EBITDA:	Reconciliation of EBITDA to Adjusted EBITDA:														Reconciliation of EBITDA to Adjusted EBITDA:
EBITDA	EBITDA	$	666,715		$	182,680		$	658,960			$	514,386		EBITDA	$	257.8			$	389.5			$	842.1			$	1,090.4
Add: Stock based compensation		4,222			3,622			18,064				16,331
Add: Non-cash change in fair value of catalyst leases		(473		)	(77		)	1,011				4,556
Add: Stock-based compensation															Add: Stock-based compensation	8.4				5.6				28.4				18.6
Add: Net non-cash change in fair value of catalyst leases															Add: Net non-cash change in fair value of catalyst leases	3.8				(1.7		)		6.4				(5.8		)
Add: Non-cash LCM inventory adjustment⁽³⁾	Add: Non-cash LCM inventory adjustment⁽³⁾	(265,077		)	(103,990		)	(97,943		)		(320,833		)	Add: Non-cash LCM inventory adjustment⁽³⁾	47.0				(54.8		)		(277.0		)		(300.5		)
Add: Change in tax receivable agreement liability ⁽³⁾		(565		)	3,143			(565		)		3,143
Add: Debt extinguishment costs ⁽³⁾		—			—			25,451				—
Add: Change in Tax Receivable Agreement liability⁽³⁾															Add: Change in Tax Receivable Agreement liability⁽³⁾	—				(7.8		)		—				(7.8		)
Adjusted EBITDA	Adjusted EBITDA	$	404,822		$	85,378		$	604,978			$	217,583		Adjusted EBITDA	$	317.0			$	330.8			$	599.9			$	794.9

——————————

See Notes to Non-GAAP Financial ~~Measures on page 63~~Measures.

Notes to Non-GAAP Financial Measures

The following notes are applicable to the Non-GAAP Financial Measures above:


(1)	Represents the elimination of the noncontrolling interest associated with the ownership by the members of PBF LLC other than PBF Energy, as if such members had fully exchanged their PBF LLC Series A Units for shares of PBF Energy’s Class A common stock.

(2)

Represents an adjustment to ~~apply~~reflect PBF Energy’s ~~expected full-year~~estimated annualized statutory corporate tax rate of approximately ~~39.4%~~26.5% and ~~39.6%~~26.4% for the ~~2017~~2019 and ~~2016~~2018 periods, respectively, applied to ~~the~~ net income attributable to ~~the~~ noncontrolling interest for all periods presented. The adjustment assumes the full exchange of existing PBF LLC Series A Units as described in ⁽¹⁾ above.

(3)

Special items: In accordance with GAAP, we are required to state our inventories at the lower of cost or market. Our inventory cost is determined by the last-in, first-out (“LIFO”) inventory valuation methodology, in which the most recently incurred costs are charged to cost of sales and inventories are valued at base layer acquisition costs. Market is determined based on an assessment of the current estimated replacement cost and net realizable selling price of the inventory. In periods where the market price of our inventory declines substantially, cost values of inventory may exceed market values. In such instances, we record an adjustment to write down the value of inventory to market value in accordance with GAAP. In subsequent periods, the value of inventory is reassessed and an LCM inventory adjustment is recorded to reflect the net change in the LCM inventory reserve between the prior period and the current period. The net impact of these LCM inventory adjustments are included in the Refining segment’s operating income, but are excluded from the operating results presented in the table in order to make such information comparable between periods.

LCM inventory adjustment - LCM is a GAAP requirement related to inventory valuation that mandates inventory to be stated at the lower of cost or market. Our inventories are stated at the lower of cost or market. Cost is determined using the last-in, first-out (“LIFO”) inventory valuation methodology, in which the most recently incurred costs are charged to cost of sales and inventories are valued at base layer acquisition costs. Market is determined based on an assessment of the current estimated replacement cost and net realizable selling price of the inventory. In periods where the market price of our inventory declines substantially, cost values of inventory may exceed market values. In such instances, we record an adjustment to write down the value of inventory to market value in accordance with GAAP. In subsequent periods, the value of inventory is reassessed and an LCM inventory adjustment is recorded to reflect the net change in the LCM inventory reserve between the prior period and the current period. The net impact of these LCM inventory adjustments are included in the Refining segment’s income from operations, but are excluded from the operating results presented in the tables, as applicable, in order to make such information comparable between periods.

The following table includes the ~~lower of cost or market~~LCM inventory reserve as of each date presented (in ~~thousands)~~millions):


	2017		2016		2019		2018
January 1,	$	595,988	$	1,117,336	$	651.8	$	300.5
June 30,	763,122		900,493		327.8		54.8
September 30,	498,045		796,503		374.8		—

The following table includes the corresponding impact of changes in the ~~lower of cost or market~~LCM inventory reserve on ~~operating~~ income from operations and net income for the periods presented (in ~~thousands)~~millions):

Three Months Ended
September 30, Nine Months Ended
September 30,

2017 2016 2017 2016
Net LCM inventory adjustment benefit in operating income $ 265,077
$ 103,990
$ 97,943
$ 320,833
Net LCM inventory adjustment benefit in net income 160,743
62,810
59,393
193,783



	Three Months Ended September 30,					Nine Months Ended September 30,
	Three Months Ended September 30,					Nine Months Ended September 30,
	2019			2018		2019		2018
Net LCM inventory adjustment (charge) benefit in income from operations	$	(47.0	)	$	54.8	$	277.0	$	300.5
Net LCM inventory adjustment (charge) benefit in net income	(34.6		)	40.3		203.7		221.1

~~Additionally, during both~~Gain on Torrance land sale - During the three and nine months ended September 30, ~~2017~~2019 and 2018, respectively, we recorded ~~a change in tax receivable agreement liability that~~gains on the sale of two separate parcels of real property acquired as part of the Torrance refinery, but not part of the refinery itself. The gain increased ~~operating~~ income from operations and net income by ~~$0.6~~$33.1 million and ~~$0.3~~$24.3 million, ~~respectively. During both~~respectively, during the three and nine months ended September 30, ~~2016~~2019. The gain increased income from operations and net income by $43.8 million and $32.2 million, respectively, during the same periods in 2018.

Change in Tax Receivable Agreement liability - During the three and nine months ended September 30, 2018 we recorded a change in ~~tax receivable agreement~~the Tax Receivable Agreement liability that ~~decreased operating~~increased income before income taxes and net income by ~~$3.1~~$7.8 million and ~~$1.9~~$5.7 million, respectively. The changes in the ~~tax receivable agreement~~Tax Receivable Agreement liability reflect charges or benefits attributable to changes in our obligation under the ~~tax receivable agreement~~Tax Receivable Agreement due to factors out of our control such as changes in tax rates.

~~Furthermore,~~ There was no change in the Tax Receivable Agreement liability during the three and nine months ended September 30, ~~2017, we recorded pre-tax debt extinguishment costs~~2019.

Early Return of ~~$25.5 million related to~~Railcars - During the ~~redemption of the 2020 Senior Secured Notes. These nonrecurring charges decreased net income by $15.4 million for the~~three and nine months ended September 30, ~~2017.~~2018 we recognized certain expenses within Cost of sales associated with the voluntary early return of certain leased railcars. These charges decreased income from operations and net income by $44.6 million and $32.8 million, respectively. There were no such ~~costs~~expenses in the ~~three months ended September 30, 2017 nor in either the three or nine months ended September 30, 2016.~~same periods of 2019.

Recomputed Income taxes on special items - The income tax impact ~~of the~~on special items ~~were~~is calculated using the tax rates shown in ~~footnote~~ (2) above.


(4)	Represents an adjustment to weighted-average diluted shares outstanding to assume the full exchange of existing PBF LLC Series A Units as described in (1) above.

(5)

Represents weighted-average diluted shares outstanding assuming the conversion of all common stock equivalents, including options and warrants for PBF LLC Series A Units and performance share units and options for shares of PBF Energy Class A common stock as calculated under the treasury stock method (to the extent the impact of such exchange would not be anti-dilutive) for the three and nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively. Common stock equivalents exclude the effects of options, warrants and ~~warrants~~performance share units to purchase ~~6,484,650~~7,739,275 and ~~6,554,650~~6,003,867 shares of PBF Energy Class A common stock and PBF LLC Series A Units because they are anti-dilutive for the three and nine months ended September 30, ~~2017,~~2019, respectively. Common stock equivalents exclude the effects of options and warrants to purchase ~~5,161,125~~15,000 and ~~4,364,250~~25,000 shares of PBF Energy Class A common stock and PBF LLC Series A Units because they are anti-dilutive for the three and nine months ended September 30, ~~2016,~~2018, respectively. For periods showing a net loss, all common stock equivalents and unvested restricted stock are considered anti-dilutive.

Liquidity and Capital Resources

Overview

Our primary sources of liquidity are our cash flows from operations and borrowing availability under our credit facilities, as ~~more fully~~ described below. We believe that our cash flows from operations and available capital resources will be sufficient to meet our and our subsidiaries’ capital expenditure, working capital needs, dividend ~~payment,~~payments, debt service requirements, and ~~share repurchase program requirements, as well as our~~PBF Energy’s obligations under the ~~tax receivable agreement,~~Tax Receivable Agreement, for the next twelve ~~months.~~months, as well as to fund the pending Martinez Acquisition. However, our ability to generate sufficient cash flow from operations depends, in part, on petroleum oil market pricing and general economic, political and other factors beyond our control. We are in compliance as of September 30, ~~2017~~2019 with all ~~of the~~ covenants, including financial covenants, in all of our debt agreements.

Cash Flow Analysis

The below cash flow analysis includes details by cash flow activity based on the results of PBF Energy. Material changes that exist between the PBF Energy and PBF LLC cash flows are explained thereafter.

Cash Flows from Operating Activities

Net cash provided by operating activities was ~~$322.2~~$432.2 million for the nine months ended September 30, ~~2017~~2019 compared to net cash provided by operating activities of ~~$388.2~~$720.2 million for the nine months ended September 30, ~~2016.~~2018. Our operating cash flows for the nine months ended September 30, ~~2017~~2019 included our net income of ~~$223.0~~$306.1 million, depreciation and amortization of ~~$215.1~~$331.3 million, deferred income taxes of ~~$111.3~~$89.6 million, pension and other post-retirement benefits costs of ~~$31.7~~$33.6 million, equity-based compensation of $18.1 million, changes in the fair value of our catalyst leases of $1.0 million, debt extinguishment costs related to the refinancing of our 2020 Senior Secured Notes of $25.5 million, and a loss on sale of assets of $0.9 million, partially offset by a net non-cash benefit of $97.9 million relating to a LCM inventory adjustment, net non-cash charges relating to the change in the fair value of our inventory repurchase obligations of ~~$26.7~~$11.4 million, stock-based compensation of $28.4 million and changes in the ~~tax receivable agreement liability~~fair value of ~~$0.6~~our catalyst leases of $6.4 million partially offset by a net non-cash benefit of $277.0 million relating to an LCM inventory adjustment and a gain on sale of assets of $31.8 million. In addition, net changes in operating assets and liabilities ~~reflected~~reflects cash uses of ~~cash of $179.2~~$65.8 million driven by the timing of inventory purchases, payments for accrued expenses and accounts ~~payable~~payables and collections of accounts ~~receivable.~~receivables. Our operating cash flows for the nine months ended September 30, ~~2016~~2018 included our net income of ~~$153.8~~$522.0 million, depreciation and amortization of ~~$170.9~~$277.7 million, deferred income taxes of ~~$194.4~~$167.0 million, ~~plus~~pension and other post-retirement benefits costs of $35.6 million, net non-cash charges relating to the change in the fair value of our inventory repurchase obligations of ~~$29.3~~$10.7 million, ~~pension and other post-retirement benefits costs of $25.9 million, equity-based~~stock-based compensation of ~~$16.3~~$18.6 million, partially offset by a gain on sale of assets of $43.1 million, a net non-cash benefit of $300.5 million relating to an LCM inventory adjustment, change in the Tax Receivable Agreement liability of $7.8 million and changes in the fair value of our catalyst leases of ~~$4.6 million, changes in tax receivable agreement~~

~~liability of $3.1 million and a loss on sale of assets of $11.4 million, partially offset by a net non-cash benefit of $320.8 million relating to a LCM inventory adjustment.~~$5.8 million. In addition, net changes in operating assets and liabilities ~~reflected sources~~reflects cash proceeds of ~~cash of $99.3~~$45.8 million driven by the timing of inventory purchases, payments for accrued expenses and accounts payables and collections of accounts receivables.

Cash Flows from Investing Activities

Net cash used in investing activities was ~~$609.9~~$593.5 million for the nine months ended September 30, ~~2017~~2019 compared to net cash used in investing activities of ~~$1,247.0~~$419.8 million for the nine months ended September 30, ~~2016.~~2018. The net cash flows used in investing activities for the nine months ended September 30, ~~2017~~2019 was comprised of cash outflows of ~~$267.2~~$309.0 million for capital expenditures, expenditures for refinery turnarounds of ~~$341.6~~$282.6 million, and expenditures for other assets of ~~$31.1 million and expenditures for the acquisition of Toledo Terminal by PBFX of $10.1~~$38.2 million, partially offset by ~~$40.0~~proceeds of $36.3 million mainly related to the sale of ~~net maturities of marketable securities.~~land at our Torrance refinery. Net cash used in investing activities for the nine months ended September 30, ~~2016~~2018 was comprised of cash outflows of ~~$971.9~~$192.2 million ~~used to fund the Torrance Acquisition,~~for capital expenditures, ~~totaling $194.6 million,~~ expenditures for refinery turnarounds of ~~$138.9~~$201.0 million, expenditures for other assets of ~~$27.7~~$16.9 million ~~cash consideration of $98.4 million used to fund the PBFX Plains Assets Purchase,~~ and ~~a final net working capital settlement of $2.7 million associated with~~expenditures for the acquisition of ~~the Chalmette refinery,~~Knoxville Terminals by PBFX of $58.0 million, partially offset by ~~$174.3~~proceeds of $48.3 million ~~of net maturities of marketable securities and $13.0 million of proceeds from~~mainly related to the sale of ~~assets.~~land at our Torrance refinery.

Cash Flows from Financing Activities

Net cash ~~used in~~provided by financing activities was ~~$157.7~~$100.3 million for the nine months ended September 30, ~~2017~~2019 compared to net cash provided by financing activities of ~~$539.8~~$185.8 million for the nine months ended September 30, ~~2016.~~2018. For the nine months ended September 30, ~~2017,~~2019, net cash ~~used~~provided by financing activities consisted of $132.5 million in net proceeds from the issuance of PBFX common units, net borrowings from the PBFX Revolving Credit Facility of $127.0 million, proceeds from insurance premium financing of $7.5 million, and proceeds from stock options exercised of $0.2 million, partially offset by distributions and dividends of ~~$134.4 million, repayment of the PBFX Term Loan of $39.7~~$156.1 million, principal amortization payments of the PBF Rail Term Loan of ~~$5.0~~$5.2 million, ~~partially offset by cash proceeds~~deferred financing costs and other of ~~$21.4~~$0.6 million, ~~from~~net settlements of precious metals catalyst leases of $3.5 million, and repurchases of our common stock in connection with tax withholding obligations upon the ~~issuance~~vesting of ~~the 2025 Senior Notes net~~certain restricted stock awards of ~~cash paid to redeem the 2020 Senior Secured Notes and related issuance costs.~~$1.5 million. Additionally, during the nine months ended September 30, ~~2017,~~2019, we borrowed and repaid ~~$490.0~~$1,350.0 million under our Revolving ~~Loan~~Credit Facility resulting in no net change to amounts outstanding for the nine months ended September 30, ~~2017.~~2019. Forthe nine months ended September 30, ~~2016,~~2018, net cash provided by financing activities consisted primarily of ~~proceeds from the Revolving Loan of $550.0~~$287.3 million in net proceeds from the ~~PBFX Revolver of $144.7~~August 2018 Equity Offering, $34.9 million in net proceeds from the issuance of PBFX common units, net borrowings under the PBFX Revolving Credit Facility of ~~$138.3~~$20.3 million, proceeds from stock options exercised of $14.0 million and proceeds from ~~a catalyst lease~~insurance premium financing of ~~$7.9~~$7.0 million, partially offset by distributions and dividends of ~~$115.1~~$140.2 million, principal amortization payments of the PBF Rail Term Loan of $5.1 million, repayment of note payable of $5.6 million, net settlements of precious metals catalyst leases of $9.5 million, deferred financing costs and other of $15.9 million and repurchases of our common stock in connection with tax withholding obligations upon the vesting of certain restricted stock awards of $1.4 million.

The cash flow activity of PBF LLC for the period ended September 30, 2019 is materially consistent with that of PBF Energy discussed above, other than changes in deferred income taxes and certain working capital items, which are different from PBF Energy due to certain tax related items not applicable to PBF LLC. Additionally, the PBF LLC cash flows reflect repayments of the affiliate note payable with PBF Energy of $0.8 million included in cash flows from financing activities, which eliminates in consolidation at PBF Energy.

The cash flow activity of PBF LLC for the period ended September 30, 2018 is materially consistent with that of PBF Energy discussed above, other than changes in deferred income taxes and certain working capital items, which are different from PBF Energy due to certain tax related items not applicable to PBF LLC. Additionally, the PBF LLC cash flows reflect net proceeds from the affiliate note payable with PBF Energy of $44.1 million included in cash flows from financing activities, which eliminates in consolidation at PBF Energy.

Credit Facilities

PBFX ~~Term Loan~~Revolving Credit Facility

On July 30, 2018, PBFX entered into the PBFX Revolving Credit Facility. The PBFX Revolving Credit Facility amended and restated the existing PBFX revolving credit facility entered into in connection with the closing of ~~$174.5~~the PBFX IPO. Among other things, the PBFX Revolving Credit Facility increased the maximum commitment available to PBFX from $360.0 million to $500.0 million, and ~~repayments~~extended the maturity date to July 2023. PBFX has the ability to further increase the maximum availability by an additional $250.0 million to a total commitment of $750.0 million, subject to receiving increased commitments from lenders or other financial institutions and satisfaction of certain conditions. Borrowings under the PBFX Revolving Credit Facility bear interest either at the Alternative Base Rate plus the Applicable Margin or at LIBOR Rate plus the Applicable Margin, all as defined in the PBFX Revolving Credit Agreement.

PBF Holding Revolving Credit Facility

On May 2, 2018, PBF Holding and certain of our wholly-owned subsidiaries, as borrowers or subsidiary guarantors, replaced the August 2014 Revolving Credit Agreement with the Revolving Credit Facility. Among other things, the Revolving Credit Facility increased the maximum commitment available to us from $2.6 billion to $3.4 billion, extended the maturity date to May 2023, and redefined certain components of the ~~Rail~~Borrowing Base (as defined in the Revolving Credit Agreement) to make more funding available for working capital and other general corporate purposes. Borrowings under the Revolving Credit Facility bear interest at the Alternative Base Rate plus the Applicable Margin or at the Adjusted LIBOR Rate plus the Applicable Margin, all as defined in the Revolving Credit Agreement. In addition, an accordion feature allows for commitments of ~~$11.5 million.~~up to $3.5 billion.

Liquidity

As of September 30, ~~2017,~~2019, our total liquidity was approximately ~~$1,232.7~~$2,122.7 million, compared to total liquidity of approximately ~~$1,280.9~~$1,677.4 million as of December 31, ~~2016. Total~~2018. Our total liquidity is equal to the ~~sum~~amount of ~~our cash and cash equivalents plus the estimated amount available~~excess availability under the Revolving ~~Loan.~~Credit Facility, which includes our cash balance at September 30, 2019. In addition, as of September 30, ~~2017 and December 31, 2016,~~2019 PBFX had approximately ~~$167.2~~$212.2 million of borrowing capacity under the PBFX Revolving Credit Facility ~~which~~in comparison to $340.0 million as of December 31, 2018. The PBFX Revolving Credit Facility is available ~~to PBFX~~ to fund working capital, acquisitions, distributions, capital expenditures and ~~for~~ other general corporate ~~purposes.~~purposes incurred by PBFX.

Working Capital

~~Our~~PBF Energy’s working capital at September 30, ~~2017~~2019 was ~~$1,153.6~~$1,290.8 million, consisting of ~~$3,445.9~~$3,602.9 million in total current assets and ~~$2,292.3~~$2,312.1 million in total current liabilities. ~~Our~~PBF Energy’s working capital at December 31, ~~2016~~2018 was ~~$1,350.7~~$1,102.4 million, consisting of ~~$3,407.3~~$3,236.9 million in total current assets and ~~$2,056.5~~$2,134.5 million in total current liabilities. PBF LLC’s working capital at September 30, 2019 was $1,264.3 million, consisting of $3,601.8 million in total current assets and $2,337.5 million in total current liabilities. PBF LLC’s working capital at December 31, 2018 was $1,081.5 million, consisting of $3,235.1 million in total current assets and $2,153.6 million in total current liabilities.

Working capital has ~~decreased primarily as a result of capital expenditures, including turnaround costs, partially offset by earnings~~increased during the nine months ended September 30, ~~2017.~~

2019 primarily as a result of earnings and the change in our LCM inventory adjustment, partially offset by capital expenditures, including turnaround costs, and dividends and distributions.

Capital Spending

~~Net capital~~Capital spending was ~~$649.9~~$629.8 million for the nine months ended September 30, ~~2017,~~2019, which primarily included turnaround costs at our Torrance, Delaware City and Paulsboro refineries, safety related enhancements and facility improvements at ~~the~~our refineries and ~~the acquisition~~approximately $23.2 million of ~~the Toledo Terminal by~~capital expenditures related to PBFX. ~~Excluding PBFX, we~~We currently expect to spend an aggregate of approximately ~~$600.0~~$625.0 million to $675.0 million in net capital expenditures during 2019, excluding PBFX and any potential capital expenditures related to the ~~full year 2017~~pending Martinez Acquisition, for facility improvements and refinery maintenance and turnarounds, the majority of which ~~have been completed as~~were incurred during the first six months of ~~September 30, 2017.~~2019. Significant capital spending for the full year ~~2017 included~~2019, excluding PBFX, includes turnarounds ~~for~~of the ~~FCC~~coker at our Torrance refinery, the coker at our Delaware City refinery ~~several major process units~~and the crude unit at our ~~Torrance~~Paulsboro refinery, ~~and the Chalmette refinery’s crude and ancillary units,~~ as well as expenditures to meet ~~Tier 3~~environmental and regulatory requirements. Capital spending plans also include strategic capital expenditures for the restart of the idled Chalmette refinery coker and the Delaware City refinery hydrogen plant. In addition, PBFX expects to spend an aggregate of ~~$110.0~~approximately $31 million to ~~$120.0~~$35 million in net capital expenditures during 2019.

As discussed in "Business Developments", we entered into a Sale and Purchase Agreement to purchase the ~~full year 2017 primarily~~Martinez refinery and related logistics assets. The aggregate purchase price for the Martinez Acquisition will range from $900.0 million to $1.0 billion in cash, based on ~~growth projects.~~

~~Share Repurchases~~

~~Our Board~~closing date, plus inventory and working capital to be valued at closing. In addition, PBF Holding also has an obligation to make certain post-closing payments to the Seller if certain conditions are met including earn-out payments based on certain earnings thresholds of ~~Directors has authorized~~ the ~~repurchase of~~Martinez refinery, as defined in the Sale and Purchase Agreement, for a period up to ~~$300.0 million~~four years following the closing. The purchase price is also subject to other customary purchase price adjustments. The Martinez Acquisition is expected to close in the first quarter of ~~our Class A common stock (the “Repurchase Program”), which expires~~2020, subject to satisfaction of customary closing conditions, including the absence of legal impediments prohibiting the Martinez Acquisition, receipt of regulatory approvals and required consents and absence of any material adverse effects. We expect to finance the transaction through a combination of cash on September 30, 2018. As of September 30, 2017, we have purchased approximately 6.05 million shares of our Class A common stock under the Repurchase Program for $150.8 million through open market transactions. No repurchases of our Class A common stock were made during the three months ended September 30, 2017. We currently have the ability to purchase approximately an additional $149.2 million in common stock under the approved Repurchase Program.

These repurchases may be made from time to time through various methods, including open market transactions, block trades, accelerated share repurchases, privately negotiated transactions or otherwise, certain of which may be effected through Rule 10b5-1hand and Rule 10b-18 plans. The timing and number of shares repurchased will depend on a variety of factors, including price, capital availability, legal requirements and economic and market conditions. We are not obligated to purchase any shares under the Repurchase Program, and repurchases may be suspended or discontinued at any time without prior notice.debt.

Crude and Feedstock Supply Agreements

Certain of our purchases of crude oil under our agreements with foreign national oil companies require that we post letters of credit and arrange for shipment. We pay for the crude when invoiced, at which time the letters of credit are lifted. ~~Our~~We have a contract with Saudi Aramco pursuant to which we have been purchasing up to approximately 100,000 bpd of crude ~~and feedstock supply agreements~~oil from Saudi Aramco that is processed at our Paulsboro refinery. In connection with the Chalmette Acquisition we entered into a contract with PDVSA ~~provide that~~for the supply of 40,000 to 60,000 bpd of crude oil that can be processed at any of our East ~~and~~or Gulf Coast refineries. We have not sourced crude oil under this agreement since the third quarter of 2017 when PDVSA suspended deliveries due to the parties’ inability to agree to mutually acceptable payment terms. Notwithstanding the suspension, the recent U. S. sanctions imposed against PDVSA and Venezuela would prevent us from purchasing crude oil under this agreement. In connection with the closing of the Torrance Acquisition, we entered into a crude supply agreement with ExxonMobil ~~to deliver~~for approximately 60,000 bpd of crude oil tothat can be processed at our Torrance refinery. We currently purchase all of our crude and feedstock needs independently from a variety of suppliers on the spot market or through term agreements for our Delaware City and Toledo refineries.

Inventory Intermediation Agreements

On ~~May 4, 2017~~certain dates subsequent to the inception of the Inventory Intermediation Agreements, we and ~~September 8, 2017, PBF Holding and its~~our subsidiaries, DCR and PRC, entered into amendments to the ~~A&R~~Inventory Intermediation Agreements (as amended in the first quarter of 2019 and amended and restated in the third quarter of 2019) with J. Aron, pursuant to which certain terms of the ~~existing inventory intermediation agreements~~Inventory Intermediation Agreements were amended, including, among other things, ~~pricing and an extension of~~ the ~~terms. As a result of~~maturity date. On August 29, 2019 the ~~amendments (i) the A&R~~Inventory Intermediation Agreement by and among J. Aron, PBF Holding and PRC ~~relating to the Paulsboro refinery extends the term~~was extended to December 31, ~~2019,~~2021, which term may be further extended by mutual consent of the parties to December 31, ~~2020~~2022 and ~~(ii)~~ the ~~A&R~~Inventory Intermediation Agreement by and among J. Aron, PBF Holding and DCR ~~relating~~was extended to ~~the Delaware City refinery extends the term to July 1, 2019,~~June 30, 2021, which term may be further extended by mutual consent of the parties to ~~July 1, 2020.~~June 30, 2022. On March 29, 2019 the Inventory Intermediation Agreement by and among J. Aron, PBF Holding and DCR was amended to add the PBFX East Coast Storage Assets as a location and crude oil as a new product type to be included in the Products sold to J. Aron by DCR.

Pursuant to each ~~A&R~~Inventory Intermediation Agreement, J. Aron continues to purchase and hold title to ~~certain of~~ the ~~intermediate and finished products (the “Products”)~~Products produced by the ~~Paulsboro and Delaware City refineries (the “Refineries”), respectively,~~Refineries, and delivered into ~~tanks at~~ the ~~Refineries.~~Storage Tanks. Furthermore, J. Aron agrees to sell the Products back to the Refineries as the Products are discharged out of the ~~Refineries’ tanks.~~Storage Tanks. J. Aron has the right to store the Products purchased in tanks under the ~~A&R~~Inventory Intermediation Agreements and will retain these storage rights for the term of the agreements. PBF Holding continues to market and sell independently to third parties.

At September 30, ~~2017,~~2019, the LIFO value of crude oil, intermediates and finished products owned by J. Aron included within ~~inventory on~~Inventory in our ~~balance sheet~~Condensed Consolidated Balance Sheets was ~~$343.9~~$287.2 million. We accrue a corresponding liability for such crude oil, intermediates and finished products.

Off-Balance Sheet Arrangements and Contractual Obligations and Commitments

We have no off-balance sheet arrangements as of September 30, ~~2017,~~2019, other than outstanding letters of credit ~~in the amount~~ of approximately ~~$330.4 million and operating leases.~~$238.4 million.

Tax Receivable Agreement Obligations

We expect that the payments that we may make under the ~~tax receivable agreement~~Tax Receivable Agreement will be substantial. As of September 30, ~~2017, we have~~2019, PBF Energy has recognized a liability for the ~~tax receivable agreement~~Tax Receivable Agreement of ~~$610.8~~$373.5 million reflecting our estimate of the undiscounted amounts that we expect to pay under the agreement due to exchanges of PBF LLC Series A Units for shares of PBF Energy’s Class A common stock that occurred prior to that date, and to range over the next five years from approximately ~~$39.6~~$30.0 million to ~~$60.0~~$65.0 million per year and decline thereafter. In addition, under certain circumstances, our obligations under the ~~tax receivable agreement~~Tax Receivable Agreement may be accelerated and determined based on certain assumptions set forth therein. Assuming that the market value of a share of our Class A common stock equals ~~$27.61~~$27.19 per share (the closing price on September 30, ~~2017)~~2019) and that LIBOR were to be 1.85%, we estimate as of September 30, ~~2017~~2019 that the aggregate amount of these accelerated payments would have been approximately ~~$592.3~~$325.9 million if triggered immediately on such date. These payment obligations are obligations of PBF Energy and not of PBF LLC or any of its subsidiaries including PBF Holding or PBFX. However, because PBF Energy is a holding company with no operations of its own, PBF Energy’s ability to make payments under the ~~tax receivable agreement~~Tax Receivable Agreement is dependent upon a number of factors, including its subsidiaries’ ability to make distributions for the benefit of PBF LLC’s members, including PBF Energy, its ability, if necessary, to finance its obligations under the ~~tax receivable agreement~~Tax Receivable Agreement and existing indebtedness which may limit PBF Energy’s subsidiaries’ ability to make distributions.

Future payments under the ~~tax receivable agreement~~Tax Receivable Agreement by us in respect of subsequent exchanges of PBF LLC Series A Units for shares of PBF ~~Energy’s~~Energy Class A common stock would be in addition to the amounts above and are expected to be substantial. The foregoing numbers are merely estimates - the actual payments could differ materially and assume that there are no material changes in the relevant tax law, and that we earn sufficient taxable income to realize all tax benefits that are subject to the ~~tax receivable agreement.~~Tax Receivable Agreement. It is possible that future transactions or events could increase or decrease the actual tax benefits realized and the corresponding ~~tax receivable agreement~~Tax Receivable Agreement payments.

Dividend and Distribution Policy

PBF Energy

With respect to dividends and distributions paid during the nine months ended September 30, ~~2017,~~2019, PBF LLC made aggregate non-tax quarterly distributions of ~~$0.90~~$109.0 million, or $0.30 per unit to its members, of which ~~$98.7~~$107.9 million was distributed pro-rata to PBF Energy and the balance was distributed to its other members. PBF Energy used this ~~$98.7~~$107.9 million to pay quarterly cash dividends of $0.30 per share of Class A common stock on March ~~13, 2017,~~14, 2019, May ~~31, 2017~~30, 2019 and August ~~31, 2017.~~30, 2019. In addition, during the nine months ended September 30, 2019, PBF LLC made aggregate tax distributions to its members of $54.8 million, of which $53.2 million was made to PBF Energy.

On ~~November 2, 2017, the Company~~October 31, 2019, PBF Energy announced a dividend of $0.30 per share on outstanding PBF Energy Class A common stock. The dividend is payable on November ~~29, 2017~~26, 2019 to PBF Energy Class A common stockholders of record at the close of business on November ~~13, 2017.~~14, 2019. PBF LLC intends to make pro-rata distributions of approximately $36.3 million, or $0.30 per unit to its members, including PBF ~~Energy. PBF~~ Energy, ~~will then~~which in turn, intends to use this distribution to fund the dividend payments to the shareholders of PBF Energy.

PBF Energy currently intends to continue to pay a quarterly cash ~~dividend~~dividends of $0.30 per share ofon its Class A common stock. The declaration, amount and payment of this and any other future dividends on shares of PBF Energy Class A common stock will be at the sole discretion of ~~our board of directors,~~PBF Energy’s Board Of Directors, and we are not obligated under any applicable laws, our

governing documents or any contractual agreements with our existing

owners or otherwise to declare or pay any dividends or other distributions (other than the obligations of PBF LLC to make tax distributions to its members).

As of September 30, ~~2017, PBF Energy~~2019, the Company had ~~$1,173.5~~$2,053.7 million of unused borrowing availability, which includes PBF Holding cash and cash equivalents of ~~$241.7~~$467.3 million, under the Revolving ~~Loan~~Credit Facility to fund its operations, if necessary. Accordingly, as of September 30, ~~2017,~~2019, there was sufficient cash and cash equivalents and borrowing capacity under our credit facilities available to make distributions to PBF LLC, if necessary, in order for PBF LLC to make pro-rata distributions to its members, including PBF Energy, necessary to fund in excess of one year’s cash dividend payments by PBF Energy. PBF Holding would have been permitted under its debt agreements to make these distributions; however, its ability to continue to comply with its debt covenants is, to a significant degree, subject to its operating results, which are dependent on a number of factors outside of our control. We believe our and our subsidiaries’ available cash and cash equivalents, other sources of liquidity to operate our business and operating performance provides us with a reasonable basis for our assessment that we can support our intended dividend and distribution policy.

PBF Logistics LP

PBFX has paid, and intends to continue to pay a minimum quarterly distribution of at least $0.30per unit per quarter, or $1.20 per unit on an annualized basis, which aggregates to approximately ~~$12.8~~$18.9 million per quarter ~~or $51.2~~and approximately $75.6 million ~~per year,~~on an annualized basis, based on the ~~current~~ number of common units ~~outstanding.~~ outstanding as of September 30, 2019.

During the nine months ended September 30, ~~2017,~~2019, PBFX made quarterly cash distributions totaling ~~$62.8~~$91.6 million of which ~~$30.5~~$45.8 million was distributed to PBF LLC and the balance was distributed to its public ~~unit holders.~~unitholders.

On ~~November 2, 2017,~~October 31, 2019, the Board of Directors of PBFX’s general partner, PBF GP, announced a distribution of ~~$0.48~~$0.52 per unit on outstanding common units of PBFX. The distribution is payable on November ~~29, 2017~~26, 2019 to PBFX common ~~unit holders~~unitholders of record at the close of business on November ~~13, 2017.~~14, 2019.

As of September 30, ~~2017,~~2019, PBFX had ~~$3.6~~$4.8 million outstanding letters of credit and ~~$167.2~~$212.2 million available under the PBFX Revolving Credit Facility and cash and cash equivalents of ~~$39.4~~$52.6 million to fund its operations, if necessary. Accordingly, as of September 30, ~~2017,~~2019, there was sufficient cash and cash equivalents and borrowing capacity under our credit facilities available to PBFX to make distributions to ~~unit holders.~~unitholders.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risks, including changes in commodity prices and interest rates. Our primary commodity price risk is associated with the difference between the prices we sell our refined products and the prices we pay for crude oil and other feedstocks. We may use derivative instruments to manage the risks from changes in the prices of crude oil and refined products, natural gas, interest rates, or to capture market opportunities.

Commodity Price Risk

Our earnings, cash flow and liquidity are significantly affected by a variety of factors beyond our control, including the supply of, and demand for, crude oil, other feedstocks, refined products and natural gas. The supply of and demand for these commodities depend on, among other factors, changes in domestic and foreign economies, weather conditions, domestic and foreign political affairs, planned and unplanned downtime in refineries, pipelines and production facilities, production levels, the availability of imports, the marketing of competitive and alternative fuels, and the extent of government regulation. As a result, the prices of these commodities can be volatile. Our revenues fluctuate significantly with movements in industry refined product prices, our cost of sales fluctuates significantly with movements in crude oil and feedstock prices and our operating expenses fluctuate with movements in the price of natural gas. We manage our exposure to these commodity price risks through our supply and offtake agreements as well as through the use of various commodity derivative instruments.

We may use non-trading derivative instruments to manage exposure to commodity price risks associated with the purchase or sale of crude oil and feedstocks, finished products and natural gas outside of our supply and offtake agreements. The derivative instruments we use include physical commodity contracts and exchange-traded and over-the-counter financial instruments. We mark-to-market our commodity derivative instruments and recognize the changes in their fair value in our statements of operations.

At September 30, ~~2017~~2019 and December 31, ~~2016,~~2018, we had gross open commodity derivative contracts representing ~~45.7~~8.5 million barrels and ~~8.8~~7.4 million barrels, respectively, with an unrealized net ~~loss~~gain of ~~$5.0~~$2.6 million and ~~$3.5~~$7.2 million, respectively. The open commodity derivative contracts as of September 30, ~~2017~~2019 expire at various times during ~~2017 and 2018.~~2019.

We carry inventories of crude oil, intermediates and refined products (“hydrocarbon inventories”) on our ~~balance sheet,~~Condensed Consolidated Balance Sheets, the values of which are subject to fluctuations in market prices. Our hydrocarbon inventories totaled approximately ~~35.1~~30.1 million barrels and ~~29.4~~30.5 million barrels at September 30, ~~2017~~2019 and December 31, ~~2016,~~2018, respectively. The average cost of our hydrocarbon inventories was approximately ~~$77.17~~$79.18 and ~~$80.50~~$78.78 per barrel on a LIFO basis at September 30, ~~2017~~2019 and December 31, ~~2016,~~2018, respectively, excluding the net impact of LCM inventory adjustments of approximately ~~$498.0~~$374.8 million and ~~$596.0~~$651.8 million, respectively. If market prices of our inventory decline to a level below our average cost, we may be required to ~~further~~ write down the carrying value of our hydrocarbon inventories to market.

Our predominant variable operating cost is energy, which is comprised primarily of natural gas and electricity. We are therefore sensitive to movements in natural gas prices. Assuming normal operating conditions, we annually consume a total of ~~approximately~~between 68 million and 73 million MMBTUs of natural gas amongst our five refineries as of September 30, ~~2017.~~2019. Accordingly, a $1.00 per MMBTU change in natural gas prices would increase or decrease our natural gas costs by approximately $68.0 million to $73.0 million.

Compliance Program Price Risk

We are exposed to market risks related to the volatility in the price of RINs required to comply with the RFS. Our overall RINs obligation is based on a percentage of our domestic shipments of on-road fuels as established by ~~the EPA.~~Environmental Protection Agency (“EPA”). To the degree we are unable to blend the required amount of biofuels to satisfy our RINs obligation, we must purchase RINs on the open market. To mitigate the impact of this risk on our results of operations and cash flows we may purchase RINs when the price of these instruments is deemed favorable.

In addition, we are exposed to risks associated with complying with federal and state legislative and regulatory measures to address greenhouse gas and other emissions. Requirements to reduce emissions could result in increased costs to operate and maintain our facilities as well as implement and manage new emission controls and programs put in place. For example, AB32 in California requires the state to reduce its GHG emissions to 1990 levels by 2020.

Interest Rate Risk

The maximum ~~availability~~commitment under our Revolving ~~Loan~~Credit Facility is ~~$2.64~~$3.4 billion. Borrowings under the Revolving ~~Loan~~Credit Facility bear interest either at the Alternative Base Rate plus the Applicable Margin or at Adjusted LIBOR plus the Applicable Margin, all as defined in the Revolving ~~Loan.~~Credit Agreement. If this facility was fully drawn, a 1.0% change in the interest rate would increase or decrease our interest expense by approximately ~~$26.4~~$21.8 million annually.

The PBFX Revolving Credit Facility, with a ~~current~~ maximum ~~availability~~commitment of ~~$360.0~~$500.0 million, bears interest either at ~~a variable rate and exposes us to interest rate risk.~~the Alternative Base Rate plus the Applicable Margin or at Adjusted LIBOR plus the Applicable Margin, all as defined in the PBFX Revolving Credit Agreement. If this facility was fully drawn, a 1.0% change in the interest rate would ~~result in a $2.9 million change in~~increase or decrease our interest expense by approximately $4.3 million annually.

In addition, the PBF Rail Term Loan, which bears interest at a variable rate, had an outstanding principal balance of ~~$30.0~~$16.3 million at September 30, ~~2017.~~2019. A 1.0% change in the interest rate would increase or decrease our interest expense by approximately ~~$0.3~~$0.2 million annually, assuming the current outstanding principal balance on the PBF Rail Term Loan remained outstanding.

We also have interest rate exposure in connection with our ~~A&R~~Inventory Intermediation Agreements under which we pay a time value of money charge based on LIBOR.

Credit Risk

We are subject to risk of losses resulting from nonpayment or nonperformance by our counterparties. We continue to closely monitor the creditworthiness of customers to whom we grant credit and establish credit limits in accordance with our credit policy.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

PBF Energy ~~maintains a system of disclosure controls~~ and procedures that is designed to provide reasonable assurance that information which is required to be disclosed is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to management in a timely manner. UnderPBF LLC conducted separate evaluations, under the supervision and with the participation of ~~our~~each company’s management, including ~~PBF Energy’s~~the principal executive officer and ~~the~~ principal financial officer, ~~we have evaluated~~of the effectiveness of ~~our system of~~the disclosure controls and procedures (as defined in Rule 13a-15(e) ~~and 15d-15(e)~~ under the Securities Exchange Act of ~~1934)~~1934 as amended (the “Exchange Act”)) as of September 30, ~~2017.~~2019. Based ~~on that evaluation, PBF Energy’s~~upon these evaluations, the principal executive officer and ~~the~~ principal financial officer, ~~have~~in each case, concluded that ~~PBF Energy’s~~the disclosure controls and procedures are effective as of September 30, ~~2017.~~2019.

Changes in Internal Control Over Financial Reporting

~~Management~~There has ~~not identified any changes~~been no change in PBF Energy’s or PBF LLC’s internal ~~controls~~control over financial reporting during the quarter ended September 30, ~~2017~~2019 that has materially affected, or is reasonably likely to materially affect ~~our~~PBF Energy’s or PBF LLC’s internal ~~controls~~control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

On July 24, 2013, the Delaware Department of Natural Resources and Environmental Control (“DNREC”) issued a Notice of Administrative Penalty Assessment and Secretary’s Order to ~~Delaware City Refining~~DCR for alleged air emission violations that occurred during the re-start of the refinery in 2011 and subsequent to the re-start. The penalty assessment ~~seeks~~sought $460,200 in penalties and $69,030 in cost recovery for DNREC’s expenses associated with investigation of the incidents. ~~We dispute the amount of the penalty assessment and allegations made in the order, and are in discussions with DNREC~~Pursuant to ~~resolve the assessment. It is possible that DNREC will assess a penalty in this matter but any such amount is not expected to be material to us.~~

As of November 1, 2015, we acquired Chalmette Refining, which was in discussions with the Louisiana Department of Environmental Quality (“LDEQ”) to resolve self-reported deviations from refinery operations relating to certain Clean Air Act Title V permit conditions, limits and other requirements. LDEQ commenced an enforcement action against Chalmette Refining on November 14, 2014 by issuing a Consolidated Compliance Order and Notice of Potential Penalty (the “Order”) covering deviations from 2009 and 2010. Chalmette Refining and LDEQ subsequently entered into a dispute resolution agreement, the enforcement of which has been suspended while negotiations are ongoing, which may include the resolution of deviations outside the periods covered by the Order. In February 2017, Chalmette Refining and the LDEQ met to resolve the issues under the Order, including the assessment of an administrative penalty against Chalmette Refining. Chalmette Refining and the LDEQ are negotiating a settlement agreement ~~with administrative penalties~~entered into on or about July 11, 2019 by and between DCR and DNREC (“Settlement Agreement”), DCR resolved this and other Notices of ~~approximately $0.7 million. Once the settlement agreement is finalized, it is subject~~Violation (“NOVs”) and DNREC claims of noncompliance related to ~~being circulated for notice and public comment for a 45-day period and must undergo a review by the Louisiana attorney general’s office.~~

~~On December 23, 2016,~~activities at the Delaware City refinery ~~received~~occurring between June 1, 2010 and October 31, 2018, including associated Title V Permit deviations and particulate matter emissions from certain coke management facilities. The Settlement Agreement provides for resolution of DNREC’s claims, a ~~Notice~~penalty payment by DCR of ~~Violation (“NOV”) from~~$950,000, and no admission of liability by DCR. The Settlement Agreement will also result in modification and reissuance by DNREC ~~concerning a potential violation~~of certain air quality permits for the Delaware City refinery to resolve objections made by DCR to certain prior permit conditions. Testing of the ~~DNREC order authorizing the shipment of crude oil by barge from the Refinery.~~ aforementioned coke management facilities was conducted in September 2019 and confirmed compliance with operating permit limits.

The ~~NOV alleges that DCR made shipments to locations other than the Paulsboro~~Delaware City refinery ~~in violation of the order and requests certain additional information. On February 7, 2017, DCR responded to the NOV. On March 10, 2017, DNREC issued an approximately $0.2 million fine in~~appealed a Notice of Penalty Assessment and Secretary’s Order ~~to the Delaware City Refinery for violating the~~issued in March 2017, including a $150,000 fine, alleging violation of a 2013 Secretary’s ~~Order.~~Order authorizing crude oil shipment by barge. DNREC determined that the Delaware City refinery had violated the order by failing to make timely and full disclosure to DNREC about the nature and extent of those shipments, and had misrepresented the number of shipments that went to other facilities. The ~~penalty assessment~~Penalty Assessment and Secretary’s Order conclude that the 2013 Secretary’s Order was violated by the refinery by shipping crude oil from the Delaware City terminal to three locations other than the Paulsboro refinery, on 15 days in 2014, making a total of 17 separate barge shipments containing approximately 35.7 million gallons of crude oil in total. On April 28, 2017, ~~DCR~~the Delaware City refinery appealed the Notice of Penalty Assessment and Secretary’s Order. On March 5, 2018, Notice of Penalty Assessment was settled by DNREC, the Delaware Attorney General and Delaware City refinery for $100,000. The ~~hearing of~~Delaware City refinery made no admissions with respect to the alleged violations and agreed to request a Coastal Zone Act status decision prior to making crude oil shipments to destinations other than Paulsboro. The Delaware City refinery has paid the penalty. The Coastal Zone Act status decision request was submitted to DNREC and the outstanding appeal ~~is scheduled for February 2018. To~~was withdrawn as required under settlement agreement. DNREC has confirmed that Delaware City Refining Company has fully satisfied its obligations under the ~~extent~~agreement, and therefore that the ~~penalty and Secretary’s Order are upheld, there will not be a material adverse effect on~~resolution of liability provided under the ~~Company’s financial position, results of operations or cash flows.~~agreement has taken effect.

On December 28, 2016, DNREC issued ~~a Coastal Zone Act permit (the “Ethanol Permit”)~~the Ethanol Permit to DCR allowing the utilization of existing tanks and existing marine loading equipment at their existing facilities to enable denatured ethanol to be loaded from storage tanks to marine vessels and shipped to offsite facilities. On January 13, 2017, the issuance of the Ethanol Permit was appealed by two environmental groups. On February 27, 2017, the Coastal Zone ~~Industrial~~ Board held a public hearing and dismissed the appeal, determining that the appellants did not have standing. The ~~final opinion and order of the Board was issued March 16, 2017. The~~ appellants filed an appeal of the Coastal Zone Board’s decision with the ~~Delaware~~ Superior Court on March 30, 2017. ~~The filing~~On January 19, 2018, the Superior Court rendered an Opinion regarding the decision of ~~briefs~~the Coastal Zone Board to dismiss the appeal of the Ethanol Permit for the ethanol project. The judge determined that the record created by the Coastal Zone Board was insufficient for the Superior Court to make a decision, and therefore remanded the case back to the Coastal Zone Board to address the deficiency in the record. Specifically, the Superior Court directed the Coastal Zone Board to address any evidence concerning whether the appellants’ claimed injuries would be affected by the increased quantity of ethanol shipments. On remand, the Coastal Zone Board met on January 28, 2019 and reversed its previous decision on standing ruling that the appellants have standing to appeal ~~has been~~the issuance of the Ethanol Permit. The parties to the action have filed a joint motion with the Coastal Zone Board, requesting that the Board concur with the parties’ proposal to secure from the Superior Court confirmation that all rights and claims are preserved for any subsequent appeal to the Superior Court, and that the matter then be scheduled for ~~October and November 2017.~~a hearing on the merits before the Coastal Zone Board.

~~On October 19, 2017,~~

At the ~~Delaware City Refinery received approval from DNREC for~~time we acquired the ~~construction and operation~~Toledo refinery, EPA had initiated an investigation into the compliance of the ethanol marketing project to allow for a combined total loading of up to 10,000 bpd, on an annual average basis, of ethanol on to marine vessels at the marine piers and the terminal truck loading rack, subject to certain operational and emissions limitations as well as other conditions. On the same date, Delaware City Logistics Company LLC received DNREC approval for the construction of (i) four additional loading arms for each of lanes

4, 10 and 11 for purposes of loading ethanol at its truck loading rack and (ii) a vapor vacuum control system for loading lanes connected to the existing vapor recovery unit located at its terminal in Delaware City. This approval is also subject to certain operational and emission limitations as well as other conditions.

~~On February 3, 2011, the~~refinery with EPA ~~sent a request for information~~standards governing flaring pursuant to Section 114 of the Clean Air Act. On February 1, 2013, EPA issued an amended notice of violation (“NOV”), and on September 20, 2013, EPA issued a NOV and Finding of Violation to Toledo refinery, alleging certain violations of the Clean Air Act at its Plant 4 and Plant 9 flares since the acquisition of the refinery on March 1, 2011. Toledo refinery and EPA subsequently entered into tolling agreements pending settlement discussions. Although the resolution has not been finalized, the civil administrative penalty is anticipated to be approximately $645,000 including supplemental environmental projects. To the ~~Paulsboro refinery with respect~~extent the administrative penalty exceeds such amount, it is not expected to ~~compliance with EPA standards governing flaring. On July 13, 2017 the U.S. Department of Justice filed with the Court the motion~~be material to ~~enter the consent decree. On September 19, 2017, the Court approved the consent decree and in connection therewith the Paulsboro refinery has paid a penalty of $0.2 million.~~us.

In connection with the acquisition of the Torrance refinery and related logistics assets, we assumed certain pre-existing environmental liabilities related to certain environmental remediation obligations to address existing soil and groundwater contamination and monitoring activities, which reflect the estimated cost of the remediation obligations. In addition, in connection with the acquisition of the Torrance refinery and related logistics assets, we purchased a ten year, $100.0 million environmental insurance policy to insure against unknown environmental liabilities. Furthermore, in connection with the acquisition, we assumed responsibility for certain specified environmental matters that occurred prior to our ownership of the refinery and logistics assets, including specified incidents and/or NOVs issued by regulatory agencies in various years before ~~the Company’s~~our ownership, including the Southern California Air Quality Management District (“SCAQMD”) and the Division of Occupational Safety and Health of the State of California (“Cal/OSHA”). ~~Following the closing of~~

Subsequent to the acquisition, further NOVs were issued by the SCAQMD, Cal/OSHA, the City of Torrance, and the Torrance Fire Department. No settlement or penalty demand in excess of $0.1 million has been made or received with respect to these notices. It is reasonably possible that SCAQMD, Cal/OSHA and/or the City of Torrance ~~will assess penalties~~Fire Department, and the Los Angeles County Sanitation District related to alleged operational violations, emission discharges and/or flaring incidents at the refinery and the logistics assets both before and after our acquisition. EPA in November 2016 conducted a Risk Management Plan (“RMP”) inspection following the acquisition related to Torrance operations and issued preliminary findings in March 2017 concerning RMP potential operational violations. Since the EPA’s issuance of the preliminary findings in March 2017, the Company has been in substantive discussions to resolve the preliminary findings. In the course of these discussions, on November 8, 2018, EPA made an offer to settle all preliminary findings for $480,000. The Company is currently in communication with EPA to resolve the RMP preliminary findings.

EPA and the California Department of Toxic Substances Control (“DTSC”) in December 2016 conducted a Resource Conservation and Recovery Act (“RCRA”) inspection following the acquisition related to Torrance operations and also issued in March 2017 preliminary findings concerning RCRA potential operational violations. On June 14, 2018, the Torrance refinery and DTSC reached settlement regarding the oil bearing materials. Following this settlement, in June 2018, DTSC referred the remaining alleged RCRA violations from EPA’s and DTSC’s December 2016 inspection to the California Attorney General for final resolution. The Torrance refinery and the California Attorney General are in discussions to resolve these alleged remaining RCRA violations.

On September 3, 2019, we received a letter from the SCAQMD proposing to settle a NOV relating to Title V deviations alleged to have occurred in the second half of 2016 for $465,000. We are currently in communication with the SCAQMD to resolve the NOV.

Other than EPA $480,000 and SCAQMD $465,000 settlement offers, no other ~~matters~~settlement or penalty demands in excess of ~~$0.1 million~~$100,000 have been received to date with respect to any of the other NOVs, preliminary findings, or orders relating to the Torrance refinery. As the ultimate outcomes are uncertain, we cannot currently estimate the final amount or timing of their resolution but any such amount is not expected to behave a material ~~to us,~~impact on our financial position, results of operations or cash flows, individually or in the aggregate.

On ~~September 2, 2011,~~December 5, 1990, prior to our ownership of the Chalmette refinery, the plaintiff in ~~Vincent Caruso,~~Adam Thomas, etal. v. Exxon Mobil Corporation and Chalmette Refining, L.L.C., filed an action on behalf of himself and potentially thousands of other ~~Louisiana residents who live or own property~~individuals in St. Bernard Parish and Orleans Parish who were allegedly exposed to hydrogen sulfide and ~~whose~~sulfur dioxide as a result of more than 100 separate flaring events that occurred between 1989 and 2010. This litigation is proceeding as a mass action with individually named plaintiffs as a result of a 2008 trial court decision, affirmed by the court of appeals that denied class certification. The plaintiffs claim to have suffered

physical injuries, property ~~was allegedly contaminated~~damage, and ~~who allegedly suffered any personal or property~~other damages as a result of ~~an emission of spent catalyst, sulfur dioxide and hydrogen sulfide from~~ the ~~Chalmette refinery on September 6, 2010. Plaintiffs claim to have suffered injuries, symptoms, and property damage as a result of the release.~~releases. Plaintiffs seek to recover unspecified compensatory and punitive damages, interest, and costs. ~~In August 2015, there was a~~The Court had scheduled an October 2019 mini-trial ~~for four~~of up to 10 plaintiffs, ~~for property damage~~ relating to ~~home~~as many as 5 separate flaring events that occurred between 2002 and ~~vehicle cleaning. On April 12, 2016,~~2007. However, on October 9, 2019, the ~~trial court rendered judgment limiting damages ranging from $100~~parties reached an agreement in principle to ~~$500 for home cleaning and $25~~settle this matter, which is expected to $75 for vehicle cleaning to the four plaintiffs. The trial court found Chalmette Refining and co-defendant Eaton Corporation (“Eaton”), to be solitarily liable for the damages. Chalmette Refining and Eaton filed an appeal in August 2016 of the judgment on the mini-trial. On June 28, 2017, the appellate court unanimously reversed the judgment awarding damages to the plaintiffs. On July 12, 2017, the plaintiffs filed for a rehearing of the appellate court judgment, which was denied on July 31, 2017. As a result of the appellate court’s judgment, the potential amount of the claims is not determinable. Depending upon the ultimate class size and the nature of the claims, the outcome may have a material adverse effect on our financial position, results of operations, or cash flows.

~~On February 14, 2017, the plaintiff in~~ ~~Adam Trotter v. ExxonMobil Corp., ExxonMobil Oil Corp., ExxonMobil Refining and Supply Company, et. al., filed a civil action against us~~ in the ~~Superior Court~~dismissal with prejudice of all outstanding claims. Although the State of California, County of Los Angeles, Southwest District, claiming public nuisance, battery, a violation of civil rights under 42 U.S.C. §1983, intentional infliction of emotional distress, negligence and strict liability in tort and injuries and symptoms resulting from the February 18, 2015 electrostatic precipitator (“ESP”) explosion at the Torrance Refinery which was then owned and operated by Exxon. The City of Torrance and the SCAQMD are also named as defendants in the lawsuit. On September 29, 2017, the court granted our motion to dismiss as well as the SCAQMD’s motion to dismiss with leave for the plaintiff to amend, and denied plaintiff’s motion for a preliminary injunction. Wesettlement resolution has not been finalized, we presently believe the ~~ultimate~~ outcome ~~of this matter~~ will not have a material impact on our financial position, results of operations, or cash flows.

On February 17, 2017, in Arnold Goldstein, et al. v. Exxon Mobil Corporation, et al., we and PBF Energy Company LLC, and our subsidiaries, PBF Energy Western Region LLC and Torrance Refining Company LLC and the manager of our Torrance refinery along with Exxon Mobil Corporation were named as defendants in a class action and representative action complaint filed on behalf of Arnold Goldstein, John Covas, Gisela Janette La Bella and others similarly situated. The complaint was filed in the Superior Court of the State of California, County of Los Angeles and alleges negligence, strict liability, ultrahazardous activity, a continuing private nuisance, a permanent private nuisance, a continuing public nuisance, a permanent public nuisance and trespass resulting from the February 18, 2015 electrostatic precipitator (“ESP”) explosion at the Torrance ~~Refinery~~refinery which was then owned and operated by ~~Exxon.~~ExxonMobil. The operation of the Torrance ~~Refinery~~refinery by the PBF entities subsequent to our acquisition in July 2016 is also referenced in the complaint. To the extent that plaintiffs’ claims relate to the ESP explosion, Exxon has retained responsibility for any liabilities that would arise from the lawsuit pursuant to the agreement relating to the acquisition of the Torrance ~~Refinery. This~~refinery. On July 2, 2018, the Court granted leave to plaintiffs’ to file a Second Amended Complaint alleging groundwater contamination. With the filing of the Second Amended Complaint, Plaintiffs’ added an additional plaintiff. On March 18, 2019, the class certification hearing was held and the judge took the matter under submission. On April 1, 2019, the judge issued an order denying class certification. On April 15, 2019, Plaintiffs filed a Petition with the Ninth Circuit for Permission to Appeal the Order Denying Motion for Class Certification. The appeal is currently pending with the Ninth Circuit. On May 3, 2019, Plaintiffs filed a Motion with the Central District Court for Leave to File a Renewed Motion for Class Certification. On May 22, 2019, the judge granted Plaintiffs’ motion. We filed our opposition to the motion on July 29, 2019. The Plaintiffs’ motion was heard on September 23, 2019. On October 15, 2019, the judge granted certification to two limited classes of property owners, rejecting two other proposed subclasses based on negligence and on strict liability for ultrahazardous activities. The certified subclasses relate to trespass claims for ground contamination and nuisance for air emissions. We presently believe the outcome will not have a material impact on our financial position, results of operations or cash flows.

On September 18, 2018, in Michelle Kendig and Jim Kendig, et al. v. ExxonMobil Oil Corporation, et al., PBF Energy Limited and Torrance Refining Company LLC along with ExxonMobil Oil Corporation and ExxonMobil Pipeline Company were named as defendants in a class action and representative action complaint filed on behalf of Michelle Kendig, Jim Kendig and others similarly situated. The complaint was filed in the ~~initial stages~~Superior Court of ~~discovery~~the State of California, County of Los Angeles and alleges failure to authorize and permit uninterrupted rest and meal periods, failure to furnish accurate wage statements, violation of the Private Attorneys General Act and violation of the California Unfair Business and Competition Law. Plaintiffs seek to recover unspecified economic damages, statutory damages, civil penalties provided by statute, disgorgement of profits, injunctive relief, declaratory relief, interest, attorney’s fees and costs. To the extent that plaintiffs’ claims accrued prior to July 1, 2016, ExxonMobil has retained responsibility for any liabilities that would arise from the lawsuit pursuant to the agreement relating to the acquisition of the Torrance refinery and logistics assets. On October 26, 2018, the matter was removed to the Federal Court, California Central District. A mediation hearing between the parties was held on August 23, 2019. From the mediation hearing, the parties have reached a tentative agreement in principle to settle. Although the settlement resolution has not been finalized, we presently believe the outcome will not have a material impact on our financial position, results of operations or cash flows.

On September 7, 2018, in Jeprece Roussell, et al. v. PBF Consultants, LLC, etal., the Plaintiff filed an action in the 19th Judicial District Court for the Parish of East Baton Rouge, alleges numerous causes of action, including wrongful death, premises liability, negligence, and gross negligence against PBF Holding Company LLC, PBFX Operating Company LLC, Chalmette Refining, L.L.C., two individual employees of the Chalmette refinery (“the PBF Defendants”), two entities, PBF Consultants, LLC and PBF Investments, LLC that are Louisiana companies that are not associated with our companies, as well as Clean Harbors, Inc. and Clean Harbors Environmental Services, Inc. (collectively, “Clean Harbors”), Mr. Roussell’s employer. Mr. Roussell was fatally injured on March 31, 2018 while performing clay removal work activities inside a clay treating vessel located at the Chalmette refinery. Plaintiff seeks unspecified compensatory damages for pain and suffering, past and future mental anguish, impairment, past and future economic loss, attorney’s fees and court costs. The PBF Defendants have issued a tender of defense and indemnity to Clean Harbors and its insurer pursuant to indemnity obligations contained in the associated services agreement. On September 25, 2018, the PBF Defendants filed an Answer in the state court action denying the allegations. On October 10, 2018, the PBF Defendants filed to remove the case to the United States District Court for the Middle District of Louisiana. On November 9, 2018, Plaintiff filed a motion to remand the matter back to state court and the PBF Defendants filed a response on November 30, 2018. On December 21, 2018, Plaintiff filed a motion for leave to file a reply memorandum and the reply memorandum was filed December 27, 2018. On April 15, 2019 the Federal Magistrate Judge filed a Report and Recommendation denying Plaintiff’s motion to remand and dismissing without prejudice the claims against John Sprafka, Wayne LaCombe, PBF Consultants, LLC and PBF Investments, LLC. On June 24, 2019, the Federal Judge adopted the Magistrate Judge’s Report and Recommendation denying Plaintiff’s motion to remand and dismissing without prejudice the claims against John Sprafka, Wayne LaCombe, PBF Consultants, LLC and PBF Investments, LLC. As this matter was recently filed, we cannot currently estimate the amount or the timing of its resolution. We presently believe the outcome will not have a material impact on our financial position, results of operations or cash flows.

In Varga, Sabrina, et al., v. CRU Railcar Services, LLC, et al., PBF Holding and other of our entities were named as defendants along with CRU Railcar Services, LLC (“CRU”) in a lawsuit arising from a railcar explosion that occurred while CRU employees were cleaning a railcar owned by PBF. The initial lawsuit alleged that an employee of CRU was fatally injured as a result of the explosion. On July 5, 2019, a petition for intervention was filed alleging that another CRU employee was fatally injured in the same explosion. On October 7, 2019, a third CRU employee joined the lawsuit alleging severe injuries from the incident. The PBF defendants have issued a tender of defense and indemnity to CRU and its insurer pursuant to indemnity obligations contained in the associated services agreement which have not been accepted at this time. As this matter was recently filed, we cannot currently estimate the amount or the timing of its resolution. We presently believe the outcome will not have a material impact on our financial position, results of operations or cash flows.

We are subject to obligations to purchase RINs. On February 15, 2017, we received ~~another~~ notification that EPA records indicated that PBF Holding used potentially invalid RINs that were in fact verified under ~~the~~ EPA’s RIN Quality Assurance Program (“QAP”) by an independent auditor as QAP A RINs. Under the regulations use of potentially invalid QAP A RINs provided the user with an affirmative defense from civil penalties provided certain conditions are met. We have asserted the affirmative defense and if accepted by ~~the~~ EPA will not be required to replace these RINs and will not be subject to civil penalties under the program. It is reasonably possible that ~~the~~ EPA will not accept our defense and may assess penalties in these matters but any such amount is not expected to have a material impact on our financial position, results of operations or cash flows.

CERCLA, also known as “Superfund,” imposes liability, without regard to fault or the legality of the original conduct, on certain classes of persons who are considered to be responsible for the release of a “hazardous substance” into the environment. These persons include the current or former owner or operator of the disposal site or sites where the release occurred and companies that disposed of or arranged for the disposal of the hazardous substances. Under CERCLA, such persons may be subject to joint and several liability for investigation and the costs of cleaning up the hazardous substances that have been released into the environment, for damages to natural resources and for the costs of certain health studies. As discussed more fully above, certain of our sites are subject to these laws and we may be held liable for investigation and remediation costs or claims for natural resource damages. It is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by hazardous substances or other pollutants released into the environment. Analogous state laws impose similar responsibilities and liabilities on responsible parties. In our current normal operations, we have generated waste, some of which falls within the statutory definition of a “hazardous substance” and some of which may have been disposed of at sites that may require cleanup under Superfund.

Item 1A. Risk Factors

The following risk factors supplement and/or update the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018:

Risks Relating to Our Business and Industry

Our announced Martinez Acquisition may not close when we expect, or at all, and may pose unforeseen risks and/or not have the benefits we expect.

On June 11, 2019, we entered into an agreement to purchase the Martinez refinery and related logistics assets. The aggregate purchase price for the Martinez Acquisition will range from $900.0 million to $1.0 billion in cash, based on closing date, plus inventory and working capital to be determined at closing. The purchase price is also subject to other customary purchase price adjustments. The Martinez Acquisition is expected to close in the first quarter of 2020, subject to satisfaction of customary closing conditions. There can be no assurance that we will complete the Martinez Acquisition under the terms set forth in the purchase agreement, or at all. We expect to finance the transaction through a combination of cash on hand and debt. The Martinez Acquisition is subject to numerous risks and uncertainties, including (i) the possibility that the announced acquisition will be delayed or will not close due to the failure of either party to satisfy the closing conditions, or for other reasons, (ii) the risk that the Martinez refinery will not be integrated into our company successfully or that expected benefits will not be realized and (iii) unforeseen liabilities associated with the Martinez Acquisition.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Exchange of PBF LLC Series A Units to PBF Energy Class A Common Stock

In the three months ended September 30, ~~2017, 16,772~~2019, there were no PBF LLC Series A Units ~~were~~ exchanged for ~~16,772~~ shares of ~~our~~PBF Energy Class A common stock in transactions exempt from registration under Section ~~4(2)~~4(a)(2) of the Securities Act. ~~No exchanges were made by any of our directors or current executive officers.~~

~~Share Repurchase Program~~

Our Board of Directors authorized the repurchase of up to $300.0 million of our Class A common stock (as amended from time to time, the “Repurchase Program”), which expires on September 30, 2018. These repurchases may be made from time to time through various methods, including open market transactions, block trades, accelerated share repurchases, privately negotiated transactions or otherwise, certain of which may be effected through Rule 10b5-1 and Rule 10b-18 plans. The timing and number of shares repurchased will depend on a variety of factors, including price, capital availability, legal requirements and economic and market conditions. We are not obligated to purchase any shares under the Repurchase Program, and repurchases may be suspended or discontinued at any time without prior notice.

There were no repurchases of our Class A Common Stock during the third quarter of 2017. For the period of time from the inception of the Repurchase Program through September 30, 2017, we purchased 6,050,717 shares for $150.8 million. As of September 30, 2017, we had $149.2 million remaining authorized availability under the Repurchase Program.

Item 6. Exhibits

The exhibits listed in the accompanying Exhibit Index are filed or incorporated by reference as part of this report and such Exhibit Index is incorporated herein by reference.

EXHIBIT INDEX



Exhibit Number		Description

~~10.1~~10.1**†		~~Amendment to the~~ Second Amended and Restated Inventory Intermediation Agreement dated as of ~~September 8, 2017,~~August 29, 2019, among J. Aron & Company LLC, PBF Holding Company LLC and Paulsboro Refining Company LLC (incorporated by reference to Exhibit 10.1 offiled with PBF Energy Inc.’s Current Report on Form ~~8-K/A~~8-K dated September 4, 2019 (File No. 001-35764) ~~filed on September 18, 2017)~~).

~~10.2~~10.2**		~~Amendment to the~~ Second Amended and Restated Inventory Intermediation Agreement dated as of ~~September 8, 2017,~~August 29, 2019, among J. Aron & Company LLC, PBF Holding Company LLC and Delaware City Refining Company LLC (incorporated by reference to Exhibit 10.2 offiled with PBF Energy Inc.’s Current Report on Form ~~8-K/A~~8-K dated September 4, 2019 (File No. 001-35764) ~~filed on September 18, 2017).~~)

~~31.1~~31.1**		Certification of Thomas J. Nimbley, Chief Executive Officer of PBF Energy Inc. pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~31.2~~31.2**		Certification of Erik Young, Chief Financial Officer of PBF Energy Inc. pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.3*		Certification of Thomas J. Nimbley, Chief Executive Officer of PBF Energy Company LLC pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.4*		Certification of Erik Young, Chief Financial Officer of PBF Energy Company LLC pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1* (1)		Certification of Thomas J. Nimbley, Chief Executive Officer of PBF Energy Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2* (1)		Certification of Erik Young, Chief Financial Officer of PBF Energy Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.3* (1)		Certification of Thomas J. Nimbley, Chief Executive Officer of PBF Energy Company LLC pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.4* (1)		Certification of Erik Young, Chief Financial Officer of PBF Energy Company LLC pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance Document.

101.SCH		Inline XBRL Taxonomy Extension Schema Document.

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

———————



**	~~Filed herewith.~~
†	~~Confidential treatment has been granted by~~Portions of the ~~SEC as to certain portions, which portions~~exhibits have been omitted because such information is both (i) not material and ~~filed separately with the Securities and Exchange Commission.~~(ii) would be competitively harmful if publicly disclosed.
*	Filed herewith.
(1)	This exhibit should not be deemed to be “filed” for purposes of Section 18 of the Exchange Act.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, ~~the~~each registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



		PBF Energy Inc.

~~Date~~Date:	~~November 2, 2017~~October 31, 2019		By:	/s/ Erik Young
				Erik Young Senior Vice President, Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer)

~~EXHIBIT INDEX~~



~~Exhibit~~ ~~Number~~		~~Description~~PBF Energy Company LLC

~~10.1~~† Date:	October 31, 2019		Amendment to the Inventory Intermediation Agreement dated as of September 8, 2017, among J. Aron & Company, PBF Holding Company LLC and Paulsboro Refining Company LLC (incorporated by reference to Exhibit 10.1 of PBF Energy Inc.’s Current Report on Form 8-K/A (File No. 001-35764) filed on September 18, 2017).By:	/s/ Erik Young

~~10.2~~		~~Amendment to the Inventory Intermediation Agreement dated as of September 8, 2017, among J. Aron & Company, PBF Holding Company LLC~~ Erik Young Senior Vice President, Chief Financial Officer (Duly Authorized Officer and ~~Delaware City Refining Company LLC (incorporated by reference to Exhibit 10.2 of PBF Energy Inc.’s Current Report on Form 8-K/A (File No. 001-35764) filed on September 18, 2017).~~Principal Financial Officer)

31.1*		~~Certification of Thomas J. Nimbley, Chief Executive Officer of PBF Energy Inc. pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~

31.2*		~~Certification of Erik Young, Chief Financial Officer of PBF Energy Inc. pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~

32.1* ~~(1)~~		~~Certification of Thomas J. Nimbley, Chief Executive Officer of PBF Energy Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

32.2* ~~(1)~~		~~Certification of Erik Young, Chief Financial Officer of PBF Energy Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

~~101.INS~~		~~XBRL Instance Document.~~

~~101.SCH~~		~~XBRL Taxonomy Extension Schema Document.~~

~~101.CAL~~		~~XBRL Taxonomy Extension Calculation Linkbase Document.~~

~~101.DEF~~		~~XBRL Taxonomy Extension Definition Linkbase Document.~~

~~101.LAB~~		~~XBRL Taxonomy Extension Label Linkbase Document.~~

~~101.PRE~~		~~XBRL Taxonomy Extension Presentation Linkbase Document.~~

~~——————————~~



*	~~Filed herewith.~~
†	~~Confidential treatment has been granted by the SEC as to certain portions, which portions have been omitted and filed separately with the Securities and Exchange Commission.~~
~~(1)~~	~~This exhibit should not be deemed to be “filed” for purposes of Section 18 of the Exchange Act.~~



	Three Months Ended September 30, 2016
	As Previously Reported		Adjustments	As Reclassified
Cost and expenses:
Cost of products and other	$	3,862,580	—	$	3,862,580
Operating expenses (excluding depreciation and amortization expense as reflected below)	412,699		—	412,699
Depreciation and amortization expense	—		54,694	54,694
Cost of sales				4,329,973
General and administrative expenses (excluding depreciation and amortization expense as reflected below)	44,020		—	44,020
Depreciation and amortization expense	56,036		(54,694)	1,342
Loss on sale of assets	8,159		—	8,159
Total cost and expenses	$	4,383,494		$	4,383,494



	Purchase Price
Gross purchase price	$	537,500
Working capital	450,582
Post close purchase price adjustments	(16,150		)
Total consideration	$	971,932



	Nine Months Ended September 30, 2016
Pro forma revenues	$	12,250,867
Pro forma net loss attributable to PBF Energy Inc. stockholders	$	(3,704	)
Pro forma net loss available to Class A common stock per share:
Basic	$	(0.04	)
Diluted	$	(0.04	)



	Units of PBFX Held by the Public		Units of PBFX Held by PBF LLC (Including Subordinated Units)		Total
December 31, 2016	23,271,174		18,459,497		41,730,671
	55.8	%	44.2	%	100.0	%
September 30, 2017	23,435,349		18,459,497		41,894,846
	55.9	%	44.1	%	100.0	%



	As of December 31, 2016
	Fair Value Hierarchy						Total Gross Fair Value		Effect of Counter-party Netting		Net Carrying Value on Balance Sheet
	Level 1		Level 2		Level 3		Total Gross Fair Value		Effect of Counter-party Netting		Net Carrying Value on Balance Sheet
Assets:
Money market funds	$	342,837	$	—	$	—	$	342,837	N/A		$	342,837
Marketable securities	40,024		—		—		40,024		N/A		40,024
Commodity contracts	948		35		—		983		(983	)	—
Derivatives included with inventory intermediation agreement obligations	—		6,058		—		6,058		—		6,058
Liabilities:
Commodity contracts	859		3,548		84		4,491		(983	)	3,508
Catalyst lease obligations	—		45,969		—		45,969		—		45,969



	Balance at September 30, 2017
	Refining		Logistics		Corporate		Eliminations			Consolidated Total
Total assets (4)	$	6,953,916	$	754,477	$	327,109	$	(36,045	)	$	7,999,457



	Balance at December 31, 2016
	Refining		Logistics		Corporate		Eliminations			Consolidated Total
Total assets (4)	$	6,419,950	$	756,861	$	482,979	$	(37,863	)	$	7,621,927