Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Oct. 26, 2015 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | TESORO CORP /NEW/ | |
Entity Central Index Key | 50,104 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 120,390,425 |
Condensed Statements of Consoli
Condensed Statements of Consolidated Operations (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | ||
Income Statement [Abstract] | |||||
Revenues (a) | $ 7,743 | $ 11,151 | $ 22,438 | $ 32,188 | |
Costs and Expenses: | |||||
Cost of sales (a) | 5,571 | 9,594 | 17,309 | 28,409 | |
Operating expenses | 589 | 624 | 1,676 | 1,813 | |
Selling, general and administrative expenses | 95 | 86 | 247 | 209 | |
Depreciation and amortization expense | 192 | 144 | 553 | 409 | |
(Gain) loss on asset disposals and impairments | 4 | 1 | 12 | (2) | |
Operating Income | 1,292 | 702 | 2,641 | 1,350 | |
Interest and financing costs, net | [1] | (54) | (50) | (163) | (168) |
Other income, net | [2] | 19 | 11 | 21 | 13 |
Earnings Before Income Taxes | 1,257 | 663 | 2,499 | 1,195 | |
Income tax expense | 458 | 249 | 888 | 437 | |
Net Earnings from Continuing Operations | 799 | 414 | 1,611 | 758 | |
Loss from discontinued operations, net of tax | 0 | (1) | (4) | (2) | |
Net Earnings | 799 | 413 | 1,607 | 756 | |
Less: Net earnings from continuing operations attributable to noncontrolling interest | 40 | 17 | 121 | 58 | |
Net Earnings Attributable to Tesoro Corporation | 759 | 396 | 1,486 | 698 | |
Net Earnings (Loss) Attributable to Tesoro Corporation | |||||
Continuing operations | 759 | 397 | 1,490 | 700 | |
Discontinued operations | 0 | (1) | (4) | (2) | |
Total | $ 759 | $ 396 | $ 1,486 | $ 698 | |
Net Earnings (Loss) per Share - Basic: | |||||
Continuing operations | $ 6.19 | $ 3.11 | $ 11.98 | $ 5.41 | |
Discontinued operations | 0 | (0.01) | (0.03) | (0.02) | |
Total | $ 6.19 | $ 3.10 | $ 11.95 | $ 5.39 | |
Weighted average common shares outstanding - Basic | 122.5 | 127.9 | 124.3 | 129.5 | |
Net Earnings (Loss) per Share - Diluted: | |||||
Continuing operations | $ 6.13 | $ 3.06 | $ 11.85 | $ 5.32 | |
Discontinued operations | 0 | (0.01) | (0.03) | (0.02) | |
Total | $ 6.13 | $ 3.05 | $ 11.82 | $ 5.30 | |
Weighted average common shares outstanding - Diluted | 123.8 | 129.7 | 125.7 | 131.7 | |
Dividends per Share | $ 0.50 | $ 0.30 | $ 1.35 | $ 0.80 | |
Supplemental Information: | |||||
(a) Includes excise taxes collected by our marketing segment | $ 137 | $ 148 | $ 423 | $ 441 | |
[1] | Includes charges totaling $41 million for premiums and unamortized debt issuance costs associated with the redemption of the 5.50% Senior Notes due 2019 during the nine months ended September 30, 2014. | ||||
[2] | During the three and nine months ended September 30, 2015, we recorded a gain of $11 million as other income for insurance proceeds related to the settlement of claims associated with the Washington Refinery Fire. |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 | |
Current Assets | |||
Cash and cash equivalents | $ 959 | $ 1,000 | |
Receivables, net of allowance for doubtful accounts | 1,016 | 1,435 | |
Inventories | 2,507 | 2,439 | |
Prepayments and other current assets | 176 | 200 | |
Total Current Assets | 4,658 | 5,074 | |
Net Property, Plant and Equipment | 9,427 | 9,045 | |
Other Noncurrent Assets | |||
Acquired intangibles, net | 1,190 | 1,222 | |
Other, net | 1,326 | 1,150 | |
Total Other Noncurrent Assets, Net | 2,516 | 2,372 | |
Total Assets | 16,601 | 16,491 | |
Current Liabilities | |||
Accounts payable | 1,789 | 2,470 | |
Other current liabilities | 1,063 | 996 | |
Total Current Liabilities | 2,852 | 3,466 | |
Deferred Income Taxes | 1,256 | 1,098 | |
Other Noncurrent Liabilities | 843 | 790 | |
Debt, Net of Unamortized Issuance Costs | $ 3,791 | $ 4,161 | |
Commitments and Contingencies (Note 10) | |||
Tesoro Corporation Stockholders’ Equity | |||
Common stock, par value $0.162/3; authorized 200,000,000 shares; 158,429,940 shares issued (156,627,604 in 2014) | $ 26 | $ 26 | |
Additional paid-in capital | 1,392 | 1,255 | |
Retained earnings | 5,959 | 4,642 | |
Treasury stock, 37,666,223 common shares (31,677,195 in 2014), at cost | (1,858) | (1,320) | |
Accumulated other comprehensive loss | (149) | (149) | |
Total Tesoro Corporation Stockholders’ Equity | 5,370 | 4,454 | |
Noncontrolling Interest | 2,489 | 2,522 | |
Total Equity | [1] | 7,859 | 6,976 |
Total Liabilities and Equity | $ 16,601 | $ 16,491 | |
[1] | We have 5.0 million shares of preferred stock authorized with no par value per share. No shares of preferred stock were outstanding as of September 30, 2015 and December 31, 2014. |
Condensed Consolidated Balance4
Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
Tesoro Corporation Stockholders’ Equity | ||
Common stock, par value (dollar per share) | $ 0.167 | $ 0.167 |
Common stock, authorized shares (shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (shares) | 158,429,940 | 156,627,604 |
Treasury stock, common shares (shares) | 37,666,223 | 31,667,195 |
Current Assets | ||
Cash and cash equivalents | $ 959 | $ 1,000 |
Property, Plant and Equipment, Net | ||
Net Property, Plant and Equipment | 9,427 | 9,045 |
Other Noncurrent Assets | ||
Acquired intangibles, net | 1,190 | 1,222 |
Other, net | 1,326 | 1,150 |
Long-term Debt, Net of Unamortized Issuance Costs | ||
Debt, Net of Unamortized Issuance Costs | 3,791 | 4,161 |
Tesoro Logistics LP | ||
Current Assets | ||
Cash and cash equivalents | 11 | 19 |
Property, Plant and Equipment, Net | ||
Net Property, Plant and Equipment | 3,432 | 3,306 |
Other Noncurrent Assets | ||
Acquired intangibles, net | 952 | 973 |
Other, net | 236 | 251 |
Long-term Debt, Net of Unamortized Issuance Costs | ||
Debt, Net of Unamortized Issuance Costs | $ 2,569 | $ 2,544 |
Condensed Statements of Consol5
Condensed Statements of Consolidated Cash Flows (Unaudited) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash Flows From (Used In) Operating Activities | ||
Net earnings | $ 1,607 | $ 756 |
Adjustments to reconcile net earnings to net cash from operating activities: | ||
Depreciation and amortization expense | 553 | 409 |
Debt redemption charges | 1 | 41 |
Stock-based compensation expense | 57 | 20 |
Deferred income taxes | 157 | 227 |
Turnaround and branding charges | (248) | (119) |
Other non-cash operating activities | (33) | (59) |
Changes in current assets and current liabilities | (247) | (228) |
Net cash from operating activities | 1,847 | 1,047 |
Cash Flows From (Used In) Investing Activities | ||
Capital expenditures | (773) | (477) |
Acquisitions | (6) | (17) |
Other investing activities | (4) | 11 |
Net cash used in investing activities | (783) | (483) |
Cash Flows From (Used In) Financing Activities | ||
Borrowings under revolving credit agreements | 346 | 295 |
Repayments on revolving credit agreements | (326) | (52) |
Proceeds from debt offering | 0 | 300 |
Repayments of debt | (402) | (433) |
Dividend payments | (169) | (104) |
Net proceeds from issuance of Tesoro Logistics LP common units | 71 | 156 |
Distributions to noncontrolling interest | (135) | (63) |
Purchases of common stock | (494) | (350) |
Other financing activities | 4 | (21) |
Net cash used in financing activities | (1,105) | (272) |
Increase (Decrease) in Cash and Cash Equivalents | (41) | 292 |
Cash and Cash Equivalents, Beginning of Period | 1,000 | 1,238 |
Cash and Cash Equivalents, End of Period | $ 959 | $ 1,530 |
Basis of Presentation (Notes)
Basis of Presentation (Notes) | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION As used in this report, the terms “Tesoro,” “we,” “us” or “our” may refer to Tesoro Corporation, one or more of its consolidated subsidiaries or all of them taken as a whole. The words “we,” “us” or “our” generally include Tesoro Logistics LP (“TLLP”) and its subsidiaries as consolidated subsidiaries of Tesoro Corporation with certain exceptions where there are transactions or obligations between TLLP and Tesoro Corporation or its other subsidiaries. When used in descriptions of agreements and transactions, “TLLP” or the “Partnership” refers to TLLP and its consolidated subsidiaries. The interim condensed consolidated financial statements and notes thereto of Tesoro Corporation and its subsidiaries have been prepared by management without audit according to the rules and regulations of the Securities and Exchange Commission (“SEC”) and reflect all adjustments that, in the opinion of management, are necessary for a fair presentation of results for the periods presented. Such adjustments are of a normal recurring nature, unless otherwise disclosed. The consolidated balance sheet at December 31, 2014 has been condensed from the audited consolidated financial statements at that date. Certain information and notes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to the SEC’s rules and regulations. However, management believes that the disclosures presented herein are adequate to present the information fairly. The accompanying condensed consolidated financial statements and notes should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2014 . We prepare our condensed consolidated financial statements in conformity with U.S. GAAP, which requires management to make estimates and assumptions that affect the reported amounts and disclosures of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. We review our estimates on an ongoing basis. Changes in facts and circumstances may result in revised estimates and actual results could differ from those estimates. The results of operations for any interim period are not necessarily indicative of results for the full year. Certain prior year balances have been aggregated or disaggregated in order to conform to the current year presentation. Due to there being no adjustments to accumulated other comprehensive income for the three and nine months ended September 30, 2015 and 2014 , consolidated statements of comprehensive income have been omitted. We changed our operating segment presentation in the second quarter of 2015 to include refining, TLLP and a new marketing segment. Comparable prior period information has been recast to reflect our revised segment presentation. See Note 13 for additional information. Our condensed consolidated financial statements include TLLP, a variable interest entity. As the general partner of TLLP, we have the sole ability to direct the activities of TLLP that most significantly impact its economic performance. We are also considered to be the primary beneficiary for accounting purposes and are TLLP’s primary customer. Under our various long-term, fee-based commercial agreements with TLLP, transactions with us accounted for 54% and 55% of TLLP’s total revenues for the three and nine months ended September 30, 2015 and 86% and 87% for the three and nine months ended September 30, 2014 . In the event TLLP incurs a loss, our operating results will reflect TLLP’s loss, net of intercompany eliminations. See Note 2 for additional information relating to TLLP. On September 25, 2013 , we completed the sale of all of our interest in Tesoro Hawaii, LLC, which operated a 94 thousand barrel per day Hawaii refinery, retail stations and associated logistics assets (the “Hawaii Business”). The results of operations for this business have been presented as discontinued operations in the condensed statements of consolidated operations for the three and nine months ended September 30, 2015 and 2014 . There were no revenues for either the three and nine months ended September 30, 2015 or 2014 . There were no recorded losses, before and after tax, respectively, for the three months ended September 30, 2015 and $6 million and $4 million , respectively, for the nine months ended September 30, 2015 . We recorded losses, before and after tax, of $2 million and $1 million , respectively, for the three months ended September 30, 2014 and $3 million and $2 million , respectively, for the nine months ended September 30, 2014 related to the Hawaii Business. Cash flows used in operating activities were $2 million for both the nine months ended September 30, 2015 and September 30, 2014 , respectively. Unless otherwise noted, the information in the notes to the condensed consolidated financial statements relates to our continuing operations. New Accounting Standards and Disclosures Revenue Recognition. In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which provides accounting guidance for all revenue arising from contracts to provide goods or services to customers. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017 given the FASB’s recent deferral of ASU 2014-09’s effective date. Entities may choose to early adopt ASU 2014-09 as of the original effective date. The standard allows for either full retrospective adoption or modified retrospective adoption. At this time, we are evaluating the standard to determine the method of adoption and the impact of ASU 2014-09 on our financial statements and related disclosures. Consolidation . In February 2015, the FASB issued ASU 2015-02, “Amendments to the Consolidation Analysis” (“ASU 2015-02”). This standard modifies existing consolidation guidance for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. ASU 2015-02 is effective for interim and annual periods beginning after December 15, 2015, and requires either a retrospective or a modified retrospective approach to adoption. Early adoption is permitted. At this time, we are evaluating the potential impact of this standard on our financial statements, as well as the available transition methods. Debt Issuance Costs. In April 2015, the FASB issued ASU 2015-03, “Interest - Imputation of Interest” (“ASU 2015-03”), which will simplify the presentation of debt issuance costs. Under ASU 2015-03, debt issuance costs related to a recognized debt liability will be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability. As a result, our balance sheet reflects a reclassification of unamortized debt issuance costs from other noncurrent assets to debt. ASU 2015-03 is effective for interim and annual periods beginning after December 15, 2015, and early adoption is permitted. We adopted this standard in the first quarter of 2015 and applied the changes retrospectively to prior periods presented. The adoption of this standard resulted in the reclassification of $93 million of unamortized debt issuance costs from other noncurrent assets to debt on the balance sheet at December 31, 2014 . Unamortized debt issuance costs of $80 million are recorded as a reduction to debt on the balance sheet at September 30, 2015 . Business Combinations. In September 2015, the FASB issued ASU 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments” (“ASU 2015-16”). The standard requires an acquirer to recognize the cumulative impact of adjustments to provisional purchase price amounts that are identified during the measurement period in the reporting period, in which the adjustment amounts are determined. The standard also requires an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. ASU 2015-16 is effective for interim and annual periods beginning after beginning after December 15, 2015 and must be applied prospectively to adjustments that occur after the effective date. Early application is permitted for financial statements that have not been issued. |
Tesoro Logistics LP (Notes)
Tesoro Logistics LP (Notes) | 9 Months Ended |
Sep. 30, 2015 | |
Variable Interest Entity, Measure of Activity [Abstract] | |
TESORO LOGISTICS LP | TESORO LOGISTICS LP TLLP is a publicly traded limited partnership that was formed to own, operate, develop and acquire logistics assets. Its assets are integral to the success of Tesoro’s refining and marketing operations and are used to gather crude oil and natural gas, process natural gas, and distribute, transport and store crude oil and refined products. TLLP provides us with various pipeline transportation, trucking, terminal distribution, storage and petroleum-coke handling services under long-term, fee-based commercial agreements. Each of these agreements, with the exception of the storage and transportation services agreement, contain minimum volume commitments. We do not provide financial or equity support through any liquidity arrangements or financial guarantees to TLLP. Tesoro Logistics GP, LLC (“TLGP”), our wholly-owned subsidiary, serves as the general partner of TLLP. We held an approximate 33% and 36% interest in TLLP at September 30, 2015 and December 31, 2014 , respectively, including an approximate 2% general partner interest and all of the incentive distribution rights. This interest at September 30, 2015 includes 28,181,748 common units and 1,631,448 general partner units. TLLP acquired assets related to, and entities engaged in, natural gas gathering, transportation and processing in Wyoming, Colorado, Utah, and North Dakota (the “Rockies Natural Gas Business”) through its acquisition of QEP Field Services, LLC (“QEPFS”) from QEP Resources, Inc. on December 2, 2014 for $2.5 billion . At the acquisition date, QEPFS held an approximate 56% limited partner interest in QEP Midstream Partners, LP (“QEPM”), consisting of 3,701,750 common units and 26,705,000 subordinated units, and 100% of QEPM’s general partner, QEP Midstream Partners GP, LLC (“QEPM GP”), which itself held a 2% general partner interest and all of the incentive distribution rights in QEPM. All intercompany transactions with TLLP and QEPM are eliminated upon consolidation. On April 6, 2015 , TLLP entered into an Agreement and Plan of Merger with TLGP, QEPFS, TLLP Merger Sub LLC (“Merger Sub”), QEPM, and QEPM GP. TLLP and QEPM completed the transaction, in which the Merger Sub merged with and into QEPM, with QEPM surviving the merger as a wholly owned subsidiary of TLLP (the “Merger”). The Merger transaction was completed on July 22, 2015 . Following the Merger, QEPM GP remains the general partner of QEPM, and all outstanding common units representing limited partnership interests in QEPM other than QEPM Common Units held by QEPFS (the “QEPM Common Units”) were converted into the right to receive 0.3088 common units representing limited partnership interests in TLLP (the “TLLP Common Units”). As a result of the Merger, TLLP issued approximately 7.1 million TLLP Common Units to QEPM unitholders. No fractional TLLP Common Units were issued in the Merger, and holders of QEPM Common Units other than QEPFS received cash in lieu of fractional TLLP Common Units. There was no impact to the purchase price allocation as a result of the Merger. TLLP’s allocation of the Rockies Natural Gas Business acquisition’s $2.5 billion purchase price remains preliminary as of September 30, 2015 . During the nine months ended September 30, 2015 , the original purchase price was increased by $6 million for the settlement of acquisition date net working capital amounts. Finalization of the purchase price allocation is pending and adjustments can be made through the end of TLLP’s measurement period, which is not to exceed one year from the acquisition date. The table below reflects the preliminary acquisition date purchase price allocation as of September 30, 2015 (in millions): Cash $ 32 Accounts receivable 120 Prepayments and other 8 Property, plant and equipment 1,735 Acquired intangibles 976 Other noncurrent assets (a) 228 Accounts payable (67 ) Other current liabilities (51 ) Other noncurrent liabilities (33 ) Noncontrolling interest (432 ) Total Purchase Price $ 2,516 ____________________ (a) Other noncurrent assets include $148 million of goodwill. |
Earnings Per Share (Notes)
Earnings Per Share (Notes) | 9 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE We compute basic earnings per share by dividing net earnings attributable to Tesoro Corporation stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share include the effects of potentially dilutive shares outstanding during the period. Our share calculations are presented below (in millions): Three Months Ended Nine Months Ended 2015 2014 2015 2014 Weighted average common shares outstanding 122.5 127.9 124.3 129.5 Common stock equivalents 1.3 1.8 1.4 2.2 Total Diluted Shares 123.8 129.7 125.7 131.7 Potentially dilutive common stock equivalents are excluded from the calculation of diluted earnings per share if the effect of including such securities in the calculation would have been anti-dilutive. Anti-dilutive securities were 0.1 million for both the three months ended September 30, 2015 and 2014 , and 0.6 million and 0.1 million for the nine months ended September 30, 2015 and 2014 , respectively. |
Inventories (Notes)
Inventories (Notes) | 9 Months Ended |
Sep. 30, 2015 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | INVENTORIES Components of inventories were as follows (in millions): September 30, December 31, Domestic crude oil and refined products $ 2,125 $ 1,930 Foreign subsidiary crude oil 190 351 Other inventories 192 158 Total Inventories $ 2,507 $ 2,439 Due to a lower crude oil and refined product pricing environment experienced since the end of 2014, we recorded a lower of cost or market adjustment to cost of sales of $83 million at September 30, 2015 for our crude oil, refined products, oxygenates and by-product inventories. At December 31, 2014 , we recorded a $42 million lower of cost or market adjustment for the same type of inventories, which was reversed in the first quarter of 2015 as the inventories associated with the adjustment at the end of 2014 were sold or used during the first quarter of 2015. |
Property, Plant and Equipment (
Property, Plant and Equipment (Notes) | 9 Months Ended |
Sep. 30, 2015 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT | PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment, at cost, is as follows (in millions): September 30, December 31, Refining $ 7,449 $ 6,994 TLLP 3,789 3,551 Marketing 842 834 Corporate 261 254 Property, Plant and Equipment, at Cost 12,341 11,633 Accumulated depreciation (2,914 ) (2,588 ) Net Property, Plant and Equipment $ 9,427 $ 9,045 We capitalize interest as part of the cost of major projects during the construction period. Capitalized interest totaled $9 million and $7 million for the three months ended September 30, 2015 and 2014 , respectively, and $27 million and $17 million for the nine months ended September 30, 2015 and 2014 , respectively, and is recorded as a reduction to net interest and financing costs in our condensed statements of consolidated operations. |
Derivative Instruments (Notes)
Derivative Instruments (Notes) | 9 Months Ended |
Sep. 30, 2015 | |
General Discussion of Derivative Instruments and Hedging Activities [Abstract] | |
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS In the ordinary course of business, our profit margins, earnings and cash flows are impacted by the timing, direction and overall change in pricing for commodities used throughout our operations. We use non-trading derivative instruments to manage our exposure to the following: • price risks associated with the purchase or sale of feedstocks, refined products and energy supplies related to our refineries, terminals, marketing fuel inventory and customers; • price risks associated with inventories above or below our target levels; • future emission credit requirements; and • exchange rate fluctuations on our purchases of Canadian crude oil. Our accounting for derivative instruments depends on whether the underlying commodity will be used or sold in the normal course of business. For contracts where the crude oil or refined products are expected to be used or sold in the normal course of business, we apply the normal purchase normal sale exception and follow the accrual method of accounting. All other derivative instruments are recorded at fair value using mark-to-market accounting. Our derivative instruments include forward purchase and sale contracts (“Forward Contracts”), exchange-traded futures (“Futures Contracts”), over-the-counter swaps (“OTC Swap Contracts”), options (“Options”), and over-the-counter options (“OTC Option Contracts”). Forward Contracts are agreements to buy or sell the commodity at a predetermined price at a specified future date. Futures Contracts are standardized agreements, traded on a futures exchange, to buy or sell the commodity at a predetermined price at a specified future date. Options provide the right, but not the obligation to buy or sell the commodity at a specified price in the future. OTC Swap Contracts and OTC Option Contracts require cash settlement for the commodity based on the difference between a contracted fixed or floating price and the market price on the settlement date. Certain of these contracts require cash collateral to be received or paid if our asset or liability position, respectively, exceeds specified thresholds. We believe that we have minimal credit risk with respect to our counterparties. The following table presents the fair value (in millions) of our derivative instruments as of September 30, 2015 and December 31, 2014 . The fair value amounts below are presented on a gross basis and do not reflect the netting of asset and liability positions permitted under the terms of our master netting arrangements including cash collateral on deposit with, or received from, brokers. We offset the recognized fair value amounts for multiple derivative instruments executed with the same counterparty in our financial statements when a legal right of offset exists. As a result, the asset and liability amounts below will not agree with the amounts presented in our condensed consolidated balance sheets. Derivative Assets Derivative Liabilities Balance Sheet Location September 30, December 31, September 30, December 31, Commodity Futures Contracts Prepayments and other current assets $ 902 $ 1,201 $ 870 $ 1,025 Commodity OTC Swap Contracts Receivables 3 — — — Commodity OTC Swap Contracts Accounts payable — — — 1 Commodity Forward Contracts Receivables 2 3 — — Commodity Forward Contracts Accounts payable — — 1 1 Total Gross Mark-to-Market Derivatives 907 1,204 871 1,027 Less: Counterparty Netting and Cash Collateral (a) (859 ) (1,136 ) (870 ) (1,024 ) Total Net Fair Value of Derivatives $ 48 $ 68 $ 1 $ 3 ________________ (a) Certain of our derivative contracts, under master netting arrangements, include both asset and liability positions. We offset both the fair value amounts and any related cash collateral amounts recognized for multiple derivative instruments executed with the same counterparty when there is a legally enforceable right and an intention to settle net or simultaneously. As of September 30, 2015 , we had provided cash collateral amounts of $11 million related to our unrealized derivative positions. At December 31, 2014 , our counterparties had provided cash collateral of $112 million related to our unrealized derivative positions. Cash collateral amounts are netted with mark-to-market derivative assets. Gains (losses) for our mark-to market derivatives for the three and nine months ended September 30, 2015 and 2014 were as follows (in millions): Three Months Ended Nine Months Ended 2015 2014 2015 2014 Commodity Futures Contracts $ 145 $ 167 $ 102 $ 90 Commodity OTC Swap Contracts 7 (2 ) 5 (5 ) Commodity Forward Contracts 1 1 15 5 Foreign Currency Forward Contracts (3 ) (3 ) (5 ) (3 ) Total Gain on Mark-to-Market Derivatives $ 150 $ 163 $ 117 $ 87 The income statement location of gains (losses) for our mark-to market derivatives above were as follows (in millions): Three Months Ended Nine Months Ended 2015 2014 2015 2014 Revenues $ 30 $ 6 $ 28 $ 7 Cost of sales 123 160 94 83 Other expense, net (3 ) (3 ) (5 ) (3 ) Total Gain on Mark-to-Market Derivatives $ 150 $ 163 $ 117 $ 87 Open Long (Short) Positions The information below presents the net volume of outstanding commodity and other contracts by type of instrument, year of maturity and unit of measure as of September 30, 2015 (units in thousands): Contract Volumes by Year of Maturity Unit of Measure Mark-to-Market Derivative Instrument 2015 2016 2017 Crude oil, refined products and blending products: Futures - short (5,311) (1,050) — Barrels OTC Swaps - long 1,100 900 — Barrels Forwards - long 250 — — Barrels Carbon emissions credits: Futures - long 175 1,000 1,000 Tons Corn: Futures - short (4,270) — — Bushels At September 30, 2015 , we had open Forward Contracts to purchase CAD $20 million that were settled on October 26, 2015 . |
Fair Value Measurements (Notes)
Fair Value Measurements (Notes) | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS We classify financial assets and liabilities according to the fair value hierarchy. Financial assets and liabilities classified as level 1 instruments are valued using quoted prices in active markets for identical assets and liabilities. Level 2 instruments are valued using quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices, such as liquidity, that are observable for the asset or liability. Our level 2 instruments include derivatives valued using market quotations from independent price reporting agencies, third-party brokers and commodity exchange price curves that are corroborated with market data. Level 3 instruments are valued using significant unobservable inputs that are not supported by sufficient market activity. We do not have any financial assets or liabilities classified as level 3 at September 30, 2015 or December 31, 2014 . Our financial assets and liabilities measured at fair value on a recurring basis include derivative instruments. Additionally, our financial liabilities include obligations for Renewable Identification Numbers (“RINs”) and cap and trade emission credits for the state of California (together with RINs, our “Environmental Credit Obligations”). See Note 6 for further information on our derivative instruments. Our Environmental Credit Obligations represent the estimated fair value amount at each balance sheet date for which we do not have sufficient RINs and California cap and trade credits to satisfy our obligations to the U.S. Environmental Protection Agency (“EPA”) and the state of California, respectively. RINs are assigned to biofuels produced or imported into the U.S. as required by the EPA, which sets annual quotas for the percentage of biofuels that must be blended into transportation fuels consumed in the U.S. As a producer of petroleum transportation fuels, we are required to blend biofuels into the products we produce at a rate that will meet the EPA’s quota. We must purchase RINs in the open market to satisfy the requirement if we are unable to blend at that rate. Our liability for cap and trade emission credits for the state of California represent the deficit of credits to satisfy emission reduction requirements mandated in California’s Assembly Bill 32 for each period which stationary or transportation fuel carbon emissions exceed the level allowed by the regulation. Financial assets and liabilities recognized at fair value in our condensed consolidated balance sheets by level within the fair value hierarchy were as follows (in millions): September 30, 2015 Level 1 Level 2 Level 3 Netting and Collateral (a) Total Assets: Commodity Futures Contracts $ 896 $ 6 $ — $ (859 ) $ 43 Commodity OTC Swap Contracts — 3 — — 3 Commodity Forward Contracts — 2 — — 2 Total Assets $ 896 $ 11 $ — $ (859 ) $ 48 Liabilities: Commodity Futures Contracts $ 867 $ 3 $ — $ (870 ) $ — Commodity Forward Contracts — 1 — — 1 Environmental Credit Obligations — 17 — — 17 Total Liabilities $ 867 $ 21 $ — $ (870 ) $ 18 December 31, 2014 Level 1 Level 2 Level 3 Netting and Collateral (a) Total Assets: Commodity Futures Contracts $ 1,165 $ 36 $ — $ (1,136 ) $ 65 Commodity Forward Contracts — 3 — — 3 Total Assets $ 1,165 $ 39 $ — $ (1,136 ) $ 68 Liabilities: Commodity Futures Contracts $ 1,011 $ 14 $ — $ (1,024 ) $ 1 Commodity OTC Swap Contracts — 1 — — 1 Commodity Forward Contracts — 1 — — 1 Environmental Credit Obligations — 20 — — 20 Total Liabilities $ 1,011 $ 36 $ — $ (1,024 ) $ 23 ________________ (a) Certain of our derivative contracts, under master netting arrangements, include both asset and liability positions. We offset both the fair value amounts and any related cash collateral amounts recognized for multiple derivative instruments executed with the same counterparty when there is a legally enforceable right and an intention to settle net or simultaneously. As of September 30, 2015 , we had provided cash collateral amounts of $11 million related to our unrealized derivative positions. At December 31, 2014 , our counterparties had provided cash collateral of $112 million related to our unrealized derivative positions. Cash collateral amounts are netted with mark-to-market derivative assets. We believe the carrying value of our other financial instruments, including cash and cash equivalents, receivables, accounts payable and certain accrued liabilities approximate fair value. Our fair value assessment incorporates a variety of considerations, including the short-term duration of the instruments and the expected future insignificance of bad debt expense, which includes an evaluation of counterparty credit risk. The borrowings under the Tesoro Corporation revolving credit facility (the “Revolving Credit Facility”) and the TLLP senior secured revolving credit agreement (the “TLLP Revolving Credit Facility”), which include variable interest rates, approximate fair value. The fair value of our fixed rate debt is based on prices from recent trade activity and is categorized in level 2 of the fair value hierarchy. The carrying values of our debt were approximately $3.9 billion and $4.3 billion at September 30, 2015 and December 31, 2014 , respectively, and the fair values of our debt were approximately $3.8 billion and $4.3 billion at September 30, 2015 and December 31, 2014 , respectively. These carrying and fair values of our debt do not consider the unamortized issuance costs, which are netted against our total debt. |
Debt (Notes)
Debt (Notes) | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Our debt balance, net of unamortized issuance costs, at September 30, 2015 and December 31, 2014 was as follows (in millions): September 30, December 31, Total debt (a) $ 3,873 $ 4,255 Unamortized issuance costs (b) (c) (76 ) (88 ) Current maturities (6 ) (6 ) Debt, Net of Current Maturities and Unamortized Issuance Costs $ 3,791 $ 4,161 ________________ (a) Total debt related to TLLP, which is non-recourse to Tesoro, except for TLGP, was $2.6 billion at both September 30, 2015 and December 31, 2014 . (b) Includes unamortized premium associated with TLLP’s 5.875% Senior Notes due 2020 of $4 million and $5 million as of September 30, 2015 and December 31, 2014 , respectively. (c) The Company adopted ASU 2015-03 in the first quarter of 2015 and applied the changes retrospectively to the prior period presented. See Note 1 for further discussion. Revolving Credit Facilities We had available capacity under our credit facilities as follows at September 30, 2015 (in millions): Total Capacity Amount Borrowed as of September 30, 2015 Outstanding Letters of Credit Available Capacity Expiration Tesoro Corporation Revolving Credit Facility (a) $ 3,000 $ — $ 76 $ 2,924 November 18, 2019 TLLP Revolving Credit Facility 900 280 — 620 December 2, 2019 Letter of Credit Facilities 1,895 — 189 1,706 Total Credit Facilities $ 5,795 $ 280 $ 265 $ 5,250 ________________ (a) Borrowing base is the lesser of the amount of the periodically adjusted borrowing base or the agreement’s total capacity of $3.0 billion . Tesoro Corporation Revolving Credit Facility. Our Revolving Credit Facility provides for borrowings (including letters of credit) up to the lesser of the amount of a periodically adjusted borrowing base, which consists of Tesoro’s eligible cash and cash equivalents, receivables and petroleum inventories, net of the standard reserve as defined, or the Revolving Credit Facility’s total capacity of $3.0 billion . We had unused credit availability of approximately 97% of the eligible borrowing base at September 30, 2015 . Our Revolving Credit Facility is guaranteed by substantially all of Tesoro’s active domestic subsidiaries, excluding TLGP, TLLP and its subsidiaries, and certain foreign subsidiaries, and is secured by substantially all of Tesoro’s active domestic subsidiaries’ crude oil and refined product inventories, cash and receivables. The Revolving Credit Facility allows us to obtain letters of credit under separate letter of credit agreements for foreign crude oil purchases. Our uncommitted letter of credit agreements had $189 million outstanding as of September 30, 2015 . Letters of credit outstanding under these agreements incur fees ranging from 0.40% to 1.00% and are secured by the crude oil inventories for which they are issued. Capacity under these letter of credit agreements is available on an uncommitted basis and can be terminated by either party at any time. TLLP Revolving Credit Facility. The TLLP Revolving Credit Facility provided for total loan availability of $900 million as of September 30, 2015 , and TLLP may request that the loan availability be increased up to an aggregate of $1.5 billion , subject to receiving increased commitments from the lenders. The TLLP Revolving Credit Facility is non-recourse to Tesoro, except for TLGP, and is guaranteed by all of TLLP’s subsidiaries, with the exception of Rendezvous Gas Services L.L.C., and secured by substantially all of TLLP’s assets. Borrowings are available under the TLLP Revolving Credit Facility up to the total loan availability of the facility. There was $280 million in borrowings outstanding under the TLLP Revolving Credit Facility, which incurred interest at a weighted average interest rate of 2.69% at September 30, 2015 . TLLP had unused credit availability of approximately 69% of the borrowing capacity at September 30, 2015 . Tesoro Debt Repayments During August 2015, we voluntarily repaid our obligation of $398 million under the Term Loan Facility in its entirety with available cash on hand. The Term Loan Facility originally funded a portion of the acquisition of BP’s integrated Southern California refining, marketing and logistics business (“The Los Angeles Acquisition”) and was scheduled to mature on May 30, 2016. Amounts paid on the Term Loan Facility cannot be re-borrowed. |
Benefit Plans (Notes)
Benefit Plans (Notes) | 9 Months Ended |
Sep. 30, 2015 | |
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | |
BENEFIT PLANS | BENEFIT PLANS Tesoro sponsors four defined benefit pension plans, including one funded qualified employee retirement plan and three unfunded nonqualified executive plans. Although our funded employee retirement plan fully meets all funding requirements under applicable laws and regulations, we voluntarily contributed $60 million during the nine months ended September 30, 2015 to improve the funded status of the plan. Tesoro also provides other postretirement health care benefits to retirees who met certain service requirements and were participating in our group health insurance program at retirement. The components of pension and other postretirement benefit expense (income) for the three and nine months ended September 30, 2015 and 2014 were (in millions): Pension Benefits Three Months Ended Nine Months Ended 2015 2014 2015 2014 Service cost $ 11 $ 12 $ 34 $ 38 Interest cost 7 7 22 24 Expected return on plan assets (7 ) (6 ) (20 ) (21 ) Amortization of prior service cost 1 — 1 1 Recognized net actuarial loss 6 3 18 10 Net Periodic Benefit Expense $ 18 $ 16 $ 55 $ 52 Other Postretirement Benefits Three Months Ended Nine Months Ended 2015 2014 2015 2014 Service cost $ — $ — $ 2 $ 2 Interest cost 1 1 2 2 Amortization of prior service credit (8 ) (8 ) (25 ) (25 ) Recognized net actuarial loss 1 1 3 4 Net Periodic Benefit Income $ (6 ) $ (6 ) $ (18 ) $ (17 ) |
Commitments and Contingencies (
Commitments and Contingencies (Notes) | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Environmental Liabilities We are incurring and expect to continue to incur expenses for environmental remediation liabilities at a number of currently and previously owned or operated refining, pipeline, terminal and retail station properties. We have accrued liabilities for these expenses and believe these accruals are adequate based on current information and projections that can be reasonably estimated. Additionally, we have recognized environmental remediation liabilities assumed in past acquisitions from the prior owners that include amounts estimated for site cleanup and monitoring activities arising from operations at refineries, certain terminals and pipelines, and retail stations prior to the dates of our acquisitions. Our environmental accruals are based on estimates including engineering assessments, and it is possible that our projections will change and that additional costs will be recorded as more information becomes available. Our accruals for environmental expenditures totaled $229 million and $274 million at September 30, 2015 and December 31, 2014 , respectively, including $15 million and $32 million for TLLP, respectively. These accruals include $196 million and $216 million at September 30, 2015 and December 31, 2014 , respectively, related to amounts estimated for site cleanup activities arising from operations at our Martinez refinery and operations of assets acquired in the Los Angeles Acquisition prior to their respective acquisition dates. We cannot reasonably determine the full extent of remedial activities that may be required at the Martinez refinery and for assets acquired in the Los Angeles Acquisition, and it is possible that we will identify additional investigation and remediation costs for site cleanup activities as more information becomes available. The environmental remediation liabilities assumed in the Los Angeles Acquisition include amounts estimated for site cleanup activities and monitoring activities arising from operations at the Carson refinery, certain terminals and pipelines, and retail stations prior to our acquisition on June 1, 2013 . These estimates for environmental liabilities are based on third-party assessments and available information. Our estimates for site cleanup activities reflect amounts for which we are responsible under applicable cost-sharing arrangements. On July 10, 2015 , a federal court issued an order denying coverage pursuant to insurance policies for environmental remediation liabilities at our Martinez refinery and those liabilities are included in our accruals above. The insurer had filed a declaratory relief action challenging coverage of the primary policy assigned to us when we acquired the refinery. The policies provide for coverage up to $190 million for expenditures in excess of $50 million in self-insurance. We have not recognized possible insurance recoveries under the policies and have appealed the order. Other Contingencies Washington Refinery Fire. The naphtha hydrotreater unit at our Washington refinery was involved in a fire in April 2010 , which fatally injured seven employees and rendered the unit inoperable. The Washington State Department of Labor & Industries (“L&I”) initiated an investigation of the incident. L&I completed its investigation in October 2010 , issued a citation and assessed a $2.4 million fine, which we appealed. L&I reassumed jurisdiction of the citation and affirmed the allegations in December 2010 . We disagree with L&I’s characterizations of operations at our Washington refinery and believe, based on available evidence and scientific reviews, that many of the agency’s conclusions are mistaken. We filed an appeal of the citation in January 2011 . In separate September 2013 , November 2013 and February 2015 orders, the Board of Industrial Insurance Appeals (“BIIA”) Judge granted partial summary judgment in our favor rejecting 33 of the original 44 allegations in the citation as lacking legal or evidentiary support. A hearing on the remaining 11 allegations started on July 21, 2015 , and we expect the Judge to issue a recommended decision for the BIIA’s review in 2016. While we cannot currently estimate the final amount or timing of the resolution of this matter, we have established an accrual based on our best estimate at this time. On November 20, 2013 , we received a notice of violation (“NOV”) from the EPA alleging 46 violations of the Clean Air Act Risk Management Plan requirements at our Washington refinery. The EPA conducted an investigation of the refinery in 2011, following the April 2010 fire in the naphtha hydrotreater unit. We have provided a response to the NOV and additional information to the EPA. While we cannot currently estimate the amount or timing of the resolution of this matter, we believe the outcome will not have a material impact on our liquidity, financial position, or results of operations. In January 2015 , we received notice and demand for indemnity from the previous owner of our Washington refinery for the damages they incurred in the civil litigation involving us and the previous owner brought by the families of those fatally wounded in the April 2010 refinery fire. We settled our involvement in the civil litigation in 2012. Arbitration proceedings concerning the demand for indemnity were initiated in March 2015 after an unsuccessful mediation and we intend to vigorously defend ourselves against this claim. Environmental. The EPA has alleged that we have violated certain Clean Air Act regulations at our Alaska, Washington, Martinez, North Dakota and Utah refineries. We also retained the responsibility for resolving similar allegations relating to our former Hawaii refinery, which we sold in September 2013. We previously received a NOV in March 2011 from the EPA alleging violations of Title V of the Clean Air Act at our Alaska refinery, which arose from a 2007 state of Alaska inspection and inspections by the EPA in 2008 and 2010. We also previously received NOVs in 2005 and 2008 alleging violations of the Clean Air Act at our Washington refinery. We are continuing discussions of all of these claims with the EPA and the U.S. Department of Justice. We have established an accrual for this matter although we cannot currently estimate the final amount or timing of its resolution. The ultimate resolution of these matters could have a material impact on us, as we may be required to incur material capital expenditures at our operating refineries. However, we do not believe that the final outcome of this matter will have a material impact on our liquidity, results of operations or financial position. Other Matters In the ordinary course of business, we become party to lawsuits, administrative proceedings and governmental investigations, including environmental, regulatory and other matters. Large, and sometimes unspecified, damages or penalties may be sought from us in some matters. We have not established accruals for these matters unless a loss is probable, and the amount of loss is currently estimable. Legal. We are a defendant, along with other manufacturing, supply and marketing defendants, in a lawsuit brought by the Orange County Water District, alleging methyl tertiary butyl ether (“MTBE”) contamination in groundwater. This matter, originally filed in 2004, is proceeding in the United States District Court of the Southern District of New York. The defendants are being sued for having manufactured MTBE and having manufactured, supplied and distributed gasoline containing MTBE. The plaintiff alleges, in part, that the defendants are liable for manufacturing or distributing a defective product. The suit generally seeks individual, unquantified compensatory and punitive damages and attorney’s fees. We intend to vigorously assert our defenses against this claim. While we cannot currently estimate the final amount or timing of the resolution of this matter, we have established an accrual based on our best estimate at this time and believe that the outcome will not have a material impact on our liquidity, financial position, or results of operations. Environmental. Certain non-governmental organizations filed a Request for Agency Action (the “Request”) with the Utah Department of Environmental Quality (“UDEQ”) concerning our Utah refinery in October 2012. The Request challenges the UDEQ’s permitting of our refinery conversion project alleging that the permits do not conform to the requirements of the Clean Air Act. As the permittee, we are the real party in interest and are defending the permits with UDEQ. In orders issued on July 10 and September 9, 2014, the UDEQ Administrative Law Judge (“ALJ”) recommended the Executive Director of UDEQ deny Petitioners’ request for a stay of the project and dismiss their challenge to the permit. The Executive Director’s final decision approving the ALJ’s recommended order is currently under appeal. While we cannot estimate the timing or estimated amount, if any, associated with the outcome of this matter, we do not believe it will have a material adverse impact on our liquidity, financial position, or results of operations. We have investigated conditions at certain active wastewater treatment units at our Martinez refinery pursuant to an order received in 2004 from the San Francisco Bay Regional Water Quality Control Board that named us as well as two previous owners of the Martinez refinery. We cannot currently estimate the amount of the ultimate resolution of the order, but we believe it will not have a material adverse impact on our liquidity, financial position, or results of operations. Tax. We are subject to extensive federal, state and foreign tax laws and regulations. Newly enacted tax laws and regulations, and changes in existing tax laws and regulations, could result in increased expenditures in the future. We are also subject to audits by federal, state and foreign taxing authorities in the normal course of business. It is possible that tax audits could result in claims against us in excess of recorded liabilities. However, we believe that resolution of any such claim(s) would not have a material impact on our liquidity, financial position, or results of operations. Unrecognized tax benefits increased by approximately $150 million in the second quarter of 2015 for tax positions taken on amended returns filed for 2006-2010. The positions taken exclude certain tax credits, for blending biofuels into refined products, from taxable income. These tax credits were received from the federal government during the years being amended. However, due to the complex and uncertain nature of the issue, we are unable to conclude that it is more likely than not that we will sustain the claims. Therefore, we have neither recognized a tax benefit, nor recorded a receivable for this item. It is reasonably possible that unrecognized tax benefits may decrease by as much as $8 million in the next twelve months, related primarily to state apportionment matters. However, since the tax was fully paid in prior years, the unrecognized tax benefit would be eliminated without impacting expense. |
Stockholders' Equity (Notes)
Stockholders' Equity (Notes) | 9 Months Ended |
Sep. 30, 2015 | |
Stockholders' Equity Attributable to Parent [Abstract] | |
STOCKHOLDERS' EQUITY | STOCKHOLDERS’ EQUITY Changes to equity during the nine months ended September 30, 2015 are presented below (in millions): Tesoro Corporation Stockholders’ Equity Noncontrolling Interest Total Equity Balance at December 31, 2014 (a) $ 4,454 $ 2,522 $ 6,976 Net earnings 1,486 121 1,607 Purchases of common stock (494 ) — (494 ) Dividend payments (169 ) — (169 ) Net effect of amounts related to equity-based compensation (b) 34 4 38 Net proceeds from issuance of Tesoro Logistics LP common units — 71 71 Distributions to noncontrolling interest — (135 ) (135 ) Transfers to (from) Tesoro paid-in capital related to: TLLP’s issuance of common units 59 (94 ) (35 ) Balance at September 30, 2015 (a) $ 5,370 $ 2,489 $ 7,859 ________________ (a) We have 5.0 million shares of preferred stock authorized with no par value per share. No shares of preferred stock were outstanding as of September 30, 2015 and December 31, 2014 . (b) We issued approximately 0.3 million shares and 0.5 million shares during the nine months ended September 30, 2015 and 2014 for proceeds of $12 million and $14 million , respectively, primarily for stock option exercises under our equity-based compensation plans. See Note 12 for more information on stock-based compensation. Share Repurchases We are authorized by our Board of Directors (the “Board”) to purchase shares of our common stock in open market transactions at our discretion. The Board’s authorization has no time limit and may be suspended or discontinued at any time. Purchases of our common stock can also be made to offset the dilutive effect of stock-based compensation awards and to meet our obligations under employee benefit and compensation plans, including the exercise of stock options and vesting of restricted stock and to fulfill other stock compensation requirements. We purchased approximately 5.5 million shares and 6.2 million shares of our common stock for approximately $494 million and $350 million during the nine months ended September 30, 2015 and 2014 , respectively. Cash Dividends We paid cash dividends totaling $62 million and $169 million for the three and nine months ended September 30, 2015 , respectively, based on a $0.50 per share and $0.425 per share quarterly cash dividend on common stock in the third and first two quarters, respectively. We paid cash dividends totaling $39 million and $104 million for the three and nine months ended September 30, 2014 , respectively, based on a $0.30 per share and $0.25 per share quarterly cash dividend on common stock in the third quarter and first two quarters respectively. On October 27, 2015 , our Board declared a cash dividend of $0.50 per share payable on December 15, 2015 to shareholders of record on November 30, 2015 . |
Stock-Based Compensation (Notes
Stock-Based Compensation (Notes) | 9 Months Ended |
Sep. 30, 2015 | |
Share-based Compensation [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Stock-based compensation expense (benefit), including discontinued operations, was as follows (in millions): Three Months Ended Nine Months Ended 2015 2014 2015 2014 Stock appreciation rights (a) $ 10 $ 4 $ 20 $ (2 ) Performance share awards (b) 3 3 9 7 Market stock units (c) 7 4 19 12 Other stock-based awards (d) 2 1 9 3 Total Stock-Based Compensation Expense $ 22 $ 12 $ 57 $ 20 ____________________ (a) We paid cash of $37 million and $22 million to settle 0.5 million and 0.8 million SARs that were exercised during the nine months ended September 30, 2015 and 2014 , respectively. We had $43 million and $60 million recorded in accrued liabilities associated with our SARs awards at September 30, 2015 and December 31, 2014 , respectively. (b) We granted 0.1 million market condition performance share awards at a weighted average grant date fair value of $117.96 per share under the amended and restated 2011 Long-Term Incentive Plan (“2011 Plan”) during the nine months ended September 30, 2015 . (c) We granted 0.4 million market stock units at a weighted average grant date fair value of $114.57 per unit under the 2011 Plan during the nine months ended September 30, 2015 . (d) We have aggregated expenses for certain award types as they are not considered significant. The income tax effect recognized in the income statement for stock-based compensation was a benefit of $8 million and $7 million for the three months ended September 30, 2015 and 2014 , respectively, and a benefit of $22 million and $9 million for the nine months ended September 30, 2015 and 2014 , respectively. The reduction in current taxes payable recognized from tax deductions resulting from exercises and vestings under all of our stock-based compensation arrangements totaled $8 million and $7 million for the three months ended September 30, 2015 and 2014 , respectively, and $71 million and $41 million for the nine months ended September 30, 2015 and 2014 , respectively. |
Operating Segments (Notes)
Operating Segments (Notes) | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
OPERATING SEGMENTS | OPERATING SEGMENTS Our branded operations represented the assets and operations that were previously shown as the retail segment. In previous periods, a portion of our marketing business related to sales in unbranded or wholesale channels that were presented within our refining operating segment. Upon considering the changes in our business, including the transition from company-owned retail operations to multi-site operator model, we assessed how our chief operating decision maker evaluates the business, assesses performance and allocates resources. From this analysis, we believed the presentation of a marketing segment inclusive of both unbranded and branded marketing operations was appropriate. As of the second quarter 2015 , we revised our operating segments to include refining, TLLP and a realigned marketing segment. Comparable prior period information has been recast to reflect our revised segment presentation. No other changes were deemed necessary to our refining and TLLP segments. Our refining segment owns and operates six petroleum refineries located in California, Washington, Alaska, North Dakota and Utah that manufacture gasoline and gasoline blendstocks, jet fuel, diesel fuel, residual fuel oil and other refined products. We sell these refined products, together with refined products purchased from third parties, to our marketing segment through terminal facilities and other locations and opportunistically export refined products to foreign markets. TLLP’s assets and operations include certain crude oil gathering assets, natural gas gathering and processing assets and crude oil and refined products terminalling and transportation assets acquired from Tesoro and other third parties. Revenues from the TLLP segment are generated by charging fees for gathering crude oil and natural gas, for processing natural gas, and for terminalling, transporting and storing crude oil, and refined products. During 2014, we converted our company-operated retail locations to multi-site operators (“MSOs”) and retained the transportation fuel sales. Our marketing segment sells gasoline and diesel fuel through branded MSOs and jobber/dealers in 16 states as well as unbranded or wholesale channels through terminal facilities and other locations. Since we do not have significant operations in foreign countries, revenue generated and long-lived assets located in foreign countries are not material to our operations. We evaluate the performance of our segments based primarily on segment operating income. Segment operating income includes those revenues and expenses that are directly attributable to management of the respective segment. TLLP and marketing revenues include intersegment transactions with our refining segment. Income taxes, other income, net, interest and financing costs, net, corporate depreciation and corporate general and administrative expenses are excluded from segment operating income. Segment information related to continuing operations is as follows: Three Months Ended Nine Months Ended 2015 2014 2015 2014 (In millions) Revenues Refining: Refined products $ 6,966 $ 10,363 $ 20,293 $ 30,353 Crude oil resales and other 172 434 780 1,060 TLLP: Gathering 87 32 253 84 Processing 71 — 205 — Terminalling and transportation 124 118 362 326 Marketing: Fuel (a) 5,144 6,501 14,143 18,814 Other non-fuel (b) 16 73 48 203 Intersegment sales (4,837 ) (6,370 ) (13,646 ) (18,652 ) Total Revenues $ 7,743 $ 11,151 $ 22,438 $ 32,188 Segment Operating Income Refining (c) $ 895 $ 536 $ 1,831 $ 1,074 TLLP (d) 112 61 329 169 Marketing (c) 379 180 724 292 Total Segment Operating Income 1,386 777 2,884 1,535 Corporate and unallocated costs (e) (94 ) (75 ) (243 ) (185 ) Operating Income 1,292 702 2,641 1,350 Interest and financing costs, net (f) (54 ) (50 ) (163 ) (168 ) Other income, net (g) 19 11 21 13 Earnings Before Income Taxes $ 1,257 $ 663 $ 2,499 $ 1,195 Depreciation and Amortization Expense Refining $ 132 $ 112 $ 373 $ 317 TLLP 44 18 132 51 Marketing 11 10 34 30 Corporate 5 4 14 11 Total Depreciation and Amortization Expense $ 192 $ 144 $ 553 $ 409 Capital Expenditures Refining $ 153 $ 118 $ 485 $ 280 TLLP 92 63 235 137 Marketing 8 9 20 27 Corporate 6 4 16 20 Total Capital Expenditures $ 259 $ 194 $ 756 $ 464 ______________________ (a) Federal and state motor fuel taxes on sales by our marketing segment are included in both revenues and cost of sales in our condensed statements of consolidated operations. These taxes totaled $137 million and $148 million for the three months ended September 30, 2015 and 2014 , respectively, and $423 million and $441 million for the nine months ended September 30, 2015 and 2014 , respectively. (b) Primarily includes rental income for the three and nine months ended September 30, 2015 and primarily merchandise revenue for the three and nine months ended September 30, 2014 . (c) Our refining segment uses RINs to satisfy its obligations under the Renewable Fuels Standard, in addition to physically blending required biofuels. Effective April 1, 2013 , we changed our intersegment pricing methodology and no longer reduced the amount marketing pays for the biofuels by the market value of the RINs due to significant volatility in the value of RINs. At the end of 2014, given the price of RINs has become more transparent in the price of biofuels, we determined our intersegment pricing methodology should include the market value of RINs as a reduction to the price our marketing segment pays to our refining segment. We made this change effective January 1, 2015 . We have not adjusted financial information presented for our refining and marketing segments for the three or nine month periods ended September 30, 2014 . Had we made this change effective January 1, 2014 , operating income in our refining segment would have been reduced by $35 million and $94 million with a corresponding increase to operating income in our marketing segment for the three and nine months ended September 30, 2014 , respectively. (d) We present TLLP’s segment operating income net of general and administrative expenses totaling $16 million and $6 million representing TLLP’s corporate costs for the three months ended September 30, 2015 and 2014 , respectively, and $43 million and $14 million for the nine months ended September 30, 2015 and 2014 , respectively that are not allocated by TLLP to its operating segments. (e) Includes stock-based compensation expense of $22 million and $12 million for the three months ended September 30, 2015 and 2014 , respectively, and $57 million and $20 million for the nine months ended September 30, 2015 and 2014 , respectively. The significant impact to stock-based compensation expense during the three and nine months ended September 30, 2015 compared to the prior period is primarily a result of changes in Tesoro’s stock price. (f) Includes charges totaling $41 million for premiums and unamortized debt issuance costs associated with the redemption of the 5.50% Senior Notes due 2019 during the nine months ended September 30, 2014 . (g) During the three and nine months ended September 30, 2015 , we recorded a gain of $11 million as other income for insurance proceeds related to the settlement of claims associated with the Washington Refinery Fire. The following table details our identifiable assets related to continuing operations: September 30, 2015 December 31, 2014 Identifiable Assets Related to Continuing Operations: (In millions) Refining $ 9,521 $ 9,467 TLLP 4,851 4,765 Marketing 1,115 1,048 Corporate 1,114 1,211 Total Assets $ 16,601 $ 16,491 |
Condensed Consolidating Financi
Condensed Consolidating Financial Information (Notes) | 9 Months Ended |
Sep. 30, 2015 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | CONDENSED CONSOLIDATING FINANCIAL INFORMATION Separate condensed consolidating financial information of Tesoro Corporation (the “Parent”), subsidiary guarantors and non-guarantors is presented below. At September 30, 2015 , Tesoro and certain subsidiary guarantors have fully and unconditionally guaranteed our 4.250% Senior Notes due 2017 , 5.375% Senior Notes due 2022 , and 5.125% Senior Notes due 2024 . TLLP, in which we had a 33% ownership interest as of September 30, 2015 , and other subsidiaries have not guaranteed these obligations. As a result of these guarantee arrangements, we are required to present the following condensed consolidating financial information, which should be read in conjunction with the accompanying condensed consolidated financial statements and notes thereto. This information is provided as an alternative to providing separate financial statements for guarantor subsidiaries. Separate financial statements of Tesoro’s subsidiary guarantors are not included because the guarantees are full and unconditional and these subsidiary guarantors are 100% owned and are jointly and severally liable for Tesoro’s outstanding senior notes. The information is presented using the equity method of accounting for investments in subsidiaries. Certain intercompany and intracompany transactions between subsidiaries are presented gross and eliminated in the eliminations column. Additionally, the results of operations of the Hawaii Business have been reported as discontinued operations in these condensed consolidating statements of operations and comprehensive income for the three and nine months ended September 30, 2015 and 2014 . Condensed Consolidating Statement of Operations for the Three Months Ended September 30, 2015 (In millions) Parent Guarantor Subsidiaries Non- Guarantors Consolidating Adjustments Consolidated Revenues $ — $ 8,574 $ 1,054 $ (1,885 ) $ 7,743 Costs and Expenses: Cost of sales — 6,574 748 (1,751 ) 5,571 Operating, selling, general and administrative expenses 2 679 137 (134 ) 684 Depreciation and amortization expense — 147 45 — 192 Loss on asset disposals and impairments — 4 — — 4 Operating Income (Loss) (2 ) 1,170 124 — 1,292 Equity in earnings of subsidiaries 776 38 — (814 ) — Interest and financing costs, net (11 ) (17 ) (26 ) — (54 ) Other income, net — 17 2 — 19 Earnings Before Income Taxes 763 1,208 100 (814 ) 1,257 Income tax expense (a) 4 443 11 — 458 Net Earnings 759 765 89 (814 ) 799 Less: Net earnings from continuing operations attributable to noncontrolling interest — — 40 — 40 Net Earnings Attributable to Tesoro Corporation $ 759 $ 765 $ 49 $ (814 ) $ 759 Comprehensive Income Total comprehensive income $ 759 $ 765 $ 89 $ (814 ) $ 799 Less: Noncontrolling interest in comprehensive income — — 40 — 40 Comprehensive Income Attributable to Tesoro Corporation $ 759 $ 765 $ 49 $ (814 ) $ 759 _________________ (a) The income tax expense (benefit) reflected in each column does not include any tax effect of the equity in earnings from corporate subsidiaries, but does include the tax effect of the corporate partners’ share of partnership income. Condensed Consolidating Statement of Operations for the Three Months Ended September 30, 2014 (In millions) Parent Guarantor Subsidiaries Non- Guarantors Consolidating Adjustments Consolidated Revenues $ — $ 12,528 $ 1,671 $ (3,048 ) $ 11,151 Costs and Expenses: Cost of sales — 11,076 1,504 (2,986 ) 9,594 Operating, selling, general and administrative expenses 2 692 78 (62 ) 710 Depreciation and amortization expense — 125 19 — 144 Loss on asset disposals and impairments — 1 — — 1 Operating Income (Loss) (2 ) 634 70 — 702 Equity in earnings of subsidiaries 405 11 — (416 ) — Interest and financing costs, net (10 ) (22 ) (18 ) — (50 ) Other income, net — 11 — — 11 Earnings Before Income Taxes 393 634 52 (416 ) 663 Income tax expense (benefit) (a) (3 ) 241 11 — 249 Net Earnings from Continuing Operations 396 393 41 (416 ) 414 Loss from discontinued operations, net of tax — (1 ) — — (1 ) Net Earnings 396 392 41 (416 ) 413 Less: Net earnings from continuing operations attributable to noncontrolling interest — — 17 — 17 Net Earnings Attributable to Tesoro Corporation $ 396 $ 392 $ 24 $ (416 ) $ 396 Comprehensive Income Total comprehensive income $ 396 $ 392 $ 41 $ (416 ) $ 413 Less: Noncontrolling interest in comprehensive income — — 17 — 17 Comprehensive Income Attributable to Tesoro Corporation $ 396 $ 392 $ 24 $ (416 ) $ 396 _________________ (a) The income tax expense (benefit) reflected in each column does not include any tax effect of the equity in earnings from corporate subsidiaries, but does include the tax effect of the corporate partners’ share of partnership income. Condensed Consolidating Statement of Operations for the Nine Months Ended September 30, 2015 (In millions) Parent Guarantor Subsidiaries Non- Guarantors Consolidating Adjustments Consolidated Revenues $ — $ 24,573 $ 2,718 $ (4,853 ) $ 22,438 Costs and Expenses: Cost of sales — 19,903 1,874 (4,468 ) 17,309 Operating, selling, general and administrative expenses 8 1,905 395 (385 ) 1,923 Depreciation and amortization expense — 417 136 — 553 Loss on asset disposals and impairments — 12 — — 12 Operating Income (Loss) (8 ) 2,336 313 — 2,641 Equity in earnings of subsidiaries 1,523 102 — (1,625 ) — Interest and financing costs, net (32 ) (52 ) (79 ) — (163 ) Other income (expense), net 1 14 6 — 21 Earnings Before Income Taxes 1,484 2,400 240 (1,625 ) 2,499 Income tax expense (benefit) (a) (2 ) 863 27 — 888 Net Earnings from Continuing Operations 1,486 1,537 213 (1,625 ) 1,611 Loss from discontinued operations, net of tax — (4 ) — — (4 ) Net Earnings 1,486 1,533 213 (1,625 ) 1,607 Less: Net earnings from continuing operations attributable to noncontrolling interest — — 121 — 121 Net Earnings Attributable to Tesoro Corporation $ 1,486 $ 1,533 $ 92 $ (1,625 ) $ 1,486 Comprehensive Income Total comprehensive income $ 1,486 $ 1,533 $ 213 $ (1,625 ) $ 1,607 Less: Noncontrolling interest in comprehensive income — — 121 — 121 Comprehensive Income Attributable to Tesoro Corporation $ 1,486 $ 1,533 $ 92 $ (1,625 ) $ 1,486 _________________ (a) The income tax expense (benefit) reflected in each column does not include any tax effect of the equity in earnings from corporate subsidiaries, but does include the tax effect of the corporate partners’ share of partnership income. Condensed Consolidating Statement of Operations for the Nine Months Ended September 30, 2014 (In millions) Parent Guarantor Subsidiaries Non- Guarantors Consolidating Adjustments Consolidated Revenues $ — $ 36,821 $ 5,110 $ (9,743 ) $ 32,188 Costs and Expenses: Cost of sales — 33,312 4,668 (9,571 ) 28,409 Operating, selling, general and administrative expenses 6 1,981 207 (172 ) 2,022 Depreciation and amortization expense — 355 54 — 409 (Gain) loss on asset disposals and impairments — 3 (5 ) — (2 ) Operating Income (Loss) (6 ) 1,170 186 — 1,350 Equity in earnings of subsidiaries 722 38 — (760 ) — Interest and financing costs, net (27 ) (105 ) (36 ) — (168 ) Other income, net 2 11 — — 13 Earnings Before Income Taxes 691 1,114 150 (760 ) 1,195 Income tax expense (benefit) (a) (7 ) 419 25 — 437 Net Earnings from Continuing Operations 698 695 125 (760 ) 758 Loss from discontinued operations, net of tax — (2 ) — — (2 ) Net Earnings 698 693 125 (760 ) 756 Less: Net earnings from continuing operations attributable to noncontrolling interest — — 58 — 58 Net Earnings Attributable to Tesoro Corporation $ 698 $ 693 $ 67 $ (760 ) $ 698 Comprehensive Income Total comprehensive income $ 698 $ 693 $ 125 $ (760 ) $ 756 Less: Noncontrolling interest in comprehensive income — — 58 — 58 Comprehensive Income Attributable to Tesoro Corporation $ 698 $ 693 $ 67 $ (760 ) $ 698 _________________ (a) The income tax expense (benefit) reflected in each column does not include any tax effect of the equity in earnings from corporate subsidiaries, but does include the tax effect of the corporate partners’ share of partnership income. Condensed Consolidating Balance Sheet as of September 30, 2015 (In millions) Parent Guarantor Subsidiaries Non- Guarantors Consolidating Adjustments Consolidated ASSETS Current Assets: Cash and cash equivalents $ — $ 926 $ 33 $ — $ 959 Receivables, net of allowance for doubtful accounts — 802 214 — 1,016 Short-term receivables from affiliates — 73 — (73 ) — Inventories — 2,315 192 — 2,507 Prepayments and other current assets 51 107 18 — 176 Total Current Assets 51 4,223 457 (73 ) 4,658 Net Property, Plant and Equipment — 5,926 3,501 — 9,427 Investment in Subsidiaries 8,125 449 — (8,574 ) — Long-Term Receivables from Affiliates 1,653 — — (1,653 ) — Long-Term Intercompany Note Receivable — — 1,376 (1,376 ) — Other Noncurrent Assets: Acquired intangibles, net — 237 953 — 1,190 Other, net 6 1,085 235 — 1,326 Total Other Noncurrent Assets, Net 6 1,322 1,188 — 2,516 Total Assets $ 9,835 $ 11,920 $ 6,522 $ (11,676 ) $ 16,601 LIABILITIES AND EQUITY Current Liabilities: Accounts payable $ 26 $ 1,546 $ 217 $ — $ 1,789 Short-term payables to affiliates — — 73 (73 ) — Other current liabilities 208 705 150 — 1,063 Total Current Liabilities 234 2,251 440 (73 ) 2,852 Long-Term Payables to Affiliates — 1,587 66 (1,653 ) — Deferred Income Taxes 1,256 — — — 1,256 Other Noncurrent Liabilities 411 380 52 — 843 Debt, net of unamortized issuance costs 1,188 34 2,569 — 3,791 Long-Term Intercompany Note Payable 1,376 — — (1,376 ) — Equity-Tesoro Corporation 5,370 7,668 906 (8,574 ) 5,370 Equity-Noncontrolling Interest — — 2,489 — 2,489 Total Liabilities and Equity $ 9,835 $ 11,920 $ 6,522 $ (11,676 ) $ 16,601 Condensed Consolidating Balance Sheet as of December 31, 2014 (In millions) Parent Guarantor Subsidiaries Non- Guarantors Consolidating Adjustments Consolidated ASSETS Current Assets: Cash and cash equivalents $ — $ 943 $ 57 $ — $ 1,000 Receivables, net of allowance for doubtful accounts 6 912 517 — 1,435 Short-term receivables from affiliates — 84 — (84 ) — Inventories — 2,088 351 — 2,439 Prepayments and other current assets 71 115 16 (2 ) 200 Total Current Assets 77 4,142 941 (86 ) 5,074 Net Property, Plant and Equipment — 5,666 3,379 — 9,045 Investment in Subsidiaries 6,592 362 — (6,954 ) — Long-Term Receivables from Affiliates 2,427 — — (2,427 ) — Long-Term Intercompany Note Receivable — — 1,376 (1,376 ) — Other Noncurrent Assets: Acquired intangibles, net — 249 973 — 1,222 Other, net 6 893 251 — 1,150 Total Other Noncurrent Assets, Net 6 1,142 1,224 — 2,372 Total Assets $ 9,102 $ 11,312 $ 6,920 $ (10,843 ) $ 16,491 LIABILITIES AND EQUITY Current Liabilities: Accounts payable $ 1 $ 1,779 $ 690 $ — $ 2,470 Short-term payables to affiliates — — 84 (84 ) — Other current liabilities 148 717 133 (2 ) 996 Total Current Liabilities 149 2,496 907 (86 ) 3,466 Long-Term Payables to Affiliates — 2,399 28 (2,427 ) — Deferred Income Taxes 1,098 — — — 1,098 Other Noncurrent Liabilities 447 296 47 — 790 Debt, net of unamortized issuance costs 1,578 39 2,544 — 4,161 Long-Term Intercompany Note Payable 1,376 — — (1,376 ) — Equity-Tesoro Corporation 4,454 6,082 872 (6,954 ) 4,454 Equity-Noncontrolling Interest — — 2,522 — 2,522 Total Liabilities and Equity $ 9,102 $ 11,312 $ 6,920 $ (10,843 ) $ 16,491 Condensed Consolidating Statement of Cash Flows for the Nine Months Ended September 30, 2015 (In millions) Parent Guarantor Subsidiaries Non- Guarantors Consolidating Adjustments Consolidated Cash Flows From (Used In) Operating Activities Net cash from (used in) operating activities $ (14 ) $ 1,462 $ 399 $ — $ 1,847 Cash Flows From (Used In) Investing Activities Capital expenditures — (530 ) (243 ) — (773 ) Acquisitions — — (6 ) — (6 ) Intercompany notes, net 1,075 — — (1,075 ) — Other investing activities — (4 ) — — (4 ) Net cash from (used in) investing activities 1,075 (534 ) (249 ) (1,075 ) (783 ) Cash Flows From (Used In) Financing Activities Borrowings under revolving credit agreements — — 346 — 346 Repayments on revolving credit agreements — — (326 ) — (326 ) Repayments of debt (398 ) (4 ) — — (402 ) Dividend payments (169 ) — — — (169 ) Net proceeds from issuance of Tesoro Logistics LP common units — — 71 — 71 Distributions to noncontrolling interest — — (135 ) — (135 ) Purchases of common stock (494 ) — — — (494 ) Net intercompany repayments — (996 ) (79 ) 1,075 — Distributions to TLLP unitholders and general partner 33 18 (51 ) — — Other financing activities (33 ) 37 — — 4 Net cash from (used in) financing activities (1,061 ) (945 ) (174 ) 1,075 (1,105 ) Decrease in Cash And Cash Equivalents — (17 ) (24 ) — (41 ) Cash and Cash Equivalents, Beginning of Period — 943 57 — 1,000 Cash and Cash Equivalents, End of Period $ — $ 926 $ 33 $ — $ 959 Condensed Consolidating Statement of Cash Flows for the Nine Months Ended September 30, 2014 (In millions) Parent Guarantor Subsidiaries Non- Guarantors Consolidating Adjustments Consolidated Cash Flows From (Used In) Operating Activities Net cash from (used in) operating activities $ (31 ) $ 926 $ 152 $ — $ 1,047 Cash Flows From (Used In) Investing Activities Capital expenditures — (341 ) (136 ) — (477 ) Acquisitions — (17 ) — — (17 ) Intercompany notes, net 261 — — (261 ) — Other investing activities — 1 10 — 11 Net cash from (used in) investing activities 261 (357 ) (126 ) (261 ) (483 ) Cash Flows From (Used In) Financing Activities Borrowings under revolving credit agreements — — 295 — 295 Proceeds from debt offering 300 — — — 300 Repayments on revolving credit agreements — — (52 ) — (52 ) Repayments of debt (300 ) (2 ) (131 ) — (433 ) Dividend payments (104 ) — — — (104 ) Net proceeds from issuance of Tesoro Logistics LP common units — — 156 — 156 Distributions to noncontrolling interest — — (63 ) — (63 ) Purchases of common stock (350 ) — — — (350 ) Net intercompany repayments — (324 ) 63 261 — Borrowings from general partner 243 — (243 ) — — Distributions to TLLP unitholders and general partner 13 15 (28 ) — — Other financing activities (32 ) 19 (8 ) — (21 ) Net cash used in financing activities (230 ) (292 ) (11 ) 261 (272 ) Increase in Cash And Cash Equivalents — 277 15 — 292 Cash and Cash Equivalents, Beginning of Period — 1,161 77 — 1,238 Cash and Cash Equivalents, End of Period $ — $ 1,438 $ 92 $ — $ 1,530 |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of presentation and significant accounting policies | We prepare our condensed consolidated financial statements in conformity with U.S. GAAP, which requires management to make estimates and assumptions that affect the reported amounts and disclosures of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. |
Use of estimates policy | We review our estimates on an ongoing basis. Changes in facts and circumstances may result in revised estimates and actual results could differ from those estimates. The results of operations for any interim period are not necessarily indicative of results for the full year. Certain prior year balances have been aggregated or disaggregated in order to conform to the current year presentation. |
Consolidation of variable interest entity policy | Our condensed consolidated financial statements include TLLP, a variable interest entity. As the general partner of TLLP, we have the sole ability to direct the activities of TLLP that most significantly impact its economic performance. We are also considered to be the primary beneficiary for accounting purposes and are TLLP’s primary customer. |
New Accounting Pronouncements, Policy | New Accounting Standards and Disclosures Revenue Recognition. In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which provides accounting guidance for all revenue arising from contracts to provide goods or services to customers. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017 given the FASB’s recent deferral of ASU 2014-09’s effective date. Entities may choose to early adopt ASU 2014-09 as of the original effective date. The standard allows for either full retrospective adoption or modified retrospective adoption. At this time, we are evaluating the standard to determine the method of adoption and the impact of ASU 2014-09 on our financial statements and related disclosures. Consolidation . In February 2015, the FASB issued ASU 2015-02, “Amendments to the Consolidation Analysis” (“ASU 2015-02”). This standard modifies existing consolidation guidance for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. ASU 2015-02 is effective for interim and annual periods beginning after December 15, 2015, and requires either a retrospective or a modified retrospective approach to adoption. Early adoption is permitted. At this time, we are evaluating the potential impact of this standard on our financial statements, as well as the available transition methods. Debt Issuance Costs. In April 2015, the FASB issued ASU 2015-03, “Interest - Imputation of Interest” (“ASU 2015-03”), which will simplify the presentation of debt issuance costs. Under ASU 2015-03, debt issuance costs related to a recognized debt liability will be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability. As a result, our balance sheet reflects a reclassification of unamortized debt issuance costs from other noncurrent assets to debt. ASU 2015-03 is effective for interim and annual periods beginning after December 15, 2015, and early adoption is permitted. We adopted this standard in the first quarter of 2015 and applied the changes retrospectively to prior periods presented. The adoption of this standard resulted in the reclassification of $93 million of unamortized debt issuance costs from other noncurrent assets to debt on the balance sheet at December 31, 2014 . Unamortized debt issuance costs of $80 million are recorded as a reduction to debt on the balance sheet at September 30, 2015 . Business Combinations. In September 2015, the FASB issued ASU 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments” (“ASU 2015-16”). The standard requires an acquirer to recognize the cumulative impact of adjustments to provisional purchase price amounts that are identified during the measurement period in the reporting period, in which the adjustment amounts are determined. The standard also requires an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. ASU 2015-16 is effective for interim and annual periods beginning after beginning after December 15, 2015 and must be applied prospectively to adjustments that occur after the effective date. Early application is permitted for financial statements that have not been issued. |
Property, Plant and Equipment21
Property, Plant and Equipment (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Property, Plant and Equipment [Abstract] | |
Interest capitalization policy | We capitalize interest as part of the cost of major projects during the construction period. |
Derivative Instruments (Policie
Derivative Instruments (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
General Discussion of Derivative Instruments and Hedging Activities [Abstract] | |
Derivatives, policy | Our accounting for derivative instruments depends on whether the underlying commodity will be used or sold in the normal course of business. For contracts where the crude oil or refined products are expected to be used or sold in the normal course of business, we apply the normal purchase normal sale exception and follow the accrual method of accounting. All other derivative instruments are recorded at fair value using mark-to-market accounting. |
Fair Value Measurements (Polici
Fair Value Measurements (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair value of financial instruments policy | We classify financial assets and liabilities according to the fair value hierarchy. Financial assets and liabilities classified as level 1 instruments are valued using quoted prices in active markets for identical assets and liabilities. Level 2 instruments are valued using quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices, such as liquidity, that are observable for the asset or liability. Our level 2 instruments include derivatives valued using market quotations from independent price reporting agencies, third-party brokers and commodity exchange price curves that are corroborated with market data. Level 3 instruments are valued using significant unobservable inputs that are not supported by sufficient market activity. |
Tesoro Logistics LP (Tables)
Tesoro Logistics LP (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Variable Interest Entity, Measure of Activity [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The table below reflects the preliminary acquisition date purchase price allocation as of September 30, 2015 (in millions): Cash $ 32 Accounts receivable 120 Prepayments and other 8 Property, plant and equipment 1,735 Acquired intangibles 976 Other noncurrent assets (a) 228 Accounts payable (67 ) Other current liabilities (51 ) Other noncurrent liabilities (33 ) Noncontrolling interest (432 ) Total Purchase Price $ 2,516 ____________________ (a) Other noncurrent assets include $148 million of goodwill. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Shares Outstanding | Our share calculations are presented below (in millions): Three Months Ended Nine Months Ended 2015 2014 2015 2014 Weighted average common shares outstanding 122.5 127.9 124.3 129.5 Common stock equivalents 1.3 1.8 1.4 2.2 Total Diluted Shares 123.8 129.7 125.7 131.7 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Inventory Disclosure [Abstract] | |
Schedule of inventory, current | Components of inventories were as follows (in millions): September 30, December 31, Domestic crude oil and refined products $ 2,125 $ 1,930 Foreign subsidiary crude oil 190 351 Other inventories 192 158 Total Inventories $ 2,507 $ 2,439 |
Property, Plant and Equipment27
Property, Plant and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Property, Plant and Equipment [Abstract] | |
Property, plant and equipment | Property, plant and equipment, at cost, is as follows (in millions): September 30, December 31, Refining $ 7,449 $ 6,994 TLLP 3,789 3,551 Marketing 842 834 Corporate 261 254 Property, Plant and Equipment, at Cost 12,341 11,633 Accumulated depreciation (2,914 ) (2,588 ) Net Property, Plant and Equipment $ 9,427 $ 9,045 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
General Discussion of Derivative Instruments and Hedging Activities [Abstract] | |
Schedule of derivative instruments in Balance Sheet, fair value | The following table presents the fair value (in millions) of our derivative instruments as of September 30, 2015 and December 31, 2014 . The fair value amounts below are presented on a gross basis and do not reflect the netting of asset and liability positions permitted under the terms of our master netting arrangements including cash collateral on deposit with, or received from, brokers. We offset the recognized fair value amounts for multiple derivative instruments executed with the same counterparty in our financial statements when a legal right of offset exists. As a result, the asset and liability amounts below will not agree with the amounts presented in our condensed consolidated balance sheets. Derivative Assets Derivative Liabilities Balance Sheet Location September 30, December 31, September 30, December 31, Commodity Futures Contracts Prepayments and other current assets $ 902 $ 1,201 $ 870 $ 1,025 Commodity OTC Swap Contracts Receivables 3 — — — Commodity OTC Swap Contracts Accounts payable — — — 1 Commodity Forward Contracts Receivables 2 3 — — Commodity Forward Contracts Accounts payable — — 1 1 Total Gross Mark-to-Market Derivatives 907 1,204 871 1,027 Less: Counterparty Netting and Cash Collateral (a) (859 ) (1,136 ) (870 ) (1,024 ) Total Net Fair Value of Derivatives $ 48 $ 68 $ 1 $ 3 ________________ (a) Certain of our derivative contracts, under master netting arrangements, include both asset and liability positions. We offset both the fair value amounts and any related cash collateral amounts recognized for multiple derivative instruments executed with the same counterparty when there is a legally enforceable right and an intention to settle net or simultaneously. As of September 30, 2015 , we had provided cash collateral amounts of $11 million related to our unrealized derivative positions. At December 31, 2014 , our counterparties had provided cash collateral of $112 million related to our unrealized derivative positions. Cash collateral amounts are netted with mark-to-market derivative assets. |
Schedule of mark-to-market derivatives | Gains (losses) for our mark-to market derivatives for the three and nine months ended September 30, 2015 and 2014 were as follows (in millions): Three Months Ended Nine Months Ended 2015 2014 2015 2014 Commodity Futures Contracts $ 145 $ 167 $ 102 $ 90 Commodity OTC Swap Contracts 7 (2 ) 5 (5 ) Commodity Forward Contracts 1 1 15 5 Foreign Currency Forward Contracts (3 ) (3 ) (5 ) (3 ) Total Gain on Mark-to-Market Derivatives $ 150 $ 163 $ 117 $ 87 The income statement location of gains (losses) for our mark-to market derivatives above were as follows (in millions): Three Months Ended Nine Months Ended 2015 2014 2015 2014 Revenues $ 30 $ 6 $ 28 $ 7 Cost of sales 123 160 94 83 Other expense, net (3 ) (3 ) (5 ) (3 ) Total Gain on Mark-to-Market Derivatives $ 150 $ 163 $ 117 $ 87 |
Schedule of open long (short) positions | The information below presents the net volume of outstanding commodity and other contracts by type of instrument, year of maturity and unit of measure as of September 30, 2015 (units in thousands): Contract Volumes by Year of Maturity Unit of Measure Mark-to-Market Derivative Instrument 2015 2016 2017 Crude oil, refined products and blending products: Futures - short (5,311) (1,050) — Barrels OTC Swaps - long 1,100 900 — Barrels Forwards - long 250 — — Barrels Carbon emissions credits: Futures - long 175 1,000 1,000 Tons Corn: Futures - short (4,270) — — Bushels |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value, assets and liabilities measured on recurring basis | Financial assets and liabilities recognized at fair value in our condensed consolidated balance sheets by level within the fair value hierarchy were as follows (in millions): September 30, 2015 Level 1 Level 2 Level 3 Netting and Collateral (a) Total Assets: Commodity Futures Contracts $ 896 $ 6 $ — $ (859 ) $ 43 Commodity OTC Swap Contracts — 3 — — 3 Commodity Forward Contracts — 2 — — 2 Total Assets $ 896 $ 11 $ — $ (859 ) $ 48 Liabilities: Commodity Futures Contracts $ 867 $ 3 $ — $ (870 ) $ — Commodity Forward Contracts — 1 — — 1 Environmental Credit Obligations — 17 — — 17 Total Liabilities $ 867 $ 21 $ — $ (870 ) $ 18 December 31, 2014 Level 1 Level 2 Level 3 Netting and Collateral (a) Total Assets: Commodity Futures Contracts $ 1,165 $ 36 $ — $ (1,136 ) $ 65 Commodity Forward Contracts — 3 — — 3 Total Assets $ 1,165 $ 39 $ — $ (1,136 ) $ 68 Liabilities: Commodity Futures Contracts $ 1,011 $ 14 $ — $ (1,024 ) $ 1 Commodity OTC Swap Contracts — 1 — — 1 Commodity Forward Contracts — 1 — — 1 Environmental Credit Obligations — 20 — — 20 Total Liabilities $ 1,011 $ 36 $ — $ (1,024 ) $ 23 ________________ (a) Certain of our derivative contracts, under master netting arrangements, include both asset and liability positions. We offset both the fair value amounts and any related cash collateral amounts recognized for multiple derivative instruments executed with the same counterparty when there is a legally enforceable right and an intention to settle net or simultaneously. As of September 30, 2015 , we had provided cash collateral amounts of $11 million related to our unrealized derivative positions. At December 31, 2014 , our counterparties had provided cash collateral of $112 million related to our unrealized derivative positions. Cash collateral amounts are netted with mark-to-market derivative assets. |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | Our debt balance, net of unamortized issuance costs, at September 30, 2015 and December 31, 2014 was as follows (in millions): September 30, December 31, Total debt (a) $ 3,873 $ 4,255 Unamortized issuance costs (b) (c) (76 ) (88 ) Current maturities (6 ) (6 ) Debt, Net of Current Maturities and Unamortized Issuance Costs $ 3,791 $ 4,161 ________________ (a) Total debt related to TLLP, which is non-recourse to Tesoro, except for TLGP, was $2.6 billion at both September 30, 2015 and December 31, 2014 . (b) Includes unamortized premium associated with TLLP’s 5.875% Senior Notes due 2020 of $4 million and $5 million as of September 30, 2015 and December 31, 2014 , respectively. (c) The Company adopted ASU 2015-03 in the first quarter of 2015 and applied the changes retrospectively to the prior period presented. See Note 1 for further discussion. |
Schedule of Line of Credit Facilities | We had available capacity under our credit facilities as follows at September 30, 2015 (in millions): Total Capacity Amount Borrowed as of September 30, 2015 Outstanding Letters of Credit Available Capacity Expiration Tesoro Corporation Revolving Credit Facility (a) $ 3,000 $ — $ 76 $ 2,924 November 18, 2019 TLLP Revolving Credit Facility 900 280 — 620 December 2, 2019 Letter of Credit Facilities 1,895 — 189 1,706 Total Credit Facilities $ 5,795 $ 280 $ 265 $ 5,250 ________________ (a) Borrowing base is the lesser of the amount of the periodically adjusted borrowing base or the agreement’s total capacity of $3.0 billion . |
Benefit Plans (Tables)
Benefit Plans (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | |
Schedule of Defined Benefit Plans Disclosures | The components of pension and other postretirement benefit expense (income) for the three and nine months ended September 30, 2015 and 2014 were (in millions): Pension Benefits Three Months Ended Nine Months Ended 2015 2014 2015 2014 Service cost $ 11 $ 12 $ 34 $ 38 Interest cost 7 7 22 24 Expected return on plan assets (7 ) (6 ) (20 ) (21 ) Amortization of prior service cost 1 — 1 1 Recognized net actuarial loss 6 3 18 10 Net Periodic Benefit Expense $ 18 $ 16 $ 55 $ 52 Other Postretirement Benefits Three Months Ended Nine Months Ended 2015 2014 2015 2014 Service cost $ — $ — $ 2 $ 2 Interest cost 1 1 2 2 Amortization of prior service credit (8 ) (8 ) (25 ) (25 ) Recognized net actuarial loss 1 1 3 4 Net Periodic Benefit Income $ (6 ) $ (6 ) $ (18 ) $ (17 ) |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Stockholders' Equity Attributable to Parent [Abstract] | |
Stockholders' equity and noncontrolling interest | Changes to equity during the nine months ended September 30, 2015 are presented below (in millions): Tesoro Corporation Stockholders’ Equity Noncontrolling Interest Total Equity Balance at December 31, 2014 (a) $ 4,454 $ 2,522 $ 6,976 Net earnings 1,486 121 1,607 Purchases of common stock (494 ) — (494 ) Dividend payments (169 ) — (169 ) Net effect of amounts related to equity-based compensation (b) 34 4 38 Net proceeds from issuance of Tesoro Logistics LP common units — 71 71 Distributions to noncontrolling interest — (135 ) (135 ) Transfers to (from) Tesoro paid-in capital related to: TLLP’s issuance of common units 59 (94 ) (35 ) Balance at September 30, 2015 (a) $ 5,370 $ 2,489 $ 7,859 ________________ (a) We have 5.0 million shares of preferred stock authorized with no par value per share. No shares of preferred stock were outstanding as of September 30, 2015 and December 31, 2014 . (b) We issued approximately 0.3 million shares and 0.5 million shares during the nine months ended September 30, 2015 and 2014 for proceeds of $12 million and $14 million , respectively, primarily for stock option exercises under our equity-based compensation plans. See Note 12 for more information on stock-based compensation. |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Share-based Compensation [Abstract] | |
Summary of stock-based compensation expense (benefit) | Stock-based compensation expense (benefit), including discontinued operations, was as follows (in millions): Three Months Ended Nine Months Ended 2015 2014 2015 2014 Stock appreciation rights (a) $ 10 $ 4 $ 20 $ (2 ) Performance share awards (b) 3 3 9 7 Market stock units (c) 7 4 19 12 Other stock-based awards (d) 2 1 9 3 Total Stock-Based Compensation Expense $ 22 $ 12 $ 57 $ 20 ____________________ (a) We paid cash of $37 million and $22 million to settle 0.5 million and 0.8 million SARs that were exercised during the nine months ended September 30, 2015 and 2014 , respectively. We had $43 million and $60 million recorded in accrued liabilities associated with our SARs awards at September 30, 2015 and December 31, 2014 , respectively. (b) We granted 0.1 million market condition performance share awards at a weighted average grant date fair value of $117.96 per share under the amended and restated 2011 Long-Term Incentive Plan (“2011 Plan”) during the nine months ended September 30, 2015 . (c) We granted 0.4 million market stock units at a weighted average grant date fair value of $114.57 per unit under the 2011 Plan during the nine months ended September 30, 2015 . (d) We have aggregated expenses for certain award types as they are not considered significant. |
Operating Segments (Tables)
Operating Segments (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Schedule of segment reporting information, by segment | Segment information related to continuing operations is as follows: Three Months Ended Nine Months Ended 2015 2014 2015 2014 (In millions) Revenues Refining: Refined products $ 6,966 $ 10,363 $ 20,293 $ 30,353 Crude oil resales and other 172 434 780 1,060 TLLP: Gathering 87 32 253 84 Processing 71 — 205 — Terminalling and transportation 124 118 362 326 Marketing: Fuel (a) 5,144 6,501 14,143 18,814 Other non-fuel (b) 16 73 48 203 Intersegment sales (4,837 ) (6,370 ) (13,646 ) (18,652 ) Total Revenues $ 7,743 $ 11,151 $ 22,438 $ 32,188 Segment Operating Income Refining (c) $ 895 $ 536 $ 1,831 $ 1,074 TLLP (d) 112 61 329 169 Marketing (c) 379 180 724 292 Total Segment Operating Income 1,386 777 2,884 1,535 Corporate and unallocated costs (e) (94 ) (75 ) (243 ) (185 ) Operating Income 1,292 702 2,641 1,350 Interest and financing costs, net (f) (54 ) (50 ) (163 ) (168 ) Other income, net (g) 19 11 21 13 Earnings Before Income Taxes $ 1,257 $ 663 $ 2,499 $ 1,195 Depreciation and Amortization Expense Refining $ 132 $ 112 $ 373 $ 317 TLLP 44 18 132 51 Marketing 11 10 34 30 Corporate 5 4 14 11 Total Depreciation and Amortization Expense $ 192 $ 144 $ 553 $ 409 Capital Expenditures Refining $ 153 $ 118 $ 485 $ 280 TLLP 92 63 235 137 Marketing 8 9 20 27 Corporate 6 4 16 20 Total Capital Expenditures $ 259 $ 194 $ 756 $ 464 ______________________ (a) Federal and state motor fuel taxes on sales by our marketing segment are included in both revenues and cost of sales in our condensed statements of consolidated operations. These taxes totaled $137 million and $148 million for the three months ended September 30, 2015 and 2014 , respectively, and $423 million and $441 million for the nine months ended September 30, 2015 and 2014 , respectively. (b) Primarily includes rental income for the three and nine months ended September 30, 2015 and primarily merchandise revenue for the three and nine months ended September 30, 2014 . (c) Our refining segment uses RINs to satisfy its obligations under the Renewable Fuels Standard, in addition to physically blending required biofuels. Effective April 1, 2013 , we changed our intersegment pricing methodology and no longer reduced the amount marketing pays for the biofuels by the market value of the RINs due to significant volatility in the value of RINs. At the end of 2014, given the price of RINs has become more transparent in the price of biofuels, we determined our intersegment pricing methodology should include the market value of RINs as a reduction to the price our marketing segment pays to our refining segment. We made this change effective January 1, 2015 . We have not adjusted financial information presented for our refining and marketing segments for the three or nine month periods ended September 30, 2014 . Had we made this change effective January 1, 2014 , operating income in our refining segment would have been reduced by $35 million and $94 million with a corresponding increase to operating income in our marketing segment for the three and nine months ended September 30, 2014 , respectively. (d) We present TLLP’s segment operating income net of general and administrative expenses totaling $16 million and $6 million representing TLLP’s corporate costs for the three months ended September 30, 2015 and 2014 , respectively, and $43 million and $14 million for the nine months ended September 30, 2015 and 2014 , respectively that are not allocated by TLLP to its operating segments. (e) Includes stock-based compensation expense of $22 million and $12 million for the three months ended September 30, 2015 and 2014 , respectively, and $57 million and $20 million for the nine months ended September 30, 2015 and 2014 , respectively. The significant impact to stock-based compensation expense during the three and nine months ended September 30, 2015 compared to the prior period is primarily a result of changes in Tesoro’s stock price. (f) Includes charges totaling $41 million for premiums and unamortized debt issuance costs associated with the redemption of the 5.50% Senior Notes due 2019 during the nine months ended September 30, 2014 . (g) During the three and nine months ended September 30, 2015 , we recorded a gain of $11 million as other income for insurance proceeds related to the settlement of claims associated with the Washington Refinery Fire. The following table details our identifiable assets related to continuing operations: September 30, 2015 December 31, 2014 Identifiable Assets Related to Continuing Operations: (In millions) Refining $ 9,521 $ 9,467 TLLP 4,851 4,765 Marketing 1,115 1,048 Corporate 1,114 1,211 Total Assets $ 16,601 $ 16,491 |
Condensed Consolidating Finan35
Condensed Consolidating Financial Information (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
Condensed Consolidating Statement of Operations | Condensed Consolidating Statement of Operations for the Three Months Ended September 30, 2015 (In millions) Parent Guarantor Subsidiaries Non- Guarantors Consolidating Adjustments Consolidated Revenues $ — $ 8,574 $ 1,054 $ (1,885 ) $ 7,743 Costs and Expenses: Cost of sales — 6,574 748 (1,751 ) 5,571 Operating, selling, general and administrative expenses 2 679 137 (134 ) 684 Depreciation and amortization expense — 147 45 — 192 Loss on asset disposals and impairments — 4 — — 4 Operating Income (Loss) (2 ) 1,170 124 — 1,292 Equity in earnings of subsidiaries 776 38 — (814 ) — Interest and financing costs, net (11 ) (17 ) (26 ) — (54 ) Other income, net — 17 2 — 19 Earnings Before Income Taxes 763 1,208 100 (814 ) 1,257 Income tax expense (a) 4 443 11 — 458 Net Earnings 759 765 89 (814 ) 799 Less: Net earnings from continuing operations attributable to noncontrolling interest — — 40 — 40 Net Earnings Attributable to Tesoro Corporation $ 759 $ 765 $ 49 $ (814 ) $ 759 Comprehensive Income Total comprehensive income $ 759 $ 765 $ 89 $ (814 ) $ 799 Less: Noncontrolling interest in comprehensive income — — 40 — 40 Comprehensive Income Attributable to Tesoro Corporation $ 759 $ 765 $ 49 $ (814 ) $ 759 _________________ (a) The income tax expense (benefit) reflected in each column does not include any tax effect of the equity in earnings from corporate subsidiaries, but does include the tax effect of the corporate partners’ share of partnership income. Condensed Consolidating Statement of Operations for the Three Months Ended September 30, 2014 (In millions) Parent Guarantor Subsidiaries Non- Guarantors Consolidating Adjustments Consolidated Revenues $ — $ 12,528 $ 1,671 $ (3,048 ) $ 11,151 Costs and Expenses: Cost of sales — 11,076 1,504 (2,986 ) 9,594 Operating, selling, general and administrative expenses 2 692 78 (62 ) 710 Depreciation and amortization expense — 125 19 — 144 Loss on asset disposals and impairments — 1 — — 1 Operating Income (Loss) (2 ) 634 70 — 702 Equity in earnings of subsidiaries 405 11 — (416 ) — Interest and financing costs, net (10 ) (22 ) (18 ) — (50 ) Other income, net — 11 — — 11 Earnings Before Income Taxes 393 634 52 (416 ) 663 Income tax expense (benefit) (a) (3 ) 241 11 — 249 Net Earnings from Continuing Operations 396 393 41 (416 ) 414 Loss from discontinued operations, net of tax — (1 ) — — (1 ) Net Earnings 396 392 41 (416 ) 413 Less: Net earnings from continuing operations attributable to noncontrolling interest — — 17 — 17 Net Earnings Attributable to Tesoro Corporation $ 396 $ 392 $ 24 $ (416 ) $ 396 Comprehensive Income Total comprehensive income $ 396 $ 392 $ 41 $ (416 ) $ 413 Less: Noncontrolling interest in comprehensive income — — 17 — 17 Comprehensive Income Attributable to Tesoro Corporation $ 396 $ 392 $ 24 $ (416 ) $ 396 _________________ (a) The income tax expense (benefit) reflected in each column does not include any tax effect of the equity in earnings from corporate subsidiaries, but does include the tax effect of the corporate partners’ share of partnership income. Condensed Consolidating Statement of Operations for the Nine Months Ended September 30, 2015 (In millions) Parent Guarantor Subsidiaries Non- Guarantors Consolidating Adjustments Consolidated Revenues $ — $ 24,573 $ 2,718 $ (4,853 ) $ 22,438 Costs and Expenses: Cost of sales — 19,903 1,874 (4,468 ) 17,309 Operating, selling, general and administrative expenses 8 1,905 395 (385 ) 1,923 Depreciation and amortization expense — 417 136 — 553 Loss on asset disposals and impairments — 12 — — 12 Operating Income (Loss) (8 ) 2,336 313 — 2,641 Equity in earnings of subsidiaries 1,523 102 — (1,625 ) — Interest and financing costs, net (32 ) (52 ) (79 ) — (163 ) Other income (expense), net 1 14 6 — 21 Earnings Before Income Taxes 1,484 2,400 240 (1,625 ) 2,499 Income tax expense (benefit) (a) (2 ) 863 27 — 888 Net Earnings from Continuing Operations 1,486 1,537 213 (1,625 ) 1,611 Loss from discontinued operations, net of tax — (4 ) — — (4 ) Net Earnings 1,486 1,533 213 (1,625 ) 1,607 Less: Net earnings from continuing operations attributable to noncontrolling interest — — 121 — 121 Net Earnings Attributable to Tesoro Corporation $ 1,486 $ 1,533 $ 92 $ (1,625 ) $ 1,486 Comprehensive Income Total comprehensive income $ 1,486 $ 1,533 $ 213 $ (1,625 ) $ 1,607 Less: Noncontrolling interest in comprehensive income — — 121 — 121 Comprehensive Income Attributable to Tesoro Corporation $ 1,486 $ 1,533 $ 92 $ (1,625 ) $ 1,486 _________________ (a) The income tax expense (benefit) reflected in each column does not include any tax effect of the equity in earnings from corporate subsidiaries, but does include the tax effect of the corporate partners’ share of partnership income. Condensed Consolidating Statement of Operations for the Nine Months Ended September 30, 2014 (In millions) Parent Guarantor Subsidiaries Non- Guarantors Consolidating Adjustments Consolidated Revenues $ — $ 36,821 $ 5,110 $ (9,743 ) $ 32,188 Costs and Expenses: Cost of sales — 33,312 4,668 (9,571 ) 28,409 Operating, selling, general and administrative expenses 6 1,981 207 (172 ) 2,022 Depreciation and amortization expense — 355 54 — 409 (Gain) loss on asset disposals and impairments — 3 (5 ) — (2 ) Operating Income (Loss) (6 ) 1,170 186 — 1,350 Equity in earnings of subsidiaries 722 38 — (760 ) — Interest and financing costs, net (27 ) (105 ) (36 ) — (168 ) Other income, net 2 11 — — 13 Earnings Before Income Taxes 691 1,114 150 (760 ) 1,195 Income tax expense (benefit) (a) (7 ) 419 25 — 437 Net Earnings from Continuing Operations 698 695 125 (760 ) 758 Loss from discontinued operations, net of tax — (2 ) — — (2 ) Net Earnings 698 693 125 (760 ) 756 Less: Net earnings from continuing operations attributable to noncontrolling interest — — 58 — 58 Net Earnings Attributable to Tesoro Corporation $ 698 $ 693 $ 67 $ (760 ) $ 698 Comprehensive Income Total comprehensive income $ 698 $ 693 $ 125 $ (760 ) $ 756 Less: Noncontrolling interest in comprehensive income — — 58 — 58 Comprehensive Income Attributable to Tesoro Corporation $ 698 $ 693 $ 67 $ (760 ) $ 698 _________________ (a) The income tax expense (benefit) reflected in each column does not include any tax effect of the equity in earnings from corporate subsidiaries, but does include the tax effect of the corporate partners’ share of partnership income. |
Condensed Consolidating Balance Sheet | Condensed Consolidating Balance Sheet as of September 30, 2015 (In millions) Parent Guarantor Subsidiaries Non- Guarantors Consolidating Adjustments Consolidated ASSETS Current Assets: Cash and cash equivalents $ — $ 926 $ 33 $ — $ 959 Receivables, net of allowance for doubtful accounts — 802 214 — 1,016 Short-term receivables from affiliates — 73 — (73 ) — Inventories — 2,315 192 — 2,507 Prepayments and other current assets 51 107 18 — 176 Total Current Assets 51 4,223 457 (73 ) 4,658 Net Property, Plant and Equipment — 5,926 3,501 — 9,427 Investment in Subsidiaries 8,125 449 — (8,574 ) — Long-Term Receivables from Affiliates 1,653 — — (1,653 ) — Long-Term Intercompany Note Receivable — — 1,376 (1,376 ) — Other Noncurrent Assets: Acquired intangibles, net — 237 953 — 1,190 Other, net 6 1,085 235 — 1,326 Total Other Noncurrent Assets, Net 6 1,322 1,188 — 2,516 Total Assets $ 9,835 $ 11,920 $ 6,522 $ (11,676 ) $ 16,601 LIABILITIES AND EQUITY Current Liabilities: Accounts payable $ 26 $ 1,546 $ 217 $ — $ 1,789 Short-term payables to affiliates — — 73 (73 ) — Other current liabilities 208 705 150 — 1,063 Total Current Liabilities 234 2,251 440 (73 ) 2,852 Long-Term Payables to Affiliates — 1,587 66 (1,653 ) — Deferred Income Taxes 1,256 — — — 1,256 Other Noncurrent Liabilities 411 380 52 — 843 Debt, net of unamortized issuance costs 1,188 34 2,569 — 3,791 Long-Term Intercompany Note Payable 1,376 — — (1,376 ) — Equity-Tesoro Corporation 5,370 7,668 906 (8,574 ) 5,370 Equity-Noncontrolling Interest — — 2,489 — 2,489 Total Liabilities and Equity $ 9,835 $ 11,920 $ 6,522 $ (11,676 ) $ 16,601 Condensed Consolidating Balance Sheet as of December 31, 2014 (In millions) Parent Guarantor Subsidiaries Non- Guarantors Consolidating Adjustments Consolidated ASSETS Current Assets: Cash and cash equivalents $ — $ 943 $ 57 $ — $ 1,000 Receivables, net of allowance for doubtful accounts 6 912 517 — 1,435 Short-term receivables from affiliates — 84 — (84 ) — Inventories — 2,088 351 — 2,439 Prepayments and other current assets 71 115 16 (2 ) 200 Total Current Assets 77 4,142 941 (86 ) 5,074 Net Property, Plant and Equipment — 5,666 3,379 — 9,045 Investment in Subsidiaries 6,592 362 — (6,954 ) — Long-Term Receivables from Affiliates 2,427 — — (2,427 ) — Long-Term Intercompany Note Receivable — — 1,376 (1,376 ) — Other Noncurrent Assets: Acquired intangibles, net — 249 973 — 1,222 Other, net 6 893 251 — 1,150 Total Other Noncurrent Assets, Net 6 1,142 1,224 — 2,372 Total Assets $ 9,102 $ 11,312 $ 6,920 $ (10,843 ) $ 16,491 LIABILITIES AND EQUITY Current Liabilities: Accounts payable $ 1 $ 1,779 $ 690 $ — $ 2,470 Short-term payables to affiliates — — 84 (84 ) — Other current liabilities 148 717 133 (2 ) 996 Total Current Liabilities 149 2,496 907 (86 ) 3,466 Long-Term Payables to Affiliates — 2,399 28 (2,427 ) — Deferred Income Taxes 1,098 — — — 1,098 Other Noncurrent Liabilities 447 296 47 — 790 Debt, net of unamortized issuance costs 1,578 39 2,544 — 4,161 Long-Term Intercompany Note Payable 1,376 — — (1,376 ) — Equity-Tesoro Corporation 4,454 6,082 872 (6,954 ) 4,454 Equity-Noncontrolling Interest — — 2,522 — 2,522 Total Liabilities and Equity $ 9,102 $ 11,312 $ 6,920 $ (10,843 ) $ 16,491 |
Condensed Consolidating Statement of Cash Flows | Condensed Consolidating Statement of Cash Flows for the Nine Months Ended September 30, 2015 (In millions) Parent Guarantor Subsidiaries Non- Guarantors Consolidating Adjustments Consolidated Cash Flows From (Used In) Operating Activities Net cash from (used in) operating activities $ (14 ) $ 1,462 $ 399 $ — $ 1,847 Cash Flows From (Used In) Investing Activities Capital expenditures — (530 ) (243 ) — (773 ) Acquisitions — — (6 ) — (6 ) Intercompany notes, net 1,075 — — (1,075 ) — Other investing activities — (4 ) — — (4 ) Net cash from (used in) investing activities 1,075 (534 ) (249 ) (1,075 ) (783 ) Cash Flows From (Used In) Financing Activities Borrowings under revolving credit agreements — — 346 — 346 Repayments on revolving credit agreements — — (326 ) — (326 ) Repayments of debt (398 ) (4 ) — — (402 ) Dividend payments (169 ) — — — (169 ) Net proceeds from issuance of Tesoro Logistics LP common units — — 71 — 71 Distributions to noncontrolling interest — — (135 ) — (135 ) Purchases of common stock (494 ) — — — (494 ) Net intercompany repayments — (996 ) (79 ) 1,075 — Distributions to TLLP unitholders and general partner 33 18 (51 ) — — Other financing activities (33 ) 37 — — 4 Net cash from (used in) financing activities (1,061 ) (945 ) (174 ) 1,075 (1,105 ) Decrease in Cash And Cash Equivalents — (17 ) (24 ) — (41 ) Cash and Cash Equivalents, Beginning of Period — 943 57 — 1,000 Cash and Cash Equivalents, End of Period $ — $ 926 $ 33 $ — $ 959 Condensed Consolidating Statement of Cash Flows for the Nine Months Ended September 30, 2014 (In millions) Parent Guarantor Subsidiaries Non- Guarantors Consolidating Adjustments Consolidated Cash Flows From (Used In) Operating Activities Net cash from (used in) operating activities $ (31 ) $ 926 $ 152 $ — $ 1,047 Cash Flows From (Used In) Investing Activities Capital expenditures — (341 ) (136 ) — (477 ) Acquisitions — (17 ) — — (17 ) Intercompany notes, net 261 — — (261 ) — Other investing activities — 1 10 — 11 Net cash from (used in) investing activities 261 (357 ) (126 ) (261 ) (483 ) Cash Flows From (Used In) Financing Activities Borrowings under revolving credit agreements — — 295 — 295 Proceeds from debt offering 300 — — — 300 Repayments on revolving credit agreements — — (52 ) — (52 ) Repayments of debt (300 ) (2 ) (131 ) — (433 ) Dividend payments (104 ) — — — (104 ) Net proceeds from issuance of Tesoro Logistics LP common units — — 156 — 156 Distributions to noncontrolling interest — — (63 ) — (63 ) Purchases of common stock (350 ) — — — (350 ) Net intercompany repayments — (324 ) 63 261 — Borrowings from general partner 243 — (243 ) — — Distributions to TLLP unitholders and general partner 13 15 (28 ) — — Other financing activities (32 ) 19 (8 ) — (21 ) Net cash used in financing activities (230 ) (292 ) (11 ) 261 (272 ) Increase in Cash And Cash Equivalents — 277 15 — 292 Cash and Cash Equivalents, Beginning of Period — 1,161 77 — 1,238 Cash and Cash Equivalents, End of Period $ — $ 1,438 $ 92 $ — $ 1,530 |
Basis of Presentation (Details)
Basis of Presentation (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Variable Interest Entity | ||||
Percentage of TLLP's revenues from Tesoro | 54.00% | 86.00% | 55.00% | 87.00% |
Basis of Presentation Discontin
Basis of Presentation Discontinued Operations (Details) MBbls / d in Thousands, $ in Millions | Sep. 25, 2013MBbls / d | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) |
Discontinued Operations | |||||
Loss from discontinued operations, net of tax | $ 0 | $ (1) | $ (4) | $ (2) | |
Hawaii Operations | |||||
Discontinued Operations | |||||
Disposal date | Sep. 25, 2013 | ||||
Capacity (bpd) | MBbls / d | 94 | ||||
Revenues | 0 | 0 | 0 | 0 | |
Loss from discontinued operations, before tax | 0 | (2) | (6) | (3) | |
Loss from discontinued operations, net of tax | $ 0 | $ (1) | (4) | (2) | |
Net Cash Used in Discontinued Operations | $ 2 | $ 2 |
Basis of Presentation New Accou
Basis of Presentation New Accounting Standards and Disclosures (Details) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
New Accounting Pronouncement, Early Adoption, Effect | ||
New Accounting Pronouncement, Early Adoption | ||
Unamortized debt issuance costs | $ (80) | $ (93) |
Tesoro Logistics LP Ownership I
Tesoro Logistics LP Ownership Interest (Details) $ in Millions | Jul. 22, 2015shares | Apr. 06, 2015 | Dec. 02, 2014shares | Sep. 30, 2015USD ($)shares | Dec. 31, 2014 |
Variable Interest Entity | |||||
Percentage ownership of Tesoro Logistics LP | 33.00% | 36.00% | |||
Limited partner common units outstanding (units) | 28,181,748 | ||||
Merger agreement date | Apr. 6, 2015 | ||||
Effective date of merger completion | Jul. 22, 2015 | ||||
Limited Partnership interests Common Units, Conversion Ratio | 0.3088 | ||||
TLLP Common units issued to QEPM unitholders | 7,100,000 | ||||
TLGP | |||||
Variable Interest Entity | |||||
General Partner, Ownership Interest | 2.00% | 2.00% | |||
General partner units outstanding (units) | 1,631,448 | ||||
Rockies Natural Gas Business | |||||
Variable Interest Entity | |||||
Limited partner common units outstanding (units) | 3,701,750 | ||||
Effective date of acquisition | Dec. 2, 2014 | ||||
Purchase price | $ | $ 2,516 | ||||
Subordinated units outstanding (units) | 26,705,000 | ||||
QEP Field Services, LLC | |||||
Variable Interest Entity | |||||
General Partner, Ownership Interest | 100.00% | ||||
Limited Partner, Ownership Interest | 56.00% | ||||
QEP Midstream Partners GP, LLC | |||||
Variable Interest Entity | |||||
General Partner, Ownership Interest | 2.00% |
Tesoro Logistics LP Preliminary
Tesoro Logistics LP Preliminary Acquisition Date Purchase Price Allocation (Details) - Rockies Natural Gas Business $ in Millions | Sep. 30, 2015USD ($) | |
Preliminary acquisition date purchase price allocation | ||
Cash | $ 32 | |
Accounts receivable | 120 | |
Prepayments and other | 8 | |
Property, plant and equipment | 1,735 | |
Acquired intangibles | 976 | |
Other noncurrent assets | 228 | [1] |
Accounts payable | (67) | |
Other current liabilities | (51) | |
Other noncurrent liabilities | (33) | |
Noncontrolling interest | (432) | |
Total Purchase Price | 2,516 | |
Goodwill | $ 148 | |
[1] | Other noncurrent assets include $148 million of goodwill. |
Tesoro Logistics LP Prelimina41
Tesoro Logistics LP Preliminary Acquisition Date Purchase Price Allocation Narrative (Details) - Rockies Natural Gas Business $ in Millions | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Variable Interest Entity | |
Purchase price | $ 2,516 |
Purchase price adjustment | $ 6 |
Earnings Per Share (Details)
Earnings Per Share (Details) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Earnings Per Share [Abstract] | ||||
Weighted average common shares outstanding | 122.5 | 127.9 | 124.3 | 129.5 |
Common stock equivalents | 1.3 | 1.8 | 1.4 | 2.2 |
Total Diluted Shares | 123.8 | 129.7 | 125.7 | 131.7 |
Earnings Per Share Narrative (D
Earnings Per Share Narrative (Details) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Earnings Per Share [Abstract] | ||||
Anti-dilutive securities (shares) | 0.1 | 0.1 | 0.6 | 0.1 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
Inventory Disclosure [Abstract] | ||
Domestic crude oil and refined products | $ 2,125 | $ 1,930 |
Foreign subsidiary crude oil | 190 | 351 |
Other inventories | 192 | 158 |
Total Inventories | $ 2,507 | $ 2,439 |
Inventories Narrative (Details)
Inventories Narrative (Details) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
Inventory Disclosure [Abstract] | ||
Lower of cost or market adjustment | $ 83 | $ 42 |
Property, Plant and Equipment46
Property, Plant and Equipment (Details) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
Property Plant and Equipment, at cost | ||
Property, Plant and Equipment, at Cost | $ 12,341 | $ 11,633 |
Accumulated depreciation | (2,914) | (2,588) |
Net Property, Plant and Equipment | 9,427 | 9,045 |
Refining | ||
Property Plant and Equipment, at cost | ||
Property, Plant and Equipment, at Cost | 7,449 | 6,994 |
TLLP | ||
Property Plant and Equipment, at cost | ||
Property, Plant and Equipment, at Cost | 3,789 | 3,551 |
Marketing | ||
Property Plant and Equipment, at cost | ||
Property, Plant and Equipment, at Cost | 842 | 834 |
Corporate | ||
Property Plant and Equipment, at cost | ||
Property, Plant and Equipment, at Cost | $ 261 | $ 254 |
Property, Plant and Equipment N
Property, Plant and Equipment Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Property, Plant and Equipment [Abstract] | ||||
Capitalized interest | $ 9 | $ 7 | $ 27 | $ 17 |
Derivative Assets and Liabiliti
Derivative Assets and Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 | |
Derivatives, Fair Value | |||
Gross derivative assets | $ 907 | $ 1,204 | |
Gross derivative liabilities | 871 | 1,027 | |
Derivative asset amount offset against collateral and netting arrangements | [1],[2] | (859) | (1,136) |
Derivative liability amount offset against collateral and netting arrangements | [1],[2] | (870) | (1,024) |
Net derivative assets | 48 | 68 | |
Net derivative liabilities | 1 | 3 | |
Derivative, Collateral | |||
Cash collateral outstanding | 11 | ||
Counterparty cash collateral | (112) | ||
Commodity Futures Contracts | Prepayments and other current assets | |||
Derivatives, Fair Value | |||
Gross derivative assets | 902 | 1,201 | |
Gross derivative liabilities | 870 | 1,025 | |
Commodity OTC Swap Contracts | Receivables | |||
Derivatives, Fair Value | |||
Gross derivative assets | 3 | 0 | |
Gross derivative liabilities | 0 | 0 | |
Commodity OTC Swap Contracts | Accounts payable | |||
Derivatives, Fair Value | |||
Gross derivative assets | 0 | 0 | |
Gross derivative liabilities | 0 | 1 | |
Commodity Forward Contracts | Receivables | |||
Derivatives, Fair Value | |||
Gross derivative assets | 2 | 3 | |
Gross derivative liabilities | 0 | 0 | |
Commodity Forward Contracts | Accounts payable | |||
Derivatives, Fair Value | |||
Gross derivative assets | 0 | 0 | |
Gross derivative liabilities | $ 1 | $ 1 | |
[1] | Certain of our derivative contracts, under master netting arrangements, include both asset and liability positions. We offset both the fair value amounts and any related cash collateral amounts recognized for multiple derivative instruments executed with the same counterparty when there is a legally enforceable right and an intention to settle net or simultaneously. As of September 30, 2015, we had provided cash collateral amounts of $11 million related to our unrealized derivative positions. At December 31, 2014, our counterparties had provided cash collateral of $112 million related to our unrealized derivative positions. Cash collateral amounts are netted with mark-to-market derivative assets. | ||
[2] | Certain of our derivative contracts, under master netting arrangements, include both asset and liability positions. We offset both the fair value amounts and any related cash collateral amounts recognized for multiple derivative instruments executed with the same counterparty when there is a legally enforceable right and an intention to settle net or simultaneously. As of September 30, 2015, we had provided cash collateral amounts of $11 million related to our unrealized derivative positions. At December 31, 2014, our counterparties had provided cash collateral of $112 million related to our unrealized derivative positions. Cash collateral amounts are netted with mark-to-market derivative assets. |
Derivative Gains and Losses (De
Derivative Gains and Losses (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Derivative Instruments, Gain (Loss) | ||||
Total Gain (Loss) on Mark-to-Market Derivatives | $ 150 | $ 163 | $ 117 | $ 87 |
Revenues | ||||
Derivative Instruments, Gain (Loss) | ||||
Total Gain (Loss) on Mark-to-Market Derivatives | 30 | 6 | 28 | 7 |
Cost of sales | ||||
Derivative Instruments, Gain (Loss) | ||||
Total Gain (Loss) on Mark-to-Market Derivatives | 123 | 160 | 94 | 83 |
Other expense, net | ||||
Derivative Instruments, Gain (Loss) | ||||
Total Gain (Loss) on Mark-to-Market Derivatives | (3) | (3) | (5) | (3) |
Commodity Futures Contracts | ||||
Derivative Instruments, Gain (Loss) | ||||
Total Gain (Loss) on Mark-to-Market Derivatives | 145 | 167 | 102 | 90 |
Commodity OTC Swap Contracts | ||||
Derivative Instruments, Gain (Loss) | ||||
Total Gain (Loss) on Mark-to-Market Derivatives | 7 | (2) | 5 | (5) |
Commodity Forward Contracts | ||||
Derivative Instruments, Gain (Loss) | ||||
Total Gain (Loss) on Mark-to-Market Derivatives | 1 | 1 | 15 | 5 |
Foreign Currency Forward Contracts | ||||
Derivative Instruments, Gain (Loss) | ||||
Total Gain (Loss) on Mark-to-Market Derivatives | $ (3) | $ (3) | $ (5) | $ (3) |
Open Long (Short) Positions (De
Open Long (Short) Positions (Details) bu in Thousands, bbl in Thousands, T in Thousands, CAD in Millions | 9 Months Ended |
Sep. 30, 2015CADTbblbu | |
Derivative | |
Derivative, notional amount | CAD | CAD 20 |
Maturity date of foreign currency derivatives | Oct. 26, 2015 |
Crude oil, refined products and blending products (in barrels) | Futures | Short | 2015 | |
Derivative | |
Contract volumes | (5,311) |
Crude oil, refined products and blending products (in barrels) | Futures | Short | 2016 | |
Derivative | |
Contract volumes | (1,050) |
Crude oil, refined products and blending products (in barrels) | Futures | Short | 2017 | |
Derivative | |
Contract volumes | 0 |
Crude oil, refined products and blending products (in barrels) | OTC Swaps | Long | 2015 | |
Derivative | |
Contract volumes | 1,100 |
Crude oil, refined products and blending products (in barrels) | OTC Swaps | Long | 2016 | |
Derivative | |
Contract volumes | 900 |
Crude oil, refined products and blending products (in barrels) | OTC Swaps | Long | 2017 | |
Derivative | |
Contract volumes | 0 |
Crude oil, refined products and blending products (in barrels) | Forwards | Long | 2015 | |
Derivative | |
Contract volumes | 250 |
Crude oil, refined products and blending products (in barrels) | Forwards | Long | 2016 | |
Derivative | |
Contract volumes | 0 |
Crude oil, refined products and blending products (in barrels) | Forwards | Long | 2017 | |
Derivative | |
Contract volumes | 0 |
Carbon credits (in tons) | Futures | Long | 2015 | |
Derivative | |
Contract volumes | T | 175 |
Carbon credits (in tons) | Futures | Long | 2016 | |
Derivative | |
Contract volumes | T | 1,000 |
Carbon credits (in tons) | Futures | Long | 2017 | |
Derivative | |
Contract volumes | T | 1,000 |
Corn (in bushels) | Futures | Short | 2015 | |
Derivative | |
Contract volumes | bu | (4,270) |
Corn (in bushels) | Futures | Short | 2016 | |
Derivative | |
Contract volumes | bu | 0 |
Corn (in bushels) | Futures | Short | 2017 | |
Derivative | |
Contract volumes | bu | 0 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 | |
Fair Value Measurements | |||
Gross derivative assets | $ 907 | $ 1,204 | |
Derivative asset amount offset against collateral and netting arrangements | [1],[2] | (859) | (1,136) |
Net derivative assets | 48 | 68 | |
Gross derivative liabilities | 871 | 1,027 | |
Derivative liability amount offset against collateral and netting arrangements | [1],[2] | (870) | (1,024) |
Net derivative liabilities | 18 | 23 | |
Cash collateral posted | 11 | ||
Counterparty cash collateral | (112) | ||
Debt carrying value | 3,900 | 4,300 | |
Debt fair value | 3,800 | 4,300 | |
Level 1 | |||
Fair Value Measurements | |||
Gross derivative assets | 896 | 1,165 | |
Gross derivative liabilities | 867 | 1,011 | |
Level 2 | |||
Fair Value Measurements | |||
Gross derivative assets | 11 | 39 | |
Gross derivative liabilities | 21 | 36 | |
Level 3 | |||
Fair Value Measurements | |||
Gross derivative assets | 0 | 0 | |
Gross derivative liabilities | 0 | 0 | |
Commodity Futures Contracts | |||
Fair Value Measurements | |||
Derivative asset amount offset against collateral and netting arrangements | [2] | (859) | (1,136) |
Net derivative assets | 43 | 65 | |
Derivative liability amount offset against collateral and netting arrangements | [2] | (870) | (1,024) |
Net derivative liabilities | 0 | 1 | |
Commodity Futures Contracts | Level 1 | |||
Fair Value Measurements | |||
Gross derivative assets | 896 | 1,165 | |
Gross derivative liabilities | 867 | 1,011 | |
Commodity Futures Contracts | Level 2 | |||
Fair Value Measurements | |||
Gross derivative assets | 6 | 36 | |
Gross derivative liabilities | 3 | 14 | |
Commodity Futures Contracts | Level 3 | |||
Fair Value Measurements | |||
Gross derivative assets | 0 | 0 | |
Gross derivative liabilities | 0 | 0 | |
Commodity OTC Swap Contracts | |||
Fair Value Measurements | |||
Derivative asset amount offset against collateral and netting arrangements | [2] | 0 | |
Net derivative assets | 3 | ||
Derivative liability amount offset against collateral and netting arrangements | [2] | 0 | |
Net derivative liabilities | 1 | ||
Commodity OTC Swap Contracts | Level 1 | |||
Fair Value Measurements | |||
Gross derivative assets | 0 | ||
Gross derivative liabilities | 0 | ||
Commodity OTC Swap Contracts | Level 2 | |||
Fair Value Measurements | |||
Gross derivative assets | 3 | ||
Gross derivative liabilities | 1 | ||
Commodity OTC Swap Contracts | Level 3 | |||
Fair Value Measurements | |||
Gross derivative assets | 0 | ||
Gross derivative liabilities | 0 | ||
Commodity Forward Contracts | |||
Fair Value Measurements | |||
Derivative asset amount offset against collateral and netting arrangements | [2] | 0 | 0 |
Net derivative assets | 2 | 3 | |
Derivative liability amount offset against collateral and netting arrangements | [2] | 0 | 0 |
Net derivative liabilities | 1 | 1 | |
Commodity Forward Contracts | Level 1 | |||
Fair Value Measurements | |||
Gross derivative assets | 0 | 0 | |
Gross derivative liabilities | 0 | 0 | |
Commodity Forward Contracts | Level 2 | |||
Fair Value Measurements | |||
Gross derivative assets | 2 | 3 | |
Gross derivative liabilities | 1 | 1 | |
Commodity Forward Contracts | Level 3 | |||
Fair Value Measurements | |||
Gross derivative assets | 0 | 0 | |
Gross derivative liabilities | 0 | 0 | |
Environmental Credit Obligations | |||
Fair Value Measurements | |||
Derivative liability amount offset against collateral and netting arrangements | [2] | 0 | 0 |
Net derivative liabilities | 17 | 20 | |
Environmental Credit Obligations | Level 1 | |||
Fair Value Measurements | |||
Gross derivative liabilities | 0 | 0 | |
Environmental Credit Obligations | Level 2 | |||
Fair Value Measurements | |||
Gross derivative liabilities | 17 | 20 | |
Environmental Credit Obligations | Level 3 | |||
Fair Value Measurements | |||
Gross derivative liabilities | $ 0 | $ 0 | |
[1] | Certain of our derivative contracts, under master netting arrangements, include both asset and liability positions. We offset both the fair value amounts and any related cash collateral amounts recognized for multiple derivative instruments executed with the same counterparty when there is a legally enforceable right and an intention to settle net or simultaneously. As of September 30, 2015, we had provided cash collateral amounts of $11 million related to our unrealized derivative positions. At December 31, 2014, our counterparties had provided cash collateral of $112 million related to our unrealized derivative positions. Cash collateral amounts are netted with mark-to-market derivative assets. | ||
[2] | Certain of our derivative contracts, under master netting arrangements, include both asset and liability positions. We offset both the fair value amounts and any related cash collateral amounts recognized for multiple derivative instruments executed with the same counterparty when there is a legally enforceable right and an intention to settle net or simultaneously. As of September 30, 2015, we had provided cash collateral amounts of $11 million related to our unrealized derivative positions. At December 31, 2014, our counterparties had provided cash collateral of $112 million related to our unrealized derivative positions. Cash collateral amounts are netted with mark-to-market derivative assets. |
Total Debt (Details)
Total Debt (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2015 | Dec. 31, 2014 | ||
Debt Instrument | |||
Total Debt | [1] | $ 3,873 | $ 4,255 |
Unamortized issuance costs | [2],[3] | (76) | (88) |
Current maturities | (6) | (6) | |
Debt, net of current maturities and unamortized issuance costs | 3,791 | 4,161 | |
TLLP | |||
Debt Instrument | |||
Total Debt | $ 2,600 | 2,600 | |
5.875% Senior Notes Due 2020 | |||
Debt Instrument | |||
Debt instrument interest rate | 5.875% | ||
Debt instrument, maturity date | Oct. 1, 2020 | ||
Unamortized premium | $ 4 | $ 5 | |
[1] | Total debt related to TLLP, which is non-recourse to Tesoro, except for TLGP, was $2.6 billion at both September 30, 2015 and December 31, 2014. | ||
[2] | Includes unamortized premium associated with TLLP’s 5.875% Senior Notes due 2020 of $4 million and $5 million as of September 30, 2015 and December 31, 2014, respectively. | ||
[3] | The Company adopted ASU 2015-03 in the first quarter of 2015 and applied the changes retrospectively to the prior period presented. See Note 1 for further discussion. |
Revolving Credit Facilities (De
Revolving Credit Facilities (Details) $ in Millions | 9 Months Ended | |
Sep. 30, 2015USD ($) | ||
Credit facilities | ||
Total capacity | $ 5,795 | |
Amount Borrowed as of September 30, 2015 | 280 | |
Outstanding Letters of Credit | 265 | |
Available Capacity | 5,250 | |
Tesoro Corporation Revolving Credit Facility | ||
Credit facilities | ||
Total capacity | 3,000 | [1] |
Amount Borrowed as of September 30, 2015 | 0 | [1] |
Outstanding Letters of Credit | 76 | [1] |
Available Capacity | $ 2,924 | [1] |
Expiration | Nov. 18, 2019 | [1] |
Maximum available capacity | $ 3,000 | |
Line of credit facility, remaining borrowing capacity percentage | 97.00% | |
TLLP Revolving Credit Facility | ||
Credit facilities | ||
Total capacity | $ 900 | |
Amount Borrowed as of September 30, 2015 | 280 | |
Outstanding Letters of Credit | 0 | |
Available Capacity | $ 620 | |
Expiration | Dec. 2, 2019 | |
Maximum available capacity | $ 1,500 | |
Line of credit facility, remaining borrowing capacity percentage | 69.00% | |
Weighted average interest rate | 2.69% | |
Line of credit facility, collateral | The TLLP Revolving Credit Facility is non-recourse to Tesoro, except for TLGP, and is guaranteed by all of TLLP’s subsidiaries, with the exception of Rendezvous Gas Services L.L.C., and secured by substantially all of TLLP’s assets. Borrowings are available under the TLLP Revolving Credit Facility up to the total loan availability of the facility. | |
Letter of Credit Facilities | ||
Credit facilities | ||
Total capacity | $ 1,895 | |
Amount Borrowed as of September 30, 2015 | 0 | |
Outstanding Letters of Credit | 189 | |
Available Capacity | $ 1,706 | |
Minimum | Letter of Credit Facilities | ||
Credit facilities | ||
Tesoro Corporation, letter of credit outstanding fees | 0.40% | |
Maximum | Letter of Credit Facilities | ||
Credit facilities | ||
Tesoro Corporation, letter of credit outstanding fees | 1.00% | |
[1] | Borrowing base is the lesser of the amount of the periodically adjusted borrowing base or the agreement’s total capacity of $3.0 billion. |
Debt Tesoro Debt Repayments (De
Debt Tesoro Debt Repayments (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Term Loan Facility | |
Line of Credit Facility | |
Repayments of borrowings | $ 398 |
Benefit Plans (Details)
Benefit Plans (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015USD ($)pension_plansplans | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)pension_plansplans | Sep. 30, 2014USD ($) | |
Pension Benefits | ||||
General Discussion of Pension Plan | ||||
Number of defined benefit plans sponsored (plans) | plans | 4 | 4 | ||
Pension Contributions | ||||
Employer contributions to employee retirement plan | $ 60 | |||
Components of Net Periodic Benefit Expense and Other Postretirement Expense (Income): | ||||
Service cost | $ 11 | $ 12 | 34 | $ 38 |
Interest cost | 7 | 7 | 22 | 24 |
Expected return on plan assets | (7) | (6) | (20) | (21) |
Amortization of prior service cost (credit) | 1 | 0 | 1 | 1 |
Recognized net actuarial loss | 6 | 3 | 18 | 10 |
Net Periodic Benefit Expense (Income) | 18 | 16 | 55 | 52 |
Other Postretirement Benefits | ||||
Components of Net Periodic Benefit Expense and Other Postretirement Expense (Income): | ||||
Service cost | 0 | 0 | 2 | 2 |
Interest cost | 1 | 1 | 2 | 2 |
Amortization of prior service cost (credit) | (8) | (8) | (25) | (25) |
Recognized net actuarial loss | 1 | 1 | 3 | 4 |
Net Periodic Benefit Expense (Income) | $ (6) | $ (6) | $ (18) | $ (17) |
Funded Qualified Employee Retirement Plan | ||||
General Discussion of Pension Plan | ||||
Number of defined benefit plans sponsored (plans) | pension_plans | 1 | 1 | ||
Unfunded Nonqualified Executive Plan | ||||
General Discussion of Pension Plan | ||||
Number of defined benefit plans sponsored (plans) | pension_plans | 3 | 3 |
Commitments and Contingencies,
Commitments and Contingencies, Environmental Liabilities (Details) $ in Millions | Jul. 10, 2015 | Sep. 30, 2015USD ($)entities | Dec. 31, 2014USD ($) |
Environmental Liabilities | |||
Environmental liability accrual | $ 229 | $ 274 | |
Martinez refinery | |||
Environmental Liabilities | |||
Environmental liability accrual | $ 196 | 216 | |
Loss Contingency, coverage denial date | Jul. 10, 2015 | ||
Remediation activities measurement period | We cannot reasonably determine the full extent of remedial activities that may be required at the Martinez refinery and for assets acquired in the Los Angeles Acquisition, and it is possible that we will identify additional investigation and remediation costs for site cleanup activities as more information becomes available. | ||
Environmental insurance coverage ceiling | $ 190 | ||
Self-insurance deductible | $ 50 | ||
Number of previous owners (owners) | entities | 2 | ||
TLLP | |||
Environmental Liabilities | |||
Environmental liability accrual | $ 15 | $ 32 |
Commitments and Contingencies57
Commitments and Contingencies, Washington Refinery Fire (Details) - Washington Refinery Fire $ in Millions | Jul. 21, 2015 | Nov. 20, 2013 | Mar. 31, 2015 | Feb. 28, 2015 | Jan. 31, 2015 | Nov. 30, 2013 | Sep. 30, 2013 | Jan. 31, 2011 | Dec. 31, 2010 | Oct. 31, 2010USD ($) | Apr. 30, 2010employees | Sep. 30, 2015 |
Loss Contingencies | ||||||||||||
Incident date | April 2,010 | |||||||||||
Number of fatally injured employees in the refinery incident (employees) | 7 | |||||||||||
Citation issuance date | October 2,010 | |||||||||||
Fines and penalties assessed | $ | $ 2.4 | |||||||||||
L&I Citation allegation reassumption date | December 2,010 | |||||||||||
Citation order appeal date | February 2,015 | November 2,013 | September 2,013 | January 2,011 | ||||||||
Loss Contingency, Allegations | 44 | |||||||||||
Loss Contingency, citation Allegations hearing start date | Jul. 21, 2015 | |||||||||||
Notice of Violation (NOV) date | Nov. 20, 2013 | |||||||||||
Notice of Violation (NOV) disclosure | 46 | We received a notice of violation (“NOV”) from the EPA alleging 46 violations of the Clean Air Act Risk Management Plan requirements at our Washington refinery. The EPA conducted an investigation of the refinery in 2011, following the April 2010 fire in the naphtha hydrotreater unit. | ||||||||||
previous owner, notification of indemnity demand date | January 2,015 | |||||||||||
Arbitration proceedings against previous owner claim, initiation date | March 2,015 | |||||||||||
Judicial Ruling Rejected Allegations | ||||||||||||
Loss Contingencies | ||||||||||||
Loss Contingency, Allegations | 33 | |||||||||||
Remaining Allegations | ||||||||||||
Loss Contingencies | ||||||||||||
Loss Contingency, Allegations | 11 |
Commitments and Contingencies58
Commitments and Contingencies, Tax Matters (Details) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2015USD ($) | Sep. 30, 2015USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | ||
Unrecognized tax benefits, increase Resulting from for tax positions taken on amended returns | $ 150 | |
Possible decrease in unrecognized tax benefits in the next twelve months | $ 8 | $ 8 |
Significant Change in Unrecognized Tax Benefits is Reasonably Possible | It is reasonably possible that unrecognized tax benefits may decrease by as much as $8 million in the next twelve months, related primarily to state apportionment matters. However, since the tax was fully paid in prior years, the unrecognized tax benefit would be eliminated without impacting expense. |
Stockholders' Equity, Changes t
Stockholders' Equity, Changes to Equity (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | ||
Total Equity | ||||||
Balance at December 31, 2014 | [1] | $ 6,976 | ||||
Net earnings | $ 799 | $ 413 | 1,607 | $ 756 | ||
Purchases of common stock | (494) | $ (350) | ||||
Dividend payments | (169) | |||||
Net effect of amounts related to equity-based compensation | [2] | 38 | ||||
Net proceeds from issuance of Tesoro Logistics LP common units | 71 | |||||
Distributions to noncontrolling interest | (135) | |||||
TLLP’s issuance of common units | (35) | |||||
Balance at September 30, 2015 | [1] | $ 7,859 | $ 7,859 | |||
Preferred Stock, Shares Authorized | 5,000,000 | 5,000,000 | 5,000,000 | |||
Preferred Stock, Par or Stated Value Per Share | $ 0 | $ 0 | $ 0 | |||
Preferred Stock, Shares Issued | 0 | 0 | 0 | |||
Shares issued for equity-based compensation plans (shares) | 300,000 | 500,000 | ||||
Stock issued during period, value, primarily stock Options exercised | $ 12 | $ 14 | ||||
Tesoro Corporation Stockholders’ Equity | ||||||
Total Equity | ||||||
Balance at December 31, 2014 | [1] | 4,454 | ||||
Net earnings | 1,486 | |||||
Purchases of common stock | (494) | |||||
Dividend payments | (169) | |||||
Net effect of amounts related to equity-based compensation | [2] | 34 | ||||
Net proceeds from issuance of Tesoro Logistics LP common units | 0 | |||||
Distributions to noncontrolling interest | 0 | |||||
TLLP’s issuance of common units | 59 | |||||
Balance at September 30, 2015 | [1] | $ 5,370 | 5,370 | |||
Noncontrolling Interest | ||||||
Total Equity | ||||||
Balance at December 31, 2014 | [1] | 2,522 | ||||
Net earnings | 121 | |||||
Purchases of common stock | 0 | |||||
Dividend payments | 0 | |||||
Net effect of amounts related to equity-based compensation | [2] | 4 | ||||
Net proceeds from issuance of Tesoro Logistics LP common units | 71 | |||||
Distributions to noncontrolling interest | (135) | |||||
TLLP’s issuance of common units | (94) | |||||
Balance at September 30, 2015 | [1] | $ 2,489 | $ 2,489 | |||
[1] | We have 5.0 million shares of preferred stock authorized with no par value per share. No shares of preferred stock were outstanding as of September 30, 2015 and December 31, 2014. | |||||
[2] | We issued approximately 0.3 million shares and 0.5 million shares during the nine months ended September 30, 2015 and 2014 for proceeds of $12 million and $14 million, respectively, primarily for stock option exercises under our equity-based compensation plans. See Note 12 for more information on stock-based compensation. |
Stockholders' Equity Stockholde
Stockholders' Equity Stockholders' Equity, Share Repurchases and Dividends (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | Oct. 27, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 |
Number of shares purchased (shares) | 5.5 | 6.2 | |||||
Share repurchases, value | $ 494 | $ 350 | |||||
Dividend payments | $ 62 | $ 39 | $ 169 | $ 104 | |||
Dividends declared (dollars per share) | $ 0.50 | $ 0.425 | $ 0.30 | $ 0.25 | $ 1.35 | $ 0.80 | |
Subsequent Event | |||||||
Dividends declared (dollars per share) | $ 0.50 | ||||||
Dividends payable, date declared | Oct. 27, 2015 | ||||||
Dividends, date to be paid | Dec. 15, 2015 | ||||||
Dividends, date of record | Nov. 30, 2015 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | ||
Stock-Based Compensation Arrangement by Stock-based Payment Award | |||||
Total Stock-Based Compensation Expense | $ 22 | $ 12 | $ 57 | $ 20 | |
Income tax benefit (expense) for stock-based compensation arrangements | 8 | 7 | 22 | 9 | |
Tax benefit realized from exercise of stock-based compensation arrangements | 8 | 7 | 71 | 41 | |
Stock appreciation rights | |||||
Stock-Based Compensation Arrangement by Stock-based Payment Award | |||||
Total Stock-Based Compensation Expense | [1] | 10 | 4 | 20 | (2) |
Performance share awards | |||||
Stock-Based Compensation Arrangement by Stock-based Payment Award | |||||
Total Stock-Based Compensation Expense | [2] | 3 | 3 | 9 | 7 |
Market stock units | |||||
Stock-Based Compensation Arrangement by Stock-based Payment Award | |||||
Total Stock-Based Compensation Expense | [3] | 7 | 4 | 19 | 12 |
Other stock-based awards | |||||
Stock-Based Compensation Arrangement by Stock-based Payment Award | |||||
Total Stock-Based Compensation Expense | [4] | $ 2 | $ 1 | $ 9 | $ 3 |
[1] | We paid cash of $37 million and $22 million to settle 0.5 million and 0.8 million SARs that were exercised during the nine months ended September 30, 2015 and 2014, respectively. We had $43 million and $60 million recorded in accrued liabilities associated with our SARs awards at September 30, 2015 and December 31, 2014, respectively. | ||||
[2] | We granted 0.1 million market condition performance share awards at a weighted average grant date fair value of $117.96 per share under the amended and restated 2011 Long-Term Incentive Plan (“2011 Plan”) during the nine months ended September 30, 2015. | ||||
[3] | We granted 0.4 million market stock units at a weighted average grant date fair value of $114.57 per unit under the 2011 Plan during the nine months ended September 30, 2015. | ||||
[4] | We have aggregated expenses for certain award types as they are not considered significant. |
Stock-Based Compensation Stock
Stock-Based Compensation Stock Appreciation Rights, Performance Share Awards and Market Stock Units(Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Stock appreciation rights | |||
Stock-Based Compensation Arrangement by Stock-based Payment Award | |||
Cash paid to settle awards | $ 37 | $ 22 | |
Exercised stock appreciation rights (shares) | 0.5 | 0.8 | |
Accrued liabilities | $ 43 | $ 60 | |
Performance share awards | |||
Stock-Based Compensation Arrangement by Stock-based Payment Award | |||
Awards granted (shares) | 0.1 | ||
Weighted average grant date fair value (dollars per share) | $ 117.96 | ||
Market stock units | |||
Stock-Based Compensation Arrangement by Stock-based Payment Award | |||
Awards granted (shares) | 0.4 | ||
Weighted average grant date fair value (dollars per share) | $ 114.57 |
Operating Segments (Details)
Operating Segments (Details) | 9 Months Ended |
Sep. 30, 2015statesrefineries | |
Segment Reporting Information | |
Foreign operations | Since we do not have significant operations in foreign countries, revenue generated in and long-lived assets located in foreign countries are not material to our operations. |
Change in basis of segmentation, description | As of the second quarter 2015, we revised our operating segments to include refining, TLLP and a realigned marketing segment. Comparable prior period information has been recast to reflect our revised segment presentation. No other changes were deemed necessary to our refining and TLLP segments. |
Refining | |
Segment Reporting Information | |
Number of refineries (refineries) | refineries | 6 |
Segment reporting description | Our refining segment owns and operates six petroleum refineries located in California, Washington, Alaska, North Dakota and Utah that manufacture gasoline and gasoline blendstocks, jet fuel, diesel fuel, residual fuel oil and other refined products. We sell these refined products, together with refined products purchased from third parties, to our marketing segment through terminal facilities and other locations and opportunistically export refined products to foreign markets. |
TLLP | |
Segment Reporting Information | |
Segment reporting description | TLLP’s assets and operations include certain crude oil gathering assets, natural gas gathering and processing assets and crude oil and refined products terminalling and transportation assets acquired from Tesoro and other third parties. Revenues from the TLLP segment are generated by charging fees for gathering crude oil and natural gas, for processing natural gas, and for terminalling, transporting and storing crude oil, and refined products. |
Marketing | |
Segment Reporting Information | |
Number of states with retail sites (states) | 16 |
Segment reporting description | Our marketing segment sells gasoline and diesel fuel through branded MSOs and jobber/dealers in 16 states as well as unbranded or wholesale channels through terminal facilities and other locations. |
Operating Segments, Results (De
Operating Segments, Results (Details) - USD ($) $ in Millions | Jan. 01, 2015 | Jan. 01, 2014 | Apr. 01, 2013 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Segment Reporting Information | |||||||||
Total Revenues | $ 7,743 | $ 11,151 | $ 22,438 | $ 32,188 | |||||
OPERATING INCOME | 1,292 | 702 | 2,641 | 1,350 | |||||
Reconciliation of Operating Income from Segments to Consolidated | |||||||||
Total Segment Operating Income | 1,386 | 777 | 2,884 | 1,535 | |||||
Corporate and unallocated costs | [1] | (94) | (75) | (243) | (185) | ||||
Segment Reporting Information, Income before Income Taxes | |||||||||
Interest and financing costs, net | [2] | (54) | (50) | (163) | (168) | ||||
Other income, net | [3] | 19 | 11 | 21 | 13 | ||||
Earnings Before Income Taxes | 1,257 | 663 | 2,499 | 1,195 | |||||
Segment Reporting, Disclosure of Other Information about Entity's Reportable Segments | |||||||||
Total Depreciation and Amortization Expense | 192 | 144 | 553 | 409 | |||||
Total Capital Expenditures | 259 | 194 | 756 | 464 | |||||
Total Assets | 16,601 | 16,601 | $ 16,491 | ||||||
Segment Reporting Table Footnotes | |||||||||
Federal and state motor fuel taxes on sales by the marketing segment | 137 | 148 | 423 | 441 | |||||
Intersegment pricing methodology effective date | [4] | Apr. 1, 2013 | |||||||
Intersegment pricing methodology, new inclusion effective date | [4] | Jan. 1, 2015 | |||||||
Debt redemption charges | (1) | (41) | |||||||
Continuing Operations | |||||||||
Segment Reporting, Disclosure of Other Information about Entity's Reportable Segments | |||||||||
Total Assets | 16,601 | 16,601 | 16,491 | ||||||
Refining | |||||||||
Segment Reporting Information | |||||||||
OPERATING INCOME | [4] | 895 | 536 | 1,831 | 1,074 | ||||
Segment Reporting, Disclosure of Other Information about Entity's Reportable Segments | |||||||||
Total Depreciation and Amortization Expense | 132 | 112 | 373 | 317 | |||||
Total Capital Expenditures | 153 | 118 | 485 | 280 | |||||
Refining | Refined products | |||||||||
Segment Reporting Information | |||||||||
Total Revenues | 6,966 | 10,363 | 20,293 | 30,353 | |||||
Refining | Crude oil resales and other | |||||||||
Segment Reporting Information | |||||||||
Total Revenues | 172 | 434 | 780 | 1,060 | |||||
Refining | Continuing Operations | |||||||||
Segment Reporting, Disclosure of Other Information about Entity's Reportable Segments | |||||||||
Total Assets | 9,521 | 9,521 | 9,467 | ||||||
TLLP | |||||||||
Segment Reporting Information | |||||||||
OPERATING INCOME | [5] | 112 | 61 | 329 | 169 | ||||
Reconciliation of Operating Income from Segments to Consolidated | |||||||||
Corporate and unallocated costs | (16) | (6) | (43) | (14) | |||||
Segment Reporting, Disclosure of Other Information about Entity's Reportable Segments | |||||||||
Total Depreciation and Amortization Expense | 44 | 18 | 132 | 51 | |||||
Total Capital Expenditures | 92 | 63 | 235 | 137 | |||||
TLLP | Gathering | |||||||||
Segment Reporting Information | |||||||||
Total Revenues | 87 | 32 | 253 | 84 | |||||
TLLP | Processing | |||||||||
Segment Reporting Information | |||||||||
Total Revenues | 71 | 0 | 205 | 0 | |||||
TLLP | Terminalling and transportation | |||||||||
Segment Reporting Information | |||||||||
Total Revenues | 124 | 118 | 362 | 326 | |||||
TLLP | Continuing Operations | |||||||||
Segment Reporting, Disclosure of Other Information about Entity's Reportable Segments | |||||||||
Total Assets | 4,851 | 4,851 | 4,765 | ||||||
Marketing | |||||||||
Segment Reporting Information | |||||||||
OPERATING INCOME | [4] | 379 | 180 | 724 | 292 | ||||
Segment Reporting, Disclosure of Other Information about Entity's Reportable Segments | |||||||||
Total Depreciation and Amortization Expense | 11 | 10 | 34 | 30 | |||||
Total Capital Expenditures | 8 | 9 | 20 | 27 | |||||
Marketing | Fuel | |||||||||
Segment Reporting Information | |||||||||
Total Revenues | [6] | 5,144 | 6,501 | 14,143 | 18,814 | ||||
Marketing | Other Non-fuel | |||||||||
Segment Reporting Information | |||||||||
Total Revenues | [7] | 16 | 73 | 48 | 203 | ||||
Marketing | Continuing Operations | |||||||||
Segment Reporting, Disclosure of Other Information about Entity's Reportable Segments | |||||||||
Total Assets | 1,115 | 1,115 | 1,048 | ||||||
Intersegment sales | |||||||||
Segment Reporting Information | |||||||||
Total Revenues | (4,837) | (6,370) | (13,646) | (18,652) | |||||
Corporate | |||||||||
Segment Reporting, Disclosure of Other Information about Entity's Reportable Segments | |||||||||
Total Depreciation and Amortization Expense | 5 | 4 | 14 | 11 | |||||
Total Capital Expenditures | 6 | 4 | 16 | 20 | |||||
Segment Reporting Table Footnotes | |||||||||
Stock-based compensation expense (benefit) | 22 | $ 12 | 57 | $ 20 | |||||
Corporate | Continuing Operations | |||||||||
Segment Reporting, Disclosure of Other Information about Entity's Reportable Segments | |||||||||
Total Assets | 1,114 | 1,114 | $ 1,211 | ||||||
5.5% Senior Notes due 2019 | |||||||||
Segment Reporting Table Footnotes | |||||||||
Debt redemption charges | $ 41 | ||||||||
Debt instrument interest rate | 5.50% | 5.50% | |||||||
Debt instrument, maturity date | Oct. 15, 2019 | ||||||||
Pro Forma | |||||||||
Segment Reporting Table Footnotes | |||||||||
Intersegment pricing methodology, new inclusion effective date | [4] | Jan. 1, 2014 | |||||||
Pro Forma | Refining | |||||||||
Segment Reporting Information | |||||||||
OPERATING INCOME | [4] | $ 35 | $ 94 | ||||||
Washington Refinery Fire | |||||||||
Segment Reporting Table Footnotes | |||||||||
(Gain) on insurance settlement claims | $ (11) | $ (11) | |||||||
[1] | Includes stock-based compensation expense of $22 million and $12 million for the three months ended September 30, 2015 and 2014, respectively, and $57 million and $20 million for the nine months ended September 30, 2015 and 2014, respectively. The significant impact to stock-based compensation expense during the three and nine months ended September 30, 2015 compared to the prior period is primarily a result of changes in Tesoro’s stock price. | ||||||||
[2] | Includes charges totaling $41 million for premiums and unamortized debt issuance costs associated with the redemption of the 5.50% Senior Notes due 2019 during the nine months ended September 30, 2014. | ||||||||
[3] | During the three and nine months ended September 30, 2015, we recorded a gain of $11 million as other income for insurance proceeds related to the settlement of claims associated with the Washington Refinery Fire. | ||||||||
[4] | Our refining segment uses RINs to satisfy its obligations under the Renewable Fuels Standard, in addition to physically blending required biofuels. Effective April 1, 2013, we changed our intersegment pricing methodology and no longer reduced the amount marketing pays for the biofuels by the market value of the RINs due to significant volatility in the value of RINs. At the end of 2014, given the price of RINs has become more transparent in the price of biofuels, we determined our intersegment pricing methodology should include the market value of RINs as a reduction to the price our marketing segment pays to our refining segment. We made this change effective January 1, 2015. We have not adjusted financial information presented for our refining and marketing segments for the three or nine month periods ended September 30, 2014. Had we made this change effective January 1, 2014, operating income in our refining segment would have been reduced by $35 million and $94 million with a corresponding increase to operating income in our marketing segment for the three and nine months ended September 30, 2014, respectively. | ||||||||
[5] | We present TLLP’s segment operating income net of general and administrative expenses totaling $16 million and $6 million representing TLLP’s corporate costs for the three months ended September 30, 2015 and 2014, respectively, and $43 million and $14 million for the nine months ended September 30, 2015 and 2014, respectively that are not allocated by TLLP to its operating segments. | ||||||||
[6] | Federal and state motor fuel taxes on sales by our marketing segment are included in both revenues and cost of sales in our condensed statements of consolidated operations. These taxes totaled $137 million and $148 million for the three months ended September 30, 2015 and 2014, respectively, and $423 million and $441 million for the nine months ended September 30, 2015 and 2014, respectively. | ||||||||
[7] | ncludes rental income for the three and nine months ended September 30, 2015 and primarily merchandise revenue for the three and nine months ended September 30, 2014. |
Condensed Consolidating Finan65
Condensed Consolidating Financial Information, Narrative (Details) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2014 | |
Guarantor Information | ||
Percentage ownership of Tesoro Logistics LP | 33.00% | 36.00% |
Percentage ownership of subsidiary guarantors | 100.00% | |
4.250% Senior Notes due 2017 | ||
Guarantor Information | ||
Debt instrument interest rate | 4.25% | |
Debt instrument, maturity date | Oct. 1, 2017 | |
5.375% Senior Notes due 2022 | ||
Guarantor Information | ||
Debt instrument interest rate | 5.375% | |
Debt instrument, maturity date | Oct. 1, 2022 | |
5.125% Senior Notes due 2024 | ||
Guarantor Information | ||
Debt instrument interest rate | 5.125% | |
Debt instrument, maturity date | Apr. 1, 2024 |
Condensed Consolidating Finan66
Condensed Consolidating Financial Information, Statement of Operations (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | ||||||
Condensed Financial Statements, captions | |||||||||
Revenues | $ 7,743 | $ 11,151 | $ 22,438 | $ 32,188 | |||||
Costs and Expenses: | |||||||||
Cost of sales | 5,571 | 9,594 | 17,309 | 28,409 | |||||
Operating, selling, general and administrative expenses | 684 | 710 | 1,923 | 2,022 | |||||
Depreciation and amortization expense | 192 | 144 | 553 | 409 | |||||
(Gain) loss on asset disposals and impairments | 4 | 1 | 12 | (2) | |||||
Operating Income | 1,292 | 702 | 2,641 | 1,350 | |||||
Equity in earnings of subsidiaries | 0 | 0 | 0 | 0 | |||||
Interest and financing costs, net | [1] | (54) | (50) | (163) | (168) | ||||
Other income (expense), net | [2] | 19 | 11 | 21 | 13 | ||||
Earnings Before Income Taxes | 1,257 | 663 | 2,499 | 1,195 | |||||
Income tax expense (benefit) | 458 | 249 | 888 | 437 | |||||
Net Earnings from Continuing Operations | 799 | 414 | 1,611 | 758 | |||||
Loss from discontinued operations, net of tax | 0 | (1) | (4) | (2) | |||||
Net Earnings | 799 | 413 | 1,607 | 756 | |||||
Less: Net earnings from continuing operations attributable to noncontrolling interest | 40 | 17 | 121 | 58 | |||||
Net Earnings Attributable to Tesoro Corporation | 759 | 396 | 1,486 | 698 | |||||
Comprehensive Income | |||||||||
Total comprehensive income | 799 | 413 | 1,607 | 756 | |||||
Less: Noncontrolling interest in comprehensive income | 40 | 17 | 121 | 58 | |||||
Comprehensive Income Attributable to Tesoro Corporation | 759 | 396 | 1,486 | 698 | |||||
Parent | |||||||||
Condensed Financial Statements, captions | |||||||||
Revenues | 0 | 0 | 0 | 0 | |||||
Costs and Expenses: | |||||||||
Cost of sales | 0 | 0 | 0 | 0 | |||||
Operating, selling, general and administrative expenses | 2 | 2 | 8 | 6 | |||||
Depreciation and amortization expense | 0 | 0 | 0 | 0 | |||||
(Gain) loss on asset disposals and impairments | 0 | 0 | 0 | 0 | |||||
Operating Income | (2) | (2) | (8) | (6) | |||||
Equity in earnings of subsidiaries | 776 | 405 | 1,523 | 722 | |||||
Interest and financing costs, net | (11) | (10) | (32) | (27) | |||||
Other income (expense), net | 0 | 0 | 1 | 2 | |||||
Earnings Before Income Taxes | 763 | 393 | 1,484 | 691 | |||||
Income tax expense (benefit) | 4 | [3] | (3) | [4] | (2) | [5] | (7) | [6] | |
Net Earnings from Continuing Operations | 396 | 1,486 | 698 | ||||||
Loss from discontinued operations, net of tax | 0 | 0 | 0 | ||||||
Net Earnings | 759 | 396 | 1,486 | 698 | |||||
Less: Net earnings from continuing operations attributable to noncontrolling interest | 0 | 0 | 0 | 0 | |||||
Net Earnings Attributable to Tesoro Corporation | 759 | 396 | 1,486 | 698 | |||||
Comprehensive Income | |||||||||
Total comprehensive income | 759 | 396 | 1,486 | 698 | |||||
Less: Noncontrolling interest in comprehensive income | 0 | 0 | 0 | 0 | |||||
Comprehensive Income Attributable to Tesoro Corporation | 759 | 396 | 1,486 | 698 | |||||
Guarantor Subsidiaries | |||||||||
Condensed Financial Statements, captions | |||||||||
Revenues | 8,574 | 12,528 | 24,573 | 36,821 | |||||
Costs and Expenses: | |||||||||
Cost of sales | 6,574 | 11,076 | 19,903 | 33,312 | |||||
Operating, selling, general and administrative expenses | 679 | 692 | 1,905 | 1,981 | |||||
Depreciation and amortization expense | 147 | 125 | 417 | 355 | |||||
(Gain) loss on asset disposals and impairments | 4 | 1 | 12 | 3 | |||||
Operating Income | 1,170 | 634 | 2,336 | 1,170 | |||||
Equity in earnings of subsidiaries | 38 | 11 | 102 | 38 | |||||
Interest and financing costs, net | (17) | (22) | (52) | (105) | |||||
Other income (expense), net | 17 | 11 | 14 | 11 | |||||
Earnings Before Income Taxes | 1,208 | 634 | 2,400 | 1,114 | |||||
Income tax expense (benefit) | 443 | [3] | 241 | [4] | 863 | [5] | 419 | [6] | |
Net Earnings from Continuing Operations | 393 | 1,537 | 695 | ||||||
Loss from discontinued operations, net of tax | (1) | (4) | (2) | ||||||
Net Earnings | 765 | 392 | 1,533 | 693 | |||||
Less: Net earnings from continuing operations attributable to noncontrolling interest | 0 | 0 | 0 | 0 | |||||
Net Earnings Attributable to Tesoro Corporation | 765 | 392 | 1,533 | 693 | |||||
Comprehensive Income | |||||||||
Total comprehensive income | 765 | 392 | 1,533 | 693 | |||||
Less: Noncontrolling interest in comprehensive income | 0 | 0 | 0 | 0 | |||||
Comprehensive Income Attributable to Tesoro Corporation | 765 | 392 | 1,533 | 693 | |||||
Non- Guarantors | |||||||||
Condensed Financial Statements, captions | |||||||||
Revenues | 1,054 | 1,671 | 2,718 | 5,110 | |||||
Costs and Expenses: | |||||||||
Cost of sales | 748 | 1,504 | 1,874 | 4,668 | |||||
Operating, selling, general and administrative expenses | 137 | 78 | 395 | 207 | |||||
Depreciation and amortization expense | 45 | 19 | 136 | 54 | |||||
(Gain) loss on asset disposals and impairments | 0 | 0 | 0 | (5) | |||||
Operating Income | 124 | 70 | 313 | 186 | |||||
Equity in earnings of subsidiaries | 0 | 0 | 0 | 0 | |||||
Interest and financing costs, net | (26) | (18) | (79) | (36) | |||||
Other income (expense), net | 2 | 0 | 6 | 0 | |||||
Earnings Before Income Taxes | 100 | 52 | 240 | 150 | |||||
Income tax expense (benefit) | 11 | [3] | 11 | [4] | 27 | [5] | 25 | [6] | |
Net Earnings from Continuing Operations | 41 | 213 | 125 | ||||||
Loss from discontinued operations, net of tax | 0 | 0 | 0 | ||||||
Net Earnings | 89 | 41 | 213 | 125 | |||||
Less: Net earnings from continuing operations attributable to noncontrolling interest | 40 | 17 | 121 | 58 | |||||
Net Earnings Attributable to Tesoro Corporation | 49 | 24 | 92 | 67 | |||||
Comprehensive Income | |||||||||
Total comprehensive income | 89 | 41 | 213 | 125 | |||||
Less: Noncontrolling interest in comprehensive income | 40 | 17 | 121 | 58 | |||||
Comprehensive Income Attributable to Tesoro Corporation | 49 | 24 | 92 | 67 | |||||
Consolidating Adjustments | |||||||||
Condensed Financial Statements, captions | |||||||||
Revenues | (1,885) | (3,048) | (4,853) | (9,743) | |||||
Costs and Expenses: | |||||||||
Cost of sales | (1,751) | (2,986) | (4,468) | (9,571) | |||||
Operating, selling, general and administrative expenses | (134) | (62) | (385) | (172) | |||||
Depreciation and amortization expense | 0 | 0 | 0 | 0 | |||||
(Gain) loss on asset disposals and impairments | 0 | 0 | 0 | 0 | |||||
Operating Income | 0 | 0 | 0 | 0 | |||||
Equity in earnings of subsidiaries | (814) | (416) | (1,625) | (760) | |||||
Interest and financing costs, net | 0 | 0 | 0 | 0 | |||||
Other income (expense), net | 0 | 0 | 0 | 0 | |||||
Earnings Before Income Taxes | (814) | (416) | (1,625) | (760) | |||||
Income tax expense (benefit) | 0 | [3] | 0 | [4] | 0 | [5] | 0 | [6] | |
Net Earnings from Continuing Operations | (416) | (1,625) | (760) | ||||||
Loss from discontinued operations, net of tax | 0 | 0 | 0 | ||||||
Net Earnings | (814) | (416) | (1,625) | (760) | |||||
Less: Net earnings from continuing operations attributable to noncontrolling interest | 0 | 0 | 0 | 0 | |||||
Net Earnings Attributable to Tesoro Corporation | (814) | (416) | (1,625) | (760) | |||||
Comprehensive Income | |||||||||
Total comprehensive income | (814) | (416) | (1,625) | (760) | |||||
Less: Noncontrolling interest in comprehensive income | 0 | 0 | 0 | 0 | |||||
Comprehensive Income Attributable to Tesoro Corporation | $ (814) | $ (416) | $ (1,625) | $ (760) | |||||
[1] | Includes charges totaling $41 million for premiums and unamortized debt issuance costs associated with the redemption of the 5.50% Senior Notes due 2019 during the nine months ended September 30, 2014. | ||||||||
[2] | During the three and nine months ended September 30, 2015, we recorded a gain of $11 million as other income for insurance proceeds related to the settlement of claims associated with the Washington Refinery Fire. | ||||||||
[3] | The income tax expense (benefit) reflected in each column does not include any tax effect of the equity in earnings from corporate subsidiaries, but does include the tax effect of the corporate partners’ share of partnership income. | ||||||||
[4] | The income tax expense (benefit) reflected in each column does not include any tax effect of the equity in earnings from corporate subsidiaries, but does include the tax effect of the corporate partners’ share of partnership income. | ||||||||
[5] | The income tax expense (benefit) reflected in each column does not include any tax effect of the equity in earnings from corporate subsidiaries, but does include the tax effect of the corporate partners’ share of partnership income. | ||||||||
[6] | The income tax expense (benefit) reflected in each column does not include any tax effect of the equity in earnings from corporate subsidiaries, but does include the tax effect of the corporate partners’ share of partnership income. |
Condensed Consolidating Finan67
Condensed Consolidating Financial Information, Balance Sheet (Details) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Dec. 31, 2013 |
Current Assets | ||||
Cash and cash equivalents | $ 959 | $ 1,000 | $ 1,530 | $ 1,238 |
Receivables, net of allowance for doubtful accounts | 1,016 | 1,435 | ||
Short-term receivables from affiliates | 0 | 0 | ||
Inventories | 2,507 | 2,439 | ||
Prepayments and other current assets | 176 | 200 | ||
Total Current Assets | 4,658 | 5,074 | ||
Net Property, Plant and Equipment | 9,427 | 9,045 | ||
Investment in Subsidiaries | 0 | 0 | ||
Long-Term Receivables from Affiliates | 0 | 0 | ||
Long-Term Intercompany Note Receivable | 0 | 0 | ||
Other Noncurrent Assets | ||||
Acquired intangibles, net | 1,190 | 1,222 | ||
Other, net | 1,326 | 1,150 | ||
Total Other Noncurrent Assets, Net | 2,516 | 2,372 | ||
Total Assets | 16,601 | 16,491 | ||
Current Liabilities: | ||||
Accounts payable | 1,789 | 2,470 | ||
Short-term payables to affiliates | 0 | 0 | ||
Other current liabilities | 1,063 | 996 | ||
Total Current Liabilities | 2,852 | 3,466 | ||
Long-Term Payables to Affiliates | 0 | 0 | ||
Deferred Income Taxes | 1,256 | 1,098 | ||
Other Noncurrent Liabilities | 843 | 790 | ||
Debt, net of unamortized issuance costs | 3,791 | 4,161 | ||
Long-Term Intercompany Note Payable | 0 | 0 | ||
Equity-Tesoro Corporation | 5,370 | 4,454 | ||
Equity-Noncontrolling Interest | 2,489 | 2,522 | ||
Total Liabilities and Equity | 16,601 | 16,491 | ||
Parent | ||||
Current Assets | ||||
Cash and cash equivalents | 0 | 0 | 0 | 0 |
Receivables, net of allowance for doubtful accounts | 0 | 6 | ||
Short-term receivables from affiliates | 0 | 0 | ||
Inventories | 0 | 0 | ||
Prepayments and other current assets | 51 | 71 | ||
Total Current Assets | 51 | 77 | ||
Net Property, Plant and Equipment | 0 | 0 | ||
Investment in Subsidiaries | 8,125 | 6,592 | ||
Long-Term Receivables from Affiliates | 1,653 | 2,427 | ||
Long-Term Intercompany Note Receivable | 0 | 0 | ||
Other Noncurrent Assets | ||||
Acquired intangibles, net | 0 | 0 | ||
Other, net | 6 | 6 | ||
Total Other Noncurrent Assets, Net | 6 | 6 | ||
Total Assets | 9,835 | 9,102 | ||
Current Liabilities: | ||||
Accounts payable | 26 | 1 | ||
Short-term payables to affiliates | 0 | 0 | ||
Other current liabilities | 208 | 148 | ||
Total Current Liabilities | 234 | 149 | ||
Long-Term Payables to Affiliates | 0 | 0 | ||
Deferred Income Taxes | 1,256 | 1,098 | ||
Other Noncurrent Liabilities | 411 | 447 | ||
Debt, net of unamortized issuance costs | 1,188 | 1,578 | ||
Long-Term Intercompany Note Payable | 1,376 | 1,376 | ||
Equity-Tesoro Corporation | 5,370 | 4,454 | ||
Equity-Noncontrolling Interest | 0 | 0 | ||
Total Liabilities and Equity | 9,835 | 9,102 | ||
Guarantor Subsidiaries | ||||
Current Assets | ||||
Cash and cash equivalents | 926 | 943 | 1,438 | 1,161 |
Receivables, net of allowance for doubtful accounts | 802 | 912 | ||
Short-term receivables from affiliates | 73 | 84 | ||
Inventories | 2,315 | 2,088 | ||
Prepayments and other current assets | 107 | 115 | ||
Total Current Assets | 4,223 | 4,142 | ||
Net Property, Plant and Equipment | 5,926 | 5,666 | ||
Investment in Subsidiaries | 449 | 362 | ||
Long-Term Receivables from Affiliates | 0 | 0 | ||
Long-Term Intercompany Note Receivable | 0 | 0 | ||
Other Noncurrent Assets | ||||
Acquired intangibles, net | 237 | 249 | ||
Other, net | 1,085 | 893 | ||
Total Other Noncurrent Assets, Net | 1,322 | 1,142 | ||
Total Assets | 11,920 | 11,312 | ||
Current Liabilities: | ||||
Accounts payable | 1,546 | 1,779 | ||
Short-term payables to affiliates | 0 | 0 | ||
Other current liabilities | 705 | 717 | ||
Total Current Liabilities | 2,251 | 2,496 | ||
Long-Term Payables to Affiliates | 1,587 | 2,399 | ||
Deferred Income Taxes | 0 | 0 | ||
Other Noncurrent Liabilities | 380 | 296 | ||
Debt, net of unamortized issuance costs | 34 | 39 | ||
Long-Term Intercompany Note Payable | 0 | 0 | ||
Equity-Tesoro Corporation | 7,668 | 6,082 | ||
Equity-Noncontrolling Interest | 0 | 0 | ||
Total Liabilities and Equity | 11,920 | 11,312 | ||
Non- Guarantors | ||||
Current Assets | ||||
Cash and cash equivalents | 33 | 57 | 92 | 77 |
Receivables, net of allowance for doubtful accounts | 214 | 517 | ||
Short-term receivables from affiliates | 0 | 0 | ||
Inventories | 192 | 351 | ||
Prepayments and other current assets | 18 | 16 | ||
Total Current Assets | 457 | 941 | ||
Net Property, Plant and Equipment | 3,501 | 3,379 | ||
Investment in Subsidiaries | 0 | 0 | ||
Long-Term Receivables from Affiliates | 0 | 0 | ||
Long-Term Intercompany Note Receivable | 1,376 | 1,376 | ||
Other Noncurrent Assets | ||||
Acquired intangibles, net | 953 | 973 | ||
Other, net | 235 | 251 | ||
Total Other Noncurrent Assets, Net | 1,188 | 1,224 | ||
Total Assets | 6,522 | 6,920 | ||
Current Liabilities: | ||||
Accounts payable | 217 | 690 | ||
Short-term payables to affiliates | 73 | 84 | ||
Other current liabilities | 150 | 133 | ||
Total Current Liabilities | 440 | 907 | ||
Long-Term Payables to Affiliates | 66 | 28 | ||
Deferred Income Taxes | 0 | 0 | ||
Other Noncurrent Liabilities | 52 | 47 | ||
Debt, net of unamortized issuance costs | 2,569 | 2,544 | ||
Long-Term Intercompany Note Payable | 0 | 0 | ||
Equity-Tesoro Corporation | 906 | 872 | ||
Equity-Noncontrolling Interest | 2,489 | 2,522 | ||
Total Liabilities and Equity | 6,522 | 6,920 | ||
Consolidating Adjustments | ||||
Current Assets | ||||
Cash and cash equivalents | 0 | 0 | $ 0 | $ 0 |
Receivables, net of allowance for doubtful accounts | 0 | 0 | ||
Short-term receivables from affiliates | (73) | (84) | ||
Inventories | 0 | 0 | ||
Prepayments and other current assets | 0 | (2) | ||
Total Current Assets | (73) | (86) | ||
Net Property, Plant and Equipment | 0 | 0 | ||
Investment in Subsidiaries | (8,574) | (6,954) | ||
Long-Term Receivables from Affiliates | (1,653) | (2,427) | ||
Long-Term Intercompany Note Receivable | (1,376) | (1,376) | ||
Other Noncurrent Assets | ||||
Acquired intangibles, net | 0 | 0 | ||
Other, net | 0 | 0 | ||
Total Other Noncurrent Assets, Net | 0 | 0 | ||
Total Assets | (11,676) | (10,843) | ||
Current Liabilities: | ||||
Accounts payable | 0 | 0 | ||
Short-term payables to affiliates | (73) | (84) | ||
Other current liabilities | 0 | (2) | ||
Total Current Liabilities | (73) | (86) | ||
Long-Term Payables to Affiliates | (1,653) | (2,427) | ||
Deferred Income Taxes | 0 | 0 | ||
Other Noncurrent Liabilities | 0 | 0 | ||
Debt, net of unamortized issuance costs | 0 | 0 | ||
Long-Term Intercompany Note Payable | (1,376) | (1,376) | ||
Equity-Tesoro Corporation | (8,574) | (6,954) | ||
Equity-Noncontrolling Interest | 0 | 0 | ||
Total Liabilities and Equity | $ (11,676) | $ (10,843) |
Condensed Consolidating Finan68
Condensed Consolidating Financial Information, Cash Flows (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Cash Flows From (Used In) Operating Activities | ||||
Net cash from (used in) operating activities | $ 1,847 | $ 1,047 | ||
Cash Flows From (Used In) Investing Activities | ||||
Capital expenditures | (773) | (477) | ||
Acquisitions | (6) | (17) | ||
Intercompany notes, net | 0 | 0 | ||
Other investing activities | (4) | 11 | ||
Net cash used in investing activities | (783) | (483) | ||
Cash Flows From (Used In) Financing Activities | ||||
Borrowings under revolving credit agreements | 346 | 295 | ||
Proceeds from debt offering | 0 | 300 | ||
Repayments on revolving credit agreements | (326) | (52) | ||
Repayments of debt | (402) | (433) | ||
Dividend payments | $ (62) | $ (39) | (169) | (104) |
Net proceeds from issuance of Tesoro Logistics LP common units | 71 | 156 | ||
Distributions to noncontrolling interest | (135) | (63) | ||
Purchases of common stock | (494) | (350) | ||
Net intercompany borrowings (repayments) | 0 | 0 | ||
Borrowings from general partner | 0 | |||
Distributions to TLLP unitholders and general partner | 0 | 0 | ||
Other financing activities | 4 | (21) | ||
Net cash used in financing activities | (1,105) | (272) | ||
Increase (Decrease) in Cash And Cash Equivalents | (41) | 292 | ||
Cash and Cash Equivalents, Beginning of Period | 1,000 | 1,238 | ||
Cash and Cash Equivalents, End of Period | 959 | 1,530 | 959 | 1,530 |
Parent | ||||
Cash Flows From (Used In) Operating Activities | ||||
Net cash from (used in) operating activities | (14) | (31) | ||
Cash Flows From (Used In) Investing Activities | ||||
Capital expenditures | 0 | 0 | ||
Acquisitions | 0 | 0 | ||
Intercompany notes, net | 1,075 | 261 | ||
Other investing activities | 0 | 0 | ||
Net cash used in investing activities | 1,075 | 261 | ||
Cash Flows From (Used In) Financing Activities | ||||
Borrowings under revolving credit agreements | 0 | 0 | ||
Proceeds from debt offering | 300 | |||
Repayments on revolving credit agreements | 0 | 0 | ||
Repayments of debt | (398) | (300) | ||
Dividend payments | (169) | (104) | ||
Net proceeds from issuance of Tesoro Logistics LP common units | 0 | 0 | ||
Distributions to noncontrolling interest | 0 | 0 | ||
Purchases of common stock | (494) | (350) | ||
Net intercompany borrowings (repayments) | 0 | 0 | ||
Borrowings from general partner | 243 | |||
Distributions to TLLP unitholders and general partner | 33 | 13 | ||
Other financing activities | (33) | (32) | ||
Net cash used in financing activities | (1,061) | (230) | ||
Increase (Decrease) in Cash And Cash Equivalents | 0 | 0 | ||
Cash and Cash Equivalents, Beginning of Period | 0 | 0 | ||
Cash and Cash Equivalents, End of Period | 0 | 0 | 0 | 0 |
Guarantor Subsidiaries | ||||
Cash Flows From (Used In) Operating Activities | ||||
Net cash from (used in) operating activities | 1,462 | 926 | ||
Cash Flows From (Used In) Investing Activities | ||||
Capital expenditures | (530) | (341) | ||
Acquisitions | 0 | (17) | ||
Intercompany notes, net | 0 | 0 | ||
Other investing activities | (4) | 1 | ||
Net cash used in investing activities | (534) | (357) | ||
Cash Flows From (Used In) Financing Activities | ||||
Borrowings under revolving credit agreements | 0 | 0 | ||
Proceeds from debt offering | 0 | |||
Repayments on revolving credit agreements | 0 | 0 | ||
Repayments of debt | (4) | (2) | ||
Dividend payments | 0 | 0 | ||
Net proceeds from issuance of Tesoro Logistics LP common units | 0 | 0 | ||
Distributions to noncontrolling interest | 0 | 0 | ||
Purchases of common stock | 0 | 0 | ||
Net intercompany borrowings (repayments) | (996) | (324) | ||
Borrowings from general partner | 0 | |||
Distributions to TLLP unitholders and general partner | 18 | 15 | ||
Other financing activities | 37 | 19 | ||
Net cash used in financing activities | (945) | (292) | ||
Increase (Decrease) in Cash And Cash Equivalents | (17) | 277 | ||
Cash and Cash Equivalents, Beginning of Period | 943 | 1,161 | ||
Cash and Cash Equivalents, End of Period | 926 | 1,438 | 926 | 1,438 |
Non- Guarantors | ||||
Cash Flows From (Used In) Operating Activities | ||||
Net cash from (used in) operating activities | 399 | 152 | ||
Cash Flows From (Used In) Investing Activities | ||||
Capital expenditures | (243) | (136) | ||
Acquisitions | (6) | 0 | ||
Intercompany notes, net | 0 | 0 | ||
Other investing activities | 0 | 10 | ||
Net cash used in investing activities | (249) | (126) | ||
Cash Flows From (Used In) Financing Activities | ||||
Borrowings under revolving credit agreements | 346 | 295 | ||
Proceeds from debt offering | 0 | |||
Repayments on revolving credit agreements | (326) | (52) | ||
Repayments of debt | 0 | (131) | ||
Dividend payments | 0 | 0 | ||
Net proceeds from issuance of Tesoro Logistics LP common units | 71 | 156 | ||
Distributions to noncontrolling interest | (135) | (63) | ||
Purchases of common stock | 0 | 0 | ||
Net intercompany borrowings (repayments) | (79) | 63 | ||
Borrowings from general partner | (243) | |||
Distributions to TLLP unitholders and general partner | (51) | (28) | ||
Other financing activities | 0 | (8) | ||
Net cash used in financing activities | (174) | (11) | ||
Increase (Decrease) in Cash And Cash Equivalents | (24) | 15 | ||
Cash and Cash Equivalents, Beginning of Period | 57 | 77 | ||
Cash and Cash Equivalents, End of Period | 33 | 92 | 33 | 92 |
Consolidating Adjustments | ||||
Cash Flows From (Used In) Operating Activities | ||||
Net cash from (used in) operating activities | 0 | 0 | ||
Cash Flows From (Used In) Investing Activities | ||||
Capital expenditures | 0 | 0 | ||
Acquisitions | 0 | 0 | ||
Intercompany notes, net | (1,075) | (261) | ||
Other investing activities | 0 | 0 | ||
Net cash used in investing activities | (1,075) | (261) | ||
Cash Flows From (Used In) Financing Activities | ||||
Borrowings under revolving credit agreements | 0 | 0 | ||
Proceeds from debt offering | 0 | |||
Repayments on revolving credit agreements | 0 | 0 | ||
Repayments of debt | 0 | 0 | ||
Dividend payments | 0 | 0 | ||
Net proceeds from issuance of Tesoro Logistics LP common units | 0 | 0 | ||
Distributions to noncontrolling interest | 0 | 0 | ||
Purchases of common stock | 0 | 0 | ||
Net intercompany borrowings (repayments) | 1,075 | 261 | ||
Borrowings from general partner | 0 | |||
Distributions to TLLP unitholders and general partner | 0 | 0 | ||
Other financing activities | 0 | 0 | ||
Net cash used in financing activities | 1,075 | 261 | ||
Increase (Decrease) in Cash And Cash Equivalents | 0 | 0 | ||
Cash and Cash Equivalents, Beginning of Period | 0 | 0 | ||
Cash and Cash Equivalents, End of Period | $ 0 | $ 0 | $ 0 | $ 0 |