UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: June 30, 2016



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 333-186007

Commission File Number: 333-186007-07

PBF HOLDING COMPANY LLC

PBF FINANCE CORPORATION

(Exact name of registrant as specified in its charter)



DELAWARE DELAWARE		27-2198168 45-2685067
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

One Sylvan Way, Second Floor Parsippany, New Jersey		07054
(Address of principal executive offices)		(Zip Code)

(973) 455-7500

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.



PBF Holding Company LLC	o Yes x No
PBF Finance Corporation	o Yes x No

(Note: As of January 1, 2014, each registrant was no longer subject to the filing requirements of Section 13 or 15(d) of the Exchange Act; however, each registrant filed all reports required to be filed during the period it was subject to Section 13 or 15(d) of the Exchange Act.)

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).



PBF Holding Company LLC	x Yes o No
PBF Finance Corporation	x Yes o No

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



	Large accelerated filer	Accelerated filer	Non-accelerated filer (Do not check if a smaller reporting company)	Smaller reporting company
PBF Holding Company LLC	¨	¨	x	¨
PBF Finance Corporation	o	o	x	o

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



PBF Holding Company LLC	¨ Yes x No
PBF Finance Corporation	o Yes x No

PBF Holding Company LLC has no common stock outstanding. As of August 12, 2016, 100% of the membership interests of PBF Holding Company LLC were owned by PBF Energy Company LLC, and PBF Finance Corporation had 100 shares of common stock outstanding, all of which were held by PBF Holding Company LLC.

PBF Finance Corporation meets the conditions set forth in General Instruction (H)(1)(a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format.

PBF HOLDING COMPANY LLC

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2016

TABLE OF CONTENTS



CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS			3

PART I – FINANCIAL INFORMATION

	ITEM 1.	Financial Statements (Unaudited)
		Condensed Consolidated Balance Sheets as of June 30, 2016 and December 31, 2015	5
		Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2016 and 2015	6
		Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2016 and 2015	7
		Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2016 and 2015	8
		Notes to Condensed Consolidated Financial Statements	9
	ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
	ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	55
	ITEM 4.	Controls and Procedures	57

PART II – OTHER INFORMATION

	ITEM 1.	Legal Proceedings	58
	ITEM 1A.	Risk Factors	58
	ITEM 6.	Exhibits	60
SIGNATURES			61

This Quarterly Report on Form 10-Q is filed by PBF Holding Company LLC ("PBF Holding") and PBF Finance Corporation ("PBF Finance"). PBF Holding is a wholly-owned subsidiary of PBF Energy Company LLC ("PBF LLC") and is the parent company for PBF LLC's refinery operating subsidiaries. PBF Finance is a wholly-owned subsidiary of PBF Holding. PBF Holding is an indirect subsidiary of PBF Energy Inc. ("PBF Energy"), which is the sole managing member of, and owner of an equity interest representing approximately 95.2% of the outstanding economic interests in, PBF LLC as of June 30, 2016. PBF Energy operates and controls all of the business and affairs and consolidates the financial results of PBF LLC and its subsidiaries. PBF Holding, together with its consolidated subsidiaries, owns and operates oil refineries and related facilities in North America.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains certain "forward-looking statements", as defined in the Private Securities Litigation Reform Act of 1995, of expected future developments that involve risks and uncertainties. You can identify forward-looking statements because they contain words such as "believes," "expects," "may," "should," "seeks," "approximately," "intends," "plans," "estimates," or "anticipates" or similar expressions that relate to our strategy, plans or intentions. All statements we make relating to our estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates and financial results or to our expectations regarding future industry trends are forward-looking statements. In addition, we, through our senior management, from time to time make forward-looking public statements concerning our expected future operations and performance and other developments. These forward-looking statements are subject to risks and uncertainties that may change at any time, and, therefore, our actual results may differ materially from those that we expected. We derive many of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and, of course, it is impossible for us to anticipate all factors that could affect our actual results.

Important factors that could cause actual results to differ materially from our expectations, which we refer to as "cautionary statements," are disclosed under "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this Form 10-Q and the Annual Report on Form 10-K for the year ended December 31, 2015 of PBF Holding Company LLC and PBF Finance Corporation, which we refer to as our 2015 Annual Report on Form 10-K, and in our other filings with the SEC. All forward-looking information in this Quarterly Report on Form 10-Q and subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements. Some of the factors that we believe could affect our results include:

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

• the effects of competition in our markets;

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

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

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

•our substantial indebtedness;

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

•termination of our A&R Intermediation Agreements with J. Aron could have a material adverse effect on our liquidity, as we would be required to finance our intermediate and refined products inventory covered by the agreements. Additionally, we are obligated to repurchase from J. Aron certain intermediates and finished products located at the Paulsboro and Delaware City refineries’ storage tanks upon termination of these agreements;

•restrictive covenants in our indebtedness that may adversely affect our operational flexibility or ability to make distributions;

•our assumptions regarding payments arising under PBF Energy's tax receivable agreement and other arrangements relating to PBF Energy;

•our expectations and timing with respect to our acquisition activity;

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

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

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

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

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

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

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

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

•our ability to complete the successful integration of the completed acquisitions of Chalmette Refining, L.L.C. and related logistic assets (collectively, the "Chalmette Acquisition") and the Torrance refinery and related logistics assets (collectively, the "Torrance Acquisition") into our business and to realize the benefits from such acquisitions;

•liabilities arising from the Chalmette Acquisition and/or Torrance Acquisition that are unforeseen or exceed our expectations; and

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

We caution you that the foregoing list of important factors may not contain all of the material factors that are important to you. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this Quarterly Report on Form 10-Q may not in fact occur. Accordingly, investors should not place undue reliance on those statements.

Our forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by applicable law, including the securities laws of the United States, we do not intend to update or revise any forward-looking statements. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

PBF HOLDING COMPANY LLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands)



	June 30, 2016			December 31, 2015
ASSETS
Current assets:
Cash and cash equivalents	$	1,310,230		$	914,749
Accounts receivable	645,404			454,759
Accounts receivable - affiliate	3,850			3,438
Inventories	1,308,536			1,174,272
Prepaid expense and other current assets	50,123			33,701
Total current assets	3,318,143			2,580,919

Property, plant and equipment, net	2,262,027			2,211,090
Deferred charges and other assets, net	370,429			290,713
Total assets	$	5,950,599		$	5,082,722

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	373,485		$	314,843
Accounts payable - affiliate	21,904			23,949
Accrued expenses	1,303,771			1,117,435
Deferred tax liabilities	26,888			—
Deferred revenue	7,810			4,043
Total current liabilities	1,733,858			1,460,270

Delaware Economic Development Authority loan	4,000			4,000
Long-term debt	1,788,870			1,236,720
Affiliate notes payable	470,165			470,047
Deferred tax liabilities	25,721			20,577
Other long-term liabilities	78,564			69,824
Total liabilities	4,101,178			3,261,438

Commitments and contingencies (Note 9)

Equity:
Member's equity	1,489,892			1,479,175
Retained earnings	370,616			349,654
Accumulated other comprehensive loss	(23,733		)	(24,770		)
Total PBF Holding Company LLC equity	1,836,775			1,804,059
Noncontrolling interest	12,646			17,225
Total equity	1,849,421			1,821,284
Total liabilities and equity	$	5,950,599		$	5,082,722

See notes to condensed consolidated financial statements.

PBF HOLDING COMPANY LLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands)



	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Revenues	$	3,855,773		$	3,550,664		$	6,655,958		$	6,545,800

Costs and expenses:
Cost of sales, excluding depreciation	3,284,748			3,026,975			5,730,731			5,556,015
Operating expenses, excluding depreciation	271,539			192,150			568,178			425,527
General and administrative expenses	38,091			35,783			71,360			68,313
Loss (gain) on sale of assets	3,222			(632		)	3,222			(991		)
Depreciation and amortization expense	48,919			47,015			103,212			93,274
	3,646,519			3,301,291			6,476,703			6,142,138

Income from operations	209,254			249,373			179,255			403,662

Other (expenses) income
Change in fair value of catalyst leases	(1,748		)	1,949			(4,633		)	3,988
Interest expense, net	(31,279		)	(22,955		)	(64,550		)	(44,027		)
Income before income taxes	176,227			228,367			110,072			363,623
Income tax (benefit) expense	(5,277		)	—			26,996			—
Net income	181,504			228,367			83,076			363,623
Less: net income attributable to noncontrolling interests	90			—			393			—
Net income attributable to PBF Holding Company LLC	$	181,414		$	228,367		$	82,683		$	363,623

See notes to condensed consolidated financial statements.

PBF HOLDING COMPANY LLC

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited, in thousands)



	Three Months Ended June 30,					Six Months Ended June 30,
	2016		2015			2016		2015
Net income	$	181,504	$	228,367		$	83,076	$	363,623
Other comprehensive income:
Unrealized gain (loss) on available for sale securities	99		(75		)	405		(4		)
Net gain on pension and other postretirement benefits	316		400			632		800
Total other comprehensive income	415		325			1,037		796
Comprehensive income	181,919		228,692			84,113		364,419
Less: comprehensive income attributable to noncontrolling interests	90		—			393		—
Comprehensive income attributable to PBF Holding Company LLC	$	181,829	$	228,692		$	83,720	$	364,419

See notes to condensed consolidated financial statements.

PBF HOLDING COMPANY LLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)



	Six Months Ended June 30,
	2016			2015
Cash flows from operating activities:
Net income	$	83,076		$	363,623
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization	107,945			97,378
Stock-based compensation	9,999			3,781
Change in fair value of catalyst lease obligations	4,633			(3,988		)
Deferred income taxes	27,060			—
Change in non-cash lower of cost or market inventory adjustment	(216,843		)	(127,166		)
Non-cash change in inventory repurchase obligations	26,172			89,203
Pension and other post retirement benefit costs	15,355			12,893
Loss (gain) on sale of assets	3,222			(991		)

Changes in operating assets and liabilities:
Accounts receivable	(190,645		)	11,042
Due to/from affiliates	(2,457		)	10,095
Inventories	82,579			(84,619		)
Prepaid expense and other current assets	(16,422		)	3,874
Accounts payable	58,642			18,534
Accrued expenses	164,247			(99,392		)
Deferred revenue	3,767			5,991
Other assets and liabilities	(12,522		)	(4,954		)
Net cash provided by operations	147,808			295,304

Cash flows from investing activities:
Expenditures for property, plant and equipment	(110,035		)	(224,046		)
Expenditures for deferred turnaround costs	(106,649		)	(22,918		)
Expenditures for other assets	(21,325		)	(5,424		)
Chalmette Acquisition working capital settlement	(2,659		)	—
Proceeds from sale of assets	6,860			138,131
Net cash used in investing activities	(233,808		)	(114,257		)

Cash flows from financing activities:
Distributions to members	(61,667		)	—
Proceeds from affiliate notes payable	635			30,000
Repayment of affiliate notes payable	(517		)	—
Proceeds from Rail Facility revolver borrowings	—			70,750
Repayments of Rail Facility revolver borrowings	(6,970		)	(64,626		)
Proceeds from revolver borrowings	550,000			—
Net cash provided by financing activities	481,481			36,124

Net increase in cash and cash equivalents	395,481			217,171
Cash and cash equivalents, beginning of period	914,749			218,403
Cash and cash equivalents, end of period	$	1,310,230		$	435,574

Supplemental cash flow disclosures
Non-cash activities:
Accrued distributions	$	—		$	146,585
Distribution of assets to PBF Energy Company LLC	—			15,975
Accrued construction in progress and unpaid fixed assets	8,149			21,367

See notes to condensed consolidated financial statements.

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

1. DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION

Description of the Business

PBF Holding Company LLC ("PBF Holding" or the "Company"), a Delaware limited liability company, together with its consolidated subsidiaries, owns and operates oil refineries and related facilities in North America. PBF Holding is a wholly-owned subsidiary of PBF Energy Company LLC ("PBF LLC"). PBF Energy Inc. ("PBF Energy") is the sole managing member of, and owner of an equity interest representing approximately 95.2% of the outstanding economic interest in, PBF LLC as of June 30, 2016. PBF Finance Corporation ("PBF Finance") is a wholly-owned subsidiary of PBF Holding. Delaware City Refining Company LLC ("Delaware City Refining" or "DCR"), PBF Power Marketing LLC, PBF Energy Limited, Paulsboro Refining Company LLC ("Paulsboro Refining"), Paulsboro Natural Gas Pipeline Company LLC, Toledo Refining Company LLC ("Toledo Refining" or "TRC"), Chalmette Refining, L.L.C. ("Chalmette Refining") and MOEM Pipeline LLC are PBF LLC's principal operating subsidiaries and are all wholly-owned subsidiaries of PBF Holding. In addition, PBF LLC, through Chalmette Refining, holds an 80% interest in and consolidates Collins Pipeline Company and T&M Terminal Company. Collectively, PBF Holding and its consolidated subsidiaries are referred to hereinafter as the "Company".

On May 14, 2014, PBF Logistics LP ("PBFX"), a Delaware master limited partnership, completed its initial public offering (the "PBFX Offering") of 15,812,500 common units. Subsequent to the PBFX Offering, PBF Holding and PBF LLC entered into a series of drop-down transactions with PBFX.

During 2014, PBF Holding distributed to PBF LLC all of the equity interests of certain of its wholly-owned subsidiaries, whose assets consist of a heavy crude oil rail unloading facility (also, capable of unloading light crude oil) at the Delaware City refinery (the "DCR West Rack") and a tank farm and related facilities located at our Toledo refinery, including a propane storage and loading facility (the "Toledo Storage Facility"), which were subsequently acquired by PBFX. In addition, on May 14, 2015, PBF Holding distributed to PBF LLC, which subsequently contributed to PBFX, all of the issued and outstanding limited liability company interests of Delaware Pipeline Company LLC and Delaware City Logistics Company LLC, whose assets consist of a product pipeline, truck rack and related facilities located at our Delaware City refinery (collectively referred to as the “Delaware City Products Pipeline and Truck Rack”). Refer to Note 8 "Related Party Transactions" of our Notes to Condensed Consolidated Financial Statements for further information on agreements entered into with PBFX. Substantially all of the Company’s operations are in the United States. As of June 30, 2016, the Company’s four oil refineries are all engaged in the refining of crude oil and other feedstocks into petroleum products, and have been aggregated to form one reportable segment. To generate earnings and cash flows from operations, the Company is primarily dependent upon processing crude oil and selling refined petroleum products at margins sufficient to cover fixed and variable costs and other expenses. Crude oil and refined petroleum products are commodities; and factors largely out of the Company’s control can cause prices to vary over time. The potential margin volatility can have a material effect on the Company’s financial position, earnings and cash flow.

Basis of Presentation

The unaudited condensed consolidated financial information furnished herein reflects all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, considered necessary for a fair presentation of the financial position and the results of operations and cash flows of the Company for the periods presented. All intercompany accounts and transactions have been eliminated in consolidation. These unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. These interim condensed consolidated financial statements should be read in conjunction with the financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2015 of PBF Holding Company LLC and PBF Finance Corporation. The results of operations for the three and six months ended June 30, 2016 are not necessarily indicative of the results to be expected for the full year.

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Noncontrolling Interest

Subsequent to the Chalmette Acquisition (as defined below), PBF Holding recorded noncontrolling interest in two subsidiaries of Chalmette refinery. PBF Holding, through Chalmette Refining, owns an 80% ownership interest in both Collins Pipeline Company and T&M Terminal Company. The Company recorded aggregate earnings related to the noncontrolling interest in these subsidiaries of $90 and $393 for the three and six months ended June 30, 2016, respectively.

Prior Period Correction

During the quarter ended March 31, 2016, the Company recorded an out-of-period adjustment increasing deferred income tax liabilities and income tax expense by $30,481 as described in Note 6, Income Taxes. The Company has considered existing guidance in evaluating whether a restatement of prior financial statements is required as a result of these misstatements. The Company has quantitatively and qualitatively assessed the materiality of the errors and concluded that this correction did not have a material impact on the financial statements as of and for the three months ended March 31, 2016 nor as of and for the six months ended June 30, 2016 and the errors were not material to the prior period financial statements, and accordingly, the Company has not restated any prior period amounts.

Recently Adopted Accounting Guidance

Effective January 1, 2016, the Company adopted Accounting Standard Update ("ASU") No. 2015-02, "Consolidation (Topic 810): Amendments to the Consolidation Analysis" ("ASU 2015-02"), which changed existing consolidation requirements associated with the analysis a reporting entity must perform to determine whether it should consolidate certain types of legal entities, including limited partnerships and variable interest entities. The Company’s adoption of this guidance did not impact our consolidated financial statements.

Effective January 1, 2016, the Company adopted ASU No. 2015-16, "Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments" ("ASU 2015-16"), which requires (i) that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined, (ii) that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date, (iii) that an entity 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. The adoption of this guidance did not materially affect any of the Company's financial statements or related disclosures.

Recent Accounting Pronouncements

In August 2015, the Financial Accounting Standards Board ("FASB") issued ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date” (“ASU 2015-14”), which defers the effective date of ASU 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”) for all entities by one year. The guidance in ASU 2014-09 will replace most existing revenue recognition guidance in GAAP when it becomes effective. Under ASU 2015-14, this guidance becomes effective for interim and annual periods beginning after December 15, 2017 and permits the use of either the retrospective or cumulative effect transition method. Under ASU 2015-14, early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently evaluating the impact of this new standard on its consolidated financial statements and related disclosures.

In November 2015, the FASB issued ASU No. 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes” (“ASU 2015-17”), which requires deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. Under ASU 2015-17, this guidance becomes effective for annual periods beginning after December 15, 2016 and interim periods within annual periods beginning after December 15, 2016 and interim periods within those years with early adoption permitted as of the beginning of an annual or

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

interim period after the issuance of the ASU. The Company is currently evaluating the impact of this new standard on its consolidated financial statements and related disclosures.

In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”), which amends how entities measure equity investments that do not result in consolidation and are not accounted for under the equity method and how they present changes in the fair value of financial liabilities measured under the fair value option that are attributable to their own credit. ASU 2016-01 also changes certain disclosure requirements and other aspects of current GAAP but does not change the guidance for classifying and measuring investments in debt securities and loans. Under ASU 2016-01, this guidance becomes effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted in certain circumstances. The Company is currently evaluating the impact of this new standard on its consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), to increase the transparency and comparability about leases among entities. The new guidance requires lessees to recognize a lease liability and a corresponding lease asset for virtually all lease contracts. It also requires additional disclosures about leasing arrangements. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018, and requires a modified retrospective approach to adoption. Early adoption is permitted. The Company is currently evaluating the impact of this new standard on its consolidated financial statements and related disclosures.

In March 2016, the FASB issued ASU No. 2016-06, “Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments No. 2016-06 March 2016 a consensus of the FASB Emerging Issues Task Force” (“ASU 2016-06”), to increase consistency in practice in applying guidance on determining if an embedded derivative is clearly and closely related to the economic characteristics of the host contract, specifically for assessing whether call (put) options that can accelerate the repayment of principal on a debt instrument meet the clearly and closely related criterion. The guidance in ASU 2016-06 applies to all entities that are issuers of or investors in debt instruments (or hybrid financial instruments that are determined to have a debt host) with embedded call (put) options. ASU 2016-06 is effective for interim and annual periods beginning after December 15, 2016, and requires a modified retrospective approach to adoption. Early adoption is permitted. The Company is currently evaluating the impact of this new standard on its consolidated financial statements and related disclosures.

In March 2016, the FASB issued ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”) which is intended to simplify certain aspects of the accounting for share-based payments to employees. The guidance in ASU 2016-09 requires all income tax effects of awards to be recognized in the income statement when the awards vest or are settled rather than recording excess tax benefits or deficiencies in additional paid-in capital. The guidance in ASU 2016-09 also allows an employer to repurchase more of an employee’s shares than it can today for tax withholding purposes without triggering liability accounting and to make a policy election to account for forfeitures as they occur. ASU 2016-09 also contains additional guidance for nonpublic entities that do not apply to the Company. ASU 2016-09 is effective for interim and annual periods beginning after December 15, 2016, and requires a modified retrospective approach to adoption. Early adoption is permitted. The Company is currently evaluating the impact of this new standard on its consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”) which requires credit losses on available-for-sale debt securities to be presented as an allowance rather than as a write-down. This approach is an improvement to current GAAP because an entity will be able to record reversals of credit losses (in situations in which the estimate of credit losses declines) in current period net income, which in turn should align the income statement recognition of credit losses with the reporting period in which changes occur. Current GAAP prohibits reflecting those improvements in current period earnings. ASU 2016-13 is effective for interim and annual periods beginning after December 15, 2019, and requires a modified retrospective approach to adoption. Early adoption is permitted for

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

interim and annual periods beginning after December 15, 2018. The Company is currently evaluating the impact of this new standard on its consolidated financial statements and related disclosures.

2. ACQUISITIONS

Chalmette Acquisition

On November 1, 2015, the Company acquired from ExxonMobil, Mobil Pipe Line Company and PDV Chalmette, L.L.C., 100% of the ownership interests of Chalmette Refining, which owns the Chalmette refinery and related logistics assets (collectively, the “Chalmette Acquisition”). The Chalmette refinery, located outside of New Orleans, Louisiana, is a dual-train coking refinery and is capable of processing both light and heavy crude oil. Subsequent to the closing of the Chalmette Acquisition, Chalmette Refining is a wholly-owned subsidiary of PBF Holding. Chalmette Refining is strategically positioned on the Gulf Coast with logistics connectivity that offers flexible raw material sourcing and product distribution opportunities, including the potential to export products and provides geographic diversification into PADD 3.

Chalmette Refining owns 100% of the MOEM Pipeline, providing access to the Empire Terminal, as well as the CAM Connection Pipeline, providing access to the Louisiana Offshore Oil Port facility through a third party pipeline. Chalmette Refining also owns 80% of each of the Collins Pipeline Company and T&M Terminal Company, both located in Collins, Mississippi, which provide a clean products outlet for the refinery to the Plantation and Colonial Pipelines. Also included in the acquisition are a marine terminal capable of importing waterborne feedstocks and loading or unloading finished products; a clean products truck rack which provides access to local markets; and a crude and product storage facility.

The aggregate purchase price for the Chalmette Acquisition was $322,000 in cash, plus inventory and final working capital of $245,963. As described below, the valuation of the working capital was finalized in the first quarter of 2016. The transaction was financed through a combination of cash on hand and borrowings under the Company’s asset based revolving credit agreement (the "Revolving Loan").

The Company accounted for the Chalmette Acquisition as a business combination under GAAP whereby we recognize assets acquired and liabilities assumed in an acquisition at their estimated fair values as of the date of acquisition. Any excess consideration transferred over the estimated fair values of the identifiable net assets acquired is recorded as goodwill. The final purchase price and fair value allocation were completed as of March 31, 2016. During the measurement period, which ended in March 2016, adjustments were made to the Company's preliminary fair value estimates related primarily to inventories and accounts payable.

The following table summarizes the final amounts recognized for assets acquired and liabilities assumed as of the acquisition date. The total purchase consideration and the fair values of the assets and liabilities at the acquisition date were as follows:



	Purchase Price
Net cash	$	587,005
Cash acquired	(19,042		)
Total consideration	$	567,963

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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



	Fair Value Allocation
Accounts receivable	$	1,126
Inventories	271,434
Prepaid expenses and other current assets	913
Property, plant and equipment	356,961
Deferred charges and other assets	8,312
Accounts payable	(4,870		)
Accrued expenses	(28,371		)
Deferred tax liability	(25,721		)
Noncontrolling interests	(11,821		)
Fair value of net assets acquired	$	567,963

In addition, in connection with the acquisition of Chalmette Refining, the Company acquired Collins Pipeline Company and T&M Terminal Company, which are both C-corporations for tax purposes. As a result, the Company recognized a deferred tax liability of $25,721 attributable to the book and tax basis difference in the C-corporation assets, which had a corresponding impact on noncontrolling interests of $5,144.

The Company’s consolidated financial statements for the three and six months ended June 30, 2016 include the results of operations of the Chalmette refinery whereas the same periods in 2015 do not include the results of operations of the Chalmette refinery. On an unaudited pro forma basis, the revenues and net income of the Company assuming the acquisition had occurred on January 1, 2014, are shown below. The unaudited pro forma information does not purport to present what the Company’s actual results would have been had the acquisition occurred on January 1, 2014, nor is the financial information indicative of the results of future operations. The unaudited pro forma financial information includes the depreciation and amortization expense related to the acquisition and interest expense associated with the financing of the Chalmette Acquisition.



(Unaudited)	Six Months Ended June 30, 2015
Pro forma revenues	$	8,831,441
Pro forma net income attributable to PBF Holding Company LLC	$	435,593

The unaudited amount of revenues and net income above have been calculated after conforming Chalmette Refining's accounting policies to those of the Company and certain one-time adjustments.

Acquisition Expenses

The Company incurred acquisition related costs consisting primarily of consulting and legal expenses related to the Chalmette Acquisition, the Torrance Acquisition (as defined in "Note 13 - Subsequent Events"), and other pending and non-consummated acquisitions of $2,410 and $7,134 in the three and six months ended June 30, 2016, respectively. In the three and six months ended June 30, 2015, the Company incurred acquisition related costs of $129 and $679 respectively. These costs are included in the condensed consolidated statement of operations in General and administrative expenses.

Cash Held for Torrance Acquisition

At June 30, 2016, the Company's Cash and cash equivalents included $998,542 that was held to fund the Torrance Acquisition that closed on July 1, 2016.

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

3. INVENTORIES

Inventories consisted of the following:



June 30, 2016
	Titled Inventory			Inventory Supply and Intermediation Arrangements			Total
Crude oil and feedstocks	$	1,034,615		$	—		$	1,034,615
Refined products and blendstocks	739,813			371,013			1,110,826
Warehouse stock and other	63,588			—			63,588
	$	1,838,016		$	371,013		$	2,209,029
Lower of cost or market reserve	(765,620		)	(134,873		)	(900,493		)
Total inventories	$	1,072,396		$	236,140		$	1,308,536



December 31, 2015
	Titled Inventory			Inventory Supply and Intermediation Arrangements			Total
Crude oil and feedstocks	$	1,137,605		$	—		$	1,137,605
Refined products and blendstocks	687,389			411,357			1,098,746
Warehouse stock and other	55,257			—			55,257
	$	1,880,251		$	411,357		$	2,291,608
Lower of cost or market reserve	(966,564		)	(150,772		)	(1,117,336		)
Total inventories	$	913,687		$	260,585		$	1,174,272

Inventory under inventory supply and intermediation arrangements included certain crude oil stored at the Company’s Delaware City refinery's storage facilities that the Company was obligated to purchase as it was consumed in connection with its Crude Supply Agreement that expired on December 31, 2015; and light finished products sold to counterparties in connection with the A&R Intermediation Agreements and stored in the Paulsboro and Delaware City refineries' storage facilities.

Due to the lower crude oil and refined product pricing environment beginning at the end of 2014 and continuing throughout 2015 and into 2016, the Company recorded adjustments to value its inventories to the lower of cost or market. During the three months ended June 30, 2016, the Company recorded an adjustment to value its inventories to the lower of cost or market which increased both operating income and net income by $157,780 reflecting the net change in the lower of cost or market inventory reserve from $1,058,273 at March 31, 2016 to $900,493 at June 30, 2016. During the six months ended June 30, 2016, the Company recorded an adjustment to value its inventories to the lower of cost or market which increased operating income and net income by $216,843 reflecting the net change in the lower of cost or market inventory reserve from $1,117,336 at December 31, 2015 to $900,493 at June 30, 2016.

During the three months ended June 30, 2015, the Company recorded an adjustment to value its inventories to the lower of cost or market which increased operating income and net income by $105,958 reflecting the net change in the lower of cost or market inventory reserve from $668,902 at March 31, 2015 to $562,944 at June 30, 2015. During the six months ended June 30, 2015 the Company recorded an adjustment to value its inventories to the lower of cost or market which increased both operating income and net income by $127,166 reflecting the net

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

change in the lower of cost or market inventory reserve from $690,110 at December 31, 2014 to $562,944 at June 30, 2015.

4. DEFERRED CHARGES AND OTHER ASSETS, NET

Deferred charges and other assets, net consisted of the following:



	June 30, 2016		December 31, 2015
Deferred turnaround costs, net	$	232,501	$	177,236
Catalyst, net	90,444		77,725
Linefill	13,504		13,504
Restricted cash	1,500		1,500
Intangible assets, net	199		219
Other	32,281		20,529
Total deferred charges and other assets, net	$	370,429	$	290,713

5. ACCRUED EXPENSES

Accrued expenses consisted of the following:



	June 30, 2016		December 31, 2015
Inventory-related accruals	$	764,093	$	548,800
Inventory supply and intermediation arrangements	248,345		252,380
Accrued transportation costs	78,236		91,546
Excise and sales tax payable	47,577		34,129
Renewable energy credit obligations	42,753		19,472
Accrued interest	30,701		22,313
Accrued utilities	20,546		25,192
Customer deposits	19,654		20,395
Accrued salaries and benefits	15,604		61,011
Accrued construction in progress	7,200		7,400
Other	29,062		34,797
Total accrued expenses	$	1,303,771	$	1,117,435

The Company has the obligation to repurchase certain intermediates and finished products that are held in the Company’s refinery storage tanks at the Delaware City and Paulsboro refineries in accordance with the A&R Intermediation Agreements with J. Aron & Company, a subsidiary of The Goldman Sachs Group, Inc. ("J. Aron"). As of June 30, 2016 and December 31, 2015, a liability is recognized for the Inventory supply and intermediation arrangements and is recorded at market price for the J. Aron owned inventory held in the Company's storage tanks under the A&R Inventory Intermediation Agreements, with any change in the market price being recorded in cost of sales.

The Company is subject to obligations to purchase Renewable Identification Numbers ("RINs") required to comply with the Renewable Fuels Standard. The Company's overall RINs obligation is based on a percentage of domestic shipments of on-road fuels as established by the Environmental Protection Agency ("EPA"). To the degree the Company is unable to blend the required amount of biofuels to satisfy its RINs obligation, RINs must be purchased

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

on the open market to avoid penalties and fines. The Company records its RINs obligation on a net basis in Accrued expenses when its RINs liability is greater than the amount of RINs earned and purchased in a given period and in Prepaid expenses and other current assets when the amount of RINs earned and purchased is greater than the RINs liability.

6. INCOME TAXES

PBF Holding is a limited liability company treated as a "flow-through" entity for income tax purposes. Accordingly, there is generally no benefit or provision for federal or state income tax in the PBF Holding financial statements apart from the income tax attributable to two subsidiaries acquired in connection with the acquisition of Chalmette Refining in the fourth quarter of 2015 and its wholly-owned Canadian subsidiary, PBF Energy Limited ("PBF Ltd."). The two subsidiaries acquired in connection with the Chalmette Acquisition are treated as C-Corporations for income tax purposes.

The two acquired subsidiaries incurred $366 and $1,164 of current income tax expense for the three and six months ended June 30, 2016, respectively. For the three months ended June 30, 2016, PBF Holding incurred a current tax benefit and deferred tax benefit in its income statement of $67 and $5,576, respectively, attributable to PBF Ltd. For the six months ended June 30, 2016, PBF Holding incurred a current tax benefit and deferred tax expense in its income statement of $79 and $25,911, respectively, attributable to PBF Ltd. During the preparation of the financial statements for the first quarter of 2016, management determined that the deferred income tax liabilities for PBF Ltd. were understated for prior periods. As of and for the three months ended March 31, 2016, the Company incurred $30,602 of deferred tax expense and $121 of current tax expense relating to a correction of prior periods which increased the recorded deferred and current tax liabilities by $30,602 and $121, respectively. This correction of prior periods did not impact the results for the second quarter of 2016.

7. AFFILIATE NOTES PAYABLE

As of June 30, 2016, PBF Holding had outstanding notes payable with PBF Energy and PBF LLC for an aggregate principal amount of $470,165 ($470,047 as of December 31, 2015). The notes have an interest rate of 2.5% and a five year term but may be prepaid in whole or in part at any time, at the option of PBF Holding, without penalty or premium.

8. RELATED PARTY TRANSACTIONS

Commercial Agreements

PBF Holding entered into long-term, fee-based commercial agreements with PBFX. Under these agreements, PBFX provides various rail and truck terminaling and storage services to PBF Holding and PBF Holding has committed to provide PBFX with minimum fees based on minimum monthly throughput volumes. The fees under each of these agreements are indexed for inflation and any increase in operating costs for providing such services to the Company. Prior to the PBFX Offering, the DCR Rail Terminal, Toledo Truck Terminal, the DCR West Rack and the Toledo Storage Facility and other assets contributed to PBFX subsequent to the PBFX Offering were owned, operated and maintained by PBF Holding. Therefore, PBF Holding did not previously pay a fee for the utilization of the facilities.

On April 29, 2016, PBFX closed on the purchase of four refined product terminals located in the greater Philadelphia region (the "East Coast Terminals") from an affiliate of Plains All American Pipeline, L.P. (the "PBFX Plains Asset Purchase"). In connection with the PBFX Plains Asset Purchase, PBFX assumed certain commercial agreements that Plains All American Pipeline, L.P. had previously entered into with PBF Holding and subsequent to the PBFX Plains Asset Purchase on April 29, 2016, PBF Holding entered into additional commercial agreements with PBFX related to the East Coast Terminals. These agreements have initial terms ranging from approximately three months to one year and include:

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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


•	tank lease agreements, under which PBFX provides tank lease services to PBF Holding at the East Coast Terminals, with fees ranging from $0.45 to $0.55 per barrel received into the tank, up to 448,000 barrels, and $0.30 to $0.351 for all additional barrels received in excess of that amount. Additionally, the lease agreements include ancillary fees for tank to tank transfers; and


•	terminaling service agreements, under which PBFX provides terminaling and other services to PBF Holding at the East Coast Terminals, with fees ranging from $0.10 to $1.25 per barrel based on services provided, with additional flat rate fees for certain unloading/loading activities at the terminal.

The tank lease agreements contain minimum requirements for the amount of leased tank capacity contracted by PBF Holding. Additionally, the fees under each commercial agreement are indexed for inflation based on the changes in the U.S Consumer Price Index for All Urban Consumers (the “CPI-U”). Each of these commercial agreements also include automatic renewal options ranging from three months to one year terms, unless written notice is provided by either PBFX or PBF Holding thirty days prior to the end of the previous term.

Below is a summary of the commercial agreements entered into during the years ended December 31, 2015 and 2014 with PBFX having initial terms ranging from seven to ten years and corresponding fees for the use of each of the assets (no such agreements were entered into in the six months ended June 30, 2016 other than in connection with the PBFX Plains Asset Purchase). Each of these commercial agreements contains minimum volume commitments. The fees under each commercial agreement are indexed for inflation and the agreements give PBF Holding the option to renew for two additional five year terms following the expiration of the initial term.

•

A rail terminaling services agreement with PBFX with an initial term of approximately seven years, under which PBFX provides terminaling services at the DCR Rail Terminal (the "DCR Terminaling Agreement"). Pursuant to the DCR Terminaling Agreement, and based on the change in the U.S. Producer Price Index (the “PPI”), effective January 1, 2016, the terminaling service fee was decreased to $2.014 per barrel up to the minimum throughput commitment and $0.503 per barrel for volumes that exceed the minimum throughput commitment;

•

A truck unloading and terminaling services agreement with PBFX, with an initial term of approximately seven years, under which PBFX provides terminaling services at the Toledo Truck Terminal (the "Toledo Terminaling Agreement"). Pursuant to the Toledo Terminaling Agreement, and based on the change in the PPI, effective January 1, 2016, the terminaling service fee was decreased to $1.007 per barrel;


•	A terminaling services agreement, with an initial term of approximately seven years, under which PBFX provides rail terminaling services to PBF Holding at the DCR West Rack (the "West Ladder Rack Terminaling Agreement");

•

A storage and terminaling services agreement, with an initial term of ten years, under which PBFX provides storage and terminaling services to PBF Holding at the Toledo Storage Facility (the "Toledo Storage Facility Storage and Terminaling Agreement"). Additionally, the Toledo Storage Facility Storage and Terminaling Agreement contains minimum requirements for the amount of storage contracted by PBF Holding;


•	A pipeline service agreement with PBFX, with an initial term of approximately ten years, under which PBFX, through Delaware Pipeline Company (“DPC”), provides pipeline services to PBF Holding at the Delaware City Products Pipeline (the "Delaware City Pipeline Services Agreement"); and


•	A truck loading service agreement with PBFX, with an initial term of approximately ten years, under which PBFX, through Delaware City Logistics Company LLC (“DCLC”), provides terminaling services to PBF Holding at the Delaware City Truck Rack (the "Delaware City Truck Loading Agreement").

Other Agreements

In addition to the commercial agreements described above, PBF Holding also entered into an omnibus agreement with PBFX, PBF GP and PBF LLC, which addresses the payment of an annual fee, in the amount of $2,350 per year, for the provision of various general and administrative services, among other matters (as amended from time

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

to time, the "Omnibus Agreement"). PBF Holding and certain of its subsidiaries entered into an operation and management services and secondment agreement with PBFX under which PBFX reimburses PBF Holding for the provision of certain operational services to PBFX in support of its operations, including operational services performed by certain of PBF Holding's field-level employees (as amended from time to time, the "Services Agreement").

Summary of Transactions

A summary of revenue and expense transactions with our affiliates is as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Revenues under affiliate agreements:
Omnibus Agreement	$	1,415	$	1,234	$	2,259	$	2,470
Services Agreement	1,121		1,134		2,243		2,290
Total expenses under commercial agreements	37,965		34,868		74,514		67,713

9. COMMITMENTS AND CONTINGENCIES

Environmental Matters

The Company’s refineries are subject to extensive and frequently changing federal, state and local laws and regulations, including, but not limited to, those relating to the discharge of materials into the environment or that otherwise relate to the protection of the environment, waste management and the characteristics and the compositions of fuels. Compliance with existing and anticipated laws and regulations can increase the overall cost of operating the refineries, including remediation, operating costs and capital costs to construct, maintain and upgrade equipment and facilities.

In connection with the Paulsboro refinery acquisition, the Company assumed certain environmental remediation obligations. The environmental liability of $11,340 recorded as of June 30, 2016 ($10,367 as of December 31, 2015) represents the present value of expected future costs discounted at a rate of 8.0%. The current portion of the environmental liability is recorded in Accrued expenses and the non-current portion is recorded in Other long-term liabilities. As of June 30, 2016 and December 31, 2015, this liability is self-guaranteed by the Company.

In connection with the acquisition of the Delaware City assets, Valero Energy Corporation ("Valero") remains responsible for certain pre-acquisition environmental obligations up to $20,000 and the predecessor to Valero in ownership of the refinery retains other historical obligations.

In connection with the acquisition of the Delaware City assets and the Paulsboro refinery, the Company and Valero purchased ten year, $75,000 environmental insurance policies to insure against unknown environmental liabilities at each site. In connection with the Toledo refinery acquisition, Sunoco, Inc. (R&M) ("Sunoco") remains responsible for environmental remediation for conditions that existed on the closing date for twenty years from March 1, 2011, subject to certain limitations.

In connection with the acquisition of the Chalmette refinery, the Company obtained $3,936 in financial assurance (in the form of a surety bond) to cover estimated potential site remediation costs associated with an agreed to Administrative Order of Consent with the EPA. The estimated cost assumes remedial activities will continue for a minimum of thirty years. Further, in connection with the acquisition of the Chalmette refinery, the Company purchased a ten year, $100,000 environmental insurance policy to insure against unknown environmental liabilities at the refinery.

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

In 2010, New York State adopted a Low-Sulfur Heating Oil mandate that, beginning July 1, 2012, requires all heating oil sold in New York State to contain no more than 15 parts per million ("PPM") sulfur. Since July 1, 2012, other states in the Northeast market began requiring heating oil sold in their state to contain no more than 15 PPM sulfur. Currently, all of the Northeastern states and Washington DC have adopted sulfur controls on heating oil. Most of the Northeastern states will now require heating oil with 15 PPM or less sulfur by July 1, 2018 (except for Pennsylvania and Maryland - 500 ppm sulfur required). All of the heating oil the Company currently produces meets these specifications. The mandate and other requirements do not currently have a material impact on the Company's financial position, results of operations or cash flows.

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

The EPA was required to release the final annual standards for the Reformulated Fuels Standard ("RFS") for 2014 no later than Nov 29, 2013 and for 2015 no later than Nov 29, 2014. The EPA did not meet these requirements but did release proposed standards for 2014. The EPA did not finalize this proposal in 2014. The EPA published the final 2014-2016 Renewable standards late in 2015. The EPA essentially set the standards for 2014 and 2015 at the estimated actual renewable fuel used in each year given they were for the most part regulating activities that had already occurred. In setting the 2016 standards the EPA recognized the E10 blend wall and used the general waiver authority to set the 2016 renewable fuel requirement lower than the original requirements stated in the Energy Independence Security Act (EISA). These new standards are being challenged by both renewable fuel producers and obligated parties in legal actions. The courts are attempting to consolidate some of these challenges. It appears unlikely the courts will be able resolve these issues before EPA releases the final 2017 standards late in 2016 assuming they stay on schedule. The EPA did propose the 2017 standards in May of 2016 and raised the requirements above the 2016 standards. Numerous public interest groups have publicly indicated that they believe that the EPA is relying on perhaps somewhat aggressive expectations of E15 and E85 marketing in proposing the new standards. The EPA is receiving comments on the new proposal and is targeting to release the final rule by the end of November 2016 as required. The Company is currently evaluating the final standards and they may have a material impact on the Company's cost of compliance with RFS 2.

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

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

In late 2015, the EPA initiated enforcement proceedings against companies it believes produced invalid RINs. The Company purchased RINs to satisfy a portion of its obligations under the Renewable Fuels Standard program for calendar year 2012 and had purchased some RINs the EPA considered invalid. The Company continues to purchase RINs to satisfy its obligations under the RFS program, and on April 11, 2016, the Company was notified by the

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

EPA that the EPA’s records indicated that it used potentially invalid RINs generated by one of the companies. The EPA directed the Company to resubmit reports to remove the potentially invalid RINs and to replace the invalid RINs with valid RINs with the same D Code. The Company has retired the invalid RINs and on May 6, 2016, the counterparty who sold the RINs to the Company replaced the RINs. The counterparty has also agreed to indemnify the Company for certain penalties to the extent imposed by the EPA. On July 28, 2016, the Company and the EPA entered an Administrative Settlement Agreement to resolve the matter which requires the payment of a $250 penalty. The Company expects to be reimbursed by the counterparty for this penalty under the indemnification agreement. In any event, the penalty is not expected to have a material effect on its financial condition, results of operations or cash flows.

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

PBF LLC Limited Liability Company Agreement

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

Taxable income of PBF LLC generally is allocated to the holders of PBF LLC units (including PBF Energy) pro-rata in accordance with their respective share of the net profits and net losses of PBF LLC. In general, PBF LLC is required to make periodic tax distributions to the members of PBF LLC, including PBF Energy, pro-rata in accordance with their respective percentage interests for such period (as determined under the amended and restated limited liability company agreement of PBF LLC), subject to available cash and applicable law and contractual restrictions (including pursuant to our debt instruments) and based on certain assumptions. Generally, these tax distributions are required to be in an amount equal to our estimate of the taxable income of PBF LLC for the year multiplied by an assumed tax rate equal to the highest effective marginal combined U.S. federal, state and local income tax rate prescribed for an individual or corporate resident in New York, New York (taking into account the nondeductibility of certain expenses). If, with respect to any given calendar year, the aggregate periodic tax distributions were less than the actual taxable income of PBF LLC multiplied by the assumed tax rate, PBF LLC is required to make a “true up” tax distribution, no later than March 15 of the following year, equal to such difference, subject to the available cash and borrowings of PBF LLC. PBF LLC obtains funding to pay its tax distributions by causing PBF Holding to distribute cash to PBF LLC and from distributions it receives from PBFX.

Tax Receivable Agreement

PBF Energy (the Company's indirect parent) entered into a tax receivable agreement with the PBF LLC Series A and PBF LLC Series B Unit holders (the “Tax Receivable Agreement”) that provides for the payment by PBF Energy to such persons of an amount equal to 85% of the amount of the benefits, if any, that PBF Energy is deemed to realize as a result of (i) increases in tax basis, as described below, and (ii) certain other tax benefits related to entering into the Tax Receivable Agreement, including tax benefits attributable to payments under the Tax Receivable Agreement. For purposes of the Tax Receivable Agreement, the benefits deemed realized by PBF Energy will be computed by comparing the actual income tax liability of PBF Energy (calculated with certain assumptions) to the amount of such taxes that PBF Energy would have been required to pay had there been no

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

increase to the tax basis of the assets of PBF LLC as a result of purchases or exchanges of PBF LLC Series A Units for shares of PBF Energy's Class A common stock and had PBF Energy not entered into the Tax Receivable Agreement. The term of the Tax Receivable Agreement will continue until all such tax benefits have been utilized or expired unless: (i) PBF Energy exercises its right to terminate the Tax Receivable Agreement, (ii) PBF Energy breaches any of its material obligations under the Tax Receivable Agreement or (iii) certain changes of control occur, in which case all obligations under the Tax Receivable Agreement will generally be accelerated and due as calculated under certain assumptions.

The payment obligations under the Tax Receivable Agreement are obligations of PBF Energy and not of PBF LLC or the Company. In general, PBF Energy expects to obtain funding for these annual payments from PBF LLC, primarily through tax distributions, which PBF LLC makes on a pro-rata basis to its owners. Such owners include PBF Energy, which holds a 95.2% interest in PBF LLC as of June 30, 2016 (95.1% as of December 31, 2015). PBF LLC obtains funding to pay its tax distributions by causing PBF Holding to distribute cash to PBF LLC and from distributions it receives from PBFX.

10. EMPLOYEE BENEFIT PLANS

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



	Three Months Ended June 30,						Six Months Ended June 30,
Pension Benefits	2016			2015			2016			2015
Components of net periodic benefit cost:
Service cost	$	7,339		$	5,789		$	14,679		$	11,579
Interest cost	775			707			1,551			1,416
Expected return on plan assets	(1,107		)	(829		)	(2,213		)	(1,659		)
Amortization of prior service costs	13			13			26			26
Amortization of loss	194			311			388			622
Net periodic benefit cost	$	7,214		$	5,991		$	14,431		$	11,984



	Three Months Ended June 30,				Six Months Ended June 30,
Post Retirement Medical Plan	2016		2015		2016		2015
Components of net periodic benefit cost:
Service cost	$	219	$	244	$	439	$	488
Interest cost	133		134		267		269
Amortization of prior service costs	109		76		218		152
Amortization of loss	—		—		—		—
Net periodic benefit cost	$	461	$	454	$	924	$	909

11. FAIR VALUE MEASUREMENTS

The tables below present information about the Company's financial assets and liabilities measured and recorded at fair value on a recurring basis and indicate the fair value hierarchy of the inputs utilized to determine the fair values as of June 30, 2016 and December 31, 2015.

We have elected to offset the fair value amounts recognized for multiple derivative contracts executed with the same counterparty; however, fair value amounts by hierarchy level are presented on a gross basis in the tables

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

below. We have posted cash margin with various counterparties to support hedging and trading activities. The cash margin posted is required by counterparties as collateral deposits and cannot be offset against the fair value of open contracts except in the event of default. We have no derivative contracts that are subject to master netting arrangements that are reflected gross on the balance sheet.



	As of June 30, 2016
	Fair Value Hierarchy						Total Gross Fair Value		Effect of Counter-party Netting		Net Carrying Value on Balance Sheet
	Level 1		Level 2		Level 3		Total Gross Fair Value		Effect of Counter-party Netting		Net Carrying Value on Balance Sheet
Assets:
Money market funds	$	25,005	$	—	$	—	$	25,005	N/A		$	25,005
Commodity contracts	17,039		23,098		493		40,630		(26,175	)	14,455
Derivatives included with inventory intermediation agreement obligations	—		9,338		—		9,338		—		9,338
Liabilities:
Commodity contracts	21,690		4,485		—		26,175		(26,175	)	—
Catalyst lease obligations	—		36,436		—		36,436		—		36,436



	As of December 31, 2015
	Fair Value Hierarchy						Total Gross Fair Value		Effect of Counter-party Netting		Net Carrying Value on Balance Sheet
	Level 1		Level 2		Level 3		Total Gross Fair Value		Effect of Counter-party Netting		Net Carrying Value on Balance Sheet
Assets:
Money market funds	$	631,280	$	—	$	—	$	631,280	N/A		$	631,280
Commodity contracts	63,810		31,256		3,543		98,609		(52,482	)	46,127
Derivatives included with inventory intermediation agreement obligations	—		35,511		—		35,511		—		35,511
Liabilities:
Commodity contracts	49,960		2,522		—		52,482		(52,482	)	—
Catalyst lease obligations	—		31,802		—		31,802		—		31,802

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


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


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

•

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


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

Non-qualified pension plan assets are measured at fair value using a market approach based on published net asset values of mutual funds as a practical expedient. As of June 30, 2016 and December 31, 2015, $9,811 and $9,325,

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

respectively, were included within Deferred charges and other assets, net for these non-qualified pension plan assets.

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



	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Balance at beginning of period	$	1,915		$	9,678		$	3,543		$	1,521
Purchases	—			—			—			—
Settlements	(746		)	(10,111		)	(1,003		)	(11,311		)
Unrealized gain included in earnings	(676		)	2,338			(2,047		)	11,695
Transfers into Level 3	—			—			—			—
Transfers out of Level 3	—			—			—			—
Balance at end of period	$	493		$	1,905		$	493		$	1,905

There were no transfers between levels during the three and six months ended June 30, 2016 and 2015, respectively.

Fair value of debt

The table below summarizes the fair value and carrying value of debt as of June 30, 2016 and December 31, 2015.



	June 30, 2016				December 31, 2015
	Carrying value		Fair value		Carrying value		Fair value
Senior Secured Notes due 2020 (a)	$	670,243	$	704,783	$	669,644	$	706,246
Revolving Loan (b)	550,000		550,000		—		—
Senior Secured Notes due 2023 (a)	500,000		483,584		500,000		492,452
Rail Facility (b)	60,521		60,521		67,491		67,491
Catalyst leases (c)	36,436		36,436		31,802		31,802
	1,817,200		1,835,324		1,268,937		1,297,991
Less - Current maturities	—		—		—		—
Less - Unamortized deferred financing costs	28,330		n/a		32,217		n/a
Long-term debt	$	1,788,870	$	1,835,324	$	1,236,720	$	1,297,991

(a) The estimated fair value, categorized as a Level 2 measurement, was calculated based on the present value of future expected payments utilizing implied current market interest rates based on quoted prices of the Senior Secured Notes.

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

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

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

12. DERIVATIVES

The Company uses derivative instruments to mitigate certain exposures to commodity price risk. Prior to December 31, 2015, the Company’s crude supply agreement contained purchase obligations for certain volumes of crude oil and other feedstocks. In addition, the Company entered into Inventory Intermediation Agreements commencing in July 2013 that contain purchase obligations for certain volumes of intermediates and refined products. The purchase obligations related to crude oil, feedstocks, intermediates and refined products under these agreements are derivative instruments that have been designated as fair value hedges in order to hedge the commodity price volatility of certain refinery inventory. The fair value of these purchase obligation derivatives is based on market prices of the underlying crude oil and refined products. The level of activity for these derivatives is based on the level of operating inventories.

As of June 30, 2016, there were no barrels of crude oil and feedstocks (no barrels at December 31, 2015) outstanding under these derivative instruments designated as fair value hedges and no barrels (no barrels at December 31, 2015) outstanding under these derivative instruments not designated as hedges. As of June 30, 2016, there were 3,300,487 barrels of intermediates and refined products (3,776,011 barrels at December 31, 2015) outstanding under these derivative instruments designated as fair value hedges and no barrels (no barrels at December 31, 2015) outstanding under these derivative instruments not designated as hedges. These volumes represent the notional value of the contract.

The Company also enters into economic hedges primarily consisting of commodity derivative contracts that are not designated as hedges and are used to manage price volatility in certain crude oil and feedstock inventories as well as crude oil, feedstock, and refined product sales or purchases. The objective in entering into economic hedges is consistent with the objectives discussed above for fair value hedges. As of June 30, 2016, there were 30,486,500 barrels of crude oil and 5,857,000 barrels of refined products (39,577,000 and 4,599,136, respectively, as of December 31, 2015), outstanding under short and long term commodity derivative contracts not designated as hedges representing the notional value of the contracts.

The following tables provide information about the fair values of these derivative instruments as of June 30, 2016 and December 31, 2015 and the line items in the condensed consolidated balance sheet in which the fair values are reflected.



Description	Balance Sheet Location	Fair Value Asset/(Liability)
Derivatives designated as hedging instruments:
June 30, 2016:
Derivatives included with the inventory intermediation agreement obligations	Accrued expenses	$	9,338
December 31, 2015:
Derivatives included with the inventory intermediation agreement obligations	Accrued expenses	$	35,511

Derivatives not designated as hedging instruments:
June 30, 2016:
Commodity contracts	Accounts receivable	$	14,455
December 31, 2015:
Commodity contracts	Accounts receivable	$	46,127

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

The following table provides information about the gain or loss recognized in income on these derivative instruments and the line items in the condensed consolidated financial statements in which such gains and losses are reflected.



Description	Location of Gain or (Loss) Recognized in Income on Derivatives	Gain or (Loss) Recognized in Income on Derivatives
Derivatives designated as hedging instruments:
For the three months ended June 30, 2016:
Derivatives included with the inventory intermediation agreement obligations	Cost of sales	$	8,973
For the three months ended June 30, 2015:
Derivatives included with inventory supply arrangement obligations	Cost of sales	$	(1,808	)
Derivatives included with the inventory intermediation agreement obligations	Cost of sales	$	(20,888	)
For the six months ended June 30, 2016:
Derivatives included with the inventory intermediation agreement obligations	Cost of sales	$	(26,172	)
For the six months ended June 30, 2015:
Derivatives included with inventory supply arrangement obligations	Cost of sales	$	(4,629	)
Derivatives included with the inventory intermediation agreement obligations	Cost of sales	$	(84,574	)

Derivatives not designated as hedging instruments:
For the three months ended June 30, 2016:
Commodity contracts	Cost of sales	$	(19,134	)
For the three months ended June 30, 2015:
Commodity contracts	Cost of sales	$	(3,969	)
For the six months ended June 30, 2016:
Commodity contracts	Cost of sales	$	(39,087	)
For the six months ended June 30, 2015:
Commodity contracts	Cost of sales	$	(45,097	)

Hedged items designated in fair value hedges:
For the three months ended June 30, 2016:
Intermediate and refined product inventory	Cost of sales	$	(8,973	)
For the three months ended June 30, 2015:
Crude oil and feedstock inventory	Cost of sales	$	1,808
Intermediate and refined product inventory	Cost of sales	$	20,888
For the six months ended June 30, 2016:
Intermediate and refined product inventory	Cost of sales	$	26,172
For the six months ended June 30, 2015:
Crude oil and feedstock inventory	Cost of sales	$	4,629
Intermediate and refined product inventory	Cost of sales	$	84,574

The Company had no ineffectiveness related to the Company's fair value hedges for the three and six months ended June 30, 2016 and 2015.

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

13. SUBSEQUENT EVENTS

Torrance Acquisition

On July 1, 2016, the Company completed its acquisition of the Torrance refinery and related logistics assets (collectively, the "Torrance Acquisition") from ExxonMobil Oil Corporation and its subsidiary, Mobil Pacific Pipeline Company (together, the "Sellers"). The Torrance refinery, located in Torrance, California, is a high-conversion, delayed-coking refinery. The facility is strategically positioned in Southern California with advantaged logistics connectivity that offers flexible raw material sourcing and product distribution opportunities primarily in the California, Las Vegas and Phoenix area markets.

In addition to refining assets, the transaction includes a number of high-quality logistics assets including a sophisticated network of crude and products pipelines, product distribution terminals and refinery crude and product storage facilities. The most significant of the logistics assets is a crude gathering and transportation system which delivers San Joaquin Valley crude oil directly from the field to the refinery. Additionally, included in the transaction are several pipelines which provide access to sources of crude oil including the Ports of Long Beach and Los Angeles, as well as clean product outlets with a direct pipeline supplying jet fuel to the Los Angeles airport. The refinery also has crude and product storage facilities.

The purchase price for the assets was $537,500, plus preliminary working capital of $460,934, which is subject to final valuation within ninety days of closing. In addition, the Company assumed certain pre-existing environmental and regulatory emission credit obligations in connection with the Torrance Acquisition. The transaction was financed through a combination of cash on hand including proceeds from PBF Energy's October 2015 Equity Offering, the Company's 2023 Senior Secured Notes offering and borrowings under the Company’s Revolving Loan. A determination of the acquisition-date fair values of the assets acquired and the liabilities assumed and the working capital at closing calculation is pending the completion of an independent appraisal and other evaluations.

The Torrance Acquisition provides the Company with a broader more diversified asset base and increases the number of operating refineries from four to five and the Company's combined crude oil throughput capacity. The acquisition also provides the Company with a presence in the attractive Petroleum Administration for Defense Districts ("PADD") 5 market.

Rail Facility Revolving Credit Facility

On July 15, 2016, the Rail Facility was amended to, among other things, extend the maturity from April 29, 2017 to October 31, 2017. The amendment also reduced the aggregate commitment to the amount outstanding, therefore, eliminating the commitment fee and requires the Company to repay $20,000 of the outstanding balance on or prior to January 1, 2017.

Distributions

On July 29, 2016, PBF Energy, PBF Holding's indirect parent, declared a dividend of $0.30 per share on its outstanding Class A common stock. The dividend is payable on August 23, 2016 to PBF Energy Class A common stockholders of record at the close of business on August 9, 2016. PBF Holding intends to make a distribution of approximately $30,839 to PBF LLC, which in turn will make pro-rata distributions to its members, including PBF Energy. PBF Energy will then use this distribution to fund the dividend payments to the stockholders of PBF Energy.

Related Party

On July 1, 2016, the Company entered into a consulting services agreement with Thomas D. O'Malley, the former Executive Chairman of the Company. Compensation for the services under the agreement will be $1,000 annually. The consulting services agreement expires on December 31, 2018. In addition, Mr. O'Malley will receive payments and benefits afforded to him under his Third Amended and Restated Employment Agreement in connection with his retirement.

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Torrance Valley Pipeline Company

On August 11, 2016, PBF Energy announced that it had entered into a non-binding letter of intent whereby the Company would sell a 50% interest in the Torrance Valley Pipeline Company ("TVPC"), an indirect subsidiary of PBF Holding, to PBFX for total consideration of approximately $175,000 in cash. PBF Energy and PBFX currently anticipate executing definitive agreements within the next 30 days and closing the acquisition in the third quarter of 2016, subject to customary closing conditions.

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

14. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF HOLDING

As of June 30, 2016, PBF Services Company, Delaware City Refining Company LLC, PBF Power Marketing LLC, Paulsboro Refining Company LLC, Paulsboro Natural Gas Pipeline Company LLC, Toledo Refining Company LLC, Chalmette Refining, L.L.C. and PBF Investments LLC are 100% owned subsidiaries of PBF Holding and serve as guarantors of the obligations under the Senior Secured Notes. These guarantees are full and unconditional and joint and several. For purposes of the following footnote, PBF Holding is referred to as "Issuer." The indentures dated February 9, 2012 and November 24, 2015, among PBF Holding, PBF Finance, the guarantors party thereto and Wilmington Trust, National Association, governs subsidiaries designated as "Guarantor Subsidiaries." PBF Energy Limited, PBF Transportation Company LLC, PBF Rail Logistics Company LLC, MOEM Pipeline LLC, Collins Pipeline Company and T&M Terminal Company are consolidated subsidiaries of the Company that are not guarantors of the Senior Secured Notes.

The Senior Secured Notes were co-issued by PBF Finance. For purposes of the following footnote, PBF Finance is referred to as “Co-Issuer.” The Co-Issuer has no independent assets or operations.

The following supplemental combining and condensed consolidating financial information reflects the Issuer’s separate accounts, the combined accounts of the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries, the combining and consolidating adjustments and eliminations and the Issuer’s consolidated accounts for the dates and periods indicated. For purposes of the following combining and consolidating information, the Issuer’s investment in its subsidiaries and the Guarantor subsidiaries' investments in their subsidiaries are accounted for under the equity method of accounting.

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

14. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF HOLDING

CONDENSED CONSOLIDATING BALANCE SHEET

(UNAUDITED)



	June 30, 2016
	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Combining and Consolidating Adjustments			Total
ASSETS
Current assets:
Cash and cash equivalents	$	1,257,959		$	20,922		$	32,694	$	(1,345	)	$	1,310,230
Accounts receivable	621,054			4,973			19,377		—			645,404
Accounts receivable - affiliate	1,574			2,276			—		—			3,850
Inventories	717,615			391,386			199,535		—			1,308,536
Prepaid expense and other current assets	28,498			21,437			188		—			50,123
Due from related parties	21,965,189			21,002,264			3,889,446		(46,856,899		)	—
Total current assets	24,591,889			21,443,258			4,141,240		(46,858,244		)	3,318,143

Property, plant and equipment, net	33,930			2,015,974			212,123		—			2,262,027
Investment in subsidiaries	1,051,658			118,982			—		(1,170,640		)	—
Deferred charges and other assets, net	28,613			340,316			1,500		—			370,429
Total assets	$	25,706,090		$	23,918,530		$	4,354,863	$	(48,028,884	)	$	5,950,599

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	277,287		$	88,947		$	8,596	$	(1,345	)	$	373,485
Accounts payable - affiliate	21,904			—			—		—			21,904
Accrued expenses	678,777			515,662			109,332		—			1,303,771
Deferred tax liability	—			—			26,888		—			26,888
Deferred revenue	7,810			—			—		—			7,810
Due to related parties	20,680,061			22,279,141			3,897,697		(46,856,899		)	—
Total current liabilities	21,665,839			22,883,750			4,042,513		(46,858,244		)	1,733,858

Delaware Economic Development Authority loan	—			4,000			—		—			4,000
Long-term debt	1,692,266			36,364			60,240		—			1,788,870
Affiliate notes payable	470,165			—			—		—			470,165
Deferred tax liability	—			—			25,721		—			25,721
Other long-term liabilities	28,399			50,165			—		—			78,564
Total liabilities	23,856,669			22,974,279			4,128,474		(46,858,244		)	4,101,178

Commitments and contingencies

Equity:
Member's equity	1,489,892			1,076,840			145,530		(1,222,370		)	1,489,892
Retained earnings (accumulated deficit)	370,616			(136,999		)	80,859		56,140			370,616
Accumulated other comprehensive (loss) income	(23,733		)	(8,236		)	—		8,236			(23,733		)
Total PBF Holding Company LLC equity	1,836,775			931,605			226,389		(1,157,994		)	1,836,775
Noncontrolling interest	12,646			12,646			—		(12,646		)	12,646
Total equity	1,849,421			944,251			226,389		(1,170,640		)	1,849,421
Total liabilities and equity	$	25,706,090		$	23,918,530		$	4,354,863	$	(48,028,884	)	$	5,950,599

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

14. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF HOLDING

CONDENSED CONSOLIDATING BALANCE SHEET

(UNAUDITED)



	December 31, 2015
	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Combining and Consolidating Adjustments			Total
ASSETS
Current assets:
Cash and cash equivalents	$	882,820		$	6,236		$	28,968	$	(3,275	)	$	914,749
Accounts receivable	430,809			11,057			12,893		—			454,759
Accounts receivable - affiliate	917			2,521			—		—			3,438
Inventories	608,646			363,151			202,475		—			1,174,272
Prepaid expense and other current assets	24,243			9,074			384		—			33,701
Due from related parties	20,236,649			20,547,503			3,262,382		(44,046,534		)	—
Total current assets	22,184,084			20,939,542			3,507,102		(44,049,809		)	2,580,919

Property, plant and equipment, net	25,240			1,960,066			225,784		—			2,211,090
Investment in subsidiaries	1,740,111			143,349			—		(1,883,460		)	—
Deferred charges and other assets, net	23,973			265,240			1,500		—			290,713
Due from related party - long term	—			—			20,577		(20,577		)	—
Total assets	$	23,973,408		$	23,308,197		$	3,754,963	$	(45,953,846	)	$	5,082,722

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	196,988		$	113,564		$	7,566	$	(3,275	)	$	314,843
Accounts Payable - affiliate	23,949			—			—		—			23,949
Accrued expenses	503,179			495,842			118,414		—			1,117,435
Deferred revenue	4,043			—			—		—			4,043
Due to related parties	19,787,807			21,026,310			3,232,417		(44,046,534		)	—
Total current liabilities	20,515,966			21,635,716			3,358,397		(44,049,809		)	1,460,270

Delaware Economic Development Authority loan	—			4,000			—		—			4,000
Long-term debt	1,137,980			31,717			67,023		—			1,236,720
Affiliate notes payable	470,047			—			—		—			470,047
Deferred tax liability	—			—			20,577		—			20,577
Other long-term liabilities	28,131			41,693			—		—			69,824
Due to related party - long term	—			20,577			—		(20,577		)	—
Total liabilities	22,152,124			21,733,703			3,445,997		(44,070,386		)	3,261,438

Commitments and contingencies

Equity:
Member's equity	1,479,175			1,062,717			182,696		(1,245,413		)	1,479,175
Retained earnings (accumulated deficit)	349,654			502,788			126,270		(629,058		)	349,654
Accumulated other comprehensive (loss) income	(24,770		)	(8,236		)	—		8,236			(24,770		)
Total PBF Holding Company LLC equity	1,804,059			1,557,269			308,966		(1,866,235		)	1,804,059
Noncontrolling interest	17,225			17,225			—		(17,225		)	17,225
Total equity	1,821,284			1,574,494			308,966		(1,883,460		)	1,821,284
Total liabilities and equity	$	23,973,408		$	23,308,197		$	3,754,963	$	(45,953,846	)	$	5,082,722

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

14. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF HOLDING

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)



	Three Months Ended June 30, 2016
	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Combining and Consolidating Adjustments			Total

Revenues	$	3,834,460		$	95,163		$	339,721		$	(413,571	)	$	3,855,773

Costs and expenses
Cost of sales, excluding depreciation	3,300,539			39,483			358,297			(413,571		)	3,284,748
Operating expenses, excluding depreciation	(28		)	268,608			2,959			—			271,539
General and administrative expenses	28,609			9,209			273			—			38,091
Gain on sale of assets	—			24			3,198			—			3,222
Depreciation and amortization expense	1,379			45,780			1,760			—			48,919
	3,330,499			363,104			366,487			(413,571		)	3,646,519

Income (loss) from operations	503,961			(267,941		)	(26,766		)	—			209,254

Other income (expense)
Equity in (loss) earnings of subsidiaries	(292,212		)	—			—			292,212			—
Change in fair value of catalyst lease	—			(1,748		)	—			—			(1,748		)
Interest expense, net	(30,245		)	(484		)	(550		)	—			(31,279		)
Net income (loss) before income taxes	181,504			(270,173		)	(27,316		)	292,212			176,227
Income taxes benefit	—			—			(5,277		)	—			(5,277		)
Net income (loss)	181,504			(270,173		)	(22,039		)	292,212			181,504
Less: net income (loss) attributable to noncontrolling interest	90			90			—			(90		)	90
Net income (loss) attributable to PBF Holding Company LLC	$	181,414		$	(270,263	)	$	(22,039	)	$	292,302		$	181,414

Comprehensive income (loss) attributable to PBF Holding Company LLC	$	181,829		$	(270,263	)	$	(22,039	)	$	292,302		$	181,829

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

14. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF HOLDING

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)



	Three Months Ended June 30, 2015
	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Combining and Consolidating Adjustments			Total

Revenues	$	3,529,849		$	275,743		$	330,048		$	(584,976	)	$	3,550,664

Costs and expenses
Cost of sales, excluding depreciation	3,036,655			234,226			341,070			(584,976		)	3,026,975
Operating expenses, excluding depreciation	(4,526		)	196,557			119			—			192,150
General and administrative expenses	32,646			3,639			(502		)	—			35,783
Gain on sale of assets	—			(232		)	(400		)	—			(632		)
Depreciation and amortization expense	2,506			43,913			596			—			47,015
	3,067,281			478,103			340,883			(584,976		)	3,301,291

Income (loss) from operations	462,568			(202,360		)	(10,835		)	—			249,373

Other income (expense)
Equity in (loss) earnings of subsidiaries	(213,468		)	—			—			213,468			—
Change in fair value of catalyst lease	—			1,949			—			—			1,949
Interest expense, net	(20,733		)	(1,372		)	(850		)	—			(22,955		)
Net income (loss) before income taxes	228,367			(201,783		)	(11,685		)	213,468			228,367
Income taxes expense	—			—			—			—			—
Net income (loss)	228,367			(201,783		)	(11,685		)	213,468			228,367
Less: net income attributable to noncontrolling interest	—			—			—			—			—
Net income (loss) attributable to PBF Holding Company LLC	$	228,367		$	(201,783	)	$	(11,685	)	$	213,468		$	228,367

Comprehensive income (loss) attributable to PBF Holding Company LLC	$	228,692		$	(201,783	)	$	(11,685	)	$	213,468		$	228,692

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

14. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF HOLDING

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)



	Six Months Ended June 30, 2016
	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Combining and Consolidating Adjustments			Total

Revenues	$	6,630,376		$	144,782		$	660,441		$	(779,641	)	$	6,655,958

Costs and expenses
Cost of sales, excluding depreciation	5,739,927			103,453			666,992			(779,641		)	5,730,731
Operating expenses, excluding depreciation	(400		)	562,642			5,936			—			568,178
General and administrative expenses	57,306			16,060			(2,006		)	—			71,360
Loss on sale of assets	—			24			3,198			—			3,222
Depreciation and amortization expense	3,076			96,522			3,614			—			103,212
	5,799,909			778,701			677,734			(779,641		)	6,476,703

Income (loss) from operations	830,467			(633,919		)	(17,293		)	—			179,255

Other income (expense)
Equity in (loss) earnings of subsidiaries	(684,805		)	—			—			684,805			—
Change in fair value of catalyst lease	—			(4,633		)	—			—			(4,633		)
Interest expense, net	(62,586		)	(842		)	(1,122		)	—			(64,550		)
Net income (loss) before income taxes	83,076			(639,394		)	(18,415		)	684,805			110,072
Income taxes expense	—			—			26,996			—			26,996
Net income (loss)	83,076			(639,394		)	(45,411		)	684,805			83,076
Less: net income attributable to noncontrolling interest	393			393			—			(393		)	393
Net income (loss) attributable to PBF Holding Company LLC	$	82,683		$	(639,787	)	$	(45,411	)	$	685,198		$	82,683

Comprehensive income (loss) attributable to PBF Holding Company LLC	$	83,720		$	(639,787	)	$	(45,411	)	$	685,198		$	83,720

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

14. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF HOLDING

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)



	Six Months Ended June 30, 2015
	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Combining and Consolidating Adjustments			Total

Revenues	$	6,522,006		$	536,576		$	828,651		$	(1,341,433	)	$	6,545,800

Costs and expenses
Cost of sales, excluding depreciation	5,527,418			572,883			797,147			(1,341,433		)	5,556,015
Operating expenses, excluding depreciation	(3,720		)	429,462			(215		)	—			425,527
General and administrative expenses	58,328			9,160			825			—			68,313
Gain on sale of assets	(181		)	(233		)	(577		)	—			(991		)
Depreciation and amortization expense	5,548			86,676			1,050			—			93,274
	5,587,393			1,097,948			798,230			(1,341,433		)	6,142,138

Income (loss) from operations	934,613			(561,372		)	30,421			—			403,662

Other income (expense)
Equity in earnings (loss) of subsidiaries	(531,606		)	—			—			531,606			—
Change in fair value of catalyst lease	—			3,988			—			—			3,988
Interest expense, net	(39,384		)	(3,065		)	(1,578		)	—			(44,027		)
Net income (loss) before income taxes	363,623			(560,449		)	28,843			531,606			363,623
Income taxes expense	—			—			—			—			—
Net income (loss)	363,623			(560,449		)	28,843			531,606			363,623
Less: net income attributable to noncontrolling interest	—			—			—			—			—
Net income (loss) attributable to PBF Holding Company LLC	$	363,623		$	(560,449	)	$	28,843		$	531,606		$	363,623

Comprehensive income (loss) attributable to PBF Holding Company LLC	$	364,419		$	(560,449	)	$	28,843		$	531,606		$	364,419

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

14. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF HOLDING

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOW

(UNAUDITED)



	Six Months Ended June 30, 2016
	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Combining and Consolidating Adjustments			Total
Cash flows from operating activities:
Net income (loss)	$	83,076		$	(639,394	)	$	(45,411	)	$	684,805		$	83,076
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization	7,405			96,645			3,895			—			107,945
Stock-based compensation	—			9,999			—			—			9,999
Change in fair value of catalyst lease obligations	—			4,633			—			—			4,633
Deferred income taxes	—			—			27,060			—			27,060
Change in non-cash lower of cost or market inventory adjustment	(200,063		)	(16,780		)	—			—			(216,843		)
Non-cash change in inventory repurchase obligations	—			26,172			—			—			26,172
Pension and other post retirement benefit costs	3,464			11,891			—			—			15,355
Gain on sale of assets	—			24			3,198			—			3,222
Equity in earnings of subsidiaries	684,805			—			—			(684,805		)	—
Changes in current assets and current liabilities:
Accounts receivable	(190,245		)	6,084			(6,484		)	—			(190,645		)
Due to/from affiliates	(838,988		)	798,315			38,216			—			(2,457		)
Inventories	91,094			(11,455		)	2,940			—			82,579
Prepaid expenses and other current assets	(4,255		)	(12,365		)	198			—			(16,422		)
Accounts payable	80,299			(24,617		)	1,030			1,930			58,642
Accrued expenses	175,598			(2,269		)	(9,082		)	—

PBF Finance Corp 10-Q