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SEC Filings
S-4
SUSSER HOLDINGS CORP filed this Form S-4 on 07/22/2016
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Table of Contents
Index to Financial Statements

PHILADELPHIA ENERGY SOLUTIONS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except unit and volume data)

 

On October 7, 2014, the Company sold refined products inventories to MLC as part of the new supply and offtake agreement signed with MLC. The Company repurchased this inventory through the intermediation process and this inventory was subsequently sold to a third party. Revenue was recognized upon the sale to the third party consistent with the sale of refined products noted below.

On October 7, 2014, the Company also acquired $371,120 of refined products inventories in noncash transactions under the agreement with MLC, which the Company is obligated to redeliver to MLC at expiration or termination of the intermediation agreement. The obligation to redeliver is classified as a component of accrued liabilities on the consolidated balance sheets and is carried at the current market price.

Under the agreement with MLC, when MLC receives title to the crude oil or noncrude feedstocks from a third party supplier, it flashes title for this inventory to Refining and Refining has an obligation to redeliver the crude oil and noncrude feedstocks to MLC at a future date at a fixed price. The Company has deemed the fixed price requirement to redeliver the inventory an embedded derivative and has designated these derivatives as fair value hedges of the inventory.

The Company purchases substantially all crude oil and noncrude feedstocks from MLC, based on market pricing for that day. The purchases occur as crude oil or noncrude feedstocks are consumed in the refining process.

Also under this agreement, refined products and blendstocks are sold to MLC as they are produced. The selling price is based on market pricing on such date. However, Refining holds title for these refined products and blendstocks until they are delivered to MLC’s customer. As a result, the Company records deferred revenue for these sales. The deferred revenue is recognized as revenue when the products are delivered to MLC’s customer. Refining also receives pricing adjustments, primarily related to transportation and other market differentials, when the refined products are delivered to MLC’s customers. Purchases of crude oil and noncrude feedstocks from MLC and sales of refined products or blendstocks to MLC are net settled daily.

A limited liability company owned by an unrelated third party, serves as an intermediary between Refining and MLC to exchange flash title for the receipt and delivery of certain crude oil and noncrude feedstocks and certain refined products and blendstocks.

MLC accounted for 76% and 17% of the Company’s revenues for the years ended December 31, 2015 and 2014, respectively. JPMVEC accounted for approximately 62% and 83% of the Company’s revenues for the years ended December 31, 2014 and 2013, respectively. MLC accounted for 37% and 53% of the Company’s accounts receivable at December 31, 2015 and 2014, respectively.

5. TAXES

The Company is subject to the Philadelphia Business Income & Receipts Tax (BIRT). Income tax expense related to BIRT was $409, $459, and nil for the years ended December 31, 2015, 2014, and 2013, respectively.

Effective January 1, 2014, the geographic areas where the Philadelphia refining complex are located were designated as Keystone Opportunity Zones (KOZ), providing specific Pennsylvania and City of Philadelphia tax benefits to the Company. Under this program, the Company’s effective tax rates are estimated to be 0.3205% of Philadelphia taxable income for BIRT, based on the statutory rate of 6.41%; and 0.007075% of Philadelphia gross receipts taxes, based on a statutory rate of 0.14150%; through December 31, 2020. From January 1, 2021 through December 31, 2023, the Company’s effective tax rates are estimated to be 0.641% of Philadelphia

 

F-49

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