Note 7—
Properties, Plants and Equipment
Our investment in PP&E, with the associated accumulated depreciation and amortization (Accum. D&A), was:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
June 30, 2014
|
|
December 31, 2013
|
|
Gross
PP&E
|
|
|
Accum.
D&A
|
|
|
Net
PP&E
|
|
|
Gross
PP&E
|
|
|
Accum.
D&A
|
|
|
Net
PP&E
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Midstream
|
$
|
3,381
|
|
|
1,141
|
|
|
2,240
|
|
|
2,865
|
|
|
1,104
|
|
|
1,761
|
|
Chemicals
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Refining
|
19,644
|
|
|
7,053
|
|
|
12,591
|
|
|
19,191
|
|
|
6,718
|
|
|
12,473
|
|
Marketing and Specialties
|
1,499
|
|
|
765
|
|
|
734
|
|
|
1,395
|
|
|
749
|
|
|
646
|
|
Corporate and Other
|
1,026
|
|
|
499
|
|
|
527
|
|
|
975
|
|
|
457
|
|
|
518
|
|
Discontinued Operations*
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
25,550
|
|
|
9,458
|
|
|
16,092
|
|
|
24,426
|
|
|
9,028
|
|
|
15,398
|
|
* At December 31, 2013, net PP&E of $58 million associated with discontinued operations was classified as current assets.
|
Note 8—
Goodwill
Effective January 1, 2014, we reallocated
$52 million
of goodwill from the Refining segment to the M&S segment based upon the realignment of certain assets between the reporting units. Goodwill was reassigned to the reporting units using a relative fair value approach. Goodwill impairment testing was completed and
no
impairment recognition was required. See
Note 20—Segment Disclosures and Related Information
for additional information on this segment realignment.
In March 2014, we acquired our co-venturer’s interest in an entity that operates a power and steam generation plant, and provisionally recorded
$39 million
of goodwill related to this transaction. The completion of our acquisition accounting is subject to the finalization of valuations of the assets acquired and liabilities assumed. See
Note 4—Business Combinations
, for additional information on this acquisition.
See
Note 5—Assets Held for Sale or Sold
for additional information on goodwill allocated to assets held for sale or sold.
The carrying amount of goodwill was as follows:
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
June 30
2014
|
|
|
December 31
2013
|
|
|
|
|
|
Midstream
|
$
|
518
|
|
|
518
|
|
Refining
|
1,872
|
|
|
1,867
|
|
Marketing and Specialties
|
750
|
|
|
711
|
|
|
$
|
3,140
|
|
|
3,096
|
|
Note 9—
Impairments
The
three- and six-month periods
ended
June 30, 2014
and
2013
, included the following before-tax impairment charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
Three Months Ended
June 30
|
|
Six Months Ended
June 30
|
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
Refining
|
$
|
1
|
|
1
|
|
|
2
|
|
1
|
|
Marketing and Specialties
|
2
|
|
—
|
|
|
2
|
|
15
|
|
Corporate and Other
|
—
|
|
—
|
|
|
—
|
|
9
|
|
|
$
|
3
|
|
1
|
|
|
4
|
|
25
|
|
During the six-month period of 2013, we recorded a
$15 million
held-for-use impairment in our M&S segment, primarily related to PP&E associated with our planned exit from the composite graphite business.
Note 10—
Earnings Per Share
The numerator of basic earnings per share (EPS) is net income attributable to Phillips 66, reduced by noncancelable dividends paid on unvested share-based employee awards during the vesting period (participating securities). The denominator of basic EPS is the sum of the daily weighted-average number of common shares outstanding during the periods presented and fully vested stock and unit awards that have not yet been issued as common stock. The numerator of diluted EPS is also based on net income attributable to Phillips 66, which is reduced only by dividend equivalents paid on participating securities for which the dividends are more dilutive than the participation of the awards in the earnings of the periods presented. To the extent unvested stock, unit or option awards and vested unexercised stock options are dilutive, they are included with the weighted-average common shares outstanding in the denominator. Treasury stock is excluded from the denominator in both basic and diluted EPS.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30
|
|
Six Months Ended
June 30
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Basic
|
Diluted
|
|
Basic
|
Diluted
|
|
Basic
|
Diluted
|
|
Basic
|
Diluted
|
Amounts attributed to Phillips 66 Common Stockholders
(millions)
:
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations attributable to Phillips 66
|
$
|
863
|
|
863
|
|
|
944
|
|
944
|
|
|
1,729
|
|
1,729
|
|
|
2,336
|
|
2,336
|
|
Income allocated to participating securities
|
(2
|
)
|
—
|
|
|
(1
|
)
|
—
|
|
|
(3
|
)
|
—
|
|
|
(2
|
)
|
—
|
|
Income from continuing operations available to common stockholders
|
861
|
|
863
|
|
|
943
|
|
944
|
|
|
1,726
|
|
1,729
|
|
|
2,334
|
|
2,336
|
|
Discontinued operations
|
—
|
|
—
|
|
|
14
|
|
14
|
|
|
706
|
|
706
|
|
|
29
|
|
29
|
|
Net Income available to common stockholders
|
$
|
861
|
|
863
|
|
|
957
|
|
958
|
|
|
2,432
|
|
2,435
|
|
|
2,363
|
|
2,365
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding
(thousands)
:
|
562,056
|
|
565,799
|
|
|
615,380
|
|
619,143
|
|
|
570,992
|
|
574,876
|
|
|
618,328
|
|
622,086
|
|
Effect of stock-based compensation
|
3,743
|
|
5,486
|
|
|
3,763
|
|
5,764
|
|
|
3,884
|
|
5,919
|
|
|
3,758
|
|
6,291
|
|
Weighted-average common shares outstanding—EPS
|
565,799
|
|
571,285
|
|
|
619,143
|
|
624,907
|
|
|
574,876
|
|
580,795
|
|
|
622,086
|
|
628,377
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Share of Common Stock
(dollars)
:
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations attributable to Phillips 66
|
$
|
1.52
|
|
1.51
|
|
|
1.53
|
|
1.51
|
|
|
3.00
|
|
2.98
|
|
|
3.75
|
|
3.72
|
|
Discontinued operations
|
—
|
|
—
|
|
|
0.02
|
|
0.02
|
|
|
1.23
|
|
1.21
|
|
|
0.05
|
|
0.04
|
|
Earnings Per Share
|
$
|
1.52
|
|
1.51
|
|
|
1.55
|
|
1.53
|
|
|
4.23
|
|
4.19
|
|
|
3.80
|
|
3.76
|
|
Note 11—
Debt
At both
June 30, 2014
, and December 31,
2013
, we had
no
direct outstanding borrowings under our
$4.5 billion
revolving credit agreement or our
$696 million
trade receivables securitization facility. However, as of both
June 30, 2014
, and December 31,
2013
,
$51 million
in letters of credit had been issued that were supported by our revolving credit agreement. As of
June 30, 2014
,
no
letters of credit were outstanding under our trade receivables securitization facility. As of December 31,
2013
,
$26 million
in letters of credit had been issued that were collateralized by trade receivables held by a subsidiary under our trade receivables securitization facility. At
June 30, 2014
, and December 31, 2013,
no
amount had been drawn on the
$250 million
revolving credit agreement of Phillips 66 Partners. Accordingly, as of
June 30, 2014
, an aggregate
$5.4 billion
of total capacity was available under these facilities.
At June 30, 2014, we classified
$800 million
of long-term debt due within a year as long-term debt, based on our intent to refinance the obligation on a long-term basis and our ability to do so under our revolving credit facility.
Note 12—
Guarantees
At
June 30, 2014
, we were liable for certain contingent obligations under various contractual arrangements as described below. We recognize a liability, at inception, for the fair value of our obligation as a guarantor for newly issued or modified guarantees. Unless the carrying amount of the liability is noted below, we have not recognized a liability either because the guarantees were issued prior to December 31, 2002, or because the fair value of the obligation is immaterial. In addition, unless otherwise stated, we are not currently performing with any significance under the guarantee and expect future performance to be either immaterial or have only a remote chance of occurrence.
Guarantees of Joint Venture Debt
In April 2012, in connection with the Separation, we issued a guarantee for
100 percent
of the
8.85%
senior notes issued by MSLP in July 1999. At
June 30, 2014
, the maximum potential amount of future payments to third parties under the guarantee is estimated to be
$203 million
, which could become payable if MSLP fails to meet its obligations under the senior notes agreement. The senior notes mature in 2019.
Other Guarantees
We have residual value guarantees associated with leases with maximum
future potential payments totaling
$228 million
. We have other guarantees with maximum future potential payment amounts totaling
$311 million
, w
hich consist primarily of guarantees to fund the short-term cash liquidity deficits of certain joint ventures, guarantees of third parties related to prior asset dispositions, and guarantees of the lease payment obligations of a joint venture. These guarantees generally extend up to
10
years or life of the venture.
Indemnifications
Over the years, we have entered into various agreements to sell ownership interests in certain corporations, joint ventures and assets that gave rise to qualifying indemnifications. Agreements associated with these sales include indemnifications for taxes, litigation, environmental liabilities, permits and licenses, supply arrangements, and employee claims; and real estate indemnity against tenant defaults. The terms of these indemnifications vary greatly. The majority of these indemnifications are related to environmental issues, the term is generally indefinite, and the maximum amount of future payments is generally unlimited. The carrying amount recorded for indemnifications at
June 30, 2014
, was
$243 million
. We amortize the indemnification liability over the relevant time period, if one exists, based on the facts and circumstances surrounding each type of indemnity. In cases where the indemnification term is indefinite, we will reverse the liability when we have information the liability is essentially relieved or amortize the liability over an appropriate time period as the fair value of our indemnification exposure declines. Although it is reasonably possible future payments may exceed amounts recorded, due to the nature of the indemnifications, it is not possible to make a reasonable estimate of the maximum potential amount of future payments. Included in the recorded carrying amount were
$113 million
of environmental accruals for known contamination that were included in asset retirement obligations and accrued environmental costs at
June 30, 2014
. For additional information about environmental liabilities, see
Note 13—Contingencies and Commitments
.
Indemnification and Release Agreement
In 2012, we entered into the Indemnification and Release Agreement with ConocoPhillips. This agreement governs the treatment between ConocoPhillips and us of matters relating to indemnification, insurance, litigation responsibility and management, and litigation document sharing and cooperation arising in connection with the Separation. Generally, the agreement provides for cross-indemnities principally designed to place financial responsibility for the obligations and liabilities of our business with us and financial responsibility for the obligations and liabilities of ConocoPhillips’ business with ConocoPhillips. The agreement also establishes procedures for handling claims subject to indemnification and related matters.
Note 13—
Contingencies and Commitments
A number of lawsuits involving a variety of claims that arose in the ordinary course of business have been filed against us or are subject to indemnifications provided by us. We also may be required to remove or mitigate the effects on the environment of the placement, storage, disposal or release of certain chemical, mineral and petroleum substances at various active and inactive sites. We regularly assess the need for accounting recognition or disclosure of these contingencies. In the case of all known contingencies (other than those related to income taxes), we accrue a liability when the loss is probable and the amount is reasonably estimable. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. We do not reduce these liabilities for potential insurance or third-party recoveries. If applicable, we record receivables for probable insurance or other third-party recoveries. In the case of income-tax-related contingencies, we use a cumulative probability-weighted loss accrual in cases where sustaining a tax position is less than certain.
Based on currently available information, we believe it is remote that future costs related to known contingent liability exposures will exceed current accruals by an amount that would have a material adverse impact on our consolidated financial statements. As we learn new facts concerning contingencies, we reassess our position both with respect to accrued liabilities and other potential exposures. Estimates particularly sensitive to future changes include contingent liabilities recorded for environmental remediation, tax and legal matters. Estimated future environmental remediation costs are subject to change due to such factors as the uncertain magnitude of cleanup costs, the unknown time and extent of such remedial actions that may be required, and the determination of our liability in proportion to that of other potentially responsible parties. Estimated future costs related to tax and legal matters are subject to change as events evolve and as additional information becomes available during the administrative and litigation processes.
Environmental
We are subject to international, federal, state and local environmental laws and regulations. When we prepare our consolidated financial statements, we record accruals for environmental liabilities based on management’s best estimates, using all information available at the time. We measure estimates and base liabilities on currently available facts, existing technology, and presently enacted laws and regulations, taking into account stakeholder and business considerations. When measuring environmental liabilities, we also consider our prior experience in remediation of contaminated sites, other companies’ cleanup experience, and data released by the U.S. Environmental Protection Agency (EPA) or other organizations. We consider unasserted claims in our determination of environmental liabilities, and we accrue them in the period they are both probable and reasonably estimable.
Although liability of those potentially responsible for environmental remediation costs is generally joint and several for federal sites and frequently so for state sites, we are usually only one of many companies alleged to have liability at a particular site. Due to the joint and several liabilities, we could be responsible for all cleanup costs related to any site at which we have been designated as a potentially responsible party. We have been successful to date in sharing cleanup costs with other financially sound companies. Many of the sites at which we are potentially responsible are still under investigation by the EPA or the state agencies concerned. Prior to actual cleanup, those potentially responsible normally assess the site conditions, apportion responsibility and determine the appropriate remediation. In some instances, we may have no liability or may attain a settlement of liability. Where it appears that other potentially responsible parties may be financially unable to bear their proportional share, we consider this inability in estimating our potential liability, and we adjust our accruals accordingly. As a result of various acquisitions in the past, we assumed certain environmental obligations. Some of these environmental obligations are mitigated by indemnifications made by others for our benefit and some of the indemnifications are subject to dollar and time limits.
We are currently participating in environmental assessments and cleanups at numerous federal Superfund and comparable state sites. After an assessment of environmental exposures for cleanup and other costs, we make accruals on an undiscounted basis (except those pertaining to sites acquired in a purchase business combination, which we record on a discounted basis) for planned investigation and remediation activities for sites where it is probable future costs will be incurred and these costs can be reasonably estimated. At
June 30, 2014
, our consolidated balance sheet included a total environmental accrual of
$504 million
, compared with
$492 million
at
December 31, 2013
. We expect to incur a substantial amount of these expenditures within the next
30
years. We have not reduced these accruals for possible insurance recoveries. In the future, we may be involved in additional environmental assessments, cleanups and proceedings.
Legal Proceedings
Our legal organization applies its knowledge, experience and professional judgment to the specific characteristics of our cases, employing a litigation management process to manage and monitor the legal proceedings against us. Our process facilitates the early evaluation and quantification of potential exposures in individual cases. This process also enables us to track those cases that have been scheduled for trial and/or mediation. Based on professional judgment and experience in using these litigation management tools and available information about current developments in all our cases, our legal organization regularly assesses the adequacy of current accruals and determines if adjustment of existing accruals, or establishment of new accruals, is required.
Other Contingencies
We have contingent liabilities resulting from throughput agreements with pipeline and processing companies not associated with financing arrangements. Under these agreements, we may be required to provide any such company with additional funds through advances and penalties for fees related to throughput capacity not utilized.
At
June 30, 2014
, we had performance obligations secured by letters of credit of
$1,148 million
(
$51 million
of which were issued under the provisions of our revolving credit facility, and the remainder were issued as direct bank letters of credit) related to various purchase and other commitments incident to the ordinary conduct of business.
Note 14—
Derivatives and Financial Instruments
Derivative Instruments
We use financial and commodity-based derivative contracts to manage exposures to fluctuations in foreign currency exchange rates and commodity prices or to capture market opportunities. Since we are not currently using cash-flow hedge accounting, all gains and losses, realized or unrealized, from commodity derivative contracts have been recognized in the consolidated statement of income. Gains and losses from derivative contracts held for trading not directly related to our physical business, whether realized or unrealized, have been reported net in “Other income” on our consolidated statement of income. Cash flows from all our derivative activity for the periods presented appear in the operating section of the consolidated statement of cash flows.
Purchase and sales contracts with fixed minimum notional volumes for commodities that are readily convertible to cash (e.g., crude oil and gasoline) are recorded on the balance sheet as derivatives unless the contracts are eligible for, and we elect, the normal purchases and normal sales exception (i.e., contracts to purchase or sell quantities we expect to use or sell over a reasonable period in the normal course of business). We generally apply this normal purchases and normal sales exception to eligible crude oil, refined product, natural gas and power commodity purchase and sales contracts; however, we may elect not to apply this exception (e.g., when another derivative instrument will be used to mitigate the risk of the purchase or sales contract but hedge accounting will not be applied, in which case both the purchase or sales contract and the derivative contract mitigating the resulting risk will be recorded on the balance sheet at fair value).
Our derivative instruments are held at fair value on our consolidated balance sheet. For further information on the fair value of derivatives, see
Note 15—Fair Value Measurements
.
Commodity Derivative Contracts
—We operate in the worldwide crude oil, refined products, natural gas liquids (NGL), natural gas and electric power markets and are exposed to fluctuations in the prices for these commodities. These fluctuations can affect our revenues, as well as the cost of operating, investing and financing activities. Generally, our policy is to remain exposed to the market prices of commodities; however, we use futures, forwards, swaps and options
in various markets to balance physical systems, meet customer needs, manage price exposures on specific transactions, and do a limited, immaterial amount of trading not directly related to our physical business. We also use the market knowledge gained from these activities to capture market opportunities such as moving physical commodities to more profitable locations, storing commodities to capture seasonal or time premiums, and blending commodities to capture quality upgrades. Derivatives may be used to optimize these activities, which may move our risk profile away from market average prices.
The following table indicates the balance sheet line items that include the fair values of commodity derivative assets and liabilities presented net (i.e., commodity derivative assets and liabilities with the same counterparty are netted where the right of setoff exists); however, the balances in the following table are presented gross. For information on the impact of counterparty netting and collateral netting, see
Note 15—Fair Value Measurements
.
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
June 30
2014
|
|
|
December 31
2013
|
|
Assets
|
|
|
|
Accounts and notes receivable
|
$
|
—
|
|
|
2
|
|
Prepaid expenses and other current assets
|
781
|
|
|
592
|
|
Other assets
|
2
|
|
|
2
|
|
Liabilities
|
|
|
|
Other accruals
|
831
|
|
|
633
|
|
Other liabilities and deferred credits
|
1
|
|
|
1
|
|
Hedge accounting has not been used for any item in the table.
The gains (losses) from commodity derivatives incurred, and the line items where they appear on our consolidated statement of income, were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
Three Months Ended
June 30
|
|
Six Months Ended
June 30
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
Sales and other operating revenues
|
$
|
(28
|
)
|
|
124
|
|
|
29
|
|
|
118
|
|
Equity in earnings of affiliates
|
(2
|
)
|
|
2
|
|
|
(2
|
)
|
|
(1
|
)
|
Other income
|
1
|
|
|
24
|
|
|
15
|
|
|
27
|
|
Purchased crude oil and products
|
(45
|
)
|
|
74
|
|
|
(43
|
)
|
|
163
|
|
Hedge accounting has not been used for any item in the table.
The following table summarizes our material net exposures resulting from outstanding commodity derivative contracts. These financial and physical derivative contracts are primarily used to manage price exposure on our underlying
operations. The underlying exposures may be from non-derivative positions such as inventory volumes. Financial derivative contracts may also offset physical derivative contracts, such as forward sales contracts. As of
June 30, 2014
, and
December 31, 2013
, the percentage of our derivative contract volume expiring within the next 12 months was over
99 percent
for both periods.
|
|
|
|
|
|
|
|
Open Position
Long/(Short)
|
|
June 30
2014
|
|
|
December 31
2013
|
|
Commodity
|
|
|
|
Crude oil, refined products and NGL
(millions of barrels)
|
(26
|
)
|
|
(9
|
)
|
Credit Risk
Financial instruments potentially exposed to concentrations of credit risk consist primarily of over-the-counter (OTC) derivative contracts and trade receivables.
The credit risk from our OTC derivative contracts, such as forwards and swaps, derives from the counterparty to the transaction. Individual counterparty exposure is managed within predetermined credit limits and includes the use of cash-call margins when appropriate, thereby reducing the risk of significant nonperformance. We also use futures, swaps and option contracts that have a negligible credit risk because these trades are cleared with an exchange clearinghouse and subject to mandatory margin requirements until settled; however, we are exposed to the credit risk of those exchange brokers for receivables arising from daily margin cash calls, as well as for cash deposited to meet initial margin requirements.
Our trade receivables result primarily from the sale of products from, or related to, our refinery operations and reflect a broad national and international customer base, which limits our exposure to concentrations of credit risk. The majority of these receivables have payment terms of
30 days or less
. We continually monitor this exposure and the creditworthiness of the counterparties and recognize bad debt expense based on historical write-off experience or specific counterparty collectability. Generally, we do not require collateral to limit the exposure to loss; however, we will sometimes use letters of credit, prepayments, and master netting arrangements to mitigate credit risk with counterparties that both buy from and sell to us, as these agreements permit the amounts owed by us or owed to others to be offset against amounts due us.
Certain of our derivative instruments contain provisions that require us to post collateral if the derivative exposure exceeds a threshold amount. We have contracts with fixed threshold amounts and other contracts with variable threshold amounts that are contingent on our credit rating. The variable threshold amounts typically decline for lower credit ratings, while both the variable and fixed threshold amounts typically revert to zero if our credit ratings fall below investment grade. Cash is the primary collateral in all contracts; however, many contracts also permit us to post letters of credit as collateral.
The aggregate fair values of all derivative instruments with such credit-risk-related contingent features that were in a liability position were not material at
June 30, 2014
, or
December 31, 2013
.
Note 15—
Fair Value Measurements
Fair Values of Financial Instruments
We used the following methods and assumptions to estimate the fair value of financial instruments:
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•
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Cash and cash equivalents: The carrying amount reported on the consolidated balance sheet approximates fair value.
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•
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Accounts and notes receivable: The carrying amount reported on the consolidated balance sheet approximates fair value.
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•
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Debt: The carrying amount of our floating-rate debt approximates fair value. The fair value of our fixed-rate debt is estimated based on quoted market prices.
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•
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Commodity swaps: Fair value is estimated based on forward market prices and approximates the exit price at period end. When forward market prices are not available, fair value is estimated using the forward prices of a similar commodity with adjustments for differences in quality or location.
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•
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Futures: Fair values are based on quoted market prices obtained from the New York Mercantile Exchange, the InterContinental Exchange Futures or other traded exchanges.
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•
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Forward-exchange contracts: Fair values are estimated by comparing the contract rate to the forward rate in effect at the end of the respective reporting periods and approximating the exit price at those dates.
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We carry certain assets and liabilities at fair value, which we measure at the reporting date using an exit price (i.e., the price that would be received to sell an asset or paid to transfer a liability), and disclose the quality of these fair values based on the valuation inputs used in these measurements under the following hierarchy:
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•
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Level 1: Fair value measured with unadjusted quoted prices from an active market for identical assets or liabilities.
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•
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Level 2: Fair value measured with: 1) adjusted quoted prices from an active market for similar assets; or 2) other valuation inputs that are directly or indirectly observable.
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•
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Level 3: Fair value measured with unobservable inputs that are significant to the measurement.
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We classify the fair value of an asset or liability based on the lowest level of input significant to its measurement; however, the fair value of an asset or liability initially reported as Level 3 will be subsequently reported as Level 2 if the unobservable inputs become inconsequential to its measurement or corroborating market data becomes available. Conversely, an asset or liability initially reported as Level 2 will be subsequently reported as Level 3 if corroborating market data becomes unavailable. We made no material transfers in or out of Level 1 during the
six-month
periods ended
June 30, 2014
and 2013.
Recurring Fair Value Measurements
Financial assets and liabilities recorded at fair value on a recurring basis consist primarily of investments to support nonqualified deferred compensation plans and derivative instruments. The deferred compensation investments are measured at fair value using unadjusted prices available from national securities exchanges; therefore, these assets are categorized as Level 1 in the fair value hierarchy. We value our exchange-traded commodity derivatives using closing prices provided by the exchange as of the balance sheet date, and these are also classified as Level 1 in the fair value hierarchy. When exchange-cleared contracts lack sufficient liquidity or are valued using either adjusted exchange-provided prices or non-exchange quotes, we classify those contracts as Level 2. OTC financial swaps and physical commodity forward purchase and sales contracts are generally valued using quotations provided by brokers and price index developers such as Platts and Oil Price Information Service. We corroborate these quotes with market data and classify the resulting fair values as Level 2. In certain less liquid markets or for longer-term contracts, forward prices are not as readily available. In these circumstances, OTC swaps and physical commodity purchase and sales contracts are valued using internally developed methodologies that consider historical relationships among various commodities that result in management’s best estimate of fair value. We classify these contracts as Level 3. Financial OTC and physical commodity options are valued using industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and contractual prices for the underlying instruments, as well as other relevant economic measures. The degree to which these inputs are observable in the forward markets determines whether the options are classified as Level 2 or 3. We use a mid-market pricing convention (the mid-point between bid and ask prices). When appropriate, valuations are adjusted to reflect credit considerations, generally based on available market evidence.
The following tables display the fair value hierarchy for our material financial assets and liabilities either accounted for or disclosed at fair value on a recurring basis. These values are determined by treating each contract as the fundamental unit of account; therefore, derivative assets and liabilities with the same counterparty are shown gross (i.e., without the effect of netting where the legal right of setoff exists) in the hierarchy sections of these tables. These tables also show that our Level 3 activity was not material.
We have master netting arrangements for all of our exchange-cleared derivative instruments, the majority of our OTC derivative instruments, and certain physical commodity forward contracts (primarily pipeline crude oil deliveries). The following tables show these contracts on a net basis in the column “Effect of Counterparty Netting.” We have no contracts that are subject to master netting arrangements that are reflected gross on the consolidated balance sheet.
The carrying values and fair values by hierarchy of our material financial instruments, either carried or disclosed at fair value, and derivative assets and liabilities, including any effects of master netting agreements or collateral, were:
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Millions of Dollars
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June 30, 2014
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Fair Value Hierarchy
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Total Fair Value of Gross Assets & Liabilities
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Effect of Counterparty Netting
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Effect of Collateral Netting
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Difference in Carrying Value and Fair Value
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Net Carrying Value Presented on the Balance Sheet
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Cash Collateral Received or Paid, Not Offset on Balance Sheet
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Level 1
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Level 2
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Level 3
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Commodity Derivative Assets
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Exchange-cleared instruments
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$
|
563
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152
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—
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715
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(703
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)
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—
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—
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12
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—
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OTC instruments
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—
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38
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—
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38
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(13
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)
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—
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—
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25
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—
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Physical forward contracts*
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—
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24
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6
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30
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(1
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)
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—
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—
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29
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—
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Rabbi trust assets
|
76
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—
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—
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76
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N/A
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N/A
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—
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76
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N/A
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$
|
639
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214
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6
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859
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(717
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)
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—
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—
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|
142
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Commodity Derivative Liabilities
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Exchange-cleared instruments
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$
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631
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161
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—
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792
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(703
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)
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(89
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—
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—
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—
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OTC instruments
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—
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28
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—
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28
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(13
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)
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—
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—
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15
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—
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Physical forward contracts*
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—
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11
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1
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12
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(1
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)
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—
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—
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11
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—
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Floating-rate debt
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52
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—
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—
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52
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N/A
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N/A
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—
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52
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N/A
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Fixed-rate debt, excluding capital leases**
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—
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6,482
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—
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6,482
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N/A
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N/A
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(523
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)
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5,959
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N/A
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$
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683
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6,682
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1
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7,366
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(717
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)
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(89
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)
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(523
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)
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6,037
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* Physical forward contracts may have a larger value on the balance sheet than disclosed in the fair value hierarchy when the remaining contract term at the reporting date is greater than 12 months and the short-term portion is an asset while the long-term portion is a liability, or vice versa.
** We carry fixed-rate debt on the balance sheet at amortized cost.
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Millions of Dollars
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December 31, 2013
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Fair Value Hierarchy
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Total Fair Value of Gross Assets & Liabilities
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Effect of Counterparty Netting
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Effect of Collateral Netting
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Difference in Carrying Value and Fair Value
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Net Carrying Value Presented on the Balance Sheet
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Cash Collateral Received or Paid, Not Offset on Balance Sheet
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Level 1
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Level 2
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Level 3
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Commodity Derivative Assets
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Exchange-cleared instruments
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$
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227
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332
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—
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559
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(538
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)
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—
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—
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21
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—
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OTC instruments
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—
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10
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—
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10
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(8
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)
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—
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—
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2
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—
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Physical forward contracts*
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—
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25
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|
|
2
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27
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—
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—
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—
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27
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—
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Rabbi trust assets
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64
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—
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—
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64
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N/A
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N/A
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|
—
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64
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N/A
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$
|
291
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|
|
367
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|
|
2
|
|
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660
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(546
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)
|
—
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—
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|
114
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Commodity Derivative Liabilities
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Exchange-cleared instruments
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$
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253
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|
326
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—
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579
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(538
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)
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(41
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)
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—
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—
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—
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OTC instruments
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—
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11
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|
—
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11
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(8
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)
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—
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—
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3
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—
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Physical forward contracts*
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—
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|
43
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|
1
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|
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44
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—
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—
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—
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44
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—
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Floating-rate debt
|
50
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—
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—
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50
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N/A
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|
N/A
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—
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50
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N/A
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Fixed-rate debt, excluding capital leases**
|
—
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6,168
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—
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6,168
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N/A
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N/A
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(262
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)
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5,906
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N/A
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|
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$
|
303
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|
|
6,548
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|
1
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|
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6,852
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|
(546
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)
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(41
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)
|
(262
|
)
|
6,003
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|
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* Physical forward contracts may have a larger value on the balance sheet than disclosed in the fair value hierarchy when the remaining contract term at the reporting date is greater than 12 months and the short-term portion is an asset while the long-term portion is a liability, or vice versa.
** We carry fixed-rate debt on the balance sheet at amortized cost.
The values presented in the preceding tables appear on our balance sheet as follows: for commodity derivative assets and liabilities, see the first table in
Note 14—Derivatives and Financial Instruments
; rabbi trust assets appear in the “Investments and long-term receivables” line; and floating-rate and fixed-rate debt appear in the “Short-term debt” and “Long-term debt” lines.
Nonrecurring Fair Value Remeasurements
During the
six-month period
ended
June 30, 2014
, there were no significant nonrecurring fair value remeasurements of assets subsequent to their initial recognition.
The following table shows the values of assets, by major category, measured at fair value on a nonrecurring basis in periods subsequent to their initial recognition during the
six-month
period ended
June 30,
2013
:
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Millions of Dollars
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|
|
|
Fair Value
Measurements Using
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Fair Value*
|
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Level 1
Inputs
|
|
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Level 2
Inputs
|
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Level 3
Inputs
|
|
|
Before-
Tax Loss
|
|
June 30, 2013
|
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Net properties, plants and equipment (held for use)
|
$
|
22
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|
|
22
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|
|
—
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|
|
—
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|
|
27
|
|
* Represents the fair value at the time of the impairment.
During the
six-month period ended June 30,
2013
, net PP&E held for use related to the composite graphite business in our M&S segment, with a carrying amount of
$18 million
, was written down to its fair value, resulting in a before-tax loss of
$18 million
. The fair value was based on an internal assessment of expected discounted future cash flows. During this same period, corporate net PP&E held for use, with a carrying amount of
$31 million
, was written down to its fair value of
$22 million
, resulting in a before-tax loss of
$9 million
. The fair value was primarily determined by a third-party valuation.
Note 16—
Employee Benefit Plans
Pension and Postretirement Plans
The components of net periodic benefit cost for the three and six months ended
June 30, 2014
and
2013
, were as follows:
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Millions of Dollars
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Pension Benefits
|
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Other Benefits
|
|
2014
|
|
2013
|
|
2014
|
|
|
2013
|
|
|
U.S.
|
|
|
Int’l.
|
|
|
U.S.
|
|
|
Int’l.
|
|
|
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Components of Net Periodic Benefit Cost
|
|
|
|
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Three Months Ended June 30
|
|
|
|
|
|
|
|
|
|
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Service cost
|
$
|
31
|
|
|
10
|
|
|
31
|
|
|
9
|
|
|
2
|
|
|
2
|
|
Interest cost
|
27
|
|
|
9
|
|
|
23
|
|
|
8
|
|
|
2
|
|
|
1
|
|
Expected return on plan assets
|
(35
|
)
|
|
(10
|
)
|
|
(30
|
)
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
Amortization of prior service cost (credit)
|
—
|
|
|
—
|
|
|
1
|
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
Recognized net actuarial loss
|
10
|
|
|
3
|
|
|
21
|
|
|
3
|
|
|
—
|
|
|
—
|
|
Total net periodic benefit cost
|
$
|
33
|
|
|
12
|
|
|
46
|
|
|
11
|
|
|
3
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30
|
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
$
|
61
|
|
|
20
|
|
|
62
|
|
|
18
|
|
|
4
|
|
|
4
|
|
Interest cost
|
54
|
|
|
18
|
|
|
46
|
|
|
16
|
|
|
4
|
|
|
3
|
|
Expected return on plan assets
|
(71
|
)
|
|
(19
|
)
|
|
(60
|
)
|
|
(15
|
)
|
|
—
|
|
|
—
|
|
Amortization of prior service cost (credit)
|
1
|
|
|
(1
|
)
|
|
1
|
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
Recognized net actuarial loss (gain)
|
20
|
|
|
6
|
|
|
42
|
|
|
8
|
|
|
(1
|
)
|
|
—
|
|
Total net periodic benefit cost
|
$
|
65
|
|
|
24
|
|
|
91
|
|
|
26
|
|
|
6
|
|
|
6
|
|
During the first half of
2014
, we contributed
$163 million
to our U.S. plans and
$31 million
to our international plans. We currently expect to make additional contributions of approximately
$50 million
in 2014, primarily to our international plans.
Note 17—
Accumulated Other Comprehensive Income (Loss)
The following table depicts changes in accumulated other comprehensive income (loss) by component, as well as detail on reclassifications out of accumulated other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
Defined Benefit Plans
|
|
|
Foreign Currency Translation
|
|
|
Hedging
|
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
$
|
(778
|
)
|
|
466
|
|
|
(2
|
)
|
|
(314
|
)
|
Other comprehensive loss before reclassifications
|
(5
|
)
|
|
(281
|
)
|
|
1
|
|
|
(285
|
)
|
Amounts reclassified from accumulated other comprehensive income (loss)*
|
|
|
|
|
|
|
|
Amortization of defined benefit plan items**
|
|
|
|
|
|
|
|
Actuarial losses
|
33
|
|
|
—
|
|
|
—
|
|
|
33
|
|
Net current period other comprehensive income (loss)
|
28
|
|
|
(281
|
)
|
|
1
|
|
|
(252
|
)
|
June 30, 2013
|
$
|
(750
|
)
|
|
185
|
|
|
(1
|
)
|
|
(566
|
)
|
|
|
|
|
|
|
|
|
December 31, 2013
|
$
|
(404
|
)
|
|
443
|
|
|
(2
|
)
|
|
37
|
|
Other comprehensive income before reclassifications
|
4
|
|
|
128
|
|
|
—
|
|
|
132
|
|
Amounts reclassified from accumulated other comprehensive income (loss)*
|
|
|
|
|
|
|
|
|
Amortization of defined benefit plan items**
|
|
|
|
|
|
|
|
Actuarial losses
|
17
|
|
|
—
|
|
|
—
|
|
|
17
|
|
Net current period other comprehensive income
|
21
|
|
|
128
|
|
|
—
|
|
|
149
|
|
June 30, 2014
|
$
|
(383
|
)
|
|
571
|
|
|
(2
|
)
|
|
186
|
|
* There were no significant reclassifications related to foreign currency translation or hedging.
** These accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit cost (see
Note 16—Employee Benefit Plans
, for additional information).
Note 18—
Cash Flow Information
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
Six Months Ended
|
|
June 30
|
|
2014
|
|
|
2013
|
|
Cash Payments
|
|
|
|
Interest
|
$
|
123
|
|
|
132
|
|
Income taxes
|
1,093
|
|
|
896
|
|
Noncash Investing and Financing Activities
As discussed more fully in
Note 5—Assets Held for Sale or Sold
, on February 25, 2014, we completed the exchange of our flow improvers business for shares of Phillips 66 common stock owned by the other party to the transaction. The noncash portion of the net assets surrendered by us in the exchange was
$204 million
, and we received approximately
17.4 million
shares of our common stock, with a fair value at the time of the exchange of
$1.35 billion
.
Note 19—
Related Party Transactions
Significant transactions with related parties were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
Three Months Ended
June 30
|
|
Six Months Ended
June 30
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
Operating revenues and other income (a)
|
$
|
1,586
|
|
|
2,050
|
|
|
3,653
|
|
|
3,799
|
|
Purchases (b)
|
4,535
|
|
|
4,474
|
|
|
8,526
|
|
|
8,761
|
|
Operating expenses and selling, general and administrative expenses (c)
|
41
|
|
|
28
|
|
|
76
|
|
|
52
|
|
Interest expense (d)
|
2
|
|
|
2
|
|
|
4
|
|
|
4
|
|
|
|
(a)
|
We sold crude oil to the Malaysian Refining Company Sdn. Bdh. (MRC). NGL and other petrochemical feedstocks, along with solvents, were sold to CPChem, and gas oil and hydrogen feedstocks were sold to Excel. Certain feedstocks and intermediate products were sold to WRB. We also acted as agent for WRB in supplying other crude oil and feedstocks, wherein the transactional amounts did not impact operating revenues. In addition, we charged several of our affiliates, including CPChem and MSLP, for the use of common facilities, such as steam generators, waste and water treaters, and warehouse facilities.
|
|
|
(b)
|
We purchased refined products from WRB. We also acted as agent for WRB in distributing asphalt and solvents, wherein the transactional amounts did not impact purchases. We purchased natural gas and NGL from DCP Midstream, LLC (DCP Midstream) and CPChem for use in our refinery processes and other feedstocks from various affiliates. We purchased refined products from MRC. We also paid fees to various pipeline equity companies for transporting finished refined products. In addition, we paid a price upgrade to MSLP for heavy crude processing. We purchased base oils and fuel products from Excel for use in our refining and specialty businesses.
|
|
|
(c)
|
We paid utility, commission and processing fees to various affiliates.
|
|
|
(d)
|
We incurred interest expense on a note payable to MSLP.
|
Note 20—
Segment Disclosures and Related Information
Our operating segments are:
|
|
1)
|
Midstream—
Gathers, processes, transports and markets natural gas; and transports, fractionates and markets NGL in the United States. In addition, this segment transports crude oil and other feedstocks to our refineries and other locations, and delivers refined and specialty products to market. The Midstream segment includes, among other businesses, our
50 percent
equity investment in DCP Midstream and our investment in Phillips 66 Partners LP.
|
|
|
2)
|
Chemicals—
Manufactures and markets petrochemicals and plastics on a worldwide basis. The Chemicals segment consists of our
50 percent
equity investment in CPChem.
|
|
|
3)
|
Refining—
Buys, sells and refines crude oil and other feedstocks at
15
refineries, mainly in the United States, Europe and Asia.
|
|
|
4)
|
Marketing and Specialties—
Purchases for resale and markets refined products, mainly in the United States and Europe. In addition, this segment includes the manufacturing and marketing of specialty products (such as base oils and lubricants), as well as power generation operations.
|
Corporate and Other includes general corporate overhead, interest expense, our investments in new technologies and various other corporate activities. Corporate assets include all cash and cash equivalents.
We evaluate performance and allocate resources based on net income attributable to Phillips 66. Intersegment sales are at prices that approximate market.
Effective January 1, 2014, we changed the organizational structure of the internal financial information reviewed by our chief executive officer, and determined this resulted in a change in the composition of our operating segments. The primary effects of this reporting reorganization were as follows:
|
|
•
|
We moved
two
of our equity investments, Excel and Jupiter Sulphur, LLC, as well as the commission revenues related to needle and anode coke, polypropylene and solvents, from the Refining segment to the M&S segment.
|
|
|
•
|
We moved several refining logistics projects from the Refining segment to the Midstream segment.
|
The new segment alignment is presented for the
three- and six-month periods
ended
June 30, 2014
, with the prior periods recast for comparability.
Analysis of Results by Operating Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
Three Months Ended
June 30
|
|
Six Months Ended
June 30
|
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
|
Sales and Other Operating Revenues
|
|
|
|
|
|
Midstream
|
|
|
|
|
|
Total sales
|
$
|
1,155
|
|
1,481
|
|
|
3,310
|
|
3,109
|
|
Intersegment eliminations
|
(274
|
)
|
(210
|
)
|
|
(566
|
)
|
(442
|
)
|
Total Midstream
|
881
|
|
1,271
|
|
|
2,744
|
|
2,667
|
|
Chemicals
|
2
|
|
2
|
|
|
4
|
|
4
|
|
Refining
|
|
|
|
|
|
Total sales
|
33,628
|
|
30,994
|
|
|
62,843
|
|
60,756
|
|
Intersegment eliminations
|
(18,793
|
)
|
(18,510
|
)
|
|
(36,351
|
)
|
(36,367
|
)
|
Total Refining
|
14,835
|
|
12,484
|
|
|
26,492
|
|
24,389
|
|
Marketing and Specialties
|
|
|
|
|
|
Total sales
|
30,489
|
|
29,729
|
|
|
57,535
|
|
57,909
|
|
Intersegment eliminations
|
(666
|
)
|
(305
|
)
|
|
(958
|
)
|
(583
|
)
|
Total Marketing and Specialties
|
29,823
|
|
29,424
|
|
|
56,577
|
|
57,326
|
|
Corporate and Other
|
8
|
|
9
|
|
|
15
|
|
15
|
|
Consolidated sales and other operating revenues
|
$
|
45,549
|
|
43,190
|
|
|
85,832
|
|
84,401
|
|
|
|
|
|
|
|
Net Income (Loss) Attributable to Phillips 66
|
|
|
|
|
|
Midstream
|
$
|
108
|
|
90
|
|
|
296
|
|
201
|
|
Chemicals
|
324
|
|
181
|
|
|
640
|
|
463
|
|
Refining
|
390
|
|
455
|
|
|
696
|
|
1,359
|
|
Marketing and Specialties
|
162
|
|
344
|
|
|
299
|
|
534
|
|
Corporate and Other
|
(121
|
)
|
(126
|
)
|
|
(202
|
)
|
(221
|
)
|
Discontinued operations
|
—
|
|
14
|
|
|
706
|
|
29
|
|
Consolidated net income attributable to Phillips 66
|
$
|
863
|
|
958
|
|
|
2,435
|
|
2,365
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
June 30
2014
|
|
|
December 31
2013
|
|
Total Assets
|
|
|
|
Midstream
|
$
|
5,803
|
|
|
5,485
|
|
Chemicals
|
4,930
|
|
|
4,377
|
|
Refining
|
26,946
|
|
|
26,046
|
|
Marketing and Specialties
|
7,380
|
|
|
7,331
|
|
Corporate and Other
|
5,763
|
|
|
6,348
|
|
Discontinued operations
|
—
|
|
|
211
|
|
Consolidated total assets
|
$
|
50,822
|
|
|
49,798
|
|
Note 21—
Income Taxes
Our effective tax rate for the
second quarter
and the
first six months
of
2014
was
36 percent
and
34 percent
, respectively, compared with
35 percent
and
33 percent
for the corresponding periods of
2013
. The effective tax rate varies from the federal statutory tax rate of
35 percent
primarily as a result of state tax expense, offset by the manufacturing deduction and foreign operations.
Note 22—
Phillips 66 Partners LP
In 2013, we formed Phillips 66 Partners, a master limited partnership, to own, operate, develop and acquire primarily fee-based crude oil, refined petroleum product and NGL pipelines and terminals, as well as other transportation and midstream assets.
On March 1, 2014, we contributed to Phillips 66 Partners certain transportation, terminaling and storage assets for total consideration of
$700 million
, which consisted of
$400 million
in cash, the receipt of
3,530,595
common units and
72,053
general partner units of Phillips 66 Partners and a 5-year,
$160 million
note receivable. These assets consisted of our Gold Line products system and the Medford spheres,
two
newly constructed refinery-grade propylene storage spheres. Since we consolidate Phillips 66 Partners for financial reporting purposes, this transaction was eliminated upon consolidation and did not impact our financial position or cash flow.
At
June 30, 2014
, we owned a
73 percent
limited partner interest and a
2 percent
general partner interest in Phillips 66 Partners, while the public owned a
25 percent
limited partner interest. We consolidate Phillips 66 Partners because we control the partnership through our general partner interest (see
Note 2—Variable Interest Entities (VIEs)
for additional information). The public’s ownership interest in Phillips 66 Partners was
$412 million
at
June 30, 2014
, and is reflected as a noncontrolling interest in our financial statements. The most significant asset of Phillips 66 Partners that can only be used to settle its obligations was net PP&E of
$275 million
at June 30, 2014.
Note 23—
New Accounting Standards
In April 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.” This ASU amends the definition of discontinued operations so that only disposals of components of an entity representing major strategic shifts that have a major effect on an entity’s operations and financial results will qualify for discontinued operations reporting. The ASU also requires additional disclosures about discontinued operations and individually material disposals that do not meet the definition of a discontinued operation. ASU 2014-08 is effective January 1, 2015, and earlier application is permitted, but only for disposals not previously reported in the financial statements. We adopted this ASU effective July 1, 2014, and the adoption of this ASU did not have an effect on our consolidated financial statements.
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” The new standard converged guidance on recognizing revenues in contracts with customers under accounting principles generally accepted in the United States and International Financial Reporting Standards. This ASU is intended to improve comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets. ASU 2014-09 is effective for annual and quarterly reporting periods of public entities beginning after December 15, 2016. Early application for public entities is not permitted. We are currently evaluating the provisions of ASU 2014-09 and assessing the impact, if any, it may have on our financial position and results of operations.
Note 24—
Condensed Consolidating Financial Information
Our
$5.8 billion
of Senior Notes were issued by Phillips 66, and are guaranteed by Phillips 66 Company, a
100
-percent-owned subsidiary. Phillips 66 Company has fully and unconditionally guaranteed the payment obligations of Phillips 66 with respect to these debt securities. The following condensed consolidating financial information presents the results of operations, financial position and cash flows for:
|
|
•
|
Phillips 66 and Phillips 66 Company (in each case, reflecting investments in subsidiaries utilizing the equity method of accounting).
|
|
|
•
|
All other nonguarantor subsidiaries.
|
|
|
•
|
The consolidating adjustments necessary to present Phillips 66’s results on a consolidated basis.
|
This condensed consolidating financial information should be read in conjunction with the accompanying consolidated financial statements and notes.
Effective with fiscal year 2013, we revised the cash flow presentation of inter-column transactions associated with our centralized cash management program and intercompany loans, from operating cash flows to investing cash flows, in a new line item labeled “Intercompany lending activities.” Additionally, interest and debt expense in the statement of income was revised to eliminate intra-column lending transactions. All periods have been revised to conform to this presentation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
Three Months Ended June 30, 2014
|
Statement of Income
|
Phillips 66
|
|
Phillips 66 Company
|
|
All Other Subsidiaries
|
|
Consolidating Adjustments
|
|
Total Consolidated
|
|
Revenues and Other Income
|
|
|
|
|
|
Sales and other operating revenues
|
$
|
—
|
|
30,145
|
|
15,404
|
|
—
|
|
45,549
|
|
Equity in earnings of affiliates
|
908
|
|
604
|
|
130
|
|
(878
|
)
|
764
|
|
Net gain on dispositions
|
—
|
|
—
|
|
9
|
|
—
|
|
9
|
|
Other income (loss)
|
—
|
|
18
|
|
(1
|
)
|
—
|
|
17
|
|
Intercompany revenues
|
—
|
|
1,057
|
|
5,700
|
|
(6,757
|
)
|
—
|
|
Total Revenues and Other Income
|
908
|
|
31,824
|
|
21,242
|
|
(7,635
|
)
|
46,339
|
|
|
|
|
|
|
|
Costs and Expenses
|
|
|
|
|
|
Purchased crude oil and products
|
—
|
|
27,670
|
|
18,358
|
|
(6,712
|
)
|
39,316
|
|
Operating expenses
|
—
|
|
862
|
|
226
|
|
(11
|
)
|
1,077
|
|
Selling, general and administrative expenses
|
2
|
|
316
|
|
117
|
|
(23
|
)
|
412
|
|
Depreciation and amortization
|
—
|
|
183
|
|
56
|
|
—
|
|
239
|
|
Impairments
|
—
|
|
1
|
|
2
|
|
—
|
|
3
|
|
Taxes other than income taxes
|
—
|
|
1,416
|
|
2,416
|
|
—
|
|
3,832
|
|
Accretion on discounted liabilities
|
—
|
|
4
|
|
2
|
|
—
|
|
6
|
|
Interest and debt expense
|
67
|
|
2
|
|
8
|
|
(11
|
)
|
66
|
|
Foreign currency transaction losses
|
—
|
|
—
|
|
29
|
|
—
|
|
29
|
|
Total Costs and Expenses
|
69
|
|
30,454
|
|
21,214
|
|
(6,757
|
)
|
44,980
|
|
Income from continuing operations before income taxes
|
839
|
|
1,370
|
|
28
|
|
(878
|
)
|
1,359
|
|
Provision (benefit) for income taxes
|
(24
|
)
|
462
|
|
49
|
|
—
|
|
487
|
|
Income (Loss) From Continuing Operations
|
863
|
|
908
|
|
(21
|
)
|
(878
|
)
|
872
|
|
Income from discontinued operations
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Net income (loss)
|
863
|
|
908
|
|
(21
|
)
|
(878
|
)
|
872
|
|
Less: net income attributable to noncontrolling interests
|
—
|
|
—
|
|
9
|
|
—
|
|
9
|
|
Net Income (Loss) Attributable to Phillips 66
|
$
|
863
|
|
908
|
|
(30
|
)
|
(878
|
)
|
863
|
|
|
|
|
|
|
|
Comprehensive Income
|
$
|
972
|
|
1,017
|
|
81
|
|
(1,089
|
)
|
981
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
Three Months Ended June 30, 2013
|
Statement of Income
|
Phillips 66
|
|
Phillips 66 Company
|
|
All Other Subsidiaries
|
|
Consolidating Adjustments
|
|
Total Consolidated
|
|
Revenues and Other Income
|
|
|
|
|
|
Sales and other operating revenues
|
$
|
—
|
|
29,335
|
|
13,855
|
|
—
|
|
43,190
|
|
Equity in earnings of affiliates
|
1,003
|
|
637
|
|
78
|
|
(1,100
|
)
|
618
|
|
Net gain on dispositions
|
—
|
|
40
|
|
1
|
|
—
|
|
41
|
|
Other income (loss)
|
(2
|
)
|
34
|
|
17
|
|
—
|
|
49
|
|
Intercompany revenues
|
—
|
|
412
|
|
5,530
|
|
(5,942
|
)
|
—
|
|
Total Revenues and Other Income
|
1,001
|
|
30,458
|
|
19,481
|
|
(7,042
|
)
|
43,898
|
|
|
|
|
|
|
|
Costs and Expenses
|
|
|
|
|
|
Purchased crude oil and products
|
—
|
|
26,420
|
|
16,747
|
|
(5,910
|
)
|
37,257
|
|
Operating expenses
|
—
|
|
821
|
|
218
|
|
(7
|
)
|
1,032
|
|
Selling, general and administrative expenses
|
1
|
|
264
|
|
126
|
|
(23
|
)
|
368
|
|
Depreciation and amortization
|
—
|
|
177
|
|
52
|
|
—
|
|
229
|
|
Impairments
|
—
|
|
—
|
|
1
|
|
—
|
|
1
|
|
Taxes other than income taxes
|
—
|
|
1,295
|
|
2,206
|
|
—
|
|
3,501
|
|
Accretion on discounted liabilities
|
—
|
|
5
|
|
1
|
|
—
|
|
6
|
|
Interest and debt expense
|
67
|
|
3
|
|
1
|
|
(2
|
)
|
69
|
|
Foreign currency transaction gains
|
—
|
|
(1
|
)
|
(17
|
)
|
—
|
|
(18
|
)
|
Total Costs and Expenses
|
68
|
|
28,984
|
|
19,335
|
|
(5,942
|
)
|
42,445
|
|
Income from continuing operations before income taxes
|
933
|
|
1,474
|
|
146
|
|
(1,100
|
)
|
1,453
|
|
Provision (benefit) for income taxes
|
(25
|
)
|
471
|
|
61
|
|
—
|
|
507
|
|
Income From Continuing Operations
|
958
|
|
1,003
|
|
85
|
|
(1,100
|
)
|
946
|
|
Income from discontinued operations*
|
—
|
|
—
|
|
14
|
|
—
|
|
14
|
|
Net income
|
958
|
|
1,003
|
|
99
|
|
(1,100
|
)
|
960
|
|
Less: net income attributable to noncontrolling interests
|
—
|
|
—
|
|
2
|
|
—
|
|
2
|
|
Net Income Attributable to Phillips 66
|
$
|
958
|
|
1,003
|
|
97
|
|
(1,100
|
)
|
958
|
|
|
|
|
|
|
|
Comprehensive Income
|
$
|
1,013
|
|
1,059
|
|
141
|
|
(1,197
|
)
|
1,016
|
|
* Net of provision for income taxes on discontinued operations:
|
$
|
—
|
|
—
|
|
7
|
|
—
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
Six Months Ended June 30, 2014
|
Statement of Income
|
Phillips 66
|
|
Phillips 66 Company
|
|
All Other Subsidiaries
|
|
Consolidating Adjustments
|
|
Total Consolidated
|
|
Revenues and Other Income
|
|
|
|
|
|
Sales and other operating revenues
|
$
|
—
|
|
57,384
|
|
28,448
|
|
—
|
|
85,832
|
|
Equity in earnings of affiliates
|
1,830
|
|
1,450
|
|
308
|
|
(2,046
|
)
|
1,542
|
|
Net gain on dispositions
|
—
|
|
—
|
|
16
|
|
—
|
|
16
|
|
Other income
|
—
|
|
40
|
|
8
|
|
—
|
|
48
|
|
Intercompany revenues
|
—
|
|
1,335
|
|
10,401
|
|
(11,736
|
)
|
—
|
|
Total Revenues and Other Income
|
1,830
|
|
60,209
|
|
39,181
|
|
(13,782
|
)
|
87,438
|
|
|
|
|
|
|
|
Costs and Expenses
|
|
|
|
|
|
Purchased crude oil and products
|
—
|
|
52,054
|
|
33,296
|
|
(11,653
|
)
|
73,697
|
|
Operating expenses
|
2
|
|
1,765
|
|
417
|
|
(17
|
)
|
2,167
|
|
Selling, general and administrative expenses
|
5
|
|
602
|
|
255
|
|
(48
|
)
|
814
|
|
Depreciation and amortization
|
—
|
|
363
|
|
110
|
|
—
|
|
473
|
|
Impairments
|
—
|
|
2
|
|
2
|
|
—
|
|
4
|
|
Taxes other than income taxes
|
—
|
|
2,717
|
|
4,753
|
|
—
|
|
7,470
|
|
Accretion on discounted liabilities
|
—
|
|
9
|
|
3
|
|
—
|
|
12
|
|
Interest and debt expense
|
133
|
|
6
|
|
13
|
|
(18
|
)
|
134
|
|
Foreign currency transaction losses
|
—
|
|
—
|
|
10
|
|
—
|
|
10
|
|
Total Costs and Expenses
|
140
|
|
57,518
|
|
38,859
|
|
(11,736
|
)
|
84,781
|
|
Income from continuing operations before income taxes
|
1,690
|
|
2,691
|
|
322
|
|
(2,046
|
)
|
2,657
|
|
Provision (benefit) for income taxes
|
(49
|
)
|
861
|
|
101
|
|
—
|
|
913
|
|
Income from Continuing Operations
|
1,739
|
|
1,830
|
|
221
|
|
(2,046
|
)
|
1,744
|
|
Income from discontinued operations*
|
696
|
|
—
|
|
10
|
|
—
|
|
706
|
|
Net income
|
2,435
|
|
1,830
|
|
231
|
|
(2,046
|
)
|
2,450
|
|
Less: net income attributable to noncontrolling interests
|
—
|
|
—
|
|
15
|
|
—
|
|
15
|
|
Net Income Attributable to Phillips 66
|
$
|
2,435
|
|
1,830
|
|
216
|
|
(2,046
|
)
|
2,435
|
|
|
|
|
|
|
|
Comprehensive Income
|
$
|
2,584
|
|
1,979
|
|
365
|
|
(2,329
|
)
|
2,599
|
|
* Net of provision for income taxes on discontinued operations:
|
$
|
—
|
|
—
|
|
5
|
|
—
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
Six Months Ended June 30, 2013
|
Statement of Income
|
Phillips 66
|
|
Phillips 66 Company
|
|
All Other Subsidiaries
|
|
Consolidating Adjustments
|
|
Total Consolidated
|
|
Revenues and Other Income
|
|
|
|
|
|
Sales and other operating revenues
|
$
|
—
|
|
56,972
|
|
27,429
|
|
—
|
|
84,401
|
|
Equity in earnings of affiliates
|
2,455
|
|
1,776
|
|
236
|
|
(2,810
|
)
|
1,657
|
|
Net gain on dispositions
|
—
|
|
41
|
|
1
|
|
—
|
|
42
|
|
Other income (loss)
|
(2
|
)
|
49
|
|
25
|
|
—
|
|
72
|
|
Intercompany revenues
|
—
|
|
902
|
|
10,363
|
|
(11,265
|
)
|
—
|
|
Total Revenues and Other Income
|
2,453
|
|
59,740
|
|
38,054
|
|
(14,075
|
)
|
86,172
|
|
|
|
|
|
|
|
Costs and Expenses
|
|
|
|
|
|
Purchased crude oil and products
|
—
|
|
51,172
|
|
32,527
|
|
(11,199
|
)
|
72,500
|
|
Operating expenses
|
—
|
|
1,620
|
|
404
|
|
(14
|
)
|
2,010
|
|
Selling, general and administrative expenses
|
3
|
|
470
|
|
268
|
|
(46
|
)
|
695
|
|
Depreciation and amortization
|
—
|
|
360
|
|
111
|
|
—
|
|
471
|
|
Impairments
|
—
|
|
(3
|
)
|
28
|
|
—
|
|
25
|
|
Taxes other than income taxes
|
—
|
|
2,504
|
|
4,321
|
|
—
|
|
6,825
|
|
Accretion on discounted liabilities
|
—
|
|
10
|
|
2
|
|
—
|
|
12
|
|
Interest and debt expense
|
134
|
|
6
|
|
5
|
|
(6
|
)
|
139
|
|
Foreign currency transaction gains
|
—
|
|
—
|
|
(16
|
)
|
—
|
|
(16
|
)
|
Total Costs and Expenses
|
137
|
|
56,139
|
|
37,650
|
|
(11,265
|
)
|
82,661
|
|
Income from continuing operations before income taxes
|
2,316
|
|
3,601
|
|
404
|
|
(2,810
|
)
|
3,511
|
|
Provision (benefit) for income taxes
|
(49
|
)
|
1,146
|
|
73
|
|
—
|
|
1,170
|
|
Income from Continuing Operations
|
2,365
|
|
2,455
|
|
331
|
|
(2,810
|
)
|
2,341
|
|
Income from discontinued operations*
|
—
|
|
—
|
|
29
|
|
—
|
|
29
|
|
Net income
|
2,365
|
|
2,455
|
|
360
|
|
(2,810
|
)
|
2,370
|
|
Less: net income attributable to noncontrolling interests
|
—
|
|
—
|
|
5
|
|
—
|
|
5
|
|
Net Income Attributable to Phillips 66
|
$
|
2,365
|
|
2,455
|
|
355
|
|
(2,810
|
)
|
2,365
|
|
|
|
|
|
|
|
Comprehensive Income
|
$
|
2,113
|
|
2,204
|
|
87
|
|
(2,286
|
)
|
2,118
|
|
* Net of provision for income taxes on discontinued operations:
|
$
|
—
|
|
—
|
|
15
|
|
—
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
At June 30, 2014
|
Balance Sheet
|
Phillips 66
|
|
Phillips 66 Company
|
|
All Other Subsidiaries
|
|
Consolidating Adjustments
|
|
Total Consolidated
|
|
Assets
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
—
|
|
1,982
|
|
2,974
|
|
—
|
|
4,956
|
|
Accounts and notes receivable
|
10
|
|
2,924
|
|
7,948
|
|
(772
|
)
|
10,110
|
|
Inventories
|
—
|
|
2,863
|
|
2,065
|
|
—
|
|
4,928
|
|
Prepaid expenses and other current assets
|
8
|
|
292
|
|
311
|
|
—
|
|
611
|
|
Total Current Assets
|
18
|
|
8,061
|
|
13,298
|
|
(772
|
)
|
20,605
|
|
Investments and long-term receivables
|
34,531
|
|
27,363
|
|
7,958
|
|
(59,814
|
)
|
10,038
|
|
Net properties, plants and equipment
|
—
|
|
12,053
|
|
4,039
|
|
—
|
|
16,092
|
|
Goodwill
|
—
|
|
3,098
|
|
42
|
|
—
|
|
3,140
|
|
Intangibles
|
—
|
|
693
|
|
42
|
|
—
|
|
735
|
|
Other assets
|
36
|
|
159
|
|
21
|
|
(4
|
)
|
212
|
|
Total Assets
|
$
|
34,585
|
|
51,427
|
|
25,400
|
|
(60,590
|
)
|
50,822
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
Accounts payable
|
$
|
—
|
|
7,729
|
|
5,892
|
|
(772
|
)
|
12,849
|
|
Short-term debt
|
(1
|
)
|
19
|
|
20
|
|
—
|
|
38
|
|
Accrued income and other taxes
|
—
|
|
484
|
|
601
|
|
—
|
|
1,085
|
|
Employee benefit obligations
|
—
|
|
269
|
|
35
|
|
—
|
|
304
|
|
Other accruals
|
49
|
|
143
|
|
652
|
|
—
|
|
844
|
|
Total Current Liabilities
|
48
|
|
8,644
|
|
7,200
|
|
(772
|
)
|
15,120
|
|
Long-term debt
|
5,796
|
|
145
|
|
233
|
|
—
|
|
6,174
|
|
Asset retirement obligations and accrued environmental costs
|
—
|
|
533
|
|
180
|
|
—
|
|
713
|
|
Deferred income taxes
|
—
|
|
4,586
|
|
1,104
|
|
(4
|
)
|
5,686
|
|
Employee benefit obligations
|
—
|
|
630
|
|
195
|
|
—
|
|
825
|
|
Other liabilities and deferred credits
|
7,201
|
|
2,411
|
|
6,374
|
|
(15,637
|
)
|
349
|
|
Total Liabilities
|
13,045
|
|
16,949
|
|
15,286
|
|
(16,413
|
)
|
28,867
|
|
Common stock
|
13,784
|
|
25,401
|
|
8,006
|
|
(33,407
|
)
|
13,784
|
|
Retained earnings
|
7,570
|
|
8,891
|
|
1,210
|
|
(10,130
|
)
|
7,541
|
|
Accumulated other comprehensive income
|
186
|
|
186
|
|
454
|
|
(640
|
)
|
186
|
|
Noncontrolling interests
|
—
|
|
—
|
|
444
|
|
—
|
|
444
|
|
Total Liabilities and Equity
|
$
|
34,585
|
|
51,427
|
|
25,400
|
|
(60,590
|
)
|
50,822
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
At December 31, 2013
|
Balance Sheet
|
Phillips 66
|
|
Phillips 66 Company
|
|
All Other Subsidiaries
|
|
Consolidating Adjustments
|
|
Total Consolidated
|
|
Assets
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
—
|
|
2,162
|
|
3,238
|
|
—
|
|
5,400
|
|
Accounts and notes receivable
|
9
|
|
2,174
|
|
8,130
|
|
(681
|
)
|
9,632
|
|
Inventories
|
—
|
|
1,962
|
|
1,392
|
|
—
|
|
3,354
|
|
Prepaid expenses and other current assets
|
10
|
|
368
|
|
473
|
|
—
|
|
851
|
|
Total Current Assets
|
19
|
|
6,666
|
|
13,233
|
|
(681
|
)
|
19,237
|
|
Investments and long-term receivables
|
33,178
|
|
27,417
|
|
7,135
|
|
(56,510
|
)
|
11,220
|
|
Net properties, plants and equipment
|
—
|
|
12,031
|
|
3,367
|
|
—
|
|
15,398
|
|
Goodwill
|
—
|
|
3,094
|
|
2
|
|
—
|
|
3,096
|
|
Intangibles
|
—
|
|
694
|
|
4
|
|
—
|
|
698
|
|
Other assets
|
40
|
|
112
|
|
1
|
|
(4
|
)
|
149
|
|
Total Assets
|
$
|
33,237
|
|
50,014
|
|
23,742
|
|
(57,195
|
)
|
49,798
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
Accounts payable
|
$
|
1
|
|
7,507
|
|
4,263
|
|
(681
|
)
|
11,090
|
|
Short-term debt
|
—
|
|
18
|
|
6
|
|
—
|
|
24
|
|
Accrued income and other taxes
|
—
|
|
250
|
|
622
|
|
—
|
|
872
|
|
Employee benefit obligations
|
—
|
|
422
|
|
54
|
|
—
|
|
476
|
|
Other accruals
|
49
|
|
178
|
|
242
|
|
—
|
|
469
|
|
Total Current Liabilities
|
50
|
|
8,375
|
|
5,187
|
|
(681
|
)
|
12,931
|
|
Long-term debt
|
5,796
|
|
152
|
|
183
|
|
—
|
|
6,131
|
|
Asset retirement obligations and accrued environmental costs
|
—
|
|
527
|
|
173
|
|
—
|
|
700
|
|
Deferred income taxes
|
—
|
|
5,045
|
|
1,084
|
|
(4
|
)
|
6,125
|
|
Employee benefit obligations
|
—
|
|
724
|
|
197
|
|
—
|
|
921
|
|
Other liabilities and deferred credits
|
5,441
|
|
2,155
|
|
6,691
|
|
(13,689
|
)
|
598
|
|
Total Liabilities
|
11,287
|
|
16,978
|
|
13,515
|
|
(14,374
|
)
|
27,406
|
|
Common stock
|
16,291
|
|
25,938
|
|
8,302
|
|
(34,240
|
)
|
16,291
|
|
Retained earnings
|
5,622
|
|
7,061
|
|
1,163
|
|
(8,224
|
)
|
5,622
|
|
Accumulated other comprehensive income
|
37
|
|
37
|
|
320
|
|
(357
|
)
|
37
|
|
Noncontrolling interests
|
—
|
|
—
|
|
442
|
|
—
|
|
442
|
|
Total Liabilities and Equity
|
$
|
33,237
|
|
50,014
|
|
23,742
|
|
(57,195
|
)
|
49,798
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
Six Months Ended June 30, 2014
|
Statement of Cash Flows
|
Phillips 66
|
|
Phillips 66 Company
|
|
All Other Subsidiaries
|
|
Consolidating Adjustments
|
|
Total Consolidated
|
|
Cash Flows From Operating Activities
|
|
|
|
|
|
Net cash provided by continuing operating activities
|
$
|
24
|
|
1,109
|
|
1,222
|
|
(129
|
)
|
2,226
|
|
Net cash provided by discontinued operations
|
—
|
|
—
|
|
2
|
|
—
|
|
2
|
|
Net Cash Provided by Operating Activities
|
24
|
|
1,109
|
|
1,224
|
|
(129
|
)
|
2,228
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities
|
|
|
|
|
|
Capital expenditures and investments*
|
—
|
|
(1,098
|
)
|
(753
|
)
|
718
|
|
(1,133
|
)
|
Proceeds from asset dispositions
|
—
|
|
998
|
|
59
|
|
(400
|
)
|
657
|
|
Intercompany lending activities
|
2,211
|
|
(1,122
|
)
|
(1,089
|
)
|
—
|
|
—
|
|
Advances/loans—related parties
|
—
|
|
—
|
|
(3
|
)
|
—
|
|
(3
|
)
|
Other
|
—
|
|
(91
|
)
|
125
|
|
—
|
|
34
|
|
Net cash provided by (used in) continuing investing activities
|
2,211
|
|
(1,313
|
)
|
(1,661
|
)
|
318
|
|
(445
|
)
|
Net cash used in discontinued operations
|
—
|
|
—
|
|
(2
|
)
|
—
|
|
(2
|
)
|
Net Cash Provided by (Used in) Investing Activities
|
2,211
|
|
(1,313
|
)
|
(1,663
|
)
|
318
|
|
(447
|
)
|
|
|
|
|
|
|
Cash Flows From Financing Activities
|
|
|
|
|
|
Repayment of debt
|
—
|
|
(7
|
)
|
(10
|
)
|
—
|
|
(17
|
)
|
Issuance of common stock
|
(12
|
)
|
—
|
|
—
|
|
—
|
|
(12
|
)
|
Repurchase of common stock
|
(1,256
|
)
|
—
|
|
—
|
|
—
|
|
(1,256
|
)
|
Share exchange—PSPI transaction
|
(450
|
)
|
—
|
|
—
|
|
—
|
|
(450
|
)
|
Dividends paid on common stock
|
(510
|
)
|
—
|
|
(102
|
)
|
102
|
|
(510
|
)
|
Distributions to controlling interests
|
—
|
|
—
|
|
(289
|
)
|
289
|
|
—
|
|
Distributions to noncontrolling interests
|
—
|
|
—
|
|
(13
|
)
|
—
|
|
(13
|
)
|
Other*
|
(7
|
)
|
31
|
|
581
|
|
(580
|
)
|
25
|
|
Net cash provided by (used in) continuing financing activities
|
(2,235
|
)
|
24
|
|
167
|
|
(189
|
)
|
(2,233
|
)
|
Net cash provided by (used in) discontinued operations
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Net Cash Provided by (Used in) Financing Activities
|
(2,235
|
)
|
24
|
|
167
|
|
(189
|
)
|
(2,233
|
)
|
|
|
|
|
|
|
Effect of Exchange Rate Changes on Cash and Cash Equivalents
|
—
|
|
—
|
|
8
|
|
—
|
|
8
|
|
|
|
|
|
|
|
Net Change in Cash and Cash Equivalents
|
—
|
|
(180
|
)
|
(264
|
)
|
—
|
|
(444
|
)
|
Cash and cash equivalents at beginning of period
|
—
|
|
2,162
|
|
3,238
|
|
—
|
|
5,400
|
|
Cash and Cash Equivalents at End of Period
|
$
|
—
|
|
1,982
|
|
2,974
|
|
—
|
|
4,956
|
|
* Includes intercompany capital contributions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
Six Months Ended June 30, 2013
|
Statement of Cash Flows
|
Phillips 66
|
|
Phillips 66 Company
|
|
All Other Subsidiaries
|
|
Consolidating Adjustments
|
|
Total Consolidated
|
|
Cash Flows From Operating Activities
|
|
|
|
|
|
Net cash provided by continuing operating activities
|
$
|
23
|
|
2,274
|
|
918
|
|
(70
|
)
|
3,145
|
|
Net cash provided by discontinued operations
|
—
|
|
—
|
|
36
|
|
—
|
|
36
|
|
Net Cash Provided by Operating Activities
|
23
|
|
2,274
|
|
954
|
|
(70
|
)
|
3,181
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities
|
|
|
|
|
|
Capital expenditures and investments*
|
—
|
|
(404
|
)
|
(364
|
)
|
20
|
|
(748
|
)
|
Proceeds from asset dispositions
|
—
|
|
53
|
|
16
|
|
—
|
|
69
|
|
Intercompany lending activities
|
1,800
|
|
(1,793
|
)
|
(7
|
)
|
—
|
|
—
|
|
Collection of advances/loans—related parties
|
—
|
|
—
|
|
100
|
|
—
|
|
100
|
|
Net cash provided by (used in) continuing investing activities
|
1,800
|
|
(2,144
|
)
|
(255
|
)
|
20
|
|
(579
|
)
|
Net cash used in discontinued operations
|
—
|
|
—
|
|
(10
|
)
|
—
|
|
(10
|
)
|
Net Cash Provided by (Used in) Investing Activities
|
1,800
|
|
(2,144
|
)
|
(265
|
)
|
20
|
|
(589
|
)
|
|
|
|
|
|
|
Cash Flows From Financing Activities
|
|
|
|
|
|
Repayment of debt
|
(500
|
)
|
(5
|
)
|
—
|
|
—
|
|
(505
|
)
|
Issuance of common stock
|
(3
|
)
|
—
|
|
—
|
|
—
|
|
(3
|
)
|
Repurchase of common stock
|
(928
|
)
|
—
|
|
—
|
|
—
|
|
(928
|
)
|
Dividends paid on common stock
|
(386
|
)
|
—
|
|
(70
|
)
|
70
|
|
(386
|
)
|
Distributions to noncontrolling interests
|
—
|
|
—
|
|
(1
|
)
|
—
|
|
(1
|
)
|
Other*
|
(6
|
)
|
4
|
|
19
|
|
(20
|
)
|
(3
|
)
|
Net cash used in continuing financing activities
|
(1,823
|
)
|
(1
|
)
|
(52
|
)
|
50
|
|
(1,826
|
)
|
Net cash provided by (used in) discontinued operations
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Net Cash Used in Financing Activities
|
(1,823
|
)
|
(1
|
)
|
(52
|
)
|
50
|
|
(1,826
|
)
|
|
|
|
|
|
|
Effect of Exchange Rate Changes on Cash and Cash Equivalents
|
—
|
|
—
|
|
(20
|
)
|
—
|
|
(20
|
)
|
|
|
|
|
|
|
Net Change in Cash and Cash Equivalents
|
—
|
|
129
|
|
617
|
|
—
|
|
746
|
|
Cash and cash equivalents at beginning of period
|
—
|
|
2,410
|
|
1,064
|
|
—
|
|
3,474
|
|
Cash and Cash Equivalents at End of Period
|
$
|
—
|
|
2,539
|
|
1,681
|
|
—
|
|
4,220
|
|
* Includes intercompany capital contributions.