An operating lease is treated like a rental contract. Neither the leased asset nor the associated liability is reported on the lessee balance sheet, but the rights may be very similar to the rights of an owner. The lessee only records the lease payments as a rental expense in income statement.

Present Value of Future Operating Lease Payments (before Adoption of FASB Topic 842)
Adjustments to Financial Statements for Operating Leases
Adjusted Financial Ratios for Operating Leases (Summary)
Adjusted Total Asset Turnover
Adjusted Debt to Equity
Adjusted Return on Assets (ROA)

Phillips 66, future operating lease payments (before adoption of FASB Topic 842)

US$ in millions

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
Total undiscounted future operating lease payments	—	1,581)	1,826)	1,556)	2,009)
Discount rate¹	—	4.39%	4.31%	4.32%	4.38%

Total present value of future operating lease payments	—	1,391)	1,608)	1,372)	1,756)

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

¹ Weighted-average interest rate for Phillips 66 debt

2018 Calculations

Year	Future operating lease payments (as reported)	Year	Future operating lease payments (estimated)	Present value at 4.39%
2019	509)	2019	509)	488)
2020	392)	2020	392)	360)
2021	181)	2021	181)	159)
2022	124)	2022	124)	104)
2023	83)	2023	83)	67)
2024 and thereafter	292)	2024	83)	64)
		2025	83)	61)
		2026	83)	59)
		2027	43)	29)
Total:	1,581)		1,581)	1,391)

Based on: 10-K (reporting date: 2018-12-31).

2017 Calculations

Year	Future operating lease payments (as reported)	Year	Future operating lease payments (estimated)	Present value at 4.31%
2018	533)	2018	533)	511)
2019	420)	2019	420)	386)
2020	306)	2020	306)	270)
2021	141)	2021	141)	119)
2022	100)	2022	100)	81)
2023 and thereafter	326)	2023	100)	78)
		2024	100)	74)
		2025	100)	71)
		2026	26)	18)
Total:	1,826)		1,826)	1,608)

Based on: 10-K (reporting date: 2017-12-31).

2016 Calculations

Year	Future operating lease payments (as reported)	Year	Future operating lease payments (estimated)	Present value at 4.32%
2017	404)	2017	404)	387)
2018	362)	2018	362)	333)
2019	276)	2019	276)	243)
2020	200)	2020	200)	169)
2021	85)	2021	85)	69)
2022 and thereafter	229)	2022	85)	66)
		2023	85)	63)
		2024	59)	42)
Total:	1,556)		1,556)	1,372)

Based on: 10-K (reporting date: 2016-12-31).

2015 Calculations

Year	Future operating lease payments (as reported)	Year	Future operating lease payments (estimated)	Present value at 4.38%
2016	510)	2016	510)	489)
2017	418)	2017	418)	384)
2018	308)	2018	308)	271)
2019	234)	2019	234)	197)
2020	171)	2020	171)	138)
2021 and thereafter	368)	2021	171)	132)
		2022	171)	127)
		2023	26)	18)
Total:	2,009)		2,009)	1,756)

Based on: 10-K (reporting date: 2015-12-31).

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Phillips 66, adjustments to financial statements

US$ in millions

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
Adjustment to Total Assets
Total assets (as reported)	58,720)	54,302)	54,371)	51,653)	48,580)
Add: Operating lease right-of-use asset (before adoption of FASB Topic 842)¹	—)	1,391)	1,608)	1,372)	1,756)
Total assets (adjusted)	58,720)	55,693)	55,979)	53,025)	50,336)
Adjustment to Total Debt
Total debt (as reported)	11,763)	11,160)	10,110)	10,138)	8,887)
Add: Operating lease liability (before adoption of FASB Topic 842)²	—)	1,391)	1,608)	1,372)	1,756)
Add: Operating lease liabilities (included in Other accruals)	455)	—)	—)	—)	—)
Add: Operating lease liabilities (included in Other liabilities and deferred credits)	806)	—)	—)	—)	—)
Total debt (adjusted)	13,024)	12,551)	11,718)	11,510)	10,643)

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

^{1, 2} Equal to total present value of future operating lease payments.

Phillips 66, Financial Data: Reported vs. Adjusted

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Phillips 66, adjusted financial ratios

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
Total Asset Turnover¹
Reported total asset turnover	1.83	2.05	1.88	1.63	2.04
Adjusted total asset turnover	1.83	2.00	1.83	1.59	1.97
Debt to Equity²
Reported debt to equity	0.47	0.45	0.40	0.45	0.38
Adjusted debt to equity	0.52	0.51	0.47	0.51	0.46
Return on Assets³ (ROA)
Reported ROA	5.24%	10.30%	9.39%	3.01%	8.70%
Adjusted ROA	5.24%	10.05%	9.12%	2.93%	8.40%

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

¹ See details »

² See details »

³ See details »

Financial ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Phillips 66 adjusted total asset turnover ratio improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.
Adjusted debt to equity	A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity.	Phillips 66 adjusted debt to equity ratio deteriorated from 2017 to 2018 and from 2018 to 2019.
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Phillips 66 adjusted ROA improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.

Phillips 66, Financial Ratios: Reported vs. Adjusted

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	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Sales and other operating revenues	107,293)	111,461)	102,354)	84,279)	98,975)
Total assets	58,720)	54,302)	54,371)	51,653)	48,580)
Activity Ratio
Total asset turnover¹	1.83	2.05	1.88	1.63	2.04
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Sales and other operating revenues	107,293)	111,461)	102,354)	84,279)	98,975)
Adjusted total assets	58,720)	55,693)	55,979)	53,025)	50,336)
Activity Ratio
Adjusted total asset turnover²	1.83	2.00	1.83	1.59	1.97

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

2019 Calculations

¹ Total asset turnover = Sales and other operating revenues ÷ Total assets
= 107,293 ÷ 58,720 = 1.83

² Adjusted total asset turnover = Sales and other operating revenues ÷ Adjusted total assets
= 107,293 ÷ 58,720 = 1.83

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Activity ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Phillips 66 adjusted total asset turnover ratio improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Total debt	11,763)	11,160)	10,110)	10,138)	8,887)
Stockholders’ equity	24,910)	24,653)	25,085)	22,390)	23,100)
Solvency Ratio
Debt to equity¹	0.47	0.45	0.40	0.45	0.38
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Adjusted total debt	13,024)	12,551)	11,718)	11,510)	10,643)
Stockholders’ equity	24,910)	24,653)	25,085)	22,390)	23,100)
Solvency Ratio
Adjusted debt to equity²	0.52	0.51	0.47	0.51	0.46

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

2019 Calculations

¹ Debt to equity = Total debt ÷ Stockholders’ equity
= 11,763 ÷ 24,910 = 0.47

² Adjusted debt to equity = Adjusted total debt ÷ Stockholders’ equity
= 13,024 ÷ 24,910 = 0.52

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Solvency ratio	Description	The company
Adjusted debt-to-equity	A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity.	Phillips 66 adjusted debt-to-equity ratio deteriorated from 2017 to 2018 and from 2018 to 2019.

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Phillips 66	3,076)	5,595)	5,106)	1,555)	4,227)
Total assets	58,720)	54,302)	54,371)	51,653)	48,580)
Profitability Ratio
ROA¹	5.24%	10.30%	9.39%	3.01%	8.70%
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Net income attributable to Phillips 66	3,076)	5,595)	5,106)	1,555)	4,227)
Adjusted total assets	58,720)	55,693)	55,979)	53,025)	50,336)
Profitability Ratio
Adjusted ROA²	5.24%	10.05%	9.12%	2.93%	8.40%

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

2019 Calculations

¹ ROA = 100 × Net income attributable to Phillips 66 ÷ Total assets
= 100 × 3,076 ÷ 58,720 = 5.24%

² Adjusted ROA = 100 × Net income attributable to Phillips 66 ÷ Adjusted total assets
= 100 × 3,076 ÷ 58,720 = 5.24%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Phillips 66 adjusted ROA improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.

Phillips 66 (NYSE:PSX)

Analysis of Operating Leases

Present Value of Future Operating Lease Payments (before Adoption of FASB Topic 842)

Adjustments to Financial Statements for Operating Leases

Phillips 66, Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios for Operating Leases (Summary)

Phillips 66, Financial Ratios: Reported vs. Adjusted

Adjusted Total Asset Turnover

Adjusted Debt to Equity

Adjusted Return on Assets (ROA)