Phillips 66 (NYSE:PSX)

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Phillips 66, adjusted total assets

US$ in millions

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
As Reported
Total assets	58,720)	54,302)	54,371)	51,653)	48,580)
Adjustments
Add: Operating lease right-of-use asset (before adoption of FASB Topic 842)¹	—)	1,391)	1,608)	1,372)	1,756)
Add: Allowances	41)	22)	29)	34)	55)
Add: Estimated excess of current replacement cost over LIFO cost of inventories²	4,300)	2,900)	4,300)	3,300)	1,300)
Less: Deferred tax assets (included in Other assets)³	48)	49)	91)	92)	161)
After Adjustment
Adjusted total assets	63,013)	58,566)	60,217)	56,267)	51,530)

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 Operating lease right-of-use asset (before adoption of FASB Topic 842). See details »

² Estimated excess of current replacement cost over LIFO cost of inventories. See details »

³ Deferred tax assets (included in Other assets). See details »

An overall upward trajectory is observed in both total and adjusted assets between 2015 and 2019. Reported total assets grew from 48,580 million US$ to 58,720 million US$, while adjusted total assets increased from 51,530 million US$ to 63,013 million US$ over the same period. A period of relative stagnation occurred in 2018, where both metrics experienced a slight decline before rebounding significantly in 2019.

Asset Growth Trends: Total assets experienced a steady increase from 2015 to 2017, followed by a marginal decrease in 2018, and a subsequent surge in 2019. Adjusted total assets followed a similar pattern, showing a more pronounced increase through 2017 before a moderate correction in 2018 and a recovery to peak levels in 2019.
Variance between Reported and Adjusted Assets: A consistent positive variance is maintained, with adjusted total assets remaining higher than reported total assets in every recorded year. This adjustment gap expanded from 2,950 million US$ in 2015 to a peak of 5,846 million US$ in 2017, before stabilizing at 4,293 million US$ by the end of 2019.
Comparative Volatility: The adjusted assets exhibit slightly higher volatility compared to reported assets, particularly during the 2017 to 2018 transition, where the adjusted figure declined by 1,651 million US$ while the reported total assets remained nearly flat with a decrease of only 69 million US$.

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Phillips 66, adjusted total liabilities

US$ in millions

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
As Reported
Total liabilities	31,551)	27,149)	26,943)	27,928)	24,642)
Adjustments
Add: Operating lease liability (before adoption of FASB Topic 842)¹	—)	1,391)	1,608)	1,372)	1,756)
Less: Deferred tax liabilities²	5,553)	5,275)	5,008)	6,743)	6,041)
After Adjustment
Adjusted total liabilities	25,998)	23,265)	23,543)	22,557)	20,357)

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 Operating lease liability (before adoption of FASB Topic 842). See details »

² Deferred tax liabilities. See details »

The analysis of financial obligations between 2015 and 2019 reveals a general expansion in both reported and adjusted liability figures. Total liabilities increased from 24,642 million US dollars in 2015 to 31,551 million US dollars by 2019, representing a total growth of approximately 28% over the five-year period.

Total Liabilities Trend: A notable increase was recorded in 2016, followed by a period of relative stability from 2017 through 2018, where figures remained within the range of 26,943 million to 27,149 million US dollars. A substantial increase occurred in 2019, marking the highest liability level in the analyzed timeframe.
Adjusted Total Liabilities Performance: Adjusted liabilities followed a similar upward trajectory, starting at 20,357 million US dollars in 2015 and reaching 25,998 million US dollars by 2019. While reported liabilities fluctuated more prominently in the middle of the period, adjusted liabilities showed a steadier progression from 2015 to 2017 before a marginal decline in 2018.
Analysis of Liability Adjustments: The variance between reported total liabilities and adjusted total liabilities remained substantial throughout the period. The absolute difference peaked in 2019 at 5,553 million US dollars. The ratio of adjusted liabilities to total liabilities fluctuated, reaching its highest point in 2017 at approximately 87.4% and its lowest point in 2016 at approximately 80.8%.

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Phillips 66, adjusted stockholders’ equity

US$ in millions

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
As Reported
Stockholders’ equity	24,910)	24,653)	25,085)	22,390)	23,100)
Adjustments
Less: Net deferred tax assets (liabilities)¹	(5,505)	(5,226)	(4,917)	(6,651)	(5,880)
Add: Allowances	41)	22)	29)	34)	55)
Add: Estimated excess of current replacement cost over LIFO cost of inventories²	4,300)	2,900)	4,300)	3,300)	1,300)
Add: Noncontrolling interests	2,259)	2,500)	2,343)	1,335)	838)
After Adjustment
Adjusted total equity	37,015)	35,301)	36,674)	33,710)	31,173)

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 Net deferred tax assets (liabilities). See details »

² Estimated excess of current replacement cost over LIFO cost of inventories. See details »

Analysis of equity accounts from 2015 to 2019 reveals a general expansion in the capital base, although the growth trajectory differs significantly between reported and adjusted figures.

Reported Stockholders' Equity Trends: Reported equity experienced fluctuations over the five-year period. An initial decline occurred between 2015 and 2016, followed by a notable increase in 2017. The subsequent years showed relative stability with minor volatility, recording a slight decrease in 2018 and a marginal recovery in 2019 to reach 24,910 million USD.
Adjusted Total Equity Performance: Adjusted total equity demonstrated a more consistent upward trend compared to reported figures. Starting at 31,173 million USD in 2015, the value rose to 37,015 million USD by 2019. While a slight contraction was observed in 2018, the overall growth pattern remained robust throughout the period.
Analysis of the Equity Adjustment Gap: A widening variance is observable between the reported stockholders' equity and the adjusted total equity. The difference between these two metrics grew from 8,073 million USD in 2015 to 12,105 million USD in 2019. This indicates that the adjustments applied to the equity base increased in magnitude over time, playing an increasingly significant role in the total adjusted equity valuation.

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Phillips 66, adjusted capitalization table

US$ in millions

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
As Reported
Short-term debt	547)	67)	41)	550)	44)
Long-term debt	11,216)	11,093)	10,069)	9,588)	8,843)
Total reported debt	11,763)	11,160)	10,110)	10,138)	8,887)
Stockholders’ equity	24,910)	24,653)	25,085)	22,390)	23,100)
Total reported capital	36,673)	35,813)	35,195)	32,528)	31,987)
Adjustments to Debt
Add: Operating lease liability (before adoption of FASB Topic 842)¹	—)	1,391)	1,608)	1,372)	1,756)
Add: Operating lease liabilities (included in Other accruals)²	455)	—)	—)	—)	—)
Add: Operating lease liabilities (included in Other liabilities and deferred credits)³	806)	—)	—)	—)	—)
Adjusted total debt	13,024)	12,551)	11,718)	11,510)	10,643)
Adjustments to Equity
Less: Net deferred tax assets (liabilities)⁴	(5,505)	(5,226)	(4,917)	(6,651)	(5,880)
Add: Allowances	41)	22)	29)	34)	55)
Add: Estimated excess of current replacement cost over LIFO cost of inventories⁵	4,300)	2,900)	4,300)	3,300)	1,300)
Add: Noncontrolling interests	2,259)	2,500)	2,343)	1,335)	838)
Adjusted total equity	37,015)	35,301)	36,674)	33,710)	31,173)
After Adjustment
Adjusted total capital	50,039)	47,852)	48,392)	45,220)	41,816)

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 Operating lease liability (before adoption of FASB Topic 842). See details »

² Operating lease liabilities (included in Other accruals). See details »

³ Operating lease liabilities (included in Other liabilities and deferred credits). See details »

⁴ Net deferred tax assets (liabilities). See details »

⁵ Estimated excess of current replacement cost over LIFO cost of inventories. See details »

Between 2015 and 2019, a consistent upward trajectory is observed in both reported and adjusted capitalization metrics. Total reported capital increased from 31,987 million US$ to 36,673 million US$, while adjusted total capital exhibited more pronounced growth, rising from 41,816 million US$ to 50,039 million US$. This indicates a steady expansion of the overall capital base over the five-year period.

Debt Obligations: Total reported debt grew steadily from 8,887 million US$ in 2015 to 11,763 million US$ in 2019. Adjusted total debt followed a similar pattern, maintaining a consistent premium over reported figures and ending the period at 13,024 million US$. The persistent gap between reported and adjusted debt suggests the systematic inclusion of off-balance sheet liabilities in the adjusted figures.
Equity Position: Stockholders' equity showed moderate volatility, with slight declines in 2016 and 2018, before ending at 24,910 million US$ in 2019. In contrast, adjusted total equity demonstrated a stronger growth trend, increasing from 31,173 million US$ in 2015 to 37,015 million US$ in 2019. The adjusted equity figures consistently exceed reported equity by a substantial margin, indicating significant capitalization adjustments.
Capitalization Divergence: A widening divergence is observed between reported and adjusted totals over the analysis period. The variance in total capital expanded from 9,829 million US$ in 2015 to 13,366 million US$ in 2019. Adjusted total capital expanded by approximately 19.7% over the period, outstripping the 14.6% growth rate observed in reported total capital.

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Phillips 66, adjusted net income attributable to Phillips 66

US$ in millions

12 months ended:	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
As Reported
Net income attributable to Phillips 66	3,076)	5,595)	5,106)	1,555)	4,227)
Adjustments
Add: Deferred income tax expense (benefit)¹	182)	252)	(1,889)	610)	483)
Add: Increase (decrease) in allowances	19)	(7)	(5)	(21)	(16)
Add: Increase (decrease) in LIFO reserve²	1,400)	(1,400)	1,000)	2,000)	(1,700)
Add: Other comprehensive income (loss), net of income taxes	(7)	(75)	378)	(342)	(122)
Add: Comprehensive income (loss), net of tax, attributable to noncontrolling interest	301)	278)	142)	89)	53)
After Adjustment
Adjusted net income	4,971)	4,643)	4,732)	3,891)	2,925)

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 Deferred income tax expense (benefit). See details »

² Increase (decrease) in LIFO reserve. See details »

An analysis of the financial results from 2015 to 2019 reveals a significant divergence between reported net income attributable to Phillips 66 and adjusted net income. While reported net income exhibited high volatility, adjusted net income followed a more stable and generally ascending trajectory, suggesting that non-recurring items had a substantial impact on the statutory bottom line.

Reported Net Income Volatility: Reported net income experienced sharp fluctuations over the observed period. A significant decline occurred in 2016, where income dropped to 1,555 million USD from 4,227 million USD in 2015. This was followed by a strong recovery, peaking at 5,595 million USD in 2018, before declining again to 3,076 million USD by 2019.
Adjusted Net Income Stability: In contrast to reported figures, adjusted net income demonstrated consistent growth and lower variance. The value increased steadily from 2,925 million USD in 2015 to 4,732 million USD in 2017. After a marginal decrease in 2018 to 4,643 million USD, it reached a five-year peak of 4,971 million USD in 2019.
Income Adjustment Patterns: The relationship between reported and adjusted figures varies by year, indicating different types of financial adjustments. In 2016 and 2019, adjusted net income was substantially higher than reported net income, implying that significant one-time losses or non-cash charges reduced the statutory results. Conversely, in 2017 and 2018, reported net income exceeded adjusted net income, suggesting the inclusion of one-time gains or positive non-operational items in the reported figures.

The data indicates that adjusted net income provides a more normalized view of the company's earning power by neutralizing the impact of volatile non-operating items. The widening gap between the two metrics in 2019 highlights an increase in the reliance on adjusted figures to assess underlying financial performance.

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