What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-02-17 compared with 2021-02-19 · 312 added, 206 removed, 976 unchanged (35% of the section changed)

4 unchanged sentences

The SEC, as required by Section 404 of the Sarbanes-Oxley Act of 2002, adopted rules that generally require every company that files reports with the SEC to evaluate its effectiveness of internal controls over financial reporting.

We acquired QuickChek on January 29, 2021.

Management excluded QuickChek from its assessment of the effectiveness of the Company's internal controls over financial reporting as of December 31, 2021.

This exclusion is in accordance with the guidance issued by the Staff of the SEC that an assessment of a recent business combination may be omitted from management's report on internal control over financial reporting in the year of acquisition.

QuickChek represented 8.9% of the Company's total assets (excluding goodwill, certain intangible assets, and capital lease and right of use assets which are included within the scope of the assessment) and 8.5% of total revenues as of and for the year ended December 31, 2021.

Management has conducted an evaluation of the effectiveness of the Company's internal control over financial reporting based on the criteria set forth in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

4 unchanged sentences

OTHER INFORMATION

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

19 unchanged sentences

Report of Management - Internal Controls

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID 185 )

Report of Independent Registered Public Accounting Firm

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Note 4 - Inventories

N ote 5 - Business Acquisition

Note 6 - Property, Plant and Equipment

Note 7 - Goodwill and Intangibles

Note 8 - Accounts Payable and Accrued Liabilities

Note 9 - Long-Term Debt

Note 8 - Asset Retirement Obligation (ARO)

Note 10 - A sset Retirement Obligation (ARO)

Note 11 - Income Taxes

10 unchanged sentences

Note 22 - Business Segments

Note 21 - Subsequent Events

Financial Statement Schedules

20 unchanged sentences

(incorporated by reference to Murphy USA’s Current Report on Form 8-K filed September 5, 2013)

10.2 Trademark License Agreement, dated August 30, 2013, between Murphy Oil Corporation and Murphy USA Inc.

(incorporated by reference to Murphy USA’s Current Report on Form 8-K filed September 5, 2013)

10.2 Severance Protection Agreement dated as of August 20, 2013 between Murphy USA and R.

7 unchanged sentences

Supplemental Executive Retirement Plan, as amended and restated, on October 1, 2018 and effective January 1, 2019 (incorporated by reference to Exhibit 10.11 to Murphy USA's Annual Report on Form 10-K filed February 19, 2019) †

10.10* Form of Murphy USA 2013 Long-Term Incentive Plan Option Grant Agreement †

10.11* Form of Murphy USA 2013 Long-Term Incentive Plan RSU Agreement †

10.12* Form of Murphy USA 2013 Long-Term Incentive Plan Performance Share Agreement †

10.13* Form of Murphy USA 2013 Non-Employee Director Award †

10.14 Amended and Restated Credit Agreement, dated as of August 27, 2019, among Murphy Oil USA, Inc.as borrower, Murphy USA Inc., certain subsidiaries of Murphy Oil USA, Inc.

as borrowing subsidiaries, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to Murphy USA's Current Report on Form 8-K as filed August 29, 2019)

10.6 Form of Murphy USA 2013 Long-Term Incentive Plan Option Grant Agreement (incorporated by reference to Exhibit 10.10 to Murphy USA Inc's Annual Report on Form 10-K filed February 19, 2021)†

10.7 Form of Murphy USA 2013 Long-Term Incentive Plan RSU Agreement (incorporated by reference to Exhibit 10.11 to Murphy USA Inc's Annual Report on Form 10-K filed February 19, 2021)†

10.8 Form of Murphy USA 2013 Long-Term Incentive Plan Performance Share Agreement (incorporated by reference to Exhibit 10.12 to M urphy USA Inc's Annual Report on Form 10-K filed on February 19 20 21 ) †

10.9 Form of Murphy USA 2013 Non-Employee Director Award (inc orporated by reference to Exhibit 10.13 to Murphy USA Inc's Annual Report on Form 10-K file February 19, 2021) †

10.10 Murphy USA Inc.

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Taylor, Director

Goebel /s/ Rosemary Turner

Goebel, Director Rosemary Turner, Director

Holliger /s/ Mindy K.

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All internal control systems have inherent limitations, and therefore, can provide only reasonable assurance with respect to the reliability of financial reporting and preparation of consolidated financial statements.

We acquired QuickChek on January 29, 2021.

Management excluded QuickChek from its assessment of the effectiveness of the Company's internal controls over financial reporting as of December 31, 2021.

Management has conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting based on the criteria set forth in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Assessment of impairment triggering events related to property, plant and equipment

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We also compared the historical cash flows by asset group to the general ledger information to assess the reliability of the information used.

Evaluation of the initial measurement of acquired trade name

As discussed in Notes 2 and 5 to the consolidated financial statements, on January 29, 2021, the Company acquired Quick Chek Corporation in a business combination.

The purchase price was allocated to the fair values of the tangible and intangible assets acquired and liabilities assumed, with the excess recorded as goodwill.

These fair value determinations required judgment and involved the use of significant estimates and assumptions.

As a result of the transaction, the Company recorded a trade name intangible asset with an acquisition-date fair value of $115.4 million.

We identified the evaluation of the initial measurement of the acquired trade name intangible asset as a critical audit matter.

The assessment of certain underlying assumptions used to measure the fair value of the acquired trade name required a high degree of auditor judgment due to the extent of management judgment used in their determination.

Such assumptions included revenue growth rates, the discount rate, and the royalty rate.

Changes in these assumptions could have a significant impact on the fair value of the trade name intangible asset.

The primary procedures performed to address this critical audit matter included the following.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s acquisition-date valuation process, including controls related to the development of the assumptions noted above.

We evaluated the Company’s revenue growth rates by comparing them to historical growth rates.

We performed sensitivity analyses over the Company’s revenue growth rates to assess the impact of the changes in those assumptions on the Company’s determination of fair value.

In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the discount rate by comparing it to a range that was independently developed based on publicly available market data and the royalty rate by comparing it against publicly available market data for comparable transactions.

We have served as the Company’s auditor since 2013.

Shreveport, Louisiana

Houston, Texas

February 17, 2022

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We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated income statements, statements of comprehensive income, statements of cash flows, and statements of changes in equity for each of the years in the three-year period ended December 31, 2021, and the related notes and financial statement schedule II (collectively, the consolidated financial statements), and our report dated February 17, 2022 expressed an unqualified opinion on those consolidated financial statements.

The Company acquired Quick Chek Corporation during 2021, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021, Quick Chek Corporation’s internal control over financial reporting associated with 8.9% of total assets (excluding goodwill, certain intangible assets, and capital lease and right of use assets which are included within the scope of the assessment) and 8.5% of total revenues included in the consolidated financial statements of the Company as of and for the year ended December 31, 2021.

Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Quick Chek Corporation.

Basis for Opinion

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Shreveport, Louisiana

Houston, Texas

February 17, 2022

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Cash and cash equivalents $ 256.4 $ 163.6

Accounts receivable—trade, less allowance for doubtful accounts of $ 0.1 in 2020 and $ 1.2 in 2019

Accounts receivable—trade, less allowance for doubtful accounts of $ 0.1 in 2021 and 2020

Inventories, at lower of cost or market 292.3 279.1

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2,378.4 1,867.6

Operating lease right of use assets, net* 419.2 147.7

Intangible assets, net of amortization* 140.7 34.6

Goodwill 328.0 —

Other assets* 14.1 10.6

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Asset retirement obligations 39.2 35.1

Non-current operating lease liabilities* 408.9 142.5

Deferred credits and other liabilities* 21.6 23.3

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Common Stock, par $ 0.01 , (authorized 200,000,000 shares,

46,767,164 shares issued at December 31, 2020 and 2019, respectively)

46,767,164 shares issued at December 31, 2021 and 2020)

Treasury stock ( 21,831,904 and 19,518,551 shares held at

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Total liabilities and stockholders' equity $ 4,048.2 $ 2,685.7

* Prior year amounts have been reclassified to conform with current period presentation

See accompanying notes to consolidated financial statements.

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Merchandise cost of goods sold 2,976.1 2,495.7 2,200.7

Station and other operating expenses 549.1 559.3 541.3

Store and other operating expenses 827.3 549.1 559.3

Depreciation and amortization 212.6 161.0 152.2

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(Millions of dollars) 2021 2020 2019

Net income (loss) $ 386.1 $ 154.8 $ 213.6

Net income $ 396.9 $ 386.1 $ 154.8

Other comprehensive income (loss), net of tax

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Reclassified to interest expense:

Realized (gain) loss reclassified to interest expense 0.1 0.9 ( 0.2 )

Amortization of unrealized gain to interest expense 0.9 — —

1.0 ( 3.4 ) 0.9

Deferred income tax expense ( 0.8 ) 0.2 —

Deferred income tax expense (benefit) 0.3 ( 0.8 ) 0.2

Other comprehensive income (loss) 0.7 ( 2.6 ) 0.7

Comprehensive income (loss) $ 383.5 $ 155.5 $ 213.6

Comprehensive income $ 397.6 $ 383.5 $ 155.5

See accompanying notes to consolidated financial statements.

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Property additions ( 274.7 ) ( 230.7 ) ( 204.8 )

Payments for acquisition, net of cash acquired ( 641.1 ) — —

Proceeds from sale of assets 3.4 8.1 2.5

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Amounts related to share-based compensation ( 6.7 ) ( 10.7 ) ( 4.5 )

Net cash required by financing activities ( 456.1 ) ( 14.4 ) ( 175.1 )

Net cash provided (required) by financing activities 269.6 ( 456.1 ) ( 14.4 )

Net change in cash, cash equivalents, and restricted cash 92.8 ( 116.7 ) 95.8

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Net income — — — — 154.8 — 154.8

Gain on interest rate hedge, net of tax — — — — — 0.7 0.7

Purchase of treasury stock — — ( 165.8 ) — — — ( 165.8 )

4 unchanged sentences

Net income — — — — 386.1 — 386.1

Gain on interest rate hedge, net of tax — — — — — 0.7 0.7

Cumulative effect of a change in accounting principle — — — — 1.1 — 1.1

Loss on interest rate hedge, net of tax — — — — — ( 2.6 ) ( 2.6 )

Cash dividends declared, ($ 0.25 per share)

— — — — ( 6.9 ) — ( 6.9 )

Dividend equivalent units accrued — — — 0.1 ( 0.1 ) — —

Purchase of treasury stock — — ( 399.6 ) — — — ( 399.6 )

4 unchanged sentences

Net income — — — — 396.9 — 396.9

Cumulative effect of a change in accounting principle — — — — 1.1 — 1.1

Loss on interest rate hedge, net of tax — — — — — ( 2.6 ) ( 2.6 )

Gain on interest rate hedge, net of tax — — — — — 0.7 0.7

Cash dividends declared, ($ 1.04 per share)

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Following the separation, Murphy USA is an independent, publicly traded company, and Murphy Oil retains no ownership interest in Murphy USA.

Murphy USA markets refined products through a network of retail gasoline stores and unbranded wholesale customers.

Murphy USA’s owned retail stores are almost all located in close proximity to Walmart stores in 25 states and use the brand name Murphy USA®.

Murphy USA also markets gasoline and other products at standalone stores under the Murphy Express brand.

At December 31, 2020, Murphy USA had a total of 1,503 Company stores.

On January 29, 2021, MUSA acquired 100 % of Quick Chek Corporation ("QuickChek"), a privately held convenience store chain with a strong regional brand that consisted of 156 stores at the time of acquisition, located in New Jersey and New York, in an all-cash transaction.

For additional information concerning the acquisition, see Note 5, "Business Acquisition".

Murphy USA markets refined products through a network of retail gasoline stores and unbranded wholesale customers and in addition, we operate non-fuel convenience stores in select markets.

The Company owns and operates a chain of retail stores under the brand name of Murphy USA® which are almost all located in close proximity to Walmart stores, markets gasoline and other products at standalone stores under the Murphy Express brand, and also has a mix of convenience stores and convenience stores with retail gasoline that operate under the name of QuickChek®.

At December 31, 2021, Murphy USA had a total of 1,679 Company stores in 27 states, of which 1,151 were Murphy USA, 370 were Murphy Express and 158 were QuickChek.

The Company also has certain product supply and wholesale assets, including product distribution terminals and pipeline positions.

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The Company often pays or receives funds related to the buy/sell arrangement based on location or quality differences.

The Company accounts for such transactions on a net basis in its Consolidated Income Statements.

The Company accounts for such transactions as non-monetary exchanges under existing accounting guidance and typically reports these on a net basis in its Consolidated Income Statements.

See Note 3 "Revenues" for additional information.

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CASH EQUIVALENTS – Short-term investments, which include government securities, money market funds and other instruments with government securities as collateral, that have a maturity of three months or less from the date of purchase are classified as cash equivalents.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ACCOUNTS RECEIVABLE – The Company’s accounts receivable are recorded at the invoiced amount and do not bear interest.

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The Company reviews this allowance for adequacy at least quarterly and bases its assessment on a combination of current information about its customers and historical write-off experience.

Any trade accounts receivable balances

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

written off are charged against the allowance for doubtful accounts.

Any trade accounts receivable balances written off are charged against the allowance for doubtful accounts.

The Company has not experienced any significant credit-related losses in the past three years.

INVENTORIES – Inventories of most finished products are valued at the lower of cost, generally applied on a last-in, first-out (“LIFO”) basis, or market.

INVENTORIES – Inventories of petroleum products located at Murphy branded stores are valued at the lower of cost, generally applied on a last-in, first-out (“LIFO”) basis, or market, while petroleum products located at QuickChek branded stores are valued at weighted average cost.

Any increments to LIFO inventory volumes are valued based on the first purchase price for these volumes during the year.

Merchandise inventories held for resale are carried at average cost.

Merchandise inventories held for resale at Murphy branded stores are carried at average cost.

Certain merchandise inventories at QuickChek stores are on a LIFO basis while all other items are valued on average cost.

Materials and supplies are valued at the lower of average cost or estimated value.

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Slotting and stocking allowances received from a vendor are recorded as a reduction to cost of sales over the period covered by the agreement.

BUSINESS COMBINATIONS – The Company accounts for business combinations under the purchase method of accounting.

The purchase price of an acquisition is measured as the aggregate of the fair value of the consideration transferred.

The purchase price is allocated to the fair values of the tangible and intangible assets acquired and liabilities assumed, with any excess recorded as goodwill.

These fair value determinations require judgment and may involve the use of significant estimates and assumptions.

The purchase price allocation may be provisional during a measurement period of up to one year to provide reasonable time to obtain the information necessary to identify and measure the assets acquired and liabilities assumed.

Any such measurement period adjustments are recognized in the period in which the adjustment amount is determined.

Transaction costs associated with the acquisition are expensed as incurred.

PROPERTY, PLANT AND EQUIPMENT – Additions to property, plant and equipment, including renewals and betterments, are capitalized and recorded at cost.

Certain marketing facilities are primarily depreciated using the composite straight-line method with depreciable lives ranging from 16 to 25 years.

Gasoline stations, improvements to gasoline stations and other assets are depreciated over 3 to 50 years by individual unit on the straight-line method.

Gasoline stores, improvements to gasoline stores and other assets are depreciated over 3 to 50 years by individual unit on the straight-line method.

The Company capitalizes interest costs as a component of construction in progress on individually significant projects based on the weighted average interest rates incurred on its long-term borrowings.

Total interest cost capitalized was $ 1.4 million in 2020 and 2019, respectfully and $ 2.2 million in 2018.

Total interest cost capitalized was $ 2.1 million in 2021 and $ 1.4 million in 2020 and 2019.

The Company has undertaken like-kind exchange ("LKE") transactions under the Federal tax code in an effort to acquire and sell real and personal property in a tax efficient manner.

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The unspent proceeds that are held in trust with the intermediary are recorded as noncurrent assets in the Consolidated Balance Sheet as the cash was restricted for the acquisition of property, plant and equipment.

At December 31, 2020 and December 31, 2019, the Company had no open LKE transactions with an intermediary.

IMPAIRMENT OF ASSETS – Long-lived assets, which include property and equipment and finite-lived intangible assets, are tested for recoverability whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

At December 31, 2021 and 2020, the Company had no open LKE transactions with an intermediary.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

GOODWILL AND INTANGIBLE ASSETS – Goodwill represents the excess of the aggregate of the consideration transferred over the net assets acquired and liabilities assumed and is tested annually for impairment, or more frequently if there are indicators of impairment.

Acquired finite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives, and are reviewed for impairment when events or circumstances indicate that the asset group to which the intangible assets belong might be impaired.

The Company revises the estimated remaining useful life of these assets when events or changes in circumstances warrant a revision.

If the Company revises the useful life, the unamortized balance is amortized over the useful life on a prospective basis.

IMPAIRMENT OF ASSETS – Long-lived assets, which include property and equipment, and finite-lived and indefinite-lived intangible assets, are tested for recoverability whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

A long-lived asset is not recoverable if its carrying amount exceeds the sum of the undiscounted cash flows expected to result from its use and eventual disposition.

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The Company reevaluates the adequacy of its recorded ARO liability at least annually.

Actual costs of asset retirements such as dismantling service stations and site restoration are charged against the related liability.

Any difference between costs incurred

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

upon settlement of an asset retirement obligation and the recorded liability is recognized as a gain or loss in the Company’s Consolidated Income Statements.

Actual costs of asset retirements such as dismantling service stores and site restoration are charged against the related liability.

Any difference between costs incurred upon settlement of an asset retirement obligation and the recorded liability is recognized as a gain or loss in the Company’s Consolidated Income Statements.

ENVIRONMENTAL LIABILITIES – A liability for environmental matters is established when it is probable that an environmental obligation exists and the cost can be reasonably estimated.

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A derivative that is not a highly effective hedge does not qualify for hedge accounting.

The change in the fair value of a qualifying fair value hedge is recorded in earnings along with the gain or loss on the hedged item.

The change in the fair value of a qualifying fair value hedge is recorded in earnings along with the gain

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

or loss on the hedged item.

The effective portion of the change in the fair value of a qualifying cash flow hedge is recorded in Accumulated other comprehensive income (AOCI) in the consolidated Balance Sheets until the hedged item is recognized currently in earnings.

If a derivative instrument no longer qualifies as a cash flow hedge and the underlying forecasted transaction is no longer probable of occurring, hedge accounting is discontinued and the gain or loss recorded in Accumulated other comprehensive income is recognized immediately in earnings.

If a hedge is de-designated, hedge accounting will no longer apply and from that time the gain and losses will be recognized in earnings and any accumulated amounts in other comprehensive income will be amortized to earnings over the remaining life of the underlying instrument.

See Note 14 "Financial Instruments and Risk Management" and Note 17 "Assets and Liabilities Measured at Fair Value" for further information about the Company’s derivatives.

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Differences between estimated and actual vested amounts are accounted for as an adjustment to expense when known.

See Note 10 "Incentive Plans" or a discussion of the basis of allocation of such costs.

See Note 12 "Incentive Plans" for a discussion of the basis of allocation of such costs.

USE OF ESTIMATES – In preparing the financial statements of the Company in conformity with U.S.

GAAP, management has made a number of estimates and assumptions related to the reporting of assets, liabilities, revenues, and expenses and the disclosure of contingent assets and liabilities.

Actual results may differ from the

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Actual results may differ from the estimates.

On an ongoing basis, we review our estimates based on currently available information.

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2 Primarily includes collection allowance on excise and sales taxes and other miscellaneous items

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Marketing segment

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These receivables are typically collected in two to seven days , depending on the terms with the particular credit/debit card providers.

Payment fees retained by the credit/debit card providers are recorded as station and other operating expenses.

Payment fees retained by the credit/debit card providers are recorded as store and other operating expenses.

Petroleum product sales (at wholesale).

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As noted above, a mixture of payment types are used for these revenues and the same terms for credit/debit card receivables are realized.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The most significant judgment with respect to merchandise sales revenue is determining whether we are the principal or agent for some categories of merchandise such as lottery tickets, lotto tickets, newspapers and other small categories of merchandise.

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We have some categories of merchandise (such as lotto tickets) where we are the agent and the revenues recorded for those transactions are our net commission only.

In June 2018 the Company initiated a loyalty pilot program through a limited number of its retail locations and was rolled out chain-wide in March 2019.

The Company offers loyalty programs through its Murphy USA, Murphy Express, and QuickChek branded retail locations.

The customers earn rewards based on their spending or other promotional activities.

This program creates a performance obligation which requires us to defer a portion of sales revenue to the loyalty program participants until they redeem their rewards.

The rewards may be redeemed for free or discounted merchandise or cash discounts on fuel purchases.

Earned rewards expire after an account is inactive for a period of 90 days.

These programs create a performance obligation which requires us to defer a portion of sales revenue to the loyalty program participants until they redeem their rewards.

The rewards may be redeemed for free or discounted merchandise or cash discounts at all stores and on fuel purchases at Murphy USA and Murphy Express stores.

Earned rewards expire after an account is inactive for a period of 90 days at Murphy USA and Murphy Express, while certain QuickChek rewards require use within the month.

We recognize loyalty revenue when a customer redeems an earned reward.

Deferred revenue associated with Murphy Rewards is included in Trade accounts payable and accrued liabilities in our Consolidated Balance Sheet.

The deferred revenues recorded in 2020 and 2019 were immaterial.

Deferred revenue associated with both rewards programs are included in Trade accounts payable and accrued liabilities in our Consolidated Balance Sheet.

The deferred revenue balances at December 31, 2021 and 2020 were immaterial.

For the sale of RINs, we recognize revenue when the RIN is transferred to the counter-party and the sale is completed.

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At December 31, 2021 and December 31, 2020, we had $ 111.8 million and $ 88.3 million of receivables, respectively, related to contracts with customers recorded.

All of the trade accounts receivable related to contracts with customers outstanding at the end of each period were collected during the succeeding quarter.

All of the trade accounts receivable related to contracts with customers outstanding at the end of each period were collected during the

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

succeeding quarter.

These receivables were generally related to credit and debit card transactions along with short term bulk and wholesale sales from our customers, which have a very short settlement window.

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(Millions of dollars) 2021 2020

Finished products - FIFO basis $ 223.0 $ 259.2

Less LIFO reserve - finished products ( 101.3 ) ( 160.8 )

Finished products - LIFO basis 121.7 98.4

Store merchandise for resale 152.0 123.0

Petroleum products - FIFO basis $ 339.8 $ 223.0

Store merchandise for resale - FIFO basis 173.1 152.0

Less LIFO reserve ( 228.0 ) ( 101.3 )

Total petroleum products and store merchandise inventory 284.9 273.7

Materials and supplies 7.4 5.4

Total inventories $ 292.3 $ 279.1

At December 31, 2020 and 2019, the replacement cost (market value) of last-in, first-out (LIFO) inventories exceeded the LIFO carrying value by $ 101.3 million and $ 160.8 million, respectively.

Murphy USA and Murphy Express branded petroleum products are valued using the last-in, first-out (LIFO) method and certain QuickChek store merchandise for resale is valued using the LIFO method.

At December 31, 2021 and 2020, the replacement cost (market value) of LIFO inventories exceeded the LIFO carrying value for petroleum products by $ 227.5 million and $ 101.3 million, respectively, and store merchandise for resale by $ 0.5 million and none , respectively.

Note 5 — Business Acquisition

On January 29, 2021, MUSA completed the previously announced transaction to acquire 100 % of QuickChek, a privately-held convenience store chain with a regional brand which consisted of 156 stores located in New Jersey and New York, in an all-cash transaction.

The acquisition was made to expand the MUSA network into the Northeast by adding stores that had an existing food and beverage model and is consistent with the Company's stated strategic priorities of developing enhanced food and beverage capabilities and accelerating its growth plans.

The excess of the purchase price over the estimated fair value of the net, identifiable assets acquired was recorded as goodwill.

The factors contributing to the recognition of goodwill are a mixture of direct and reverse synergies that are expected to be realized as a result of this acquisition.

The direct synergies include additional margin capture on the retail fuel side from the tactical pricing decisions and improved benefits from increased scale on the product acquisition side combined with other cost savings in both merchandise and store operations.

The reverse synergies reflect management's ability to leverage QuickChek's product pricing and operational capabilities related to food and beverage sales to Murphy branded stores.

The Company has determined that the trade name has an indefinite life, as there is no economic, contractual, or other factors that limit its useful life and expects to generate value as long as the trade name is utilized, and therefore is not subject to amortization.

The fair value of intangible assets was based on widely-accepted valuation techniques, including discounted cash flows.

The following table summarizes the fair value of the consideration transferred at the date of the acquisition, as well as the calculation of goodwill based on the excess of consideration over the fair value of net assets acquired:

(Millions of dollars)

Cash paid to shareholders $ 641.9

Less cash and cash equivalents acquired 0.8

Fair value of consideration transferred, net of cash acquired $ 641.1

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Millions of dollars)

Assets acquired:

Accounts receivable $ 8.0

Inventories 24.3

Prepaid expenses and other current assets 5.5

Property and equipment 447.1

Right of use assets 237.6

Other assets 5.4

Identified intangible assets 106.8

Liabilities assumed:

Accounts payable and accrued expenses ( 68.4 )

Deferred income tax liabilities ( 58.5 )

Asset retirement obligation ( 1.2 )

Current and long term debt, including finance lease obligations ( 148.5 )

Deferred credits and other liabilities ( 7.4 )

Operating lease liabilities ( 237.6 )

Net assets acquired 313.1

Goodwill 328.0

Fair value of consideration transferred, net of cash and cash equivalents acquired $ 641.1

The Company has not disclosed pro forma information of the combined business as the transaction is not material to revenue or net earnings.

In connection with the acquisition, the Company recognized certain acquisition-related expenses which were expensed as incurred.

These expenses, recognized within acquisition related costs in the consolidated statements of operations, include amounts related to transaction and integration costs, including fees for advisory and professional services incurred as part of the acquisition and integration costs subsequent to the acquisition in the amount of $ 10.4 million and $ 1.7 million for the years ended December 31, 2021 and 2020, respectively.

Note 6 – Property, Plant and Equipment

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Land $ 639.4 $ 639.4 $ 609.5 $ 609.5

Real estate finance lease 1 to 40 years

147.1 134.3 — —

Pipeline and terminal facilities 16 to 25 years

83.2 44.5 79.8 43.5

Retail gasoline stations 3 to 50 years

Retail gasoline stores 3 to 50 years

2,657.8 1,451.1 2,179.7 1,123.2

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Depreciation expense of $ 211.6 million, $ 160.0 million and $ 151.2 million was recorded for the years ended December 31, 2021, 2020 and 2019, respectively.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 7 – Goodwill and Intangible Assets

The Company's goodwill is assigned to its Marketing segment and no ne of the goodwill is deductible for tax purposes.

(Millions of dollars)

Goodwill balance, January 1, 2021 $ —

QuickChek acquisition 328.0

Goodwill balance, December 31, 2021 $ 328.0

In connection with our acquisition of QuickChek on January 29, 2021, we recorded the following amounts of intangible assets.

Remaining Useful Life January 29,

(Millions of dollars) (in years) Carrying Value

Intangible assets subject to amortization:

Intangible lease liability 13.6 $ ( 9.1 )

Intangible assets not subject to amortization:

Trade name n/a 115.4

Liquor licenses n/a 0.5

Total intangible assets $ 106.8

We amortize intangible assets subject to amortization on a straight-line or accelerated basis based on the period for which the economic benefits of the asset or liability are expected to be realized.

The intangible assets subject to amortization was in addition to the Company's existing intangible asset pipeline space, which is being amortized over a 40 year life.

Intangible assets at December 31, 2021 and December 31, 2020 consisted of the following:

Remaining Useful Life (in years) December 31, 2021 December 31, 2020

(Millions of dollars) Cost Net Cost Net

Intangible assets subject to amortization:

Pipeline space 33.7 $ 39.6 $ 33.7 $ 39.6 $ 34.6

Intangible lease liability 12.5 ( 9.1 ) ( 8.6 ) — —

Total intangible assets subject to amortization 30.5 25.1 39.6 34.6

Intangible assets not subject to amortization, indefinite lives 115.6 115.6 — —

Intangible assets, net of amortization $ 146.1 $ 140.7 $ 39.6 $ 34.6

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 8 – Accounts Payable and Accrued Liabilities

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5.625 % senior notes due 2027 (net of unamortized discount of $ 2.0 at 2021 and $ 2.4 at 2020)

$ 298.0 $ 297.6

4.75 % senior notes due 2029 (net of unamortized discount of $ 4.8 at 2021 and $ 5.4 at 2020)

Term loan due 2023 (effective interest rate of 2.67 % at 2020 and 4.31 % at 2019)

3.75 % senior notes due 2031 (net of unamortized discount of $ 5.7 at 2021 and none at 2020)

Term loan due 2023 (effective interest rate of 2.67 % at 2020)

Term loan due 2028 (effective interest rate of 2.27 % at 2021) net of unamortized discount of $ 0.9 at 2021 and none at 2020

Capitalized lease obligations, vehicles, due through 2025 2.7 2.1

Capitalized lease obligations, buildings, due through 2059 138.9 —

Unamortized debt issuance costs ( 11.1 ) ( 4.4 )

2 unchanged sentences

Total long-term debt, net of current $ 1,800.1 $ 951.2

On January 29, 2021, the Company completed its acquisition of QuickChek for an all-cash consideration of $ 641.1 million.

In conjunction with the closing of the acquisition, the Company entered in a credit agreement that provides for a cash flow revolving facility with commitments of $ 350 million and a term loan in a principal amount of $ 400 million.

The Company also issued a new series of 3.750 % senior unsecured notes due 2031 in an aggregate principal amount of $ 500 million.

As a result of the above transactions, the ABL facility existing at December 31, 2020, was terminated and the term loan with $ 200 million remaining balance outstanding at January 29, 2021 was repaid and retired.

On April 25, 2017, Murphy Oil USA, Inc., our primary operating subsidiary, issued $ 300 million of 5.625 % Senior Notes due 2027 (the "2027 Senior Notes") under its existing shelf registration statement.

The 2027 Senior Notes are fully and unconditionally guaranteed by Murphy USA, and are guaranteed by certain 100% owned subsidiaries that guarantee our credit facilities.

The indenture governing the 2027 Senior Notes contains restrictive covenants

The indenture governing the 2027 Senior Notes contains restrictive covenants that limit, among other things, the ability of Murphy USA, Murphy Oil USA, Inc.

and the restricted subsidiaries to incur additional indebtedness or liens, dispose of assets, make certain restricted payments or investments, enter into transactions with affiliates or merge with or into other entities.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

that limit, among other things, the ability of Murphy USA, Murphy Oil USA, Inc.

On September 13, 2019, Murphy Oil USA, Inc., issued $ 500 million of 4.75 % Senior Notes due 2029 (the “2029 Senior Notes”).

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The indenture governing the 2029 Senior Notes contains restrictive covenants that are essentially identical to the covenants for the 2027 Senior Notes.

The 2027 and 2029 Senior Notes and the guarantees rank equally with all of our and the guarantors’ existing and future senior unsecured indebtedness and effectively junior to our and the guarantors’ existing and future secured indebtedness (including indebtedness with respect to the credit facilities) to the extent of the value of the assets securing such indebtedness.

The 2027 and 2029 Senior Notes are structurally subordinated to all of the existing and future third-party liabilities, including trade payables, of our existing and future subsidiaries that do not guarantee the notes.

See Note 21 "Subsequent Events" for additional information regarding a new issuance of senior notes.

Credit Facilities and Term Loan

In August 2019, we amended and extended our existing credit agreement.

The effective date of the agreement was extended to August, 2024.

The credit agreement provides for a committed $ 325 million asset-based loan (ABL) facility (with availability subject to the borrowing base described below) and a $ 200 million term loan facility with an additional $ 50 million available until December 31, 2019.

It also provides for a $ 150 million uncommitted incremental facility.

On August 27, 2019, Murphy Oil USA, Inc.

borrowed $ 200 million under the term loan facility that has a four-year term and prepaid the remaining balance of the prior term loan of $ 57 million.

On December 31, 2019, we borrowed the additional $ 50 million term loan, and at December 31, 2020 had an outstanding balance of $ 212.5 million.

The term loan is due August 2023 and requires quarterly principal payments of $ 12.5 million beginning April 1, 2020.

As of December 31, 2020, we had zero outstanding under our ABL facility.

The borrowing base is expected, at any time of determination, to be an amount (net of reserves) equal to the sum of:

• 100 % of eligible cash at such time, plus

• 90 % of eligible credit card receivables at such time, plus

• 90 % of eligible investment grade accounts, plus

• 85 % of eligible other accounts, plus

• 80 % of eligible product supply/wholesale refined products inventory at such time, plus

• 75 % of eligible retail refined products inventory at such time, plus

the lesser of (i) 70 % of the average cost of eligible retail merchandise inventory at such time and (ii) 85 % of the net orderly liquidation value of eligible retail merchandise inventory at such time.

The ABL facility includes a $ 100 million sublimit for the issuance of letters of credit.

Letters of credit issued under the ABL facility reduce availability under the ABL facility.

On January 29, 2021, Murphy Oil USA, Inc.

issued $ 500 million of 3.75 % Senior Notes due 2031 (the "2031 Senior Notes" and, together with the 2027 Senior Notes and the 2029 Senior Notes, the "Senior Notes").

The net proceeds from the issuance of the 2031 Senior Notes were used, in part, to fund the acquisition of QuickChek and other obligations related to that transaction.

The 2031 Senior Notes are fully and unconditionally guaranteed by the Company and by the Company's subsidiaries that guarantee our Credit Facilities.

The indenture governing the 2031 Senior Notes contains restrictive covenants that are essentially identical to the covenants for the 2027 and 2029 Senior Notes.

The Senior Notes and related guarantees rank equally with all of our and the guarantors’ existing and future senior unsecured indebtedness and effectively junior to our and the guarantors’ existing and future secured indebtedness (including indebtedness with respect to the Credit Facilities) to the extent of the value of the assets securing such indebtedness.

The Senior Notes are structurally subordinated to all of the existing and future third-party liabilities, including trade payables, of our existing and future subsidiaries that do not guarantee the notes.

Revolving Credit Facility and Term Loan

On January 29, 2021, the Company entered into a new credit agreement that consists of both a cash flow revolving credit facility and a senior secured term loan and that replaced the Company’s prior ABL facility and term loan.

The credit agreement provides for a senior secured term loan in an aggregate principal amount of $ 400 million (the “Term Facility”) (which was borrowed in full on January 29, 2021) and revolving credit commitments in an aggregate amount equal to $ 350 million (the “Revolving Facility”, and together with the Term Facility, the “Credit Facilities”).

The outstanding balance of the term loan was $ 398 million at December 31, 2021.

The term loan is due January 2028 and requires quarterly principal payments of $ 1 million beginning July 1, 2021.

As of December 31, 2021, we had none outstanding under the revolving facility while there were $ 3.7 million in outstanding letters of credit, which reduces the amount available to borrow.

Interest payable on the Credit Facilities is based on either:

• the London interbank offered rate, adjusted for statutory reserve requirements (the “Adjusted LIBO Rate”);

• the Alternate Base Rate, which is defined as the highest of (a) the prime rate, (b) the federal funds effective rate from time to time plus 0.50 % per annum and (c) the one-month Adjusted LIBO Rate plus 1.00 % per annum,

plus, (A) in the case Adjusted LIBO Rate borrowings, (i) with respect to the ABL facility, spreads ranging from 1.50 % to 2.00 % per annum depending on a total debt to EBITDA ratio under the ABL facility or (ii) with respect to the term facility, spreads ranging from 2.50 % to 2.75 % per annum depending on a total debt to EBITDA ratio and (B) in the

• the London interbank offered rate, adjusted for statutory reserve requirements (the “Adjusted LIBO Rate”); or

• the Alternate Base Rate, which is defined as the highest of (a) the rate of interest last quoted by The Wall Street Journal as the “Prime Rate”, (b) the greater of federal funds effective rate and the overnight bank funding rate determined by the Federal Reserve Bank of New York from time to time plus 0.50 % per annum and (c) the one-month Adjusted LIBO Rate plus 1.00 % per annum,

plus, (A) in the case of Adjusted LIBO Rate borrowings, (i) with respect to the Revolving Facility, spreads ranging from 1.75 % to 2.25 % per annum depending on a total debt to EBITDA ratio or (ii) with respect to the Term Facility, a spread of 1.75 % per annum and (B) in the case of Alternate Base Rate borrowings (i) with respect to the Revolving Facility, spreads ranging from 0.75 % to 1.25 % per annum depending on a total debt to EBITDA ratio or (ii) with respect to the Term Facility, a spread of 1.75 % per annum.

The Term Facility amortizes in quarterly installments starting with the first amortization payment being due on July 1, 2021 at a rate of 1.00 % per annum.

Murphy USA is also required to prepay the Term Facility with a portion of its excess cash flow, a portion of the net cash proceeds of certain asset sales and casualty events (subject to certain reinvestment rights) and the net cash proceeds of issuances of indebtedness not permitted under the Credit Agreement.

The Credit Agreement allows Murphy USA to prepay, in whole or in part, the Term Facility outstanding thereunder, together with any accrued and unpaid interest, with prior notice but without premium or penalty other than breakage and redeployment costs.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

case of Alternate Base Rate borrowings, (i) with respect to the ABL facility, spreads ranging from 0.50 % to 1.00 % per annum depending on a total debt to EBITDA ratio under the ABL facility or (ii) with respect to the term facility, spreads ranging from 1.50 % to 1.75 % per annum depending on a total debt to EBITDA ratio.

The interest rate period with respect to the Adjusted LIBO Rate interest rate option can be set at one-, two-, three-, or six-months as selected by us in accordance with the terms of the credit agreement.

The credit agreement contains certain covenants that limit, among other things, the ability of us and our subsidiaries to incur additional indebtedness or liens, to make certain investments, to enter into sale-leaseback transactions, to make certain restricted payments, to enter into consolidations, mergers or sales of material assets and other fundamental changes, to transact with affiliates, to enter into agreements restricting the ability of subsidiaries to incur liens or pay dividends, or to make certain accounting changes.

In addition, the credit agreement requires us to maintain a minimum fixed charge coverage ratio of a minimum of 1.0 to 1.0 when availability for at least three consecutive business days is less than the greater of (a) 17.5 % of the lesser of the aggregate ABL facility commitments and the borrowing base and (b) $ 70,000,000 (including as of the most recent fiscal quarter end on the first date when availability is less than such amount) as well as a maximum secured debt to EBITDA ratio of 4.5 to 1.0 at any time when term facility commitments or term loans thereunder are outstanding.

As of December 31, 2020, our fixed charge coverage ratio was 0.90 however, we had more than $ 100 million of availability under the ABL facility at that date so the fixed charge coverage rate currently has no impact on our operations or liquidity.

Our secured debt to EBITDA ratio as of December 31, 2020 was 0.29 to 1.0.

The credit agreement contains restrictions on certain payments, including dividends, when availability under the credit agreement is less than or equal to the greater of $ 100 million and 25 % of the lesser of the revolving commitments and the borrowing base and our fixed charge coverage ratio is less than 1.0 to 1.0 (unless availability under the credit agreement is greater than $ 100 million and 40 % of the lesser of the revolving commitments and the borrowing base).

As of December 31, 2020, our ability to make restricted payments was not limited as our availability under the borrowing base was more than $ 100 million, while our fixed charge coverage ratio under our credit agreement was less than 1.0 to 1.0.

As of December 31, 2020, the Company had a shortfall of approximately $ 82.7 million of our net income and retained earnings subject to such restrictions before the fixed charge coverage ratio would exceed 1.0 to 1.0.

The credit agreement contains certain covenants that limit, among other things, the ability of the Company and certain of its subsidiaries to incur additional indebtedness or liens, to make certain investments, to enter into sale-leaseback transactions, to make certain restricted payments, to enter into consolidations, mergers or sales of material assets and other fundamental changes, to transact with affiliates, to enter into agreements restricting the ability of subsidiaries to incur liens or pay dividends, or to make certain accounting changes.

The credit agreement also contains total leverage ratio and secured net leverage ratio financial maintenance covenants solely for the benefit of the revolving facility which are tested quarterly.

Pursuant to the total leverage ratio financial maintenance covenant, the Company must maintain a total leverage ratio of not more than 5.0 to 1.0 with an ability in certain circumstances to temporarily increase that limit to 5.5 to 1.0 and a maximum secured net leverage ratio of not more than 3.75 to 1.0 with an ability in certain circumstances to temporarily increase that limit to 4.25 to 1.0.

The Credit Agreement also contains customary events of default.

Pursuant to the credit agreement's covenant limiting certain restricted payments, certain payments in respect of our equity interests, including dividends, when the total leverage ratio, calculated on a pro forma basis, is greater than 3.0 to 1.0, could be limited.

At December 31, 2021, our total leverage ratio was 2.2 to 1.0 which meant our ability at that date to make restricted payments was not limited.

If our total leverage ratio, on a pro forma basis, exceeds 3.0 to 1.0, any restricted payments made following that time until the ratio is once again, on a pro forma basis, below 3.0 to 1.0 would be limited by the covenant, which contains certain exceptions, including an ability to make restricted payments in an aggregate not to exceed the greater of $ 112.7 million or 4.5 % of consolidated net tangible assets over the life of the credit agreement.

All obligations under the credit agreement are guaranteed by Murphy USA and the subsidiary guarantors party thereto, and all obligations under the credit agreement, including the guarantees of those obligations, are secured by certain assets of Murphy USA, Murphy Oil USA, Inc.

and the guarantors party thereto.

See also Note 21 "Subsequent Events" for additional information concerning changes to our credit facilities and term loan.

Note 10 — Asset Retirement Obligations (ARO)

The majority of the ARO recognized by the Company at December 31, 2020 and 2019 related to the estimated costs to dismantle and abandon certain of its retail gasoline stations.

The majority of the ARO recognized by the Company at December 31, 2021 and 2020 is related to the estimated costs to dismantle and abandon certain of its retail gasoline stores.

The Company has not recorded an ARO for certain of its marketing assets because sufficient information is presently not available to estimate a range of potential settlement dates for the obligation.

4 unchanged sentences

Balance at beginning of period $ 35.1 $ 32.8

Addition for acquisition 1.2 —

Accretion expense 2.5 2.3

2 unchanged sentences

Balance at end of period $ 39.2 $ 35.1

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The estimation of future ARO is based on a number of assumptions requiring professional judgment.

The Company cannot predict the type of revisions to these assumptions that may be required in future periods due to the lack of availability of additional information.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 11 — Income Taxes

22 unchanged sentences

Property costs and asset retirement obligations $ 5.2 $ 4.5

Net operating loss 6.3 —

Employee benefits 8.6 8.0

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Although the Company believes that recorded liabilities for unsettled issues are adequate, additional gains or losses could occur in future periods from resolution of outstanding unsettled matters.

The FASB’s rules for accounting for income tax uncertainties clarify the criteria for recognizing uncertain income tax benefits and require additional disclosures about uncertain tax positions.

GAAP the financial statement recognition of the benefit for a tax position is dependent upon the benefit being more likely than not to be

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The FASB’s rules for accounting for income tax uncertainties clarify the criteria for recognizing uncertain income tax benefits and require additional disclosures about uncertain tax positions.

GAAP the financial statement recognition of the benefit for a tax position is dependent upon the benefit being more likely than not to be sustainable upon audit by the applicable taxing authority.

sustainable upon audit by the applicable taxing authority.

If this threshold is met, the tax benefit is then measured and recognized at the largest amount that is greater than 50 percent likely of being realized upon ultimate settlement.

6 unchanged sentences

Settlements with taxing authorities — ( 0.3 )

Expiration of statutes of limitation ( 0.2 ) —

Balance at December 31 $ 0.5 $ 0.4

2 unchanged sentences

Income tax expense for the years ended December 31, 2021, 2020 and 2019 included immaterial amounts of interest and penalties, associated with uncertain tax positions.

Of these amounts shown in the table, $ 0.3 million and $ 0.5 million represent the amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate.

Of these amounts shown in the table, $ 0.4 million and $ 0.3 million represent the amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate for the years ended December 31, 2021 and 2020, respectively.

During the next twelve months, the Company does not expect a material change to the liability for uncertain taxes.

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Effective August 8, 2013, Murphy USA adopted the 2013 Murphy USA Stock Plan for Non-employee Directors (the “Directors Plan”).

The directors for Murphy USA are compensated with a mixture of cash payments and equity-

The directors for Murphy USA are compensated with a mixture of cash payments and equity-based awards.

Awards under the Directors Plan may be in the form of restricted stock, restricted stock units, stock options, or a combination thereof.

An aggregate of 500,000 shares of common stock shall be available for issuance

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

based awards.

Awards under the Directors Plan may be in the form of restricted stock, restricted stock units, stock options, or a combination thereof.

An aggregate of 500,000 shares of common stock shall be available for issuance of grants under the Directors Plan.

of grants under the Directors Plan.

Since 2013, 142,678 time-based restricted stock units have been granted under the terms of the Directors Plan which leaves 357,322 shares available to be granted in the future.

12 unchanged sentences

STOCK OPTIONS – The Committee fixes the option price of each option granted at no less than fair market value (FMV) on the date of the grant and fixes the option term at no more than 7 years from such date.

In February 2020, the Committee granted nonqualified stock options to certain employees of the Company.

Most of the nonqualified stock options granted to certain employees by the Committee were granted in February 2021.

Following are the assumptions used by the Company to value the original awards:

14 unchanged sentences

Exercised ( 28,250 ) 68.88

Forfeited ( 13,850 ) 105.84

Outstanding at December 31, 2021 366,100 $ 90.44 4.2 $ 39.8

14 unchanged sentences

$ 100.00 to $ 109.99

70,300 5.1 — —

$ 120.00 to $ 129.99

76,300 6.1 — —

$ 130.00 to $ 139.99

3,300 6.2 — —

$ 140.00 to $ 149.99

366,100 4.2 167,950 3.0

RESTRICTED STOCK UNITS (MUSA 2013 Plan) – The Committee has granted time based restricted stock units (RSUs) as part of the compensation plan for its executives and certain other employees since its inception.

10 unchanged sentences

The portion of the awards that vest based on TSR qualify as a market condition and must be valued using a Monte Carlo valuation model.

For the TSR portion of the awards, the fair value was determined to be $ 142.07 per unit.

For the ROACE portion of the awards, the valuation was based on the grant date fair value of $ 106.72 per unit and the number of awards will be periodically assessed to determine the probability of vesting.

For the TSR portion of the awards, the fair value was determined to

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

be $ 168.42 per unit.

For the ROACE portion of the awards, the valuation was based on the grant date fair value of $ 126.00 per unit and the number of awards will be periodically assessed to determine the probability of vesting.

Changes in performance-based restricted stock units outstanding for Company employees during the period from December 31, 2020 to December 31, 2021 are presented in the following table:

15 unchanged sentences

THRIFT PLAN – Most full-time employees of the Company may participate in defined contribution savings plans by contributing up to a specified percentage of their base pay.

The Company matches contributions at 100 % of each employee’s contribution with a maximum match of 6 %.

In addition, the Company makes profit sharing contributions on an annual basis.

The Company matches contributions for Murphy USA eligible employees at 100 % of each employee’s contribution with a maximum match of 6 %.

In addition, the Company makes profit sharing contributions on an annual basis for Murphy USA employees.

Eligible employees receive a stated percentage of their base and incentive pay of 5 %, 7 %, or 9 % determined on a formula that is based on a combination of age and years of service.

The Company’s combined expenses related to this plan were $ 15.0 million in 2021, $ 15.3 million in 2020 and $ 12.9 million in 2019.

PROFIT SHARING PLAN – Eligible part-time employees may participate in the Company’s noncontributory profit sharing plan.

The Company maintained the thrift plan of QuickChek on acquisition, and matches 100 % of the first 3 % and 50 % of the next 2 % contributed by eligible employees.

The Company made contributions of $ 1.9 million to the QuickChek plan in 2021.

PROFIT SHARING PLAN – Eligible part-time employees of Murphy USA may participate in the Company’s noncontributory profit sharing plan.

Each year, the Company may make a discretionary employer contribution in an amount determined and authorized at the discretion of the Board of Directors.

1 unchanged sentence

The Company’s expenses related to this plan were $ 1.1 million in 2021, $ 1.8 million in 2020 and $ 1.5 million in 2019.

SUPPLEMENTAL EXECUTIVE RETIREMENT – The Company provides a Supplemental Executive Retirement Plan ('SERP'), a nonqualified deferred compensation plan, to eligible executives and certain members of management.

SUPPLEMENTAL EXECUTIVE RETIREMENT – The Company provides a Supplemental Executive Retirement Plan ('SERP'), a nonqualified deferred compensation plan for Murphy USA employees, to eligible executives and certain members of management.

The SERP plan is intended to restore qualified defined contribution plan benefits restricted under the Internal Revenue Code of 1986 to certain highly-compensated individuals.

The liability balances, net of associated assets, were $ 4.7 million and $ 3.7 million, at December 31, 2021 and 2020, respectfully.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 14 — Financial Instruments and Risk Management

4 unchanged sentences

For accounting purposes, the Company has not designated commodity derivative contracts as hedges, and therefore, it recognizes all gains and losses on these derivative contracts in its Consolidated Statement of Income.

Certain interest rate derivative contracts were accounted for as hedges and

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

gain or loss associated with recording the fair value of these contracts was deferred in AOCI until the anticipated transactions occur.

Certain interest rate derivative contracts were accounted for as hedges and gain or loss associated with recording the fair value of these contracts was deferred in AOCI until the anticipated transactions occur.

As of December 31, 2021, all current commodity derivative activity is immaterial.

At December 31, 2020 and 2019, cash deposits of $ 0.6 million and $ 1.0 million, respectively, related to commodity derivative contracts were reported in Prepaid expenses and other current assets in the Consolidated Balance Sheets.

Cash deposits were $ 0.6 million at December 31, 2021 and 2020 related to commodity derivative contracts and were reported in Prepaid expenses and other current assets in the Consolidated Balance Sheets.

These cash deposits have not been used to reduce the reported net liabilities on the derivative contracts at December 31, 2021 and 2020.

Interest Rate Risks

Under hedge accounting rules, the Company deferred the net impact associated with the interest rate swap entered into to manage the variability in interest payments for the variable-rate debt in association with $ 150 million of our outstanding term loan dated August 27, 2019.

The effective date of the hedge was September 27, 2019, and under the swap the Company pays fixed rate interest and receives one month LIBOR to hedge the floating interest rate of the outstanding debt and the balance reduces each quarter by $ 7.5 million.

The balance of term debt remaining applicable to the hedge was $ 127.5 million at December 31, 2020.

During the year December 31, 2020, $ 0.9 million of realized loss on interest rate swaps was included in interest expense in the Consolidated Statement of Income.

The remaining pre-tax loss deferred on these contracts during December 31, 2020, was $ 3.4 million, which was recorded, net of an income tax benefit of $ 0.8 million, in other comprehensive income for the year.

During the year ended December 31, 2019, $ 0.2 million of realized gain on the interest rate swaps was credited to interest expense in the Consolidated Statements of Income.

The remaining pre-tax benefit deferred on these contracts at December 31, 2019, was $ 0.9 million, which is recorded, net of income taxes, of $ 0.2 million, in AOCI in the Consolidated Balance Sheets.

Under hedge accounting rules, the Company deferred the net charge or benefit associated with the interest rate swap entered into to manage the variability in interest payments for the variable-rate debt in association with $ 150 million of our outstanding term loan dated August 27, 2019 until the debt was repaid on January 29, 2021.

At that time the hedge was de-designated and therefore hedge accounting is no longer applicable and mark-to-market gains and losses are recognized in the period in which the change occurs in the Consolidated Statement of income in interest expense.

The current loan balance subject to the hedge is $ 97.5 million.

The Company is reclassifying the accumulated other comprehensive loss on the previous interest rate swap, $ 2.4 million as of the de-designation date, into interest expense using a straight-line approach over the remaining life of the originally designated hedging relationship.

The amount of pre-tax gains in accumulated other comprehensive loss that was reclassified into interest expense was $ 0.9 million for the twelve months ended December 31, 2021, leaving a balance of $ 1.5 million at December 31, 2021.

Prior to the de-designation, changes in the fair values of the interest rate swaps were recorded as a component of other comprehensive loss.

Note 15 – Earnings Per Share

1 unchanged sentence

Diluted earnings per common share adjusts basic earnings per common share for the effects of stock options and restricted stock in the periods where such items are dilutive.

On July 24, 2019, the Board of Directors approved an up to $ 400 million share repurchase program to be executed over the two-year period ending July 2021, which was completed in November 2020.

On October 28, 2020, a new authorization of $ 500 million was put into place through December 2023.

During 2020, the total repurchases were 3,338,028 common shares for $ 399.6 million,or $ 119.70 per share.

The number repurchased in 2020 under the July 2019 authorization were 2,368,374 common shares for $ 274.6 million, or $ 115.93 per share and shares purchased under the October 2020 authorization were 969,654 common shares for $ 125.0 million, or $ 128.91 per share, leaving approximately $ 375.0 million, at December 31, 2020, available until December 2023.

During 2019, the total number of common shares repurchased were 1,898,023 for $ 165.8 million, or $ 87.35 per share, of which 1,393,626 common shares were under the July 2019 plan for $ 125.0 million, or $ 89.70 per share and other shares purchased were 504,397 common shares for $ 40.8 million, or $ 80.85 per share.

During 2018 the Company acquired 1,994,632 common shares at an average price of $ 72.39 .

On October 28, 2020, a share repurchase authorization of $ 500 million was put into place through December 2023.

Shares repurchased under the October 2020 authorization in 2020 were 969,654 common shares for $ 125.0 million, or $ 128.91 per share, leaving approximately $ 375.0 million available, at December 31, 2020.

During 2021, common shares repurchased under the October authorization were 2,398,477 common shares for $ 355.0 million, or $ 148.00 per share, leaving approximately $ 20.0 million, at December 31, 2021, available until December 2023.

In December 2021, the Board of Directors announced an additional authorization to repurchase shares of up to $ 1 billion to be executed by December 31, 2026, once the current program has been completed.

During 2019, the total number of common shares repurchased were 1,898,023 for $ 165.8 million, or $ 87.35 per share, of which 1,393,626 common shares for $ 125.0 million, or $ 89.70 per share were under a $ 400 million share repurchase authorization approved by the Company Board of Directors in July 2019, and other shares purchased were 504,397 common shares for $ 40.8 million, or $ 80.85 per share.

During 2020, the total number of common shares repurchased were 3,338,028 for $ 399.6 million, or $ 119.70 per share, of which 2,368,374 common shares were under the July 2019 plan for $ 274.6 million, or $ 115.93 per share, which completed the authorization in November 2020.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table provides a reconciliation of basic and diluted earnings per share computations for the years ended December 31, 2020, 2019 and 2018 (in millions, except per share amounts):

The following table provides a reconciliation of basic and diluted earnings per share computations for the years ended December 31, 2021, 2020, and 2019.

Years ended December 31,

52 unchanged sentences

Financial liabilities

Current and long-term debt $ ( 1,002.4 ) $ ( 1,029.9 ) $ ( 1,038.1 ) $ ( 1,069.4 )

Current and long-term debt, excluding finance leases $ ( 1,673.5 ) $ ( 1,709.5 ) $ ( 1,000.3 ) $ ( 1,029.9 )

Note 18 – Commitments

The Company leases land, gasoline stations, and other facilities under operating leases.

The Company leases land, gasoline stores, and other facilities under operating leases.

During the next five years, expected future rental payments under all operating leases are approximately $ 44.4 million in 2022, $ 44.0 million in 2023, $ 43.6 million in 2024, $ 42.6 million in 2025, and $ 41.9 million in 2026.

Rental expense for noncancellable operating leases, including contingent payments when applicable, was $ 48.7 million in 2021, $ 24.9 million in 2020 and $ 21.6 million in 2019.

Commitments for capital expenditures were approximately $ 286.8 million at December 31, 2020, including $ 278.3 million approved for potential construction of future Murphy USA and Murphy Express gasoline stations (including land) at year-end, along with $ 4.1 million for improvements of existing stations, to be financed with our operating cash flow and/or incurrence of indebtedness.

Commitments for capital expenditures were approximately $ 275.6 million at December 31, 2021, including $ 252.5 million approved for potential construction of future stores (including land) at year-end, along with $ 8.2 million for improvements of existing stores, to be financed with our operating cash flow and/or incurrence of indebtedness.

The Company has certain take-or-pay contracts primarily to supply terminals with a noncancellable remaining term of 8.8 years.

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With respect to the previously owned refinery properties, Murphy Oil retained those liabilities in the Separation and Distribution agreement that was entered into related to the separation on August 30, 2013.

With respect to any remaining potential liabilities, the Company believes costs related to these sites will not have a material adverse effect on Murphy USA’s net income, financial position or liquidity in a future period.

With respect to any remaining potential liabilities, the Company believes costs related to these properties will not have a material adverse effect on Murphy USA’s net income, financial position or liquidity in a future period.

Certain environmental expenditures are likely to be recovered by the Company from other sources, primarily environmental funds maintained by certain states.

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Murphy USA is engaged in a number of other legal proceedings, all of which the Company considers routine and incidental to its business.

Currently, the City of Charleston, South Carolina and the state of Delaware have filed lawsuits against energy companies, including the Company.

These lawsuits allege damages as a result of climate change and the plaintiffs are seeking unspecified damages and abatement under various tort theories.

At this early stage, the ultimate outcome of these matters remain uncertain, and neither the likelihood of an unfavorable outcome nor the ultimate liability, if any, can be determined.

Based on information currently available to the Company, the ultimate resolution of those other legal matters is not expected to have a material adverse effect on the Company’s net income, financial condition or liquidity in a future period.

INSURANCE — The Company maintains insurance coverage at levels that are customary and consistent with industry standards for companies of similar size.

Murphy USA maintains statutory workers compensation insurance with a deductible of $ 1.0 million per occurrence, general liability insurance with a deductible of $ 3.0 million per occurrence, and auto liability insurance with a deductible of $ 0.3 million per occurrence.

As of December 31, 2020, there were a number of outstanding claims that are of a routine nature.

The estimated incurred but unpaid liabilities relating to these claims are included in Trade account payables and accrued liabilities on the Consolidated Balance Sheets.

While the ultimate outcome of these claims cannot presently be determined, management believes that the

Murphy USA maintains statutory workers compensation insurance with a deductible of $ 1.0 million per occurrence, general liability insurance with a deductible of $ 3.0 million per

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

accrued liability of $ 27.8 million will be sufficient to cover the related liability and that the ultimate disposition of these claims will have no material effect on the Company’s financial position and results of operations.

occurrence, and auto liability insurance with a deductible of $ 0.3 million per occurrence.

As of December 31, 2021, there were a number of outstanding claims that are of a routine nature.

The estimated incurred but unpaid liabilities relating to these claims are included in Trade account payables and accrued liabilities on the Consolidated Balance Sheets.

While the ultimate outcome of these claims cannot presently be determined, management believes that the accrued liability of $ 39.4 million will be sufficient to cover the related liability and that the ultimate disposition of these claims will have no material effect on the Company’s financial position and results of operations.

The Company has obtained insurance coverage as appropriate for the business in which it is engaged, but may incur losses that are not covered by insurance or reserves, in whole or in part, and such losses could adversely affect our results of operations and financial position.

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The exercise of lease renewal options is at the Company's sole discretion.

Due to the uncertainties of future markets, economic factors, technology changes, demographic shifts and behavior, environmental regulatory requirements and other information that impacts decisions as to station location, management has determined that it was not reasonably certain to exercise contract options and they are not included in the lease term.

Due to the uncertainties of future markets, economic factors, technology changes, demographic shifts and behavior, environmental regulatory requirements and other information that impacts decisions as to store location, management has determined that it was not reasonably certain to exercise contract options and they are not included in the lease term.

Additionally, short-term leases and leases with variable lease costs are immaterial.

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Lease income associated with these leases is immaterial.

Lessee —We lease land for 232 stations, one terminal, and various equipment.

We also have certain areas where we sublease building and land space to others.

This lease income is immaterial.

Lessee —We lease land for 407 stores, one terminal, and various equipment.

Our lease agreements do not contain any material residual value guarantees and approximately 102 sites leased from Walmart contain restrictive covenants, though the restrictions are deemed to have an immaterial impact.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Leases are reflected in the following balance sheet accounts:

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2021 December 31,

Operating (Right-of-use) Other Assets $ 147.7 $ 124.2

Operating (Right-of-use) Operating lease right of use assets, net $ 419.2 $ 147.7

Finance Property, plant, and equipment, at cost, less accumulated depreciation of $ 16.7 in 2021 and $ 2.8 in 2020

Total leased assets $ 556.5 $ 150.3

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Millions of dollars) Classification December 31,

2020 December 31,

Operating Trade accounts payable and accrued liabilities $ 18.1 $ 7.8

Finance Current maturities of long-term debt 11.0 1.2

Operating Deferred credits and other liabilities 142.5 118.5

Operating Non-current operating lease liabilities 408.9 142.5

Finance Long-term debt, including capitalized lease obligations 130.6 0.9

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(Millions of dollars) Classification 2021 2020 2019

Operating lease cost Station and other operating expenses $ 16.6 $ 14.5

Operating lease cost Store and other operating expenses $ 43.1 $ 16.6 $ 14.5

Finance lease cost

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Financing cash flows required by finance leases $ 9.8 $ 1.4 $ 1.4

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Maturity of Lease Liabilities:

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2024 43.6 16.9

2025 42.6 15.9

2026 41.9 15.3

After 2026 498.1 137.2

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Present value of lease liabilities $ 427.0 $ 141.6

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Lease Term and Discount Rate:

Year Ended December 31,

Weighted average remaining lease term (years)

Weighted average remaining lease term In Years

Finance leases 13.7

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Note 21 — Recent Accounting and Reporting Rules

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments." ASU 2016-13 was subsequently modified by ASU 2018-19, ASU 2019-04, ASU 2019-05, and ASU 2019-11.

This ASU changed the way entities recognize impairment of many financial assets by requiring immediate recognition of estimated credit losses expected to occur over their remaining life, which will result in timelier recognition of losses.

ASU 2016-13 and the associated modifications was effective for the Company on January 1, 2020 and required a modified retrospective approach with an adjustment at the beginning of year for any adjustment due to its adoption.

In applying ASC 326 at January 1, 2020, the Company calculated an adjustment to its estimated credit loss allowance and lowered the allowance by $ 1.1 million, which was credited to retained earnings under the modified retrospective approach.

The adjustment reflects the Company's changes in credit practices since its spin-of in 2013 which includes tighter applied credit terms and faster turnover of receivables resulting in a decrease to its estimated credit loss allowance as of January 1, 2020.

In August 2018, the FASB issued ASU 2018-15, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40):

Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract".

This ASU aligns the accounting treatment for capitalizing implementation costs incurred by customers in cloud computing arrangements in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.

This guidance was effective for the Company on January 1, 2020.

The amendments in this update were applied prospectively to all implementation costs incurred after the date of adoption.

The Company assessed the effect that this ASU had on our financial position, results of operations, and disclosures and determined that this update did not have a material impact on the Company's consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, "Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement".

This ASU eliminated, amended, and added disclosure requirements for fair value measurements in Topic 820, including disclosing the changes in unrealized gains and losses for the period included in other comprehensive income for level 3 measurements.

This guidance was effective for the Company on January 1, 2020.

See Note 12 "Financial Instruments and Risk Management" for additional information.

In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740):

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The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group.

This ASU is effective for the Company for the year beginning January 1, 2021, and early adoption is permitted.

The Company has assessed the effect that this ASU will have on our financial position, results of operations, and disclosures and has concluded that this update will not have a material impact on the Company's consolidated financial statements.

This ASU was effective for the Company for the year beginning January 1, 2021 and this update did not have a material impact on the Company's consolidated financial statements.

In January 2021, the FASB issued ASU 2021-01, "Reference Rate Reform (Topic 848):

This standard extends certain of the optional expedients and exceptions in ASC 848 which applies to derivative contracts impacted by the discounting transition, including derivatives that do not reference LIBOR or other reference rates that are expected to be discontinued.

The new standard applies to all entities and is in effect for a limited time, from March 12, 2020 through December 31, 2022.

The Company has determined this standard has not had a material impact on the Company's consolidated financial statements.

In August 2021, the FASB issued ASU 2021-08, "Accounting for Contract Assets and Contract Liabilities from Contracts with Customers," which requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities (deferred revenue) from acquired contracts using the revenue recognition guidance in Topic 606.

Under Topic 606, the acquirer applies the revenue model as if it had originated the contracts.

This is a departure from the current requirement to measure contract assets and contract liabilities at fair value.

This ASU is effective for the Company for the year beginning January 1, 2023, with early adoption permitted.

The Company has determined this will not have a material impact on the Company's consolidated financial statements.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting".

This standard included option guidance for a limited period of time to help ease the burden in accounting for the effects of reference rate reform.

The new standard applies for all entities through December 31, 2022.

The Company has determined this standard has not had a material impact on the Company's consolidated financial statements.

Note 22 — Business Segments

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As the primary purpose of the product supply and wholesale group is to support our retail operations and provide fuel for their daily operation, the bulk and wholesale fuel sales are secondary to the support functions played by these groups.

As such, they are all treated as one segment for reporting purposes as they sell the same products.

As such, they are all treated as one segment for reporting purposes as they sell the same products and have similar economic characteristics.

This Marketing segment contains essentially all of the revenue generating activities of the Company.

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Interest expense $ ( 8.1 ) $ ( 74.3 ) $ ( 82.4 )

Loss on early debt extinguishment $ — $ — $ —

Income tax expense (benefit) $ 148.5 $ ( 23.5 ) $ 125.0

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Accretion of asset retirement obligations $ 2.5 $ — $ 2.5

Debt extinguishment costs $ — $ — $ —

Deferred and noncurrent income taxes (benefits) $ 22.6 $ ( 3.6 ) $ 19.0

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Interest expense $ ( 0.1 ) $ ( 51.1 ) $ ( 51.2 )

Loss on early debt extinguishment $ — $ ( 14.8 ) $ ( 14.8 )

Income tax expense (benefit) $ 132.9 $ ( 9.9 ) $ 123.0

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Accretion of asset retirement obligations $ 2.3 $ — $ 2.3

Debt extinguishment costs $ — $ 4.4 $ 4.4

Deferred and noncurrent income taxes (benefits) $ 2.8 $ ( 0.3 ) $ 2.5

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Interest expense $ ( 0.1 ) $ ( 54.8 ) $ ( 54.9 )

Loss on early debt extinguishment $ — $ ( 14.8 ) $ ( 14.8 )

Income tax expense (benefit) $ 66.3 $ ( 18.7 ) $ 47.6

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Accretion of asset retirement obligations $ 2.1 $ — $ 2.1

Debt extinguishment costs $ — $ 4.4 $ 4.4

Deferred and noncurrent income taxes (benefits) $ 32.9 $ ( 9.2 ) $ 23.7

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Total assets at year-end $ 2,304.7 $ 382.5 $ 2,687.2

Note 21 Subsequent Events

On January 29, 2021, the Company completed its acquisition of QuickChek, a chain of convenience stores located primarily in New Jersey and New York by purchasing 100 % of the outstanding equity for an all-cash consideration of $ 645 million before adjustments for working capital and other customary items.

Due to the close proximity of the completion of the acquisition to the filing of this Form 10-K, the Company is unable to provide a preliminary purchase price allocation of the fair value of assets acquired and liabilities assumed in the transaction.

The Company will disclose a preliminary purchase price allocation in its Form 10-Q for the period ending March 31, 2021.

The financial results for QuickChek will be included in the Company's consolidated financial statements from the date of acquisition.

Also, on January 29, 2021, the Company refinanced its existing credit facility and issued new senior unsecured notes.

The Company entered into a new credit agreement that provides for a secured term loan of $ 400 million (which was borrowed in full) and revolving credit commitments of $ 350 million.

The term loan expires seven years from the date of issuance and the revolving credit facility matures in five years .

The secured term loan accrues interest at LIBOR plus 1.75 %, subject to a LIBOR floor of 0.50 % and the revolving credit facility accrues interest, when drawn, at LIBOR plus a range of 1.75 % to 2.25 % depending on a total debt to EBITDA ratio covenant.

As part of entering into the new credit agreement, the prior agreement which consisted of an ABL facility and term loan was fully repaid and retired.

The senior unsecured notes were issued in an aggregate principal of $ 500 million and bear interest at a rate of 3.750 % per annum.

The notes mature on February 15, 2031, and interest is payable every February 15 and August beginning August 15, 2021.

These senior unsecured notes contain covenants that are essentially identical to the Company's other outstanding senior notes.

SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures