Segment Data

We report our operating results in two reportable segments: (i) pipelines and transportation and (ii) wholesale marketing and terminalling. Our operating segments adhere to the accounting polices used for our consolidated financial statements, as described in Note 1. Our operating segments are managed separately because each segment requires different industry knowledge, technology and marketing strategies. Decisions concerning the allocation of resources and assessment of operating performance are made based on this segmentation. Management measures the operating performance of each of its reportable segments based on the segment contribution margin. Segment contribution margin is defined as net sales less cost of sales and operating expenses, excluding depreciation and amortization.

We generate revenue by charging fees for gathering, transporting and storing crude oil and for marketing, distributing, transporting and storing refined products. A substantial majority of our contribution margin is derived from commercial agreements with Delek with initial terms ranging from five to ten years.

The pipelines and transportation segment provides crude oil gathering, transportation and storage services to Delek's refining operations and independent third parties.

The wholesale marketing and terminalling segment provides marketing and terminalling services to Delek's refining operations and independent third parties.

The following is a summary of business segment operating performance as measured by contribution margin for the period indicated (in thousands):



	As of and For the Year Ended December 31, 2012 (1)
(In thousands)	Pipelines and Transportation		Wholesale Marketing and Terminalling		Consolidated
Net sales (excluding intercompany fees and sales)	$	33,539	$	989,047	$	1,022,586
Operating costs and expenses:
Cost of goods sold	—		959,434		959,434
Operating expenses	17,862		5,500		23,362
Segment contribution margin	$	15,677	$	24,113	39,790
General and administrative expenses					8,389
Depreciation and amortization					8,675
Loss on sale of assets					9
Operating income					$	22,717
Total assets	$	147,257	$	98,512	$	245,769
Capital spending (excluding business combinations)	$	6,555	$	4,544	$	11,099

(1) The information presented includes the results of operations of our Predecessor for periods presented through November 6, 2012 and of the Partnership for the period beginning November 7, 2012, the date the Partnership commenced operations. Prior to the completion of the Offering our Predecessor did not record revenues for intercompany trucking, terminalling, storage and short-haul pipeline transportation services. Volumes for all periods presented include both affiliate and third-party throughput.



	As of and For the Year Ended December 31, 2011
	Predecessor
(In thousands)	Pipelines and Transportation (1)		Wholesale Marketing and Terminalling		Consolidated
Net sales (excluding intercompany fees and sales)	$	21,878	$	722,201	$	744,079
Operating costs and expenses:
Cost of goods sold	—		700,505		700,505
Operating expenses	9,530		3,410		12,940
Segment contribution margin	$	12,348	$	18,286	30,634
General and administrative expenses					5,795
Depreciation and amortization					4,820
Gain on sale of assets					(2		)
Operating income					$	20,021
Total assets	$	111,564	$	88,263	$	199,827
Capital spending (excluding business combinations)	$	267	$	618	$	885

(1) The operating results presented are for the 247 days and 12 days, respectively, Delek operated the El Dorado Refinery and the Paline Pipeline System in 2011.



	As of and For the Year Ended December 31, 2010
	Predecessor
(In thousands)	Pipelines and Transportation		Wholesale Marketing and Terminalling		Consolidated
Net sales (excluding intercompany fees and sales)	$	9,451	$	494,957	$	504,408
Operating costs and expenses:
Cost of goods sold	—		476,678		476,678
Operating expenses	1,955		965		2,920
Segment contribution margin	$	7,496	$	17,314	24,810
General and administrative expenses					4,247
Depreciation and amortization					2,810
Operating income					$	17,753
Total assets	$	1,793	$	70,038	$	71,831
Capital spending (excluding business combinations)	$	—	$	—	$	—