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Acquisitions (Notes) | 9 Months Ended
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Sep. 30, 2013
Acquisitions [Abstract] |
Acquisitions | Acquisitions Nettleton Acquisition On January 31, 2012, Delek completed the acquisition of an approximately 35-mile long, eight and ten-inch pipeline system (the "Nettleton Pipeline") from Plains Marketing, L.P. (“Plains”), which was subsequently contributed to the Partnership in connection with the Offering. The Nettleton Pipeline is used to transport crude oil from our tank farms in and around Nettleton, Texas to the Bullard Junction at the Tyler Refinery. Prior to the acquisition of the Nettleton Pipeline, Delek leased the Nettleton Pipeline from Plains under the terms of the Pipeline Capacity Lease Agreement dated April 12, 1999, as amended, which was terminated in connection with the acquisition of the Nettleton Pipeline. The aggregate purchase price of the Nettleton Pipeline was approximately $12.3 million. The allocation of the purchase price was based primarily upon a preliminary valuation. During 2012, we adjusted certain of the acquisition-date fair values previously disclosed, based primarily on the finalization of goodwill and intangible amounts, which were obtained subsequent to the acquisition. The allocation of the aggregate purchase price of the Nettleton Pipeline as of December 31, 2012 is summarized as follows (in thousands):
Property, plant and equipment | $ | 8,590 |
Intangible assets | 2,240 |
Goodwill (all expected to be deductible for tax purposes) | 1,415 |
Total | $ | 12,245 |
Big Sandy Acquisition On February 7, 2012, Delek purchased (i) a light petroleum products terminal located in Big Sandy, Texas, the underlying real property, and other related assets from Sunoco Partners Marketing & Terminals L.P. (the "Big Sandy Terminal") and (ii) the 19-mile, eight-inch diameter Hopewell - Big Sandy Pipeline originating at the Hopewell Station in Smith County, Texas and terminating at the Big Sandy Station in Big Sandy, Texas from Sunoco Pipeline L.P (the "Big Sandy Pipeline"). The Big Sandy Terminal and Big Sandy Pipeline were subsequently contributed to the Partnership in connection with the Offering. The Big Sandy Terminal was supplied by the Tyler Refinery but has been idle since November 2008. The aggregate purchase price of the Big Sandy Terminal and Big Sandy Pipeline was approximately $11.0 million. The allocation of the purchase price was based primarily upon a preliminary valuation. During 2012, we adjusted certain of the acquisition-date fair values previously disclosed, based primarily on the finalization of goodwill and intangible amounts. The allocation of the aggregate purchase price of the Big Sandy Terminal and Big Sandy Pipeline as of December 31, 2012 is summarized as follows (in thousands):
Property, plant and equipment | $ | 8,258 |
Intangible assets | 1,229 |
Goodwill (all expected to be deductible for tax purposes) | 1,540 |
Total | $ | 11,027 |
Pro Forma Financial Information - Nettleton and the Big Sandy Terminal We began consolidating the results of operations of the Nettleton Pipeline and the Big Sandy Terminal on January 31, 2012 and February 7, 2012, respectively. The Nettleton Pipeline contributed $1.2 million and $4.4 million to net sales for the three and nine months ended September 30, 2013, respectively, and $0.8 million and $3.0 million to net income for the three and nine months ended September 30, 2013, respectively. The Big Sandy Terminal contributed $0.4 million and $1.1 million to net sales for the three and nine months ended September 30, 2013, respectively, and $0.3 million and $0.9 million to net income for the three and nine months ended September 30, 2013, respectively. Below are the unaudited pro forma consolidated results of operations for the three and nine months ended September 30, 2012, as if these acquisitions had occurred on January 1, 2011 (amounts in thousands):
|  | Three Months Ended |  | Nine Months Ended
|  | September 30, 2012 |  | September 30, 2012
|  | Predecessors |  | Predecessors
Net sales |  | $ | 271,935 |  |  | $ | 773,498 |
Net (loss) income |  | $ | (421 | ) |  | $ | 1,420 |
Hopewell Acquisition On July 19, 2013, the Partnership purchased from Enterprise TE Products Pipeline Company LLC a 13.5 mile pipeline (the "Hopewell Pipeline") that originates at the Tyler Refinery and terminates at the Hopewell Station, where it effectively connects to the Big Sandy Pipeline. The Hopewell Pipeline and the Big Sandy Pipeline form essentially one pipeline link between the Tyler Refinery and the Big Sandy Terminal (the "Tyler-Big Sandy Pipeline"). The aggregate purchase price was approximately $5.7 million in cash, which has been preliminarily allocated to property, plant and equipment. The property, plant and equipment valuation is subject to change during the purchase price allocation period. Amended and Restated Services Agreement (Big Sandy Terminal and Pipeline). In connection with the acquisition of the Hopewell Pipeline, on July 25, 2013, the Partnership and Delek entered into the Amended and Restated Services Agreement (Big Sandy Terminal and Pipeline), which amended and restated the Terminalling Services Agreement dated November 7, 2012 for the Big Sandy Terminal to include, among other things, a minimum throughput commitment and a per barrel throughput fee that Delek will pay us for throughput along the Tyler-Big Sandy Pipeline. See Note 13 for additional information on this agreement. Pro Forma Financial Information - Hopewell Acquisition We began consolidating the results of operations of the Hopewell Pipeline on July 19, 2013. Although the Hopewell Pipeline has not been operational, Delek paid to us pipeline fees for the Hopewell Pipeline in the third quarter 2013. The Hopewell Pipeline contributed $0.2 million to net sales for both the three and nine months ended September 30, 2013 and a nominal amount to net income for the three and nine months ended September 30, 2013. As the Hopewell Pipeline has not been operational since prior to January 1, 2012, there are no proforma revenue adjustments for the three and nine months ended September 30, 2013 or September 30, 2012. Tyler Acquisition On July 26, 2013, the Partnership completed the Tyler Acquisition and acquired the Tyler Terminal and Tank Assets. The purchase price paid for the assets acquired was $94.8 million in cash. The assets acquired consisted of the following:
• | The Tyler Terminal. The refined products terminal located at the Tyler Refinery, which consists of a truck loading rack with nine loading bays supplied by pipelines from storage tanks, also owned by the Partnership, located adjacent to the Tyler Refinery, along with certain ancillary assets. Total throughput capacity for the Tyler Terminal is approximately 72,000 barrels per day ("bpd").
• | The Tyler Tank Assets. Ninety-six storage tanks and certain ancillary assets (such as tank pumps and piping) located adjacent to the Tyler Refinery with an aggregate shell capacity of approximately 2.0 million barrels (the "Tyler Storage Tanks").
Delek retained any current assets, current liabilities and environmental liabilities related to the Tyler Terminal and Tank Assets as of the date of the Tyler Acquisition. The only historical balance sheet items that transferred to the Partnership in the Acquisition were property, plant and equipment assets and asset retirement obligations which were recorded by us at historical cost. In connection with the Tyler Acquisition, the Partnership and Delek (i) entered into an asset purchase agreement, (ii) amended and restated the omnibus agreement (iii) entered into a throughput and tankage agreement with respect to the Tyler Terminal and Tank Assets, (iv) entered into a lease and access agreement and (v) entered into a site services agreement. See Note 13 for additional information regarding these agreements. Tyler Terminal and Tank Assets Financial Results The acquisition of the Tyler Terminal and Tank Assets was considered a transfer of a business between entities under common control. Accordingly, the Tyler Acquisition was recorded at amounts based on the historical carrying value of the Tyler Terminal and Tank Assets as of July 26, 2013, which was $38.3 million. Our historical financial statements have been retrospectively adjusted to reflect the results of operations, financial position, cash flows and equity attributable to the Tyler Terminal and Tank Assets as if we owned the assets for all periods presented. The results of the Tyler Terminal and the Tyler Tank Assets are included in the wholesale marketing and terminalling segment and the pipelines and transportation segment, respectively. The results of the Tyler Terminal and Tank Assets operations prior to the completion of the Tyler Acquisition on July 26, 2013 have been included in the Tyler Predecessor results in the tables below. The results of the Tyler Terminal and Tank Assets subsequent to July 26, 2013 have been included in the Partnership's results. Accordingly, for the three and nine months ended September 30, 2013, total operating revenues of $3.3 million and net income attributable to the Partnership of $2.1 million associated with the Tyler Terminal and Tank Assets are included in the condensed combined consolidated statements of operations of the Partnership. Nominal costs associated with the Tyler Acquisition are included in general and administrative expenses for the three and nine months ended September 30, 2013, respectively. The tables on the following page present our results of operations, the effect of including the results of the Tyler Terminal and Tank Assets and the adjusted total amounts included in our condensed combined consolidated financial statements. Condensed Combined Consolidated Balance Sheet as of December 31, 2012
|  | Delek Logistics |  | Tyler Terminal and Tank Assets |  | Delek Logistics Partners, LP
|  | Partners, LP |  | (Tyler Predecessor) |  | December 31, 2012
|  |  |  | (In thousands) |  |
ASSETS
Current Assets: |  |  |  |  |  |
Cash and cash equivalents |  | $ | 23,452 |  |  | $ | — |  |  | $ | 23,452 |
Accounts receivable |  | 27,725 |  |  | — |  |  | 27,725 |
Inventory |  | 14,351 |  |  | — |  |  | 14,351 |
Deferred tax assets |  | 14 |  |  | — |  |  | 14 |
Other current assets |  | 169 |  |  | — |  |  | 169 |
Total current assets |  | 65,711 |  |  | — |  |  | 65,711 |
Property, plant and equipment: |  |  |  |  |  |
Property, plant and equipment |  | 172,300 |  |  | 43,748 |  |  | 216,048 |
Less: accumulated depreciation |  | (18,790 | ) |  | (6,201 | ) |  | (24,991 | )
Property, plant and equipment, net |  | 153,510 |  |  | 37,547 |  |  | 191,057 |
Goodwill |  | 10,454 |  |  | — |  |  | 10,454 |
Intangible assets, net |  | 12,430 |  |  | — |  |  | 12,430 |
Other non-current assets |  | 3,664 |  |  | — |  |  | 3,664 |
Total assets |  | $ | 245,769 |  |  | $ | 37,547 |  |  | $ | 283,316 |
LIABILITIES AND EQUITY
Current liabilities: |  |  |  |  |  |
Accounts payable |  | $ | 21,849 |  |  | $ | — |  |  | $ | 21,849 |
Accounts payable to related parties |  | 10,148 |  |  | — |  |  | 10,148 |
Fuel and other taxes payable |  | 4,650 |  |  | — |  |  | 4,650 |
Accrued expenses and other current liabilities |  | 3,615 |  |  | 35 |  |  | 3,650 |
Total current liabilities |  | 40,262 |  |  | 35 |  |  | 40,297 |
Non-current liabilities: |  |  |  |  |  |
Revolving credit facility |  | 90,000 |  |  | — |  |  | 90,000 |
Asset retirement obligations |  | 1,440 |  |  | 1,737 |  |  | 3,177 |
Deferred tax liability |  | 17 |  |  | — |  |  | 17 |
Other non-current liabilities |  | 9,625 |  |  | 185 |  |  | 9,810 |
Total non-current liabilities |  | 101,082 |  |  | 1,922 |  |  | 103,004 |
Equity: |  |  |  |  |  |
Predecessors division equity |  | — |  |  | 35,590 |  |  | 35,590 |
Common unitholders - public (9,200,000 units issued and outstanding) |  | 178,728 |  |  | — |  |  | 178,728 |
Common unitholders - Delek (2,799,258 units issued and outstanding) |  | (127,129 | ) |  | — |  |  | (127,129 | )
Subordinated unitholders - Delek (11,999,258 units issued and outstanding) |  | 52,875 |  |  | — |  |  | 52,875 |
General Partner unitholders - Delek (489,766 units issued and outstanding) |  | (49 | ) |  | — |  |  | (49 | )
Total equity |  | 104,425 |  |  | 35,590 |  |  | 140,015 |
Total liabilities and equity |  | $ | 245,769 |  |  | $ | 37,547 |  |  | $ | 283,316 |
Condensed Statements of Combined Consolidated Operations
|  | Delek Logistics |  | Tyler Terminal and Tank Assets |  | Three Months Ended
|  | Partners, LP |  | (Tyler Predecessor) |  | September 30, 2013
|  |  |  | (In thousands) |  |
Net Sales |  | $ | 243,295 |  |  | $ | — |  |  | $ | 243,295 |
Operating costs and expenses: |  |  |  |  |  |
Cost of goods sold |  | 218,222 |  |  | — |  |  | 218,222 |
Operating expenses |  | 6,645 |  |  | 829 |  |  | 7,474 |
General and administrative expenses |  | 1,782 |  |  | 86 |  |  | 1,868 |
Depreciation and amortization |  | 2,600 |  |  | 244 |  |  | 2,844 |
Total operating costs and expenses |  | 229,249 |  |  | 1,159 |  |  | 230,408 |
Operating income (loss) |  | 14,046 |  |  | (1,159 | ) |  | 12,887 |
Interest expense, net |  | 1,194 |  |  | — |  |  | 1,194 |
Net income (loss) before income tax expense |  | 12,852 |  |  | (1,159 | ) |  | 11,693 |
Income tax expense |  | 307 |  |  | — |  |  | 307 |
Net income (loss) |  | 12,545 |  |  | (1,159 | ) |  | 11,386 |
Less: (Loss) attributable to Predecessors |  | — |  |  | (1,159 | ) |  | (1,159 | )
Net income attributable to partners |  | $ | 12,545 |  |  | $ | — |  |  | $ | 12,545 |
|  | Delek Logistics |  | Tyler Terminal and |  | Three Months Ended
|  | Partners, LP |  | Tank Assets |  | September 30, 2012
|  | (DKL Predecessor) |  | (Tyler Predecessor) |  | (Predecessors)
|  |  |  | (In thousands) |  |
Net Sales |  | $ | 271,806 |  |  | $ | — |  |  | $ | 271,806 |
Operating costs and expenses: |  |  |  |  |  |
Cost of goods sold |  | 255,281 |  |  | — |  |  | 255,281 |
Operating expenses |  | 6,579 |  |  | 2,961 |  |  | 9,540 |
General and administrative expenses |  | 1,614 |  |  | 190 |  |  | 1,804 |
Depreciation and amortization |  | 2,255 |  |  | 361 |  |  | 2,616 |
Loss on sale of assets |  | 5 |  |  | — |  |  | 5 |
Total operating costs and expenses |  | 265,734 |  |  | 3,512 |  |  | 269,246 |
Operating income (loss) |  | 6,072 |  |  | (3,512 | ) |  | 2,560 |
Interest expense, net |  | 667 |  |  | — |  |  | 667 |
Income (loss) before income tax expense |  | 5,405 |  |  | (3,512 | ) |  | 1,893 |
Income tax expense |  | 2,437 |  |  | — |  |  | 2,437 |
Net income (loss) |  | 2,968 |  |  | (3,512 | ) |  | (544 | )
Less: Income (loss) attributable to Predecessors |  | 2,968 |  |  | (3,512 | ) |  | (544 | )
Net income attributable to partners |  | $ | — |  |  | $ | — |  |  | $ | — |
|  | Delek Logistics |  | Tyler Terminal and Tank Assets |  | Nine Months Ended
|  | Partners, LP |  | (Tyler Predecessor) |  | September 30, 2013
|  |  |  | (In thousands) |  |
Net Sales |  | $ | 684,331 |  |  | $ | — |  |  | $ | 684,331 |
Operating costs and expenses: |  |  |  |  |  |
Cost of goods sold |  | 614,048 |  |  | — |  |  | 614,048 |
Operating expenses |  | 18,574 |  |  | 4,501 |  |  | 23,075 |
General and administrative expenses |  | 4,570 |  |  | 602 |  |  | 5,172 |
Depreciation and amortization |  | 7,324 |  |  | 1,750 |  |  | 9,074 |
Total operating costs and expenses |  | 644,516 |  |  | 6,853 |  |  | 651,369 |
Operating income (loss) |  | 39,815 |  |  | (6,853 | ) |  | 32,962 |
Interest expense, net |  | 2,763 |  |  | — |  |  | 2,763 |
Net income (loss) before income tax expense |  | 37,052 |  |  | (6,853 | ) |  | 30,199 |
Income tax expense |  | 547 |  |  | — |  |  | 547 |
Net income (loss) |  | 36,505 |  |  | (6,853 | ) |  | 29,652 |
Less: (Loss) attributable to Predecessors |  | — |  |  | (6,853 | ) |  | (6,853 | )
Net income attributable to partners |  | $ | 36,505 |  |  | $ | — |  |  | $ | 36,505 |
|  | Delek Logistics |  | Tyler Terminal and |  | Nine Months Ended
|  | Partners, LP |  | Tank Assets |  | September 30, 2012
|  | (DKL Predecessor) |  | (Tyler Predecessor) |  | (Predecessors)
|  |  |  | (In thousands) |  |
Net Sales |  | $ | 773,369 |  |  | $ | — |  |  | $ | 773,369 |
Operating costs and expenses: |  |  |  |  |  |
Cost of goods sold |  | 729,750 |  |  | — |  |  | 729,750 |
Operating expenses |  | 15,673 |  |  | 4,964 |  |  | 20,637 |
General and administrative expenses |  | 6,367 |  |  | 570 |  |  | 6,937 |
Depreciation and amortization |  | 6,649 |  |  | 1,071 |  |  | 7,720 |
Loss on sale of assets |  | 5 |  |  | — |  |  | 5 |
Total operating costs and expenses |  | 758,444 |  |  | 6,605 |  |  | 765,049 |
Operating income (loss) |  | 14,925 |  |  | (6,605 | ) |  | 8,320 |
Interest expense, net |  | 1,777 |  |  | — |  |  | 1,777 |
Net income (loss) before income tax expense |  | 13,148 |  |  | (6,605 | ) |  | 6,543 |
Income tax expense |  | 5,183 |  |  | — |  |  | 5,183 |
Net income (loss) |  | 7,965 |  |  | (6,605 | ) |  | 1,360 |
Less: Income (loss) attributable to Predecessors |  | 7,965 |  |  | (6,605 | ) |  | 1,360 |
Net income attributable to partners |  | $ | — |  |  | $ | — |  |  | $ | — |

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=7488404&loc=d3e6996-128479 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=7488404&loc=d3e7000-128479 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4922-128472 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4926-128472 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4934-128472 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1383-128463 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1392-128463 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1486-128463 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=7488404&loc=d3e6927-128479 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1497-128463 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1490-128463 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=7488404&loc=d3e7008-128479 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4845-128472 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1500-128463 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1524-128463 + Details
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