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	$	—	$	—		$	—