Net Income Per Unit

We use the two-class method when calculating the net income per unit applicable to limited partners because we have more than one participating security. The two-class method is based on the weighted-average number of common units outstanding during the period. Basic net income per unit applicable to limited partners (including subordinated unitholders) is computed by dividing limited partners’ interest in net income, after deducting the general partner’s 2% interest and incentive distributions, if any, by the weighted-average number of outstanding common and subordinated units. Our net income is allocated to our general partner and limited partners in accordance with their respective partnership percentages after giving effect to priority income allocations for incentive distributions, if any, to our general partner, which is the holder of the incentive distribution rights, pursuant to our partnership agreement, which are declared and paid following the close of each quarter.

Net income per unit is only calculated for periods after the Offering as no units were outstanding prior to November 7, 2012. Earnings in excess of distributions are allocated to our general partner and limited partners based on their respective ownership interests. Payments made to our unitholders are determined in relation to actual distributions declared and are not based on the net income allocations used in the calculation of net income per unit. The basic weighted-average number of units outstanding for the year ended December 31, 2013 increased to 24,514,527 units from 24,503,469 units in the third quarter 2013.

Diluted net income per unit applicable to common limited partners includes the effects of potentially dilutive units on our common units. At present, the only potentially dilutive units outstanding consist of unvested phantom units. Basic and diluted net income per unit applicable to subordinated limited partners are the same because there are no potentially dilutive subordinated units outstanding.

Our distributions are declared subsequent to quarter end. Therefore, the table represents total cash distributions applicable to the period in which the distributions are earned. The calculation of net income per unit is as follows (dollars in thousands, except per unit amounts):



	Year Ended December 31,
	2013		2012
Net income attributable to partners	$	47,830	$	8,410
Less: General partner's distribution	785		110
Less: Limited partners' distribution	19,292		2,688
Less: Subordinated partner's distribution	19,199		2,688
Earnings in excess of distributions	$	8,554	$	2,924

General partner's earnings:
Distributions	$	785	$	110
Allocation of earnings in excess of distributions	172		58
Total general partner's earnings	$	957	$	168

Limited partners' earnings on common units:
Distributions	$	19,292	$	2,688
Allocation of earnings in excess of distributions	4,198		1,433
Total limited partners' earnings on common units	$	23,490	$	4,121

Limited partners' earnings on subordinated units:
Distributions	$	19,199	$	2,688
Allocation of earnings in excess of distributions	4,184		1,433
Total limited partner's earnings on subordinated units	$	23,383	$	4,121

Weighted average limited partner units outstanding:
Common units - (basic)	12,025,249		11,999,258
Common units - (diluted)	12,148,774		11,999,258
Subordinated units - Delek (basic and diluted)	11,999,258		11,999,258

Net income per limited partner unit:
Common - (basic)	$	1.95	$	0.34
Common - (diluted)	$	1.93	$	0.34
Subordinated - (basic and diluted)	$	1.95	$	0.34