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Acquisitions (Notes) | 9 Months Ended
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Sep. 30, 2014
Acquisitions [Abstract] |
Acquisitions | Acquisitions El Dorado Acquisition On February 10, 2014, the Partnership completed the El Dorado Acquisition and acquired the El Dorado Terminal and Tank Assets. The purchase price paid for the assets acquired was approximately $95.9 million in cash. The assets acquired consisted of the following:
• | The El Dorado Terminal. The refined products terminal located at the El Dorado Refinery, which consisted of a truck loading rack with three loading bays supplied by pipelines from storage tanks located at the El Dorado Refinery along with certain ancillary assets. Total throughput capacity for the El Dorado Terminal is approximately 26,700 barrels per day ("bpd").
• | The El Dorado Tank Assets. A total of 158 storage tanks and certain ancillary assets (such as pumps and piping) located at and adjacent to the El Dorado Refinery with an aggregate shell capacity of approximately 2.5 million barrels.
Delek retained any current assets and current liabilities related to the El Dorado Terminal and Tank Assets as of the date of the El Dorado Acquisition. The only historical balance sheet items that transferred to the Partnership in the El Dorado Acquisition were property, plant and equipment assets, tank inspection liabilities and asset retirement obligations, which were recorded by us at historical cost. In connection with the El Dorado Acquisition, the Partnership and Delek entered into (i) an asset purchase agreement, (ii) the Second Omnibus Amendment (as defined in Note 13), (iii) a throughput and tankage agreement with respect to the El Dorado Terminal and Tank Assets, (iv) a lease and access agreement, and (v) a site services agreement. See Note 13 for additional information regarding these agreements. 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 consisted of a truck loading rack with nine loading bays supplied by pipelines from storage tanks located adjacent to the Tyler Refinery, along with certain ancillary assets. Total throughput capacity for the Tyler Terminal is approximately 72,000 bpd.
• | The Tyler Tank Assets. Ninety-six storage tanks and certain ancillary assets (such as pumps and piping) located adjacent to the Tyler Refinery with an aggregate shell capacity of approximately 2.0 million barrels.
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 entered into (i) an asset purchase agreement, (ii) the First Omnibus Amendment (as defined in Note 13), (iii) a throughput and tankage agreement with respect to the Tyler Terminal and Tank Assets, (iv) a lease and access agreement, and (v) a site services agreement. See Note 13 for additional information regarding these agreements. Financial Results of El Dorado Terminal and Tank Assets and Tyler Terminal and Tank Assets The acquisitions of the El Dorado Terminal and Tank Assets and the Tyler Terminal and Tank Assets were considered transfers of businesses between entities under common control. Accordingly, the El Dorado Acquisition and the Tyler Acquisition were recorded at amounts based on Delek's historical carrying value as of each respective acquisition date, which were $25.2 million as of February 10, 2014 and $38.3 million as of July 26, 2013. Our historical financial statements have been retrospectively adjusted to reflect the results of operations, financial position, cash flows and equity attributable to the El Dorado Terminal and Tank Assets and the Tyler Terminal and Tank Assets as if we owned the assets for all periods presented. The results of the El Dorado Terminal and the Tyler Terminal are included in the wholesale marketing and terminalling segment, and the results of the El Dorado Tank Assets and the Tyler Tank Assets are included in the pipelines and transportation segment. The following amounts associated with the El Dorado Terminal and Tanks Assets and the Tyler Terminal and Tank Assets, subsequent to each respective acquisition date, are included in the condensed consolidated statements of operations of the Partnership (in thousands):
|  | Three Months Ended |  | Nine Months Ended
|  | September 30, 2014 |  | September 30, 2014
Tyler Terminal and Tank Assets: |  |  |  |
Total operating revenues |  | $ | 4,486 |  |  | $ | 13,488 |
Net income attributable to the Partnership |  | $ | 2,341 |  |  | $ | 7,625 |
El Dorado Terminal and Tank Assets: |  |  |  |
Total operating revenues |  | $ | 4,471 |  |  | $ | 11,326 |
Net income attributable to the Partnership |  | $ | 3,021 |  |  | $ | 6,962 |
Costs associated with the acquisition |  | $ | — |  |  | $ | 186 |
The results of the El Dorado Terminal and Tank Assets' operations prior to the completion of the El Dorado Acquisition on February 10, 2014 have been included in the El Dorado Predecessor results in the tables below. 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 El Dorado Terminal and Tank Assets subsequent to February 10, 2014, and the results of the Tyler Terminal and Tank Assets subsequent to July 26, 2013 have been included in the Partnership's results. The tables on the following page present our results of operations, the effect of including the results of the El Dorado Terminal and Tank Assets and the Tyler Terminal and Tank Assets and the adjusted total amounts included in our condensed consolidated financial statements. Condensed Combined Balance Sheet as of December 31, 2013
|  | Delek Logistics |  | El Dorado Terminal and Tank Assets |  |
|  | Partners, LP |  | (El Dorado Predecessor) |  | December 31, 2013
|  | (In thousands)
ASSETS
Current Assets: |  |  |  |  |  |
Cash and cash equivalents |  | $ | 924 |  |  | $ | — |  |  | $ | 924 |
Accounts receivable |  | 28,976 |  |  | — |  |  | 28,976 |
Inventory |  | 17,512 |  |  | — |  |  | 17,512 |
Deferred tax assets |  | 12 |  |  | — |  |  | 12 |
Other current assets |  | 341 |  |  | — |  |  | 341 |
Total current assets |  | 47,765 |  |  | — |  |  | 47,765 |
Property, plant and equipment: |  |  |  |  |  |
Property, plant and equipment |  | 235,588 |  |  | 29,800 |  |  | 265,388 |
Less: accumulated depreciation |  | (36,306 | ) |  | (3,260 | ) |  | (39,566 | )
Property, plant and equipment, net |  | 199,282 |  |  | 26,540 |  |  | 225,822 |
Goodwill |  | 10,454 |  |  | — |  |  | 10,454 |
Intangible assets, net |  | 12,258 |  |  | — |  |  | 12,258 |
Other non-current assets |  | 5,045 |  |  | — |  |  | 5,045 |
Total assets |  | $ | 274,804 |  |  | $ | 26,540 |  |  | $ | 301,344 |
LIABILITIES AND EQUITY
Current liabilities: |  |  |  |  |  |
Accounts payable |  | $ | 26,045 |  |  | $ | — |  |  | $ | 26,045 |
Accounts payable to related parties |  | 1,513 |  |  | — |  |  | 1,513 |
Fuel and other taxes payable |  | 5,700 |  |  | — |  |  | 5,700 |
Accrued expenses and other current liabilities |  | 5,776 |  |  | 675 |  |  | 6,451 |
Total current liabilities |  | 39,034 |  |  | 675 |  |  | 39,709 |
Non-current liabilities: |  |  |  |  |  |
Revolving credit facility |  | 164,800 |  |  | — |  |  | 164,800 |
Asset retirement obligations |  | 2,993 |  |  | 94 |  |  | 3,087 |
Deferred tax liabilities |  | 324 |  |  | — |  |  | 324 |
Other non-current liabilities |  | 5,612 |  |  | 610 |  |  | 6,222 |
Total non-current liabilities |  | 173,729 |  |  | 704 |  |  | 174,433 |
Equity: |  |  |  |  |  |
Predecessors division equity |  | — |  |  | 25,161 |  |  | 25,161 |
Common unitholders - public (9,353,240 units issued and outstanding) |  | 183,839 |  |  | — |  |  | 183,839 |
Common unitholders - Delek (2,799,258 units issued and outstanding) |  | (176,680 | ) |  | — |  |  | (176,680 | )
Subordinated unitholders - Delek (11,999,258 units issued and outstanding) |  | 59,386 |  |  | — |  |  | 59,386 |
General Partner unitholders - Delek (492,893 units issued and outstanding) |  | (4,504 | ) |  | — |  |  | (4,504 | )
Total equity |  | 62,041 |  |  | 25,161 |  |  | 87,202 |
Total liabilities and equity |  | $ | 274,804 |  |  | $ | 26,540 |  |  | $ | 301,344 |
Condensed Combined Statements of Operations
|  |  |  | El Dorado Terminal and Tank Assets |  |
|  | Delek Logistics Partners, LP |  | (El Dorado Predecessor) |  | Nine Months Ended September 30, 2014
|  | (In thousands)
Net sales |  | $ | 667,906 |  |  | $ | — |  |  | $ | 667,906 |
Operating costs and expenses: |  |  |  |  |  |
Cost of goods sold |  | 562,916 |  |  | — |  |  | 562,916 |
Operating expenses |  | 28,293 |  |  | 783 |  |  | 29,076 |
General and administrative expenses |  | 7,312 |  |  | 46 |  |  | 7,358 |
Depreciation and amortization |  | 10,644 |  |  | 114 |  |  | 10,758 |
Loss on asset disposals |  | 74 |  |  | — |  |  | 74 |
Total operating costs and expenses |  | 609,239 |  |  | 943 |  |  | 610,182 |
Operating income (loss) |  | 58,667 |  |  | (943 | ) |  | 57,724 |
Interest expense, net |  | 6,551 |  |  | — |  |  | 6,551 |
Net income (loss) before income tax expense |  | 52,116 |  |  | (943 | ) |  | 51,173 |
Income tax expense |  | 605 |  |  | — |  |  | 605 |
Net income (loss) |  | 51,511 |  |  | (943 | ) |  | 50,568 |
Less: Loss attributable to Predecessors |  | — |  |  | (943 | ) |  | (943 | )
Net income attributable to partners |  | $ | 51,511 |  |  | $ | — |  |  | $ | 51,511 |
|  |  |  | Tyler Terminal and Tank Assets |  | El Dorado Terminal and Tank Assets |  |
|  | Delek Logistics Partners, LP |  | (Tyler Predecessor) |  | (El Dorado Predecessor) |  | Three Months Ended 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 |  |  | 1,499 |  |  | 8,973 |
General and administrative expenses |  | 1,782 |  |  | 86 |  |  | 105 |  |  | 1,973 |
Depreciation and amortization |  | 2,600 |  |  | 244 |  |  | 297 |  |  | 3,141 |
Total operating costs and expenses |  | 229,249 |  |  | 1,159 |  |  | 1,901 |  |  | 232,309 |
Operating income (loss) |  | 14,046 |  |  | (1,159 | ) |  | (1,901 | ) |  | 10,986 |
Interest expense, net |  | 1,194 |  |  | — |  |  | — |  |  | 1,194 |
Net income (loss) before income tax expense |  | 12,852 |  |  | (1,159 | ) |  | (1,901 | ) |  | 9,792 |
Income tax expense |  | 307 |  |  | — |  |  | — |  |  | 307 |
Net income (loss) |  | 12,545 |  |  | (1,159 | ) |  | (1,901 | ) |  | 9,485 |
Less: Loss attributable to Predecessors |  | — |  |  | (1,159 | ) |  | (1,901 | ) |  | (3,060 | )
Net income attributable to partners |  | $ | 12,545 |  |  | $ | — |  |  | $ | — |  |  | $ | 12,545 |
|  |  |  | Tyler Terminal and Tank Assets |  | El Dorado Terminal and Tank Assets |  |
|  | Delek Logistics Partners, LP |  | (Tyler Predecessor) |  | (El Dorado Predecessor) |  | Nine Months Ended 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 |  |  | 4,907 |  |  | 27,982 |
General and administrative expenses |  | 4,570 |  |  | 602 |  |  | 524 |  |  | 5,696 |
Depreciation and amortization |  | 7,324 |  |  | 1,750 |  |  | 892 |  |  | 9,966 |
Total operating costs and expenses |  | 644,516 |  |  | 6,853 |  |  | 6,323 |  |  | 657,692 |
Operating income (loss) |  | 39,815 |  |  | (6,853 | ) |  | (6,323 | ) |  | 26,639 |
Interest expense, net |  | 2,763 |  |  | — |  |  | — |  |  | 2,763 |
Net income (loss) before income tax expense |  | 37,052 |  |  | (6,853 | ) |  | (6,323 | ) |  | 23,876 |
Income tax expense |  | 547 |  |  | — |  |  | — |  |  | 547 |
Net income (loss) |  | 36,505 |  |  | (6,853 | ) |  | (6,323 | ) |  | 23,329 |
Less: Loss attributable to Predecessors |  | — |  |  | (6,853 | ) |  | (6,323 | ) |  | (13,176 | )
Net income attributable to partners |  | $ | 36,505 |  |  | $ | — |  |  | $ | — |  |  | $ | 36,505 |
North Little Rock Acquisition On October 24, 2013, we purchased a refined products terminal in North Little Rock, Arkansas from Enterprise Refined Products Company, LLC (the "North Little Rock Terminal"). The North Little Rock Terminal consists of a total of three products tanks with effective capacity of 140,000 barrels and a truck rack with throughput capacity of up to 10,000 bpd. We acquired the North Little Rock Terminal to extend our logistics presence in Arkansas. During the second quarter of 2014, we finalized our purchase price allocation and adjusted certain of the acquisition-date fair values previously disclosed. The final allocation of the aggregate purchase price of the North Little Rock Terminal as of September 30, 2014 is summarized as follows (in thousands):
Property, plant and equipment | $ | 4,990 |
Intangible assets | 10 |
Total | $ | 5,000 |
North Little Rock Terminalling Agreement In connection with the acquisition of the North Little Rock Terminal, on October 24, 2013, the Partnership and Delek entered into the North Little Rock Terminalling Agreement, which includes a minimum throughput commitment and a per barrel throughput fee that Delek will pay us for providing terminalling and other services to Delek at the North Little Rock Terminal, and for storing product at the terminal. Pro Forma Financial Information - North Little Rock Acquisition We began consolidating the results of operations of the North Little Rock Terminal on October 24, 2013. The North Little Rock Terminal contributed $0.4 million and $1.1 million to net sales for the three and nine months ended September 30, 2014, respectively, and $0.2 million and $0.6 million to net income for the three and nine months ended September 30, 2014, respectively. Below are the unaudited pro forma consolidated results of operations of the Partnership for the three and nine months ended September 30, 2013, as if the acquisition had occurred on January 1, 2013 (in thousands):
|  | Three Months Ended |  | Nine Months Ended
|  | September 30, 2013 |  | September 30, 2013
Net sales |  | $ | 243,673 |  |  | $ | 685,432 |
Net income |  | $ | 9,687 |  |  | $ | 23,953 |
Hopewell Acquisition On July 19, 2013, the Partnership purchased a 13.5-mile pipeline and certain ancillary assets (the "Hopewell Pipeline"), including a related delivery station (the "Hopewell Station") and pumps. The Hopewell Pipeline originates at the Tyler Refinery and terminates at the Hopewell Station, where it effectively connects to the Partnership's 19-mile pipeline (the "Big Sandy Pipeline") that originates at the Hopewell Station and terminates at our light petroleum products terminal located in Big Sandy, Texas. 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"). During the second quarter of 2014, we finalized our purchase price allocation and adjusted certain of the acquisition-date fair values previously disclosed. The final allocation of the aggregate purchase price of the Hopewell Pipeline as of September 30, 2014 is summarized as follows (in thousands):
Property, plant and equipment | $ | 3,538 |
Intangible assets | 984 |
Goodwill | 1,200 |
Total | $ | 5,722 |
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. Pro Forma Financial Information - Hopewell Acquisition We began consolidating the results of operations of the Hopewell Pipeline on July 19, 2013. Although the Tyler-Big Sandy Pipeline, of which the Hopewell Pipeline is an integral part, was not operational prior to November 2013 due to required maintenance to return it to service, Delek paid to us pipeline fees for the Tyler-Big Sandy Pipeline beginning in July 2013 and through the year ended December 31, 2013. The maintenance required to return the Hopewell Pipeline to service and thereby connect it to the Big Sandy Pipeline was completed in the fourth quarter of 2013. The Tyler-Big Sandy Pipeline contributed $0.4 million and $1.2 million to net sales for the three and nine months ended September 30, 2014, respectively, and $0.4 million and $0.9 million to net income for the three and nine months ended September 30, 2014, respectively. Below are the unaudited pro forma consolidated results of operations of the Partnership for the three and nine months ended September 30, 2013, as if the acquisition had occurred on January 1, 2013 (in thousands):
|  | Three Months Ended |  | Nine Months Ended
|  | September 30, 2013 |  | September 30, 2013
Net sales |  | $ | 243,295 |  |  | $ | 684,334 |
Net income |  | $ | 9,459 |  |  | $ | 23,047 |

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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 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1383-128463 Reference 2: 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 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 4 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4934-128472 Reference 5: 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 6: 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 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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