Acquisitions

Acquisitions from Delek

El Dorado Terminal and Tankage 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 $95.9 million in cash financed with borrowings under the Partnership's amended and restated senior secured revolving credit facility.

The assets acquired in the El Dorado Acquisition consist of:


•	The El Dorado Terminal. The refined products terminal located at the El Dorado Refinery, which consists of a truck loading rack with three loading bays supplied by pipeline 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. 158 storage tanks and certain ancillary assets (such as pumps and piping) located 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 18—Related Party Transactions), (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 18 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 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 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 entered into (i) an asset purchase agreement, (ii) the First Omnibus Amendment (as defined in Note 18—Related Party Transactions), (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 18 for additional information regarding these agreements.

Financial Results of El Dorado Terminal and Tanks 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, respectively. 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. 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 Tank Assets, subsequent to February 10, 2014, are included in the consolidated statements of income and comprehensive income of the Partnership (in thousands):



	Year Ended
	December 31, 2014
El Dorado Terminal and Tank Assets
Total operating revenues	$	15,809
Net income attributable to the Partnership	$	10,481
Costs associated with the acquisition	$	186

The results of the El Dorado Terminal and and Tank Assets operations prior to the completion of the El Dorado Acquisition on February 10, 2014 and the Tyler Terminal and Tank Assets operations prior to the completion of the Tyler Acquisition on July 26, 2013 have been included in the El Dorado Predecessor and Tyler Predecessor results in the tables below. The results of the El Dorado Terminal and Tank Assets and the Tyler Terminal and Tank Assets subsequent to February 10, 2014 and July 26, 2013, respectively have been included in the Partnership's results. Costs associated with the El Dorado Acquisition in the amount of $0.2 million are included in general and administrative expenses for the year ended December 31, 2014.

The tables below present our balance sheet and 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 consolidated financial statements.

Consolidated Balance Sheet as of December 31, 2013



	Delek Logistics			El Dorado Terminal and Tank Assets			Delek Logistics Partners, LP
	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	234,272			29,800			264,072
Less: accumulated depreciation	(36,306		)	(3,260		)	(39,566		)
Property, plant and equipment, net	197,966			26,540			224,506
Goodwill	11,654			—			11,654
Intangible assets, net	12,374			—			12,374
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
Excise and other taxes payable	5,700			—			5,700
Accrued expenses and other current liabilities	4,732			—			4,732
Tank inspection liabilities	1,044			675			1,719
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 liability	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

Consolidated Statements of Income



	Delek Logistics Partners, LP		El Dorado Terminal and Tank Assets			Year Ended December 31, 2014
(In thousands)			(El Dorado Predecessor)
Net Sales	$	841,253	$	—		$	841,253
Operating costs and expenses:
Cost of goods sold	697,221		—			697,221
Operating expenses	38,003		783			38,786
General and administrative expenses	10,570		46			10,616
Depreciation and amortization	14,591		114			14,705
Loss on asset disposals	83		—			83
Total operating costs and expenses	760,468		943			761,411
Operating income (loss)	80,785		(943		)	79,842
Interest expense, net	8,656		—			8,656
Net income (loss) before income tax expense	72,129		(943		)	71,186
Income tax expense	132		—			132
Net income (loss)	71,997		(943		)	71,054
Less: loss attributable to Predecessors	—		(943		)	(943		)
Net income attributable to partners	$	71,997	$	—		$	71,997



	Delek Logistics Partners, LP		El Dorado Terminal and Tank Assets			Tyler Terminal and Tank Assets			Year Ended December 31, 2013
(In thousands)			(El Dorado Predecessor)			(Tyler Predecessor)
Net Sales	$	907,428	$	—		$	—		$	907,428
Operating costs and expenses:
Cost of goods sold	811,364		—			—			811,364
Operating expenses	25,801		5,338			4,501			35,640
General and administrative expenses	6,254		670			602			7,526
Depreciation and amortization	10,686		1,302			1,750			13,738
Loss on asset disposals	166		—			—			166
Total operating costs and expenses	854,271		7,310			6,853			868,434
Operating income (loss)	53,157		(7,310		)	(6,853		)	38,994
Interest expense, net	4,570		—			—			4,570
Net income (loss) before income tax expense	48,587		(7,310		)	(6,853		)	34,424
Income tax expense	757		—			—			757
Net income (loss)	47,830		(7,310		)	(6,853		)	33,667
Less: loss attributable to Predecessors	—		(7,310		)	(6,853		)	(14,163		)
Net income attributable to partners	$	47,830	$	—		$	—		$	47,830



	Delek Logistics Partners, LP			El Dorado Terminal and Tank Assets			Tyler Terminal and Tank Assets			Year Ended December 31, 2012
(In thousands)				(El Dorado Predecessor)			(Tyler Predecessor)			(Predecessors)
Net Sales	$	1,022,586		$	—		$	—		$	1,022,586
Operating costs and expenses:
Cost of goods sold	959,434			—			—			959,434
Operating expenses	23,362			9,023			7,035			39,420
General and administrative expenses	8,389			706			761			9,856
Depreciation and amortization	8,675			1,223			1,445			11,343
Gain on disposal of assets	9			—			—			9
Total operating costs and expenses	999,869			10,952			9,241			1,020,062
Operating income (loss)	22,717			(10,952		)	(9,241		)	2,524
Interest expense, net	2,682			—			—			2,682
Income (loss) before income tax expense	20,035			(10,952		)	(9,241		)	(158		)
Income tax benefit	(14,024		)	—			—			(14,024		)
Net income (loss)	34,059			(10,952		)	(9,241		)	13,866
Less: income (loss) attributable to Predecessors	25,649			(10,952		)	(9,241		)	5,456
Net income attributable to partners	$	8,410		$	—		$	—		$	8,410

Acquisitions from Third Parties

Trucking Assets Acquisition

On December 17, 2014, we completed the purchase of substantially all of the assets of Frank Thompson Transport, Inc. ("FTT"), a company that primarily hauled crude oil and asphalt products by transport truck, to complement our existing assets and increase our third party business. The assets purchased from FTT include approximately 120 trucks and 200 trailers (the "FTT Assets").

Terminal and Pipeline Acquisition

On October 1, 2014, we completed the purchase from an affiliate of Magellan Midstream Partners, LP of (i) a light products terminal in Mount Pleasant, Texas (the "Mount Pleasant Terminal"), (ii) a light products storage facility in Greenville, Texas (the "Greenville Storage Facility") and (iii) a 76-mile pipeline connecting the locations (the "Greenville-Mount Pleasant Pipeline"). The Mount Pleasant Terminal, the Greenville Storage Facility and the Greenville-Mount Pleasant Pipeline are hereinafter collectively referred to as the "Greenville-Mount Pleasant Assets." We acquired the Greenville-Mount Pleasant Assets to complement our existing assets and provide enhanced logistical capabilities. The Mount Pleasant Terminal consists of approximately 200,000 barrels of light product storage capacity, three truck loading lanes and ethanol blending capability. The Greenville Storage Facility has approximately 325,000 barrels of storage capacity and is connected to the Explorer Pipeline System, which is a common carrier pipeline owned by a third party.

North Little Rock Acquisition

On October 24, 2013, we purchased a refined product terminal in 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.

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 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").

Big Sandy Acquisition

On February 7, 2012, Delek Marketing-Big Sandy, LLC 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. and (ii) the 19-mile, eight-inch diameter Hopewell-Big Sandy Pipeline originating at Hopewell Junction, Texas and terminating at the Big Sandy Station in Big Sandy, Texas from Sunoco Pipeline L.P (collectively "Big Sandy").

Nettleton Acquisition

On January 31, 2012, Delek Crude Logistics, LLC completed the acquisition of an approximately 35-mile long, eight- and ten-inch pipeline system (the "Nettleton Pipeline") from Plains Marketing, L.P. (“Plains”). The Nettleton Pipeline is used exclusively to transport crude oil from our tank farms in and around Longview, Texas to the Bullard Junction at the Tyler Refinery.

Purchase Price Allocations - Acquisitions from Third Parties

The following table summarizes the allocation of the aggregate purchase price for each of the third party acquisitions described above (in thousands):



	FTT Assets ⁽¹⁾			Greenville-Mount Pleasant Assets ⁽¹⁾		North Little Rock Terminal⁽²⁾		Hopewell⁽²⁾		Big Sandy		Nettleton Pipeline
Property, plant and equipment	$	11,055		$	10,000	$	4,990	$	3,538	$	8,258	$	8,590
Intangible assets	—			—		10		984		1,229		2,240
Goodwill ⁽³⁾	—			—		—		1,200		1,540		1,415
Inventory	—			1,125		—		—		—		—
Accounts Receivable	1,871			—		—		—		—		—
Accounts Payable	(1,401		)	—		—		—		—		—
Total	$	11,525		$	11,125	$	5,000	$	5,722	$	11,027	$	12,245


⁽¹⁾	Allocations are preliminary. The property, plant and equipment valuation is subject to change during the purchase price allocation period.


⁽²⁾	During the second quarter of 2014, we finalized our purchase price allocation and adjusted certain of the acquisition-date fair values previously disclosed.


⁽³⁾	All goodwill is expected to be deductible for tax purposes.

Financial Results - Acquisitions from Third Parties

The following amounts associated with the third party acquisitions described above, subsequent to each respective acquisition date, are included in the consolidated statements of income and comprehensive income of the Partnership (in thousands) for the year ended December 31, 2014:



	Year Ended
	December 31, 2014
FTT Assets:
Total operating revenues contributed	$	531
Net income contributed	$	122
Greenville-Mount Pleasant Assets:
Total operating revenues contributed	$	172
Net loss contributed	$	(109	)

Pro Forma Financial Information - Acquisitions from Third Parties

Below are the unaudited pro forma consolidated results of operations of the Partnership for the years ended December 31, 2014 and 2013, as if our 2014 acquisitions had occurred on January 1, 2013 (in thousands):



	Year Ended December 31,
	2014		2013
FTT Assets:
Net Sales	$	854,842	$	921,017
Net income	$	71,820	$	34,433
Greenville-Mount Pleasant Assets:
Net Sales	$	841,943	$	908,118
Net income	$	70,617	$	33,230

Below are the unaudited pro forma consolidated results of operations of the Partnership for the years ended December 31, 2013 and 2012, as if our 2013 acquisitions had occurred on January 1, 2012 (in thousands):



	Year Ended December 31,
	2013		2012
North Little Rock Terminal:
Net Sales	$	908,867	1,024,025
Net income	$	34,958	15,157
Hopewell:
Net Sales	$	908,382	1,023,540
Net income	$	33,981	14,180

Below are the unaudited pro forma consolidated results of the Partnership for the year ended December 31, 2012, as if our 2012 acquisitions had occurred on January 1, 2011 (in thousands):



	Year Ended
	December 31, 2012
Nettleton and Big Sandy:
Net Sales	$	1,022,715
Net income	$	13,989