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 class of securities. Our participating securities consist of common units, subordinated units, general partner units and incentive distribution rights ("IDRs"). 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 our general partner’s 2% interest and incentive distribution rights, 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 distribution rights 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.

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.

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 unit awards under the Delek Logistics GP, LLC 2012 Long-Term Incentive Plan (the "LTIP"). 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 earned with respect to a given period are declared subsequent to quarter end. Therefore, the table below represents total cash distributions applicable to the period in which the distributions are earned. The expected date of distribution for the distributions earned during the period ended June 30, 2015 is August 14, 2015. The calculation of net income per unit is as follows (dollars in thousands, except per unit amounts):



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
Net income attributable to partners	$	18,311	$	21,754	$	32,951	$	36,426
Less: General partner's distribution (including IDRs) ⁽¹⁾	1,030		424		1,898		633
Less: Limited partners' distribution	6,738		5,787		13,213		10,952
Less: Subordinated partner's distribution	6,600		5,699		12,959		10,799
Earnings in excess of distributions	$	3,943	$	9,844	$	4,881	$	14,042

General partner's earnings:
Distributions (including IDRs) ⁽¹⁾	$	1,030	$	424	$	1,898	$	633
Allocation of earnings in excess of distributions	79		196		98		281
Total general partner's earnings	$	1,109	$	620	$	1,996	$	914

Limited partners' earnings on common units:
Distributions	$	6,738	$	5,787	$	13,213	$	10,952
Allocation of earnings in excess of distributions	1,952		4,861		2,416		6,930
Total limited partners' earnings on common units	$	8,690	$	10,648	$	15,629	$	17,882

Limited partners' earnings on subordinated units:
Distributions	$	6,600	$	5,699	$	12,959	$	10,799
Allocation of earnings in excess of distributions	1,912		4,787		2,367		6,831
Total limited partner's earnings on subordinated units	$	8,512	$	10,486	$	15,326	$	17,630

Weighted average limited partner units outstanding:
Common units - (basic)	12,224,007		12,159,732		12,220,248		12,156,135
Common units - (diluted)	12,360,519		12,291,273		12,350,621		12,281,598
Subordinated units - Delek (basic and diluted)	11,999,258		11,999,258		11,999,258		11,999,258

Net income per limited partner unit:
Common units - (basic)	$	0.71	$	0.88	$	1.28	$	1.47
Common units - (diluted)	$	0.70	$	0.87	$	1.27	$	1.46
Subordinated units - Delek (basic and diluted)	$	0.71	$	0.87	$	1.28	$	1.47

⁽¹⁾General partner distributions (including IDRs) consist of the 2% general partner interest and IDRs, which represent the right of the general partner to receive increasing percentages of quarterly distributions of available cash from operating surplus in excess of $0.43125 per unit per quarter. See Note 7 for further discussion related to IDRs.