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Segment Data (Notes)
 6 Months Ended
Jun. 30, 2015
Segment Reporting [Abstract]  
Segment Data
Segment Data

We report our assets and operating results in two reportable segments: (i) pipelines and transportation and (ii) wholesale marketing and terminalling:
  
•
The assets and investments reported in the pipelines and transportation segment provide crude oil gathering, and crude oil, intermediate and finished products transportation and storage services to Delek's refining operations and independent third parties.

•
The assets in the wholesale marketing and terminalling segment provide marketing and terminalling services to Delek's refining operations and independent third parties.

Our operating segments adhere to the same accounting policies used for our consolidated financial statements. Our operating segments are managed separately because each segment requires different industry knowledge, technology and marketing strategies. Decisions concerning the allocation of resources and assessment of operating performance are made based on this segmentation. Management measures the operating performance of each reportable segment based on segment contribution margin. Segment contribution margin is defined as net sales less cost of sales and operating expenses, excluding depreciation and amortization.

On February 10, 2014 and March 31, 2015, we acquired the El Dorado Terminal and Tank Assets and the Logistics Assets, respectively, from Delek. Our historical financial statements have been retrospectively adjusted to reflect the results of operations attributable to the El Dorado Terminal and Tank Assets and the Logistics Assets as if we owned the assets for all periods presented. The results of the El Dorado Terminal are included in the wholesale marketing and terminalling segment. The results of the El Dorado Tank Assets and the Logistics Assets are included in the pipelines and transportation segment.

The following is a summary of business segment operating performance as measured by contribution margin for the periods indicated (in thousands):

 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2015
 
2014
 
2015
 
2014
Pipelines and Transportation
 
 
 
 
 
 
 
 
Net Sales:
 
 
 
 
 
 
 
 
     Affiliate
 
$
26,093

 
$
20,245

 
$
50,078

 
$
37,746

     Third-Party
 
7,641

 
2,821

 
14,658

 
5,588

          Total Pipelines and Transportation
 
33,734

 
23,066

 
64,736

 
43,334

     Operating costs and expenses:
 
 
 
 
 
 
 
 
     Cost of goods sold
 
5,102

 
1,130

 
9,915

 
2,256

     Operating expenses (1) (2)
 
7,745

 
8,308

 
14,663

 
15,484

     Segment contribution margin
 
$
20,887

 
$
13,628

 
$
40,158

 
$
25,594

 Capital spending (excluding business combinations) (1) (2)
 
$
3,057

 
$
1,128

 
$
7,610

 
$
3,416

 
 
 
 
 
 
 
 
 
Wholesale Marketing and Terminalling
 
 
 
 
 
 
 
 
Net Sales:
 
 
 
 
 
 
 
 
     Affiliate
 
$
13,778

 
$
8,648

 
$
22,073

 
$
16,429

     Third-Party
 
124,622

 
204,629

 
228,837

 
380,107

          Total Wholesale Marketing and Terminalling
 
138,400

 
213,277

 
250,910

 
396,536

     Operating costs and expenses:
 
 
 
 
 
 
 
 
     Cost of goods sold
 
127,392

 
195,444

 
230,986

 
366,527

     Operating expenses
 
3,053

 
1,411

 
6,912

 
3,731

     Segment contribution margin
 
$
7,955

 
$
16,422

 
$
13,012

 
$
26,278

 Capital spending (excluding business combinations)
 
$
2,905

 
$
756

 
$
5,925

 
$
784

 
 
 
 
 
 
 
 
 
Consolidated
 
 
 
 
 
 
 
 
Net Sales:
 
 
 
 
 
 
 
 
     Affiliate
 
$
39,871

 
$
28,893

 
$
72,151

 
$
54,175

     Third-Party
 
132,263

 
207,450

 
243,495

 
385,695

     Net sales
 
172,134

 
236,343

 
315,646

 
439,870

     Operating costs and expenses:
 
 
 
 
 
 
 
 
     Cost of goods sold
 
132,494

 
196,574

 
240,901

 
368,783

     Operating expenses (1) (2)
 
10,798

 
9,719

 
21,575

 
19,215

     Contribution margin
 
28,842

 
30,050

 
53,170

 
51,872

     General and administrative expenses
 
2,982

 
2,242

 
6,391

 
4,905

     Depreciation and amortization
 
4,744

 
3,623

 
9,244

 
7,100

     (Gain) loss on asset disposals
 
(23
)
 
74


(18
)
 
74

     Operating income
 
$
21,139

 
$
24,111

 
$
37,553

 
$
39,793

 Capital spending (excluding business combinations) (1) (2)
 
$
5,962

 
$
1,884

 
$
13,535

 
$
4,200

            

(1) Includes operating expenses and capital spending expenditures incurred in connection with the El Dorado Offloading Racks Acquisition and the Tyler Crude Tank Acquisition for the six months ended June 30, 2015.

(2) Adjusted to include operating expenses and capital spending expenditures incurred in connection with the assets acquired in the El Dorado Offloading Racks Acquisition and the Tyler Crude Tank Acquisition for the six months ended June 30, 2014.

The following table summarizes the total assets for each segment as of June 30, 2015 and December 31, 2014 (in thousands).

 
 
June 30, 2015
 
December 31, 2014
Pipelines and Transportation
 
$
285,733

 
$
230,293

Wholesale Marketing and Terminalling
 
66,263

 
100,993

     Total Assets
 
$
351,996

 
$
331,286


Property, plant and equipment and accumulated depreciation as of June 30, 2015 and depreciation expense by reporting segment as of and for the three and six months ended June 30, 2015 were as follows (in thousands):

 
 
Pipelines and Transportation
 
Wholesale Marketing and Terminalling
 
Consolidated
Property, plant and equipment
 
$
291,375

 
$
25,833

 
$
317,208

Less: accumulated depreciation
 
(50,017
)
 
(11,948
)
 
(61,965
)
Property, plant and equipment, net
 
$
241,358

 
$
13,885

 
$
255,243

Depreciation expense for the three months ended June 30, 2015
 
$
3,447

 
$
1,031

 
$
4,478

Depreciation expense for the six months ended June 30, 2015
 
$
6,923

 
$
1,789

 
$
8,712



In accordance with ASC 360, Property, Plant & Equipment, we evaluate the realizability of property, plant and equipment as events occur that might indicate potential impairment.