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Segment Data (Notes)
 3 Months Ended
Mar. 31, 2016
Segment Reporting [Abstract]  
Segment Data
Segment Data

We aggregate our operating units into 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 wholesale marketing and terminalling segment provides wholesale marketing and terminalling services to Delek's refining operations and independent third parties.

Our operating segments adhere to the 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 of its reportable segments 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 March 31, 2015, we acquired the Logistics Assets from Delek. Our historical financial statements have been retrospectively adjusted as appropriate to reflect the results of operations attributable to the Logistics Assets as if we owned the assets for all periods presented. The results of 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
 
 
March 31,
 
 
2016
 
2015
Pipelines and Transportation
 
 
 
 
Net Sales:
 
 
 
 
     Affiliate
 
$
26,306

 
$
23,985

     Third-Party
 
6,477

 
7,017

          Total Pipelines and Transportation
 
32,783

 
31,002

     Operating costs and expenses:
 
 
 
 
     Cost of goods sold
 
4,776

 
4,813

     Operating expenses
 
7,740

 
6,918

     Segment contribution margin
 
$
20,267

 
$
19,271

 Capital spending (excluding business combinations)
 
$
706

 
$
4,553

 
 
 
 
 
Wholesale Marketing and Terminalling
 
 
 
 
Net Sales:
 
 
 
 
     Affiliate
 
$
12,454

 
$
8,295

     Third-Party
 
58,819

 
104,215

          Total Wholesale Marketing and Terminalling
 
71,273

 
112,510

     Operating costs and expenses:
 
 
 
 
     Cost of goods sold
 
61,977

 
103,594

     Operating expenses
 
2,724

 
3,859

     Segment contribution margin
 
$
6,572

 
$
5,057

 Capital spending (excluding business combinations)
 
$
378

 
$
3,020

 
 
 
 
 
Consolidated
 
 
 
 
Net Sales:
 
 
 
 
     Affiliate
 
$
38,760

 
$
32,280

     Third-Party
 
65,296

 
111,232

     Net sales
 
104,056

 
143,512

     Operating costs and expenses:
 
 
 
 
     Cost of goods sold
 
66,753

 
108,407

     Operating expenses
 
10,464

 
10,777

     Contribution margin
 
26,839

 
24,328

     General and administrative expenses
 
2,913

 
3,409

     Depreciation and amortization
 
4,996

 
4,500

     (Gain) loss on asset disposals
 
(44
)
 
5

     Operating income
 
$
18,974

 
$
16,414

 Capital spending (excluding business combinations) 
 
$
1,084

 
$
7,573




The following table summarizes the total assets for each segment as of March 31, 2016 and December 31, 2015 (in thousands).

 
 
March 31, 2016
 
December 31, 2015
Pipelines and Transportation
 
$
298,984

 
$
283,553

Wholesale Marketing and Terminalling
 
80,216

 
91,735

     Total Assets
 
$
379,200

 
$
375,288


Property, plant and equipment and accumulated depreciation as of March 31, 2016 and depreciation expense by reporting segment as of and for the three months ended March 31, 2016 were as follows (in thousands):
 
 
Pipelines and Transportation
 
Wholesale Marketing and Terminalling
 
Consolidated
Property, plant and equipment
 
$
267,367

 
$
59,845

 
$
327,212

Less: accumulated depreciation
 
(54,220
)
 
(22,267
)
 
(76,487
)
Property, plant and equipment, net
 
$
213,147

 
$
37,578

 
$
250,725

Depreciation expense for the three months ended March 31, 2016
 
$
3,720

 
$
1,010

 
$
4,730



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.