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Segment Data (Notes)
 6 Months Ended
Jun. 30, 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
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2016
 
2015
 
2016
 
2015
Pipelines and Transportation
 
 
 
 
 
 
 
 
Net Sales:
 
 
 
 
 
 
 
 
     Affiliate
 
$
26,136

 
$
26,093

 
$
52,442

 
$
50,078

     Third-Party
 
5,874

 
7,641

 
12,351

 
14,658

          Total Pipelines and Transportation
 
32,010

 
33,734

 
64,793

 
64,736

     Operating costs and expenses:
 
 
 
 
 
 
 
 
     Cost of goods sold
 
4,814

 
5,102

 
9,590

 
9,915

     Operating expenses
 
6,899

 
7,745

 
14,639

 
14,663

     Segment contribution margin
 
$
20,297

 
$
20,887

 
$
40,564

 
$
40,158

 Capital spending (excluding business combinations)
 
$
718

 
$
3,057

 
$
1,424

 
$
7,610

 
 
 
 
 
 
 
 
 
Wholesale Marketing and Terminalling
 
 
 
 
 
 
 
 
Net Sales:
 
 
 
 
 
 
 
 
     Affiliate
 
$
10,558

 
$
13,778

 
$
23,012

 
$
22,073

     Third-Party
 
69,285

 
124,622

 
128,104

 
228,837

          Total Wholesale Marketing and Terminalling
 
79,843

 
138,400

 
151,116

 
250,910

     Operating costs and expenses:
 
 
 
 
 
 
 
 
     Cost of goods sold
 
68,287

 
127,392

 
130,264

 
230,986

     Operating expenses
 
1,831

 
3,053

 
4,555

 
6,912

     Segment contribution margin
 
$
9,725

 
$
7,955

 
$
16,297

 
$
13,012

 Capital spending (excluding business combinations)
 
$
130

 
$
2,905

 
$
508

 
$
5,925

 
 
 
 
 
 
 
 
 
Consolidated
 
 
 
 
 
 
 
 
Net Sales:
 
 
 
 
 
 
 
 
     Affiliate
 
$
36,694

 
$
39,871

 
$
75,454

 
$
72,151

     Third-Party
 
75,159

 
132,263

 
140,455

 
243,495

     Net sales
 
111,853

 
172,134

 
215,909

 
315,646

     Operating costs and expenses:
 
 
 
 
 
 
 
 
     Cost of goods sold
 
73,101

 
132,494

 
139,854

 
240,901

     Operating expenses
 
8,730

 
10,798

 
19,194

 
21,575

     Contribution margin
 
30,022

 
28,842

 
56,861

 
53,170

     General and administrative expenses
 
2,698

 
2,982

 
5,611

 
6,391

     Depreciation and amortization
 
4,812

 
4,744

 
9,808

 
9,244

     Gain on asset disposals
 
—

 
(23
)

(44
)
 
(18
)
     Operating income
 
$
22,512

 
$
21,139

 
$
41,486

 
$
37,553

 Capital spending (excluding business combinations) 
 
$
848

 
$
5,962

 
$
1,932

 
$
13,535




The following table summarizes the total assets for each segment as of June 30, 2016 and December 31, 2015 (in thousands).

 
 
June 30, 2016
 
December 31, 2015
Pipelines and Transportation
 
$
309,678

 
$
283,553

Wholesale Marketing and Terminalling
 
72,093

 
91,735

     Total Assets
 
$
381,771

 
$
375,288


Property, plant and equipment and accumulated depreciation as of June 30, 2016 and depreciation expense by reporting segment for the three and six months ended June 30, 2016 were as follows (in thousands):
 
 
Pipelines and Transportation
 
Wholesale Marketing and Terminalling
 
Consolidated
Property, plant and equipment
 
$
271,899

 
$
56,312

 
$
328,211

Less: accumulated depreciation
 
(58,706
)
 
(22,367
)
 
(81,073
)
Property, plant and equipment, net
 
$
213,193

 
$
33,945

 
$
247,138

Depreciation expense for the three months ended June 30, 2016
 
$
3,920

 
$
626

 
$
4,546

Depreciation expense for the six months ended June 30, 2016
 
$
7,640

 
$
1,636

 
$
9,276



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.