Segment Data

We aggregate our operating segments 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 goods sold and operating expenses.

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



	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2017			2016		2017		2016
Pipelines and Transportation
Net sales:
Affiliate	$	27,805		$	25,238	$	81,972	$	77,680
Third party	3,177			3,388		7,910		15,739
Total pipelines and transportation	30,982			28,626		89,882		93,419
Operating costs and expenses:
Cost of goods sold	4,883			4,811		13,691		14,401
Operating expenses	8,573			7,678		24,661		22,317
Segment contribution margin	$	17,526		$	16,137	$	51,530	$	56,701
Capital spending (excluding business combinations)	$	2,918		$	2,613	$	6,715	$	4,037

Wholesale Marketing and Terminalling
Net sales:
Affiliate	$	12,326		$	11,122	$	34,602	$	34,134
Third party	87,318			67,722		262,384		195,826
Total wholesale marketing and terminalling	99,644			78,844		296,986		229,960
Operating costs and expenses:
Cost of goods sold	84,237			68,716		253,058		198,980
Operating expenses	2,089			1,573		6,325		6,128
Segment contribution margin	$	13,318		$	8,555	$	37,603	$	24,852
Capital spending (excluding business combinations)	$	868		$	464	$	1,981	$	972

Consolidated
Net sales:
Affiliate	$	40,131		$	36,360	$	116,574	$	111,814
Third party	90,495			71,110		270,294		211,565
Total consolidated	130,626			107,470		386,868		323,379
Operating costs and expenses:
Cost of goods sold	89,120			73,527		266,749		213,381
Operating expenses	10,662			9,251		30,986		28,445
Contribution margin	30,844			24,692		89,133		81,553
General and administrative expenses	2,751			2,307		8,255		7,918
Depreciation and amortization	5,462			5,356		16,397		15,164
(Gain) loss on asset disposals	(5		)	28		2		(16		)
Operating income	$	22,636		$	17,001	$	64,479	$	58,487
Capital spending (excluding business combinations)	$	3,786		$	3,077	$	8,696	$	5,009

The following table summarizes the total assets for each segment as of September 30, 2017 and December 31, 2016 (in thousands).



	September 30, 2017		December 31, 2016
Pipelines and transportation	$	344,260	$	337,349
Wholesale marketing and terminalling	78,598		78,198
Total assets	$	422,858	$	415,547

Property, plant and equipment and accumulated depreciation as of September 30, 2017 and depreciation expense by reporting segment for the three and nine months ended September 30, 2017 were as follows (in thousands):



	Pipelines and Transportation			Wholesale Marketing and Terminalling			Consolidated
Property, plant and equipment	$	292,116		$	65,416		$	357,532
Less: accumulated depreciation	(80,008		)	(26,872		)	(106,880		)
Property, plant and equipment, net	$	212,108		$	38,544		$	250,652
Depreciation expense for the three months ended September 30, 2017	$	4,257		$	940		$	5,197
Depreciation expense for the nine months ended September 30, 2017	$	12,821		$	2,779		$	15,600

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. There were no indicators of impairment of our property, plant and equipment as of September 30, 2017.