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 revenues 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						Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
Pipelines and Transportation
Net revenues:
Affiliates	$	34,030		$	27,668		$	63,492		$	54,168
Third party	3,714			2,555			7,965			4,732
Total pipelines and transportation	37,744			30,223			71,457			58,900
Operating costs and expenses:
Cost of goods sold	5,195			4,403			9,636			8,808
Operating expenses	9,933			7,933			19,555			16,088
Segment contribution margin	$	22,616		$	17,887		$	42,266		$	34,004
Capital spending ⁽¹⁾	$	826		$	1,660		$	2,234		$	3,797

Wholesale Marketing and Terminalling
Net revenues:
Affiliates ⁽²⁾	$	19,050		$	12,156		$	51,232		$	22,275
Third party	109,486			84,390			211,512			175,067
Total wholesale marketing and terminalling	128,536			96,546			262,744			197,342
Operating costs and expenses:
Cost of goods sold	100,821			80,636			215,412			168,821
Operating expenses	4,984			2,033			7,939			4,236
Segment contribution margin	$	22,731		$	13,877		$	39,393		$	24,285
Capital spending ⁽¹⁾	$	1,426		$	459		$	2,215		$	1,113

Consolidated
Net revenues:
Affiliates	$	53,080		$	39,824		$	114,724		$	76,443
Third party	113,200			86,945			219,477			179,799
Total consolidated	166,280			126,769			334,201			256,242
Operating costs and expenses:
Cost of goods sold	106,016			85,039			225,048			177,629
Operating expenses	14,917			9,966			27,494			20,324
Contribution margin	45,347			31,764			81,659			58,289
General and administrative expenses	3,747			2,656			6,722			5,504
Depreciation and amortization	7,019			5,742			13,019			10,935
Loss (gain) on asset disposals	(129		)	(5		)	(69		)	7
Operating income	$	34,710		$	23,371		$	61,987		$	41,843
Capital spending ⁽¹⁾	$	2,252		$	2,119		$	4,449		$	4,910

⁽¹⁾Capital spending excludes transaction costs capitalized in the amount of $0.4 million that relate to the Big Spring Logistic Assets Acquisition for the six months ended June 30, 2018. No costs were capitalized during the three months ended June 30, 2018.

⁽²⁾ Affiliate revenue for the wholesale marketing and terminalling segment is presented net of amortization expense pertaining to the Marketing Contract Intangible Acquisition. See Note 3 for additional information.

The following table summarizes the total assets for each segment as of June 30, 2018 and December 31, 2017 (in thousands):



	June 30, 2018		December 31, 2017
Pipelines and transportation	$	439,311	$	349,351
Wholesale marketing and terminalling	211,038		94,179
Total assets	$	650,349	$	443,530

Property, plant and equipment and accumulated depreciation as of June 30, 2018 and depreciation expense by reporting segment for the three and six months ended June 30, 2018 were as follows (in thousands):



	Pipelines and Transportation			Wholesale Marketing and Terminalling			Consolidated
Property, plant and equipment	$	362,128		$	84,833		$	446,961
Less: accumulated depreciation	(96,915		)	(30,713		)	(127,628		)
Property, plant and equipment, net	$	265,213		$	54,120		$	319,333
Depreciation expense for the three months ended June 30, 2018	$	5,594		$	1,336		$	6,930
Depreciation expense for the six months ended June 30, 2018	$	10,524		$	2,406		$	12,930

In accordance with Accounting Standards Codification ("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 June 30, 2018.