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Segment Data | 9 Months Ended
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Sep. 30, 2018
Segment Reporting [Abstract] |
Segment Data | 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 materials and other and operating expenses, excluding depreciation and amortization. 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,
|  | 2018 |  | 2017 |  | 2018 |  | 2017
Pipelines and Transportation |  |  |  |  |  |  |  |
Net revenues: |  |  |  |  |  |  |  |
Affiliates |  | $ | 36,132 |  |  | $ | 27,805 |  |  | $ | 99,624 |  |  | $ | 81,972 |
Third party |  | 3,653 |  |  | 3,177 |  |  | 11,618 |  |  | 7,910 |
Total pipelines and transportation |  | 39,785 |  |  | 30,982 |  |  | 111,242 |  |  | 89,882 |
Cost of materials and other |  | 5,055 |  |  | 4,883 |  |  | 14,691 |  |  | 13,691 |
Operating expenses (excluding depreciation and amortization) |  | 9,499 |  |  | 8,573 |  |  | 29,054 |  |  | 24,661 |
Segment contribution margin |  | $ | 25,231 |  |  | $ | 17,526 |  |  | $ | 66,839 |  |  | $ | 51,530 |
Capital spending (1) |  | $ | 2,086 |  |  | $ | 2,918 |  |  | $ | 4,320 |  |  | $ | 6,715 |
Wholesale Marketing and Terminalling |  |  |  |  |  |  |  |
Net revenues: |  |  |  |  |  |  |  |
Affiliates (2) |  | $ | 27,703 |  |  | $ | 12,326 |  |  | $ | 78,935 |  |  | $ | 34,602 |
Third party |  | 96,622 |  |  | 87,318 |  |  | 308,134 |  |  | 262,384 |
Total wholesale marketing and terminalling |  | 124,325 |  |  | 99,644 |  |  | 387,069 |  |  | 296,986 |
Cost of materials and other |  | 100,541 |  |  | 84,237 |  |  | 315,953 |  |  | 253,058 |
Operating expenses (excluding depreciation and amortization) |  | 5,896 |  |  | 2,089 |  |  | 13,835 |  |  | 6,325 |
Segment contribution margin |  | $ | 17,888 |  |  | $ | 13,318 |  |  | $ | 57,281 |  |  | $ | 37,603 |
Capital spending (1) |  | $ | 905 |  |  | $ | 868 |  |  | $ | 3,120 |  |  | $ | 1,981 |
Consolidated |  |  |  |  |  |  |  |
Net revenues: |  |  |  |  |  |  |  |
Affiliates |  | $ | 63,835 |  |  | $ | 40,131 |  |  | $ | 178,559 |  |  | $ | 116,574 |
Third party |  | 100,275 |  |  | 90,495 |  |  | 319,752 |  |  | 270,294 |
Total consolidated |  | 164,110 |  |  | 130,626 |  |  | 498,311 |  |  | 386,868 |
Cost of materials and other |  | 105,596 |  |  | 89,120 |  |  | 330,644 |  |  | 266,749 |
Operating expenses (excluding depreciation and amortization presented below) |  | 15,395 |  |  | 10,662 |  |  | 42,889 |  |  | 30,986 |
Contribution margin |  | 43,119 |  |  | 30,844 |  |  | 124,778 |  |  | 89,133 |
General and administrative expenses |  | 3,076 |  |  | 2,751 |  |  | 9,798 |  |  | 8,255 |
Depreciation and amortization |  | 6,702 |  |  | 5,462 |  |  | 19,721 |  |  | 16,397 |
Loss (gain) on asset disposals |  | 717 |  |  | (5 | ) |  | 648 |  |  | 2 |
Operating income |  | $ | 32,624 |  |  | $ | 22,636 |  |  | $ | 94,611 |  |  | $ | 64,479 |
Capital spending (1) |  | $ | 2,991 |  |  | $ | 3,786 |  |  | $ | 7,440 |  |  | $ | 8,696 |
(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 nine months ended September 30, 2018. No costs were capitalized during the three months ended September 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 September 30, 2018 and December 31, 2017 (in thousands):
|  | September 30, 2018 |  | December 31, 2017
Pipelines and transportation |  | $ | 431,173 |  |  | $ | 349,351 |
Wholesale marketing and terminalling |  | 262,396 |  |  | 94,179 |
Total assets |  | $ | 693,569 |  |  | $ | 443,530 |
Property, plant and equipment and accumulated depreciation as of September 30, 2018 and depreciation expense by reporting segment for the three and nine months ended September 30, 2018 were as follows (in thousands):
|  | Pipelines and Transportation |  | Wholesale Marketing and Terminalling |  | Consolidated
Property, plant and equipment |  | $ | 356,646 |  |  | $ | 92,076 |  |  | $ | 448,722 |
Less: accumulated depreciation |  | (101,801 | ) |  | (32,251 | ) |  | (134,052 | )
Property, plant and equipment, net |  | $ | 254,845 |  |  | $ | 59,825 |  |  | $ | 314,670 |
Depreciation expense for the three months ended September 30, 2018 |  | $ | 5,284 |  |  | $ | 1,418 |  |  | $ | 6,702 |
Depreciation expense for the nine months ended September 30, 2018 |  | $ | 15,808 |  |  | $ | 3,824 |  |  | $ | 19,632 |
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, 2018.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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