Acquisitions

Acquisitions from Delek

The Partnership completed various transactions with Delek and our general partner during the years ended December 31, 2015, 2014 and 2013 pursuant to which we acquired the following assets from Delek:


•	the El Dorado Assets effective March 31, 2015 for approximately $42.5 million in cash financed with borrowings under the Partnership's amended and restated senior secured revolving credit facility.


•	the Tyler Assets effective March 31, 2015 for approximately $19.4 million in cash financed with borrowings under the Partnership's amended and restated senior secured revolving credit facility.


•	the El Dorado Terminal and Tank Assets effective February 10, 2014 for $95.9 million in cash financed with borrowings under the Partnership's amended and restated senior secured revolving credit facility.


•	the Tyler Terminal and Tank Assets effective July 26, 2013 for $94.8 million in cash.

Financial Results of the El Dorado Assets and the Tyler Assets

The acquisitions of the El Dorado Assets and the Tyler Assets were considered transfers of businesses between entities under common control. Accordingly, the El Dorado Offloading Racks Acquisition and the Tyler Crude Tank Acquisition were recorded at amounts based on Delek's historical carrying value as of each respective acquisition date, which were $7.6 million and $11.6 million as of March 31, 2015, respectively. Our historical financial statements have been retrospectively adjusted to reflect the results of operations, financial position, cash flows and equity attributable to the El Dorado Assets and the Tyler Assets as if we owned the assets for all periods presented. The results of the El Dorado Assets and the Tyler Assets are included in the pipelines and transportation segment.

The following amounts associated with the El Dorado Assets and the Tyler Assets subsequent to March 31, 2015, are included in the consolidated statements of income and comprehensive income of the Partnership (in thousands):



	Year Ended
	December 31, 2015
El Dorado Assets
Total operating revenues	$	4,449
Net income attributable to the Partnership	$	3,277
Costs associated with the acquisition	$	235

Tyler Assets
Total operating revenues	$	1,620
Net income attributable to the Partnership	$	1,035
Costs associated with the acquisition	$	240

The results of the El Dorado Assets operations and the Tyler Assets operations prior to the completion of the El Dorado Offloading Racks Acquisition and the Tyler Crude Tank Acquisition on March 31, 2015 have been included in the El Dorado Assets Predecessor and Tyler Assets Predecessor results in the tables below. The results of the El Dorado Assets and the Tyler Assets subsequent to March 31, 2015 have been included in the Partnership's results.

The tables below present our balance sheet and results of operations, the effect of including the results of the El Dorado Assets and the Tyler Assets, and the adjusted total amounts included in our consolidated financial statements.

Consolidated Balance Sheet as of December 31, 2014



	Delek Logistics Partners, LP			El Dorado Assets Predecessor			Tyler Assets Predecessor		December 31, 2014
	(In thousands)
ASSETS
Current Assets:
Cash and cash equivalents	$	1,861		$	—		$	—	$	1,861
Accounts receivable	27,986			—			—		27,986
Inventory	10,316			—			—		10,316
Deferred tax assets	28			—			—		28
Other current assets	768			—			—		768
Total current assets	40,959			—			—		40,959
Property, plant and equipment:
Property, plant and equipment	288,045			8,267			11,776		308,088
Less: accumulated depreciation	(52,992		)	(317		)	—		(53,309		)
Property, plant and equipment, net	235,053			7,950			11,776		254,779
Goodwill	11,654			—			—		11,654
Intangible assets, net	16,520			—			—		16,520
Other non-current assets	7,374			—			—		7,374
Total assets	$	311,560		$	7,950		$	11,776	$	331,286
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	17,929		$	—		$	—	$	17,929
Accounts payable to related parties	628			—			—		628
Excise and other taxes payable	5,443			—			—		5,443
Tank inspection liabilities	2,829			—			—		2,829
Pipeline release liabilities	1,899			—			—		1,899
Accrued expenses and other current liabilities	1,588			—					1,588
Total current liabilities	30,316			—			—		30,316
Non-current liabilities:
Revolving credit facility	251,750			—			—		251,750
Asset retirement obligations	3,319			—			—		3,319
Deferred tax liabilities	231			—			—		231
Other non-current liabilities	5,889			—			—		5,889
Total non-current liabilities	261,189			—			—		261,189
Equity:
Predecessors division equity	—			7,950			11,776		19,726
Common unitholders - public (9,417,189 units issued and outstanding)	194,737			—			—		194,737
Common unitholders - Delek (2,799,258 units issued and outstanding)	(241,112		)	—			—		(241,112		)
Subordinated unitholders - Delek (11,999,258 units issued and outstanding)	73,515			—			—		73,515
General Partner unitholders - Delek (494,197 units issued and outstanding)	(7,085		)	—			—		(7,085		)
Total equity	20,055			7,950			11,776		39,781
Total liabilities and equity	$	311,560		$	7,950		$	11,776	$	331,286

Consolidated Statements of Income



	Delek Logistics Partners, LP			El Dorado Assets Predecessor			Tyler Assets Predecessor			Year Ended December 31, 2015
	(In thousands)
Net Sales	$	589,669		$	—		$	—		$	589,669
Operating costs and expenses:
Cost of goods sold	436,304			—			—			436,304
Operating expenses	44,756			167			—			44,923
General and administrative expenses	11,384			—			—			11,384
Depreciation and amortization	19,222			372			98			19,692
Loss on asset disposals	104			—			—			104
Total operating costs and expenses	511,770			539			98			512,407
Operating income (loss)	77,899			(539		)	(98		)	77,262
Interest expense, net	10,658			—			—			10,658
Loss on equity method investments	588			—			—			588
Total non-operating expenses	11,246			—			—			11,246
Income (loss) before income tax benefit	66,653			(539		)	(98		)	66,016
Income tax benefit	(195		)	—			—			(195		)
Net income (loss)	66,848			(539		)	(98		)	66,211
Less: loss attributable to Predecessors	—			(539		)	(98		)	(637		)
Net income attributable to partners	$	66,848		$	—		$	—		$	66,848



	Delek Logistics Partners, LP		El Dorado Assets Predecessor			Year Ended December 31, 2014 ⁽¹⁾
	(In thousands)
Net Sales	$	841,253	$	—		$	841,253
Operating costs and expenses:
Cost of goods sold	697,221		—			697,221
Operating expenses	38,003		679			39,465
General and administrative expenses	10,570		—			10,616
Depreciation and amortization	14,591		317			15,022
Loss on asset disposals	83		—			83
Total operating costs and expenses	760,468		996			762,407
Operating income (loss)	80,785		(996		)	78,846
Interest expense, net	8,656		—			8,656
Income (loss) before income tax expense	72,129		(996		)	70,190
Income tax expense	132		—			132
Net income (loss)	71,997		(996		)	70,058
Less: loss attributable to Predecessors	—		(996		)	(1,939		)
Net income attributable to partners	$	71,997	$	—		$	71,997



	Delek Logistics Partners, LP			El Dorado Assets Predecessor			Year Ended December 31, 2013 ⁽¹⁾
	(In thousands)
Net Sales	$	907,428		$	—		$	907,428
Operating costs and expenses:
Cost of goods sold	811,364			—			811,364
Operating expenses	35,640			263			35,903
General and administrative expenses	7,526			—			7,526
Depreciation and amortization	13,738			—			13,738
Loss on asset disposals	166			—			166
Total operating costs and expenses	868,434			263			868,697
Operating income (loss)	38,994			(263		)	38,731
Interest expense, net	4,570			—			4,570
Income (loss) before income tax expense	34,424			(263		)	34,161
Income tax expense	757			—			757
Net income (loss)	33,667			(263		)	33,404
Less: loss attributable to Predecessors	(14,163		)	(263		)	(14,426		)
Net income attributable to partners	$	47,830		$	—		$	47,830

⁽¹⁾

There were no expenses associated with the Tyler Assets Predecessor included in our consolidated financial statements for the years ended December 31, 2014 and 2013, as the Tyler Assets were not fully constructed and were not placed into service until January 2015. Additionally, prior to the Tyler Crude Tank Acquisition, the Tyler Assets Predecessor did not record revenues for intercompany storage services.

Acquisitions from Third Parties

During the years ended December 31, 2014 and 2013, we acquired certain transportation, pipeline and terminalling assets to complement our existing assets, provide enhanced logistical capabilities and further our presence in certain areas. The acquisitions include the following:


•	On December 17, 2014 we acquired substantially all of the assets of Frank Thompson Transport, Inc. ("FTT"), a company that primarily hauled crude oil and asphalt products by transport truck, including 123 trucks and 205 trailers (the "FTT Assets").

•

On October 1, 2014 we acquired from an affiliate of Magellan Midstream Partners, LP (i) a light products terminal in Mount Pleasant, Texas consisting of approximately 200,000 barrels of light product storage capacity, three truck loading lanes and ethanol blending capability (the "Mount Pleasant Terminal"), (ii) a light products storage facility in Greenville, Texas with approximately 325,000 barrels of storage capacity and a connection to the Explorer Pipeline System, a common carrier pipeline owned by a third party (the "Greenville Storage Facility"), and (iii) a 76-mile pipeline connecting the locations (the "Greenville-Mount Pleasant Pipeline"). The Mount Pleasant Terminal, the Greenville Storage Facility and the Greenville-Mount Pleasant Pipeline are hereinafter collectively referred to as the "Greenville-Mount Pleasant Assets."


•	On October 24, 2013, we acquired from Enterprise Refined Products Company, LLC a refined product terminal in Little Rock, Arkansas consisting of a total of three products tanks with effective capacity of 140,000 barrels and a truck rack with throughput capacity of up to 10,000 bpd (the "North Little Rock Terminal").

•

On July 19, 2013, we acquired a 13.5-mile pipeline and certain ancillary assets (the "Hopewell Pipeline"), including a related delivery station (the "Hopewell Station") and pumps. The Hopewell Pipeline originates at the Tyler Refinery and terminates at the Hopewell Station, where it effectively connects to a 19-mile pipeline (the "Big Sandy Pipeline") that was owned by the Partnership at the time the Hopewell Pipeline was acquired and that originates at our light petroleum products terminal located in Big Sandy, Texas. The Hopewell Pipeline and the Big Sandy Pipeline form essentially one pipeline link between the Tyler Refinery and the Big Sandy Terminal (the "Tyler-Big Sandy Pipeline").

Purchase Price Allocations - Acquisitions from Third Parties

The following table summarizes the allocation of the aggregate purchase price for each of the third party acquisitions described above (in thousands):



	FTT Assets ⁽¹⁾			Greenville-Mount Pleasant Assets ⁽²⁾		North Little Rock Terminal		Hopewell
Property, plant and equipment	$	10,790		$	4,829	$	4,990	$	3,538
Intangible assets	—			5,171		10		984
Goodwill ⁽³⁾	549			—		—		1,200
Inventory	—			1,125		—		—
Accounts Receivable	1,767			—		—		—
Accounts Payable	(1,181		)	—		—		—
Total	$	11,925		$	11,125	$	5,000	$	5,722


⁽¹⁾	During the fourth quarter of 2015, we finalized our purchase price allocation and adjusted certain of the acquisition-date fair values previously disclosed in connection with working capital adjustments and an additional $0.4 million of consideration paid for additional assets.


⁽²⁾	During the third quarter of 2015, we finalized our purchase price allocation and adjusted certain of the acquisition-date fair values previously disclosed.


⁽³⁾	All goodwill is expected to be deductible for tax purposes.

Pro Forma Financial Information - Acquisitions from Third Parties

Below are the unaudited pro forma consolidated results of operations of the Partnership for the years ended December 31, 2014 and 2013, as if our 2014 acquisitions had occurred on January 1, 2013 (in thousands):



	Year Ended December 31, 2014				Year Ended December 31, 2013
	As Reported		Pro Forma		As Reported		Pro Forma
FTT Assets:
Net Sales	$	841,253	$	854,842	$	907,428	$	921,017
Net income	$	70,058	$	70,824	$	33,404	$	34,170
Greenville-Mount Pleasant Assets:
Net Sales	$	841,253	$	841,943	$	907,428	$	908,118
Net income	$	70,058	$	69,621	$	33,404	$	32,967

Below are the unaudited pro forma consolidated results of operations of the Partnership for the year ended December 31, 2013, as if our 2013 acquisitions had occurred on January 1, 2012 (in thousands):



	Year Ended December 31, 2013
	As Reported		Pro Forma
North Little Rock Terminal:
Net Sales	$	907,428	$	908,867
Net income	$	33,404	$	34,695
Hopewell:
Net Sales	$	907,428	$	908,382
Net income	$	33,404	$	33,718