| 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 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 | | Six Months Ended | | | June 30, | | June 30, | | | 2017 | | 2016 | | 2017 | | 2016 | Pipelines and Transportation | | | | | | | | | Net sales: | | | | | | | | | Affiliate | | $ | 27,668 |
| | $ | 26,136 |
| | $ | 54,168 |
| | $ | 52,442 |
| Third party | | 2,555 |
| | 5,874 |
| | 4,732 |
| | 12,351 |
| Total pipelines and transportation | | 30,223 |
| | 32,010 |
| | 58,900 |
| | 64,793 |
| Operating costs and expenses: | | | | | | | | | Cost of goods sold | | 4,403 |
| | 4,814 |
| | 8,808 |
| | 9,590 |
| Operating expenses | | 7,933 |
| | 6,899 |
| | 16,088 |
| | 14,639 |
| Segment contribution margin | | $ | 17,887 |
| | $ | 20,297 |
| | $ | 34,004 |
| | $ | 40,564 |
| Capital spending (excluding business combinations) | | $ | 1,660 |
| | $ | 718 |
| | $ | 3,797 |
| | $ | 1,424 |
| | | | | | | | | | Wholesale Marketing and Terminalling | | | | | | | | | Net sales: | | | | | | | | | Affiliate | | $ | 12,156 |
| | $ | 10,558 |
| | $ | 22,275 |
| | $ | 23,012 |
| Third party | | 84,390 |
| | 69,285 |
| | 175,067 |
| | 128,104 |
| Total wholesale marketing and terminalling | | 96,546 |
| | 79,843 |
| | 197,342 |
| | 151,116 |
| Operating costs and expenses: | | | | | | | | | Cost of goods sold | | 80,636 |
| | 68,287 |
| | 168,821 |
| | 130,264 |
| Operating expenses | | 2,033 |
| | 1,831 |
| | 4,236 |
| | 4,555 |
| Segment contribution margin | | $ | 13,877 |
| | $ | 9,725 |
| | $ | 24,285 |
| | $ | 16,297 |
| Capital spending (excluding business combinations) | | $ | 459 |
| | $ | 130 |
| | $ | 1,113 |
| | $ | 508 |
| | | | | | | | | | Consolidated | | | | | | | | | Net sales: | | | | | | | | | Affiliate | | $ | 39,824 |
| | $ | 36,694 |
| | $ | 76,443 |
| | $ | 75,454 |
| Third party | | 86,945 |
| | 75,159 |
| | 179,799 |
| | 140,455 |
| Total consolidated | | 126,769 |
| | 111,853 |
| | 256,242 |
| | 215,909 |
| Operating costs and expenses: | | | | | | | | | Cost of goods sold | | 85,039 |
| | 73,101 |
| | 177,629 |
| | 139,854 |
| Operating expenses | | 9,966 |
| | 8,730 |
| | 20,324 |
| | 19,194 |
| Contribution margin | | 31,764 |
| | 30,022 |
| | 58,289 |
| | 56,861 |
| General and administrative expenses | | 2,656 |
| | 2,698 |
| | 5,504 |
| | 5,611 |
| Depreciation and amortization | | 5,742 |
| | 4,812 |
| | 10,935 |
| | 9,808 |
| (Gain) loss on asset disposals | | (5 | ) | | — |
|
| 7 |
| | (44 | ) | Operating income | | $ | 23,371 |
| | $ | 22,512 |
| | $ | 41,843 |
| | $ | 41,486 |
| Capital spending (excluding business combinations) | | $ | 2,119 |
| | $ | 848 |
| | $ | 4,910 |
| | $ | 1,932 |
|
The following table summarizes the total assets for each segment as of June 30, 2017 and December 31, 2016 (in thousands).
| | | | | | | | | | | | June 30, 2017 | | December 31, 2016 | Pipelines and transportation | | $ | 338,781 |
| | $ | 337,349 |
| Wholesale marketing and terminalling | | 76,751 |
| | 78,198 |
| Total assets | | $ | 415,532 |
| | $ | 415,547 |
|
Property, plant and equipment and accumulated depreciation as of June 30, 2017 and depreciation expense by reporting segment for the three and six months ended June 30, 2017 were as follows (in thousands): | | | | | | | | | | | | | | | | Pipelines and Transportation | | Wholesale Marketing and Terminalling | | Consolidated | Property, plant and equipment | | $ | 282,703 |
| | $ | 64,600 |
| | $ | 347,303 |
| Less: accumulated depreciation | | (75,751 | ) | | (25,933 | ) | | (101,684 | ) | Property, plant and equipment, net | | $ | 206,952 |
| | $ | 38,667 |
| | $ | 245,619 |
| Depreciation expense for the three months ended June 30, 2017 | | $ | 4,499 |
| | $ | 977 |
| | $ | 5,476 |
| Depreciation expense for the six months ended June 30, 2017 | | $ | 8,564 |
| | $ | 1,839 |
| | $ | 10,403 |
|
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 June 30, 2017. |