þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the Fiscal Year Ended December 31, 2017
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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Delaware
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45-5379027
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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7102 Commerce Way
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Brentwood, Tennessee
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37027
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common Units Representing Limited Partner Interests
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New York Stock Exchange
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the Magnolia Pipeline system;
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the El Dorado Pipeline system;
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multiple short crude oil pipelines located at the El Dorado Refinery and our Sandhill Station;
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the Magnolia Station located west of the El Dorado Refinery;
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the Refined Products Pipeline system; and
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certain related crude oil pipelines.
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Average Daily Throughput (bpd)
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Year Ended
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December 31,
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2017
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2016
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2015
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Lion Pipeline System:
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Crude Oil Pipelines (Non-gathered)
(1)
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59,362
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56,555
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54,960
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Refined Products Pipelines to Enterprise System
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51,927
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52,071
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57,366
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(1)
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Excludes crude oil gathered on our SALA Gathering System and injected into our Lion Pipeline System.
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Average Daily Throughput (bpd)
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Year Ended
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December 31,
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2017
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2016
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2015
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SALA Gathering System:
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Throughput (average bpd):
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15,871
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17,756
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20,673
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Average Daily Throughput (bpd)
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Year Ended
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December 31,
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2017
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2016
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2015
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East Texas Crude Logistics System (average bpd)
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15,780
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12,735
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18,828
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Year Ended
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December 31,
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2017
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2016
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2015
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Sales volumes (average bpd):
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73,655
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68,131
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59,174
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Terminal Location
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Number of Tanks
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Active Aggregate Shell Capacity (bbls)
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Number of Truck Loading Lanes
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Maximum Daily Available Truck Loading Capacity (bpd)
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Abilene, TX
(1)
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9
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368,000
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2
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15,000
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San Angelo, TX
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5
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93,000
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2
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15,000
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Total
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14
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461,000
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4
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30,000
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(1)
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Excludes approximately 545,530 barrels of shell capacity that is out of service.
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Year Ended
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December 31,
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2017
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2016
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2015
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Throughput (average bpd)
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13,817
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13,257
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16,357
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Gross margin (in thousands)
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$
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20,320
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$
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6,929
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$
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7,984
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Gross margin per barrel
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$
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4.03
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$
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1.43
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$
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1.35
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Maximum
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Daily
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Active
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Available
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Aggregate
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Number of
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Truck
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Shell
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Truck
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Loading
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Number
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Capacity
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Loading
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Capacity
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Terminal Location
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of Tanks
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(bbls)
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Lanes
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(bpd)
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Big Sandy, TX
(1)
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3
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25,000
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El Dorado, AR
(1)
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3
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35,000
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Memphis, TN
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12
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126,000
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3
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20,000
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Mount Pleasant, TX
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7
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175,000
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3
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10,000
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Nashville, TN
(2)
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10
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128,000
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2
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15,000
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North Little Rock, AR
(1)
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2
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17,100
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Tyler, TX
(1)
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11
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91,000
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Total
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29
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429,000
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27
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213,100
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(1)
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See "—Pipelines and Transportation Segment—Tyler-Big Sandy Product Pipeline," "—Pipelines and Transportation Segment—Tyler Tank Assets," "—Pipelines and Transportation Segment—North Little Rock Tanks" and "—Pipelines and Transportation Segment—El Dorado Tank Assets," above for a discussion of the storage tanks associated with these terminals.
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(2)
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Excludes approximately 10,000 barrels of shell capacity that is currently not in service.
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Year Ended
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December 31,
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2017
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2016
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2015
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Throughput (average bpd):
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Big Sandy, TX
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6,878
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7,025
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7,135
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El Dorado, AR
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14,149
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17,040
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10,363
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Memphis, TN
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7,112
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7,982
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7,616
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Mount Pleasant, TX
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5,202
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2,746
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1,056
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Nashville, TN
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7,292
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6,939
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9,440
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North Little Rock, AR
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8,848
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10,174
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9,853
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Tyler, TX
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75,007
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70,444
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61,051
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Total (average bpd)
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124,488
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122,350
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106,514
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the timing and extent of changes in the costs and availability of crude oil and other refinery feedstocks (including prolonged periods of low crude oil prices that could impact production of inland crude oil and reduce the amount of cost advantaged crude oil available and/or the discount of such crude oil as compared to other crude oil) and in the price and demand for Delek's refined products;
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the risk of contract cancellation, non-renewal or failure to perform by Delek’s suppliers or customers, and Delek’s inability to replace such suppliers, contracts, customers and/or revenues;
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disruptions due to equipment interruption or failure or other events at Delek’s facilities, or at third-party facilities on which Delek’s business is dependent;
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the effects of economic downturns on Delek’s business and the business of its suppliers, customers, business partners and lenders;
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Delek’s ability to remain in compliance with its contracts;
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Delek’s ability to remain in compliance with the terms of its outstanding and any future indebtedness;
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changes in the cost or availability of third-party pipelines, terminals and other means of delivering and transporting crude oil, feedstocks and refined products;
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state and federal environmental, economic, health and safety, energy and other policies and regulations, and any changes in those policies and regulations;
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environmental incidents and violations and related remediation costs, fines and other liabilities; and
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changes in crude oil and refined product inventory levels and carrying costs.
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an inability of Delek to grow as expected and realize the synergies and the other expected benefits of its merger with Alon USA, which became effective as of July 1, 2017, and Delek's acquisition of the remaining interest in Alon USA Partners, LP that Delek did not already own, which became effective as of February 7, 2018;
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as it relates to our potential future growth opportunities, including dropdowns, and other potential benefits, the ability to successfully integrate the businesses of Delek and Alon USA;
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lost sales and customers as a result of certain customers of either of the two companies deciding not to do business with Delek;
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complexities associated with managing the combined businesses;
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integrating personnel from the two companies;
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challenges in the creation of uniform standards, controls, procedures, policies and information systems;
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potential unknown liabilities and unforeseen increased expenses, delays, or regulatory conditions associated with the Delek/Alon Merger; and
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performance shortfalls as a result of the diversion of management's attention caused by integrating the companies' operations.
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business interruption due to maintenance and repairs or mechanical or structural failures with respect to our assets, or our facilities or with respect to third-party assets or facilities on which our operations are dependent, including Delek’s assets or facilities;
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operational errors that result in a loss of physical integrity or performance in our pipelines and facilities;
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deterioration of the condition of our pipelines and facilities through age, use and disuse;
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damages to our assets and surrounding properties caused by earthquakes, floods, fires, severe weather, explosions and other natural disasters and acts of terrorism;
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damages to and loss of availability of interconnecting third-party pipelines, terminals and other means of delivering crude oil, feedstocks and refined petroleum products;
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the inability of third-party facilities on which our operations are dependent, including Delek’s facilities, to complete capital projects and to restart timely refining operations following a shutdown;
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curtailments of operations as a result of severe seasonal weather;
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inadvertent damage to pipelines from construction, farm and utility equipment;
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constrained pipeline and storage infrastructure;
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disruption or failure of information technology systems and network infrastructure due to various causes, including unauthorized access or attacks; and
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other hazards.
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perform ongoing assessments of pipeline integrity;
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identify and characterize applicable threats to pipeline segments that could impact a high consequence area;
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maintain processes for data collection, integration and analysis;
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repair and remediate pipelines as necessary; and
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implement preventive and mitigating actions.
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acts of God;
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strikes, lockouts or other industrial disturbances;
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acts of the public enemy, wars, blockades, insurrections, riots or civil disturbances;
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storms, floods or washouts;
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arrests or the order of any court or governmental authority having jurisdiction while the same is in force and effect;
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explosions, breakage or accident to machinery, storage tanks or lines of pipe;
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any inability to obtain, or unavoidable delay in obtaining, material or equipment;
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any inability to deliver crude oil or refined products because of a failure of third-party pipelines; and
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any other causes not reasonably within the control of the party claiming suspension and which by the exercise of due diligence such party is unable to prevent or overcome.
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the volatility and uncertainty of regional pricing differentials for crude oil and refined products;
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the action by the members of the Organization of the Petroleum Exporting Countries, or OPEC, individually or in the aggregate, regarding production levels and prices;
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the nature and extent of governmental regulation and taxation; and
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the anticipated future prices of crude oil and refined products in markets served by Delek’s refineries.
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incur or guarantee additional debt;
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incur certain liens on assets;
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dispose of assets;
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make certain cash distributions or redeem or repurchase units;
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change the nature of our business;
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engage in certain mergers or acquisitions or make certain investments (including joint ventures); and
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enter into certain transactions with affiliates.
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our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes may be impaired, or such financing may not be available on favorable terms;
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our funds available for operations, future business opportunities and distributions to unitholders will be reduced by that portion of our cash flows required to make payments on our debt and any interest thereon;
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we may be more vulnerable to competitive pressures or a downturn in our business or the economy generally; and
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our flexibility in responding to changing business and economic conditions may be limited.
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mistaken assumptions about revenues and costs, including synergies;
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the assumption of known or unknown liabilities;
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limitations on rights to indemnity from the seller;
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mistaken assumptions about the overall costs of equity or debt;
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the diversion of management’s attention from other business concerns;
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ineffective or poor integration of such acquisitions;
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unforeseen difficulties operating multi-customer and product assets in new product areas or new markets; and
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customer or key employee losses at the acquired businesses.
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Our Partnership Agreement replaces the fiduciary duties that would otherwise be owed by our general partner with contractual standards governing its duties, limits our general partner’s liabilities and restricts the remedies available to our unitholders for actions that, without such limitations, might constitute breaches of fiduciary duty.
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Neither our Partnership Agreement nor any other agreement requires Delek to pursue a business strategy that favors us or utilizes our assets, including whether to increase or decrease refinery production, whether to shut down or reconfigure a refinery or what markets to pursue or grow. The directors and officers of Delek have a fiduciary duty to make these decisions in the best interests of the stockholders of Delek, which may be contrary to our interests. Delek may choose to shift the focus of its investment and growth to areas not served by our assets.
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Delek, as our primary customer, has an economic incentive to cause us not to seek higher service fees, even if such higher fees could be obtained in arm’s-length, third-party transactions. Furthermore, under many of our commercial agreements with them, Delek’s consent is required before we may enter into an agreement with any third party with respect to certain of our assets, including those that serve the El Dorado and Tyler Refineries, and Delek has an incentive to cause us not to pursue such third-party contracts in certain circumstances.
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Our general partner is allowed to take into account the interests of parties other than us, such as Delek, in resolving conflicts of interest.
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All of the officers and three of the directors of our general partner (who are also the three Individual GP Owners) are also officers and/or directors of Delek and owe fiduciary duties to Delek. These officers will also devote significant time to the business of Delek and will be compensated by Delek accordingly.
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Delek may be constrained by the terms of its debt instruments from taking actions, or refraining from taking actions, that may be in our best interests.
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Except in limited circumstances, our general partner has the power and authority to conduct our business without unitholder approval.
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Disputes may arise under our commercial agreements with Delek.
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Our general partner determines the amount and timing of asset purchases and sales, borrowings, issuances of additional partnership units and the creation, reduction or increase of cash reserves, each of which can affect the amount of cash available for distribution to our unitholders.
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Our general partner determines the amount and timing of any capital expenditures and whether a capital expenditure is classified as a maintenance capital expenditure, which reduces operating surplus, or an expansion or investment capital expenditure, which does not reduce operating surplus. This determination can affect the amount of cash that is distributed to our unitholders.
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Our general partner determines which costs incurred by it are reimbursable by us.
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Our general partner may cause us to borrow funds in order to permit the payment of cash distributions, even if the purpose or effect of the borrowing is to make a distribution on their common units or to make incentive distributions.
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Our Partnership Agreement permits us to classify up to $25.0 million as operating surplus, even if it is generated from asset sales, non-working capital borrowings or other sources that would otherwise constitute capital surplus. This cash may be used to fund distributions on our general partner units or to our general partner in respect of the incentive distribution rights.
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Our Partnership Agreement does not restrict our general partner from causing us to pay it or its affiliates for any services rendered to us or entering into additional contractual arrangements with any of these entities on our behalf.
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Our general partner intends to limit its liability regarding our contractual and other obligations.
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Our general partner may exercise its right to call and purchase all of the common units not owned by it and its affiliates if they own more than 80% of the common units.
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Our general partner controls the enforcement of the obligations that it and its affiliates owe to us, including Delek’s obligations under the Omnibus Agreement and its commercial agreements with us.
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Our general partner decides whether to retain separate counsel, accountants or other advisers to perform services for us.
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Our general partner may transfer its incentive distribution rights without unitholder approval.
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Our general partner may elect to cause us to issue common units to it in connection with a resetting of the target distribution levels related to our incentive distribution rights without the approval of the conflicts committee of the board of directors of our general partner or our unitholders. This election may result in lower distributions to our common unitholders in certain situations.
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how to allocate corporate opportunities among us and its other affiliates;
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whether to exercise its limited call right;
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whether to seek approval of the resolution of a conflict of interest by the conflicts committee of the board of directors of our general partner;
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how to exercise its voting rights with respect to the units it owns;
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whether to exercise its registration rights;
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whether to elect to reset target distribution levels;
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whether to transfer the incentive distribution rights to a third party; and
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whether or not to consent to any merger or consolidation of the Partnership or amendment to the Partnership Agreement.
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any assets that were owned by Delek upon the completion of the Offering (including replacements or expansions of those assets);
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any asset or business that Delek acquires or constructs that has a fair market value of less than $5.0 million; and
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any asset or business that Delek acquires or constructs that has a fair market value of $5.0 million or more if we have been offered the opportunity to purchase the asset or business for fair market value not later than six months after completion of such acquisition or construction, and we decline to do so.
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whenever our general partner, the board of directors of our general partner or any committee thereof (including the conflicts committee) makes a determination or takes, or declines to take, any other action in their respective capacities, our general partner, the board of directors of our general partner and any committee thereof (including the conflicts committee), as applicable, is required to make such determination, or take or decline to take such other action, in good faith, meaning that it subjectively believed that the decision was in the best interests of the Partnership, and, except as specifically provided by our Partnership Agreement, will not be subject to any other or different standard imposed by our Partnership Agreement, Delaware law, or any other law, rule or regulation, or at equity;
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our general partner will not have any liability to us or our unitholders for decisions made in its capacity as a general partner so long as such decisions are made in good faith;
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our general partner and its officers and directors will not be liable for monetary damages to us or our limited partners resulting from any act or omission, unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that our general partner or its officers and directors, as the case may be, acted in bad faith or engaged in fraud or willful misconduct or, in the case of a criminal matter, acted with knowledge that the conduct was criminal; and
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our general partner will not be in breach of its obligations under the Partnership Agreement (including any duties to us or our unitholders) if a transaction with an affiliate or the resolution of a conflict of interest is:
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approved by the conflicts committee of the board of directors of our general partner, although our general partner is not obligated to seek such approval;
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approved by the vote of a majority of the outstanding common limited partner units, excluding any common units owned by our general partner and its affiliates;
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determined by the board of directors of our general partner to be on terms no less favorable to us than those generally being provided to or available from unrelated third parties; or
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determined by the board of directors of our general partner to be fair and reasonable to us, taking into account the totality of the relationships among the parties involved, including other transactions that may be particularly favorable or advantageous to us.
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our existing unitholders’ proportionate ownership interest in us will decrease;
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the amount of cash available for distribution on each unit may decrease;
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because the amount payable to holders of incentive distribution rights is based on a percentage of the total cash available for distribution, the distributions to holders of incentive distribution rights will increase even if the per-unit distribution on common limited partner units remains the same;
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the ratio of taxable income to distributions may increase;
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the relative voting strength of each previously outstanding unit may be diminished; and
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the market price of the common limited partner units may decline.
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we were conducting business in a state but had not complied with that particular state’s partnership statute; or
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our unitholders' right to act with other unitholders to remove or replace our general partner, to approve some amendments to our Partnership Agreement or to take other actions under our Partnership Agreement constitute “control” of our business.
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ITEM 5.
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MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
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Quarter Ended
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High Sales Price
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Low Sales Price
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Quarterly Cash Distribution per Limited Partner Unit
(1)
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Distribution Date
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Record Date
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December 31, 2017
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$32.80
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$26.80
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$0.725
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February 12, 2018
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February 2, 2018
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September 30, 2017
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$35.54
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$28.25
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$0.715
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November 14, 2017
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November 7, 2017
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June 30, 2017
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$33.85
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$28.35
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$0.705
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August 11, 2017
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August 4, 2017
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March 31, 2017
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$36.05
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$28.50
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$0.690
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May 12, 2017
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May 5, 2017
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December 31, 2016
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$30.60
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$21.30
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$0.680
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February 14, 2017
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February 3, 2017
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September 30, 2016
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$29.59
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$25.20
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$0.655
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November 14, 2016
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November 7, 2016
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June 30, 2016
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$33.92
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$24.16
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$0.630
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August 12, 2016
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August 5, 2016
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March 31, 2016
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$35.25
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$21.84
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$0.610
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May 13, 2016
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May 5, 2016
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(1)
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Represents cash distributions attributable to the quarter and declared and paid within 45 days of quarter end in accordance with our Partnership Agreement.
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•
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less
the amount of cash reserves established by our general partner to:
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◦
|
provide for the proper conduct of our business (including cash reserves for our future capital expenditures and anticipated future debt service requirements and refunds of collected rates reasonably likely to be refunded as a result of a settlement or hearing related to FERC rate proceedings or rate proceedings under applicable law subsequent to that quarter);
|
◦
|
comply with applicable law, any of our debt instruments or other agreements; or
|
◦
|
provide funds for distributions to our unitholders and to our general partner for any one or more of the next four quarters (provided that our general partner may not establish cash reserves for distributions if the effect of the establishment of
|
•
|
plus
, if our general partner so determines, all or any portion of the cash on hand on the date of determination of available cash for the quarter resulting from working capital borrowings made subsequent to the end of such quarter. Under our Partnership Agreement, working capital borrowings are generally borrowings that are made under a credit facility, commercial paper facility or similar financing arrangement, and in all cases are used solely for working capital purposes or to pay distributions to partners, and with the intent of the borrower to repay such borrowings within 12 months with funds other than from additional working capital borrowings.
|
|
|
Total Quarterly
|
|
Marginal Percentage
|
||||
|
|
Distribution per Unit
|
|
Interest in Distributions
|
||||
|
|
Target Amount
|
|
Unitholders
|
|
General Partner
|
||
Minimum Quarterly Distribution
|
|
$0.37500
|
|
98.0
|
%
|
|
2.0
|
%
|
First Target Distribution
|
|
above $0.37500
|
|
98.0
|
%
|
|
2.0
|
%
|
|
|
up to $0.43125
|
|
|
|
|
||
Second Target Distribution
|
|
above $0.43125
|
|
85.0
|
%
|
|
15.0
|
%
|
|
|
up to $0.46875
|
|
|
|
|
||
Third Target Distribution
|
|
above $0.46875
|
|
75.0
|
%
|
|
25.0
|
%
|
|
|
up to $0.56250
|
|
|
|
|
||
Thereafter
|
|
above $0.56250
|
|
50.0
|
%
|
|
50.0
|
%
|
Date of Sale
|
|
Number of General Partner Units Sold
|
|
Price per General Partner Unit
|
|
Consideration Paid to the Partnership
|
June 14, 2017
|
|
670
|
|
$31.90
|
|
$21,386
|
December 11, 2017
|
|
432
|
|
$30.05
|
|
$12,987
|
•
|
two crude oil rail offloading racks, which are designed to receive up to 25,000 barrels per day (“bpd”) of light crude oil or 12,000 bpd of heavy crude oil, or any combination of the two, delivered by rail to Delek's El Dorado Refinery (the "El Dorado Refinery")and related ancillary assets (the “El Dorado Assets”) effective March 31, 2015 (such transaction, the "El Dorado Rail Offloading Racks Acquisition");
|
•
|
a crude oil storage tank (the "Tyler Crude Tank") with a shell capacity of approximately 350,000 barrels located adjacent to Delek's Tyler Refinery (the "Tyler Refinery") and certain ancillary assets (collectively, with the Tyler Crude Tank, the "Tyler Assets") effective March 31, 2015 (such transaction, the "Tyler Crude Tank Acquisition"); the Tyler Assets, together with the El Dorado Assets, are hereinafter collectively referred to as the "Logistics Assets";
|
•
|
a refined products terminal (the “El Dorado Terminal”) located at the El Dorado Refinery and 158 storage tanks and certain ancillary assets (the "El Dorado Tank Assets" and, together with the El Dorado Terminal, the “El Dorado Terminal and Tank Assets”) at and adjacent to the El Dorado Refinery effective February 4, 2014 (such transaction, the “El Dorado Acquisition”);
|
•
|
a refined products terminal (the “Tyler Terminal”) located at the Tyler Refinery and 96 storage tanks and certain ancillary assets (the "Tyler Tank Assets" and, together with the Tyler Terminal, the “Tyler Terminal and Tank Assets”) adjacent to the Tyler Refinery, effective July 26, 2013 (such transaction, the “Tyler Acquisition”).
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Statements of Income and Other Comprehensive Income Data:
|
|
|
|
(In thousands, except units and per unit data)
|
|
|
||||||||||||||
Net sales
|
|
$
|
538,075
|
|
|
$
|
448,059
|
|
|
$
|
589,669
|
|
|
$
|
841,253
|
|
|
$
|
907,428
|
|
Operating costs and expenses
|
|
449,898
|
|
|
370,409
|
|
|
512,407
|
|
|
762,407
|
|
|
868,697
|
|
|||||
Operating income
|
|
88,177
|
|
|
77,650
|
|
|
77,262
|
|
|
78,846
|
|
|
38,731
|
|
|||||
Non-operating costs and expenses
|
|
18,990
|
|
|
14,765
|
|
|
11,246
|
|
|
8,656
|
|
|
4,570
|
|
|||||
Income (loss) before income tax (benefit) expense
|
|
69,187
|
|
|
62,885
|
|
|
66,016
|
|
|
70,190
|
|
|
34,161
|
|
|||||
Income tax (benefit) expense
|
|
(222
|
)
|
|
81
|
|
|
(195
|
)
|
|
132
|
|
|
757
|
|
|||||
Net income
|
|
69,409
|
|
|
62,804
|
|
|
66,211
|
|
|
70,058
|
|
|
33,404
|
|
|||||
Less: (Loss) income attributable to Predecessors
|
|
—
|
|
|
—
|
|
|
(637
|
)
|
|
(1,939
|
)
|
|
(14,426
|
)
|
|||||
Net income attributable to partners
|
|
$
|
69,409
|
|
|
$
|
62,804
|
|
|
$
|
66,848
|
|
|
$
|
71,997
|
|
|
$
|
47,830
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Less: General partners' interest in net income, including incentive distribution rights
|
|
18,429
|
|
|
12,193
|
|
|
5,163
|
|
|
2,366
|
|
|
957
|
|
|||||
Limited partners' interest in net income
|
|
$
|
50,980
|
|
|
$
|
50,611
|
|
|
$
|
61,685
|
|
|
$
|
69,631
|
|
|
$
|
46,873
|
|
Net income per limited partner unit:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Common - (basic)
|
|
$
|
2.09
|
|
|
$
|
2.08
|
|
|
$
|
2.55
|
|
|
$
|
2.88
|
|
|
$
|
1.95
|
|
Common - (diluted)
|
|
$
|
2.09
|
|
|
$
|
2.07
|
|
|
$
|
2.52
|
|
|
$
|
2.85
|
|
|
$
|
1.93
|
|
Subordinated - Delek (basic and diluted)
|
|
$
|
—
|
|
|
$
|
2.19
|
|
|
$
|
2.54
|
|
|
$
|
2.88
|
|
|
$
|
1.95
|
|
Weighted average limited partner units outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Common units - (basic)
|
|
24,348,063
|
|
|
22,490,264
|
|
|
12,237,154
|
|
|
12,171,548
|
|
|
12,025,249
|
|
|||||
Common units - (diluted)
|
|
24,376,972
|
|
|
22,558,717
|
|
|
12,356,914
|
|
|
12,302,629
|
|
|
12,148,774
|
|
|||||
Subordinated units - Delek (basic and diluted)
|
|
—
|
|
|
1,803,167
|
|
|
11,999,258
|
|
|
11,999,258
|
|
|
11,999,258
|
|
|||||
Cash distributions per limited partner unit
|
|
$
|
2.835
|
|
|
$
|
2.575
|
|
|
$
|
2.240
|
|
|
$
|
1.900
|
|
|
$
|
1.600
|
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance Sheet Data:
|
|
|
|
(In thousands)
|
|
|
||||||||||||||
Property, plant and equipment, net
|
|
$
|
255,068
|
|
|
$
|
251,029
|
|
|
$
|
253,848
|
|
|
$
|
254,779
|
|
|
$
|
242,512
|
|
Total assets
|
|
443,530
|
|
|
415,547
|
|
|
375,288
|
|
|
331,286
|
|
|
319,350
|
|
|||||
Total debt, including current maturities
|
|
422,649
|
|
|
392,600
|
|
|
351,600
|
|
|
251,750
|
|
|
164,800
|
|
|||||
Total liabilities
|
|
472,755
|
|
|
428,831
|
|
|
386,306
|
|
|
291,505
|
|
|
214,142
|
|
|||||
Total (deficit) equity
|
|
(29,225
|
)
|
|
(13,284
|
)
|
|
(11,018
|
)
|
|
39,781
|
|
|
105,208
|
|
•
|
our substantial dependence on Delek or its assignees and their support of and respective ability to pay us under our commercial agreements;
|
•
|
our future coverage, leverage, financial flexibility and growth, and our ability to improve performance and achieve distribution growth at any level or at all;
|
•
|
Delek’s future growth, financial performance, share repurchases, crude oil supply pricing and flexibility and product distribution;
|
•
|
positive industry dynamics, including Permian Basin growth, efficiencies and takeaway capacity;
|
•
|
the age and condition of our assets and operating hazards and other risks incidental to transporting, storing and gathering crude oil, intermediate and refined products, including, but not limited to, costs, penalties, regulatory or legal actions and other effects related to spills, releases and tank failures;
|
•
|
changes in insurance markets impacting costs and the level and types of coverage available;
|
•
|
the timing and extent of changes in commodity prices and demand for refined products;
|
•
|
the wholesale marketing margins we are able to obtain and the number of barrels of product we are able to purchase and sell in our west Texas wholesale business;
|
•
|
the suspension, reduction or termination of Delek's or its assignees' or any third-party's obligations under our commercial agreements including the duration, fees or terms thereof;
|
•
|
the results of our investments in joint ventures;
|
•
|
the ability to secure commercial agreements with Delek or third parties upon expiration of existing agreements;
|
•
|
disruptions due to acts of God, equipment interruption or failure at our facilities, Delek’s facilities or third-party facilities on which our business is dependent;
|
•
|
changes in the availability and cost of capital of debt and equity financing;
|
•
|
our reliance on information technology systems in our day-to-day operations;
|
•
|
changes in general economic conditions;
|
•
|
the effects of existing and future laws and governmental regulations, including, but not limited to, the rules and regulations promulgated by the Federal Energy Regulatory Commission ("FERC") and those relating to environmental protection, pipeline integrity and safety;
|
•
|
competitive conditions in our industry;
|
•
|
actions taken by our customers and competitors;
|
•
|
the demand for crude oil, refined products and transportation and storage services;
|
•
|
our ability to successfully implement our business plan;
|
•
|
an inability to have growth projects completed on time and on budget;
|
•
|
an inability of Delek to grow as expected and realize the synergies and the other expected benefits of its merger with Alon USA, which became effective as of July 1, 2017, and Delek's acquisition of the remaining interest in Alon USA Partners, LP that Delek did not already own, which became effective as of February 7, 2018;
|
•
|
as it relates to our potential future growth opportunities, including dropdowns, and other potential benefits, the ability to successfully integrate the businesses of Delek and Alon USA;
|
•
|
our ability to successfully integrate acquired businesses;
|
•
|
natural disasters, weather-related delays, casualty losses and other matters beyond our control;
|
•
|
changes or volatility in interest and inflation rates;
|
•
|
labor relations;
|
•
|
large customer defaults;
|
•
|
changes in tax status and regulations;
|
•
|
the effects of future litigation; and
|
•
|
other factors discussed elsewhere in this Annual Report on Form 10-K.
|
•
|
Generate Stable Cash Flow.
We will continue to pursue opportunities to provide logistics, marketing and other services to Delek and third parties pursuant to long-term, fee-based contracts. In new service contracts, we will endeavor to include minimum volume throughput, or other commitments, similar to those included in our current commercial agreements with Delek.
|
•
|
Focus on Growing Our Business.
We intend to evaluate and pursue opportunities to grow our business through both strategic acquisitions and expansion and construction projects, both internally funded or in combination with potential external partners. We believe that our strong relationship with Delek will enhance our opportunities to grow our business.
|
◦
|
Pursue Acquisitions
.
We plan to pursue strategic acquisitions that both complement our existing assets and provide attractive returns for our unitholders. As we continue to grow through acquisitions, we believe we will be able to increase our third party business.
|
◦
|
Pursue Attractive Expansion and Construction Opportunities.
We intend to pursue organic growth opportunities that complement our existing businesses or that provide attractive returns within or outside our current geographic footprint. We plan to evaluate potential opportunities to make capital investments that will be used to expand our existing asset base through the expansion and construction of new logistics assets to support growth of any of our customers', including Delek's, businesses and from increased third-party activity. These construction projects may be developed either through joint venture relationships or by us acting independently, depending on size and scale.
|
•
|
Optimize Our Existing Assets and Expand Our Customer Base.
We seek to enhance the profitability of our existing assets by adding incremental throughput volumes, improving operating efficiencies and increasing system-wide utilization. We also expect to further diversify our customer base by increasing third-party throughput volumes running through certain of our existing systems and expanding our existing asset portfolio to service more third-party customers.
|
•
|
Delek’s utilization of our assets in excess of its minimum volume commitments;
|
•
|
our ability to identify and execute acquisitions and organic expansion projects and capture incremental volume increases from Delek or third parties;
|
•
|
our ability to increase throughput volumes at our refined products terminals and provide additional ancillary services at those terminals;
|
•
|
our ability to identify and serve new customers in our marketing and trucking operations; and
|
•
|
our ability to make connections to third-party facilities and pipelines.
|
•
|
our operating performance as compared to other publicly traded partnerships in the midstream energy industry, without regard to historical cost basis, or in the case of EBITDA, financing methods;
|
•
|
the ability of our assets to generate sufficient cash flow to make distributions to our unitholders;
|
•
|
our ability to incur and service debt and fund capital expenditures; and
|
•
|
the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.
|
Statements of Income and Comprehensive Income Data
|
||||||||||||
(In thousands, except unit data and per unit data)
|
||||||||||||
|
|
|
|
|
|
|
||||||
|
|
Years ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Net sales:
|
|
|
|
|
|
|
||||||
Pipelines and transportation
|
|
$
|
121,729
|
|
|
$
|
122,172
|
|
|
$
|
131,379
|
|
Wholesale marketing and terminalling
|
|
416,346
|
|
|
325,887
|
|
458,290
|
|||||
Total
|
|
538,075
|
|
|
448,059
|
|
589,669
|
|||||
Operating costs and expenses:
|
|
|
|
|
|
|
||||||
Cost of goods sold
|
|
372,890
|
|
|
302,158
|
|
436,304
|
|||||
Operating expenses
|
|
43,274
|
|
|
37,198
|
|
44,923
|
|||||
General and administrative expenses
|
|
11,840
|
|
|
10,256
|
|
11,384
|
|||||
Depreciation and amortization
|
|
21,914
|
|
|
20,813
|
|
19,692
|
|||||
(Gain) loss on asset disposals
|
|
(20
|
)
|
|
(16
|
)
|
|
104
|
|
|||
Total operating costs and expenses
|
|
449,898
|
|
370,409
|
|
512,407
|
||||||
Operating income
|
|
88,177
|
|
|
77,650
|
|
77,262
|
|||||
Interest expense, net
|
|
23,944
|
|
|
13,587
|
|
10,658
|
|
||||
(Income) loss from equity method investments
|
|
(4,953
|
)
|
|
1,178
|
|
|
588
|
|
|||
Other income, net
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|||
Total non-operating costs and expenses
|
|
18,990
|
|
|
14,765
|
|
|
11,246
|
|
|||
Income before income tax (benefit) expense
|
|
69,187
|
|
|
62,885
|
|
|
66,016
|
|
|||
Income tax (benefit) expense
|
|
(222
|
)
|
|
81
|
|
|
(195
|
)
|
|||
Net income
|
|
69,409
|
|
|
62,804
|
|
|
66,211
|
|
|||
Less: Loss attributable to Predecessors
|
|
—
|
|
|
—
|
|
|
(637
|
)
|
|||
Net income attributable to partners
|
|
$
|
69,409
|
|
|
$
|
62,804
|
|
|
$
|
66,848
|
|
Comprehensive income attributable to partners
|
|
$
|
69,409
|
|
|
$
|
62,804
|
|
|
$
|
66,848
|
|
EBITDA
(1)
|
|
$
|
115,045
|
|
|
$
|
97,285
|
|
|
$
|
96,366
|
|
|
|
|
|
|
|
|
|
|||||
Less: General partner's interest in net income, including incentive distribution rights
|
|
18,429
|
|
|
12,193
|
|
|
5,163
|
|
|||
Limited partners' interest in net income
|
|
$
|
50,980
|
|
|
$
|
50,611
|
|
|
$
|
61,685
|
|
|
|
|
|
|
|
|
||||||
Net income per limited partner unit
(2)
:
|
|
|
|
|
|
|
||||||
Common units - (basic)
|
|
$
|
2.09
|
|
|
$
|
2.08
|
|
|
$
|
2.55
|
|
Common units - (diluted)
|
|
$
|
2.09
|
|
|
$
|
2.07
|
|
|
$
|
2.52
|
|
Subordinated units - Delek (basic and diluted)
|
|
$
|
—
|
|
|
$
|
2.19
|
|
|
$
|
2.54
|
|
|
|
|
|
|
|
|
||||||
Weighted average limited partner units outstanding
(2)
:
|
|
|
|
|
|
|
||||||
Common units - (basic)
|
|
24,348,063
|
|
|
22,490,264
|
|
|
12,237,154
|
||||
Common units - (diluted)
|
|
24,376,972
|
|
|
22,558,717
|
|
|
12,356,914
|
||||
Subordinated units - Delek (basic and diluted)
|
|
—
|
|
|
1,803,167
|
|
|
11,999,258
|
||||
|
|
|
|
|
|
|
||||||
Cash distributions per limited partner unit
|
|
$
|
2.835
|
|
|
$
|
2.575
|
|
|
$
|
2.240
|
|
(1)
|
For a definition of EBITDA, see "—How We Evaluate Our Operations—EBITDA and Distributable Cash Flow."
|
(2)
|
We base our calculation of net income per unit on the weighted-average number of common and subordinated limited partner units outstanding during the period. The weighted-average number of common and subordinated units reflects the conversion
|
(in thousands)
|
|
Years Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
(2)
|
||||||
Reconciliation of net income to EBITDA:
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
69,409
|
|
|
$
|
62,804
|
|
|
$
|
66,211
|
|
Add:
|
|
|
|
|
|
|
||||||
Income tax (benefit) expense
|
|
(222
|
)
|
|
81
|
|
|
(195
|
)
|
|||
Depreciation and amortization
|
|
21,914
|
|
|
20,813
|
|
|
19,692
|
|
|||
Interest expense, net
|
|
23,944
|
|
|
13,587
|
|
|
10,658
|
|
|||
EBITDA
(1)
|
|
$
|
115,045
|
|
|
$
|
97,285
|
|
|
$
|
96,366
|
|
|
|
|
|
|
|
|
||||||
Reconciliation of net cash from operating activities to distributable cash flow:
|
|
|
|
|
|
|
||||||
Net cash provided by operating activities
|
|
$
|
87,703
|
|
|
$
|
100,707
|
|
|
$
|
68,024
|
|
Changes in assets and liabilities
|
|
3,462
|
|
|
(14,861
|
)
|
|
20,106
|
|
|||
Maintenance and regulatory capital expenditures
(3)
|
|
(9,444
|
)
|
|
(5,920
|
)
|
|
(11,841
|
)
|
|||
Reimbursement from Delek for capital expenditures
(4)
(5)
|
|
3,453
|
|
|
3,251
|
|
|
5,503
|
|
|||
Accretion of asset retirement obligations
|
|
(292
|
)
|
|
(266
|
)
|
|
(251
|
)
|
|||
Deferred income taxes
|
|
111
|
|
|
173
|
|
|
(14
|
)
|
|||
Gain (loss) on asset disposals
|
|
20
|
|
|
16
|
|
|
(104
|
)
|
|||
Distributable cash flow
(1)
|
|
$
|
85,013
|
|
|
$
|
83,100
|
|
|
$
|
81,423
|
|
(1)
|
For a definition of EBITDA and distributable cash flow, please see "—How We Evaluate Our Operations—EBITDA and Distributable Cash Flow."
|
(2)
|
EBITDA and distributable cash flow include net loss of $0.2 million related to our Predecessors during the year ended
December 31, 2015
.
|
(3)
|
Maintenance and regulatory capital expenditures represent cash expenditures (including expenditures for the addition or improvement to, or the replacement of, our capital assets, and for the acquisition of existing, or the construction or development of new, capital assets) made to maintain our long-term operating income or operating capacity. Examples of maintenance and regulatory capital expenditures are expenditures for the repair, refurbishment and replacement of pipelines and terminals, to maintain equipment reliability, integrity and safety and to address environmental laws and regulations.
|
(4)
|
For the years ended
December 31, 2017
,
2016
and
2015
, Delek reimbursed us for certain capital expenditures pursuant to the terms of the Omnibus Agreement (as defined in
Note 4
to our consolidated financial statements).
|
(5)
|
In the current year, the reimbursed capital expenditure amounts in the determination of distributable cash flow were revised to reflect the accrual of reimbursed capital expenditures from Delek rather than the cash amounts received for reimbursed capital expenditures during the years ended
December 31, 2017
,
2016
and
2015
. This resulted in an increase to the distributable cash flow of $1.4 million and $0.3 million during the years ended December 31, 2016 and 2015, respectively, from amounts presented on our Annual Report on Form 10-K for the year ended
December 31, 2016
.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Capital spending (excluding business combinations)
|
|
|
|
|
|
|
||||||
Pipelines and Transportation
|
|
$
|
14,262
|
|
|
$
|
8,478
|
|
|
$
|
16,030
|
|
Wholesale Marketing and Terminalling
|
|
4,141
|
|
|
3,289
|
|
|
6,397
|
|
|||
Total capital spending
|
|
$
|
18,403
|
|
|
$
|
11,767
|
|
|
$
|
22,427
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Pipelines and Transportation
|
|
|
|
|
|
|
||||||
Net sales:
|
|
|
|
|
|
|
||||||
Affiliate
|
|
109,298
|
|
|
$
|
103,749
|
|
|
102,551
|
|
||
Third-Party
|
|
12,431
|
|
|
18,423
|
|
|
28,828
|
|
|||
Total Pipelines and Transportation
|
|
121,729
|
|
|
122,172
|
|
|
131,379
|
|
|||
Operating costs and expenses:
|
|
|
|
|
|
|
||||||
Cost of goods sold
|
|
18,210
|
|
|
19,425
|
|
|
19,607
|
|
|||
Operating expenses
|
|
33,240
|
|
|
29,235
|
|
|
33,751
|
|
|||
Segment contribution margin
|
|
$
|
70,279
|
|
|
$
|
73,512
|
|
|
$
|
78,021
|
|
|
|
|
|
|
|
|
||||||
Wholesale Marketing and Terminalling
|
|
|
|
|
|
|
||||||
Net Sales:
|
|
|
|
|
|
|
||||||
Affiliate
|
|
46,982
|
|
|
45,815
|
|
|
50,013
|
|
|||
Third-Party
|
|
369,364
|
|
|
280,072
|
|
|
408,277
|
|
|||
Total Wholesale Marketing and Terminalling
|
|
416,346
|
|
|
325,887
|
|
|
458,290
|
|
|||
Operating costs and expenses:
|
|
|
|
|
|
|
||||||
Cost of goods sold
|
|
354,680
|
|
|
282,733
|
|
|
416,697
|
|
|||
Operating expenses
|
|
10,034
|
|
|
7,963
|
|
|
11,172
|
|
|||
Segment contribution margin
|
|
$
|
51,632
|
|
|
$
|
35,191
|
|
|
$
|
30,421
|
|
|
|
|
|
|
|
|
||||||
Consolidated
|
|
|
|
|
|
|
||||||
Net Sales:
|
|
|
|
|
|
|
||||||
Affiliate
|
|
$
|
156,280
|
|
|
$
|
149,564
|
|
|
$
|
152,564
|
|
Third-Party
|
|
381,795
|
|
|
298,495
|
|
|
437,105
|
|
|||
Net sales
|
|
538,075
|
|
|
448,059
|
|
|
589,669
|
|
|||
Operating costs and expenses:
|
|
|
|
|
|
|
||||||
Cost of goods sold
|
|
372,890
|
|
|
302,158
|
|
|
436,304
|
|
|||
Operating expenses
|
|
43,274
|
|
|
37,198
|
|
|
44,923
|
|
|||
Contribution margin
|
|
121,911
|
|
|
108,703
|
|
|
108,442
|
|
|||
General and administrative expenses
|
|
11,840
|
|
|
10,256
|
|
|
11,384
|
|
|||
Depreciation and amortization
|
|
21,914
|
|
|
20,813
|
|
|
19,692
|
|
|||
(Loss) gain on asset disposals
|
|
(20
|
)
|
|
(16
|
)
|
|
104
|
|
|||
Operating income
|
|
$
|
88,177
|
|
|
$
|
77,650
|
|
|
$
|
77,262
|
|
|
|
Year Ended December 31,
|
|||||||
|
|
2017
|
|
2016
|
|
2015
|
|||
Throughputs (average bpd)
|
|
|
|
|
|
|
|||
Lion Pipeline System:
|
|
|
|
|
|
|
|||
Crude pipelines (non-gathered)
|
|
59,362
|
|
|
56,555
|
|
|
54,960
|
|
Refined products pipelines to Enterprise Systems
|
|
51,927
|
|
|
52,071
|
|
|
57,366
|
|
SALA Gathering System
|
|
15,871
|
|
|
17,756
|
|
|
20,673
|
|
East Texas Crude Logistics System
|
|
15,780
|
|
|
12,735
|
|
|
18,828
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Operating Information:
|
|
|
|
|
|
|
||||||
East Texas - Tyler Refinery sales volumes (average bpd)
|
|
73,655
|
|
|
68,131
|
|
|
59,174
|
|
|||
West Texas marketing throughputs (average bpd)
|
|
13,817
|
|
|
13,257
|
|
|
16,357
|
|
|||
West Texas marketing gross margin per barrel
|
|
$
|
4.03
|
|
|
$
|
1.43
|
|
|
$
|
1.35
|
|
Terminalling throughputs (average bpd)
(1)
|
|
124,488
|
|
|
122,350
|
|
|
106,514
|
|
Quarter Ended
|
|
Total Quarterly Distribution Per Limited Partner Unit
|
|
Total Quarterly Distribution Per Limited Partner Unit, Annualized
|
|
Total Cash Distribution, including general partner interest and IDRs (in thousands)
|
|
Date of Distribution
|
March 31, 2017
|
|
$0.690
|
|
$2.76
|
|
$21,024
|
|
May 12, 2017
|
June 30, 2017
|
|
$0.705
|
|
$2.82
|
|
$21,783
|
|
August 11, 2017
|
September 30, 2017
|
|
$0.715
|
|
$2.86
|
|
$22,270
|
|
November 14, 2017
|
December 31, 2017
|
|
$0.725
|
|
$2.90
|
|
$22,777
|
|
February 12, 2018
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Cash Flow Data:
|
|
|
|
|
|
|
||||||
Cash flows provided by operating activities
|
|
$
|
87,703
|
|
|
$
|
100,707
|
|
|
$
|
68,024
|
|
Cash flows used in investing activities
|
|
(30,672
|
)
|
|
(72,692
|
)
|
|
(56,592
|
)
|
|||
Cash flows used in financing activities
|
|
(52,415
|
)
|
|
(27,956
|
)
|
|
(13,293
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
|
$
|
4,616
|
|
|
$
|
59
|
|
|
$
|
(1,861
|
)
|
|
|
Year Ended December 31,
|
||||||
|
|
2018 Forecast
|
|
2017 Actual
(2)
|
||||
Capital Spending:
|
|
|
|
|
||||
Regulatory
|
|
$
|
3,789
|
|
|
$
|
3,208
|
|
Maintenance
(1)
|
|
8,818
|
|
|
7,896
|
|
||
Discretionary
|
|
4,910
|
|
|
7,299
|
|
||
Total capital spending
|
|
$
|
17,517
|
|
|
$
|
18,403
|
|
(1)
|
Maintenance capital expenditures represent cash expenditures (including expenditures for the addition or improvement to, or the replacement of, our capital assets, and for the acquisition of existing, or the construction or development of new, capital assets) made to maintain our long-term operating income or operating capacity. Examples of maintenance capital expenditures are expenditures for the repair, refurbishment and replacement of pipelines and terminals, to maintain equipment reliability, integrity and safety and to address environmental laws and regulations. Delek has agreed to reimburse us with respect to certain assets it has transferred to us pursuant to the terms of the Omnibus Agreement (as defined in Note 4 to our consolidated financial statements).
|
(2)
|
Of the total
$18.4 million
spent in 2017, $9.0 million was related to growth projects.
|
|
|
<1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
>5 Years
|
|
Total
|
||||||||||
Long term debt and notes payable
|
|
$
|
—
|
|
|
$
|
179,900
|
|
|
$
|
—
|
|
|
250,000
|
|
|
$
|
429,900
|
|
|
Capital lease obligations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Interest
(1)
|
|
24,765
|
|
|
41,618
|
|
|
33,750
|
|
|
42,188
|
|
|
142,321
|
|
|||||
Operating lease commitments
(2)
|
|
2,482
|
|
|
1,029
|
|
|
466
|
|
|
9
|
|
|
3,986
|
|
|||||
Total
|
|
$
|
27,247
|
|
|
$
|
222,547
|
|
|
$
|
34,216
|
|
|
$
|
292,197
|
|
|
$
|
576,207
|
|
(1)
|
Includes expected interest payments on debt outstanding under our revolving credit facility in place at
December 31, 2017
and on the 2025 Notes. Floating interest rate debt is calculated using
December 31, 2017
rates.
|
(2)
|
Amounts reflect future estimated lease payments under operating leases having remaining non-cancelable terms in excess of one year as of
December 31, 2017
.
|
i.
|
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
|
ii.
|
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures recorded by us are being made only in accordance with authorizations of our management and Board of Directors; and
|
iii.
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
|
Name
|
Age
|
Position With Delek Logistics GP, LLC
|
Ezra Uzi Yemin
|
49
|
Chairman of the Board of Directors and Chief Executive Officer
|
Charles J. Brown, III
|
70
|
Director, Chairman of Conflicts Committee and Member of Audit and EHS Committees
|
Mark Baker Cox
|
59
|
Director
|
Francis C. D'Andrea
|
64
|
Director, Chairman of Audit Committee and Member of Conflicts and EHS Committees
|
Eric D. Gadd
|
62
|
Director, Chairman of EHS Committee and Member of Audit and Conflicts Committees
|
Assi Ginzburg
|
42
|
Director and Executive Vice President
|
Frederec Green
|
52
|
Director and Executive Vice President
|
Ron W. Haddock
|
77
|
Director
|
Reuven Spiegel
|
61
|
Director and Member of Audit, EHS and Conflicts Committees
|
Alan P. Moret
|
63
|
President
|
Kevin L. Kremke
|
44
|
Executive Vice President and Chief Financial Officer
|
Melissa M. Buhrig
|
42
|
Executive Vice President, General Counsel and Secretary
|
Daniel L. Gordon
|
40
|
Executive Vice President
|
Jared Paul Serff
|
50
|
Executive Vice President
|
Avigal Soreq
|
39
|
Executive Vice President
|
•
|
On April 17, 2017, Delek US Holdings, Inc. filed a Form 4 reporting the acquisition of 1,800 common units that occurred on April 12, 2017.
|
•
|
On November 15, 2017, Ms. Melissa M. Buhrig filed a Form 3 reporting that Ms. Buhrig became an executive officer on October 24, 2017.
|
•
|
On December 13, 2017, Mr. Frederec Green filed a Form 4 reporting the disposition of 1,367 common units that occurred on December 10, 2017 due to the fact that the vesting date fell over a weekend.
|
•
|
On December 13, 2017, Mr. Ezra Uzi Yemin filed a Form reporting the disposition of 3,348 common units that occurred on December 10, 2017 due to the fact that the vesting date fell over a weekend.
|
•
|
On December 14, 2017, Mr. Daniel L. Gordon filed a Form 4 reporting the disposition of 273 common units that occurred on December 10, 2017 due to the fact that the vesting date fell over a weekend.
|
•
|
On December 13, 2017, Mr. Assaf Ginzburg filed a Form 4 reporting the disposition of 673 common units that occurred on December 10, 2017 due to the fact that the vesting date fell over a weekend.
|
•
|
On February 14, 2018, Mr. Mark Cox filed a Form 5 reporting the disposition of 81 common units that occurred on June 10, 2015, 81 common units that occurred on June 10, 2016, 80 common units that occurred on June 10, 2016 and 814 common units that occurred on June 10, 2017.
|
•
|
On February 19, 2018, Mr. Francis D'Andrea filed a Form 4/A correcting certain information contained in a Form 4 filed by Mr. Francis D'Andrea reporting the acquisition of 2,018 common units that occurred on June 10, 2017.
|
•
|
to motivate and retain our general partner's key executives;
|
•
|
to align the long-term economic interests of our general partner's executives with those of our unitholders; and
|
•
|
to reward excellence and performance by our general partner's executives that increases the value of our units.
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(i)
|
(j)
|
Name and
Principal Position
(1)
|
Fiscal Year
|
Salary
($)
|
Bonus
($)
|
Unit Awards
($)
|
Option Awards
($)
|
All Other Compensation ($)
|
Total
($)
|
Ezra Uzi Yemin
Chief Executive Officer
|
2017
|
—
|
—
|
—
|
—
|
—
|
—
|
2016
|
—
|
—
|
—
|
—
|
—
|
—
|
|
2015
|
—
|
—
|
—
|
—
|
—
|
—
|
|
Assaf Ginzburg
Executive Vice President and Former Chief Financial Officer
|
2017
|
—
|
—
|
—
|
—
|
—
|
—
|
2016
|
—
|
—
|
—
|
—
|
—
|
—
|
|
2015
|
—
|
—
|
—
|
—
|
—
|
—
|
|
Kevin Kremke
Chief Financial Officer
|
2017
|
—
|
—
|
—
|
—
|
—
|
—
|
2016
|
—
|
—
|
—
|
—
|
—
|
—
|
|
2015
|
—
|
—
|
—
|
—
|
—
|
—
|
(1)
|
Because none of our executive officers received total compensation from us or our general partner in excess of $100,000 in
2017
, information is presented only for Messrs. Yemin, Ginzburg and Kremke.
|
|
Option Awards
|
Unit Awards
|
||||
Name
|
Number of Securities Underlying Unexercised Options Exercisable
|
Number of Securities Underlying Unexercised Options Unexercisable
|
Option Exercise Price
|
Option Expiration Date
|
Number of Units That Have Not Vested
|
Market Value of Units That Have Not Vested
|
Ezra Uzi Yemin
|
—
|
—
|
n/a
|
n/a
|
—
|
$—
|
Assaf Ginzburg
|
—
|
—
|
n/a
|
n/a
|
—
|
$—
|
Kevin Kremke
|
—
|
—
|
n/a
|
n/a
|
—
|
$—
|
|
Option Awards
|
Stock Awards
(1)
|
||
Name
|
Number of Shares Acquired on Exercise
|
Value Realized on Exercise
|
Number of Shares Acquired on Vesting
|
Value Realized on Vesting
|
Ezra Uzi Yemin
|
—
|
n/a
|
24,488
|
$758,516
|
Assaf Ginzburg
|
—
|
n/a
|
5,000
|
$154,875
|
Kevin Kremke
|
—
|
n/a
|
—
|
$—
|
(1)
|
Consists of the following:
|
Date
|
NEO
|
Phantom Units Vested
|
Fair Market Value Per Unit
|
Value Realized on Vesting
|
6/10/2017
|
Yemin
|
12,244
|
$32.20
|
$394,257
|
Ginzburg
|
2,500
|
$80,500
|
||
Kremke
|
—
|
$—
|
||
12/10/2017
|
Yemin
|
12,244
|
$29.75
|
$364,259
|
Ginzburg
|
2,500
|
$74,375
|
||
Kremke
|
|
$—
|
Name
|
Termination of Employment
|
Change-In-Control
(1)
|
Ezra Uzi Yemin
|
—
|
$—
|
Assaf Ginzburg
|
—
|
$—
|
Kevin Kremke
|
—
|
$—
|
Board of Directors Retainer (Per Year)
|
$50,000
|
||
Lead Director Fee (Per Year)
|
$10,000
|
||
Committee Retainers (Per Year):
|
Chairman
|
Others
|
|
Audit Committee
|
$10,000
|
$5,000
|
|
Conflicts Committee
|
$5,000
|
$2,500
|
|
EHS Committee
|
$5,000
|
$3,000
|
|
Target Value for Equity Awards (Per Year)
|
$65,000
|
Director Compensation
|
|||||
Name
(1)
|
Fees Earned or Paid in Cash ($)
(2)
|
Stock Awards ($)
(3)
|
Option Awards ($)
|
All Other Compensation ($)
|
Total ($)
|
Charles J. Brown, III
|
62,750
|
64,980
|
—
|
—
|
127,730
|
Mark Baker Cox
|
35,278
|
64,980
|
—
|
—
|
100,258
|
Francis C. D'Andrea
|
67,750
|
64,980
|
—
|
—
|
132,730
|
Eric D. Gadd
|
62,083
|
64,980
|
—
|
—
|
127,063
|
Ron W. Haddock
(4)
|
13,125
|
—
|
—
|
—
|
13,125
|
Reuven Spiegel
|
62,750
|
64,980
|
—
|
—
|
127,730
|
(1)
|
Because they are officers and employees of Delek or its subsidiaries, Messrs. Yemin, Ginzburg and Green did not receive any compensation for their service as directors in
2017
.
|
(2)
|
This column reports the amount of cash compensation earned in
2017
for Board and committee service and the Lead Director Fee.
|
(3)
|
Amounts in this column represent the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 for financial statement reporting purposes. Assumptions used in the calculation of this amount for the
2017
fiscal year are included in
Note 13
to our audited financial statements for the
2017
fiscal year included in this Annual Report on Form 10-K. The grant date fair value of $32.20 per unit is equal to the NYSE closing price of our common units as of the June 10,
2017
grant date. Messrs. Brown, Cox, D'Andrea, Gadd and Spiegel held 1,248, 0, 632, 1,498 and 1,248 outstanding phantom units, respectively, at
December 31, 2017
.
|
(4)
|
As of July 2017, Mr. Haddock joined the Board and began receiving compensation as a director at that time.
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
|
Name of Beneficial Owner
(1)
|
Amount, Nature and Percentage of Beneficial Ownership of Common Units
(2)
|
Amount, Nature and Percentage of Beneficial Ownership of Subordinated Units
(2)
|
Amount, Nature and Percentage of Beneficial Ownership of General Partner Units
(2)
|
Amount and Nature of Beneficial Ownership of Common Stock
(2)
|
|||||||
Delek Logistics Partners, LP
|
Delek US Holdings, Inc.
|
||||||||||
(#)
|
(%)
|
(#)
|
(%)
|
(#)
|
(%)
|
(#)
(3)
|
(%)
|
||||
Beneficial Owners of More Than 5% of Units:
|
|
|
|
|
|
|
|
|
|||
Delek US Holdings, Inc.
(4)
|
15,294,046
|
62.7
|
—
|
n/a
|
497,604
|
|
100.0
|
n/a
|
n/a
|
||
Advisory Research Inc.
(5)
|
1,643,562
|
6.7
|
—
|
n/a
|
—
|
n/a
|
n/a
|
n/a
|
|||
Directors, Director Nominees and NEOs:
|
|
|
|
|
|
|
|
|
|||
Ezra Uzi Yemin
(6)
|
261,570
|
|
*
|
—
|
n/a
|
—
|
n/a
|
368,367
|
*
|
||
Charles Brown
|
10,919
|
|
*
|
—
|
n/a
|
—
|
n/a
|
—
|
n/a
|
||
Mark Baker Cox
|
29,626
|
|
*
|
—
|
n/a
|
—
|
n/a
|
39,000
|
*
|
||
Francis C. D'Andrea
|
4,768
|
|
*
|
—
|
n/a
|
—
|
n/a
|
—
|
n/a
|
||
Eric Gadd
|
8,494
|
|
*
|
—
|
n/a
|
—
|
n/a
|
—
|
n/a
|
||
Assi Ginzburg
(7)
|
16,510
|
|
*
|
—
|
n/a
|
—
|
n/a
|
33,872
|
*
|
||
Frederec Green
(8)
|
68,552
|
|
*
|
—
|
n/a
|
—
|
n/a
|
78,421
|
|
*
|
|
Ron W. Haddock
|
—
|
|
*
|
—
|
n/a
|
—
|
n/a
|
—
|
n/a
|
||
Reuven Spiegel
|
6,494
|
|
*
|
—
|
n/a
|
—
|
n/a
|
—
|
n/a
|
||
Kevin Kremke
|
—
|
|
*
|
—
|
n/a
|
—
|
n/a
|
—
|
n/a
|
||
Melissa Buhrig
|
—
|
|
*
|
—
|
n/a
|
—
|
n/a
|
—
|
n/a
|
||
Alan P. Moret
|
—
|
|
*
|
—
|
n/a
|
—
|
n/a
|
—
|
n/a
|
||
Dan Gordon
|
2,181
|
|
*
|
—
|
n/a
|
—
|
n/a
|
15,498
|
*
|
||
All directors, all director nominees, all NEOs and all executive officers as a group (13 persons)
|
409,114
|
1.7
|
|
|
|
|
535,158
|
*
|
*
|
Less than 1% of our issued and outstanding common units of Delek Logistics Partners, LP or issued and outstanding shares of Delek US Holdings, Inc. Common Stock, as applicable.
|
(1)
|
Unless otherwise indicated, the address for all beneficial owners is 7102 Commerce Way, Brentwood, Tennessee 37027.
|
(2)
|
For purposes of this table, a person is deemed to have “beneficial ownership” of any securities when such person has the right to acquire them within 60 days after the Measurement Date. The percentage of our units beneficially owned is based on a total of
24,382,633
common units representing limited partner interests and
497,604
general partner units issued and outstanding on the Measurement Date. The percentage ownership of Delek US Holdings, Inc. Common Stock is based on a total of
83,919,132
shares issued and outstanding shares on the Measurement Date (excluding securities held by or for the account of the registrant or its subsidiaries). For purposes of computing the percentage of outstanding securities held by each person named above, any securities which such person has the right to acquire within 60 days after the Measurement Date are deemed to be outstanding but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person.
|
(3)
|
For non-qualified stock options (“NQSOs”) and restricted stock units (“RSUs”) under the Delek US Holdings, Inc. 2006 Long-Term Incentive Plan, or 2016 Long-Term Incentive Plan, we report shares equal to the number of NQSOs or RSUs that are vested or that will vest within 60 days of the Measurement Date. For stock appreciation rights (“SARs”) under the Delek US Holdings, Inc. 2006 Long-Term Incentive Plan, or 2016 Long-Term Incentive Plan, we report the shares that would be delivered upon exercise of SARs that are vested or that will vest within 60 days of the Measurement Date (which is calculated by multiplying the number of SARs by the difference between the $33.97 fair market value of Delek US Holdings, Inc. Common Stock on the Measurement Date and the exercise price divided by $33.97).
|
(4)
|
Subsidiaries of Delek US Holdings, Inc. hold the common units and general partner units. Lion Oil Company and Delek Marketing & Supply, LLC directly hold 12,611,465 and 2,682,581 common units, respectively. Delek Logistics GP, LLC directly holds all general partner units. Delek US Holdings, Inc. is the ultimate parent of each of these entities and may, therefore, be deemed to beneficially own the units held by each such entity. Delek US Holdings, Inc. files information with, or furnishes information to, the United States Securities and Exchange Commission (the "SEC") pursuant to the information requirements of the Securities Exchange Act of 1934, as amended.
|
(5)
|
According to a Schedule 13G/A filed with the SEC on February 13, 2017 by Advisory Research Inc. with an address of 180 North Stetson Avenue, Suite 5500, Chicago, Illinois 60601 and Piper Jaffray Companies with an address of 800 Nicollet Mall, Suite 800, Minneapolis, Minnesota 55402. The Schedule 13G/A reports that Advisory Research Inc. has sole voting power with respect to 1,639,937 of the reported units and sole dispositive power with respect to all of the reported units and Piper Jaffray Companies has shared voting power with respect to 1,639,937 of the reported units and shared dispositive power with respect to all of the reported units.
|
(6)
|
33,500 of our units and 106,802 shares of Delek US Holdings, Inc. Common Stock are held of record by Yemin Investments, L.P., a limited partnership of which Mr. Yemin is the sole general partner. Delek US Holdings, Inc. Common Stock includes 11,654 RSUs that will vest within 60 days of the Measurement Date and 21,261 performance-vesting RSUs for completed performance periods that will vest within 60 days of the Measurement Date.
|
(7)
|
Delek US Holdings, Inc. Common Stock includes 8,033 RSUs that will vest within 60 days of the Measurement Date.
|
(8)
|
Delek US Holdings, Inc. Common Stock includes 5,326 RSUs that will vest within 60 days of the Measurement Date.
|
Plan Category
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
|
Weighted-average exercise price of outstanding options, warrants and rights
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
|
|
(a)
|
(b)
|
(c)
|
Equity compensation plans approved by security holders
|
546,784
|
N/A
|
123,031
|
Equity compensation plans not approved by security holders
|
—
|
N/A
|
—
|
TOTAL
|
546,784
|
N/A
|
123,031
|
(a)
|
The amounts in column (a) of this table reflect only phantom units that have been granted under the LTIP. No Awards (as defined under the LTIP) have been made other than the phantom units, each of which represent rights to receive (upon vesting and payout) one common unit in the Partnership or an amount of cash equal to the fair market value of such unit. These phantom units vest over one- to five-year service periods from the date of grant.
|
(b)
|
Column (b) of this table is not applicable because phantom units do not have an exercise price.
|
(c)
|
The
LTIP was adopted by the Delek Logistics GP, LLC in connection with the closing of our Offering and provides for the making of certain awards, including common units, restricted units, phantom units, unit appreciation rights and distribution equivalent rights. For information about the LTIP, which did not require approval by our limited partners, refer to Item 11 of this Annual Report on Form 10-K.
|
•
|
Delek, directly or indirectly, paid us approximately
$2.1 million
pursuant to the Memphis terminalling agreement and
$1.2 million
for terminalling services at our Nashville, Tennessee terminal;
|
•
|
Delek paid us approximately
$9.3 million
pursuant to the East Texas Crude Logistics System pipeline and tankage agreement;
|
•
|
Delek paid us approximately
$20.4 million
pursuant to the East Texas marketing agreement;
|
•
|
Delek paid us approximately
$3.6 million
pursuant to the amended and restated services agreement for the Big Sandy terminal and pipeline;
|
•
|
Delek paid us approximately $20.3 million pursuant to the Tyler Terminal and Tank Assets Throughput and Tankage Agreement;
|
•
|
Delek, directly or indirectly, paid us approximately
$2.0 million
pursuant to the North Little Rock terminalling services agreement;
|
•
|
Delek, directly or indirectly, paid us approximately
$19.5 million
pursuant to the El Dorado Terminal and Tank Assets Throughput and Tankage Agreement;
|
•
|
Delek paid us approximately
$4.3 million
related to revenue earned on our Greenville-Mount Pleasant Assets;
|
•
|
Delek paid us approximately
$10.8 million
related to revenue earned on trucking services;
|
•
|
Delek paid us approximately
$6.1 million
related to the El Dorado Rail Offloading Racks; and
|
•
|
Delek paid us approximately $2.0 million related to the Tyler Crude Tank.
|
•
|
an agreement whereby Delek will not compete with us under certain circumstances;
|
•
|
our right of first offer to acquire certain of Delek's logistics assets, including certain terminals, storage facilities and other related assets located at the Tyler and El Dorado Refineries and, under specified circumstances, logistics and marketing assets that Delek may acquire or construct in the future;
|
•
|
Delek's right of first refusal to purchase our assets that serve its refineries;
|
•
|
our obligation to pay an annual fee to Delek, currently in the amount of $3.7 million, for Delek's provision of centralized corporate services, including executive management services of Delek employees who devote less than 50% of their time to our business, financial and administrative services, information technology services, legal services, health, safety and environmental services, human resource services, and insurance administration;
|
•
|
Delek's reimbursement to us for certain operating expenses and certain maintenance capital expenditures and Delek's indemnification of us for certain matters, including environmental, title and tax matters;
|
•
|
reimbursement to us for certain designated periods of time related to the date of acquisition of the relevant asset for any operating expenses in excess of certain thresholds per year that we incur for inspections, maintenance and repairs to any of the storage tanks contributed to us by Delek that are necessary to comply with the DOT pipeline integrity rules and certain API storage tank standards; and
|
•
|
reimbursement to us for certain designated periods of time related to the date of acquisition of the relevant asset for all non-discretionary maintenance capital expenditures, other than those required to comply with applicable environmental laws and regulations, in excess of certain thresholds for such 12-month period and per year that we make with respect to the assets contributed to us by Delek for which we have not been reimbursed as described above.
|
1.
|
Financial Statements. The accompanying Index to Financial Statements and Schedule on page F-1 of this Annual Report on Form 10-K is provided in response to this item.
|
2.
|
List of Financial Statement Schedules. All schedules are omitted because the required information is either not present, not present in material amounts or included within the Consolidated Financial Statements.
|
3.
|
Exhibits - See below.
|
Exhibit No.
|
|
Description
|
|
1.1
|
|
|
|
3.1
|
|
|
|
3.2(a)
|
|
|
|
3.2(b)
|
#
|
|
|
3.3
|
|
|
|
3.4
|
|
|
|
4.1
|
|
|
|
4.2
|
|
|
|
4.3
|
|
|
|
10.1
|
*
|
|
|
10.2
|
*
|
|
|
10.3
|
*
|
|
|
10.4
|
*#
|
|
|
10.5
|
*
|
|
|
10.6
|
++
|
|
|
10.7
|
|
|
|
10.8
|
|
|
10.9
|
|
|
|
10.10
|
|
|
|
10.11
|
*
|
|
|
10.12
|
|
|
|
10.13
|
|
|
|
10.14
|
|
|
|
10.15
|
|
|
|
10.16
|
*
|
|
|
10.17
|
*
|
|
|
10.18
|
|
|
|
10.19
|
|
|
|
10.20
|
|
|
|
10.21
|
*
|
|
|
10.22
|
*
|
|
|
10.23
|
*
|
|
|
10.24
|
|
|
|
10.25
|
|
|
10.26
|
|
|
|
10.27
|
|
|
|
10.28
|
|
|
|
10.29
|
|
|
|
10.30
|
|
|
|
10.31
|
++
|
|
|
10.32
|
++
|
|
|
21.1
|
#
|
|
|
23.1
|
#
|
|
|
24.1
|
#
|
|
|
31.1
|
#
|
|
|
31.2
|
#
|
|
|
32.1
|
##
|
|
|
32.2
|
##
|
|
|
101
|
^
|
|
The following materials from Delek Logistics Partners, LP's Annual Report on Form 10-K for the annual period ended December 31, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of December 31, 2017 and 2016; (ii) Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 2017, 2016 and 2015; (iii) Consolidated Statements of Changes in Partners’ Equity for the years ended December 31, 2017, 2016 and 2015; (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015; and (v) Notes to Consolidated Financial Statements.
|
|
|
|
|
*
|
|
|
Management contract or compensatory plan or arrangement.
|
#
|
|
|
Filed herewith.
|
##
|
|
|
Furnished herewith.
|
++
|
|
|
Confidential treatment has been requested and granted with respect to certain portions of this exhibit pursuant to Rule 24b-2 of the Securities Exchange Act of 1934. Omitted portions have been filed separately with the Securities and Exchange Commission.
|
^
|
|
|
Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files in Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
|
Audited Financial Statements:
|
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
4,675
|
|
|
$
|
59
|
|
Accounts receivable
|
|
23,013
|
|
|
19,202
|
|
||
Accounts receivable from related parties
|
|
1,124
|
|
|
2,834
|
|
||
Inventory
|
|
20,855
|
|
|
8,875
|
|
||
Other current assets
|
|
783
|
|
|
1,071
|
|
||
Total current assets
|
|
50,450
|
|
|
32,041
|
|
||
Property, plant and equipment:
|
|
|
|
|
||||
Property, plant and equipment
|
|
367,179
|
|
|
342,407
|
|
||
Less: accumulated depreciation
|
|
(112,111
|
)
|
|
(91,378
|
)
|
||
Property, plant and equipment, net
|
|
255,068
|
|
|
251,029
|
|
||
Equity method investments
|
|
106,465
|
|
|
101,080
|
|
||
Goodwill
|
|
12,203
|
|
|
12,203
|
|
||
Intangible assets, net
|
|
15,917
|
|
|
14,420
|
|
||
Other non-current assets
|
|
3,427
|
|
|
4,774
|
|
||
Total assets
|
|
$
|
443,530
|
|
|
$
|
415,547
|
|
LIABILITIES AND DEFICIT
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
19,147
|
|
|
$
|
10,853
|
|
Excise and other taxes payable
|
|
4,700
|
|
|
4,841
|
|
||
Tank inspection liabilities
|
|
902
|
|
|
1,013
|
|
||
Pipeline release liabilities
|
|
1,000
|
|
|
1,097
|
|
||
Accrued expenses and other current liabilities
|
|
6,033
|
|
|
2,925
|
|
||
Total current liabilities
|
|
31,782
|
|
|
20,729
|
|
||
Non-current liabilities:
|
|
|
|
|
||||
Long-term debt
|
|
422,649
|
|
|
392,600
|
|
||
Asset retirement obligations
|
|
4,064
|
|
|
3,772
|
|
||
Other non-current liabilities
|
|
14,260
|
|
|
11,730
|
|
||
Total non-current liabilities
|
|
440,973
|
|
|
408,102
|
|
||
Deficit:
|
|
|
|
|
||||
Common unitholders - public; 9,088,587 units issued and outstanding at December 31, 2017 (9,263,415 at December 31, 2016)
|
|
174,378
|
|
|
188,013
|
|
||
Common unitholders - Delek; 15,294,046 units issued and outstanding at December 31, 2017 (15,065,192 at December 31, 2016)
|
|
(197,206
|
)
|
|
(195,076
|
)
|
||
General partner - 497,604 units issued and outstanding at December 31, 2017 (496,502 at December 31, 2016)
|
|
(6,397
|
)
|
|
(6,221
|
)
|
||
Total deficit
|
|
(29,225
|
)
|
|
(13,284
|
)
|
||
Total liabilities and deficit
|
|
$
|
443,530
|
|
|
$
|
415,547
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Net sales:
|
|
|
|
|
|
|
||||||
Affiliate
(1)
|
|
$
|
156,280
|
|
|
$
|
149,564
|
|
|
$
|
152,564
|
|
Third party
|
|
381,795
|
|
|
298,495
|
|
|
437,105
|
|
|||
Net sales
|
|
538,075
|
|
|
448,059
|
|
|
589,669
|
|
|||
|
|
|
|
|
|
|
||||||
Operating costs and expenses:
|
|
|
|
|
|
|
||||||
Cost of goods sold
|
|
372,890
|
|
|
302,158
|
|
|
436,304
|
|
|||
Operating expenses
|
|
43,274
|
|
|
37,198
|
|
|
44,923
|
|
|||
General and administrative expenses
|
|
11,840
|
|
|
10,256
|
|
|
11,384
|
|
|||
Depreciation and amortization
|
|
21,914
|
|
|
20,813
|
|
|
19,692
|
|
|||
(Gain) loss on asset disposals
|
|
(20
|
)
|
|
(16
|
)
|
|
104
|
|
|||
Total operating costs and expenses
|
|
449,898
|
|
|
370,409
|
|
|
512,407
|
|
|||
Operating income
|
|
88,177
|
|
|
77,650
|
|
|
77,262
|
|
|||
Interest expense, net
|
|
23,944
|
|
|
13,587
|
|
|
10,658
|
|
|||
(Income) loss from equity method investments
|
|
(4,953
|
)
|
|
1,178
|
|
|
588
|
|
|||
Other income, net
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|||
Total non-operating expenses
|
|
18,990
|
|
|
14,765
|
|
|
11,246
|
|
|||
Income before income tax (benefit) expense
|
|
69,187
|
|
|
62,885
|
|
|
66,016
|
|
|||
Income tax (benefit) expense
|
|
(222
|
)
|
|
81
|
|
|
(195
|
)
|
|||
Net income
|
|
69,409
|
|
|
62,804
|
|
|
66,211
|
|
|||
Less: loss attributable to Predecessors
|
|
—
|
|
|
—
|
|
|
(637
|
)
|
|||
Net income attributable to partners
|
|
69,409
|
|
|
$
|
62,804
|
|
|
$
|
66,848
|
|
|
Comprehensive income attributable to partners
|
|
$
|
69,409
|
|
|
$
|
62,804
|
|
|
$
|
66,848
|
|
|
|
|
|
|
|
|
||||||
Less: General partner's interest in net income, including incentive distribution rights
|
|
18,429
|
|
|
12,193
|
|
|
5,163
|
|
|||
Limited partners' interest in net income
|
|
$
|
50,980
|
|
|
$
|
50,611
|
|
|
$
|
61,685
|
|
|
|
|
|
|
|
|
||||||
Net income per limited partner unit
(2)
:
|
|
|
|
|
|
|
||||||
Common units - (basic)
|
|
$
|
2.09
|
|
|
$
|
2.08
|
|
|
$
|
2.55
|
|
Common units - (diluted)
|
|
$
|
2.09
|
|
|
$
|
2.07
|
|
|
$
|
2.52
|
|
Subordinated units - Delek (basic and diluted)
|
|
$
|
—
|
|
|
$
|
2.19
|
|
|
$
|
2.54
|
|
|
|
|
|
|
|
|
||||||
Weighted average limited partner units outstanding
(2)
:
|
|
|
|
|
|
|
||||||
Common units - (basic)
|
|
24,348,063
|
|
|
22,490,264
|
|
|
12,237,154
|
|
|||
Common units - (diluted)
|
|
24,376,972
|
|
|
22,558,717
|
|
|
12,356,914
|
|
|||
Subordinated units - Delek (basic and diluted)
|
|
—
|
|
|
1,803,167
|
|
|
11,999,258
|
|
|||
|
|
|
|
|
|
|
||||||
Cash distributions per limited partner unit
|
|
$
|
2.835
|
|
|
$
|
2.575
|
|
|
$
|
2.240
|
|
|
|
|
|
Partnership
|
|
|
||||||||||||||||||
|
|
Equity of Predecessors
|
|
Common - Public
|
|
Common - Delek
|
|
Subordinated - Delek
|
|
General Partner - Delek
|
|
Total
|
||||||||||||
|
|
(In thousands)
|
||||||||||||||||||||||
Balance at December 31, 2014
|
$
|
19,726
|
|
|
$
|
194,737
|
|
|
$
|
(241,112
|
)
|
|
$
|
73,515
|
|
|
$
|
(7,085
|
)
|
|
$
|
39,781
|
|
|
Sponsor contributions of equity to the Predecessor
|
115
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
115
|
|
|||||||
Loss attributable to Predecessor
|
(637
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(637
|
)
|
|||||||
Allocation of net assets acquired by the unitholders
|
(19,204
|
)
|
|
—
|
|
|
18,820
|
|
|
—
|
|
|
384
|
|
|
—
|
|
|||||||
Cash distributions
(1)
|
—
|
|
|
(20,755
|
)
|
|
(66,698
|
)
|
|
(25,919
|
)
|
|
(5,156
|
)
|
|
(118,528
|
)
|
|||||||
Sponsorship contribution of fixed assets
|
—
|
|
|
—
|
|
|
573
|
|
|
—
|
|
|
11
|
|
|
584
|
|
|||||||
Net income attributable to partners
|
—
|
|
|
24,039
|
|
|
7,121
|
|
|
30,525
|
|
|
5,163
|
|
|
66,848
|
|
|||||||
Unit-based compensation
|
—
|
|
|
740
|
|
|
219
|
|
|
940
|
|
|
(1,493
|
)
|
|
406
|
|
|||||||
Other
|
—
|
|
|
(360
|
)
|
|
249
|
|
|
(460
|
)
|
|
984
|
|
|
413
|
|
|||||||
Balance at December 31, 2015
|
—
|
|
|
198,401
|
|
|
(280,828
|
)
|
|
78,601
|
|
|
(7,192
|
)
|
|
(11,018
|
)
|
|||||||
Sponsor contributions of equity to the Predecessor
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Loss attributable to Predecessor
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Allocation of net assets acquired by the unitholders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Cash distributions
(2)
|
—
|
|
|
(23,847
|
)
|
|
(25,271
|
)
|
|
(11,503
|
)
|
|
(10,244
|
)
|
|
(70,865
|
)
|
|||||||
Sponsorship contribution of fixed assets
|
—
|
|
|
—
|
|
|
5,063
|
|
|
—
|
|
|
104
|
|
|
5,167
|
|
|||||||
Net income attributable to partners
|
—
|
|
|
19,667
|
|
|
27,002
|
|
|
3,942
|
|
|
12,193
|
|
|
62,804
|
|
|||||||
Unit-based compensation
|
—
|
|
|
664
|
|
|
1,046
|
|
|
—
|
|
|
(1,111
|
)
|
|
599
|
|
|||||||
Subordinated unit conversion
|
—
|
|
|
—
|
|
|
71,040
|
|
|
(71,040
|
)
|
|
—
|
|
|
—
|
|
|||||||
Delek unit repurchases from public
|
—
|
|
|
(6,872
|
)
|
|
6,872
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29
|
|
|
29
|
|
|||||||
Balance at December 31, 2016
|
—
|
|
|
188,013
|
|
|
(195,076
|
)
|
|
—
|
|
|
(6,221
|
)
|
|
(13,284
|
)
|
|||||||
Cash distributions
(3)
|
—
|
|
|
(25,978
|
)
|
|
(42,490
|
)
|
|
—
|
|
|
(17,691
|
)
|
|
(86,159
|
)
|
|||||||
Sponsor contribution of fixed assets
|
—
|
|
|
—
|
|
|
65
|
|
|
—
|
|
|
2
|
|
|
67
|
|
|||||||
Net income attributable to partners
|
—
|
|
|
19,015
|
|
|
31,965
|
|
|
—
|
|
|
18,429
|
|
|
69,409
|
|
|||||||
Unit-based compensation
|
—
|
|
|
619
|
|
|
1,039
|
|
|
—
|
|
|
(937
|
)
|
|
721
|
|
|||||||
Delek unit repurchases from public
|
—
|
|
|
(7,291
|
)
|
|
7,291
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|
21
|
|
|||||||
Balance at December 31, 2017
|
$
|
—
|
|
|
$
|
174,378
|
|
|
$
|
(197,206
|
)
|
|
$
|
—
|
|
|
$
|
(6,397
|
)
|
|
$
|
(29,225
|
)
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
69,409
|
|
|
$
|
62,804
|
|
|
$
|
66,211
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Depreciation and amortization
|
|
21,914
|
|
|
20,813
|
|
|
19,692
|
|
|||
Amortization of deferred revenue
|
|
(1,234
|
)
|
|
(1,085
|
)
|
|
(596
|
)
|
|||
Amortization of deferred financing costs and debt discount
|
|
2,048
|
|
|
1,460
|
|
|
1,460
|
|
|||
Accretion of asset retirement obligations
|
|
292
|
|
|
266
|
|
|
251
|
|
|||
Loss (gain) on asset disposals
|
|
(20
|
)
|
|
(16
|
)
|
|
104
|
|
|||
Deferred income taxes
|
|
(111
|
)
|
|
(173
|
)
|
|
14
|
|
|||
(Income) loss from equity method investments
|
|
(4,953
|
)
|
|
1,178
|
|
|
588
|
|
|||
Dividends from equity method investments
|
|
3,099
|
|
|
—
|
|
|
—
|
|
|||
Unit-based compensation expense
|
|
721
|
|
|
599
|
|
|
406
|
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
|
||||||
Accounts receivable
|
|
(3,811
|
)
|
|
15,847
|
|
|
(7,197
|
)
|
|||
Inventories and other current assets
|
|
(11,692
|
)
|
|
2,045
|
|
|
(907
|
)
|
|||
Accounts payable and other current liabilities
|
|
10,859
|
|
|
3,551
|
|
|
(13,734
|
)
|
|||
Accounts receivable/payable to related parties
|
|
1,682
|
|
|
(6,983
|
)
|
|
1,737
|
|
|||
Non-current assets and liabilities, net
|
|
(500
|
)
|
|
401
|
|
|
(5
|
)
|
|||
Net cash provided by operating activities
|
|
87,703
|
|
|
100,707
|
|
|
68,024
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
|
||||||
Asset acquisitions
|
|
(9,003
|
)
|
|
—
|
|
|
(400
|
)
|
|||
Purchases of property, plant and equipment
|
|
(18,184
|
)
|
|
(11,287
|
)
|
|
(19,956
|
)
|
|||
Proceeds from sales of property, plant and equipment
|
|
46
|
|
|
175
|
|
|
1,198
|
|
|||
Equity method investments
|
|
(3,531
|
)
|
|
(61,580
|
)
|
|
(37,434
|
)
|
|||
Net cash used in investing activities
|
|
(30,672
|
)
|
|
(72,692
|
)
|
|
(56,592
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
|
||||||
Proceeds from issuance of additional units to maintain 2% General Partner interest
|
|
21
|
|
|
29
|
|
|
50
|
|
|||
Distributions to general partner
|
|
(17,691
|
)
|
|
(10,244
|
)
|
|
(3,918
|
)
|
|||
Distributions to common unitholders - public
|
|
(25,978
|
)
|
|
(23,847
|
)
|
|
(20,755
|
)
|
|||
Distributions to common unitholders - Delek
|
|
(42,490
|
)
|
|
(25,271
|
)
|
|
(6,046
|
)
|
|||
Distributions to subordinated unitholders - Delek
|
|
—
|
|
|
(11,503
|
)
|
|
(25,919
|
)
|
|||
Distributions to Delek for acquisitions
|
|
—
|
|
|
—
|
|
|
(61,890
|
)
|
|||
Proceeds from revolving credit facility
|
|
277,100
|
|
|
314,750
|
|
|
396,400
|
|
|||
Payments of revolving credit facility
|
|
(489,800
|
)
|
|
(273,750
|
)
|
|
(296,550
|
)
|
|||
Proceeds from issuance of senior notes
|
|
248,112
|
|
|
—
|
|
|
—
|
|
|||
Deferred financing costs paid
|
|
(5,951
|
)
|
|
—
|
|
|
—
|
|
|||
Predecessor division equity contribution
|
|
—
|
|
|
—
|
|
|
115
|
|
|||
Reimbursement of capital expenditures by Delek
|
|
4,262
|
|
|
1,880
|
|
|
5,220
|
|
|||
Net cash used in financing activities
|
|
(52,415
|
)
|
|
(27,956
|
)
|
|
(13,293
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
|
4,616
|
|
|
59
|
|
|
(1,861
|
)
|
|||
Cash and cash equivalents at the beginning of the period
|
|
59
|
|
|
—
|
|
|
1,861
|
|
|||
Cash and cash equivalents at the end of the period
|
|
$
|
4,675
|
|
|
$
|
59
|
|
|
$
|
—
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
||||||
Cash paid during the period for:
|
|
|
|
|
|
|
||||||
Interest
|
|
$
|
19,441
|
|
|
$
|
12,206
|
|
|
$
|
9,009
|
|
Income taxes
|
|
$
|
60
|
|
|
$
|
224
|
|
|
$
|
4
|
|
Non-cash investing activities:
|
|
|
|
|
|
|
|
|
||||
Equity method investments
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,832
|
|
Increase in accrued capital expenditures
|
|
$
|
194
|
|
|
$
|
480
|
|
|
$
|
2,471
|
|
Non-cash financing activities:
|
|
|
|
|
|
|
||||||
Sponsor contribution of fixed assets
|
|
$
|
67
|
|
|
$
|
5,167
|
|
|
$
|
584
|
|
•
|
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; and
|
•
|
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.
|
Property, plant and equipment
|
|
$
|
6,443
|
|
Intangible assets
(1)
|
|
2,560
|
|
|
Total
|
|
$
|
9,003
|
|
Asset/Operation
|
|
Initiation Date
|
|
Initial/Maximum Term (years)
(1)
|
Service
|
|
Minimum Throughput Commitment (bpd)
|
|
Fee (/bbl)
|
||
Lion Pipeline System and SALA Gathering System:
|
|
|
|
|
|
|
|
|
|
||
Crude Oil Pipelines (non-gathered)
|
|
November 2012
|
|
5 / 15
|
Crude oil and refined products transportation
|
|
46,000
(2)
|
|
$ 0 .95
(3)
|
|
|
Refined Products Pipelines
|
|
November 2012
|
|
5 / 15
|
|
|
40,000
|
|
$
|
0.11
|
|
SALA Gathering System
|
|
November 2012
|
|
5 / 15
|
Crude oil gathering
|
|
14,000
|
|
$ 2.55
(3)
|
|
|
East Texas Crude Logistics System:
|
|
|
|
|
|
|
|
|
|
||
Crude Oil Pipelines
|
|
November 2012
|
|
5 / 15
|
Crude oil transportation and storage
|
|
35,000
|
|
$ 0.45
(4)
|
|
|
Storage
|
|
November 2012
|
|
5 / 15
|
|
|
N/A
|
|
$ 278,923/month
|
||
East Texas Marketing
|
|
November 2012
|
|
10
(5)
|
Marketing products for Tyler Refinery
|
|
50,000
|
|
$ 0.777
(5)
|
|
|
Big Sandy Terminal:
(6)
|
|
|
|
|
|
|
|
|
|
||
Refined Products Transportation
|
|
November 2012
|
|
5 / 15
|
Refined products transportation, dedicated terminalling services and storage for the Tyler Refinery
|
|
5,000
|
|
$
|
0.56
|
|
Terminalling
|
|
November 2012
|
|
5 / 15
|
|
|
5,000
|
|
$
|
0.56
|
|
Storage
|
|
November 2012
|
|
5 / 15
|
|
|
N/A
|
|
$ 55,735/month
|
||
Tyler Throughput and Tankage:
|
|
|
|
|
|
|
|
|
|
||
Refined Products Throughput
|
|
July 2013
|
|
8 / 16
|
Dedicated Terminalling and storage
|
|
50,000
|
|
$
|
0.36
|
|
Storage
|
|
July 2013
|
|
8 / 16
|
|
|
N/A
|
|
$ 832,530/month
|
||
Memphis Pipeline
|
|
October 2013
|
|
5
|
Refined Products Transportation
|
|
10,959
|
|
$
|
1.35
|
|
El Dorado Throughput and Tankage:
|
|
|
|
|
|
|
|
|
|
||
Refined Products Throughput
|
|
February 2014
|
|
8 / 16
|
Dedicated terminalling and storage
|
|
11,000
|
|
$
|
0.51
|
|
Storage
|
|
February 2014
|
|
8 / 16
|
|
|
N/A
|
|
$1,319,135/month
|
||
El Dorado Assets Throughput:
|
|
|
|
|
|
|
|
|
|
||
Light Crude Throughput
|
|
March 2015
|
|
9/15
|
Dedicated Offloading Services
|
|
N/A
(7)
|
|
$ 1.11
|
||
Heavy Crude Throughput
|
|
March 2015
|
|
9/15
|
Dedicated Offloading Services
|
|
N/A
(7)
|
|
$ 2.28
|
(1)
|
Maximum term gives effect to the extension of the commercial agreement pursuant to the terms thereof.
|
(2)
|
Excludes volumes gathered on the SALA Gathering System.
|
(3)
|
Volumes gathered on the SALA Gathering System will not be subject to an additional fee for transportation on our Lion Pipeline System to the El Dorado Refinery.
|
(4)
|
For any volumes in excess of
50,000
bpd, the throughput fee will be
$0.670
/bbl.
|
(5)
|
For any volumes in excess of
50,000
bpd, the throughput fee will be
$0.738
/bbl. Following the primary term, the marketing agreement automatically renews for successive one-year terms, unless either party provides notice of non-renewal 10 months prior to the expiration of the then-current term. The initial primary term for the marketing agreement has been extended through 2026.
|
(6)
|
On July 19, 2013, we acquired the Hopewell Pipeline in order to effectively connect it with the Big Sandy Pipeline and thereby return the Big Sandy Terminal to operation. In connection with the acquisition, on July 25, 2013, we and Delek entered into the Amended and Restated Services Agreement (Big Sandy Terminal and Pipeline), which amended and restated the terminalling services agreement for the Big Sandy Terminal originally entered into in November 2012.
|
(7)
|
The throughput agreement provides for a minimum throughput fee of
$1.5 million
per quarter for throughput of a combination of light and heavy crude.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Revenues
|
|
$
|
156,280
|
|
|
$
|
149,564
|
|
|
$
|
152,564
|
|
Cost of Goods Sold
|
|
$
|
54,982
|
|
|
$
|
32,514
|
|
|
$
|
105,461
|
|
Operating and maintenance expenses
(1)
|
|
$
|
29,483
|
|
|
$
|
27,668
|
|
|
$
|
31,636
|
|
General and administrative expenses
(2)
|
|
$
|
7,492
|
|
|
$
|
6,254
|
|
|
$
|
6,356
|
|
(1)
|
Operating and maintenance expenses include costs allocated to our Predecessors for operating support provided by Delek, including certain labor related costs, property and liability insurance costs and certain other operating expenses. Costs allocated to our Predecessors by Delek were
$0.2 million
for the year ended
December 31, 2015
.
|
(2)
|
No general and administrative expenses were allocated to our Predecessors by Delek for the year ended
December 31, 2015
.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Net income attributable to partners
|
|
$
|
69,409
|
|
|
$
|
62,804
|
|
|
$
|
66,848
|
|
Less: General partner's distribution (including IDRs)
(1)
|
|
18,797
|
|
|
12,437
|
|
|
5,013
|
|
|||
Less: Limited partners' distribution
|
|
69,057
|
|
|
58,158
|
|
|
27,439
|
|
|||
Less: Subordinated partner's distribution
|
|
—
|
|
|
4,424
|
|
|
26,878
|
|
|||
(Distributions) earnings excess
|
|
$
|
(18,445
|
)
|
|
$
|
(12,215
|
)
|
|
$
|
7,518
|
|
|
|
|
|
|
|
|
||||||
General partner's earnings:
|
|
|
|
|
|
|
||||||
Distributions (including IDRs)
(1)
|
|
$
|
18,797
|
|
|
$
|
12,437
|
|
|
$
|
5,013
|
|
Allocation of (distributions) earnings excess
|
|
(368
|
)
|
|
(244
|
)
|
|
150
|
|
|||
Total general partner's earnings
|
|
$
|
18,429
|
|
|
$
|
12,193
|
|
|
$
|
5,163
|
|
|
|
|
|
|
|
|
||||||
Limited partners' earnings on common units:
|
|
|
|
|
|
|
||||||
Distributions
|
|
$
|
69,057
|
|
|
$
|
58,158
|
|
|
$
|
27,439
|
|
Allocation of (distributions) earnings excess
|
|
(18,077
|
)
|
|
(11,489
|
)
|
|
3,721
|
|
|||
Total limited partners' earnings on common units
|
|
$
|
50,980
|
|
|
$
|
46,669
|
|
|
$
|
31,160
|
|
|
|
|
|
|
|
|
||||||
Limited partners' earnings on subordinated units:
|
|
|
|
|
|
|
||||||
Distributions
|
|
$
|
—
|
|
|
$
|
4,424
|
|
|
$
|
26,878
|
|
Allocation of (distributions) earnings excess
|
|
—
|
|
|
(482
|
)
|
|
3,647
|
|
|||
Total limited partner's earnings on subordinated units
|
|
$
|
—
|
|
|
$
|
3,942
|
|
|
$
|
30,525
|
|
|
|
|
|
|
|
|
||||||
Weighted average limited partner units outstanding
(2)
:
|
|
|
|
|
|
|
||||||
Common units - (basic)
|
|
24,348,063
|
|
|
22,490,264
|
|
|
12,237,154
|
|
|||
Common units - (diluted)
|
|
24,376,972
|
|
|
22,558,717
|
|
|
12,356,914
|
|
|||
Subordinated units - Delek (basic and diluted)
(3)
|
|
—
|
|
|
1,803,167
|
|
|
11,999,258
|
|
|||
|
|
|
|
|
|
|
||||||
Net income per limited partner unit
(2)
:
|
|
|
|
|
|
|
||||||
Common - (basic)
|
|
$
|
2.09
|
|
|
$
|
2.08
|
|
|
$
|
2.55
|
|
Common - (diluted)
(4)
|
|
$
|
2.09
|
|
|
$
|
2.07
|
|
|
$
|
2.52
|
|
Subordinated - (basic and diluted)
|
|
$
|
—
|
|
|
$
|
2.19
|
|
|
$
|
2.54
|
|
(1)
|
General partner distributions (including IDRs) consist of the
2%
general partner interest and IDRs, which represent the right of the general partner to receive increasing percentages of quarterly distributions of available cash from operating surplus in excess of
$0.43125
per unit per quarter. See
Note 12
for further discussion related to IDRs.
|
(2)
|
We base our calculation of net income per unit on the weighted-average number of common and subordinated limited partner units outstanding during the period. The weighted-average number of common and subordinated units reflects the conversion of the subordinated units to common units on February 25, 2016.
|
(3)
|
On February 25, 2016, all of the Partnership's
11,999,258
outstanding subordinated units converted into common units and began participating pro rata with the other common units in distributions of available cash. Distributions and the Partnership's net income were allocated to the subordinated units through February 24, 2016.
|
(4)
|
There were
no
outstanding common unit equivalents excluded from the diluted earnings per unit calculation during the year ended
December 31, 2017
. Outstanding common unit equivalents totaling
4,240
and
6,200
were excluded from the diluted earnings per
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
||||
Land and land improvements
|
|
$
|
4,440
|
|
|
$
|
4,435
|
|
Building and building improvements
|
|
2,804
|
|
|
2,236
|
|
||
Pipelines, tanks and terminals
|
|
314,251
|
|
|
305,302
|
|
||
Asset retirement obligation assets
|
|
2,073
|
|
|
2,073
|
|
||
Other equipment
|
|
14,650
|
|
|
12,925
|
|
||
Construction in process
|
|
28,961
|
|
|
15,436
|
|
||
|
|
367,179
|
|
|
342,407
|
|
||
Less: accumulated depreciation
|
|
(112,111
|
)
|
|
(91,378
|
)
|
||
|
|
$
|
255,068
|
|
|
$
|
251,029
|
|
|
|
As of and For the Year Ended December 31, 2017
|
||||||||||
|
|
Pipelines and Transportation
|
|
Wholesale Marketing and Terminalling
|
|
Consolidated
|
||||||
Property, plant and equipment
|
|
$
|
300,134
|
|
|
$
|
67,045
|
|
|
$
|
367,179
|
|
Less: accumulated depreciation
|
|
(84,435
|
)
|
|
(27,676
|
)
|
|
(112,111
|
)
|
|||
Property, plant and equipment, net
|
|
$
|
215,699
|
|
|
$
|
39,369
|
|
|
$
|
255,068
|
|
Depreciation expense
|
|
$
|
17,268
|
|
|
$
|
3,583
|
|
|
$
|
20,851
|
|
|
|
As of and For the Year Ended December 31, 2016
|
||||||||||
|
|
Pipelines and Transportation
|
|
Wholesale Marketing and Terminalling
|
|
Consolidated
|
||||||
Property, plant and equipment
|
|
$
|
279,155
|
|
|
$
|
63,252
|
|
|
$
|
342,407
|
|
Less: Accumulated depreciation
|
|
(67,032
|
)
|
|
(24,346
|
)
|
|
(91,378
|
)
|
|||
Property, plant and equipment, net
|
|
$
|
212,123
|
|
|
$
|
38,906
|
|
|
$
|
251,029
|
|
Depreciation expense
|
|
$
|
16,133
|
|
|
$
|
3,617
|
|
|
$
|
19,750
|
|
|
|
|
|
|
|
|
|
|
Useful
|
|
|
|
Accumulated
|
|
|
||||||
As of December 31, 2017
|
|
Life
|
|
Gross
|
|
Amortization
|
|
Net
|
||||||
Intangible assets subject to amortization:
|
|
|
|
|
|
|
|
|
||||||
Supply contract
|
|
11.5
|
|
$
|
12,227
|
|
|
$
|
(12,138
|
)
|
|
$
|
89
|
|
Intangible assets not subject to amortization:
|
|
|
|
|
|
|
|
|
||||||
Rights-of-way assets
|
|
Indefinite
|
|
15,828
|
|
|
|
|
15,828
|
|
||||
Total
|
|
|
|
$
|
28,055
|
|
|
$
|
(12,138
|
)
|
|
$
|
15,917
|
|
|
|
Useful
|
|
|
|
Accumulated
|
|
|
||||||
As of December 31, 2016
|
|
Life
|
|
Gross
|
|
Amortization
|
|
Net
|
||||||
Intangible assets subject to amortization:
|
|
|
|
|
|
|
|
|
||||||
Supply contract
|
|
11.5
|
|
$
|
12,227
|
|
|
$
|
(11,075
|
)
|
|
$
|
1,152
|
|
Intangible assets not subject to amortization:
|
|
|
|
|
|
|
|
|
||||||
Rights-of-way assets
|
|
Indefinite
|
|
13,268
|
|
|
|
|
13,268
|
|
||||
Total
|
|
|
|
$
|
25,495
|
|
|
$
|
(11,075
|
)
|
|
$
|
14,420
|
|
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
Thereafter
|
|
Total
|
||||||||||||||
Second Amended and Restated Credit Agreement
|
|
$
|
—
|
|
|
$
|
179,900
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
179,900
|
|
2025 Notes
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
250,000
|
|
|
$
|
250,000
|
|
|
|
Common - Public
|
|
Common - Delek
|
|
Subordinated
|
|
General Partner
|
|
Total
|
|||||
Balance at December 31, 2014
|
|
9,417,189
|
|
|
2,799,258
|
|
|
11,999,258
|
|
|
494,197
|
|
|
24,709,902
|
|
GP units issued to maintain 2% interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,248
|
|
|
1,248
|
|
Unit-based compensation awards
(1)
|
|
61,084
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
61,084
|
|
Balance at December 31, 2015
|
|
9,478,273
|
|
|
2,799,258
|
|
|
11,999,258
|
|
|
495,445
|
|
|
24,772,234
|
|
GP units issued to maintain 2% interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,057
|
|
|
1,057
|
|
Unit-based compensation awards
(1)
|
|
51,818
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
51,818
|
|
Delek unit repurchases from public
|
|
(266,676
|
)
|
|
266,676
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Subordinated unit conversion
|
|
—
|
|
|
11,999,258
|
|
|
(11,999,258
|
)
|
|
—
|
|
|
—
|
|
Balance at December 31, 2016
|
|
9,263,415
|
|
|
15,065,192
|
|
|
—
|
|
|
496,502
|
|
|
24,825,109
|
|
GP units issued to maintain 2% interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,102
|
|
|
1,102
|
|
Unit-based compensation awards
|
|
54,026
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
54,026
|
|
Delek unit repurchases from public
|
|
(228,854
|
)
|
|
228,854
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Balance at December 31, 2017
|
|
9,088,587
|
|
|
15,294,046
|
|
|
—
|
|
|
497,604
|
|
|
24,880,237
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Net income attributable to partners
|
|
$
|
69,409
|
|
|
$
|
62,804
|
|
|
$
|
66,848
|
|
Less: General partner's IDRs
|
|
(17,389
|
)
|
|
(11,160
|
)
|
|
(3,904
|
)
|
|||
Net income available to partners
|
|
$
|
52,020
|
|
|
$
|
51,644
|
|
|
$
|
62,944
|
|
General partner's ownership interest
|
|
2.0
|
%
|
|
2.0
|
%
|
|
2.0
|
%
|
|||
General partner's allocated interest in net income
|
|
1,040
|
|
|
1,033
|
|
|
1,259
|
|
|||
General partner's IDRs
|
|
17,389
|
|
|
11,160
|
|
|
3,904
|
|
|||
Total general partner's interest in net income
|
|
$
|
18,429
|
|
|
$
|
12,193
|
|
|
$
|
5,163
|
|
|
|
|
Target Quarterly Distribution per Unit
|
|
Marginal Percentage Interest in Distributions
|
||||||
|
|
|
Target Amount
|
|
Unitholders
|
|
General Partner
|
||||
Minimum Quarterly Distribution
|
|
|
$
|
0.37500
|
|
|
98.0
|
%
|
|
2.0
|
%
|
First Target Distribution
|
|
above
|
$
|
0.37500
|
|
|
98.0
|
%
|
|
2.0
|
%
|
|
|
up to
|
$
|
0.43125
|
|
|
|
|
|
||
Second Target Distribution
|
|
above
|
$
|
0.43125
|
|
|
85.0
|
%
|
|
15.0
|
%
|
|
|
up to
|
$
|
0.46875
|
|
|
|
|
|
||
Third Target Distribution
|
|
above
|
$
|
0.46875
|
|
|
75.0
|
%
|
|
25.0
|
%
|
|
|
up to
|
$
|
0.56250
|
|
|
|
|
|
||
Thereafter
|
|
thereafter
|
$
|
0.56250
|
|
|
50.0
|
%
|
|
50.0
|
%
|
Quarter Ended
|
|
Total Quarterly Distribution Per Limited Partner Unit
|
|
Total Quarterly Distribution Per Limited Partner Unit, Annualized
|
|
Total Cash Distribution, including general partner interest and IDRs (in thousands)
|
|
Date of Distribution
|
|
Unitholders Record Date
|
||||||
December 31, 2015
|
|
$
|
0.590
|
|
|
$
|
2.36
|
|
|
$
|
16,124
|
|
|
February 12, 2016
|
|
February 5, 2016
|
March 31, 2016
|
|
$
|
0.610
|
|
|
$
|
2.44
|
|
|
$
|
17,095
|
|
|
May 13, 2016
|
|
May 5, 2016
|
June 30, 2016
|
|
$
|
0.630
|
|
|
$
|
2.52
|
|
|
$
|
18,085
|
|
|
August 12, 2016
|
|
August 5, 2016
|
September 30, 2016
|
|
$
|
0.655
|
|
|
$
|
2.62
|
|
|
$
|
19,302
|
|
|
November 14, 2016
|
|
November 7, 2016
|
December 31, 2016
|
|
$
|
0.680
|
|
|
$
|
2.72
|
|
|
$
|
20,537
|
|
|
February 14, 2017
|
|
February 3, 2017
|
March 31, 2017
|
|
$
|
0.690
|
|
|
$
|
2.76
|
|
|
$
|
21,024
|
|
|
May 12, 2017
|
|
May 5, 2017
|
June 30, 2017
|
|
$
|
0.705
|
|
|
$
|
2.82
|
|
|
$
|
21,783
|
|
|
August 11, 2017
|
|
August 4, 2017
|
September 30, 2017
|
|
$
|
0.715
|
|
|
$
|
2.86
|
|
|
$
|
22,270
|
|
|
November 14, 2017
|
|
November 7, 2017
|
December 31, 2017
|
|
$
|
0.725
|
|
|
$
|
2.90
|
|
|
$
|
22,777
|
|
|
February 12, 2018
|
|
February 2, 2018
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
General partner's distributions:
|
|
|
|
|
|
|
||||||
General partner's distributions
|
|
$
|
1,408
|
|
|
$
|
1,277
|
|
|
$
|
1,109
|
|
General partner's IDRs
|
|
17,389
|
|
|
11,160
|
|
|
3,904
|
|
|||
Total general partner's distributions
|
|
18,797
|
|
|
12,437
|
|
|
5,013
|
|
|||
|
|
|
|
|
|
|
||||||
Limited partners' distributions:
|
|
|
|
|
|
|
||||||
Common
|
|
69,057
|
|
|
58,158
|
|
|
27,439
|
|
|||
Subordinated
|
|
—
|
|
|
4,424
|
|
|
26,878
|
|
|||
Total limited partners' distributions
|
|
69,057
|
|
|
62,582
|
|
|
54,317
|
|
|||
Total cash distributions
|
|
$
|
87,854
|
|
|
$
|
75,019
|
|
|
$
|
59,330
|
|
|
|
|
|
|
|
|
||||||
Cash distributions per limited partner unit
|
|
$
|
2.835
|
|
|
$
|
2.575
|
|
|
$
|
2.240
|
|
|
|
Number of Phantom Units
|
|
Weighted-Average Grant Price
|
|||
Non-vested
|
December 31, 2014
|
215,464
|
|
|
$
|
23.48
|
|
Granted
|
|
11,836
|
|
|
$
|
39.73
|
|
Vested
|
|
(82,228
|
)
|
|
$
|
23.55
|
|
Non-vested
|
December 31, 2015
|
145,072
|
|
|
$
|
24.76
|
|
Granted
|
|
12,475
|
|
|
$
|
26.05
|
|
Vested
|
|
(69,094
|
)
|
|
$
|
24.66
|
|
Forfeited
|
|
(14,500
|
)
|
|
$
|
22.65
|
|
Non-vested
|
December 31, 2016
|
73,953
|
|
|
$
|
25.49
|
|
Granted
|
|
10,090
|
|
|
$
|
32.20
|
|
Vested
|
|
(68,079
|
)
|
|
$
|
24.60
|
|
Non-vested
|
December 31, 2017
|
15,964
|
|
|
$
|
33.54
|
|
|
|
Year Ended
|
|
Year Ended
|
||||
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
Current assets
|
|
$
|
12,671
|
|
|
$
|
7,760
|
|
Non-current assets
|
|
$
|
244,329
|
|
|
$
|
237,516
|
|
Current liabilities
|
|
$
|
1,798
|
|
|
$
|
4,512
|
|
|
|
Year Ended
|
|
Year Ended
|
|
Year Ended
|
||||||
|
|
December 31, 2017
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||
Revenues
|
|
$
|
28,805
|
|
|
$
|
2,217
|
|
|
$
|
—
|
|
Gross profit
|
|
$
|
28,805
|
|
|
$
|
2,217
|
|
|
$
|
—
|
|
Net Income/loss
|
|
$
|
10,714
|
|
|
$
|
(3,641
|
)
|
|
$
|
(1,967
|
)
|
•
|
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.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Pipelines and Transportation
|
|
|
|
|
|
|
||||||
Net sales:
|
|
|
|
|
|
|
||||||
Affiliate
|
|
109,298
|
|
|
$
|
103,749
|
|
|
102,551
|
|
||
Third party
|
|
12,431
|
|
|
18,423
|
|
|
28,828
|
|
|||
Total pipelines and transportation
|
|
121,729
|
|
|
122,172
|
|
|
131,379
|
|
|||
Operating costs and expenses:
|
|
|
|
|
|
|
||||||
Cost of goods sold
|
|
18,210
|
|
|
19,425
|
|
|
19,607
|
|
|||
Operating expenses
|
|
33,240
|
|
|
29,235
|
|
|
33,751
|
|
|||
Segment contribution margin
|
|
$
|
70,279
|
|
|
$
|
73,512
|
|
|
$
|
78,021
|
|
Capital spending (excluding business combinations)
|
|
$
|
14,262
|
|
|
$
|
8,478
|
|
|
$
|
16,030
|
|
|
|
|
|
|
|
|
||||||
Wholesale Marketing and Terminalling
|
|
|
|
|
|
|
||||||
Net sales:
|
|
|
|
|
|
|
||||||
Affiliate
|
|
46,982
|
|
|
45,815
|
|
|
50,013
|
|
|||
Third party
|
|
369,364
|
|
|
280,072
|
|
|
408,277
|
|
|||
Total wholesale marketing and terminalling
|
|
416,346
|
|
|
325,887
|
|
|
458,290
|
|
|||
Operating costs and expenses:
|
|
|
|
|
|
|
||||||
Cost of goods sold
|
|
354,680
|
|
|
282,733
|
|
|
416,697
|
|
|||
Operating expenses
|
|
10,034
|
|
|
7,963
|
|
|
11,172
|
|
|||
Segment contribution margin
|
|
$
|
51,632
|
|
|
$
|
35,191
|
|
|
$
|
30,421
|
|
Capital spending (excluding business combinations)
|
|
$
|
4,141
|
|
|
$
|
3,289
|
|
|
$
|
6,397
|
|
|
|
|
|
|
|
|
||||||
Consolidated
|
|
|
|
|
|
|
||||||
Net sales:
|
|
|
|
|
|
|
||||||
Affiliate
|
|
$
|
156,280
|
|
|
$
|
149,564
|
|
|
$
|
152,564
|
|
Third party
|
|
381,795
|
|
|
298,495
|
|
|
437,105
|
|
|||
Total Consolidated
|
|
538,075
|
|
|
448,059
|
|
|
589,669
|
|
|||
Operating costs and expenses:
|
|
|
|
|
|
|
||||||
Cost of goods sold
|
|
372,890
|
|
|
302,158
|
|
|
436,304
|
|
|||
Operating expenses
|
|
43,274
|
|
|
37,198
|
|
|
44,923
|
|
|||
Contribution margin
|
|
121,911
|
|
|
108,703
|
|
|
108,442
|
|
|||
General and administrative expenses
|
|
11,840
|
|
|
10,256
|
|
|
11,384
|
|
|||
Depreciation and amortization
|
|
21,914
|
|
|
20,813
|
|
|
19,692
|
|
|||
(Gain) loss on asset disposals
|
|
(20
|
)
|
|
(16
|
)
|
|
104
|
|
|||
Operating income
|
|
$
|
88,177
|
|
|
$
|
77,650
|
|
|
$
|
77,262
|
|
Capital spending (excluding business combinations)
|
|
$
|
18,403
|
|
|
$
|
11,767
|
|
|
$
|
22,427
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Pipelines and transportation
|
|
$
|
349,351
|
|
|
$
|
337,349
|
|
Wholesale marketing and terminalling
|
|
94,179
|
|
|
78,198
|
|
||
Total Assets
|
|
$
|
443,530
|
|
|
$
|
415,547
|
|
|
|
As of December 31, 2016
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
|
||||||||
OTC commodity swaps
|
|
$
|
—
|
|
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
9
|
|
Total assets
|
|
—
|
|
|
9
|
|
|
—
|
|
|
9
|
|
||||
Liabilities
|
|
|
|
|
|
|
|
|
||||||||
OTC commodity swaps
|
|
—
|
|
|
(82
|
)
|
|
—
|
|
|
(82
|
)
|
||||
Net assets
|
|
$
|
—
|
|
|
$
|
(73
|
)
|
|
$
|
—
|
|
|
$
|
(73
|
)
|
(in thousands)
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||
Derivative Type
|
Balance Sheet Location
|
|
Assets
|
|
Liabilities
|
|
Assets
|
|
Liabilities
|
||||||||
Derivatives:
|
|
|
|
|
|
|
|
|
|||||||||
OTC commodity swaps
(1)
|
Other current assets
|
|
$
|
—
|
|
|
$
|
(1,087
|
)
|
|
$
|
9
|
|
|
$
|
(82
|
)
|
Total gross value of derivatives
|
|
—
|
|
|
(1,087
|
)
|
|
9
|
|
|
(82
|
)
|
|||||
Less: Counterparty netting and cash collateral
(2)
|
|
|
—
|
|
|
(290
|
)
|
|
9
|
|
|
621
|
|
||||
Total net fair value of derivatives
|
|
|
$
|
—
|
|
|
$
|
(797
|
)
|
|
$
|
—
|
|
|
$
|
(703
|
)
|
(1)
|
As of
December 31, 2017
and
2016
, we had open derivative contracts representing
370,000
barrels and
93,000
barrels, respectively, of refined petroleum products.
|
(2)
|
As of
December 31, 2017
and
2016
, we had cash collateral of
$0.3 million
and a cash deficit of
$0.6 million
, respectively, netted with the net derivative position of our counterparty.
|
|
|
|
Year Ended December 31,
|
||||||||||
Derivative Type
|
Income Statement Location
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
Interest rate derivatives
|
Interest expense
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(24
|
)
|
OTC commodity swaps
|
Cost of goods sold
|
|
(1,550
|
)
|
|
(2,122
|
)
|
|
441
|
|
|||
|
Total
|
|
$
|
(1,550
|
)
|
|
$
|
(2,122
|
)
|
|
$
|
417
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
State income taxes
|
|
(222
|
)
|
|
121
|
|
|
171
|
|
|||
Other items
|
|
—
|
|
|
(40
|
)
|
|
(366
|
)
|
|||
Income tax expense (benefit)
|
|
$
|
(222
|
)
|
|
$
|
81
|
|
|
$
|
(195
|
)
|
•
|
In January 2016, a crude oil release of less than
30
barrels occurred from a gathering line at the Modisette pumping station near El Dorado, Arkansas;
|
•
|
In January 2016, a crude oil release of approximately
350
barrels occurred from the Paline Pipeline near Woodville, Texas (the "Paline Release");
|
•
|
In April 2015, a crude oil release of an estimated
130
barrels was discovered from a gathering line near Fouke, Arkansas; and
|
•
|
In March 2013, a release of approximately
5,900
barrels of crude oil, the majority of which was contained on-site, occurred from a pumping facility at our Magnolia Station located west of the El Dorado Refinery (the "Magnolia Release").
|
2018
|
|
$
|
2,482
|
|
2019
|
|
546
|
|
|
2020
|
|
483
|
|
|
2021
|
|
293
|
|
|
2022
|
|
173
|
|
|
Thereafter
|
|
8
|
|
|
Total future minimum rentals
|
|
$
|
3,985
|
|
|
|
For the Three Month Periods Ended
|
||||||||||||||
|
|
March 31, 2017
|
|
June 30, 2017
|
|
September 30, 2017
|
|
December 31, 2017
|
||||||||
Net sales
|
|
$
|
129,473
|
|
|
$
|
126,769
|
|
|
$
|
130,626
|
|
|
$
|
151,207
|
|
Operating income
|
|
$
|
18,472
|
|
|
$
|
23,371
|
|
|
$
|
22,636
|
|
|
$
|
23,698
|
|
Net income
|
|
$
|
14,595
|
|
|
$
|
18,977
|
|
|
$
|
16,923
|
|
|
$
|
18,914
|
|
Limited partners' interest in net income
|
|
$
|
10,486
|
|
|
$
|
14,425
|
|
|
$
|
12,178
|
|
|
$
|
13,891
|
|
Net income per limited partner unit:
|
|
|
|
|
|
|
|
|
|
|||||||
Common (basic)
|
|
$
|
0.43
|
|
|
$
|
0.59
|
|
|
$
|
0.50
|
|
|
$
|
0.57
|
|
Common (diluted)
|
|
$
|
0.43
|
|
|
$
|
0.59
|
|
|
$
|
0.50
|
|
|
$
|
0.57
|
|
|
|
For the Three Month Periods Ended
|
||||||||||||||
|
|
March 31, 2016
|
|
June 30, 2016
|
|
September 30, 2016
|
|
December 31, 2016
|
||||||||
Net sales
|
|
$
|
104,056
|
|
|
$
|
111,853
|
|
|
$
|
107,470
|
|
|
$
|
124,680
|
|
Operating income
|
|
$
|
18,974
|
|
|
$
|
22,512
|
|
|
$
|
17,001
|
|
|
$
|
19,163
|
|
Net income
|
|
$
|
15,448
|
|
|
$
|
18,893
|
|
|
$
|
13,151
|
|
|
$
|
15,312
|
|
Limited partners' interest in net income
|
|
$
|
13,195
|
|
|
$
|
16,102
|
|
|
$
|
9,892
|
|
|
$
|
11,422
|
|
Net income per limited partner unit:
|
|
|
|
|
|
|
|
|
||||||||
Common (basic)
|
|
$
|
0.54
|
|
|
$
|
0.66
|
|
|
$
|
0.41
|
|
|
$
|
0.47
|
|
Common (diluted)
|
|
$
|
0.54
|
|
|
$
|
0.66
|
|
|
$
|
0.41
|
|
|
$
|
0.47
|
|
Subordinated - Delek (basic and diluted)
|
|
$
|
0.54
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
•
|
Approximately 60 storage tanks and certain ancillary assets (such as tank pumps and piping) primarily located adjacent to the Big Spring Refinery;
|
•
|
An asphalt terminal and a light products terminal;
|
•
|
Certain crude oil and refined product pipelines; and
|
•
|
Other logistics assets, such as four underground saltwells used for natural gas liquids storage.
|
1.
|
Term
. The term of this Agreement (the "Term") is effective as of January I, 2018 and shall expire on June 30, 2019 unless terminated earlier as provided for herein.
|
2.
|
Scope of Employment.
During the Tenn, the Company shall employ Executive and he shall render services to Company in the capacity of President of Delek Logistics GP, LLC, the General Partner of Delek Logistics Partners, LP ("DKL"), a subsidiary of Company, and as Executive Vice President of Delek US Holdings, Inc., the parent of Company, as well as such other titles as may be established by the Company from time to time. During the Term, Executive may also serve as an executive vice president of any affiliated or subsidiary entities of the Company required to be listed by the Company or DK under Item 60l(b)(21) of Regulation S-K of the United States Security and Exchange Commission (the "SEC"). Executive shall devote his full business time and best effort to the successful functioning of the Company's business and shall faithfully and industriously perform all duties pertaining to his position, including such additional duties as may be assigned from time to time, to the best of his ability, experience and talent; provided, however, that Executive may pursue charitable or
civic activities, engage in passive personal investments, participate in industry association and trade
groups, and serve as an executor, trustee or in other similar fiduciary capacities; provided that any such activities do not interfere with the performance of his responsibilities and obligations pursuant to this Agreement. Executive shall be subject at all times during the Term hereof to the direction and control of the Company's Board of Directors (the "Board") in respect of the work to be done.
|
3.
|
Compensation.
|
(a)
|
Base Compensation.
During the Term, Executive's annual salary (the "Base Compensation") shall be (i) no less than the annualized equivalent of $400,000, (ii) subject to all appropriate federal and state withholding taxes, and (iii) payable at the same times and under the same conditions as salaries are paid to the Company's other employees in accordance with the normal payroll practices of the Company. The Base Compensation shall be reviewed and may be increased from time to time following the Effective Date by the Board (or any applicable committee thereof) in its sole discretion applied consistent with this Section 3(a). The Base Compensation shall at all times during the Term be, and remain, more than the compensation of Executive's subordinates at all times. If the Base Compensation is adjusted after the Effective Date, the Base Compensation defined above shall also be adjusted for all purposes of this Agreement.
|
(b)
|
Annual Bonus
. Executive will be eligible to participate in the Company's annual cash incentive plan at a level that is commensurate with Executive's positions as determined by the Board (or any committee thereof) in its sole and reasonable discretion. The Executive's Annual Bonus target for service during the 2018 fiscal year will be 75% of Executive's Base Compensation at December 31, 2018. The maximum Annual Bonus shall be 200% of such Annual Bonus target. The Annual Bonus may be based upon achievement of performance measures and objectives established by the Board from time to time. The Annual Bonus is typically paid in the first fiscal quarter of the year following the applicable bonus year. For purposes of this Agreement, an "Annual Bonus" shall mean a cash bonus, if any, awarded by the Company's Board of Directors (or any applicable Committee thereof) to Executive in recognition of
|
(c)
|
Long-Term
Incentive
Compensation.
Executive shall be eligible to participate in the Company's long-term incentive plans that may be in effect from time to time for the Company, its parent, and/or its subsidiaries including, without limitation, the Delek US Holdings, Inc. 2016 Long-Tenn Incentive Plan and the Delek Logistics GP, LLC 2012 Long-Tenn Incentive Plan (collectively, the "Plans") on terms commensurate with his position and duties, as determined by the Board or any other authorized administrator of a Plan (the "Plan Administrator") in their sole discretion. Program design, including, without limitation, performance measures and weighting, is at the sole discretion of the Plan Administrator. Executive acknowledges that he may be granted awards under Plans that are not subject to control of the Board or any applicable committee thereof).
If
so, the obligations of the Board (or any applicable committee thereof) hereunder including, without limitation, any obligations to accelerate the vesting of such award, shall be fully discharged as long as the Board (or any applicable committee thereof) uses reasonable efforts to ensure that such obligations are met by the applicable Plan Administrator.
|
4.
|
Fringe Benefits/ Reimbursement of Business Expenses.
|
(a)
|
General
. The Company shall make available, or cause to be made available to him, throughout the period of his employment hereunder, such benefits, as may be put into effect from time to time by the Company generally for other senior Executives of the Company. The Company expressly reserves the right to modify such benefits available to Executive at any time provided that such modifications apply to other similarly situated employees.
|
(b)
|
Business Expenses.
Executive will be reimbursed for all reasonable out-of-pocket business, business entertainment and travel expenses paid by him in connection with the perfonnance of his duties for the Company, in accordance with and subject to applicable Company expense
incurrence and reimbursement policies.
|
(c)
|
Other Benefits.
During the Tenn, the Company will pay the Executive's reasonable costs of professional tax and financial counseling, provided that, beginning with the calendar year 2018, the costs of such benefit does not exceed $25,000 in any calendar year. Perquisites and other personal benefits that are not integrally and directly related to the perfonnance of the Executive's duties and confer a direct or indirect benefit upon him that has a personal aspect may be disclosed in public filings according to the regulations of the SEC).
|
5.
|
Vacation Time
I
Sick Leave
. Executive will be granted twenty-five (25) working days of vacation per calendar year. Unused vacation will accrue and carry over into a new calendar year during the Tenn and the amount attributed to accrued and unused vacation will be paid to the Executive upon the termination of employment. Vacation time shall be taken only after providing reasonable notice to the person to whom the Executive reports. Executive will be provided with sick leave according to the Company's standard policies.
|
6.
|
Compliance With Company Policies.
Executive shall comply with and abide by all applicable policies and directives of the Company, its parent and each of their subsidiaries including, without limitation, the Codes of Business Conduct
&
Ethics for the Company, its parent and each of their subsidiaries, the Supplemental Insider Trading Policies for the Company, its parent and each of their subsidiaries and any applicable employee handbooks or manuals. The Company, its parent and each of their subsidiaries may, in their sole discretion, change, modify or adopt new policies and directives affecting Executive's
|
7.
|
Confidentiality
. Executive recognizes that during the course of his employment, he will be exposed to infonnation or ideas of a confidential or proprietary nature that pertain to Company's business, financial, legal, marketing, administrative, personnel, technical or other functions or which constitute
trade secrets (including, without limitation, specifications, designs, plans, drawings, software, data,
prototypes, the identity of sources and markets, marketing infonnation and strategies, business and financial plans and strategies, methods of doing business, data processing and technical systems,
programs and practices, customers and users and their needs, sales history, financial health or material
non-public information as defined under federal securities law) (collectively "Confidential Information"). Confidential Information also includes such information of third parties that has been provided to Company in confidence. All such information is deemed "confidential" or "proprietary" whether or not it is so marked. Information will not be considered Confidential Information to the extent that it is or becomes generally available to the public other than through any breach of this Agreement by or at the discretion of Executive. Nothing in this Section will prohibit the use or disclosure by Executive of knowledge that is in general use in the industry or general business knowledge, was known to him prior to his service to the Company or which enters the public domain other than through any breach of this Agreement by or at the discretion of Executive. Executive may also disclose such information if required by court order or applicable law provided that he (a) uses his reasonable best efforts to give the Company written notice as far in advance as is practicable to allow the Company to seek a protective order or other appropriate remedy (except to the extent that his compliance with the foregoing would cause him to violate a court order or other legal requirement), (b) discloses only such infonnation as Executive believes in good faith to be required by law, and (c) uses his reasonable best efforts (at the Company's expense) to obtain confidential treatment for any Confidential Infonnation so disclosed. During Executive's employment and for so long as the Confidential Information remains confidential or proprietary thereafter, he shall hold Confidential Information in confidence, shall use it only in connection with the perfonnance of his duties on behalf of the Company, shall restrict its disclosure to those directors, employees or independent contractors of the Company with a need to know such Confidential Infonnation, and shall not disclose, copy or use Confidential Infonnation for the benefit of anyone other than the Company without the Company's prior written consent. However, nothing in this Agreement shall prohibit the Executive from reporting possible violations oflaw to any governmental agency or entity in accordance with applicable whistleblower protection provisions including, without limitation, the rules promulgated under Section 21F of the Exchange Act or Section 806 of the Sarbanes-Oxley Act of 2002, or require the Executive to notify the Company (or obtain its prior approval) of any such reporting. Executive shall, upon Company's request or his termination of employment, return to the Company and/or certify in a fonn satisfactory to the Company the destruction of any and all written documents containing Confidential Infonnation in his possession, custody or control. For the avoidance of doubt, Executive shall not retain any copy in any form of any Confidential Information following such request or tennination.
|
8.
|
Restrictive Covenants
.
|
(a)
|
Non-Competition
.
|
(i)
|
In consideration of the Confidential Information provided to the Executive and the other benefits provided to him pursuant to this Agreement, Executive agrees that, if his employment ends during the Term, then, during a six month Non-Compete Period (as defined below), he will not, without the prior written consent of the Company (which shall not be unreasonably withheld), directly or indirectly, either as an individual or as an employee, officer, director, shareholder, partner, equity participant, sole proprietor, independent contractor, consultant or in any other capacity conduct any business, or assist any person in conducting any business, that is directly in competition with the Company's Business (as defined below) in the Territory (as defined below). It is expressly agreed and understood that this restriction is not intended to and shall not prevent Executive from employment or other engagement by a person or entity that competes with Company's Business as long as he does not personally compete or assist such person or entity in such restricted competition. The tenns of this Section 8(a) shall not apply to the ownership by Executive ofless than 5% of a class of equity securities of an entity, which securities are publicly traded on any national securities exchange.
|
(ii)
|
For any termination except for a termination by the Company for Cause, the "Non Compete Period" shall commence upon the date that notice of termination of employment is delivered or deemed delivered under the notice provisions of this Agreement, it being acknowledged and agreed that the Non-Compete Period may commence to run, or even completely run, during a period of time during which the Executive remains employed by the Company (assuming that he continues to be so employed after the delivery of such notice of termination). In the event of a tennination by the Company for Cause, the Non-Compete Period shall commence upon the date that Executive's employment with the Company ends.
|
(iii)
|
For purposes of this Section 8(a), the "Company's Business'' means the businesses conducted by the Company, its parent and each of their subsidiaries at the time of the termination of the Executive's employment over which he has primary responsibility at the time of the tennination of his employment (it being agreed and understood that other aspects of the businesses conducted by the Company, its parent and/or each of their subsidiaries is not within such definition).
|
(iv)
|
For purposes of Section 8(a), the "Territory" shall mean the following geographic areas as of the commencement of the Non-Compete Period (A) a 75 mile radius from any of the Company's refining facilities, (B) a 75 mile radius from any of the Company's wholesale refined products distribution facilities and (C) a 50 mile radius from any of the Company's retail fuel and/or convenience merchandise facilities.
|
(b)
|
Non-Interference
with Commercial Relationships
. During the Executive's employment with the Company, and for a period of six months thereafter, Executive will not, directly or
indirectly, either as an individual or as an employee, officer, director, shareholder, partner,
equity participant, sole proprietor, independent contractor, consultant or in any other capacity whatsoever approach or solicit any customer or vendor of Company for the purpose of causing, directly or indirectly, any such customer or vendor to cease doing business with the Company, its parent and/or each of their subsidiaries, nor will Executive engage in any other activity that
|
(c)
|
Non-Interference with Employment Relationships
. During the Executive's employment with the Company, and for a period of one year thereafter, Executive shall not, without the Company's prior written consent, directly or indirectly:
(i)
induce or attempt to induce any Company employee to terminate his/her employment with the Company; or (ii) interfere with or disrupt the Company's relationship with any of its employees or independent contractors. The foregoing does not prohibit the Executive (personally or as an employee, officer, director, shareholder, partner, equity participant, sole proprietor, independent contractor, consultant or in any other capacity) from hiring or employing an individual that contacts the Executive on his/her own initiative without any direct or indirect solicitation by the Executive other than customary fonns of general solicitation such as newspaper advertisements or internet postings.
|
(d)
|
It
is understood and agreed that the scope of each of the covenants contained in this Section 8
is reasonable as to time, area, and persons and is necessary to protect the legitimate business
interest of the Company.
It
is further agreed that such covenants will be regarded as divisible and will be operative as to time, area and persons to the extent that they may be so operative.
|
9.
|
Copyright, Inventions, Patents.
The Company shall have all right, title and interest to all intellectual property (including, without limitation, graphic designs, cop,Tights, trademarks and patents) created during the course of the Executive's employment with the Company. The Executive hereby assigns to Company all copyright ownership and rights to any work developed by him or at his discretion and reduced to practice for or on behalf of the Company or which relate to the Company's business during the course of the employment relationship. At the Company's expense and for a period beginning on the Effective Date and continuing for three years following the termination of his employment, the Executive shall reasonably assist or support tbe Company to obtain, maintain, and assert its rights in such intellectual property and work product including, without limitation, the giving of evidence in suits and proceedings, and the furnishing and/or assigning of all documentation and other materials relative to the Company's intellectual property rights.
|
10.
|
Termination of Employment.
|
(a)
|
Tennination
By Company For Cause
. The Company may immediately terminate this Agreement and/or the Executive's employment at any time for Cause. Upon any such tennination, the Company shall be under no further obligation to the Executive hereunder except as otherwise required by law, and the Company will reserve all further rights and remedies available to it at law or in equity.
|
(b)
|
Tennination by Executive for Good Reason
. Within 30 calendar days after Executive becomes (or should have become) aware of the occurrence of a Good Reason during the Term, Executive may tenninate this Agreement (and his employment hereunder) by providing 30 calendar days advance written notice of tennination and pro,ided that the condition remains uncured by the end of such 30-day period. After such 30-day period, Executive shall either resign his employment immediate or, if he continues in employment beyond such 30-day period, Executive shall have irrevocably waived and released any right to resign for Good Reason based upon the circumstances identified in his advance notice of tennination. In the event of any such tennination, Executive shall be entitled to the separation benefits under Section
|
(c)
|
Tennination At-Will By Company.
Subject to the provisions of
(f)
below, the Company may terminate this Agreement (and Executive's employment hereunder) at any time and for any reason.
If
the termination occurs during the Tenn and is other than for Cause, Executive shall be entitled to the following (in addition to all accrued compensation and benefits through the date of tennination): (i) the Separation Payment, (ii) the costs of continuing family health insurance coverage under COBRA through November 26, 2020 following termination of employment, provided, that the Company may, in its sole discretion, (A) pay such amounts directly to the applicable provider or (B) pay an equivalent amount directly to Executive, (iii) the Post-Employment Annual Bonus and (iv) Accelerated Vesting upon tennination. This provision shall not apply if Executive is tenninated by reason of death or Disability.
|
(d)
|
Termination At-Will By Executive.
Executive may terminate this Agreement (and Executive's employment hereunder) at any time and for any reason (other than death or Disability).
If
the Executive tenninates this Agreement and his employment hereunder during the Tenn, the Executive must provide the Company with advance written notice of termination equal to the lesser of three months or the balance of the Term (the "Required Notice").
|
(i)
|
If
Executive terminates his employment during the Tenn other than for a Good Reason and provides at least three months advance written notice of termination (even if the Required Notice is less than three months), Executive shall be entitled to a single lump sum payment upon tennination equal to 50% of his annualized salary at the time the notice of termination is delivered and the costs of continuing family health insurance coverage under COBRA through November 26, 2020 following termination of employment, provided, that the Company may, in its sole discretion, (A) pay such amounts directly to the applicable provider or (B) pay an equivalent amount directly
to Executive.
|
(ii)
|
If
Executive (A) terminates his employment during the Term other than for a Good Reason without providing the Required Notice or (B) fails to render services to the Company in a diligent and good faith manner after the delivery of the Required Notice and continues or repeats snch failure after receiving written notice of such failure, he shall receive compensation only in the manner stated in Section 10(a) and the Company may immediately tenninate his employment. This Section l0(d)(ii) shall not apply if Executive is terminated by reason of death or Disability.
|
(e)
|
Accelerated
Tennination
After Notice.
Nothing herein shall limit the Company's right to terminate this Agreement and/or Executive's employment after the Company receives notice of tennination from him. However, if the Company receives the Required Notice from Executive and then tenninates this Agreement and/or his employment for any reason other than for Cause or under Section l0(d)(ii)(B), his employment shall tenninate on (and post employment provisions of Sections 7, 8(b), 8(c) and 9 shall be effective from) the date on which the Company terminates Executive's employment but he shall be entitled to a single lump sum payment of the amount of such compensation, bonuses, vesting and other benefits as if his tennination had been effective on the earlier of (i) the termination date specified in his notice oftennination or (ii) three months following his notice of termination.
|
(f)
|
Separation Release
. Notwithstanding anything to the contrary, but subject to any applicable six-month delay required by Section 18 hereof and Section 409A of the Internal Revenue Code of 1986, as amended ("Section 409A"), if a payment is otherwise payable to Executive hereunder, payment of such Separation Payment shall be payable in cash to him at the end of the month following the month in which his separation from service (within the meaning of Section 409A) occurs (or such later date as may be required by law). However, Executive's right to receive the Separation Payment shall be conditioned upon (i) his execution and delivery to the Company of a Separation Release (and the expiration of any statutorily mandated revocation period) within 30 days (or such longer period as may be required by law) following the separation from service date and (ii) his continued compliance with this Agreement and any other restrictive covenants to which he is bound.
If
Executive fails to timely execute and deliver the Separation Release or if he timely revokes his acceptance of the Separation Release thereafter (if such revocation is pennitted), he shall not be entitled to the Separation Payment and shall repay any Separation Payment received.
If
the foregoing consideration and revocation periods begin in one taxable year and end in a second taxable year, payment will be made in the second taxable year.
|
(g)
|
Definitions.
The following tenns shall have the following meanings as used in this Agreement:
|
(i)
|
"Accelerated Vesting" means the immediate vesting of all unvested equity awards granted to Executive under the Plans. However, any Accelerated Vesting that occurs other than in the context of a Change in Control will apply to unvested (A) performance awards on a prorated basis through the termination of employment, based on actual results evaluated after the close of the applicable perfonnance period and payable in a lump sum at the same time as perfonnance awards are paid to executives of the Company generally and (B) full value equity awards (e.g., restricted stock, restricted stock units and phantom units) and appreciation equity awards (e.g., non-qualified stock options and stock appreciation rights) only to the extent that such awards that would have vested if Executive's employment had continued during a period equal to the lesser of six months following termination of employment or the balance of the Tenn.
|
(ii)
|
"Cause" means Executive's: (A) fraud, gross negligence, willful misconduct involving the Company or its affiliates or willful breach of a fiduciary duty, including, without limitation, Section 7 hereof, owed to the Company or its affiliates, (B) conviction of, or plea of nolo contendere to, a felony or crime involving moral turpitude or
|
(iii)
|
"Disability" means the inability of Executive to perform the customary duties of his employment or other service with the Company or its affiliates by reason of a physical or mental incapacity or illness that is expected to result in death or to be of indefinite duration, as determined by a duly licensed physician selected by the Company.
|
(iv)
|
"Post-Employment Annual Bonus" shall mean the Annual Bonus to which Executive would have otherwise been entitled if his employment had continued through the end of the bonus year based upon the actual perfonnance of the Company, prorated for the period of actual employment during the bonus year, and paid upon the payment of the
|
(v)
|
"Separation Payment" shall mean an amount equal to sum of Executive's Base Compensation and Annual Bonus as in effect before any notice of termination multiplied by (A) two in the case of a Change in Control or (B) one in all other cases. The Separation Payment shall be payable in a cash lump sum pursuant to Section IO(f). Executive shall have no responsibility for mitigating the amount of any payment provided for herein by seeking other employment or otherwise, and any such payment will not be reduced in the event such other employment is obtained.
|
(vi)
|
"Separation Release" means a general release of claims against the Company (and its subsidiaries and affiliates) in a fonn reasonably satisfactory to Executive and the Company that pertains to all claims related to Executive's employment and the termination of his employment and that contains appropriate anti-disparagement and continuing confidentiality covenants.
|
11.
|
Change in Control
.
|
(a)
|
If Executive's employment is tenninated by the Company without Cause or by Executive for Good Reason within two years following a Change in Control, the tennination of his employment shall be deemed to have occurred in the context of a Change in Control, and he shall be entitled to the separation benefits set forth in Section I0(c);
provided, however,
that if the separation benefits would result in an excess parachute payment under Internal revenue Code Section 280G(a), the separation benefits shall be reduced so as not to result in an excess parachute payment.
|
(b)
|
For purposes of this Agreement, a "Change in Control" of the Company shall mean any of the following:
|
(i)
|
Any "person" (as defined in Section 13(h)(8)(E) of the Exchange Act), other than the Company or any of its subsidiaries or any employee benefit plan of the Company or any of its subsidiaries, becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company (or any successor to all or substantially all of the Company's assets) representing more than 30% of the combined voting power of the Company's (or such successor's) then outstanding voting securities that may be cast for the election of directors of the Company (other than as a result of an issuance of securities initiated by the Company (or such successor) in the ordinary course of business);
|
(ii)
|
As the result of, or in connection with, any cash tender or exchange offer, merger or other business combination or contested election, or any combination of the foregoing transactions, less than 51% of the combined voting power of the then outstanding securities of the Company or any successor company or entity entitled to vote generally in the election of the directors of the Company or such other corporation or entity after such transaction are held in the aggregate by the holders of the Company's securities entitled to vote generally in the election of directors of the Company immediately prior
to such transaction;
|
(iii)
|
All or substantially all of the assets of the Company are sold, exchanged or otherwise
|
(iv)
|
The Company's stockholders approve a plan of liquidation or dissolution of the
|
(v)
|
During any 12-month period within the Tenn, Continuing Directors cease for any reason to constitute at least a majority of the Board. For this purpose, a "Continuing Director" is any person who at the beginning of the Term was a member of the Board, or any person first elected to the Board during the Tenn whose election, or the nomination for election by the Company's shareholders, was approved by a vote of at least two-thirds of the Continuing Directors then in office, but excluding any person
|
12.
|
Survival ofTenns.
The provisions of Sections 7, 8(b), 8(c), 9 and 10 shall survive the termination or expiration of this Agreement and will continue in effect following the termination of Executive's employment for the periods described therein.
If
a Change in Control occurs during the Tern,, the provisions of Section 11 shall survive the termination or expiration of this Agreement and will continue in effect following the Change in Control for the periods described therein. The provisions of Section 8(a) shall survive the termination (but not the expiration) of this Agreement.
|
13.
|
Assignment.
This Agreement shall not be assignable by either party without the written consent of the other party except that the Company may assign this Agreement to its parent, a subsidiary, or an affiliate of the Company. Any failure by the Company to assign this Agreement to an unaffiliated third party successor upon the Company's sale or transfer of all or substantially all of its business will be considered the termination of Executive's employment in the context ofa Change in Control effective upon the closing of the applicable transaction without an assignment to the successor, which closing constitutes a Change in Control. Any failure by Executive to consent to the assignment of this Agreement
to
such unaffiliated third party successor will be considered the tennination of his employment for a Good Reason other than in the context of a Change in Control effective upon the closing of the applicable Change in Control transaction without any assignment to the successor. For the avoidance of doubt, the parties acknowledge that the payment of any benefits under this Section 13 sha11 be made in accordance with the applicable provision of Section 10 or 11 of this Agreement within 30 days of the closing date of the Change in Control transaction, and no payments wi11 be made pursuant to this Section 13 if a Change in Control transaction does not occur.
|
14.
|
No Inducement
I
Agreement Voluntary.
Executive represents that (a) he has not been pressured, misled, or induced to enter into this Agreement based upon any representation by Company or its agents not contained herein, (b) he has entered into tbis Agreement voluntarily, after having the opportunity to consult with representatives of his own choosing and (c) his assent is freely given.
|
15.
|
Interpretation
. Any Section, phrase or other provision of this Agreement that is detennined by a court, arbitrator or arbitration panel of competent jurisdiction to be unreasonable or in conflict with any applicable statute or rule, shall be deemed, if possible, to be modified or altered so that it is not unreasonable or in conflict or, if that is not possible, then it sha11 be deemed omitted from this Agreement. The invalidity of any portion of this Agreement shall not affect the validity of the remaining
|
16.
|
Prior Agreements
I
Amendments.
This Agreement (a) represents the entire agreement between the parties in relation to the employment of Executive by the Company on, and subsequent to, the Effective Date and (b) revokes and supersedes all prior agreements pertaining to the subject matter herein, whether written and oral. However, this Agreement does not nullify or otherwise affect any prior equity awards granted to Executive. This Agreement shall not be subject to modification or amendment by any oral representation, or any written statement by either party, except for a dated writing signed by Executive and the Company.
|
17.
|
Notices.
All notices of any kind to be delivered in connection with this Agreement shall be in writing and shall be deemed to have been duly given if personally delivered or if sent by nationally-recognized overnight courier (e.g., FedEx, UPS, etc.) or by registered or certified mail, return receipt requested and postage prepaid, addressed to the Company at 7102 Commerce Way, Brentwood, Tennessee 37027, Attn: General Counsel, to the Executive at his then-existing payroll address, or to such other address as the party to whom notice is to be given may have furnihed to the other in writing in accordance with the provisions of this Section. Any such notice or communication shall be deemed to have been received: (a) if by personal delivery or nationally-recognized overnight courier, on the date of such delivery and (b) if by registered or certified mail, on the third postal service day following the date postmarked.
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(a)
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Any dispute concerning a legally cognizable claim arismg out of this Agreement or in connection with the employment of Executive by Company, including, without limitation,
claims of breach of contract, fraud, unlawful termination, discrimination, harassment, retaliation, defamation, tortious infliction of emotional distress, unfair competition,
arbitrability and conversion (collectively a "Legal Dispute") shall be resolved according to the following protocol:
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(i)
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The parties shall first submit the Legal Dispute to mediation under the auspices of the American Arbitration Association ("AAA") and pursuant to the mediation rules and procedures promulgated by the AAA. The Company shall pay the expenses associated with the mediation.
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(ii)
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In the event mediation is unsuccessful in fully resolving the Legal Dispute, binding arbitration shall be the method of final resolution. The parties expressly waive their rights to bring action against one another in a court oflaw except as expressly provided herein. In addition to remedies at law, the parties acknowledge that failure to comply with this provision shall entitle the non-breaching party to injunctive relief to enjoin the actions of the breaching party. Any Legal Dispute submitted to Arbitration shall be under the auspices of the AAA and pursuant to the "National Rules for the Resolution of Employment Disputes," or any similar identified rules promulgated at such time the Legal Dispute is submitted for resolution. All mediation and arbitration hearings shall take place in either Davidson or Williamson County, Tennessee. The Company shall
pay the filing expenses associated with the arbitration. All other expenses and fees associated with the arbitration shall be determined in accordance with the AAA rules.
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(b)
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Notice of submission of any Legal Dispute to mediation shall be provided no later than one year following the date the submitting party became aware, or should have become aware of, the conduct constituting the alleged claims. Failure to do so shall result in the irrevocable waiver of the claim made in the Legal Dispute.
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(c)
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Notwithstanding that mediation and arbitration are established as the exclusive procedures for resolution of any Legal Dispute, (i) either party may apply to an appropriate judicial or administrative forum for injunctive relief and (ii) claims by Company arising in connection with Sections 7, 8, 9, 10 and/or 11 may be brought in any court of competent jurisdiction.
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(d)
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With respect to any breach or attempted breach of Sections 7, 8 and/or 9 of this Agreement, each party acknowledges that a remedy at law will be inadequate, agrees that the Company will be entitled to specific perfonnance and injunctive and other equitable relief and agrees not to nse as a defense that any party has an adequate remedy at law. This Agreement shall be enforceable in a court of equity, or other tribunal with jurisdiction, by a decree of specific performance, and appropriate injunctive relief may be applied for and granted in connection herewith. Such remedy shall not be exclusive and shall be in addition to any other remedies now or hereafter existing at law or in equity, by statute or otherwise. No delay or omission in exercising any right or remedy set forth in this Agreement shall operate as a waiver thereof or of any other right or remedy and no single or partial exercise thereof shall preclude any other or further exercise thereof or the exercise of any other right or remedy.
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20.
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Section 409A
.
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(a)
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It
is intended that each installment of the payments provided under this Agreement, if any, is a separate "payment" for purposes of Section 409A and the payments satisfy, to the greatest extent possible, the exemptions from the application of Section 409A provided under Treasury Regulations l.409A-l(b)(4), l.409A-l(b)(9)(iii) and l.409A-l(b)(9)(v). Notwithstanding any other provision to the contrary, a tennination of employment with the Company shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of"deferred compensation" (as such term is defined in Section 409A and the Treasury Regulations promulgated thereunder) upon or following a tennination of employment unless such termination is also a "separation from service" from the Company within the meaning of Section 409A and Section l .409A-l(h) of the Treasury Regulations and, for purposes of any
such provision of this Agreement, references to a "separation," "termination," "tennination of
employment" or like terms shall mean "separation from service.'·
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(b)
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Notwithstanding anything to the contrary in this Agreement, if the Company detennines (i) that on the date his employment with the Company terminates or at such other time that the Company determines to be relevant, Executive is a "specified employee" (as such term is defined under Treasury Regulation 1.409A-l (i)(l)) of the Company and (ii) that any payments to be provided to him pursuant to this Agreement are or may become subject to the additional tax under Section 409A(a)(l)(B) or any other taxes or penalties imposed under Section 409A if provided at the time otherwise required under this Agreement, then such payments shall be delayed until the date that is six months after the date of his "separation from service" (as such tennis defined under Treasury Regulation 1.409A-l(h)) with the Company, or, if earlier, the date of his death. Any payments delayed pursuant to this Section shall be made in a lump sum
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(c)
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In addition, to the extent that any reimbursement, fringe benefit or other, similar plan or arrangement in which Executive participates during the tenn of his employment under this Agreement or thereafter provides for a "deferral of compensation" within the meaning of Section 409A, then such amount shall be reimbursed in accordance with Section 1.409A- 3(i)(l)(iv) of the Treasury Regulations, including (i) the amount eligible for reimbursement or payment under such plan or arrangement in one calendar year may not affect the amount eligible for reimbursement or pay1nent in any other calendar year (except that a plan providing medical or health benefits may impose a generally applicable limit on the amount that may be reimbursed or paid), (ii) subject to any shorter time periods provided herein or the applicable plans or arrangements, any reimbursement or payment of an expense under such plan or arrangement must be made on or before the last day of the calendar year following the calendar year in which the expense was incurred, and (iii) the right to any reimbursement or in-kind benefit is not subject to liquidation or exchange for another benefit,
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(d)
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For the avoidance of doubt, any payment due under this Agreement within a period following Executive's termination of employment or other event, shall be made on a date during such period as determined by the Company in its sole discretion
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(e)
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Notwithstanding any other provision to the contrary, in no event shall any payment under this Agreement that constitutes "deferred compensation" for purposes of Section 409A and the Treasury Regulations promulgated thereunder be subject to offset by any other amount unless otherwise pennitted by Section 409A,
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(f)
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This Agreement is intended to comply with the applicable requirements under Section 409A and the related Treasury Regulations and guidance issued by the Depai1ment of the Treasury, as modified from time to time, including exceptions and exemptions provided for therein (the "409A Requirements"). Accordingly, this Agreement shall be administered, construed and interpreted in a manner to comply with the 409A Requirements. Specifically, and without limiting the foregoing, if any terms set forth in this Agreement are considered to be ambiguous, such tenns shall be administered, construed and interpreted in a manner to comply with the 409A Requirements.
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Company Name:
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State of
Incorporation:
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Delek Logistics Operating, LLC
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DE
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Delek Marketing & Supply, LP
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DE
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Delek Marketing GP, LLC
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DE
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Delek Crude Logistics, LLC
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TX
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Delek Marketing-Big Sandy, LLC
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TX
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Paline Pipeline Company, LLC
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TX
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Magnolia Pipeline Company, LLC
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DE
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SALA Gathering Systems, LLC
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TX
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El Dorado Pipeline Company, LLC
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DE
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DKL Transportation, LLC
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DE
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DKL Caddo, LLC
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DE
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DKL RIO, LLC
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DE
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/s/ Ezra Uzi Yemin
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/s/ Frederec Green
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Ezra Uzi Yemin
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Frederec Green
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Date: February 26, 2018
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Date: February 26, 2018
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/s/ Charles J. Brown III
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/s/ Ron W. Haddock
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Charles J. Brown III
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Ron W. Haddock
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Date: February 26, 2018
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Date: February 26, 2018
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/s/ Mark Baker Cox
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Reuven Spiegel
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Mark Baker Cox
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Reuven Spiegel
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Date: February 26, 2018
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Date: February 26, 2018
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/s/ Francis C. D’Andrea
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Francis C. D'Andrea
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Date: February 26, 2018
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/s/ Eric D. Gadd
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Eric D. Gadd
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Date: February 26, 2018
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/s/ Assi Ginzburg
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Assi Ginzburg
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Date: February 26, 2018
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By:
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/s/ Ezra Uzi Yemin
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Ezra Uzi Yemin,
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Chairman and Chief Executive Officer
(Principal Executive Officer) of Delek Logistics GP, LLC (the general partner of Delek Logistics Partners, LP)
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By:
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/s/ Kevin Kremke
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Kevin Kremke,
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Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) of Delek Logistics GP, LLC (the general partner of Delek Logistics Partners, LP)
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By:
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/s/ Ezra Uzi Yemin
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Ezra Uzi Yemin,
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Chairman and Chief Executive Officer
(Principal Executive Officer) of Delek Logistics GP, LLC (the general partner of Delek Logistics Partners, LP)
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By:
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/s/ Kevin Kremke
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Kevin Kremke,
|
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Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer) of Delek Logistics GP, LLC (the general partner of Delek Logistics Partners, LP)
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