þ
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ANNUAL REPORT PURSUANT TO SECTION 18 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the Fiscal Year Ended December 31, 2018
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o
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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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32-2581557
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Title of each class
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Name of each exchange on which registered
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Common Stock, $.01 par value
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New York Stock Exchange
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Date
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Acquired Company/Assets
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Acquired From
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Approximate
Purchase Price(1)
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February 2014
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The Crossett Facility, a biodiesel plant in Crossett, Arkansas
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Pinnacle Biofuels, Inc.
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$11.1 million
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October 2014
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The Greenville-Mount Pleasant Assets, a light products terminal in Mount Pleasant, Texas, a light products storage facility in Greenville, Texas and a 76-mile pipeline connecting the locations.
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An affiliate of Magellan Midstream Partners, L.P.
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$11.1 million
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December 2014
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FTT, a transport company that primarily hauls crude oil and asphalt by truck, including 130 trucks and 210 trailers.
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Frank Thompson Transport, Inc.
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$12.0 million
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May 2015
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33.7 million shares of common stock of Alon, representing approximately 48% of the outstanding common stock of Alon at the time of investment.
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Alon Israel Oil Company, Ltd.
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$575.8 million
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July 2017
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Purchased the remaining 53% ownership in Alon, that Delek did not already own, in an all-stock transaction.
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Shareholders of Alon
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$530.7 million
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September 2017
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The Big Spring Pipeline, an approximate 40-mile pipeline and related ancillary assets, which originates in Big Spring, Texas and terminates in Midland, Texas.
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Plains Pipeline, L.P.
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$9.0 million
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February 2018
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Purchased the remaining 18.4% ownership in the Alon Partnership that Delek did not already own, in an all-equity transaction.
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Limited partner unit holders of the Alon Partnership
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$184.7 million
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•
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the Lion Pipeline System, which transports crude oil to, and refined products from, the El Dorado refinery (the "Lion Pipeline System");
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the SALA Gathering System, which gathers and transports crude oil production in southern Arkansas and northern Louisiana, primarily for the El Dorado refinery;
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the Paline Pipeline System, which primarily transports crude oil from Longview, Texas to third-party facilities in Nederland, Texas;
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the East Texas Crude Logistics System, which currently transports a portion of the crude oil delivered to the Tyler refinery (the "East Texas Crude Logistics System");
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the Tyler-Big Sandy Product Pipeline, which is a pipeline between the Tyler refinery and the Big Sandy Terminal;
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the Tyler Tanks;
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the El Dorado Tanks;
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the Greenville-Mount Pleasant Pipeline and Greenville Storage Facility;
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the North Little Rock Tanks;
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the El Dorado Rail Offloading Racks;
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the Tyler Crude Tank;
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the Talco Crude Pipeline;
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the Big Spring Pipeline;
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Big Spring Truck Unloading Station; and
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Big Spring Tanks
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a 50% interest in an 80-mile crude oil pipeline with a capacity of 80,000 bpd that originates in Longview, Texas, with destinations in the Shreveport, Louisiana area (the "Caddo Pipeline") and;
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a 33% interest in a 109-mile crude oil pipeline with an initial capacity of 80,000 bpd, that originates in north Loving County, Texas near the Texas-New Mexico border and terminates in Midland, Texas ("the RIO Pipeline").
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Year Ended December 31,
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2018
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2017
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2016
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Operating Information:
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West Texas marketing throughputs (average bpd)
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13,323
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13,817
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13,257
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Terminalling throughputs (average bpd) (1)
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155,193
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124,488
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122,350
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East Texas marketing throughputs (average bpd)
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77,487
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73,655
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68,131
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(1)
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Consists of terminalling throughputs at our Tyler, Big Sandy and Mount Pleasant, Texas, El Dorado and North Little Rock, Arkansas and Memphis and Nashville, Tennessee terminals.
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Year Ended December 31,
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2018
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2017
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2016
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Throughputs (average bpd)
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Lion Pipeline System:
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Crude pipelines (non-gathered)
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51,992
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59,362
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56,555
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Refined products pipelines to Enterprise Systems
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45,728
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51,927
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52,071
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SALA Gathering System
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16,571
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15,871
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17,756
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East Texas Crude Logistics System
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15,696
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15,780
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12,735
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Year ended December 31, 2018
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Period from July 1, 2017 through December 31, 2017
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Number of fuel stores (end of period)
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271
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293
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Average number of fuel stores (during period)
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271
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293
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Total fuel revenue (in thousands)
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$
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571,596
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$
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251,781
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Retail fuel revenues (thousands of gallons)
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217,118
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107,599
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Average retail gallons per store (based on average number of stores) (thousands of gallons)
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801
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367
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Retail fuel margin ($ per gallon)
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$
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0.24
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$
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0.19
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Year ended December 31, 2018
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Period from July 1, 2017 through December 31, 2017
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Number of merchandise stores (end of period)
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279
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302
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Average number of merchandise stores (during period)
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295
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302
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Merchandise margin percentage
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30.9
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%
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30.7
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%
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Total merchandise revenues (in thousands)
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$
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339,000
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$
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174,600
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Average merchandise sales per store (in thousands)
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$
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275
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$
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578
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•
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changes in global and local economic conditions;
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domestic and foreign supply and demand for crude oil and refined products;
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the level of foreign and domestic production of crude oil and refined petroleum products;
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increased regulation of feedstock production activities, such as hydraulic fracturing;
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infrastructure limitations that restrict, or events that disrupt, the distribution of crude oil, other feedstocks and refined petroleum products;
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excess or overbuilt infrastructure;
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an increase or decrease of infrastructure limitations (or the perception that such an increase or decrease could occur) on the distribution of crude oil, other feedstocks or refined products;
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investor speculation in commodities;
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worldwide political conditions, particularly in significant oil producing regions such as the Middle East, Africa, the former Soviet Union and South America;
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the ability of the members of the Organization of Petroleum Exporting Countries to maintain oil price and production controls;
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pricing and other actions taken by competitors that impact the market;
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the level of crude oil, other feedstocks and refined petroleum products imported into and exported out of the United States;
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excess capacity and utilization rates of refineries worldwide;
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development and marketing of alternative and competing fuels, such as ethanol and biodiesel;
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changes in fuel specifications required by environmental and other laws, particularly with respect to oxygenates and sulfur content;
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local factors, including market conditions, adverse weather conditions and the level of operations of other refineries and pipelines in our markets;
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volatility in the costs of natural gas and electricity used by our refineries;
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accidents, interruptions in transportation, inclement weather or other events, including cyber attacks, that can cause unscheduled shutdowns or otherwise adversely affect our refineries or the supply and delivery of crude oil from third parties; and
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United States government regulations.
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select, and compete successfully in, new markets;
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obtain suitable sites at acceptable costs;
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realize an acceptable return on the capital invested in new facilities;
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hire, train, and retain qualified personnel;
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integrate new retail fuel and convenience stores into our existing distribution, inventory control, and information systems;
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expand relationships with our suppliers or develop relationships with new suppliers; and
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secure adequate financing, to the extent required.
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its reliance on significant customers, including us;
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macroeconomic factors, such as commodity price volatility that could affect its customers' utilization of its assets;
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its reliance on us for near-term growth;
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sufficiency of cash flow for required distributions;
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counterparty risks, such as creditworthiness and force majeure;
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competition from third-party pipelines and terminals and other competitors in the transportation and marketing industries;
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environmental regulations;
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operational hazards and risks;
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pipeline tariff regulations;
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limitations on additional borrowings and other restrictions in its debt agreements; and
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other financial, operational and legal risks.
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We may not be able to identify suitable acquisition candidates or acquire additional assets on favorable terms;
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We usually compete with others to acquire assets, which competition may increase, and any level of competition could result in decreased availability or increased prices for acquisition candidates;
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We may experience difficulty in anticipating the timing and availability of acquisition candidates;
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We may not be able to obtain the necessary financing, on favorable terms or at all, to finance any of our potential acquisitions; and
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As a public company, we are subject to reporting obligations, internal controls and other accounting requirements with respect to any business we acquire, which may prevent or negatively affect the valuation of some acquisitions we might otherwise deem favorable or increase our acquisition costs.
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during the acquisition process, we may fail, or be unable, to discover some of the liabilities of companies or businesses that we acquire;
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we may assume contracts or other obligations in connection with particular acquisitions on terms that are less favorable or desirable than the terms that we would expect to obtain if we negotiated the contracts or other obligations directly;
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we may fail to successfully integrate or manage acquired assets;
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acquired assets may not perform as we expect, or we may not be able to obtain the cost savings and financial improvements we anticipate;
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acquisitions may require us to incur additional debt or issue additional equity;
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acquired assets may suffer a diminishment in fair value as a result of which we may need to record a write-down or impairment;
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we may fail to grow our existing systems, financial controls, information systems, management resources and human resources in a manner that effectively supports our growth;
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to the extent that we acquire assets in new lines of business, we may become subject to additional regulatory requirements and additional risks that are characteristic or typical of these lines of business; and
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to the extent that we acquire equity interests in entities that control assets (rather than acquiring the assets directly), we may become subject to liabilities that predate our ownership and control of the assets.
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our quarterly or annual earnings, or those of other companies in our industry;
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inaccuracies in, and changes to, our previously published quarterly or annual earnings;
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changes in accounting standards, policies, guidance, interpretations or principles;
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economic conditions within our industry, as well as general economic and stock market conditions;
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the failure of securities analysts to cover our common stock, or the cessation of such coverage;
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changes in financial estimates by securities analysts and the frequency and accuracy of such reports;
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future issuance or sales of our common stock;
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announcements by us or our competitors of significant contracts or acquisitions;
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sales of common stock by our senior officers or our affiliates; and
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the other factors described in these "Risk Factors."
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stockholder actions may only be taken at annual or special meetings of stockholders;
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members of our Board of Directors can be removed with or without cause by a supermajority vote of stockholders;
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the Court of Chancery of the State of Delaware is, with certain exceptions, the exclusive forum for certain legal actions;
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our bylaws, as may be in effect from time to time, can be amended only by a supermajority vote of stockholders; and
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certain provisions of our certificate of incorporation, as may be in effect from time to time, can be amended only by a supermajority vote of stockholders.
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increase our vulnerability to general adverse economic and industry conditions;
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require us to dedicate a substantial portion of our cash flow from operations to service our debt and lease obligations, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes;
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limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
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place us at a disadvantage relative to our competitors that have less indebtedness or better access to capital by, for example, limiting our ability to enter into new markets, upgrade our refining assets or pursue acquisitions or other business opportunities;
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limit our ability to borrow additional funds in the future; and
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increase interest costs for our borrowed funds and letters of credit.
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declare dividends and redeem or repurchase capital stock;
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prepay, redeem or repurchase debt;
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make loans and investments, issue guaranties and pledge assets;
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incur additional indebtedness or amend our debt and other material agreements;
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make capital expenditures;
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engage in mergers, acquisitions and asset sales; and
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enter into certain intercompany arrangements or make certain intercompany payments, which in some instances could restrict our ability to use the assets, cash flows or earnings of one operating segment to support another operating segment or Holdings.
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Period
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Total Number of Shares Purchased
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Average Price Paid per Share
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Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
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Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans
or Programs
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October 1 - October 31, 2018
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184,589
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$
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42.60
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184,589
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$
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59,722,234
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November 1 - November 30, 2018
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—
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—
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—
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559,722,234
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December 1 - December 31, 2018
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3,990,286
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37.59
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3,990,286
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409,722,408
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Total
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4,174,875
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$
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37.81
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|
4,174,875
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N/A
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|
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Repurchases on 2016 Authorization (excluding December 29, 2016 Authorization)
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Repurchases on December 29, 2016 Authorization
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Repurchases on February 2018 Authorization
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Repurchases on December 2018 Authorization
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Period
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Share Repurchase Authorization
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Shares Repurchased
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Average Price Paid per Share
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Shares Repurchased
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Average Price Paid per Share
|
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Shares Repurchased
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Average Price Paid per Share
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Shares Repurchased
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Average Price Paid per Share
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Beginning Share Repurchases Authorized as of January 1, 2016
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$
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—
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Repurchases Authorized 2016 (excluding December 29, 2016 Authorization)
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125,000,000
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2016 Repurchases
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(5,999,839
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)
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386,090
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$
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15.54
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|
|
|
|
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Repurchases Expiration
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(119,000,161
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)
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|
|||||||||||||
December 29, 2016 Repurchases Authorized
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150,000,000
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|
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Share Repurchases Authorized as of December 31, 2016
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150,000,000
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2017 Repurchases
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(24,999,985
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)
|
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|
|
|
|
762,623
|
|
|
$
|
32.78
|
|
|
|
|
|
|
|
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|
||||||||||
Share Repurchases Authorized as of December 31, 2017
|
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125,000,015
|
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|
|
|
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|
|
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|
|
|
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Repurchases Authorized February 2018
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150,000,000
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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Repurchases Authorized November 2018
|
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500,000,000
|
|
|
|
|
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|
|
|
|
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|
|
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2018 Repurchases
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(365,277,607
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)
|
|
|
|
|
|
3,135,942
|
|
|
$
|
39.86
|
|
|
3,449,260
|
|
|
$
|
43.49
|
|
|
2,437,184
|
|
|
$
|
37.04
|
|
||||
Share Repurchases Authorized as of December 31, 2018
|
|
$
|
409,722,408
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
2018(1)(2)
|
|
2017(3)
|
|
2016
|
|
2015(4)
|
|
2014(4)
|
||||||||||
Statement of Operations Data:
|
|
|
|
|
|
|
|
|||||||||||||
Net revenues
|
|
$
|
10,233.1
|
|
|
$
|
7,267.1
|
|
|
$
|
4,197.9
|
|
|
$
|
4,782.0
|
|
|
$
|
7,019.2
|
|
Income (loss) from continuing operations before income tax expense (benefit)
|
|
485.5
|
|
|
299.3
|
|
|
(391.2
|
)
|
|
21.3
|
|
|
326.9
|
|
|||||
Income tax expense (benefit)
|
|
101.9
|
|
|
(29.2
|
)
|
|
(171.5
|
)
|
|
(15.8
|
)
|
|
101.6
|
|
|||||
Income (loss) from continuing operations, net of tax
|
|
383.6
|
|
|
328.5
|
|
|
(219.7)
|
|
|
37.1
|
|
|
225.3
|
|
|||||
(Loss) income from discontinued operations, net of tax
|
|
(8.7
|
)
|
|
(5.9
|
)
|
|
86.3
|
|
|
6.6
|
|
|
0.7
|
|
|||||
Net income (loss)
|
|
374.9
|
|
|
322.6
|
|
|
(133.4
|
)
|
|
43.7
|
|
|
226.0
|
|
|||||
Net income attributed to non-controlling interests
|
|
34.8
|
|
|
33.8
|
|
|
20.3
|
|
|
24.3
|
|
|
27.4
|
|
|||||
Net income (loss) attributable to Delek
|
|
$
|
340.1
|
|
|
$
|
288.8
|
|
|
$
|
(153.7
|
)
|
|
$
|
19.4
|
|
|
$
|
198.6
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total basic income (loss) per share
|
|
$
|
4.11
|
|
|
$
|
4.04
|
|
|
$
|
(2.49
|
)
|
|
$
|
0.32
|
|
|
$
|
3.38
|
|
Total diluted income (loss) per share
|
|
$
|
3.95
|
|
|
$
|
4.00
|
|
|
$
|
(2.49
|
)
|
|
$
|
0.32
|
|
|
$
|
3.34
|
|
Dividends declared per common share outstanding
|
|
$
|
0.96
|
|
|
$
|
0.60
|
|
|
$
|
0.60
|
|
|
$
|
0.60
|
|
|
$
|
1.00
|
|
|
|
December 31,
|
||||||||||||||||||
|
|
2018(5)
|
|
2017(3)
|
|
2016
|
|
2015(4)
|
|
2014(4)
|
||||||||||
Balance Sheet Data:
|
|
|
|
(In millions)
|
|
|
||||||||||||||
Cash and cash equivalents
|
|
$
|
1,079.3
|
|
|
$
|
931.8
|
|
|
$
|
689.2
|
|
|
$
|
287.2
|
|
|
$
|
429.8
|
|
Total current assets
|
|
2,420.3
|
|
|
2,611.8
|
|
|
1,396.9
|
|
|
1,389.4
|
|
|
1,656.0
|
|
|||||
Total assets
|
|
5,760.6
|
|
|
5,935.2
|
|
|
2,979.8
|
|
|
3,316.8
|
|
|
2,888.7
|
|
|||||
Total current liabilities
|
|
1,663.5
|
|
|
2,671.7
|
|
|
935.2
|
|
|
996.0
|
|
|
1,057.5
|
|
|||||
Total debt, including current maturities
|
|
1,783.3
|
|
|
1,465.6
|
|
|
832.9
|
|
|
805.2
|
|
|
464.8
|
|
|||||
Total stockholders' equity
|
|
1,808.1
|
|
|
1,964.2
|
|
|
1,182.5
|
|
|
1,353.9
|
|
|
1,198.4
|
|
•
|
volatility in our refining margins or fuel gross profit as a result of changes in the prices of crude oil, other feedstocks and refined petroleum products;
|
•
|
our ability to execute our strategy of growth through acquisitions and capital projects and changes in the expected value of and benefits derived therefrom, including any inability to successfully integrate acquisitions, realize expected synergies or achieve operational efficiency and effectiveness;
|
•
|
acquired assets may suffer a diminishment in fair value, which may require us to record a write-down or impairment;
|
•
|
reliability of our operating assets;
|
•
|
actions of our competitors and customers;
|
•
|
changes in, or the failure to comply with, the extensive government regulations applicable to our industry segments;
|
•
|
changes in interpretations, assumptions and expectations regarding the Tax Cuts and Jobs Act, including additional guidance that may be issued by federal and state taxing authorities;
|
•
|
diminution in value of long-lived assets may result in an impairment in the carrying value of the assets on our balance sheet and a resultant loss recognized in the statement of operations;
|
•
|
general economic and business conditions affecting the southern, southwestern and western United States, particularly levels of spending related to travel and tourism;
|
•
|
volatility under our derivative instruments;
|
•
|
deterioration of creditworthiness or overall financial condition of a material counterparty (or counterparties);
|
•
|
unanticipated increases in cost or scope of, or significant delays in the completion of, our capital improvement and periodic turnaround projects;
|
•
|
risks and uncertainties with respect to the quantities and costs of refined petroleum products supplied to our pipelines and/or held in our terminals;
|
•
|
operating hazards, natural disasters, casualty losses and other matters beyond our control;
|
•
|
increases in our debt levels or costs;
|
•
|
changes in our ability to continue to access the credit markets;
|
•
|
compliance, or failure to comply, with restrictive and financial covenants in our various debt agreements;
|
•
|
the inability of our subsidiaries to freely make dividends, loans or other cash distributions to us;
|
•
|
seasonality;
|
•
|
acts of terrorism (including cyber-terrorism) aimed at either our facilities or other facilities that could impair our ability to produce or transport refined products or receive feedstocks;
|
•
|
disruption, failure, or cybersecurity breaches affecting or targeting our IT systems and controls, our infrastructure, or the infrastructure of our cloud-based IT service providers;
|
•
|
changes in the cost or availability of transportation for feedstocks and refined products; and
|
•
|
other factors discussed under Item 1A, Risk Factors and Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations and in our other filings with the SEC.
|
•
|
For our Tyler refinery, we compare our per barrel refined product margin to the Gulf Coast 5-3-2 crack spread. The Gulf Coast 5-3-2 crack spread is used as a benchmark for measuring a refinery's product margins by measuring the difference between the market price of light products and crude oil, and represents the approximate refined product margin resulting from processing one barrel of crude oil into three-fifths barrel of gasoline and two-fifths barrel of high-sulfur diesel.
|
•
|
For our Big Spring refinery, we compare our per barrel refined product margin to the Gulf Coast 3-2-1 crack spread. The Gulf Coast 3-2-1 crack spread is calculated assuming that one barrel of WTI Cushing crude oil are converted into two-thirds barrel of Gulf Coast conventional gasoline and one-third barrel of Gulf Coast ultra-low sulfur diesel. Our Big Spring refinery is capable of processing substantial volumes of sour crude oil, which has historically cost less than intermediate, and/or substantial volumes of sweet crude oils, and therefore the WTI Cushing/WTS price differential, taking into account differences in production yield, is an important measure for helping us make strategic, market-respondent production decisions.
|
•
|
For our Krotz Springs refinery, we compare our per barrel refined product margin to the Gulf Coast 2-1-1 high sulfur diesel crack spread, which is calculated assuming that one barrel of LLS crude oil is converted into one-half barrel of Gulf Coast conventional gasoline and one-half barrel of Gulf Coast high sulfur diesel. The Krotz Springs refinery has the capability to process substantial volumes of light sweet, crude oils to produce a high percentage of refined light products.
|
•
|
The crude oil and product slate flexibility of the El Dorado refinery allows us to take advantage of changes in the crude oil and product markets; therefore, we anticipate that the quantities and varieties of crude oil processed and products manufactured at the El Dorado refinery by processing a variety of feedstocks into a number of refined product types will continue to vary. While there is variability in the crude slate and the product output at the El Dorado refinery, we compare our per barrel refined product margin to the Gulf Coast 5-3-2 crack spread because we believe it to be the most closely aligned benchmark.
|
•
|
Maintain and continue to enhance our safe operations. As we invest in and grow our business, we remain focused on safe and compliant operations for the benefit of our employees, communities, customers and shareholders.
|
•
|
Capitalize on the successful integration of the Alon transaction. During 2017 and 2018 we expended significant efforts to fully integrate the Alon organization. Now that the integration is complete, our goal is to continue to implement best practices to improve the performance of our larger organization which includes focusing on simplifying the organization structure and the balance sheet. We are continuing to realize synergies that are expected to have a positive effect on our combined operations.
|
•
|
Build on a winning culture. During 2017 and 2018, we believe our team responded well to our larger scale, as steps were taken to integrate the two companies following the acquisition of Alon in July 2017. We are now a larger and more diverse company, but our focus is to foster a culture that has the ability to act quickly in a changing environment to take advantage of opportunities. In order to support this operation, we continue to be focused on expanding our team, developing systems and providing the resources to position the organization for success in the future.
|
•
|
Enhance our position in the Permian Basin. Our 302,000 barrels per day of crude throughput capacity is primarily a WTI-linked crude oil slate that is weighted to supply from the Permian Basin through our access to approximately 200,000 barrels per day. In addition, we have complementary retail and logistics presence in the area. Our strategic focus will be to evaluate options to utilize our position to create additional growth across our businesses, while working toward reducing our susceptibility to volatility in the crude and refined product markets.
|
•
|
Grow our logistics operations. The combination of our access to the Permian Basin and larger refining operation should allow us to continue to grow our logistics footprint. We will look for opportunities to capitalize on this position to increase our crude gathering operations, support the refining system and third party customers. This includes exploring opportunities for continued development through joint ventures and opportunities to acquire assets in markets that are complementary to our existing geographic footprint.
|
•
|
Optimization of our refining system. We have doubled the size of our refining system since 2016. This gives us the opportunities to utilize the best practices from each location to improve reliability, efficiencies and yields in an effort to maximize performance. This should enhance our competitive position and free cash flow potential.
|
•
|
Use our financial flexibility and cash flow to create shareholder value. We are focused on managing the cash flow in our business to support our capital allocation program that includes: 1) returning cash to shareholders through dividends and share repurchases, 2) investing in our business and 3) growing through acquisitions - all of which combine to serve our central goal of increasing long-term value for our shareholders.
|
•
|
growing our business through new lines of business and investment in our existing businesses including capital improvements and new technology, and
|
•
|
identifying and managing operational and financial risks to improve operational decision-making and increase profitability.
|
I.
|
Become nationally recognized for safety and wellness leadership,
|
II.
|
Maximize return on assets through best-in-industry reliability and integrity,
|
III.
|
Improve efficiency and execution through development of systems and processes,
|
IV.
|
Identify and manage risks to improve decision making and increase profitability, and
|
V.
|
Significantly increase overall earnings.
|
I.
|
Safety and wellness. In the refining environment, safety is always of paramount concern. But safety, and wellness, are also critical to maximizing productivity and optimizing the use of our team members' talents and capital assets, our two most valuable resources. For these reasons, safety and wellness have become an enterprise-wide, pervasive mantra in our culture that is already resulting in fewer injuries and less downtime. For 2019, our initiatives are centered around awareness and developing programs with our employees' input to guide and support all of the business units. We believe these cultural programs will drive continued reductions in work-related recordable injuries and move us toward becoming first in class with respect to safety and wellness.
|
II.
|
Reliability and integrity. We are focused on improving refinery system availability through top-tiered maintenance and equipment monitoring, and minimizing environmental releases by exploring new technologies and methods for monitoring and correcting failures before they result in releases. But this objective reaches beyond our refining and logistics operations. We are also committed to improving the reliability and integrity of our internal information and organizational infrastructure, with a specific emphasis on information technology as well as other functions that support the operating business units.
|
III.
|
Systems and processes. A primary focus to achieve not only an efficient model for sustainability but also to position us to absorb anticipated growth is to develop next generation processes and systems that are integrated, organized, and that are aligned with our operational and strategic objectives.
|
IV.
|
Risk-based decision making. Making effective and insightful decisions in a rapidly changing environment is a hallmark of high-performing organizations that sustain through volatile times. We are working to develop mitigation plans for defined operational and business unit risks that will be anticipatory and preemptive.
|
V.
|
Positioning for growth. We have a history of achieving growth, largely through acquisitions. Our view for the future includes continuing to identify acquisition targets that are strategic as well as accretive while also exploring the possibility of capital investment opportunities in new technology and alternative energy.
|
Summary Statement of Operations Data
|
|
Year Ended December 31,
|
||||||||||
|
|
2018(1)(2)
|
|
2017(3)
|
|
2016
|
||||||
Net revenues
|
|
$
|
10,233.1
|
|
|
$
|
7,267.1
|
|
|
$
|
4,197.9
|
|
Total operating costs and expenses
|
|
9,621.2
|
|
|
7,086.8
|
|
|
4,247.1
|
|
|||
Operating income (loss)
|
|
611.9
|
|
|
180.3
|
|
|
(49.2
|
)
|
|||
Total non-operating expenses (income), net
|
|
126.4
|
|
|
(119.0
|
)
|
|
342.0
|
|
|||
Income (loss) from continuing operations before income tax expense (benefit)
|
|
485.5
|
|
|
299.3
|
|
|
(391.2
|
)
|
|||
Income tax expense (benefit)
|
|
101.9
|
|
|
(29.2
|
)
|
|
(171.5
|
)
|
|||
Income (loss) from continuing operations, net of tax
|
|
383.6
|
|
|
328.5
|
|
|
(219.7
|
)
|
|||
(Loss) income from discontinued operations, net of tax
|
|
(8.7
|
)
|
|
(5.9
|
)
|
|
86.3
|
|
|||
Net income (loss)
|
|
374.9
|
|
|
322.6
|
|
|
(133.4
|
)
|
|||
Net income attributed to non-controlling interests
|
|
34.8
|
|
|
33.8
|
|
|
20.3
|
|
|||
Net income (loss) attributable to Delek
|
|
$
|
340.1
|
|
|
$
|
288.8
|
|
|
$
|
(153.7
|
)
|
•
|
the addition of Alon financial results as a result of the Delek/Alon Merger, which contributed net incremental revenues of $2,710.9 million in the year ended December 31, 2018, which included twelve months of Alon operating results, as compared to the year ended December 31, 2017, which included only six months; and
|
•
|
the effects of increases in the price of finished petroleum products at our refineries (including a 18.0% increase in average price of CBOB gasoline per gallon and a 26.3% increase in average price of ULSD per gallon).
|
•
|
the addition of Alon financial results as a result of the Delek/Alon Merger, which contributed net sales of $1,906.4 during the year ended December 31, 2017 (related to the six months since the date of the Delek/Alon Merger);
|
•
|
the effects of increases in the price of finished petroleum products at our refineries (including a 19.7% increase in average price of CBOB gasoline per gallon and a 22.8% increase in average price of ULSD per gallon); and
|
•
|
net increases in sales volumes in our refining and logistics segments during 2017.
|
•
|
the addition of Alon financial results as a result of the Delek/Alon Merger, which contributed net incremental cost of materials and other of $2,159.2 million during the year ended December 31, 2018 which included twelve months of Alon operating results, as compared to the year ended December 31, 2017, which included only six months of Alon operating results;
|
•
|
an increase in the cost of crude oil feedstocks at the refineries including an increase in the cost of WTI Cushing crude oil from an average of $50.78 per barrel to an average of $65.20, and an increase in the cost of WTI Midland crude oil from an average of $50.44 per barrel to an average of $57.84; and
|
•
|
an increase in the cost of refined products in the logistics segment where the average cost per gallon of gasoline and diesel purchased increased $0.23 per gallon and $0.45 per gallon, respectively.
|
•
|
a reduction in cost of materials and other attributable to a decrease in average RIN prices and RIN waivers received which resulted in an incremental net reduction of such costs as compared to the prior year.
|
•
|
the addition of Alon financial results as a result of the Delek/Alon Merger, which contributed cost of materials and other of $1,531.90 million during the year ended December 31, 2017 (related to the six months since the date of the Delek/Alon Merger);
|
•
|
an increase in the cost of crude oil feedstocks at the refineries including an increase in the cost of WTI Cushing crude oil from an average of $43.33 per barrel to an average of $50.78, and an increase in the cost of WTI Midland crude oil from an average of $43.25 per barrel to an average of $50.44;
|
•
|
an increase in the cost of refined products in the logistics segment where the average cost per gallon of gasoline and diesel purchased increased $0.27 per gallon and $0.31 per gallon, respectively; and
|
•
|
an increase in sales volumes in our refining and logistics segments.
|
•
|
a reduction in cost of materials and other attributable to RIN waiver received which resulted in an incremental net reduction of such costs as compared to the prior year.
|
•
|
the addition of Alon financial results as a result of the Delek/Alon Merger, which contributed incremental operating expenses of $160.5 million during the year ended December 31, 2018, which included twelve months of Alon operating results, as compared to the year ended December 31, 2017, which included only six months of Alon operating results;
|
•
|
higher employee related expenses due to increased headcount, overtime and employee incentive costs;
|
•
|
higher operating costs at our refineries associated with various spills, maintenance, outages and increased utility expenses; and
|
•
|
higher operating costs in our logistics segment associated with increased volumes at our terminals and maintenance costs.
|
•
|
a $16.0 million reduction of operating expenses attributed to recoveries received from the settlement of disputed indemnification matters related to environmental obligations and asset retirement obligations at the Bakersfield Refinery.
|
•
|
addition of Alon financial results as a result of the Delek/Alon Merger, which contributed operating expenses of $172.6 during the year ended December 31, 2017 (related to the six months since the date of the Delek/Alon Merger).
|
•
|
the addition of Alon as a result of the Delek/Alon Merger, which contributed incremental general and administrative expenses of $31.8 million during the year ended December 31, 2018, which included twelve months of Alon operating results, as compared to the year ended December 31, 2017, which included only six months of Alon operating results;
|
•
|
an increase in employee related costs resulting from increases in incentive plan costs and the addition of employees in connection with the integration of the acquisition of Alon; and
|
•
|
increases in information technology expenses related to system upgrades, security and licensing.
|
•
|
the addition of Alon as a result of the Delek/Alon Merger, which contributed general and administrative expenses of $37.4 during the year ended December 31, 2017 (related to the six months since the date of the Delek/Alon Merger), as well as additional absorbed overhead cost, integration costs and related transaction costs incurred during 2017; and
|
•
|
transaction costs related to the Delek/Alon Merger incurred by the Company totaled approximately $24.7 million, inclusive of $10.1 million of merger costs and $14.7 million of non-recurring costs associated with the transaction for the year ended December 31, 2017.
|
•
|
the addition of Alon property, plant and equipment of $1,130.3 million and the addition of amortizable intangibles of $61.3 million as a result of the Delek/Alon Merger, combined with the addition of other capital expenditures and acquisitions (net of disposals) completed to date, where such additions contributed $45.3 million in incremental depreciation and amortization during the year ended December 31, 2018, which included twelve months of Alon operating results, as compared to the year ended December 31, 2017, which included only six months of Alon operating results.
|
•
|
addition of Alon property, plant and equipment of $1,130.5 million (at preliminary fair value) and amortizable intangibles of $53.6 million (at preliminary fair value) as a result of the Delek/Alon Merger, which contributed $34.4 million in additional depreciation and amortization during 2017 (related to the six months since the date of the Delek/Alon Merger).
|
•
|
an increase of $20.1 million related to realized and unrealized gains on trading forward contract derivatives and net of gains of $7.7 million on related hedging derivatives in 2018; and
|
•
|
a gain on asset disposal of $0.9 million partially driven by the sale of 14 retail stores.
|
•
|
an increase in net average borrowings outstanding (including the obligations under the supply and offtake agreements which have an associated interest charge) of approximately $594.0 million (calculated as a simple average of beginning borrowings/obligations and ending borrowings/obligations for the period) for the year ended December 31, 2018 compared to the year ended December 31, 2017, where a significant driver of the increase in borrowings related to the assumption of debt/obligations in connection with the Delek/Alon Merger.
|
•
|
addition of assumed debt totaling $568.0 million (at fair value) in connection with the Delek/Alon Merger; and
|
•
|
increases in the weighted average interest rate, including LIBOR interest rates, under our credit facilities
|
•
|
the absence of the equity method investment in Alon during the year ended December 31, 2018 whereas we recognized our proportionate share of the net income from our investment in Alon of $4.5 million, net of $1.3 million in amortization of the excess of our investment over our equity in the underlying net assets of Alon, for the year ended December 31, 2017; and
|
•
|
the disposal of an equity method investment associated with the sale of asphalt terminals during the year ended December 31, 2018.
|
•
|
the absence of an equity method investment in Alon during the last half of 2017, in which we recognized our proportionate share of the net income from our investment in Alon of $4.5 million, net of $1.3 million in amortization of the excess of our investment over our equity in the underlying net assets of Alon, as compared to our proportionate share of the net loss from our investment in Alon of $39.6 million and $2.6 million in amortization of the excess of our investment over our equity in the underlying net assets of Alon for 2016; and
|
•
|
the recognition of our proportionate share of net income for equity method investments acquired in the Delek/Alon Merger.
|
•
|
the recognition of a gain related to settlement of disputed indemnification matters related to environmental obligations and asset retirement obligations at the Bakersfield Refinery; and
|
•
|
increase in other miscellaneous income, including decrease in reserves related to pending litigation and the relieving of certain retail deposits.
|
•
|
expense associated with the termination of our license agreement with 7-Eleven in 2018 .
|
•
|
pre-tax income of $485.5 million compared to $299.3 million for the years ended December 31, 2018 and 2017, respectively, and an increase in our effective tax rate which was 21.0% compared to (9.8)% for the years ended December 31, 2018 and 2017, respectively.
|
•
|
an increase to our effective tax rate to a more normalized level (in relation to statutory tax rates) where the 2017 tax rate was favorably and significantly impacted by the $166.9 million benefit attributable to the impact of applying the Tax Reform Act to our existing net deferred tax liabilities in 2017.
|
•
|
pre-tax income of $299.3 million compared to pre- tax loss of $391.2 million for the years 2017 and 2016, respectively, which resulted in income tax expense for 2017 as compared to benefit for 2016; and
|
•
|
a $166.9 million benefit attributable to the impact of applying the Tax Reform Act to our existing net deferred tax liabilities in 2017.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net revenues
|
|
$
|
9,610.4
|
|
|
$
|
6,620.6
|
|
|
$
|
3,923.2
|
|
Cost of materials and other
|
|
8,279.9
|
|
|
5,852.2
|
|
|
3,614.1
|
|
|||
Refining Margin
|
|
1,330.5
|
|
|
768.4
|
|
|
309.1
|
|
|||
Operating expenses (excluding depreciation and amortization)
|
|
465.4
|
|
|
317.7
|
|
|
212.4
|
|
|||
Insurance proceeds - business interruption
|
|
—
|
|
|
—
|
|
|
(42.4
|
)
|
|||
Contribution margin
|
|
$
|
865.1
|
|
|
$
|
450.7
|
|
|
$
|
139.1
|
|
Contribution margin percentage
|
|
9.0
|
%
|
|
6.8
|
%
|
|
3.5
|
%
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Tyler, TX Refinery
|
|
|
|
|
|
|
||||||
Days in period
|
|
365
|
|
|
365
|
|
|
366
|
|
|||
Total sales volume - refined (average barrels per day) (1)
|
|
78,658
|
|
|
76,041
|
|
|
72,542
|
|
|||
Products manufactured (average barrels per day):
|
|
|
|
|
|
|
||||||
Gasoline
|
|
42,138
|
|
|
40,936
|
|
|
38,618
|
|
|||
Diesel/Jet
|
|
30,035
|
|
|
29,194
|
|
|
28,031
|
|
|||
Petrochemicals, LPG, NGLs
|
|
2,564
|
|
|
2,522
|
|
|
2,551
|
|
|||
Other
|
|
1,665
|
|
|
1,677
|
|
|
1,548
|
|
|||
Total production
|
|
76,402
|
|
|
74,329
|
|
|
70,748
|
|
|||
Throughput (average barrels per day):
|
|
|
|
|
|
|
||||||
Crude Oil
|
|
70,041
|
|
|
69,088
|
|
|
67,357
|
|
|||
Other feedstocks
|
|
6,770
|
|
|
6,729
|
|
|
4,310
|
|
|||
Total throughput
|
|
76,811
|
|
|
75,817
|
|
|
71,667
|
|
|||
Per barrel of sales:
|
|
|
|
|
|
|
||||||
Tyler refining margin
|
|
$
|
11.88
|
|
|
$
|
9.10
|
|
|
$
|
7.56
|
|
Direct operating expenses
|
|
$
|
3.64
|
|
|
$
|
3.42
|
|
|
$
|
3.75
|
|
Crude Slate: (% based on amount received in period)
|
|
|
|
|
|
|
||||||
WTI crude oil
|
|
83.0
|
%
|
|
81.1
|
%
|
|
80.3
|
%
|
|||
East Texas crude oil
|
|
16.3
|
%
|
|
17.8
|
%
|
|
18.6
|
%
|
|||
Other
|
|
0.7
|
%
|
|
1.1
|
%
|
|
1.1
|
%
|
|||
|
|
|
|
|
|
|
||||||
El Dorado, AR Refinery
|
|
|
|
|
|
|
||||||
Days in period
|
|
365
|
|
|
|
|
366
|
|
||||
Total sales volume - refined (average barrels per day) (2)
|
|
71,381
|
|
|
80,277
|
|
|
78,100
|
|
|||
Products manufactured (average barrels per day):
|
|
|
|
|
|
|
||||||
Gasoline
|
|
33,718
|
|
|
38,175
|
|
|
40,751
|
|
|||
Diesel
|
|
24,609
|
|
|
27,482
|
|
|
27,085
|
|
|||
Petrochemicals, LPG, NGLs
|
|
1,228
|
|
|
1,782
|
|
|
1,042
|
|
|||
Asphalt
|
|
5,179
|
|
|
6,507
|
|
|
5,203
|
|
|||
Other
|
|
732
|
|
|
985
|
|
|
947
|
|
|||
Total production
|
|
65,466
|
|
|
74,931
|
|
|
75,028
|
|
|||
Throughput (average barrels per day):
|
|
|
|
|
|
|
||||||
Crude Oil
|
|
65,615
|
|
|
73,577
|
|
|
72,660
|
|
|||
Other feedstocks
|
|
1,313
|
|
|
2,568
|
|
|
3,742
|
|
|||
Total throughput
|
|
66,928
|
|
|
76,145
|
|
|
76,402
|
|
|||
Per barrel of sales:
|
|
|
|
|
|
|
||||||
El Dorado refining margin
|
|
$
|
8.64
|
|
|
$
|
7.76
|
|
|
$
|
3.09
|
|
Direct operating expenses
|
|
$
|
5.22
|
|
|
$
|
3.61
|
|
|
$
|
3.73
|
|
Crude Slate: (% based on amount received in period)
|
|
|
|
|
|
|
||||||
WTI crude oil
|
|
58.6
|
%
|
|
60.8
|
%
|
|
65.6
|
%
|
|||
Local Arkansas crude oil
|
|
21.2
|
%
|
|
18.9
|
%
|
|
21.1
|
%
|
|||
Other
|
|
20.2
|
%
|
|
20.3
|
%
|
|
13.3
|
%
|
|
|
Year ended December 31, 2018
|
|
Period from July 1, 2017 through December 31, 2017
|
|||||
Big Spring, TX Refinery (acquired on July 1, 2017)
|
|
|
|
|
|||||
Days in period
|
|
365
|
|
|
184
|
|
|||
Total sales volume - refined (average barrels per day) (3)
|
|
74,721
|
|
|
74,276
|
|
|||
Products manufactured (average barrels per day):
|
|
|
|
|
|||||
Gasoline
|
|
36,596
|
|
—
|
|
37,266
|
|
||
Diesel/Jet
|
|
26,660
|
|
—
|
|
27,027
|
|
||
Petrochemicals, LPG, NGLs
|
|
3,646
|
|
—
|
|
3,738
|
|
||
Asphalt
|
|
1,855
|
|
—
|
|
1,308
|
|
||
Other
|
|
1,339
|
|
—
|
|
1,354
|
|
||
Total production
|
|
70,096
|
|
—
|
|
70,693
|
|
||
Throughput (average barrels per day):
|
|
|
|
|
|||||
Crude oil
|
|
67,978
|
|
—
|
|
69,549
|
|
||
Other feedstocks
|
|
1,533
|
|
—
|
|
1,253
|
|
||
Total throughput
|
|
69,511
|
|
—
|
|
70,802
|
|
||
Per barrel of sales:
|
|
|
|
|
|||||
Big Spring refining margin
|
|
$
|
18.44
|
|
|
$
|
12.86
|
|
|
Direct operating expenses
|
|
$
|
4.20
|
|
|
$
|
4.04
|
|
|
Crude Slate: (% based on amount received in period)
|
|
|
|
|
|||||
WTI crude oil
|
|
73.8
|
%
|
|
72.9
|
%
|
|||
WTS crude oil
|
|
26.2
|
%
|
|
27.1
|
%
|
|||
|
|
|
|
|
|||||
Krotz Springs, LA Refinery (acquired on July 1, 2017)
|
|
|
|
|
|||||
Days in period
|
|
365
|
|
|
184
|
|
|||
Total sales volume - refined (average barrels per day) (4)
|
|
78,902
|
|
|
70,923
|
|
|||
Products manufactured (average barrels per day):
|
|
|
|
|
|||||
Gasoline
|
|
36,729
|
|
—
|
|
33,286
|
|
||
Diesel/Jet
|
|
31,459
|
|
—
|
|
27,686
|
|
||
Heavy Oils
|
|
1,216
|
|
—
|
|
1,024
|
|
||
Petrochemicals, LPG, NGLs
|
|
7,224
|
|
—
|
|
7,018
|
|
||
Total production
|
|
76,628
|
|
—
|
|
69,014
|
|
||
Throughput (average barrels per day):
|
|
|
|
|
|||||
Crude Oil
|
|
73,171
|
|
—
|
|
67,407
|
|
||
Other feedstocks
|
|
2,211
|
|
—
|
|
1,017
|
|
||
Total throughput
|
|
75,382
|
|
—
|
|
68,424
|
|
||
Per barrel of sales:
|
|
|
|
|
|||||
Krotz Springs refining margin
|
|
$
|
9.48
|
|
|
$
|
8.29
|
|
|
Direct operating expenses
|
|
$
|
3.84
|
|
|
$
|
3.80
|
|
|
Crude Slate: (% based on amount received in period)
|
|
|
|
|
|||||
WTI Crude
|
|
61.3
|
%
|
|
52.9
|
%
|
|||
Gulf Coast Sweet Crude
|
|
38.7
|
%
|
|
47.1
|
%
|
Pricing statistics (average for the periods presented):
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
WTI — Cushing crude oil (per barrel)
|
|
$
|
65.20
|
|
|
$
|
50.78
|
|
|
$
|
43.33
|
|
WTI — Midland crude oil (per barrel)
|
|
$
|
57.84
|
|
|
$
|
50.44
|
|
|
$
|
43.25
|
|
WTS -- Midland crude oil (per barrel) (5)
|
|
$
|
57.43
|
|
|
$
|
49.81
|
|
|
$
|
42.49
|
|
LLS (per barrel) (5)
|
|
$
|
70.19
|
|
|
$
|
54.01
|
|
|
$
|
45.02
|
|
Brent crude oil (per barrel)
|
|
$
|
71.69
|
|
|
$
|
54.73
|
|
|
$
|
45.18
|
|
|
|
|
|
|
|
|
||||||
U.S. Gulf Coast 5-3-2 crack spread (per barrel) (5)
|
|
$
|
13.21
|
|
|
$
|
13.01
|
|
|
$
|
9.19
|
|
U.S. Gulf Coast 3-2-1 crack spread (per barrel) (5)
|
|
$
|
16.63
|
|
|
$
|
16.69
|
|
|
$
|
12.43
|
|
U.S. Gulf Coast 2-1-1 crack spread (per barrel) (5)
|
|
$
|
9.58
|
|
|
$
|
10.94
|
|
|
$
|
8.47
|
|
|
|
|
|
|
|
|
||||||
U.S. Gulf Coast Unleaded Gasoline (per gallon)
|
|
$
|
1.83
|
|
|
$
|
1.55
|
|
|
$
|
1.30
|
|
Gulf Coast Ultra low sulfur diesel (per gallon)
|
|
$
|
2.05
|
|
|
$
|
1.62
|
|
|
$
|
1.32
|
|
U.S. Gulf Coast high sulfur diesel (per gallon)
|
|
$
|
1.92
|
|
|
$
|
1.47
|
|
|
$
|
1.18
|
|
Natural gas (per MMBTU)
|
|
$
|
3.07
|
|
|
$
|
3.02
|
|
|
$
|
2.55
|
|
(1)
|
Total sales volume includes 986, 1,592 and 622 bpd sold to the logistics segment during the years ended December 31, 2018, 2017 and 2016, respectively. Total sales volume also includes sales of 193, 129 and 510 bpd of intermediate and finished products to the El Dorado refinery during the years ended December 31, 2018, 2017 and 2016, respectively. Total sales volume also includes 399 and 546 bpd of produced finished product sold to the Big Spring refinery for the years ended December 31, 2018 and 2017, respectively, and 232 bpd sold to the Krotz Springs refinery during the year ended December 31, 2018. Total sales volume excludes 4,444, 4,209 and 1,281 bpd of wholesale activity during the years ended December 31, 2018, 2017 and 2016, respectively.
|
(2)
|
Total sales volume includes 1,387, 514, and 102 bpd of produced finished product sold to the Tyler refinery during the years ended December 31, 2018, 2017 and 2016, respectively, and 27,048 bpd and 302 of produced finished product sold to the Krotz Springs and Big Spring refineries, respectively, for the year ended December 31, 2018. There were 140 bpd of produced finished product sold to the logistics segment and 17 bpd sold to the retail segment during the year ended December 31, 2018. In addition, 406 and 2,247 bpd of produced finished product was sold to Alon Asphalt Company during the years ended December 31, 2018 and 2017, respectively. Total sales volume excludes 47,422, 25,750 and 20,329 bpd of wholesale activity during the years ended December 31, 2018, 2017 and 2016, respectively.
|
(3)
|
Total sales volume includes 13,967 and 15,190 bpd sold to the retail segment, 10,005 and 176 bpd sold to the logistics segment and 1,688 and 1,510 bpd sold to Alon Asphalt Company during the years ended December 31, 2018 and 2017, respectively.
|
(4)
|
Sales volume includes 19,039 and 728 bpd sold to the El Dorado refinery and 606 and 60 bpd sold to the Tyler refinery during the years ended December 31, 2018 and 2017, respectively.
|
(5)
|
For our Tyler and El Dorado refineries, we compare our per barrel refining product margin to the Gulf Coast 5-3-2 crack spread consisting of WTI Cushing crude, U.S. Gulf Coast CBOB and U.S, Gulf Coast Pipeline No. 2 heating oil (high sulfur diesel). For our Big Spring refinery, we compare our per barrel refined product margin to the Gulf Coast 3-2-1 crack spread consisting of WTI Cushing crude, Gulf Coast 87 Conventional gasoline and Gulf Coast ultra low sulfur diesel, and for our Krotz Springs refinery, we compare our per barrel refined product margin to the Gulf Coast 2-1-1 crack spread consisting of LLS crude oil, Gulf Coast 87 Conventional gasoline and U.S, Gulf Coast Pipeline No. 2 heating oil (high sulfur diesel). The Tyler refinery's crude oil input is primarily WTI Midland and east Texas, while the El Dorado refinery's crude input is primarily combination of WTI Midland, local Arkansas and other domestic inland crude oil. The Big Spring refinery’s crude oil input is primarily comprised of WTS and WTI Midland. The Krotz Springs refinery’s crude oil input is primarily comprised of LLS and WTI Midland. The Big Spring and Krotz Springs refineries were acquired July 1, 2017 as part of the Delek/Alon Merger, so Gulf Coast 3-2-1 and 2-1-1 crack spreads, LLS and WTS statistics are presented only for the period Delek owned these refineries.
|
•
|
the addition of the Big Spring and Krotz Springs refineries in connection with the Delek/Alon Merger in the second half of 2017; and
|
•
|
increases in the price of U.S. Gulf Coast gasoline, ULSD and HSD, where increases in sales volume at he Tyler, Big Spring and Krotz Springs refineries were offset by a decrease in sales volumes at the El Dorado refinery.
|
•
|
increase in net revenues included the addition of the Big Spring and Krotz Springs refineries in connection with the Delek/Alon Merger in the second half of 2017; and
|
•
|
increases in the price of U.S. Gulf Coast gasoline, ULSD and HSD.
|
•
|
the addition of the Big Spring and Krotz Springs refineries in connection with the Delek/Alon Merger in the second half of 2017;
|
•
|
an increase in the cost of WTI- Cushing crude oil from an average of $50.78 per barrel for 2017 to an average of $65.20 during 2018; and
|
•
|
an increase in the cost of WTI - Midland crude oil, from an average of $50.44 per barrel for 2017 to an average of $57.84 during 2018 .
|
•
|
a reduction of our RINs Obligation and related cost of materials and other of approximately $59.3 million and $47.5 million for the year ended December 31, 2018 and 2017, respectively, related to the receipt of small refinery exemptions from the requirements of the renewable fuel standard at our El Dorado refinery for the 2018 and 2017 calendar years, respectively. In March 2018, the Krotz Springs refinery received such approval as well, which resulted in a reduction of our RINs Obligation and related cost of materials and other of approximately $31.6 million for the year ended December 31, 2018.
|
•
|
the addition of the Big Spring and Krotz Springs refineries in connection with the Delek/Alon Merger in the second half of 2017;
|
•
|
an increase in the cost of WTI- Cushing crude oil from an average of $43.33 per barrel for 2016 to an average of $50.78 during 2017,; and
|
•
|
an increase in the cost of WTI - Midland crude oil, from an average of $43.25 per barrel for 2016 to an average of $50.44 during 2017.
|
•
|
$47.5 million reduction in RINs expense associated with the RINs waiver received by the El Dorado refinery in the first quarter of 2017.
|
•
|
the addition of the Big Spring and Krotz Springs refineries in connection with the Delek/Alon Merger on July 1, 2017;
|
•
|
wider discounts between WTI Cushing crude oil compared to Brent and WTI Midland crude oil compared to WTI Cushing which impact refining margin at the Tyler and El Dorado Refineries where, during the year ended December 31, 2018, the average WTI Cushing crude oil differential to Brent crude oil was $6.49 per barrel compared to $3.95 during the year ended December 31, 2017, and the average WTI Midland crude oil differential to WTI Cushing crude oil was $7.36 per barrel compared to $0.34 during the year ended December 31, 2017;
|
•
|
a 1.5% improvement in the average Gulf Coast 5-3-2 crack spread; and
|
•
|
the cost of materials and other benefit attributable to the RIN waivers.
|
•
|
the addition of the Big Spring and Krotz Springs refineries in connection with the Delek/Alon Merger on July 1, 2017;
|
•
|
a 41.6% improvement in the average Gulf Coast 5-3-2 crack spread; and
|
•
|
the cost of materials and other benefit attributable to the RIN waivers.
|
•
|
addition of the Big Spring and Krotz Springs refineries in connection with the Delek/Alon Merger in the second half of 2017;
|
•
|
additional costs associated with various spills at the El Dorado refinery;
|
•
|
higher maintenance and other costs associated with outages at the refineries; and
|
•
|
higher employee costs due to overtime and incentive bonuses.
|
•
|
addition of the Big Spring and Krotz Springs refineries in connection with the Delek/Alon Merger in the second half of 2017.
|
•
|
the addition of the Big Spring and Krotz Springs refineries in connection with the Delek/Alon Merger on July 1, 2017;
|
•
|
a 1.5% improvement in the average Gulf Coast 5-3-2 crack spread;
|
•
|
improvements in crude oil differentials as described above; and
|
•
|
the cost of materials and other benefit attributable to the RIN waivers.
|
•
|
the addition of the Big Spring and Krotz Springs refineries in connection with the Delek/Alon Merger in the second half of 2017;
|
•
|
a 41.6% improvement in the average Gulf Coast 5-3-2 crack spread in 2017 as compared to 2016, which favorably impacted the period-over- period margins at all refineries; and
|
•
|
reduction in RINs expense, primarily associated with the $47.5 million reduction in RINs expense associated with the RINs waiver received by the El Dorado refinery in the first quarter of 2017.
|
•
|
the recognition of the inventory fair value adjustment associated with purchase accounting as an increase in cost of materials and other during 2017 totaling $33.2 million, as the inventory acquired was sold; and
|
•
|
business interruption insurance proceeds of $42.4 million associated with a settlement of litigation received in the first quarter of 2016.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net revenues
|
|
$
|
657.6
|
|
|
538.1
|
|
|
$
|
448.1
|
|
|
Cost of materials and other
|
|
429.1
|
|
|
372.9
|
|
|
302.2
|
|
|||
Operating expenses (excluding depreciation and amortization)
|
|
58.7
|
|
|
43.3
|
|
|
37.2
|
|
|||
Contribution margin
|
|
$
|
169.8
|
|
|
$
|
121.9
|
|
|
$
|
108.7
|
|
Operating Information:
|
|
|
|
|
|
|
||||||
East Texas - Tyler Refinery sales volumes (average bpd) (1)
|
|
77,487
|
|
|
73,655
|
|
|
68,131
|
|
|||
Big Spring wholesale marketing throughputs (average bpd) (2)
|
|
81,117
|
|
|
—
|
|
|
—
|
|
|||
West Texas wholesale marketing throughputs (average bpd)
|
|
13,323
|
|
|
13,817
|
|
|
13,257
|
|
|||
West Texas wholesale marketing margin per barrel
|
|
$
|
5.57
|
|
|
$
|
4.03
|
|
|
$
|
1.43
|
|
Terminalling throughputs (average bpd) (3)
|
|
161,284
|
|
|
124,488
|
|
|
122,350
|
|
|||
Throughputs (average bpd):
|
|
|
|
|
|
|
||||||
Lion Pipeline System:
|
|
|
|
|
|
|
||||||
Crude pipelines (non-gathered)
|
|
51,992
|
|
|
59,362
|
|
|
56,555
|
|
|||
Refined products pipelines to Enterprise Systems
|
|
45,728
|
|
|
51,927
|
|
|
52,071
|
|
|||
SALA Gathering System
|
|
16,571
|
|
|
15,871
|
|
17,756
|
|
||||
East Texas Crude Logistics System
|
|
15,696
|
|
|
15,780
|
|
12,735
|
•
|
increases in the average sales prices per gallon of gasoline and diesel sold in our west Texas marketing operations. The average sales prices per gallon of gasoline and diesel sold increased $0.29 per gallon and $0.45 per gallon, respectively, amounting to an increase of $78.7 million of the $119.5 million increase in net revenues; and
|
•
|
net revenues generated under the agreements executed in connection with the Big Spring Logistics Assets Acquisition, which were effective March 1, 2018. Refer to Note 6 to our accompanying condensed consolidated financial statements for additional information about the agreements executed in connection with the Big Spring Logistic Assets Acquisition; and
|
•
|
increased net revenue related to the Paline Pipeline as a result of volume increases on the pipeline.
|
•
|
increases in the average sales prices per gallon of gasoline and diesel sold in our west Texas marketing operations. The average sales prices increased $0.32 per gallon and $0.39 per gallon, respectively;
|
•
|
a net increase of 8.0 million gallons in the volume of gasoline and diesel sold in west Texas during the year ended December 31, 2017 compared to gallons sold during the year ended December 31, 2016;
|
•
|
increased fees under our marketing agreement with Delek Holdings as a result of increased throughput due to higher demand following product supply disruptions associated with Hurricane Harvey, partially offset by a decline in fees on our Paline Pipeline System; and
|
•
|
decreases in revenues on our Paline Pipeline System. During the year ended December 31, 2017, the Paline Pipeline System was FERC regulated pipeline with a tariff established for potential shippers, compared to the year ended December 31, 2016, when the pipeline capacity was under contract with two third parties for a monthly fee.
|
•
|
increases in the average cost per gallon of gasoline and diesel purchased in our west Texas marketing operations. The average cost per gallon of gasoline and diesel purchased increased $0.23 per gallon and $0.45 per gallon, respectively, which amounted to an increase of $72.6 million in cost of materials and other. The increase in the average cost per gallon of gasoline and diesel was partially offset by a decrease in volumes sold amounting to $13.5 million and hedging gains of $4.8 million.
|
•
|
increases in the average cost per gallon of gasoline and diesel purchased in our west Texas marketing operations. The average cost per gallon of gasoline and diesel increased $0.27 per gallon and $0.31 per gallon, respectively; and
|
•
|
a net increase of 8.0 million gallons in the volume of gasoline and diesel purchased in west Texas during the year ended December 31, 2017 compared to gallons purchased during the year ended December 31, 2016.
|
•
|
higher operating costs associated with the logistics assets acquired in the Big Spring Logistic Assets Acquisition, including maintenance expenses, allocated employee costs, variable expenses such as utilities, and professional services fees incurred in connection with the transaction, which accounted for the majority of the increase in operating increases;
|
•
|
higher employee costs, primarily payroll expense, allocated to us as a result of increases in allocated employee headcount and employee incentive costs;
|
•
|
higher costs associated with operating certain of our terminals as a result of volume increases at such terminals; and
|
•
|
increases in outside services expenses related to maintenance projects on certain of our pipelines and tanks.
|
•
|
increases in labor and utilities costs associated with certain of our pipelines as a result of increased usage;
|
•
|
higher maintenance costs associated with certain of our tanks at our tank farms; and
|
•
|
employee incentive costs incurred during the year ended December 31, 2017, with no comparable costs incurred during the year ended December 31, 2016.
|
•
|
reduction in operating expenses for one of our terminal locations at which we incurred increased costs related to internal tank contamination during the year ended December 31, 2016 that were not incurred during the year ended December 31, 2017.
|
•
|
improved contribution margin in our west Texas operations as a result of continued increased drilling activity in the region and favorable market price movements; and
|
•
|
increases in revenue generated under the agreements executed in connection with the Big Spring Logistic Assets Acquisition as described above.
|
•
|
improved contribution margin in our west Texas operations as a result of increased drilling activity in the region, which has improved market conditions and increased demand;
|
•
|
improvements in our west Texas wholesale marketing margin per barrel as a result of a period of product supply disruptions associated with Hurricane Harvey; and
|
•
|
increased fees associated with the marketing agreement as described above.
|
•
|
a decline in fees on our Paline Pipeline System as described above.
|
|
|
Year Ended December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Net revenues
|
|
$
|
915.4
|
|
|
426.7
|
|
|
Cost of materials and other
|
|
755.8
|
|
|
350.3
|
|
||
Operating expenses (excluding depreciation and amortization)
|
|
100.7
|
|
|
49.6
|
|
||
Contribution margin
|
|
$
|
58.9
|
|
|
$
|
26.8
|
|
Operating Information:
|
|
|
|
|
||||
Number of stores (end of period)
|
|
279
|
|
|
302
|
|
||
Average number of stores
|
|
295
|
|
|
302
|
|
||
Retail fuel sales
|
|
$
|
571.6
|
|
|
$
|
251.8
|
|
Retail fuel sales (thousands of gallons)
|
|
217,118
|
|
|
107,599
|
|
||
Average retail gallons per average number of stores (in thousands)
|
|
801
|
|
|
367
|
|
||
Average retail sales price per gallon sold
|
|
$
|
2.63
|
|
|
$
|
2.34
|
|
Retail fuel margin ($ per gallon)(1)
|
|
$
|
0.239
|
|
|
$
|
0.190
|
|
Merchandise sales
|
|
$
|
339.0
|
|
|
$
|
174.6
|
|
Merchandise sales per average number of stores
|
|
$
|
1.1
|
|
|
$
|
0.6
|
|
Merchandise margin %
|
|
30.9
|
%
|
|
30.7
|
%
|
||
Operating expense/merchandise sales plus total gallons
|
|
11.1
|
%
|
|
11.9
|
%
|
(1)
|
Retail fuel margin represents gross margin on fuel sales in the retail segment, and is calculated as retail fuel sales revenue less retail fuel cost of sales. The retail fuel margin per gallon calculation is derived by dividing retail fuel margin by the total retail fuel gallons sold for the period.
|
•
|
the addition of 302 convenience stores on July 1, 2017 in connection with the Delek/Alon Merger, where 2018 has twelve months of retail operating results and 2017 has only six months of retail operating results; and
|
•
|
improvements in average sales price of retail fuel per gallon to $2.63 during the year ended December 31, 2018 compared to $2.34 during the six months ended December 31, 2017.
|
•
|
the addition of 302 convenience stores on July 1, 2017 in connection with the Delek/Alon Merger, where 2018 has twelve months of retail operating results and 2017 has only six months of retail operating results; and
|
•
|
increases in cost per gallon of fuel sold to $2.39 during the year ended December 31, 2018 compared to $2.15 during the six months ended December 31, 2017.
|
•
|
the addition of 302 convenience stores on July 1, 2017 in connection with the Delek/Alon Merger, where 2018 has twelve months of retail operating results and 2017 has only six months of retail operating results.
|
•
|
the addition of 302 convenience stores on July 1, 2017 in connection with the Delek/Alon Merger, where 2018 has twelve months of retail operating results and 2017 has only six months of retail operating results; and
|
•
|
improvements in average sales price of retail fuel per gallon to $2.63 during the year ended December 31, 2018 compared to $2.34 during the six months ended December 31, 2017, or an increase of 12.5%, where cost per gallon of fuel sold increased to $2.39 during the year ended December 31, 2018 compared to $2.15 during the six months ended December 31, 2017, an increase of 11.2%.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Cash Flow Data:
|
|
|
|
|
|
|
||||||
Operating activities
|
|
$
|
560.3
|
|
|
$
|
319.7
|
|
|
$
|
248.0
|
|
Investing activities
|
|
(125.3
|
)
|
|
37.6
|
|
|
200.7
|
|
|||
Financing activities
|
|
(297.6
|
)
|
|
(104.6
|
)
|
|
(61.7
|
)
|
|||
Net increase
|
|
$
|
137.4
|
|
|
$
|
252.7
|
|
|
$
|
387.0
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2019 Forecast
|
|
2018
Actual
|
||||
Refining:
|
|
|
|
|
||||
Sustaining maintenance, including turnaround activities
|
|
$
|
112.3
|
|
|
$
|
88.7
|
|
Regulatory
|
|
82.9
|
|
|
38.0
|
|
||
Discretionary projects
|
|
28.5
|
|
|
77.2
|
|
||
Refining segment total
|
|
223.7
|
|
|
203.9
|
|
||
Logistics:
|
|
|
|
|
||||
Regulatory
|
|
8.1
|
|
|
1.2
|
|
||
Sustaining maintenance
|
|
8.8
|
|
|
5.4
|
|
||
Discretionary projects
|
|
0.6
|
|
|
5.0
|
|
||
Logistics segment total
|
|
17.5
|
|
|
11.6
|
|
||
Retail:
|
|
|
|
|
||||
Regulatory
|
|
—
|
|
|
0.2
|
|
||
Sustaining maintenance
|
|
3.3
|
|
|
4.0
|
|
||
Discretionary projects
|
|
14.9
|
|
|
5.8
|
|
||
Retail segment total
|
|
18.2
|
|
|
10.0
|
|
||
Other
|
|
|
|
|
||||
Regulatory
|
|
2.2
|
|
|
0.3
|
|
||
Sustaining maintenance
|
|
3.4
|
|
|
1.4
|
|
||
Discretionary projects
|
|
85.1
|
|
|
90.0
|
|
||
Other total
|
|
90.7
|
|
|
91.7
|
|
||
Total capital spending
|
|
$
|
350.1
|
|
|
$
|
317.2
|
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
|
<1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
>5 Years
|
|
Total
|
||||||||||
Long term debt and notes payable obligations
|
|
$
|
32.0
|
|
|
$
|
89.0
|
|
|
$
|
770.7
|
|
|
$
|
909.8
|
|
|
$
|
1,801.5
|
|
Interest(1)
|
|
97.3
|
|
|
187.0
|
|
|
163.4
|
|
|
65.1
|
|
|
512.8
|
|
|||||
Operating lease commitments(2)
|
|
48.1
|
|
|
81.6
|
|
|
51.9
|
|
|
77.9
|
|
|
259.5
|
|
|||||
Purchase commitments(3)
|
|
577.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
577.3
|
|
|||||
Transportation agreements(4)
|
|
126.8
|
|
|
195.3
|
|
|
89.1
|
|
|
126.9
|
|
|
538.1
|
|
|||||
Total
|
|
$
|
881.5
|
|
|
$
|
552.9
|
|
|
$
|
1,075.1
|
|
|
$
|
1,179.7
|
|
|
$
|
3,689.2
|
|
|
|
Total Outstanding
|
|
Notional Contract Volume by
Year of Maturity
|
|
|
||||||||||||||||
Contract Description
|
|
Fair Value
|
|
Notional Contract Volume
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
||||||||
Contracts not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Crude oil price swaps - long(1)
|
|
$
|
(1.6
|
)
|
|
480,000
|
|
|
—
|
|
|
480,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Crude oil price swaps - short(1)
|
|
0.5
|
|
|
480,000
|
|
|
—
|
|
|
480,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Inventory, refined product and crack spread swaps - long(1)
|
|
(8.9
|
)
|
|
9,265,000
|
|
|
6,225,000
|
|
|
3,040,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Inventory, refined product and crack spread swaps - short(1)
|
|
19.2
|
|
|
10,207,000
|
|
|
4,967,000
|
|
|
5,000,000
|
|
|
240,000
|
|
|
—
|
|
|
—
|
|
|
RIN commitment contracts - long(2)
|
|
0.3
|
|
|
74,000,000
|
|
|
74,000,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
RIN commitment contracts - short(2)
|
|
6.5
|
|
|
63,750,000
|
|
|
63,750,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
$
|
16.0
|
|
|
158,182,000
|
|
|
148,942,000
|
|
|
9,000,000
|
|
|
240,000
|
|
|
—
|
|
|
—
|
|
Contracts designated as cash flow hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Inventory, refined product and crack spread swaps - long(1)
|
|
27.0
|
|
|
15,811,000
|
|
|
15,811,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Inventory, refined product and crack spread swaps - short(1)
|
|
17.6
|
|
|
650,000
|
|
|
350,000
|
|
|
300,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
$
|
44.6
|
|
|
16,461,000
|
|
|
16,161,000
|
|
|
300,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Contract Description
|
|
Less than 1 year
|
||
Over the counter forward sales contracts
|
|
|
||
Notional contract volume (1)
|
|
1,454,109
|
|
|
Weighted-average market price (per barrel)
|
|
$
|
28.87
|
|
Contractual volume at fair value (in millions)
|
|
$
|
42.0
|
|
Over the counter forward purchase contracts
|
|
|
||
Notional contract volume (1)
|
|
930,713
|
|
|
Weighted-average market price (per barrel)
|
|
$
|
29.06
|
|
Contractual volume at fair value (in millions)
|
|
$
|
27.0
|
|
(1)
|
Volume in barrels
|
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 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.
|
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:
|
3.
|
Exhibits - See below.
|
Exhibit No.
|
|
Description
|
||
2.1
|
|
|
|
|
2.2
|
|
<
|
|
|
2.3
|
|
<
|
|
|
2.4
|
|
|
|
|
2.5
|
|
|
|
|
2.6
|
|
|
|
|
2.7
|
|
|
|
|
3.1
|
|
|
|
|
3.2
|
|
|
|
|
4.1
|
|
|
|
|
4.2
|
|
|
|
|
4.3
|
|
|
|
|
10.1
|
|
*
|
|
|
10.2(a)
|
|
*
|
|
|
10.2(b)
|
|
*
|
|
|
10.2(c)
|
|
*
|
|
|
10.2(d)
|
|
*
|
|
|
10.2(e)
|
|
*
|
|
|
10.2(f)
|
|
*
|
|
|
10.2(g)
|
|
*
|
|
|
10.3
|
|
|
|
|
10.4
|
|
|
|
|
10.5
|
|
|
|
10.6
|
|
++
|
|
|
10.7(a)
|
|
|
|
|
10.7(b)
|
|
|
|
|
10.7(c)
|
|
|
|
|
10.8(a)
|
|
*
|
|
|
10.8(b)
|
|
*
|
|
|
10.9
|
|
|
|
|
10.10(a)
|
|
|
|
|
10.10(b)
|
|
|
|
|
10.11(a)
|
|
|
|
|
10.11(b)
|
|
|
|
|
10.12(a)
|
|
*
|
|
|
10.12(b)
|
|
*
|
|
|
10.12(c)
|
|
*
|
|
|
10.12(d)
|
|
*
|
|
|
10.12(e)
|
|
*
|
|
|
10.13(a)
|
|
*
|
|
|
10.13(b)
|
|
*
|
|
10.13(c)
|
|
*
|
|
|
10.13(d)
|
|
*
|
|
|
10.13(e)
|
|
*
|
|
|
10.13(f)
|
|
*
|
|
|
10.13(g)
|
|
*
|
|
|
10.13(h)
|
|
*
|
|
|
10.14(a)
|
|
*
|
|
|
10.14(b)
|
|
*
|
|
|
10.14(c)
|
|
*
|
|
|
10.14(d)
|
|
*
|
|
|
10.15
|
|
|
|
|
10.16
|
|
|
|
|
10.17
|
|
|
|
|
10.18(a)
|
|
|
|
|
10.18(b)
|
|
|
|
|
10.19
|
|
|
|
|
10.20(a)
|
|
++
|
|
|
10.20(b)
|
|
|
|
|
10.21(a)
|
|
++
|
|
|
10.21(b)
|
|
~#
|
|
|
10.22
|
|
++
|
|
|
10.23(a)
|
|
|
|
|
10.23(b)
|
|
|
|
|
10.24(a)
|
|
|
|
|
10.24(b)
|
|
|
|
|
10.25
|
|
*
|
|
|
10.26
|
|
*
|
|
|
10.27
|
|
*
|
|
|
10.28
|
|
*
|
|
|
10.29
|
|
*
|
|
|
10.30
|
|
|
|
|
10.31
|
|
|
|
|
10.32
|
|
|
|
|
10.33
|
|
|
|
|
10.34
|
|
|
|
|
10.35
|
|
|
|
|
10.36
|
|
|
|
|
10.37
|
|
|
|
|
10.38
|
|
* #
|
|
|
21.1
|
|
#
|
|
|
23.1
|
|
#
|
|
|
31.1
|
|
#
|
|
|
31.2
|
|
#
|
|
|
32.1
|
|
##
|
|
|
32.2
|
|
##
|
|
|
101
|
|
|
|
The following materials from Delek US Holdings, Inc.’s Annual Report on Form 10-K for the annual period ended December 31, 2018, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of December 31, 2018 and 2017, (ii) Consolidated Statements of Income for the years ended December 31, 2018, 2017 and 2016, (iii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2018, 2017 and 2016, (iv) Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2018, 2017 and 2016, (v) Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2016 and (vi) Notes to Consolidated Financial Statements.
|
*
|
Management contract or compensatory plan or arrangement.
|
#
|
Filed herewith.
|
##
|
Furnished herewith.
|
<
|
Certain schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to supplementally furnish a copy of any of the omitted schedules to the United States Securities and Exchange Commission upon request.
|
++
|
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, as amended. Omitted portions have been filed separately with the United States Securities and Exchange Commission.
|
Audited Financial Statements:
|
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
1,079.3
|
|
|
$
|
931.8
|
|
Accounts receivable, net
|
|
514.4
|
|
|
579.6
|
|
||
Accounts receivable from related parties
|
|
—
|
|
|
2.1
|
|
||
Inventories, net of inventory valuation reserves
|
|
690.9
|
|
|
808.4
|
|
||
Assets held for sale
|
|
—
|
|
|
160.0
|
|
||
Other current assets
|
|
135.7
|
|
|
129.9
|
|
||
Total current assets
|
|
2,420.3
|
|
|
2,611.8
|
|
||
Property, plant and equipment:
|
|
|
|
|
||||
Property, plant and equipment
|
|
2,999.6
|
|
|
2,772.5
|
|
||
Less: accumulated depreciation
|
|
(804.7
|
)
|
|
(631.7
|
)
|
||
Property, plant and equipment, net
|
|
2,194.9
|
|
|
2,140.8
|
|
||
Goodwill
|
|
857.8
|
|
|
816.6
|
|
||
Other intangibles, net
|
|
104.4
|
|
|
101.1
|
|
||
Equity method investments
|
|
130.3
|
|
|
138.1
|
|
||
Other non-current assets
|
|
52.9
|
|
|
126.8
|
|
||
Total assets
|
|
$
|
5,760.6
|
|
|
$
|
5,935.2
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
1,009.7
|
|
|
$
|
973.4
|
|
|
Accounts payable to related parties
|
|
1.5
|
|
|
1.7
|
|
||
Current portion of long-term debt
|
|
32.0
|
|
|
590.2
|
|
||
Obligation under Supply and Offtake Agreements
|
|
312.6
|
|
|
435.6
|
|
||
Liabilities associated with assets held for sale
|
|
—
|
|
|
105.9
|
|
||
Accrued expenses and other current liabilities
|
|
307.7
|
|
|
564.9
|
|
||
Total current liabilities
|
|
1,663.5
|
|
|
2,671.7
|
|
||
Non-current liabilities:
|
|
|
|
|
||||
Long-term debt, net of current portion
|
|
1,751.3
|
|
|
875.4
|
|
||
Obligation under Supply and Offtake Agreements
|
|
49.6
|
|
|
—
|
|
||
Environmental liabilities, net of current portion
|
|
139.5
|
|
|
68.9
|
|
||
Asset retirement obligations
|
|
75.5
|
|
|
72.1
|
|
||
Deferred tax liabilities
|
|
210.2
|
|
|
199.9
|
|
||
Other non-current liabilities
|
|
62.9
|
|
|
83.0
|
|
||
Total non-current liabilities
|
|
2,289.0
|
|
|
1,299.3
|
|
||
Stockholders’ equity:
|
|
|
|
|
||||
Preferred stock, $0.01 par value, 10,000,000 shares authorized, no shares issued and outstanding
|
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value, 110,000,000 shares authorized, 90,478,075 shares and 81,533,548 shares issued at December 31, 2018 and 2017, respectively
|
|
0.9
|
|
|
0.8
|
|
||
Additional paid-in capital
|
|
1,135.4
|
|
|
900.1
|
|
||
Accumulated other comprehensive income
|
|
28.6
|
|
|
6.9
|
|
||
Treasury stock, 12,477,780 shares and 762,623 shares, at cost, as of December 31, 2018 and 2017, respectively
|
|
(514.1
|
)
|
|
(25.0
|
)
|
||
Retained earnings
|
|
981.8
|
|
|
767.8
|
|
||
Non-controlling interests in subsidiaries
|
|
175.5
|
|
|
313.6
|
|
||
Total stockholders’ equity
|
|
1,808.1
|
|
|
1,964.2
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
5,760.6
|
|
|
$
|
5,935.2
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net revenues
|
|
$
|
10,233.1
|
|
|
$
|
7,267.1
|
|
|
$
|
4,197.9
|
|
Cost of sales:
|
|
|
|
|
|
|
||||||
Cost of materials and other
|
|
8,560.5
|
|
|
6,327.6
|
|
|
3,812.9
|
|
|||
Operating expenses (excluding depreciation and amortization presented below)
|
|
538.5
|
|
|
375.7
|
|
|
247.0
|
|
|||
Depreciation and amortization
|
|
161.3
|
|
|
132.1
|
|
|
106.2
|
|
|||
Total cost of sales
|
|
9,260.3
|
|
|
6,835.4
|
|
|
4,166.1
|
|
|||
Insurance proceeds — business interruption
|
|
—
|
|
|
—
|
|
|
(42.4
|
)
|
|||
Operating expenses related to retail and wholesale business (excluding depreciation and amortization presented below)
|
|
106.5
|
|
|
53.3
|
|
|
2.3
|
|
|||
General and administrative expenses
|
|
247.6
|
|
|
175.9
|
|
|
106.1
|
|
|||
Depreciation and amortization
|
|
38.1
|
|
|
21.2
|
|
|
10.2
|
|
|||
Other operating (income) expense, net
|
|
(31.3
|
)
|
|
1.0
|
|
|
4.8
|
|
|||
Total operating costs and expenses
|
|
9,621.2
|
|
|
7,086.8
|
|
|
4,247.1
|
|
|||
Operating income (loss)
|
|
611.9
|
|
|
180.3
|
|
|
(49.2
|
)
|
|||
Interest expense
|
|
125.9
|
|
|
93.8
|
|
|
54.4
|
|
|||
Interest income
|
|
(5.8
|
)
|
|
(4.0
|
)
|
|
(1.5
|
)
|
|||
(Income) loss from equity method investments
|
|
(9.7
|
)
|
|
(12.6
|
)
|
|
43.4
|
|
|||
Loss on impairment of equity method investment
|
|
—
|
|
|
—
|
|
|
245.3
|
|
|||
Gain on remeasurement of equity method investment
|
|
—
|
|
|
(190.1
|
)
|
|
—
|
|
|||
Gain on sale of business
|
|
(13.3
|
)
|
|
—
|
|
|
—
|
|
|||
Impairment loss on assets held for sale
|
|
27.5
|
|
|
—
|
|
|
—
|
|
|||
Loss on extinguishment of debt
|
|
9.1
|
|
|
—
|
|
|
—
|
|
|||
Other (income) expense, net
|
|
(7.3
|
)
|
|
(6.1
|
)
|
|
0.4
|
|
|||
Total non-operating expenses (income), net
|
|
126.4
|
|
|
(119.0
|
)
|
|
342.0
|
|
|||
Income (loss) from continuing operations before income tax expense (benefit)
|
|
485.5
|
|
|
299.3
|
|
|
(391.2
|
)
|
|||
Income tax expense (benefit)
|
|
101.9
|
|
|
(29.2
|
)
|
|
(171.5
|
)
|
|||
Income (loss) from continuing operations, net of tax
|
|
383.6
|
|
|
328.5
|
|
|
(219.7
|
)
|
|||
Discontinued operations:
|
|
|
|
|
|
|
||||||
(Loss) income from discontinued operations, including gain (loss) on sale of discontinued operations
|
|
(10.9
|
)
|
|
(8.6
|
)
|
|
144.2
|
|
|||
Income tax (benefit) expense
|
|
(2.2
|
)
|
|
(2.7
|
)
|
|
57.9
|
|
|||
(Loss) income from discontinued operations, net of tax
|
|
(8.7
|
)
|
|
(5.9
|
)
|
|
86.3
|
|
|||
Net income (loss)
|
|
374.9
|
|
|
322.6
|
|
|
(133.4
|
)
|
|||
Net income attributed to non-controlling interests
|
|
34.8
|
|
|
33.8
|
|
|
20.3
|
|
|||
Net income (loss) attributable to Delek
|
|
$
|
340.1
|
|
|
$
|
288.8
|
|
|
$
|
(153.7
|
)
|
Basic income (loss) per share:
|
|
|
|
|
|
|
||||||
Income (loss) from continuing operations
|
|
$
|
4.31
|
|
|
$
|
4.12
|
|
|
$
|
(3.88
|
)
|
(Loss) income from discontinued operations
|
|
(0.20
|
)
|
|
(0.08
|
)
|
|
1.39
|
|
|||
Total basic income (loss) per share
|
|
$
|
4.11
|
|
|
$
|
4.04
|
|
|
$
|
(2.49
|
)
|
Diluted income per share:
|
|
|
|
|
|
|
||||||
Income (loss) from continuing operations
|
|
$
|
4.14
|
|
|
$
|
4.08
|
|
|
$
|
(3.88
|
)
|
(Loss) income from discontinued operations
|
|
(0.19
|
)
|
|
(0.08
|
)
|
|
1.39
|
|
|||
Total diluted income (loss) per share
|
|
$
|
3.95
|
|
|
$
|
4.00
|
|
|
$
|
(2.49
|
)
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
||||||
Basic
|
|
82,797,110
|
|
|
71,566,225
|
|
|
61,921,787
|
|
|||
Diluted
|
|
86,768,401
|
|
|
72,303,083
|
|
|
61,921,787
|
|
|||
Dividends declared per common share outstanding
|
|
$
|
0.96
|
|
|
$
|
0.60
|
|
|
$
|
0.60
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net income (loss) attributable to Delek
|
|
$
|
340.1
|
|
|
$
|
288.8
|
|
|
$
|
(153.7
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
||||||
Commodity contracts designated as cash flow hedges:
|
|
|
|
|
|
|
||||||
Unrealized gains (losses), net of ineffectiveness losses (gains) of $0.9 million, $(0.5) million and $(3.1) million for the years ended December 31, 2018, 2017 and 2016, respectively
|
|
31.4
|
|
|
(2.0
|
)
|
|
8.4
|
|
|||
Realized losses reclassified to cost of materials and other
|
|
1.7
|
|
|
38.6
|
|
|
27.8
|
|
|||
Net gains related to commodity cash flow hedges
|
|
33.1
|
|
|
36.6
|
|
|
36.2
|
|
|||
Income tax expense
|
|
(6.9
|
)
|
|
(12.8
|
)
|
|
(12.7
|
)
|
|||
Net comprehensive income on commodity contracts designated as cash flow hedges
|
|
26.2
|
|
|
23.8
|
|
|
23.5
|
|
|||
|
|
|
|
|
|
|
||||||
Interest rate contracts designated as cash flow hedges:
|
|
|
|
|
|
|
||||||
Unrealized (losses) gains
|
|
(1.3
|
)
|
|
0.3
|
|
|
—
|
|
|||
Realized losses reclassified to interest expense
|
|
0.7
|
|
|
0.3
|
|
|
—
|
|
|||
Net (losses) gains related to interest rate cash flow hedges
|
|
(0.6
|
)
|
|
0.6
|
|
|
—
|
|
|||
Income tax (expense) benefit
|
|
0.1
|
|
|
(0.2
|
)
|
|
—
|
|
|||
Net comprehensive (loss) income on interest rate contracts designated as cash flow hedges
|
|
(0.5
|
)
|
|
0.4
|
|
|
—
|
|
|||
|
|
|
|
|
|
|
||||||
Foreign currency translation (loss) gain (net of taxes)
|
|
(0.9
|
)
|
|
0.1
|
|
|
0.2
|
|
|||
|
|
|
|
|
|
|
||||||
Other comprehensive income from equity method investments, net of tax expense of $0.0 million and $2.2 million for the years ended December 31, 2018 and 2017, respectively
|
|
—
|
|
|
4.1
|
|
|
0.8
|
|
|||
|
|
|
|
|
|
|
||||||
Postretirement benefit plans:
|
|
|
|
|
|
|
||||||
Unrealized gain (loss) arising during the year related to:
|
|
|
|
|
|
|
||||||
Net actuarial loss
|
|
(6.5
|
)
|
|
(0.8
|
)
|
|
—
|
|
|||
Curtailment and settlement gains
|
|
2.5
|
|
|
6.3
|
|
|
—
|
|
|||
(Gain) loss reclassified to earnings:
|
|
|
|
|
|
|
||||||
Recognized due to curtailment and settlement
|
|
(2.5
|
)
|
|
(6.1
|
)
|
|
—
|
|
|||
Amortization of net actuarial loss
|
|
0.5
|
|
|
—
|
|
|
—
|
|
|||
Loss related to postretirement benefit plans, net
|
|
(6.0
|
)
|
|
(0.6
|
)
|
|
—
|
|
|||
Income tax benefit
|
|
1.3
|
|
|
—
|
|
|
—
|
|
|||
Net comprehensive loss on postretirement benefit plans
|
|
(4.7
|
)
|
|
(0.6
|
)
|
|
—
|
|
|||
Total other comprehensive income
|
|
20.1
|
|
|
27.8
|
|
|
24.5
|
|
|||
Comprehensive income (loss) attributable to Delek
|
|
$
|
360.2
|
|
|
$
|
316.6
|
|
|
$
|
(129.2
|
)
|
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Accumulated Other Comprehensive Income
|
|
Retained Earnings
|
|
Treasury Stock
|
|
Non-Controlling Interest in Subsidiaries
|
|
Total Stockholders' Equity
|
||||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
Shares
|
|
Amount
|
|
|
|||||||||||||||||||||
Balance at
|
December 31, 2015
|
66,946,721
|
|
|
$
|
0.7
|
|
|
$
|
639.2
|
|
|
$
|
(45.3
|
)
|
|
$
|
713.5
|
|
|
(4,809,701
|
)
|
|
$
|
(154.8
|
)
|
|
$
|
200.6
|
|
|
$
|
1,353.9
|
|
Net (loss) income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(153.7
|
)
|
|
—
|
|
|
—
|
|
|
20.3
|
|
|
(133.4
|
)
|
||||||||
Other comprehensive income related to commodity contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
23.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23.5
|
|
||||||||
Other comprehensive income from equity method investments
|
|
|
|
|
|
|
0.8
|
|
|
|
|
|
|
|
|
|
|
0.8
|
|
|||||||||||||||
Foreign currency translation gain
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
||||||||
Common stock dividends ($0.60 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(37.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(37.5
|
)
|
||||||||
Equity-based compensation expense
|
—
|
|
|
—
|
|
|
15.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
|
16.4
|
|
||||||||
Distribution to non-controlling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(24.1
|
)
|
|
(24.1
|
)
|
||||||||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(386,090
|
)
|
|
(6.0
|
)
|
|
—
|
|
|
(6.0
|
)
|
||||||||
Repurchase of non-controlling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6.9
|
)
|
|
(6.9
|
)
|
||||||||
Income tax benefit from equity-based compensation expense
|
—
|
|
|
—
|
|
|
(2.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.9
|
)
|
||||||||
Taxes paid due to the net settlement of equity-based compensation
|
—
|
|
|
—
|
|
|
(1.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.5
|
)
|
||||||||
Exercise of equity-based awards
|
203,631
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Balance at
|
December 31, 2016
|
67,150,352
|
|
|
$
|
0.7
|
|
|
$
|
650.5
|
|
|
$
|
(20.8
|
)
|
|
$
|
522.3
|
|
|
(5,195,791
|
)
|
|
$
|
(160.8
|
)
|
|
$
|
190.6
|
|
|
$
|
1,182.5
|
|
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Accumulated Other Comprehensive Income
|
|
Retained Earnings
|
|
Treasury Stock
|
|
Non-Controlling Interest in Subsidiaries
|
|
Total Stockholders' Equity
|
||||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
Shares
|
|
Amount
|
|
|
|||||||||||||||||||||
Balance at
|
December 31, 2016
|
67,150,352
|
|
|
$
|
0.7
|
|
|
$
|
650.5
|
|
|
$
|
(20.8
|
)
|
|
$
|
522.3
|
|
|
(5,195,791
|
)
|
|
$
|
(160.8
|
)
|
|
$
|
190.6
|
|
|
$
|
1,182.5
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
288.8
|
|
|
—
|
|
|
—
|
|
|
33.8
|
|
|
322.6
|
|
||||||||
Other comprehensive income related to commodity contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
23.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23.8
|
|
||||||||
Other comprehensive income from equity method investments (1)
|
|
|
|
|
|
|
4.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.1
|
|
|||||||||||
Other comprehensive income related to postretirement benefit plans
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
||||||||
Other comprehensive income related to interest rate contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
||||||||
Foreign currency translation gain
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
||||||||
Common stock dividends ($0.60 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
(44.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(44.0
|
)
|
|||||||||
Issuance of equity in connection with Delek/Alon Merger
|
19,250,795
|
|
|
0.1
|
|
|
399.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
131.6
|
|
|
530.7
|
|
||||||||
Retirement of Treasury shares in connection with Delek/Alon Merger
|
(5,195,791
|
)
|
|
—
|
|
|
(160.8
|
)
|
|
—
|
|
|
—
|
|
|
5,195,791
|
|
|
160.8
|
|
|
—
|
|
|
—
|
|
||||||||
Equity-based compensation expense
|
—
|
|
|
—
|
|
|
16.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.6
|
|
|
17.5
|
|
||||||||
Distribution to non-controlling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(35.7
|
)
|
|
(35.7
|
)
|
||||||||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(762,623
|
)
|
|
(25.0
|
)
|
|
(7.3
|
)
|
|
(32.3
|
)
|
||||||||
Issuance costs in connection with Delek/Alon Merger
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
||||||||
Taxes paid due to the net settlement of equity-based compensation
|
—
|
|
|
—
|
|
|
(5.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5.0
|
)
|
||||||||
Exercise of equity-based awards
|
328,192
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Other
|
—
|
|
|
—
|
|
|
(0.3
|
)
|
|
(0.1
|
)
|
|
0.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
||||||||
Balance at
|
December 31, 2017
|
81,533,548
|
|
|
$
|
0.8
|
|
|
$
|
900.1
|
|
|
$
|
6.9
|
|
|
$
|
767.8
|
|
|
(762,623
|
)
|
|
$
|
(25.0
|
)
|
|
$
|
313.6
|
|
|
$
|
1,964.2
|
|
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Accumulated Other Comprehensive Income
|
|
Retained Earnings
|
|
Treasury Stock
|
|
Non-Controlling Interest in Subsidiaries
|
|
Total Stockholders' Equity
|
||||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
Shares
|
|
Amount
|
|
|
|||||||||||||||||||||
Balance at
|
December 31, 2017
|
81,533,548
|
|
|
$
|
0.8
|
|
|
$
|
900.1
|
|
|
$
|
6.9
|
|
|
$
|
767.8
|
|
|
(762,623
|
)
|
|
$
|
(25.0
|
)
|
|
$
|
313.6
|
|
|
$
|
1,964.2
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
340.1
|
|
|
—
|
|
|
—
|
|
|
34.8
|
|
|
374.9
|
|
||||||||
Other comprehensive income related to commodity contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
26.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26.2
|
|
||||||||
Other comprehensive loss related to postretirement benefit plans
|
—
|
|
|
—
|
|
|
—
|
|
|
(4.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4.7
|
)
|
||||||||
Other comprehensive loss related to interest rate contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.5
|
)
|
||||||||
Foreign currency translation loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.9
|
)
|
||||||||
Common stock dividends ($0.96 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(80.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(80.1
|
)
|
||||||||
Distributions to non-controlling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27.7
|
)
|
|
(27.7
|
)
|
||||||||
Equity-based compensation expense
|
—
|
|
|
—
|
|
|
20.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.5
|
|
|
21.4
|
|
||||||||
Issuance of stock for non-controlling interest repurchase, net of tax
|
5,649,373
|
|
|
0.1
|
|
|
140.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(127.0
|
)
|
|
13.5
|
|
||||||||
De-recognition of non-controlling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18.7
|
)
|
|
(18.7
|
)
|
||||||||
Reclassification for stranded tax effects resulting from the the Tax Reform Act (see Note 2)
|
—
|
|
|
—
|
|
|
—
|
|
|
1.6
|
|
|
(1.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Cumulative effect of adopting accounting principle regarding income tax effect of intra-equity transfers (see Note 2) (1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(44.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(44.4
|
)
|
||||||||
Shares issued in connection with settlement of Convertible Notes
|
2,692,218
|
|
|
—
|
|
|
(0.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.3
|
)
|
||||||||
Shares received in connection with exercise of Call Options
|
—
|
|
|
—
|
|
|
124.2
|
|
|
—
|
|
|
—
|
|
|
(2,692,771
|
)
|
|
(123.9
|
)
|
|
—
|
|
|
0.3
|
|
||||||||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,022,386
|
)
|
|
(365.3
|
)
|
|
—
|
|
|
(365.3
|
)
|
||||||||
Warrant reclassification to liability award
|
—
|
|
|
—
|
|
|
(35.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(35.9
|
)
|
||||||||
Taxes due to the net settlement of equity-based compensation
|
—
|
|
|
—
|
|
|
(11.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11.5
|
)
|
||||||||
Exercise of equity-based awards
|
602,936
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Other
|
—
|
|
|
—
|
|
|
(2.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
(2.4
|
)
|
||||||||
Balance at
|
December 31, 2018
|
90,478,075
|
|
|
$
|
0.9
|
|
|
$
|
1,135.4
|
|
|
$
|
28.6
|
|
|
$
|
981.8
|
|
|
(12,477,780
|
)
|
|
$
|
(514.1
|
)
|
|
$
|
175.5
|
|
|
$
|
1,808.1
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
||||||
Net income (loss)
|
|
$
|
374.9
|
|
|
$
|
322.6
|
|
|
$
|
(133.4
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Depreciation and amortization
|
|
199.4
|
|
|
153.3
|
|
|
116.4
|
|
|||
Amortization of above and below market leases, net
|
|
(1.5
|
)
|
|
—
|
|
|
—
|
|
|||
Amortization of deferred financing costs and debt discount
|
|
8.6
|
|
|
8.3
|
|
|
4.4
|
|
|||
Accretion of environmental liabilities and asset retirement obligations
|
|
3.3
|
|
|
1.2
|
|
|
0.3
|
|
|||
Amortization of unfavorable contract liability
|
|
(2.2
|
)
|
|
(5.8
|
)
|
|
(0.7
|
)
|
|||
Deferred income taxes
|
|
(26.8
|
)
|
|
(48.0
|
)
|
|
(153.2
|
)
|
|||
(Income) loss from equity method investments
|
|
(9.7
|
)
|
|
(12.6
|
)
|
|
43.4
|
|
|||
Dividends from equity method investments
|
|
8.8
|
|
|
5.9
|
|
|
—
|
|
|||
(Gain) loss on disposal of assets
|
|
(0.9
|
)
|
|
1.0
|
|
|
4.8
|
|
|||
Impairment of equity method investment
|
|
—
|
|
|
—
|
|
|
245.3
|
|
|||
Gain on remeasurement of equity method investment
|
|
—
|
|
|
(190.1
|
)
|
|
—
|
|
|||
Loss on extinguishment of debt
|
|
9.1
|
|
|
—
|
|
|
—
|
|
|||
Gain on sale of business
|
|
(13.3
|
)
|
|
—
|
|
|
—
|
|
|||
Impairment of assets held for sale
|
|
27.5
|
|
|
—
|
|
|
—
|
|
|||
Equity-based compensation expense
|
|
21.4
|
|
|
17.5
|
|
|
16.4
|
|
|||
Income tax benefit of equity-based compensation
|
|
(2.2
|
)
|
|
(1.4
|
)
|
|
(1.2
|
)
|
|||
Loss from discontinued operations
|
|
8.7
|
|
|
5.9
|
|
|
(86.3
|
)
|
|||
Changes in assets and liabilities, net of acquisitions:
|
|
|
|
|
|
|
||||||
Accounts receivable
|
|
112.7
|
|
|
(155.8
|
)
|
|
(48.1
|
)
|
|||
Inventories and other current assets
|
|
138.7
|
|
|
(191.1
|
)
|
|
(56.5
|
)
|
|||
Fair value of derivatives
|
|
(52.6
|
)
|
|
39.2
|
|
|
44.2
|
|
|||
Accounts payable and other current liabilities
|
|
(128.1
|
)
|
|
290.9
|
|
|
223.8
|
|
|||
Obligation under Supply and Offtake Agreement
|
|
(84.3
|
)
|
|
113.0
|
|
|
12.8
|
|
|||
Non-current assets and liabilities, net
|
|
(1.1
|
)
|
|
(32.2
|
)
|
|
2.3
|
|
|||
Cash provided by operating activities - continuing operations
|
|
590.4
|
|
|
321.8
|
|
|
234.7
|
|
|||
Cash (used in) provided by operating activities - discontinued operations
|
|
(30.1
|
)
|
|
(2.1
|
)
|
|
13.3
|
|
|||
Net cash provided by operating activities
|
|
560.3
|
|
|
319.7
|
|
|
248.0
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|||||
Business combinations, net of cash acquired
|
|
—
|
|
|
196.2
|
|
|
—
|
|
|||
Equity method investment contributions
|
|
(0.2
|
)
|
|
(5.8
|
)
|
|
(61.6
|
)
|
|||
Distributions from equity method investments
|
|
1.2
|
|
|
12.4
|
|
|
20.2
|
|
|||
Purchases of property, plant and equipment
|
|
(322.0
|
)
|
|
(172.0
|
)
|
|
(46.3
|
)
|
|||
Purchase of intangible assets
|
|
(1.7
|
)
|
|
(5.5
|
)
|
|
(0.7
|
)
|
|||
Proceeds from sale of property, plant and equipment
|
|
11.1
|
|
|
0.1
|
|
|
0.2
|
|
|||
Proceeds from sale of business
|
|
110.8
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from sales of discontinued operations
|
|
55.5
|
|
|
—
|
|
|
—
|
|
|||
Cash (used in) provided by investing activities - continuing operations
|
|
(145.3
|
)
|
|
25.4
|
|
|
(88.2
|
)
|
|||
Cash provided by investing activities - discontinued operations
|
|
20.0
|
|
|
12.2
|
|
|
288.9
|
|
|||
Net cash (used in) provided by investing activities
|
|
(125.3
|
)
|
|
37.6
|
|
|
200.7
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|||||
Proceeds from long-term revolvers
|
|
2,124.6
|
|
|
1,122.1
|
|
|
369.0
|
|
|||
Payments on long-term revolvers
|
|
(1,679.8
|
)
|
|
(1,239.8
|
)
|
|
(327.9
|
)
|
|||
Proceeds from term debt
|
|
690.6
|
|
|
286.2
|
|
|
40.3
|
|
|||
Payments on term debt
|
|
(826.3
|
)
|
|
(103.6
|
)
|
|
(55.0
|
)
|
|||
Proceeds from product financing agreements
|
|
—
|
|
|
52.5
|
|
|
56.5
|
|
|||
Repayments of product financing agreements
|
|
(72.4
|
)
|
|
(98.7
|
)
|
|
(50.4
|
)
|
|||
Settlement of warrants unwind agreement
|
|
(35.9
|
)
|
|
—
|
|
|
—
|
|
|||
Taxes paid due to the net settlement of equity-based compensation
|
|
(11.5
|
)
|
|
(5.0
|
)
|
|
(1.5
|
)
|
|||
Income tax benefit of equity-based compensation
|
|
—
|
|
|
—
|
|
|
1.2
|
|
|||
Repurchase of common stock
|
|
(365.3
|
)
|
|
(25.0
|
)
|
|
(6.0
|
)
|
|||
Repurchase of non-controlling interest
|
|
—
|
|
|
(7.3
|
)
|
|
(6.9
|
)
|
|||
Distribution to non-controlling interest
|
|
(27.7
|
)
|
|
(35.7
|
)
|
|
(24.1
|
)
|
|||
Dividends paid
|
|
(80.1
|
)
|
|
(44.0
|
)
|
|
(37.5
|
)
|
|||
Deferred financing costs paid
|
|
(13.8
|
)
|
|
(6.3
|
)
|
|
(1.9
|
)
|
|||
Cash used in financing activities - continuing operations
|
|
(297.6
|
)
|
|
(104.6
|
)
|
|
(44.2
|
)
|
|||
Cash used in financing activities - discontinued operations
|
|
—
|
|
|
—
|
|
|
(17.5
|
)
|
|||
Net cash used in financing activities
|
|
(297.6
|
)
|
|
(104.6
|
)
|
|
(61.7
|
)
|
|||
Net increase in cash and cash equivalents
|
|
137.4
|
|
|
252.7
|
|
|
387.0
|
|
|||
Cash and cash equivalents at the beginning of the period
|
|
941.9
|
|
|
689.2
|
|
|
302.2
|
|
|||
Cash and cash equivalents at the end of the period
|
|
1,079.3
|
|
|
941.9
|
|
|
689.2
|
|
|||
Less cash and cash equivalents of discontinued operations at the end of the period
|
|
—
|
|
|
10.1
|
|
|
—
|
|
|||
Cash and cash equivalents of continuing operations at the end of the period
|
|
$
|
1,079.3
|
|
|
$
|
931.8
|
|
|
$
|
689.2
|
|
|
|
|
|
|
|
|
||||||
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|
|||||
Cash paid during the period for:
|
|
|
|
|
|
|
|
|||||
Interest, net of capitalized interest of $0.8 million, and $0.3 million and $0.2 million in 2018, 2017 and 2016, respectively
|
|
$
|
120.1
|
|
|
$
|
82.1
|
|
|
$
|
51.9
|
|
Income taxes
|
|
$
|
103.9
|
|
|
$
|
70.5
|
|
|
$
|
1.7
|
|
Non-cash investing activities:
|
|
|
|
|
|
|
||||||
Common stock issued in connection with the buyout of Alon Partnership non-controlling interest
|
|
$
|
127.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(Decrease) increase in accrued capital expenditures
|
|
$
|
(4.8
|
)
|
|
$
|
9.4
|
|
|
$
|
(3.7
|
)
|
Non-cash financing activities:
|
|
|
|
|
|
|
||||||
Common stock issued in connection with settlement of Convertible Notes
|
|
$
|
123.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Treasury shares received in connection with exercise of Call Options
|
|
$
|
(123.9
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Common stock issued in connection with the Delek/Alon Merger
|
|
$
|
—
|
|
|
$
|
509.0
|
|
|
$
|
—
|
|
Equity instruments issued in connection with the Delek/Alon Merger
|
|
$
|
—
|
|
|
$
|
21.7
|
|
|
$
|
—
|
|
|
Years
|
Building and building improvements
|
15-40
|
Refinery machinery and equipment
|
5-40
|
Pipelines and terminals
|
15-40
|
Retail store equipment and site improvements
|
7-40
|
Refinery turnaround costs
|
4-6
|
Automobiles
|
3-5
|
Computer equipment and software
|
3-10
|
Furniture and fixtures
|
5-15
|
Asset retirement obligation assets
|
15-50
|
|
|
December 31, 2017
|
||||||||||
(in millions)
|
|
As Reported
|
|
Adjustment
|
|
As Adjusted
|
||||||
General and administrative expenses
|
|
$
|
169.8
|
|
|
$
|
6.1
|
|
|
$
|
175.9
|
|
Other income, net
|
|
$
|
—
|
|
|
$
|
(6.1
|
)
|
|
$
|
(6.1
|
)
|
Delek common stock issued
|
19,250,795
|
|
|
|||
Ending price per share of Delek Common Stock immediately before the Effective Time
|
$
|
26.44
|
|
|
||
Total value of common stock consideration
|
|
$
|
509.0
|
|
||
Additional consideration (1)
|
|
21.7
|
|
|||
Fair value of Delek's pre-existing equity method investment in Alon (2)
|
|
449.0
|
|
|||
|
|
$
|
979.7
|
|
Cash
|
|
$
|
215.3
|
|
Receivables
|
|
176.8
|
|
|
Inventories
|
|
266.3
|
|
|
Prepaids and other current assets
|
|
38.7
|
|
|
Property, plant and equipment (1)
|
|
1,130.3
|
|
|
Equity method investments
|
|
31.0
|
|
|
Acquired intangible assets (2)
|
|
86.7
|
|
|
Goodwill (3)
|
|
870.7
|
|
|
Other non-current assets
|
|
37.0
|
|
|
Accounts payable
|
|
(263.4
|
)
|
|
Obligation under Supply & Offtake Agreements
|
|
(208.9
|
)
|
|
Current portion of environmental liabilities
|
|
(7.9
|
)
|
|
Other current liabilities
|
|
(308.6
|
)
|
|
Environmental liabilities and asset retirement obligations, net of current portion
|
|
(226.7
|
)
|
|
Deferred income taxes
|
|
(194.0
|
)
|
|
Debt
|
|
(568.0
|
)
|
|
Other non-current liabilities (4)
|
|
(95.6
|
)
|
|
Fair value of net assets acquired
|
|
$
|
979.7
|
|
•
|
Third-party fuel supply agreement intangible that is subject to amortization with a fair value of $49.0 million, which is being amortized over a 10-year useful life. We recognized amortization expense for the year ended December 31, 2018 of $4.9 million. The estimated annual amortization is $4.9 million for the four succeeding fiscal years.
|
•
|
Fuel trade name intangible valued at $4.0 million, which will be amortized over 5 years. We recognized amortization expense for the year ended December 31, 2018 of $0.8 million. The estimated annual amortization is $0.8 million for the three succeeding fiscal years, with $0.4 million in the fourth succeeding year.
|
•
|
License agreements intangible valued at $2.6 million, which is being amortized over 8.7 years. We recognized amortization expense for the year ended December 31, 2018 of $0.1 million, as this intangible was sold in the first quarter of 2018.
|
•
|
Rights-of-way intangible valued at $9.5 million, which has an indefinite life.
|
•
|
Liquor license intangible valued at $8.5 million, which has an indefinite life.
|
•
|
Colonial Pipeline shipping rights intangible valued at $1.7 million, which has an indefinite life.
|
•
|
Refinery permits valued at $3.1 million, which have an indefinite life.
|
•
|
Below-market lease intangibles valued at $8.3 million, which is being amortized over the remaining lease term.
|
|
Year Ended
|
||||||
|
December 31,
|
||||||
(in millions, except per share data)
|
2017 (1) (2)
|
|
2016 (1) (2)
|
||||
|
(unaudited)
|
||||||
Net revenues
|
$
|
9,477.8
|
|
|
$
|
8,100.9
|
|
Net income attributable to Delek
|
223.6
|
|
|
16.3
|
|
||
Earnings per share:
|
|
|
|
||||
Basic
|
$
|
2.75
|
|
|
$
|
0.20
|
|
Diluted
|
$
|
2.73
|
|
|
$
|
0.20
|
|
(2)
|
The unaudited pro forma statements of operations reflect the following adjustments:
|
•
|
To eliminate transactions between Delek and Alon for purchases and sales of refined products, reducing revenue and the associated cost of materials and other. Such pro forma eliminations resulted in a decrease to combined pro forma revenues by $59.0 million and $10.4 million million for the years ended December 31, 2017 and 2016, respectively.
|
•
|
To eliminate the non-recurring transaction costs incurred during the historical periods. Such adjustments to general and administrative expense have been estimated to result in an increase to pro forma pre-tax income attributable to Delek totaling $32.2 million and $13.7 million million for the years ended December 31, 2017 and 2016.
|
•
|
To retrospectively reflect depreciation of property, plant and equipment and amortization of intangibles based on the fair value of the assets as of the acquisition date, as if that fair value had been reflected beginning January 1, 2016, and to retrospectively eliminate the amortization of any previously recorded intangibles. Such adjustments to depreciation and amortization have been estimated to result in an increase to pro forma pre-tax income attributable to Delek totaling $34.7 million and $70.8 million million for the years ended December 31, 2017 and 2016, respectively.
|
•
|
To retrospectively reflect the accretion of asset retirement obligations and certain environmental liabilities. Such adjustments to general and administrative expense have been estimated to result in a decrease to pro forma pre-tax income attributable to Delek totaling $0.8 million and $1.6 million million for the years ended December 31, 2017 and 2016, respectively.
|
•
|
To retrospectively reflect adjustments to interest expense, including the impact of discounts or premiums created by the difference in fair value and outstanding amounts as of the acquisition date (collectively, the “new effective yield”), by applying the new effective yield to historical outstanding amounts in the pro forma period and reversing previously recognized interest expense. Such net adjustments to interest expense have been estimated to result in an increase to pro forma pre-tax income attributable to Delek totaling $9.4 million and $20.7 million million for the years ended December 31, 2017 and 2016, respectively.
|
•
|
To eliminate Delek’s equity income previously recorded on its equity method investment in Alon, prior to the Merger. Such pro forma elimination resulted in an (increase) decrease to pro forma pre-tax income totaling $3.2 million and $(42.2) million million for the years ended December 31, 2017 and 2016, respectively.
|
•
|
To eliminate the impairment charge on the equity method investment in Alon totaling $245.3 million recognized in the year ended December 31, 2016, and to eliminate the gain on remeasurement of the equity method investment in Alon totaling $190.1 million recognized during the year ended December 31, 2017.
|
•
|
To record the tax effect on pro forma adjustments and additional tax benefit associated with dividends received from Alon at a combined U.S. (federal and state) income tax statutory blended rate of approximately 37% for the year ended December 31, 2017, and approximately 35% for the year ended December 31, 2016.
|
•
|
To adjust the weighted average number of shares outstanding based on 0.504 of a share of Delek common stock for each share of Alon common stock outstanding as of July 1, 2017, as if they were outstanding for the entire year ended December 31, 2017, reflecting the elimination of Alon historical weighted average shares outstanding and the addition of the estimated New Delek incremental shares issued.
|
Subsequent increases (decreases) to initial allocation of fair value of net assets acquired:
|
|
|
||
Receivables (1)
|
|
$
|
10.7
|
|
Inventories
|
|
(0.5
|
)
|
|
Prepaids and other current assets (2)
|
|
9.7
|
|
|
Property, plant and equipment
|
|
(0.2
|
)
|
|
Acquired intangible assets (3)
|
|
7.7
|
|
|
Accounts payable (4)
|
|
6.0
|
|
|
Obligation under Supply & Offtake Agreements (5)
|
|
10.9
|
|
|
Current portion of environmental liabilities
|
|
0.4
|
|
|
Other current liabilities (6)
|
|
22.3
|
|
|
Environmental liabilities and asset retirement obligations, net of current portion (7)
|
|
65.3
|
|
|
Deferred income taxes (8)
|
|
(8.4
|
)
|
|
Other non-current liabilities (9)
|
|
(2.8
|
)
|
|
Resulting increase to goodwill
|
|
$
|
66.3
|
|
Land
|
|
$
|
0.2
|
|
Property, plant and equipment
|
|
6.4
|
|
|
Intangible assets (1)
|
|
6.4
|
|
|
Total
|
|
$
|
13.0
|
|
|
|
As of and For the Year Ended December 31, 2018
|
||||||||||||||||||
(In millions)
|
|
Refining
|
|
Retail
|
|
Logistics
|
|
Corporate,
Other and Eliminations |
|
Consolidated
|
||||||||||
Net revenues (excluding intercompany fees and sales)
|
|
$
|
8,771.4
|
|
|
$
|
915.4
|
|
|
$
|
416.8
|
|
|
$
|
129.5
|
|
|
$
|
10,233.1
|
|
Intercompany fees and sales
|
|
839.0
|
|
|
—
|
|
|
240.8
|
|
|
(1,079.8
|
)
|
|
—
|
|
|||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of materials and other
|
|
8,279.9
|
|
|
755.8
|
|
|
429.1
|
|
|
(904.3
|
)
|
|
8,560.5
|
|
|||||
Operating expenses (excluding depreciation and amortization presented below)
|
|
465.4
|
|
|
100.7
|
|
|
58.7
|
|
|
20.2
|
|
|
645.0
|
|
|||||
Segment contribution margin
|
|
$
|
865.1
|
|
|
$
|
58.9
|
|
|
$
|
169.8
|
|
|
$
|
(66.2
|
)
|
|
1,027.6
|
|
|
Depreciation and amortization
|
|
133.7
|
|
|
24.6
|
|
|
26.0
|
|
|
15.1
|
|
|
199.4
|
|
|||||
General and administrative expenses
|
|
|
|
|
|
|
|
|
|
247.6
|
|
|||||||||
Other operating income, net
|
|
|
|
|
|
|
|
|
|
(31.3
|
)
|
|||||||||
Operating income
|
|
|
|
|
|
|
|
|
|
$
|
611.9
|
|
||||||||
Total assets
|
|
$
|
5,430.1
|
|
|
$
|
310.6
|
|
|
$
|
624.6
|
|
|
$
|
(604.7
|
)
|
|
$
|
5,760.6
|
|
Capital spending (excluding business combinations)(1)
|
|
$
|
203.9
|
|
|
$
|
10.0
|
|
|
$
|
11.6
|
|
|
$
|
91.7
|
|
|
$
|
317.2
|
|
|
|
As of and For the Year Ended December 31, 2017
|
||||||||||||||||||
(In millions)
|
|
Refining
|
|
Retail
|
|
Logistics
|
|
Corporate,
Other and Eliminations |
|
Consolidated
|
||||||||||
Net revenues (excluding intercompany fees and sales)
|
|
$
|
6,364.5
|
|
|
$
|
426.7
|
|
|
$
|
382.3
|
|
|
$
|
93.6
|
|
|
$
|
7,267.1
|
|
Intercompany fees and sales
|
|
256.1
|
|
|
—
|
|
|
155.8
|
|
|
(411.9
|
)
|
|
—
|
|
|||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of materials and other
|
|
5,852.2
|
|
|
350.3
|
|
|
372.9
|
|
|
(247.8
|
)
|
|
6,327.6
|
|
|||||
Operating expenses (excluding depreciation and amortization presented below)
|
|
317.7
|
|
|
49.6
|
|
|
43.3
|
|
|
18.4
|
|
|
429.0
|
|
|||||
Segment contribution margin
|
|
$
|
450.7
|
|
|
$
|
26.8
|
|
|
$
|
121.9
|
|
|
$
|
(88.9
|
)
|
|
510.5
|
|
|
Depreciation and amortization
|
|
109.2
|
|
|
7.0
|
|
|
21.9
|
|
|
15.2
|
|
|
153.3
|
|
|||||
General and administrative expenses
|
|
|
|
|
|
|
|
|
|
|
175.9
|
|
||||||||
Other operating expense, net
|
|
|
|
|
|
|
|
|
|
1.0
|
|
|||||||||
Operating income
|
|
|
|
|
|
|
|
|
|
$
|
180.3
|
|
||||||||
Total assets (2)
|
|
$
|
4,846.5
|
|
|
$
|
331.4
|
|
|
$
|
443.5
|
|
|
$
|
313.8
|
|
|
$
|
5,935.2
|
|
Capital spending (excluding business combinations)(3)
|
|
$
|
128.2
|
|
|
$
|
11.7
|
|
|
$
|
18.4
|
|
|
$
|
19.2
|
|
|
$
|
177.5
|
|
|
|
As of and For the Year Ended December 31, 2016
|
||||||||||||||
(In millions)
|
|
Refining
|
|
Logistics
|
|
Corporate,
Other and Eliminations |
|
Consolidated
|
||||||||
Net revenues (excluding intercompany fees and sales)
|
|
$
|
3,605.1
|
|
|
$
|
301.3
|
|
|
$
|
(0.6
|
)
|
|
$
|
3,905.8
|
|
Intercompany fees and sales (4)
|
|
318.1
|
|
|
146.8
|
|
|
(172.8
|
)
|
|
292.1
|
|
||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
||||||||
Cost of materials and other
|
|
3,614.1
|
|
|
302.2
|
|
|
(103.4
|
)
|
|
3,812.9
|
|
||||
Operating expenses (excluding depreciation and amortization presented below)
|
|
212.4
|
|
|
37.2
|
|
|
(0.3
|
)
|
|
249.3
|
|
||||
Insurance proceeds - business interruption
|
|
(42.4
|
)
|
|
—
|
|
|
—
|
|
|
(42.4
|
)
|
||||
Segment contribution margin
|
|
$
|
139.1
|
|
|
$
|
108.7
|
|
|
$
|
(69.7
|
)
|
|
178.1
|
|
|
Depreciation and amortization
|
|
88.2
|
|
|
20.8
|
|
|
7.4
|
|
|
116.4
|
|
||||
General and administrative expenses
|
|
|
|
|
|
|
|
106.1
|
|
|||||||
Other operating expense, net
|
|
|
|
|
|
|
|
4.8
|
|
|||||||
Operating loss
|
|
|
|
|
|
|
|
$
|
(49.2
|
)
|
||||||
Capital spending (excluding business combinations) (3)
|
|
$
|
27.9
|
|
|
$
|
11.8
|
|
|
$
|
6.6
|
|
|
$
|
46.3
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Numerator:
|
|
|
|
|
|
|
||||||
Numerator for EPS - continuing operations
|
|
|
|
|
|
|
||||||
Income (loss) from continuing operations
|
|
$
|
383.6
|
|
|
$
|
328.5
|
|
|
$
|
(219.7
|
)
|
Less: Income from continuing operations attributed to non-controlling interest
|
|
26.7
|
|
|
33.8
|
|
|
20.3
|
|
|||
Income (loss) from continuing operations attributable to Delek (numerator for basic EPS - continuing operations attributable to Delek)
|
|
356.9
|
|
|
294.7
|
|
|
(240.0
|
)
|
|||
Interest on convertible debt, net of tax
|
|
2.6
|
|
|
—
|
|
|
—
|
|
|||
Numerator for diluted EPS - continuing operations attributable to Delek
|
|
$
|
359.5
|
|
|
$
|
294.7
|
|
|
$
|
(240.0
|
)
|
|
|
|
|
|
|
|
||||||
Numerator for EPS - discontinued operations
|
|
|
|
|
|
|
||||||
Income (loss) from discontinued operations
|
|
$
|
(8.7
|
)
|
|
$
|
(5.9
|
)
|
|
$
|
86.3
|
|
Less: Income from discontinued operations attributed to non-controlling interest
|
|
8.1
|
|
|
—
|
|
|
—
|
|
|||
Income (loss) from discontinued operations attributable to Delek
|
|
$
|
(16.8
|
)
|
|
$
|
(5.9
|
)
|
|
$
|
86.3
|
|
|
|
|
|
|
|
|
||||||
Denominator:
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding (denominator for basic EPS)
|
|
82,797,110
|
|
|
71,566,225
|
|
|
61,921,787
|
|
|||
Dilutive effect of convertible debt
|
|
1,525,846
|
|
|
—
|
|
|
—
|
|
|||
Dilutive effect of warrants
|
|
967,352
|
|
|
—
|
|
|
—
|
|
|||
Dilutive effect of stock-based awards
|
|
1,478,093
|
|
|
736,858
|
|
|
—
|
|
|||
Weighted average common shares outstanding, assuming dilution
|
|
86,768,401
|
|
|
72,303,083
|
|
|
61,921,787
|
|
|||
|
|
|
|
|
|
|
||||||
EPS:
|
|
|
|
|
|
|
||||||
Basic income (loss) per share:
|
|
|
|
|
|
|
||||||
Income (loss) from continuing operations
|
|
$
|
4.31
|
|
|
$
|
4.12
|
|
|
$
|
(3.88
|
)
|
(Loss) income from discontinued operations
|
|
$
|
(0.20
|
)
|
|
(0.08
|
)
|
|
1.39
|
|
||
Total basic income (loss) per share
|
|
$
|
4.11
|
|
|
$
|
4.04
|
|
|
$
|
(2.49
|
)
|
Diluted income (loss) per share:
|
|
|
|
|
|
|
||||||
Income (loss) from continuing operations
|
|
$
|
4.14
|
|
|
$
|
4.08
|
|
|
$
|
(3.88
|
)
|
(Loss) income from discontinued operations
|
|
$
|
(0.19
|
)
|
|
(0.08
|
)
|
|
1.39
|
|
||
Total diluted income (loss) per share
|
|
$
|
3.95
|
|
|
$
|
4.00
|
|
|
$
|
(2.49
|
)
|
|
|
|
|
|
|
|
||||||
The following equity instruments were excluded from the diluted weighted average common shares outstanding because their effect would be anti-dilutive:
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
Antidilutive stock-based compensation (because average share price is less than exercise price)
|
|
1,462,112
|
|
|
|
|
|
2,297,127
|
|
|||
Antidilutive due to loss
|
|
—
|
|
|
|
|
276,094
|
|
||||
Total antidilutive stock-based compensation
|
|
1,462,112
|
|
|
—
|
|
|
2,573,221
|
|
|||
|
|
|
|
|
|
|
||||||
Antidilutive convertible debt instruments (because average share price is less than exercise price)
|
|
—
|
|
|
2,811,652
|
|
|
—
|
|
|||
Total antidilutive convertible debt instruments
|
|
—
|
|
|
2,811,652
|
|
|
—
|
|
|||
|
|
|
|
|
|
|
||||||
Antidilutive warrants (because average share price is less than exercise price)
|
|
—
|
|
|
2,806,291
|
|
|
—
|
|
|||
Total antidilutive warrants
|
|
—
|
|
|
2,806,291
|
|
|
—
|
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
ASSETS
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
4.5
|
|
|
$
|
4.7
|
|
Accounts receivable
|
|
21.6
|
|
|
23.0
|
|
||
Accounts receivable from related parties
|
|
—
|
|
|
1.1
|
|
||
Inventory
|
|
5.5
|
|
|
20.9
|
|
||
Other current assets
|
|
1.0
|
|
|
0.7
|
|
||
Property, plant and equipment, net
|
|
312.6
|
|
|
255.1
|
|
||
Equity method investments
|
|
104.8
|
|
|
106.5
|
|
||
Goodwill
|
|
12.2
|
|
|
12.2
|
|
||
Intangible assets, net
|
|
154.0
|
|
|
15.9
|
|
||
Other non-current assets
|
|
8.4
|
|
|
3.4
|
|
||
Total assets
|
|
$
|
624.6
|
|
|
$
|
443.5
|
|
LIABILITIES AND DEFICIT
|
|
|
|
|
||||
Accounts payable
|
|
$
|
14.2
|
|
|
$
|
19.1
|
|
Accounts payable to related parties
|
|
7.8
|
|
|
—
|
|
||
Accrued expenses and other current liabilities
|
|
14.5
|
|
|
12.6
|
|
||
Long-term debt
|
|
700.4
|
|
|
422.6
|
|
||
Asset retirement obligations
|
|
5.2
|
|
|
4.1
|
|
||
Other non-current liabilities
|
|
17.3
|
|
|
14.3
|
|
||
Deficit
|
|
(134.8
|
)
|
|
(29.2
|
)
|
||
Total liabilities and deficit
|
|
$
|
624.6
|
|
|
$
|
443.5
|
|
Income Statement Information
|
|
For the period January 1, 2017 to June 30, 2017
|
|
Year Ended December 31, 2016
|
||||
Net revenues
|
|
$
|
2,269.7
|
|
|
$
|
3,913.4
|
|
Gross profit
|
|
351.2
|
|
|
536.6
|
|
||
Pre-tax income (loss)
|
|
20.0
|
|
|
(126.6
|
)
|
||
Net income (loss)
|
|
15.0
|
|
|
(79.8
|
)
|
||
Net income (loss) attributable to Alon
|
|
9.5
|
|
|
(82.8
|
)
|
|
|
|
December 31, 2017
|
||
Assets held for sale:
|
|
|
|
||
Cash and cash equivalents
|
|
|
$
|
10.1
|
|
Accounts receivable
|
|
|
7.9
|
|
|
Inventory
|
|
|
1.9
|
|
|
Other current assets
|
|
|
1.3
|
|
|
Property, plant & equipment, net
|
|
|
130.0
|
|
|
Other intangibles, net
|
|
|
6.6
|
|
|
Other non-current assets
|
|
|
2.2
|
|
|
Assets held for sale
|
|
|
$
|
160.0
|
|
Liabilities associated with assets held for sale:
|
|
|
|
||
Accrued expenses and other current liabilities
|
|
|
$
|
9.5
|
|
Deferred tax liabilities
|
|
|
63.9
|
|
|
Other non-current liabilities
|
|
|
32.5
|
|
|
Liabilities associated with assets held for sale
|
|
|
$
|
105.9
|
|
|
|
Year Ended
|
||||||
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
Net revenues
|
|
$
|
32.5
|
|
|
$
|
82.4
|
|
Cost of sales:
|
|
|
|
|
||||
Cost of materials and other
|
|
3.8
|
|
|
(68.7
|
)
|
||
Operating expenses (excluding depreciation and amortization)
|
|
(9.4
|
)
|
|
(14.4
|
)
|
||
Total cost of sales
|
|
(5.6
|
)
|
|
(83.1
|
)
|
||
General and administrative expenses
|
|
(1.1
|
)
|
|
(6.0
|
)
|
||
Other operating income, net
|
|
0.3
|
|
|
(0.2
|
)
|
||
Interest expense
|
|
—
|
|
|
(1.7
|
)
|
||
Interest income
|
|
3.0
|
|
|
—
|
|
||
Other expense, net
|
|
—
|
|
|
—
|
|
||
Loss on sale of California Discontinued Entities
|
|
(40.0
|
)
|
|
—
|
|
||
Loss from discontinued operations before taxes
|
|
(10.9
|
)
|
|
(8.6
|
)
|
||
Income tax benefit
|
|
(2.2
|
)
|
|
(2.7
|
)
|
||
Loss from discontinued operations, net of tax
|
|
$
|
(8.7
|
)
|
|
$
|
(5.9
|
)
|
|
|
Year Ended
|
||
|
|
December 31, 2016
|
||
Net revenues
|
|
$
|
1,216.3
|
|
Cost of materials and other
|
|
(1,041.2
|
)
|
|
Operating expenses
|
|
(116.4
|
)
|
|
General and administrative expenses
|
|
(21.8
|
)
|
|
Depreciation and amortization
|
|
(20.4
|
)
|
|
Interest expense
|
|
(6.4
|
)
|
|
Gain on sale of Retail Entities
|
|
134.1
|
|
|
Income from discontinued operations before taxes
|
|
144.2
|
|
|
Income tax expense
|
|
57.9
|
|
|
Income from discontinued operations, net of tax
|
|
$
|
86.3
|
|
|
|
December 31,
2018 |
|
December 31,
2017 |
||||
Refinery raw materials and supplies
|
|
$
|
289.0
|
|
|
$
|
308.0
|
|
Refinery work in process
|
|
58.9
|
|
|
79.2
|
|
||
Refinery finished goods
|
|
304.1
|
|
|
366.4
|
|
||
Retail fuel
|
|
8.0
|
|
|
8.3
|
|
||
Retail merchandise
|
|
25.4
|
|
|
25.6
|
|
||
Logistics refined products
|
|
5.5
|
|
|
20.9
|
|
||
Total inventories
|
|
$
|
690.9
|
|
|
$
|
808.4
|
|
|
|
December 31,
2018 |
|
December 31,
2017 |
||||
Revolving Credit Facility
|
|
$
|
300.0
|
|
|
$
|
—
|
|
Term Loan Credit Facility (1)
|
|
682.9
|
|
|
—
|
|
||
Delek Logistics Credit Facility
|
|
456.7
|
|
|
179.9
|
|
||
Delek Logistics Notes (2)
|
|
243.7
|
|
|
242.7
|
|
||
Wells Term Loan (3)
|
|
—
|
|
|
40.5
|
|
||
Wells Revolving Loan
|
|
—
|
|
|
45.0
|
|
||
Reliant Bank Revolver
|
|
30.0
|
|
|
17.0
|
|
||
Promissory Notes
|
|
70.0
|
|
|
95.1
|
|
||
Lion Term Loan (4)
|
|
—
|
|
|
203.4
|
|
||
Alon Partnership Credit Facility
|
|
—
|
|
|
100.0
|
|
||
Alon Partnership Term Loan
|
|
—
|
|
|
237.5
|
|
||
Convertible Notes (5)
|
|
—
|
|
|
146.0
|
|
||
Alon Term Loan Credit Facilities (6)
|
|
—
|
|
|
72.4
|
|
||
Alon Retail Credit Facilities (7)
|
|
—
|
|
|
86.1
|
|
||
|
|
1,783.3
|
|
|
1,465.6
|
|
||
Less: Current portion of long-term debt and notes payable
|
|
32.0
|
|
|
590.2
|
|
||
|
|
$
|
1,751.3
|
|
|
$
|
875.4
|
|
(1)
|
The Term Loan Credit Facility is net of deferred financing costs of $3.5 million and debt discount of $8.4 million at December 31, 2018.
|
(2)
|
The Delek Logistics Notes are net of deferred financing costs of $4.8 million and $5.6 million, respectively, and debt discount of $1.5 million and $1.7 million, respectively, at December 31, 2018 and December 31, 2017.
|
(3)
|
The Wells Term Loan was extinguished on March 30, 2018, as further discussed below, and was net of deferred financing costs of a nominal amount and debt discount $0.3 million at December 31, 2017.
|
(4)
|
The Lion Term Loan Facility was extinguished on March 30, 2018, as further discussed below, and was net of deferred financing costs of $2.1 million and debt discount of $0.8 million at December 31, 2017.
|
(5)
|
The Convertible Notes were extinguished on September 17, 2018, as further discussed below, and were net of debt discount of $4.0 million at December 31, 2017.
|
(6)
|
The Alon Term Loan Credit Facilities were extinguished on March 30, 2018, as further discussed below, and were net of debt discount of $0.6 million at December 31, 2017.
|
(7)
|
The Alon Retail Credit Facilities were extinguished on March 30, 2018, as further discussed below, and were net of debt discount of $2.4 million at December 31, 2017.
|
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
|
Total
|
||||||||||||||
Revolving Credit Facility
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
300.0
|
|
|
$
|
—
|
|
|
$
|
300.0
|
|
Term Loan Credit Facility
|
|
7.0
|
|
|
7.0
|
|
|
7.0
|
|
|
7.0
|
|
|
7.0
|
|
|
659.8
|
|
|
694.8
|
|
|||||||
Delek Logistics Credit Facility
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
456.7
|
|
|
—
|
|
|
456.7
|
|
|||||||
Delek Logistics Notes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
250.0
|
|
|
250.0
|
|
|||||||
Reliant Bank Revolver
|
|
—
|
|
|
30.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30.0
|
|
|||||||
Promissory Notes
|
|
25.0
|
|
|
25.0
|
|
|
20.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
70.0
|
|
|||||||
Total
|
|
$
|
32.0
|
|
|
$
|
62.0
|
|
|
$
|
27.0
|
|
|
$
|
7.0
|
|
|
$
|
763.7
|
|
|
$
|
909.8
|
|
|
$
|
1,801.5
|
|
•
|
limiting the exposure to price fluctuations of commodity inventory above or below target levels at each of our segments;
|
•
|
managing our exposure to commodity price risk associated with the purchase or sale of crude oil, feedstocks and finished grade fuel products at each of our segments;
|
•
|
managing the cost of our RINs Obligation using future commitments to purchase or sell RINs at fixed prices and quantities; and
|
•
|
limiting the exposure to interest rate fluctuations on our floating rate borrowings.
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||
Derivative Type
|
Balance Sheet Location
|
|
Assets
|
|
Liabilities
|
|
Assets
|
|
Liabilities
|
||||||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|||||||||
Commodity derivatives(1)
|
Other current assets
|
|
$
|
158.3
|
|
|
$
|
(142.4
|
)
|
|
$
|
164.6
|
|
|
$
|
(162.0
|
)
|
Commodity derivatives(1)
|
Other current liabilities
|
|
—
|
|
|
(8.4
|
)
|
|
13.4
|
|
|
(28.3
|
)
|
||||
Commodity derivatives(1)
|
Other long-term assets
|
|
2.1
|
|
|
(2.4
|
)
|
|
—
|
|
|
—
|
|
||||
Commodity derivatives(1)
|
Other long-term liabilities
|
|
93.0
|
|
|
(94.0
|
)
|
|
—
|
|
|
—
|
|
||||
RIN commitment contracts(2)
|
Other current assets
|
|
2.0
|
|
|
—
|
|
|
1.4
|
|
|
—
|
|
||||
RIN commitment contracts(2)
|
Other current liabilities
|
|
—
|
|
|
(6.7
|
)
|
|
—
|
|
|
(24.0
|
)
|
||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|||||||||
Commodity derivatives(1)
|
Other current assets
|
|
200.3
|
|
|
(157.0
|
)
|
|
—
|
|
|
—
|
|
||||
Commodity derivatives(1)
|
Other current liabilities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13.6
|
)
|
||||
Commodity derivatives(1)
|
Other long-term assets
|
|
6.1
|
|
|
(4.8
|
)
|
|
—
|
|
|
—
|
|
||||
Interest rate derivatives
|
Other long-term liabilities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.9
|
)
|
||||
Total gross fair value of derivatives
|
|
461.8
|
|
|
(415.7
|
)
|
|
179.4
|
|
|
(228.8
|
)
|
|||||
Less: Counterparty netting and cash collateral(3)
|
|
399.9
|
|
|
(399.5
|
)
|
|
163.5
|
|
|
(173.6
|
)
|
|||||
Total net fair value of derivatives
|
|
$
|
61.9
|
|
|
$
|
(16.2
|
)
|
|
$
|
15.9
|
|
|
$
|
(55.2
|
)
|
(1)
|
As of December 31, 2018 and 2017, we had open derivative positions representing 39,277,822 and 35,978,000 barrels, respectively, of crude oil and refined petroleum products. Of these open positions, contracts representing 16,461,000 and 575,000 barrels were designated as cash flow hedging instruments as of December 31, 2018 and 2017, respectively.
|
(2)
|
As of December 31, 2018 and 2017, we had open RIN commitment contracts representing 137,750,000 and 163,361,320 RINs, respectively.
|
(3)
|
As of December 31, 2018 and 2017, $(0.4) million and $10.0 million, respectively, of cash (obligation) collateral held by counterparties has been netted with the derivatives with each counterparty.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Gains (losses) on commodity derivatives not designated as hedging instruments recognized in cost of materials and other (1)
|
|
$
|
0.9
|
|
|
$
|
(33.1
|
)
|
|
$
|
(21.7
|
)
|
Gains on commodity derivatives not designated as hedging instruments recognized in other operating income (expenses), net (1) (2)
|
|
7.7
|
|
|
—
|
|
|
—
|
|
|||
Realized losses reclassified out of OCI on commodity derivatives designated as cash flow hedging instruments
|
|
(1.7
|
)
|
|
(38.6
|
)
|
|
(27.8
|
)
|
|||
Gains recognized on commodity derivatives due to cash flow hedging ineffectiveness
|
|
0.9
|
|
|
0.5
|
|
|
3.1
|
|
|||
Total income (losses)
|
|
$
|
7.8
|
|
|
$
|
(71.2
|
)
|
|
$
|
(46.4
|
)
|
(1)
|
Gains (losses) on commodity derivatives that are economic hedges but not designated as hedging instruments include unrealized gains (losses) of $32.1 million, $(13.0) million and $(34.2) million for the years ended December 31, 2018, 2017 and 2016, respectively. Of these amounts, approximately $8.1 million and $4.6 million for the years ended December 31, 2018 and 2017, respectively, represent unrealized gains where the instrument has matured but where it has not cash settled as of period end, excluding the reversal of prior period settlement differences. Derivative instruments that have matured but not cash settled at the balance sheet date continue to be reflected in derivative assets or liabilities on our balance sheet.
|
(2)
|
See separate table below for disclosures about "trading derivatives."
|
|
|
Year Ended December 31, 2018
|
||
Realized gains
|
|
$
|
23.1
|
|
Unrealized losses
|
|
(3.0
|
)
|
|
Total
|
|
$
|
20.1
|
|
|
|
As of December 31, 2018
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
|
||||||||
Commodity derivatives
|
|
$
|
—
|
|
|
$
|
459.8
|
|
|
$
|
—
|
|
|
$
|
459.8
|
|
Commodity investments
|
|
15.8
|
|
|
—
|
|
|
—
|
|
|
15.8
|
|
||||
RIN commitment contracts
|
|
—
|
|
|
2.0
|
|
|
—
|
|
|
2.0
|
|
||||
Total assets
|
|
15.8
|
|
|
461.8
|
|
|
—
|
|
|
477.6
|
|
||||
Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Commodity derivatives
|
|
—
|
|
|
(409.0
|
)
|
|
—
|
|
|
(409.0
|
)
|
||||
RIN commitment contracts
|
|
—
|
|
|
(6.7
|
)
|
|
—
|
|
|
(6.7
|
)
|
||||
RINs obligation deficit
|
|
—
|
|
|
(11.8
|
)
|
|
—
|
|
|
(11.8
|
)
|
||||
J. Aron supply and offtake obligations
|
|
—
|
|
|
(362.2
|
)
|
|
—
|
|
|
(362.2
|
)
|
||||
Total liabilities
|
|
—
|
|
|
(789.7
|
)
|
|
—
|
|
|
(789.7
|
)
|
||||
Net liabilities
|
|
$
|
15.8
|
|
|
$
|
(327.9
|
)
|
|
$
|
—
|
|
|
$
|
(312.1
|
)
|
|
|
As of December 31, 2017
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
|
||||||||
Commodity derivatives
|
|
$
|
—
|
|
|
$
|
178.0
|
|
|
$
|
—
|
|
|
$
|
178.0
|
|
RIN commitment contracts
|
|
—
|
|
|
1.4
|
|
|
—
|
|
|
1.4
|
|
||||
RINs Obligation surplus
|
|
—
|
|
|
1.1
|
|
|
—
|
|
|
1.1
|
|
||||
Total assets
|
|
—
|
|
|
180.5
|
|
|
—
|
|
|
180.5
|
|
||||
Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Commodity derivatives
|
|
—
|
|
|
(203.9
|
)
|
|
—
|
|
|
(203.9
|
)
|
||||
Interest rate derivatives
|
|
—
|
|
|
(0.9
|
)
|
|
—
|
|
|
(0.9
|
)
|
||||
RIN commitment contracts
|
|
—
|
|
|
(24.0
|
)
|
|
—
|
|
|
(24.0
|
)
|
||||
RINs obligation deficit
|
|
—
|
|
|
(130.8
|
)
|
|
—
|
|
|
(130.8
|
)
|
||||
J. Aron supply and offtake obligations
|
|
—
|
|
|
(435.6
|
)
|
|
—
|
|
|
(435.6
|
)
|
||||
Total liabilities
|
|
—
|
|
|
(795.2
|
)
|
|
—
|
|
|
(795.2
|
)
|
||||
Net liabilities
|
|
$
|
—
|
|
|
$
|
(614.7
|
)
|
|
$
|
—
|
|
|
$
|
(614.7
|
)
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Discounted environmental liabilities
|
|
$
|
58.7
|
|
|
$
|
33.7
|
|
Undiscounted environmental liabilities
|
|
84.6
|
|
|
42.4
|
|
||
Total accrued environmental liabilities
|
|
$
|
143.3
|
|
|
$
|
76.1
|
|
2019
|
|
$
|
2.9
|
|
2020
|
|
3.1
|
|
|
2021
|
|
3.2
|
|
|
2022
|
|
3.7
|
|
|
2023
|
|
2.8
|
|
|
Thereafter
|
|
61.7
|
|
|
Discounted environmental liabilities, gross
|
|
77.4
|
|
|
Less: Discount applied
|
|
18.7
|
|
|
Discounted environmental liabilities
|
|
$
|
58.7
|
|
•
|
Magnolia Station in March 2013 (the "Magnolia Release");
|
•
|
a pipeline segment east of El Dorado, Arkansas in February 2018;
|
•
|
a gathering line release near one of our storage facilities located south of El Dorado, Arkansas in February 2018;
|
•
|
a gathering line release located on property owned by Clean Harbors, Inc. in El Dorado, Arkansas in March 2018;
|
•
|
two gathering line releases near Smackover, Arkansas occurring in November 2018 and December 2018; and
|
•
|
a gathering line release near Norphlet, Arkansas in December 2018.
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Beginning balance
|
|
$
|
72.1
|
|
|
$
|
5.2
|
|
Liabilities identified (1)
|
|
(1.2
|
)
|
|
66.2
|
|
||
Liabilities settled
|
|
(2.2
|
)
|
|
—
|
|
||
Accretion expense
|
|
1.9
|
|
|
0.7
|
|
||
Reclassification from discontinued operations
|
|
4.9
|
|
|
—
|
|
||
Ending balance
|
|
$
|
75.5
|
|
|
$
|
72.1
|
|
2019
|
|
$
|
48.1
|
|
2020
|
|
42.1
|
|
|
2021
|
|
39.5
|
|
|
2022
|
|
28.5
|
|
|
2023
|
|
23.4
|
|
|
Thereafter
|
|
77.9
|
|
|
Total future minimum rentals
|
|
$
|
259.5
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Non-Current Deferred Taxes:
|
|
|
|
||||
Property, plant and equipment, and intangibles
|
$
|
(275.6
|
)
|
|
$
|
(180.9
|
)
|
Partnership and equity investments
|
22.2
|
|
|
(83.7
|
)
|
||
Deferred revenues
|
(5.5
|
)
|
|
(6.5
|
)
|
||
Derivatives and hedging
|
(12.5
|
)
|
|
4.8
|
|
||
Compensation and employee benefits
|
15.5
|
|
|
15.9
|
|
||
Net operating loss carryforwards
|
39.9
|
|
|
26.5
|
|
||
Reserves and accruals
|
63.0
|
|
|
40.8
|
|
||
Inventories
|
1.3
|
|
|
4.4
|
|
||
Valuation allowance
|
(58.5
|
)
|
|
(21.2
|
)
|
||
Total net deferred tax liabilities
|
$
|
(210.2
|
)
|
|
$
|
(199.9
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Provision (benefit) for federal income taxes at statutory rate
|
$
|
102.0
|
|
|
$
|
104.7
|
|
|
$
|
(137.0
|
)
|
State income tax expense (benefit), net of federal tax provision
|
5.5
|
|
|
4.9
|
|
|
(10.2
|
)
|
|||
Income tax (benefit) expense attributable to non-controlling interest
|
(7.3
|
)
|
|
(12.0
|
)
|
|
(7.1
|
)
|
|||
Tax credits and incentives
|
(8.3
|
)
|
|
(1.6
|
)
|
|
(9.7
|
)
|
|||
Partnership basis differences not expected to be realized
|
5.5
|
|
|
—
|
|
|
—
|
|
|||
Dividends received deduction
|
—
|
|
|
(2.8
|
)
|
|
(5.7
|
)
|
|||
Executive compensation limitation
|
1.7
|
|
|
1.5
|
|
|
0.3
|
|
|||
Stock compensation
|
(2.2
|
)
|
|
—
|
|
|
—
|
|
|||
Amortization - prepaid taxes
|
—
|
|
|
(2.4
|
)
|
|
(3.5
|
)
|
|||
Reversal of deferred taxes related to equity method investment in Alon
|
—
|
|
|
45.3
|
|
|
—
|
|
|||
Impact of Tax Reform Act
|
(0.6
|
)
|
|
(166.9
|
)
|
|
—
|
|
|||
Goodwill write-down
|
5.3
|
|
|
—
|
|
|
—
|
|
|||
Other items
|
0.3
|
|
|
0.1
|
|
|
1.4
|
|
|||
Income tax expense (benefit)
|
$
|
101.9
|
|
|
$
|
(29.2
|
)
|
|
$
|
(171.5
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Current
|
$
|
128.7
|
|
|
$
|
18.8
|
|
|
$
|
(18.3
|
)
|
Deferred
|
(26.8
|
)
|
|
(48.0
|
)
|
|
(153.2
|
)
|
|||
|
$
|
101.9
|
|
|
$
|
(29.2
|
)
|
|
$
|
(171.5
|
)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Balance at the beginning of the year
|
$
|
6.1
|
|
|
$
|
1.7
|
|
|
$
|
0.2
|
|
Additions based on tax positions related to current year
|
11.2
|
|
|
0.4
|
|
|
1.5
|
|
|||
Additions for tax positions related to prior years and acquisitions
|
3.4
|
|
|
4.2
|
|
|
—
|
|
|||
Reductions for tax positions related to prior years
|
(0.9
|
)
|
|
(0.2
|
)
|
|
—
|
|
|||
Settlements with taxing authorities
|
(0.6
|
)
|
|
—
|
|
|
—
|
|
|||
Balance at the end of the year
|
$
|
19.2
|
|
|
$
|
6.1
|
|
|
$
|
1.7
|
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Land
|
|
$
|
66.2
|
|
|
$
|
54.0
|
|
Building and building improvements
|
|
108.7
|
|
|
67.9
|
|
||
Refinery machinery and equipment
|
|
1,801.8
|
|
|
1,823.4
|
|
||
Pipelines and terminals
|
|
412.2
|
|
|
314.3
|
|
||
Retail store equipment and site improvements
|
|
37.8
|
|
|
75.5
|
|
||
Refinery turnaround costs
|
|
166.9
|
|
|
124.8
|
|
||
Other equipment
|
|
124.9
|
|
|
108.2
|
|
||
Construction in progress
|
|
281.1
|
|
|
204.4
|
|
||
|
|
$
|
2,999.6
|
|
|
2,772.5
|
|
|
Less: accumulated depreciation
|
|
(804.7
|
)
|
|
(631.7
|
)
|
||
|
|
$
|
2,194.9
|
|
|
$
|
2,140.8
|
|
|
|
As of and For the Year Ended December 31, 2018
|
||||||||||||||||||
|
|
Refining
|
|
Logistics
|
|
Retail
|
|
Corporate,
Other and Eliminations |
|
Consolidated
|
||||||||||
Property, plant and equipment
|
|
$
|
2,230.6
|
|
|
$
|
452.7
|
|
|
$
|
146.5
|
|
|
$
|
169.8
|
|
|
$
|
2,999.6
|
|
Less: Accumulated depreciation
|
|
(584.2
|
)
|
|
(140.2
|
)
|
|
(29.3
|
)
|
|
(51.0
|
)
|
|
(804.7
|
)
|
|||||
Property, plant and equipment, net
|
|
$
|
1,646.4
|
|
|
$
|
312.5
|
|
|
$
|
117.2
|
|
|
$
|
118.8
|
|
|
$
|
2,194.9
|
|
Depreciation expense
|
|
$
|
124.2
|
|
|
$
|
25.9
|
|
|
$
|
23.8
|
|
|
$
|
15.1
|
|
|
$
|
189.0
|
|
|
|
As of and For the Year Ended December 31, 2017
|
||||||||||||||||||
|
|
Refining
|
|
Logistics
|
|
Retail
|
|
Corporate,
Other and Eliminations |
|
Consolidated
|
||||||||||
Property, plant and equipment
|
|
$
|
2,112.2
|
|
|
$
|
367.2
|
|
|
$
|
141.9
|
|
|
$
|
151.2
|
|
|
$
|
2,772.5
|
|
Less: Accumulated depreciation
|
|
(474.8
|
)
|
|
(112.1
|
)
|
|
(6.7
|
)
|
|
(38.1
|
)
|
|
(631.7
|
)
|
|||||
Property, plant and equipment, net
|
|
$
|
1,637.4
|
|
|
$
|
255.1
|
|
|
$
|
135.2
|
|
|
$
|
113.1
|
|
|
$
|
2,140.8
|
|
Depreciation expense
|
|
$
|
106.8
|
|
|
$
|
20.9
|
|
|
$
|
6.6
|
|
|
$
|
15.2
|
|
|
$
|
149.5
|
|
|
|
|
Refining
|
Logistics
|
Retail
|
Corporate, Other and Eliminations
|
Total
|
||||||||||
Balance,
|
December 31, 2015
|
|
$
|
—
|
|
$
|
12.2
|
|
$
|
—
|
|
$
|
—
|
|
$
|
12.2
|
|
Acquisitions
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||
Balance,
|
December 31, 2016
|
|
—
|
|
12.2
|
|
—
|
|
—
|
|
12.2
|
|
|||||
Acquisitions
|
|
750.9
|
|
—
|
|
30.8
|
|
22.7
|
|
804.4
|
|
||||||
Balance,
|
December 31, 2017
|
|
750.9
|
|
12.2
|
|
30.8
|
|
22.7
|
|
816.6
|
|
|||||
Finalization of purchase price allocation for 2017 Delek/Alon Merger
|
|
50.4
|
|
—
|
|
13.5
|
|
2.4
|
|
66.3
|
|
||||||
Write-down resulting from asset held for sale impairment (1)
|
|
—
|
|
—
|
|
—
|
|
(25.1
|
)
|
(25.1
|
)
|
||||||
Balance,
|
December 31, 2018
|
|
$
|
801.3
|
|
$
|
12.2
|
|
$
|
44.3
|
|
$
|
—
|
|
$
|
857.8
|
|
(1)
|
This impairment of goodwill resulted from the write-down of assets held for sale associated with the asphalt business to net realizable value, as discussed in Note 8.
|
As of December 31, 2018
|
|
Useful Life
|
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
|||||||
Intangible Assets subject to amortization:
|
|
|
|
|
|
|
|
|
|||||||
Supply contract
|
|
11.5 years
|
|
$
|
12.2
|
|
|
$
|
(12.2
|
)
|
|
$
|
—
|
|
|
Third-party fuel supply agreement
|
|
10 years
|
|
49.0
|
|
|
(7.4
|
)
|
|
41.6
|
|
||||
Capacity contract
|
|
8 years
|
|
9.3
|
|
|
(9.3
|
)
|
|
—
|
|
||||
Fuel trade name
|
|
5 years
|
|
4.0
|
|
|
(1.2
|
)
|
|
2.8
|
|
||||
Below market leases
|
|
13 - 15 years
|
|
8.3
|
|
|
(0.3
|
)
|
|
8.0
|
|
||||
Intangible assets not subject to amortization:
|
|
|
|
|
|
|
|
|
|||||||
Rights-of-way
|
|
Indefinite
|
|
30.0
|
|
|
|
|
30.0
|
|
|||||
Line space history
|
|
Indefinite
|
|
11.3
|
|
|
|
|
11.3
|
|
|||||
Liquor licenses
|
|
Indefinite
|
|
8.5
|
|
|
|
|
8.5
|
|
|||||
Refinery permits
|
|
Indefinite
|
|
2.2
|
|
|
|
|
2.2
|
|
|||||
Total
|
|
|
|
$
|
134.8
|
|
|
$
|
(30.4
|
)
|
|
$
|
104.4
|
|
As of December 31, 2017
|
|
Useful Life
|
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
|||||||
Intangible Assets subject to amortization:
|
|
|
|
|
|
|
|
|
|||||||
Supply contract
|
|
11.5 years
|
|
$
|
12.2
|
|
|
$
|
(12.2
|
)
|
|
$
|
—
|
|
|
Third-party fuel supply agreement
|
|
10 years
|
|
49.0
|
|
|
(2.4
|
)
|
|
46.6
|
|
||||
Capacity contract
|
|
8 years
|
|
9.3
|
|
|
(9.2
|
)
|
|
0.1
|
|
||||
Fuel trade name
|
|
5 years
|
|
4.0
|
|
|
(0.4
|
)
|
|
3.6
|
|
||||
Below market leases
|
|
13 - 15 years
|
|
0.6
|
|
|
(0.1
|
)
|
|
0.5
|
|
||||
Intangible assets not subject to amortization:
|
|
|
|
|
|
|
|
|
|||||||
Rights-of-way
|
|
Indefinite
|
|
30.1
|
|
|
|
|
30.1
|
|
|||||
Line space history
|
|
Indefinite
|
|
9.6
|
|
|
|
|
9.6
|
|
|||||
Liquor licenses
|
|
Indefinite
|
|
8.5
|
|
|
|
|
8.5
|
|
|||||
Refinery permits
|
|
Indefinite
|
|
2.1
|
|
|
|
|
2.1
|
|
|||||
Total
|
|
|
|
$
|
125.4
|
|
|
$
|
(24.3
|
)
|
|
$
|
101.1
|
|
2019
|
|
$
|
5.9
|
|
2020
|
|
5.9
|
|
|
2021
|
|
5.9
|
|
|
2022
|
|
5.5
|
|
|
2023
|
|
5.1
|
|
Other Current Assets
|
December 31,
2018 |
|
December 31,
2017 |
||||
Prepaid expenses
|
$
|
15.8
|
|
|
$
|
17.6
|
|
Short-term derivative assets (see Note 12)
|
61.9
|
|
|
15.9
|
|
||
Income and other tax receivables
|
24.3
|
|
|
74.9
|
|
||
RINs Obligation surplus (see Note 13)
|
—
|
|
|
1.1
|
|
||
Commodity investments
|
15.6
|
|
|
—
|
|
||
Other
|
18.1
|
|
|
20.4
|
|
||
Total
|
$
|
135.7
|
|
|
$
|
129.9
|
|
Other Non-Current Assets
|
December 31,
2018 |
|
December 31,
2017 |
||||
Prepaid tax asset
|
$
|
—
|
|
|
$
|
56.2
|
|
Deferred financing costs
|
10.6
|
|
|
5.9
|
|
||
Long-term income tax receivables
|
—
|
|
|
2.1
|
|
||
Supply and Offtake receivable
|
32.7
|
|
|
46.3
|
|
||
Long-term derivative assets (see Note 12)
|
1.0
|
|
|
—
|
|
||
Other
|
8.6
|
|
|
16.3
|
|
||
Total
|
$
|
52.9
|
|
|
$
|
126.8
|
|
Accrued Expenses and Other Current Liabilities
|
December 31,
2018 |
|
December 31,
2017 |
||||
Income and other taxes payable
|
$
|
126.0
|
|
|
$
|
154.1
|
|
Short-term derivative liabilities (see Note 12)
|
16.2
|
|
|
54.4
|
|
||
Interest payable
|
10.2
|
|
|
13.0
|
|
||
Employee costs
|
46.5
|
|
|
46.6
|
|
||
Environmental liabilities (see Note 14)
|
3.8
|
|
|
7.2
|
|
||
Product financing agreements
|
—
|
|
|
72.3
|
|
||
RINs Obligation deficit (see Note 13)
|
11.8
|
|
|
130.8
|
|
||
Accrued utilities
|
10.6
|
|
|
9.4
|
|
||
Tank inspection liabilities
|
7.0
|
|
|
10.7
|
|
||
Crude liabilities
|
42.3
|
|
|
34.5
|
|
||
Other
|
33.3
|
|
|
31.9
|
|
||
Total
|
$
|
307.7
|
|
|
$
|
564.9
|
|
|
|
2018 Grants
|
|
2017 Grants
|
|
2016 Grants
|
||||||
|
|
(Graded Vesting)
|
|
(Graded Vesting)
|
|
(Graded Vesting)
|
||||||
|
|
4 years
|
|
4 years
|
|
4 years
|
||||||
Expected volatility
|
|
47.52%-49.42%
|
|
47.49%-49.18%
|
|
51.31%-54.12%
|
||||||
Dividend yield
|
|
2.00%-2.33%
|
|
2.41%-3.72%
|
|
1.84%-3.72%
|
||||||
Expected term
|
|
4.38-4.62 years
|
|
4.37-4.82 years
|
|
4.75-4.87 years
|
||||||
Risk free rate
|
|
1.56%-2.92%
|
|
0.60%-2.58%
|
|
0.18%-2.47%
|
||||||
Fair value per share
|
|
$
|
15.00
|
|
|
$
|
8.08
|
|
|
$
|
5.67
|
|
|
|
Number of Options
|
|
Weighted-Average Strike Price
|
|
Weighted-Average Contractual Term (in years)
|
|
Average Intrinsic Value
(in millions) |
|||||
Options outstanding, December 31, 2015
|
3,032,143
|
|
|
$
|
28.60
|
|
|
|
|
|
|||
Granted
|
|
347,800
|
|
|
$
|
16.26
|
|
|
|
|
|
||
Exercised
|
|
(68,510
|
)
|
|
$
|
14.69
|
|
|
|
|
|
||
Forfeited
|
|
(743,050
|
)
|
|
$
|
31.17
|
|
|
|
|
|
||
Options and SARs outstanding, December 31, 2016
|
2,568,383
|
|
|
$
|
26.56
|
|
|
|
|
|
|||
Granted
|
|
2,460,500
|
|
|
$
|
25.95
|
|
|
|
|
|
||
Exercised
|
|
(303,049
|
)
|
|
$
|
17.04
|
|
|
|
|
|
||
Forfeited
|
|
(534,827
|
)
|
|
$
|
28.00
|
|
|
|
|
|
||
Options and SARs outstanding, December 31, 2017
|
4,191,007
|
|
|
$
|
26.71
|
|
|
|
|
|
|||
Granted
|
|
1,497,400
|
|
|
$
|
43.49
|
|
|
|
|
|
||
Exercised
|
|
(1,286,527
|
)
|
|
$
|
30.55
|
|
|
|
|
|
||
Forfeited
|
|
(827,775
|
)
|
|
$
|
29.01
|
|
|
|
|
|
||
Options and SARs outstanding, December 31, 2018
|
3,574,105
|
|
|
$
|
32.67
|
|
|
8.4
|
|
$
|
42.7
|
|
|
Vested options and SARs exercisable, December 31, 2018
|
768,955
|
|
|
$
|
26.40
|
|
|
6.7
|
|
$
|
4.7
|
|
|
2018 Grants
|
|
2017 Grants
|
|
2016 Grants
|
||||||
Expected volatility
|
36.11%-44.66%
|
|
|
44.03%-46.54%
|
|
|
41.77
|
%
|
|||
Expected term
|
2.06-2.81
|
|
|
2.06-3.06
|
|
|
2.81
|
|
|||
Risk free rate
|
2.40%-2.73%
|
|
|
1.43%-1.93%
|
|
|
1.08
|
%
|
|||
Fair value per share
|
$
|
57.93
|
|
|
$
|
37.80
|
|
|
$
|
14.31
|
|
|
|
Number of RSUs
|
|
Weighted-Average Grant Date Price
|
|||
Balance
|
December 31, 2015
|
384,567
|
|
|
$
|
33.6
|
|
Granted
|
|
858,296
|
|
|
$
|
12.94
|
|
Vested
|
|
(246,657
|
)
|
|
$
|
21.17
|
|
Forfeited
|
|
(114,393
|
)
|
|
$
|
17.23
|
|
Balance
|
December 31, 2016
|
881,813
|
|
|
$
|
19.08
|
|
Granted
|
|
614,035
|
|
|
$
|
31.56
|
|
Vested
|
|
(351,713
|
)
|
|
$
|
21.95
|
|
Forfeited
|
|
(78,676
|
)
|
|
$
|
13.44
|
|
Performance Not Achieved
|
|
(5,789
|
)
|
|
$
|
38.03
|
|
Balance
|
December 31, 2017
|
1,059,670
|
|
|
$
|
25.68
|
|
Granted
|
|
440,896
|
|
|
$
|
53.10
|
|
Vested
|
|
(341,774
|
)
|
|
$
|
25.62
|
|
Forfeited
|
|
(154,780
|
)
|
|
$
|
36.96
|
|
Balance
|
December 31, 2018
|
1,004,012
|
|
|
$
|
36.00
|
|
|
2018
|
|
2017
|
||||
Change in projected benefit obligation:
|
|
|
|
||||
Benefit obligation at beginning of the period (July 1, 2017 business combination)
|
$
|
146.9
|
|
|
$
|
145.2
|
|
Service cost
|
0.4
|
|
|
1.2
|
|
||
Interest cost
|
5.2
|
|
|
2.7
|
|
||
Actuarial (gain) loss
|
(9.9
|
)
|
|
6.5
|
|
||
Benefits paid
|
(9.1
|
)
|
|
(2.4
|
)
|
||
Other (effect of curtailment/settlement)
|
(2.5
|
)
|
|
(6.3
|
)
|
||
Projected benefit obligations at end of year
|
$
|
131.0
|
|
|
$
|
146.9
|
|
Change in plan assets:
|
|
|
|
||||
Fair value of plan assets at beginning of the period (July 1, 2017 business combination)
|
$
|
108.8
|
|
|
$
|
96.1
|
|
Actual (loss) gain on plan assets
|
(8.2
|
)
|
|
9.8
|
|
||
Employer contribution
|
24.2
|
|
|
5.3
|
|
||
Benefits paid
|
(9.1
|
)
|
|
(2.4
|
)
|
||
Fair value of plan assets at end of year
|
$
|
115.7
|
|
|
$
|
108.8
|
|
Reconciliation of funded status:
|
|
|
|
||||
Fair value of plan assets at end of year
|
$
|
115.7
|
|
|
$
|
108.8
|
|
Less projected benefit obligations at end of year
|
131.0
|
|
|
146.9
|
|
||
Under-funded status at end of year
|
$
|
(15.3
|
)
|
|
$
|
(38.1
|
)
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Net actuarial loss
|
$
|
5.5
|
|
|
$
|
0.8
|
|
Prior service credit
|
—
|
|
|
—
|
|
||
Projected benefit obligations at end of year
|
$
|
5.5
|
|
|
$
|
0.8
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Projected benefit obligation
|
$
|
131.0
|
|
|
$
|
146.9
|
|
Accumulated benefit obligation
|
$
|
131.0
|
|
|
143.8
|
|
|
Fair value of plan assets
|
$
|
115.7
|
|
|
108.8
|
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||
Discount rate
|
4.15
|
%
|
|
3.60
|
%
|
Rate of compensation increase
|
N/A
|
|
|
3.00
|
%
|
|
Year Ended December 31,
|
||||
|
2018
|
|
2017
|
||
Discount rate
|
3.60
|
%
|
|
3.80
|
%
|
Expected long-term rate of return on plan assets
|
7.33
|
%
|
|
7.45
|
%
|
Rate of compensation increase
|
3.00
|
%
|
|
3.00
|
%
|
|
|
Year Ended December 31,
|
||||||
Components of net periodic benefit cost:
|
|
2018
|
|
2017
|
||||
Service cost
|
|
$
|
0.4
|
|
|
$
|
1.2
|
|
Interest cost
|
|
5.2
|
|
|
2.7
|
|
||
Expected return on plan assets
|
|
(8.0
|
)
|
|
(2.7
|
)
|
||
Recognition of gain due to settlement
|
|
(0.1
|
)
|
|
—
|
|
||
Recognition of gain due to curtailment
|
|
(2.4
|
)
|
|
(6.1
|
)
|
||
Net periodic benefit cost
|
|
$
|
(4.9
|
)
|
|
$
|
(4.9
|
)
|
|
Year Ended December 31,
|
||||
|
2018
|
|
2017
|
||
Asset Category:
|
|
|
|
||
Equity securities
|
66.4
|
%
|
|
78.5
|
%
|
Debt securities
|
26.8
|
%
|
|
13.0
|
%
|
Real estate investment trust
|
6.8
|
%
|
|
8.5
|
%
|
Total
|
100.0
|
%
|
|
100.0
|
%
|
|
Quoted Prices in
Active Markets
For Identical
Assets or
Liabilities
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Consolidated
Total
|
||||||||
Year Ended December 31, 2018
|
|
|
|
|
|
|
|
||||||||
Equity securities:
|
|
|
|
|
|
|
|
||||||||
U.S. companies
|
$
|
—
|
|
|
$
|
62.8
|
|
|
$
|
—
|
|
|
$
|
62.8
|
|
International companies
|
—
|
|
|
14.0
|
|
|
—
|
|
|
14.0
|
|
||||
Debt securities:
|
|
|
|
|
|
|
|
||||||||
Preferred securities
|
—
|
|
|
4.4
|
|
|
—
|
|
|
4.4
|
|
||||
Bond securities
|
—
|
|
|
26.6
|
|
|
—
|
|
|
26.6
|
|
||||
Real estate securities
|
—
|
|
|
7.9
|
|
|
—
|
|
|
7.9
|
|
||||
Total
|
$
|
—
|
|
|
$
|
115.7
|
|
|
$
|
—
|
|
|
$
|
115.7
|
|
Year Ended December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Equity securities:
|
|
|
|
|
|
|
|
||||||||
U.S. companies
|
$
|
67.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
67.1
|
|
International companies
|
18.3
|
|
|
—
|
|
|
—
|
|
|
18.3
|
|
||||
Debt securities:
|
|
|
|
|
|
|
|
||||||||
Preferred securities
|
4.6
|
|
|
—
|
|
|
—
|
|
|
4.6
|
|
||||
Bond securities
|
—
|
|
|
9.5
|
|
|
—
|
|
|
9.5
|
|
||||
Real estate securities
|
9.3
|
|
|
—
|
|
|
—
|
|
|
9.3
|
|
||||
Total
|
$
|
99.3
|
|
|
$
|
9.5
|
|
|
$
|
—
|
|
|
$
|
108.8
|
|
|
|
For the Three Month Periods Ended
|
||||||||||||||
|
|
March 31, 2018(1)
|
|
June 30, 2018(2)
|
|
September 30, 2018 (2)
|
|
December 31, 2018
|
||||||||
Net revenues
|
|
$
|
2,353.2
|
|
|
$
|
2,636.9
|
|
|
$
|
2,768.9
|
|
|
$
|
2,474.1
|
|
Operating income
|
|
$
|
38.8
|
|
|
$
|
135.1
|
|
|
$
|
255.2
|
|
|
$
|
182.8
|
|
Net income (loss) from continuing operations
|
|
$
|
(17.3
|
)
|
|
$
|
87.5
|
|
|
$
|
185.8
|
|
|
$
|
127.6
|
|
Net income (loss) attributable to Delek
|
|
$
|
(40.4
|
)
|
|
$
|
79.1
|
|
|
$
|
179.8
|
|
|
$
|
121.6
|
|
Basic income (loss) per share from continuing operations
|
|
$
|
(0.29
|
)
|
|
$
|
0.95
|
|
|
$
|
2.15
|
|
|
$
|
1.50
|
|
Diluted income (loss) per share from continuing operations
|
|
$
|
(0.29
|
)
|
|
$
|
0.90
|
|
|
$
|
2.02
|
|
|
$
|
1.48
|
|
(1)
|
Net loss from continuing operations and net loss attributable to Delek for the quarter ended March 31, 2018 reflect a correction to record additional deferred tax expense totaling $5.5 million related to the recognition of a valuation allowance on deferred tax assets previously recognized in connection with the Big Spring Logistic Assets Acquisition (see Note 6) not previously reported in our March 31, 2018 Quarterly Report on Form 10-Q filed on May 10, 2018. Such amount was not considered material to the financial statements or the trend of earnings for that period.
|
(2)
|
Net revenues for the quarter ended September 30, 2018 reflects a correction of an intercompany elimination which resulted in an increase in net revenues and cost of materials and other of $273.7 million not previously reflected on the unaudited consolidated financial statements in our September 30, 2018 Quarterly Report on Form 10-Q filed on November 9, 2018, and net revenues for the quarter ended June 30, 2018 reflects a similar correction resulting in an increase in net revenues and cost of materials and other of $73.4 million not previously reflected on the unaudited consolidated financial statements in our June 30, 2018 Quarterly Report on Form 10-Q filed on August 9, 2018. Such amounts are not considered material to the financial statements and had no impact to operating income or segment contribution margin for those periods.
|
•
|
Net income from continuing operations for the quarter ended December 31, 2018 includes an environmental indemnification settlement totaling $20.0 million, where $16.0 million is attributable to additional recoveries of remediation costs incurred by the Company and is included as a reduction of operating expenses, and $4.0 million is considered additional consideration for concessions made under the Settlement Agreement and is included as other income in the accompanying consolidated statements of income for the year ended December 31, 2018.
|
|
|
For the Three Month Periods Ended
|
||||||||||||||
|
|
March 31, 2017
|
|
June 30, 2017
|
|
September 30, 2017
|
|
December 31, 2017
|
||||||||
Net revenues
|
|
$
|
1,182.2
|
|
|
$
|
1,230.7
|
|
|
$
|
2,370.6
|
|
|
$
|
2,483.7
|
|
Operating income (loss)
|
|
$
|
29.8
|
|
|
$
|
(46.5
|
)
|
|
$
|
90.8
|
|
|
$
|
112.5
|
|
Net income (loss) from continuing operations
|
|
$
|
15.3
|
|
|
$
|
(32.2
|
)
|
|
$
|
118.5
|
|
|
$
|
226.9
|
|
Net income (loss) attributable to Delek
|
|
$
|
11.2
|
|
|
$
|
(37.9
|
)
|
|
$
|
104.4
|
|
|
$
|
211.1
|
|
Basic income (loss) per share from continuing operations
|
|
$
|
0.18
|
|
|
$
|
(0.61
|
)
|
|
$
|
1.30
|
|
|
$
|
2.62
|
|
Diluted income (loss) per share from continuing operations
|
|
$
|
0.18
|
|
|
$
|
(0.61
|
)
|
|
$
|
1.29
|
|
|
$
|
2.58
|
|
•
|
Net income from continuing operations for the quarter ended September 30, 2017 includes gain on remeasurement of the Alon equity method investment, before tax, of $190.1 million (see Note 3) and the income tax effect of the write-off of deferred taxes in connection with the Delek/Alon Merger of $46.9 million;
|
•
|
Net income attributable to Delek for the quarter ended December 31, 2017 includes the income tax effect of the Tax Reform Act of $166.9 million.
|
|
|
Three Months Ended December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Numerator:
|
|
|
|
|
||||
Numerator for EPS - continuing operations
|
|
|
|
|
||||
Income (loss) from continuing operations
|
|
$
|
127.6
|
|
|
$
|
226.9
|
|
Less: Income from continuing operations attributed to non-controlling interest
|
|
5.8
|
|
|
14.0
|
|
||
Income (loss) from continuing operations attributable to Delek (numerator for basic EPS - continuing operations attributable to Delek)
|
|
121.8
|
|
|
212.9
|
|
||
Interest on convertible debt, net of tax
|
|
—
|
|
|
0.7
|
|
||
Numerator for diluted EPS - continuing operations attributable to Delek
|
|
$
|
121.8
|
|
|
$
|
213.6
|
|
|
|
|
|
|
||||
Numerator for EPS - discontinued operations
|
|
|
|
|
||||
Income (loss) from discontinued operations
|
|
$
|
(0.2
|
)
|
|
$
|
(1.8
|
)
|
|
|
|
|
|
||||
Denominator:
|
|
|
|
|
||||
Weighted average common shares outstanding (denominator for basic EPS)
|
|
81,321,240
|
|
|
81,338,755
|
|
||
Dilutive effect of convertible debt
|
|
—
|
|
|
526,464
|
|
||
Dilutive effect of warrants
|
|
260,838
|
|
|
—
|
|
||
Dilutive effect of stock-based awards
|
|
946,261
|
|
|
779,841
|
|
||
Weighted average common shares outstanding, assuming dilution
|
|
82,528,339
|
|
|
82,645,060
|
|
||
|
|
|
|
|
||||
EPS:
|
|
|
|
|
||||
Basic income (loss) per share:
|
|
|
|
|
||||
Income (loss) from continuing operations
|
|
$
|
1.50
|
|
|
$
|
2.62
|
|
(Loss) income from discontinued operations
|
|
—
|
|
|
(0.02
|
)
|
||
Total basic income (loss) per share
|
|
$
|
1.50
|
|
|
$
|
2.60
|
|
Diluted income (loss) per share:
|
|
|
|
|
||||
Income (loss) from continuing operations
|
|
$
|
1.48
|
|
|
$
|
2.58
|
|
(Loss) income from discontinued operations
|
|
—
|
|
|
(0.02
|
)
|
||
Total diluted income (loss) per share
|
|
$
|
1.48
|
|
|
$
|
2.56
|
|
The following equity instruments were excluded from the diluted weighted average common shares outstanding because their effect would be anti-dilutive:
|
|
|
|
|
||||
|
|
|
|
|
||||
Antidilutive stock-based compensation
|
|
1,749,569
|
|
|
3,660,354
|
|
||
Antidilutive due to loss
|
|
—
|
|
|
—
|
|
||
Total antidilutive stock-based compensation
|
|
1,749,569
|
|
|
3,660,354
|
|
||
|
|
|
|
|
||||
Antidilutive convertible debt instruments
|
|
—
|
|
|
5,623,304
|
|
||
Antidilutive warrants
|
|
—
|
|
|
5,612,581
|
|
1.
|
Term. The term of this Agreement (the "Term") shall commence upon the Effective Date and expire on August 5, 2022 unless terminated earlier as provided for herein.
|
2.
|
Scope of Employment. During the Term, the Company shall employ Executive and he shall render services to Company in the capacity of Executive Vice President of the Company and of Delek US Holdings, Inc, ("DK"), parent of Company, and Delek Logistics GP, LLC, the General Partner of Delek Logistics Partners, LP ("DKL"), a subsidiary 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 or other officer any affiliated or subsidiary entities of the Company required to be listed by the Company or DK under Item 601(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 $300,000, (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 50% 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 Executive's service during the preceding fiscal year in a manner consistent with the Company's annual bonus program for senior executives.
|
(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-Term Incentive Plan and the Delek Logistics GP, LLC 2012 Long-Term 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
|
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 performance of his duties for the Company, in accordance with and subject to applicable Company expense incurrence and reimbursement policies.
|
(c)
|
Other Benefits. During the Term, 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 performance 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/ 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 Term 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 employment. In the event of any conflict between the terms of this Agreement and the employment policies and directives of the Company, its parent and each of their subsidiaries, the terms of this Agreement will control. The Executive acknowledges that the Company's Parent DK and its subsidiary DKL, and its affiliate Alon USA Partners, LP ("ALDW"), are currently subject to SEC reporting requirements pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the continued listing requirements of the New York Stock Exchange or any other securities exchange on which the securities of the Company may be listed from time to time for public trading (collectively a "Securities Market"), and other federal securities laws and regulations applicable to publicly traded companies in the United States. As an employee and officer of the Company and as an officer of DK, DKL and/or ALDW, Executive will, in such capacities, be required to comply with applicable federal securities laws and regulations (including, without limitation, the reporting requirements under Exchange Act Section 16(a} and related SEC rules and regulations), Securities Market listing requirements as well as certain policies of the Company, its parent and each of their subsidiaries designed to comply with such laws and regulations.
|
7.
|
Confidentiality. Executive recognizes that during the course of his employment, he will be exposed to information or ideas
|
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 terms of this Section 8(a) shall not apply to the ownership by Executive of less 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 termination 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 termination 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).
|
(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 interferes or could reasonably be expected to interfere in any material way with the commercial relationships between the Company, its parent and each of their subsidiaries and such customers or vendors. The foregoing covenant shall be in addition to any other covenants or agreements to which the Executive may be subject.
|
(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 forms 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, copyrights, 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 the 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)
|
Termination 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 termination, 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)
|
Termination 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 terminate this Agreement (and his employment hereunder) by providing 30 calendar days advance written notice of termination and provided that the condition remains uncured by the end of such 30-day period. After such 30-day period,
|
(c)
|
Termination 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 Term 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 termination): (i) the Separation Payment, (ii) the costs of continuing family health insurance coverage under COBRA for 12 months 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 termination. This provision shall not apply if Executive is terminated 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 terminates this Agreement and his employment hereunder during the Term, 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 Term 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 termination 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 for 12 months 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 such failure after receiving written notice of such failure, he shall receive compensation only in the manner stated in Section IO(a) and the Company may immediately terminate his employment. This Section 10(d)(ii) shall not apply if Executive is terminated by reason of death or Disability.
|
(e)
|
Accelerated Termination 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 termination from him. However, if the Company receives the Required Notice from Executive and then terminates this Agreement and/or his employment for any reason other than for Cause or under Section lO(d)(ii)(B), his employment shall terminate 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 termination had been effective on the earlier of (i) the termination date specified in his notice of termination or (ii) three months following his notice of termination.
|
(f)
|
Separation Release. Notwithstanding anything to the contrary, but suJ:\ject 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.
|
(g)
|
Definitions. The following terms 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 performance period and payable in a lump sum at the same time as performance 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,
|
(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 performance of the Company, prorated for the period of actual employment during the bonus year, and paid upon the payment of the annual bonuses to senior executives of the Company pursuant to the Company's annual bonus programs.
|
(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 10(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 form 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 terminated by the Company without Cause or by Executive for Good Reason within two years following a Change in Control, the termination 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 10(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
|
(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 transferred;
|
(iv)
|
The Company's stockholders approve a plan of liquidation or dissolution of the Company; or
|
(v)
|
During any 12-month period within the Term, 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 Term 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 of Terms. 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 Term, 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 patty 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 of a 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 termination 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 shall 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 will be made pursuant to this Section 13 if a Change in Control transaction does not occur.
|
14.
|
No Inducement/ 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 this Agreement voluntarily, after having the opportunity to consult with representatives of his own choosing and (c) his
|
15.
|
Interpretation. Any Section, phrase or other provision of this Agreement that is determined 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 shall be deemed omitted from this Agreement. The invalidity of any portion of this Agreement shall not affect the validity of the remaining portions. Unless expressly stated to the contrary, all references to "days" in this Agreement shall mean calendar days.
|
16.
|
Prior Agreements / 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 furnished 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.
|
18.
|
Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Tennessee without giving effect to its principles of conflicts of law. The state and federal courts for Davidson County, Tennessee shall be the exclusive venue for any litigation based in significant part upon this Agreement.
|
19.
|
Mediation / Arbitration
|
(a)
|
Any dispute concerning a legally cognizable claim arising 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:
|
(i)
|
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.
|
(ii)
|
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 of law 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.
|
(b)
|
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.
|
(c)
|
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.
|
(d)
|
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 performance and injunctive and other equitable relief and agrees not to use 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 Jaw 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.
|
20.
|
Section 409A.
|
(a)
|
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), 1.409A-l(b)(9)(iii) and 1.409A-l(b)(9)(v). Notwithstanding any other provision to the contrary, a termination 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 termination 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," "termination of employment" or like terms shall mean "separation from service."
|
(b)
|
Notwithstanding anything to the contrary in this Agreement, if the Company determines (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-1(i)(1)) 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)(1)(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 term is 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 on the first business day of the seventh month following Executive's "separation from service" (as such term is defined under Treasury Regulation l.409A-l(h)), or, if earlier, the date of his death.
|
(c)
|
In addition, to the extent that any reimbursement, fringe benefit or other, similar plan or arrangement in which Executive participates during the term 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 l.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 payment 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) su ject 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.
|
(d)
|
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
|
(e)
|
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 permitted by Section 409A.
|
(f)
|
This Agreement is intended to comply with the applicable requirements under Section 409A and the related Treasury Regulations and guidance issued by the Department 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 terms shall be administered, construed and interpreted in a manner to comply with the 409A Requirements.
|
Section 1
|
Definitions; Interpretation
|
SECTION 2
|
Amendments and Agreements
|
SECTION 3
|
Representations and Warranties
|
SECTION 4
|
Miscellaneous
|
Group
|
|
Step-In Price
|
Step-Out Price for Termination Dates other than May 31, 2020
|
Step-Out Price for Termination Date May 31, 2020
|
|
GASOLINE
|
Averaging Mechanism
|
Arithmetic average of the 4 Trading Days ending with and including the penultimate Trading Day of the month
(May 24, 28, 29, & 30 of 2013) |
Arithmetic average of the Trading Days on the relevant Applicable Step-Out Pricing Dates
|
N/A
|
|
|
Reference Price
|
The sum of
(i) the closing settlement price on the New York Mercantile Exchange for the first nearby Light Crude Futures contract and
(ii) plus $[*CONFIDENTIAL*]
|
The sum, expressed in USD/BBL, of:
(i) the closing settlement price on the New York Mercantile Exchange for the first nearby Light Crude Futures contract and
(ii) plus $[*CONFIDENTIAL*]
|
The sum, expressed in USD/BBL, of:
(i) $[*CONFIDENTIAL*] and
(ii) $[*CONFIDENTIAL*]
|
|
|
|
|
|
|
|
JET
|
Averaging Mechanism
|
Arithmetic average of the 4 Trading Days ending with and including the penultimate Trading Day of the month
(May 24, 28, 29, & 30 of 2013) |
Arithmetic average of the Trading Days on the relevant Applicable Step-Out Pricing Dates
|
N/A
|
Group
|
|
Step-In Price
|
Step-Out Price for Termination Dates other than May 31, 2020
|
Step-Out Price for Termination Date May 31, 2020
|
|
|
Reference Price
|
The sum of
(i) the closing settlement price on the New York Mercantile Exchange for the first nearby Light Crude Futures contract and
(ii) plus $[*CONFIDENTIAL*]
|
The sum, expressed in USD/BBL of:
(i) the closing settlement price on the New York Mercantile Exchange for the first nearby Light Crude Futures contract and
(ii) plus $[*CONFIDENTIAL*]
|
The sum, expressed in USD/BBL, of:
(i) $[*CONFIDENTIAL*] and
(ii) $[*CONFIDENTIAL*]
|
|
|
|
|
|
|
|
|
CATFEED
|
Averaging Mechanism
|
Arithmetic average of the 4 Trading Days ending with and including the penultimate Trading Day of the month
(May 24, 28, 29, & 30 of 2013) |
Arithmetic average of the Trading Days on the relevant Applicable Step-Out Pricing Dates
|
N/A
|
|
Reference Price
|
The sum of
(i) the closing settlement price on the New York Mercantile Exchange for the first nearby Light Crude Futures contract and
(ii) plus $[*CONFIDENTIAL*]
|
The sum, expressed in USD/BBL of:
(i) the closing settlement price on the New York Mercantile Exchange for the first nearby Light Crude Futures contract and
(ii) plus $[*CONFIDENTIAL*]
|
The sum, expressed in USD/BBL, of:
(i) $[*CONFIDENTIAL*] and
(ii) $[*CONFIDENTIAL*]
|
|
|
|
|
|
|
|
CRUDE
|
Averaging Mechanism
|
Arithmetic average of the 4 Trading Days ending with and including the penultimate Trading Day of the month
(May 24, 28, 29, & 30 of 2013) |
Arithmetic average of the Trading Days on the relevant Applicable Step-Out Pricing Dates
|
N/A
|
Group
|
|
Step-In Price
|
Step-Out Price for Termination Dates other than May 31, 2020
|
Step-Out Price for Termination Date May 31, 2020
|
|
|
Reference Price
|
The sum of
(i) the closing settlement price on the New York Mercantile Exchange for the first nearby Light Crude Futures contract and
(ii) plus $[*CONFIDENTIAL*]
|
The sum, expressed in USD/BBL, of:
(i) the closing settlement price on the New York Mercantile Exchange for the first nearby Light Crude Futures contract and
(ii) plus $[*CONFIDENTIAL*]
|
The sum, expressed in USD/BBL, of:
(i) $[*CONFIDENTIAL*] and
(ii) $[*CONFIDENTIAL*]
|
|
|
|
|
|
|
|
SLOP / TRANSMIX
|
Averaging Mechanism
|
Arithmetic average of the 4 Trading Days ending with and including the penultimate Trading Day of the month
(May 24, 28, 29, & 30 of 2013) |
Arithmetic average of the Trading Days on the relevant Applicable Step-Out Pricing Dates
|
N/A
|
|
|
Reference Price
|
The sum of
(i) the closing settlement price on the New York Mercantile Exchange for the first nearby Light Crude Futures contract and
(ii) plus $[*CONFIDENTIAL*]
|
The sum, expressed in USD/BBL, of:
(i) the closing settlement price on the New York Mercantile Exchange for the first nearby Light Crude Futures contract and
(ii) plus $[*CONFIDENTIAL*]
|
The sum, expressed in USD/BBL, of:
(i) $[*CONFIDENTIAL*] and
(ii) $[*CONFIDENTIAL*]
|
|
|
|
|
|
|
|
DIESEL
|
Averaging Mechanism
|
Arithmetic average of the 4 Trading Days ending with and including the penultimate Trading Day of the month
(May 24, 28, 29, & 30 of 2013) |
Arithmetic average of the Trading Days on the relevant Applicable Step-Out Pricing Dates
|
N/A
|
Group
|
|
Step-In Price
|
Step-Out Price for Termination Dates other than May 31, 2020
|
Step-Out Price for Termination Date May 31, 2020
|
|
|
Reference Price
|
The sum of
(i) the closing settlement price on the New York Mercantile Exchange for the first nearby Light Crude Futures contract and
(ii) plus $[*CONFIDENTIAL*]
|
The sum, expressed in USD/BBL of:
(i) the closing settlement price on the New York Mercantile Exchange for the first nearby Light Crude Futures contract and
(ii) plus $[*CONFIDENTIAL*]
|
The sum, expressed in USD/BBL, of:
(i) $[*CONFIDENTIAL*] and
(ii) $[*CONFIDENTIAL*]
|
|
|
|
|
|
|
|
SLURRY
|
Averaging Mechanism
|
Arithmetic average of the 4 Trading Days ending with and including the penultimate Trading Day of the month
(May 24, 28, 29, & 30 of 2013) |
Arithmetic average of the Trading Days on the relevant Applicable Step-Out Pricing Dates
|
N/A
|
|
|
Reference Price
|
The sum of
(i) the closing settlement price on the New York Mercantile Exchange for the first nearby Light Crude Futures contract and
(ii) plus $[*CONFIDENTIAL*]
|
The sum, expressed in USD/BBL of:
(i) the closing settlement price on the New York Mercantile Exchange for the first nearby Light Crude Futures contract and
(ii) plus $[*CONFIDENTIAL*]
|
The sum, expressed in USD/BBL, of:
(i) $[*CONFIDENTIAL*] and
(ii) $[*CONFIDENTIAL*]
|
|
|
|
|
|
|
|
ZERO PEN
|
Averaging Mechanism
|
Arithmetic average of the 4 Trading Days ending with and including the penultimate Trading Day of the month
(May 24, 28, 29, & 30 of 2013) |
Arithmetic average of the Trading Days on the relevant Applicable Step-Out Pricing Dates
|
N/A
|
Group
|
|
Step-In Price
|
Step-Out Price for Termination Dates other than May 31, 2020
|
Step-Out Price for Termination Date May 31, 2020
|
|
|
Reference Price
|
The sum of
(i) the closing settlement price on the New York Mercantile Exchange for the first nearby Light Crude Futures contract and
(ii) plus $[*CONFIDENTIAL*]
|
The sum, expressed in USD/BBL of:
(i) the closing settlement price on the New York Mercantile Exchange for the first nearby Light Crude Futures contract and
(ii) plus $[*CONFIDENTIAL*]
|
The sum, expressed in USD/BBL, of:
(i) $[*CONFIDENTIAL*] and
(ii) $[*CONFIDENTIAL*]
|
|
|
|
|
|
|
|
ASPHALT
|
Averaging Mechanism
|
Arithmetic average of the 4 Trading Days ending with and including the penultimate Trading Day of the month
(May 24, 28, 29, & 30 of 2013) |
Arithmetic average of the Trading Days on the relevant Applicable Step-Out Pricing Dates
|
N/A
|
|
|
Reference Price
|
The sum of
(i) the closing settlement price on the New York Mercantile Exchange for the first nearby Light Crude Futures contract and
(ii) plus $[*CONFIDENTIAL*]
|
The sum, expressed in USD/BBL of:
(i) the closing settlement price on the New York Mercantile Exchange for the first nearby Light Crude Futures contract and
(ii) plus $[*CONFIDENTIAL*]
|
The sum, expressed in USD/BBL, of:
(i) $[*CONFIDENTIAL*] and
(ii) $[*CONFIDENTIAL*]
|
|
|
|
|
|
|
|
PROPANE
|
Averaging Mechanism
|
Arithmetic average of the 4 Trading Days ending with and including the penultimate Trading Day of the month
(May 24, 28, 29, & 30 of 2013) |
Arithmetic average of the Trading Days on the relevant Applicable Step-Out Pricing Dates
|
N/A
|
Group
|
|
Step-In Price
|
Step-Out Price for Termination Dates other than May 31, 2020
|
Step-Out Price for Termination Date May 31, 2020
|
|
|
Reference Price
|
The sum of
(i) the closing settlement price on the New York Mercantile Exchange for the first nearby Light Crude Futures contract and
(ii) plus $[*CONFIDENTIAL*]
|
The sum, expressed in USD/BBL of:
(i) the closing settlement price on the New York Mercantile Exchange for the first nearby Light Crude Futures contract and
(ii) plus $[*CONFIDENTIAL*]
|
The sum, expressed in USD/BBL, of:
(i) $[*CONFIDENTIAL*] and
(ii) $[*CONFIDENTIAL*]
|
|
|
|
|
|
|
|
BUTANE
|
Averaging Mechanism
|
N/A
|
N/A
|
N/A
|
|
|
Reference Price
|
N/A
|
N/A
|
N/A
|
Group
|
|
Step-In Price
|
Daily Price
|
Short Crude FIFO Price / Short Product FIFO Price
|
Long Crude FIFO Price / Long Product FIFO Price
|
Step-Out Price
|
|
|||||||
GASOLINE
|
Averaging Mechanism
|
Arithmetic average of the 4 Trading Days ending with and including the penultimate Trading Day of the month
(May 24, 28, 29, & 30 of 2013) |
The Trading Day preceding the relevant Invoice Date
|
Arithmetic average of the Trading Days in the applicable calendar month
|
Arithmetic average of the Trading Days in the applicable calendar month
|
Arithmetic average of the Trading Days on the relevant Applicable Step-Out Pricing Dates
|
|
|||||||
|
Reference Price
|
The product of
(i) the sum of
(x) the closing settlement price on the New York Mercantile for the first nearby New York Harbor Reformulated Gasoline Blendstock for Oxygen Blending contract and
(y) minus $[*CONFIDENTIAL*] / gallon, and
(ii) 42 gallons / barrel
|
The product of
(i) the sum of
(x) the closing settlement price on the New York Mercantile for the first nearby New York Harbor Reformulated Gasoline Blendstock for Oxygen Blending contract and
(y) minus $[*CONFIDENTIAL*] / gallon, and
(ii) 42 gallons / barrel
|
The product of
(i) the sum of
(x) the closing settlement price on the New York Mercantile for the first nearby New York Harbor Reformulated Gasoline Blendstock for Oxygen Blending contract and
(y) minus $[*CONFIDENTIAL*] / gallon, and
(ii) 42 gallons / barrel
|
The product of
(i) the sum of
(x) the closing settlement price on the New York Mercantile for the first nearby New York Harbor Reformulated Gasoline Blendstock for Oxygen Blending contract and
(y) minus $[*CONFIDENTIAL*] / gallon, and
(ii) 42 gallons / barrel
|
The product of
(i) the sum of
(x) the closing settlement price on the New York Mercantile for the first nearby New York Harbor Reformulated Gasoline Blendstock for Oxygen Blending contract and
(y) minus $[*CONFIDENTIAL*] / gallon, and
(ii) 42 gallons / barrel
|
|
|||||||
|
|
|
|
|
|
|
|
|||||||
JET
|
Averaging Mechanism
|
Arithmetic average of the 4 Trading Days ending with and including the penultimate Trading Day of the month
(May 24, 28, 29, & 30 of 2013) |
The Trading Day preceding the relevant Invoice Date
|
Arithmetic average of the Trading Days in the applicable calendar month
|
Arithmetic average of the Trading Days in the applicable calendar month
|
Arithmetic average of the Trading Days on the relevant Applicable Step-Out Pricing Dates
|
|
Group
|
|
Step-In Price
|
Daily Price
|
Short Crude FIFO Price / Short Product FIFO Price
|
Long Crude FIFO Price / Long Product FIFO Price
|
Step-Out Price
|
|
|||||||
|
Reference Price
|
The product of
(i) the sum of
(x) the arithmetic average of the high and low quotations appearing in “Platt’s US Marketscan” in the section “GULF COAST” under the heading ‘Distillates and blendstocks’ for the Jet 54-Pipeline quotation and
(y) $[*CONFIDENTIAL*] / gallon, and
(ii) 42 gallons / barrel
|
The product of
(i) the sum of
(x) the average of the means of the daily quotations appearing in “Platts US Marketscan” in the section “Gulf Coast” under the heading “Houston” and subheading “Prompt Pipeline” for the Jet 54 quotation and
(y) $[*CONFIDENTIAL*] / gallon, and
(ii) 42 gallons / barrel
|
The product of
(i) the sum of
(x) average of the means of the daily quotations appearing in “Platts US Marketscan” in the section “Gulf Coast” under the heading “Houston” and subheading “Prompt Pipeline” for the Jet 54 quotation and
(y) $[*CONFIDENTIAL*] / gallon, and
(ii) 42 gallons / barrel
|
The product of
(i) the sum of
(x) average of the means of the daily quotations appearing in “Platts US Marketscan” in the section “Gulf Coast” under the heading “Houston” and subheading “Prompt Pipeline” for the Jet 54 quotation and
(y) $[*CONFIDENTIAL*] / gallon, and
(ii) 42 gallons / barrel
|
The product of
(i) the sum of
(x) average of the means of the daily quotations appearing in “Platts US Marketscan” in the section “Gulf Coast” under the heading “Houston” and subheading “Prompt Pipeline” for the Jet 54 quotation and
(y) $[*CONFIDENTIAL*] / gallon, and
(ii) 42 gallons / barrel
|
|
|||||||
|
|
|
|
|
|
|
|
|||||||
|
CATFEED
|
Averaging Mechanism
|
Arithmetic average of the 4 Trading Days ending with and including the penultimate Trading Day of the month
(May 24, 28, 29, & 30 of 2013) |
The Trading Day preceding the relevant Invoice Date
|
Arithmetic average of the Trading Days in the applicable calendar month
|
Arithmetic average of the Trading Days in the applicable calendar month
|
Arithmetic average of the Trading Days on the relevant Applicable Step-Out Pricing Dates
|
Group
|
|
Step-In Price
|
Daily Price
|
Short Crude FIFO Price / Short Product FIFO Price
|
Long Crude FIFO Price / Long Product FIFO Price
|
Step-Out Price
|
|
|||||||
|
Reference Price
|
The sum of
(i) the arithmetic average of the high and low quotations appearing in “Platt’s US Marketscan” in the section “GULF COAST” under the heading ‘Residual fuel ($/barrel)’ for the No. 6 3% quotation
(ii) minus $[*CONFIDENTIAL*] / barrel
|
For the period up to, and including December 31, 2016:
The sum of
(i) the average of the means of the daily quotations appearing in “Platts US Marketscan” in the section “GULF COAST” under the heading “Houston” and subheading “($/barrel)” for the No.6 3% quotation
(ii) minus $[*CONFIDENTIAL*] / barrel
For the period commencing January 1, 2017:
The sum of (i.) the average of the means of the daily quotations appearing in “Platts US Marketscan” in the section “GULF COAST” under the heading “Houston” and subheading “($/barrel)” for the USGC HSFO quotation (ii.) minus $[*CONFIDENTIAL*] / barrel
|
For the period up to, and including December 31, 2016:
The sum of
(i) the average of the means of the daily quotations appearing in “Platts US Marketscan” in the section “GULF COAST” under the heading “Houston” and subheading “($/barrel)” for the No.6 3% quotation
(ii) minus $[*CONFIDENTIAL*]/ barrel
For the period commencing January 1, 2017:
The sum of (i.) the average of the means of the daily quotations appearing in “Platts US Marketscan” in the section “GULF COAST” under the heading “Houston” and subheading “($/barrel)” for the USGC HSFO quotation (ii.) minus $[*CONFIDENTIAL*] / barrel
|
For the period up to, and including December 31, 2016:
The sum of
(i) the average of the means of the daily quotations appearing in “Platts US Marketscan” in the section “GULF COAST” under the heading “Houston” and subheading “($/barrel)” for the No.6 3% quotation
(ii) minus $[*CONFIDENTIAL*]/ barrel
For the period commencing January 1, 2017:
The sum of (i.) the average of the means of the daily quotations appearing in “Platts US Marketscan” in the section “GULF COAST” under the heading “Houston” and subheading “($/barrel)” for the USGC HSFO quotation (ii.) minus $[*CONFIDENTIAL*] / barrel
|
The sum of
(i) the average of the means of the daily quotations appearing in “Platts US Marketscan” in the section “GULF COAST” under the heading “Houston” and subheading “($/barrel)” for the USGC HSFO quotation
(ii) minus $[*CONFIDENTIAL*] / barrel
|
|
|||||||
|
|
|
|
|
|
|
|
|||||||
DIESEL
|
Averaging Mechanism
|
Arithmetic average of the 4 Trading Days ending with and including the penultimate Trading Day of the month
(May 24, 28, 29, & 30 of 2013) |
The Trading Day preceding the relevant Invoice Date
|
Arithmetic average of the Trading Days in the applicable calendar month
|
Arithmetic average of the Trading Days in the applicable calendar month
|
Arithmetic average of the Trading Days on the relevant Applicable Step-Out Pricing Dates
|
|
Group
|
|
Step-In Price
|
Daily Price
|
Short Crude FIFO Price / Short Product FIFO Price
|
Long Crude FIFO Price / Long Product FIFO Price
|
Step-Out Price
|
|
|||||||
|
Reference Price
|
The product of
(i) the sum of
(x) the arithmetic average of the high and low quotations appearing in “Platt’s US Marketscan” in the section “GULF COAST” under the heading “Distillates and blendstocks” for the Ultra low sulfur diesel-Pipeline quotation and
(y) $[*CONFIDENTIAL*] / gallons, and
(ii) 42 gallons / barrel
|
The product of
(i) the sum of
(x) the average of the mean of the high and low daily quotation published in “Platt's US Marketscan” in the section “GULF COAST” under the heading “Houston” and subheading “Prompt Pipeline” for the Ultra low sulfur diesel quotation and
(y) $[*CONFIDENTIAL*] / gallons, and
(ii) 42 gallons / barrel
|
The product of
(i) the sum of
(x) the average of the mean of the high and low daily quotation published in “Platt's US Marketscan” in the section “GULF COAST” under the heading “Houston” and subheading “Prompt Pipeline” for the Ultra low sulfur diesel-quotation and
(y) $[*CONFIDENTIAL*] / gallons, and
(ii) 42 gallons / barrel
|
The product of
(i) the sum of
(x) the average of the mean of the high and low daily quotation published in “Platt's US Marketscan” in the section “GULF COAST” under the heading “Houston” and subheading “Prompt Pipeline” for the Ultra low sulfur diesel-quotation and
(y) $[*CONFIDENTIAL*] / gallons, and
(ii) 42 gallons / barrel
|
The product of
(i) the sum of
(x) the average of the mean of the high and low daily quotation published in “Platt's US Marketscan” in the section “GULF COAST” under the heading “Houston” and subheading “Prompt Pipeline” for the Ultra low sulfur diesel-quotation and
(y) $[*CONFIDENTIAL*] / gallons, and
(ii) 42 gallons / barrel
|
|
|||||||
|
|
|
|
|
|
|
|
|||||||
ASPHALT (0-PEN)
|
Averaging Mechanism
|
The arithmetic average of the Trading Days in the month of March 2013
|
The Trading Day preceding the relevant Invoice Date
|
Arithmetic average of the Trading Days in the applicable calendar month
|
Arithmetic average of the Trading Days in the applicable calendar month
|
Arithmetic average of the Trading Days on the relevant Applicable Step-Out Pricing Dates
|
|
|||||||
|
Reference Price
|
The sum of
(i) the product of
(x) [*CONFIDENTIAL*] and
(y) the closing settlement price on the New York Mercantile Exchange for the first nearby Light Crude Futures contract, and
(ii) minus $[*CONFIDENTIAL*] / barrel
|
The sum of
(i) the product of
(x) [*CONFIDENTIAL*] and
(y) the closing settlement price on the New York Mercantile Exchange for the first nearby Light Crude Futures contract, and
(ii) minus $[*CONFIDENTIAL*] / barrel
|
The sum of
(i) the product of
(x) [*CONFIDENTIAL*] and
(y) the closing settlement price on the New York Mercantile Exchange for the first nearby Light Crude Futures contract, and
(ii) minus $[*CONFIDENTIAL*] / barrel
|
The sum of
(i) the product of
(x) [*CONFIDENTIAL*] and
(y) the closing settlement price on the New York Mercantile Exchange for the first nearby Light Crude Futures contract, and
(ii) minus $[*CONFIDENTIAL*] / barrel
|
The sum of
(i) the product of
(x) [*CONFIDENTIAL*] and
(y) the closing settlement price on the New York Mercantile Exchange for the first nearby Light Crude Futures contract, and
(ii) minus $[*CONFIDENTIAL*] / barrel
|
|
|||||||
|
|
|
|
|
|
|
|
|||||||
ASPHALT (OTHER)
|
Averaging Mechanism
|
The arithmetic average of the Trading Days in the month of February 2013
|
The Trading Day preceding the relevant Invoice Date
|
Arithmetic average of the Trading Days in the applicable calendar month
|
Arithmetic average of the Trading Days in the applicable calendar month
|
Arithmetic average of the Trading Days on the relevant Applicable Step-Out Pricing Dates
|
|
|||||||
|
Reference Price
|
[*CONFIDENTIAL*]
|
[*CONFIDENTIAL*]
|
[*CONFIDENTIAL*]
|
[*CONFIDENTIAL*]
|
[*CONFIDENTIAL*]
|
|
|||||||
|
|
|
|
|
|
|
|
Company Name:
|
State of Incorporation:
|
|
|
Delek US Energy, Inc.
|
DE
|
Delek Refining, Inc.
|
DE
|
Delek U.S. Refining GP, LLC
|
TX
|
Delek Refining, Ltd.
|
TX
|
Lion Oil Company
|
AR
|
Lion Oil Trading & Transportation, LLC
|
TX
|
J. Christy Construction Co., Inc.
|
AR
|
Delek Marketing & Supply, LLC
|
DE
|
Delek Logistics Services Company
|
DE
|
Delek Logistics GP, LLC
|
DE
|
Delek Logistics Partners, LP
|
DE
|
Delek Logistics Operating, LLC
|
DE
|
Delek Marketing & Supply, LP
|
DE
|
Delek Marketing GP, LLC
|
DE
|
Delek Crude Logistics, LLC
|
TX
|
Delek Marketing-Big Sandy, LLC
|
TX
|
Paline Pipeline Company, LLC
|
TX
|
Magnolia Pipeline Company, LLC
|
DE
|
SALA Gathering Systems, LLC
|
TX
|
El Dorado Pipeline Company, LLC
|
DE
|
DKL Transportation, LLC
|
DE
|
DKL RIO, LLC
|
DE
|
DKL Caddo, LLC
|
DE
|
Delek Finance, Inc.
|
DE
|
Delek Renewables, LLC
|
DE
|
NLR Energy Logistics LLC
|
DE
|
Delek Helena, LLC
|
DE
|
Delek Rail Logistics, Inc.
|
TX
|
DK Canada Energy ULC
|
BC (Canada)
|
Delek Land Holdings, LLC
|
DE
|
Delek Permian Gathering, LLC
|
TX
|
Delek Big Spring Gathering, LLC
|
TX
|
Delek Big Spring North Gathering, LLC
|
TX
|
Delek Big Spring South Mainline, LLC
|
TX
|
Rangeland RIO Pipeline, LLC
|
DE
|
Caddo Pipeline LLC
|
DE
|
Alon Asphalt Bakersfield, Inc.
|
DE
|
Alon Asphalt Company
|
DE
|
Alon Assets, Inc.
|
DE
|
Alon Bakersfield Holdings, Inc.
|
DE
|
Alon Bakersfield Logistics, Inc.
|
DE
|
Alon Bakersfield Property, Inc.
|
DE
|
Alon Brands, Inc.
|
DE
|
Alon Crude Pipeline, LLC
|
TX
|
Alon Financial Services, Inc.
|
TX
|
Alon Louisiana Holdings, Inc
|
DE
|
Alon Paramount Holdings, Inc.
|
DE
|
Alon Refining Krotz Springs, Inc.
|
DE
|
Alon Refining Louisiana, Inc.
|
DE
|
Alon Renewable Fuels, Inc.
|
DE
|
Alon Store Acquisitions, LLC
|
DE
|
Alon Supply, Inc.
|
DE
|
Alon Terminals, Inc.
|
DE
|
Alon USA Capital, Inc.
|
DE
|
Alon USA Delaware, LLC
|
DE
|
Alon USA GP, LLC
|
DE
|
Alon USA GP II, LLC
|
DE
|
Alon USA Holdings, LLC
|
TX
|
Alon USA, Inc.
|
DE
|
Alon USA, LP
|
TX
|
Alon USA Partners GP, LLC
|
DE
|
Alon USA Partners, LP
|
DE
|
Alon USA Energy, Inc.
|
DE
|
Alon USA Refining, LLC
|
DE
|
Alon West Coast, LLC
|
DE
|
Edgington Oil Company, LLC
|
DE
|
GTS Licensing Company, Inc.
|
TX
|
Paramount Petroleum Corporation
|
DE
|
Paramount Petroleum Corporation of Arizona, Inc.
|
DE
|
Paramount of Oregon, LLC
|
DE
|
Paramount of Washington, LLC
|
DE
|
Skinny's, LLC
|
TX
|
Southwest Convenience Stores, LLC
|
TX
|
DK Trading & Supply, LLC
|
DE
|
DK Big Springs, LLC
|
DE
|
Delek Logistics Finance Corp
|
DE
|
DKPG Energy Terminals, LLC
|
DE
|
DK Innovation (US),Inc.
|
DE
|
Delek Acquisitions, Inc.
|
DE
|
DK-IL Acquisitions (US), LLC
|
DE
|
DK Innovation (Israel), Ltd.
|
Israel
|
DK-MX Acquisition (US), LLC
|
DE
|
By:
|
/s/ Ezra Uzi Yemin
|
|
Ezra Uzi Yemin,
|
|
President and Chief Executive Officer
(Principal Executive Officer)
|
By:
|
/s/ Kevin Kremke
|
|
Kevin Kremke,
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
|
By:
|
/s/ Ezra Uzi Yemin
|
|
Ezra Uzi Yemin,
|
|
President and Chief Executive Officer
(Principal Executive Officer)
|
By:
|
/s/ Kevin Kremke
|
|
Kevin Kremke,
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
|