What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2020-11-09 compared with 2020-08-07 · 368 added, 323 removed, 847 unchanged (45% of the section changed)

3 unchanged sentences

(In millions, except share and per share data)

June 30, 2020

December 31, 2019

September 30, 2020 December 31, 2019

Current assets:

9 unchanged sentences

Operating lease right-of-use assets 180.3 183.6

Goodwill 855.7 855.7

Other intangibles, net 109.0 110.3

1 unchanged sentence

Other non-current assets 68.5 67.8

Total assets $ 6,525.0 $ 7,016.3

LIABILITIES AND STOCKHOLDERS’ EQUITY

16 unchanged sentences

Stockholders’ equity:

Preferred stock, $0.01 par value, 11,000,000 shares and 10,000,000 shares authorized at June 30,2020 and December 31, 2019, respectively, no shares issued and outstanding

Common stock, $0.01 par value, 110,000,000 shares authorized, 91,232,964 shares and 90,987,025 shares issued at June 30, 2020 and December 31, 2019, respectively

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, 91,301,229 shares and 90,987,025 shares issued at September 30, 2020 and December 31, 2019, respectively

Additional paid-in capital 1,180.1 1,151.9

Accumulated other comprehensive income — 0.1

Treasury stock, 17,575,527 shares and 17,516,814 shares, at cost, as of June 30, 2020 and December 31, 2019, respectively

Treasury stock, 17,575,527 shares and 17,516,814 shares, at cost, as of September 30, 2020 and December 31, 2019, respectively

( 694.1 ) ( 692.2 )

Retained earnings 815.3 1,205.6

5 unchanged sentences

Delek US Holdings, Inc.

Condensed Consolidated Statements of Income (Unaudited)

(In millions, except share and per share)

Three Months Ended

Six Months Ended

Condensed Consolidated Statements of Operations (Unaudited)

(In millions, except share and per share data)

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Net revenues $ 2,062.9 $ 2,334.3 $ 5,419.6 $ 7,014.5

Cost of sales:

6 unchanged sentences

Depreciation and amortization 5.8 6.0 17.4 21.0

Other operating income, net

Other operating loss (income), net 0.3 0.5 ( 14.6 ) ( 0.7 )

Total operating costs and expenses 2,138.1 2,246.9 5,833.5 6,570.4

Operating income (loss)

Operating (loss) income ( 75.2 ) 87.4 ( 413.9 ) 444.1

Interest expense 31.9 33.9 98.0 95.4

1 unchanged sentence

Income from equity method investments ( 12.8 ) ( 16.5 ) ( 28.6 ) ( 28.4 )

Gain on sale of non-operating refinery

Loss (gain) on sale of non-operating refinery 0.1 — ( 56.8 ) —

Other (income) expense, net ( 1.0 ) ( 0.2 ) ( 3.4 ) 3.3

Total non-operating (income) expense, net

Income (loss) before income tax (benefit) expense

Total non-operating expense, net 17.3 14.0 6.1 61.3

(Loss) income before income tax (benefit) expense ( 92.5 ) 73.4 ( 420.0 ) 382.8

Income tax (benefit) expense ( 15.6 ) 13.4 ( 134.6 ) 83.8

Income (loss) from continuing operations, net of tax

(Loss) income from continuing operations, net of tax ( 76.9 ) 60.0 ( 285.4 ) 299.0

Discontinued operations:

Loss from discontinued operations, including gain (loss) on sale of discontinued operations

Loss from discontinued operations, including loss on sale of discontinued operations — — — ( 1.0 )

Income tax benefit — — — ( 0.2 )

Loss from discontinued operations, net of tax — — — ( 0.8 )

Net income (loss)

Net (loss) income ( 76.9 ) 60.0 ( 285.4 ) 298.2

Net income attributed to non-controlling interests 11.2 8.7 29.4 20.3

Net income (loss) attributable to Delek

Basic income (loss) per share:

Income (loss) from continuing operations

Net (loss) income attributable to Delek $ ( 88.1 ) $ 51.3 $ ( 314.8 ) $ 277.9

Basic (loss) income per share:

(Loss) income from continuing operations $ ( 1.20 ) $ 0.68 $ ( 4.28 ) $ 3.64

Loss from discontinued operations — $ — — ( 0.01 )

Basic income (loss) per share

Diluted income (loss) per share:

Income (loss) from continuing operations

Basic (loss) income per share $ ( 1.20 ) $ 0.68 $ ( 4.28 ) $ 3.63

Diluted (loss) income per share:

(Loss) income from continuing operations $ ( 1.20 ) $ 0.68 $ ( 4.28 ) $ 3.61

Loss from discontinued operations — — — ( 0.01 )

Diluted income (loss) per share

Diluted (loss) income per share $ ( 1.20 ) $ 0.68 $ ( 4.28 ) $ 3.60

Dividends declared per common share outstanding $ 0.31 $ 0.29 $ 0.93 $ 0.84

2 unchanged sentences

Delek US Holdings, Inc.

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

Condensed Consolidated Statements of Comprehensive Operations (Unaudited)

(In millions)

Three Months Ended June 30,

Six Months Ended June 30,

Net income (loss)

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Net (loss) income $ ( 76.9 ) $ 60.0 $ ( 285.4 ) $ 298.2

Other comprehensive income (loss):

Commodity contracts designated as cash flow hedges:

Net gains (losses) related to commodity cash flow hedges

Income tax expense (benefit)

Net comprehensive income (loss) on commodity contracts designated as cash flow hedges

Net loss related to commodity cash flow hedges ( 0.6 ) ( 19.8 ) ( 0.3 ) ( 23.2 )

Income tax benefit ( 0.1 ) ( 4.1 ) ( 0.1 ) ( 4.8 )

Net comprehensive loss on commodity contracts designated as cash flow hedges ( 0.5 ) ( 15.7 ) ( 0.2 ) ( 18.4 )

Other income, net of taxes — 0.1 0.1 0.5

Total other comprehensive income (loss)

Comprehensive income (loss)

Total other comprehensive loss ( 0.5 ) ( 15.6 ) ( 0.1 ) ( 17.9 )

Comprehensive (loss) income ( 77.4 ) 44.4 ( 285.5 ) 280.3

Comprehensive income attributable to non-controlling interest 11.2 8.7 29.4 20.3

Comprehensive income (loss) attributable to Delek

Comprehensive (loss) income attributable to Delek $ ( 88.6 ) $ 35.7 $ ( 314.9 ) $ 260.0

See accompanying notes to condensed consolidated financial statements

3 unchanged sentences

(In millions, except share and per share data)

Three Months Ended June 30, 2020

Additional Paid-in Capital

Accumulated Other Comprehensive Income

Retained Earnings

Treasury Stock

Non-Controlling Interest in Subsidiaries

Total Stockholders' Equity

March 31, 2020

Three Months Ended September 30, 2020

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 June 30, 2020 91,232,964 $ 0.9 $ 1,160.1 $ 0.5 $ 926.4 ( 17,575,527 ) $ ( 694.1 ) $ 165.5 $ 1,559.3

Net (loss) income — — — — ( 88.1 ) — — 11.2 ( 76.9 )

Other comprehensive loss related to commodity contracts, net — — — ( 0.5 ) — — — — ( 0.5 )

Common stock dividends ($ 0.31 per share)

— — — — ( 23.0 ) — — — ( 23.0 )

Distributions to non-controlling interests — — — — — — — ( 8.2 ) ( 8.2 )

1 unchanged sentence

Repurchase of non-controlling interests — — ( 23.5 ) — — — — 0.4 ( 23.1 )

Impact from IDR Simplification transaction of Delek Logistics LP — — 37.2 — — — — ( 50.8 ) ( 13.6 )

Taxes paid due to the net settlement of equity-based compensation — — ( 0.4 ) — — — — — ( 0.4 )

Exercise of equity-based awards 68,265 — — — — — — — —

June 30, 2020

Balance at September 30, 2020 91,301,229 $ 0.9 $ 1,180.1 $ — $ 815.3 ( 17,575,527 ) $ ( 694.1 ) $ 118.1 $ 1,420.3

Financial Statements

2 unchanged sentences

(In millions, except share and per share data)

Three Months Ended June 30, 2019

Additional Paid-in Capital

Accumulated Other Comprehensive Income

Retained Earnings

Treasury Stock

Non-Controlling Interest in Subsidiaries

Total Stockholders' Equity

March 31, 2019

Three Months Ended September 30, 2019

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 June 30, 2019 90,861,698 $ 0.9 $ 1,140.3 $ 26.3 $ 1,165.9 ( 15,416,502 ) $ ( 618.9 ) $ 171.7 $ 1,886.2

Net income — — — — 51.3 — — 8.7 60.0

Other comprehensive loss related to commodity contracts, net — — — ( 15.7 ) — — — — ( 15.7 )

Common stock dividends ($ 0.29 per share)

— — — — ( 21.8 ) — — — ( 21.8 )

Distribution to non-controlling interest — — — — — — — ( 8.2 ) ( 8.2 )

3 unchanged sentences

Exercise of equity-based awards 78,695 — — — — — — — —

June 30, 2019

Other — — — 0.1 ( 0.1 ) — — — —

Balance at September 30, 2019 90,940,393 $ 0.9 $ 1,146.1 $ 10.7 $ 1,195.3 ( 16,653,356 ) $ ( 661.9 ) $ 172.3 $ 1,863.4

Financial Statements

2 unchanged sentences

(In millions, except share and per share data)

Six Months Ended June 30, 2020

Additional Paid-in Capital

Accumulated Other Comprehensive Income

Retained Earnings

Treasury Stock

Non-Controlling Interest in Subsidiaries

Total Stockholders' Equity

December 31, 2019

Nine Months Ended September 30, 2020

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, 2019 90,987,025 $ 0.9 $ 1,151.9 $ 0.1 $ 1,205.6 ( 17,516,814 ) $ ( 692.2 ) $ 169.0 $ 1,835.3

Cumulative effect of adopting accounting principle regarding measurement of credit losses on financial instruments, net — — — — ( 6.5 ) — — — ( 6.5 )

Net (loss) income — — — — ( 314.8 ) — — 29.4 ( 285.4 )

Other comprehensive income related to commodity contracts, net

Other comprehensive loss related to commodity contracts, net — — — ( 0.2 ) — — — — ( 0.2 )

Common stock dividends ($ 0.93 per share)

— — — — ( 69.0 ) — — — ( 69.0 )

Distributions to non-controlling interests — — — — — — — ( 25.0 ) ( 25.0 )

2 unchanged sentences

Repurchases of non-controlling interests — — ( 24.3 ) — — — — ( 4.6 ) ( 28.9 )

Impact from IDR Simplification transaction of Delek Logistics LP — — 37.2 — — — — ( 50.8 ) ( 13.6 )

Taxes paid due to the net settlement of equity-based compensation — — ( 2.3 ) — — — — — ( 2.3 )

Exercise of equity-based awards 314,204 — — — — — — — —

June 30, 2020

Other — — — 0.1 — — — — 0.1

Balance at September 30, 2020 91,301,229 $ 0.9 $ 1,180.1 $ — $ 815.3 ( 17,575,527 ) $ ( 694.1 ) $ 118.1 $ 1,420.3

Financial Statements

2 unchanged sentences

(In millions, except share and per share data)

Six Months Ended June 30, 2019

Additional Paid-in Capital

Accumulated Other Comprehensive Income

Retained Earnings

Treasury Stock

Non-Controlling Interest in Subsidiaries

Total Stockholders' Equity

December 31, 2018

Nine Months Ended September 30, 2019

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, 2018 90,478,075 $ 0.9 $ 1,135.4 $ 28.6 $ 981.8 ( 12,477,780 ) $ ( 514.1 ) $ 175.5 $ 1,808.1

Net income — — — — 277.9 — — 20.3 298.2

Other comprehensive loss related to commodity contracts, net — — — ( 18.4 ) — — — — ( 18.4 )

Common stock dividends ($ 0.84 per share)

— — — — ( 64.3 ) — — — ( 64.3 )

Distribution to non-controlling interest — — — — — — — ( 23.8 ) ( 23.8 )

3 unchanged sentences

Exercise of equity-based awards 462,318 — — — — — — — —

June 30, 2019

Other — — 0.2 0.5 ( 0.1 ) — — — 0.6

Balance at September 30, 2019 90,940,393 $ 0.9 $ 1,146.1 $ 10.7 $ 1,195.3 ( 16,653,356 ) $ ( 661.9 ) $ 172.3 $ 1,863.4

See accompanying notes to condensed consolidated financial statements

3 unchanged sentences

(In millions)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

7 unchanged sentences

Dividends from equity method investments 21.6 11.7

Loss on disposal of assets

Non-cash lower of cost or market/net realizable value adjustment 65.6 ( 31.5 )

Gain on sale of non-operating refinery ( 56.8 ) —

Equity-based compensation expense 17.7 19.2

Excess tax deficiency (benefit) of equity-based compensation

Loss from discontinued operations

Other 2.7 2.6

Changes in assets and liabilities:

18 unchanged sentences

(In millions)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from financing activities:

9 unchanged sentences

Distribution to non-controlling interest ( 25.0 ) ( 23.8 )

Impact of IDR Simplification transaction of Delek Logistics LP ( 2.1 ) —

Dividends paid ( 69.0 ) ( 64.3 )

3 unchanged sentences

Cash and cash equivalents at the beginning of the period 955.3 1,079.3

Cash and cash equivalents of continuing operations at the end of the period

Cash and cash equivalents at the end of the period $ 807.9 $ 1,006.4

Supplemental disclosures of cash flow information:

1 unchanged sentence

Interest, net of capitalized interest of $ 0.2 million and $ 1.2 million in the 2020 and 2019 periods, respectively

$ 91.1 $ 88.3

Income taxes $ 3.3 $ 73.3

Non-cash investing activities:

29 unchanged sentences

Risks and Uncertainties Arising from the COVID-19 Pandemic and the OPEC Production Disputes

The recent outbreak of COVID-19 and its development into a pandemic in March 2020 (the "COVID-19 Pandemic") has resulted in significant economic disruption globally, including in the U.S.

The outbreak of COVID-19 and its development into a pandemic in March 2020 (the "COVID-19 Pandemic") has resulted in significant economic disruption globally, including in the U.S.

and specific geographic areas where we operate.

6 unchanged sentences

Uncertainties related to the impact of the COVID-19 Pandemic and other events exist that could impact our future results of operations and financial position, the nature of which and the extent to which are currently unknown.

To the extent these uncertainties have been identified and are believed to have an impact on our current period results of operations or financial position based on the requirements for assessing such financial statement impact under GAAP, we have considered them in the preparation of our unaudited financial statements as of and for the three and six months ended June 30, 2020 .

The application of accounting policies impacted by such considerations include (but are not necessarily limited to) the following:

30 unchanged sentences

We adopted this guidance on January 1, 2020 and the adoption did not have a material impact on our business, financial condition or results of operations.

See Note 10 .

ASU 2016-13, Financial Instruments - Measurement of Credit Losses on Financial Instruments

6 unchanged sentences

Accounting Pronouncements Not Yet Adopted

ASU 2020-06, Debt— Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity

In August 2020, the FASB issued ASU 2020-06, which is intended to simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity's own equity.

The guidance allows for either full retrospective adoption or modified retrospective adoption.

The pronouncement is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2021, and early adoption is permitted.

The Company is evaluating the impact of this guidance but does not currently expect adopting this new guidance will have a material impact on its consolidated financial statements and related disclosures.

ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848)

In March 2020, the FASB issued an amendment which is intended to provide temporary optional expedients and exceptions to GAAP guidance on contracts, hedge accounting and other transactions affected by the expected market transition from the London Interbank Offered Rate ("LIBOR") and other interbank rates.

This guidance is effective for all entities at anytime beginning on March 12, 2020 through December 31, 2022 and may be applied from the beginning of an interim period that includes the issuance date of the ASU.

This guidance is effective for all entities at any time beginning on March 12, 2020 through December 31, 2022 and may be applied from the beginning of an interim period that includes the issuance date of the ASU.

The Company is currently evaluating the impact this guidance may have on its consolidated financial statements and related disclosures.

24 unchanged sentences

Segment contribution margin is defined as net revenues less cost of materials and other and operating expenses, excluding depreciation and amortization.

During the first quarter of 2020, we revised the structure of the internal financial information reviewed by management and began allocating the results of hedging activity associated with managing risks of our refineries, previously reported in corporate, other and eliminations, to our refining segment.

Notes to Condensed Consolidated Financial Statements (Unaudited)

eliminations, to our refining segment.

The historical results of this hedging activity have been reclassified to conform to the current presentation.

2 unchanged sentences

The refining segment processes crude oil and other feedstocks for the manufacture of transportation motor fuels, including various grades of gasoline, diesel fuel and aviation fuel, asphalt and other petroleum-based products that are distributed through owned and third-party product terminals.

The refining segment has a combined nameplate capacity of 302,000 barrels per day ("bpd") as of June 30, 2020 , including the following:

The refining segment has a combined nameplate capacity of 302,000 barrels per day ("bpd") as of September 30, 2020, including the following:

• 75,000 bpd Tyler, Texas refinery (the "Tyler refinery");

• 80,000 bpd El Dorado, Arkansas refinery (the "El Dorado refinery");

Notes to Condensed Consolidated Financial Statements (Unaudited)

• 73,000 bpd Big Spring, Texas refinery (the "Big Spring refinery");

18 unchanged sentences

Retail Segment

Our retail segment consists of 253 owned and leased convenience store sites as of June 30, 2020 , located primarily in Central and West Texas and New Mexico.

Our retail segment consists of 253 owned and leased convenience store sites as of September 30, 2020, located primarily in Central and West Texas and New Mexico.

These convenience stores typically offer various grades of gasoline and diesel primarily under the Alon or Delek brand name and food products, food service, tobacco products, non-alcoholic and alcoholic beverages, general merchandise as well as money orders to the public, primarily under the 7-Eleven and Alon brand names.

1 unchanged sentence

In November 2018, we terminated the license agreement with 7-Eleven, Inc.

This agreement was amended in April 2020 to extend date for the required removal of all 7-Eleven branding on a store-by-store basis from December 31, 2021 to December 31, 2022.

This agreement was amended in April 2020 to extend the date for the required removal of all 7-Eleven branding on a store-by-store basis from December 31, 2021 to December 31, 2022.

Merchandise sales at our convenience store sites will continue to be sold under the 7-Eleven brand name until 7-Eleven branding is removed at such convenience store sites.

4 unchanged sentences

• logistics segment service fee revenue under service agreements with the refining segment based on the number of gallons sold and to share a portion of the margin achieved in return for providing marketing, sales and customer services;

Notes to Condensed Consolidated Financial Statements (Unaudited)

• logistics segment sales of wholesale finished product to our refining segment;

• logistics segment crude transportation, terminalling and storage fee revenue from our refining segment for the utilization of pipeline, terminal and storage assets.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Business Segment Operating Performance

The following is a summary of business segment operating performance as measured by contribution margin for the period indicated (in millions):

Three Months Ended June 30, 2020

(In millions)

Other and Eliminations

Three Months Ended September 30, 2020

(In millions) Refining Logistics Retail Corporate,

Other and Eliminations Consolidated

Net revenues (excluding inter-segment fees and revenues)

$ 1,450.8 $ 49.4 $ 177.7 $ 385.0 $ 2,062.9

Inter-segment fees and revenues 112.7 92.8 — ( 205.5 ) —

5 unchanged sentences

General and administrative expenses

Other operating income, net

Operating income

Other operating loss, net 0.3

Operating loss $ ( 75.2 )

Capital spending (excluding business combinations)

Three Months Ended June 30, 2019

$ 0.6 $ 3.2 $ 0.7 $ 0.2 $ 4.7

Three Months Ended September 30, 2019

Logistics Retail Corporate,

Other and Eliminations (1)

Net revenues (excluding inter-segment fees and revenues)

$ 2,036.9 $ 71.4 $ 218.5 $ 7.5 $ 2,334.3

Inter-segment fees and revenues

139.9 66.2 — ( 206.1 ) —

Operating costs and expenses:

4 unchanged sentences

General and administrative expenses

Other operating income, net

Other operating loss, net 0.5

Operating income $ 87.4

Capital spending (excluding business combinations)

Six Months Ended June 30, 2020

(In millions)

Other and Eliminations

$ 63.3 $ 4.0 $ 3.8 $ 39.4 $ 110.5

Notes to Condensed Consolidated Financial Statements (Unaudited)

Nine Months Ended September 30, 2020

(In millions) Refining Logistics Retail Corporate,

Other and Eliminations Consolidated

Net revenues (excluding inter-segment fees and revenues)

$ 4,021.9 $ 133.4 $ 521.7 $ 742.6 $ 5,419.6

Inter-segment fees and revenues 346.5 289.9 — ( 636.4 ) —

8 unchanged sentences

Capital spending (excluding business combinations)

Notes to Condensed Consolidated Financial Statements (Unaudited)

Six Months Ended June 30, 2019

$ 180.9 $ 6.9 $ 8.2 $ 12.0 $ 208.0

Nine Months Ended September 30, 2019

Logistics Retail Corporate,

Other and Eliminations (1)

Net revenues (excluding inter-segment fees and revenues)

$ 6,096.7 $ 254.3 $ 640.2 $ 23.3 $ 7,014.5

Inter-segment fees and revenues

539.9 191.1 — ( 731.0 ) —

Operating costs and expenses:

7 unchanged sentences

Capital spending (excluding business combinations) $ 193.8 $ 6.2 $ 14.3 $ 110.5 $ 324.8

The refining segment results of operations for the three and six months ended June 30, 2019 , includes hedging gains, a component of cost of materials and other, of $ 19.8 million and $ 27.4 million , respectively, which was previously included and reported in corporate, other and eliminations.

(1) The refining segment results of operations for the three and nine months ended September 30, 2019, includes hedging gains, a component of cost of materials and other, of $ 22.6 million and $ 50.0 million, respectively, which was previously included and reported in corporate, other and eliminations.

Other Segment Information

Total assets by segment were as follows as of June 30, 2020 :

Other and Eliminations

Total assets by segment were as follows as of September 30, 2020:

Refining Logistics Retail Corporate,

Other and Eliminations Consolidated

Total assets $ 6,103.2 $ 957.7 $ 299.1 $ ( 835.0 ) $ 6,525.0

Inter-segment notes receivable ( 1,326.3 ) — — 1,326.3 —

1 unchanged sentence

Total assets, excluding inter-segment notes receivable and right of use assets $ 4,383.1 $ 957.7 $ 299.1 $ 885.1 $ 6,525.0

Property, plant and equipment and accumulated depreciation as of June 30, 2020 and depreciation expense by reporting segment for the three and six months ended June 30, 2020 are as follows (in millions):

Other and Eliminations

Notes to Condensed Consolidated Financial Statements (Unaudited)

Property, plant and equipment and accumulated depreciation as of September 30, 2020 and depreciation expense by reporting segment for the three and nine months ended September 30, 2020 are as follows (in millions):

Refining Logistics Retail Corporate,

Other and Eliminations Consolidated

Property, plant and equipment $ 2,558.2 $ 684.2 $ 164.8 $ 108.5 $ 3,515.7

1 unchanged sentence

Property, plant and equipment, net $ 1,799.3 $ 467.5 $ 119.4 $ 37.7 $ 2,423.9

Depreciation expense for the three months ended June 30, 2020

Depreciation expense for the six months ended June 30, 2020

Depreciation expense for the three months ended September 30, 2020 $ 48.5 $ 9.5 $ 2.7 $ 2.6 $ 63.3

Depreciation expense for the nine months ended September 30, 2020 $ 127.3 $ 24.4 $ 8.5 $ 11.6 $ 171.8

I n accordance with ASC 360, Property, Plant and Equipment ("ASC 360"), Delek evaluates the realizability of property, plant and equipment as events occur that might indicate potential impairment.

T here were no indicators of impairment related to our property, plant and equipment as of June 30, 2020 (see Note 1 for further discussion on the impact of COVID-19 Pandemic and OPEC Production Disputes).

Notes to Condensed Consolidated Financial Statements (Unaudited)

T here were no indicators of impairment related to our property, plant and equipment as of September 30, 2020 (see Note 1 for further discussion on the impact of COVID-19 Pandemic and OPEC Production Disputes).

Note 3 - Earnings (Loss) Per Share

3 unchanged sentences

For those instruments that are indexed to our common stock, they are generally dilutive when the market price of the underlying indexed share of common stock is in excess of the exercise price.

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table sets forth the computation of basic and diluted earnings per share.

Three Months Ended

Six Months Ended

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Numerator for EPS

Income (loss) from continuing operations, net of tax

(Loss) income from continuing operations, net of tax $ ( 76.9 ) $ 60.0 $ ( 285.4 ) $ 299.0

Income from continuing operations attributed to non-controlling interest 11.2 8.7 29.4 20.3

Numerator for basic and diluted EPS - attributable to Delek

(Loss) Income from continuing operations attributable to Delek $ ( 88.1 ) $ 51.3 $ ( 314.8 ) $ 278.7

Numerator for EPS - discontinued operations

3 unchanged sentences

Weighted average common shares outstanding, assuming dilution (denominator for diluted EPS) 73,669,310 75,702,311 73,551,970 77,167,834

Basic income (loss) per share:

Income (loss) from continuing operations

Basic (loss) income per share:

(Loss) Income from continuing operations $ ( 1.20 ) $ 0.68 $ ( 4.28 ) $ 3.64

Loss from discontinued operations — — $ — ( 0.01 )

Basic income (loss) per share

Diluted income (loss) per share:

Income (loss) from continuing operations

Basic (loss) income per share $ ( 1.20 ) $ 0.68 $ ( 4.28 ) $ 3.63

Diluted (loss) income per share:

(Loss) Income from continuing operations $ ( 1.20 ) $ 0.68 $ ( 4.28 ) $ 3.61

Loss from discontinued operations $ — — $ — ( 0.01 )

Diluted income (loss) per share

Diluted (loss) income per share $ ( 1.20 ) $ 0.68 $ ( 4.28 ) $ 3.60

The following equity instruments were excluded from the diluted weighted average common shares outstanding because their effect would be antidilutive:

6 unchanged sentences

A substantial majority of Delek Logistics' assets are integral to Delek’s refining and marketing operations.

As of June 30, 2020 , we owned a 69.1 % interest in Delek Logistics, consisting of 20,745,868 common limited partner units (representing a 70.5 % interest), and a 94.8 % interest in Delek Logistics GP, LLC, which owns the entire 2.0 % general partner interest (consisting of 600,678 general partner units) in Delek Logistics as well as all of the incentive distribution rights.

On August 13, 2020, Delek Logistics completed a transaction to eliminate the incentive distribution rights ("IDRs") held by Delek Logistics GP, LLC, the general partner, and convert the 2.0 % economic general partner interest into a non-economic general partner interest in exchange for total consideration consisting of $ 45.0 million cash and 14.0 million newly issued common limited partner units.

Contemporaneously, we repurchased 5.2 % ownership interest in the general partner from affiliates, who are also members of the general partner's management and board of directors, for $ 23.1 million, increasing our ownership interest in the general partner to 100.0 %.

As a result of these transactions, the non-controlling interest in our consolidated balance sheets decreased by $ 50.8 million, with a $ 37.2 million increase to additional paid-in capital which is net of $ 11.5 million related to deferred income taxes and $ 2.1 million of transaction costs.

In August 2020, Delek Logistics filed a shelf registration statement, which subsequently became effective, with the U.S.

Securities and Exchange Commission for the proposed re-sale or other disposition from time to time by Delek of up to 14.0 million common limited partner units representing our limited partner interests in Delek Logistics.

As of September 30, 2020, we owned an 80.0 % interest in Delek Logistics, consisting of 34,745,868 common limited partner units and the non-economic general partner interest.

The limited partner interests in Delek Logistics not owned by us are reflected in net income attributable to non-controlling interest in the accompanying condensed consolidated statements of income and in non-controlling interest in subsidiaries in the accompanying condensed consolidated balance sheets.

4 unchanged sentences

Exclusive of intercompany balances and the marketing agreement intangible asset between Delek Logistics and Delek which are eliminated in consolidation, the Delek Logistics condensed consolidated balance sheets as presented below are included in the condensed consolidated balance sheets of Delek (unaudited, in millions).

Notes to Condensed Consolidated Financial Statements (Unaudited)

September 30, 2020 December 31, 2019

Cash and cash equivalents $ 6.0 $ 5.5

1 unchanged sentence

Accounts receivable from related parties 9.9 —

Inventory 1.7 12.6

Other current assets 0.4 2.3

2 unchanged sentences

Operating lease right-of-use assets 18.1 3.7

Goodwill 12.2 12.2

Intangible assets, net 161.8 146.6

Other non-current assets 7.0 6.3

Total assets $ 957.5 $ 744.4

LIABILITIES AND DEFICIT

8 unchanged sentences

Other non-current liabilities 19.2 19.3

Deficit ( 111.5 ) ( 151.1 )

Total liabilities and deficit $ 957.5 $ 744.4

3 unchanged sentences

Promptly following the consummation of the Acquisition, Delek Trucking merged with and into DKL Transportation, with DKL Transportation continuing as the surviving entity.

Total consideration for the Acquisition was approximately $ 48.0 million in cash, subject to certain post-closing adjustments,

Notes to Condensed Consolidated Financial Statements (Unaudited)

financed primarily with borrowings under Delek Logistics’ revolving credit facility.

Total consideration for the Acquisition was approximately $ 48.0 million in cash, subject to certain post-closing adjustments, financed primarily with borrowings under Delek Logistics’ revolving credit facility.

In connection with the Acquisition, Delek Refining, Lion Oil and DKL Transportation entered into a Transportation Services Agreement pursuant to which DKL Transportation will gather, coordinate the pickup of, transport and deliver petroleum products for Delek Refining and Lion Oil, as well as provide ancillary services as requested.

8 unchanged sentences

The purchase price of the units amounted to approximately $ 5.0 million.

As a result of the transaction, our ownership in Delek Logistics' outstanding common limited partner units increased to 64.5 % from 62.6 % .

Our ownership in Delek Logistics' common limited partner units was further increased to 70.5 % as a result of the issuance of 5.0 million common units in connection with the Big Spring Gathering Assets Acquisition described above.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 5 - Equity Method Investments

3 unchanged sentences

WWP intends to construct and operate a crude oil pipeline system from Wink, Texas to Webster, Texas along with certain pipelines from Webster, Texas to other destinations in the Gulf Coast area.

Pursuant to the LLCA, Delek Energy will be required to contribute its percentage interest of the applicable construction costs (including certain costs previously incurred by WWP) and it is anticipated that Delek Energy’s capital contributions will total approximately $ 340 million to $ 380 million over the course of construction (expected to be two to three years ).

During the six months ended June 30, 2020 , we made capital contributions totaling $ 18.9 million .

As of December 31, 2019 , Delek's investment balance in WWP totaled $ 125.3 million .

Pursuant to the LLCA, Delek Energy will be required to contribute its percentage interest of the applicable construction costs (including certain costs previously incurred by WWP) and, at the date we acquired our ownership interest, it was anticipated that Delek Energy’s capital contributions would total approximately $ 340 million to $ 380 million over the course of construction (expected to be two to three years ).

Construction of the crude oil pipeline system remains ongoing, where the main segment of the pipeline system connecting the Permian Basin to Houston, Texas was recently completed and began transporting crude oil in October 2020.

During the nine months ended September 30, 2020 and September 30, 2019, we made capital contributions totaling $ 18.9 million and $75.3 million, respectively.

As of December 31, 2019, Delek's investment balance in WWP totaled $ 125.3 million and we recognized a nominal amount of income on the investment for the three and nine months ended September 30, 2019.

On February 21, 2020, we, through our wholly-owned direct subsidiary Delek Energy, entered into the W2W Holdings LLC ("HoldCo") Agreement with MPLX Operations LLC ("MPLX") (collectively, with its wholly-owned subsidiaries, the "WWP Project Financing Joint Venture" or the "WWP Project Financing JV").

8 unchanged sentences

The Company's maximum exposure to any losses incurred by HoldCo is limited to its investment.

As of June 30, 2020 , except for the guarantee of member obligations under the W2W Holdings LLC Agreement, the Company does not have other existing guarantees with or to HoldCo, or any third-party work contracted with it.

As of June 30, 2020 , Delek's investment balance in WWP Project Financing Joint Venture totaled $ 73.0 million .

During the six months ended June 30, 2020 , we received distributions of $ 69.3 million from WWP Project Financing Joint Venture to return excess contributions made.

In addition, we recognized a loss on the investment totaling $ 0.9 million and $ 2.0 million for the three and six months ended June 30, 2020 ,

Notes to Condensed Consolidated Financial Statements (Unaudited)

respectively.

This investment is accounted for using the equity method and is included as part of total assets in corporate, other and eliminations in our segment disclosure.

As of September 30, 2020, except for the guarantee of member obligations under the W2W Holdings LLC Agreement, the Company does not have other existing guarantees with or to HoldCo, or any third-party work contracted with it.

As of September 30, 2020, Delek's investment balance in WWP Project Financing Joint Venture totaled $ 73.3 million and is included as part of total assets in corporate, other and eliminations in our segment disclosure.

During the nine months ended September 30, 2020, we received distributions of $ 69.3 million from WWP Project Financing Joint Venture to return excess contributions made.

In addition on the investment, we recognized income totaling $ 0.2 million and a loss of $ 1.8 million for the three and nine months ended September 30, 2020, respectively.

Delek Logistics Investments

2 unchanged sentences

Pursuant to the Contribution Agreement, DKL Pipeline contributed $ 124.7 million, substantially all of which was financed under the Delek Logistics Credit Facility (as defined in Note 8), to Red River in exchange for a 33 % membership interest in Red River and DKL Pipeline’s admission as a member of Red River (the "Red River Pipeline Joint Venture").

Red River owns a 16-inch crude oil pipeline running from Cushing, Oklahoma to Longview, Texas, with an expansion project planned to increase the pipeline capacity, which is expected to be completed during the third quarter of 2020.

Delek Logistics contributed an additional $ 3.5 million related to such expansion project in May 2019 and, during the six months ended June 30, 2020 , we made additional capital contributions totaling $ 10.5 million based on capital calls received.

As of June 30, 2020 and December 31, 2019 , Delek's investment balance in Red River totaled $ 142.0 million and $ 131.0 million , respectively, and we recognized income on the investment totaling $ 2.9 million and $ 4.7 million for the three and six months ended June 30, 2020 , respectively.

This investment is accounted for using the equity method and is included as part of total assets in our logistics segment.

Red River owns a 16-inch crude oil pipeline running from Cushing, Oklahoma to Longview, Texas.

In August 2020, Red River completed a planned expansion project to increase the pipeline capacity which commenced operations on October 1, 2020.

Delek Logistics contributed an additional $ 3.5 million related to such expansion project in May 2019.

During the nine months ended September 30, 2020, we made additional capital contributions totaling $ 11.8 million based on capital calls received.

As of September 30, 2020 and December 31, 2019, Delek's investment balance in Red River totaled $ 143.5 million and $ 131.0 million, respectively.

We recognized income on the investment totaling $ 2.0 million and $ 6.8 million for the three and nine months ended September 30, 2020, respectively and $4.7 million and $7.0 million for the three and nine months ended September 30, 2019, respectively.

This investment is accounted for using the equity method and is included as part of total assets in our

Notes to Condensed Consolidated Financial Statements (Unaudited)

logistics segment.

In addition to Red River, Delek Logistics has two joint ventures that own and operate logistics assets, and which serve third parties and subsidiaries of Delek.

1 unchanged sentence

to operate one of these pipeline systems (the "Caddo Pipeline") and a 33 % membership interest in Andeavor Logistics Rio Pipeline LLC which operates the other pipeline system (the "Rio Pipeline").

As of June 30, 2020 and December 31, 2019 , Delek Logistics' investment balances in these joint ventures totaled $ 113.3 million and $ 116.0 million , respectively, and were accounted for using the equity method.

We recognized income on these investments totaling $ 3.5 million and $ 7.3 million for the three and six months ended June 30, 2020 , respectively and $ 2.2 million and $ 4.1 million for the three and six months ended June 30, 2019 , respectively.

As of September 30, 2020 and December 31, 2019, Delek Logistics' investment balances in these joint ventures totaled $ 111.8 million and $ 116.0 million, respectively, and were accounted for using the equity method.

We recognized income on these investments totaling $ 2.9 million and $ 10.1 million for the three and nine months ended September 30, 2020, respectively and $ 3.7 million and $ 7.9 million for the three and nine months ended September 30, 2019, respectively.

Other Investments

We have a 50 % interest in a joint venture that owns an asphalt terminal located in Brownwood, Texas.

As of June 30, 2020 and December 31, 2019 , Delek's investment balance in this joint venture was $ 35.3 million and $ 30.7 million , respectively.

We recognized income on this investment totaling $ 5.0 million and $ 5.5 million for the three and six months ended June 30, 2020 , respectively and $ 4.7 million and $ 5.2 million for the three and six months ended June 30, 2019 , respectively.

As of September 30, 2020 and December 31, 2019, Delek's investment balance in this joint venture was $ 40.7 million and $ 30.7 million, respectively.

We recognized income on this investment totaling $ 7.5 million and $ 13.0 million for the three and nine months ended September 30, 2020, respectively and $ 7.9 million and $ 13.1 million for the three and nine months ended September 30, 2019, respectively.

This investment is accounted for using the equity method and is included as part of total assets in corporate, other and eliminations in our segment disclosure.

Delek Renewables, LLC, a wholly-owned subsidiary of Delek, has a joint venture that owns, operates and maintains a terminal consisting of an ethanol unit train facility with an ethanol tank in North Little Rock, Arkansas.

As of June 30, 2020 and December 31, 2019 , Delek Renewables, LLC's investment balance in this joint venture was $ 3.7 million and $ 4.3 million , respectively, and was accounted for using the equity method.

As of September 30, 2020 and December 31, 2019, Delek Renewables, LLC's investment balance in this joint venture was $ 3.8 million and $ 4.3 million, respectively, and was accounted for using the equity method.

The investment in this joint venture is reflected in the refining segment.

4 unchanged sentences

Carrying value of inventories consisted of the following (in millions):

September 30, 2020 December 31, 2019

Refinery raw materials and supplies $ 261.4 $ 400.4

1 unchanged sentence

Refinery finished goods 299.1 397.5

Retail fuel 5.9 7.3

Retail merchandise 21.0 19.8

1 unchanged sentence

Total inventories $ 672.0 $ 946.7

Notes to Condensed Consolidated Financial Statements (Unaudited)

At June 30, 2020 , we recorded a pre-tax inventory valuation reserve of $ 77.0 million , $ 76.3 million of which related to LIFO inventory, due to a market price decline below our cost of certain inventory products.

At September 30, 2020, we recorded a pre-tax inventory valuation reserve of $ 67.5 million, $ 65.0 million of which related to LIFO inventory, due to a market price decline below our cost of certain inventory products.

At December 31, 2019, we recorded a pre-tax inventory valuation reserve of $ 1.7 million, $ 1.2 million of which related to LIFO inventory, which reversed in the first quarter of 2020 due to the sale of inventory quantities that gave rise to the December 31, 2019 reserve.

We recognized a net (increase) reduction in cost of materials and other in the accompanying condensed consolidated statements of income related to the change in pre-tax inventory valuation of $ 203.1 million and $( 75.1 ) million for the three and six months ended June 30, 2020 , respectively, and $( 0.6 ) million and $ 51.5 million for the three and six months ended June 30, 2019 , respectively.

We recognized a net reduction (increase) in cost of materials and other in the accompanying condensed consolidated statements of income related to the change in pre-tax inventory valuation of $ 9.5 million and $( 65.6 ) million for the three and nine months ended September 30, 2020, respectively, and $( 20.0 ) million and $ 31.5 million for the three and nine months ended September 30, 2019, respectively.

Note 7 - Crude Oil Supply and Inventory Purchase Agreement

13 unchanged sentences

Barrels subject to the Supply and Offtake Agreements are as follows:

(in millions)

Krotz Springs

(in millions) El Dorado Big Spring Krotz Springs

Baseline Volumes pursuant to the respective Supply and Offtake Agreements 2.0 0.8 1.3

Barrels of inventory consigned under the respective Supply and Offtake Agreements as of June 30, 2020 (1)

Barrels of inventory consigned under the respective Supply and Offtake Agreements as of September 30, 2020 (1)

Barrels of inventory consigned under the respective Supply and Offtake Agreements as of December 31, 2019 (1)

4 unchanged sentences

As a result of these amendments, the subsequent changes in fair value of the Baseline Step-Out Liabilities were recorded in interest expense.

In January 2020, we amended our three Supply and Offtake Agreements so that the repurchase of Baseline Volumes at the end of the Supply and Offtake Agreement term (representing the "Baseline Step-Out Liability" or, collectively, the "Baseline Step-Out Liabilities") would be based on market-indexed prices subject to commodity price risk.

As a result of the amendment, such Baseline Step-Out Liabilities will continue to be recorded at fair value under the fair value election provided by ASC 815 and ASC 825, where the fair value will now reflect changes in commodity price risk rather than interest rate risk with subsequent changes in fair value being recorded in cost of materials and other.

In January 2020, we amended our three Supply and Offtake Agreements so that the repurchase of Baseline Volumes at the end of the Supply and Offtake Agreement term (representing the "Baseline Step-Out Liability" or, collectively, the "Baseline Step-Out Liabilities") was based on market-indexed prices subject to commodity price risk.

As a result of the amendment, such Baseline Step-Out Liabilities continued to be recorded at fair value under the fair value election provided by ASC 815 and ASC 825, where the fair value now reflected changes in commodity price risk rather than interest rate risk with subsequent changes in fair value being recorded in cost of materials and other.

We recognized a loss in the first quarter of 2020 of $ 1.5 million on the change in fair value resulting from the modification.

8 unchanged sentences

Additionally, at the Periodic Pricing Dates, if a Periodic Price Adjustment is triggered, the prospective pricing underlying the fixed component of the Baseline Step-Out Liabilities will be adjusted to reflect either the pay-down or the incremental proceeds, accordingly.

As of June 30, 2020 , the fixed component of the Baseline Step-Out Liabilities subject to the Periodic Price Adjustments amounted to approximately $58.8 million .

As of September 30, 2020, the fixed component of the Baseline Step-Out Liabilities subject to the Periodic Price Adjustments amounted to approximately $58.8 million.

All or some portion of that amount may become due or payable in periods occurring within twelve months, if Periodic Price Adjustments are triggered in October 2020 and May

See Note 19 - Subsequent Events , for details on the subsequent Periodic Price Adjustment and paydown triggered on October 1, 2020.

Monthly activity resulting in over and short volumes continue to be valued using market-indexed pricing, and are included in current liabilities (or receivables) on our consolidated balance sheet.

Net balances payable (receivable) under the Supply and Offtake Agreements were as follows as of the balance sheet dates:

(in millions)

Krotz Springs

Balances as of June 30, 2020:

(in millions) El Dorado Big Spring Krotz Springs Total

Balances as of September 30, 2020:

Baseline Step-Out Liability $ 100.5 $ 49.1 $ 70.8 $ 220.4

3 unchanged sentences

Obligations Under Supply and Offtake Agreements - Noncurrent portion $ 100.5 $ 49.1 $ 70.8 $ 220.4

Other current payable (receivable) for monthly activity true-up

(in millions)

Krotz Springs

Other current payable for monthly activity true-up $ 12.6 $ 1.0 $ — $ 13.6

(in millions) El Dorado Big Spring Krotz Springs Total

Balances as of December 31, 2019:

7 unchanged sentences

Recurring cash fees paid during the periods presented were as follows:

(in millions)

Krotz Springs

Recurring cash fees paid during the three months ended June 30, 2020

Recurring cash fees paid during the three months ended June 30, 2019

Recurring cash fees paid during the six months ended June 30,2020

Recurring cash fees paid during the six months ended June 30, 2019

(in millions) El Dorado Big Spring Krotz Springs Total

Recurring cash fees paid during the three months ended September 30, 2020 $ 1.5 $ 0.7 $ 1.1 $ 3.3

Recurring cash fees paid during the three months ended September 30, 2019 $ 2.9 $ 1.5 $ 2.5 $ 6.9

Recurring cash fees paid during the nine months ended September 30, 2020 $ 7.4 $ 2.8 $ 3.1 $ 13.3

Recurring cash fees paid during the nine months ended September 30, 2019 $ 8.5 $ 4.4 $ 7.6 $ 20.5

Interest expense recognized under the Supply and Offtake Agreements includes the yield attributable to recurring cash fees, one-time cash fees (e.g., in connection with amendments), as well as other changes in fair value, which may increase or decrease interest expense.

Total interest expense incurred during the periods presented was as follows:

(in millions)

Krotz Springs

Interest expense for the three months ended June 30, 2020

Interest expense for the three months ended June 30, 2019

Interest expense for the six months ended June 30, 2020

Interest expense for the six months ended June 30, 2019

Reflected in interest expense are losses totaling $ 3.9 million for the six months ended June 30, 2020 , and losses totaling $ 1.4 million and gains totaling $ 3.7 million for the three and six months ended June 30, 2019 , respectively, related to the changes in fair value in the Baseline Step-Out Liabilities component of Obligations Under Supply and Offtake Agreements.

There were no such gains or losses for three months ended June 30, 2020 .

(in millions) El Dorado Big Spring Krotz Springs Total

Interest expense for the three months ended September 30, 2020 $ 1.5 $ 0.7 $ 1.1 $ 3.3

Interest expense for the three months ended September 30, 2019 $ 3.7 $ 2.0 $ 2.7 $ 8.4

Interest expense for the nine months ended September 30, 2020 $ 7.8 $ 5.9 $ 3.5 $ 17.2

Interest expense for the nine months ended September 30, 2019 $ 10.9 $ 3.6 $ 8.8 $ 23.3

Reflected in interest expense are losses totaling $ 3.9 million for the nine months ended September 30, 2020, and gains totaling $ 7.7 million and gains totaling $ 11.4 million for the three and nine months ended September 30, 2019, respectively, related to the changes in fair value in the Baseline Step-Out Liabilities component of Obligations Under Supply and Offtake Agreements.

There were no such gains

or losses for three months ended September 30, 2020.

We maintained letters of credit under the Supply and Offtake Agreements as follows:

(in millions)

Big Spring and Krotz Springs

Letters of credit outstanding as of

June 30, 2020

Letters of credit outstanding as of

December 31, 2019

(in millions) El Dorado Big Spring and Krotz Springs

Letters of credit outstanding as of September 30, 2020 $ 170.0 $ 10.0

Letters of credit outstanding as of December 31, 2019 $ 180.0 $ 44.0

Note 8 - Long-Term Obligations and Notes Payable

Outstanding borrowings, net of unamortized debt discounts and certain deferred financing costs, under Delek’s existing debt instruments are as follows (in millions):

June 30, 2020

December 31, 2019

September 30, 2020 December 31, 2019

Revolving Credit Facility $ 110.0 $ 30.0

Term Loan Credit Facility (1)

1,248.6 1,069.5

Delek Logistics Credit Facility 760.7 588.4

3 unchanged sentences

Promissory Notes 20.0 45.0

2,474.0 2,067.1

Current portion of long-term debt and notes payable 33.4 36.4

Net of deferred financing costs of $ 3.2 million and $ 3.5 million and debt discount of $ 26.0 million and $ 12.5 million at June 30, 2020 and December 31, 2019 , respectively.

Net deferred financing costs of $ 0.2 million and $ 0.3 million and debt discount of $ 0.2 million and $ 0.2 million at June 30, 2020 and December 31, 2019 , respectively.

Net of deferred financing costs of $ 3.6 million and $ 4.0 million and debt discount of $ 1.2 million and $ 1.3 million at June 30, 2020 and December 31, 2019 , respectively.

$ 2,440.6 $ 2,030.7

(1) Net of deferred financing costs of $ 3.0 million and $ 3.5 million and debt discount of $ 24.7 million and $ 12.5 million at September 30, 2020 and December 31, 2019, respectively.

(2) Net of deferred financing costs of $ 0.2 million and $ 0.3 million and debt discount of $ 0.2 million and $ 0.2 million at September 30, 2020 and December 31, 2019, respectively.

(3) Net of deferred financing costs of $ 3.5 million and $ 4.0 million and debt discount of $ 1.1 million and $ 1.3 million at September 30, 2020 and December 31, 2019, respectively.

Delek Revolver and Term Loan

28 unchanged sentences

In addition, the Revolving Credit Facility requires Delek to pay an unused line fee on the average amount of unused commitments thereunder in each quarter, which the fee is at a rate of 0.25 % or 0.375 % per annum, depending on average commitment usage for such quarter.

As of June 30, 2020 , the unused line fee was 0.375 % per annum.

As of September 30, 2020, the unused line fee was 0.375 % per annum.

Maturity and Repayments

4 unchanged sentences

Additionally, the Term Loan Credit Facility requires prepayments by Delek with the net cash proceeds from certain debt incurrences, asset dispositions and insurance or condemnation events with respect to Delek’s assets, subject to certain exceptions, thresholds and reinvestment rights.

The Term Loan Credit Facility also requires annual prepayments with a variable percentage of Delek’s excess cash flow, ranging from 50.0 % to 0 % depending on Delek’s consolidated fiscal year end secured net leverage ratio.

The Third Incremental Term Loan requires quarterly payments on the Class B Loans of $ 0.5 million commencing June 30, 2020.

The Term Loan Credit Facility also requires annual prepayments with a variable percentage of Delek’s excess cash flow, ranging from 50.0 % to

Notes to Condensed Consolidated Financial Statements (Unaudited)

0 % depending on Delek’s consolidated fiscal year end secured net leverage ratio.

The Third Incremental Term Loan requires quarterly payments on the Class B Loans of $ 0.5 million commencing June 30, 2020.

Guarantee and Security

5 unchanged sentences

Additional Information

At June 30, 2020 , the weighted average borrowing rate under the Revolving Credit Facility was 3.50 % and was comprised entirely of a base rate borrowing, and the principal amount outstanding thereunder was $ 100.0 million .

Additionally, there were letters of credit issued of approximately $ 204.6 million as of June 30, 2020 under the Revolving Credit Facility.

Unused credit commitments under the Revolving Credit Facility, as of June 30, 2020 , were approximately $ 695.4 million .

At June 30, 2020 , the weighted average borrowing rate under the Term Loan Credit Facility was approximately 3.06 % comprised entirely of LIBOR borrowings, and the principal amount outstanding thereunder was $ 1,279.5 million .

As of June 30, 2020 , the effective interest rate related to the Term Loan Credit Facility was 3.44 % .

At September 30, 2020, the weighted average borrowing rate under the Revolving Credit Facility was 3.50 % and was comprised entirely of a base rate borrowing, and the principal amount outstanding thereunder was $ 110.0 million.

Additionally, there were letters of credit issued of approximately $ 227.3 million as of September 30, 2020 under the Revolving Credit Facility.

Unused credit commitments under the Revolving Credit Facility, as of September 30, 2020, were approximately $ 662.7 million.

At September 30, 2020, the weighted average borrowing rate under the Term Loan Credit Facility was approximately 3.04 % comprised entirely of LIBOR borrowings, and the principal amount outstanding thereunder was $ 1,276.3 million.

As of September 30, 2020, the effective interest rate related to the Term Loan Credit Facility was 3.57 %.

Delek Hapoalim Term Loan

7 unchanged sentences

Any such additional borrowings must be completed by December 31, 2021.

At June 30, 2020 , the weighted average borrowing rate under the term loan was approximately 3.18 % comprised entirely of a LIBOR borrowing and the principal amount outstanding thereunder was $ 39.8 million .

As of June 30, 2020 , the effective interest rate related to the BHI Term Loan was 3.61 % .

At September 30, 2020, the weighted average borrowing rate under the term loan was approximately 3.15 % comprised entirely of a LIBOR borrowing and the principal amount outstanding thereunder was $ 39.7 million.

As of September 30, 2020, the effective interest rate related to the BHI Term Loan was 3.58 %.

Delek Logistics Credit Facility

Prior to its amendment and restatement on September 28, 2018 , Delek Logistics had a $ 700.0 million senior secured revolving credit agreement with Fifth Third Bank ("Fifth Third"), as administrative agent, and a syndicate of lenders (the "2014 Facility").

On September 28, 2018 , Delek Logistics and all of its subsidiaries entered into a third amended and restated senior secured revolving credit agreement with Fifth Third as administrative agent and a syndicate of lenders (hereafter, the "Delek Logistics Credit Facility").

Under the terms of the Delek Logistics Credit Facility, among other things, the lender commitments were increased from $ 700.0 million to $ 850.0 million .

On September 28, 2018, Delek Logistics and all of its subsidiaries entered into a third amended and restated senior secured revolving credit agreement with Fifth Third Bank ("Fifth Third") as administrative agent and a syndicate of lenders (hereafter, the "Delek Logistics Credit Facility") with lender commitments of 850.0 million.

The Delek Logistics Credit Facility also contains an accordion feature whereby Delek Logistics can increase the size of the credit facility to an aggregate of $ 1.0 billion, subject to receiving increased or new commitments from lenders and the satisfaction of certain other conditions precedent.

3 unchanged sentences

Effective March 30, 2020, the limited guaranty and pledge of the Holdings Note was terminated pursuant to a guaranty and pledge release approved by the required lenders under the Delek Logistics Credit Facility.

Notes to Condensed Consolidated Financial Statements (Unaudited)

The Delek Logistics Credit Facility has a maturity date of September 28, 2023.

Borrowings under the Delek Logistics Credit Facility bear interest at either a U.S.

dollar prime rate , Canadian dollar prime rate , LIBOR , or a CDOR rate, in each case plus applicable margins, at the

Notes to Condensed Consolidated Financial Statements (Unaudited)

election of the borrowers and as a function of draw down currency.

dollar prime rate , Canadian dollar prime rate , LIBOR , or a CDOR rate, in each case plus applicable margins, at the election of the borrowers and as a function of draw down currency.

The applicable margin in each case and the fee payable for the unused revolving commitments vary based upon Delek Logistics' most recent total leverage ratio calculation delivered to the lenders, as called for and defined under the terms of the Delek Logistics Credit Facility.

At June 30, 2020 , the weighted average borrowing rate was approximately 2.78 % .

At September 30, 2020, the weighted average borrowing rate was approximately 2.69 %.

Additionally, the Delek Logistics Credit Facility requires Delek Logistics to pay a leverage ratio dependent quarterly fee on the average unused revolving commitment.

As of June 30, 2020 , this fee was 0.40 % on an annualized basis.

As of June 30, 2020 , Delek Logistics had $ 750.0 million of outstanding borrowings under the Delek Logistics Credit Facility, with no letters of credit in place.

Unused credit commitments under the Delek Logistics Credit Facility, as of June 30, 2020 , were $ 100.0 million .

As of September 30, 2020, this fee was 0.40 % on an annualized basis.

In connection with the elimination of IDRs in August 2020, Delek Logistics entered into a First Amendment to the Delek Logistics Credit Facility which, among other things, permitted the transfer of cash and equity consideration for the elimination of IDRs.

It also modified the total leverage ratio and the senior leverage ratio (each as defined in the Delek Logistics Credit Facility) calculations to reduce the total funded debt (as defined in the Delek Logistics Credit Facility) component thereof by the total amount of unrestricted consolidated cash and cash equivalents on the balance sheet of the Delek Logistics and its subsidiaries up to $20.0 million.

As of September 30, 2020, Delek Logistics had $ 760.7 million of outstanding borrowings under the Delek Logistics Credit Facility, with no letters of credit in place.

Unused credit commitments under the Delek Logistics Credit Facility, as of September 30, 2020, were $ 89.3 million.

Delek Logistics Notes

8 unchanged sentences

In May 2018, the Delek Logistics Notes were exchanged for new notes with terms substantially identical in all material respects with the 2025 Notes except the new notes do not contain terms with respect to transfer restrictions.

As of June 30, 2020 , we had $ 250.0 million in outstanding principal amount under the Delek Logistics Notes.

As of June 30, 2020 , the effective interest rate related to the Delek Logistics Notes was 7.22 % .

As of September 30, 2020, we had $ 250.0 million in outstanding principal amount under the Delek Logistics Notes.

As of September 30, 2020, the effective interest rate related to the Delek Logistics Notes was 7.22 %.

Reliant Bank Revolver

Delek has an unsecured revolving credit agreement with Reliant Bank (the "Reliant Bank Revolver").

On December 16, 2019, we amended the Reliant Bank Revolver to extend the maturity date from June 28, 2020 to June 30, 2022, reduce the fixed interest rate from 4.75 % to 4.50 % per annum and increase the revolver commitment amount from $ 30.0 million to $ 50.0 million .

On December 16, 2019, we amended the Reliant Bank Revolver to extend the maturity date to June 30, 2022, reduce the fixed interest rate from 4.75 % to 4.50 % per annum and increase the revolver commitment amount from $ 30.0 million to $ 50.0 million.

There were no other significant changes to the agreement .

The revolving credit agreement requires us to pay a quarterly fee of 0.50 % on an annualized basis on the average unused revolving commitment.

As of June 30, 2020 , we had $ 50.0 million outstanding and had no unused credit commitments under the Reliant Bank Revolver.

As of September 30, 2020, we had $ 50.0 million outstanding and had no unused credit commitments under the Reliant Bank Revolver.

Promissory Notes

Delek has four notes payable (the "Promissory Notes") with various assignees of Alon Israel Oil Company, Ltd., the holder of a predecessor consolidated promissory note, which bear interest at a fixed rate of 5.50 % per annum and which, collectively, require annual principal amortization payments of $ 25.0 million to be made each January through 2020, followed by a final principal amortization payment of $ 20.0 million at maturity on January 4, 2021.

As of June 30, 2020 , a total principal amount of $ 20.0 million was outstanding under the Promissory Notes.

As of September 30, 2020, a total principal amount of $ 20.0 million was outstanding under the Promissory Notes.

Restrictive Covenants

Under the terms of our Revolving Credit Facility, Term Loan Credit Facility, Delek Logistics Credit Facility, Delek Logistics Notes, Reliant Bank Revolver and BHI Agreement, we are required to comply with certain usual and customary financial and non-financial covenants.

The terms and conditions of the Revolving Credit Facility include periodic compliance with a springing minimum fixed charge coverage ratio financial covenant if excess availability under the revolver borrowing base is below certain thresholds, as defined in the credit agreement.

Notes to Condensed Consolidated Financial Statements (Unaudited)

terms and conditions of the Revolving Credit Facility include periodic compliance with a springing minimum fixed charge coverage ratio financial covenant if excess availability under the revolver borrowing base is below certain thresholds, as defined in the credit agreement.

The Term Loan Credit Facility does not have any financial maintenance covenants.

We believe we were in compliance with all covenant requirements under each of our credit facilities as of June 30, 2020 .

We believe we were in compliance with all covenant requirements under each of our credit facilities as of September 30, 2020.

Certain of our debt facilities contain limitations on the incurrence of additional indebtedness, making of investments, creation of liens, dispositions and acquisitions of assets, and making of restricted payments and transactions with affiliates.

1 unchanged sentence

Additionally, some of our debt facilities limit our ability to make investments, including extensions of loans or advances to, or acquisitions of equity interests in, or guarantees of obligations of, certain other entities.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 9 - Derivative Instruments

15 unchanged sentences

Forward contracts entered into for trading purposes that do not meet the normal purchases, normal sales exception are accounted for as derivative instruments at fair value with changes in fair value recognized in earnings in the period of change.

As of June 30, 2020 and December 31, 2019 , and for the three and six months ended June 30, 2020 and June 30, 2019 , all of our forward contracts that were accounted for as derivative instruments primarily consisted of contracts related to our Canadian crude trading operations.

As of September 30, 2020 and December 31, 2019, and for the three and nine months ended September 30, 2020 and September 30, 2019, all of our forward contracts that were accounted for as derivative instruments primarily consisted of contracts related to our Canadian crude trading operations.

Since Canadian crude trading activity is not related to managing supply or pricing risk of the actual inventory that will be used in production, such unrealized and realized gains and losses are recognized in other operating income, net rather than cost of materials and other on the accompanying condensed consolidated statements of income.

3 unchanged sentences

Changes in the fair value of these future RIN commitment contracts are recorded in cost of materials and other on the condensed consolidated statements of income.

As of June 30, 2020 , we do not believe there is any material credit risk with respect to the counterparties to any of our derivative contracts.

As of September 30, 2020, we do not believe there is any material credit risk with respect to the counterparties to any of our derivative contracts.

In accordance with ASC 815, certain of our commodity swap contracts have been designated as cash flow hedges and the change in fair value between the execution date and the end of period has been recorded in other comprehensive income.

The fair value of these contracts is recognized in income in the same financial statement line item as hedged transaction at the time the positions are closed and the hedged transactions are recognized in income.

The following table presents the fair value of our derivative instruments as of June 30, 2020 and December 31, 2019 .

The fair value of these contracts is recognized in income in the same financial statement line item as hedged transaction at the time the positions are closed and

Notes to Condensed Consolidated Financial Statements (Unaudited)

the hedged transactions are recognized in income.

The following table presents the fair value of our derivative instruments as of September 30, 2020 and December 31, 2019.

The fair value amounts below are presented on a gross basis and do not reflect the netting of asset and liability positions permitted under our master netting arrangements, including cash collateral on deposit with our counterparties.

2 unchanged sentences

See Note 10 for further information regarding the fair value of derivative instruments (in millions).

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2020

December 31, 2019

Derivative Type

Balance Sheet Location

September 30, 2020 December 31, 2019

Derivative Type Balance Sheet Location Assets Liabilities Assets Liabilities

Derivatives not designated as hedging instruments:

4 unchanged sentences

Commodity derivatives (1)

Other long-term assets 0.1 — — —

Commodity derivatives (1)

Other long-term liabilities 374.9 ( 376.7 ) 23.4 ( 24.8 )

10 unchanged sentences

Counterparty netting and cash collateral (3)

1,319.6 ( 1,328.7 ) 210.7 ( 249.5 )

Total net fair value of derivatives $ 33.1 $ ( 18.1 ) $ 30.2 $ ( 15.4 )

As of June 30, 2020 and December 31, 2019 , we had open derivative positions representing 289,196,954 and 86,484,065 barrels, respectively, of crude oil and refined petroleum products.

Of these open positions, contracts representing 180,000 and 600,000 barrels were designated as cash flow hedging instruments as of June 30, 2020 and December 31, 2019 , respectively.

Additionally, as of June 30, 2020 and December 31, 2019 , we had open derivative positions representing 50,830,000 and 40,050,000 One Million British Thermal Units, ("MMBTU") of natural gas products, respectively.

As of June 30, 2020 and December 31, 2019 , we had open RIN commitment contracts representing 103,400,000 and 147,000,000 RINs, respectively.

As of June 30, 2020 and December 31, 2019 , $ 11.5 million and $ 38.8 million , respectively, of cash collateral held by counterparties has been netted with the derivatives with each counterparty.

(1) As of September 30, 2020 and December 31, 2019, we had open derivative positions representing 193,693,716 and 86,484,065 barrels, respectively, of crude oil and refined petroleum products.

Of these open positions, contracts representing 90,000 and 600,000 barrels were designated as cash flow hedging instruments as of September 30, 2020 and December 31, 2019, respectively.

Additionally, as of September 30, 2020 and December 31, 2019, we had open derivative positions representing 13,180,000 and 40,050,000 One Million British Thermal Units ("MMBTU") of natural gas products, respectively.

(2) As of September 30, 2020 and December 31, 2019, we had open RIN commitment contracts representing 59,200,000 and 147,000,000 RINs, respectively.

(3) As of September 30, 2020 and December 31, 2019, $ 9.1 million and $ 38.8 million, respectively, of cash collateral held by counterparties has been netted with the derivatives with each counterparty.

Total gains on our hedging derivatives and RIN commitment contracts recorded in the condensed consolidated statements of income are as follows (in millions):

Three Months Ended June 30,

Six Months Ended June 30,

(Losses) gains on commodity derivatives not designated as hedging instruments recognized in cost of materials and other (1)

(Losses) gains on commodity derivatives not designated as hedging instruments recognized in other operating income, net (1) (2)

Realized losses (gains) reclassified out of accumulated other comprehensive income and into cost of materials and other on commodity derivatives designated as cash flow hedging instruments

Total (losses) gains

Gains (losses) on commodity derivatives that are economic hedges but not designated as hedging instruments include unrealized (losses) gains of $( 23.4 ) million and $ 28.6 million for the three and six months ended June 30, 2020 , respectively, and $( 3.6 ) million and $( 30.7 ) million for the three and six months ended June 30, 2019 , respectively.

Of these amounts, approximately $ 33.4 million and $( 0.8 ) million as of June 30, 2020 and June 30, 2019 , respectively, represent unrealized gains (losses) where the instrument has matured but where it has not cash settled as of period end.

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Gains (losses) on commodity derivatives not designated as hedging instruments recognized in cost of materials and other (1)

$ 5.1 $ 34.2 $ ( 85.8 ) $ 118.5

Gains (losses) on commodity derivatives not designated as hedging instruments recognized in other operating income, net (1) (2)

0.1 ( 0.3 ) 7.9 0.2

Realized gains (losses) reclassified out of accumulated other comprehensive income and into cost of materials and other on commodity derivatives designated as cash flow hedging instruments 0.8 ( 21.1 ) 3.7 ( 55.0 )

Total gains (losses) $ 6.0 $ 12.8 $ ( 74.2 ) $ 63.7

(1) Gains (losses) on commodity derivatives that are economic hedges but not designated as hedging instruments include unrealized (losses) gains of $( 19.4 ) million and $ 9.2 million for the three and nine months ended September 30, 2020, respectively, and $ 0.5 million and $( 30.1 ) million for the three and nine months ended September 30, 2019, respectively.

Of these amounts, approximately $ 0.4 million and $( 13.0 ) million as of September 30, 2020 and September 30, 2019, respectively, represent unrealized gains (losses) where the instrument has matured but where it has not cash settled as of period end.

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.

1 unchanged sentence

The effect of cash flow hedge accounting on the condensed consolidated statements of income is as follows (in millions):

Three Months Ended June 30,

Six Months Ended June 30,

Notes to Condensed Consolidated Financial Statements (Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Gain (loss) on cash flow hedging relationships recognized in cost of materials and other:

Commodity contracts:

Hedged items $ ( 0.8 ) $ 21.1 $ ( 3.7 ) $ 55.0

Derivative designated as hedging instruments 0.8 ( 21.1 ) 3.7 ( 55.0 )

Notes to Condensed Consolidated Financial Statements (Unaudited)

For cash flow hedges, no component of the derivative instruments’ gains or losses was excluded from the assessment of hedge effectiveness for the three and six months ended June 30, 2020 or 2019 .

Gains (losses), net of tax, on settled commodity contracts of $ 1.7 and $ 2.3 million during the three and six months ended June 30, 2020 , respectively, and $( 11.7 ) million and $( 26.8 ) million during the three and six months ended June 30, 2019 , respectively, were reclassified into cost of materials and other in the condensed consolidated statements of income.

As of June 30, 2020 , we estimate that $ 1.9 million of deferred gains related to commodity cash flow hedges will be reclassified into cost of materials and other over the next 12 months as a result of hedged transactions that are forecasted to occur.

Total (losses) gains on our trading physical forward contract derivatives (none of which were designated as hedging instruments) recorded in other operating income (expense), net on the condensed consolidated statements of income are as follows (in millions):

Three Months Ended June 30,

Six Months Ended June 30,

Total $ — $ — $ — $ —

For cash flow hedges, no component of the derivative instruments’ gains or losses was excluded from the assessment of hedge effectiveness for the three and nine months ended September 30, 2020 or 2019.

Gains, net of tax, on settled commodity contracts of $ 0.7 and $ 3.0 million during the three and nine months ended September 30, 2020, respectively, and $( 16.6 ) million and $( 43.4 ) million during the three and nine months ended September 30, 2019, respectively, were reclassified into cost of materials and other in the condensed consolidated statements of income.

As of September 30, 2020, we estimate that $ 1.2 million of deferred gains related to commodity cash flow hedges will be reclassified into cost of materials and other over the next 12 months as a result of hedged transactions that are forecasted to occur.

Total (losses) gains on our trading physical forward contract derivatives (none of which were designated as hedging instruments) recorded in other operating loss (income), net on the condensed consolidated statements of income are as follows (in millions):

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Realized (losses) gains

$ ( 0.4 ) $ ( 1.4 ) $ ( 3.4 ) $ 3.3

Unrealized (losses) gains

0.2 4.5 ( 0.5 ) 6.6

Total $ ( 0.2 ) $ 3.1 $ ( 3.9 ) $ 9.9

Note 10 - Fair Value Measurements

7 unchanged sentences

Such investment stores, included in other current assets on the condensed consolidated balance sheets, are maintained on a weighted average cost basis for determining realized gains and losses on physical sales under forward contracts, and ending balances are adjusted to fair value at each reporting date.

The unrealized gain (loss) on commodity investments for the three and six months ended June 30, 2020 totaled $ 8.9 million and $ 1.0 million , respectively, and totaled $( 1.0 ) million and $( 2.0 ) million for the three and six months ended June 30, 2019 , respectively.

The unrealized gain (loss) on commodity investments for the three and nine months ended September 30, 2020 totaled $ 0.1 million and $ 1.0 million, respectively, and totaled $ 0.1 million and $( 1.9 ) million for the three and nine months ended September 30, 2019, respectively.

In April 2020, we entered into a contract with the Department of Energy to deposit one million barrels of crude oil into one of the Strategic Petroleum Reserve ("SPR") storage locations where they will be stored on our behalf until October 2020 for a fee of approximately 100,000 barrels.

1 unchanged sentence

Such asset is, therefore, classified as Level 2.

The unrealized gain on the underlying commodity related to the SPR financial asset for the three and six months ended June 30, 2020 of $9.7 million was recorded in other (income) expense, net.

The unrealized gain

Notes to Condensed Consolidated Financial Statements (Unaudited)

on the underlying commodity related to the SPR financial asset for the three and nine months ended September 30, 2020 of $ 0.9 million and $ 10.6 million was recorded in other (income) expense, net.

Our RIN commitment contracts are future commitments to purchase or sell RINs at fixed prices and quantities, which are used to manage the costs associated with our RINs Obligation.

2 unchanged sentences

The environmental credits obligation surplus or deficit is categorized as Level 2 if measured at fair value either directly through observable inputs or indirectly through market-corroborated inputs.

Notes to Condensed Consolidated Financial Statements (Unaudited)

The fair values of financial instruments are estimated based upon current market conditions and quoted market prices for the same or similar instruments.

Management estimates that the carrying value approximates fair value for all of Delek's assets and liabilities that fall under the scope of ASC 825.

As of and for the six months ended June 30, 2020 and 2019 , we elected to account for our J.

As of and for the nine months ended September 30, 2020 and 2019, we elected to account for our J.

Aron step-out liability at fair value in accordance with ASC 825 , as it pertains to the fair value option.

6 unchanged sentences

Before the January 2020 amendments, we determined the fair value for the fixed price step-out liability based on changes to interest rates reflecting changes to the interest rate risk, with obligation categorized as Level 2.

For all other financial instruments, the fair value approximates the historical or amortized cost basis comprising our carrying value and therefore are not included in the table below.

The fair value hierarchy for our financial assets and liabilities accounted for at fair value on a recurring basis was as follows (in millions):

June 30, 2020

September 30, 2020

Level 1 Level 2 Level 3 Total

Commodity derivatives $ — $ 1,349.8 $ — $ 1,349.8

2 unchanged sentences

RIN commitment contracts — 2.9 — 2.9

1.0 1,389.3 — 1,390.3

Commodity derivatives — ( 1,345.7 ) — ( 1,345.7 )

4 unchanged sentences

Net assets (liabilities) $ 1.0 $ ( 514.3 ) $ — $ ( 513.3 )

Notes to Condensed Consolidated Financial Statements (Unaudited)

December 31, 2019

Level 1 Level 2 Level 3 Total

Commodity derivatives $ — $ 240.3 $ — $ 240.3

2 unchanged sentences

Environmental credits obligation surplus — 16.8 — 16.8

Total assets 12.1 257.7 — 269.8

Commodity derivatives — ( 263.0 ) — ( 263.0 )

4 unchanged sentences

Net assets (liabilities) $ 12.1 $ ( 503.0 ) $ — $ ( 490.9 )

Notes to Condensed Consolidated Financial Statements (Unaudited)

The derivative values above are based on analysis of each contract as the fundamental unit of account as required by ASC 820.

1 unchanged sentence

This differs from the presentation in the financial statements which reflects our policy, wherein we have elected to offset the fair value amounts recognized for multiple derivative instruments executed with the same counterparty and where the legal right of offset exists.

As of June 30, 2020 and December 31, 2019 , $ 11.5 million and $ 38.8 million , respectively, of cash collateral was held by counterparty brokerage firms and has been netted in the financial statements with the net derivative positions with each counterparty.

As of September 30, 2020 and December 31, 2019, $ 9.1 million and $ 38.8 million, respectively, of cash collateral was held by counterparty brokerage firms and has been netted in the financial statements with the net derivative positions with each counterparty.

See Note 9 for further information regarding derivative instruments.

4 unchanged sentences

One of our Alon subsidiaries was the defendant in a legal action related to an easement dispute arising from a purchase of property that occurred in October 2013.

In June 2019, the court found in favor of the plaintiffs and assessed damages against such subsidiary totaling $ 6.7 million , which is included as of June 30, 2020 in accrued expenses and other current liabilities on the accompanying condensed consolidated balance sheet.

In June 2019, the court found in favor of the plaintiffs and assessed damages against such subsidiary, which were reduced in the fourth quarter of 2019 to $ 6.4 million.

Such amount is included as of September 30, 2020 in accrued expenses and other current liabilities on the accompanying condensed consolidated balance sheet.

Self-insurance

5 unchanged sentences

These laws and regulations govern the discharge of materials into the environment, waste management practices, pollution prevention measures and the composition of the fuels we produce, as well as the safe operation of our plants and pipelines and the safety of our workers and the public.

Numerous permits or other authorizations are required under these laws and regulations for the operation of our refineries, renewable fuels facilities, terminals, pipelines, underground storage tanks, trucks, rail cars and related operations, and may be subject to revocation, modification and renewal.

Numerous permits or other authorizations are required under these laws and regulations for the operation of our refineries, renewable fuels facilities, terminals, pipelines, underground

Notes to Condensed Consolidated Financial Statements (Unaudited)

storage tanks, trucks, rail cars and related operations, and may be subject to revocation, modification and renewal.

These laws and permits raise potential exposure to future claims and lawsuits involving environmental and safety matters which could include soil and water contamination, air pollution, personal injury and property damage allegedly caused by substances which we manufactured, handled, used, released or disposed of, transported, or that relate to pre-existing conditions for which we have assumed responsibility.

2 unchanged sentences

While it is often difficult to quantify future environmental or safety related expenditures, we anticipate that continuing capital investments and changes in operating procedures will be required for the foreseeable future to comply with existing and new requirements, as well as evolving interpretations and more strict enforcement of existing laws and regulations.

As of June 30, 2020 , we have recorded an environmental liability of approximately $ 112.9 million , primarily related to the estimated probable costs of remediating or otherwise addressing certain environmental issues of a non-capital nature at our refineries, as well as terminals, some of which we no longer own.

As of September 30, 2020, we have recorded an environmental liability of approximately $ 112.7 million, primarily related to the estimated probable costs of remediating or otherwise addressing certain environmental issues of a non-capital nature at our refineries, as well as terminals, some of which we no longer own.

This liability includes estimated costs for ongoing investigation and remediation efforts for known contamination of soil and groundwater.

1 unchanged sentence

In the future, we could be required to extend the expected remediation period or undertake additional investigations of our refineries, pipelines and terminal facilities, which could result in the recognition of additional remediation liabilities.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Crude Oil and Other Releases

We have experienced several crude oil and other releases involving our assets.

There were no material releases that occurred during the six months ended June 30, 2020 , and five releases that occurred throughout the year 2019.

Cleanup operations and site maintenance and remediation efforts on these and other releases are at various stages of completion.

The majority of the remediation efforts for these releases are substantially complete or have received regulatory closure.

With the exception of the Sulphur Springs release defined below, we expect regulatory closure in 2020 for the release sites that have not yet received it.

On October 3, 2019, a finished product release involving one of our pipelines occurred near Sulphur Springs, Texas (the "Sulphur Springs Release").

Cleanup operations and site maintenance and remediation on this release have been substantially completed where such costs incurred totaled $ 7.1 million during 2019.

During the three and six months ended June 30, 2020 , we incurred approximately $ 0.1 million and $ 0.3 million of additional costs related to final clean-up of this release, respectively.

The release is currently in boom maintenance.

Ground water monitoring wells were installed in the second quarter of 2020.

We expect to conduct quarterly ground water monitoring for at least a year.

Additionally, we will be conducting creek bed sediment sampling in the third quarter of 2020.

We have filed suit in January 2020 against a third party contractor, seeking damages related to this release.

We have not received notification that any legal action with respect to fines and penalties will be pursued by the regulatory agencies.

There were no material releases that occurred during the nine months ended September 30, 2020.

For releases that occurred in prior years, we have received regulatory closure or a majority of the cleanup and remediation efforts are substantially complete.

For the release sites that have not yet received regulatory closure, we expect to receive regulatory closure in late 2020 or 2021 and do not anticipate material costs associated with any fines or penalties or to complete activities that may be needed to achieve regulatory closure.

Expenses incurred for the remediation of these crude oil and other releases are included in operating expenses in our consolidated statements of income.

Letters of Credit

As of June 30, 2020 , we had in place letters of credit totaling approximately $ 204.6 million with various financial institutions securing obligations primarily with respect to our commodity transactions for the refining segment and certain of our insurance programs.

There were no amounts drawn by beneficiaries of these letters of credit at June 30, 2020 .

As of September 30, 2020, we had in place letters of credit totaling approximately $ 227.3 million with various financial institutions securing obligations primarily with respect to our commodity transactions for the refining segment and certain of our insurance programs.

There were no amounts drawn by beneficiaries of these letters of credit at September 30, 2020.

Note 12 - Income Taxes

Under ASC 740, Income Taxes (“ASC 740”) we used an estimated annual tax rate to record income taxes for the three and six months ended June 30, 2020 and June 30, 2019 .

Our effective tax rate was ( 57.3 )% and 36.3 % for the three and six months ended June 30, 2020 , respectively, compared to 22.5 % and 22.8 % for the three and six ended June 30, 2019 , respectively.

Under ASC 740, Income Taxes (“ASC 740”) we used an estimated annual tax rate to record income taxes for the three and nine months ended September 30, 2020 and September 30, 2019.

Our effective tax rate was 16.9 % and 32.0 % for the three and nine months ended September 30, 2020, respectively, compared to 18.3 % and 21.9 % for the three and nine ended September 30, 2019, respectively.

The difference between the effective tax rate and the statutory rate is generally attributable to permanent differences and discrete items.

The change in our effective tax rate for the three and six months ended June 30, 2020 as compared to the three and six months ended June 30, 2019 was primarily due to tax benefit for federal tax credits attributable to the Company’s biodiesel blending operations that were re-enacted in December 2019, reversal of a valuation allowance for deferred tax assets in partnership investments due to changes in the future realizability of deferred tax basis differences, and expected net operating loss carryback provided under the CARES Act which allows the Company to recover federal taxes paid in prior years at a 35% tax rate creating a 14% tax rate benefit.

The change in our effective tax rate for the three and nine months ended September 30, 2020 as compared to the three and nine months ended September 30, 2019 was primarily due to tax benefit for federal tax credits attributable to the Company’s biodiesel blending operations that were re-enacted in December 2019, reversal of a valuation allowance for deferred tax assets in partnership investments due to changes in the future realizability of deferred tax basis differences, and expected net operating loss carryback provided under the CARES Act which allows the Company to recover federal taxes paid in prior years at a 35% tax rate creating a 14% tax rate benefit.

On March 27, 2020, the Coronavirus Aid Relief, and Economic Security Act (the "CARES Act") was enacted into law.

The Act includes several significant provisions for corporations, including the usage of net operating losses, interest deductions and payroll benefits.

The Company recognized $ 16.8 million of current federal income tax benefit for the three and six months ended June 30, 2020 , attributable to anticipated tax refunds from net operating loss carryback to prior 35% tax rate years under the CARES Act.

Additionally, we recorded an income tax receivable totaling $ 193 million as of June 30, 2020 related to the net operating loss carryback, which we expect to collect in the first half of 2021.

The CARES Act includes several significant provisions for corporations, including the usage of net operating losses, interest deductions and payroll benefits.

The Company recognized $ 16.8 million of current federal income tax benefit for the nine months ended September 30, 2020, attributable to anticipated tax refunds from net operating loss carryback to prior 35% tax rate years under the CARES Act.

Additionally, we recorded an federal income tax receivable totaling $ 165.6 million as of September 30, 2020 related to the federal net operating loss carryback.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 13 - Related Party Transactions

1 unchanged sentence

Transactions with our related parties were as follows for the periods presented:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in millions) 2020 2019 2020 2019

$ 27.6 $ 45.1 $ 57.5 $ 73.3

Cost of materials and other (2)

$ 10.9 $ 20.3 $ 31.4 $ 33.7

(1) Consists primarily of asphalt sales which are recorded in corporate, other and eliminations segment.

(2) Consists primarily of pipeline throughput fees paid by the refining segment and asphalt purchases.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 14 - Other Assets and Liabilities

The detail of other current assets is as follows (in millions):

Other Current Assets

June 30, 2020

December 31, 2019

Other Current Assets September 30, 2020 December 31, 2019

RINs assets $ 231.1 $ 14.5

Income and other tax receivables 181.1 61.9

Short-term derivative assets (see Note 9)

Right to receive crude oil barrels (see Note 10) 36.6 —

Short-term derivative assets (see Note 9) 33.0 30.2

Prepaid expenses 19.2 21.9

2 unchanged sentences

Investment commodities 1.0 12.1

Other 3.4 13.8

Total $ 515.9 $ 268.7

The detail of other non-current assets is as follows (in millions):

Other Non-Current Assets

June 30, 2020

December 31, 2019

Other Non-Current Assets September 30, 2020 December 31, 2019

Supply and Offtake receivable $ 32.7 $ 32.7

1 unchanged sentence

Deferred financing costs 7.3 8.5

Long-term derivative assets (see Note 9)

Other 18.1 17.7

Total $ 68.5 $ 67.8

Notes to Condensed Consolidated Financial Statements (Unaudited)

The detail of accrued expenses and other current liabilities is as follows (in millions):

Accrued Expenses and Other Current Liabilities

June 30, 2020

December 31, 2019

Income and other taxes payable

Accrued Expenses and Other Current Liabilities September 30, 2020 December 31, 2019

Environmental Credits Obligation deficit (see Note 10) $ 237.6 $ 18.5

Product financing agreements 168.5 21.1

Income and other taxes payable 88.3 119.6

Crude purchase liabilities 74.3 72.1

Environmental Credits Obligation deficit (see Note 10)

Short-term derivative liabilities (see Note 9)

Employee costs 23.8 47.6

Environmental liabilities (see Note 11)

Short-term derivative liabilities (see Note 9) 16.3 14.1

Interest payable 9.6 8.8

Tank inspection liabilities

Environmental liabilities (see Note 11) 6.6 8.2

Accrued utilities 3.7 4.4

Notes to Condensed Consolidated Financial Statements (Unaudited)

Tank inspection liabilities 3.1 5.6

Other 25.3 26.8

Total $ 657.1 $ 346.8

The detail of other non-current liabilities is as follows (in millions):

Other Non-Current Liabilities

June 30, 2020

December 31, 2019

Other Non-Current Liabilities September 30, 2020 December 31, 2019

Liability for unrecognized tax benefits $ 15.2 $ 12.1

2 unchanged sentences

Long-term derivative liabilities (see Note 9) 1.8 1.4

Deferred payroll taxes 7.8 —

Other 0.1 2.2

Total $ 37.4 $ 30.9

Note 15 - Equity-Based Compensation

4 unchanged sentences

2016 Long-Term Incentive Plan that increased the number of shares of Common Stock available for issuance under this plan by 2,120,000 shares to 11,020,000 shares.

Compensation expense related to equity-based awards granted under the Incentive Plans amounted to $ 5.0 million and $ 10.9 million for the three and six months ended June 30, 2020 , respectively, and $ 6.6 million and $ 11.4 million for the three and six months ended June 30, 2019 , respectively.

Compensation expense related to equity-based awards granted under the Incentive Plans amounted to $ 6.6 million and $ 17.4 million for the three and nine months ended September 30, 2020, respectively, and $ 7.3 million and $ 18.7 million for the three and nine months ended September 30, 2019, respectively.

These amounts are included in general and administrative expenses in the accompanying condensed consolidated statements of income.

As of June 30, 2020 , there was $ 48.2 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements, which is expected to be recognized over a weighted-average period of 2.1 years.

We issued net shares of common stock of 143,044 and 246,463 as a result of exercised or vested equity-based awards during the three and six months ended June 30, 2020 , respectively, and 139,057 and 383,623 for the three and six months ended June 30, 2019 , respectively.

These amounts are net of 68,944 and 130,449 shares withheld to satisfy employee tax obligations related to the exercises and vestings during the three and six months ended June 30, 2020 , respectively, and 153,940 and 324,076 for the three and six months ended June 30, 2019 , respectively.

As of September 30, 2020, there was $ 42.2 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements, which is expected to be recognized over a weighted-average period of 1.8 years.

We issued net shares of common stock of 68,265 and 314,204 as a result of exercised or vested equity-based awards during the three and nine months ended September 30, 2020, respectively, and 78,695 and 462,318 for the three and nine months ended September 30, 2019, respectively.

These amounts are net of 31,020 and 161,469 shares withheld to satisfy employee tax obligations related to the exercises and vesting during the three and nine months ended September 30, 2020, respectively, and 146,148 and 470,232 for the three and nine months ended September 30, 2019, respectively.

Delek Logistics GP, LLC 2012 Long-Term Incentive Plan

1 unchanged sentence

The LTIP is administered by the Conflicts Committee of the board of directors of Delek Logistics' general partner.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 16 - Shareholders' Equity

During the six months ended June 30, 2020 , our Board of Directors declared the following dividends:

Approval Date

Dividend Amount Per Share

February 24, 2020

March 10, 2020

March 24, 2020

During the nine months ended September 30, 2020, our Board of Directors declared the following dividends:

Approval Date Dividend Amount Per Share Record Date Payment Date

February 24, 2020 $ 0.31 March 10, 2020 March 24, 2020

May 4, 2020 $ 0.31 May 20, 2020 June 3, 2020

August 3, 2020 $ 0.31 August 19, 2020 September 3, 2020

Stock Repurchase Program

3 unchanged sentences

The repurchase program does not obligate us to acquire any particular amount of stock and does not expire.

During the six months ended June 30, 2020 , 58,713 shares of our common stock were repurchased for a total of $ 1.9 million .

No repurchases of our common stock were made in the three months

Notes to Condensed Consolidated Financial Statements (Unaudited)

ended June 30, 2020 .

During the three and six months ended June 30, 2019 , we repurchased 1,647,078 and 2,938,722 shares of our common stock for a total of $ 58.6 million and $ 104.8 million , respectively.

As of June 30, 2020 , there was $ 229.7 million of authorization remaining under Delek's aggregate stock repurchase program.

During the nine months ended September 30, 2020, 58,713 shares of our common stock were repurchased for a total of $ 1.9 million.

No repurchases of our common stock were made in the three months ended September 30, 2020.

During the three and nine months ended September 30, 2019, we repurchased 1,236,854 and 4,175,576 shares of our common stock for a total of $ 43.0 million and $ 147.8 million, respectively.

As of September 30, 2020, there was $ 229.7 million of authorization remaining under Delek's aggregate stock repurchase program.

Stockholder Rights Plan

13 unchanged sentences

On March 20, 2020, our Board of Directors authorized 1,000,000 shares of preferred stock with a par value of $ 0.01 per share as Series A Junior Participating Preferred Stock.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 17 - Employees

Postretirement Benefits

The net periodic (benefit) cost for our postretirement benefit plans was not material for the three and six months ended June 30, 2020 or 2019 .

The net periodic (benefit) cost for our postretirement benefit plans was not material for the three and nine months ended September 30, 2020 or 2019.

Additionally, our estimated contributions to our pension plans during 2020 have not changed significantly from amounts previously disclosed in the notes to the consolidated financial statements for the year ended December 31, 2019.

11 unchanged sentences

Our sublease portfolio consists primarily of operating leases within our retail stores and crude storage equipment.

As of June 30, 2020 , $ 27.3 million of our net property, plant, and equipment balance is subject to an operating lease.

As of September 30, 2020, $ 26.8 million of our net property, plant, and equipment balance is subject to an operating lease.

This agreement does not include options for the lessee to purchase our leasing equipment, nor does it include any material residual value guarantees or material restrictive covenants.

The agreement includes a one-year renewal option and certain variable payment based on usage.

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table presents additional information related to our operating leases in accordance ASC 842, Leases ("ASC 842"):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in millions) 2020 2019 2020 2019

1 unchanged sentence

Short-term lease costs (1)

5.4 4.0 19.1 11.3

Sublease income ( 1.8 ) ( 1.9 ) ( 5.7 ) ( 6.4 )

4 unchanged sentences

Leased assets obtained in exchange for new operating lease liabilities $ 8.5 $ 1.5 $ 30.7 $ 9.6

June 30, 2020

September 30, 2020

Weighted-average remaining lease term (years) operating leases 6.1

3 unchanged sentences

Note 19 - Subsequent Events

Dividend Declaration

On August 3, 2020 , our Board of Directors voted to declare a quarterly cash dividend of $ 0.31 per share of our common stock, payable on September 3, 2020 to shareholders of record on August 19, 2020 .

Dividend Suspension

We have elected to suspend dividends beginning in the fourth quarter of 2020 in order to conserve capital.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Supply and Offtake Agreements

Pursuant to the Supply and Offtake Agreements' Periodic Price Adjustment provision, we determined that the provision was triggered on October 1, 2020 and a paydown amounting to $ 20.8 million was made to J.

Aron on October 30, 2020.

The prospective pricing underlying the fixed component of the Baseline Step-Out liabilities will be adjusted accordingly to reflect this payment, resulting in a reduction to the fixed differential component of our long-term Supply and Offtake Obligation totaling $ 20.8 million and a prospective contractual reset of the fixed differentials subject to future Periodic Price Adjustments.

Contemporaneous with the payment, J.

Aron separately refunded to us the $ 10.0 million of deferred additional monthly fees.

Management's Discussion and Analysis

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements