What changed in this filing

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Item 9A. Controls and Procedures

2021-03-01 compared with 2020-02-28 · 879 added, 1056 removed, 1517 unchanged (56% of the section changed)

10 unchanged sentences

• Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

Controls and Procedures, and Other Information

• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that receipts and expenditures recorded by us are being made only in accordance with authorizations of our management and Board of Directors;

12 unchanged sentences

OTHER INFORMATION

Dividend Declaration

On February 24, 2020 , Delek's Board of Directors voted to declare a quarterly cash dividend of $0.31 per share, payable on March 24, 2020 , to stockholders of record on March 10, 2020 .

Directors, Executive Officers, Corporate Governance and Security Ownership

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Our Board Governance Guidelines, our charters for our Audit, Compensation, Nominating and Corporate Governance and Environmental, Health and Safety Committees and our Code of Business Conduct & Ethics covering all employees, including our principal executive officer, principal financial officer, principal accounting officer and controllers, are available on our website, www.DelekUS.com, under the "About Us - Corporate Governance" caption.

A print copy of any of these documents will be mailed upon a written request made by a stockholder to the Secretary, Delek US Holdings, Inc.

Our Board of Directors Governance Guidelines, our charters for our Audit, Compensation, Nominating and Corporate Governance and Environmental, Health and Safety Committees and our Code of Business Conduct & Ethics covering all employees, including our principal executive officer, principal financial officer, principal accounting officer and controllers, are available on our website, www.DelekUS.com, under the "About Us - Corporate Governance" caption.

A print copy of any of these documents will be mailed upon a written request made by a stockholder to the Corporate Secretary, Delek US Holdings, Inc.

7102 Commerce Way, Brentwood, Tennessee 37027.

We intend to disclose any amendments to or waivers of the Code of Business Conduct & Ethics on behalf of our Chief Executive Officer, Chief Financial Officer and persons performing similar functions on our website, at www.DelekUS.com, under the "Investor Relations" caption, promptly following the date of any such amendment or waiver.

The information required by Item 401 of Regulation S-K regarding directors will be included under "Election of Directors" in the definitive Proxy Statement for our Annual Meeting of Stockholders to be held May 5, 2020 (the "Definitive Proxy Statement"), and is incorporated herein by reference.

The information required by Item 401 of Regulation S-K regarding directors will be included under "Election of Directors" in the definitive Proxy Statement for our Annual Meeting of Stockholders expected to be held May 6, 2021 (the "Definitive Proxy Statement"), and is incorporated herein by reference.

The information required by Item 401 of Regulation S-K regarding executive officers will be included under "Corporate Governance" in the Definitive Proxy Statement and is incorporated herein by reference.

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EXHIBIT INDEX

Stock Purchase Agreement between Alon Israel Oil Company, LTD, and Delek US Holdings, Inc., dated April 14, 2015 (incorporated by reference to Exhibit 99.3 to the Schedule 13D filed by the Company on May 26, 2015).

Equity Purchase Agreement dated August 27, 2016 by and between Delek US Holdings, Inc., Copec Inc.

and Compañía de Petróleos de Chile COPEC S.A.

(incorporated by reference to Exhibit 2.1 to the Company's Form 8-K filed on September 1, 2016).

< Agreement and Plan of Merger dated as of January 2, 2017, among Delek US Holdings, Inc., Delek Holdco, Inc., Dione Mergeco, Inc., Astro Mergeco, Inc.

6 unchanged sentences

Agreement and Plan of Merger dated as of November 8, 2017, among Delek US Holdings, Inc., Sugarland Mergeco, LLC, Alon USA Partners, LP, and Alon USA Partners GP, LLC (incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K filed on November 9, 2017).

Asset Purchase Agreement, dated as of February 26, 2018, by and among DKL Big Spring, LLC, Delek US Holdings, Inc., Alon USA Partners, LP, Alon USA GP II, Alon USA Delaware, LLC, Alon USA Refining, LLC, and Alon USA, LP (incorporated by reference herein to Exhibit 2.1 to the Company's Current Report on Form 8-K filed on March 2, 2018, File No.

Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q filed on May 9, 2019).

Amended and Restated Certificate of Incorporation, as amended by that certain Certificate of Designations of Series A Junior Participating Preferred Stock of Delek US Holdings, Inc., dated March 23, 2020 (incorporated by reference to Exhibit 3.1 of the Company’s Form 10-Q filed on May 8, 2020).

Amended and Restated Bylaws of Delek US Holdings, Inc.

(incorporated by reference to Exhibit 3.3 of the Company’s Form 8-K filed on July 3, 2017).

(incorporated by reference to Exhibit 3.2 of the Company’s Form 10-Q filed on May 8, 2020).

Indenture, dated as of May 23, 2017, among Delek Logistics, LP, Delek Logistics Finance Corp., the Guarantors named therein and U.S.

21 unchanged sentences

and Delek Crude Logistics, LLC (incorporated by reference to Exhibit 10.4 to the Company's Form 8-K filed on November 14, 2012, SEC File No.

Financial Statements and Schedules

Pipelines and Storage Facilities Agreement, dated November 7, 2012, by and among Lion Oil Company, Delek Logistics Partners, LP, SALA Gathering Systems, LLC, El Dorado Pipeline Company, LLC, Magnolia Pipeline Company, LLC and J.

Aron & Company (incorporated by reference to Exhibit 10.5 to the Company's Form 8-K filed on November 14, 2012, SEC File No.

Second Amended and Restated Master Supply and Offtake Agreement dated February 27, 2017 among J.

Aron & Company, Lion Oil Company, and Lion Oil Trading & Transportation, LLC (incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q filed on May 9, 2017).

Amendment to Second Amended and Restated Master Supply and Offtake Agreement dated January 3, 2019 among J.

Aron & Company, Lion Oil Company, and Lion Oil Trading & Transportation, LLC (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on May 9, 2019).

Amendment to Second Amended and Restated Supply and Offtake Agreement dated September 19, 2019, by and between Lion Oil Company and J.

Aron & Company LLC (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q filed on November 8, 2019).

El Dorado Throughput and Tankage Agreement, executed as of February 10, 2014, between Lion Oil Company and Delek Logistics Operating LLC, and, for limited purposes, J.

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Aron & Company (incorporated by reference to Exhibit 10.4 to the Company's Form 10-Q filed on August 5, 2016).

Financial Statements and Schedules

Third Amended and Restated Omnibus Agreement, dated as of March 31, 2015, among Delek US Holdings, Inc., Lion Oil Company, Delek Logistics Operating, LLC, Delek Marketing & Supply, LP, Delek Refining, Ltd., Delek Logistics Partners, LP, Paline Pipeline Company, LLC, SALA Gathering Systems, LLC, Magnolia Pipeline Company, LLC, El Dorado Pipeline Company, LLC, Delek Crude Logistics, LLC, Delek Marketing-Big Sandy, LLC, DKL Transportation, LLC and Delek Logistics GP, LLC (incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q filed on May 7, 2015).

First Amendment to Third Amended and Restated Omnibus Agreement, dated as of August 3, 2015, by and among Delek US Holdings, Inc., Lion Oil Company, Delek Logistics Operating, LLC, Delek Marketing & Supply, LP, Delek Refining, Ltd., Delek Logistics Partners, LP, Paline Pipeline Company, LLC, SALA Gathering Systems, LLC, Magnolia Pipeline Company, LLC, El Dorado Pipeline Company, LLC, Delek Crude Logistics, LLC, Delek Marketing-Big Sandy, LLC, DKL Transportation, LLC and Delek Logistics GP, LLC (incorporated by reference to Exhibit 10.5 to the Company's Form 10-Q filed on August 5, 2015).

Second Amendment and Restatement of Schedules to Third Amended and Restated Omnibus Agreement, dated and effective as of March 31, 2020 (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed on April 6, 2020).

Third Amendment and Restatement of Schedules to Third Amended and Restated Omnibus Agreement, dated and effective as of May 15, 2020 (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed on May 18, 2020).

* Delek US Holdings, Inc.

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2016 Long-Term Incentive Plan, effective May 8, 2018 (incorporated by reference to Exhibit 10.2 to the Company's Registration Statement on Form S-8 filed on May 31, 2018).

* Second Amendment to the Delek US Holdings, Inc.

2016 Long-Term Incentive Plan, effective May 5, 2020 (incorporated by reference to Exhibit 10.3 to the Company's Form 10-Q filed on May 8, 2020).

* General Terms and Conditions for Restricted Stock Unit Awards to Executive Officers and Directors under the 2016 Delek US Holdings, Inc.

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2005 Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to Alon USA Energy, Inc.’s Form 8-K filed on March 12, 2007, SEC File No.

Financial Statements and Schedules

* Form of Amendment to Appreciation Rights Award Agreement relating to Participant Grants pursuant to Section 7 of the Alon USA Energy, Inc.

2 unchanged sentences

2005 Amended and Restated Incentive Compensation Plan (incorporated by reference to Exhibit 10.2 to Alon USA Energy, Inc.’s Form 8-K filed on May 9, 2011, SEC File No.

Second Amended and Restated Supply and Offtake Agreement dated February 1, 2015 by and between Alon Refining Krotz Springs, Inc.

Aron & Company (incorporated by reference to Exhibit 10.3 to Alon USA Energy, Inc.’s Form 10-Q filed on May 8, 2015, SEC File No.

Amendment to Second Amended and Restated Supply and Offtake Agreement dated as of January 13, 2017 between Alon Refining Krotz Springs, Inc.

Aron & Company (incorporated by reference to Exhibit 10.53 to Alon USA Energy, Inc.’s Form 10-K filed on February 27, 2017, SEC File No.

Amendment to Second Amended and Restated Supply and Offtake Agreement dated January 2, 2019 by and between Alon Refining Krotz Springs, Inc.

Aron & Company (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on May 9, 2019).

Amendment to Second Amended and Restated Supply and Offtake Agreement dated September 19, 2019, by and between Alon Refining Krotz Springs, Inc.

Aron & Company LLC (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on November 8, 2019).

Second Amended and Restated Supply and Offtake Agreement by and between Alon USA, LP and J.

Aron & Company dated February 1, 2015 (incorporated by reference to Exhibit 10.1 to Alon USA Energy, Inc.’s Form 10-Q filed on May 8, 2015, SEC File No.

Amendment No.

4 to Second Amended and Restated Supply and Offtake Agreement dated December 26, 2018 by and between Alon USA, LP and J.

Aron & Company (incorporated by reference to Exhibit 10.21(b) to the Company’s Annual Report on Form 10-K filed on March 1, 2019).

Amendment to Second Amended and Restated Supply and Offtake Agreement dated September 19, 2019, by and between Alon USA, LP and J.

Aron & Company LLC (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed on November 8, 2019).

Amended and Restated Supply and Offtake Agreement by and between J.

Aron & Company and Alon Supply, Inc., dated February 1, 2015 (incorporated by reference to Exhibit 10.2 to Alon USA Energy, Inc.’s Form 10-Q filed on May 8, 2015, SEC File No.

Executive Employment Agreement, effective November 1, 2017, by and between Delek US Holdings, Inc.

and Ezra Uzi Yemin (incorporated by reference to Exhibit 10.3 to the Company's Form 10-Q filed on November 9, 2017).

Executive Employment Agreement, effective November 1, 2016, by and between Delek US Holdings, Inc.

and Frederec C.

Green (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on November 17, 2016).

Employment Agreement, effective November 1, 2016, by and between Delek US Holdings, Inc.

and Avigal Soreq (incorporated by reference to Exhibit 10.39 to the Company's Form 10-K filed on February 28, 2017).

Employment Agreement, effective June 1, 2017, by and between Delek US Holdings, Inc.

and Assaf Ginzburg (incorporated by reference to Exhibit 10.2 to the Company's Form 10-Q filed on November 3, 2016).

Executive Employment Agreement, effective May 21, 2018, by and between Delek US Holdings, Inc.

and Regina Bynote Jones (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on May 25, 2018) .

* Amended and Restated Executive Employment Agreement, dated as of May 8, 2020, by and between Delek US Holdings, Inc.

and Ezra Uzi Yemin (incorporated by reference to Exhibit 10.4 to the Company’s Form 10-Q filed on May 8, 2020).

* Amended and Restated Executive Employment Agreement, dated April 6, 2020, between Delek US Holdings, Inc.

and Avigal Soreq (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on April 9, 2020).

* Executive Employment Agreement, effective August 6, 2018, by and between Delek US, Energy, Inc.

and Louis LaBella (incorporated by reference to Exhibit 10.38 to the Company's Form 10-K filed on March 1, 2019).

Financial Statements and Schedules

* Offer Letter, dated April 6, 2020, between Delek US Holdings, Inc.

and Reuven Spiegel (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on April 9, 2020).

* Executive Employment Agreement, dated August 1, 2020, by and between Delek US Holdings, Inc.

and Reuven Spiegel (incorporated by reference to Exhibit 10.5 of the Company’s Form 10-Q filed on August 7, 2020).

Pipelines, Storage and Throughput Facilities Agreement (Big Spring Refinery Logistics Assets and Duncan Terminal), dated March 20, 2018 and effective as of March 1, 2018, by and among Alon USA, LP, DKL Big Spring, LLC, for the limited purposes specified therein, Delek US, and for the limited purposes specified therein, J.

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Marketing Agreement, dated as of March 20, 2018 and effective as of March 1, 2018, by and among Alon USA, LP, DKL Big Spring, LLC, and for the limited purposes specified therein, Delek US (incorporated by reference to Exhibit 10.3 to the Company's Form 8-K filed on March 26, 2018).

Financial Statements and Schedules

Amendment and Restatement of Schedules to Third Amended and Restated Omnibus Agreement, dated March 20, 2018 and effective as of March 1, 2018, by and among Delek US Energy, Inc.

(f/k/a Delek US Holdings, Inc.), Delek Refining, Ltd., Lion Oil Company, Delek Logistics Partners, LP, Paline Pipeline Company, LLC, SALA Gathering Systems, LLC, Magnolia Pipeline Company, LLC, El Dorado Pipeline Company, LLC, Delek Crude Logistics, LLC, Delek Marketing-Big Sandy, LLC, Delek Marketing & Supply, LP, DKL Transportation, LLC, Delek Logistics Operating, LLC, Delek US Holdings, Inc.

(f/k/a Delek Holdco, Inc.), Alon USA Partners, LP, Alon USA GP II, LLC, Alon USA Delaware, LLC,Alon USA Refining, LLC, Alon USA, LP, Alon Paramount Holdings, Inc., DKL Big Spring, LLC, and Delek Logistics GP, LLC (incorporated by reference to Exhibit 10.4 to the Company's Form 8-K filed on March 26, 2018).

Term Loan Credit Agreement, dated as of March 30, 2018, by and among Delek US Holdings, Inc., as borrower, the lenders from time to time party thereto, Wells Fargo Bank, National Association, as administrative agent for each member of the Lender Group, Wells Fargo Securities, LLC, Barclays Bank PLC, SunTrust Robinson Humphrey, Inc., and Regions Capital Markets, a division of Regions Bank, each as a joint lead arranger and joint bookrunner, and The Bank of Tokyo-Mitsubishi, Ltd., Credit Suisse Securities (USA) LLC, PNC Capital Markets LLC and Fifth Third Bank, each as a co-manager (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on April 5, 2018).

First Incremental Amendment to Term Loan Credit Agreement, dated as of May 22, 2019, by and among Delek US Holdings, Inc., as borrower, the guarantors party thereto, the lenders party thereto, and Wells Fargo Bank, National Association, as administrative agent (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on May 29, 2019).

Second Incremental Amendment to Term Loan Credit Agreement, dated as of November 12, 2019, by and among Delek US Holdings, Inc., as borrower, the guarantors party thereto, the lenders party thereto, and Wells Fargo Bank, National Association, as administrative agent (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on November 15, 2019).

Amendment No.

1 to Term Loan Credit Agreement, dated as of October 26, 2018 by and among Delek US Holdings, Inc., as borrower, the guarantors thereto, the lenders from time to time party thereto and Wells Fargo Bank, National Association, as administrative agent LLC (incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q filed on November 8, 2019).

Third Incremental Amendment to Term Loan Credit Agreement, dated as of May 19, 2020, among Delek US Holdings, Inc., as borrower, the guarantors party thereto, the lenders party thereto, and Wells Fargo Bank, National Association, as administrative agent (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on May 21, 2020).

Second Amended and Restated Credit Agreement, dated as of March 30, 2018, by and among Delek US Holdings, Inc., as borrower, the lenders from time to time party thereto, Wells Fargo Bank, National Association, as administrative agent for each member of the Lender Group and the Bank Product Providers, the Subsidiaries of Delek US Holdings, Inc.

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Second Amendment to Second Amended and Restated Credit Agreement, dated as of July 13, 2018, by and among Delek US Holdings, Inc., as borrower, Wells Fargo Bank, National Association, as administrative agent for each member of the Lender Group and the Bank Product Providers and the lenders from time to time party thereto (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on November 8, 2019).

Third Amendment to Second Amended and Restated Credit Agreement, dated October 18, 2019 (incorporated by reference to Exhibit 10.31 of the Company’s Form 10-K filed on February 28, 2020).

Fourth Amendment to Second Amended and Restated Credit Agreement, dated December 18, 2019 (incorporated by reference to Exhibit 10.32 of the Company’s Form 10-K filed on February 28, 2020).

Third Amended and Restated Limited Liability Company Agreement of Wink to Webster Pipeline LLC, a Delaware limited liability company, dated as of July 30, 2019, by and among Delek US Energy, Inc., ExxonMobil Permian Logistics LLC, Plains Pipeline, L.P., MPLX W2W Pipeline Holdings, LLC, Centurion Permian Logistics, LLC, and Rattler Midstream Operating LLC (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on August 5, 2019) .

J Aron Amendment Early Termination Election, dated November 7, 2019.

Third Amendment to Second Amended and Restated Credit Agreement, dated October 18, 2019.

Forth Amendment to Second Amended and Restated Credit Agreement, dated December 18, 2019.

Financial Statements and Schedules

Throughput and Deficiency Agreement, dated and effective as of March 31, 2020, by and between Lion Oil Trading & Transportation, LLC and DKL Permian Gathering, LLC (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on April 6, 2020).

Transportation Services Agreement, dated May 15, 2020 and effective as of May 1, 2020, between Delek Refining, Ltd., Lion Oil Company and DKL Transportation, LLC (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on May 18, 2020).

Third Amended and Restated Supply and Offtake Agreement, dated as of April 7, 2020, between J.

Aron & Company LLC and Alon Refining Krotz Springs, Inc.

(incorporated by reference to Exhibit 10.9 of the Company’s Form 10-Q filed on August 7, 2020).

Third Amended and Restated Master Supply and Offtake Agreement, dated as of April 7, 2020, among J.

Aron & Company LLC, Lion Oil Company and Lion Oil Trading & Transportation, LLC (incorporated by reference to Exhibit 10.10 of the Company’s Form 10-Q filed on August 7, 2020).

# Letter Agreement, dated as of December 21, 2020 by and between J.

Aron & Company LLC, Lion Oil Company, and Lion Oil Trading & Transportation, LLC.

Third Amended and Restated Supply and Offtake Agreement, dated as of April 7, 2020, between J.

Aron & Company LLC and Alon USA, LP (incorporated by reference to Exhibit 10.11 of the Company’s Form 10-Q filed on August 7, 2020)

Exchange Agreement, dated as of August 13, 2020, among Delek Logistics Partners, LP, Delek Logistics GP, LLC, and Delek US Holdings, Inc.

(incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on August 14, 2020).

* Letter Agreement, dated as of August 13, 2020, between Delek Logistics GP, LLC and Ezra Uzi Yemin (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed on August 14, 2020).

* Letter Agreement, dated as of August 13, 2020, between Delek Logistics GP, LLC and Frederec Green (incorporated by reference to Exhibit 10.3 of the Company’s Form 8-K filed on August 14, 2020).

* # Consulting Agreement, dated as of November 3, 2020, by and between Delek US Holdings, Inc.

and Frederec Green.

# Subsidiaries of the Registrant.

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Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Financial Statements and Schedules

## Certification of the Company's Chief Financial Officer pursuant to 18 U.S.C.

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generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 27, 2020 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 1, 2021 expressed an unqualified opinion thereon.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Financial Statements and Schedules

Goodwill Impairment Assessment

Description of the Matter

At December 31, 2019, the Company’s goodwill was $855.7 million and represented approximately 12% of total assets, of which $801.3 million was associated with the refining segment.

As discussed in Notes 2 and 18 of the consolidated financial statements, goodwill is tested for impairment at least annually at the reporting unit level, or more frequently if events or changes in circumstances indicate the goodwill might be impaired.

The Company performs its annual goodwill impairment testing in the fourth quarter of each year.

Auditing management’s annual goodwill impairment test for the reporting units within the refining segment requires significant judgment, as the valuation includes subjective estimates and assumptions in estimating the fair value.

In particular, the fair value estimates are sensitive to significant assumptions, such as forecasted gross margins and the weighted average cost of capital.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls relating to the valuation of the Company’s goodwill.

For example, we tested controls over management’s review of the discounted cash flow calculation, the prospective financial data, and the valuation assumptions.

To test the estimated fair value of the Company’s reporting units within the refining segment, our audit procedures included, among others, assessing the valuation methodology applied, performing recalculations, and testing the significant assumptions discussed above and the underlying data used by the Company.

We compared the significant assumptions in the prospective financial data used by management to current industry and economic trends and historical performance.

We performed sensitivity analyses of certain significant assumptions to evaluate the change in the fair value resulting from changes in the assumptions, as well as a hindsight analysis.

In addition, we involved our valuation specialists to assist in evaluating the fair value methodology and testing the related assumptions that are most significant to the fair value estimates, as well as the market capitalization reconciliation.

Environmental Liabilities

Description of the Matter

As described in Notes 2 and 14 of the consolidated financial statements, the Company accrues environmental remediation costs when it is both probable that a liability has been incurred and the amount can be reasonably estimated.

At December 31, 2019, the Company accrued a liability of $146.1 million, representing management’s best estimate of the expected costs related to environmental liabilities.

Auditing the Company’s environmental liabilities requires significant judgment due to the inherent complexity in estimating the likelihood, timing and amount of future costs.

This required us to make highly subjective auditor judgments as estimates are based on management’s assessment of the extent of contamination, the selected remediation methodology and applicable environmental regulations.

Such estimates require management to adjust its accruals as further information develops or circumstances change and includes significant judgment with respect to costs, time frame of remediation and monitoring activities, and extent of required remedial and clean-up activities.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s environmental liability cost estimation and review process, including controls over management’s review of the significant assumptions relating to costs, time frame and extent of required remedial and clean-up activities.

To test the environmental liabilities, our audit procedures included, among others, evaluating the nature of contamination and the status of remediation including reviewing publicly available remediation data and through inquiries of the Company’s management.

We utilized our environmental specialists to evaluate the reasonableness of management’s assessment of the extent of contamination, the selected remediation methodology and applicable environmental regulations.

Our specialists also reviewed key assumptions used in the valuation of the environmental liabilities, including costs, time frame and extent of required remedial, clean-up and on-going monitoring activities in management’s analysis, including adjustments or lack thereof in the related cost estimates.

Valuation of Goodwill

Description of the Matter At December 31, 2020, the Company’s goodwill was $729.7 million and represented approximately 11% of total assets.

As discussed in Notes 2 and 18 of the consolidated financial statements, goodwill is reviewed at the reporting unit level for impairment at least annually or more frequently if events or changes in circumstances indicate the goodwill might be impaired.

The Company performs its annual goodwill impairment assessment in the fourth quarter of each year.

The Company evaluates the recoverability of goodwill by comparing the carrying amount of each reporting unit to its estimated fair value.

The estimated fair value of each reporting unit is determined using a combination of a discounted cash flow analysis based upon projected financial information and a multiple of expected future cash flows, such as those used by third-party analysts.

During 2020, the Company recorded a goodwill impairment charge of $126 million for certain reporting units within the Refining segment.

Auditing management’s annual goodwill impairment analysis for reporting units within the Refining segment requires significant judgment, as the valuation includes subjective estimates and assumptions in determining the estimated fair value of the reporting units.

In particular, the discounted cash flow analysis is sensitive to significant assumptions such as the weighted average cost of capital and the estimate of future cash flows including the related gross margin and long-term growth rate.

The market approach involves significant judgment involved in the selection of the appropriate peer group companies and valuation multiples.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls relating to the valuation of the reporting units within the Refining Segment in the goodwill impairment analysis process.

For example, we tested controls over management’s review of the discounted cash flow analysis, the projected financial information, and the valuation assumptions.

To test the estimated fair value of the Company’s reporting units within the Refining segment, our audit procedures included, among others, assessing valuation methodologies, performing recalculations, and testing the significant assumptions discussed above and the underlying data used by the Company.

We compared the significant assumptions in the prospective financial data used by management to current industry and economic trends, analysts’ expectations, historical performance, and other relevant factors.

We performed sensitivity analyses of significant assumptions to evaluate the change in the fair value of the reporting units resulting from changes in the significant assumptions.

We also involved our valuation specialists to assist in evaluating the fair value methodologies, assessing the market multiples by comparison to the appropriate peer group companies, and testing the related components and assumptions that are most significant to the fair value estimates.

/s/ Ernst & Young LLP

1 unchanged sentence

Nashville, Tennessee

February 27, 2020

March 1, 2021

Financial Statements and Schedules

7 unchanged sentences

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of Delek US Holdings, Inc.

as of December 31, 2019 and 2018, the related consolidated statements of income, comprehensive income, changes in stockholders' equity and cash flows for each of the three years in the period ended December 31, 2019, and the related notes, and our report dated February 27, 2020 expressed an unqualified opinion thereon.

as of December 31, 2020 and 2019, the related consolidated statements of income, comprehensive income, changes in stockholders' equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes, and our report dated March 1, 2021 expressed an unqualified opinion thereon.

Basis for Opinion

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Nashville, Tennessee

February 27, 2020

March 1, 2021

Financial Statements and Schedules

13 unchanged sentences

Operating lease right-of-use assets 182.0 183.6

Goodwill 729.7 855.7

Other intangibles, net 107.8 110.3

1 unchanged sentence

Other non-current assets 84.3 67.8

Total assets $ 6,134.1 $ 7,016.3

LIABILITIES AND STOCKHOLDERS’ EQUITY

17 unchanged sentences

Preferred stock, $ 0.01 par value, 10,000,000 shares authorized, no shares issued and outstanding

Common stock, $0.01 par value, 110,000,000 shares authorized, 90,987,025 shares and 90,478,075 shares issued at December 31, 2019 and December 31, 2018, respectively

Common stock, $ 0.01 par value, 110,000,000 shares authorized, 91,356,868 shares and 90,987,025 shares issued at December 31, 2020 and 2019, respectively

Additional paid-in capital 1,185.1 1,151.9

Accumulated other comprehensive income

Treasury stock, 17,516, 814 shares and 12,477,780 shares, at cost, as of December 31, 2019 and December 31, 2018, respectively

Accumulated other comprehensive (loss) income ( 7.2 ) 0.1

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

( 694.1 ) ( 692.2 )

Retained earnings 522.0 1,205.6

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Year Ended December 31,

2020 2019 2018

Net revenues $ 7,301.8 $ 9,298.2 $ 10,233.1

Cost of sales:

6 unchanged sentences

Depreciation and amortization 26.0 23.6 38.1

Other operating (income) expense, net

Impairment of goodwill 126.0 — —

Other operating income, net ( 13.1 ) ( 2.5 ) ( 31.3 )

Total operating costs and expenses 8,029.8 8,805.9 9,621.2

Operating income

Operating (loss) income ( 728.0 ) 492.3 611.9

Interest expense 129.0 131.1 125.9

1 unchanged sentence

Income from equity method investments ( 30.3 ) ( 34.3 ) ( 9.7 )

Gain on remeasurement of equity method investment

Gain on sale of business — — ( 13.3 )

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

Impairment loss on assets held for sale — — 27.5

Loss on extinguishment of debt — — 9.1

Other expense (income), net

Total non-operating expenses (income), net

Income from continuing operations before income tax expense

Income tax expense (benefit)

Income from continuing operations, net of tax

Other (income) expense, net ( 3.5 ) 4.1 ( 7.3 )

Total non-operating expense, net 35.1 89.6 126.4

(Loss) income before income tax (benefit) expense ( 763.1 ) 402.7 485.5

Income tax (benefit) expense ( 192.7 ) 71.7 101.9

(Loss) income from continuing operations, net of tax ( 570.4 ) 331.0 383.6

Discontinued operations:

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

Income (loss) from discontinued operations, including loss on sale of discontinued operations — 6.6 ( 10.9 )

Income tax expense (benefit) — 1.4 ( 2.2 )

Income (loss) from discontinued operations, net of tax — 5.2 ( 8.7 )

Net (loss) income ( 570.4 ) 336.2 374.9

Net income attributed to non-controlling interests 37.6 25.6 34.8

Net income attributable to Delek

Basic income (loss) per share:

Income from continuing operations

Net (loss) income attributable to Delek $ ( 608.0 ) $ 310.6 $ 340.1

Basic (loss) income per share:

(Loss) income from continuing operations $ ( 8.26 ) $ 4.03 $ 4.31

Income (loss) from discontinued operations — 0.07 ( 0.20 )

Total basic income per share

Diluted income (loss) per share:

Income from continuing operations

Total basic (loss) income per share $ ( 8.26 ) $ 4.10 $ 4.11

Diluted (loss) income per share:

(Loss) income from continuing operations $ ( 8.26 ) $ 3.99 $ 4.14

Income (loss) from discontinued operations — 0.07 ( 0.19 )

Total diluted income per share

Total diluted (loss) income per share $ ( 8.26 ) $ 4.06 $ 3.95

Weighted average common shares outstanding:

Basic 73,598,389 75,853,187 82,797,110

Diluted 73,598,389 76,574,091 86,768,401

Dividends declared per common share outstanding $ 0.93 $ 1.14 $ 0.96

5 unchanged sentences

Year Ended December 31,

2020 2019 2018

Net (loss) income $ ( 570.4 ) $ 336.2 $ 374.9

Other comprehensive income (loss):

Commodity contracts designated as cash flow hedges:

Net (losses) gains related to commodity cash flow hedges

Net (loss) gain related to commodity cash flow hedges ( 1.3 ) ( 43.4 ) 33.1

Income tax (benefit) expense ( 0.3 ) ( 9.5 ) 6.9

Net comprehensive (loss) income on commodity contracts designated as cash flow hedges ( 1.0 ) ( 33.9 ) 26.2

(Loss) Gain on interest rate contracts designated as cash flow hedges, net of taxes

Loss on interest rate contracts designated as cash flow hedges, net of taxes — — ( 0.5 )

Foreign currency translation gain (loss), net of taxes 0.6 0.3 ( 0.9 )

Other comprehensive income from equity method investments, net of tax expense of $0.0 million, $0.0 million and $2.2 million for the years ended December 31, 2019, 2018 and 2017, respectively

Postretirement benefit plans:

Unrealized gain (loss) arising during the year related to:

Net actuarial gain (loss)

Unrealized (loss) gain arising during the year related to:

Net actuarial (loss) gain ( 8.9 ) 5.8 ( 6.5 )

Curtailment and settlement gains — 2.7 2.5

2 unchanged sentences

Amortization of net actuarial loss 0.1 0.7 0.5

Gain (loss) related to postretirement benefit plans, net

Income tax expense (benefit)

Net comprehensive gain (loss) on postretirement benefit plans

Total other comprehensive (loss) income

Comprehensive income

(Loss) gain related to postretirement benefit plans, net ( 8.8 ) 6.5 ( 6.0 )

Income tax (benefit) expense ( 1.9 ) 1.4 ( 1.3 )

Net comprehensive (loss) gain on postretirement benefit plans ( 6.9 ) 5.1 ( 4.7 )

Total other comprehensive (loss) gain ( 7.3 ) ( 28.5 ) 20.1

Comprehensive (loss) income $ ( 577.7 ) $ 307.7 $ 395.0

Comprehensive income attributable to non-controlling interest 37.6 25.6 34.8

Comprehensive Income attributable to Delek

Comprehensive (loss) income attributable to Delek $ ( 615.3 ) $ 282.1 $ 360.2

See accompanying notes to the consolidated financial statements

3 unchanged sentences

(In millions, except share and per share data)

Additional Paid-in Capital

Accumulated Other Comprehensive Income

Retained Earnings

Treasury Shares

Non-Controlling Interest in Subsidiaries

Total Stockholders' Equity

December 31, 2016

Other comprehensive income related to commodity contracts

Other comprehensive income from equity method investments (1)

Other comprehensive income related to postretirement benefit plans

Other comprehensive income related to interest rate contracts

Foreign currency translation gain, net

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income Retained Earnings Treasury Shares Non-Controlling Interest in Subsidiaries Total Stockholders' Equity

Shares Amount Shares Amount

Balance at December 31, 2017:

81,533,548 $ 0.8 $ 900.1 $ 6.9 $ 767.8 ( 762,623 ) $ ( 25.0 ) $ 313.6 $ 1,964.2

Net income — — — — 340.1 — — 34.8 374.9

Other comprehensive income related to commodity contracts, net — — — 26.2 — — — — 26.2

Other comprehensive loss related to postretirement benefit plans, net — — — ( 4.7 ) — — — — ( 4.7 )

Other comprehensive loss related to interest rate contracts — — — ( 0.5 ) — — — — ( 0.5 )

Foreign currency translation loss, net — — — ( 0.9 ) — — — — ( 0.9 )

Common stock dividends ($ 0.96 per share)

Issuance of equity in connection with Delek/Alon Merger

Retirement of Treasury shares in connection with Delek/Alon Merger

— — — — ( 80.1 ) — — — ( 80.1 )

De-recognition of non-controlling interest — — — — — — — ( 18.7 ) ( 18.7 )

Reclassification for stranded tax effects resulting from the Tax Reform Act — — — 1.6 ( 1.6 ) — — — —

Equity-based compensation expense — — 20.9 — — — — 0.5 21.4

1 unchanged sentence

Repurchase of common stock — — — — — ( 9,022,386 ) ( 365.3 ) — ( 365.3 )

Issuance costs in connection with Delek/Alon Merger

Issuance of stock for non-controlling interest repurchase, net of tax 5,649,373 0.1 140.4 — — — — ( 127.0 ) 13.5

Shares received in connection with exercise of Call Options — — 124.2 — — ( 2,692,771 ) ( 123.9 ) — 0.3

Warrant reclassification to liability award — — ( 35.9 ) — — — — — ( 35.9 )

Cumulative effect of adopting accounting principle regarding income tax effect of intra-equity transfers — — — — ( 44.4 ) — — — ( 44.4 )

Shares issued in connection with settlement of Convertible Notes 2,692,218 — ( 0.3 ) — — — — — ( 0.3 )

Taxes paid due to the net settlement of equity-based compensation — — ( 11.5 ) — — — — — ( 11.5 )

Exercise of equity-based awards 602,936 — — — — — — — —

December 31, 2017

(1) Includes reversal of $ 4.1 million of accumulated other comprehensive loss related to the pre-Merger equity method investment in Alon.

Other — — ( 2.5 ) — — — 0.1 — ( 2.4 )

Balance at December 31, 2018:

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

Financial Statements and Schedules

2 unchanged sentences

(In millions, except share and per share data)

Additional Paid-in Capital

Accumulated Other Comprehensive Income

Retained Earnings

Treasury Stock

Non-Controlling Interest in Subsidiaries

Total Stockholders' Equity

December 31, 2017

Other comprehensive income related to commodity contracts

Other comprehensive income related to postretirement benefit plans

Other comprehensive income related to interest rate contracts

Foreign currency translation loss, net

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 — — — — 310.6 — — 25.6 336.2

Other comprehensive loss related to commodity contracts, net — — — ( 33.9 ) — — — — ( 33.9 )

Other comprehensive gain related to postretirement benefit plans, net — — — 5.1 — — — — 5.1

Foreign currency translation gain, net — — — 0.3 — — — — 0.3

Common stock dividends ($ 1.14 per share)

— — — ( 86.8 ) — — — ( 86.8 )

Equity-based compensation expense — — 25.5 — — — — 0.3 25.8

Distribution to non-controlling interest — — — — — — — ( 32.3 ) ( 32.3 )

Issuance of stock for non-controlling interest repurchase, net of tax

De-recognition of non-controlling interest

Reclassification for stranded tax effects resulting from the Tax Reform Act

Cumulative effect of adopting accounting principle regarding income tax effect of intra-equity transfers (1)

Shares issued in connection with settlement of Convertible Notes

Shares received in connection with exercise of Call Options

Repurchase of common stock — — — — — ( 5,039,034 ) ( 178.1 ) — ( 178.1 )

Warrant reclassification to liability award

Taxes paid due to the net settlement of equity-based compensation — — ( 9.2 ) — — — — — ( 9.2 )

Exercise of equity-based awards 508,950 — — — — — — — —

December 31, 2018

1) This cumulative effect of adopting an accounting principle reflects a $ 14.5 million adjustment to decrease retained earnings related to the establishment of a valuation allowance on deferred tax assets recognized in connection with the adoption that was not previously reported in our March 31, 2018 Quarterly Report on Form 10-Q filed on May 10, 2018.

This adjustment was not considered material to retained earnings or deferred tax liabilities.

Other — — 0.2 — — — — ( 0.1 ) 0.1

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

Financial Statements and Schedules

2 unchanged sentences

(In millions, except share and per share data)

Additional Paid-in Capital

Accumulated Other Comprehensive Income

Retained Earnings

Treasury Shares

Non-Controlling Interest in Subsidiaries

Total Stockholders' Equity

December 31, 2018

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings Treasury Shares 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 — — — — ( 608.0 ) — — 37.6 ( 570.4 )

Other comprehensive loss related to commodity contracts, net — — — ( 1.0 ) — — — — ( 1.0 )

Other comprehensive income related to postretirement benefit plans, net

Other comprehensive loss related to postretirement benefit plans, net — — — ( 6.9 ) — — — — ( 6.9 )

Foreign currency translation gain, net — — — 0.6 — — — — 0.6

Common stock dividends ( 0.93 per share)

— — — — ( 69.1 ) — — — ( 69.1 )

Distributions to non-controlling interests — — — — — — — ( 32.9 ) ( 32.9 )

1 unchanged sentence

Repurchase of common stock — — — — — ( 58,713 ) ( 1.9 ) — ( 1.9 )

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

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

Taxes paid due to the net settlement of equity-based compensation — — ( 2.4 ) — — — — — ( 2.4 )

Exercise of equity-based awards 369,843 — — — — — — — —

December 31, 2019

Balance at December 31, 2020:

91,356,868 $ 0.9 $ 1,185.1 $ ( 7.2 ) $ 522.0 ( 17,575,527 ) $ ( 694.1 ) $ 118.4 $ 1,125.1

See accompanying notes to the consolidated financial statements

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Year Ended December 31,

2020 2019 2018

Cash flows from operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Net (loss) income $ ( 570.4 ) $ 336.2 $ 374.9

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:

Depreciation and amortization 267.6 194.3 199.4

2 unchanged sentences

Deferred income taxes ( 32.1 ) 64.6 ( 26.8 )

Impairment of goodwill 126.0 — —

Income from equity method investments ( 30.3 ) ( 34.3 ) ( 9.7 )

Dividends from equity method investments 33.2 23.9 8.8

Loss (gain) on disposal of assets

Gain on remeasurement of equity method investment

Non-cash lower of cost or market/net realizable value adjustment 29.2 — —

Loss on extinguishment of debt — — 9.1

Gain on sale of business — — ( 13.3 )

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

Impairment of assets held for sale — — 27.5

Equity-based compensation expense 22.8 25.8 21.4

Income tax benefit of equity-based compensation

(Income) loss from discontinued operations

Changes in assets and liabilities, net of acquisitions:

Other 3.1 ( 5.5 ) 5.6

Changes in assets and liabilities:

Accounts receivable 259.7 ( 276.7 ) 112.7

2 unchanged sentences

Accounts payable and other current liabilities ( 480.3 ) 565.2 ( 128.1 )

Obligation under Supply and Offtake Agreement

Obligation under Supply and Offtake Agreements ( 129.6 ) 115.1 ( 84.3 )

Non-current assets and liabilities, net ( 16.8 ) ( 47.6 ) ( 1.1 )

Cash provided by operating activities - continuing operations

Cash (used in) provided by operating activities - continuing operations ( 282.9 ) 575.2 590.4

Cash used in operating activities - discontinued operations — — ( 30.1 )

Net cash provided by operating activities

Net cash (used in) provided by operating activities ( 282.9 ) 575.2 560.3

Cash flows from investing activities:

Business combinations, net of cash acquired

Equity method investment contributions ( 31.2 ) ( 267.4 ) ( 0.2 )

5 unchanged sentences

Proceeds from sale of retail stores — 15.1 —

Proceeds from sale of non-operating refinery 39.9 — —

Proceeds from sale of business — — 110.8

Proceeds from sales of discontinued operations — — 55.5

Cash (used in) provided by investing activities - continuing operations

Cash used in investing activities - continuing operations ( 191.3 ) ( 691.3 ) ( 145.3 )

Cash provided by investing activities - discontinued operations — — 20.0

Net cash (used in) provided by investing activities

Net cash used in investing activities ( 191.3 ) ( 691.3 ) ( 125.3 )

Delek US Holdings, Inc.

2 unchanged sentences

Year Ended December 31,

2020 2019 2018

Cash flows from financing activities:

10 unchanged sentences

Distribution to non-controlling interest ( 32.9 ) ( 32.3 ) ( 27.7 )

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

Dividends paid ( 69.1 ) ( 86.8 ) ( 80.1 )

Deferred financing costs paid ( 0.7 ) ( 1.5 ) ( 13.8 )

Cash used in financing activities - continuing operations

Cash used in financing activities - discontinued operations

Net cash used in financing activities

Net cash provided by (used in) financing activities 306.4 ( 7.9 ) ( 297.6 )

Net (decrease) increase in cash and cash equivalents ( 167.8 ) ( 124.0 ) 137.4

1 unchanged sentence

Cash and cash equivalents at the end of the period $ 787.5 $ 955.3 $ 1,079.3

Less cash and cash equivalents of discontinued operations at the end of the period

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

Supplemental disclosures of cash flow information:

1 unchanged sentence

Interest, net of capitalized interest of $ 0.4 million, $ 1.5 million and $ 0.8 million in the 2020, 2019 and 2018 periods, respectively

$ 123.7 $ 126.2 $ 120.1

Income taxes $ 3.6 $ 94.2 $ 103.9

Non-cash investing activities:

Common stock issued in connection with the buyout of Alon Partnership non-controlling interest $ — $ — $ 127.0

Increase (decrease) in accrued capital expenditures

(Decrease) increase in accrued capital expenditures $ ( 30.1 ) $ 15.1 $ ( 4.8 )

Non-cash financing activities:

Non-cash lease liability arising from recognition of right of use assets upon adoption of ASU 2016-02

Non-cash lease liability arising from recognition of right of use assets upon adoption of Accounting Standards Update ("ASU") 2016-02 $ — $ 206.0 $ —

Non-cash lease liability arising from obtaining right of use assets during the period $ 58.1 $ 15.9 $ —

1 unchanged sentence

Treasury shares received in connection with exercise of Call Options $ — $ — $ ( 123.9 )

Common stock issued in connection with the Delek/Alon Merger

Equity instruments issued in connection with the Delek/Alon Merger

See accompanying notes to the consolidated financial statements

6 unchanged sentences

("Alon") (and its subsidiaries).

Effective July 1, 2017 (the "Effective Time"), we acquired the outstanding common stock of Alon (previously listed under NYSE:

Effective July 1, 2017 (the "Effective Time"), we acquired the outstanding common stock of Alon (previously listed under New York Stock Exchange ("NYSE"):

ALJ) (the "Delek/Alon Merger", as further discussed in Note 3), resulting in a new post-combination consolidated registrant renamed as Delek US Holdings, Inc.

(“New Delek”), with Alon and the previous Delek US Holdings, Inc.

(“Old Delek”) surviving as wholly-owned subsidiaries.

New Delek is the successor issuer to Old Delek and Alon pursuant to Rule 12g-3(c) under the Securities Exchange Act of 1934, as amended (the "Exchange Act").

In addition, as a result of the Delek/Alon Merger, the shares of common stock of Old Delek and Alon were delisted from the New York Stock Exchange ("NYSE") in July 2017, and their respective reporting obligations under the Exchange Act were terminated.

Unless otherwise indicated or the context requires otherwise, the disclosures and financial information included in this report for the periods prior to July 1, 2017 reflect that of Old Delek, and the disclosures and financial information included in this report for the periods beginning July 1, 2017 reflect that of New Delek.

The terms "we," "our," "us," "Delek" and the "Company" are used in this report to refer to Old Delek and its consolidated subsidiaries for the periods prior to July 1, 2017, and New Delek and its consolidated subsidiaries for the periods on or after July 1, 2017, unless otherwise noted.

New Delek's Common Stock is listed on the NYSE under the symbol "DK."

Unless otherwise noted or the context requires otherwise, the terms "we," "our," "us," "Delek" and the "Company" are used in this report to refer to Delek and its consolidated subsidiaries for all periods presented.

Delek's Common Stock is listed on the NYSE under the symbol "DK."

Accounting Policies

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Any material subsequent events that occurred during this time have been properly recognized or disclosed in our financial statements.

During the third quarter 2017, we committed to a plan to sell certain assets associated with our Paramount and Long Beach, California refineries and Alon's California renewable fuels facility (collectively, the "California Discontinued Entities"), which were acquired as part of the Delek/Alon Merger.

As a result of this decision and commitment to a plan, and because it was made within three months of the Delek/Alon Merger, we met the requirements under the provisions of Accounting Standards Codification ("ASC") 205-20, Presentation of Financial Statements - Discontinued Operations ("ASC 205-20") and ASC 360, Property, Plant and Equipment ("ASC 360") to report the results of the California Discontinued Entities as discontinued operations and to classify the California Discontinued Entities as a group of assets held for sale.

On March 16, 2018, Delek sold to World Energy, LLC (i) all of Delek’s membership interests in AltAir Paramount, LLC (Alon's California renewable fuels facility), (ii) certain refining assets and other related assets located in Paramount, California and (iii) certain associated tank farm and pipeline assets and other related assets located in California.

The transaction to dispose of certain assets and liabilities associated with our Long Beach, California refinery, to Bridge Point Long Beach, LLC, closed July 17, 2018.

See Note 8 for further information regarding the California Discontinued Entities.

On February 12, 2018, Delek announced it had reached a definitive agreement to sell certain assets and operations of four asphalt terminals (included in Delek's corporate/other segment), as well as an equity method investment in an additional asphalt terminal, to an affiliate of Andeavor (prior to its acquisition by Marathon Petroleum).

This transaction included asphalt terminal assets in Bakersfield, Mojave and Elk Grove, California and Phoenix, Arizona, as well as Delek’s 50 % equity interest in the Paramount-Nevada Asphalt Company, LLC joint venture that operates an asphalt terminal located in Fernley, Nevada.

On May 21, 2018, Delek completed the transaction and received net proceeds of approximately $ 110.8 million , inclusive of the $ 75.0 million base proceeds as well as certain preliminary working capital adjustments.

These associated assets did not meet the definition of held for sale pursuant to ASC 360 as of December 31, 2017 , and therefore were not reflected as held for sale nor as discontinued operations in the consolidated financial statements as of and for the year ended December 31, 2017 .

See Note 8 for further information regarding the disposal of these assets held for sale.

As of December 31, 2017 , our consolidated financial statements included the consolidated financial statements of the following variable interest entities:

Delek Logistics Partners, LP ("Delek Logistics"), Alon USA Partners, LP (the "Alon Partnership") and AltAir Paramount LLC ("AltAir").

On February 7, 2018, Delek acquired the non-controlling interest in the Alon Partnership;

and on March 16, 2018, we sold the membership interests in AltAir.

Thus, Delek Logistics is Delek's only remaining variable interest entity as of December 31, 2019 and 2018 .

As the indirect owner of the general partner of Delek Logistics, we have the ability to direct the activities of this entity that most significantly impact economic performance.

Our consolidated financial statements include Delek Logistics Partners, LP ("Delek Logistics"), which is a variable interest entity ("VIE").

As the indirect owner of the general partner of Delek Logistics, we have the ability to direct the activities of this entity that most significantly impact its economic performance.

We are also considered to be the primary beneficiary for accounting purposes for this entity and are Delek Logistics' primary customer.

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The preparation of financial statements in conformity with U.S.

reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

generally accepted accounting principles ("GAAP") and in accordance with the rules and regulations of the Securities and Exchange Commission ("SEC") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates.

3 unchanged sentences

Certain immaterial reclassifications have been made to prior period presentation in order to conform to the current year presentation.

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

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.

Actions taken by various governmental authorities, individuals and companies around the world to prevent the spread of COVID-19 through social distancing have restricted travel, many business operations, public gatherings and the overall level of individual movement and in-person interaction across the globe.

This has in turn significantly reduced global economic activity and resulted in airlines dramatically cutting back on flights and a decrease in motor vehicle use.

As a result, there has also been a decline in the demand for, and thus also the market prices of, crude oil and certain of our products.

In April and June 2020, an agreement was reached to cut oil production between the members of the Organization of Petroleum Exporting Countries ("OPEC") and other leading oil producing countries (together with OPEC, “OPEC+”), as part of the efforts to resolve the oil production disputes ("OPEC Production Disputes") that significantly affected crude oil prices beginning in first quarter of 2020 and to provide stability in the oil markets.

While OPEC+ have reached an agreement to cut oil production, uncertainty about the duration of the COVID-19 Pandemic has caused storage constraints in the United States resulting from over-supply of produced oil.

Therefore, downward pressure on commodity prices has remained and could continue for the foreseeable future.

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 consolidated financial statements as of and for the year ended December 31, 2020.

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

• The evaluation of indefinite-lived intangibles and goodwill for potential impairment during our annual assessment or where indicators exist, as defined by GAAP;

• The evaluation of long-lived assets for potential impairment, where indicators exist, as defined by GAAP;

• The evaluation of joint ventures for potential impairment, where indicators exist, as defined by GAAP;

• The evaluation of derivatives and hedge accounting for counterparty risk and changes in forecasted transactions, as provided for under GAAP;

• The evaluation of inventory valuation allowances that may be warranted under the lower of cost or net realizable value analysis, for first-in, first-out (“FIFO”), and the lower of cost or market analysis, for last-in, first-out ("LIFO"), pursuant to GAAP;

• The consideration of debt modifications and/or covenant requirements, as applicable;

• The evaluation of commitments and contingencies, including changes in concentrations, as applicable;

• The evaluation of the impact of changing forecasts on our assessment of deferred tax asset valuation allowances and annual effective tax rates;

• The evaluation of our ability to continue as a going concern.

Segment Reporting

3 unchanged sentences

and convenience store retailing.

For the periods presented, we have aggregated our operating units into three reportable segments:

For the periods presented, we have aggregated our operating segments into three reportable segments:

Refining, Logistics and Retail.

3 unchanged sentences

• Alon's asphalt terminal operations acquired as part of the Delek/Alon Merger and subsequently disposed in the second quarter of 2018 (see Note 8 for further discussion);

our non-controlling equity interest of approximately 47 % of the outstanding shares in Alon (which was accounted for as an equity method investment) prior to the Delek/Alon Merger;

• wholesale crude operations;

• results and assets of discontinued operations;

4 unchanged sentences

All inter-segment transactions have been eliminated in consolidation.

The refining segment operates high conversion, independent refineries located in Tyler, Texas (the "Tyler refinery"), El Dorado, Arkansas (the "El Dorado refinery"), Big Spring, Texas (the "Big Spring refinery"), Krotz Springs, Louisiana (the "Krotz Springs refinery") and a non-operating refinery located in Bakersfield, California (the "Bakersfield refinery").

In addition, the refining segment owns and operates three biodiesel facilities involved in the production of biodiesel fuels and related activities, located in Crossett, Arkansas, Cleburne, Texas and New Albany, Mississippi (acquired in October 2019).

The logistics segment owns and operates crude oil and refined products logistics and marketing assets.

The retail segment markets gasoline, diesel and other refined petroleum products, and convenience merchandise through a network of company-operated retail fuel and convenience stores and includes the assets and results of operations of the retail business acquired in connection with the Delek/Alon Merger.

The retail segment markets gasoline, diesel and other refined petroleum products, and convenience merchandise through a network of company-operated retail fuel and convenience stores.

Segment reporting is more fully discussed in Note 4.

7 unchanged sentences

Accounts Receivable

Accounts receivable primarily consists of trade receivables generated in the ordinary course of business.

Delek recorded an allowance for doubtful accounts related to trade receivables of $ 3.7 million and $ 3.4 million as of December 31, 2019 and 2018 , respectively.

Accounts receivable primarily consists of trade receivables generated in the ordinary course of business, but may also include receivables on commodity sales contracts that are part of crude optimization and are, therefore, related to transactions that are reflected as reductions of cost of materials and other rather than revenue.

Such other receivables are with the same or similar customers as our trade receivables, and are subject to the same characteristics regarding the nature, timing, pricing and risk.

Delek recorded an allowance for doubtful accounts related to accounts receivable of $ 7.2 million and $ 3.7 million and as of December 31, 2020 and 2019, respectively.

Credit is extended based on evaluation of the customer’s financial condition.

4 unchanged sentences

Our allowance for doubtful accounts is reflected as a reduction of accounts receivable in the consolidated balance sheets.

One customer accounted for more than 10% of our consolidated accounts receivable balance as of December 31, 2019 .

No customer accounted for more than 10% of our consolidated accounts receivable balance as of December 31, 2018 .

One customer accounted for more than 10% of our consolidated accounts receivable balance as of December 31, 2020 and 2019.

No customer accounted for more than 10% of consolidated net sales for the years ended December 31, 2020, 2019 or 2018.

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Such investment commodities are maintained on a weighted average cost basis for determining realized gains and losses on physical purchases and sales under forward contracts, and ending balances are adjusted to fair value at each reporting date using published market prices of the commodity on the applicable exchange.

The investment commodities are included in other current assets on the accompanying consolidated balance sheets and changes in fair value are recorded in other operating income (expense) in the accompanying consolidated statements of income.

The investment commodities are included in other current assets on the accompanying consolidated balance sheets and changes in fair value are recorded in other operating income in the accompanying consolidated statements of income.

Property, Plant and Equipment

Assets acquired by Delek in conjunction with business acquisitions are recorded at estimated fair value at the acquisition date in accordance with the purchase method of accounting as prescribed in ASC 805, Business Combinations ("ASC 805").

Other acquisitions of property and equipment are carried at cost.

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Refinery turnaround costs 4 - 6

Automobiles 3 - 5

Computer equipment and software 3 - 10

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The amortization expense is included in depreciation and amortization on the accompanying consolidated statements of income.

Acquired intangible assets determined to have an indefinite useful life are not amortized, but are instead tested for impairment in connection with our evaluation of long-lived assets as events and circumstances indicate that the asset might be impaired.

Property, Plant and Equipment and Other Intangibles Impairment

Property, plant and equipment held and used and other intangibles are evaluated for impairment whenever indicators of impairment exist.

In accordance with ASC 360 and ASC 350, Intangibles - Goodwill and Other ("ASC 350"), Delek evaluates the realizability of these long-lived assets as events occur that might indicate potential impairment.

In accordance with ASC 360, Property, Plant and Equipmen t ("ASC 360") and ASC 350, Intangibles - Goodwill and Other ("ASC 350"), Delek evaluates the realizability of these long-lived assets as events occur that might indicate potential impairment.

In doing so, Delek assesses whether the carrying amount of the asset is recoverable by estimating the sum of the future cash flows expected to result from the asset, undiscounted and without interest charges.

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Variable Interest Entities

Our consolidated financial statements include the financial statements of our subsidiaries and variable interest entities ("VIE"), of which we are the primary beneficiary.

Our consolidated financial statements include the financial statements of our subsidiaries and variable interest entities, of which we are the primary beneficiary.

We evaluate all legal entities in which we hold an ownership or other pecuniary interest to determine if the entity is a VIE.

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Delek capitalizes interest on capital projects associated with the refining and logistics segments.

For the years ended December 31, 2019 , 2018 and 2017 , interest of $ 1.5 million , $ 0.8 million and $ 0.3 million , respectively, was capitalized relating to these projects.

Refinery Turnaround Costs

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Refinery turnaround costs include, among other things, the cost to repair, restore, refurbish or replace refinery equipment such as vessels, tanks, reactors, piping, rotating equipment, instrumentation, electrical equipment, heat exchangers and fired heaters.

Goodwill and Potential Impairment

Goodwill and Impairment

Goodwill in an acquisition represents the excess of the aggregate purchase price over the fair value of the identifiable net assets.

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Goodwill is evaluated for impairment by comparing the carrying amount of the reporting unit to its estimated fair value.

The Company adopted Accounting Standard Update ("ASU") 2017-04, Goodwill and Other (Topic 350);

The Company adopted ASU 2017-04, Goodwill and Other (Topic 350);

Simplifying the Test for Goodwill Impairment , during the fourth quarter of 2018.

In accordance with this guidance, if a reporting unit's carrying amount exceeds its fair value, the impairment assessment leads to the testing of the implied fair value of the reporting unit's goodwill to its carrying amount If the implied fair value is less than the carrying amount, a goodwill impairment charge is recorded.

In accordance with this guidance, a goodwill impairment charge is recognized for the amount that the carrying amount of a reporting unit, including goodwill, exceeds its fair value, limited to the total amount of goodwill allocated to that reporting unit.

In assessing the recoverability of goodwill, assumptions are made with respect to future business conditions and estimated expected future cash flows to determine the fair value of a reporting unit.

We may consider inputs such as a market participant weighted average cost of capital, estimated growth rates for revenue, gross margin and capital expenditures based on history and our best estimate of future forecasts, all of which are subject to significant judgment and estimates.

We may also estimate the fair values of the reporting units using a multiple of expected future cash flows, such as those used by market participants.

We may consider inputs such as a market participant weighted average cost of capital, gross margin, capital expenditures and long-term growth rates based on historical information and our best estimate of future forecasts, all of which are subject to significant judgment and estimates.

We may also consider a market approach in determining or corroborating the fair values of the reporting units using a multiple of expected future cash flows, such as those used by third-party analysts, which is also subject to significant judgment and estimates.

If these estimates and assumptions change in the future, due to factors such as a decline in general economic conditions, competitive pressures on sales and margins and other economic and industry factors beyond management's control, an impairment charge may be required.

A significant risk to our future results and the potential future impairment of goodwill is the volatility of the crude oil and the refined product markets which is often unpredictable and may negatively impact our results of operations in ways that cannot be anticipated and that are beyond management's control.

Our annual assessment of goodwill did not result in impairment during the years ended December 31, 2019 , 2018 or 2017 .

Our annual assessment of goodwill resulted in an impairment of $ 126.0 million during the year ended December 31, 2020, and no impairment during the years ended December 31, 2019 and 2018.

Details of remaining goodwill balances by segment are included in Note 18.

Renewable Identification Numbers

Environmental Protection Agency (“EPA”) requires certain refiners to blend biofuels into the fuel products they produce pursuant to the EPA’s Renewable Fuel Standard - 2 ("RFS-2").

Alternatively, credits, called Renewable Identification Numbers ("RINs"), which may be generated and/or purchased, can be used to satisfy this obligation instead of physically blending biofuels ("RINs Obligation").

All of our refineries are obligated parties to the RFS-2.

To the extent that any of our refineries is unable to blend biofuels at the required rate, it must purchase RINs in the open market to satisfy its annual requirement.

Our RINs Obligation is based on the amount of RINs we must purchase and the price of those RINs as

of the balance sheet date.

The cost of RINs used each period is charged to cost of materials and other in the consolidated statements of income.

We recognize a liability at the end of each reporting period in which we do not have sufficient RINs to cover the RINs Obligation.

The liability is calculated by multiplying the RINs shortage (based on actual results) by the period end RIN spot price.

From time to time, we may hold RINs generated or acquired in excess of our current obligations.

We recognize an asset at the end of each reporting period in which we have generated or acquired RINs in excess of our RINs Obligation.

The asset is calculated by multiplying the RINs surplus (based on actual results) by the period end RIN spot price.

The value of RINs in excess of our RINs Obligation, if any, would be reflected in other current assets on the consolidated balance sheets.

RINs generated in excess of our current RINs Obligation may be sold or held to offset future RINs Obligations.

Any such sales of excess RINs are recorded in cost of materials and other on the consolidated statements of income.

The assets and liabilities associated with our RINs Obligation are considered recurring fair value measurements.

See Note 13 for further information.

From time to time, Delek enters into future commitments to purchase or sell RINs at fixed prices and quantities, which are used to manage the costs associated with our RINs Obligation.

These future RIN commitment contracts meet the definition of derivative instruments under ASC 815, Derivatives and Hedging ("ASC 815"), and are measured at fair value based on quoted prices from an independent pricing service.

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

See Note 12 for further information.

Other Environmental Credits Obligations

From time to time, we may create, during the operation of our refining or other activities, or purchase on a market, other environmental credits (e.g., sulfur credits, benzene credits, etc.) for purposes of ultimately meeting expected environmental credit obligations.

Such other environmental credits obligation surplus or deficit is based on the amount of these other emissions credits required for compliance as of the balance sheet date, net of amounts internally generated and purchased.

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

See Note 13 for further information.

Delek records all derivative financial instruments, including any interest rate swap and cap agreements, fuel-related derivatives, over the counter ("OTC") future swaps, forward contracts and future RIN purchase and sales commitments that qualify as derivative instruments, at estimated fair value in accordance with the provisions of ASC 815.

Changes in the fair value of the derivative instruments are recognized in operations, unless we elect to apply and qualify for the hedging treatment permitted under the provisions of ASC 815 allowing such changes to be classified as other comprehensive income for cash flow hedges.

We validate the fair value of all derivative financial instruments on a periodic basis, utilizing exchange pricing and/or price index developers such as Platts, Argus or OPIS.

We determine the fair value of all derivative financial instruments utilizing exchange pricing and/or price index developers such as Platts, Argus or OPIS.

On a regular basis, Delek enters into commodity contracts with counterparties for the purchase or sale of crude oil, blendstocks, and various finished products.

These contracts usually qualify for the normal purchase / normal sale exemption under ASC 815 and, as such, are not measured at fair value.

We evaluate these contracts under ASC 815 and do not measure at fair value if they qualify for, and we elect, the normal purchase / normal sale exception.

Delek's policy under the guidance of ASC 815-10-45, Derivatives and Hedging - Other Presentation Matters ("ASC 815-10-45"), is to net the fair value amounts recognized for multiple derivative instruments executed with the same counterparty and offset these values against the cash collateral arising from these derivative positions.

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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, Financial Instruments ("ASC 825").

Delek also applies the provisions of ASC 825 as it pertains to the fair value option with respect to certain financial instruments.

This option permits the election to carry financial instruments and certain other items similar to financial instruments at fair value on the balance sheet, with all changes in fair value reported in earnings.

Delek applies the provisions of ASC 820, Fair Value Measurements and Disclosure ("ASC 820"), which defines fair value, establishes a framework for its measurement and expands disclosures about fair value measurements.

ASC 820 applies to our commodity and other derivatives that are measured at fair value on a recurring basis, and to our environmental credit obligations that are accounted for under the fair value election.

ASC 820 applies to our commodity and other derivatives that are measured at fair value on a recurring basis, and to our supply and offtake agreements and environmental credit obligations that are accounted for under the fair value election.

ASC 820 also applies to the measurement of our equity method investment, goodwill and long-lived tangible and intangible assets when determining whether or not an impairment exists, when circumstances require evaluation.

See Note 7 for further information.

This standard also requires that we assess the impact of nonperformance risk on our derivatives.

Nonperformance risk is not considered material to our financial statements as of December 31, 2020 and 2019.

Delek also applies the provisions of ASC 825 as it pertains to the fair value option.

This standard permits the election to carry financial instruments and certain other items similar to financial instruments at fair value on the balance sheet, with all changes in fair value reported in earnings.

By electing the fair value option, we can achieve an accounting result similar to a fair value hedge without having to follow the complex hedge accounting rules.

As of December 31, 2018 , we elected to account for the market-indexed step-out liabilities associated with our applicable Master Supply and Offtake Agreements (the "Supply and Offtake Agreements" or the "J.

Inventory Supply and Offtake Obligations

Delek has Supply and Offtake Agreements (the "Supply and Offtake Agreements" or the "J.

Aron Agreements") with J.

Aron & Company ("J.

Aron") at fair value and recognize all changes in the fair value of the step-out liabilities in cost of materials and other in the accompanying statements of income.

Additionally, at December 31, 2019 , we continue to apply our fair value election to our amended fixed-price step-out liabilities where changes in fair value relate to interest rate risk and therefore are recognized in interest expense in the accompanying statements of income.

Aron") in connection with its El Dorado, Big Spring and Krotz Springs refineries, which provide a financing mechanism on contractual baseline inventory volumes and also revolving over and short volumes.

We account for the market-indexed obligations under our Supply and Offtake Agreements as product (in this case, crude oil and refined product inventory) financing arrangements under the fair value option pursuant to ASC 825 and the fair value guidance provided by ASC 820, and recognize all changes in the fair value in cost of materials and other in the accompanying statements of income.

During periods where we had fixed price components that were subject to interest rate risk and not market price risk, the changes in fair value of those components was recognized in interest expense.

By electing the fair value option, the changes in fair value provide a natural economic hedge to our FIFO cost of sales recognition without having to bifurcate any embedded derivatives and consider the complex hedge accounting rules.

See Notes 10 and 13 for further discussion.

Environmental Credits and Related Regulatory Obligations

As part of our refining operations, we generate certain regulatory environmental credit obligations due to the U.S.

Environmental Protection Agency (“EPA”) or other regulatory agencies.

Additionally, we may generate, during the operation of our refining or other activities, or purchase on a market, environmental credits for purposes of ultimately meeting expected environmental credit obligations.

These resultant net environmental credit obligations are financial instruments under ASC 825.

For those financial instruments where (1) there are consistently available observable market inputs or market-corroborated inputs;

and (2) there continues to be (or is reasonably expected to be) sustained liquidity in the applicable credits market, we generally apply the fair value option, as available pursuant to ASC 825.

We recognize a current liability at the end of each reporting period in which we do not have sufficient environmental credits to cover the current environmental credits obligation (a “deficit”), and we recognize a current asset at the end of each reporting period in which we have generated or acquired environmental credits meeting our recognition criteria in excess of our current environmental credits obligation (a “surplus”).

Any obligation surplus or deficit would be measured at fair value either directly through the observable inputs or indirectly through the market-corroborated inputs.

The net cost of environmental credits used each period as well as changes to fair value attributable to our environmental credit obligations (surplus or deficit) are charged to cost of materials and other in the consolidated statements of income.

Our environmental credit obligations predominantly relate to EPA’s Renewable Fuel Standard - 2 ("RFS-2"), which requires that certain refiners generate environmental credits, called Renewable Identification Numbers ("RINs"), by blending renewable fuels into the fuel products they produce, or else purchasing RINs on the market, and that such RINs shall be used to satisfy the related environmental credit obligation.

of our refineries is an obligated party under RFS-2.

To the extent that any of our refineries is unable to blend renewable fuels to generate sufficient RINs, it must purchase RINs to satisfy its annual requirement ("RINs Obligation").

To the extent that we have purchased RINs or transferred RINs to our refineries, each refinery’s RINs Obligation may be a surplus or deficit at the end of each reporting period (their respective “Net RINs Obligation”).

Because our Net RINs Obligations exceed the RINs we are able to generate annually on a consolidated basis, and because we have the legal ability to transfer RINs generated or purchased through any of our entities to our obligated parties as needed, we view and manage the Company’s individual Net RINs Obligations, as well as any non-obligated party RINs holdings, on a consolidated basis.

Therefore, the sum of our individual obligated parties’ Net RINs Obligations as well as RINs held by our non-obligated parties which meet our recognition criteria, comprises the Company’s “Consolidated Net RINs Obligation.” For all periods presented in these consolidated financial statements, the individual financial instruments relating to specific category and vintage requirements under RFS-2 comprising our Consolidated Net RINs Obligation are subject to market risk and meet the criteria set forth above.

Therefore, we have elected to apply the fair value option to the individual financial instruments comprising our Consolidated Net RIN Obligation, using the fair value guidance provided by ASC 820.

Other Related Transactions

From time to time, Delek enters into future commitments to purchase or sell RINs at fixed prices and quantities, which are used to manage the costs associated with our RINs Obligation.

These future RINs commitment contracts meet the definition of derivative instruments under ASC 815, Derivatives and Hedging ("ASC 815"), and are measured at fair value based on quoted prices from an independent pricing service.

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

See Note 12 for further information.

Additionally, from time to time, we may elect to sell surplus environmental credits and contemporaneously enter into a corresponding obligation to repurchase substantially identical environmental credits at a future date to provide an additional source of short-term financing and to take advantage of market liquidity for holdings that are not currently required for operations.

We account for such transactions as product financing arrangements.

In such cases, the sale is not recognized, but rather the proceeds are treated as product financing proceeds where a corresponding product financing obligation is recorded, while the subsequent repurchase is treated as repayment of the product financing obligation, with the difference recorded as interest expense over the intervening period.

Such transactions are included in our cash flows from financing transactions.

Self-Insurance Reserves

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In the logistics segment, these obligations relate to the required cleanout of the pipeline and terminal tanks and removal of certain above-grade portions of the pipeline situated on right-of-way property.

In the retail segment, we have asset retirement obligations related to the removal of underground storage tanks and the removal of brand signage at owned and leased retail sites which are legally required under the applicable leases.

In the retail segment, we have asset retirement obligations related to the removal of underground storage tanks and the removal of brand signage at owned and leased retail

sites which are legally required under the applicable leases.

The asset retirement obligation for storage tank removal on leased retail sites is accreted over the expected life of the owned retail site or the average retail site lease term.

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The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or by providing services to a customer.

The adoption of ASC 606, Revenue from Contracts with Customers ("ASC 606") beginning January 1, 2018, did not materially change our revenue recognition patterns, which are described below by reportable segment.

The principles for recognizing revenue as codified in ASC 605, Revenue Recognition ("ASC 605"), were applied during the year ended December 31, 2017 .

No restatements to revenues or expenses were required to be made to our consolidated statements of income, as we applied the modified retrospective transition method in adopting ASC 606.

Revenues for products sold are recorded at the point of sale upon delivery of product, which is the point at which title to the product is transferred, the customer has accepted the product and the customer has significant risks and rewards of owning the product.

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Service revenue and related costs are recorded at gross amounts or net amounts, as appropriate, in accordance with the principal versus agent provisions in ASC 606.

Refer to Note 4 for disclosure of our revenue disaggregated by segment, as well as a description of our reportable segment operations.

In the first quarter of 2020, we began selling crude barrels through supply agreements predominantly in the gulf coast region.

The transaction price for these products is based on contractual rates.

Revenue is recognized based on consideration specified in such agreements when performance obligations are satisfied by transferring control of crude oil to the customer.

The transaction prices of our contracts with customers are either fixed or variable, with variable pricing generally based on various market indices.

For our contracts that include variable consideration, we utilize the variable consideration allocation exception, whereby the variable consideration is only allocated to the performance obligations that are satisfied during the period.

Refer to Note 4 for disclosure of our revenue disaggregated by segment, as well as a description of our reportable segment income.

Credit Losses

Under ASU 2016-13, Financial Instruments - Measurement of Credit Losses on Financial Instruments as codified in ASC 326, Financial Instruments - Credit Losses ("ASC 326"), we have applied the expected credit loss model for recognition and measurement of impairments in financial assets measured at amortized cost or at fair value through other comprehensive income including accounts receivables.

The expected credit loss model is also applied for notes receivables and contractual holdbacks to which ASU 2016-13 applies and which are not accounted for at fair value through profit or loss.

The loss allowance for the financial asset is measured at an amount equal to the lifetime expected credit losses.

If the credit risk on the financial asset has decreased significantly since initial recognition, the loss allowance for the financial asset is re-measured.

Changes in loss allowances are recognized in profit and loss.

For trade receivables, a simplified impairment approach is applied recognizing expected lifetime losses from initial recognition.

Cost of Materials and Other and Operating Expenses

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Sales, Use and Excise Taxes

Prior to the adoption of ASC 606, Delek's policy was to exclude sales, use and excise taxes from revenue when we are an agent of the taxing authority, in accordance with the applicable guidance in ASC 605, Revenue Recognition .

Upon the adoption of ASC 606, we made the accounting policy election to exclude from revenue all taxes assessed by a governmental authority, including sales, use and excise taxes, that are both imposed on and concurrent with a specific revenue-producing transaction and collected from a customer.

Delek's policy is to exclude from revenue all taxes assessed by a governmental authority, including sales, use and excise taxes, that are both imposed on and concurrent with a specific revenue-producing transaction and collected from a customer.

Deferred Financing Costs

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A corresponding right-of-use asset is recognized based on the lease liability and adjusted for certain costs and prepayments.

The right-of-use asset is amortized over the noncancelable lease period, considering renewals for all periods for which it is reasonably certain to be exercised.

See Note 25 for further information.

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federal corporate tax rate from 35% to 21%, provides for immediate deduction of qualified capital assets placed in service, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign sourced earnings.

In the fourth quarter of fiscal 2018 we finalized our accounting analysis based on the guidance, interpretations, and data available.

Adjustments made upon finalization of our accounting analysis were not material to our consolidated financial statements.

See Note 15 for further discussion.

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

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

Equity-Based Compensation

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It is our practice to issue new shares when share-based awards are exercised.

Our equity-based compensation expense includes estimates

for forfeitures and volatility based on our historical experience.

Our equity-based compensation expense includes estimates for forfeitures and volatility based on our historical experience.

If actual forfeitures differ from our estimates, we adjust equity-based compensation expense accordingly.

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New Accounting Pronouncements Adopted During 2020

ASU 2016-02, Leases

In February 2016, the Financial Accounting Standards Board (the "FASB") issued guidance that requires the recognition of a lease liability and a right-of-use asset, initially measured at the present value of the lease payments, in the statement of financial condition for all leases with terms longer than one year.

The guidance was subsequently amended to consider the impact of practical expedients and provide additional clarifications.

This guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.

We adopted the new lease standard on January 1, 2019.

We elected the package of practical expedients which, among other things, allows us to carry forward the historical lease classification.

For substantially all classes of underlying assets, we have elected the practical expedient not to separate lease and non-lease components, which allows us to combine the components if certain criteria are met.

For certain leases of logistic assets, we account for the service component separately.

Further, we elected the optional transition method, which allows us to recognize a cumulative-effect adjustment to the opening balance sheet of retained earnings at the date of adoption and to not recast our comparative periods.

We have not elected the hindsight practical expedient, which would have allowed us to use hindsight in determining the reasonably certain lease term.

The adoption of the lease accounting guidance had no impact on January 1, 2019 retained earnings and resulted in the recognition of a $ 206.0 million lease liability and a corresponding right-of-use asset on our consolidated balance sheet.

The adoption did not have a material impact on our consolidated income statement.

See Note 24 for further information.

ASU 2017-12, Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities

In August 2017, the FASB issued guidance to better align financial reporting for hedging activities with the economic objectives of those activities for both financial (e.g., interest rate) and commodity risks.

The guidance was intended to create more transparency in the presentation of financial results, both on the face of the financial statements and in the footnotes, and simplify the application of hedge accounting guidance.

This guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years.

Companies are required to apply the guidance on a modified retrospective transition method in which the cumulative effect of the change is recognized within equity in the consolidated balance sheet as of the date of adoption.

We adopted this guidance on January 1, 2019 and the adoption did not have a material impact on our business, financial condition or results of operations.

See Note 12 for further information.

Accounting Pronouncements Not Yet Adopted

ASU 2019-12, Simplifying the Accounting for Income Taxes

In December 2019, the FASB issued guidance which is intended to simplify various aspects related to accounting for income taxes, eliminate certain exceptions within ASC 740 and clarify certain aspects of the current guidance to promote consistency among reporting entities.

The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted.

We expect to adopt this guidance on the effective date and are currently evaluating the impact that adopting this new guidance will have on our business, financial condition and results of operations.

ASU 2018-15, Intangible - Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

In August 2018, the FASB issued guidance related to customers’ accounting for implementation costs incurred in a cloud computing arrangement that is considered a service contract.

In August 2018, the Financial Accounting Standards Board (the "FASB") issued guidance related to customers’ accounting for implementation costs incurred in a cloud computing arrangement that is considered a service contract.

This pronouncement aligns the requirements for capitalizing implementation costs in such arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.

This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019.

Early adoption is permitted, including adoption in any interim period for which financial statements have not been issued.

Entities can choose to adopt the new guidance prospectively or

retrospectively.

We expect to adopt this guidance prospectively on the effective date and do not expect adopting this guidance will have a material impact on our business, financial condition or results of operations.

ASU 2018-14, Compensation - Changes to the Disclosure Requirements for Defined Benefit Plans

In August 2018, the FASB issued guidance related to disclosure requirements for defined benefit plans.

The pronouncement eliminates, modifies and adds disclosure requirements for defined benefit plans.

The pronouncement is effective for fiscal years ending after December 15, 2020, and early adoption is permitted.

We expect to adopt this guidance on the effective date and do not expect adopting this new guidance will have a material impact on our business, financial condition or results of operations.

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

ASU 2018-13, Fair Value Measurement - Changes to the Disclosure Requirements for Fair Value Measurement

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The pronouncement eliminates, modifies and adds disclosure requirements for fair value measurements.

The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted.

We expect to adopt this guidance on the effective date and do not expect adopting this new guidance will have a material impact on our disclosures included in the consolidated financial statements.

The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019.

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.

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

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Organizations will now use forward-looking information to better inform their credit loss estimates.

Entities are required to adopt this guidance using a modified retrospective approach, subject to certain limited exceptions.

The new guidance will be effective for Delek beginning with the first quarter of 2020 and is not expected to have a material impact on the Company's consolidated financial statements.

Effective July 1, 2017, we acquired the outstanding common stock of Alon (as previously defined the "Delek/Alon Merger").

Prior to the Delek/Alon Merger, Old Delek owned a non-controlling equity interest of approximately 47 % of the outstanding shares of Alon, which was accounted for under the equity method of accounting (See Note 7 ).

Alon was a refiner and marketer of petroleum products, operating primarily in the south central, southwestern and western regions of the United States.

Subject to the terms and conditions of the Delek/Alon Merger Agreement (the "Merger Agreement"), at the Effective Time, each issued and outstanding share of Alon Common Stock, other than shares owned by Old Delek and its subsidiaries or held in the treasury of Alon, was converted into the right to receive 0.504 of a share of New Delek Common Stock, or, in the case of fractional shares of New Delek Common Stock, cash (without interest) in an amount equal to the product of (i) such fractional part of a share of New Delek Common Stock multiplied by (ii) $ 25.96 per share, which was the volume weighted average price of the Old Delek Common Stock, par value $ 0.01 per share as reported on the NYSE Composite Transactions Reporting System for the twenty consecutive NYSE full trading days ending on June 30, 2017.

Each outstanding share of restricted Alon Common Stock was assumed by New Delek and converted into restricted stock denominated in shares of New Delek Common Stock, using the conversion rate applicable to the Delek/Alon Merger.

Committed but unissued share-based awards were exchanged and converted into rights to receive share-based awards indexed to New Delek Common Stock.

In addition, subject to the terms and conditions of the Merger Agreement, each share of Old Delek Common Stock or fraction thereof issued and outstanding immediately prior to the Effective Time (other than Old Delek Common Stock held in the treasury of Old Delek, which was retired in connection with the Delek/Alon Merger) was converted at the Effective Time into the right to receive one validly issued, fully paid and non‑assessable share of New Delek Common Stock or such fraction thereof equal to the fractional share of New Delek Common Stock.

All existing Old Delek stock options, restricted stock awards and stock appreciation rights were converted into equivalent rights with respect to New Delek Common Stock.

In connection with the Delek/Alon Merger, Alon, New Delek and U.S.

Bank National Association, as trustee (the “Trustee”), entered into a First Supplemental Indenture (the “Supplemental Indenture”), effective as of July 1, 2017, supplementing the Indenture, dated as of September 16, 2013 (the “Original Indenture”;

the Original Indenture, as amended by the Supplemental Indenture, is referred to as the "Indenture"), pursuant to which Alon issued its 3.0 % Convertible Senior Notes due 2018 (the “Convertible Notes”), which were convertible into shares of Alon’s Common Stock, par value $ 0.01 per share or cash or a combination of cash and Alon Common Stock, all as provided in the Indenture.

The Supplemental Indenture provided that, as of the Effective Time, the right to convert each $ 1,000 principal amount of the Convertible Notes based on a number of shares of Alon Common Stock equal to the Conversion Rate (as defined in the Indenture) in effect immediately prior to the Delek/Alon Merger was changed into a right to convert each $ 1,000 principal amount of Convertible Notes into or based on a number of shares of New Delek Common Stock (at the exchange rate of 0.504 ), par value $ 0.01 per share, equal to the Conversion Rate in effect immediately prior to the Delek/Alon Merger.

In addition, the Supplemental Indenture provided that, as of the Effective Time, New Delek fully and unconditionally guaranteed, on a senior basis, Alon’s obligations under the Convertible Notes.

See Note 11 for further discussion.

Additionally, in connection with the Convertible Notes, Alon also entered into equity instruments, including call options (the "Call Options") and warrants (the "Warrants"), designed, in combination, to hedge a portion of the risk associated with the potential exercise of the conversion feature

of the Convertible Notes and to mitigate the dilutive effect of such potential conversion.

These equity instruments, in addition to the conversion feature, represent equity instruments originally indexed to Alon Common Stock that were exchanged for instruments with terms designed to preserve the original economic intent of such instruments and indexed to New Delek Common Stock in connection with the Delek/Alon Merger.

This guidance is effective for interim and annual periods beginning after December 15, 2019.

We adopted this guidance on January 1, 2020 using the modified retrospective approach as of the adoption date.

The adoption did not have a material impact on the Company’s operating results, financial position or disclosures.

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 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.

ASU 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)—Clarifying the Interactions between Topic 321, Topic 323, and Topic 815

In January 2020, the FASB issued ASU 2020-01 which is intended to clarify interactions between the guidance to account for certain equity securities under Topics 321, 323 and 815, and improve current GAAP by reducing diversity in practice and increasing comparability of accounting.

The pronouncement is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2020.

We expect to adopt this guidance on the effective date and do not expect adopting this new guidance will have a material impact on our business, financial condition and results of operations.

ASU 2019-12, Simplifying the Accounting for Income Taxes

The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2020.

We expect to adopt this guidance on the effective date and do not expect adopting this new guidance will have a material impact on our business, financial condition and results of operations.

ASU 2018-14, Compensation - Changes to the Disclosure Requirements for Defined Benefit Plans

In August 2018, the FASB issued guidance related to disclosure requirements for defined benefit plans.

The pronouncement eliminates, modifies and adds disclosure requirements for defined benefit plans.

The pronouncement is effective for fiscal years beginning after December 15, 2020.

We expect to adopt this guidance on the effective date and do not expect adopting this new guidance will have a material impact on our business, financial condition or results of operations.

Effective July 1, 2017, we acquired the outstanding common stock of Alon resulting in a new post-combination consolidated registrant renamed as Delek US Holdings, Inc.

In connection with the Delek/Alon Merger, Alon, Delek and U.S.

Bank National Association, as trustee (the “Trustee”) entered into a First Supplemental Indenture (the “Supplemental Indenture”), effective as of July 1, 2017, which provided that Alon's 3.0 % Convertible Senior Notes due 2018, which were previously convertible into Alon common stock, would thereafter be convertible into Delek common stock based on the exchange rate applied in the Delek/Alon Merger (the “Convertible Notes”).

These instruments were exchanged in connection with the Delek/Alon Merger into instruments that were indexed to Delek common stock.

See Note 11 for further discussion of these instruments and subsequent activity.

In connection with the Delek/Alon Merger, Delek acquired 100 % of the general partner and 81.6 % of the limited partner interests in the Alon Partnership, which owns a crude oil refinery in Big Spring, Texas with a crude oil throughput capacity of 73,000 barrels per day ("bpd") and an integrated wholesale marketing business.

Delek acquired the non-controlling interest in the Alon Partnership on February 7, 2018.

In addition, as a result of the Delek/Alon Merger, Delek acquired a crude oil refinery in Krotz Springs, Louisiana with a crude oil throughput capacity of 74,000 bpd.

In connection with the Delek/Alon Merger, Delek also acquired crude oil refineries in California, which have not processed crude oil since 2012.

On March 16, 2018, Delek sold to World Energy, LLC the Paramount, California refinery and the California renewables facility (AltAir).

The transaction to dispose of certain assets and liabilities associated with the Long Beach, California refinery, to Bridge Point Long Beach, LLC, closed July 17, 2018.

Alon was a marketer of asphalt, which it distributed through asphalt terminals located predominantly in the southwestern and western United States.

Alon also owned crude oil refineries in California, which have not processed crude oil since 2012.

On May 21, 2018, Delek sold four asphalt terminals (included in Delek's corporate/other segment) and its 50 % interest in an asphalt joint venture to an affiliate of Andeavor.

See further discussion in Note 2 and Note 8 .

Finally, in connection with the Delek/Alon Merger, Delek acquired Alon's retail business where Alon was the largest 7-Eleven licensee in the United States and operating approximately 300 convenience stores which market motor fuels in Central and West Texas and New Mexico.

The Delek/Alon Merger was accounted for using the acquisition method of accounting, which requires, among other things, that assets acquired and liabilities assumed be recognized on the balance sheet at their fair value as of the acquisition date.

Transaction costs incurred by the Company in connection with the Delek/Alon Merger totaled approximately $ 6.6 million and $ 24.7 million for the years ended December 31, 2018 and 2017 , respectively.

During the year ended December 31, 2018, we continued our procedures to determine the fair value of assets acquired and liabilities assumed in the Delek/Alon Merger, all of which were completed by June 30, 2018.

Transaction costs incurred by the Company in connection with the Delek/Alon Merger totaled approximately $ 6.6 million for the year ended December 31, 2018.

Such costs were included in general and administrative expenses in the accompanying consolidated statements of income.

Determination of Purchase Price

The purchase consideration comprised of 19,250,795 Delek common stock units valued at $ 509 million and equity instruments originally indexed to Alon stock exchanged for instruments indexed to New Delek's stock and certain share-based payments that were required to be exchanged for awards indexed to New Delek's stock fair valued at $ 21.7 million .

The fair value of Delek's pre-existing equity method investment in Alon was valued at $ 449 million on acquisition date based on the quoted market price of shares of Alon.

Based on these components the total purchase price was $ 979.7 million , which was allocated as follows:

Prepaids and other current assets

Property, plant and equipment (1)

Equity method investments

Acquired intangible assets (2)

Other non-current assets

Accounts payable

Obligation under Supply & Offtake Agreements

Other current liabilities

Environmental liabilities and asset retirement obligations

Deferred income taxes

Other non-current liabilities (4)

Fair value of net assets acquired

(1) This fair value of property, plant and equipment is based on a valuation using a combination of the income, cost and market approaches.

The useful lives are based upon guidelines for similar equipment, years since installation and consideration of costs spent on upgrades, repairs, turnarounds and rebuilds.

(2) The acquired intangible assets amount included certain identified intangibles, the most significant of which were as follows:

Third-party fuel supply agreement intangible that is subject to amortization with a fair value of $ 49.0 million , which is being amortized over a 10 -year useful life;

Fuel trade name intangible valued at $ 4.0 million , which is being amortized over 5 years;

Rights-of-way intangible valued at $ 9.5 million , which has an indefinite life;

Liquor license intangible valued at $ 8.5 million , which has an indefinite life;

Below-market lease intangibles valued at $ 8.3 million , which is being amortized over the remaining lease term.

(3) Goodwill generated as a result of the Delek/Alon Merger consists of the value of expected synergies from combining operations, the acquisition of an existing integrated refining, marketing and retail business located in areas with access to cost–advantaged feedstocks with an assembled workforce that cannot be duplicated at the same costs by a new entrant, and the strategic advantages of having a larger market presence.

The total amount of goodwill that is expected to be deductible for tax purposes is $ 15.5 million .

Goodwill was allocated to reportable segments based on various relevant factors as follows:

Refining - $ 801.3 million and Retail - $ 44.3 million .

The remainder relates to the asphalt operations, which was included in the corporate, other and eliminations segment, and which was subsequently written off as part of the impairment on assets held for sale during the first quarter of 2018.

(4) The assumed other non-current liabilities include liabilities related to above-market leases fair valued at $ 15.8 million , which is being amortized over the remaining lease term.

Pro Forma Financial Information

The following unaudited pro forma financial information presents the condensed combined results of operations of Delek and Alon for the year ended December 31, 2017 , as if the Delek/Alon Merger had occurred on January 1, 2016, and reflects the final purchase price allocation.

The unaudited pro forma financial information is not intended to represent or be indicative of the consolidated results of operations that would have been reported had the Delek/Alon merger been completed as of January 1, 2016, and should not be taken as indicative of New Delek's future consolidated results of operations.

In addition, the unaudited pro forma condensed combined results of operations do not reflect any cost savings or associated costs to achieve such savings from operating efficiencies, synergies, debt refinancing or other restructuring that may result from the Delek/Alon Merger.

The pro forma financial information also does not reflect certain non-recurring adjustments that have been, or are expected to be, recorded in connection with the Delek/Alon Merger, including any accrual for integration costs or transaction costs or additional transactions costs related to the Delek/Alon Merger, nor any retrospective adjustments related to the conforming of Alon's accounting policies to Delek's accounting policies, as such adjustments are impracticable to determine, and such adjustments are not expected to be indicative of on-going operations of the combined company.

Finally, the pro forma presentation of net revenues and net income is inclusive of the revenue and net income (loss) attributable to the California Discontinued Entities (which are generally not material as the majority of the California Discontinued Entities were non-operating during the pro forma period).

Pro forma adjustments are tax-effected at the Company's estimated statutory tax rates.

Year Ended December 31,

(in millions, except per share data)

Net income attributable to Delek

Earnings per share:

(1) The pro forma information for the year ended December 31, 2017 has been updated to reflect the final purchase price allocation in the table above.

The unaudited pro forma statements of operations reflect the following adjustments:

T o eliminate transactions between Delek and Alon for purchases and sales of refined products, reducing revenue and the associated cost of materials and other.

Such pro forma eliminations resulted in a decrease to combined pro forma revenues by $ 59.0 million for the year ended December 31, 2017 .

To eliminate the non-recurring transaction costs incurred during the historical periods.

Such adjustments to general and administrative expense have been estimated to result in an increase to pro forma pre-tax income attributable to Delek totaling $ 32.2 million for the year ended December 31, 2017 .

To retrospectively reflect depreciation of property, plant and equipment and amortization of intangibles based on the fair value of the assets as of the acquisition date, as if that fair value had been reflected beginning January 1, 2016, and to retrospectively eliminate the amortization of any previously recorded intangibles.

Such adjustments to depreciation and amortization have been estimated to result in an increase to pro forma pre-tax income attributable to Delek totaling $ 34.7 million for the year ended December 31, 2017 .

To retrospectively reflect the accretion of asset retirement obligations and certain environmental liabilities.

Such adjustments to general and administrative expense have been estimated to result in a decrease to pro forma pre-tax income attributable to Delek totaling $ 0.8 million for the years ended December 31, 2017 .

To retrospectively reflect adjustments to interest expense, including the impact of discounts or premiums created by the difference in fair value and outstanding amounts as of the acquisition date (collectively, the “new effective yield”), by applying the new effective yield to historical outstanding amounts in the pro forma period and reversing previously recognized interest expense.

Such net adjustments to interest expense have been estimated to result in an increase to pro forma pre-tax income attributable to Delek totaling $ 9.4 million for the year ended December 31, 2017 .

To eliminate Delek’s equity income previously recorded on its equity method investment in Alon, prior to the Delek/Alon Merger.

Such pro forma elimination resulted in a decrease to pro forma pre-tax income totaling $ 3.2 million for the year ended December 31, 2017 .

To eliminate the gain on remeasurement of the equity method investment in Alon totaling $ 190.1 million recognized during the year ended December 31, 2017 .

To record the tax effect on pro forma adjustments and additional tax benefit associated with dividends received from Alon at a combined U.S.

(federal and state) income tax statutory blended rate of approximately 37 % for the year ended December 31, 2017 .

To adjust the weighted average number of shares outstanding based on 0.504 of a share of Delek common stock for each share of Alon common stock

outstanding as of July 1, 2017, as if they were outstanding for the entire year ended December 31, 2017 , reflecting the elimination of Alon historical weighted average shares outstanding and the addition of the estimated New Delek incremental shares issued.

As of June 30, 2017, the carrying value of Delek's equity method investment in Alon was $ 252.6 million .

During the year ended December 31, 2017 , we recognized a gain of $ 196.4 million as a result of remeasuring the 47 % equity method investment in Alon at its fair value as of the Effective Time of the Delek/Alon Merger, in accordance with ASC 805, net of a $ 6.3 million loss to record the reversal of accumulated other comprehensive income.

This net gain of $ 190.1 million was recognized in the line item entitled gain on remeasurement of equity method investment in Alon in the consolidated statements of income.

The acquisition-date fair value of the pre-existing non-controlling interest in Alon was $ 449.0 million and is included in the measurement of the consideration transferred.

Delek began consolidating Alon's results of operations on July 1, 2017.

Alon operations contributed $ 4,428.3 million , $ 4,649.8 million and $ 1,950.0 million to net revenues and $ 328.1 million , $ 394.9 million , and $ 90.1 million to pre-tax income for the years ended December 31, 2019 , 2018 and 2017 , respectively, inclusive of the contribution of the California Discontinued Entities.

Updates to the Preliminary Purchase Price Allocation

During the year ended December 31, 2018 , we continued our procedures to determine the fair value of assets acquired and liabilities assumed in the Delek/Alon Merger, as anticipated and disclosed in our 2017 Annual Report on Form 10-K (all of which were completed by June 30, 2018, within the permitted measurement period).

As a result, the following changes were made to the preliminary purchase price allocation disclosed in our 2017 Annual Report on Form 10-K:

Subsequent increases (decreases) to initial allocation of fair value of net assets acquired:

Receivables (1)

Prepaids and other current assets (2)

Property, plant and equipment

Acquired intangible assets (3)

Accounts payable (4)

Obligation under Supply & Offtake Agreements (5)

Current portion of environmental liabilities

Other current liabilities (6)

Environmental liabilities and asset retirement obligations, net of current portion (7)

Deferred income taxes (8)

Other non-current liabilities (9)

Resulting increase to goodwill

(1) Change primarily relates to the recognition of a receivable associated with a third-party indemnification agreement for asset retirement obligations for one of the acquired refineries that was previously under review, and finalization of an accrued receivable estimate.

(2) Change primarily relates to a reclassification of RINs assets from other current liabilities to other current assets.

(3) Change is primarily due to the addition of an intangible asset for certain below-market leases that had previously been identified but for which the evaluation and determination of fair value was not complete at December 31, 2017 .

(4) Change is primarily due to the elimination of amounts in accounts payable in the retail segment that were determined not to have value combined with reclassifications of amounts to accounts receivable.

(5) Change relates to true-up of certain accounts related to one of the acquired supply and offtake agreements for contractual terms that were previously under review.

( 6) Change is primarily due to an increase related to the reclassification of RINs assets from other current liabilities to other current assets and an increase related to the accrual of certain executive bonuses that were required under existing Alon employment agreements and related to service provided prior to the Delek/Alon Merger, net of adjustments to current income taxes payable to true up income taxes related to the acquired net assets.

(7) Change is to record the long-term portion of additional asset retirement obligations and environmental liabilities identified and/or to update preliminary estimates based on additional information.

(8) Change is related to adjustments to net deferred tax liabilities based on the updated purchase price allocation and revisions of preliminary tax estimates.

(9) Change is related to the reversal of an accrual established in the purchase price allocation related to a pre-acquisition legal contingency that was resolved during the first quarter 2018 in our favor.

We aggregate our operating segments into three reportable segments:

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• results of certain immaterial operating segments, including our Canadian crude trading operations (as discussed in Note 12);

Alon's asphalt terminal operations effective with the Delek/Alon Merger (see Note 8 for further discussion);

our equity method investment in Alon prior to the Delek/Alon Merger (as discussed in Note 6 );

• wholesale crude operations;

• Alon's asphalt terminal operations;

• our discontinued Paramount and Long Beach, California refinery and California renewable fuels facility operations (acquired as part of the Delek/Alon Merger) (see Note 8 for further discussion);

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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.

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

The assets and/or liabilities associated with this hedging activity have not been allocated to the refining segment.

Refining Segment

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 December 31, 2019 , including the following:

The refining segment has a combined nameplate capacity of 302,000 bpd as of December 31, 2020, including the following:

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

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• 74,000 bpd Krotz Springs, Louisiana refinery (the "Krotz Springs refinery");

a non-operating refinery located in Bakersfield, California.

Prior to the Delek/Alon Merger, the refining segment had a combined nameplate capacity of 155,000 bpd, including the Tyler refinery and the El Dorado refinery.

As of December 31, 2019 , the refining segment also owns and operates three biodiesel facilities involved in the production of biodiesel fuels and related activities, located in Crossett, Arkansas, Cleburne, Texas and New Albany, Mississippi (acquired in October 2019).

• a non-operating refinery located in Bakersfield, California, which was sold May 7, 2020.

As of December 31, 2020, the refining segment also owns and operates three biodiesel facilities involved in the production of biodiesel fuels and related activities, located in Crossett, Arkansas, Cleburne, Texas and New Albany, Mississippi.

The biodiesel industry has historically been substantially aided by federal and state tax incentives.

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The blender's tax credit was re-enacted in December 2019 for the years 2020 through 2022 and was retroactively reinstated for 2018 and 2019.

Previously, the blender's tax credit expired on December 31, 2016, but was retroactively reinstated during the first quarter of 2018 to extend through December 31, 2017.

The refining segment's petroleum-based products are marketed primarily in the south central, southwestern and western regions of the United States and also ships and sells gasoline into wholesale markets in the southern and eastern United States.

On May 7, 2020, we sold our equity interests in Alon Bakersfield Property, Inc., an indirect wholly-owned subsidiary that owns our non-operating refinery located in Bakersfield, California, to a subsidiary of Global Clean Energy Holdings, Inc.

(“GCE”) for total cash consideration of $ 40.0 million.

As a result of this sale, we recognized a gain of $ 56.8 million, largely due to the buyer assuming substantially all of the asset retirement obligations and environmental liabilities associated with this refinery, which is included in gain on sale of non-operating refinery on the accompanying consolidated statements of income.

As part of the transaction, GCE granted a call option to Delek to acquire up to a 33 1/3% limited member interest in the acquiring subsidiary of GCE for $ 400 per unit (up to $ 13.3 million), subject to certain adjustments.

Such option is exercisable by Delek through the 90th day after GCE demonstrates commercial operations, as contractually defined.

The refining segment's petroleum-based products are marketed primarily in the south central, southwestern and western regions of the United States.

This segment also ships and sells gasoline into wholesale markets in the southern and eastern United States.

Motor fuels are sold under the Alon or Delek brand through various terminals to supply Alon or Delek branded retail sites.

In addition, Alon sells motor fuels through its wholesale distribution network on an unbranded basis.

In addition, we sell motor fuels through its wholesale distribution network on an unbranded basis.

Logistics Segment

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Retail Segment

Effective with the Delek/Alon Merger July 1, 2017 (see Note 3 ), Delek's retail segment includes the operations of Alon's owned and leased convenience store sites located primarily in central and West Texas and New Mexico.

Our retail segment includes the operations of owned and leased convenience store sites located primarily in Central and West Texas and New Mexico.

These convenience stores typically offer various grades of gasoline and diesel 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.

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

and the terms of such termination require the removal of all 7-Eleven

branding on a store-by-store basis by the earlier of December 31, 2021 or the date upon which our last 7-Eleven store is de-identified or closed.

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 stores pursuant to the termination.

In connection with certain strategic initiatives, we closed or sold 30 under-performing or non-strategic store locations for the year ended December 31, 2019 for total proceeds of $ 15.1 million .

The terms of such agreement and subsequent amendments require the removal of all 7-Eleven branding on a store-by-store basis by December 31, 2023.

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.

In connection with certain strategic initiatives, we closed one store in 2020 and for the year ended December 31, 2019, we closed or sold 30 under-performing or non-strategic store locations for total proceeds of $ 15.1 million.

Significant Inter-segment Transactions

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Year Ended December 31, 2020

(In millions)

Other and Eliminations

Net revenues (excluding intercompany fees and sales)

Inter-segment fees and sales

(In millions) Refining Logistics Retail Corporate,

Other and Eliminations Consolidated

Net revenues (excluding intercompany fees and revenues) $ 5,363.1 $ 183.6 $ 681.7 $ 1,073.4 $ 7,301.8

Inter-segment fees and revenues 454.6 379.8 — ( 834.4 ) —

Operating costs and expenses:

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Depreciation and amortization $ 198.3 $ 35.7 $ 13.2 $ 20.4 267.6

Impairment of goodwill $ 126.0 $ — $ — $ — 126.0

General and administrative expenses 248.3

Other operating income, net ( 13.1 )

Operating income

Operating loss $ ( 728.0 )

Capital spending (excluding business combinations) $ 201.0 $ 15.8 $ 9.1 $ 13.7 $ 239.6

Year Ended December 31, 2019

(In millions)

(In millions) Refining (1) (2)

Logistics Retail Corporate,

Other and Eliminations (2)

Net revenues (excluding intercompany fees and sales)

Inter-segment fees and sales

Net revenues (excluding intercompany fees and revenues) $ 8,095.9 $ 323.0 $ 838.0 $ 41.3 $ 9,298.2

Inter-segment fees and revenues 702.6 261.0 — ( 963.6 ) —

Operating costs and expenses:

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General and administrative expenses 274.7

Other operating expense, net

Other operating income, net ( 2.5 )

Operating income $ 492.3

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Year Ended December 31, 2018

(In millions)

(In millions) Refining (1) (2)

Logistics Retail Corporate,

Other and Eliminations (2)

Net revenues (excluding intercompany fees and sales)

Inter-segment fees and sales

Net revenues (excluding intercompany fees and revenues) $ 8,771.4 $ 416.8 $ 915.4 $ 129.5 $ 10,233.1

Inter-segment fees and revenues 839.0 240.8 — ( 1,079.8 ) —

Operating costs and expenses:

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General and administrative expenses 247.6

Other operating expense, net

Other operating income, net ( 31.3 )

Operating income $ 611.9

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Refining segment contribution margin for the year ended December 31, 2018 includes $ 24.9 million of BTC that was enacted in 2018 all of which related to 2017 renewable blending activities.

(2) The refining segment results of operations for the years ended December 31, 2019 and 2018, includes hedging gains (losses), a component of cost of materials and other, of $ 16.3 million and $( 25.6 ) million, respectively, which was previously included and reported in corporate, other and eliminations.

Other Segment Information

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December 31, 2020

Other and Eliminations

Refining Logistics Retail Corporate,

Other and Eliminations Consolidated

Total assets $ 5,848.9 $ 956.5 $ 258.9 $ ( 930.2 ) $ 6,134.1

Inter-segment notes receivable ( 1,285.8 ) — — 1,285.8 —

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December 31, 2019

Other and Eliminations

Refining Logistics Retail Corporate,

Other and Eliminations Consolidated

Total assets $ 6,549.4 $ 744.4 $ 344.9 $ ( 622.4 ) $ 7,016.3

Inter-segment notes receivable ( 1,586.8 ) — — 1,586.8 —

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Total assets, excluding inter-segment notes receivable and right of use assets $ 4,521.3 $ 744.4 $ 344.9 $ 1,405.7 $ 7,016.3

Earnings (Loss) Per Share and Stock Repurchase Program

Earnings (Loss) Per Share

Basic earnings per share (or "EPS") is computed by dividing net income (loss) by the weighted average common shares outstanding.

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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.

Additionally, in connection with the Delek/Alon Merger (disclosed in Note 3 ), we assumed certain equity instruments, including conversion options (associated with Convertible Notes) and Warrants, that were dilutive in certain periods in which they were outstanding (see discussion of these instruments in Note 11 ).

Additionally, in connection with the Delek/Alon Merger, we assumed certain equity instruments, including conversion options (associated with Convertible Notes) and Warrants, that were dilutive in certain periods in which they were outstanding (see discussion of these instruments in Note 11).

The Convertible Notes conversion options were dilutive during the period they were outstanding when the incremental EPS calculated by dividing the increase in income associated with the elimination of interest expense on the convertible debt, net of tax, by the number of shares that would be issued upon conversion using the treasury stock method (which is applicable because of the cash settlement feature associated with the underlying principal) is dilutive to the overall diluted EPS calculation.

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We also assumed Call Options in connection with the Delek/Alon Merger which were not reflected in the diluted weighted average common shares outstanding because to do so would have been antidilutive.

On September 17, 2018, Delek settled the Convertible Notes for a combination of cash and shares of New Delek Common Stock (See Note 11 ) and in November 2018, Delek entered into Warrant Unwind Agreements (the "Unwind Agreements" - See Note 11 ) with the holders of our outstanding common stock warrants;

therefore, these instruments were only potentially dilutive for EPS for the years ended December 31, 2018 and 2017 .

On September 17, 2018, Delek settled the Convertible Notes for a combination of cash and shares of Delek common stock (See Note 11) and in November 2018, Delek entered into Warrant Unwind Agreements (the "Unwind Agreements" - See Note 11) with the holders of our outstanding common stock warrants;

therefore, these instruments were only potentially dilutive for EPS for the year ended December 31, 2018.

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

Year Ended December 31,

2020 2019 2018

Numerator for EPS - continuing operations

Income from continuing operations

(Loss) Income from continuing operations $ ( 570.4 ) $ 331.0 $ 383.6

Income from continuing operations attributed to non-controlling interest 37.6 25.6 26.7

Income from continuing operations attributable to Delek (numerator for basic EPS - continuing operations attributable to Delek)

(Loss) income from continuing operations attributable to Delek (numerator for basic EPS - continuing operations attributable to Delek) ( 608.0 ) 305.4 356.9

Interest on convertible debt, net of tax — — 2.6

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Weighted average common shares outstanding, assuming dilution 73,598,389 76,574,091 86,768,401

Basic income (loss) per share:

Income (loss) from continuing operations

(Loss) income from discontinued operations

Total basic income (loss) per share

Diluted income (loss) per share:

Income (loss) from continuing operations

(Loss) income from discontinued operations

Total diluted income (loss) per share

Basic (loss) income per share:

(Loss) income from continuing operations $ ( 8.26 ) $ 4.03 $ 4.31

Income (loss) from discontinued operations — 0.07 ( 0.20 )

Total basic (loss) income per share $ ( 8.26 ) $ 4.10 $ 4.11

Diluted (loss) income per share:

(Loss) income from continuing operations $ ( 8.26 ) $ 3.99 $ 4.14

Income (loss) from discontinued operations — 0.07 ( 0.19 )

Total diluted (loss) income per share $ ( 8.26 ) $ 4.06 $ 3.95

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

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Total antidilutive stock-based compensation 4,082,944 1,932,179 1,462,112

Antidilutive convertible debt instruments (because average share price is less than exercise price)

Total antidilutive convertible debt instruments

Antidilutive warrants (because average share price is less than exercise price)

Total antidilutive warrants

Stock Repurchase Program

In December 2016, our Board of Directors authorized a share repurchase program for up to $ 150.0 million of Delek common stock.

Any share repurchases under the repurchase program may be implemented through open market transactions or in privately negotiated transactions, in accordance with applicable securities laws.

The timing, price and size of repurchases will be made at the discretion of management and will depend on prevailing market prices, general economic and market conditions and other considerations.

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

We repurchased 762,623 shares, for a total of $ 25.0 million , pursuant to this repurchase program in December 2017.

On February 26, 2018, the Board of Directors approved a new $ 150.0 million authorization to repurchase Delek common stock.

This amount has no expiration date and is in addition to any remaining amounts previously authorized.

On November 6, 2018 , the Board of Directors authorized the repurchase of an additional $ 500.0 million of Delek common stock.

During the year ended December 31, 2018 , we repurchased 9,022,386 shares of our common stock for a total of $ 365.3 million .

The purchases included the 2.0 million shares of our common stock purchased from Alon Israel in connection with Delek’s rights pursuant to a Stock Purchase Agreement dated April 14, 2015, by and between Delek and Alon Israel.

Alon Israel delivered a right of first offer notice to Delek on January 16, 2018, informing Delek of Alon Israel’s intention to sell the 2.0 million shares, and Delek accepted such offer on January 17, 2018.

The total purchase price for the 2.0 million shares was approximately $ 75.3 million , or $ 37.64 per share.

During the year ended December 31, 2019 , we repurchased 5,039,034 common shares for $ 178.1 million .

As of December 31, 2019 , there was approximately $ 231.7 million of authorization remaining under Delek's aggregate stock repurchase program (based on repurchases that had settled as of December 31, 2019 ).

Delek Logistics and the Alon Partnership

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

As of December 31, 2019 , we owned a 61.4 % limited partner interest in Delek Logistics, consisting of 15,294,046 common units, and a 94.6 % interest in Delek Logistics GP, LLC which owns the entire 2.0 % general partner interest, consisting of 498,482 general partner units, in Delek Logistics and all of the incentive distribution rights.

As of December 31, 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 consolidated statements of income and in non-controlling interest in subsidiaries in the accompanying consolidated balance sheets.

In March 2018, Delek Logistics, through its wholly-owned subsidiary DKL Big Spring, LLC, completed the acquisition from a subsidiary of Delek (the Alon Partnership) of storage tanks and terminals that support our Big Spring, Texas refinery (the "Big Spring Logistic Assets Acquisition"), which included the execution of related commercial agreements.

In addition, a new marketing agreement was entered into between the subsidiary of Delek Logistics and the Alon Partnership pursuant to which the subsidiary of Delek Logistics provides marketing services for product sales from Big Spring refinery.

The cash paid for the transferred assets was $ 170.8 million , and the cash paid for the marketing agreement was $ 144.2 million .

The transactions were financed with borrowings under the 2014 Facility (as defined in Note 11 ).

Additionally, the transaction resulted in the creation of a deferred tax asset related to the tax-book basis difference in the sold assets totaling $ 98.8 million , against which we have recorded a valuation allowance totaling $ 5.5 million for the portion of the deferred tax asset that relates to basis difference attributable to the non-controlling interest and therefore may not be realizable.

Prior periods have not been recast in our Segment Data Note 4 , as these assets did not constitute a business in accordance with the ASU 2017-01, Clarifying the Definition of a Business (" ASU 2017-01"), and were accounted for as acquisitions of assets between entities under common control.

We have agreements with Delek Logistics that, among other things, establish fees for certain administrative and operational services provided by us and our subsidiaries to Delek Logistics, provide certain indemnification obligations and establish terms for fee-based commercial logistics and marketing services provided by Delek Logistics and its subsidiaries to us, including new agreements related to the Big Spring Logistic Assets Acquisition.

On August 13, 2020, Delek Logistics completed a transaction to eliminate the incentive distribution rights ("IDRs") held by Delek Logistics GP, LLC ("Logistics GP"), 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.

No units were sold for the year ended December 31, 2020.

The revenues and expenses associated with these agreements are eliminated in consolidation.

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Accounts receivable 15.7 13.2

Accounts receivable from related parties 5.9 —

Inventory 3.1 12.6

Other current assets 0.4 2.3

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Operating lease right-of-use assets 24.2 3.7

Goodwill 12.2 12.2

Intangible assets, net 160.1 146.6

Other non-current assets 12.1 6.3

Total assets $ 956.4 $ 744.4

LIABILITIES AND DEFICIT

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Other non-current liabilities 22.1 19.3

Deficit ( 108.3 ) ( 151.1 )

Total liabilities and deficit $ 956.4 $ 744.4

Effective May 1, 2020, Delek through its wholly owned subsidiaries Lion Oil Company (“Lion Oil”) and Delek Refining, Ltd.

(“Delek Refining”) contributed certain leased and owned tractors and trailers and related assets used in the provision of trucking and transportation services for crude oil, petroleum and certain other products throughout Arkansas, Oklahoma and Texas to Delek Trucking, LLC (“Delek Trucking”), a direct wholly owned subsidiary of Lion Oil.

Following this contribution, Lion Oil sold all of the issued and outstanding membership interests in Delek Trucking (the “Trucking Acquisition”) to DKL Transportation, LLC (“DKL Transportation”), a wholly owned subsidiary of Delek Logistics.

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

Total consideration for the Trucking 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 Trucking 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.

Prior periods have not been recast in our Note 4 - Segment Data, as these assets did not constitute a business in accordance with ASU 2017-01, Clarifying the Definition of a Business ("ASU 2017-01" ) , and the transaction was accounted for as an acquisition of assets between entities under common control.

Effective March 31, 2020, Delek Logistics, through its wholly-owned subsidiary DKL Permian Gathering, LLC, acquired the Big Spring Gathering System, located in Howard, Borden and Martin Counties, Texas, from Delek, which included the execution of related commercial agreements.

In connection with the closing of the transaction, Delek, Delek Logistics and various of their respective subsidiaries entered into a Throughput and Deficiency Agreement (the “T&D Agreement”).

Under the T&D Agreement, Delek Logistics will operate and maintain the Big Spring Gathering System connecting our interests in and to certain crude oil production with the Delek Logistics' Big Spring, Texas terminal and provide gathering, transportation and other related services.

The total consideration was subject to certain post-closing adjustments and was comprised of $ 100.0 million in cash and 5.0 million common units representing limited partner interest in Delek Logistics.

The cash component of this dropdown was financed with borrowings on the DKL Credit Facility (as defined in Note 11).

Prior periods have not been recast in our Note 4 - Segment Data, as these assets did not constitute a business in accordance with ASU 2017-01 and the transaction was accounted for as an acquisition of assets between entities under common control.

Additionally, in March 2020, we purchased 451,822 of Delek Logistics limited partner units from an investor pursuant to a Common Unit Purchase Agreement between Delek Marketing & Supply, LLC and such investor.

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

The cash paid for the transferred assets was $ 170.8 million, and the cash paid for the marketing agreement was $ 144.2 million.

The transactions were financed with borrowings under the 2014 Facility (as defined in Note 11).

Additionally, the transaction resulted in the creation of a deferred tax asset related to the tax-book basis difference in the sold assets totaling $ 98.8 million, against which we have recorded a valuation allowance totaling $ 5.5 million for the portion of the deferred tax asset that relates to basis difference attributable to the non-controlling interest and therefore may not be realizable.

Prior periods have not been recast in our Note 4 - Segment Data, as these assets did not constitute a business in accordance with the ASU 2017-01, and were accounted for as acquisitions of assets between entities under common control.

Alon Partnership

As part of the Delek/Alon Merger, we acquired the Alon Partnership which owns the assets and conducts the operations of the Big Spring refinery and the associated integrated wholesale marketing operations.

On November 8, 2017, Delek and the Alon Partnership entered into a definitive merger agreement under which Delek agreed to acquire all of the outstanding limited partner units which Delek did not already own in an all-equity transaction (the "Alon Partnership Merger").

This transaction closed on February 7, 2018 (the "Merger Date").

On February 7, 2018 (the "Merger Date"), Delek acquired from the Alon Partnership all of the outstanding limited partner units that Delek did not already own in an all-equity transaction (the "Alon Partnership Merger").

Delek owned approximately 51.0 million limited partner units of the Alon Partnership, or approximately 81.6 % of the outstanding units, immediately prior to the Merger Date.

Under terms of the merger agreement, the owners of the remaining outstanding units in the Alon Partnership that Delek did not own immediately prior to the Merger Date received a fixed exchange ratio of 0.49 shares of New Delek common stock for each limited partner unit of the Alon Partnership, resulting in the issuance of approximately 5.6 million shares of New Delek common stock to the public unitholders of the Alon Partnership.

Under terms of the merger agreement, the owners of the remaining outstanding units in the Alon Partnership that Delek did not own immediately prior to the Merger Date received a fixed exchange ratio of 0.49 shares of Delek common stock for each limited partner unit of the Alon Partnership, resulting in the issuance of approximately 5.6 million shares of Delek common stock to the public unitholders of the Alon Partnership.

Because the transaction represented a combination of ownership interests under common control, the transfer of equity from non-controlling interest to owned interest (additional paid-in capital) was recorded at carrying value and no gain or loss was recognized in connection with the transaction.

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Such costs were included in general and administrative expenses in the accompanying consolidated statements of income.

The limited partner interests of the Alon Partnership prior to this acquisition were represented as common units outstanding.

As of December 31, 2017 , the 11.5 million common units held by the public represented approximately 18.4 % of the Alon Partnership’s common units outstanding.

The limited partner interests in the Alon Partnership not owned by us are reflected in net income attributable to non-controlling interest in the accompanying consolidated statements of income for the year ended December 31, 2017 .

Prior to the Alon Partnership Merger, we had agreements with the Alon Partnership, under which the Alon Partnership agreed to reimburse us for certain administrative and operational services provided by us and our subsidiaries to the Alon Partnership, indemnify us with respect to certain matters and establish terms for the supply of products by the Alon Partnership to us.

As of December 31, 2019 and 2018 , the Alon Partnership is included in Delek's consolidated balance sheet as a wholly-owned subsidiary.

Equity Method Investments

Wink to Webster Pipeline LLC ("WWP")

Wink to Webster Pipeline

On July 30, 2019, we, through our wholly-owned direct subsidiary Delek US Energy, Inc.

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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 year ended December 31, 2019 , we made capital contributions totaling $ 126.7 million .

Subsequent to December 31, 2019 , we made additional capital contributions totaling $ 18.9 million based on capital calls received.

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 years ended December 31, 2020 and 2019, we made capital contributions totaling $ 18.9 million and $ 126.7 million, respectively.

As of December 31, 2019, Delek's investment balance in WWP totaled $ 125.3 million, and our portion of net losses was $ 1.4 million for the year ended December 31, 2019.

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.

Subsequent to December 31, 2019 , on February 21, 2020, we, through our wholly-owned direct subsidiary Delek Energy, entered into the W2W Holdings LLC Agreement with MPLX Operations LLC ("MPLX") (collectively, with its wholly-owned subsidiaries, the "WWP Project Financing Joint Venture" or the "WWP Project Financing JV").

The WWP Project Financing JV was created for the specific purpose of obtaining financing, through its wholly-owned subsidiary, W2W Finance LLC, to fund our combined capital calls resulting from and occurring during the construction period of the pipeline system under the WWP Joint Venture, and to service that debt.

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

The WWP Project Financing JV was created for the specific purpose of obtaining financing to fund our combined capital calls resulting from and occurring during the construction period of the pipeline system under the WWP Joint Venture, and to service that debt.

In connection with the arrangement, both Delek Energy and MPLX contributed their respective 15 % ownership interests to the WWP Project Financing JV as collateral for and in service of the related project financing.

Accordingly, distributions received from WWP through the WWP Project Financing JV will first be applied in service of the related project financing debt, with excess distributions being made to the members of the WWP Project Financing JV as provided for in the W2W Holdings LLC Agreement.

The obligations of the members under the W2W Holdings LLC Agreement are guaranteed by the parents of the members of the WWP Project Financing JV (i.e., for Delek Energy, the guarantee is from Delek US Holdings, Inc.).

Red River Pipeline Company LLC ("Red River")

The obligations of the members under the joint venture are guaranteed by the parents of the members of the WWP Project Financing JV.

The Company evaluated Delek's investment in W2W Holdings LLC ("HoldCo") and determined that HoldCo is a variable interest entity.

The Company determined it is not the primary beneficiary since it does not have the power to direct activities that most significantly impact HoldCo.

The Company does not hold a controlling financial interest in HoldCo because no single party has the power to direct the activities that most significantly impact HoldCo’s economic performance since power to make the decisions about the significant activities is shared equally with MPLX and all significant decisions require unanimous consent of the Board of Directors.

The Company accounts for its investment in HoldCo using the equity method of accounting due to its significant influence with its 50 % membership interest.

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

As of December 31, 2020, except for the guarantee of member obligations under the joint venture, the Company does not have other existing guarantees with or to HoldCo, or any third-party work contracted with it.

As of December 31, 2020, Delek's investment balance in WWP Project Financing Joint Venture totaled $ 66.6 million and is included as part of total assets in corporate, other and eliminations in our segment disclosure.

During the year ended December 31, 2020, we received distributions of $ 69.3 million from WWP Project Financing Joint Venture to return excess capital contributions made.

In addition, we recognized a loss on the investment of $ 8.5 million for the year ended December 31, 2020.

Delek Logistics Investments

In May 2019, Delek Logistics, through its wholly owned indirect subsidiary DKL Pipeline, LLC (“DKL Pipeline”), entered into a Contribution and Subscription Agreement (the “Contribution Agreement”) with Plains Pipeline, L.P.

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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 11), to Red River in exchange for a 33 % membership interest in Red River and DKL Pipeline’s admission as a member of Red River ("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 first half of 2020.

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.

As of December 31, 2019 , Delek's investment balance in Red River totaled $ 131.0 million , and we recognized income on the investment totaling $ 8.4 million for the year ended December 31, 2019 .

During the year ended December 31, 2020, we made additional capital contributions totaling $ 12.2 million based on capital calls received.

As of December 31, 2020 and 2019, Delek's investment balance in Red River totaled $ 141.8 million and $ 131.0 million, respectively.

We recognized income on the investment totaling $ 8.9 million and $ 8.4 million for the years ended December 31, 2020 and 2019, respectively.

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

Other Investments

On May 14, 2015, Delek acquired from Alon Israel Oil Company, Ltd.

("Alon Israel") approximately 33.7 million shares of common stock (the "ALJ Shares") of Alon pursuant to the terms of a stock purchase agreement with Alon Israel dated April 14, 2015 (the "Alon Acquisition").

The ALJ Shares represented an equity interest in Alon of approximately 48 % at the time of acquisition.

Our equity method investment in Alon prior to the Delek/Alon Merger was reported in the corporate, other and eliminations segment.

Effective July 1, 2017, Alon became a wholly-owned subsidiary of New Delek in connection with the Delek/Alon Merger.

In connection with the acquisition, we recognized a gain of $ 196.4 as a result of remeasuring the 47 % equity method investment in Alon at its fair value as of the Effective Time of the Delek/Alon Merger, in accordance with ASC 805, net of a $ 6.3 million loss to record the reversal of accumulated other comprehensive income.

This net gain of $ 190.1 million was recognized in the line item entitled gain on remeasurement of equity method investment in Alon in the consolidated statements of income.

The acquisition-date fair value of the pre-existing non-controlling interest in Alon was $ 449.0 million and is included in the measurement of the consideration transferred.

See Note 3 for further discussion.

Below are the summarized financial information of the results of operations of Alon (in millions) for the previous periods when Alon was accounted for as an equity method investment:

Income Statement Information

For the period January 1, 2017 to June 30, 2017

Pre-tax income

Net income attributable to Alon

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

We own a 50 % membership interest in the entity formed with an affiliate of Plains All American Pipeline, L.P.

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 December 31, 2020 and 2019, Delek Logistics' investment balance in these joint ventures was $ 111.9 million and $ 116.0 million, respectively, and are accounted for using the equity method.

We recognized income on these investments totaling $ 13.8 million and $ 11.5 million for the years ended December 31, 2020 and 2019, respectively.

Other Investments

Effective with the Delek/Alon Merger, we acquired a 50 % interest in two joint ventures that own asphalt terminals located in Fernley, Nevada, and Brownwood, Texas.

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As of December 31, 2020 and 2019, Delek's investment balance in the Brownwood, Texas joint venture was $ 39.3 million and $ 30.7 million, respectively.

We recognized income on this investment totaling $ 15.4 million and $ 15.2 million for the years ended December 31, 2020 and 2019, respectively.

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

Delek Renewables, LLC, a wholly-owned subsidiary of Delek, has a 50 % interest in 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 December 31, 2020 and 2019, Delek Renewables, LLC's investment balance in this joint venture was $ 4.0 million and $ 4.3 million, respectively, and was accounted for using the equity method.

We recognized nominal income on this investment for the both years ended December 31, 2020 and 2019.

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

Discontinued Operations and Assets Held for Sale

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On May 21, 2018, Delek completed the transaction and received net proceeds of approximately $ 110.8 million, inclusive of the $ 75.0 million base proceeds as well as certain preliminary working capital adjustments.

The assets associated with the owned terminals met the definition of held for sale pursuant to ASC 360 as of February 1, 2018, but did not meet the definition of discontinued operations pursuant to ASC 205-20, as the sale of these asphalt assets did not represent a strategic shift that would have a major effect on the entity's operations and financial results.

The assets associated with the owned terminals met the definition of held for sale pursuant to ASC 360 as of February 1, 2018, but did not meet the definition of discontinued operations pursuant to ASC 205-20, Presentation of Financial Statements - Discontinued Operations ("ASC 205-20"), as the sale of these asphalt assets did not represent a strategic shift that would have a major effect on the entity's operations and financial results.

Accordingly, depreciation ceased as of February 1, 2018, and the assets to be sold were reclassified to assets held for sale as of that date and were written down to the estimated fair value less costs to sell, resulting in an impairment loss on assets held for sale of $ 27.5 million for the year ended December 31, 2018.

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In connection with the completion of the sale transaction, we recognized a gain of approximately $ 13.3 million, resulting primarily from the recognition of certain additional proceeds at closing associated with the asphalt terminals which were not previously determinable or probable and the recognition of the gain on the sale of the joint venture which was not previously recognized as held for sale (as it did not meet the criteria).

Such gain on sale of the asphalt assets is reflected in results of continuing operations on the accompanying consolidated income statement for the year ended December 31, 2018 .

Such gain on sale of the asphalt assets is reflected in results of continuing operations on the accompanying consolidated statement of income for the year ended December 31, 2018.

California Discontinued Entities

During the third quarter 2017, we committed to a plan to sell certain assets associated with our Paramount and Long Beach, California refineries (both non-operating refineries) and our California renewable fuels facility ("AltAir"), which were acquired as part of the Delek/Alon Merger.

As a result of this decision and commitment to a plan, and because it was made within three months of the Delek/Alon Merger, we met the requirements under ASC 205-20 and ASC 360 to report the results of the California Discontinued Entities as discontinued operations and to classify the California Discontinued Entities as a group of assets held for sale as of July 1, 2017.

The property, plant and equipment of the California Discontinued Entities were recorded at fair value as part of the Delek/Alon Merger, and we have not recorded any depreciation of these assets since the Delek/Alon Merger.

Such operations were designated and reported as discontinued operations.

Sale of Paramount Refinery Assets and Altair

On March 16, 2018, Delek sold to World Energy, LLC ("World Energy") (i) all of Delek’s membership interests in the California renewable fuels facility ("AltAir") (ii) certain refining assets and other related assets located in Paramount, California and (iii) certain associated tank farm and pipeline assets and other related assets located in California.

The sale involved initial proceeds due at closing, a subsequent working capital

settlement as well as contingent proceeds for Delek's pro rata portion of any BTC relating to AltAir activities in 2018 earned through the sale date in connection with the re-enactment of the 2018 BTC that occurred in December 2019, and other final adjustments on retained contingent liabilities.

In August 2019, we reached an agreement with World Energy to offset amounts payable by Delek under our seller obligations for the Ten-Tex Litigation matter (defined and further discussed in Note 14 ) against the working capital settlement receivable referenced above, and to convert the net receivable to a promissory note in the amount of $ 12.3 million (the "World Energy Note Receivable" or the "Note Receivable").

In connection with the sale, including the initial proceeds and the subsequent resolution of contingencies, we recorded the following:

Recognized in 2019

Recognized in 2018

Total Transaction

(in millions)

Initial cash proceeds received in March 2018:

Continuing operations

Cash flows from investing activities - continuing operations

Discontinued operations

Cash flows from investing activities - discontinued operations

Total cash proceeds

Add (less) non-cash balance sheet adjustments:

Receivable for working capital settlement

Balance sheet - Other current assets (other receivables)

Note Receivable for working capital settlement, net of actual litigation settlement (1)

Balance sheet - Other current and non-current assets (notes receivable)

Relief of existing liability for contingent litigation (net of immaterial rounding)

Balance sheet - Other current liabilities

Net Contingent Proceeds Receivable related to re-enactment of 2018 BTC

Balance sheet - Other current assets (other receivables) and other current liabilities (other accrued liabilities)

Additional proceeds

Total expected proceeds

Pre-tax loss (gain) on sale:

Initial loss on sale recognized in March 2018

Loss on sale of discontinued operations

Subsequent reduction of contingent litigation accrual related to July 2019 settlement

Gain on sale of discontinued operations

Subsequent accrual for contingent proceeds due upon re-enactment of the 2018 BTC

Gain on sale of discontinued operations

Total (gain) loss on sale before taxes

(1) The World Energy Note Receivable bears interest at a fixed rate of 6.0 % per annum payable monthly, and requires monthly principal payments totaling approximately $ 0.5 million beginning in January 2020.

The Note Receivable matures on December 31, 2021, subject to acceleration clauses if certain events occur.

In the event that the BTC is re-enacted for 2018 and/or 2019 resulting in proceeds to World Energy for Altair's qualifying credits, the Note Receivable also provides for the pre-payment of the lesser of the remaining outstanding balance (and all accrued interest) or the amount of the BTC proceeds received will be payable to Delek within 15 days of such receipt.

Because the BTC was re-enacted for those periods in December 2019, this acceleration provision will be applicable when the BTC proceeds are received by World Energy, which is expected to occur in 2020.

On March 16, 2018, Delek sold to World Energy, LLC ("World Energy") (i) all of Delek’s membership interests in AltAir (ii) certain refining assets and other related assets located in Paramount, California and (iii) certain associated tank farm and pipeline assets and other related assets located in California.

The sale involved initial proceeds due at closing, a subsequent working capital settlement as well as contingent proceeds for Delek's pro rata portion of any BTC relating to AltAir activities in 2018 earned through the sale date in connection with the re-enactment of the 2018 BTC that occurred in December 2019, and other final adjustments on retained contingent liabilities.

Total proceeds for the sale were $ 93.3 million, and we recognized a loss in discontinued operations on the sale before taxes of $ 33.3 million, $ 41.4 million of which was recognized in 2018 with the remainder recognized in 2019.

Sale of Long Beach Refinery Net Assets

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We retained certain asset retirement obligations in connection with the disposition of the Long Beach refinery related to work that was required subsequent to the sale.

As of December 31, 2019 , the work has been completed and the remaining unused asset retirement obligations were written off resulting in additional gain on sale of discontinued operations of $ 1.9 million .

As of December 31, 2019, the work was completed and the remaining unused asset retirement obligations were written off resulting in additional gain on sale of discontinued operations of $ 1.9 million.

Operating Results of Discontinued Operations

The operating results, net of tax, from discontinued operations associated with the California Discontinued Entities are presented separately in Delek’s consolidated statements of income and the notes to the consolidated financial statements have been adjusted to exclude the discontinued operations.

Classification as discontinued operations requires retrospective reclassification of the associated assets, liabilities and results of operations for all periods presented, beginning (in this case) as of the date of acquisition, which was July 1, 2017.

Components of amounts reflected in income from discontinued operations are as follows (in millions):

December 31, 2019

December 31, 2018

December 31, 2017

Cost of sales:

Cost of materials and other

Operating expenses (excluding depreciation and amortization)

Total cost of sales

General and administrative expenses

Other operating income, net

Interest expense

Interest income

Other expense, net

Gain (loss) on sale of California Discontinued Entities (1)

Income (loss) from discontinued operations before taxes

Income tax expense (benefit)

Income (loss) from discontinued operations, net of tax (2)

See detail of subsequent adjustments to Gain (loss) on sale of discontinued operations in the table below.

Included in loss from discontinued operations is net income attributable to non-controlling interest totaling $( 8.1 ) million related to AltAir for the year ended December 31, 2018 .

Subsequent Adjustments to Gain (Loss) on Sale of Discontinued Operations

Subsequent to the disposition of the California Discontinued Entities, we recognized certain adjustments that were attributable to operations of the California Discontinued Entities for periods prior to disposition, including (but not necessarily limited to):

litigations, claims or assessments related to matters/events that occurred prior to disposition;

indemnification of certain liabilities that related to the California Discontinued Entities and arose prior to disposition;

and resolution of other contingencies including contingent proceeds.

The following table provides a detail of the subsequent adjustments to the gain (loss) on sale of discontinued operations, as well as the remaining identified contingent liabilities:

(in millions)

December 31, 2019

December 31, 2018

Subsequent adjustments to gain (loss) on sale of discontinued operations (pre-tax):

Reduction of AltAir-related contingent litigation accrual related to July 2019 settlement (1)

Accrual for AltAir-related contingent proceeds due upon re-enactment of the 2018 BTC

Reduction of Paramount-related accrual for California emissions credits requirements

Write-off related to retained Long Beach asset retirement obligations and environmental liabilities

Total adjustments to gain (loss) on sale of discontinued operations (pre-tax)

(in millions)

December 31, 2019

December 31, 2018

Remaining identified contingent liabilities (recorded in other current liabilities):

AltAir-related Ten-Tex Litigation Accrual (1)

Paramount-related accrual for California emissions credits requirements

Relates to the "Ten-Tex Litigation" further discussed in Note 14 .

Classification as discontinued operations requires retrospective reclassification of the associated assets, liabilities and results of operations for all periods presented.

The loss from discontinued operations, net of tax of $ 8.7 million for the year ended December 31, 2018, included operating income of $ 26.1 million and a preliminary loss on sale of California Discontinued Entities of $ 40.0 million, which was subsequently adjusted in 2019 by $ 6.6 million for a final loss on the sale of $ 33.4 million.

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

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019

Refinery raw materials and supplies $ 270.7 $ 400.4

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Refinery finished goods 327.1 397.5

Retail fuel 6.2 7.3

Retail merchandise 28.5 19.8

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For the years ended December 31, 2020, 2019 and 2018, we recognized a net reduction (increase) in cost of materials and other in the accompanying consolidated statements of income related to the change in pre-tax inventory valuation of $( 29.2 ) million, $ 52.3 million and $( 51.3 ) million, respectively.

At December 31, 2019 and 2018 , the excess of replacement cost over the carrying value (LIFO) of the Tyler refinery inventories was $ 14.9 million and $ 1.5 million , respectively.

At December 31, 2020 and 2019, the excess of replacement cost compared to the carrying value (LIFO) of the Tyler refinery inventories was $ 3.4 million and $ 14.9 million, respectively.

Permanent Liquidations

We incurred a permanent reduction in a LIFO layer resulting in liquidation gain (loss) in our refinery inventory of $ 9.2 million , $( 7.5 ) million and $ 0.9 million during the years ended December 31, 2019 , 2018 and 2017 , respectively.

We incurred a permanent reduction in a LIFO layer resulting in liquidation (loss) gain in our refinery inventory of $( 1.6 ) million, $ 9.2 million and $( 7.5 ) million during the years ended December 31, 2020, 2019 and 2018, respectively.

These liquidation (losses) gains were recognized as a component of cost of materials and other in the accompanying consolidated statements of income.

Crude Oil Supply and Inventory Purchase Agreements

Inventory Supply and Offtake Obligations

Delek has Supply and Offtake Agreements with J.

Aron & Company ("J.

Aron") in connection with its El Dorado, Big Spring and Krotz Spring refineries (collectively, the "Supply and Offtake Agreements").

Aron in connection with its El Dorado, Big Spring and Krotz Springs refineries.

Pursuant to the Supply and Offtake Agreements, (i) J.

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Aron (the "Step-In"), and the Supply and Offtake Agreements require the repurchase of remaining inventory (including certain "Baseline Volumes") at the termination of those Agreements (the "Step-Out").

The Supply and Offtake Agreements are accounted for as product financing arrangements under the fair value election provided by ASC 815 and ASC 825.

The Supply and Offtake Agreements are accounted for as inventory financing arrangements under the fair value election provided by ASC 815 and ASC 825.

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

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(1) Includes Baseline Volumes plus/minus over/short quantities.

The El Dorado Supply and Offtake Agreement has a maturity date of April 30, 2020.

The Big Spring and Krotz Springs Supply and Offtake Agreements expire in May 2021, except that J.

Aron or Delek may elect to early terminate in May 2020 on prior notice, as defined in those Agreements.

The Big Spring and Krotz Springs Supply and Offtake Agreements were amended in November 2019 to require such notice in February 2020, and again in January and February 2020 to ultimately require such notice in March 2020.

The Supply and Offtake Agreements have certain termination provisions, which may include requirements to negotiate with third parties for the assignment to us of certain contracts, commitments and arrangements, including procurement contracts, commitments for the sale of product, and pipeline, terminalling, storage and shipping arrangements.

The Supply and Offtake Agreements were amended in December 2018 for Big Spring and in January 2019 for El Dorado and Krotz Springs 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") will be based upon a fixed price.

Prior to those amendments, the Baseline Step-Out Liabilities were based on market-indexed pricing.

The amendments resulted in Baseline Step-Out Liabilities that are no longer subject to commodity price volatility, but for which its fair value is now subject to interest rate risk.

As a result, we recorded gains on the change in fair value resulting from the modification of the instruments from commodities-based risk to interest rate risk in cost of materials and other in the periods in which the amendments occurred, including $ 7.6 million of which were recognized in the first quarter of 2019 and $ 4.0 million in the fourth quarter of 2018.

Subsequent to these amendments, such Baseline Step-Out Liabilities continued to be recorded at fair value, where the fair value reflected changes in interest rate risk rather than commodity price risk under the fair value election provided by ASC 815 and ASC 825.

Prior to the amendments, the Obligations under the Supply and Offtake Agreements were all classified as current based on the market-indexed nature of the liabilities.

Subsequent to the amendments, the Baseline Step-Out Liabilities are reflected as non-current liabilities on our consolidated balance sheet to the extent that they are not contractually due within twelve months.

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

In September 2019, we amended the Supply and Offtake Agreements to increase the fixed Step-Out price on Baseline Volumes.

As a result of the change in the contractual terms, we received cash, net of estimated fees paid, totaling approximately $ 38.9 million.

No gain or loss was recognized as a result of these September 2019 amendments.

In January 2020, we amended our three Supply and Offtake Agreements so that the Baseline Step-Out Liabilities were once again 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.

In April 2020, we amended and restated our three Supply and Offtake Agreements to renew and extend the terms to December 30, 2022, with J.

Aron having the sole discretion to further extend to May 30, 2025 by giving at least 6 months prior notice to the current maturity date.

As part of this amendment, there were changes to the underlying market index, annual fee, the crude purchase fee, crude roll fees and timing of cash settlements related to periodic price adjustments (the "Periodic Price Adjustments").

The Baseline Step-Out Liabilities continue to be recorded at fair value under the fair value election included under ASC 815 and ASC 825.

The Baseline Step-Out Liabilities have a floating component whose fair value reflects changes to commodity price risk with changes in fair value recorded in cost of materials and other and a fixed component whose fair value reflects changes to interest rate risk with changes in fair value recorded in interest expense.

There was no amendment date change in fair value resulting from the modification.

The Baseline Step-Out Liabilities are reflected as non-current liabilities on our consolidated balance sheet to the extent that they are not contractually due within twelve months.

Pursuant to the Periodic Price Adjustments provision in the Supply and Offtake Agreements, the Company may be required to pay down all or a portion of the fixed component of the Baseline Step-Out Liabilities or may receive additional proceeds depending on the change in fair value of the inventory collateral subject to a threshold at certain specified Periodic Pricing Dates, which occur on October 1st and May 1st, annually, not to extend beyond expiration of the Supply and Offtake Agreements.

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.

On October 1, 2020, the provision was triggered 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 was 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.

As of December 31, 2020, the fixed component of the Baseline Step-Out Liabilities subject to the Periodic Price Adjustments amounted to approximately $ 33.1 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 May 2021 and October 2021.

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

(in millions) El Dorado Big Spring Krotz Springs Total

Balances as of December 31, 2020:

Baseline Step-Out Liability $ 106.3 $ 47.9 $ 70.7 $ 224.9

Revolving over/short product financing liability

Revolving over/short product financing liability (receivable) 102.0 25.3 ( 4.5 ) 122.8

Total Obligations Under Supply and Offtake Agreements 208.3 73.2 66.2 347.7

Current portion (1)

102.0 25.3 ( 4.5 ) 122.8

Obligations Under Supply and Offtake Agreements - Noncurrent portion $ 106.3 $ 47.9 $ 70.7 $ 224.9

Other receivable for monthly activity true-up (included in current receivables)

(in millions)

Krotz Springs

Other payable for monthly activity true-up $ 6.6 $ 7.0 $ — $ 13.6

(in millions) El Dorado Big Spring Krotz Springs Total

Balances as of December 31, 2019:

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Revolving over/short product financing liability 93.0 73.5 40.5 207.0

Revolving Step-Out Liability (prior to January 2019 amendments)

Total Obligations Under Supply and Offtake Agreements 218.5 130.7 128.1 477.3

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Obligations Under Supply and Offtake Agreements - Noncurrent portion $ — $ 57.2 $ 87.6 $ 144.8

Other (receivable) payable for monthly activity true-up (included in current payables (receivables))

In September 2019, we amended the Supply and Offtake Agreements to increase the fixed Step-Out price on Baseline Volumes.

As a result of the change in the contractual terms, we received cash, net of estimated fees paid, totaling approximately $ 38.9 million .

No gain or loss was recognized as a result of these September 2019 amendments.

Subsequent to December 31, 2019 , in January 2020, we amended our three Supply and Offtake Agreements to convert the Baseline Step-Out Liabilities back to a market-indexed price subject to commodity price risk with corresponding changes to underlying market-based indices and certain differentials.

As of December 31, 2019 , the effective interest rates related to the Supply and Offtake Agreements, as amended, were as follows:

Krotz Springs

Effective interest rate as of December 31, 2019

Other receivable for monthly activity true-up $ ( 16.4 ) $ ( 3.1 ) $ ( 3.5 ) $ ( 23.0 )

(1) Current portion for Krotz Springs includes $ 1.9 million of current portion of obligations under Supply and Offtake Agreements and $ 6.4 million of current assets presented in our consolidated balance sheet.

The Supply and Offtake Agreements require payments of fees which are factored into the interest rate yield under the fair value accounting model.

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

(in millions)

Krotz Springs

(in millions) El Dorado Big Spring Krotz Springs Total

Recurring cash fees paid during the year ended December 31, 2020 $ 9.7 $ 3.4 $ 4.1 $ 17.2

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

(in millions)

Krotz Springs

(in millions) El Dorado Big Spring Krotz Springs Total

Interest expense for the year ended December 31, 2020 $ 10.1 $ 6.5 $ 4.5 $ 21.1

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Interest expense for the year ended December 31, 2018 $ 10.7 $ 7.1 $ 6.7 $ 24.5

Reflected in interest expense are gains totaling $ 9.3 million for the year ended December 31, 2019 , related to the changes in fair value in the Baseline Step-Out Liabilities component of Obligations Under Supply and Offtake Agreements.

Reflected in interest expense are losses totaling $ 3.9 million for the year ended December 31, 2020, and gains totaling $ 9.3 million for the year ended December 31, 2019 related to the changes in fair value in the Baseline Step-Out Liabilities component of Obligations Under Supply and Offtake Agreements.

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

(in millions)

Big Spring and Krotz Springs

(in millions) El Dorado Big Spring and Krotz Springs

Letters of credit outstanding as of December 31, 2020 $ 195.0 $ 10.0

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

In connection with the Krotz Springs Supply and Offtake Agreement, prior to September 30, 2019, we granted a security interest to J.

Aron in certain assets (including all of its accounts receivable and inventory) to secure our obligations to J.

Pursuant to an amendment to the security agreement effective September 30, 2019, no cash, deposit accounts or accounts receivable constitute collateral.

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):

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019

Revolving Credit Facility $ — $ 30.0

Term Loan Credit Facility (1)

1,246.8 1,069.5

Hapoalim Term Loan (2)

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Promissory Notes 20.0 45.0

2,348.4 2,067.1

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

$ 2,315.0 $ 2,030.7

(1) Net of deferred financing costs of $ 2.9 million and $ 3.5 million, respectively, and debt discount of $ 23.3 million and $ 12.5 million, respectively, at December 31, 2020 and December 31, 2019.

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

(2) Net of deferred financing costs of $ 0.2 million and $ 0.3 million, respectively, and debt discount of $ 0.1 million and $ 0.2 million, respectively, at December 31, 2020 and December 31, 2019.

(3) Net of deferred financing costs of $ 3.3 million and $ 4.0 million, respectively, and debt discount of $ 1.0 million and $ 1.3 million, respectively, at December 31, 2020 and December 31, 2019.

Delek Revolver and Term Loan

On March 30, 2018 (the "Closing Date"), Delek entered into (i) a new term loan credit agreement with Wells Fargo Bank, National Association, as administrative agent (the "Term Administrative Agent"), Delek, as borrower, certain subsidiaries of Delek, as guarantors, and the lenders from time to time party thereto, providing for a senior secured term loan facility in an amount of $ 700.0 million (the "Term Loan Credit Facility") and (ii) a second amended and restated credit agreement with Wells Fargo Bank, National Association, as administrative agent (the "Revolver Administrative Agent"), Delek, as borrower, certain subsidiaries of Delek, as guarantors, and the other lenders party thereto, providing for a senior

secured asset-based revolving credit facility with commitments of $ 1.0 billion (the "Revolving Credit Facility" and, together with the Term Loan Credit Facility, the "New Credit Facilities").

The Revolving Credit Facility permits borrowings in Canadian dollars of up to $ 50.0 million.

Prior to the December 2019 amendment, the Revolving Credit Facility permitted the issuance of letters of credit of up to $ 300.0 million , including letters of credit denominated in Canadian dollars of up to $ 10.0 million .

On December 18, 2019, we amended the Second Amended and Restated Credit Agreement dated March 30, 2018, which increased the capacity to issue letters of credit under the agreement from $ 300.0 million up to $ 400.0 million .

The Revolving Credit Facility also permits the issuance of letters of credit of up to $ 400.0 million, including letters of credit denominated in Canadian dollars of up to $ 10.0 million.

Delek may designate restricted subsidiaries as additional borrowers under the Revolving Credit Facility.

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The terms of the Incremental Term Loans and Incremental Loans are substantially identical to the terms applicable to the initial term loans under the Term Loan Credit Facility borrowed in March 2018.

There are no restrictions on the Company's use of the proceeds of the Incremental Term Loans and Incremental Term Loans.

The proceeds for the Incremental Term Loans may be used for (i) reducing utilizations under the Revolving Credit Facility, (ii) general corporate purposes and (iii) paying transaction fees and expenses associated with the Incremental Amendment.

The proceeds for the Incremental Loans may be used for (i) for general corporate purposes (including growth capital expenditures) and (ii) to pay fees and expenses associated with the Second Incremental Amendment.

There are no restrictions on the Company's use of the proceeds of the Incremental Term Loans and Incremental Loans.

The proceeds may be used for (i) reducing utilizations under the Revolving Credit Facility, (ii) general corporate purposes and (iii) paying transaction fees and expenses associated with the incremental amendments.

On May 19, 2020, we amended the Term Loan Credit Facility agreement and borrowed $ 200.0 million in aggregate principal amount of incremental term loans (the “Third Incremental Term Loan”) at an original issue discount of 7.00 %.

The Third Incremental Term Loan constitutes a separate class of term loan (the "Class B Loan") under the Term Loan Credit Facility from those initially borrowed in March 2018 and the incremental term loans borrowed in May 2019 and November 2019 (collectively, the "Class A Loans").

Delek will be required to pay a make-whole prepayment fee if the Third Incremental Term Loan is prepaid pursuant to an optional prepayment, in connection with a non-permitted debt issuance or in connection with an acceleration within one year of the incurrence of the Third Incremental Term Loan.

Delek may voluntarily prepay the outstanding Third Incremental Term Loan at any time subject to customary breakage costs with respect to LIBOR loans and subject to a prepayment premium of 1.00 % in connection with certain customary repricing events that may occur during the period from the day after the first anniversary of the Third Incremental Term Loan through the second anniversary of the Third Incremental Term Loan.

The other terms of the Third Incremental Term Loan are substantially identical to the terms applicable to the Class A Loans.

The proceeds of the Third Incremental Term Loan may be used (i) for general corporate purposes and (ii) to pay transaction fees and expenses associated with the Third Incremental Term Loan.

Interest and Unused Line Fees

The interest rates applicable to borrowings under the Term Loan Credit Facility and the Revolving Credit Facility are based on a fluctuating rate of interest measured by reference to either, at Delek’s option, (i) a base rate, plus an applicable margin, or (ii) a reserve-adjusted London Interbank Offered Rate ("LIBOR"), plus an applicable margin (or, in the case of Revolving Credit Facility borrowings denominated in Canadian dollars, the Canadian dollar bankers' acceptances rate ("CDOR")).

The interest rates applicable to borrowings under the Term Loan Credit Facility and the Revolving Credit Facility are based on a fluctuating rate of interest measured by reference to either, at Delek’s option, (i) a base rate, plus an applicable margin, or (ii) a reserve-adjusted LIBOR, plus an applicable margin (or, in the case of Revolving Credit Facility borrowings denominated in Canadian dollars, the Canadian dollar bankers' acceptances rate ("CDOR")).

The initial applicable margin for all Term Loan Credit Facility borrowings was 1.50 % per annum with respect to base rate borrowings and 2.50 % per annum with respect to LIBOR borrowings.

On October 26, 2018, Delek entered into an amendment to the Term Loan Credit Facility (the “First Amendment”) to reduce the margin on borrowings under the Term Loan Credit Facility and incorporate certain other changes.

The First Amendment decreased the applicable margins for borrowings under (i) Base Rate Loans from 1.50 % to 1.25 % and (ii) LIBOR Rate Loans from 2.50 % to 2.25 % , as such terms are defined in the Term Loan Credit Facility.

The initial applicable margin for Revolving Credit Facility borrowings was 0.25 % per annum with respect to base rate borrowings and 1.25 % per annum with respect to LIBOR and CDOR borrowings, and the applicable margin for such borrowings after September 30, 2018 is based on Delek’s excess availability as determined by reference to a borrowing base, ranging from 0.25 % to 0.75 % per annum with respect to base rate borrowings and from 1.25 % per annum to 1.75 % per annum with respect to LIBOR and CDOR borrowings.

The First Amendment decreased the applicable margins for Class A Loans under (i) Base Rate Loans from 1.50 % to 1.25 % and (ii) LIBOR Rate Loans from 2.50 % to 2.25 %, as such terms are defined in the Term Loan Credit Facility.

Class B Loans incurred under the Third Incremental Term Loan bear interest at a rate that is determined, at the Company’s election, at LIBOR or at base rate, in each case, plus an applicable margin of 5.50 % with respect to LIBOR borrowings and 4.50 % with respect to base rate borrowings.

Additionally, Class B loans that are LIBOR borrowings are subject to a minimum LIBOR rate floor of 1.00 %.

The initial applicable margin for Revolving Credit Facility borrowings was 0.25 % per annum with respect to base rate borrowings and 1.25 % per annum with respect to LIBOR and CDOR borrowings, and the applicable margin for such borrowings after September 30, 2018 is based on Delek’s excess revolver availability as determined by reference to a borrowing base, ranging from 0.25 % to 0.75 % per annum with respect to base rate borrowings and from 1.25 % to 1.75 % per annum with respect to LIBOR and CDOR borrowings.

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 fee will be at a rate of 0.25 % or 0.375 % per annum, depending on average commitment usage for such quarter.

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The Term Loan Credit Facility also requires annual prepayments with a variable percentage of Delek’s excess cash flow, ranging from 50 % to 0 % depending on Delek’s consolidated fiscal year end secured net leverage ratio.

Delek may also make voluntarily prepayments under the Term Loan Credit Facility at any time, subject to a prepayment

premium of 1.0 % in connection with certain customary repricing events that may occur within six months after the Second Incremental Effective Date, with no premium applied after six months.

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

Guarantee and Security

The obligations of the borrowers under the New Credit Facilities are guaranteed by Delek and each of its direct and indirect, existing and future, wholly-owned domestic subsidiaries, subject to customary exceptions and limitations, and excluding Delek Logistics Partners, LP, Delek Logistics GP, LLC, and each subsidiary of the foregoing (collectively, the "MLP Subsidiaries").

The obligations of the borrowers under the New Credit Facilities are guaranteed by Delek and each of its direct and indirect, existing and future, wholly-owned domestic subsidiaries, subject to customary exceptions and limitations, and excluding Delek Logistics, Delek Logistics GP, LLC, and each subsidiary of the foregoing (collectively, the "MLP Subsidiaries").

Borrowings under the New Credit Facilities are also guaranteed by DK Canada Energy ULC, a British Columbia unlimited liability company and a wholly-owned restricted subsidiary of Delek.

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Additional Information

At December 31, 2019 , the weighted average borrowing rate under the Revolving Credit Facility was 5.0 % and was comprised entirely of a base rate borrowing and the principal amount outstanding thereunder was $ 30.0 million .

At December 31, 2020, the weighted average borrowing rate under the Revolving Credit Facility was 3.5 % with no principal amount outstanding.

Additionally, there were letters of credit issued of approximately $ 253.2 million as of December 31, 2020 under the Revolving Credit Facility.

Unused credit commitments under the Revolving Credit Facility, as of December 31, 2020, were approximately $ 746.8 million.

At December 31, 2019 , the weighted average borrowing rate under the Term Loan Credit Facility was approximately 4.05 % comprised entirely of a LIBOR borrowing and the principal amount outstanding thereunder was $ 1,085.5 million .

At December 31, 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 $ 1,273.0 million.

As of December 31, 2020, the effective interest rate related to the Term Loan Credit Facility was 3.57 %.

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The interest rate under the Agreement is equal to LIBOR plus a margin of 3.00 %.

The Agreement has a current maturity of December 31, 2022 and requires quarterly loan amortization payments of $ 0.1 million , commencing March 31, 2020.

Proceeds may be used for general purposes.

The Agreement has a maturity date of December 31, 2022 and requires quarterly loan amortization payments of $ 0.1 million, commencing March 31, 2020.

Proceeds may be used for general corporate purposes.

The Agreement has an accordion feature that allows increasing the term loan to maximum size of $ 100.0 million, subject to receiving increased or new commitments from lenders and the satisfaction of certain other conditions precedent.

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

On December 30, 2020, we amended the BHI Term Loan to modify one of the required quarterly financial covenant metrics;

there were no other changes as a result of this amendment.

At December 31, 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 $ 39.6 million.

1 unchanged sentence

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") with a $ 100.0 million accordion feature, bearing interest at either the U.S.

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.

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.

The obligations under the Delek Logistics Credit Facility remain secured by first priority liens on substantially all of Delek Logistics' tangible and intangible assets.

Additionally, a subsidiary of Delek continues to provide a limited guaranty of Delek Logistics' obligations under the Delek Logistics Credit Facility.

The guaranty is (i) limited to an amount equal to the principal amount, plus unpaid and accrued interest, of a promissory note made by Delek in favor of the subsidiary guarantor (the "Holdings Note") and (ii) secured by the subsidiary guarantor's pledge of the Holdings Note to the Delek Logistics Credit Facility lenders.

As of both December 31, 2019 and 2018 , the principal amount of the Holdings Note was $ 102.0 million .

The obligations under the Delek Logistics Credit Facility are secured by first priority liens on substantially all of Delek Logistics' tangible and intangible assets.

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

4 unchanged sentences

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 December 31, 2019 , this fee was 0.50 % per year.

As of December 31, 2020, this fee was 0.35 % 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 Delek Logistics and its subsidiaries up to $ 20.0 million.

As of December 31, 2020, Delek Logistics had $ 746.6 million of outstanding borrowings under the Delek Logistics Credit Facility, with no letters of credit in place.

2 unchanged sentences

On May 23, 2017, Delek Logistics and Delek Logistics Finance Corp.

(collectively, the “Issuers”) issued $ 250.0 million in aggregate principal amount of 6.75 % senior notes due 2025 (the “Delek Logistics Notes”) at a discount.

(collectively, the “Issuers”) issued $ 250.0 million in aggregate principal amount of 6.75 % senior notes due in 2025 (the “Delek Logistics Notes”) at a discount.

The Delek Logistics Notes are general unsecured senior obligations of the Issuers.

2 unchanged sentences

Interest on the Delek Logistics Notes is payable semi-annually in arrears on each May 15 and November 15, commencing November 15, 2017.

At any time prior to May 15, 2020, the Issuers may redeem up to 35 % of the aggregate principal amount of the Delek Logistics Notes with the net cash proceeds of one or more equity offerings by Delek Logistics at a redemption price of 106.750 % of the redeemed principal amount, plus accrued and unpaid interest, if any, subject to certain conditions and limitations.

Prior to May 15, 2020, the Issuers may redeem all or part of the Delek Logistics Notes at a redemption price of the principal amount plus accrued and unpaid interest, if any, plus a "make whole" premium, subject to certain conditions and limitations.

In addition, beginning on May 15, 2020, the Issuers may, subject to certain conditions and limitations, redeem all or part of the Delek Logistics Notes, at a redemption price of 105.063 % of the redeemed principal for the twelve-month period beginning on May 15, 2020, 103.375 % for the twelve-month period beginning on May 15, 2021, 101.688 % for the twelve-month period beginning on May 15, 2022, and 100.00 % beginning on May 15, 2023 and thereafter, plus accrued and unpaid interest, if any.

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

Beginning on May 15, 2020, the Issuers may, subject to certain conditions and limitations, redeem all or part of Delek Logistics Notes, at a redemption price of 105.063 % of the redeemed principal for the twelve-month period beginning on May 15, 2020, 103.375 % for the twelve-month period beginning on May 15, 2021, 101.688 % for the twelve-month period beginning on May 15, 2022, and 100.00 % beginning on May 15, 2023 and thereafter, plus accrued and unpaid interest, if any.

In the event of a change of control, accompanied or followed by a ratings downgrade within a certain period of time, subject to certain conditions and limitations, the Issuers will be obligated to make an offer for the purchase of the Delek Logistics Notes from holders at a price equal to 101.00 % of the principal amount thereof, plus accrued and unpaid interest.

In connection with the issuance of the Delek Logistics Notes, the Issuers and the Guarantors entered into a registration rights agreement, whereby the Issuers and the Guarantors were required to exchange the Delek Logistics Notes for new notes with terms substantially identical in all material respects with the Delek Logistics Notes except the new notes do not contain terms with respect to transfer restrictions.

On April 25, 2018, Delek Logistics made an offer to exchange the Delek Logistics Notes and the related guarantees that were validly tendered and not validly withdrawn for an equal principal amount of exchange notes that are freely tradeable, as required under the terms of the original indenture (the “Exchange Offer”).

The Exchange Offer expired on May 23, 2018 (the "Expiration Date").

The terms of the exchange notes that were issued as a result of the Exchange Offer (also referred to as the "2025 Notes") are substantially identical to the terms of the original Delek Logistics Notes.

As of December 31, 2019 , we had $ 250.0 million in outstanding principal amount under the Delek Logistics Notes.

As of December 31, 2019 , the effective interest rate to the Delek Logistics Notes was 7.43 % .

As of December 31, 2020, we had $ 250.0 million in outstanding principal amount under the Delek Logistics Notes, and the effective interest rate was 7.45 %.

Alon Convertible Senior Notes (share values in dollars)

In connection with the Delek/Alon Merger, Alon, New Delek and U.S.

In connection with the Delek/Alon Merger, Alon, Delek and U.S.

Bank National Association, the Trustee, entered into the Supplemental Indenture, effective as of July 1, 2017, supplementing the Indenture, dated as of September 16, 2013 (the “Original Indenture”;

the Original Indenture, as amended by the Supplemental Indenture, is referred to as the "Indenture"), pursuant to which Alon issued its 3.0 % Convertible Senior Notes due 2018 (as previously defined, the “Convertible Notes”) in the aggregate principal amount of $ 150.0 million, which were convertible into shares of Alon’s common stock, par value $ 0.01 per share or cash or a combination of cash and Alon common stock, at Alon's election, all as provided in the Indenture.

The Supplemental Indenture provides that, as of the Effective Time, the right to convert each $ 1,000 principal amount of the Convertible Notes based on a number of shares of Alon Common Stock equal to the Conversion Rate (as defined in the Indenture) in effect immediately prior to the Delek/Alon Merger was changed into a right to convert each $ 1,000 principal amount of Convertible Notes into or based on a number of shares of New Delek Common Stock (at the exchange rate of 0.504 ), par value $ 0.01 per share, equal to the Conversion Rate in effect immediately prior to the Merger.

In addition, the Supplemental Indenture provided that, as of the Effective Time, New Delek fully and unconditionally guaranteed, on a senior basis, Alon’s obligations under the Convertible Notes.

The Supplemental Indenture provides that, as of the Effective Time, the right to convert each $ 1,000 principal amount of the Convertible Notes based on a number of shares of Alon common stock equal to the Conversion Rate (as defined in the Indenture) in effect immediately prior to the Delek/Alon Merger was changed into a right to convert each $ 1,000 principal amount of Convertible Notes into or based on a number of shares of Delek common stock (at the exchange rate of 0.504 ), par value $ 0.01 per share, equal to the Conversion Rate in effect immediately prior to the Merger.

In addition, the Supplemental Indenture provided that, as of the Effective Time, Delek fully and unconditionally guaranteed, on a senior basis, Alon’s obligations under the Convertible Notes.

Interest on the Convertible Notes was payable in arrears in March and September of each year.

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The holders of the Convertible Notes could convert their notes at any time after June 15, 2018 into a settlement amount determined in accordance with the terms of the Indenture.

The Convertible Notes could be converted into shares of New Delek Common Stock, into cash, or into a combination of cash and shares of New Delek Common Stock, at our election.

The Convertible Notes could be converted into shares of Delek common stock, into cash, or into a combination of cash and shares of Delek common stock, at our election.

In May 2018, we made the election and notified holders of our intention to satisfy the principal amount outstanding with cash and the incremental value of the conversion options with shares at maturity.

The conversion rate of the Convertible Notes was subject to adjustment upon the occurrence of certain events, including cash dividend adjustments.

On September 17, 2018, Delek settled the Convertible Notes for a combination of cash and shares of New Delek Common Stock.

The maturity settlement in respect of the Convertible Notes consisted of (i) cash payments totaling approximately $ 152.5 million which included a cash payment for outstanding principal of $ 150.0 million , a cash payment for accrued interest of approximately $ 2.2 million , a cash payment for dividends of approximately $ 0.3 million and a nominal cash payment in lieu of fractional shares, and (ii) the issuance of approximately 2.7 million shares of New Delek Common Stock to holders of the Convertible Notes (the “Conversion Shares”).

On September 17, 2018, Delek settled the Convertible Notes for a combination of cash and shares of Delek common stock.

The maturity settlement in respect of the Convertible Notes consisted of (i) cash payments totaling approximately $ 152.5 million which included a cash payment for outstanding principal of $ 150.0 million, a cash payment for accrued interest of approximately $ 2.2 million, a cash payment for dividends of approximately $ 0.3 million and a nominal cash payment in lieu of fractional shares, and (ii) the issuance of approximately 2.7 million shares of Delek common stock to holders of the Convertible Notes (the “Conversion Shares”).

The issuance of the Conversion Shares was made in exchange for the Convertible Notes pursuant to an exemption from the registration requirements provided by Section 3(a)(9) of the Securities Act of 1933, as amended.

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In connection with the Convertible Notes offering, Alon entered into convertible note hedge transactions with respect to Alon common stock (as previously defined, the “Call Options”) with the initial purchasers of the Convertible Notes (the “Hedge Counterparties”).

In connection with the Delek/Alon Merger, Alon, Delek and the Hedge Counterparties entered into amended and restated Call Options permitting us to purchase up to approximately 5.7 million shares of New Delek Common Stock, subject to customary anti-dilution adjustments, that underlie the Convertible Notes sold in the offering.

In connection with the Delek/Alon Merger, Alon, Delek and the Hedge Counterparties entered into amended and restated Call Options permitting us to purchase up to approximately 5.7 million shares of Delek common stock, subject to customary anti-dilution adjustments, that underlie the Convertible Notes sold in the offering.

On September 17, 2018, we exercised the Call Options in connection with the settlement of the Convertible Notes and received approximately 2.7 million shares of our common stock from the Call Option counterparties, a cash payment for dividends of approximately $ 0.3 million and a nominal cash payment in lieu of fractional shares.

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In connection with the Convertible Notes offering, Alon also entered into warrant transactions whereby warrants to acquire Alon common stock were sold to the Hedge Counterparties.

In connection with the Delek/Alon Merger, Alon, Delek and the Hedge Counterparties entered into amended and restated Warrants which allow the Hedge Counterparties to purchase up to approximately 5.7 million shares of New Delek Common Stock, subject to customary anti-dilution adjustments.

In connection with the Delek/Alon Merger, Alon, Delek and the Hedge Counterparties entered into amended and restated Warrants which allowed the Hedge Counterparties to purchase up to approximately 5.7 million shares of Delek common stock, subject to customary anti-dilution adjustments.

In November 2018, Delek entered into Warrant Unwind Agreements with the holders of our outstanding common stock Warrants.

Pursuant to the terms of the Unwind Agreements, we settled for cash all outstanding Warrants with the holders at various prices per Warrant as provided in the Unwind Agreements.

Pursuant to the terms of the Unwind Agreements, we settled for cash all outstanding Warrants with

the holders at various prices per Warrant as provided in the Unwind Agreements.

The settlement amount was based on the volume-weighted average market price of our common stock taking into account an adjustment for the exercise price of the Warrants over a period of sixteen trading days beginning November 9, 2018 (the “Unwind Period”).

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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 .

There were no other significant changes to the agreement .

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 in connection with this amendment.

On December 9, 2020, we amended the Reliant Bank Revolver to modify one of the required quarterly financial covenant metrics;

there were no other changes as a result of this amendment.

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

As of December 31, 2019 , we had $ 50.0 million outstanding under this facility and no unused credit commitments under the Reliant Bank Revolver.

As of December 31, 2020, we had $ 50.0 million outstanding under this facility and had no unused credit commitments under the Reliant Bank Revolver.

Promissory Notes

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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.

Specifically, these covenants may limit the payment, in the form of cash or other assets, of dividends or other distributions, or the repurchase of shares with respect to the equity of our subsidiaries.

These covenants may also limit the payment, in the form of cash or other assets, of dividends or other distributions, or the repurchase of shares with respect to our equity.

Additionally, certain 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, any other entities.

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Principal maturities of Delek's existing third-party debt instruments for the next five years and thereafter are as follows as of December 31, 2020 (in millions):

2021 2022 2023 2024 2025 Thereafter Total

Revolving Credit Facility $ — $ — $ — $ — $ — $ — $ —

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Promissory Notes 20.0 — — — — — 20.0

Obligations Extinguished in Connection with the 2018 Refinancing

During the first quarter 2018, Delek had outstanding various credit facilities/debt instruments as follows, all of which were extinguished in connection with the March 2018 Refinancing:

Our subsidiary, Delek Refining, Ltd., had an asset-based loan credit facility with Wells Fargo Bank, National Association, as administrative agent, and a syndicate of lenders, which was previously amended and restated on September 29, 2016 (the "Wells ABL").

The Wells ABL consisted of (i) a $ 450.0 million revolving loan (the "Wells Revolving Loan") and (ii) a $ 70 million term loan (the "Wells Term Loan").

Borrowings under the Wells Revolving Loan and Wells Term Loan bore interest based on separate predetermined pricing grids that allowed us to choose between base rate loans or LIBOR rate loans.

Additionally, the Wells ABL required us to pay a quarterly unused credit commitment fee.

This facility was amended and restated on March 30, 2018 in connection with the Refinancing and replaced by the New Credit Facilities, as previously defined.

Lion Term Loan

Our subsidiary, Lion Oil, had a term loan credit facility with Fifth Third Bank, as administrative agent, and a syndicate of lenders, with a total loan size of $ 275.0 million (the "Lion Term Loan").

For the period(s) it was outstanding, interest on the unpaid balance of the Lion Term Loan was computed at a rate per annum equal to LIBOR or a base rate, at our election, plus the applicable margins, subject in each case to an all-in interest rate floor of 5.50 % per annum.

Alon Partnership Facilities

Revolving Credit Facility

Alon USA, LP, a wholly-owned subsidiary of the Alon Partnership, had a $ 240.0 million asset-based revolving credit facility with Israel Discount Bank of New York, as administrative agent (the “Alon Partnership Credit Facility”).

Borrowings under the Alon Partnership Credit Facility bore interest at LIBOR or base rate, at our election, plus the applicable margins.

Partnership Term Loan Credit Facility

The Alon Partnership had a $ 250.0 million term loan with Credit Suisse AG, as administrative agent (the “Alon Partnership Term Loan”).

The Alon Partnership Term Loan bore interest at a rate per annum equal to LIBOR (subject to a floor of 1.25 % ) or a base rate plus the applicable margins.

Alon Term Loan Credit Facilities

Alon Energy Term Loan

Alon had a promissory note to Bank Hapoalim B.M.

in an original principal amount of $ 25.0 million that was refinanced by Delek on December 29, 2017 with a new note in the principal amount of $ 38.0 million ("New Alon Energy Term Loan"), The New Alon Energy Term Loan incurred interest at an annual rate equal to LIBOR plus an applicable margin.

Alon Asphalt Term Loan

Alon had a term loan owed to Export Development Canada secured by liens on certain of our asphalt terminals (“Alon Asphalt Term Loan”) in an original principal amount of $ 35.0 million .

The Alon Asphalt Term Loan bore interest at a rate equal to LIBOR plus an applicable margin.

Alon Retail Credit Agreement

Alon wholly-owned subsidiaries Southwest Convenience Stores, LLC and Skinny’s LLC, (collectively, “Alon Retail”), had a credit agreement (“Alon Retail Credit Agreement”), that was to mature in March 2019, with Wells Fargo Bank, National Association, as administrative agent.

The Alon Retail Credit Agreement included a term loan in an original principal amount of $ 110.0 million and a $ 10.0 million revolving credit facility.

Borrowings under the Alon Retail Credit Agreement bore interest at LIBOR or base rate, at our election, plus an applicable margin, determined quarterly based upon Alon Retail’s leverage ratio.

Total Amounts Outstanding and Repaid

Principal amounts outstanding and repaid in connection with the March 2018 Refinancing with respect to these credit facilities/debt instruments were as follows:

(in millions)

Amount Outstanding/Repaid at March 30, 2018

Lion Term Loan

Alon Partnership Facilities

Alon Term Loan Credit Facilities

Alon Retail Credit Agreement

Additionally, on March 29, 2018, in anticipation of the March 2018 Refinancing, we also repaid $ 35.0 million of principal on the Alon Asphalt Term Loan.

Total $ 33.4 $ 102.2 $ 759.6 $ 13.0 $ 1,471.0 $ — $ 2,379.2

Derivative Instruments

We use the majority of our derivatives to reduce normal operating and market risks with the primary objective of reducing the impact of market price volatility on our results of operations.

As such, our use of derivative contracts is aimed at:

As such, our use of derivative contracts is primarily aimed at:

• limiting the exposure to price fluctuations of commodity inventory above or below target levels at each of our segments;

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Because these derivatives are entered into to achieve objectives specifically related to our inventory and production risks, such gains and losses (to the extent not designated as accounting hedges and recognized on an unrealized basis in other comprehensive income) are recognized in cost of materials and other.

During the first quarter of 2018, we utilized Interest rate swap agreements to hedge floating rate debt by exchanging interest rate cash flows, based on a notional amount from a floating rate to a fixed rate.

Effective with the Delek/Alon Merger, we had four interest rate swap agreements (that had maturities in March 2019) which effectively fixed the variable LIBOR interest component of the term loans within the Alon Retail Credit Agreement.

The aggregate notional amount under these agreements were to cover approximately 77 % of the outstanding principal of these term loans throughout the duration of the interest rate swaps.

These interest rate swap agreements were terminated due to the extinguishment of the Alon Retail Credit

Agreement in connection with the Refinancing on March 30, 2018, resulting in a reclassification of unrealized loss of $ 0.6 million from accumulated other comprehensive income to interest expense on the consolidated statement of income for the year ended December 31, 2018 - see Note 11 for further information.

Forward contracts are agreements to buy or sell a commodity at a predetermined price at a specified future date, and for our transactions, generally require physical delivery.

Forward contracts where the underlying commodity will be used or sold in the normal course of business qualify as normal purchases and normal sales pursuant to ASC 815 and are not accounted for as derivative instruments.

Rather, such forward contracts are accounted for under other applicable GAAP.

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.

For the years ended December 31, 2019 and 2018 , all of our forward contracts that were accounted for as derivative instruments primarily consisted of contracts related to our Canadian crude trading operations.

Commodity forward contracts are agreements to buy or sell a commodity at a predetermined price at a specified future date, and for our transactions, generally require physical delivery.

Forward contracts where the underlying commodity will be used or sold in the normal course of business qualify as normal purchases and normal sales pursuant to ASC 815.

If we elect the normal purchases and normal sales exception, such forward contracts are not accounted for as derivative instruments but rather are accounted for under other applicable GAAP.

Commodity forward contracts accounted for as derivative instruments are recorded at fair value with changes in fair value recognized in earnings in the period of change.

For the years ended December 31, 2020 and 2019, our commodity fixed-price 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 consolidated statements of income.

There were no forward contract transactions that were accounted for as derivatives for the year ended December 31, 2017 .

Futures, swaps or other commodity related derivative instruments that are utilized to specifically provide economic hedges on our Canadian forward contract or investment positions are recognized in other operating income, net because that is where the related underlying transactions are reflected.

From time to time, we also enter into future commitments to purchase or sell RINs at fixed prices and quantities, which are used to manage the costs associated with our RINs Obligation.

These future RIN commitment contracts meet the definition of derivative instruments under ASC 815, and are recorded at estimated fair value in accordance with the provisions of ASC 815.

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

These future RINs commitment contracts are forward contracts that meet the definition of derivative instruments under ASC 815, and are recorded at estimated fair value in accordance with the provisions of ASC 815.

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

At this time, 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 and our interest rate agreements have been designated as cash flow hedges and the change in fair value between the execution date and the end of period (or early termination date in regards to the four Alon retail interest rate swaps discussed above) has been recorded in other comprehensive income.

In accordance with ASC 815, certain of our commodity swap contracts were designated as cash flow hedges and the change in fair value between the execution date and the end of period was 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.

In regards to our interest rate swap agreements, the losses in accumulated other comprehensive income were reclassified into earnings as a result of the discontinuance of cash flow hedges since the originally forecasted Alon Retail Credit Agreement interest payments did not occur by the end of the originally specified time period due to the Refinancing on March 30, 2018, as discussed above.

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

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See Note 13 for further information regarding the fair value of derivative instruments as presented below (in millions):

December 31, 2019

December 31, 2018

Derivative Type

Balance Sheet Location

December 31, 2020 December 31, 2019

Derivative Type Balance Sheet Location Assets Liabilities Assets Liabilities

Derivatives not designated as hedging instruments:

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Other long-term liabilities 415.2 ( 415.8 ) 23.4 ( 24.8 )

RIN commitment contracts (2)

RINs commitment contracts (2)

Other current assets 33.6 — 0.6 —

RIN commitment contracts (2)

RINs commitment contracts (2)

Other current liabilities — ( 22.5 ) — ( 1.9 )

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Other long-term assets — — 0.2 ( 0.1 )

Interest rate derivatives

Other long-term liabilities

Total gross fair value of derivatives 1,431.3 ( 1,409.5 ) 240.9 ( 264.9 )

Counterparty netting and cash collateral (3)

1,358.3 ( 1,373.1 ) 210.7 ( 249.5 )

Total net fair value of derivatives $ 73.0 $ ( 36.4 ) $ 30.2 $ ( 15.4 )

(1) As of December 31, 2020 and 2019, we had open derivative positions representing 159,682,606 and 86,484,065 barrels, respectively, of crude oil and refined petroleum products.

Of these open positions, contracts representing 600,000 and 16,461,000 barrels were designated as cash flow hedging instruments as of December 31, 2019 and 2018 , respectively.

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

As of December 31, 2019 and 2018 , we had open RIN commitment contracts representing 147,000,000 and 137,750,000 RINs, respectively.

As of December 31, 2019 and 2018 , $ 38.8 million and $( 0.4 ) million , respectively, of cash collateral (obligation) held by counterparties has been netted with the derivatives with each counterparty.

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

Of these open positions, contracts representing 600,000 barrels were designated as cash flow hedging instruments as of December 31, 2019.

There were no open positions designated as cash flow hedging instruments as of December 31, 2020.

Additionally, as of December 31, 2020 and 2019, we had open derivative positions representing 22,130,000 and 49,350,000 One Million British Thermal Units ("MMBTU"), respectively, of natural gas products.

(2) As of December 31, 2020 and 2019, we had open RINs commitment contracts representing 746,050,000 and 147,000,000 RINs, respectively.

(3) As of December 31, 2020 and 2019, $ 14.8 million and $ 38.8 million, respectively, of cash collateral held by counterparties has been netted with the derivatives with each counterparty.

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

Year Ended December 31,

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

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

2020 2019 2018

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

$ ( 88.0 ) $ 18.0 $ 0.9

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

4.6 4.8 ( 1.7 )

Gains recognized in cost of materials and other due to cash flow hedging ineffectiveness on commodity derivatives designated as hedging instruments

Total gains (losses)

Total (losses) gains $ ( 75.5 ) $ 22.8 $ 7.8

(1) Gains (losses) on commodity derivatives that are economic hedges but not designated as hedging instruments include unrealized gains (losses) of $ 23.1 million , $( 41.0 ) million and $ 32.1 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Of these amounts, approximately $( 6.8 ) million and $ 8.1 million for the years ended December 31, 2019 and 2018 , respectively, represent unrealized (losses) gains where the instrument has matured but where it has not cash settled as of period end, excluding the reversal of prior period settlement differences.

Derivative instruments that have matured but not cash settled at the balance sheet date continue to be reflected in derivative assets or liabilities on our balance sheet.

(2) See separate table below for disclosures about "trading derivatives."

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Commodity contracts:

Hedged items $ ( 4.6 ) $ ( 4.8 )

Derivative designated as hedging instruments 4.6 4.8

Total $ — $ —

For cash flow hedges, no component of the derivative instruments’ gains or losses was excluded from the assessment of hedge effectiveness for the years ended December 31, 2020, 2019 and 2018.

Losses of $ 3.6 million, $ 3.8 million and $ 1.5 million, net of tax, on settled commodity contracts were reclassified into cost of materials and other in the consolidated statements of income during the years ended December 31, 2020, 2019 and 2018, respectively.

We estimate that $ 1.4 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 gains on our trading forward contract derivatives (none of which were designated as hedging instruments) recorded in other operating (income) expense, net on the consolidated statements of income are as follows (in millions):

As of December 31, 2020, we estimate that $ 0.2 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) expense, net on the consolidated statements of income are as follows (in millions):

Year Ended December 31,

Realized gains

Unrealized gains (losses)

2020 2019 2018

Realized (losses) gains $ ( 3.1 ) $ 5.1 $ 23.1

Unrealized (losses) gains ( 0.3 ) 3.6 ( 3.0 )

Total $ ( 3.4 ) $ 8.7 $ 20.1

Fair Value Measurements

Our assets and liabilities that are measured at fair value include commodity derivatives, investment commodities, environmental credits obligations and Supply and Offtake Agreements.

ASC 820 requires disclosures that we categorize assets and liabilities measured at fair value into one of three different levels depending on the observability of the inputs employed in the measurement.

ASC 820 requires disclosures that categorizes assets and liabilities measured at fair value into one of three different levels depending on the observability of the inputs employed in the measurement.

Level 1 inputs are quoted prices in active markets for identical assets or liabilities.

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Our commodity derivative contracts, which consist of commodity swaps, exchange-traded futures, options and physical commodity forward purchase and sale contracts (that do not qualify as normal purchases or normal sales exception under ASC 815), are valued based on exchange pricing and/or price index developers such as Platts or Argus and are, therefore, classified as Level 2.

Investment commodities, which represent those commodities (generally crude oil) physically on hand as a result of trading activities with physical forward contracts, are valued using published market prices of the commodity on the applicable exchange and are, therefore, classified as Level 1.

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.

These RIN commitment contracts are categorized as Level 2, and are measured at fair value based on quoted prices from an independent pricing service.

Our environmental credits obligation surplus or deficit is based on the amount of RINs or other emissions credits we must purchase, net of amounts internally generated and purchased and the price of those RINs or other emissions credits as of the balance sheet date by refinery/obligor.

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

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 which was stored on our behalf until October 2020 for a fee of approximately 100,000 barrels.

The fee of 100,000 barrels was recorded as a prepaid asset at cost, and the right to receive the 900,000 barrels was recorded as a financial asset, measured at fair value based on the value of the underlying commodity using published market prices of the commodity on the applicable exchange.

Such asset was, therefore, classified as Level 2.

Such barrels were received in the fourth quarter of 2020.

The realized gain on the underlying commodity related to the SPR financial asset for the year ended December 31, 2020 of $ 10.8 million was recorded in other (income) expense, net.

Our RINs 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 Consolidated Net RINs Obligation.

These RINs commitment contracts (which are forward contracts accounted for as derivatives – see Note 12) are categorized as Level 2, and are measured at fair value based on quoted prices from an independent pricing service.

Our environmental credits obligation surplus or deficit includes the Consolidated Net RINs Obligation surplus or deficit, as well as Other Environmental Credit Obligation surplus or deficit positions subject to fair value accounting pursuant to our accounting policy (see Note 20).

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.

The environmental credits obligation is impacted by government regulation requiring such credits, and the obligation, and likewise the value of the underlying credits, may be impacted by exemptions granted by the regulatory agencies.

During the third quarter of 2019, the Tyler, El Dorado and Krotz Springs refineries received approval from the EPA for a small refinery exemption from the requirements of the renewable fuel standard ("RIN Waivers") for the 2018 calendar year, which resulted in a reduction of our RINs Obligation and related cost of materials and other of approximately $ 20.7 million for the year ended December 31, 2019 .

During the first quarter 2019, the Tyler and Big Spring refineries received RIN Waivers for the 2017 calendar year, which had an immaterial impact on our results of operations, while the 2017 RIN Waivers for the El Dorado and Krotz Springs refineries received in March 2018 resulted in a reduction of our RINs Obligation and related cost of materials and other of approximately $ 90.9 million for the year ended December 31, 2018 .

In March 2017, the El Dorado refinery received a RIN Waiver for the 2016 calendar year which resulted in a reduction of our RINs Obligation and related cost of material other of approximately $ 47.5 million for the year ended December 31, 2017 .

During the third quarter of 2019, the Tyler, El Dorado and Krotz Springs refineries received approval from the EPA for a small refinery exemption from the requirements of the renewable fuel

standard ("RIN Waivers") for the 2018 calendar year, which resulted in a reduction of our Consolidated Net RINs Obligation and related cost of materials and other of approximately $ 20.7 million for the year ended December 31, 2019.

During the first quarter 2019, the Tyler and Big Spring refineries received RIN Waivers for the 2017 calendar year, which had an immaterial impact on our results of operations, while the 2017 RIN Waivers for the El Dorado and Krotz Springs refineries received in March 2018 resulted in a reduction of our Consolidated Net RINs Obligation and related cost of materials and other of approximately $ 90.9 million for the year ended December 31, 2018.

We have not received any additional RIN Waivers impacting the year ended December 31, 2020.

As of and for the years ended December 31, 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.

As of December 31, 2018 , our J.

Aron step-out liability related to the El Dorado and Krotz Spring Supply and Offtake Agreements was categorized as Level 2, and measured at fair value using market prices for the consigned crude oil and refined products we were required to repurchase from J.

Aron at the end of the term of the Supply and Offtake Agreement.

With respect to the amended Supply and Offtake Agreements, such amendments being effective December 2018 for our Big Spring Agreement and January 2019 for our El Dorado and Krotz Springs Agreements and as all subsequently amended on September 19, 2019, we apply fair value measurement as follows:

(1) we determine fair value for our amended fixed-price step-out liability based on changes in fair value related to interest rate risk where such obligation is categorized as Level 2;

and (2) we determine fair value of the short-term commodity-indexed financing facility based on the market prices for the consigned crude oil and refined products collateralizing the financing/funding where such obligation is categorized as Level 2.

With respect to the amended and restated Supply and Offtake Agreements, such amendments being effective April 2020 for all the agreements, we apply fair value measurement as follows:

(1) we determine fair value for our amended variable step-out liability based on changes in fair value related to market volatility based on a floating commodity-index price, and for our amended fixed step-out liability based on changes to interest rates and the timing and amount of expected future cash settlements where such obligation is categorized as Level 2.

Gains (losses) related to changes in fair value due to commodity-index price are recorded as a component of cost of materials and other, and changes in fair value due to interest rate risk are recorded as a component of interest expense in the consolidated statements of income;

and (2) we determine fair value of the commodity-indexed revolving over/short inventory financing liability based on the market prices for the consigned crude oil and refined products collateralizing the financing/funding where such obligation is categorized as Level 2 and is presented in the current portion of the Obligation under Supply and Offtake Agreements on our consolidated balance sheets.

Gains (losses) related to the change in fair value are recorded as a component of cost of materials and other in the consolidated statements of income.

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):

As of December 31, 2020

Level 1 Level 2 Level 3 Total

Commodity derivatives $ — $ 1,397.7 $ — $ 1,397.7

Investment commodities

RIN commitment contracts

Environmental Credits Obligation surplus

RINs commitment contracts — 33.6 — 33.6

Total assets — 1,431.3 — 1,431.3

Commodity derivatives — ( 1,387.0 ) — ( 1,387.0 )

RIN commitment contracts

RINs commitment contracts — ( 22.5 ) — ( 22.5 )

Environmental credits obligation deficit — ( 59.6 ) — ( 59.6 )

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Total liabilities — ( 1,823.2 ) — ( 1,823.2 )

Net liabilities

Net assets (liabilities) $ — $ ( 391.9 ) $ — $ ( 391.9 )

As of December 31, 2019

Level 1 Level 2 Level 3 Total

Commodity derivatives $ — $ 240.3 $ — $ 240.3

Investment commodities 12.1 — — 12.1

RIN commitment contracts

RINs commitment contracts — 0.6 — 0.6

Environmental credits obligation surplus — 16.8 — 16.8

Total assets 12.1 257.7 — 269.8

Commodity derivatives — ( 263.0 ) — ( 263.0 )

RIN commitment contracts

RINs commitment contracts — ( 1.9 ) — ( 1.9 )

Environmental credits obligation deficit — ( 18.5 ) — ( 18.5 )

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Total liabilities — ( 760.7 ) — ( 760.7 )

Net liabilities

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

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

In the table above, derivative assets and liabilities with the same counterparty are not netted where the legal right of offset exists.

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 December 31, 2019 and 2018 , $ 38.8 million and $( 0.4 ) million , respectively, of cash collateral (obligation) was held by counterparty brokerage firms and has been netted with the net derivative positions with each counterparty.

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 December 31, 2020 and 2019, $ 14.8 million and $ 38.8 million, respectively, of cash collateral was held by counterparty brokerage firms and has been netted with the net derivative positions with each counterparty.

See Note 12 for further information regarding derivative instruments.

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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, prior to the Delek/Alon Merger.

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 December 31, 2019 in accrued expenses and other current liabilities on the accompanying consolidated balance sheet, and which reflects a $ 5.7 million increase in the accrual recorded during the year ended December 31, 2019 .

Additionally, we have incurred $ 1.2 million of related legal expenses during the year ended December 31, 2019 and has been recorded in general and administrative expenses in the accompanying consolidated statements of income.

In June 2019, the court found in favor of the plaintiffs and assessed damages against such subsidiary totaling $ 6.7 million, which was reduced to $ 6.4 million in the fourth quarter of 2019 and is included as of December 31, 2020 in accrued expenses and other current liabilities on the accompanying consolidated balance sheet.

As a result of this liability, a $ 5.7 million increase in the accrual was recorded during the year ended December 31, 2019.

Additionally, we incurred $ 1.2 million of related legal expenses during the year ended December 31, 2019 that was recorded in general and administrative expenses in the accompanying consolidated statements of income.

The judgment of $ 6.4 million is currently stayed while the case is under appeal with the Ninth Circuit Court of Appeals.

The estimated resolution date is indeterminable at this time.

As of December 31, 2019 and 2018, AltAir (one of the California Discontinued Entities) was the party to a lawsuit whereby the plaintiff alleged breach of contract relating to a supply agreement during the period prior to the Delek/Alon Merger.

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Related to this obligation, we reduced our litigation accrual by $ 2.4 million during the year ended December 31, 2019, which was recorded in discontinued operations.

In August 2019, we reached an agreement with World Energy to offset amounts payable by Delek under our seller obligations for the Ten-Tex Litigation matter against the working capital settlement receivable, and to convert the net receivable into the World Energy Note Receivable.

As a result, this obligation is no longer reflected in our liabilities on the consolidated balance sheet as of December 31, 2019 .

As a result, this obligation is not reflected in our liabilities on the consolidated balance sheet as of December 31, 2019.

See Note 8 for further discussion of these matters.

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On November 5, 2018, Alon and certain of its subsidiaries including Alon Bakersfield Property, Inc.

(collectively, "ABPI") entered into a Settlement and Release Agreement (the "Settlement Agreement") with Equilon Enterprises, LLC, doing business as Shell Oil Products, US ("Shell"), a former owner of our non-operating Bakersfield refinery which was acquired by Delek in connection with the Delek/Alon Merger.

(which was subsequently sold on May 7, 2020 - See Note 4) (collectively, "ABPI") entered into a Settlement and Release Agreement (the "Settlement Agreement") with Equilon

Enterprises, LLC, doing business as Shell Oil Products, US ("Shell"), a former owner of our non-operating Bakersfield refinery which was acquired by Delek in connection with the Delek/Alon Merger.

The Settlement Agreement resolved certain disputed indemnification matters related to environmental obligations and asset retirement obligations at the Bakersfield refinery.

As a result of this Settlement Agreement, Shell paid ABPI a lump sum payment of $ 34.0 million and conveyed to ABPI ownership of a non-operating terminal located on the site of the Bakersfield refinery (deemed to have little or no value) and the parties will terminate a nominal lease agreement related to such terminal.

was deemed by the Company to be probable of realization based on existing indemnification agreements in place on the date of the acquisition and that related to identified asset retirement obligations that were also recognized in the purchase price allocation.

Of this total lump sum settlement payment, $ 14.0 million was previously recognized as an indemnification receivable in the purchase price allocation associated with the Delek/Alon Merger as of July 1, 2017, because such amounts represented indemnification that was deemed by the Company to be probable of realization based on existing indemnification agreements in place on the date of the acquisition and that related to identified asset retirement obligations that were also recognized in the purchase price allocation.

Of the remaining settlement amount received, $ 16.0 million is attributable to additional recoveries of remediation costs and is included as a reduction of operating expenses, and $ 4.0 million is considered additional consideration for concessions made under the Settlement Agreement and is included as other income in the accompanying consolidated statements of income for the year ended December 31, 2018.

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The civil penalty of $ 0.5 million was paid on June 18, 2019.

Per amended consent decree, the Company will be required to expend capital for pollution control equipment that may be significant over the next 10 years .

Per the amended consent decree, the Company will be required to expend capital for pollution control equipment that may be significant over the next 10 years .

As of December 31, 2020, we have recorded an environmental liability of approximately $ 112.6 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, which were already being performed by the former operators of the refineries and terminals prior to our acquisition of those facilities, for known contamination of soil and groundwater, as well as estimated costs for additional issues which have been identified subsequent to the acquisitions.

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

Approximately $ 5.2 million of the total liability is expected to be expended over the next 12 months, with most of the balance expended by 2032, although some costs may extend up to 30 years.

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Environmental liabilities with payments that are fixed or reliably determinable have been discounted to present value at various rates depending on their expected payment stream.

In regards to the environmental liabilities assumed in the Delek/Alon acquisition, the discount rates vary from 1.51 % to 2.84 % .

See Note 3 for further information regarding the environmental liabilities assumed in the Delek/Alon Merger.

These discount rates vary from 1.51 % to 2.84 %.

The table below summaries our environmental liability accruals (in millions):

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As of December 31, 2020, the estimated future payments of environmental obligations for which discounts have been applied are as follows (in millions):

Thereafter 32.0

Discounted environmental liabilities, gross 40.2

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We have experienced several crude oil and other releases involving our assets, including five releases that occurred in 2019 and six releases that occurred in 2018.

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

The majority of remediation efforts for these releases have been substantially completed, or have received regulatory closure.

Boom maintenance and confirmatory sampling has been completed on the releases that occurred in 2019, with the exception of one release, which is currently in boom maintenance.

We received regulatory closure in December of 2019 for the release sites that have not yet received it, with closure on a few remaining sites expected to occur in 2020.

Many of the releases have occurred on the SALA gathering system.

During the year ended December 31, 2019 , we decommissioned certain sections of the SALA gathering system in an effort to improve the safety and integrity of the system.

The decommissioning of these sections was completed in August 2019 and the project did not have a material effect on the financial statements.

On October 3, 2019, a release of diesel fuel 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 the year ended December 31, 2019 .

Ground water wells for monitoring activities are expected to be installed in the first quarter of 2020.

We expect the monitoring period to last for at least a year.

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 year ended December 31, 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 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.

The DOJ, on behalf of the EPA, and the State of Arkansas, on behalf of the Arkansas Department of Environmental Quality, have been pursuing an enforcement action against Delek Logistics with regard to potential violations of the Clean Water Act and certain state laws arising from the release of crude oil from a pumping facility at its Magnolia Station near the El Dorado Refinery (the "Magnolia Release") since June 2015.

On July 13, 2018, the DOJ and the State of Arkansas filed a civil action against two of Delek Logistics’ wholly-owned subsidiaries, Delek Logistics Operating LLC and SALA Gathering Systems LLC, in the United States District Court for the Western District of Arkansas.

In December 2018, Delek Logistics, the United States and the State of Arkansas reached an agreement to settle the claims related to the Magnolia Release for $ 2.2 million and the claims against Delek Logistics were resolved and an additional demand for a compliance audit at the Magnolia terminal was abandoned in exchange for payment of monetary penalties and other relief.

In July 2019, Delek Logistics signed and submitted to the DOJ, a consent decree (the "Magnolia Consent Decree") to settle the release, and on August 30, 2019, the Magnolia Consent Decree was lodged with the Court.

On November 8, 2019, the Magnolia Consent Decree was entered and on November 20, 2019, final payments were made to the State of Arkansas in the amount of $ 0.6 million and to the DOJ in the amount of $ 1.7 million , which includes interest.

Asset Retirement Obligations

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Beginning balance $ 68.6 $ 75.5

Liabilities identified

Liabilities settled ( 32.5 ) ( 8.6 )

Accretion expense 1.4 1.7

Reclassification from discontinued operations

Ending balance $ 37.5 $ 68.6

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Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

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

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 year ended December 31, 2020, attributable to anticipated tax refunds from net operating loss carryback to prior 35% tax rate years under the CARES Act.

Also, we recorded a federal income tax receivable specifically related to the net operating loss carryback totaling $ 156.2 million of which $ 135.6 million is current and $ 20.6 million is non-current as of December 31, 2020.

On December 22, 2017, the U.S.

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federal corporate tax rate from 35% to 21% (“Rate Reduction”).

The Tax Reform Act also puts into place new tax laws that will apply prospectively, which include, but are not limited to, modifying the rules governing the deductibility of certain executive compensation;

The Tax Reform Act also put into place new tax laws that will apply prospectively, which include, but are not limited to, modifying the rules governing the deductibility of certain executive compensation;

extending and modifying the additional first-year depreciation deduction to accelerate expensing of certain qualified property;

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At December 31, 2018, we finalized our accounting analysis based on the guidance, interpretations, and data available.

Adjustments made in the fourth quarter 2018 upon finalization of our accounting analysis were not material to our consolidated financial statements.

We continue to monitor IRS guidance including final regulations, revenue rulings, revenue procedures, and applicable notices.

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Right-of-use asset ( 35.1 ) ( 40.7 )

Derivatives and hedging

Partnership and equity investments ( 133.3 ) ( 15.5 )

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Total deferred tax liabilities ( 434.2 ) ( 367.8 )

Derivatives and hedging

Compensation and employee benefits 13.6 14.5

Net operating loss carryforwards 136.4 52.4

Partnership and equity investments

Tax credit carryforwards 17.0 —

Lease obligation 35.2 40.7

Reserves and accruals 33.4 48.3

Other 4.1 9.8

Total deferred tax assets 239.7 165.7

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Total net deferred tax liabilities (1)

$ ( 249.5 ) $ ( 267.9 )

(1) Total net deferred tax liabilities includes $ 6.0 million of state deferred tax assets recorded in other non-current assets in our consolidated balance sheet.

The difference between the actual income tax expense and the tax expense computed by applying the statutory federal income tax rate to income from continuing operations was attributable to the following (in millions):

Year Ended December 31,

2020 2019 2018

Provision for federal income taxes at statutory rate $ ( 160.3 ) $ 84.6 $ 102.0

State income tax expense, net of federal tax provision

State income tax (benefit) expense, net of federal tax provision ( 11.3 ) 6.3 3.4

Income tax benefit attributable to non-controlling interest ( 7.9 ) ( 5.4 ) ( 7.3 )

Tax credits and incentives (1)

Executive compensation limitation

Stock compensation

( 9.6 ) ( 23.2 ) ( 8.3 )

Changes in valuation allowance ( 10.8 ) 7.3 7.7

Amortization - prepaid taxes

Reversal of deferred taxes related to equity method investment in Alon

Impact of Tax Reform Act — — ( 0.6 )

Goodwill write-down

Income tax expense (benefit)

Impact of CARES Act NOL carryback ( 16.8 ) — —

Goodwill impairment 21.4 — 5.3

Other items 2.6 2.1 ( 0.3 )

Income tax (benefit) expense $ ( 192.7 ) $ 71.7 $ 101.9

(1) Tax credits and incentives include work opportunity and research and development credits, as well as incentives for the Company’s biodiesel blending operations.

Income tax expense (benefit) from continuing operations was as follows (in millions):

Income tax (benefit) expense from continuing operations was as follows (in millions):

Year Ended December 31,

2020 2019 2018

Current $ ( 160.6 ) $ 7.1 $ 128.7

Deferred ( 32.1 ) 64.6 ( 26.8 )

$ ( 192.7 ) $ 71.7 $ 101.9

We carry valuation allowances against certain state deferred tax assets and net operating losses that may not be recoverable with future taxable income.

We also carry valuation allowances related to basis differences that may not be recoverable.

During the years ended December 31, 2019 and 2018 , we recorded increases to the valuation allowance of $ 7.3 million and $ 37.3 million ( $ 17.2 million of which was charged to retained earnings as a result of the cumulative effect of the adoption of ASU 2016-16), respectively.

During the years ended December 31, 2020 and 2019, we recorded decreases to the valuation allowance of $ 10.8 million and increases of $ 7.3 million, respectively.

The 2020 decrease in the valuation allowance was primarily driven by the reversal of allowance for deferred tax assets in partnership investments due to changes in the future realizability of deferred tax basis differences.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized.

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Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.

Based upon the level of historical taxable income and projections for future taxable income over the periods for which the deferred tax assets are deductible, management believes it is more likely than not Delek will realize the benefits of these deductible differences, net of the existing valuation allowance.

Based upon the level of historical taxable income and projections for future taxable income over the periods for which the deferred tax assets are deductible, management believes it is

more likely than not Delek will realize the benefits of these deductible differences, net of the existing valuation allowance.

The amount of the deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced.

Subsequently recognized tax benefit or expense relating to the valuation allowance for deferred tax assets will be reported as an income tax benefit or expense in the consolidated statement of income.

Federal net operating loss and credit carryforwards at December 31, 2020 totaled $ 355.2 million and $ 14.9 million, respectively, a portion of which are subject to a valuation allowance.

Federal net operating losses have an indefinite carryforward life, and federal tax credit carryforwards will begin expiring in 2028.

State net operating loss and credit carryforwards at December 31, 2020 totaled $ 1,259.9 million and $ 2.9 million, respectively, a portion of which are subject to a valuation allowance.

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Pre-acquisition tax returns for Alon USA Energy & Subsidiaries ("Alon") are closed for U.S.

federal income tax examinations for the tax year ended December 31, 2012.

Alon's federal tax returns for tax years 2014 through 2016 are currently under examination.

federal income tax examinations through the tax year ended December 31, 2016 as of December 31, 2020.

Alon is currently under Joint Committee of Taxation review for tax year 2017.

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ASC 740 requires the elimination of the income tax benefits associated with any income tax position where it is not "more likely than not" that the position would be sustained upon examination by the taxing authorities.

Increases and decreases to the beginning balance of unrecognized tax benefits, which includes interest and penalties, during the years ended December 31, 2019 , 2018 , and 2017 were as follows:

Increases and decreases to the beginning balance of unrecognized tax benefits, which includes interest and penalties were as follows (in millions):

Year Ended December 31,

2020 2019 2018

Balance at the beginning of the year $ 12.1 $ 19.2 $ 6.1

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Reductions for tax positions related to prior years ( 0.8 ) ( 13.0 ) ( 0.9 )

Reductions for tax positions related to lapse of applicable statute of limitations ( 0.2 ) — —

Settlements with taxing authorities ( 5.8 ) ( 0.9 ) ( 0.6 )

Balance at the end of the year $ 9.6 $ 12.1 $ 19.2

The amount of the unrecognized benefit above, that if recognized would change the effective tax rate, is $ 7.4 million as of both December 31, 2019 and 2018 .

The amount of the unrecognized benefit above, that if recognized would change the effective tax rate, is $ 6.2 million and $ 7.4 million as of December 31, 2020 and 2019, respectively.

Delek recognizes accrued interest and penalties related to unrecognized tax benefits as an adjustment to the current provision for income taxes.

We recognized interest (income) expense of $( 1.1 ) million , $ 2.9 million , and $ 0.5 million related to unrecognized tax benefits during the years ended December 31, 2019 , 2018 and 2017 .

We recognized interest expense (income) of $ 0.5 million, $( 1.1 ) million, and $ 2.9 million related to unrecognized tax benefits during the years ended December 31, 2020, 2019 and 2018.

The total recognized liability for interest was $ 1.4 million and $ 2.4 million as of December 31, 2020 and 2019, respectively.

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(in millions) 2020 2019 2018

$ 69.0 $ 86.0 $ 33.7

Cost of materials and other (2)

$ 46.7 $ 44.9 $ 21.4

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

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Property, plant and equipment, at cost, consist of the following (in millions):

Land $ 58.0 $ 59.5

Building and building improvements 114.3 108.5

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Construction in progress 428.5 369.2

$ 3,519.5 $ 3,362.8

accumulated depreciation ( 1,152.3 ) ( 934.5 )

$ 2,367.2 $ 2,428.3

Property, plant and equipment, accumulated depreciation and depreciation expense by reporting segment are as follows (in millions):

As of and For the Year Ended December 31, 2020

Other and Eliminations

Refining Logistics Retail Corporate,

Other and Eliminations Consolidated

Property, plant and equipment $ 2,566.0 $ 692.3 $ 165.3 $ 95.9 $ 3,519.5

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Depreciation expense (1)

$ 191.5 $ 35.7 $ 12.4 $ 20.4 $ 260.0

As of and For the Year Ended December 31, 2019

Other and Eliminations

Refining Logistics Retail Corporate,

Other and Eliminations Consolidated

Property, plant and equipment $ 2,444.4 $ 461.3 $ 156.4 $ 300.7 $ 3,362.8

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Depreciation expense $ 128.7 $ 26.7 $ 10.4 $ 22.1 $ 187.9

(1) Depreciation expense includes accelerated depreciation of $ 19.0 million taken in the fourth quarter of 2020 primarily due to the decision to abandon certain property and equipment.

Of this amount, $ 11.1 million, $ 1.6 million and $ 6.3 million relate to refining, logistics and other segments, respectively.

Goodwill represents the excess of the aggregate purchase price over the fair value of the identifiable net assets acquired and is not amortized.

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We performed our annual goodwill impairment review in the fourth quarter of 2020, 2019 and 2018.

This review was performed at the reporting unit level, which is at or one level below our reportable segment.

We performed a discounted cash flows test to estimate the value of each of our reporting units using a market participant weighted average cost of capital, estimated growth rates for revenue, forecasted crack spreads, gross margin, capital expenditures, and long-term growth rate based on history and our best estimate of future forecasts.

We also corroborate the fair values of the reporting units using a multiple of expected future cash flows, such as those used by third-party analysts.

This review was performed at the reporting unit level, which is at or one level below our operating segment.

We estimated the value of each of our reporting units using a discounted cash flows ("DCF") analysis and a multiple of expected future cash flows, such as those used by third-party analysts.

The DCF analysis included a market participant weighted average cost of capital, forecasted crack spreads, gross margin, capital expenditures, and long-term growth rate based on historical information and our best estimate of future forecasts.

The market approach involves significant judgment, including selection of an appropriate peer group, selection of valuation multiples, and determination of the appropriate weighting in our valuation model.

With respect to the goodwill associated with the reporting units within the logistics segment, we performed a qualitative assessment in 2020, 2019 and 2018.

For the years ended December 31, 2019 , 2018 and 2017 , the annual impairment review resulted in the determination that no impairment of goodwill had occurred, and we had no accumulated goodwill impairment losses as of December 31, 2019 .

For the year ended December 31, 2020, the annual impairment review resulted in an impairment charge

of $ 126.0 million.

For the years ended December 31, 2019 and 2018, no impairment of goodwill had occurred.

Accumulated goodwill impairment was $ 126.0 million as of December 31, 2020.

A summary of our goodwill by segment is as follows (in millions):

Corporate, Other and Eliminations

December 31, 2016

December 31, 2017

Refining Logistics Retail Corporate, Other and Eliminations Total

Balance, December 31, 2017 $ 750.9 $ 12.2 $ 30.8 $ 22.7 $ 816.6

Finalization of purchase price allocation for 2017 Delek/Alon Merger 50.4 — 13.5 2.4 66.3

Write-down resulting from asset held for sale impairment (1)

December 31, 2018

— — — ( 25.1 ) ( 25.1 )

Balance, December 31, 2018 801.3 12.2 44.3 — 857.8

Write-off of goodwill associated with retail stores sold — — ( 2.1 ) — ( 2.1 )

December 31, 2019

Balance, December 31, 2019 801.3 12.2 42.2 — 855.7

Goodwill Impairment ( 126.0 ) — — — ( 126.0 )

Balance, December 31, 2020 $ 675.3 $ 12.2 $ 42.2 $ — $ 729.7

(1) This write-down of goodwill resulted from the impairment of assets held for sale associated with the asphalt business to net realizable value, as discussed in Note 8.

Goodwill associated with the Delek/Alon Merger has been updated to reflect the final purchase price allocation in the table above for acquisitions during the year ended December 31, 2017 .

There was no goodwill allocated to the California Discontinued Entities as of December 31, 2019 .

Other Intangible Assets

A summary of our identifiable intangible assets are as follows (in millions):

As of December 31, 2019

Accumulated Amortization

As of December 31, 2020 Useful Life Gross Accumulated Amortization Net

Intangible Assets subject to amortization:

Third-party fuel supply agreement

Fuel trade name

Third-party fuel supply agreement 10 years $ 49.0 $ ( 17.2 ) $ 31.8

Fuel trade name 5 years 4.0 ( 2.8 ) 1.2

Intangible assets not subject to amortization:

Rights-of-way

Line space history

Liquor licenses

Refinery permits

As of December 31, 2018

Accumulated Amortization

Rights-of-way Indefinite 52.1 52.1

Line space history Indefinite 12.0 12.0

Liquor licenses Indefinite 8.5 8.5

Refinery permits Indefinite 2.2 2.2

Total $ 127.8 $ ( 20.0 ) $ 107.8

As of December 31, 2019 Useful Life Gross Accumulated Amortization Net

Intangible Assets subject to amortization:

Third-party fuel supply agreement

Fuel trade name

Below market leases

13 - 15 years

Third-party fuel supply agreement 10 years 49.0 ( 12.3 ) 36.7

Fuel trade name 5 years 4.0 ( 2.0 ) 2.0

Intangible assets not subject to amortization:

Rights-of-way

Line space history

Liquor licenses

Refinery permits

Amortization of intangible assets was $ 5.7 million , $ 6.1 million , and $ 3.8 million during the years ended December 31, 2019 , 2018 and 2017 , respectively, and is included in depreciation and amortization on the accompanying consolidated statements of income, with the exception of an immaterial amount related to below market leases.

Rights-of-way Indefinite 48.9 48.9

Line space history Indefinite 12.0 12.0

Liquor licenses Indefinite 8.5 8.5

Refinery permits Indefinite 2.2 2.2

Total $ 124.6 $ ( 14.3 ) $ 110.3

Amortization of intangible assets was $ 5.7 million, $ 5.7 million, and $ 6.1 million during the years ended December 31, 2020, 2019 and 2018, respectively, and is included in depreciation and amortization on the accompanying consolidated statements of income.

Amortization expense for the next five years is estimated to be as follows (in millions):

Other Assets and Liabilities

Other Current Assets and Liabilities

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

Other Current Assets

December 31, 2019

December 31, 2018

Biodiesel tax credit (see Note 4)

Other Current Assets December 31, 2020 December 31, 2019

Income and other tax receivables $ 142.0 $ 61.9

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Prepaid expenses 21.8 21.9

Environmental Credits Obligation surplus (see Note 13)

Biodiesel tax credit (see Note 4)

Investment commodities 1.1 12.1

Note receivable - current portion (see Note 8)

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

Other Non-Current Assets

December 31, 2019

December 31, 2018

Supply and Offtake receivable

Other equity Investments

Deferred financing costs

Note receivable - non-current portion (see Note 8)

Long-term derivative assets (see Note 12)

Consolidated Net RINs Obligation surplus (see Note 13)

Other 15.7 34.4

Total $ 256.4 $ 268.7

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

Accrued Expenses and Other Current Liabilities

December 31, 2019

December 31, 2018

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

Product financing agreements $ 198.0 $ 21.1

Income and other taxes payable 109.5 119.6

Crude purchase liabilities 62.1 72.1

Employee costs

Product financing agreements

Environmental Credits Obligation deficit (see Note 13)

Consolidated Net RINs Obligation deficit (see Note 13)

Short-term derivative liabilities (see Note 12)

Interest payable

Environmental liabilities (see Note 14)

Tank inspection liabilities

Accrued utilities

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

Other Non-Current Liabilities

December 31, 2019

December 31, 2018

Tank inspection liabilities

Liability for unrecognized tax benefits

Pension and other postemployment benefit liabilities, net

Long-term derivative liabilities (see Note 12)

Above-market leases

Employee costs 30.2 47.6

Other 51.2 72.3

Total $ 546.4 $ 346.8

Equity-Based Compensation

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The 2016 Plan allows Delek to grant stock options, SARs, restricted stock, RSUs, performance awards and other stock-based awards of up to 4,400,000 shares of Delek's common stock to certain directors, officers, employees, consultants and other individuals who perform services for Delek or its affiliates.

On May 18, 2018, the Company's stockholders approved an amendment to the 2016 plan that increased the number of Common Stock available under this plan by 4,500,000 shares to 8,900,000 shares.

On May 18, 2018 and May 5 2020, the Company's stockholders approved an amendment to the 2016 plan that increased the number of Common Stock available under this plan by 4,500,000 shares and 2,120,000 shares, respectively, to 11,020,000 shares.

Stock options and SARs issued under the 2016 Plan are granted at prices equal to (or greater than) the fair market value of Delek's common stock on the grant date and are generally subject to a vesting period of one year or more.

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The Alon 2005 Plan permits the granting of awards to Alon's officers and key employees in the form of options to purchase common stock, SARs, restricted shares of common stock, RSUs, performance shares, performance units and senior executive plan bonuses.

Effective with the Delek/Alon Merger, all contractually unvested share-based awards were converted into share-based awards denominated in New Delek Common Stock.

Committed but unissued share-based awards were exchanged and converted into rights to receive share-based awards indexed to New Delek Common Stock.

Effective with the Delek/Alon Merger, all contractually unvested share-based awards were converted into share-

based awards denominated in Delek common stock.

Committed but unissued share-based awards were exchanged and converted into rights to receive share-based awards indexed to Delek common stock.

Option and SAR Assumptions

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For all awards granted, we calculated volatility using historical volatility and implied volatility of a peer group of public companies using weekly stock prices.

(Graded Vesting)

2019 Grants 2018 Grants

(Graded Vesting) (Graded Vesting)

4 years 4 years

Expected volatility 48.16 %- 48.94 %

47.52 %- 49.42 %

47.52%-49.42%

47.49%-49.18%

Dividend yield 2.03 %- 2.60 %

Expected term

4.57- 4.62 years

4.38-4.62 years

2.00 %- 2.33 %

Expected term 4.57 - 4.62 years

4.38 - 4.62 years

Risk free rate 1.57 %- 2.41 %

1.56 %- 2.92 %

Fair value per share $ 11.46 $ 15.00

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The following table summarizes the stock option and SAR activity under the Incentive Plans for the years ended December 31, 2020, 2019 and 2018:

Number of Options

Weighted-Average Strike Price

Weighted-Average Contractual Term (in years)

Average Intrinsic Value

Number of Shares Under Option Weighted-Average Strike Price Weighted-Average Contractual Term (in years) Average Intrinsic Value

(in millions)

Options and SARs outstanding, December 31, 2017 4,191,007 $ 26.71

Granted 1,497,400 $ 43.49

Exercised ( 1,286,527 ) $ 30.55

Forfeited ( 827,775 ) $ 29.01

Options and SARs outstanding, December 31, 2018 3,574,105 $ 32.67

Granted 593,500 $ 34.96

Exercised ( 466,569 ) $ 29.61

Forfeited ( 494,826 ) $ 33.47

Options and SARs outstanding, December 31, 2019 3,206,210 $ 34.21

Granted 17,000 $ 36.56

Exercised ( 23,675 ) $ 14.68

Forfeited ( 709,055 ) $ 34.25

Options and SARs outstanding, December 31, 2020 2,490,480 $ 34.16 6.8 $ 0.1

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The grant date fair value of RSUs is determined based on the closing price of Delek's common stock on the grant date.

PRSUs initially granted to employees will typically vest in two tranches, the first of which vests on December 31 of the year following the grant date and the second on the subsequent December 31.

PRSUs initially granted to employees will typically vest in one to three tranches, the first of which vests on December 31 of the year following the grant date, the second and third on the subsequent December 31.

PRSUs subsequently granted to employees will typically vest at the end of a three calendar year performance period.

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For all awards granted, we calculated volatility using historical volatility and implied volatility of a peer group of public companies using weekly stock prices.

2020 Grants 2019 Grants 2018 Grants

Expected volatility 45.06 %- 62.70 %

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36.11 %- 44.66 %

44.03%-46.54%

Expected term

Expected term 2.56 - 2.81 years

2.06 - 2.81 years

Risk free rate 0.20 %- 0.56 %

1.64 %- 2.42 %

2.40 %- 2.73 %

Fair value per share $ 10.65 $ 41.19 $ 57.93

The following table summarizes the RSU and PRSU activity under the Incentive Plans for the years ended December 31, 2020, 2019 and 2018:

Number of RSUs

Weighted-Average Grant Date Price

December 31, 2016

Performance Not Achieved

December 31, 2017

December 31, 2018

Number of RSUs Weighted-Average Grant Date Price

Balance December 31, 2017 1,059,670 $ 25.68

Granted 440,896 $ 53.10

Vested ( 341,774 ) $ 25.62

Forfeited ( 154,780 ) $ 36.96

Balance December 31, 2018 1,004,012 $ 36.00

Granted 701,875 $ 36.30

Vested ( 604,971 ) $ 24.88

Forfeited ( 133,243 ) $ 39.19

Performance Achieved 145,169 $ 16.55

December 31, 2019

Balance December 31, 2019 1,112,842 $ 39.31

Granted 1,624,695 $ 15.14

Vested ( 512,914 ) $ 29.72

Forfeited ( 413,499 ) $ 24.98

Performance Achieved 18,651 $ 29.19

Balance December 31, 2020 1,829,775 $ 23.62

Compensation Expense Related to Equity-based Awards Granted Under the Incentive Plans

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

We recognized income tax benefits for equity-based awards of $ 2.5 million , $ 2.2 million and $ 1.4 million for the years ended December 31, 2019 , 2018 and 2017 , respectively.

We recognized income tax expense (benefits) for equity-based awards of $ 2.3 million, $( 2.5 ) million and $( 2.2 ) million for the years ended December 31, 2020, 2019 and 2018, respectively.

As of December 31, 2020, there was $ 33.7 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 1.6 years.

The aggregate intrinsic value, which represents the difference between the underlying stock's market price and the award's exercise price, of the share-based awards exercised or vested during the years ended December 31, 2020, 2019 and 2018 was $ 8.4 million, $ 27.0 million and $ 39.4 million, respectively.

During the years December 31, 2019 , 2018 and 2017 , respectively, we issued net shares of common stock of 508,950 , 580,455

and 332,156 as a result of exercised or vested equity-based awards.

These amounts are net of 564,090 , 1,027,398 and 306,659 shares, respectively, withheld to satisfy employee tax obligations related to the exercises and vestings for the years ended December 31, 2019 , 2018 and 2017 .

During the years December 31, 2020, 2019 and 2018, respectively, we issued net shares of common stock of 369,843 , 508,950 and 580,455 as a result of exercised or vested equity-based awards.

These amounts are net of 167,094 , 564,090 and 1,027,398 shares, respectively, withheld to satisfy employee tax obligations related to the exercises and vesting for the years ended December 31, 2020, 2019 and 2018.

Delek paid approximately $ 2.4 million, $ 9.2 million and $ 11.5 million of taxes in connection with the settlement of these awards both for the years ended December 31, 2020, 2019 and 2018.

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Delek Logistics GP, LLC 2012 Long-Term Incentive Plan

Delek Logistics GP maintains a unit-based compensation plan for officers, directors and employees of Logistics GP or its affiliates and certain consultants, affiliates of Logistics GP or other individuals who perform services for Delek Logistics.

Logistics GP maintains a unit-based compensation plan for officers, directors and employees of Logistics GP or its affiliates and certain consultants, affiliates of Logistics GP or other individuals who perform services for Delek Logistics.

The Delek Logistics GP, LLC 2012 Long-Term Incentive Plan ("Logistics LTIP") permits the grant of unit options, restricted units, phantom units, unit appreciation rights, distribution equivalent rights, other unit-based awards, and unit awards.

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Awards granted under the Logistics LTIP will be settled with Delek Logistics units.

Compensation expense for awards granted under the Logistics LTIP was $ 0.6 million , $ 0.5 million , and $ 1.7 million for the years ended December 31, 2019 , 2018 and 2017 , respectively.

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

As of December 31, 2019 , there was $ 0.2 million of total unrecognized compensation cost related to non-vested Logistics LTIP awards, which is expected to be recognized over a weighted-average period of 0.4 years .

As of December 31, 2019 , operations, maintenance and warehouse hourly employees along with truck drivers at the Tyler refinery were represented by the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union and its Local 202.

Equity-based compensation expense is included in general and administrative expenses in the accompanying consolidated statements of income and is immaterial for the years ended December 31, 2020, 2019 and 2018.

Shareholders' Equity

Stockholder Rights Plan

On March 20, 2020, our Board of Directors declared a dividend of one preferred share purchase right (a “Right”) for each outstanding share of Delek’s common stock and adopted a stockholder rights plan (the “Rights Agreement”).

The dividend was distributed in a non-cash transaction on March 30, 2020 to the stockholders of record on that date.

The Rights initially trade with, and are inseparable from, Delek’s common stock.

Once the Rights become exercisable, each Right will allow its holder to purchase one one-thousandth of a share of Series A Junior Participating Preferred Stock, par value $ 0.01 per share (a “Preferred Share”) for $ 92.24 , subject to adjustment (the “Exercise Price”).

This portion of a Preferred Share will give the stockholder approximately the same dividend, voting and liquidation rights as would one share of Delek’s common stock.

Prior to exercise, the Right does not give its holder any dividend, voting or liquidation rights.

The Rights will not be exercisable until 10 days after the public announcement that a person or group that has become an “Acquiring Person” (as defined in the Rights Agreement).

The point at which these terms are met is otherwise referred to as the "Distribution Date." If a person or group becomes an Acquiring Person, all holders of Rights except the Acquiring Person may, for the Exercise Price, purchase shares of the Company’s common stock with a market value of two times the Exercise Price, based on the market price of the common stock prior to such acquisition.

In addition, subject to certain conditions set forth in the Rights Agreement, the Board may extinguish the Rights.

If the Company is later acquired in a merger or similar transaction after the Distribution Date, all holders of Rights except the Acquiring Person may, for the Exercise Price, purchase shares of the acquiring corporation with a market value of two times the Exercise Price, based on the market price of the acquiring corporation’s stock prior to such merger.

In the event the Company receives a fully financed, all-cash tender offer satisfying the conditions set forth in the Rights Agreement (a “Qualifying Offer”), and certain other events occur, the Rights Agreement provides a mechanism for stockholders holding more than 20 % of the shares of Delek common stock then outstanding (excluding shares beneficially owned by the person making the Qualifying Offer) to demand a special meeting of the stockholders of the Company to vote on a resolution exempting such Qualifying Offer from the provisions of the Rights Agreement.

The Rights will expire on March 19, 2021, subject to a possible earlier expiration to the extent provided in the Rights Agreement.

Preferred Stock

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.

Stock Repurchase Program

In December 2016, our Board of Directors authorized a share repurchase program for up to $ 150.0 million of Delek common stock.

Any share repurchases under the repurchase program may be implemented through open market transactions or in privately negotiated transactions, in accordance with applicable securities laws.

The timing, price and size of repurchases will be made at the discretion of management and will depend on prevailing market prices, general economic and market conditions and other considerations.

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

On February 26, 2018, the Board of Directors approved a new $ 150.0 million authorization to repurchase Delek common stock.

This amount has no expiration date and is in addition to any remaining amounts previously authorized.

On November 6, 2018, the Board of Directors authorized the repurchase of an additional $ 500.0 million of Delek common stock.

During the year ended December 31, 2018, we repurchased 9,022,386 shares of our common stock for a total of $ 365.3 million.

The total purchase price for the 2.0 million shares was approximately $ 75.3 million, or $ 37.64 per share.

During the years ended December 31, 2020 and 2019, we repurchased 58,713 and 5,039,034 shares of our common stock for a total of $ 1.9 million and $ 178.1 million, respectively.

As of December 31, 2020, there was approximately $ 229.7 million of authorization remaining under Delek's aggregate stock repurchase program (based on repurchases that had settled as of December 31, 2020).

During the year ended December 31, 2020, we suspended the share repurchase program until our internal parameters are met for resuming such repurchases.

As of December 31, 2020, operations, maintenance and warehouse hourly employees along with truck drivers at the Tyler refinery were represented by the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union

and its Local 202.

Of the Tyler employees, 51.0 % of operations, maintenance and warehouse hourly employees are currently covered by a collective bargaining agreement that expires January 31, 2022 while 13.2 % of Tyler truck drivers are currently covered by a collective bargaining agreement that expires May 1, 2021.

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The related expense (estimated without considering forfeitures) has been or will be recognized over the remaining union contract period.

Estimated remaining expense is approximately $ 2.0 million during each of the years 2020 and 2021, and approximately $ 0.1 million in 2022.

As of December 31, 2020, estimated remaining expense is approximately $ 2.0 million during 2021, and approximately $ 0.1 million in 2022.

On October 1, 2018, we spun off a portion of the Alon's qualified pension plan into a new plan - The Alon USA Pension Plan for Collectively Bargained Employees.

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Fair value of plan assets at beginning of year $ 128.1 $ 115.7

Actual gain (loss) on plan assets

Actual gain on plan assets 15.7 29.5

Employer contribution — 1.4

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The pre-tax amounts related to the defined benefit plans recognized as pension benefit liability in the consolidated balance sheets as of December 31, 2020 was $ 10.2 million.

The pre-tax amounts in accumulated other comprehensive loss that have not yet been recognized as components of net periodic benefit cost were as follows:

Net actuarial loss

The pre-tax amounts in accumulated other comprehensive income (loss) that have not yet been recognized as components of net periodic benefit cost were as follows:

Year Ended December 31,

Net actuarial loss (gain) $ 9.3 $ ( 0.1 )

Prior service credit — —

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The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the pension plans were as follows:

Year Ended December 31,

Projected benefit obligation $ 148.7 $ 131.5

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The weighted-average assumptions used to determine benefit obligations were as follows:

Year Ended December 31,

Discount rate 2.45 % 3.20 %

Rate of compensation increase

Rate of compensation increase N/A N/A

The discount rate used reflects the expected future cash flow based on our funding valuation assumptions and participant data as of the beginning of the plan period.

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Year Ended December 31,

2020 2019 2018

Discount rate 3.20 % 4.15 % 3.60 %

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Components of net periodic benefit:

2020 2019 2018

Service cost $ — $ — $ 0.4

Interest cost 4.2 5.4 5.2

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Year Ended December 31,

Asset Category:

Equity securities

Debt securities

Real estate investment trust

Investments in common collective trust consisting of:

and International companies 40.4 % 40.0 %

Fixed-income 59.6 % 60.0 %

Total 100.0 % 100.0 %

The fair value of our pension assets by category were as follows:

Quoted Prices in

Active Markets

For Identical

Quoted Prices in Active Markets For Identical Assets or Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant

Unobservable Inputs

(Level 3) Consolidated

Year Ended December 31, 2020

Equity securities:

companies $ — $ 36.2 $ — $ 36.2

International companies — 19.7 — 19.7

Debt securities:

Preferred securities

Bond securities

Real estate securities

Fixed-income — 82.6 — 82.6

Total $ — $ 138.5 $ — $ 138.5

Year Ended December 31, 2019

Equity securities:

companies $ — $ 38.5 $ — $ 38.5

International companies — 12.8 — 12.8

Debt securities:

Preferred securities

Bond securities

Real estate securities

Fixed-income — 76.8 — 76.8

Total $ — $ 128.1 $ — $ 128.1

The investment policies and strategies for the assets of our pension benefits is to, over a five-year period, provide returns in excess of the benchmark.

The portfolio is expected to earn long-term returns from capital appreciation and a stable stream of current income.

The portfolio in our common collective trust is expected to earn long-term returns from capital appreciation and a stable stream of current income.

This approach recognizes that assets are exposed to price risk and the market value of the plans’ assets may fluctuate from year to year.

Risk tolerance is determined based on our specific risk management policies.

In line with the investment return objective and risk parameters, the plans’ mix of assets includes a diversified portfolio of equity, fixed-income and real estate investments.

Equity investments include domestic and international stocks of various sizes of capitalization.

In line with the investment return objective and risk parameters, the plans’ mix of assets includes a diversified portfolio of underlying securities in companies and fixed-income.

The underlying securities include domestic and international companies of various sizes of capitalization.

The asset allocation of the plan is reviewed on at least an annual basis.

We contributed $ 1.4 million to the pension plans for the year ended December 31, 2019 , and expect to contribute $ 5.8 million to the pension plans in 2020 .

We made no contributions to the pension plans for the year ended December 31, 2020, and expect to contribute $ 6.1 million to the pension plans in 2021.

There were no employee contributions to the plans.

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Quarterly financial information for the years ended December 31, 2020 and 2019 is summarized below.

The sum of the quarterly results may differ from the annual results presented on our consolidated income statement due to rounding.

The sum of the quarterly results may differ from the annual results presented on our consolidated statements of operations due to rounding.

The quarterly financial information summarized below has been prepared by Delek's management and is unaudited (in millions, except per share data).

For the Three Month Periods Ended

March 31, 2019

June 30, 2019

September 30, 2019

December 31, 2019 (1)

Operating income

Net income from continuing operations

Net income attributable to Delek

Basic income per share from continuing operations

Diluted income per share from continuing operations

For the Three Month Periods Ended

March 31, 2018 (2)

June 30, 2018

September 30, 2018

December 31, 2018 (3)

Operating income

March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020

Net revenues $ 1,821.2 $ 1,535.5 $ 2,062.9 $ 1,882.2

Operating (loss) income $ ( 361.5 ) $ 22.8 $ ( 75.2 ) $ ( 314.1 )

Net (loss) income from continuing operations $ ( 307.0 ) $ 98.5 $ ( 76.9 ) $ ( 285.0 )

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Diluted (loss) income per share from continuing operations $ ( 4.28 ) $ 1.18 $ ( 1.20 ) $ ( 3.98 )

For the Three Month Periods Ended

March 31, 2019 June 30, 2019 September 30, 2019 December 31, 2019 (1)

Net revenues $ 2,199.9 $ 2,480.3 $ 2,334.3 $ 2,283.7

Operating income $ 222.4 $ 134.3 $ 87.4 $ 48.2

Net income from continuing operations $ 154.4 $ 84.6 $ 60.0 $ 32.0

Net income $ 154.4 $ 83.8 $ 60.0 $ 38.0

Net income attributable to Delek $ 149.3 $ 77.3 $ 51.3 $ 32.7

Basic income per share from continuing operations $ 1.92 $ 1.02 $ 0.68 $ 0.36

Diluted income per share from continuing operations $ 1.90 $ 1.01 $ 0.68 $ 0.36

The tables above include the following infrequently occurring items:

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Of this amount, $ 31.1 million related to the first three quarters of 2019 blending activities and $ 36.0 million related to 2018 blending activities.

Net loss from continuing operations for the quarter ended March 31, 2018 includes the benefit of retroactive biodiesel tax credits related to 2017 blending activities totaling $ 24.9 million .

Net income from continuing operations for the quarter ended December 31, 2018 includes an environmental indemnification settlement totaling $ 20.0 million , where $ 16.0 million is attributable to additional recoveries of remediation costs incurred by the Company and is included as a reduction of operating expenses, and $ 4.0 million is considered additional consideration for concessions made under the Settlement Agreement and is included as other income in the accompanying consolidated statements of income for the year ended December 31, 2018 .

The quarterly earnings per share calculations for the three months ended December 31, 2020 and 2019 are presented below:

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Numerator for EPS - continuing operations

Income from continuing operations

(Loss) income from continuing operations $ ( 285.0 ) $ 32.0

Income from continuing operations attributed to non-controlling interest 8.2 5.3

Income from continuing operations attributable to Delek (numerator for basic EPS - continuing operations attributable to Delek)

Interest on convertible debt, net of tax

Numerator for diluted EPS - continuing operations attributable to Delek $ ( 293.2 ) $ 26.7

Numerator for EPS - discontinued operations

Income (loss) from discontinued operations

Income from discontinued operations $ — $ 6.0

Weighted average common shares outstanding (denominator for basic EPS) 73,736,637 74,042,343

Dilutive effect of warrants

Dilutive effect of stock-based awards — 658,583

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Basic income per share:

Income from continuing operations

(Loss) income from continuing operations $ ( 3.98 ) $ 0.36

Income from discontinued operations — 0.08

Total basic income (loss) per share

Total basic (loss) income per share $ ( 3.98 ) $ 0.44

Diluted income per share:

Income from continuing operations

(Loss) income from continuing operations $ ( 3.98 ) $ 0.36

Income from discontinued operations — 0.08

Total diluted income (loss) per share

Total diluted (loss) income per share $ ( 3.98 ) $ 0.44

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

Antidilutive stock-based compensation 301,086 1,925,207

Antidilutive due to loss 3,685,519 —

Total antidilutive stock-based compensation 3,986,605 1,925,207

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

(in millions)

Year Ended December 31,

(in millions) Year Ended December 31,

Operating lease costs (1)

$ 64.0 $ 49.5

Short-term lease costs (2)

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Operating cash flows from operating leases (1)

$ ( 64.0 ) $ ( 49.5 )

Leased assets obtained in exchange for new operating lease liabilities $ 58.1 $ 15.9

December 31, 2020

Weighted-average remaining lease term (years) operating leases 5.2

Weighted-average discount rate operating leases (3)

(1) Includes an immaterial amount of financing lease cost.

(2) Includes an immaterial amount of variable lease cost.

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The following is an estimate of the maturity of our lease liabilities for operating leases having remaining noncancelable terms in excess of one year as of December 31, 2020 (in millions) under the new lease guidance ASC 842:

Maturity of Lease Liabilities

Maturity of Lease Liabilities Total

12 months or less $ 216.6

13-24 months 214.7

25-36 months 192.8

37-48 months 182.2

49- 50 months 94.8

Thereafter 214.4

Total future lease payments 1,115.5

Interest 933.5

Present Value of Lease Liabilities $ 182.0

Subsequent Events

Dividend Declaration

On February 24, 2020 , Delek's Board of Directors voted to declare a quarterly cash dividend of $ 0.31 per share, payable on March 24, 2020 , to stockholders of record on March 10, 2020 .

Investment in Project Financing Joint Venture

On February 21, 2020, we, through our wholly-owned direct subsidiary Delek Energy, entered into the W2W Holdings LLC Agreement with MPLX to form the WWP Project Financing JV (inclusive of its wholly-owned subsidiaries).

See Note 7 for further discussion.

2020 Amendments to Supply and Offtake Agreements

In January 2020, we amended our three Supply and Offtake Agreements to convert the Baseline Step-Out Liabilities back to a market-indexed price subject to commodity price risk with corresponding changes to underlying market-based indices and certain differentials.

See Note 10 for further discussion.

During February 2021, the Company experienced a severe weather event at the Tyler, El Dorado and Krotz Springs refineries, resulting in units being temporarily shut down and damages to parts of the facilities due to extreme freezing conditions.

The Company is currently determining the financial impact of the event and expects to incur certain recovery costs and repair costs.

Additionally, the severe weather conditions and the resultant industry downtime have caused energy prices to rise in certain regions where we operate, which are expected to result in additional operating expenses for the refineries impacted until such time that supply is restored and energy prices stabilize.

On February 27, 2021, our El Dorado refinery experienced a fire in its Penex unit.

The facility was in the process of undergoing turnaround activity, so there are no operational disruptions as a result of the fire.

We are in the preliminary stages of assessing the extent of the damages.

Financial Statements and Schedules

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Delek US Holdings, Inc.

/s/ Assaf Ginzburg

Assaf Ginzburg

/s/ Reuven Spiegel

Reuven Spiegel

Executive Vice President and Chief Financial Officer

February 27, 2020

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by or on behalf of the following persons on behalf of the registrant and in the capacities indicated on February 27, 2020 :

(Principal Financial Officer)

March 1, 2021

/s/ Ezra Uzi Yemin

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(Principal Executive Officer)

/s/ Assaf Ginzburg

Assaf Ginzburg

Executive Vice President and Chief Financial Officer

(Principal Financial and Accounting Officer)

/s/ Nilah Staskus

Nilah Staskus

Senior Vice President, Chief Accounting Officer

(Principal Accounting Officer)

/s/ William J.

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/s/ Vicky Sutil

/s/ Laurie Z.

/s/ David Wiessman

2 unchanged sentences

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-K

Item 9A. Controls and Procedures