Delek US Holdings, Inc. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Disclosure Controls and Procedures We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Exchange Act that are designed to provide reasonable assurance that the information that we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. It should be noted that, because of inherent limitations, our disclosure controls and procedures, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the disclosure controls and procedures are met. As required by paragraph (b) of Rule 13a-15 under the Exchange Act, we carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report. Management's Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process that is designed under the supervision of our Chief Executive Officer and Chief Financial Officer, and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our internal control over financial reporting includes those policies and procedures that: • Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; • Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that receipts and expenditures recorded by us are being made only in accordance with authorizations of our management and Board of Directors; and • Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate. Management has conducted its evaluation of the effectiveness of internal control over financial reporting as of December 31, 2020, based on the framework in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management's assessment included an evaluation of the design of our internal control over financial reporting and testing the operational effectiveness of our internal control over financial reporting. Management reviewed the results of the assessment with the Audit Committee of the Board of Directors. Based on its assessment and review with the Audit Committee, management concluded that, at December 31, 2020, we maintained effective internal control over financial reporting. Report of Independent Registered Public Accounting Firm Our independent registered public accounting firm, Ernst & Young LLP, has audited the effectiveness of our internal control over financial reporting as of December 31, 2020, as stated in their report, which is included in the section beginning on page F-1. The information required by Item 8 is incorporated by reference to the section beginning on page F-1. Changes in Internal Control over Financial Reporting There has been no change in our internal control over financial reporting (as described in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION None. 100 | Directors, Executive Officers, Corporate Governance and Security Ownership PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 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 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. The information required by Item 405 of Regulation S-K will be included under "Section 16(a) Beneficial Ownership Reporting Compliance" in the Definitive Proxy Statement and is incorporated herein by reference. The information required by Items 406, 407(c)(3), (d)(4), and (d)(5) of Regulation S-K will be included under "Corporate Governance" in the Definitive Proxy Statement and is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION The information required by Item 402 and paragraphs (e)(4) and (e)(5) of Item 407 of Regulation S-K will be included under "Executive Compensation" and "Corporate Governance" in the Definitive Proxy Statement and is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information required by Item 201(d) and Item 403 of Regulation S-K will be included under "Equity Compensation Plan Information" and "Security Ownership of Certain Beneficial Owners and Management" in the Definitive Proxy Statement and is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE The information required by Item 404 of Regulation S-K will be included under "Certain Relationships and Related Transactions" in the Definitive Proxy Statement and is incorporated herein by reference. The information required by Item 407(a) of Regulation S-K will be included under "Election of Directors" and "Corporate Governance" in the Definitive Proxy Statement and is incorporated herein by reference. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information required by this item will be included under “Independent Public Accountants” in the Definitive Proxy Statement and is incorporated herein by reference. 101 | Financial Statements and Schedules PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) Certain Documents Filed as Part of this Annual Report on Form 10-K: 1. Financial Statements. The accompanying Index to Financial Statements on page F-1 of this Annual Report on Form 10-K is provided in response to this item. 2. List of Financial Statement Schedules. All schedules are omitted because the required information is either not present, not present in material amounts, included within the Consolidated Financial Statements or is not applicable. 3. Exhibits - See below. 102 | Financial Statements and Schedules EXHIBIT INDEX Exhibit No. Description 2.1 < 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. and Alon USA Energy, Inc. (incorporated by reference to Exhibit 2.1 to the Company's Form 8-K filed on January 3, 2017). 2. 2 First Amendment to Agreement and Plan of Merger dated as of February 27, 2017, among Delek US Holdings, Inc., Delek Holdco, Inc., Dion Mergeco, Inc., Astro Mergeco, Inc., and Alon USA Energy, Inc. (incorporated by reference to Exhibit 2.6 to the Company’s Form 10-K filed on February 28, 2017). 2.3 Second Amendment to Agreement and Plan of Merger dated as of April 21, 2017, among Delek US Holdings, Inc., Delek Holdco, Inc., Dion Mergeco, Inc., Astro Mergeco, Inc., and Alon USA Energy, Inc. (incorporated by reference to Annex B-2 to the Company’s Proxy Statement/Prospectus filed pursuant to Rule 424(b)(3) on May 30, 2017). 2.4 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). 3.1 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). 3.2 Amended and Restated Bylaws of Delek US Holdings, Inc. (incorporated by reference to Exhibit 3.2 of the Company’s Form 10-Q filed on May 8, 2020). 4.1 Indenture, dated as of May 23, 2017, among Delek Logistics, LP, Delek Logistics Finance Corp., the Guarantors named therein and U.S. Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Partnership's Form 8-K filed on May 24, 2017, SEC File No. 001-35721). 4.2 Form of 6.750% Senior Notes due 2025 (included as Exhibit A in Exhibit 4.1). 4.3 # Description of Common Stock 10.1 * Form of Indemnification Agreement for Directors and Officers (incorporated by reference to Exhibit 10.3 to the Company's Registration Statement on Form S-1/A, filed on April 20, 2006, SEC File No. 333-131675). 10.2(a) * Delek US Holdings, Inc. 2006 Long-Term Incentive Plan (as amended through May 4, 2010) (incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q filed on May 7, 2010, SEC File No. 001-32868). 10.2(b) * Form of Delek US Holdings, Inc. 2006 Long-Term Incentive Plan Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.13(a) to the Company's Registration Statement on Form S-1/A, filed on April 20, 2006, SEC File No. 333-131675). 10.2(c) * Director Form of Delek US Holdings, Inc. 2006 Long-Term Incentive Plan Stock Option Agreement (incorporated by reference to Exhibit 10.13(b) to the Company's Registration Statement on Form S-1/A, filed on April 20, 2006, SEC File No. 333-131675). 10.2(d) * Officer Form of Delek US Holdings, Inc. 2006 Long-Term Incentive Plan Stock Option Agreement (incorporated by reference to Exhibit 10.13(c) to the Company's Registration Statement on Form S-1/A, filed on April 20, 2006, SEC File No. 333-131675). 10.2(e) * Director Form of Delek US Holdings, Inc. 2006 Long-Term Incentive Plan Stock Appreciation Rights Agreement (incorporated by reference to Exhibit 10.5 to the Company's Form 10-Q filed on August 6, 2010, SEC File No. 001-32868). 10.2(f) * Employee Form of Delek US Holdings, Inc. 2006 Long-Term Incentive Plan Stock Appreciation Rights Agreement (incorporated by reference to Exhibit 10.4 to the Company's Form 10-Q filed on August 6, 2010, SEC File No. 001-32868). 10.2(g) * Form of Delek US Holdings, Inc. 2006 Long-Term Incentive Plan Performance Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.4 to the Company's Form 10-Q filed on August 7, 2014, SEC File No. 001-32868). 10.3 Tyler Throughput and Tankage Agreement, dated July 26, 2013, between Delek Refining, Ltd. and Delek Marketing & Supply, LP (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on August 1, 2013). 10.4 Pipelines and Tankage Agreement, dated November 7, 2012, by and between Delek Refining, Ltd. 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. 001-32868). 10.5 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. 001-32868). 10.6(a) 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. Aron & Company (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on February 14, 2014). 10.6(b) Amendment to El Dorado Throughput and Tankage Agreement, executed as of July 22, 2016 but effective as of February 11, 2014, between Lion Oil Company and Delek Logistics Operating LLC, and, for limited purposes, J. Aron & Company (incorporated by reference to Exhibit 10.4 to the Company's Form 10-Q filed on August 5, 2016). 103 | Financial Statements and Schedules 10.7(a) 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). 10.7(b) 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). 10.7(c) 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). 10.7(d) 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). 10.8(a) * Delek US Holdings, Inc. 2016 Long-Term Incentive Plan (incorporated by reference to Exhibit 99.1 to the Company's Registration Statement on Form S-8 filed on June 1, 2016). 10.8(b) * First Amendment to the Delek US Holdings, Inc. 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). 10.8(c) * 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). 10.8(d) * General Terms and Conditions for Restricted Stock Unit Awards to Executive Officers and Directors under the 2016 Delek US Holdings, Inc. Long-Term Incentive Plan (incorporated by reference to Exhibit 10.5 to the Company's Form 10-Q filed on August 5, 2016). 10.8(e) * General Terms and Conditions for Stock Appreciation Right Awards to Executive Officers and Directors under the 2016 Delek US Holdings, Inc. Long-Term Incentive Plan (incorporated by reference to Exhibit 10.6 to the Company's Form 10-Q filed on August 5, 2016). 10.8(f) * Form of Delek US Holdings, Inc. 2016 Long-Term Incentive Plan Performance Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.29(c) to the Company’s Form 10-K filed February 28, 2017). 10.8(g) * Form of Delek US Holdings, Inc. 2016 Long-Term Incentive Plan Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.29(d) to the Company’s Form 10-K filed February 28, 2017). 10.9(a) * Alon USA Energy, Inc. Second Amended and Restated 2005 Incentive Compensation Plan (incorporated by reference to Exhibit 10.2 to Alon USA Energy, Inc.’s Form 10-Q filed on May 9, 2012, SEC File No. 001-32567). 10.9(b) * Form of Restricted Stock Award Agreement relating to Director Grants pursuant to Section 12 of the Alon USA Energy, Inc. 2005 Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to Alon USA Energy, Inc.’s Form 8-K filed on August 5, 2005, SEC File No. 001-32567). 10.9(c) * Form of Restricted Stock Award Agreement relating to Participant Grants pursuant to Section 8 of the Alon USA Energy, Inc. 2005 Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to Alon USA Energy, Inc.’s Form 8-K filed on August 23, 2005, SEC File No. 001-32567). 10.9(d) * Form II of Restricted Stock Award Agreement relating to Participant Grants pursuant to Section 8 of the Alon USA Energy, Inc. 2005 Incentive Compensation Plan (incorporated by reference to Exhibit 10.3 to Alon USA Energy, Inc.’s Form 8-K filed on November 8, 2005, SEC File No. 001-32567). 10.9(e) * Alon USA Energy, Inc. Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.1 to Alon USA Energy, Inc.’s Form 8-K filed on January 12, 2017, SEC File No. 001-32567). 10.9(f) * Form of Appreciation Rights Award Agreement relating to Participant Grants pursuant Section 7 of the Alon USA Energy, Inc. 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. 001-32567). 10.9(g) * Form of Amendment to Appreciation Rights Award Agreement relating to Participant Grants pursuant to Section 7 of the Alon USA Energy, Inc. 2005 Incentive Compensation Plan (incorporated by reference to Exhibit 10.2 to Alon USA Energy, Inc.’s Form 8-K filed on January 27, 2010, SEC File No. 001-32567). 10.9(h) * Form of Award Agreement relating to Executive Officer Restricted Stock Grants pursuant to the Alon USA Energy, Inc. 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. 001-32567). 10.1 * 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). 10.11 * 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). 10.12 * 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). 104 | Financial Statements and Schedules 10.13(a) * 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). 10.13(b) * 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). 10.14 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. Aron & Company LLC (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on March 26, 2018). 10.15 Big Spring Asphalt Services Agreement, 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. Aron & Company LLC (incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed on March 26, 2018). 10.16 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). 10.17(a) 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). 10.17(b) 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). 10.17(c) 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). 10.17(d) 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). 10.17(e) 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). 10.18(a) 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. from time to time party thereto, as guarantors, Wells Fargo, Barclays Bank PLC, Regions Capital Markets, a division of Regions Bank, and SunTrust Robinson Humphrey, Inc., each as a joint lead arranger and joint book runner, Barclays Bank PLC, Regions Bank, and SunTrust Bank, each as a co-syndication agent, and Fifth Third Bank, The Bank of Tokyo-Mitsubishi UFJ, Ltd., PNC Bank, National Association, and Credit Suisse AG, Cayman Islands Branch, each as a co-documentation agent (incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed on April 5, 2018). 10.18(b ) First Amendment to Second Amended and Restated Credit Agreement, dated as of May 14, 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 10.1 to the Company’s Quarterly Report on Form 10-Q filed on November 8, 2019). 10.18(c) 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). 10.18(d ) 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). 10.18(e) 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). 10.19 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) . 105 | Financial Statements and Schedules 10.20 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). 10.21 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). 10.22 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). 10.23 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). 10.24 # Letter Agreement, dated as of December 21, 2020 by and between J. Aron & Company LLC, Lion Oil Company, and Lion Oil Trading & Transportation, LLC. 10.25 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) 10.26 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). 10.27 * 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). 10.28 * 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). 10.29 * # Consulting Agreement, dated as of November 3, 2020, by and between Delek US Holdings, Inc. and Frederec Green. 21.1 # Subsidiaries of the Registrant. 23.1 # Consent of Ernst & Young LLP. 31.1 # Certification of the Company's Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act. 31.2 # Certification of the Company's Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act. 32.1 ## Certification of the Company's Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 ## Certification of the Company's Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101 The following materials from Delek US Holdings, Inc.’s Annual Report on Form 10-K for the annual period ended December 31, 2020, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of December 31, 2020 and 2019, (ii) Consolidated Statements of Income for the years ended December 31, 2020, 2019 and 2018, (iii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2020, 2019 and 2018, (iv) Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2020, 2019 and 2018, (v) Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018 and (vi) Notes to Consolidated Financial Statements. 104 # Cover Page Interactive Data File formatted in iXBRL (Inline eXtensible Business Reporting Language) and contained in Exhibit 101. * Management contract or compensatory plan or arrangement. # Filed herewith. ## Furnished herewith. < Certain schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to supplementally furnish a copy of any of the omitted schedules to the United States Securities and Exchange Commission upon request. ++ Confidential treatment has been requested and granted with respect to certain portions of this exhibit pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Omitted portions have been filed separately with the United States Securities and Exchange Commission. ~ Certain confidential information contained in these exhibits has been omitted because it (i) is not material and (ii) would be competitively harmful if publicly disclosed. 106 | Financial Statements and Schedules Delek US Holdings, Inc. Consolidated Financial Statements As of December 31, 2020 and 2019 and For Each of the Three Years Ended December 31, 2020, 2019 and 2018 INDEX TO FINANCIAL STATEMENTS Reports of Independent Registered Public Accounting Firm F- 2 Audited Financial Statements: Consolidated Balance Sheets F- 5 Consolidated Statements of Income F- 6 Consolidated Statements of Comprehensive Income F- 7 Consolidated Statements of Changes in Stockholders' Equity F- 8 Consolidated Statements of Cash Flows F- 11 Notes to Consolidated Financial Statements F- 12 F-1 | Financial Statements and Schedules Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Delek US Holdings, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Delek US Holdings, Inc. (“the Company”) as of December 31, 2020 and 2019, and 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 (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S. 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, 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 These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. 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. F-2 | Financial Statements and Schedules 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 We have served as the Company’s auditor since 2002. Nashville, Tennessee March 1, 2021 F-3 | Financial Statements and Schedules Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Delek US Holdings, Inc. Opinion on Internal Control over Financial Reporting We have audited Delek US Holdings, Inc.’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) (the COSO criteria). In our opinion, Delek US Holdings, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria. 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, 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 The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion . Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Nashville, Tennessee March 1, 2021 F-4 | Financial Statements and Schedules Delek US Holdings, Inc. Consolidated Balance Sheets (In millions, except share and per share data) December 31, 2020 2019 ASSETS Current assets: Cash and cash equivalents $ 787.5 $ 955.3 Accounts receivable, net 527.9 792.6 Inventories, net of inventory valuation reserves 727.7 946.7 Other current assets 256.4 268.7 Total current assets 2,299.5 2,963.3 Property, plant and equipment: Property, plant and equipment 3,519.5 3,362.8 Less: accumulated depreciation ( 1,152.3 ) ( 934.5 ) Property, plant and equipment, net 2,367.2 2,428.3 Operating lease right-of-use assets 182.0 183.6 Goodwill 729.7 855.7 Other intangibles, net 107.8 110.3 Equity method investments 363.6 407.3 Other non-current assets 84.3 67.8 Total assets $ 6,134.1 $ 7,016.3 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 1,144.0 $ 1,599.7 Current portion of long-term debt 33.4 36.4 Obligation under Supply and Offtake Agreements 129.2 332.5 Current portion of operating lease liabilities 50.2 40.5 Accrued expenses and other current liabilities 546.4 346.8 Total current liabilities 1,903.2 2,355.9 Non-current liabilities: Long-term debt, net of current portion 2,315.0 2,030.7 Obligation under Supply and Offtake Agreements 224.9 144.8 Environmental liabilities, net of current portion 107.4 137.9 Asset retirement obligations 37.5 68.6 Deferred tax liabilities 255.5 267.9 Operating lease liabilities, net of current portion 131.8 144.3 Other non-current liabilities 33.7 30.9 Total non-current liabilities 3,105.8 2,825.1 Stockholders’ equity: Preferred stock, $ 0.01 par value, 10,000,000 shares authorized, no shares issued and outstanding — — Common stock, $ 0.01 par value, 110,000,000 shares authorized, 91,356,868 shares and 90,987,025 shares issued at December 31, 2020 and 2019, respectively 0.9 0.9 Additional paid-in capital 1,185.1 1,151.9 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 Non-controlling interests in subsidiaries 118.4 169.0 Total stockholders’ equity 1,125.1 1,835.3 Total liabilities and stockholders’ equity $ 6,134.1 $ 7,016.3 See accompanying notes to the consolidated financial statements F-5 | Financial Statements and Schedules Delek US Holdings, Inc. Consolidated Statements of Income (In millions, except share and per share data) Year Ended December 31, 2020 2019 2018 Net revenues $ 7,301.8 $ 9,298.2 $ 10,233.1 Cost of sales: Cost of materials and other 6,841.2 7,657.2 8,560.5 Operating expenses (excluding depreciation and amortization presented below) 462.0 580.2 538.5 Depreciation and amortization 241.6 170.7 161.3 Total cost of sales 7,544.8 8,408.1 9,260.3 Operating expenses related to retail and wholesale business (excluding depreciation and amortization presented below) 97.8 102.0 106.5 General and administrative expenses 248.3 274.7 247.6 Depreciation and amortization 26.0 23.6 38.1 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 (loss) income ( 728.0 ) 492.3 611.9 Interest expense 129.0 131.1 125.9 Interest income ( 3.3 ) ( 11.3 ) ( 5.8 ) Income from equity method investments ( 30.3 ) ( 34.3 ) ( 9.7 ) 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 (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 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 (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 (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 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 See accompanying notes to the consolidated financial statements F-6 | Financial Statements and Schedules Delek US Holdings, Inc. Consolidated Statements of Comprehensive Income (In millions) 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 (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 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 ) Postretirement benefit plans: 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 Reclassified to other expense (income), net: Gain recognized due to curtailment and settlement — ( 2.7 ) ( 2.5 ) Amortization of net actuarial loss 0.1 0.7 0.5 (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 (loss) income attributable to Delek $ ( 615.3 ) $ 282.1 $ 360.2 See accompanying notes to the consolidated financial statements F-7 | Financial Statements and Schedules Delek US Holdings, Inc. Consolidated Statements of Changes in Stockholders' Equity (In millions, except share and per share data) 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) — — — — ( 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 Distribution to non-controlling interest — — — — — — — ( 27.7 ) ( 27.7 ) Repurchase of common stock — — — — — ( 9,022,386 ) ( 365.3 ) — ( 365.3 ) 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 — — — — — — — — 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 F-8 | Financial Statements and Schedules Delek US Holdings, Inc. Consolidated Statements of Changes in Stockholders' Equity (Continued) (In millions, except share and per share data) 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 ) Repurchase of common stock — — — — — ( 5,039,034 ) ( 178.1 ) — ( 178.1 ) Taxes paid due to the net settlement of equity-based compensation — — ( 9.2 ) — — — — — ( 9.2 ) Exercise of equity-based awards 508,950 — — — — — — — — 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 F-9 | Financial Statements and Schedules Delek US Holdings, Inc. Consolidated Statements of Changes in Stockholders' Equity (Continued) (In millions, except share and per share data) 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 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 ) Equity-based compensation expense — — 22.7 — — — — 0.1 22.8 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 — — — — — — — — 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 F-10 | Financial Statements and Schedules Delek US Holdings, Inc. Consolidated Statements of Cash Flows (In millions, except per share data) Year Ended December 31, 2020 2019 2018 Cash flows from 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 Other amortization/accretion 10.8 9.5 8.2 Non-cash lease expense 59.7 34.9 — 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 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 Other 3.1 ( 5.5 ) 5.6 Changes in assets and liabilities: Accounts receivable 259.7 ( 276.7 ) 112.7 Inventories and other current assets 244.4 ( 417.7 ) 138.7 Fair value of derivatives ( 23.1 ) ( 12.5 ) ( 52.6 ) Accounts payable and other current liabilities ( 480.3 ) 565.2 ( 128.1 ) 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 (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 (used in) provided by operating activities ( 282.9 ) 575.2 560.3 Cash flows from investing activities: Equity method investment contributions ( 31.2 ) ( 267.4 ) ( 0.2 ) Distributions from equity method investments 72.0 0.8 1.2 Purchases of property, plant and equipment ( 269.4 ) ( 413.0 ) ( 322.0 ) Asset acquisitions — ( 8.0 ) — Purchase of intangible assets ( 2.8 ) ( 19.9 ) ( 1.7 ) Proceeds from sale of property, plant and equipment 0.2 1.1 11.1 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 investing activities - continuing operations ( 191.3 ) ( 691.3 ) ( 145.3 ) Cash provided by investing activities - discontinued operations — — 20.0 Net cash used in investing activities ( 191.3 ) ( 691.3 ) ( 125.3 ) Delek US Holdings, Inc. Consolidated Statements of Cash Flows (Continued) (In millions, except per share data ) Year Ended December 31, 2020 2019 2018 Cash flows from financing activities: Proceeds from long-term revolvers 1,883.1 1,435.4 2,124.6 Payments on long-term revolvers ( 1,754.9 ) ( 1,553.7 ) ( 1,679.8 ) Proceeds from term debt 185.0 434.0 690.6 Payments on term debt ( 37.9 ) ( 34.3 ) ( 826.3 ) Proceeds from product financing agreements 297.2 40.8 — Repayments of product financing agreements ( 128.1 ) ( 22.2 ) ( 72.4 ) Settlement of warrants unwind agreement — — ( 35.9 ) Taxes paid due to the net settlement of equity-based compensation ( 2.4 ) ( 9.2 ) ( 11.5 ) Repurchase of common stock ( 1.9 ) ( 178.1 ) ( 365.3 ) Repurchase of non-controlling interest ( 28.9 ) — — 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 ) 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 Cash and cash equivalents at the beginning of the period 955.3 1,079.3 941.9 Cash and cash equivalents at the end of the period $ 787.5 $ 955.3 $ 1,079.3 Supplemental disclosures of cash flow information: Cash paid during the period for: 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 (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 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 $ — Common stock issued in connection with settlement of Convertible Notes $ — $ — $ 123.9 Treasury shares received in connection with exercise of Call Options $ — $ — $ ( 123.9 ) See accompanying notes to the consolidated financial statements F-11 | Financial Statements and Schedules Delek US Holdings, Inc. Notes to Consolidated Financial Statements 1. General Delek US Holdings, Inc. operates through its consolidated subsidiaries, which include Delek US Energy, Inc. ("Delek Energy") (and its subsidiaries) and Alon USA Energy, Inc. ("Alon") (and its subsidiaries). 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. 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." 2. Accounting Policies Basis of Presentation Our consolidated financial statements include the accounts of Delek and its subsidiaries. All significant intercompany transactions and account balances have been eliminated in consolidation. We have evaluated subsequent events through the filing of this Form 10-K. Any material subsequent events that occurred during this time have been properly recognized or disclosed in our financial statements. 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. As Delek Logistics does not derive an amount of gross margin material to us from third parties, there is limited risk to Delek associated with Delek Logistics' operations. However, in the event that Delek Logistics incurs a loss, our operating results will reflect such loss, net of intercompany eliminations, to the extent of our ownership interest in this entity. The preparation of financial statements in conformity with U.S. 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. In the opinion of management, all adjustments necessary for a fair presentation of the financial condition and the results of operations have been included. All adjustments are of a normal, recurring nature. Reclassifications 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; F-12 | • 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; and • The evaluation of our ability to continue as a going concern. Segment Reporting Delek is an integrated downstream energy business based in Brentwood, Tennessee, and has three primary lines of business: petroleum refining; the transportation, storage and wholesale distribution of crude oil, intermediate and refined products; and convenience store retailing. For the periods presented, we have aggregated our operating segments into three reportable segments: Refining, Logistics and Retail. Operations that are not specifically included in the reportable segments are included in Corporate, Other and Eliminations, which consists of the following: • our corporate activities; • results of certain immaterial operating segments, including our Canadian crude trading operations (as discussed in Note 12); • 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); • wholesale crude operations; • results and assets of discontinued operations; and • intercompany eliminations. Decisions concerning the allocation of resources and assessment of operating performance are made based on this segmentation. Management measures the operating performance of each of the reportable segments based on the segment contribution margin. Segment contribution margin is defined as net revenues less cost of materials and other and operating expenses, excluding depreciation and amortization. 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"), which was sold May 7, 2020. 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. 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. Segment reporting is more fully discussed in Note 4. Cash and Cash Equivalents Delek maintains cash and cash equivalents in accounts with large, U.S. or multi-national financial institutions. All highly liquid investments purchased with a term of three months or less are considered to be cash equivalents. As of December 31, 2020 and 2019, these cash equivalents consisted primarily of bank money market accounts and bank certificates of deposit, as well as overnight investments in U.S. Government or its agencies' obligations and bank repurchase obligations collateralized by U.S. Government or its agencies' obligations. Accounts Receivable 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. F-13 | Credit is extended based on evaluation of the customer’s financial condition. We perform ongoing credit evaluations of our customers and require letters of credit, prepayments or other collateral or guarantees as management deems appropriate. Allowance for doubtful accounts is based on a combination of historical experience and specific identification methods. Credit risk is minimized as a result of the ongoing credit assessment of our customers and a lack of concentration in our customer base. Credit losses are charged to allowance for doubtful accounts when deemed uncollectible. 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, 2020 and 2019. No customer accounted for more than 10% of consolidated net sales for the years ended December 31, 2020, 2019 or 2018. Inventory Refinery crude oil, work-in-process, refined products, blendstocks and asphalt inventory for all of our operations, excluding the Tyler refinery and merchandise inventory in our Retail segment, are stated at the lower of cost determined using the first-in, first-out (“FIFO”) basis or net realizable value. Cost of inventory at the Tyler refinery is determined using the last-in, first-out (“LIFO”) inventory valuation method and inventory is stated at the lower of LIFO cost or market. Retail merchandise inventory consists of cigarettes, beer, convenience merchandise and food service merchandise and is stated at estimated cost as determined by the retail inventory method. We are not subject to concentration risk with specific suppliers, since our crude oil and refined products inventory purchases are commodities that are readily available from a large selection of suppliers. Investment Commodities Investment commodities represent those commodities (generally crude oil) physically on hand as a result of trading activities with physical forward contracts where such crude will not be used (either directly in production or indirectly through inventory optimization) in the normal course of our refining business. 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 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 Accounting Standards Codification ("ASC") 805, Business Combinations ("ASC 805"). Other acquisitions of property and equipment are carried at cost. Betterments, renewals and extraordinary repairs that extend the life of an asset are capitalized. Maintenance and repairs are charged to expense as incurred. Delek owns certain fixed assets on leased locations and depreciates these assets and asset improvements over the lesser of management's estimated useful lives of the assets or the remaining lease term. Depreciation is computed using the straight-line method over management's estimated useful lives of the related assets, which are as follows: Years Building and building improvements 15 - 40 Refinery machinery and equipment 5 - 40 Pipelines and terminals 15 - 40 Retail store equipment and site improvements 7 - 40 Refinery turnaround costs 4 - 6 Automobiles 3 - 5 Computer equipment and software 3 - 10 Furniture and fixtures 5 - 15 Asset retirement obligation assets 15 - 50 Other Intangible Assets Other intangible assets acquired in a business combination and determined to be finite-lived are amortized over their respective estimated useful lives. The finite-lived intangible assets are amortized on straight-line bases over the estimated useful lives of five to 15 years. 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. F-14 | 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, 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. If the carrying amount is more than the recoverable amount, an impairment charge must be recognized based on the fair value of the asset. These impairment charges are included in other operating income in our consolidated statements of income. There were no impairment charges for the years ended December 31, 2020, 2019 or 2018. Equity Method Investments For equity investments that are not required to be consolidated under the variable or voting interest model, we evaluate the level of influence we are able to exercise over an entity’s operations to determine whether to use the equity method of accounting. Our judgment regarding the level of influence over an equity method investment includes considering key factors such as our ownership interest, participation in policy-making and other significant decisions and material intercompany transactions. Equity investments for which we determine we have significant influence are accounted for as equity method investments. Amounts recognized for equity method investments are included in equity method investments in our consolidated balance sheets and adjusted for our share of the net earnings and losses of the investee and cash distributions, which are separately stated in our consolidated statements of income and our consolidated statements of cash flows. We evaluate our equity method investments presented for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may be impaired. There were no impairment losses recorded on equity method investments for the years ended December 31, 2020, 2019 or 2018. See Note 7 for further information on our equity method investments. Variable Interest Entities 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. Variable interests can be contractual, ownership or other pecuniary interests in an entity that change with changes in the fair value of the VIE’s assets. If we are not the primary beneficiary, the general partner or another limited partner may consolidate the VIE, and we record the investment as an equity method investment. Capitalized Interest Delek capitalizes interest on capital projects associated with the refining and logistics segments. Refinery Turnaround Costs Refinery turnaround costs are incurred in connection with planned shutdowns and inspections of our refineries' major units to perform necessary repairs and replacements. Refinery turnaround costs are deferred when incurred, classified as property, plant and equipment and amortized on a straight-line basis over that period of time estimated to lapse until the next planned turnaround occurs. 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 Impairment Goodwill in an acquisition represents the excess of the aggregate purchase price over the fair value of the identifiable net assets. Goodwill is reviewed at least annually during the fourth quarter for impairment, or more frequently if indicators of impairment exist, such as disruptions in our business, unexpected significant declines in operating results or a sustained market capitalization decline. Goodwill is evaluated for impairment by comparing the carrying amount of the reporting unit to its estimated fair value. 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, 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, 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. F-15 | 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. Derivatives 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 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. 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. Fair Value of Financial Instruments The fair values of financial instruments are estimated based upon current market conditions and quoted market prices for the same or similar instruments. Management estimates that the carrying value approximates fair value for all of Delek's assets and liabilities that fall under the scope of ASC 825, 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 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. 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. 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") 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. Each F-16 | 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 Delek has varying deductibles or self-insured retentions on our workers’ compensation, general liability, automobile liability insurance and medical claims for certain employees with coverage above the deductibles or self-insured retentions in amounts management considers adequate. We maintain an accrual for these costs based on claims filed and an estimate of claims incurred but not reported. Differences between actual settlements and recorded accruals are recorded in the period identified. Environmental Expenditures It is Delek's policy to accrue environmental and clean-up related costs of a non-capital nature when it is both probable that a liability has been incurred and the amount can be reasonably estimated. Environmental liabilities represent the current estimated costs to investigate and remediate contamination at sites where we have environmental exposure. This estimate is based on assessments of the extent of the contamination, the selected remediation technology and review of applicable environmental regulations, typically considering estimated activities and costs for 15 years, and up to 30 years if a longer period is believed reasonably necessary. Such estimates may require judgment with respect to costs, time frame and extent of required remedial and clean-up activities. Accruals for estimated costs from environmental remediation obligations generally are recognized no later than completion of the remedial feasibility study and include, but are not limited to, costs to perform remedial actions and costs of machinery and equipment that are dedicated to the remedial actions and that do not have an alternative use. Such accruals are adjusted as further information develops or circumstances change. We discount environmental liabilities to their present value if payments are fixed or reliably determinable. Expenditures for equipment necessary for environmental issues relating to ongoing operations are capitalized. Provisions for environmental liabilities generally are recognized in operating expenses. Changes in laws and regulations and actual remediation expenses compared to historical experience could significantly impact our results of operations and financial position. We believe the estimates selected, in each instance, represent our best estimate of future outcomes, but the actual outcomes could differ from the estimates selected. Asset Retirement Obligations Delek initially recognizes liabilities which represent the fair value of a legal obligation to perform asset retirement activities, including those that are conditional on a future event, when the amount can be reasonably estimated. If a reasonable estimate cannot be made at the time the liability is incurred, we record the liability when sufficient information is available to estimate the liability’s fair value. In the refining segment, we have asset retirement obligations with respect to our refineries due to various legal obligations to clean and/or dispose of these assets at the time they are retired. 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 F-17 | 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. In order to determine fair value, management must make certain estimates and assumptions including, among other things, projected cash flows, a credit-adjusted risk-free rate and an assessment of market conditions that could significantly impact the estimated fair value of the asset retirement obligations. We believe the estimates selected, in each instance, represent our best estimate of future outcomes, but the actual outcomes could differ from the estimates selected. Revenue Recognition The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or by providing services to a customer. Refining 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. We typically have a right to payment once control of the product is transferred to the customer. Transaction prices for these products are typically at market rates for the product at the time of delivery. Payment terms require customers to pay shortly after delivery and do not contain significant financing components. Logistics Revenues for products sold are generally recognized upon delivery of the product, which is when title and control of the product is transferred. Transaction prices for these products are typically at market rates for the product at the time of delivery. Service revenues are recognized as crude oil, intermediate and refined product are shipped through, delivered by or stored in our pipelines, trucks, terminals and storage facility assets, as applicable. We do not recognize product revenues for these services as the product does not represent a promised good in the context of ASC 606. All service revenues are based on regulated tariff rates or contractual rates. Payment terms require customers to pay shortly after delivery and do not contain significant financing components. Retail Fuel and merchandise revenue is recognized at the point of sale, which is when control of the product is transferred to the customer. Payments from customers are received at the time sales occur in cash or by credit or debit card. We derive service revenues from the sale of lottery tickets, money orders, car washes and other ancillary product and service offerings. 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. Other 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 For the refining segment, cost of materials and other includes the following: • the direct cost of materials (such as crude oil and other refinery feedstocks, refined petroleum products and blendstocks, and ethanol feedstocks and products) that are a component of our products sold; • costs related to the delivery (such as shipping and handling costs) of products sold; F-18 | • costs related to our environmental credit obligations to comply with various governmental and regulatory programs (such as the cost of RINs as required by the EPA's Renewable Fuel Standard and emission credits under various cap-and-trade systems); and • gains and losses on our commodity derivative instruments. Operating expenses for the refining segment include the costs to operate our refineries and biodiesel facilities, excluding depreciation and amortization. These costs primarily include employee-related expenses, energy and utility costs, catalysts and chemical costs, and repairs and maintenance expenses. For the logistics segment, cost of materials and other includes the following: • all costs of purchased refined products, additives and related transportation of such products, • costs associated with the operation of our trucking assets, which primarily include allocated employee costs and other costs related to fuel, truck leases and repairs and maintenance, • the cost of pipeline capacity leased from a third-party, and • gains and losses related to our commodity hedging activities. Operating expenses for the logistics segment include the costs associated with the operation of owned terminals and pipelines and terminalling expenses at third-party locations, excluding depreciation and amortization. These costs primarily include outside services, allocated employee costs, repairs and maintenance costs and energy and utility costs. Operating expenses related to the wholesale business are excluded from cost of sales because they primarily relate to costs associated with selling the products through our wholesale business. For the retail segment, cost of materials and other comprises the costs related to specific products sold at retail sites, primarily consisting of motor fuels and merchandise. Retail fuel cost of sales represents the cost of purchased fuel, including transportation costs. Merchandise cost of sales includes the delivered cost of merchandise purchases, net of merchandise rebates and commissions. Operating expenses related to the retail business include costs such as wages of employees, lease expense, utility expense and other costs of operating the stores, excluding depreciation and amortization, and are excluded from cost of sales because they primarily relate to costs associated with selling the products through our retail sites. Depreciation and amortization is separately presented in our statement of income and disclosed by reportable segment in Note 4. Interest Expense Interest expense includes interest expense on debt, letters of credit, financing fees (including certain J. Aron fees associated with our Supply and Offtake Agreements), the amortization, net of accretion, of debt discounts or premium and amortization of deferred debt issuance costs, and interest rate swap settlements, but excludes capitalized interest. Original issuance discount and debt issuance costs are amortized ratably over the term of the related debt when it is not materially different from the effective interest method. Sales, Use and Excise Taxes 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 Deferred financing costs associated with our revolving credit facilities are included in other non-current assets in the accompanying consolidated balance sheets. Deferred financing costs associated with our term loan facilities are included as a reduction to the associated debt balance in the accompanying consolidated balance sheets. These costs represent expenses related to issuing our long-term debt and obtaining our lines of credit and are amortized ratably over the remaining term of the respective financing when it is not materially different from the effective interest method and included in interest expense in the accompanying consolidated statements of income. See Note 11 for further information. Advertising Costs Delek expenses advertising costs as the advertising space is utilized. Advertising expense for the years ended December 31, 2020, 2019 and 2018 was $ 1.9 million, $ 3.4 million and $ 4.1 million, respectively. Leases In accordance with ASC 842-20, Leases - Lessee ("ASC 842-20"), we classify leases with contractual terms longer than twelve months as either operating or finance. Finance leases are generally those leases that are highly specialized or allow us to substantially utilize or pay for the entire asset over its useful life. All other leases are classified as operating leases. Delek leases land, buildings and various equipment under primarily operating lease arrangements, most of which provide the option, after the initial lease term, to renew the leases. Some of these lease arrangements include fixed lease rate increases, while others include lease rate increases based upon such factors as changes, if any, in defined inflationary indices. F-19 | For all leases that include fixed rental rate increases, these are included in our fixed lease payments. Our leases may include variable payments, based on changes on price or other indices, that are expensed as incurred. Delek calculates the total lease expense for the entire noncancelable lease period, considering renewals for all periods for which it is reasonably certain to be exercised, and records lease expense on a straight-line basis in the accompanying consolidated statements of income. Accordingly, a lease liability is recognized for these leases and is calculated to be the present value of the fixed lease payments, as defined by ASC 842-20, using a discount rate based on our incremental borrowing rate. 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. Income Taxes Income taxes are accounted for under the provisions of ASC 740, Income Taxes ("ASC 740"). This standard generally requires Delek to record deferred income taxes for the differences between the book and tax bases of its assets and liabilities, which are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred income tax expense or benefit represents the net change during the year in our deferred income tax assets and liabilities, exclusive of the amounts held in other comprehensive income. ASC 740 also prescribes a comprehensive model for how companies should recognize, measure, present and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return and prescribes the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. Finally, ASC 740 requires an annual tabular roll-forward of unrecognized tax benefits. The Tax Cuts and Jobs Act (the "Tax Reform Act") was enacted on December 22, 2017. The Tax Reform Act reduces the U.S. 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. 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 ASC 718, Compensation - Stock Compensation ("ASC 718"), requires the cost of all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement and establishes fair value as the measurement objective in accounting for share-based payment arrangements. ASC 718 requires the use of a valuation model to calculate the fair value of stock-based awards on the date of grant. Delek uses the Black-Scholes-Merton option-pricing model to determine the fair value of stock option and stock appreciation right (SAR) awards. Restricted stock units ("RSUs") are valued based on the fair market value of the underlying stock on the date of grant. Performance-based RSUs ("PRSUs") include a market condition based on the Company's total shareholder return over the performance period and are valued using a Monte-Carlo simulation model. We record compensation expense for these awards based on the grant date fair value of the award, recognized ratably over the measurement period. Vested RSUs and PRSUs are not issued until the minimum statutory withholding requirements have been remitted to us for payment to the taxing authority. As a result, the actual number of shares accounted for as issued may be less than the number of RSUs vested, due to any withholding amounts which have not been remitted. We generally recognize compensation expense related to stock-based awards with graded or cliff vesting on a straight-line basis over the vesting period. 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. If actual forfeitures differ from our estimates, we adjust equity-based compensation expense accordingly. Postretirement Benefits In connection with the Delek/Alon Merger, we assumed defined benefit pension and postretirement medical plans for certain former Alon employees. We recognize the underfunded status of our defined benefit pension and postretirement medical plans as a liability. Changes in the funded status of our defined benefit pension and postretirement medical plans are recognized in other comprehensive income in the period when the changes occur. The funded status represents the difference between the projected benefit obligation and the fair value of the plan assets. The projected benefit obligation is the present value of benefits earned to date by plan participants, including the effect of assumed future salary increases. Plan assets are measured at fair value. We use December 31 of each year, or more frequently as necessary, as the measurement date for plan assets and obligations for all of our defined benefit pension and postretirement medical plans. We straight-line amortize prior service costs and actuarial gains and losses over the average future service of members expected to receive benefits and use a 10% corridor in regards to the actuarial gains and losses. See Note 23 for more information regarding our postretirement benefits. The service cost component of net periodic benefit is included as part of general and administrative expenses in the accompanying consolidated statements of income. The other components of net periodic benefit are included as part of other expense (income), net in the accompanying consolidated statements of income. F-20 | New Accounting Pronouncements Adopted During 2020 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 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. 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 In August 2018, the FASB issued guidance related to disclosure requirements for fair value measurements. 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. We adopted this guidance on January 1, 2020 and the adoption did not have a material impact on our business, financial condition or results of operations. See Note 13. ASU 2016-13, Financial Instruments - Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued guidance requiring the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Organizations will now use forward-looking information to better inform their credit loss estimates. 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 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. 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. F-21 | 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. 3. Acquisitions Alon 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”). 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 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. 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. 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. 4. Segment Data We aggregate our operating segments into three reportable segments: Refining, Logistics and Retail. Operations that are not specifically included in the reportable segments are included in Corporate, Other and Eliminations, which consists of the following: • our corporate activities; • results of certain immaterial operating segments, including our Canadian crude trading operations (as discussed in Note 12); • 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); and • intercompany eliminations. Decisions concerning the allocation of resources and assessment of operating performance are made based on this segmentation. Management measures the operating performance of each of the reportable segments based on the segment contribution margin. 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 bpd as of December 31, 2020, including the following: • 75,000 bpd Tyler, Texas refinery (the "Tyler refinery"); • 80,000 bpd El Dorado, Arkansas refinery (the "El Dorado refinery"); • 73,000 bpd Big Spring, Texas refinery (the "Big Spring refinery"); F-22 | • 74,000 bpd Krotz Springs, Louisiana refinery (the "Krotz Springs refinery"); and • 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. One tax incentive program that has been significant to our renewable fuels facilities is the federal blender's tax credit (also known as the biodiesel tax credit or "BTC"). The BTC provides a $1.00 refundable tax credit per gallon of pure biodiesel to the first blender of biodiesel with petroleum-based diesel fuel. 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. 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, we sell motor fuels through its wholesale distribution network on an unbranded basis. Logistics Segment Our logistics segment owns and operates crude oil and refined products logistics and marketing assets. The logistics segment generates revenue by charging fees for gathering, transporting and storing crude oil and for marketing, distributing, transporting and storing intermediate and refined products in select regions of the southeastern United States and West Texas for our refining segment and third parties, and sales of wholesale products in the West Texas market. Retail Segment 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. Substantially all of the motor fuel sold through our retail segment is supplied by our Big Spring refinery, which is transferred to the retail segment at prices substantially determined by reference to published commodity pricing information. We operated 253 and 252 stores as of December 31, 2020 and 2019, respectively. In November 2018, we terminated the license agreement with 7-Eleven, Inc. 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 All inter-segment transactions have been eliminated in consolidation and consists primarily of the following: • refining segment refined product sales to the retail segment to be sold through the store locations; • refining segment sales of asphalt and refined product to entities included in corporate, other and eliminations; • logistics segment service fee revenue under service agreements with the refining segment based on the number of gallons sold and to share a portion of the margin achieved in return for providing marketing, sales and customer services; • logistics segment sales of wholesale finished product to our refining segment; and • logistics segment crude transportation, terminalling and storage fee revenue from our refining segment for the utilization of pipeline, terminal and storage assets. Business Segment Operating Performance The following is a summary of business segment operating performance as measured by contribution margin for the year ended indicated (in millions): F-23 | Year Ended December 31, 2020 (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: Cost of materials and other 5,745.5 269.1 523.6 303.0 6,841.2 Operating expenses (excluding depreciation and amortization presented below) 402.7 56.2 90.5 10.4 559.8 Segment contribution margin $ ( 330.5 ) $ 238.1 $ 67.6 $ ( 74.4 ) ( 99.2 ) 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 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) Refining (1) (2) Logistics Retail Corporate, Other and Eliminations (2) Consolidated 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: Cost of materials and other 7,528.2 336.5 684.7 ( 892.2 ) 7,657.2 Operating expenses (excluding depreciation and amortization presented below) 492.4 74.1 94.8 20.9 682.2 Segment contribution margin $ 777.9 $ 173.4 $ 58.5 $ ( 51.0 ) 958.8 Depreciation and amortization $ 134.3 $ 26.7 $ 11.2 $ 22.1 194.3 General and administrative expenses 274.7 Other operating income, net ( 2.5 ) Operating income $ 492.3 Capital spending (excluding business combinations) $ 266.6 $ 9.9 $ 20.5 $ 131.1 $ 428.1 Year Ended December 31, 2018 (In millions) Refining (1) (2) Logistics Retail Corporate, Other and Eliminations (2) Consolidated 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: Cost of materials and other 8,305.5 429.1 755.8 ( 929.9 ) 8,560.5 Operating expenses (excluding depreciation and amortization presented below) 465.4 58.7 100.7 20.2 645.0 Segment contribution margin $ 839.5 $ 169.8 $ 58.9 $ ( 40.6 ) 1,027.6 Depreciation and amortization $ 133.7 $ 26.0 $ 24.6 $ 15.1 199.4 General and administrative expenses 247.6 Other operating income, net ( 31.3 ) Operating income $ 611.9 Capital spending (excluding business combinations) $ 203.9 $ 11.6 $ 10.0 $ 91.7 $ 317.2 (1) Refining segment contribution margin for the year ended December 31, 2019 includes $ 77.6 million of BTC that was re-enacted in 2019, $ 36.0 million of which related to 2018 renewable blending activities. 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. F-24 | Other Segment Information Total assets by segment were as follows as of: December 31, 2020 Refining Logistics Retail Corporate, Other and Eliminations Consolidated Total assets $ 5,848.9 $ 956.5 $ 258.9 $ ( 930.2 ) $ 6,134.1 Less: Inter-segment notes receivable ( 1,285.8 ) — — 1,285.8 — Inter-segment right of use lease assets ( 370.6 ) — — 370.6 — Total assets, excluding inter-segment notes receivable and right of use assets $ 4,192.5 $ 956.5 $ 258.9 $ 726.2 $ 6,134.1 December 31, 2019 Refining Logistics Retail Corporate, Other and Eliminations Consolidated Total assets $ 6,549.4 $ 744.4 $ 344.9 $ ( 622.4 ) $ 7,016.3 Less: Inter-segment notes receivable ( 1,586.8 ) — — 1,586.8 — Inter-segment right of use lease assets ( 441.3 ) — — 441.3 — 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 5. Earnings (Loss) Per Share Earnings (Loss) Per Share Basic earnings per share (or "EPS") is computed by dividing net income (loss) by the weighted average common shares outstanding. Diluted earnings per share is computed by dividing net income (loss), as adjusted for changes to income that would result from the assumed settlement of the dilutive equity instruments included in diluted weighted average common shares outstanding, by the diluted weighted average common shares outstanding. For all years presented, we have outstanding various equity-based compensation awards that are considered in our diluted EPS calculation (when to do so would not be anti-dilutive), and is inclusive of awards disclosed in Note 21 to these consolidated financial statements. 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, 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. The Warrants were generally dilutive during the periods they were outstanding when the market price of the underlying indexed share of common stock was in excess of the exercise price. All such instruments that may otherwise be dilutive may not be dilutive when there is net loss for the period. 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 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. F-25 | Year Ended December 31, 2020 2019 2018 Numerator: Numerator for EPS - continuing operations (Loss) Income from continuing operations $ ( 570.4 ) $ 331.0 $ 383.6 Less: Income from continuing operations attributed to non-controlling interest 37.6 25.6 26.7 (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 Numerator for diluted EPS - continuing operations attributable to Delek $ ( 608.0 ) $ 305.4 $ 359.5 Numerator for EPS - discontinued operations Income (loss) from discontinued operations, including gain (loss) on sale of discontinued operations $ — $ 6.6 $ ( 10.9 ) Less: Income tax expense (benefit) — 1.4 ( 2.2 ) Income (loss) from discontinued operations, net of tax — 5.2 ( 8.7 ) Less: Income from discontinued operations attributed to non-controlling interest — — 8.1 Income (loss) from discontinued operations attributable to Delek $ — $ 5.2 $ ( 16.8 ) Denominator: Weighted average common shares outstanding (denominator for basic EPS) 73,598,389 75,853,187 82,797,110 Dilutive effect of convertible debt — 1,525,846 Dilutive effect of warrants — — 967,352 Dilutive effect of stock-based awards — 720,904 1,478,093 Weighted average common shares outstanding, assuming dilution 73,598,389 76,574,091 86,768,401 EPS: 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: Antidilutive stock-based compensation (because average share price is less than exercise price) 466,254 1,932,179 1,462,112 Antidilutive due to loss 3,616,690 — — Total antidilutive stock-based compensation 4,082,944 1,932,179 1,462,112 F-26 | 6. Delek Logistics and the Alon Partnership Delek Logistics Delek Logistics is a publicly traded limited partnership that was formed by Delek in 2012 to own, operate, acquire and construct crude oil and refined products logistics and marketing assets. A substantial majority of Delek Logistics' assets are integral to Delek’s refining and marketing operations. 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. 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. 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. The revenues and expenses associated with these agreements are eliminated in consolidation. Delek Logistics is a variable interest entity, as defined under GAAP, and is consolidated into our consolidated financial statements, representing our logistics segment. The assets of Delek Logistics can only be used to settle its own obligations and its creditors have no recourse to our assets. Exclusive of intercompany balances and the marketing agreement intangible asset between Delek Logistics and Delek which are eliminated in consolidation, the Delek Logistics consolidated balance sheets are included in the consolidated balance sheets of Delek. The Delek Logistics consolidated balance sheets are presented below (in millions): December 31, 2020 2019 ASSETS Cash and cash equivalents $ 4.2 $ 5.5 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 Property, plant and equipment, net 464.8 295.0 Equity method investments 253.7 247.0 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 Accounts payable $ 6.7 $ 12.5 Accounts payable to related parties — 8.9 Current portion of operating lease liabilities 8.7 1.4 Accrued expenses and other current liabilities 12.9 12.2 Long-term debt 992.3 833.1 Asset retirement obligations 6.0 5.6 Operating lease liabilities, net of current portion 15.4 2.3 Deferred tax liabilities 0.6 0.2 Other non-current liabilities 22.1 19.3 Deficit ( 108.3 ) ( 151.1 ) Total liabilities and deficit $ 956.4 $ 744.4 F-27 | 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. 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 the 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 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 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 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. Additionally, book-tax basis difference was created as a result of the transaction that resulted in a deferred tax asset of approximately $ 13.5 million, net of a valuation allowance on certain state income tax components, that also increased additional paid-in capital. Transaction costs incurred by the Company in connection with the Alon Partnership Merger totaled approximately $ 3.0 million for the year ended December 31, 2018. Such costs were included in general and administrative expenses in the accompanying consolidated statements of income. F-28 | 7. Equity Method Investments Wink to Webster Pipeline On July 30, 2019, we, through our wholly-owned direct subsidiary Delek US Energy, Inc. (“Delek Energy”), entered into a limited liability company agreement (the “LLCA”) and related agreements with multiple joint venture members of Wink to Webster Pipeline LLC (“WWP”). Pursuant to the LLCA, Delek Energy acquired a 15 % ownership interest in WWP ("WWP Joint Venture"). 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, 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. 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 and as allowed under the project financing debt. 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. (“Plains”) and Red River Pipeline Company LLC (“Red River”). 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. In August 2020, Red River completed a planned expansion project to increase the pipeline capacity which commenced operations on October 1, 2020. Delek Logistics contributed an additional $ 3.5 million related to such expansion project in May 2019. During the 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. 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. F-29 | 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. On May 21, 2018, Delek sold its 50 % interest in the asphalt terminal located in Fernley, Nevada. See Note 8 for further discussion. 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. 8. Discontinued Operations and Assets Held for Sale Asphalt Terminals Held for Sale On February 12, 2018, Delek announced it had reached a definitive agreement to sell certain assets and operations of four asphalt terminals (included in corporate, other and eliminations in our segment disclosure), as well as an equity method investment in an additional asphalt terminal, to an affiliate of Andeavor. 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 operated 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. 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. All goodwill associated with the asphalt operations sold was written off in connection with the impairment charge discussed above. 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 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. 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 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 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 resulting in initial cash proceeds of approximately $ 14.5 million, net of expenses, and resulting in a gain on sale of discontinued operations of approximately $ 1.4 million during the third quarter of 2018. 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 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. F-30 | 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. 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. 9. Inventory Carrying value of inventories consisted of the following (in millions): December 31, 2020 December 31, 2019 Refinery raw materials and supplies $ 270.7 $ 400.4 Refinery work in process 92.1 109.1 Refinery finished goods 327.1 397.5 Retail fuel 6.2 7.3 Retail merchandise 28.5 19.8 Logistics refined products 3.1 12.6 Total inventories $ 727.7 $ 946.7 At December 31, 2020, we recorded a pre-tax inventory valuation reserve of $ 31.1 million, $ 30.3 million of which related to LIFO inventory, due to a market price decline below our cost of certain inventory products. At December 31, 2019, we recorded a pre-tax inventory valuation reserve of $ 1.7 million, $ 1.2 million of which related to LIFO inventory, which reversed in the first quarter of 2020 due to the sale of inventory quantities that gave rise to the December 31, 2019 reserve. 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, 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 (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. 10. Inventory Supply and Offtake Obligations Delek has Supply and Offtake Agreements with J. Aron in connection with its El Dorado, Big Spring and Krotz Springs refineries. Pursuant to the Supply and Offtake Agreements, (i) J. Aron agrees to sell to us, and we agree to buy from J. Aron, at market prices, crude oil for processing at these refineries and (ii) we agree to sell, and J. Aron agrees to buy, at market prices, certain refined products produced at these refineries. The Supply and Offtake Agreements also provide for the lease to J. Aron of crude oil and refined product storage facilities, and the identification of prospective purchasers of refined products on J. Aron’s behalf. At the inception of the Supply and Offtake Agreements, we transferred title to a certain number of barrels of crude and other inventories to J. 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 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) El Dorado Big Spring Krotz Springs Baseline Volumes pursuant to the respective Supply and Offtake Agreements 2.0 0.8 1.3 Barrels of inventory consigned under the respective Supply and Offtake Agreements as of December 31, 2020 (1) 4.0 1.3 1.2 Barrels of inventory consigned under the respective Supply and Offtake Agreements as of December 31, 2019 (1) 3.5 2.0 1.7 (1) Includes Baseline Volumes plus/minus over/short quantities. F-31 | 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") were based upon a fixed price where, prior to those amendments, the Baseline Step-Out Liabilities were based on market-indexed pricing. 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) 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 (receivable) 102.0 25.3 ( 4.5 ) 122.8 Total Obligations Under Supply and Offtake Agreements 208.3 73.2 66.2 347.7 Less: 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 payable for monthly activity true-up $ 6.6 $ 7.0 $ — $ 13.6 F-32 | (in millions) El Dorado Big Spring Krotz Springs Total Balances as of December 31, 2019: Baseline Step-Out Liability $ 125.5 $ 57.2 $ 87.6 $ 270.3 Revolving over/short product financing liability 93.0 73.5 40.5 207.0 Total Obligations Under Supply and Offtake Agreements 218.5 130.7 128.1 477.3 Less: Current portion 218.5 73.5 40.5 332.5 Obligations Under Supply and Offtake Agreements - Noncurrent portion $ — $ 57.2 $ 87.6 $ 144.8 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) 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 Recurring cash fees paid during the year ended December 31, 2019 $ 11.6 $ 6.2 $ 10.3 $ 28.1 Recurring cash fees paid during the year ended December 31, 2018 $ 10.7 $ 7.1 $ 6.7 $ 24.5 Interest expense recognized under the Supply and Offtake Agreements includes the yield attributable to recurring cash fees, one-time cash fees (e.g., in connection with amendments), as well as other changes in fair value, which may increase or decrease interest expense. Total interest expense incurred during the periods presented was as follows: (in millions) El Dorado Big Spring Krotz Springs Total Interest expense for the year ended December 31, 2020 $ 10.1 $ 6.5 $ 4.5 $ 21.1 Interest expense for the year ended December 31, 2019 $ 15.4 $ 5.5 $ 12.1 $ 33.0 Interest expense for the year ended December 31, 2018 $ 10.7 $ 7.1 $ 6.7 $ 24.5 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) 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 F-33 | 11. 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, 2020 December 31, 2019 Revolving Credit Facility $ — $ 30.0 Term Loan Credit Facility (1) 1,246.8 1,069.5 Hapoalim Term Loan (2) 39.3 39.5 Delek Logistics Credit Facility 746.6 588.4 Delek Logistics Notes (3) 245.7 244.7 Reliant Bank Revolver 50.0 50.0 Promissory Notes 20.0 45.0 2,348.4 2,067.1 Less: 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. (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. 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. The Term Loan Credit Facility was drawn in full for $ 700.0 million on the Closing Date at an original issue discount of 0.50 %. Proceeds under the Term Loan Credit Facility, as well as proceeds of approximately $ 300.0 million in borrowings under the Revolving Credit Facility on the Closing Date, were used to repay certain indebtedness of Delek and its subsidiaries (the “Refinancing”), as well as certain fees, costs and expenses in connection with the closing of the New Credit Facilities with any remaining proceeds held in cash. Proceeds of future borrowings under the Revolving Credit Facility will be used for working capital and general corporate purposes of Delek and its subsidiaries. In connection with the Refinancing, we recorded a loss on extinguishment of debt totaling approximately $ 9.1 million during 2018. On May 22, 2019 (the "First Incremental Effective Date"), we amended the Term Loan Credit Facility agreement pursuant to the terms of the First Incremental Amendment to Term Loan Credit Agreement (the "Incremental Amendment"). Pursuant to the Incremental Amendment, the Company borrowed $ 250.0 million in aggregate principal amount of incremental term loans (the “Incremental Term Loans”) at an original issue discount of 0.75 %, increasing the aggregate principal amount of loans outstanding under the Term Loan Credit Facility on the First Incremental Effective Date to $ 943.0 million. On November 12, 2019 (the "Second Incremental Effective Date"), we amended the Term Loan Credit facility agreement pursuant to the terms of the Second Incremental Amendment to the Term Loan Credit Agreement (the "Second Incremental Amendment") and borrowed $ 150.0 million in aggregate principal amount of incremental term loans (the "Incremental Loans") at an original issue discount of 1.21 %, increasing the aggregate principal amount of loans outstanding under the Term Loan Credit Facility on the Second Incremental Effective Date to $ 1,088.3 million. 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 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. F-34 | 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 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 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. As of December 31, 2020, the unused line fee was set at 0.375 % per annum. Maturity and Repayments The Revolving Credit Facility will mature and the commitments thereunder will terminate on March 30, 2023. The Term Loan Credit Facility matures on March 30, 2025 and requires scheduled quarterly principal payments on the last business day of the applicable quarter. Pursuant to the Incremental Amendment, quarterly payments increased from $ 1.75 million to $ 2.38 million. Pursuant to the Second Incremental Amendment, the quarterly payments increased to $ 2.75 million commencing with December 31, 2019. Additionally, the Term Loan Credit Facility requires prepayments by Delek with the net cash proceeds from certain debt incurrences, asset dispositions and insurance or condemnation events with respect to Delek’s assets, subject to certain exceptions, thresholds and reinvestment rights. The Term Loan Credit Facility also requires annual prepayments with a variable percentage of Delek’s excess cash flow, ranging from 50 % to 0 % depending on Delek’s consolidated fiscal year end secured net leverage ratio. The Third Incremental Term Loan requires quarterly payments on the Class B Loans of $ 0.5 million commencing June 30, 2020. 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, 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. The Revolving Credit Facility is secured by a first priority lien over substantially all of Delek’s and each guarantor's receivables, inventory, RINs, instruments, intercompany loan receivables, deposit and securities accounts and related books and records and certain other personal property, subject to certain customary exceptions (the "Revolving Priority Collateral"), and a second priority lien over substantially all of Delek's and each guarantor's other assets, including all of the equity interests of any subsidiary held by Delek or any guarantor (other than equity interests in certain MLP Subsidiaries) subject to certain customary exceptions, but excluding real property (such real property and equity interests, the "Term Priority Collateral"). The Term Loan Credit Facility is secured by a first priority lien on the Term Priority Collateral and a second priority lien on the Revolving Priority Collateral, all in accordance with an intercreditor agreement between the Term Administrative Agent and the Revolver Administrative Agent and acknowledged by Delek and the subsidiary guarantors. Certain excluded assets are not included in the Term Priority Collateral and the Revolving Priority Collateral. F-35 | Additional Information 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, 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 %. Delek Hapoalim Term Loan On December 31, 2019, Delek entered into a term loan credit and guaranty agreement (the "Agreement") with Bank Hapoalim B.M. ("BHI") as the administrative agent. Pursuant to the Agreement, on December 31, 2019, Delek borrowed $ 40.0 million (the "BHI Term Loan"). The interest rate under the Agreement is equal to LIBOR plus a margin of 3.00 %. 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. As of December 31, 2020, the effective interest rate related to the BHI Term Loan was 3.58 %. Delek Logistics Credit Facility On September 28, 2018, Delek Logistics and all of its subsidiaries entered into a third amended and restated senior secured revolving credit agreement with Fifth Third 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 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. Borrowings under the Delek Logistics Credit Facility bear interest at either a U.S. dollar prime rate, Canadian dollar prime rate, LIBOR, or a CDOR rate, in each case plus applicable margins, at the election of the borrowers and as a function of draw down currency. The applicable margin, in each case, and the fee payable for the unused revolving commitments vary based upon Delek Logistics' most recent total leverage ratio calculation delivered to the lenders, as called for and defined under the terms of the Delek Logistics Credit Facility. At December 31, 2020, the weighted average borrowing rate was approximately 2.44 %. 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, 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. Unused credit commitments under the Delek Logistics Credit Facility as of December 31, 2020, were $ 103.4 million. Delek Logistics Notes 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 in 2025 (the “Delek Logistics Notes”) at a discount. The Delek Logistics Notes are general unsecured senior obligations of the Issuers. The Delek Logistics Notes are unconditionally guaranteed jointly and severally on a senior unsecured basis by Delek Logistics' existing subsidiaries (other than Delek Logistics Finance Corp., the "Guarantors") and will be unconditionally guaranteed on the same basis by certain of Delek Logistics' future subsidiaries. The Delek Logistics Notes rank equal in right of payment with all existing and future senior indebtedness of the Issuers, and senior in right of payment to any future subordinated indebtedness of the Issuers. Interest on the Delek Logistics Notes is payable semi-annually in arrears on each May 15 and November 15, commencing November 15, 2017. 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. F-36 | 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. 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, 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 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. The Convertible Notes were not redeemable at our option prior to maturity. Under the terms of the Convertible Notes, the holders of the Convertible Notes could not require us to repurchase all or part of the notes except for instances of a fundamental change, as defined in the Indenture. 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 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 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. Prior to the conversion, the conversion feature met the definition for recognition as a bifurcated equity instrument. Convertible Note Hedge Transactions 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 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. On a net basis, the settlement of the Convertible Notes and the exercise of the Call Options resulted in no net dilution to our common stock. Prior to their exercise, the Call Options totaling $ 23.3 million were included as a reduction of additional paid-in capital on the consolidated balance sheets. Warrant Transactions 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 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 F-37 | 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”). Following the Unwind Period and upon the satisfaction of the payment obligation, the Warrants were canceled and the associated rights and obligations terminated. Based on the provisions of the Unwind Agreements, the amount paid to warrant holders in satisfaction of the payment obligation totaled approximately $ 36 million. Reliant Bank Revolver Delek has an unsecured revolving credit agreement with Reliant Bank (the "Reliant Bank Revolver"). On December 16, 2019, we amended the Reliant Bank Revolver to extend the maturity date 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, 2020, we had $ 50.0 million outstanding under this facility and had no unused credit commitments under the Reliant Bank Revolver. Promissory Notes Delek has four notes payable (the "Promissory Notes") with various assignees of Alon Israel Oil Company, Ltd., the holder of a predecessor consolidated promissory note, which bear interest at a fixed rate of 5.50 % per annum and which, collectively, requires annual principal amortization payments of $ 25.0 million through 2020 followed by a final principal amortization payment of $ 20.0 million at maturity on January 4, 2021. As of December 31, 2020, a total principal amount of $ 20.0 million was outstanding under the Promissory Notes. Restrictive Covenants Under the terms of our Revolving Credit Facility, Term Loan Credit Facility, Delek Logistics Credit Facility, Delek Logistics Notes, Reliant Bank Revolver and BHI Agreement, we are required to comply with certain usual and customary financial and non-financial covenants. The terms and conditions of the Revolving Credit Facility include periodic compliance with a springing minimum fixed charge coverage ratio financial covenant if excess availability under the revolver borrowing base is below certain thresholds, as defined in the credit agreement. The Term Loan Credit Facility does not have any financial maintenance covenants. We believe we were in compliance with all covenant requirements under each of our credit facilities as of December 31, 2020. Certain of our debt facilities contain limitations on the incurrence of additional indebtedness, making of investments, creation of liens, dispositions and acquisitions of assets, and making of restricted payments and transactions with affiliates. 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. Restricted Net Assets Some of Delek's subsidiaries have restrictions in their respective credit facilities limiting their use of assets, as has been discussed above. As of December 31, 2020, we had no subsidiaries with restricted net assets which would prohibit earnings from being transferred to the parent company for its use. Future Maturities 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 $ — $ — $ — $ — $ — $ — $ — Term Loan Credit Facility 13.0 13.0 13.0 13.0 1,221.0 — 1,273.0 Hapoalim Term Loan 0.4 39.2 — — — — 39.6 Delek Logistics Credit Facility — — 746.6 — — — 746.6 Delek Logistics Notes — — — — 250.0 — 250.0 Reliant Bank Revolver — 50.0 — — — — 50.0 Promissory Notes 20.0 — — — — — 20.0 Total $ 33.4 $ 102.2 $ 759.6 $ 13.0 $ 1,471.0 $ — $ 2,379.2 F-38 | 12. 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 primarily aimed at: • limiting the exposure to price fluctuations of commodity inventory above or below target levels at each of our segments; • managing our exposure to commodity price risk associated with the purchase or sale of crude oil, feedstocks and finished grade fuel products at each of our segments; • managing the cost of our RINs Obligation using future commitments to purchase or sell RINs at fixed prices and quantities; and • limiting the exposure to interest rate fluctuations on our floating rate borrowings. We primarily utilize commodity swaps, futures, forward contracts and options contracts, generally with maturity dates of three years or less, and from time to time interest rate swap agreements to achieve these objectives. Futures contracts are standardized agreements, traded on a futures exchange, to buy or sell the commodity at a predetermined price at a specified future date. Options provide the right, but not the obligation to buy or sell the commodity at a specified price in the future. Commodity swap and futures contracts require cash settlement for the commodity based on the difference between a fixed or floating price and the market price on the settlement date, and options require payment of an upfront premium. 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. 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. 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 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 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. F-39 | The following table presents the fair value of our derivative instruments as of December 31, 2020 and 2019. The fair value amounts below are presented on a gross basis and do not reflect the netting of asset and liability positions permitted under our master netting arrangements, including cash collateral on deposit with our counterparties. We have elected to offset the recognized fair value amounts for multiple derivative instruments executed with the same counterparty in our financial statements. As a result, the asset and liability amounts below differ from the amounts presented in our consolidated balance sheets. See Note 13 for further information regarding the fair value of derivative instruments as presented below (in millions): December 31, 2020 December 31, 2019 Derivative Type Balance Sheet Location Assets Liabilities Assets Liabilities Derivatives not designated as hedging instruments: Commodity derivatives (1) Other current assets $ 48.9 $ ( 24.8 ) $ 188.9 $ ( 202.1 ) Commodity derivatives (1) Other current liabilities 930.7 ( 943.8 ) 24.4 ( 34.0 ) Commodity derivatives (1) Other long-term assets 2.4 ( 2.3 ) — — Commodity derivatives (1) Other long-term liabilities 415.2 ( 415.8 ) 23.4 ( 24.8 ) RINs commitment contracts (2) Other current assets 33.6 — 0.6 — RINs commitment contracts (2) Other current liabilities — ( 22.5 ) — ( 1.9 ) Derivatives designated as hedging instruments: Commodity derivatives (1) Other current assets 0.5 ( 0.3 ) 3.4 ( 2.0 ) Commodity derivatives (1) Other current liabilities — — — — Commodity derivatives (1) Other long-term assets — — 0.2 ( 0.1 ) Total gross fair value of derivatives 1,431.3 ( 1,409.5 ) 240.9 ( 264.9 ) Less: 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 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, 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) 7.9 — 7.7 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 — — 0.9 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. (2) See separate table below for disclosures about "trading derivatives." F-40 | The effect of cash flow hedge accounting on the consolidated statements of income is as follows (in millions): Year Ended December 31, 2020 2019 Gain (loss) on cash flow hedging relationships recognized in cost of materials and other: 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. 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, 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 13. 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 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. Level 2 inputs are observable inputs other than quoted prices included within Level 1 for the asset or liability, either directly or indirectly through market-corroborated inputs. Level 3 inputs are unobservable inputs for the asset or liability reflecting our assumptions about pricing by market participants. 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. 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 F-41 | 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. 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. 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 Assets Commodity derivatives $ — $ 1,397.7 $ — $ 1,397.7 RINs commitment contracts — 33.6 — 33.6 Total assets — 1,431.3 — 1,431.3 Liabilities Commodity derivatives — ( 1,387.0 ) — ( 1,387.0 ) RINs commitment contracts — ( 22.5 ) — ( 22.5 ) Environmental credits obligation deficit — ( 59.6 ) — ( 59.6 ) J. Aron supply and offtake obligations — ( 354.1 ) — ( 354.1 ) Total liabilities — ( 1,823.2 ) — ( 1,823.2 ) Net assets (liabilities) $ — $ ( 391.9 ) $ — $ ( 391.9 ) As of December 31, 2019 Level 1 Level 2 Level 3 Total Assets Commodity derivatives $ — $ 240.3 $ — $ 240.3 Investment commodities 12.1 — — 12.1 RINs commitment contracts — 0.6 — 0.6 Environmental credits obligation surplus — 16.8 — 16.8 Total assets 12.1 257.7 — 269.8 Liabilities Commodity derivatives — ( 263.0 ) — ( 263.0 ) RINs commitment contracts — ( 1.9 ) — ( 1.9 ) Environmental credits obligation deficit — ( 18.5 ) — ( 18.5 ) J. Aron supply and offtake obligations — ( 477.3 ) — ( 477.3 ) Total liabilities — ( 760.7 ) — ( 760.7 ) 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 F-42 | 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. 14. Commitments and Contingencies Litigation In the ordinary conduct of our business, we are from time to time subject to lawsuits, investigations and claims, including environmental claims and employee-related matters. Although we cannot predict with certainty the ultimate resolution of lawsuits, investigations and claims asserted against us, including civil penalties or other enforcement actions, we do not believe that any currently pending legal proceeding or proceedings to which we are a party will have a material adverse effect on our financial statements. Certain environmental matters that have or may result in penalties or assessments are discussed below in the "Environmental, Health and Safety" section of this note. 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 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. We recorded a contingent liability associated with this matter (the "Ten-Tex Litigation") totaling $ 5.0 million as part of the purchase price allocation, which was finalized in June 2018. In July 2019, we reached a settlement with the plaintiff, whereby we were obligated for $ 2.3 million of the judgment against AltAir plus expected legal fees of approximately $ 0.2 million. 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 a note receivable from World Energy. 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. Self-insurance Delek records a self-insurance accrual for workers’ compensation claims up to a $ 4.0 million deductible on a per accident basis, general liability claims up to $ 4.0 million on a per occurrence basis, and medical claims for eligible full-time employees up to $ 0.3 million per covered individual per calendar year. We also record a self-insurance accrual for auto liability up to a $ 4.0 million deductible on a per accident basis. We have umbrella liability insurance available to each of our segments in an amount determined reasonable by management. Environmental Health and Safety We are subject to extensive federal, state and local environmental and safety laws and regulations enforced by various agencies, including the EPA, the United States Department of Transportation and the Occupational Safety and Health Administration, as well as numerous state, regional and local environmental, safety and pipeline agencies. These laws and regulations govern the discharge of materials into the environment, waste management practices, pollution prevention measures and the composition of the fuels we produce, as well as the safe operation of our plants and pipelines and the safety of our workers and the public. Numerous permits or other authorizations are required under these laws and regulations for the operation of our refineries, renewable fuels facilities, terminals, pipelines, underground storage tanks, trucks, rail cars and related operations, and may be subject to revocation, modification and renewal. These laws and permits raise potential exposure to future claims and lawsuits involving environmental and safety matters which could include soil and water contamination, air pollution, personal injury and property damage allegedly caused by substances which we manufactured, handled, used, released or disposed of, transported, or that relate to pre-existing conditions for which we have assumed responsibility. We believe that our current operations are in substantial compliance with existing environmental and safety requirements. However, there have been and will continue to be ongoing discussions about environmental and safety matters between us and federal and state authorities, including notices of violations, citations and other enforcement actions, some of which have resulted or may result in changes to operating procedures and in capital expenditures. While it is often difficult to quantify future environmental or safety related expenditures, we anticipate that continuing capital investments and changes in operating procedures will be required for the foreseeable future to comply with existing and new requirements, as well as evolving interpretations and more strict enforcement of existing laws and regulations. On November 5, 2018, Alon and certain of its subsidiaries including Alon Bakersfield Property, Inc. (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 F-43 | 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. 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. The Big Spring refinery negotiated an agreement with the EPA for over 10 years under the EPA’s National Petroleum Refinery Initiative regarding alleged historical violations of the federal Clean Air Act related to emissions and emissions control equipment. A consent decree resolving these alleged historical violations for the Big Spring refinery was lodged with the United States District Court for the Northern District of Texas on June 6, 2017. An amendment to such consent decree was agreed upon by the Delek and the EPA/Department of Justice ("DOJ") in late 2018 and was executed by Delek. That amended consent decree was lodged during the first quarter of 2019, and was entered by the Court on June 5, 2019. The civil penalty of $ 0.5 million was paid on June 18, 2019. 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 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. In the future, we could be required to extend the expected remediation period or undertake additional investigations of our refineries, pipelines and terminal facilities, which could result in the recognition of additional remediation liabilities. 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. These discount rates vary from 1.51 % to 2.84 %. The table below summaries our environmental liability accruals (in millions): December 31, 2020 2019 Discounted environmental liabilities $ 35.3 $ 59.5 Undiscounted environmental liabilities 77.3 86.6 Total accrued environmental liabilities $ 112.6 $ 146.1 As of December 31, 2020, the estimated future payments of environmental obligations for which discounts have been applied are as follows (in millions): 2021 $ 1.8 2022 1.9 2023 1.5 2024 1.5 2025 1.5 Thereafter 32.0 Discounted environmental liabilities, gross 40.2 Less: Discount applied 4.9 Discounted environmental liabilities $ 35.3 Crude Oil and Other Releases 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. 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. F-44 | Expenses incurred for the remediation of these crude oil and other releases are included in operating expenses in our consolidated statements of income. Asset Retirement Obligations The reconciliation of the beginning and ending carrying amounts of asset retirement obligations is as follows (in millions): December 31, 2020 2019 Beginning balance $ 68.6 $ 75.5 Liabilities settled ( 32.5 ) ( 8.6 ) Accretion expense 1.4 1.7 Ending balance $ 37.5 $ 68.6 Letters of Credit As of December 31, 2020, we had in place letters of credit totaling approximately $ 253.2 million with various financial institutions securing obligations primarily with respect to our commodity purchases for the refining segment and certain of our insurance programs. There were no amounts drawn by beneficiaries of these letters of credit at December 31, 2020. 15. Income Taxes 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. government enacted the Tax Reform Act, which made broad and complex changes to the U.S. tax code, including a permanent reduction in the U.S. federal corporate tax rate from 35% to 21% (“Rate Reduction”). 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; creating a limitation on deductible interest expense; and changing rules related to uses and limitations of net operating loss carryforwards. At December 31, 2018, we finalized our accounting analysis based on the guidance, interpretations, and data available. We continue to monitor IRS guidance including final regulations, revenue rulings, revenue procedures, and applicable notices. We applied the guidance in Staff Accounting Bulletin 118 (“SAB 118”), when accounting for the effects of the Tax Reform Act. In 2017, we made a reasonable estimate of the effects on our existing deferred tax balances, and recognized a provisional benefit amount of $ 166.9 million, which was included as a component of income tax expense from continuing operations. We remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21% for federal purposes. For the year ended December 31, 2018, we completed the analysis of the accounting for the tax effects of the Tax Reform Act, resulting in our recording of an additional tax benefit of $ 0.6 million during 2018. These adjustments to the previously recorded provisional amounts include the tax effects on the existing deferred tax balances and executive compensation. We also had a reclassification of $ 1.6 million from accumulated other comprehensive income to retained earnings for stranded tax effects as of December 31, 2018 resulting from the Tax Reform Act. On January 1, 2018, we adopted ASU 2016-16. As a result of the adoption, we decreased prepaid income taxes by $ 59.4 million, increased income taxes payable by $ 3.0 million, increased deferred tax assets by $ 18.0 million (net of a valuation allowance of $ 17.2 million), and decreased retained earnings by $ 44.4 million for the cumulative effect related to new guidance that requires recognizing the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. F-45 | Significant components of Delek's deferred tax assets (liabilities) reported in the accompanying consolidated financial statements as of December 31, 2020 and 2019 were as follows (in millions): December 31, 2020 2019 Non-Current Deferred Taxes: Property, plant and equipment, and intangibles $ ( 261.0 ) $ ( 306.3 ) Right-of-use asset ( 35.1 ) ( 40.7 ) Partnership and equity investments ( 133.3 ) ( 15.5 ) Deferred revenues ( 4.8 ) ( 5.3 ) Total deferred tax liabilities ( 434.2 ) ( 367.8 ) Compensation and employee benefits 13.6 14.5 Net operating loss carryforwards 136.4 52.4 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 Valuation allowance ( 55.0 ) ( 65.8 ) 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 (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) ( 9.6 ) ( 23.2 ) ( 8.3 ) Changes in valuation allowance ( 10.8 ) 7.3 7.7 Impact of Tax Reform Act — — ( 0.6 ) 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 (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, 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. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. 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 F-46 | 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. State net operating losses and tax credit carryforwards will begin expiring in 2021. Delek files a consolidated U.S. federal income tax return, as well as income tax returns in various state jurisdictions. Delek is no longer subject to U.S. federal income tax examinations by tax authorities for years through 2011. Delek is under Joint Committee of Taxation review for tax years 2012 through 2017. Pre-acquisition tax returns for Alon USA Energy & Subsidiaries ("Alon") are closed for U.S. 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. Delek is currently under audit in various states for tax years 2014 through 2019. No material adjustments have been identified at this time. ASC 740 provides a recognition threshold and guidance for measurement of income tax positions taken or expected to be taken on a tax return. 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 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 Additions based on tax positions related to current year 1.9 0.4 11.2 Additions for tax positions related to prior years and acquisitions 2.4 6.4 3.4 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 $ 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 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. Uncertain tax positions have been examined by Delek for any material changes in the next 12 months, and no material changes are expected. 16. Related Party Transactions Our related party transactions consist primarily of transactions with our equity method investees (See Note 7). Transactions with our related parties were as follows for the periods presented: Year Ended December 31, (in millions) 2020 2019 2018 Revenues (1) $ 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. (2) Consists primarily of pipeline throughput fees paid by the refining segment and asphalt purchases. F-47 | 17. Property, Plant and Equipment Property, plant and equipment, at cost, consist of the following (in millions): December 31, 2020 2019 Land $ 58.0 $ 59.5 Building and building improvements 114.3 108.5 Refinery machinery and equipment 1,989.5 2,019.4 Pipelines and terminals 562.3 427.3 Retail store equipment and site improvements 53.1 56.3 Refinery turnaround costs 151.7 179.9 Other equipment 162.1 142.7 Construction in progress 428.5 369.2 $ 3,519.5 $ 3,362.8 Less: 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 Refining Logistics Retail Corporate, Other and Eliminations Consolidated Property, plant and equipment $ 2,566.0 $ 692.3 $ 165.3 $ 95.9 $ 3,519.5 Less: Accumulated depreciation ( 811.2 ) ( 227.5 ) ( 48.9 ) ( 64.7 ) ( 1,152.3 ) Property, plant and equipment, net $ 1,754.8 $ 464.8 $ 116.4 $ 31.2 $ 2,367.2 Depreciation expense (1) $ 191.5 $ 35.7 $ 12.4 $ 20.4 $ 260.0 As of and For the Year Ended December 31, 2019 Refining Logistics Retail Corporate, Other and Eliminations Consolidated Property, plant and equipment $ 2,444.4 $ 461.3 $ 156.4 $ 300.7 $ 3,362.8 Less: Accumulated depreciation ( 658.6 ) ( 166.3 ) ( 36.6 ) ( 73.0 ) ( 934.5 ) Property, plant and equipment, net $ 1,785.8 $ 295.0 $ 119.8 $ 227.7 $ 2,428.3 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. 18. Goodwill Goodwill represents the excess of the aggregate purchase price over the fair value of the identifiable net assets acquired and is not amortized. Delek performs an annual assessment of whether goodwill retains its value. This assessment is done more frequently if indicators of potential impairment exist. 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 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 year ended December 31, 2020, the annual impairment review resulted in an impairment charge F-48 | 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): 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) — — — ( 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 ) 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. 19. Other Intangible Assets A summary of our identifiable intangible assets are as follows (in millions): As of December 31, 2020 Useful Life Gross Accumulated Amortization Net Intangible Assets subject to amortization: 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 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 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 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): 2021 $ 5.7 2022 $ 5.3 2023 $ 4.9 2024 $ 4.9 2025 $ 4.9 F-49 | 20. Other Current Assets and Liabilities The detail of other current assets is as follows (in millions): Other Current Assets December 31, 2020 December 31, 2019 Income and other tax receivables $ 142.0 $ 61.9 Short-term derivative assets (see Note 12) 72.9 30.2 Prepaid expenses 21.8 21.9 Biodiesel tax credit (see Note 4) 2.9 97.5 Investment commodities 1.1 12.1 Consolidated Net RINs Obligation surplus (see Note 13) — 10.7 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, 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 Consolidated Net RINs Obligation deficit (see Note 13) 59.6 — Short-term derivative liabilities (see Note 12) 35.8 14.1 Employee costs 30.2 47.6 Other 51.2 72.3 Total $ 546.4 $ 346.8 21. Equity-Based Compensation Delek US Holdings, Inc. 2006 Long-Term Incentive Plan The Delek US Holdings, Inc. 2006 Long-Term Incentive Plan, as amended (the "2006 Plan"), allowed Delek to grant stock options, stock appreciation rights ("SARs"), restricted stock, restricted common stock units ("RSUs"), performance awards ("PRSUs"), and other stock-based awards of up to 5,053,392 shares of Delek's common stock to certain directors, officers, employees, consultants and other individuals who performed services for Delek or its affiliates. Stock options and SARs granted under the 2006 Plan were generally granted at market price or higher. The vesting of all outstanding awards was subject to continued service to Delek or its affiliates except that vesting of awards granted to certain executive employees could, under certain circumstances, accelerate upon termination of their employment and the vesting of all outstanding awards could accelerate upon the occurrence of an Exchange Transaction (as defined in the 2006 Plan). In the second quarter of 2010, Delek's Board of Directors and its Incentive Plan Committee began using stock-settled SARs, rather than stock options, as the primary form of appreciation award under the 2006 Plan. The 2006 Plan expired in April 2016. Delek US Holdings, Inc. 2016 Long-Term Incentive Plan On May 5, 2016, our stockholders approved our 2016 Long-Term Incentive Plan (the “2016 Plan”) to succeed our 2006 Plan. 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 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. No awards will be made under the 2016 Plan after May 5, 2026. Alon USA Energy, Inc. 2005 Long-Term Incentive Plan In connection with the Delek/Alon Merger, Delek assumed the Alon USA Energy, Inc. Second Amended and Restated 2005 Incentive Compensation Plan (“the Alon 2005 Plan” and, collectively with the 2006 Plan and the 2016 Plan, the "Incentive Plans") as a component of its overall executive incentive compensation program. 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- F-50 | 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 The table below provides the assumptions used in estimating the fair values of our outstanding stock options and SARs under the Incentive Plans. For all awards granted, we calculated volatility using historical volatility and implied volatility of a peer group of public companies using weekly stock prices. 2019 Grants 2018 Grants (Graded Vesting) (Graded Vesting) 4 years 4 years Expected volatility 48.16 %- 48.94 % 47.52 %- 49.42 % Dividend yield 2.03 %- 2.60 % 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 Stock Option and SAR Activity 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 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 Vested options and SARs exercisable, December 31, 2020 1,501,155 $ 32.60 6.4 $ 0.1 Restricted Stock Units The Incentive Plans provide for the award of RSUs and PRSUs to certain employees and non-employee directors. RSUs granted to employees vest ratably over three to five years from the date of grant, and RSUs granted to non-employee directors vest quarterly over the year following the date of grant. 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 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. The number of PRSUs that will ultimately vest is based on the Company's total shareholder return over the performance period. The grant date fair value of PRSUs is determined using a Monte-Carlo simulation model. We record compensation expense for these awards based on the grant date fair value of the award, recognized ratably over the measurement period. F-51 | Performance-Based Restricted Stock Unit Assumptions The table below provides the assumptions used in estimating the fair values of our outstanding PRSUs under the Plan. 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 % 39.67 %- 39.98 % 36.11 %- 44.66 % Expected term 2.56 - 2.81 years 2.06 - 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 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 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 Compensation expense for Delek equity-based awards amounted to $ 22.3 million, $ 25.2 million and $ 20.9 million for the years ended December 31, 2020, 2019 and 2018, respectively. These amounts are included in general and administrative expenses in the accompanying consolidated statements of income. 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, 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. We issue new shares of common stock upon exercise or vesting of share-based awards. Delek Logistics GP, LLC 2012 Long-Term Incentive Plan 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. The Logistics LTIP limits the number of units that may be delivered pursuant to vested awards to 612,207 common units, subject to proportionate adjustment in the event of unit splits and similar events. Awards granted under the Logistics LTIP will be settled with Delek Logistics units. 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. F-52 | 22. 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 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 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. 23. Employees Workforce 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 F-53 | 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. As of December 31, 2020, operations and maintenance hourly employees at the El Dorado refinery were represented by the International Union of Operating Engineers and its Local 381. Of the El Dorado employees, 40.7 % are covered by a collective bargaining agreement which expires on August 1, 2021. As of December 31, 2020, our El Dorado and Texas based truck drivers for Lion Oil Company were represented by the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL - CIO while our El Dorado refinery warehouse hourly employees were represented by the International Union of Operating Engineers and its Local 381; none are currently covered by a collective bargaining agreement. As of December 31, 2020, approximately 68.9 % of employees who work at our Big Spring refinery are covered by a collective bargaining agreement that expires March 31, 2022. None of our employees in our logistics segment, retail segment or in our corporate office are represented by a union. We consider our relations with our employees to be satisfactory. Postretirement Benefits Pension Plans Effective with the Delek/Alon Merger on July 1, 2017 (see Note 3), we had four defined benefit pension plans covering substantially all of Alon's employees, excluding employees of the retail segment. The benefits are based on years of service and the employee’s final average monthly compensation. Our funding policy is to contribute annually no less than the minimum required nor more than the maximum amount that can be deducted for federal income tax purposes. Contributions are intended to provide not only for benefits attributed to service to date but also for those benefits expected to be earned in the future. The plans were frozen for non-union employees effective September 30, 2017. During 2018, we completely settled the supplemental retirement income plan of the retail segment, had a partial settlement of Alon's executive non-qualified restoration plan, froze Alon's qualified pension plan for union employees effective July 31, 2018, and entered into an agreement with the International Union of Operating Engineers (the "Union") to extend the Union agreement to March 31, 2022. As part of the extended Union agreement, the Company agreed to compensate each pension-eligible employee in the Union for the loss of the pension benefit over the remaining union contract period in four annual installments beginning July 2018. Payments are contingent upon continued employment at each annual payment date and are expected to total approximately $ 6.9 million in the aggregate without considering forfeitures (which cannot yet be estimated). The related expense (estimated without considering forfeitures) has been or will be recognized over the remaining union contract period. 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. This new plan consists of Union employees. The assets were allocated as required under IRC Section 414. The remaining accumulated other comprehensive income at that date was split between the two plans based on their respective portions of projected benefit obligation. The Alon USA Pension Plan for Collectively Bargained Employees was terminated. The plan's obligation was settled and paid out from the plan's asset on December 20, 2019. Financial information related to our pension plans is presented below: Year Ended December 31, 2020 2019 Change in projected benefit obligation: Benefit obligation at beginning of year $ 131.5 $ 131.0 Interest cost 4.2 5.4 Actuarial loss (gain) 18.3 13.6 Benefits paid ( 5.3 ) ( 5.3 ) Other (effect of curtailment/settlement) — ( 13.2 ) Projected benefit obligations at end of year $ 148.7 $ 131.5 Change in plan assets: Fair value of plan assets at beginning of year $ 128.1 $ 115.7 Actual gain on plan assets 15.7 29.5 Employer contribution — 1.4 Benefits paid ( 5.3 ) ( 5.3 ) Other (effect of curtailment/settlement) — ( 13.2 ) Fair value of plan assets at end of year $ 138.5 $ 128.1 Reconciliation of funded status: Fair value of plan assets at end of year $ 138.5 $ 128.1 Less projected benefit obligations at end of year 148.7 131.5 Under-funded status at end of year $ ( 10.2 ) $ ( 3.4 ) F-54 | 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 income (loss) that have not yet been recognized as components of net periodic benefit cost were as follows: Year Ended December 31, 2020 2019 Net actuarial loss (gain) $ 9.3 $ ( 0.1 ) Prior service credit — — Projected benefit obligations at end of year $ 9.3 $ ( 0.1 ) The accumulated benefit obligation for each of our pension plans was in excess of the fair value of plan assets. The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the pension plans were as follows: Year Ended December 31, 2020 2019 Projected benefit obligation $ 148.7 $ 131.5 Accumulated benefit obligation $ 148.7 131.6 Fair value of plan assets $ 138.5 128.1 The weighted-average assumptions used to determine benefit obligations were as follows: Year Ended December 31, 2020 2019 Discount rate 2.45 % 3.20 % 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. The expected future cash flow is discounted by the Principal Pension Discount Yield Curve for the fiscal year end because it has been specifically designed to help pension funds comply with statutory funding guidelines. The weighted-average assumptions used to determine net periodic benefit costs were as follows: Year Ended December 31, 2020 2019 2018 Discount rate 3.20 % 4.15 % 3.60 % Expected long-term rate of return on plan assets 5.75 % 7.00 % 7.33 % Rate of compensation increase — % — % 3.00 % The expected long-term rate of return is based on the portfolio as a whole and not on the sum of the returns on individual asset categories. The components of net periodic benefit cost related to our benefit plans consisted of the following: Year Ended December 31, Components of net periodic benefit: 2020 2019 2018 Service cost $ — $ — $ 0.4 Interest cost 4.2 5.4 5.2 Expected return on plan assets ( 6.8 ) ( 7.5 ) ( 8.0 ) Recognition of gain due to settlement — — ( 0.1 ) Recognition of gain due to curtailment — ( 2.7 ) ( 2.4 ) Net periodic benefit $ ( 2.6 ) $ ( 4.8 ) $ ( 4.9 ) The service cost component of net periodic benefit is included as part of general and administrative expenses in the accompanying statements of income. The other components of net periodic benefit are included as part of other non-operating expense (income), net. F-55 | The weighted-average asset allocation of our pension benefits plan assets were as follows: Year Ended December 31, 2020 2019 Investments in common collective trust consisting of: U.S. 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 Assets or Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Consolidated Total Year Ended December 31, 2020 U.S. companies $ — $ 36.2 $ — $ 36.2 International companies — 19.7 — 19.7 Fixed-income — 82.6 — 82.6 Total $ — $ 138.5 $ — $ 138.5 Year Ended December 31, 2019 U.S. companies $ — $ 38.5 $ — $ 38.5 International companies — 12.8 — 12.8 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 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 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 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. The benefits expected to be paid in each year 2021–2025 are $ 6.1 million, $ 6.6 million, $ 6.5 million, $ 7.0 million and $ 6.9 million, respectively. The aggregate benefits expected to be paid in the five years from 2026–2030 are $ 35.4 million. The expected benefits are based on the same assumptions used to measure our benefit obligation at December 31, 2020 and include estimated future employee service. 401(k) Plans For the years ended December 31, 2020, 2019 and 2018, we sponsored a voluntary 401(k) Employee Retirement Savings Plans for eligible employees. Employees must be at least 21 years of age and have 45 days of service to be eligible to participate in the plan. Employee contributions are matched on a fully-vested basis by us up to a maximum of 8 % of eligible compensation. Eligibility for the Company matching contribution begins on the first of the month following one year of employment. For the years ended December 31, 2020, 2019 and 2018, the 401(k) plans expense recognized was $ 10.4 million, $ 9.6 million and $ 9.6 million, respectively. Postretirement Medical Plan In addition to providing pension benefits, Alon has an unfunded postretirement medical plan covering certain health care and life insurance benefits for certain employees of Alon that retired prior to January 2, 2017, who met eligibility requirements in the plan documents. This plan is closed to new participants. The health care benefits in excess of certain limits are insured. The accrued benefit liability related to this plan reflected in the consolidated balance sheet was $ 1.8 million and $ 2.6 million at December 31, 2020 and 2019, respectively. F-56 | 24. Selected Quarterly Financial Data (Unaudited) 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 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, 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 ) Net (loss) income $ ( 307.0 ) $ 98.5 $ ( 76.9 ) $ ( 285.0 ) Net (loss) income attributable to Delek $ ( 314.4 ) $ 87.7 $ ( 88.1 ) $ ( 293.2 ) Basic (loss) income per share from continuing operations $ ( 4.28 ) $ 1.19 $ ( 1.20 ) $ ( 3.98 ) 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: (1) Net income from continuing operations for the quarter ended December 31, 2019 includes the benefit of retroactive biodiesel tax credits related to 2019 and 2018 blending activities totaling $ 77.6 million. 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. F-57 | The quarterly earnings per share calculations for the three months ended December 31, 2020 and 2019 are presented below: Three Months Ended December 31, 2020 2019 Numerator: Numerator for EPS - continuing operations (Loss) income from continuing operations $ ( 285.0 ) $ 32.0 Less: Income from continuing operations attributed to non-controlling interest 8.2 5.3 Numerator for diluted EPS - continuing operations attributable to Delek $ ( 293.2 ) $ 26.7 Numerator for EPS - discontinued operations Income from discontinued operations $ — $ 6.0 Denominator: Weighted average common shares outstanding (denominator for basic EPS) 73,736,637 74,042,343 Dilutive effect of stock-based awards — 658,583 Weighted average common shares outstanding, assuming dilution 73,736,637 74,700,926 EPS: Basic income per share: (Loss) income from continuing operations $ ( 3.98 ) $ 0.36 Income from discontinued operations — 0.08 Total basic (loss) income per share $ ( 3.98 ) $ 0.44 Diluted income per share: (Loss) income from continuing operations $ ( 3.98 ) $ 0.36 Income from discontinued operations — 0.08 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 25. Leases We lease certain retail stores, land, building and various equipment from others. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to 15 years or more. The exercise of existing lease renewal options is at our sole discretion. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Some of our lease agreements include a rate based on equipment usage and others include a rate with fixed increases or inflationary indices based increase. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. We rent or sublease certain real estate and equipment to third parties. Our sublease portfolio consists primarily of operating leases within our retail stores and crude storage equipment. As of December 31, 2020, $ 26.4 million of our net property, plant, and equipment balance is subject to an operating lease. This agreement does not include options for the lessee to purchase our leasing equipment, nor does it include any material residual value guarantees or material restrictive covenants. The agreement includes a one year renewal option and certain variable payment based on usage. F-58 | The following table presents additional information related to our operating leases in accordance ASC 842, Leases ("ASC 842"): (in millions) Year Ended December 31, 2020 2019 Lease Cost Operating lease costs (1) $ 64.0 $ 49.5 Short-term lease costs (2) 24.4 17.4 Sublease income ( 7.7 ) ( 6.4 ) Net lease costs $ 80.7 $ 60.5 Other Information Cash paid for amounts included in the measurement of lease liabilities: 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) 6.4 % (1) Includes an immaterial amount of financing lease cost. (2) Includes an immaterial amount of variable lease cost. (3) Our discount rate is primarily based on our incremental borrowing rate in accordance with ASC 842. 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 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 Less: Interest 933.5 Present Value of Lease Liabilities $ 182.0 26. Subsequent Events 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. F-59 | Financial Statements and Schedules ITEM 16. FORM 10-K SUMMARY None. F-101 | SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Delek US Holdings, Inc. By: /s/ Reuven Spiegel Reuven Spiegel Executive Vice President and Chief Financial Officer (Principal Financial Officer) Dated: March 1, 2021 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 March 1, 2021: /s/ Ezra Uzi Yemin Ezra Uzi Yemin Director (Chairman), President and Chief Executive Officer (Principal Executive Officer) /s/ Nilah Staskus Nilah Staskus Senior Vice President, Chief Accounting Officer (Principal Accounting Officer) /s/ William J. Finnerty William J. Finnerty Director /s/ Richard J. Marcogliese Richard J. Marcogliese Director /s/ Gary M. Sullivan, Jr. Gary M. Sullivan, Jr. Director /s/ Vicky Sutil Vicky Sutil Director F-102 | /s/ Laurie Z. Tolson Laurie Z. Tolson Director /s/ David Wiessman David Wiessman Director /s/ Shlomo Zohar Shlomo Zohar Director F-103 |