What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-05 compared with 2021-08-05 · 286 added, 275 removed, 888 unchanged (39% of the section changed)

3 unchanged sentences

(In millions, except share and per share data)

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Current assets:

33 unchanged sentences

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

Common stock, $ 0.01 par value, 110,000,000 shares authorized, 91,637,661 shares and 91,356,868 shares issued at June 30, 2021 and December 31, 2020, respectively

Common stock, $ 0.01 par value, 110,000,000 shares authorized, 91,700,464 shares and 91,356,868 shares issued at September 30, 2021 and December 31, 2020, respectively

Additional paid-in capital 1,199.2 1,185.1

Accumulated other comprehensive loss ( 7.4 ) ( 7.2 )

Treasury stock, 17,575,527 shares, at cost, as of June 30, 2021 and December 31, 2020

Treasury stock, 17,575,527 shares, at cost, as of September 30, 2021 and December 31, 2020

( 694.1 ) ( 694.1 )

8 unchanged sentences

(In millions, except share and per share data)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

8 unchanged sentences

Depreciation and amortization 5.2 5.8 17.2 17.4

Other operating income, net ( 4.9 ) ( 14.2 ) ( 3.0 ) ( 14.9 )

Other operating (income) expense, net ( 1.7 ) 0.3 ( 4.7 ) ( 14.6 )

Total operating costs and expenses 2,910.7 2,138.1 7,659.9 5,833.5

Operating (loss) income ( 85.4 ) 22.8 ( 165.5 ) ( 338.7 )

Operating income (loss) 45.8 ( 75.2 ) ( 119.7 ) ( 413.9 )

Interest expense 37.7 31.9 100.5 98.0

1 unchanged sentence

Income from equity method investments ( 2.9 ) ( 12.8 ) ( 14.5 ) ( 28.6 )

Gain on sale on non-operating refinery — ( 56.9 ) — ( 56.9 )

Other expense (income), net 6.8 ( 1.5 ) 5.8 ( 2.4 )

Total non-operating expense (income), net 33.1 ( 39.8 ) 56.7 ( 11.2 )

(Loss) income before income tax benefit ( 118.5 ) 62.6 ( 222.2 ) ( 327.5 )

Income tax benefit ( 46.0 ) ( 35.9 ) ( 58.4 ) ( 119.0 )

Net (loss) income ( 72.5 ) 98.5 ( 163.8 ) ( 208.5 )

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

Other income, net ( 21.8 ) ( 1.0 ) ( 16.0 ) ( 3.4 )

Total non-operating expense, net 12.8 17.3 69.5 6.1

Income (loss) before income tax expense (benefit) 33.0 ( 92.5 ) ( 189.2 ) ( 420.0 )

Income tax expense (benefit) 6.1 ( 15.6 ) ( 52.3 ) ( 134.6 )

Net income (loss) 26.9 ( 76.9 ) ( 136.9 ) ( 285.4 )

Net income attributed to non-controlling interests 8.8 11.2 24.7 29.4

Net (loss) income attributable to Delek $ ( 81.1 ) $ 87.7 $ ( 179.7 ) $ ( 226.7 )

Basic (loss) income per share $ ( 1.10 ) $ 1.19 $ ( 2.43 ) $ ( 3.08 )

Diluted (loss) income per share $ ( 1.10 ) $ 1.18 $ ( 2.43 ) $ ( 3.08 )

Net income (loss) attributable to Delek $ 18.1 $ ( 88.1 ) $ ( 161.6 ) $ ( 314.8 )

Basic income (loss) per share $ 0.24 $ ( 1.20 ) $ ( 2.19 ) $ ( 4.28 )

Diluted income (loss) per share $ 0.24 $ ( 1.20 ) $ ( 2.19 ) $ ( 4.28 )

Dividends declared per common share outstanding $ — $ 0.31 $ — $ 0.93

2 unchanged sentences

Delek US Holdings, Inc.

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(In millions)

Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020

Net (loss) income $ ( 72.5 ) $ 98.5 $ ( 163.8 ) $ ( 208.5 )

Other comprehensive income (loss):

Commodity contracts designated as cash flow hedges:

Net (loss) gain related to commodity cash flow hedges — ( 1.4 ) ( 0.2 ) 0.3

Income tax benefit — ( 0.3 ) — —

Net comprehensive (loss) income on commodity contracts designated as cash flow hedges — ( 1.1 ) ( 0.2 ) 0.3

Other income, net of taxes — 0.4 — 0.1

Total other comprehensive (loss) gain — ( 0.7 ) ( 0.2 ) 0.4

Comprehensive (loss) income ( 72.5 ) 97.8 ( 164.0 ) ( 208.1 )

Comprehensive income attributable to non-controlling interest 8.6 10.8 15.9 18.2

Comprehensive (loss) income attributable to Delek $ ( 81.1 ) $ 87.0 $ ( 179.9 ) $ ( 226.3 )

See accompanying notes to condensed consolidated financial statements

Financial Statements

Delek US Holdings, Inc.

Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited)

(In millions, except share and per share data)

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

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 March 31, 2021

Balance at June 30, 2021

91,637,661 $ 0.9 $ 1,192.6 $ ( 7.4 ) $ 342.0 ( 17,575,527 ) $ ( 694.1 ) $ 118.4 $ 952.4

Net (loss) income — — — — ( 81.1 ) — — 8.6 ( 72.5 )

Net income — — — — 18.1 — — 8.8 26.9

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

3 unchanged sentences

Other — — 0.2 — — — — ( 0.2 ) —

Balance at June 30, 2021

Balance at September 30, 2021

91,700,464 $ 0.9 $ 1,199.2 $ ( 7.4 ) $ 360.1 ( 17,575,527 ) $ ( 694.1 ) $ 118.9 $ 977.6

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

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

Shares Amount Shares Amount

Balance at March 31, 2020

Balance at June 30, 2020

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

Net income — — — — 87.7 — — 10.8 98.5

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

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

3 unchanged sentences

Equity-based compensation expense — — 6.7 — — — — — 6.7

Repurchase of non-controlling interest — — ( 0.8 ) — — — — — ( 0.8 )

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

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

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

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

Other — — — 0.4 — — — — 0.4

Balance at June 30, 2020

Balance at September 30, 2020

91,301,229 $ 0.9 $ 1,180.1 $ — $ 815.3 ( 17,575,527 ) $ ( 694.1 ) $ 118.1 $ 1,420.3

3 unchanged sentences

(In millions, except share and per share data)

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

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

9 unchanged sentences

Other — — 0.2 — ( 0.3 ) — — ( 0.2 ) ( 0.3 )

Balance at June 30, 2021

Balance at September 30, 2021

91,700,464 $ 0.9 $ 1,199.2 $ ( 7.4 ) $ 360.1 ( 17,575,527 ) $ ( 694.1 ) $ 118.9 $ 977.6

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

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

4 unchanged sentences

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

Other comprehensive income related to commodity contracts, net — — — 0.3 — — — — 0.3

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

Common stock dividends ($ 0.93 per share)

4 unchanged sentences

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

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

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

1 unchanged sentence

Other — — — 0.1 — — — — 0.1

Balance at June 30, 2020

Balance at September 30, 2020

91,301,229 $ 0.9 $ 1,180.1 $ — $ 815.3 ( 17,575,527 ) $ ( 694.1 ) $ 118.1 $ 1,420.3

4 unchanged sentences

(In millions)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

24 unchanged sentences

Proceeds from sale of non-operating refinery — 39.9

Insurance proceeds 4.4 —

Net cash used in investing activities ( 143.2 ) ( 163.0 )

10 unchanged sentences

Distribution to non-controlling interest ( 24.1 ) ( 25.0 )

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

Dividends paid — ( 69.0 )

Deferred financing costs paid ( 6.2 ) ( 0.7 )

Net cash provided by financing activities 29.3 372.7

Net cash (used in) provided by financing activities ( 23.9 ) 415.4

Net increase (decrease) in cash and cash equivalents 43.1 ( 147.4 )

4 unchanged sentences

(In millions)

Six Months Ended June 30,

Nine Months Ended September 30,

Supplemental disclosures of cash flow information:

4 unchanged sentences

Non-cash investing activities:

Increase (decrease) in accrued capital expenditures $ 0.1 $ ( 33.1 )

Decrease in accrued capital expenditures $ ( 1.5 ) $ ( 33.9 )

Non-cash financing activities:

1 unchanged sentence

See accompanying notes to condensed consolidated financial statements

Financial Statements

Delek US Holdings, Inc.

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(In millions)

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

Net income (loss) $ 26.9 $ ( 76.9 ) $ ( 136.9 ) $ ( 285.4 )

Other comprehensive income (loss):

Commodity contracts designated as cash flow hedges:

Net loss related to commodity cash flow hedges — ( 0.6 ) ( 0.2 ) ( 0.3 )

Income tax benefit — ( 0.1 ) — ( 0.1 )

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

Other (loss) income, net of taxes — — — 0.1

Total other comprehensive loss — ( 0.5 ) ( 0.2 ) ( 0.1 )

Comprehensive income (loss) 26.9 ( 77.4 ) ( 137.1 ) ( 285.5 )

Comprehensive income attributable to non-controlling interest 8.8 11.2 24.7 29.4

Comprehensive income (loss) attributable to Delek $ 18.1 $ ( 88.6 ) $ ( 161.8 ) $ ( 314.9 )

See accompanying notes to condensed consolidated financial statements

Notes to Condensed Consolidated Financial Statements (Unaudited)

7 unchanged sentences

Our condensed consolidated financial statements include the accounts of Delek and its subsidiaries.

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S.

Generally Accepted Accounting Principles ("GAAP") have been condensed or omitted, although management believes that the disclosures herein are adequate to make the financial information presented not misleading.

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with United States ("U.S.") Generally Accepted Accounting Principles ("GAAP") have been condensed or omitted, although management believes that the disclosures herein are adequate to make the financial information presented not misleading.

Our unaudited condensed consolidated financial statements have been prepared in conformity with GAAP applied on a consistent basis with those of the annual audited consolidated financial statements included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 1, 2021 (the "Annual Report on Form 10-K") and in accordance with the rules and regulations of the SEC.

12 unchanged sentences

Risks and Uncertainties Arising from the COVID-19 Pandemic

economic activity continued on a recovery trend during the quarter ended June 30, 2021, albeit remaining subject to heightened levels of uncertainty related to the on-going impact of the COVID-19 outbreak that developed into a pandemic in March 2020 (the “COVID-19 Pandemic” or the “Pandemic”), and the spread of new variants of the virus.

economic activity continued on a recovery trend during the quarter ended September 30, 2021, albeit remaining subject to heightened levels of uncertainty related to the on-going impact of the COVID-19 outbreak that developed into a pandemic in March 2020 (the “COVID-19 Pandemic” or the “Pandemic”), and the spread of new variants of the virus.

Most of the restrictions imposed in the prior year to prevent its spread have been eased and government vaccination campaigns continue.

Compared to the prior year, the economic recovery trends in the three and six months ended June 30, 2021 included a resumption of flights by major airlines and increased motor vehicle use.

Compared to the prior year, the economic recovery trends in the three and nine months ended September 30, 2021 included a resumption of flights by major airlines and increased motor vehicle use.

This has in turn resulted in increased demand and market prices for crude oil and certain of our products.

1 unchanged sentence

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 had a material impact on our current period results of operations or financial position based on the requirements for assessing such financial statement impact under GAAP, we have considered them in the preparation of our unaudited financial statements as of and for the three and six months ended June 30, 2021.

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

36 unchanged sentences

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

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 2 - Segment Data

4 unchanged sentences

• results of certain immaterial operating segments, including our Canadian crude trading operations (as discussed in Note 9);

Notes to Condensed Consolidated Financial Statements (Unaudited)

• wholesale crude operations;

6 unchanged sentences

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

The refining segment has a combined nameplate capacity of 302,000 barrels per day ("bpd") as of June 30, 2021, including the following:

The refining segment has a combined nameplate capacity of 302,000 barrels per day ("bpd") as of September 30, 2021, including the following:

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

9 unchanged sentences

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

As a result of this sale, we recognized a gain of $ 56.9 million during the second quarter of 2020, largely due to the buyer assuming substantially all of the asset retirement obligations and environmental liabilities associated with this refinery.

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.

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 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, which has not yet occurred as of June 30, 2021.

Such option is exercisable by Delek through the 90th day after GCE demonstrates commercial operations, as contractually defined, which has not yet occurred as of September 30, 2021.

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

6 unchanged sentences

Retail Segment

Our retail segment consists of 252 owned and leased convenience store sites as of June 30, 2021, located primarily in Central and West Texas and New Mexico.

Our retail segment consists of 250 owned and leased convenience store sites as of September 30, 2021, located primarily in Central and West Texas and New Mexico.

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

Substantially all of the motor fuel sold through

Notes to Condensed Consolidated Financial Statements (Unaudited)

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.

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

3 unchanged sentences

• refining segment refined product sales to the retail segment to be sold through the store locations;

Notes to Condensed Consolidated Financial Statements (Unaudited)

• refining segment sales of asphalt and refined product to entities included in corporate, other and eliminations;

4 unchanged sentences

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

Three Months Ended June 30, 2021

(In millions) Refining Logistics Retail Corporate,

Other and Eliminations (1)

Consolidated (1)

Three Months Ended September 30, 2021

Refining Logistics Retail Corporate,

Other and Eliminations Consolidated

Net revenues (excluding inter-segment fees and revenues)

8 unchanged sentences

Other operating income, net ( 1.7 )

Operating loss $ ( 85.4 )

Operating income $ 45.8

Capital spending (excluding business combinations) $ 14.5 $ 4.2 $ 1.9 $ 8.3 $ 28.9

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Refining Logistics Retail Corporate,

10 unchanged sentences

General and administrative expenses

Other operating income, net ( 14.2 )

Operating income $ 22.8

Other operating expense, net 0.3

Operating loss $ ( 75.2 )

Capital spending (excluding business combinations)

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements (Unaudited)

Six Months Ended June 30, 2021

(In millions) Refining Logistics Retail Corporate,

Nine Months Ended September 30, 2021

Refining Logistics Retail Corporate,

Other and Eliminations Consolidated

11 unchanged sentences

Capital spending (excluding business combinations) $ 133.0 $ 14.6 $ 3.2 $ 10.8 $ 161.6

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Refining Logistics Retail Corporate,

13 unchanged sentences

Capital spending (excluding business combinations) $ 180.9 $ 6.9 $ 8.2 $ 12.0 $ 208.0

(1) Reflects an adjustment to net down year-to-date net revenues and cost of materials and other of approximately $ 362 million related to certain crude wholesale net settled transactions included in corporate, other and eliminations that occurred during the three months ended March 31, 2021, which was not reflected in the unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2021, as filed on our March 31, 2021 Quarterly Report on Form 10-Q on May 6, 2021.

Such uncorrected adjustment, as well as the subsequent out-of-period correction reflected above, did not relate to any of our reportable segments, had no impact on segment contribution margin, consolidated contribution margin or consolidated operating loss, and are not considered material to the condensed consolidated financial statements in either period.

Other Segment Information

Total assets by segment were as follows as of June 30, 2021:

Total assets by segment were as follows as of September 30, 2021 (in millions):

Refining Logistics Retail Corporate,

5 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Unaudited)

Property, plant and equipment and accumulated depreciation as of June 30, 2021 and depreciation expense by reporting segment for the three and six months ended June 30, 2021 are as follows (in millions):

Property, plant and equipment and accumulated depreciation as of September 30, 2021 and depreciation expense by reporting segment for the three and nine months ended September 30, 2021 are as follows (in millions):

Refining Logistics Retail Corporate,

3 unchanged sentences

Property, plant and equipment, net $ 1,729.0 $ 448.2 $ 109.8 $ 29.3 $ 2,316.3

Depreciation expense for the three months ended June 30, 2021 $ 49.4 $ 10.0 $ 3.2 $ 1.9 $ 64.5

Depreciation expense for the six months ended June 30, 2021 $ 99.8 $ 20.7 $ 6.2 $ 4.4 $ 131.1

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

T here were no indicators of impairment related to our property, plant and equipment as of June 30, 2021 (see Note 1 for further discussion on the impact of COVID-19 Pandemic).

Depreciation expense for the three months ended September 30, 2021 $ 44.2 $ 10.2 $ 2.8 $ 1.7 $ 58.9

Depreciation expense for the nine months ended September 30, 2021 $ 144.0 $ 30.9 $ 9.0 $ 6.1 $ 190.0

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

There were no indicators of impairment related to our property, plant and equipment as of September 30, 2021 (see Note 1 for further discussion on the impact of COVID-19 Pandemic).

Note 3 - Earnings (Loss) Per Share

4 unchanged sentences

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

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

Numerator for EPS

Net (loss) income $ ( 72.5 ) $ 98.5 $ ( 163.8 ) $ ( 208.5 )

Net income (loss) $ 26.9 $ ( 76.9 ) $ ( 136.9 ) $ ( 285.4 )

Income attributed to non-controlling interest 8.8 11.2 24.7 29.4

3 unchanged sentences

Weighted average common shares outstanding, assuming dilution (denominator for diluted EPS) 74,492,176 73,669,310 73,930,925 73,551,970

Basic (loss) income per share $ ( 1.10 ) $ 1.19 $ ( 2.43 ) $ ( 3.08 )

Diluted (loss) income per share $ ( 1.10 ) $ 1.18 $ ( 2.43 ) $ ( 3.08 )

Basic income (loss) per share $ 0.24 $ ( 1.20 ) $ ( 2.19 ) $ ( 4.28 )

Diluted income (loss) per share $ 0.24 $ ( 1.20 ) $ ( 2.19 ) $ ( 4.28 )

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

6 unchanged sentences

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

As of June 30, 2021, 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.

As of September 30, 2021, we owned an 80.0 % interest in Delek Logistics, consisting of 34,745,868 common limited partner units and the non-economic general partner interest.

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

1 unchanged sentence

Contemporaneously, we repurchased the 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, none of which was recognized during the three and six months ended June 30, 2020.

In August 2020, Delek Logistics filed a shelf registration statement, which subsequently became effective, with the SEC 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 as of June 30, 2021.

No units were sold as of September 30, 2021.

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.

3 unchanged sentences

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

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Cash and cash equivalents $ 4.9 $ 4.2

39 unchanged sentences

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).

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

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

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").

8 unchanged sentences

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

As of June 30, 2021, except for the guarantee of member obligations under the W2W Holdings LLC Agreement, the Company does not have other existing guarantees with or to HoldCo, or any third-party work contracted with it.

As of June 30, 2021 and December 31, 2020, Delek's investment balance in WWP Project Financing Joint Venture totaled $ 62.6 million and $ 66.6 million, respectively, and is included as part of total assets in corporate, other and eliminations in our segment disclosure.

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

In addition on the investment, we recognized a loss of $ 3.9 million and $ 4.1 million for the three and six

As of September 30, 2021, except for the guarantee of member obligations under the W2W Holdings LLC Agreement, the Company does not have other existing guarantees with or to HoldCo, or any third-party work contracted with it.

On September 30, 2021 WWP made the decision to buy Delek out of the Midland Connector Financing Commitment Agreement which provided an interest-free commitment to fund us up to $ 65.0 million upon completion of a connector to connect the WWP long-haul pipeline to our Big Spring Gathering System, with repayment over 14 years.

The buy-out totaled $ 27.5 million and represented the estimated incremental cost of capital to fund the $ 65.0 million in expenditures over a 14 -year term, and enabled us to recover approximately $ 18.0 million of capital expenditures that we may not have incurred had it not been for the financing commitment, including approximately $ 6.6

Notes to Condensed Consolidated Financial Statements (Unaudited)

months ended June 30, 2021, respectively, and a loss of $ 0.9 million and $ 2.0 million for the three and six months ended June 30, 2020, respectively.

million that was written off during the third quarter.

As a result of the transaction, we recognized $ 20.9 million of other non-operating income in the third quarter, representing the excess over our current period recognized write-offs.

As of September 30, 2021 and December 31, 2020, Delek's investment balance in WWP Project Financing Joint Venture totaled $ 53.9 million and $ 66.6 million, respectively, and is included as part of total assets in corporate, other and eliminations in our segment disclosure.

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

In addition on the investment, we recognized a loss of $ 8.8 million and $ 12.9 million for the three and nine months ended September 30, 2021, respectively, and income totaling $ 0.2 million and a loss of $ 1.8 million for the three and nine months ended September 30, 2020, respectively.

Delek Logistics Investments

5 unchanged sentences

Delek Logistics contributed an additional $ 3.5 million related to such expansion project in May 2019 and during 2020 made additional capital contributions of $ 12.2 million based on capital calls received.

During the six months ended June 30, 2021, we made additional capital contributions totaling $ 1.4 million based on capital calls received.

As of June 30, 2021 and December 31, 2020, Delek's investment balance in Red River totaled $ 143.2 million and $ 141.8 million, respectively.

We recognized income on the investment totaling $ 3.7 million and $ 6.0 million and for the three and six months ended June 30, 2021, respectively, and $ 2.9 million and $ 4.7 million for the three and six months ended June 30, 2020, respectively.

During the nine months ended September 30, 2021, we made additional capital contributions totaling $ 1.4 million based on capital calls received.

As of September 30, 2021 and December 31, 2020, Delek's investment balance in Red River totaled $ 143.4 million and $ 141.8 million, respectively.

We recognized income on the investment totaling $ 3.9 million and $ 9.9 million and for the three and nine months ended September 30, 2021, respectively, and $ 2.0 million and $ 6.8 million for the three and nine months ended September 30, 2020, respectively.

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

2 unchanged sentences

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

As of June 30, 2021 and December 31, 2020, Delek Logistics' investment balances in these joint ventures totaled $ 108.9 million and $ 111.9 million, respectively, and were accounted for using the equity method.

We recognized income on these investments totaling $ 2.9 million and $ 4.6 million for the three and six months ended June 30, 2021, respectively, and $ 3.5 million and $ 7.3 million for the three and six months ended June 30, 2020, respectively.

As of September 30, 2021 and December 31, 2020, Delek Logistics' investment balances in these joint ventures totaled $ 108.5 million and $ 111.9 million, respectively, and were accounted for using the equity method.

We recognized income on these investments totaling $ 3.4 million and $ 8.0 million for the three and nine months ended September 30, 2021, respectively, and $ 2.9 million and $ 10.1 million for the three and nine months ended September 30, 2020, respectively.

Other Investments

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

As of June 30, 2021 and December 31, 2020, Delek's investment balance in this joint venture was $ 41.8 million and $ 39.3 million, respectively.

We recognized income on this investment totaling $ 3.9 million and $ 4.8 million for the three and six months ended June 30, 2021, respectively, and $ 5.0 million and $ 5.5 million for the three and six months ended June 30, 2020, respectively.

As of September 30, 2021 and December 31, 2020, Delek's investment balance in this joint venture was $ 44.1 million and $ 39.3 million, respectively.

We recognized income on this investment totaling $ 4.2 million and $ 9.0 million for the three and nine months ended September 30, 2021, respectively, and $ 7.5 million and $ 13.0 million for the three and nine months ended September 30, 2020, respectively.

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

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

As of June 30, 2021 and December 31, 2020, Delek Renewables, LLC's investment balance in this joint venture was $ 4.3 million and $ 4.0 million, respectively, and was accounted for using the equity method.

We recognized income on this investment totaling $ 0.2 million and $ 0.3 million for the three and six months ended June 30, 2021, respectively, and $ 0.2 million and $ 0.3 million for the three and six months ended June 30, 2020, respectively.

As of September 30, 2021 and December 31, 2020, Delek Renewables, LLC's investment balance in this joint venture was $ 4.5 million and $ 4.0 million, respectively, and was accounted for using the equity method.

We recognized income on this investment totaling $ 0.2 million and $ 0.5 million for the three and nine months ended September 30, 2021, respectively, and $ 0.2 million and $ 0.5 million for the three and nine months ended September 30, 2020, respectively.

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

3 unchanged sentences

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.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Refinery raw materials and supplies $ 470.9 $ 270.7

5 unchanged sentences

Total inventories $ 1,093.0 $ 727.7

Notes to Condensed Consolidated Financial Statements (Unaudited)

At June 30, 2021, we recorded a pre-tax inventory valuation reserve of $ 0.9 million, none of which related to LIFO inventory, due to a market price decline below our cost of certain inventory products.

At September 30, 2021, we recorded a pre-tax inventory valuation reserve of $ 1.1 million, none of which related to LIFO inventory, due to a market price decline below our cost of certain inventory products.

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, which reversed in the first quarter of 2021 due to the sale of inventory quantities that gave rise to the December 31, 2020 reserve.

We recognized a net reduction (increase) in cost of materials and other in the accompanying condensed consolidated statements of income related to the change in pre-tax inventory valuation of $ 9.7 million and $ 30.1 million for the three and six months ended June 30, 2021, respectively, and $ 203.1 million and $( 75.1 ) million for the three and six months ended June 30, 2020, respectively.

We recognized a net reduction (increase) in cost of materials and other in the accompanying condensed consolidated statements of income related to the change in pre-tax inventory valuation of $( 0.2 ) million and $ 29.9 million for the three and nine months ended September 30, 2021, respectively, and $ 9.5 million and $( 65.6 ) million for the three and nine months ended September 30, 2020, respectively.

As of September 30, 2021, we recorded an immaterial cumulative error correction relating to prior periods to capitalize manufacturing overhead costs that should have been included in refining finished goods totaling $ 21.5 million.

The impact of the balance sheet error correction would not have been material to the prior period financial statements and is not material to total inventory.

Of that amount, $ 14.0 million was recognized as a reduction of operating expenses and $ 7.5 million was recognized as a reduction of depreciation in the refining segment during the three and nine months ended September 30, 2021.

Note 7 - Crude Oil Supply and Inventory Purchase Agreement

12 unchanged sentences

The Supply and Offtake Agreements are accounted for as inventory financing arrangements under the fair value election provided by ASC 815 Derivatives and Hedging ("ASC 815") and ASC 825, Financial Instruments ("ASC 825").

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

(in millions) El Dorado Big Spring Krotz Springs

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 June 30, 2021 (1)

Barrels of inventory consigned under the respective Supply and Offtake Agreements as of September 30, 2021 (1)

Barrels of inventory consigned under the respective Supply and Offtake Agreements as of December 31, 2020 (1)

15 unchanged sentences

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.

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.

2 unchanged sentences

Effective June 4, 2021, J.

Aron terminated our $ 10.0 million letter of credit that was issued to them under the terms of the Supply and Offtake Agreement.

As of June 30, 2021, the fixed component of the Baseline Step-Out Liabilities subject to the Periodic Price Adjustments amounted to approximately $ 38.6 million.

Aron terminated our $ 10.0 million letter of credit that was issued to them under the terms of the Supply and Offtake Agreements.

As of September 30, 2021, the fixed component of the Baseline Step-Out Liabilities subject to the Periodic Price Adjustments amounted to approximately $ 38.6 million.

Some portion of that amount may become due or payable in periods occurring within twelve months, if Periodic Price Adjustments are triggered on the Periodic Pricing Dates.

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 condensed 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 June 30, 2021:

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 September 30, 2021:

Baseline Step-Out Liability $ 159.3 $ 68.3 $ 102.2 $ 329.8

3 unchanged sentences

Obligations Under Supply and Offtake Agreements - Noncurrent portion $ 159.3 $ 68.3 $ 102.2 $ 329.8

Other current payable (receivable) for monthly activity true-up $ 17.8 $ ( 0.5 ) $ 18.8 $ 36.1

(in millions) El Dorado Big Spring Krotz Springs Total

Other current receivable for monthly activity true-up $ ( 2.0 ) $ ( 5.5 ) $ ( 4.9 ) $ ( 12.4 )

El Dorado Big Spring Krotz Springs Total

Balances as of December 31, 2020:

8 unchanged sentences

The Supply and Offtake Agreements require payments of fixed annual 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 three months ended June 30, 2021

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 three months ended September 30, 2021

$ 2.5 $ 0.9 $ 1.0 $ 4.4

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

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

$ 1.5 $ 0.7 $ 1.1 $ 3.3

Recurring cash fees paid during the six months ended June 30, 2021

Recurring cash fees paid during the nine months ended September 30, 2021

$ 7.7 $ 2.4 $ 3.2 $ 13.3

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

Recurring cash fees paid during the nine months ended September 30, 2020

$ 7.4 $ 2.8 $ 3.1 $ 13.3

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 three months ended June 30, 2021

Total interest expense incurred during the periods presented was as follows (in millions):

El Dorado Big Spring Krotz Springs Total

Interest expense for the three months ended September 30, 2021

$ 2.5 $ 0.9 $ 1.0 $ 4.4

Interest expense for the three months ended June 30, 2020

Interest expense for the three months ended September 30, 2020

$ 1.5 $ 0.7 $ 1.1 $ 3.3

Interest expense for the six months ended June 30, 2021

Interest expense for the nine months ended September 30, 2021

$ 7.7 $ 2.4 $ 3.2 $ 13.3

Interest expense for the six months ended June 30, 2020

Interest expense for the nine months ended September 30, 2020

$ 7.8 $ 5.9 $ 3.5 $ 17.2

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

There were no such losses for the three

and six months ended June 30, 2021.

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 June 30, 2021

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

There were no such losses for the three and nine months ended September 30, 2021.

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 September 30, 2021

Letters of credit outstanding as of December 31, 2020

2 unchanged sentences

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

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Revolving Credit Facility $ — $ —

10 unchanged sentences

$ 2,158.8 $ 2,315.0

(1) Net of deferred financing costs of $ 2.5 million and $ 2.9 million and debt discount of $ 20.6 million and $ 23.3 million at June 30, 2021 and December 31, 2020, respectively.

(2) Net of deferred financing costs of $ 0.1 million and $ 0.2 million and debt discount of $ 0.1 million and $ 0.1 million at June 30, 2021 and December 31, 2020, respectively.

(3) Net of deferred financing costs of $ 2.9 million and $ 3.3 million and debt discount of $ 0.9 million and $ 1.0 million at June 30, 2021 and December 31, 2020, respectively.

(4) Net of deferred financing costs of $ 6.3 million at June 30, 2021.

(1) Net of deferred financing costs of $ 2.4 million and $ 2.9 million and debt discount of $ 19.2 million and $ 23.3 million at September 30, 2021 and December 31, 2020, respectively.

(2) Net of deferred financing costs of $ 0.1 million and $ 0.2 million and debt discount of $ 0.1 million and $ 0.1 million at September 30, 2021 and December 31, 2020, respectively.

(3) Net of deferred financing costs of $ 2.7 million and $ 3.3 million and debt discount of $ 0.9 million and $ 1.0 million at September 30, 2021 and December 31, 2020, respectively.

(4) Net of deferred financing costs of $ 5.9 million at September 30, 2021.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Delek Revolver and Term Loan

6 unchanged sentences

Proceeds of future borrowings under the Revolving Credit Facility may be used for working capital and general corporate purposes of Delek and its subsidiaries.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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").

16 unchanged sentences

The applicable margin for Revolving Credit Facility borrowings is based on Delek’s excess availability as determined by reference to a borrowing base, ranging from 0.25 % to 0.75 % per annum with respect to base rate borrowings and from 1.25 % 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 the fee is at a rate of 0.25 % or 0.375 % per annum, depending on average commitment usage for such quarter.

As of June 30, 2021, the unused line fee was 0.375 % per annum.

In addition, the Revolving Credit Facility requires Delek to pay an unused line fee on the average amount of unused commitments

Notes to Condensed Consolidated Financial Statements (Unaudited)

thereunder in each quarter, which the fee is at a rate of 0.25 % or 0.375 % per annum, depending on average commitment usage for such quarter.

As of September 30, 2021, the unused line fee was 0.375 % per annum.

Maturity and Repayments

8 unchanged sentences

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.

Notes to Condensed Consolidated Financial Statements (Unaudited)

The Revolving Credit Facility is secured by a first priority lien over substantially all of Delek’s and each guarantor's receivables, inventory, renewable identification numbers ("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").

2 unchanged sentences

Additional Information

At June 30, 2021, the weighted average borrowing rate under the Revolving Credit Facility was 3.50 % and there were no principal amounts outstanding thereunder .

Additionally, there were letters of credit issued of approximately $ 305.9 million as of June 30, 2021 under the Revolving Credit Facility.

Unused credit commitments under the Revolving Credit Facility, as of June 30, 2021, were approximately $ 694.1 million.

At June 30, 2021, the weighted average borrowing rate under the Term Loan Credit Facility was approximately 3.00 % comprised entirely of LIBOR borrowings, and the principal amount outstanding thereunder was $ 1,266.5 million.

As of June 30, 2021, the effective interest rate related to the Term Loan Credit Facility was 3.53 %.

At September 30, 2021, the borrowing rate for base rate loans under the Revolving Credit Facility was 3.50 % and there were no principal amounts outstanding thereunder.

Additionally, there were letters of credit issued of approximately $ 278.3 million as of September 30, 2021 under the Revolving Credit Facility.

Unused credit commitments under the Revolving Credit Facility, as of September 30, 2021, were approximately $ 721.7 million.

At September 30, 2021, the weighted average borrowing rate under the Term Loan Credit Facility was approximately 2.98 % comprised entirely of LIBOR borrowings, and the principal amount outstanding thereunder was $ 1,263.3 million.

As of September 30, 2021, the effective interest rate related to the Term Loan Credit Facility was 3.51 %.

Delek Hapoalim Term Loan

9 unchanged sentences

there were no other changes as a result of these amendments.

At June 30, 2021, the weighted average borrowing rate under the term loan was approximately 3.10 % comprised entirely of a LIBOR borrowing and the principal amount outstanding thereunder was $ 39.4 million.

As of June 30, 2021, the effective interest rate related to the BHI Term Loan was 3.53 %.

At September 30, 2021, the weighted average borrowing rate under the term loan was approximately 3.08 % comprised entirely of a LIBOR borrowing and the principal amount outstanding thereunder was $ 29.3 million.

On July 30, 2021, we elected to voluntarily prepay $10.0 million in principal of the term loan.

As of September 30, 2021, the effective interest rate related to the BHI Term Loan was 3.65 %.

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.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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.

4 unchanged sentences

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

At June 30, 2021, the weighted average borrowing rate was approximately 2.50 %.

At September 30, 2021, the weighted average borrowing rate was approximately 2.62 %.

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

As of June 30, 2021, this fee was 0.35 % on an annualized basis.

As of September 30, 2021, 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 the Delek Logistics and its subsidiaries up to $ 20.0 million.

Notes to Condensed Consolidated Financial Statements (Unaudited)

As of June 30, 2021, Delek Logistics had $ 288.8 million of outstanding borrowings under the Delek Logistics Credit Facility, with no letters of credit in place.

Unused credit commitments under the Delek Logistics Credit Facility, as of June 30, 2021, were $ 561.2 million.

As of September 30, 2021, Delek Logistics had $ 260.9 million of outstanding borrowings under the Delek Logistics Credit Facility, with no letters of credit in place.

Unused credit commitments under the Delek Logistics Credit Facility, as of September 30, 2021, were $ 589.1 million.

Delek Logistics 2025 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 2025 (the “Delek Logistics 2025 Notes”) at a discount.

On May 23, 2017, Delek Logistics and its wholly owned subsidiary Delek Logistics Finance Corp.

(“Finance Corp.” and together with Delek Logistics, the “Issuers”) issued $ 250.0 million in aggregate principal amount of 6.75 % senior notes due 2025 (the “Delek Logistics 2025 Notes”) at a discount.

The Delek Logistics 2025 Notes are general unsecured senior obligations of the Issuers.

The Delek Logistics 2025 Notes are unconditionally guaranteed jointly and severally on a senior unsecured basis by Delek Logistics' existing subsidiaries (other than Delek Logistics Finance Corp.) and will be unconditionally guaranteed on the same basis by certain of Delek Logistics' future subsidiaries.

The Delek Logistics 2025 Notes are unconditionally guaranteed jointly and severally on a senior unsecured basis by Delek Logistics' existing subsidiaries (other than Finance Corp.) and will be unconditionally guaranteed on the same basis by certain of Delek Logistics' future subsidiaries.

The Delek Logistics 2025 Notes rank equal in right of payme nt 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 2025 Notes is payable semi-annually in arrears on each May 15 and November 15, commencing November 15, 2017.

Interest on the Delek Logistics 2025 Notes is payable semi-annually in arrears on each May 15 and November 15.

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

2 unchanged sentences

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 2025 Notes from holders at a price equal to 101 % of the principal amount thereof, plus accrued and unpaid interest.

As of June 30, 2021, we had $ 250.0 million in outstanding principal amount under the Delek Logistics 2025 Notes, and the effective interest rate was 7.21 %.

As of September 30, 2021, we had $ 250.0 million in outstanding principal amount under the Delek Logistics 2025 Notes, and the effective interest rate was 7.21 %.

Delek Logistics 2028 Notes

On May 24, 2021, Delek Logistics and its wholly owned subsidiary Delek Logistics Finance Corp.

(“Finance Corp.” and together with Delek Logistics, the “Co-issuers”), sold $ 400.0 million in aggregate principal amount of the Co-issuers 7.125 % Senior Notes due 2028 (the “Delek Logistics 2028 Notes”), at par, pursuant to an indenture with U.S.

On May 24, 2021, Delek Logistics and Finance Corp.

(collectively, the “Co-issuers”), issued $ 400.0 million in aggregate principal amount of the Co-issuers 7.125 % Senior Notes due 2028 (the “Delek Logistics 2028 Notes”), at par, pursuant to an indenture with U.S.

Bank, National Association as trustee.

3 unchanged sentences

The Delek Logistics 2028 Notes will mature on June 1, 2028, and interest is payable semi-annually in arrears on each June 1 and December 1, commencing December 1, 2021.

At any time prior to June 1, 2024, the Co-issuers may redeem up to 35 % of the aggregate principal amount of the Delek Logistics 2028 Notes with the net cash proceeds of one or more equity offerings by Delek Logistics at a redemption price of 107.125 % of the redeemed principal amount, plus accrued and unpaid interest, if any, subject to certain conditions and limitations.

Notes to Condensed Consolidated Financial Statements (Unaudited)

principal amount, plus accrued and unpaid interest, if any, subject to certain conditions and limitations.

Prior to June 1, 2024, the Co-issuers may also redeem all or part of the Delek Logistics 2028 Notes at a redemption price of the principal amount plus accrued and unpaid interest, if any, plus a "make whole" premium, subject to certain conditions and limitations.

1 unchanged sentence

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 Co-issuers will be obligated to make an offer for the purchase of the Delek Logistics 2028 Notes from holders at a price equal to 101 % of the principal amount thereof, plus accrued and unpaid interest.

As of June 30, 2021, we had $ 400.0 million in outstanding principal amount under the Delek Logistics 2028 Notes, and the effective interest rate was 7.41 %.

Notes to Condensed Consolidated Financial Statements (Unaudited)

As of September 30, 2021, we had $ 400.0 million in outstanding principal amount under the Delek Logistics 2028 Notes, and the effective interest rate was 7.41 %.

Reliant Bank Revolver

5 unchanged sentences

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

As of June 30, 2021, we had $ 33.0 million outstanding and $ 17.0 million of unused credit commitments under the Reliant Bank Revolver.

As of September 30, 2021, we had $ 50.0 million outstanding and had no unused credit commitments under the Reliant Bank Revolver.

Promissory Notes

Delek had four notes payable (the "Promissory Notes") with various assignees of Alon Israel Oil Company, Ltd., the holder of a predecessor consolidated promissory note, which bore interest at a fixed rate of 5.50 % per annum and which, collectively, required annual principal amortization payments of $ 25.0 million, with a final payment of $ 20.0 million which was paid at maturity of the Promissory Notes on January 4, 2021.

Delek had four notes payable (the "Promissory Notes") for a total of $120.0 million in principal with various assignees of Alon Israel Oil Company, Ltd., the holder of a predecessor consolidated promissory note, which bore interest at a fixed rate of 5.50 % per annum and which, collectively, required annual principal amortization payments of $ 25.0 million, with a final payment of $ 20.0 million which was paid at maturity of the Promissory Notes on January 4, 2021.

Restrictive Covenants

2 unchanged sentences

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

We believe we were in compliance with all covenant requirements under each of our credit facilities as of June 30, 2021.

We believe we were in compliance with all covenant requirements under each of our credit facilities as of September 30, 2021.

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.

10 unchanged sentences

• 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 swaps or caps to achieve these objectives.

We primarily utilize commodity swaps, futures, forward contracts and options contracts, generally with maturity dates of three years or less,

Notes to Condensed Consolidated Financial Statements (Unaudited)

and from time to time interest rate swaps or caps to achieve these objectives.

Futures contracts are standardized agreements, traded on a futures exchange, to buy or sell a commodity at a predetermined price and location at a specified future date.

5 unchanged sentences

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

Notes to Condensed Consolidated Financial Statements (Unaudited)

recognized in earnings in the period of change.

As of June 30, 2021 and December 31, 2020, and for the three and six months ended June 30, 2021 and June 30, 2020, our commodity fixed-price forward contracts that were accounted for as derivative instruments primarily consisted of contracts related to our Canadian crude trading operations.

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.

As of September 30, 2021 and December 31, 2020, and for the three and nine months ended September 30, 2021 and September 30, 2020, 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 condensed consolidated statements of income.

Additionally, as of and for the three months ended September 30, 2021, we also had certain fixed price normal course transactions related to crude optimization that included identifiable one-to-one hedges associated with them which are being recognized as derivatives.

We elected to not take the NPNS election on these forward physical transaction so that both the hedged item and the related economic hedge would be recognized together in earnings.

Such transactions are specific to managing crude costs and optimizing crude procurement rather than for trading purposes, are therefore are recognized in cost of materials and other on the accompanying condensed consolidated statements of income in our refining segment, and are included in our disclosures of commodity derivatives in the tables below.

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.

2 unchanged sentences

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

As of June 30, 2021, we do not believe there is any material credit risk with respect to the counterparties to any of our derivative contracts.

As of September 30, 2021, we do not believe there is any material credit risk with respect to the counterparties to any of our derivative contracts.

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

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

The following table presents the fair value of our derivative instruments as of June 30, 2021 and December 31, 2020.

The following table presents the fair value of our derivative instruments as of September 30, 2021 and December 31, 2020.

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

2 unchanged sentences

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

June 30, 2021 December 31, 2020

Notes to Condensed Consolidated Financial Statements (Unaudited)

September 30, 2021 December 31, 2020

Derivative Type Balance Sheet Location Assets Liabilities Assets Liabilities

19 unchanged sentences

Total net fair value of derivatives $ 45.0 $ ( 31.0 ) $ 73.0 $ ( 36.4 )

(1) As of June 30, 2021 and December 31, 2020, we had open derivative positions representing 212,533,990 and 159,682,606 barrels, respectively, of crude oil and refined petroleum products.

There were no open positions designated as cash flow hedging instruments as of June 30, 2021 and December 31, 2020.

(1) As of September 30, 2021 and December 31, 2020, we had open derivative positions representing 179,677,948 and 159,682,606 barrels, respectively, of crude oil and refined petroleum products.

There were no open positions designated as cash flow hedging instruments as of September 30, 2021 and December 31, 2020.

Additionally, as of December 31, 2020, we had open derivative positions representing and 22,130,000 MMBTU of natural gas products.

There were no open natural gas positions as of June 30, 2021.

(2) As of June 30, 2021 and December 31, 2020, we had open RINs commitment contracts representing 83,460,000 and 282,150,000 RINs, respectively.

(3) As of June 30, 2021 and December 31, 2020, $ 8.0 million and $ 14.8 million, respectively, of cash collateral held by counterparties has been netted with the derivatives with each counterparty.

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

Notes to Condensed Consolidated Financial Statements (Unaudited)

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

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

There were no open natural gas positions as of September 30, 2021.

(2) As of September 30, 2021 and December 31, 2020, we had open RINs commitment contracts representing 67,750,000 and 282,150,000 RINs, respectively.

(3) As of September 30, 2021 and December 31, 2020, $ 9.4 million and $ 14.8 million, respectively, of cash collateral held by counterparties has been netted with the derivatives with each counterparty.

Total gains (losses) on our non-trading commodity derivatives and RINs commitment contracts recorded in the condensed consolidated statements of income are as follows (in millions):

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

2021 2020 2021 2020

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

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

$ ( 23.2 ) $ 5.1 $ 56.4 $ ( 85.8 )

Gains (losses) on non-trading physical forward contract commodity derivatives in cost of materials and other 7.5 — 7.5 —

Realized gains reclassified out of accumulated other comprehensive income and into cost of materials and other on commodity derivatives designated as cash flow hedging instruments — 0.8 0.2 3.7

Total gains (losses) $ ( 15.7 ) $ 5.9 $ 64.1 $ ( 82.1 )

(1) Gains (losses) on commodity derivatives that are economic hedges but not designated as hedging instruments include unrealized gains (losses) of $( 21.2 ) million and $( 9.4 ) million for the three and six months ended June 30, 2021, respectively, and $( 23.4 ) million and $ 28.6 million for the three and six months ended June 30, 2020, respectively.

(1) Gains (losses) on commodity derivatives that are economic hedges but not designated as hedging instruments include unrealized gains (losses) of $( 6.8 ) million and $( 16.2 ) million for the three and nine months ended September 30, 2021, respectively, and $( 19.4 ) million and $ 9.2 million for the three and nine months ended September 30, 2020, respectively.

(2) See separate table below for disclosures about "trading derivatives."

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

Three Months Ended June 30, Six Months Ended June 30,

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

2021 2020 2021 2020

4 unchanged sentences

Total $ — $ — $ — $ —

For cash flow hedges, no component of the derivative instruments’ gains or losses was excluded from the assessment of hedge effectiveness for the three and six months ended June 30, 2021 or 2020.

There were no gains (losses), net of tax, on settled commodity contracts during the three months ended June 30, 2021, and $ 0.2 million during the six months ended June 30, 2021, and $ 1.7 million and $ 2.3 million during the three and six months ended June 30, 2020, respectively, which were reclassified into cost of materials and other in the condensed consolidated statements of income.

As of June 30, 2021, we estimate that no amount of deferred gains related to commodity cash flow hedges will be reclassified into cost of materials and other over the next 12 months as a result of hedged transactions that are forecasted to occur.

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

Three Months Ended June 30, Six Months Ended June 30,

Notes to Condensed Consolidated Financial Statements (Unaudited)

For cash flow hedges, no component of the derivative instruments’ gains or losses was excluded from the assessment of hedge effectiveness for the three and nine months ended September 30, 2021 or 2020.

There were no gains (losses), net of tax, on settled commodity contracts during the three months ended September 30, 2021, and $ 0.2 million during the nine months ended September 30, 2021, and $ 0.7 million and $ 3.0 million during the three and nine months ended September 30, 2020, respectively, which were reclassified into cost of materials and other in the condensed consolidated statements of income.

As of September 30, 2021, we estimate that no amount 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 derivatives (none of which were designated as hedging instruments) recorded in other operating income, net on the condensed consolidated statements of income are as follows (in millions):

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

2021 2020 2021 2020

Trading Physical Forward Contract Commodity Derivatives

Realized gains (losses) $ 2.8 $ ( 0.4 ) $ 4.9 $ ( 3.4 )

1 unchanged sentence

Total $ 2.0 $ ( 0.2 ) $ 4.5 $ ( 3.9 )

Trading Hedging Commodity Derivatives

Realized gains (losses) $ 0.7 $ 1.7 $ 0.2 $ 0.5

Unrealized gains (losses) ( 0.9 ) ( 1.6 ) ( 5.9 ) 7.4

Total $ ( 0.2 ) $ 0.1 $ ( 5.7 ) $ 7.9

Note 10 - Fair Value Measurements

5 unchanged sentences

Level 3 inputs are unobservable inputs for the asset or liability reflecting our assumptions about pricing by market participants.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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.

4 unchanged sentences

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

As of and for the six months ended June 30, 2021 and 2020, we elected to account for our J.

Notes to Condensed Consolidated Financial Statements (Unaudited)

As of and for the nine months ended September 30, 2021 and 2020, we elected to account for our J.

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

6 unchanged sentences

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

June 30, 2021

September 30, 2021

Level 1 Level 2 Level 3 Total

7 unchanged sentences

Total liabilities — ( 1,018.5 ) — ( 1,018.5 )

Net assets (liabilities) $ — $ ( 600.6 ) $ — $ ( 600.6 )

Notes to Condensed Consolidated Financial Statements (Unaudited)

Net liabilities $ — $ ( 566.6 ) $ — $ ( 566.6 )

December 31, 2020

8 unchanged sentences

Total liabilities — ( 1,823.2 ) — ( 1,823.2 )

Net assets (liabilities) $ — $ ( 391.9 ) $ — $ ( 391.9 )

Net liabilities $ — $ ( 391.9 ) $ — $ ( 391.9 )

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

1 unchanged sentence

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

As of June 30, 2021 and December 31, 2020, $ 8.0 million and $ 14.8 million, respectively, of cash collateral was held by counterparty brokerage firms and has been netted with the net derivative positions with each counterparty.

As of September 30, 2021 and December 31, 2020, $ 9.4 million and $ 14.8 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 9 for further information regarding derivative instruments.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 11 - Commitments and Contingencies

2 unchanged sentences

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.

On April 8, 2021, an action titled CVR Energy Inc.

Delek US Holdings, Inc., Case No.

2021-0297-JTL, was filed in the Court of Chancery of the State of Delaware.

The complaint asserted claims arising out of the Company's response to the plaintiff's demand to inspect certain books and records of the Company purportedly pursuant to Section 220 of the Delaware General Corporation Law.

The matter was dismissed on May 13, 2021 by the parties.

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

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

Such amount is included as of June 30, 2021 and December 31, 2020 in accrued expenses and other current liabilities on the accompanying condensed consolidated balance sheet.

The matter is currently under appeal.

Such amount is included as of September 30, 2021 and December 31, 2020 in accrued expenses and other current liabilities on the accompanying condensed consolidated balance sheet.

The matter is currently under appeal, but has been remanded to the district court regarding jurisdictional issues.

On June 19, 2017, the Arkansas Teacher Retirement System filed a lawsuit in the Delaware Court of Chancery (Arkansas Teacher Retirement System v.

2 unchanged sentences

and Alon USA Energy, Inc.

Following a mediation, the parties to the litigation have agreed to a settlement and release of all claims of the plaintiff class in exchange for the defendants' agreement to pay $ 44.8 million into a settlement fund, of which our insurance carriers agreed to fund approximately $ 42.5 million under the applicable insurance policies and pursuant to varying limits and limitations.

The settlement, in which the Company and other defendants expressly deny all assertions of wrongdoing or fault, is subject to approval by the court after notice and a fairness hearing, which is scheduled for October 29, 2021.

In addition to the $ 2.3 million of the settlement that is not covered by insurance, we have accrued $ 4.2 million as estimated unpaid and remaining legal fees, for a total accrual of approximately $ 6.5 million as of June 30, 2021.

Such amount is included as of June 30, 2021 in accrued expenses and other current liabilities on the accompanying condensed consolidated balance sheet.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Following a mediation, the parties to the litigation agreed to a settlement and release of all claims of the plaintiff class in exchange for the defendants' agreement to pay $ 44.8 million into a settlement fund, of which our insurance carriers agreed to fund approximately $ 42.5 million under the applicable insurance policies and pursuant to varying limits and limitations.

The settlement, in which the Company and other defendants expressly deny all assertions of wrongdoing or fault, was approved by the Court on October 29, 2021.

In addition to the $ 2.3 million of the settlement that was not covered by insurance, we accrued $ 4.2 million of estimated unpaid and remaining legal fees.

As of September 30, 2021 the remaining unpaid balance is $ 0.8 million, and is included in accrued expenses and other current liabilities on the accompanying condensed consolidated balance sheet.

Self-insurance

10 unchanged sentences

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

As of June 30, 2021, we have recorded an environmental liability of approximately $ 112.0 million, primarily related to the estimated probable costs of remediating or otherwise addressing certain environmental issues of a non-capital nature at our refineries, as well as terminals, some of which we no longer own.

As of September 30, 2021, we have recorded an environmental liability of approximately $ 112.1 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 $ 2.8 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.

We are also subject to various regulatory requirements related to carbon emissions and the compliance requirements to remit environmental credit obligations due to the EPA or other regulatory agencies, the most significant of which relates to the RINs Obligation subject to the EPA’s RFS-2 regulations (as as defined in our accounting policies in Note 1 to the audited consolidated financial statements included in Item.

In the future, we could be

Notes to Condensed Consolidated Financial Statements (Unaudited)

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.

We are also subject to various regulatory requirements related to carbon emissions and the compliance requirements to remit environmental credit obligations due to the EPA or other regulatory agencies, the most significant of which relates to the RINs Obligation subject to the EPA’s RFS-2 regulations (as defined in our accounting policies in Note 1 to the audited consolidated financial statements included in Item.

8 Financial Statements and Supplementary Data, of our December 31, 2020 Annual Report on Form 10-K).

3 unchanged sentences

Such adjustments may also require communication with the EPA if they involve reportable non-compliance which could lead to the assessment of penalties.

Based on management’s review which was completed during the second quarter 2021, we recorded a RINs inventory true-up adjustment during the three and six months ended June 30, 2021 totaling $( 12.3 ) million which increased our recorded RINs Obligation.

Based on management’s review which was completed during the second quarter 2021, we recorded a RINs inventory true-up adjustment totaling $( 12.3 ) million which increased our recorded RINs Obligation.

We have also self-reported our related instances of non-compliance to the EPA, and while we cannot yet estimate the extent of penalties that may be assessed, it is not expected to be material in relation to our total RINs Obligation.

5 unchanged sentences

On February 27, 2021, our El Dorado refinery experienced a fire in its Penex unit.

Six employees were injured in the fire, which is currently being investigated by the Occupational Safety and Health Administration.

Contrary to initial assessments, and despite occurring during the

Notes to Condensed Consolidated Financial Statements (Unaudited)

early stages of turnaround activity, the facility did suffer operational disruptions as a result of the fire.

During the six months ended June 30, 2021, we incurred workers' compensation losses of $ 3.8 million associated with the fire, which is included in operating expenses in the accompanying condensed consolidated statements of income.

Additionally, we recognized accelerated depreciation of $ 1.0 million in the six months ended June 30, 2021 due to property damaged in the fire, and we continue to incur repair costs that may be recoverable under property and casualty insurance polices.

Six employees were injured in the fire, which was investigated by the Occupational Safety and Health Administration.

Contrary to initial assessments, and despite occurring during the early stages of turnaround activity, the facility did suffer operational disruptions as a result of the fire.

During the nine months ended September 30, 2021, we incurred workers' compensation losses of $ 3.8 million associated with the fire, which is included in operating expenses in the accompanying condensed consolidated statements of income.

Additionally, we recognized accelerated depreciation of $ 1.0 million in the nine months ended September 30, 2021 due to property damaged in the fire, which was recovered during the three months ended September 30, 2021.

An additional $ 3.4 million was recognized as a gain, in excess of these losses, during the three months ended September 30, 2021.

We continue to incur repair costs that may be recoverable under property and casualty insurance policies.

If applicable, we accrue receivables for probable insurance or other third-party recoveries.

Work to determine the full extent of covered business interruption and property and casualty losses and potential insurance claims is ongoing and may result in the future recognition of insurance recoveries.

The extent of any incremental losses is not yet determinable and may also be subject to insurance recoveries.

Winter Storm Uri

1 unchanged sentence

Due to the extreme freezing conditions, we experienced reduced throughputs at our refineries as there was a disruption in the crude supply, as well as damages to various units at our refineries requiring additional operating and capital expenditures.

The majority of our losses related to Winter Storm Uri resulted from the operational disruptions and related lost profit which are not accruable under ASC 450, Contingencies, but which may be covered under our business interruption insurance policies.

Work to determine the full extent of covered business interruption losses, as well as any property and casualty losses, and potential insurance claims is ongoing and may result in the future recognition of insurance recoveries.

The extent of any incremental losses is not yet determinable and may also be subject to insurance recoveries.

We recognized additional operating expenses in the amount of $ 28.4 million in the nine months ended September 30, 2021 due to property damaged in the freeze, and we continue to incur repair costs that may be recoverable under property and casualty insurance policies.

If applicable, we accrue receivables for probable insurance or other third-party recoveries.

During the three months ended September 30, 2021, we recorded $ 17.0 million in receivables from the insurers for those losses.

Work to determine the full extent of covered business interruption and property and casualty losses and potential insurance claims is ongoing and is expected to result in additional future recognition of insurance recoveries.

Crude Oil and Other Releases

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

There were no material releases that occurred during the six months ended June 30, 2021.

There were no material releases that occurred during the nine months ended September 30, 2021.

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.

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 the completion of activities that may be needed to achieve regulatory closure.

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

Letters of Credit

As of June 30, 2021, we had in place letters of credit totaling approximately $ 305.9 million with various financial institutions securing obligations primarily with respect to our commodity transactions for the refining segment and certain of our insurance programs.

There were no amounts drawn by beneficiaries of these letters of credit at June 30, 2021.

As of September 30, 2021, we had in place letters of credit totaling approximately $ 278.3 million with various financial institutions securing obligations primarily with respect to our commodity transactions for the refining segment and certain of our insurance programs.

There were no amounts drawn by beneficiaries of these letters of credit at September 30, 2021.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 12 - Income Taxes

Under ASC 740 we used an estimated annual tax rate to record income taxes for the three and six months ended June 30, 2021 and June 30, 2020.

Our effective tax rate was 38.8 % and 26.3 % for the three and six months ended June 30, 2021, respectively, and ( 57.3 )% and 36.3 % for the three and six months ended June 30, 2020, respectively.

Under ASC 740 we used an estimated annual tax rate to record income taxes for the three and nine months ended September 30, 2021 and September 30, 2020.

Our effective tax rate was 18.5 % and 27.6 % for the three and nine months ended September 30, 2021, respectively, and 16.9 % and 32.0 % for the three and nine months ended September 30, 2020, respectively.

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

The change in our effective tax rate for the three and six months ended June 30, 2021 as compared to the three and six months ended June 30, 2020 was primarily due to reversal of a valuation allowance for deferred tax assets in partnership investments and federal net operating loss carryback to a prior 35% tax rate year recorded as discrete adjustments during the first and second quarters of 2020 coupled with the impact of changes in the second quarter estimated annual effective tax rate applied to year-to date loss for the six months ended June 30, 2021 and June 30, 2020.

The change in our effective tax rate for the three and nine months ended September 30, 2021 as compared to the three and nine months ended September 30, 2020 was primarily due to the impact of credits and permanent differences on the tax rate due to changes in pre-tax book income and adjustments reported in 2020 to reflect the reversal of a valuation allowance for deferred tax assets in partnership investments and federal net operating loss carryback to a prior 35% tax rate year coupled with the impact of changes in the third quarter estimated annual effective tax rate applied to year-to date loss for the nine months ended September 30, 2021 and September 30, 2020.

As of December 31, 2020, we recorded a current income tax receivable of $ 135.6 million and a non-current tax receivable of $ 20.6 million, related to the federal net operating loss carryback as allowed per the Coronavirus Aid Relief, and Economic Security Act (the "CARES Act") which was enacted in March 2020.

The full amount of this federal income tax receivable, totaling $ 156.2 million, was received in July and August of 2021.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 13 - Related Party Transactions

Our related party transactions consist primarily of transactions with our equity method investees (See Note 5).

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

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2021 2020 2021 2020

Transactions with our related parties were as follows for the periods presented (in millions):

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

2021 2020 2021 2020

$ 25.7 $ 27.6 $ 55.3 $ 57.5

Cost of materials and other (2)

4 unchanged sentences

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

Other Current Assets June 30, 2021 December 31, 2020

Income and other tax receivables $ 146.7 $ 142.0

Other Current Assets September 30, 2021 December 31, 2020

Short-term derivative assets (see Note 9) 45.1 72.9

Prepaid expenses 19.2 21.8

Income and other tax receivables $ 4.5 $ 142.0

Other 11.5 19.7

1 unchanged sentence

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

Accrued Expenses and Other Current Liabilities June 30, 2021 December 31, 2020

Accrued Expenses and Other Current Liabilities September 30, 2021 December 31, 2020

Product financing agreements $ 342.5 $ 198.0

Consolidated Net RINs Obligation deficit (see Note 10) 139.8 59.6

Crude purchase liabilities 142.3 62.1

Income and other taxes payable 99.2 109.5

Deferred revenue 48.1 16.5

Consolidated Net RINs Obligation deficit (see Note 10) 92.7 59.6

Employee costs 36.9 30.2

Short-term derivative liabilities (see Note 9) 30.7 35.8

Inventory reserve 29.5 —

Deferred revenue 12.9 16.5

Other 53.3 34.7

Total $ 840.0 $ 546.4

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 15 - Equity-Based Compensation

4 unchanged sentences

2016 Long-Term Incentive Plan that increased the number of shares of common stock available for issuance under this plan by 3,215,000 shares to 14,235,000 shares.

Compensation expense related to equity-based awards granted under the Incentive Plans amounted to $ 5.7 million and $ 10.1 million for the three and six months ended June 30, 2021, respectively, and $ 5.0 million and $ 10.9 million for the three and six months ended June 30, 2020, respectively.

Compensation expense related to equity-based awards granted under the Incentive Plans amounted to $ 6.5 million and $ 16.7 million for the three and nine months ended September 30, 2021, respectively, and $ 6.6 million and $ 17.4 million for the three and nine months ended September 30, 2020, respectively.

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

As of June 30, 2021, there was $ 45.5 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 1.7 years.

Notes to Condensed Consolidated Financial Statements (Unaudited)

We issued net shares of common stock of 186,937 and 280,793 as a result of exercised or vested equity-based awards during the three and six months ended June 30, 2021, respectively, and 143,044 and 246,463 for the three and six months ended June 30, 2020, respectively.

These amounts are net of 88,478 and 147,329 shares withheld to satisfy employee tax obligations related to the exercises and vesting during the three and six months ended June 30, 2021, and 68,944 and 130,449 for the three and six months ended June 30, 2020, respectively

As of September 30, 2021, there was $ 39.5 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 1.5 years.

We issued net shares of common stock of 62,803 and 343,596 as a result of exercised or vested equity-based awards during the three and nine months ended September 30, 2021, respectively, and 68,265 and 314,204 for the three and nine months ended September 30, 2020, respectively.

These amounts are net of 11,781 and 159,110 shares withheld to satisfy employee tax obligations related to the exercises and vesting during the three and nine months ended September 30, 2021, and 31,020 and 161,469 for the three and nine months ended September 30, 2020, respectively

Delek Logistics GP, LLC 2012 Long-Term Incentive Plan

12 unchanged sentences

There are four offering periods of three months during each fiscal year, beginning each January 1st, April 1st, July 1st, and October 1st.

No shares of common stock were issued under the ESPP as of June 30, 2021.

No shares of common stock were issued under the ESPP as of September 30, 2021.

Note 16 - Shareholders' Equity

Dividends Suspension

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

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

Stock Repurchase Program

4 unchanged sentences

In the second quarter of 2020, we elected to suspend the share repurchase program.

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

none of which were repurchased during the second quarter of 2020.

No repurchases of our common stock were made in the three and six months ended June 30, 2021.

As of June 30, 2021, there was $ 229.7 million of authorization remaining under Delek's aggregate stock repurchase program.

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

none of which were repurchased during the third quarter of 2020.

No repurchases of our common stock were made in the three and nine months ended September 30, 2021.

As of September 30, 2021, there was $ 229.7 million of authorization remaining under Delek's aggregate stock repurchase program.

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 traded with Delek’s common stock.

The Rights expired in accordance with the terms of the Rights Agreement on March 19, 2021.

The dividend was distributed in a non-

Notes to Condensed Consolidated Financial Statements (Unaudited)

cash transaction on March 30, 2020 to the stockholders of record on that date.

The Rights traded with Delek’s common stock and expired in accordance with the terms of the Rights Agreement on March 19, 2021.

Note 17 - Leases

8 unchanged sentences

Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Notes to Condensed Consolidated Financial Statements (Unaudited)

rent or sublease certain real estate and equipment to third parties.

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 June 30, 2021, $ 25.5 million of our net property, plant, and equipment balance is subject to an operating lease.

As of September 30, 2021, $ 25.0 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.

1 unchanged sentence

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

Three Months Ended June 30, Six Months Ended June 30,

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

(in millions) 2021 2020 2021 2020

11 unchanged sentences

Leased assets obtained in exchange for new financing lease liabilities $ 3.2 $ — $ 15.6 $ —

June 30, 2021 June 30, 2020

September 30, 2021 September 30, 2020

Weighted-average remaining lease term (years) operating leases 4.8 6.1

5 unchanged sentences

(3) Our discount rate is primarily based on our incremental borrowing rate in accordance with ASC 842 .

Note 18 - Subsequent Events

In July and August 2021, we received a total of $ 156.2 million in federal income tax refunds related to net operating loss carryback provisions which were enacted under the CARES Act.

See Note 12 for additional information.

Management's Discussion and Analysis

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

What changed 10-Q

Item 1. Financial Statements