##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE TRANSITION PERIOD FROM  TO
 Commission file number: 001-32567
 
 Alon USA Energy, Inc.
 (Exact name of Registrant as specified in its charter)
 
 Delaware(State or other jurisdiction of 
incorporation or organization)
    
    74-2966572(I.R.S. Employer
Identification No.)
 (Address of principal executive offices) (Zip Code)
 (Registrants telephone number, including area code)
 
 þ o
  o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



PART I. FINANCIAL INFORMATION
    
    
    1ITEM 1. FINANCIAL STATEMENTS
    
    
    1CONSOLIDATED BALANCE SHEETS
    
    
    1CONSOLIDATED STATEMENTS OF OPERATIONS
    
    
    2CONSOLIDATED STATEMENTS OF CASH FLOWS
    
    
    3NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    
    
    4ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
    
    
    23FORWARD-LOOKING STATEMENTS
    
    
    23ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    47ITEM 4. CONTROLS AND PROCEDURES
    
    
    48PART II. OTHER INFORMATION
    
    
    49ITEM 3. DEFAULTS UPON SENIOR SECURITIES
    
    
    49ITEM 6. EXHIBITS
    
    
    49SIGNATURESEXHIBITSEX-10.2EX-31.1 CERTIFICATION OF CEO PURSUANT TO SECTION 302EX-31.2 CERTIFICATION OF CFO PURSUANT TO SECTION 302EX-32.1 CERTIFICATION OF CEO AND CFO PURSUANT TO SECTION 906




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 ALON USA ENERGY, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 (dollars in thousands except per share data)
 March 31,
    
    
    December 31,2010
    
    
    2009(unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    7,560
    
    
    $
    40,437Accounts and other receivables, net
    
    
    96,605
    
    
    
    103,094Income tax receivable
    
    
    30,763
    
    
    
    65,418Inventories
    
    
    222,987
    
    
    
    214,999Deferred income tax asset
    
    
    43,246
    
    
    
    7,700Prepaid expenses and other current assets
    
    
    30,396
    
    
    
    4,188Total current assets
    
    
    431,557
    
    
    
    435,836Equity method investments
    
    
    19,498
    
    
    
    43,052Property, plant, and equipment, net
    
    
    1,458,647
    
    
    
    1,477,426Goodwill
    
    
    105,943
    
    
    
    105,943Other assets
    
    
    68,001
    
    
    
    70,532Total assets
    
    $
    2,083,646
    
    
    $
    2,132,789LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    239,326
    
    
    $
    248,253Accrued liabilities
    
    
    87,087
    
    
    
    92,380Short-term debt and current portion of long-term debt
    
    
    75,946
    
    
    
    10,946Total current liabilities
    
    
    402,359
    
    
    
    351,579Other non-current liabilities
    
    
    96,655
    
    
    
    95,076Long-term debt
    
    
    878,670
    
    
    
    926,078Deferred income tax liability
    
    
    328,907
    
    
    
    328,138Total liabilities
    
    
    1,706,591
    
    
    
    1,700,871Commitments and contingencies (Note 16)Stockholders equity:Preferred stock, par value $0.01, 10,000,000 shares
authorized; no shares issued and outstanding
    
    
    
    
    
    
    Common stock, par value $0.01, 100,000,000 shares
authorized; 54,170,913 shares issued and outstanding
at March 31, 2010, and December 31, 2009, respectively
    
    
    542
    
    
    
    542Additional paid-in capital
    
    
    290,212
    
    
    
    289,853Accumulated other comprehensive loss, net of income tax
    
    
    (31,517
    )
    
    
    (32,871
    )Retained earnings
    
    
    110,139
    
    
    
    165,248Total stockholders equity
    
    
    369,376
    
    
    
    422,772Non-controlling interest in subsidiaries
    
    
    7,679
    
    
    
    9,146Total equity
    
    
    377,055
    
    
    
    431,918Total liabilities and equity
    
    $
    2,083,646
    
    
    $
    2,132,789
  1




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ALON USA ENERGY, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (unaudited, dollars in thousands except per share data)
 For the Three Months EndedMarch 31,2010
    
    
    2009Net sales (1)
    
    $
    579,313
    
    
    $
    722,180Operating costs and expenses:Cost of sales
    
    
    538,715
    
    
    
    539,730Direct operating expenses
    
    
    61,444
    
    
    
    68,864Selling, general and administrative expenses
    
    
    31,807
    
    
    
    31,915Depreciation and amortization
    
    
    26,322
    
    
    
    22,090Total operating costs and expenses
    
    
    658,288
    
    
    
    662,599Operating income (loss)
    
    
    (78,975
    )
    
    
    59,581Interest expense
    
    
    (26,585
    )
    
    
    (28,256
    )Equity losses of investees
    
    
    (103
    )
    
    
    (3
    )Other income, net
    
    
    14,204
    
    
    
    257Income (loss) before income tax expense (benefit),
non-controlling interest in income (loss) of
subsidiaries and accumulated dividends on preferred
stock of subsidiary
    
    
    (91,459
    )
    
    
    31,579Income tax expense (benefit)
    
    
    (34,713
    )
    
    
    10,995Income (loss) before non-controlling interest in income
(loss) of subsidiaries and accumulated dividends on
preferred stock of subsidiary
    
    
    (56,746
    )
    
    
    20,584Non-controlling interest in income (loss) of subsidiaries
    
    
    (3,804
    )
    
    
    1,083Accumulated dividends on preferred stock of subsidiary
    
    
    
    
    
    
    2,150Net income (loss) available to common stockholders
    
    $
    (52,942
    )
    
    $
    17,351Earnings (loss) per share, basic and diluted
    
    $
    (0.98
    )
    
    $
    0.37Weighted average shares outstanding, basic (in thousands)
    
    
    54,161
    
    
    
    46,806Cash dividends per share
    
    $
    0.04
    
    
    $
    0.04
 
 (1)
    
    Includes excise taxes on sales by the retail and branded marketing segment of $12,786 and
$11,044 for the three months ended March 31, 2010, and 2009, respectively.  2




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ALON USA ENERGY, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (unaudited, dollars in thousands)
 For the Three Months EndedMarch 31,2010
    
    
    2009Cash flows from operating activities:Net income (loss) available to common stockholders
    
    $
    (52,942
    )
    
    $
    17,351Adjustments to reconcile net income (loss) available to common
stockholders to cash provided by (used in) operating
activities:Depreciation and amortization
    
    
    26,322
    
    
    
    22,090Stock compensation
    
    
    234
    
    
    
    421Deferred income tax expense
    
    
    (34,713
    )
    
    
    (26
    )Non-controlling interest in income (loss) of subsidiaries
    
    
    (3,804
    )
    
    
    1,083Accumulated dividends on preferred stock of subsidiary
    
    
    
    
    
    
    2,150Amortization of debt issuance costs
    
    
    1,379
    
    
    
    1,659Amortization of original issuance discount
    
    
    393
    
    
    
    Write-off of unamortized debt issuance costs
    
    
    6,659
    
    
    
    Mark-to-market of heating oil crack spread hedge
    
    
    
    
    
    
    (21,334
    )Changes in operating assets and liabilities:Accounts and other receivables, net
    
    
    8,180
    
    
    
    14,879Income tax receivable
    
    
    34,655
    
    
    
    112,952Inventories
    
    
    (7,988
    )
    
    
    (105,412
    )Prepaid expenses and other current assets
    
    
    (7,634
    )
    
    
    (10,225
    )Other assets
    
    
    (9,257
    )
    
    
    13,454Accounts payable
    
    
    (8,927
    )
    
    
    73,062Accrued liabilities
    
    
    6,803
    
    
    
    (1,624
    )Other non-current liabilities
    
    
    (339
    )
    
    
    (953
    )Net cash provided by (used in) operating activities
    
    
    (40,979
    )
    
    
    119,527Cash flows from investing activities:Capital expenditures
    
    
    (7,303
    )
    
    
    (10,357
    )Capital expenditures to rebuild the Big Spring refinery
    
    
    
    
    
    
    (32,135
    )Capital expenditures for turnarounds and catalysts
    
    
    (10,009
    )
    
    
    (7,363
    )Proceeds from insurance to rebuild Big Spring refinery
    
    
    
    
    
    
    34,125Proceeds from sale of securities
    
    
    22,760
    
    
    
    Escrow deposit for purchase of Bakersfield refinery
    
    
    (10,000
    )
    
    
    Earnout payment related to Krotz Springs refinery acquisition
    
    
    (2,188
    )
    
    
    Dividends from investment in investees (net of equity earnings)
    
    
    409
    
    
    
    721Net cash used in investing activities
    
    
    (6,331
    )
    
    
    (15,009
    )Cash flows from financing activities:Dividends paid to stockholders
    
    
    (2,167
    )
    
    
    (1,873
    )Dividends paid to non-controlling interest
    
    
    (144
    )
    
    
    (144
    )Deferred debt issuance costs
    
    
    (455
    )
    
    
    (1,436
    )Revolving credit facilities, net
    
    
    (45,065
    )
    
    
    (94,833
    )Addition to short-term debt
    
    
    65,000
    
    
    
    Payments on long-term debt
    
    
    (2,736
    )
    
    
    (6,393
    )Net cash provided by (used in) financing activities
    
    
    14,433
    
    
    
    (104,679
    )Net decrease in cash and cash equivalents
    
    
    (32,877
    )
    
    
    (161
    )Cash and cash equivalents, beginning of period
    
    
    40,437
    
    
    
    18,454Cash and cash equivalents, end of period
    
    $
    7,560
    
    
    $
    18,293Supplemental cash flow information:Cash paid for interest
    
    $
    11,979
    
    
    $
    23,583Cash paid (refunds received) for income tax
    
    $
    (34,668
    )
    
    $
    (113,474
    )
  3




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ALON USA ENERGY, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (unaudited, dollars in thousands except as noted)
 (1) Basis of Presentation and Certain Significant Accounting Policies
 (a) Basis of Presentation
   (b) Revenue Recognition
   (c) New Accounting Standards
 Subsequent Event (Topic 855) Subsequent Events
 Improving Disclosures about Fair Value Fair Value Measurements and Disclosure
 (d) Reclassifications
  4




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
 (2) Segment Data
  (a) Refining and Unbranded Marketing Segment
  (b) Asphalt Segment
  (c) Retail and Branded Marketing Segment
  (d) Corporate
  5




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
  Refining and
    
    
    
    
    
    Retail andUnbranded
    
    
    
    
    
    Branded
    
    
    
    
    
    ConsolidatedThree Months ended March 31, 2010
    
    Marketing
    
    Asphalt
    
    Marketing
    
    Corporate
    
    TotalNet sales to external customers
    
    $
    286,144
    
    
    $
    67,141
    
    
    $
    226,028
    
    
    $
    
    
    
    $
    579,313Intersegment sales/purchases
    
    
    196,896
    
    
    
    (51,059
    )
    
    
    (145,837
    )
    
    
    
    
    
    
    Depreciation and amortization
    
    
    20,954
    
    
    
    1,717
    
    
    
    3,420
    
    
    
    231
    
    
    
    26,322Operating loss
    
    
    (58,518
    )
    
    
    (18,179
    )
    
    
    (1,859
    )
    
    
    (419
    )
    
    
    (78,975
    )Total assets
    
    
    1,686,285
    
    
    
    191,198
    
    
    
    189,952
    
    
    
    16,211
    
    
    
    2,083,646Turnaround, chemical catalyst and
capital expenditures
    
    
    16,321
    
    
    
    179
    
    
    
    397
    
    
    
    415
    
    
    
    17,312
 Refining and
    
    
    
    
    
    Retail andUnbranded
    
    
    
    
    
    Branded
    
    
    
    
    
    ConsolidatedThree Months ended March 31, 2009
    
    Marketing
    
    Asphalt
    
    Marketing
    
    Corporate
    
    TotalNet sales to external customers
    
    $
    503,950
    
    
    $
    50,760
    
    
    $
    167,470
    
    
    $
    
    
    
    $
    722,180Intersegment sales/purchases
    
    
    129,347
    
    
    
    (44,528
    )
    
    
    (84,819
    )
    
    
    
    
    
    
    Depreciation and amortization
    
    
    16,877
    
    
    
    1,698
    
    
    
    3,368
    
    
    
    147
    
    
    
    22,090Operating income (loss)
    
    
    81,359
    
    
    
    (22,818
    )
    
    
    1,377
    
    
    
    (337
    )
    
    
    59,581Total assets
    
    
    1,965,849
    
    
    
    237,401
    
    
    
    190,320
    
    
    
    14,224
    
    
    
    2,407,794Capital expenditures to rebuild the
Big Spring refinery
    
    
    32,135
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,135Turnaround, chemical catalyst and
capital expenditures
    
    
    16,761
    
    
    
    162
    
    
    
    219
    
    
    
    578
    
    
    
    17,720
   (3) Fair Value
   6




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
  Quoted Prices in
    
    SignificantActive Markets
    
    Other
    
    Significantfor Identical
    
    Observable
    
    UnobservableLiabilities
    
    Inputs
    
    Inputs
    
    Consolidated(Level 1)
    
    (Level 2)
    
    (Level 3)
    
    TotalThree Months ended March 31, 2010Liabilities:Futures and forwards
    
    $
    300
    
    
    $
    
    
    
    $
    
    
    
    $
    300Commodity swaps
    
    
    
    
    
    
    9,983
    
    
    
    
    
    
    
    9,983Interest rate swaps
    
    
    
    
    
    
    15,364
    
    
    
    
    
    
    
    15,364Year ended December 31, 2009Assets:Futures and forwards
    
    $
    322
    
    
    $
    
    
    
    $
    
    
    
    $
    322Commodity swaps
    
    
    
    
    
    
    89
    
    
    
    
    
    
    
    89Liabilities:Commodity swaps
    
    
    
    
    
    $
    9,983
    
    
    
    
    
    
    
    9,983Interest rate swaps
    
    
    
    
    
    
    16,933
    
    
    
    
    
    
    
    16,933
 (4) Derivative Financial Instruments
 Commodity Derivatives  Mark to Market
       7




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
  Cash Flow Hedges
  Interest Rate Derivatives.
   Commodity Derivatives.
  8




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
  March 31,
    
    
    December 31,Counterparty Credit Quality (1)
    
    2010
    
    
    2009AAA
    
    $
    
    
    
    $
    322AA
    
    
    (6,404
    )
    
    
    (17,856
    )A
    
    
    (19,243
    )
    
    
    (8,971
    )Lower than A
    
    
    
    
    
    
    Total
    
    $
    (25,647
    )
    
    $
    (26,505
    )
 
 (1)
    
    As determined by nationally recognized statistical ratings organizations.  As of March 31, 2010Asset Derivatives
    
    
    Liability DerivativesBalance Sheet
    
    
    
    
    
    
    Balance SheetLocation
    
    
    Fair Value
    
    
    Location
    
    
    Fair ValueDerivatives
not designated as
hedging instruments:Commodity contracts
(futures, forwards
and SPR swaps)
    
    Accounts receivable
    
    $
    (158
    )
    
    Accrued liabilities
    
    $
    (6,138
    )Commodity contracts
(futures, forwards
and SPR swaps)
    
    
    
    
    
    
    
    
    
    Non-current liabilities
    
    
    (3,987
    )Total derivatives
not designated as
hedging instruments
    
    
    
    
    
    $
    (158
    )
    
    
    
    
    
    $
    (10,125
    )Derivatives
designated as
hedging instruments:Interest rate swaps
    
    
    
    
    
    $
    
    
    
    Other non-current liabilities
    
    $
    (15,364
    )Total derivatives
designated as
hedging instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,364
    )Total derivatives
    
    
    
    
    
    $
    (158
    )
    
    
    
    
    
    $
    (25,489
    )
 As of December 31, 2009Asset Derivatives
    
    
    Liability DerivativesBalance Sheet
    
    
    
    
    
    
    Balance SheetLocation
    
    
    Fair Value
    
    
    Location
    
    
    Fair ValueDerivatives
not designated as
hedging instruments:Commodity contracts
(futures, forwards
and SPR swaps)
    
    Accounts receivable
    
    $
    411
    
    
    Accrued liabilities
    
    $
    (9,983
    )Total derivatives
not designated as
hedging instruments
    
    
    
    
    
    $
    411
    
    
    
    
    
    
    $
    (9,983
    )Derivatives
designated as
hedging instruments:Interest rate swaps
    
    
    
    
    
    $
    
    
    
    Other non-current liabilities
    
    $
    (16,933
    )Total derivatives
designated as
hedging instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,933
    )Total derivatives
    
    
    
    
    
    $
    411
    
    
    
    
    
    
    $
    (26,916
    )
 9




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
  Gain (Loss) Reclassified fromAccumulated OCI into IncomeGain (Loss)
    
    
    Gain (Loss) Reclassified from
    
    
    (Ineffective Portion and AmountRecognized in
    
    
    Accumulated OCI into Income
    
    
    Excluded from EffectivenessCash Flow Hedging Relationships
    
    OCI
    
    
    (Effective Portion)
    
    
    Testing)Location
    
    
    Amount
    
    
    Location
    
    
    AmountFor the Three Months Ended March 31, 2010Commodity swaps (heating oil
swaps)
    
    $
    
    
    
    Cost of sales
    
    $
    (598
    )
    
    
    
    
    
    $
    Interest rate swaps
    
    
    1,569
    
    
    Interest expense
    
    
    (3,558
    )
    
    
    
    
    
    
    Total derivatives
    
    $
    1,569
    
    
    
    
    
    
    $
    (4,156
    )
    
    
    
    
    
    $
    
 Gain (Loss) Reclassified fromAccumulated OCI into IncomeGain (Loss)
    
    
    Gain (Loss) Reclassified from
    
    
    (Ineffective Portion and AmountRecognized in
    
    
    Accumulated OCI into Income
    
    
    Excluded from EffectivenessCash Flow Hedging Relationships
    
    OCI
    
    
    (Effective Portion)
    
    
    Testing)Location
    
    
    Amount
    
    
    Location
    
    
    AmountFor the Three Months Ended March 31, 2009Commodity swaps (heating oil
swaps)
    
    $
    
    
    
    Cost of sales
    
    $
    946
    
    
    
    
    
    
    $
    Interest rate swaps
    
    
    1,037
    
    
    Interest expense
    
    
    (3,446
    )
    
    
    
    
    
    
    Total derivatives
    
    $
    1,037
    
    
    
    
    
    
    $
    (2,500
    )
    
    
    
    
    
    $
    
 Derivatives not designated as hedging instruments:
 Gain (Loss) Recognized in IncomeLocation
    
    
    AmountFor the Three Months Ended March 31, 2010Commodity contracts (futures & forwards)
    
    Cost of sales
    
    $
    1,473Commodity contracts (heating oil swaps)
    
    Cost of sales
    
    
    (106
    )Commodity contracts (SPR swaps)
    
    Cost of sales
    
    
    Total derivatives
    
    
    
    
    
    $
    1,367
 Gain (Loss) Recognized in IncomeLocation
    
    
    AmountFor the Three Months Ended March 31, 2009Commodity contracts (futures & forwards)
    
    Cost of sales
    
    $
    (489
    )Commodity contracts (heating oil swaps)
    
    Cost of sales
    
    
    40,712Commodity contracts (SPR swaps)
    
    Cost of sales
    
    
    (900
    )Total derivatives
    
    
    
    
    
    $
    39,323
 (5) Inventories
  10




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
  March 31,
    
    
    December 31,2010
    
    
    2009Crude oil, refined products, asphalt and blendstocks
    
    $
    159,454
    
    
    $
    150,370Crude oil, inventory consigned to others
    
    
    23,012
    
    
    
    22,558Materials and supplies
    
    
    18,469
    
    
    
    18,069Store merchandise
    
    
    16,656
    
    
    
    18,856Store fuel
    
    
    5,396
    
    
    
    5,146Total inventories
    
    $
    222,987
    
    
    $
    214,999
   (6) Property, Plant and Equipment, Net
  March 31,
    
    
    December 31,2010
    
    
    2009Refining facilities
    
    $
    1,539,530
    
    
    $
    1,535,841Pipelines and terminals
    
    
    39,213
    
    
    
    39,213Retail
    
    
    137,519
    
    
    
    137,150Other
    
    
    15,731
    
    
    
    16,747Property, plant and equipment, gross
    
    
    1,731,993
    
    
    
    1,728,951Less accumulated depreciation
    
    
    (273,346
    )
    
    
    (251,525
    )Property, plant and equipment, net
    
    $
    1,458,647
    
    
    $
    1,477,426
 (7) Additional Financial Information
  (a) Other Assets
 March 31,
    
    
    December 31,2010
    
    
    2009Deferred turnaround and chemical catalyst cost
    
    $
    29,954
    
    
    $
    24,387Environmental receivables
    
    
    3,946
    
    
    
    3,448Deferred debt issuance costs
    
    
    18,239
    
    
    
    25,822Intangible assets
    
    
    8,313
    
    
    
    8,516Other
    
    
    7,549
    
    
    
    8,359Total other assets
    
    $
    68,001
    
    
    $
    70,532
  11




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
 (b) Accrued Liabilities and Other Non-Current Liabilities
 March 31,
    
    
    December 31,2010
    
    
    2009Accrued Liabilities:Taxes other than income taxes, primarily excise taxes
    
    $
    20,268
    
    
    $
    20,205Employee costs
    
    
    6,117
    
    
    
    6,716Commodity swaps
    
    
    6,138
    
    
    
    9,983Valero earnout liability
    
    
    8,750
    
    
    
    8,750Other
    
    
    45,814
    
    
    
    46,726Total accrued liabilities
    
    $
    87,087
    
    
    $
    92,380Other Non-Current Liabilities:Pension and other postemployment benefit liabilities, net
    
    $
    35,611
    
    
    $
    34,902Environmental accrual (Note 16)
    
    
    26,335
    
    
    
    27,350Asset retirement obligations
    
    
    8,853
    
    
    
    8,789Interest rate swap valuations
    
    
    15,364
    
    
    
    16,933Valero earnout liability
    
    
    4,374
    
    
    
    6,562Commodity swaps
    
    
    3,987
    
    
    
    Other
    
    
    2,131
    
    
    
    540Total other non-current liabilities
    
    $
    96,655
    
    
    $
    95,076
 (c) Comprehensive Income
  Three Months EndedMarch 31,2010
    
    
    2009Income (loss) before non-controlling interest in income
(loss) of subsidiaries and accumulated dividends on preferred
stock of subsidiary
    
    $
    (56,746
    )
    
    $
    20,584Other comprehensive gain (loss), net of tax:Unrealized gain (loss) on cash flow hedges, net of tax
    
    
    1,397
    
    
    
    (272
    )Total other comprehensive income (loss), net of tax
    
    
    1,397
    
    
    
    (272
    )Comprehensive income (loss)
    
    
    (55,349
    )
    
    
    20,312Comprehensive income attributable to non-controlling
interest (including accumulated dividends on preferred
shares of subsidiary)
    
    
    (3,761
    )
    
    
    3,214Comprehensive income attributable to common stockholders
    
    $
    (51,588
    )
    
    $
    17,098
  March 31,
    
    
    December 31,2010
    
    
    2009Unrealized losses on cash flow hedges, net of tax
    
    $
    (14,541
    )
    
    $
    (15,895
    )Pension and post-employment benefits, net of tax
    
    
    (16,976
    )
    
    
    (16,976
    )Accumulated other comprehensive loss, net of tax
    
    $
    (31,517
    )
    
    $
    (32,871
    )
 (8) Postretirement Benefits
  12




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
   For the Three Months EndedMarch 31,2010
    
    
    2009Components of net periodic benefit cost:Service cost
    
    $
    1,018
    
    
    $
    837Interest cost
    
    
    946
    
    
    
    841Expected return on plan assets
    
    
    (905
    )
    
    
    (840
    )Amortization of net loss
    
    
    386
    
    
    
    263Net periodic benefit cost
    
    $
    1,445
    
    
    $
    1,101
 (9) Long-Term Debt
  March 31,
    
    
    December 31,2010
    
    
    2009Term loan credit facilities
    
    $
    498,125
    
    
    $
    434,250Revolving credit facilities
    
    
    171,512
    
    
    
    216,577Senior secured notes
    
    
    206,086
    
    
    
    205,693Retail credit facilities
    
    
    78,893
    
    
    
    80,504Total debt
    
    
    954,616
    
    
    
    937,024Less short-term debt and current portion of long-term debt
    
    
    (75,946
    )
    
    
    (10,946
    )Total long-term debt
    
    $
    878,670
    
    
    $
    926,078
 (a) Alon USA Energy, Inc. Credit Facilities
 Term Loan Credit Facility
     13




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
 Letters of Credit Facility.
  (b) Alon USA LP Credit Facility
 Revolving Credit Facility.
     (c) Paramount Petroleum Corporation Credit Facility
 Revolving Credit Facility.
     (d) Alon Refining Krotz Springs, Inc. Credit Facilities
 Senior Secured Notes.
 14




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
       Bridge Facility.
     Revolving Credit Facility.
  (e) Retail Credit Facilities
   15




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
    (f) Other Retail Related Credit Facilities
  (10) Stock-Based Compensation
  (a) Amended and Restated 2005 Incentive Compensation Plan (share value in
dollars)
  Restricted Stock
  16




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
  WeightedAverageGrant DateNonvested
Shares
    
    Shares
    
    
    Fair ValuesNon-vested at January 1, 2009
    
    
    7,662
    
    
    $
    19.58Granted
    
    
    5,841
    
    
    
    12.84Vested
    
    
    (3,277
    )
    
    
    22.89Forfeited
    
    
    
    
    
    
    Non-vested at December 31, 2009
    
    
    10,226
    
    
    $
    14.67Granted
    
    
    
    
    
    
    Vested
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Non-vested at March 31, 2010
    
    
    10,226
    
    
    $
    14.67
  Stock Appreciation Rights.
       17




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
 (b) 2000 Incentive Stock Compensation Plan
   Alon Assets
    
    
    Alon OperatingWeighted
    
    
    
    
    
    
    WeightedNumber of
    
    
    Average
    
    
    Number of
    
    
    AverageOptions
    
    
    Exercise
    
    
    Options
    
    
    ExerciseOutstanding
    
    
    Price
    
    
    Outstanding
    
    
    PriceOutstanding at January 1, 2009
    
    
    2,793
    
    
    $
    100
    
    
    
    1,049
    
    
    $
    100Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited and expired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at December 31, 2009
    
    
    2,793
    
    
    $
    100
    
    
    
    1,049
    
    
    $
    100Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited and expired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at March 31, 2010
    
    
    2,793
    
    
    $
    100
    
    
    
    1,049
    
    
    $
    100
  (11) Stockholders Equity (per share in dollars)
 Common Stock Dividends
  (12) Earnings (Loss) Per Share (earnings per share in dollars)
  18




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
  Three Months EndedMarch 31,2010
    
    
    2009Net income (loss)
    
    $
    (52,942
    )
    
    $
    17,351Average number of shares of common stock outstanding
    
    
    54,161
    
    
    
    46,806Dilutive restricted shares, SARs and conversion of preferred shares
    
    
    
    
    
    
    5,562Average number of shares of common stock outstanding assuming dilution
    
    
    54,161
    
    
    
    52,368Earnings (loss) per share  basic
    
    $
    (0.98
    )
    
    $
    0.37Earnings (loss) per share  diluted *
    
    $
    (0.98
    )
    
    $
    0.37
 
 *
    
    For the purpose of adjusting net income (loss) in the calculation of diluted earnings (loss)
per share issued by Alons subsidiaries, the effect for the three months ended March 31, 2009
was $193, but for the three months ended March 31, 2010, the effect is anti-dilutive and
therefore excluded from the calculation. Additionally, net income for the three months ended
March 31, 2009 was adjusted $1,996 for preferred stock dividends that would no longer be paid
if the preferred stock was converted to shares of common stock. (13) Big Spring Refinery Fire
   (14) Bakersfield Refinery
    (15) Related Party Transactions
 Sale of Preferred Shares
  19




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
     Sale of HEP Units
   (16) Commitments and Contingencies
 (a) Commitments
  Offtake Agreement with Valero
  20




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
 Earnout Settlement with Valero
  (b) Contingencies
  (c) Environmental
      21




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
 (17) Subsequent Event
 Dividend Declared
  Alon Refining Krotz Springs Inventory Financing Arrangement
  22




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ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 The following discussion of our financial condition and results of operations should be read
in conjunction with the audited consolidated financial statements and notes thereto included in our
Annual Report on Form 10-K for the year ended December 31, 2009. In this document, the words
Alon, the Company, we and our refer to Alon USA Energy, Inc. and its subsidiaries.
 
 Forward-Looking Statements
    
    
    changes in general economic conditions and capital markets;
    
    changes in the underlying demand for our products;
    
    the availability, costs and price volatility of crude oil, other refinery feedstocks
and refined products;
    
    changes in the sweet/sour spread;
    
    changes in the light/heavy spread;
    
    the effects of transactions involving forward contracts and derivative instruments;
    
    actions of customers and competitors;
    
    changes in fuel and utility costs incurred by our facilities;
    
    disruptions due to equipment interruption, pipeline disruptions or failure at our or
third-party facilities;
    
    the execution of planned capital projects;
    
    adverse changes in the credit ratings assigned to our trade credit and debt
instruments;
    
    the effects of and cost of compliance with current and future state and federal
environmental, economic, safety and other laws, policies and regulations;
    
    operating hazards, natural disasters, casualty losses and other matters beyond our
control;
    
    the global financial crisis impact on our business and financial condition; and
    
    the other factors discussed in our Annual Report on Form 10-K for the year ended
December 31, 2009 under the caption Risk Factors.
 23




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Company Overview
  Refining and Unbranded Marketing Segment
    Asphalt Segment
 Retail and Branded Marketing Segment
 24




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First Quarter Operational and Financial Highlights
  
    
    The Big Spring refinery and California refineries combined throughput for the first
quarter of 2010, averaged 61,047 bpd, consisting of 42,784 bpd at the Big Spring refinery
and 18,263 bpd at the California refineries compared to a combined average of 93,178 bpd in
the first quarter of 2009, consisting of 64,417 bpd at the Big Spring refinery and 28,761
bpd at the California refineries. There was no throughput at the Krotz Springs refinery in
the first quarter of 2010 due to turnaround work. Throughput at the Krotz Springs refinery
for the first quarter of 2009 was 53,712 bpd.
    
    Refinery operating margin at the Big Spring refinery was $4.91 per barrel for the first
quarter of 2010, compared to $13.63 per barrel for the same period in 2009. This decrease
was primarily due to lower Gulf Coast 3/2/1 crack spreads.
    
    Refinery operating margin at the California refineries was ($0.42) per barrel for the
first quarter of 2010, compared to $1.21 per barrel for the same period in 2009. This
decrease primarily resulted from lower West Coast 3/2/1 crack spreads.
    
    Asphalt margins for the first quarter of 2010, increased to an average of ($28.50) per
ton compared to ($51.48) per ton for the first quarter of 2009. The average blended
asphalt sales price increased 47.5% from $314.16 per ton in the first quarter of 2009 to
$463.53 per ton in the first quarter of 2010, and the average non-blended asphalt sales
price increased 169.8% from $123.73 per ton in the first quarter of 2009 to $333.82 per ton
in the first quarter of 2010. Blended asphalt sales accounted for 89.1% of total asphalt
sales in the first quarter of 2010.
    
    On March 31, 2010, Alon paid a regular quarterly cash dividend of $0.04 per share on
Alons common stock to stockholders of record at the close of business on March 15, 2010.
 Major Influences on Results of Operations
 Refining and Unbranded Marketing
 25




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26




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##### Table of Contents



Asphalt
 Retail and Branded Marketing
 Factors Affecting Comparability
   Results of Operations
 Net Sales
  Cost of Sales
 Direct Operating Expenses
 27




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Selling, General and Administrative Expenses
 28




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ALON USA ENERGY, INC. AND SUBSIDIARIES CONSOLIDATED
 Summary Financial Tables
 For the Three Months EndedMarch 31,2010
    
    
    2009(dollars in thousands, except pershare data)STATEMENT OF OPERATIONS DATA:Net sales (1)
    
    $
    579,313
    
    
    $
    722,180Operating costs and expenses:Cost of sales
    
    
    538,715
    
    
    
    539,730Direct operating expenses
    
    
    61,444
    
    
    
    68,864Selling, general and administrative expenses (2)
    
    
    31,807
    
    
    
    31,915Depreciation and amortization (3)
    
    
    26,322
    
    
    
    22,090Total operating costs and expenses
    
    
    658,288
    
    
    
    662,599Operating income (loss)
    
    
    (78,975
    )
    
    
    59,581Interest expense (4)
    
    
    (26,585
    )
    
    
    (28,256
    )Equity losses of investees
    
    
    (103
    )
    
    
    (3
    )Other income, net (5)
    
    
    14,204
    
    
    
    257Income (loss) before income tax expense (benefit),
non-controlling interest in income (loss) of
subsidiaries and accumulated dividends on preferred
stock of subsidiary
    
    
    (91,459
    )
    
    
    31,579Income tax expense (benefit)
    
    
    (34,713
    )
    
    
    10,995Income (loss) before non-controlling interest in income
(loss) of subsidiaries and accumulated dividends on
preferred stock of subsidiary
    
    
    (56,746
    )
    
    
    20,584Non-controlling interest in income (loss) of subsidiaries
    
    
    (3,804
    )
    
    
    1,083Accumulated dividends on preferred stock of subsidiary
    
    
    
    
    
    
    2,150Net income (loss) available to common stockholders
    
    $
    (52,942
    )
    
    $
    17,351Earnings (loss) per share, basic and diluted
    
    $
    (0.98
    )
    
    $
    0.37Weighted average shares outstanding, basic (in thousands)
    
    
    54,161
    
    
    
    46,806Cash dividends per share
    
    $
    0.04
    
    
    $
    0.04CASH FLOW DATA:Net cash provided by (used in):Operating activities
    
    $
    (40,979
    )
    
    $
    119,527Investing activities
    
    
    (6,331
    )
    
    
    (15,009
    )Financing activities
    
    
    14,433
    
    
    
    (104,679
    )OTHER DATA:Adjusted EBITDA (6)
    
    
    (38,552
    )
    
    
    81,925Capital expenditures (7)
    
    
    7,303
    
    
    
    10,357Capital expenditures to rebuild the Big Spring refinery
    
    
    
    
    
    
    32,135Capital expenditures for turnaround and chemical catalyst
    
    
    10,009
    
    
    
    7,363
 29




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March 31,
    
    December 31,2010
    
    2009BALANCE SHEET DATA (end of period):Cash and cash equivalents
    
    $
    7,560
    
    
    $
    40,437Working capital
    
    
    29,198
    
    
    
    84,257Total assets
    
    
    2,083,646
    
    
    
    2,132,789Total debt
    
    
    954,616
    
    
    
    937,024Total equity
    
    
    377,055
    
    
    
    431,918
 
 (1)
    
    Includes excise taxes on sales by the retail and branded marketing segment of $12,786 and
$11,044 for the three months ended March 31, 2010, and 2009, respectively.(2)
    
    Includes corporate headquarters selling, general and administrative expenses of $188 and $190
for the three months ended March 31, 2010, and 2009, respectively, which are not allocated to
our three operating segments.(3)
    
    Includes corporate depreciation and amortization of $231 and $147 for the three months ended
March 31, 2010, and 2009, respectively, which are not allocated to our three operating
segments.(4)
    
    Interest expense of $26,585 for the three months ended March 31, 2010, includes a charge of
$6,659 for the write-off of debt issuance costs associated with our prepayment of the Alon
Refining Krotz Springs, Inc. revolving credit facility. Interest expense of $28,256 for the
three months ended March 31, 2009, includes $5,715 related to the unwind of the heating oil
crack spread hedge.(5)
    
    In the first quarter of 2010, we sold approximately two thirds of our investment in Holly
Energy Partners for $22,760, resulting in a gain of $8,047. Subsequently, we marked-to-market
our remaining investment, resulting in an unrealized gain of $6,291.(6)
    
    Adjusted EBITDA represents earnings before non-controlling interest in income of
subsidiaries, income tax expense, interest expense, depreciation and amortization and gain on
disposition of assets. Adjusted EBITDA is not a recognized measurement under GAAP; however,
the amounts included in Adjusted EBITDA are derived from amounts included in our consolidated
financial statements. Our management believes that the presentation of Adjusted EBITDA is
useful to investors because it is frequently used by securities analysts, investors, and other
interested parties in the evaluation of companies in our industry. In addition, our
management believes that Adjusted EBITDA is useful in evaluating our operating performance
compared to that of other companies in our industry because the calculation of Adjusted EBITDA
generally eliminates the effects of non-controlling interest in income of subsidiaries, income
tax expense, interest expense, gain on disposition of assets and the accounting effects of
capital expenditures and acquisitions, items that may vary for different companies for reasons
unrelated to overall operating performance.Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in
isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these
limitations are: 
    
    Adjusted EBITDA does not reflect our cash expenditures or future requirements for
capital expenditures or contractual commitments;
    
    Adjusted EBITDA does not reflect the interest expense or the cash requirements
necessary to service interest or principal payments on our debt;
    
    Adjusted EBITDA does not reflect the prior claim that non-controlling interest
have on the income generated by non-wholly-owned subsidiaries;
    
    Adjusted EBITDA does not reflect changes in or cash requirements for our working
capital needs; and
 30




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
    
    Our calculation of Adjusted EBITDA may differ from EBITDA calculations of other
companies in our industry, limiting its usefulness as a comparative measure.
   For the Three Months EndedMarch 31,2010
    
    
    2009(dollars in thousands)Net income (loss) available to common stockholders
    
    $
    (52,942
    )
    
    $
    17,351Non-controlling interest in income (loss) of
subsidiaries (including accumulated dividends on
preferred stock of subsidiary)
    
    
    (3,804
    )
    
    
    3,233Income tax expense (benefit)
    
    
    (34,713
    )
    
    
    10,995Interest expense
    
    
    26,585
    
    
    
    28,256Depreciation and amortization
    
    
    26,322
    
    
    
    22,090Adjusted EBITDA
    
    $
    (38,552
    )
    
    $
    81,925
 
 (7)
    
    Includes corporate capital expenditures of $415 and
$578 for the three months ended March 31, 2010, and
2009, respectively, which are not allocated to our three
operating segments. 31




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REFINING AND UNBRANDED MARKETING SEGMENT
 For the Three Months EndedMarch 31,2010
    
    
    2009(dollars in thousands, except perbarrel data and pricing statistics)STATEMENTS OF OPERATIONS DATA:Net sales (1)
    
    $
    483,040
    
    
    $
    633,297Operating costs and expenses:Cost of sales
    
    
    463,864
    
    
    
    469,363Direct operating expenses
    
    
    50,352
    
    
    
    58,371Selling, general and administrative expenses
    
    
    6,388
    
    
    
    7,327Depreciation and amortization
    
    
    20,954
    
    
    
    16,877Total operating costs and expenses
    
    
    541,558
    
    
    
    551,938Operating income (loss)
    
    $
    (58,518
    )
    
    $
    81,359KEY OPERATING STATISTICS:Total unbranded sales volume (bpd)
    
    
    36,280
    
    
    
    122,459Per barrel of throughput:Refinery operating margin  Big Spring (2)
    
    $
    4.91
    
    
    $
    13.63Refinery operating margin  CA Refineries (2)
    
    
    (0.42
    )
    
    
    1.21Refinery operating margin  Krotz Springs (2)
    
    
    N/A
    
    
    
    13.19Refinery direct operating expenses  Big Spring (3)
    
    
    6.57
    
    
    
    3.60Refinery direct operating expenses  CA Refineries (3)
    
    
    8.82
    
    
    
    5.84Refinery direct operating expenses  Krotz Springs (3)
    
    
    N/A
    
    
    
    4.63Capital expenditures
    
    $
    6,312
    
    
    $
    9,398Capital expenditures to rebuild Big Spring refinery
    
    
    
    
    
    
    32,135Capital expenditures for turnaround and chemical catalyst
    
    
    10,009
    
    
    
    7,363PRICING STATISTICS:WTI crude oil (per barrel)
    
    $
    78.75
    
    
    $
    43.10WTS crude oil (per barrel)
    
    
    76.87
    
    
    
    42.16MAYA crude oil (per barrel)
    
    
    69.84
    
    
    
    38.58Crack spreads (3/2/1) (per barrel):Gulf Coast
    
    $
    7.09
    
    
    $
    9.65Group III
    
    
    6.75
    
    
    
    9.72West Coast
    
    
    10.12
    
    
    
    17.92Crack spreads (6/1/2/3) (per barrel):West Coast
    
    $
    1.45
    
    
    $
    6.21Crack spreads (2/1/1) (per barrel):Gulf Coast high sulfur diesel
    
    $
    6.25
    
    
    $
    9.48Crude oil differentials (per barrel):WTI less WTS
    
    $
    1.88
    
    
    $
    0.94WTI less MAYA
    
    
    8.91
    
    
    
    4.52Product price (dollars per gallon):Gulf Coast unleaded gasoline
    
    $
    2.040
    
    
    $
    1.218Gulf Coast ultra low-sulfur diesel
    
    
    2.052
    
    
    
    1.331Gulf Coast high sulfur diesel
    
    
    2.008
    
    
    
    1.285Group III unleaded gasoline
    
    
    2.036
    
    
    
    1.232Group III ultra low-sulfur diesel
    
    
    2.035
    
    
    
    1.309West Coast LA CARBOB (unleaded gasoline)
    
    
    2.136
    
    
    
    1.505West Coast LA ultra low-sulfur diesel
    
    
    2.076
    
    
    
    1.349Natural gas (per MMBTU)
    
    $
    4.99
    
    
    $
    4.47
 32




---



##### Table of Contents



THROUGHPUT AND YIELD DATA:
BIG SPRING
 For the Three Months EndedMarch 31,2010
    
    
    2009bpd
    
    
    %
    
    
    bpd
    
    
    %Refinery throughput:Sour crude
    
    
    35,978
    
    
    
    84.1
    
    
    
    55,452
    
    
    
    86.1Sweet crude
    
    
    5,258
    
    
    
    12.3
    
    
    
    7,864
    
    
    
    12.2Blendstocks
    
    
    1,548
    
    
    
    3.6
    
    
    
    1,101
    
    
    
    1.7Total refinery throughput (4)
    
    
    42,784
    
    
    
    100.0
    
    
    
    64,417
    
    
    
    100.0Refinery production:Gasoline
    
    
    20,618
    
    
    
    48.9
    
    
    
    28,265
    
    
    
    44.9Diesel/jet
    
    
    13,743
    
    
    
    32.6
    
    
    
    21,737
    
    
    
    34.5Asphalt
    
    
    2,359
    
    
    
    5.6
    
    
    
    5,228
    
    
    
    8.3Petrochemicals
    
    
    2,021
    
    
    
    4.8
    
    
    
    3,026
    
    
    
    4.8Other
    
    
    3,396
    
    
    
    8.1
    
    
    
    4,672
    
    
    
    7.5Total refinery production (5)
    
    
    42,137
    
    
    
    100.0
    
    
    
    62,928
    
    
    
    100.0Refinery utilization (6)
    
    
    
    
    
    
    64.8
    %
    
    
    
    
    
    
    90.5
    %
 THROUGHPUT AND YIELD DATA:
CALIFORNIA REFINERIES
 For the Three Months EndedMarch 31,2010
    
    
    2009bpd
    
    
    %
    
    
    bpd
    
    
    %Refinery throughput:Sour crude
    
    
    4,106
    
    
    
    22.5
    
    
    
    12,225
    
    
    
    42.5Heavy crude
    
    
    13,740
    
    
    
    75.2
    
    
    
    16,498
    
    
    
    57.4Blendstocks
    
    
    417
    
    
    
    2.3
    
    
    
    38
    
    
    
    0.1Total refinery throughput (4)
    
    
    18,263
    
    
    
    100.0
    
    
    
    28,761
    
    
    
    100.0Refinery production:Gasoline
    
    
    2,469
    
    
    
    14.0
    
    
    
    3,266
    
    
    
    11.5Diesel/jet
    
    
    3,370
    
    
    
    19.1
    
    
    
    6,215
    
    
    
    22.0Asphalt
    
    
    6,163
    
    
    
    34.9
    
    
    
    8,735
    
    
    
    30.9Light unfinished
    
    
    
    
    
    
    
    
    
    
    1,909
    
    
    
    6.7Heavy unfinished
    
    
    5,259
    
    
    
    29.8
    
    
    
    7,796
    
    
    
    27.6Other
    
    
    393
    
    
    
    2.2
    
    
    
    370
    
    
    
    1.3Total refinery production (5)
    
    
    17,654
    
    
    
    100.0
    
    
    
    28,291
    
    
    
    100.0Refinery utilization (6)
    
    
    
    
    
    
    24.6
    %
    
    
    
    
    
    
    58.5
    %
 THROUGHPUT AND YIELD DATA:
KROTZ SPRINGS
 For the Three Months EndedMarch 31,2010
    
    
    2009bpd
    
    
    %
    
    
    bpd
    
    
    %Refinery throughput:Light sweet crude
    
    
    
    
    
    
    
    
    
    
    27,423
    
    
    
    51.1Heavy sweet crude
    
    
    
    
    
    
    
    
    
    
    20,083
    
    
    
    37.4Blendstocks
    
    
    
    
    
    
    
    
    
    
    6,206
    
    
    
    11.5Total refinery throughput (4)
    
    
    
    
    
    
    
    
    
    
    53,712
    
    
    
    100.0Refinery production:Gasoline
    
    
    
    
    
    
    
    
    
    
    24,449
    
    
    
    44.7Diesel/jet
    
    
    
    
    
    
    
    
    
    
    24,468
    
    
    
    44.7Heavy oils
    
    
    
    
    
    
    
    
    
    
    887
    
    
    
    1.6Other
    
    
    
    
    
    
    
    
    
    
    4,885
    
    
    
    9.0Total refinery production (5)
    
    
    
    
    
    
    
    
    
    
    54,689
    
    
    
    100.0Refinery utilization (6)
    
    
    
    
    
    
    N/A
    
    
    
    
    
    
    
    57.2
    %
 33




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##### Table of Contents



(1)
    
    Net sales include intersegment sales to our asphalt and retail and branded marketing segments
at prices which approximate wholesale market price. These intersegment sales are eliminated
through consolidation of our financial statements.(2)
    
    Refinery operating margin is a per barrel measurement calculated by dividing the margin
between net sales and cost of sales (exclusive of substantial unrealized hedge positions)
attributable to each refinery by the refinerys throughput volumes. Industry-wide refining
results are driven and measured by the margins between refined product prices and the prices
for crude oil, which are referred to as crack spreads. We compare our refinery operating
margins to these crack spreads to assess our operating performance relative to other
participants in our industry. There were unrealized hedging gains of $18,026 for the Krotz
Springs refinery for the three months ended March 31, 2009.(3)
    
    Refinery direct operating expense is a per barrel measurement calculated by dividing direct
operating expenses at our Big Spring, California, and Krotz Springs refineries, exclusive of
depreciation and amortization, by the applicable refinerys total throughput volumes.(4)
    
    Total refinery throughput represents the total barrels per day of crude oil and blendstock
inputs in the refinery production process.(5)
    
    Total refinery production represents the barrels per day of various products produced from
processing crude and other refinery feedstocks through the crude units and other conversion
units at the refineries.(6)
    
    Refinery utilization represents average daily crude
oil throughput divided by crude oil capacity, excluding
planned periods of downtime for maintenance and
turnarounds. 34




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##### Table of Contents



ASPHALT SEGMENT
 For the Three Months EndedMarch 31,2010
    
    
    2009(dollars in thousands,except per ton data)STATEMENTS OF OPERATIONS DATA:Net sales
    
    $
    67,141
    
    
    $
    50,760Operating costs and expenses:Cost of sales (1)
    
    
    71,445
    
    
    
    60,233Direct operating expenses
    
    
    11,092
    
    
    
    10,493Selling, general and administrative expenses
    
    
    1,066
    
    
    
    1,154Depreciation and amortization
    
    
    1,717
    
    
    
    1,698Total operating costs and expenses
    
    
    85,320
    
    
    
    73,578Operating income (loss)
    
    $
    (18,179
    )
    
    $
    (22,818
    )KEY OPERATING STATISTICS:Blended asphalt sales volume (tons in thousands) (2)
    
    
    129
    
    
    
    147Non-blended asphalt sales volume (tons in thousands) (3)
    
    
    22
    
    
    
    37Blended asphalt sales price per ton (2)
    
    $
    463.53
    
    
    $
    314.16Non-blended asphalt sales price per ton (3)
    
    $
    333.82
    
    
    $
    123.73Asphalt margin per ton (4)
    
    $
    (28.50
    )
    
    $
    (51.48
    )Capital expenditures
    
    $
    179
    
    
    $
    162
 
 (1)
    
    Cost of sales includes intersegment purchases of asphalt blends from our refining and
unbranded marketing segment at prices which approximate wholesale market prices. These
intersegment purchases are eliminated through consolidation of our financial statements.(2)
    
    Blended asphalt represents base asphalt that has been blended with other materials necessary
to sell the asphalt as a finished product.(3)
    
    Non-blended asphalt represents base material asphalt and other components that require
additional blending before being sold as a finished product.(4)
    
    Asphalt margin is a per ton measurement calculated by
dividing the margin between net sales and cost of sales by
the total sales volume. Asphalt margins are used in the
asphalt industry to measure operating results related to
asphalt sales. 35




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##### Table of Contents



RETAIL AND BRANDED MARKETING SEGMENT
 For the Three Months EndedMarch 31,2010
    
    
    2009(dollars in thousands,except per gallon data)STATEMENTS OF OPERATIONS DATA:Net sales (1)
    
    $
    226,028
    
    
    $
    167,470Operating costs and expenses:Cost of sales (2)
    
    
    200,302
    
    
    
    139,481Selling, general and administrative expenses
    
    
    24,165
    
    
    
    23,244Depreciation and amortization
    
    
    3,420
    
    
    
    3,368Total operating costs and expenses
    
    
    227,887
    
    
    
    166,093Operating income (loss)
    
    $
    (1,859
    )
    
    $
    1,377KEY OPERATING STATISTICS:Branded fuel sales (thousands of gallons) (3)
    
    
    70,469
    
    
    
    66,792Branded fuel margin (cents per gallon) (3)
    
    
    4.2
    
    
    
    5.6Number of stores (end of period)
    
    
    308
    
    
    
    306Retail fuel sales (thousands of gallons)
    
    
    32,714
    
    
    
    28,283Retail fuel sales (thousands of gallons per site per month)
    
    
    35
    
    
    
    31Retail fuel margin (cents per gallon) (4)
    
    
    9.0
    
    
    
    14.2Retail fuel sales price (dollars per gallon) (5)
    
    $
    2.63
    
    
    $
    1.87Merchandise sales
    
    $
    63,482
    
    
    $
    63,053Merchandise sales (per site per month)
    
    
    69
    
    
    
    69Merchandise margin (6)
    
    
    30.0
    %
    
    
    31.7
    %Capital expenditures
    
    $
    397
    
    
    $
    219
 
 (1)
    
    Includes excise taxes on sales by the retail and branded marketing segment of $12,786 and
$11,044 for the three months ended March 31, 2010, and 2009, respectively. Net sales also
includes royalty and related net credit card fees of $773 and $266 for the three months ended
March 31, 2010, and 2009, respectively.(2)
    
    Cost of sales includes inter-segment purchases of motor fuels from our refining and unbranded
marketing segment at prices which approximate wholesale market prices. These inter-segment
purchases are eliminated through consolidation of our financial statements.(3)
    
    Marketing sales volume represents branded fuel sales to our wholesale marketing customers
that are primarily supplied by the Big Spring refinery. The branded fuels that are not
supplied by the Big Spring refinery are obtained from third-party suppliers. The marketing
margin represents the margin between the net sales and cost of sales attributable to our
branded fuel sales volume, expressed on a cents-per-gallon basis.(4)
    
    Retail fuel margin represents the difference between motor fuel sales revenue and the net
cost of purchased motor fuel, including transportation costs and associated motor fuel taxes,
expressed on a cents-per-gallon basis. Motor fuel margins are frequently used in the retail
industry to measure operating results related to motor fuel sales.(5)
    
    Retail fuel sales price per gallon represents the average sales price for motor fuels sold
through our retail convenience stores.(6)
    
    Merchandise margin represents the difference between merchandise sales revenues and the
delivered cost of merchandise purchases, net of rebates and commissions, expressed as a
percentage of merchandise sales revenues. Merchandise margins, also referred to as in-store
margins, are commonly used in the retail convenience store industry to measure in-store, or
non-fuel, operating results. 36




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##### Table of Contents



Three Months Ended March 31, 2010 Compared to the Three Months Ended March 31, 2009
 Net Sales
 Consolidated
 Refining and Unbranded Marketing Segment
   Asphalt Segment
 Retail and Branded Marketing Segment
 Cost of Sales
 Consolidated
 37




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##### Table of Contents



Refining and Unbranded Marketing Segment.
 Asphalt Segment
 Retail and Branded Marketing Segment.
 Direct Operating Expenses
 Consolidated
 Refining and Unbranded Marketing Segment.
 Asphalt Segment.
 Selling, General and Administrative Expenses
 Consolidated
 Refining and Unbranded Marketing Segment
 Asphalt Segment
 Retail and Branded Marketing Segment
 38




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##### Table of Contents



Depreciation and Amortization
  Operating Income
 Consolidated
 Refining and Unbranded Marketing Segment
   Asphalt Segment.
 Retail and Branded Marketing Segment.
 Interest Expense
  39




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##### Table of Contents



Income Tax Expense (Benefit)
  Non-Controlling Interest In Income (Loss) Of Subsidiaries
  Net Income (Loss) Available to Common Stockholders
  Liquidity and Capital Resources
      40




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##### Table of Contents



Cash Flows
  For the Three Months EndedMarch 31,2010
    
    
    2009(dollars in thousands)Cash provided by (used in):Operating activities
    
    $
    (40,979
    )
    
    $
    119,527Investing activities
    
    
    (6,331
    )
    
    
    (15,009
    )Financing activities
    
    
    14,433
    
    
    
    (104,679
    )Net decrease in cash and cash equivalents
    
    $
    (32,877
    )
    
    $
    (161
    )
 Cash Flows Provided By (Used In) Operating Activities
  Cash Flows Used In Investing Activities
  Cash Flows Provided by (Used In) Financing Activities
  Cash Position and Indebtedness
  41




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##### Table of Contents



Summary of Indebtedness and liquidity
 As of March 31, 2010(dollars in thousands)Amount Outstanding
    
    
    Total Facility
    
    
    Total Availability (1)(2)Term loan credit facilities
    
    $
    498,125
    
    
    $
    498,125
    
    
    $
    Revolving credit facilities
    
    
    171,512
    
    
    
    540,000
    
    
    
    109,727Senior secured notes
    
    
    206,086
    
    
    
    206,086
    
    
    
    Retail credit facilities
    
    
    78,893
    
    
    
    78,893
    
    
    
    Totals
    
    $
    954,616
    
    
    $
    1,323,104
    
    
    $
    109,727
 
 (1)
    
    Total availability was calculated as the lesser of (a) the total size of the facilities
less outstanding borrowings and letters of credit as of March 31, 2010 which was $247.8
million or (b) total borrowing base and letters of credit facility less outstanding
borrowings and letters of credit, if applicable, which was $109.7 million.(2)
    
    Availability includes $34.0 million available under the $60.0 million letter of credit
facility. Alon USA Energy, Inc. Credit Facilities
 Term Loan Credit Facility
     Letters of Credit Facility.
  42




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##### Table of Contents



Alon USA LP Credit Facility
 Revolving Credit Facility.
     Paramount Petroleum Corporation Credit Facility
 Revolving Credit Facility.
     Alon Refining Krotz Springs, Inc. Credit Facilities
 Senior Secured Notes.
  43




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##### Table of Contents



Bridge Facility.
     Revolving Credit Facility.
  Retail Credit Facilities
    44




---



##### Table of Contents



Other Retail Related Credit Facilities
  Capital Spending
  Turnaround and Chemical Catalyst Costs
 Contractual Obligations and Commercial Commitments
  Off-Balance Sheet Arrangements
  45




---



##### Table of Contents



Critical Accounting Policies
   New Accounting Standards and Disclosures
  46




---



##### Table of Contents



ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Commodity Price Risk
     47




---



##### Table of Contents



Wtd Avg
    
    Wtd AvgDescription
    
    Contract
    
    Purchase
    
    Sales
    
    Contract
    
    Market
    
    Gainof Activity
    
    Volume
    
    Price/BBL
    
    Price/BBL
    
    Value
    
    Value
    
    (Loss)(in thousands)Forwards-long (Crude)
    
    
    24,000
    
    
    $
    81.00
    
    
    $
    
    
    
    $
    1,944
    
    
    $
    2,004
    
    
    $
    60Forwards-short (Crude)
    
    
    (24,000
    )
    
    
    
    
    
    
    81.25
    
    
    
    (1,950
    )
    
    
    (2,004
    )
    
    
    (54
    )Forwards-short
(Gasoline)
    
    
    (25,000
    )
    
    
    
    
    
    
    90.67
    
    
    
    (2,267
    )
    
    
    (2,279
    )
    
    
    (12
    )Forwards-short (Diesel)
    
    
    (40,000
    )
    
    
    
    
    
    
    88.78
    
    
    
    (3,551
    )
    
    
    (3,680
    )
    
    
    (129
    )
 Wtd Avg
    
    Wtd AvgDescription
    
    Contract
    
    Contract
    
    Market
    
    Contract
    
    Market
    
    Gainof Activity
    
    Volume
    
    Spread
    
    Spread
    
    Value
    
    Value
    
    (Loss)Futures-crack spread
(Heating Oil)
    
    
    328,800
    
    
    $
    11.38
    
    
    $
    10.87
    
    
    $
    3,740
    
    
    
    3,576
    
    
    $
    (164
    )Futures-long (SPR swaps)
    
    
    278,322
    
    
    
    95.92
    
    
    
    84.18
    
    
    
    26,696
    
    
    
    23,429
    
    
    
    (3,267
    )Futures-short (SPR swaps)
    
    
    (278,322
    )
    
    
    60.05
    
    
    
    84.18
    
    
    
    (16,713
    )
    
    
    (23,429
    )
    
    
    (6,716
    )
 Interest Rate Risk
  
 ITEM 4.
    
    CONTROLS AND PROCEDURES
 (1) Evaluation of disclosure controls and procedures.
  (2) Changes in internal control over financial reporting.
  48




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##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIES.
  
 ITEM 6.
    
    EXHIBITS
 ExhibitNumber
    
    Description of Exhibit3.1
    
    Amended and Restated Certificate of Incorporation of Alon USA Energy, Inc. (incorporated by
reference to Exhibit 3.1 to Form S-1, filed by the Company on July 7, 2005, SEC File No.
333-124797).3.2
    
    Amended and Restated Bylaws of Alon USA Energy, Inc. (incorporated by reference to Exhibit
3.2 to Form S-1, filed by the Company on July 14, 2005, SEC File No. 333-124797).4.1
    
    Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to Form S-1,
filed by the Company on June 17, 2005, SEC File No. 333-124797).10.1
    
    Alon USA Energy, Inc. Amended and Restated 2005 Incentive Compensation Plan (incorporated by
reference to Exhibit 10.1 to Form 8-K, filed by the Company on May 7, 2010, SEC File No.
001-32567).10.2
    
    Sixth Amendment to Amended
Revolving Credit Agreement, dated as of May 10, 2010, by and among
Alon USA, LP, Israel Discount Bank of New York, Bank Leumi USA and
certain other guarantor companies and financial institutions from
time to time named therein.31.1
    
    Certifications of Chief Executive Officer pursuant to §302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certifications of Chief Financial Officer pursuant to §302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.
§1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.
 49




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##### Table of Contents



SIGNATURES
  Alon USA Energy, Inc.Date: May 10, 2010
    By:
    /s/ David WiessmanDavid WiessmanExecutive ChairmanDate: May 10, 2010
    By:
    /s/ Jeff D. MorrisJeff D. MorrisChief Executive OfficerDate: May 10, 2010
    By:
    /s/ Shai EvenShai EvenChief Financial Officer




---



##### Table of Contents



EXHIBITS
 ExhibitNumber
    
    Description of Exhibit3.1
    
    Amended and Restated Certificate of Incorporation of Alon USA Energy, Inc. (incorporated by
reference to Exhibit 3.1 to Form S-1, filed by the Company on July 7, 2005, SEC File No.
333-124797).3.2
    
    Amended and Restated Bylaws of Alon USA Energy, Inc. (incorporated by reference to Exhibit
3.2 to Form S-1, filed by the Company on July 14, 2005, SEC File No. 333-124797).4.1
    
    Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to Form S-1,
filed by the Company on June 17, 2005, SEC File No. 333-124797).10.1
    
    Alon USA Energy, Inc. Amended and Restated 2005 Incentive Compensation Plan (incorporated by
reference to Exhibit 10.1 to Form 8-K, filed by the Company on May 7, 2010, SEC File No.
001-32567).10.2
    
    Sixth Amendment to Amended
Revolving Credit Agreement, dated as of May 10, 2010, by and among
Alon USA, LP, Israel Discount Bank of New York, Bank Leumi USA and
certain other guarantor companies and financial institutions from
time to time named therein.31.1
    
    Certifications of Chief Executive Officer pursuant to §302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certifications of Chief Financial Officer pursuant to §302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.
§1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.