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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, 2008
 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
    
    74-2966572(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 (Address of principal executive offices) (Zip Code)    (Registrants telephone number, including area code)
 
 þ 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
    
    
    18FORWARD-LOOKING STATEMENTS
    
    
    18ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    40ITEM 4. CONTROLS AND PROCEDURES
    
    
    41PART II. OTHER INFORMATION
    
    
    42ITEM 6. EXHIBITS
    
    
    42SIGNATURESEXHIBITSDescription of Annual Bonus PlansCertifications of Chief Executive Officer Pursuant to Section 302Certifications of Chief Financial Officer Pursuant to Section 302Certifications of Chief Executive Officer and Chief Financial Officer 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 31,2008
    
    
    2007(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    31,135
    
    
    $
    68,615Short-term investments
    
    
    
    
    
    
    27,296Accounts and other receivables, net
    
    
    216,226
    
    
    
    228,987Income tax receivable
    
    
    57,012
    
    
    
    35,244Insurance receivable
    
    
    44,974
    
    
    
    Inventories
    
    
    235,550
    
    
    
    300,689Prepaid expenses and other current assets
    
    
    7,121
    
    
    
    12,231Total current assets
    
    
    592,018
    
    
    
    673,062Equity method investments
    
    
    39,729
    
    
    
    40,092Property, plant and equipment, net
    
    
    686,102
    
    
    
    713,592Goodwill
    
    
    105,943
    
    
    
    105,943Other assets
    
    
    44,618
    
    
    
    48,697Total assets
    
    $
    1,468,410
    
    
    $
    1,581,386LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    233,910
    
    
    $
    291,339Accrued liabilities
    
    
    68,846
    
    
    
    82,184Current portion of deferred gain on disposition of assets
    
    
    8,527
    
    
    
    8,805Current portion of long-term debt
    
    
    11,145
    
    
    
    11,154Total current liabilities
    
    
    322,428
    
    
    
    393,482Other non-current liabilities
    
    
    75,566
    
    
    
    58,637Deferred gain on disposition of assets
    
    
    31,909
    
    
    
    33,832Long-term debt
    
    
    522,739
    
    
    
    525,461Deferred income tax liability
    
    
    158,308
    
    
    
    166,052Total liabilities
    
    
    1,110,950
    
    
    
    1,177,464Commitments and contingencies (Note 15)Minority interest in subsidiaries
    
    
    14,042
    
    
    
    16,155Stockholders 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; 46,808,444
shares issued and outstanding at March 31, 2008 and December 31, 2007
    
    
    468
    
    
    
    468Additional paid-in capital
    
    
    183,232
    
    
    
    182,932Accumulated other comprehensive loss, net of income tax
    
    
    (17,334
    )
    
    
    (8,135
    )Retained earnings
    
    
    177,052
    
    
    
    212,502Total stockholders equity
    
    
    343,418
    
    
    
    387,767Total liabilities and stockholders equity
    
    $
    1,468,410
    
    
    $
    1,581,386
  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 31,2008
    
    
    2007Net sales (1)
    
    $
    1,020,763
    
    
    $
    965,905Operating costs and expenses:Cost of sales
    
    
    968,997
    
    
    
    811,261Direct operating expenses
    
    
    42,289
    
    
    
    49,283Selling, general and administrative expenses
    
    
    28,854
    
    
    
    22,538Net costs associated with fire
    
    
    16,462
    
    
    
    Depreciation and amortization
    
    
    13,745
    
    
    
    14,442Total operating costs and expenses
    
    
    1,070,347
    
    
    
    897,524Gain on disposition of assets
    
    
    2,311
    
    
    
    955Operating income (loss)
    
    
    (47,273
    )
    
    
    69,336Interest expense
    
    
    (10,656
    )
    
    
    (11,418
    )Equity earnings of investees
    
    
    316
    
    
    
    604Other income, net
    
    
    745
    
    
    
    890Income (loss) before income tax expense (benefit) and
minority interest in income (loss) of subsidiaries
    
    
    (56,868
    )
    
    
    59,412Income tax expense (benefit)
    
    
    (21,093
    )
    
    
    21,971Income (loss) before minority interest in income (loss) of subsidiaries
    
    
    (35,775
    )
    
    
    37,441Minority interest in income (loss) of subsidiaries
    
    
    (2,197
    )
    
    
    1,876Net income (loss)
    
    $
    (33,578
    )
    
    $
    35,565Earnings (loss) per share
    
    $
    (0.72
    )
    
    $
    0.76Weighted average shares outstanding (in thousands)
    
    
    46,782
    
    
    
    46,757Cash dividends per share
    
    $
    0.04
    
    
    $
    0.04
 
 (1)
    
    Includes excise taxes on sales by the retail segment of $9,654 and $7,308 for the three months
ended March 31, 2008 and 2007, 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 31,2008
    
    
    2007Cash flows from operating activities:Net income (loss)
    
    $
    (33,578
    )
    
    $
    35,565Adjustments to reconcile net income (loss) to cash (used in)
provided by operating activities:Depreciation and amortization
    
    
    13,745
    
    
    
    14,442Stock compensation
    
    
    505
    
    
    
    682Deferred income tax expense
    
    
    407
    
    
    
    (417
    )Minority interest in income (loss) of subsidiaries
    
    
    (2,197
    )
    
    
    1,876Gain on disposition of assets
    
    
    (2,311
    )
    
    
    (955
    )Changes in operating assets and liabilities:Accounts and other receivables, net
    
    
    12,761
    
    
    
    (36,689
    )Income tax receivable
    
    
    (21,768
    )
    
    
    Insurance receivable
    
    
    (15,692
    )
    
    
    Inventories
    
    
    65,139
    
    
    
    (26,581
    )Prepaid expenses and other current assets
    
    
    (710
    )
    
    
    2,385Other assets
    
    
    (664
    )
    
    
    76Accounts payable
    
    
    (57,429
    )
    
    
    40,325Accrued liabilities
    
    
    (25,146
    )
    
    
    9,577Other non-current liabilities
    
    
    17,314
    
    
    
    (1,418
    )Net cash (used in) provided by operating activities
    
    
    (49,624
    )
    
    
    38,868Cash flows from investing activities:Capital expenditures
    
    
    (9,182
    )
    
    
    (4,592
    )Capital expenditures for turnarounds and catalysts
    
    
    (1,609
    )
    
    
    (4,674
    )Sale of short-term investments, net
    
    
    27,296
    
    
    
    Dividends from investment in investees (net of equity earnings)
    
    
    363
    
    
    
    390Net cash provided by (used in) investing activities
    
    
    16,868
    
    
    
    (8,876
    )Cash flows from financing activities:Dividends paid to shareholders
    
    
    (1,872
    )
    
    
    (1,873
    )Dividends paid to minority interest shareholders
    
    
    (121
    )
    
    
    Deferred debt issuance costs
    
    
    
    
    
    
    (2,090
    )Payments on long-term debt
    
    
    (2,731
    )
    
    
    (1,699
    )Net cash used in financing activities
    
    
    (4,724
    )
    
    
    (5,662
    )Net (decrease) increase in cash and cash equivalents
    
    
    (37,480
    )
    
    
    24,330Cash and cash equivalents, beginning of period
    
    
    68,615
    
    
    
    64,166Cash and cash equivalents, end of period
    
    $
    31,135
    
    
    $
    88,496Supplemental cash flow information:Cash paid for interest
    
    $
    10,115
    
    
    $
    14,452Cash paid (refunds received) for income tax
    
    $
    (101
    )
    
    $
    6,098
  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
 Business Combinations
 Non-controlling Interests in Consolidated
Financial Statements, an Amendment of ARB 51
 4




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
 Fair Value
Measurements,
 Partial Deferral of the Effective
Date of Statement 157
 The Fair Value Option for Financial Assets and
Financial Liabilities
 Accounting for Uncertainty in Income
Taxes, an interpretation of FASB Statement No. 109
 How Taxes Collected from
Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement
(That Is, Gross versus Net Presentation).
 (d) Reclassifications
  (2) Big Spring Refinery Fire
  5




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
    (3) Acquisitions
 Skinnys Acquisition
    Cash paid, net of unrestricted cash acquired
    
    $
    74,787Transaction costs
    
    
    542Total purchase price
    
    $
    75,329
  Current assets, net of unrestricted cash acquired
    
    $
    7,002Property, plant and equipment
    
    
    43,684Other assets
    
    
    771Goodwill
    
    
    34,471Intangibles
    
    
    827Current liabilities
    
    
    (10,483
    )Other non-current liabilities
    
    
    (943
    )Total purchase price
    
    $
    75,329
  6




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
 Pipeline Acquisition
  (4) Segment Data
  (a) Refining and Unbranded Marketing Segment
  (b) Asphalt Segment
  (c) Retail and Branded Marketing Segment
  7




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
 (d) Corporate
   Refining and
    
    
    
    
    
    Retail andUnbranded
    
    
    
    
    
    Branded
    
    
    
    
    
    ConsolidatedThree Months ended March 31, 2008
    
    Marketing
    
    Asphalt
    
    Marketing
    
    Corporate
    
    TotalNet sales to external customers
    
    $
    607,569
    
    
    $
    103,940
    
    
    $
    309,254
    
    
    $
    
    
    
    $
    1,020,763Intersegment sales/purchases
    
    
    164,470
    
    
    
    (101,919
    )
    
    
    (62,551
    )
    
    
    
    
    
    
    Depreciation and amortization
    
    
    9,630
    
    
    
    532
    
    
    
    3,360
    
    
    
    223
    
    
    
    13,745Operating income (loss)
    
    
    (42,561
    )
    
    
    (1,929
    )
    
    
    (2,409
    )
    
    
    (374
    )
    
    
    (47,273
    )Total assets
    
    
    923,477
    
    
    
    305,604
    
    
    
    228,465
    
    
    
    10,864
    
    
    
    1,468,410Turnaround, chemical catalyst
and capital expenditures
    
    
    9,311
    
    
    
    213
    
    
    
    1,127
    
    
    
    140
    
    
    
    10,791
 Refining and
    
    
    
    
    
    Retail andUnbranded
    
    
    
    
    
    Branded
    
    
    
    
    
    ConsolidatedThree Months ended March 31, 2007
    
    Marketing
    
    Asphalt
    
    Marketing
    
    Corporate
    
    TotalNet sales to external customers
    
    $
    593,597
    
    
    $
    113,946
    
    
    $
    258,362
    
    
    $
    
    
    
    $
    965,905Intersegment sales/purchases
    
    
    128,222
    
    
    
    (94,044
    )
    
    
    (34,178
    )
    
    
    
    
    
    
    Depreciation and amortization
    
    
    12,374
    
    
    
    497
    
    
    
    1,337
    
    
    
    234
    
    
    
    14,442Operating income (loss)
    
    
    62,741
    
    
    
    6,261
    
    
    
    655
    
    
    
    (321
    )
    
    
    69,336Total assets
    
    
    978,741
    
    
    
    357,652
    
    
    
    144,470
    
    
    
    9,516
    
    
    
    1,490,379Turnaround, chemical catalyst
and capital expenditures
    
    
    8,513
    
    
    
    136
    
    
    
    495
    
    
    
    122
    
    
    
    9,266
   (5) Cash, Cash Equivalents and Short-Term Investments
   (6) Derivatives and Hedging Activities
 (a) Fair Value of Financial Instruments
  8




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
  (b) Derivative Financial Instruments
 Commodity Derivatives
    Interest Rate Derivatives
     9




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
    Quoted Prices inActive Markets
    
    Significantfor Identical
    
    Other
    
    SignificantAssets or
    
    Observable
    
    UnobservableLiabilities
    
    Inputs
    
    InputsMarch 31, 2008
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)
    
    TotalAssets:Futures and forwards
    
    $
    430
    
    
    $
    
    
    
    $
    
    
    
    $
    430Liabilities:Interest rate swaps
    
    
    
    
    
    
    17,851
    
    
    
    
    
    
    
    17,851December 31, 2007Assets:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Liabilities:Futures and forwards
    
    
    4,250
    
    
    
    
    
    
    
    
    
    
    
    4,250Interest rate swaps
    
    
    
    
    
    
    3,000
    
    
    
    
    
    
    
    3,000
  (7) Inventories
   March 31,
    
    
    December 31,2008
    
    
    2007Crude oil, refined products, asphalt and blendstocks
    
    $
    198,846
    
    
    $
    261,816Materials and supplies
    
    
    12,896
    
    
    
    12,789Store merchandise
    
    
    17,039
    
    
    
    18,197Store fuel
    
    
    6,769
    
    
    
    7,887Total inventories
    
    $
    235,550
    
    
    $
    300,689
 10




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
   (8) Property, Plant and Equipment, Net
  March 31,
    
    
    December 31,2008
    
    
    2007Refining facilities
    
    $
    620,095
    
    
    $
    645,653Pipelines and terminals
    
    
    45,191
    
    
    
    45,158Retail
    
    
    132,676
    
    
    
    131,556Other
    
    
    12,411
    
    
    
    12,271Property, plant and equipment, gross
    
    
    810,373
    
    
    
    834,638Less accumulated depreciation
    
    
    (124,271
    )
    
    
    (121,046
    )Property, plant and equipment, net
    
    $
    686,102
    
    
    $
    713,592
 (9) Other Assets
  March 31,
    
    
    December 31,2008
    
    
    2007Deferred turnaround, chemical catalyst cost
    
    $
    4,223
    
    
    $
    9,232Environmental receivables
    
    
    9,247
    
    
    
    9,425Deferred debt issuance costs
    
    
    10,836
    
    
    
    11,286Intangible assets
    
    
    7,464
    
    
    
    7,488Other
    
    
    12,848
    
    
    
    11,266Total other assets
    
    $
    44,618
    
    
    $
    48,697
 (10) Employee and Postretirement Benefits
  11




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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 31,2008
    
    
    2007Components of net periodic benefit cost:Service cost
    
    $
    457
    
    
    $
    507Interest cost
    
    
    748
    
    
    
    665Expected return on plan assets
    
    
    (822
    )
    
    
    (704
    )Amortization of net loss
    
    
    53
    
    
    
    134Net periodic benefit cost
    
    $
    436
    
    
    $
    602
 (11) Long-Term Debt
  March 31,
    
    
    December 31,2008
    
    
    2007Term loan credit facility
    
    $
    442,125
    
    
    $
    443,250Revolving credit facilities
    
    
    
    
    
    
    Retail credit facilities
    
    
    91,759
    
    
    
    93,365Total debt
    
    
    533,884
    
    
    
    536,615Less current portion
    
    
    (11,145
    )
    
    
    (11,154
    )Total long-term debt
    
    $
    522,739
    
    
    $
    525,461
 (a) Credit Suisse Credit Facility
      12




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
 (b) Revolving Credit Facilities
 Israel Discount Bank Credit Facility
   Bank of America Credit Facility.
  (c) Retail Credit Facilities
    13




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
    (d) Other Retail Related Credit Facilities
  (12) Stock-Based Compensation
  (a) 2005 Incentive Compensation Plan (share value in dollars)
  Restricted Stock
  14




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
  Weighted AverageGrant Date Fair ValuesNonvested Shares
    
    Shares
    
    
    (per share)Nonvested at January 1, 2007
    
    
    49,079
    
    
    $
    20.27Granted
    
    
    2,001
    
    
    
    37.51Vested
    
    
    (24,162
    )
    
    
    20.06Forfeited
    
    
    
    
    
    
    Nonvested at December 31, 2007
    
    
    26,918
    
    
    $
    21.74Granted
    
    
    
    
    
    
    Vested
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Nonvested at March 31, 2008
    
    
    26,918
    
    
    $
    21.74
  Stock Appreciation Rights
  (b) 2000 Incentive Stock Compensation Plan
  15




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
  Alon Assets
    
    
    Alon OperatingWeighted
    
    
    
    
    
    
    WeightedNumber of
    
    
    Average
    
    
    Number of
    
    
    AverageOptions
    
    
    Exercise
    
    
    Options
    
    
    ExerciseOutstanding
    
    
    Price
    
    
    Outstanding
    
    
    PriceOutstanding at January 1, 2007
    
    
    6,848
    
    
    $
    100
    
    
    
    2,572
    
    
    $
    100Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    (1,632
    )
    
    
    100
    
    
    
    (613
    )
    
    
    100Outstanding at December 31, 2007
    
    
    5,216
    
    
    
    100
    
    
    
    1,959
    
    
    
    100Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at March 31, 2008
    
    
    5,216
    
    
    $
    100
    
    
    
    1,959
    
    
    $
    100
  (13) Stockholders Equity (per share in dollars)
 Common Stock Dividends
  (14) Earnings (Loss) Per Share (earnings per share in dollars)
   Three Months EndedMarch 31,2008
    
    
    2007Net income (loss)
    
    $
    (33,578
    )
    
    $
    35,565Average number of shares of common stock outstanding
    
    
    46,782
    
    
    
    46,757Dilutive restricted shares and SARs
    
    
    
    
    
    
    37Average number of shares of common stock outstanding assuming dilution
    
    
    46,782
    
    
    
    46,794Earnings (loss) per share  basic
    
    $
    (0.72
    )
    
    $
    0.76Earnings (loss) per share  diluted *
    
    $
    (0.72
    )
    
    $
    0.76
 
 *
    
    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, 2008
is anti-dilutive and therefore is excluded from the calculation. 16




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
 (15) Commitments and Contingencies
 (a) Commitments
  (b) Contingencies
  (c) Environmental
      (16) Subsequent Event
 Dividend Declared
  17




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##### Table of Contents



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, 2007. 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;
    
    expected cost savings from the Paramount Petroleum Corporation and Edgington Oil
Company acquisitions may not be fully realized or recognized within the expected time
frame;
    
    revenues or margins following the Paramount Petroleum Corporation and Edgington Oil
Company acquisitions may be lower than expected;
    
    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;
 18




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##### Table of Contents




    
    operating hazards, natural disasters, casualty losses and other matters beyond our
control;
    
    our planned projects to bring back online the naphtha hydrotreater and the design and
construction of a hydrocracker unit at our California refineries may not be completed
within the expected time frames or within the budgeted costs for such projects due to
factors outside of our control;
    
    with respect to the February 18, 2008 explosion and fire at our Big Spring refinery,
the resulting damage to equipment and disruption to operations may be greater than
currently anticipated; the costs and time necessary to resume full operations may be
greater than currently anticipated or may be increased due to factors outside of our
control, and we may not fully recover all costs, expenses and damages resulting from the
incident under applicable insurance policies; and
    
    the other factors discussed in our Annual Report on Form 10-K for the year ended
December 31, 2007 under the caption Risk Factors.
  Company Overview
   Refining and Unbranded Marketing Segment
  Asphalt Segment.
  19




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##### Table of Contents



Retail and Branded Marketing Segment
 First Quarter Operational and Financial Highlights
   
    
    The combined refineries throughput for the first quarter of 2008 averaged 66,682 barrels
per day (bpd), consisting of an average of 29,270 bpd at the Big Spring refinery and an
average of 37,412 bpd at the California refineries compared to a combined average of
124,615 bpd in the first quarter of 2007, consisting of an average of 65,451 bpd at the Big
Spring refinery and an average of 59,164 bpd at the California refineries. In addition to
the shutdown due to the fire, the Big Spring refinery completed a scheduled turnaround in
January 2008 to correct operational issues related to the catalytic reformer.
    
    Our average refinery operating margin for the Big Spring refinery decreased $7.45 per
barrel to $6.54 per barrel for the three months ended March 31, 2008, compared to $13.99
per barrel for the three months ended March 31, 2007. This decrease was attributable mainly
to the fire on February 18, 2008 and to a lower Gulf Coast 3/2/1 crack spread which
decreased by $3.33 per barrel to $9.42 per barrel for the three months ended March 31, 2008
compared to $12.75 per barrel for the three months ended March 31, 2007.
    
    Our California refineries operating margin for the three months ended March 31, 2008
decreased $6.98 per barrel to ($0.39) per barrel, compared to $6.59 per barrel for the
three months ended March 31, 2007. The decrease was primarily attributable to a 49.1%
decrease in the West Coast 3/2/1 crack spread to $16.53 per barrel for the three months
ended March 31, 2008 from $32.49 per barrel for the three months ended March 31, 2007 and
higher crude oil prices.
    
    The decreased margin environment for the first quarter of 2008 was partially offset by
higher sweet/sour and light/heavy crude oil differentials. The average sweet/sour spread
for the three months ended March 31,
 20




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##### Table of Contents



2008 was $4.67 per barrel compared to $3.98 per barrel for the three months ended March 31,
2007. The average light/heavy spread for the three months ended March 31, 2008 was $16.85
per barrel compared to $12.53 per barrel for the three months ended March 31, 2007.
    
    Asphalt margins in the first quarter of 2008 were $42.31 per ton compared to $50.70 per
ton in the first quarter of 2007.
    
    On March 14, 2008, we paid a regular quarterly cash dividend of $0.04 per share on our
common stock to stockholders of record at the close of business on February 29, 2008.
 Major Influences on Results of Operations
 Refining and Unbranded Marketing
      21




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##### Table of Contents



Asphalt
  Retail and Branded Marketing
  Factors Affecting Comparability
   22




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##### Table of Contents



Results of Operations
 Net Sales
 Cost of Sales
 Direct Operating Expenses.
 Selling, General and Administrative Expenses
 23




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES CONSOLIDATED
 Summary Financial Tables
 For the Three Months EndedMarch 31,2008
    
    
    2007(dollars in thousands, except pershare data)STATEMENT OF OPERATIONS DATA:Net sales
    
    $
    1,020,763
    
    
    $
    965,905Operating costs and expenses:Cost of sales
    
    
    968,997
    
    
    
    811,261Direct operating expenses
    
    
    42,289
    
    
    
    49,283Selling, general and administrative expenses (1)
    
    
    28,854
    
    
    
    22,538Net costs associated with fire (2)
    
    
    16,462
    
    
    
    Depreciation and amortization (3)
    
    
    13,745
    
    
    
    14,442Total operating costs and expenses
    
    
    1,070,347
    
    
    
    897,524Gain on disposition of assets (4)
    
    
    2,311
    
    
    
    955Operating income (loss)
    
    
    (47,273
    )
    
    
    69,336Interest expense
    
    
    (10,656
    )
    
    
    (11,418
    )Equity earnings of investees
    
    
    316
    
    
    
    604Other income, net
    
    
    745
    
    
    
    890Income (loss) before income tax expense (benefit) and minority
interest in income (loss) of subsidiaries
    
    
    (56,868
    )
    
    
    59,412Income tax expense (benefit)
    
    
    (21,093
    )
    
    
    21,971Income (loss) before minority interest in income (loss) of subsidiaries
    
    
    (35,775
    )
    
    
    37,441Minority interest in income (loss) of subsidiaries
    
    
    (2,197
    )
    
    
    1,876Net income (loss)
    
    $
    (33,578
    )
    
    $
    35,565Earnings (loss) per share
    
    $
    (0.72
    )
    
    $
    0.76Weighted average shares outstanding (in thousands)
    
    
    46,782
    
    
    
    46,757Cash dividends per share
    
    $
    0.04
    
    
    $
    0.04CASH FLOW DATA:Net cash provided by (used in):Operating activities
    
    $
    (49,624
    )
    
    $
    38,868Investing activities
    
    
    16,868
    
    
    
    (8,876
    )Financing activities
    
    
    (4,724
    )
    
    
    (5,662
    )OTHER DATA:Adjusted EBITDA (5)
    
    $
    (34,778
    )
    
    $
    84,317Capital expenditures (6)
    
    
    9,182
    
    
    
    4,592Capital expenditures for turnaround and chemical catalyst
    
    
    1,609
    
    
    
    4,674
 24




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##### Table of Contents



March 31,
    
    December 31,2008
    
    2007BALANCE SHEET DATA (end of period):Cash, cash equivalents and short-term investments
    
    $
    31,135
    
    
    $
    95,911Working capital
    
    
    269,590
    
    
    
    279,580Total assets
    
    
    1,468,410
    
    
    
    1,581,386Total debt
    
    
    533,884
    
    
    
    536,615Total stockholders equity
    
    
    343,418
    
    
    
    387,767
 
 (1)
    
    Includes corporate headquarters selling, general and administrative expenses of $151 and $87
for the three months ended March 31, 2008 and 2007, respectively, which are not allocated to
our three operating segments.(2)
    
    Includes $9,672 of expenses incurred from pipeline commitment deficiencies, crude sale losses
and other incremental costs; $6,000 for our insurance deductibles under the insurance
policies; and $790 for depreciation for the temporarily idled facilities.(3)
    
    Includes corporate depreciation and amortization of $223 and $234 for the three months ended
March 31, 2008 and 2007, respectively, which are not allocated to our three operating
segments.(4)
    
    Gain on disposition of assets reported in the three months ended March 31, 2008 and 2007
includes the recognition of deferred gain recorded primarily in connection with the
contribution of certain product pipelines and terminals to Holly Energy Partners, LP in March
2005 (HEP Transaction).(5)
    
    Adjusted EBITDA represents earnings before minority interest in income (loss) of
subsidiaries, income tax expense, interest expense, depreciation, 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 minority 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 which 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 minority stockholders 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
    
    Our calculation of Adjusted EBITDA may differ from the Adjusted EBITDA calculations
of other companies in our industry, limiting its usefulness as a comparative measure.
 25




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##### Table of Contents



Because of these limitations, Adjusted EBITDA should not be considered a measure of
discretionary cash available to us to invest in the growth of our business. We compensate for
these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only
supplementally.The following table reconciles net income (loss) to Adjusted EBITDA for the three months ended
March 31, 2008 and 2007, respectively: For the Three Months EndedMarch 31,2008
    
    
    2007(dollars in thousands)Net income (loss)
    
    $
    (33,578
    )
    
    $
    35,565Minority interest in income (loss) of subsidiaries
    
    
    (2,197
    )
    
    
    1,876Income tax expense (benefit)
    
    
    (21,093
    )
    
    
    21,971Interest expense
    
    
    10,656
    
    
    
    11,418Depreciation and amortization
    
    
    13,745
    
    
    
    14,442Gain on disposition of assets
    
    
    (2,311
    )
    
    
    (955
    )Adjusted EBITDA
    
    $
    (34,778
    )
    
    $
    84,317
 
 (6)
    
    Includes corporate capital expenditures of $140 and $122 for the three months ended March
31, 2008 and 2007, respectively, which are not allocated to our three operating segments. 26




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REFINING AND UNBRANDED MARKETING SEGMENT (A)
 For the Three Months EndedMarch 31,2008
    
    
    2007(dollars in thousands, except perbarrel data and pricing statistics)STATEMENTS OF OPERATIONS DATA:Net sales (1)
    
    $
    772,039
    
    
    $
    721,819Operating costs and expenses:Cost of sales
    
    
    755,957
    
    
    
    604,303Direct operating expenses
    
    
    30,473
    
    
    
    38,447Selling, general and administrative expenses
    
    
    4,389
    
    
    
    4,978Net costs associated with fire (2)
    
    
    16,462
    
    
    
    Depreciation and amortization
    
    
    9,630
    
    
    
    12,374Total operating costs and expenses
    
    
    816,911
    
    
    
    660,102Gain on disposition of assets (3)
    
    
    2,311
    
    
    
    1,024Operating income (loss)
    
    $
    (42,561
    )
    
    $
    62,741KEY OPERATING STATISTICS:Total unbranded sales volume (bpd)
    
    
    63,707
    
    
    
    84,437Per barrel of throughput:Refinery operating margin  Big Spring (4)
    
    $
    6.54
    
    
    $
    13.99Refinery operating margin  CA Refineries (4)
    
    
    (0.39
    )
    
    
    6.59Refinery direct operating expenses  Big Spring (5)
    
    
    5.93
    
    
    
    3.89Refinery direct operating expenses  CA Refineries (5)
    
    
    4.31
    
    
    
    2.91Capital expenditures
    
    
    7,702
    
    
    
    3,839Capital expenditures for turnaround and chemical catalyst
    
    
    1,609
    
    
    
    4,674PRICING STATISTICS:WTI crude oil (per barrel)
    
    $
    98.00
    
    
    $
    57.95WTS crude oil (per barrel)
    
    
    93.33
    
    
    
    53.97MAYA crude oil (per barrel)
    
    
    81.15
    
    
    
    45.42Crack spreads (3/2/1) (per barrel):Gulf Coast
    
    $
    9.42
    
    
    $
    12.75Group III
    
    
    10.10
    
    
    
    15.00West Coast
    
    
    16.53
    
    
    
    32.49Crack spreads (6/1/2/3) (per barrel):West Coast
    
    $
    (0.86
    )
    
    $
    9.35Crude oil differentials (per barrel):WTI less WTS
    
    $
    4.67
    
    
    $
    3.98WTI less MAYA
    
    
    16.85
    
    
    
    12.53Product price (dollars per gallon):Gulf Coast unleaded gasoline
    
    $
    2.431
    
    
    $
    1.627Gulf Coast low-sulfur diesel
    
    
    2.811
    
    
    
    1.796Group III unleaded gasoline
    
    
    2.449
    
    
    
    1.672Group III low-sulfur diesel
    
    
    2.823
    
    
    
    1.866West Coast LA CARBOB (unleaded gasoline)
    
    
    2.690
    
    
    
    2.260West Coast LA ultra low-sulfur diesel
    
    
    2.799
    
    
    
    1.939Natural gas (per MMBTU)
    
    $
    8.74
    
    
    $
    7.18
 
 (A)
    
    Beginning with the three months ended March 31, 2008, our branded marketing business has been
removed from the refining and marketing segment and combined with the retail segment. Information
for the three months ended March 31, 2007 has been recast to provide a comparison to the current
year results. 27




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##### Table of Contents



THROUGHPUT AND YIELD DATA:
BIG SPRING
 For the Three Months EndedMarch 31,2008
    
    2007bpd
    
    %
    
    bpd
    
    %Refinery throughput:Sour crude
    
    
    25,034
    
    
    
    85.6
    
    
    
    58,617
    
    
    
    89.6Sweet crude
    
    
    2,378
    
    
    
    8.1
    
    
    
    2,373
    
    
    
    3.6Blendstocks
    
    
    1,858
    
    
    
    6.3
    
    
    
    4,461
    
    
    
    6.8Total refinery throughput (6)
    
    
    29,270
    
    
    
    100.0
    
    
    
    65,451
    
    
    
    100.0Refinery production:Gasoline
    
    
    13,976
    
    
    
    48.0
    
    
    
    30,517
    
    
    
    47.2Diesel/jet
    
    
    7,640
    
    
    
    26.2
    
    
    
    18,856
    
    
    
    29.1Asphalt
    
    
    3,098
    
    
    
    10.6
    
    
    
    6,956
    
    
    
    10.7Petrochemicals
    
    
    1,402
    
    
    
    4.8
    
    
    
    4,768
    
    
    
    7.4Other
    
    
    3,046
    
    
    
    10.4
    
    
    
    3,653
    
    
    
    5.6Total refinery production (7)
    
    
    29,162
    
    
    
    100.0
    
    
    
    64,750
    
    
    
    100.0Refinery utilization (8)
    
    
    
    
    
    
    40.8
    %
    
    
    
    
    
    
    90.8
    %
 THROUGHPUT AND YIELD DATA:
CALIFORNIA REFINERIES
 For the Three Months EndedMarch 31,2008
    
    2007bpd
    
    %
    
    bpd
    
    %Refinery throughput:Sour crude
    
    
    10,702
    
    
    
    28.6
    
    
    
    21,463
    
    
    
    36.3Heavy crude
    
    
    25,551
    
    
    
    68.3
    
    
    
    37,405
    
    
    
    63.2Blendstocks
    
    
    1,159
    
    
    
    3.1
    
    
    
    296
    
    
    
    0.5Total refinery throughput (6)
    
    
    37,412
    
    
    
    100.0
    
    
    
    59,164
    
    
    
    100.0Refinery production:Gasoline
    
    
    5,505
    
    
    
    15.3
    
    
    
    6,873
    
    
    
    11.9Diesel/jet
    
    
    8,622
    
    
    
    23.9
    
    
    
    14,086
    
    
    
    24.4Asphalt
    
    
    10,398
    
    
    
    28.9
    
    
    
    18,753
    
    
    
    32.5Light unfinished
    
    
    0
    
    
    
    0.0
    
    
    
    2,503
    
    
    
    4.3Heavy unfinished
    
    
    11,282
    
    
    
    31.4
    
    
    
    14,566
    
    
    
    25.2Other
    
    
    197
    
    
    
    0.5
    
    
    
    997
    
    
    
    1.7Total refinery production (7)
    
    
    36,004
    
    
    
    100.0
    
    
    
    57,778
    
    
    
    100.0Refinery utilization (8)
    
    
    
    
    
    
    50.0
    %
    
    
    
    
    
    
    83.9
    %
 
 (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)
    
    Includes $9,672 of expenses incurred from pipeline commitment deficiencies, crude sale losses
and other incremental costs; $6,000 for our insurance deductibles under the insurance
policies; and $790 for depreciation for the temporarily idled facilities.(3)
    
    Gain on disposition of assets reported in the three months ended March 31, 2008 and 2007
includes the recognition of deferred gain recorded primarily in connection with the HEP
Transaction.(4)
    
    Refinery operating margin is a per barrel measurement calculated by dividing the margin
between net sales and cost of sales 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. 28




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##### Table of Contents



(5)
    
    Refinery direct operating expense is a per barrel measurement calculated by dividing direct
operating expenses at our Big Spring and California refineries, exclusive of depreciation and
amortization, by the applicable refinerys total throughput volumes.(6)
    
    Total refinery throughput represents the total barrels per day of crude oil and blendstock
inputs in the refinery production process.(7)
    
    Total refinery production represents the barrels per day of various finished products
produced from processing crude and other refinery feedstocks through the crude units and other
conversion units at the refinery.(8)
    
    Refinery utilization represents average
daily crude oil throughput divided by crude
oil capacity, excluding planned periods of
downtime for maintenance and turnarounds. The
decrease in refinery utilization at our Big
Spring refinery is due to the fire on February
18, 2008 which ceased production at the
refinery until limited operations were resumed
on April 5, 2008. The decrease in refinery
utilization at our California refineries is
due to reduced throughput related to low
refining margins. 29




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##### Table of Contents



ASPHALT SEGMENT
 For the Three Months EndedMarch 31,2008
    
    
    2007(dollars in thousands,except per ton data)STATEMENTS OF OPERATIONS DATA:Net sales
    
    $
    103,940
    
    
    $
    113,946Operating costs and expenses:Cost of sales (1)
    
    
    92,135
    
    
    
    95,795Direct operating expenses
    
    
    11,816
    
    
    
    10,836Selling, general and administrative expenses
    
    
    1,386
    
    
    
    557Depreciation and amortization
    
    
    532
    
    
    
    497Total operating costs and expenses
    
    
    105,869
    
    
    
    107,685Operating income (loss)
    
    $
    (1,929
    )
    
    $
    6,261KEY OPERATING STATISTICS:Total sales volume (tons in thousands)
    
    
    279
    
    
    
    358Sales price per ton
    
    $
    372.54
    
    
    $
    318.28Asphalt margin per ton (2)
    
    $
    42.31
    
    
    $
    50.70Capital expenditures
    
    $
    213
    
    
    $
    136
 
 (1)
    
    Cost of sales includes intersegment purchases of asphalt blends from our refining and
unbranded marketing segment at prices substantially determined by reference to the cost of
crude oil, which is intended to approximate bulk wholesale market prices. These intersegment
purchases are eliminated through consolidation of our financial statements.(2)
    
    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
the asphalt sales. 30




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##### Table of Contents



RETAIL AND BRANDED MARKETING SEGMENT (A)
 For the Three Months EndedMarch 31,2008
    
    
    2007(dollars in thousands,except per gallon data)STATEMENTS OF OPERATIONS DATA:Net sales
    
    $
    309,254
    
    
    $
    258,362Operating costs and expenses:Cost of sales (1)
    
    
    285,375
    
    
    
    239,385Selling, general and administrative expenses
    
    
    22,928
    
    
    
    16,916Depreciation and amortization
    
    
    3,360
    
    
    
    1,337Total operating costs and expenses (2)
    
    
    311,663
    
    
    
    257,638Loss on disposition of assets
    
    
    
    
    
    
    (69
    )Operating income (loss)
    
    $
    (2,409
    )
    
    $
    655KEY OPERATING STATISTICS:Integrated branded fuel sales (thousands of gallons) (2)
    
    
    54,158
    
    
    
    66,671Integrated branded fuel margin (cents per gallon) (2)
    
    
    1.8
    ¢
    
    
    3.5
    ¢Non-Integrated branded fuel sales (thousands of gallons) (2)
    
    
    38,269
    
    
    
    52,449Non-Integrated branded fuel margin (cents per gallon) (2)
    
    
    (0.2
    )¢
    
    
    0.2
    ¢Number of stores (end of period)
    
    
    307
    
    
    
    206Retail fuel sales (thousands of gallons)
    
    
    24,871
    
    
    
    18,867Retail fuel sales (thousands of gallons per site per month)
    
    
    27
    
    
    
    31Retail fuel margin (cents per gallon) (2)
    
    
    18.4
    ¢
    
    
    19.7
    ¢Retail fuel sales price (dollars per gallon) (3)
    
    $
    3.10
    
    
    $
    2.32Merchandise sales
    
    $
    58,455
    
    
    $
    42,040Merchandise sales (per site per month)
    
    
    63
    
    
    
    67Merchandise margin (4)
    
    
    31.4
    %
    
    
    30.5
    %Capital expenditures
    
    $
    1,127
    
    
    $
    495
 
 (A)
    
    Beginning with the three months ended March 31, 2008, our branded marketing business has been
removed from the refining and marketing segment and combined with the retail segment. Information
for the three months ended March 31, 2007 has been recast to provide a comparison to the current
year results.(1)
    
    Cost of sales includes intersegment purchases of motor fuels from our refining and unbranded
marketing segment at prices which approximate wholesale market price. These intersegment
purchases are eliminated through consolidation of our financial statements.(2)
    
    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.(3)
    
    Fuel sales price per gallon represents the average sales price for motor fuels sold through
our retail operations.(4)
    
    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 industry to measure in-store, or non-fuel, operating
results. 31




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##### Table of Contents



Three Months Ended March 31, 2008 Compared to the Three Months Ended March 31, 2007
 Net Sales
 Consolidated
 Refining and Unbranded Marketing Segment
 Asphalt Segment
 Retail and Branded Marketing Segment
 Cost of Sales
 Consolidated
 Refining and Unbranded Marketing Segment.
 Asphalt Segment
 Retail and Branded Marketing Segment.
 32




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##### Table of Contents



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
 Depreciation and Amortization
  Operating Income
 Consolidated
 Refining and Unbranded Marketing Segment
  33




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##### Table of Contents



Asphalt Segment.
 Retail and Branded Marketing Segment.
 Interest Expense
  Income Tax Expense(Benefit)
  Minority Interest In Income (Loss) Of Subsidiaries
  Net Loss
  Liquidity and Capital Resources
  34




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##### Table of Contents



Cash Flows
  For the Three Months EndedMarch 31,2008
    
    
    2007(dollars in thousands)Cash provided by (used in):Operating activities
    
    $
    (49,624
    )
    
    $
    38,868Investing activities
    
    
    16,868
    
    
    
    (8,876
    )Financing activities
    
    
    (4,724
    )
    
    
    (5,662
    )Net (decrease) increase in cash and cash equivalents
    
    $
    (37,480
    )
    
    $
    24,330
 Cash Flows (Used In) Provided by Operating Activities
  Cash Flows Provided By (Used In) Investing Activities
  Cash Flows Used In Financing Activities
  35




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##### Table of Contents



Cash Position and Indebtedness
  Summary of Indebtedness
 As of March 31, 2008(dollars in thousands)Amount Outstanding
    
    
    Total Facility
    
    
    Total Availability (1)Debt, including current portion:Term loan credit facility
    
    $
    442,125
    
    
    $
    442,125
    
    
    $
    Revolving credit facilities
    
    
    
    
    
    
    540,000
    
    
    
    314,103Retail credit facilities
    
    
    91,759
    
    
    
    91,759
    
    
    
    Totals
    
    $
    533,884
    
    
    $
    1,073,884
    
    
    $
    314,103
 
 (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, 2008 which was $314.1 million or
(b) total borrowing base less outstanding borrowings and letters of credit as of March 31, 2008
which was $367.4 million. Credit Facilities
 Credit Suisse Credit Facility
     36




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##### Table of Contents



Israel Discount Bank Credit Facility
   Bank of America Credit Facility
 Wachovia Credit Facility
   37




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##### Table of Contents



Other Retail Related Credit Facilities.
 Capital Spending
  Clean Air Capital Expenditures
 Turnaround and Chemical Catalyst Costs
 Contractual Obligations and Commercial Commitments
  Off-Balance Sheet Arrangements
  Critical Accounting Policies
   38




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##### Table of Contents



New Accounting Standards and Disclosures
  39




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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Commodity Price Risk
      Wtd AvgDescription
    
    Contract
    
    Wtd Avg
    
    Receive
    
    Contract
    
    Market
    
    Pre-tax Fairof Activity
    
    Volumes
    
    Pay Price
    
    Price
    
    Value
    
    Value
    
    Value(in thousands)Forwards-long (Gasoline)
    
    
    25,000
    
    
    $
    116.00
    
    
    $
    
    
    
    $
    2,900
    
    
    $
    2,835
    
    
    $
    (65
    )Forwards-long (Crude)
    
    
    780,000
    
    
    
    102.70
    
    
    
    
    
    
    
    80,107
    
    
    
    76,874
    
    
    
    (3,233
    )Forwards-short (Crude)
    
    
    (780,000
    )
    
    
    
    
    
    
    102.65
    
    
    
    (80,064
    )
    
    
    (76,874
    )
    
    
    3,190Futures-long (Crude)
    
    
    20,000
    
    
    
    107.59
    
    
    
    
    
    
    
    2,152
    
    
    
    2,032
    
    
    
    (120
    )Futures-short (Crude)
    
    
    (200,000
    )
    
    
    
    
    
    
    105.45
    
    
    
    (21,090
    )
    
    
    (20,316
    )
    
    
    774Futures-short (Heating Oil)
    
    
    (15,000
    )
    
    
    
    
    
    
    123.15
    
    
    
    (1,847
    )
    
    
    (1,831
    )
    
    
    16Futures-long (RBOB)
    
    
    50,000
    
    
    
    112.98
    
    
    
    
    
    
    
    5,649
    
    
    
    5,517
    
    
    
    (132
    )
 40




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##### Table of Contents



Interest Rate Risk
  
 ITEM 4. CONTROLS AND PROCEDURES
 (1) Evaluation of disclosure controls and procedures.
  (2) Changes in internal control over financial reporting.
  41




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##### Table of Contents



PART II. OTHER INFORMATION
 
 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
    
    Pipeline Lease Agreement, dated as of December 12, 2007, between Plains Pipeline, L.P. and
Alon USA, L.P. (incorporated by reference to Exhibit 10.1 to Form 8-K, filed by the Company
on February 5, 2008, SEC File No. 001-32567).10.2*
    
    Description of Annual Bonus Plans.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.
 
 *
    
    Identifies management contracts and compensatory arrangements. 42




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##### Table of Contents



SIGNATURES
  Alon USA Energy, Inc.Date: May 6, 2008
    By:
    /s/ David WiessmanDavid WiessmanExecutive ChairmanDate: May 6, 2008
    By:
    /s/ Jeff D. MorrisJeff D. MorrisChief Executive OfficerDate: May 6, 2008
    By:
    /s/ Shai EvenShai EvenChief Financial Officer 43




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##### 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
    
    Pipeline Lease Agreement, dated as of December 12, 2007, between Plains Pipeline, L.P. and
Alon USA, L.P. (incorporated by reference to Exhibit 10.1 to Form 8-K, filed by the Company
on February 5, 2008, SEC File No. 001-32567).10.2*
    
    Description of Annual Bonus Plans.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.
 
 *
    
    Identifies management contracts and compensatory arrangements. 44