##### 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 SEPTEMBER 30, 2009
 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
  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 INFORMATIONITEM 1. FINANCIAL STATEMENTS
    
    
    1CONSOLIDATED BALANCE SHEETS
    
    
    1CONSOLIDATED STATEMENTS OF OPERATIONS
    
    
    2CONSOLIDATED STATEMENTS OF CASH FLOWS
    
    
    3NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    
    
    5ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    26FORWARD-LOOKING STATEMENTS
    
    
    26ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    53ITEM 4. CONTROLS AND PROCEDURES
    
    
    54PART II. OTHER INFORMATIONITEM 3. DEFAULTS UPON SENIOR SECURITIES
    
    
    55ITEM 6. EXHIBITS
    
    
    56SIGNATURES
    
    
    57EXHIBITSCERTIFICATION OF CEO PURSUANT TO SECTION 302CERTIFICATION OF CFO PURSUANT TO SECTION 302CERTIFICATION OF CEO AND CFO PURSUANT TO SECTION 906EX-10.1EX-31.1EX-31.2EX-32.1




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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)
 September 30,
    
    
    December 31,2009
    
    
    2008(unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    18,078
    
    
    $
    18,454Accounts and other receivables, net
    
    
    178,850
    
    
    
    204,576Income tax receivable
    
    
    9,920
    
    
    
    116,564Inventories
    
    
    280,392
    
    
    
    232,320Current portion of heating oil crack spread hedge
    
    
    
    
    
    
    75,405Prepaid expenses and other current assets
    
    
    6,161
    
    
    
    6,353Deferred tax asset
    
    
    5,720
    
    
    
    Total current assets
    
    
    499,121
    
    
    
    653,672Equity method investments
    
    
    51,449
    
    
    
    37,661Property, plant, and equipment, net
    
    
    1,472,812
    
    
    
    1,448,959Goodwill
    
    
    105,943
    
    
    
    105,943Non-current portion of heating oil crack spread hedge
    
    
    
    
    
    
    42,080Other assets
    
    
    75,941
    
    
    
    125,118Total assets
    
    $
    2,205,266
    
    
    $
    2,413,433LIABILITIES AND EQUITYCurrent liabilities:Accounts payable
    
    $
    350,843
    
    
    $
    233,004Accrued liabilities
    
    
    91,273
    
    
    
    111,317Current portion of long-term debt
    
    
    17,164
    
    
    
    28,397Deferred income tax liability
    
    
    
    
    
    
    30,570Total current liabilities
    
    
    459,280
    
    
    
    403,288Other non-current liabilities
    
    
    101,902
    
    
    
    104,190Long-term debt
    
    
    817,933
    
    
    
    1,075,172Deferred income tax liability
    
    
    314,726
    
    
    
    293,916Total liabilities
    
    
    1,693,841
    
    
    
    1,876,566Commitments and contingencies (Note 17)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; 46,819,862 and 46,814,021 shares issued and
outstanding at September 30, 2009 and December 31, 2008,
respectively
    
    
    468
    
    
    
    468Additional paid-in capital
    
    
    184,054
    
    
    
    183,642Accumulated other comprehensive loss, net of income tax
    
    
    (36,176
    )
    
    
    (37,354
    )Retained earnings
    
    
    257,731
    
    
    
    287,895Total stockholders equity
    
    
    406,077
    
    
    
    434,651Non-controlling interest in subsidiaries
    
    
    14,598
    
    
    
    17,916Preferred stock of subsidiary including accumulated dividends
    
    
    90,750
    
    
    
    84,300Total equity
    
    
    511,425
    
    
    
    536,867Total liabilities and equity
    
    $
    2,205,266
    
    
    $
    2,413,433
  1




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, dollars in thousands except per share data)
 For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net sales (1)
    
    $
    1,253,113
    
    
    $
    1,905,106
    
    
    $
    3,081,691
    
    
    $
    4,170,540Operating costs and expenses:Cost of sales
    
    
    1,165,295
    
    
    
    1,812,399
    
    
    
    2,693,343
    
    
    
    4,033,788Direct operating expenses
    
    
    64,091
    
    
    
    66,748
    
    
    
    204,300
    
    
    
    149,583Selling, general and administrative expenses
    
    
    32,276
    
    
    
    29,697
    
    
    
    95,772
    
    
    
    86,353Net costs associated with fire
    
    
    
    
    
    
    17,376
    
    
    
    
    
    
    
    43,212Business interruption recovery
    
    
    
    
    
    
    (30,000
    )
    
    
    
    
    
    
    (30,000
    )Depreciation and amortization
    
    
    25,247
    
    
    
    17,232
    
    
    
    70,898
    
    
    
    44,484Total operating costs and expenses
    
    
    1,286,909
    
    
    
    1,913,452
    
    
    
    3,064,313
    
    
    
    4,327,420Gain on involuntary conversion of assets
    
    
    
    
    
    
    103,092
    
    
    
    
    
    
    
    199,680Gain (loss) on disposition of assets
    
    
    (547
    )
    
    
    (2,241
    )
    
    
    (2,147
    )
    
    
    43,005Operating income (loss)
    
    
    (34,343
    )
    
    
    92,505
    
    
    
    15,231
    
    
    
    85,805Interest expense
    
    
    (21,460
    )
    
    
    (21,493
    )
    
    
    (70,739
    )
    
    
    (42,885
    )Equity earnings (losses) of investees
    
    
    12,811
    
    
    
    (3,915
    )
    
    
    21,184
    
    
    
    (2,307
    )Other income (loss), net
    
    
    (180
    )
    
    
    (25
    )
    
    
    268
    
    
    
    1,093Income (loss) before income tax expense (benefit),
non-controlling interest in income (loss) of subsidiaries
and accumulated dividends on preferred stock of subsidiary
    
    
    (43,172
    )
    
    
    67,072
    
    
    
    (34,056
    )
    
    
    41,706Income tax expense (benefit)
    
    
    (16,452
    )
    
    
    25,083
    
    
    
    (13,006
    )
    
    
    15,850Income (loss) before non-controlling interest in income
(loss) of subsidiaries and accumulated dividends on
preferred stock of subsidiary
    
    
    (26,720
    )
    
    
    41,989
    
    
    
    (21,050
    )
    
    
    25,856Non-controlling interest in income (loss) of subsidiaries
    
    
    (2,312
    )
    
    
    2,542
    
    
    
    (2,953
    )
    
    
    1,760Accumulated dividends on preferred stock of subsidiary
    
    
    2,150
    
    
    
    2,150
    
    
    
    6,450
    
    
    
    2,150Net income (loss) available to common stockholders
    
    $
    (26,558
    )
    
    $
    37,297
    
    
    $
    (24,547
    )
    
    $
    21,946Earnings (loss) per share, basic
    
    $
    (0.57
    )
    
    $
    0.80
    
    
    $
    (0.52
    )
    
    $
    0.47Weighted average shares outstanding, basic (in thousands)
    
    
    46,810
    
    
    
    46,786
    
    
    
    46,808
    
    
    
    46,783Earnings (loss) per share, diluted
    
    $
    (0.57
    )
    
    $
    0.74
    
    
    $
    (0.52
    )
    
    $
    0.46Weighted average shares outstanding, diluted (in thousands)
    
    
    46,810
    
    
    
    52,362
    
    
    
    46,808
    
    
    
    46,802Cash dividends per share
    
    $
    0.04
    
    
    $
    0.04
    
    
    $
    0.12
    
    
    $
    0.12
 
 (1)
    
    Includes excise taxes on sales by the retail segment of $12,073 and $9,102 for the three
months and $34,887 and $28,075 for the nine months ended September 30, 2009 and 2008, respectively.  2




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ALON USA ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, dollars in thousands)
 For the Nine Months EndedSeptember 30,2009
    
    
    2008Cash flows from operating activities:Net income (loss)
    
    $
    (24,547
    )
    
    $
    21,946Adjustments to reconcile net income (loss) to cash provided by (used
in) operating activities:Depreciation and amortization
    
    
    70,898
    
    
    
    44,484Stock compensation
    
    
    533
    
    
    
    487Deferred income tax expense (benefit)
    
    
    (14,575
    )
    
    
    86,885Non-controlling interest in income (loss) of subsidiaries
    
    
    (2,953
    )
    
    
    1,760Equity (earnings) losses of investees (net of dividends)
    
    
    (13,788
    )
    
    
    4,374Accumulated dividends on preferred stock of subsidiary
    
    
    6,450
    
    
    
    2,150Gain on involuntary conversion of assets
    
    
    
    
    
    
    (199,680
    )(Gain) loss on disposition of assets
    
    
    2,147
    
    
    
    (43,005
    )Changes in operating assets and liabilities, net of acquisition effects:Accounts and other receivables, net
    
    
    (8,399
    )
    
    
    (53,502
    )Income tax receivable
    
    
    103,032
    
    
    
    (41,190
    )Inventories
    
    
    (48,072
    )
    
    
    104,587Heating oil crack spread hedge
    
    
    117,485
    
    
    
    Prepaid expenses and other current assets
    
    
    192
    
    
    
    (8,811
    )Other assets
    
    
    11,195
    
    
    
    (4,377
    )Accounts payable
    
    
    161,370
    
    
    
    85,169Accrued liabilities
    
    
    (27,604
    )
    
    
    (6,675
    )Other non-current liabilities
    
    
    (8,232
    )
    
    
    (2,996
    )Net cash provided by (used in) operating activities
    
    
    325,132
    
    
    
    (8,394
    )Cash flows from investing activities:Capital expenditures
    
    
    (52,132
    )
    
    
    (41,248
    )Capital expenditures to rebuild the Big Spring refinery
    
    
    (45,072
    )
    
    
    (312,566
    )Capital expenditures for turnarounds and catalysts
    
    
    (13,005
    )
    
    
    (2,072
    )Proceeds from insurance to rebuild Big Spring refinery
    
    
    34,125
    
    
    
    225,010Acquisition of the Krotz Springs refinery
    
    
    
    
    
    
    (480,170
    )Earnout payment related to Krotz Springs refinery acquisition
    
    
    (17,521
    )
    
    
    Sale of short-term investments, net
    
    
    
    
    
    
    27,296Net cash used in investing activities
    
    
    (93,605
    )
    
    
    (583,750
    )Cash flows from financing activities:Dividends paid to stockholders
    
    
    (5,617
    )
    
    
    (5,617
    )Dividends paid to non-controlling interest stockholders
    
    
    (576
    )
    
    
    (242
    )Deferred debt issuance costs
    
    
    (7,238
    )
    
    
    (27,678
    )Revolving credit facilities, net
    
    
    (123,029
    )
    
    
    254,000Additions to long-term debt
    
    
    
    
    
    
    252,000Proceeds from sale of preferred stock by subsidiary
    
    
    
    
    
    
    80,000Payments on long-term debt
    
    
    (95,443
    )
    
    
    (10,258
    )Net cash (used in) provided by financing activities
    
    
    (231,903
    )
    
    
    542,205Net decrease in cash and cash equivalents
    
    
    (376
    )
    
    
    (49,939
    )Cash and cash equivalents, beginning of period
    
    
    18,454
    
    
    
    68,615Cash and cash equivalents, end of period
    
    $
    18,078
    
    
    $
    18,676Supplemental cash flow information:Cash paid for interest
    
    $
    67,968
    
    
    $
    32,204Cash paid (net of refunds received) for income tax
    
    $
    (106,281
    )
    
    $
    (22,630
    )
  3




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For the Nine Months EndedSeptember 30,2009
    
    
    2008Non-cash activities:Financing activity  payments on long-term debt from deposit held
to secure heating oil crack spread hedge
    
    $
    (50,000
    )
    
    $
    Financing activity  proceeds from borrowings retained by bank as
deposit for hedge related activities for Krotz Springs refinery
acquisition
    
    $
    
    
    
    $
    50,000
  4




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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
 The FASB
Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles a
replacement of FASB Statement No. 162
 Subsequent Events
 Employers Disclosures
about Postretirement Benefit Plans Employers Disclosures about Pensions and Other
Postretirement Benefits
 5




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
  Equity Method
Investment Accounting Considerations
 Accounting by Lessees
for Maintenance Deposits
 Determination of the Useful Life
of Intangible Assets Goodwill and Other Intangible Assets.
 Disclosure about Derivative Instruments and
Hedging Activities
 Fair Value
Measurements
 Partial Deferral of the
Effective Date of Statement 157
 Non-controlling Interests in Consolidated
Financial Statements, an Amendment of ARB 51
 6




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
  December 31,
    
    
    
    
    
    
    December 31,2008
    
    
    Adjustments
    
    
    2008(aspreviously
    
    
    
    
    
    
    (recast)reported)Total stockholders equity
    
    $
    431,919
    
    
    $
    2,732
    
    
    $
    434,651Non-controlling interest in subsidiaries (1)
    
    
    
    
    
    
    17,916
    
    
    
    17,916Preferred stock of subsidiary including accumulated dividends (1)
    
    
    
    
    
    
    84,300
    
    
    
    84,300Total equity
    
    $
    431,919
    
    
    $
    104,948
    
    
    $
    536,867
 
 (1)
    
    Previously reported outside of equity.  Business Combinations
 d) Reclassifications
  (2) Big Spring Refinery Fire
      7




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
  (3) Acquisitions and Deferred Gain Recognition
 Krotz Springs Refinery Acquisition
      Cash paid
    
    $
    474,494Transaction costs
    
    
    6,517Total Purchase Price
    
    $
    481,011
  Current assets
    
    $
    145,859Property, plant and equipment
    
    
    376,702Current liabilities
    
    
    (29,309
    )Other non-current liabilities
    
    
    (12,241
    )Total Purchase Price
    
    $
    481,011
  8




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
   Unaudited Pro Forma Financial Information
  
    
    The acquisition of the Krotz Springs refining business occurred on January 1, 2008;
    
    $302,000 of term debt and $141,494 of borrowings under the revolver was incurred on
January 1, 2008 to fund the acquisition and buy initial inventories; and
    
    Depreciation expense was higher beginning January 1, 2008 based upon the revaluation of
estimated asset values as of that date.
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(unaudited)
    
    
    (pro forma)
    
    
    (unaudited)
    
    
    (pro forma)Net sales
    
    $
    1,253,113
    
    
    $
    1,905,106
    
    
    $
    3,081,691
    
    
    $
    5,710,169Operating income (loss)
    
    
    (34,343
    )
    
    
    92,068
    
    
    
    15,231
    
    
    
    28,987Net income (loss)
    
    
    (26,558
    )
    
    
    37,034
    
    
    
    (24,547
    )
    
    
    (30,173
    )Earnings (loss) per share, basic
    
    $
    (0.57
    )
    
    $
    0.79
    
    
    $
    (0.52
    )
    
    $
    (0.64
    )Earnings (loss) per share, diluted
    
    $
    (0.57
    )
    
    $
    0.73
    
    
    $
    (0.52
    )
    
    $
    (0.64
    )
 Deferred Gain Recognition
  (4) Segment Data
  (a) Refining and Unbranded Marketing Segment
  9




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
  (b) Asphalt Segment
  (c) Retail and Branded Marketing Segment
  (d) Corporate
   Refining and
    
    
    
    
    
    Retail andUnbranded
    
    
    
    
    
    Branded
    
    
    
    
    
    ConsolidatedMarketing
    
    Asphalt
    
    Marketing
    
    Corporate
    
    TotalThree Months ended September 30, 2009Net sales to external customers
    
    $
    860,692
    
    
    $
    175,189
    
    
    $
    217,232
    
    
    $
    
    
    
    $
    1,253,113Intersegment sales/purchases
    
    
    132,377
    
    
    
    (73,800
    )
    
    
    (58,577
    )
    
    
    
    
    
    
    Depreciation and amortization
    
    
    21,098
    
    
    
    545
    
    
    
    3,399
    
    
    
    205
    
    
    
    25,247Operating income (loss)
    
    
    (58,935
    )
    
    
    20,821
    
    
    
    4,165
    
    
    
    (394
    )
    
    
    (34,343
    )Total assets
    
    
    1,742,871
    
    
    
    251,382
    
    
    
    193,850
    
    
    
    17,163
    
    
    
    2,205,266Turnaround, chemical catalyst, capital
expenditures (including earnout payment) and capital expenditures to
rebuild the Big Spring refinery
    
    
    45,862
    
    
    
    523
    
    
    
    751
    
    
    
    1,755
    
    
    
    48,891
 10




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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
    
    
    
    
    
    ConsolidatedMarketing
    
    Asphalt
    
    Marketing
    
    Corporate
    
    TotalThree Months ended September 30, 2008Net sales to external customers
    
    $
    1,292,054
    
    
    $
    261,556
    
    
    $
    351,496
    
    
    $
    
    
    
    $
    1,905,106Intersegment sales/purchases
    
    
    180,874
    
    
    
    (105,887
    )
    
    
    (74,987
    )
    
    
    
    
    
    
    Depreciation and amortization
    
    
    13,081
    
    
    
    535
    
    
    
    3,392
    
    
    
    224
    
    
    
    17,232Operating income (loss)
    
    
    72,453
    
    
    
    20,113
    
    
    
    314
    
    
    
    (375
    )
    
    
    92,505Total assets
    
    
    1,950,580
    
    
    
    262,184
    
    
    
    215,404
    
    
    
    8,142
    
    
    
    2,436,310Turnaround, chemical catalyst, capital
expenditures and capital expenditures to
rebuild the Big Spring refinery
    
    
    173,049
    
    
    
    32
    
    
    
    844
    
    
    
    27
    
    
    
    173,952
 Refining and
    
    
    
    
    
    Retail andUnbranded
    
    
    
    
    
    Branded
    
    
    
    
    
    ConsolidatedMarketing
    
    Asphalt
    
    Marketing
    
    Corporate
    
    TotalNine months ended September 30, 2009Net sales to external customers
    
    $
    2,139,099
    
    
    $
    351,429
    
    
    $
    591,163
    
    
    $
    
    
    
    $
    3,081,691Intersegment sales/purchases
    
    
    338,417
    
    
    
    (188,676
    )
    
    
    (149,741
    )
    
    
    
    
    
    
    Depreciation and amortization
    
    
    58,594
    
    
    
    1,625
    
    
    
    10,179
    
    
    
    500
    
    
    
    70,898Operating income (loss)
    
    
    2,912
    
    
    
    5,447
    
    
    
    7,941
    
    
    
    (1,069
    )
    
    
    15,231Total assets
    
    
    1,742,871
    
    
    
    251,382
    
    
    
    193,850
    
    
    
    17,163
    
    
    
    2,205,266Turnaround, chemical catalyst, capital
expenditures (including earnout payment) and capital expenditures
to rebuild the Big Spring refinery
    
    
    121,780
    
    
    
    1,099
    
    
    
    1,864
    
    
    
    2,987
    
    
    
    127,730
 Refining and
    
    
    
    
    
    Retail andUnbranded
    
    
    
    
    
    Branded
    
    
    
    
    
    ConsolidatedMarketing
    
    Asphalt
    
    Marketing
    
    Corporate
    
    TotalNine months ended September 30, 2008Net sales to external customers
    
    $
    2,589,745
    
    
    $
    542,773
    
    
    $
    1,038,022
    
    
    $
    
    
    
    $
    4,170,540Intersegment sales/purchases
    
    
    524,781
    
    
    
    (307,579
    )
    
    
    (217,202
    )
    
    
    
    
    
    
    Depreciation and amortization
    
    
    31,921
    
    
    
    1,603
    
    
    
    10,290
    
    
    
    670
    
    
    
    44,484Operating income (loss)
    
    
    68,354
    
    
    
    20,837
    
    
    
    (2,263
    )
    
    
    (1,123
    )
    
    
    85,805Total assets
    
    
    1,950,580
    
    
    
    262,184
    
    
    
    215,404
    
    
    
    8,142
    
    
    
    2,436,310Turnaround, chemical catalyst, capital
expenditures and capital expenditures
to rebuild the Big Spring refinery
    
    
    353,083
    
    
    
    307
    
    
    
    2,011
    
    
    
    485
    
    
    
    355,886
   (5) Cash and Cash Equivalents
  (6) Fair Value
  11




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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)
    Quoted PricesinActive Markets
    
    Significantfor Identical
    
    Other
    
    SignificantAssets or
    
    Observable
    
    UnobservableLiabilities
    
    Inputs
    
    Inputs
    
    Consolidated(Level 1)
    
    (Level 2)
    
    (Level 3)
    
    TotalAs of September 30, 2009Liabilities:Futures and forwards
    
    $
    538
    
    
    $
    
    
    
    $
    
    
    
    $
    538Commodity swaps
    
    
    
    
    
    
    15,157
    
    
    
    
    
    
    
    15,157Interest rate swaps
    
    
    
    
    
    
    19,839
    
    
    
    
    
    
    
    19,839As of December 31, 2008Assets:Commodity swaps
    
    $
    
    
    
    $
    117,485
    
    
    $
    
    
    
    $
    117,485Liabilities:Futures and forwards
    
    
    1,197
    
    
    
    
    
    
    
    
    
    
    
    1,197Commodity swaps
    
    
    
    
    
    
    25,473
    
    
    
    
    
    
    
    25,473Interest rate swaps
    
    
    
    
    
    
    26,100
    
    
    
    
    
    
    
    26,100
 (7) Derivative Financial Instruments
 Commodity Derivatives  Mark to Market
    12




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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)
   Cash Flow Hedges
  Interest Rate Derivatives.
   Commodity Derivatives.
  13




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
  September 30,Counterparty Credit Quality (1)
    
    2009AAA
    
    $
    AA
    
    
    (25,352
    )A
    
    
    (10,182
    )Lower than A
    
    
    Total
    
    $
    (35,534
    )
 
 (1)
    
    As determined by nationally recognized statistical ratings organizations.  As of September 30, 2009Asset Derivatives
    
    
    Liability DerivativesBalance Sheet
    
    Fair
    
    
    Balance Sheet
    
    FairLocation
    
    Value
    
    
    Location
    
    ValueDerivatives not
designated as hedging
instruments under FAS
133:Commodity contracts
(futures, forwards
and SPR swaps)
    
    Accounts receivable
    
    $
    150
    
    
    Accrued liabilities
    
    $
    15,845Total derivatives not
designated as hedging
instruments under FAS
133
    
    
    
    $
    150
    
    
    
    
    $
    15,845Derivatives
designated as hedging
instruments under FAS
133:Interest rate swaps
    
    
    
    $
    
    
    
    Other non-current liabilities
    
    $
    19,839Total derivatives
designated as hedging
instruments under FAS
133
    
    
    
    
    
    
    
    
    
    
    19,839Total derivatives
    
    
    
    $
    150
    
    
    
    
    $
    35,684
  Gain (Loss) Reclassifiedfrom Accumulated OCI intoGain (Loss)
    
    
    Gain (Loss) Reclassified from
    
    
    Income (Ineffective PortionCash Flow Hedging
    
    Recognized in
    
    
    Accumulated OCI into Income
    
    
    and Amount Excluded fromRelationships
    
    OCI
    
    
    (Effective Portion)
    
    
    Effectiveness Testing)Location
    
    Amount
    
    
    Location
    
    
    AmountFor the Three Months Ended September
30, 2009Commodity swaps
(heating oil
swaps)
    
    $
    
    
    
    Cost of sales
    
    $
    433
    
    
    
    
    
    
    $
    Interest rate swaps
    
    
    622
    
    
    Interest expense
    
    
    (3,713
    )
    
    
    
    
    
    
    Total derivatives
    
    $
    622
    
    
    
    
    $
    (3,280
    )
    
    
    
    
    
    $
    For the Nine months Ended September 30,
2009Commodity swaps
(heating oil
swaps)
    
    $
    
    
    
    Cost of sales
    
    $
    4,447
    
    
    
    
    
    
    $
    Interest rate swaps
    
    
    6,261
    
    
    Interest expense
    
    
    (10,716
    )
    
    
    
    
    
    
    Total derivatives
    
    $
    6,261
    
    
    
    
    $
    (6,269
    )
    
    
    
    
    
    $
    
 14




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
 Gain (Loss) Recognized in IncomeLocation
    
    AmountDerivatives not designated as hedging
instruments under FAS 133:For the Three Months Ended September 30, 2009Commodity contracts (futures & forwards)
    
    Cost of sales
    
    $
    564Total derivatives
    
    
    
    $
    564For the Nine months Ended September 30, 2009Commodity contracts (futures & forwards)
    
    Cost of sales
    
    $
    (13,927
    )Commodity contracts (heating oil swaps)
    
    Cost of sales
    
    
    41,182Commodity contracts (SPR swaps)
    
    Cost of sales
    
    
    174Total derivatives
    
    
    
    $
    27,429
 (8) Inventories
   September 30,
    
    
    December 31,2009
    
    
    2008Crude oil, refined products, asphalt and blendstocks
    
    $
    238,565
    
    
    $
    192,997Materials and supplies
    
    
    17,910
    
    
    
    16,456Store merchandise
    
    
    18,963
    
    
    
    19,875Store fuel
    
    
    4,954
    
    
    
    2,992Total inventories
    
    $
    280,392
    
    
    $
    232,320
   (9) Property, Plant and Equipment, net
  September 30,
    
    
    December 31,2009
    
    
    2008Refining facilities
    
    $
    1,512,093
    
    
    $
    1,430,896Pipelines and terminals
    
    
    39,180
    
    
    
    39,161Retail
    
    
    135,278
    
    
    
    134,263Other
    
    
    16,032
    
    
    
    13,052Property, plant and equipment, gross
    
    
    1,702,583
    
    
    
    1,617,372Less accumulated depreciation
    
    
    (229,771
    )
    
    
    (168,413
    )Property, plant and equipment, net
    
    $
    1,472,812
    
    
    $
    1,448,959
 15




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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)
 (10) Additional Financial Information
  (a) Other Assets
 September 30,
    
    
    December 31,2009
    
    
    2008Deferred turnaround and chemical catalyst cost
    
    $
    16,780
    
    
    $
    11,684Environmental receivables
    
    
    2,743
    
    
    
    8,524Deferred debt issuance costs
    
    
    37,718
    
    
    
    35,648Intangible assets
    
    
    8,702
    
    
    
    7,055Deposit for hedge related activities for Krotz Springs refinery acquisition
    
    
    
    
    
    
    50,000Other
    
    
    9,998
    
    
    
    12,207Total other assets
    
    $
    75,941
    
    
    $
    125,118
 (b) Accrued Liabilities and Other Non-Current Liabilities
 September 30,
    
    
    December 31,2009
    
    
    2008Accrued Liabilities:Taxes other than income taxes, primarily excise taxes
    
    $
    23,255
    
    
    $
    27,789Employee costs
    
    
    6,363
    
    
    
    4,884Commodity swaps
    
    
    10,795
    
    
    
    26,670Valero earnout liability
    
    
    8,729
    
    
    
    Other
    
    
    42,131
    
    
    
    51,974Total accrued liabilities
    
    $
    91,273
    
    
    $
    111,317Other Non-Current Liabilities:Pension and other postemployment benefit liabilities, net (Note 11)
    
    $
    35,817
    
    
    $
    35,989Environmental accrual
    
    
    28,283
    
    
    
    33,181Interest rate swap valuations
    
    
    19,839
    
    
    
    26,100Valero earnout liability
    
    
    8,750
    
    
    
    Other
    
    
    9,213
    
    
    
    8,920Total other non-current liabilities
    
    $
    101,902
    
    
    $
    104,190
 (c) Comprehensive Income
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Income (loss) before non-controlling interest in
income (loss) of subsidiaries and accumulated dividends
on preferred stock of subsidiary
    
    $
    (26,720
    )
    
    $
    41,989
    
    
    $
    (21,050
    )
    
    $
    25,856Other comprehensive gain (loss), net of tax:Unrealized gain (loss) on cash flow hedges, net of tax
    
    
    131
    
    
    
    33,492
    
    
    
    1,267
    
    
    
    (1,949
    )Total other comprehensive income (loss), net of tax
    
    
    131
    
    
    
    33,492
    
    
    
    1,267
    
    
    
    (1,949
    )Comprehensive income (loss)
    
    
    (26,589
    )
    
    
    75,481
    
    
    
    (19,783
    )
    
    
    23,907Comprehensive income attributable to non-controlling
interest (including accumulated dividends on
preferred shares of subsidiary)
    
    
    (153
    )
    
    
    6,700
    
    
    
    3,587
    
    
    
    3,770Comprehensive income attributable to common stockholders
    
    $
    (26,436
    )
    
    $
    68,781
    
    
    $
    (23,370
    )
    
    $
    20,137
  16




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
 September 30,
    
    
    December 31,2009
    
    
    2008Unrealized losses on cash flow hedges, net of tax
    
    $
    (16,827
    )
    
    $
    (18,005
    )Pension and post-employment benefits, net of tax
    
    
    (19,349
    )
    
    
    (19,349
    )Accumulated other comprehensive loss, net of tax
    
    $
    (36,176
    )
    
    $
    (37,354
    )
 (11) Employee and Postretirement Benefits
   For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Components of net periodic benefit cost:Service cost
    
    $
    837
    
    
    $
    857
    
    
    $
    2,510
    
    
    $
    1,771Interest cost
    
    
    841
    
    
    
    748
    
    
    
    2,522
    
    
    
    2,244Expected return on plan assets
    
    
    (840
    )
    
    
    (822
    )
    
    
    (2,519
    )
    
    
    (2,466
    )Amortization of net loss
    
    
    262
    
    
    
    (47
    )
    
    
    788
    
    
    
    (141
    )Net periodic benefit cost
    
    $
    1,100
    
    
    $
    736
    
    
    $
    3,301
    
    
    $
    1,408
 (12) Long-Term Debt
  September 30,
    
    
    December 31,2009
    
    
    2008Term loan credit facilities
    
    $
    599,194
    
    
    $
    739,810Revolving credit facilities
    
    
    153,789
    
    
    
    276,818Retail credit facilities
    
    
    82,114
    
    
    
    86,941Total debt
    
    
    835,097
    
    
    
    1,103,569Less current portion
    
    
    (17,164
    )
    
    
    (28,397
    )Total long-term debt
    
    $
    817,933
    
    
    $
    1,075,172
 (a) Alon USA Energy, Inc. Credit Facilities
 Term Loan Credit Facility
  17




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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)
  Letters of Credit Facility.
 (b) Alon USA, LP Credit Facilities
 Revolving Credit Facility.
   (c) Paramount Petroleum Corporation Credit Facility
 Revolving Credit Facility.
  18




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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)
 (d) Alon Refining Krotz Springs, Inc. Credit Facilities
 Term Loan Credit Facility
     Revolving Credit Facility
      19




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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)
  (d) Retail Credit Facilities
     (e) Other Retail Related Credit Facilities
   (13) Stock-Based Compensation
  (a) 2005 Incentive Compensation Plan (share value in dollars)
  Restricted Stock.
 20




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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)
   Weighted AverageNonvested Shares
    
    Shares
    
    
    Grant Date Fair ValuesNonvested at January 1, 2008
    
    
    26,918
    
    
    $
    21.74Granted
    
    
    5,577
    
    
    
    13.45Vested
    
    
    (24,833
    )
    
    
    20.54Forfeited
    
    
    
    
    
    
    Nonvested at December 31, 2008
    
    
    7,662
    
    
    $
    19.58Granted
    
    
    5,841
    
    
    
    12.84Vested
    
    
    (3,277
    )
    
    
    22.89Forfeited
    
    
    
    
    
    
    Nonvested at September 30, 2009
    
    
    10,226
    
    
    $
    14.67
  Stock Appreciation Rights
   (b) 2000 Incentive Stock Compensation Plan
  21




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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)
   Alon Assets
    
    
    Alon OperatingWeighted
    
    
    
    
    
    
    WeightedNumber of
    
    
    Average
    
    
    Number of
    
    
    AverageOptions
    
    
    Exercise
    
    
    Options
    
    
    ExerciseOutstanding
    
    
    Price
    
    
    Outstanding
    
    
    PriceOutstanding at January 1, 2008
    
    
    5,216
    
    
    $
    100
    
    
    
    1,959
    
    
    $
    100Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    (2,423
    )
    
    
    100
    
    
    
    (910
    )
    
    
    100Forfeited and expired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at December 31, 2008
    
    
    2,793
    
    
    $
    100
    
    
    
    1,049
    
    
    $
    100Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited and expired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at September 30, 2009
    
    
    2,793
    
    
    $
    100
    
    
    
    1,049
    
    
    $
    100
  (14) Stockholders Equity (per share in dollars)
 Common Stock Dividends
  (15) Earnings Per Share (per share in dollars)
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income (loss)
    
    $
    (26,558
    )
    
    $
    37,297
    
    
    $
    (24,547
    )
    
    $
    21,946Average number of shares of common stock outstanding
    
    
    46,810
    
    
    
    46,786
    
    
    
    46,808
    
    
    
    46,783Dilutive restricted shares, SARs and conversion of
preferred shares
    
    
    
    
    
    
    5,576
    
    
    
    
    
    
    
    19Average number of shares of common stock
outstanding assuming dilution
    
    
    46,810
    
    
    
    52,362
    
    
    
    46,808
    
    
    
    46,802Earnings (loss) per share  basic
    
    $
    (0.57
    )
    
    $
    0.80
    
    
    $
    (0.52
    )
    
    $
    0.47Earnings (loss) per share  diluted *
    
    $
    (0.57
    )
    
    $
    0.74
    
    
    $
    (0.52
    )
    
    $
    0.46
 
 *
    
    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 and nine months ended
September 30, 2009 was anti-dilutive and therefore excluded from the calculation, but for the
three and nine months ended September 30, 2008 the adjustment was $382 and $334, respectively.
Additionally, net income for the three and nine months ended 22




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ALON USA ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands except as noted)
 September 30, 2009 was not adjusted for preferred stock dividends that would no longer be paid
if the preferred stock was converted to shares of common stock because their effects were
anti-dilutive. Net income for the three months ended September 30, 2008 was adjusted for
preferred stock dividends that would no longer be paid if the preferred stock was converted to
shares of common stock, but net income for the nine months ended September 30, 2008 was not
adjusted because the effect was anti-dilutive.
 (16) Related Party Transactions
 Sale of Preferred Shares
      23




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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)
 (17) Commitments and Contingencies
 (a) Commitments
  Offtake Agreement with Valero
  (b) Contingencies
  SemGroup, LP Bankruptcy
   (c) Environmental
   24




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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)
     (18) Subsequent Event
  Dividend Declared
  Sale of Senior Secured Notes
 1 2
    25




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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, 2008. 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;
    
    our planned project of the design and construction of a hydrocracker unit at our
California refineries may not be completed within the expected time frame or within the
budgeted costs for such project due to factors outside of our control;
 26




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##### Table of Contents




    
    the global financial crisis impact on our business and financial condition in ways
that we currently cannot predict. We may face significant challenges if conditions in the
financial markets do not improve or continue to worsen, such as adversely impacting our
ability to refinance existing credit facilities or extend their terms; and
    
    the other factors discussed in our Annual Report on Form 10-K for the year ended
December 31, 2008 under the caption Risk Factors.
  Company Overview
  Refining and Unbranded Marketing Segment
    Asphalt Segment
 27




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##### Table of Contents



Retail and Branded Marketing Segment
  Third Quarter Operational and Financial Highlights
  
    
    The combined refineries throughput for the third quarter of 2009 averaged 157,660
barrels per day (bpd), consisting of 62,500 bpd at the Big Spring refinery, 35,470 bpd at
the California refineries and 59,690 bpd at the Krotz Springs refinery compared to a
combined average of 122,252 bpd in the third quarter of 2008, consisting of 35,204 bpd at
the Big Spring refinery, 28,661 bpd at the California refineries and 58,387 bpd at the
Krotz Springs refinery. The Big Spring refinery had higher throughput in the third quarter
of 2009 compared to the third quarter of 2008 primarily due to last years fire.
    
    Our average refinery operating margin for the Big Spring refinery, which was negatively
impacted by the absence of the alkylation unit and additional feedstock costs related to
preparations for start up of the ultra low-sulfur gasoline unit, decreased $6.83 per barrel
to $1.34 per barrel for the three months ended September 30, 2009, compared to $8.17 per
barrel for the three months ended September 30, 2008. This decrease was also attributable
to the contractions in the Gulf Coast and Group III 3/2/1 crack spreads.
    
    Our California refineries operating margin for the three months ended September 30, 2009
decreased $9.68 per barrel to ($0.55) per barrel, compared to $9.13 per barrel for the
three months ended September 30, 2008. This decrease was primarily due to the lower
light/heavy crude oil spread.
    
    The average operating margin for the Krotz Springs refinery for the three months ended
September 30, 2009 decreased $4.75 per barrel to $2.45 per barrel, compared to $7.20 per
barrel for the three months ended September 30, 2008. This decrease was attributable
mainly to the contractions in the Gulf Coast 2/1/1 crack spreads.
    
    The third quarter of 2009 saw the continued contraction of sweet/sour and light/heavy
crude oil differentials compared to the prior period. The average sweet/sour spread for the
three months ended September 30, 2009 was $1.68 per barrel compared to $2.16 per barrel for
the three months ended September 30, 2008. The average light/heavy spread for the three
months ended September 30, 2009 was $4.97 per barrel compared to $11.23 per barrel for the
three months ended September 30, 2008.
    
    The average 3/2/1 Gulf Coast crack spread for the three months ended September 30, 2009
was $6.52 per barrel compared to $16.05 per barrel for the three months ended September 30,
2008. The average 2/1/1
 28




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##### Table of Contents



Gulf Coast high sulfur diesel crack spread for the three months ended September 30, 2009
was $5.36 per barrel compared to $15.86 per barrel for the three months ended September 30,
2008. Additionally, the average 3/2/1 West Coast crack spread for the three months ended
September 30, 2009 was $14.85 per barrel compared to $14.68 per barrel for the three months
ended September 30, 2008.
    
    Asphalt margins in the third quarter of 2009 were $82.99 per ton compared to $80.30 per
ton in the third quarter of 2008, primarily due to lower crude oil costs. The average
blended asphalt sales price decreased 27.9% from $618.53 per ton in the third quarter of
2008 to $446.26 per ton in the third quarter of 2009 and the average non-blended asphalt
sales price decreased 64.8% from $541.04 per ton in the third quarter of 2008 to $190.23
per ton in the third quarter of 2009. The blended asphalt sales accounted for 93.5% of
total asphalt sales in the third quarter of 2009. The decrease in the blended asphalt
sales price of 27.9% was less than the 42.2% decrease in WTI prices in the third quarter of
2009.
    
    Our retail fuel sales gallons for the three months ended September 30, 2009
increased 7.1 million gallons, or 29.9%, to 30.9 million gallons from 23.8 million gallons for the three months ended September 30, 2008.
Our integrated branded fuel sales gallons for the three months ended September 30, 2009 increased 10.0 million gallons, or 18.0%, to 64.7 million gallons from 54.7 million
gallons for the three months ended September 30, 2008.
    
    On September 15, 2009, 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 August 31, 2009.
 Major Influences on Results of Operations
 Refining and Unbranded Marketing
     29




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##### Table of Contents



Asphalt
  Retail and Branded Marketing
  30




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##### Table of Contents



Factors Affecting Comparability
      Results of Operations
 Net Sales
  Cost of Sales
 Direct Operating Expenses
 Selling, General and Administrative Expenses
 31




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES CONSOLIDATED
 Summary Financial Tables
 For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(dollars in thousands, except per
    
    
    (dollars in thousands, except pershare data)
    
    
    share data)STATEMENT OF OPERATIONS DATA:Net sales (1)
    
    $
    1,253,113
    
    
    $
    1,905,106
    
    
    $
    3,081,691
    
    
    $
    4,170,540Operating costs and expenses:Cost of sales
    
    
    1,165,295
    
    
    
    1,812,399
    
    
    
    2,693,343
    
    
    
    4,033,788Direct operating expenses
    
    
    64,091
    
    
    
    66,748
    
    
    
    204,300
    
    
    
    149,583Selling, general and administrative
expenses (2)
    
    
    32,276
    
    
    
    29,697
    
    
    
    95,772
    
    
    
    86,353Net costs associated with fire (3)
    
    
    
    
    
    
    17,376
    
    
    
    
    
    
    
    43,212Business interruption recovery (4)
    
    
    
    
    
    
    (30,000
    )
    
    
    
    
    
    
    (30,000
    )Depreciation and amortization (5)
    
    
    25,247
    
    
    
    17,232
    
    
    
    70,898
    
    
    
    44,484Total operating costs and expenses
    
    
    1,286,909
    
    
    
    1,913,452
    
    
    
    3,064,313
    
    
    
    4,327,420Gain on involuntary conversion of assets (6)
    
    
    
    
    
    
    103,092
    
    
    
    
    
    
    
    199,680Gain (loss) on disposition of assets (7)
    
    
    (547
    )
    
    
    (2,241
    )
    
    
    (2,147
    )
    
    
    43,005Operating income (loss)
    
    
    (34,343
    )
    
    
    92,505
    
    
    
    15,231
    
    
    
    85,805Interest expense (8)
    
    
    (21,460
    )
    
    
    (21,493
    )
    
    
    (70,739
    )
    
    
    (42,885
    )Equity earnings (losses) of investees
    
    
    12,811
    
    
    
    (3,915
    )
    
    
    21,184
    
    
    
    (2,307
    )Other income (loss), net
    
    
    (180
    )
    
    
    (25
    )
    
    
    268
    
    
    
    1,093Income (loss) before income tax expense
(benefit), non-controlling interest in
income (loss) of subsidiaries and
accumulated dividends on preferred stock of
subsidiary
    
    
    (43,172
    )
    
    
    67,072
    
    
    
    (34,056
    )
    
    
    41,706Income tax expense (benefit)
    
    
    (16,452
    )
    
    
    25,083
    
    
    
    (13,006
    )
    
    
    15,850Income (loss) before non-controlling
interest in income (loss) of subsidiaries
and accumulated dividends on preferred
stock of subsidiary
    
    
    (26,720
    )
    
    
    41,989
    
    
    
    (21,050
    )
    
    
    25,856Non-controlling interest in income (loss)
of subsidiaries
    
    
    (2,312
    )
    
    
    2,542
    
    
    
    (2,953
    )
    
    
    1,760Accumulated dividends on preferred stock of
subsidiary
    
    
    2,150
    
    
    
    2,150
    
    
    
    6,450
    
    
    
    2,150Net income (loss)
    
    $
    (26,558
    )
    
    $
    37,297
    
    
    $
    (24,547
    )
    
    $
    21,946Earnings (loss) per share, basic
    
    $
    (0.57
    )
    
    $
    0.80
    
    
    $
    (0.52
    )
    
    $
    0.47Weighted average shares outstanding, basic
(in thousands)
    
    
    46,810
    
    
    
    46,786
    
    
    
    46,808
    
    
    
    46,783Earnings (loss) per share, diluted
    
    $
    (0.57
    )
    
    $
    0.74
    
    
    $
    (0.52
    )
    
    $
    0.46Weighted average shares outstanding,
diluted (in thousands)
    
    
    46,810
    
    
    
    52,362
    
    
    
    46,808
    
    
    
    46,802Cash dividends per share
    
    $
    0.04
    
    
    $
    0.04
    
    
    $
    0.12
    
    
    $
    0.12
 32




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##### Table of Contents



For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(dollars in thousands, except per
    
    
    (dollars in thousands, except pershare data)
    
    
    share data)CASH FLOW DATA:Net cash provided by (used in):Operating activities
    
    $
    28,168
    
    
    $
    33,682
    
    
    $
    325,132
    
    
    $
    (8,394
    )Investing activities
    
    
    (48,891
    )
    
    
    (532,747
    )
    
    
    (93,605
    )
    
    
    (583,750
    )Financing activities
    
    
    (4,676
    )
    
    
    503,845
    
    
    
    (231,903
    )
    
    
    542,205OTHER DATA:Adjusted EBITDA (9)
    
    $
    4,082
    
    
    $
    108,038
    
    
    $
    109,728
    
    
    $
    86,070Capital expenditures (including earnout payment) (10)
    
    
    40,409
    
    
    
    21,724
    
    
    
    69,653
    
    
    
    41,248Capital expenditures to rebuild the Big
Spring refinery
    
    
    5,791
    
    
    
    152,225
    
    
    
    45,072
    
    
    
    312,566Capital expenditures for turnaround and
chemical catalyst
    
    
    2,691
    
    
    
    3
    
    
    
    13,005
    
    
    
    2,072
 September 30,
    
    December 31,2009
    
    2008BALANCE SHEET DATA (end of period):Cash and cash equivalents
    
    $
    18,078
    
    
    $
    18,454Working capital
    
    
    39,841
    
    
    
    250,384Total assets
    
    
    2,205,266
    
    
    
    2,413,433Total debt
    
    
    835,097
    
    
    
    1,103,569Total equity
    
    
    511,425
    
    
    
    536,867
 
 (1)
    
    Includes excise taxes on sales by the retail and branded marketing segment of $12,073 and
$9,102 for the three months ended September 30, 2009 and 2008, respectively, and $34,887 and
$28,075 for the nine months ended September 30, 2009 and 2008, respectively. Net sales also
includes royalty and related net credit card fees of $284 and $86 for the three months ended
September 30, 2009 and 2008, respectively, and $635 and $213 for the nine months ended
September 30, 2009 and 2008, respectively.(2)
    
    Includes corporate headquarters selling, general and administrative expenses of $189 and $151
for the three months ended September 30, 2009 and 2008, respectively, and $569 and $453 for
the nine months ended September 30, 2009 and 2008, respectively, which are not allocated to
our three operating segments.(3)
    
    Net costs associated with fire for the three and nine months ended September 30, 2008,
respectively, includes $17,376 and $37,422 of expenses incurred from pipeline commitment
deficiencies, crude sale losses and other incremental costs; $5,000 for the nine months ended
September 30, 2008 for our third party liability insurance deductible under the insurance
policy; and depreciation for the temporarily idled facilities of $790 for the nine months
ended September 30, 2008.(4)
    
    Business interruption recovery income for the three and nine months ended September 30, 2008
of $30,000 was recorded as a result of the Big Spring refinery fire with all proceeds received
in September and October 2008.(5)
    
    Includes corporate depreciation and amortization of $205 and $224 for the three months ended
September 30, 2009 and 2008, respectively, and $500 and $670 for the nine months ended
September 30, 2009 and 2008, respectively, which are not allocated to our three operating
segments. Additionally, 2009 depreciation reflects depreciation on the assets acquired in the
Krotz Springs refinery since the acquisition in July 2008 and capital expenditures placed in
service in September 2008 from the rebuild of the Big Spring refinery.(6)
    
    Based upon the receipt of insurance proceeds of $250,000 through September 30, 2008, an
involuntary gain on conversion of assets was recorded of $199,680 for the proceeds received in
excess of the book value of the assets impaired of $25,330 and demolition and repair expenses
of $24,990 incurred through September 30, 2008.(7)
    
    Gain on disposition of assets reported in the nine months ended September 30, 2008 includes
the recognition of deferred gain recorded primarily in connection with the contribution of
certain product pipelines and terminals to Holly Energy Partners, LP,(HEP), in March 2005
(HEP transaction). A gain of $42,935 in the second 33




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##### Table of Contents



quarter of 2008 represented all the recognition of the remaining deferred gain associated with
the HEP transaction and was due to the termination of an indemnification agreement with HEP.(8)
    
    Interest expense of $70,739 for the nine months ended September 30, 2009 includes $5,715
related to the liquidation of the heating oil hedge in the second quarter of 2009. The
remaining increase compared to interest expense for the nine months ended September 30, 2008
of $42,885 is primarily due to interest on borrowings and letter of credit fees related to the
Krotz Springs refinery acquisition.(9)
    
    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
    
    Our calculation of Adjusted EBITDA may differ from EBITDA calculations of other
companies in our industry, limiting its usefulness as a comparative measure.
 
 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 and nine
months ended September 30, 2009 and 2008, respectively: For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(dollars in thousands)Net income (loss)
    
    $
    (26,558
    )
    
    $
    37,297
    
    
    $
    (24,547
    )
    
    $
    21,946Non-controlling interest in income
(loss) of subsidiaries (including
accumulated dividends on preferred
stock of subsidiary)
    
    
    (162
    )
    
    
    4,692
    
    
    
    3,497
    
    
    
    3,910Income tax expense (benefit)
    
    
    (16,452
    )
    
    
    25,083
    
    
    
    (13,006
    )
    
    
    15,850Interest expense
    
    
    21,460
    
    
    
    21,493
    
    
    
    70,739
    
    
    
    42,885Depreciation and amortization
    
    
    25,247
    
    
    
    17,232
    
    
    
    70,898
    
    
    
    44,484(Gain) loss on disposition of assets
    
    
    547
    
    
    
    2,241
    
    
    
    2,147
    
    
    
    (43,005
    )Adjusted EBITDA
    
    $
    4,082
    
    
    $
    108,038
    
    
    $
    109,728
    
    
    $
    86,070
 34




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##### Table of Contents



Adjusted EBITDA for the three and nine months ended September 30, 2008 includes a gain on the
involuntary conversion of assets of $103,092 and $199,680, respectively, representing the
insurance proceeds received with respect to property damage resulting from the Big Spring
refinery fire in excess of the net book value of assets impaired of $25,330 and the demolition
and repair expenses of $24,990 incurred through September 30, 2008; income for the three and
nine months ended September 30, 2008 for a business interruption recovery of $30,000; net costs
associated with fire at the Big Spring refinery of $17,376 and $43,212 for the three and nine
months ended September 30, 2008, respectively; and a 2008 third quarter charge of $61,192 to
cost of sales for inventory adjustments related to the Krotz Springs refinery acquisition.(10)
    
    Includes corporate capital expenditures of $1,755 and $27 for the three months ended
September 30, 2009 and 2008, respectively, and $2,987 and $485 for the nine months ended
September 30, 2009 and 2008, respectively, which are not allocated to our three operating
segments. 35




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##### Table of Contents



REFINING AND UNBRANDED MARKETING SEGMENT
 For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(dollars in thousands, except per barrel data and pricing statistics)STATEMENTS OF OPERATIONS DATA:Net sales (1)
    
    $
    993,069
    
    
    $
    1,472,928
    
    
    $
    2,477,516
    
    
    $
    3,114,526Operating costs and expenses:Cost of sales
    
    
    972,686
    
    
    
    1,442,376
    
    
    
    2,221,615
    
    
    
    3,116,022Direct operating expenses
    
    
    51,286
    
    
    
    54,109
    
    
    
    171,295
    
    
    
    115,250Selling, general and administrative expenses
    
    
    6,934
    
    
    
    4,384
    
    
    
    21,500
    
    
    
    12,452Net costs associated with fire (2)
    
    
    
    
    
    
    17,376
    
    
    
    
    
    
    
    43,212Business interruption recovery (3)
    
    
    
    
    
    
    (30,000
    )
    
    
    
    
    
    
    (30,000
    )Depreciation and amortization (4)
    
    
    21,098
    
    
    
    13,081
    
    
    
    58,594
    
    
    
    31,921Total operating costs and expenses
    
    
    1,052,004
    
    
    
    1,501,326
    
    
    
    2,473,004
    
    
    
    3,288,857Gain on involuntary conversion of assets (5)
    
    
    
    
    
    
    103,092
    
    
    
    
    
    
    
    199,680Gain (loss) on disposition of assets (6)
    
    
    
    
    
    
    (2,241
    )
    
    
    (1,600
    )
    
    
    43,005Operating income (loss)
    
    $
    (58,935
    )
    
    $
    72,453
    
    
    $
    2,912
    
    
    $
    68,354KEY OPERATING STATISTICS:Total sales volume (bpd)
    
    
    127,580
    
    
    
    108,596
    
    
    
    127,460
    
    
    
    113,860Per barrel of throughput:Refinery operating margin  Big Spring (7)
    
    $
    1.34
    
    
    $
    8.17
    
    
    $
    6.32
    
    
    $
    2.30Refinery operating margin  CA Refineries (7)
    
    
    (0.55
    )
    
    
    9.13
    
    
    
    2.41
    
    
    
    (0.37
    )Refinery operating margin  Krotz Springs (7)
    
    
    2.45
    
    
    
    7.20
    
    
    
    6.64
    
    
    
    7.20Refinery direct operating expense  Big Spring (8)
    
    
    4.11
    
    
    
    5.15
    
    
    
    4.13
    
    
    
    5.00Refinery direct operating expense  CA Refineries (8)
    
    
    3.85
    
    
    
    6.17
    
    
    
    4.37
    
    
    
    5.26Refinery direct operating expense  Krotz Springs (8)
    
    
    2.75
    
    
    
    3.94
    
    
    
    3.77
    
    
    
    3.94Capital expenditures (including earnout payment)
    
    
    37,380
    
    
    
    20,821
    
    
    
    63,703
    
    
    
    38,445Capital expenditures to rebuild the Big Spring refinery
    
    
    5,791
    
    
    
    152,225
    
    
    
    45,072
    
    
    
    312,566Capital expenditures for turnaround and chemical catalyst
    
    
    2,691
    
    
    
    3
    
    
    
    13,005
    
    
    
    2,072PRICING STATISTICS:WTI crude oil (per barrel)
    
    $
    68.17
    
    
    $
    117.98
    
    
    $
    57.03
    
    
    $
    113.34WTS crude oil (per barrel)
    
    
    66.49
    
    
    
    115.82
    
    
    
    55.69
    
    
    
    109.53MAYA crude oil (per barrel)
    
    
    63.20
    
    
    
    106.75
    
    
    
    51.98
    
    
    
    97.03Crack spreads (3/2/1) (per barrel):Gulf Coast
    
    $
    6.52
    
    
    $
    16.05
    
    
    $
    8.14
    
    
    $
    12.82Group III
    
    
    8.01
    
    
    
    14.94
    
    
    
    9.02
    
    
    
    12.95West Coast
    
    
    14.85
    
    
    
    14.68
    
    
    
    15.74
    
    
    
    18.15Crack spreads (6/1/2/3) (per barrel):West Coast
    
    $
    5.39
    
    
    $
    3.17
    
    
    $
    4.73
    
    
    $
    0.22Crack spreads (2/1/1) (per barrel):Gulf Coast high sulfur diesel
    
    $
    5.36
    
    
    $
    15.86
    
    
    $
    7.14
    
    
    $
    13.15Crude oil differentials (per barrel):WTI less WTS
    
    $
    1.68
    
    
    $
    2.16
    
    
    $
    1.34
    
    
    $
    3.81WTI less MAYA
    
    
    4.97
    
    
    
    11.23
    
    
    
    5.05
    
    
    
    16.31Product price (dollars per gallon):Gulf Coast unleaded gasoline
    
    $
    1.773
    
    
    $
    3.090
    
    
    $
    1.545
    
    
    $
    2.863Gulf Coast ultra low-sulfur diesel
    
    
    1.789
    
    
    
    3.394
    
    
    
    1.565
    
    
    
    3.285Gulf Coast high sulfur diesel
    
    
    1.728
    
    
    
    3.283
    
    
    
    1.510
    
    
    
    3.160Group III unleaded gasoline
    
    
    1.814
    
    
    
    3.032
    
    
    
    1.575
    
    
    
    2.861Group III ultra low-sulfur diesel
    
    
    1.815
    
    
    
    3.430
    
    
    
    1.567
    
    
    
    3.300West Coast LA CARBOB (unleaded gasoline)
    
    
    2.042
    
    
    
    3.084
    
    
    
    1.798
    
    
    
    3.067West Coast LA ultra low-sulfur diesel
    
    
    1.847
    
    
    
    3.308
    
    
    
    1.602
    
    
    
    3.258Natural gas (per MMBTU)
    
    
    3.44
    
    
    
    8.98
    
    
    
    3.90
    
    
    
    9.75
 36




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##### Table of Contents



THROUGHPUT AND YIELD DATA:
BIG SPRING
 For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008bpd
    
    
    %
    
    
    bpd
    
    
    %
    
    
    bpd
    
    
    %
    
    
    bpd
    
    
    %Refinery throughput:Sour crude
    
    
    44,924
    
    
    
    71.9
    
    
    
    29,413
    
    
    
    83.5
    
    
    
    50,345
    
    
    
    80.0
    
    
    
    27,199
    
    
    
    84.2Sweet crude
    
    
    15,521
    
    
    
    24.8
    
    
    
    4,396
    
    
    
    12.5
    
    
    
    10,411
    
    
    
    16.5
    
    
    
    3,736
    
    
    
    11.6Blendstocks
    
    
    2,055
    
    
    
    3.3
    
    
    
    1,395
    
    
    
    4.0
    
    
    
    2,177
    
    
    
    3.5
    
    
    
    1,364
    
    
    
    4.2Total refinery throughput (9)
    
    
    62,500
    
    
    
    100.0
    
    
    
    35,204
    
    
    
    100.0
    
    
    
    62,933
    
    
    
    100.0
    
    
    
    32,299
    
    
    
    100.0Refinery production:Gasoline
    
    
    27,366
    
    
    
    44.1
    
    
    
    8,987
    
    
    
    26.3
    
    
    
    27,424
    
    
    
    43.8
    
    
    
    10,642
    
    
    
    33.7Diesel/jet
    
    
    19,690
    
    
    
    31.8
    
    
    
    8,861
    
    
    
    26.0
    
    
    
    20,477
    
    
    
    32.7
    
    
    
    8,128
    
    
    
    25.7Asphalt
    
    
    5,830
    
    
    
    9.4
    
    
    
    4,582
    
    
    
    13.5
    
    
    
    5,879
    
    
    
    9.4
    
    
    
    4,552
    
    
    
    14.4Petrochemicals
    
    
    3,340
    
    
    
    5.4
    
    
    
    626
    
    
    
    1.8
    
    
    
    3,286
    
    
    
    5.3
    
    
    
    790
    
    
    
    2.5Other
    
    
    5,790
    
    
    
    9.3
    
    
    
    11,054
    
    
    
    32.4
    
    
    
    5,524
    
    
    
    8.8
    
    
    
    7,511
    
    
    
    23.7Total refinery production (10)
    
    
    62,016
    
    
    
    100.0
    
    
    
    34,110
    
    
    
    100.0
    
    
    
    62,590
    
    
    
    100.0
    
    
    
    31,623
    
    
    
    100.0Refinery utilization (11)
    
    
    
    
    
    
    86.3
    %
    
    
    
    
    
    
    52.9
    %
    
    
    
    
    
    
    86.8
    %
    
    
    
    
    
    
    45.3
    %
 THROUGHPUT AND YIELD DATA:
CALIFORNIA REFINERIES
 For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008bpd
    
    
    %
    
    
    bpd
    
    
    %
    
    
    bpd
    
    
    %
    
    
    bpd
    
    
    %Refinery throughput:Medium sour crude
    
    
    16,073
    
    
    
    45.3
    
    
    
    8,692
    
    
    
    30.3
    
    
    
    16,164
    
    
    
    46.6
    
    
    
    10,404
    
    
    
    30.1Heavy crude
    
    
    18,937
    
    
    
    53.4
    
    
    
    19,714
    
    
    
    68.8
    
    
    
    18,259
    
    
    
    52.6
    
    
    
    23,587
    
    
    
    68.1Blendstocks
    
    
    460
    
    
    
    1.3
    
    
    
    255
    
    
    
    0.9
    
    
    
    288
    
    
    
    0.8
    
    
    
    629
    
    
    
    1.8Total refinery throughput (9)
    
    
    35,470
    
    
    
    100.0
    
    
    
    28,661
    
    
    
    100.0
    
    
    
    34,711
    
    
    
    100.0
    
    
    
    34,620
    
    
    
    100.0Refinery production:Gasoline
    
    
    5,456
    
    
    
    15.8
    
    
    
    3,513
    
    
    
    12.6
    
    
    
    5,189
    
    
    
    15.3
    
    
    
    4,672
    
    
    
    14.0Diesel/jet
    
    
    8,434
    
    
    
    24.5
    
    
    
    7,379
    
    
    
    26.5
    
    
    
    8,037
    
    
    
    23.7
    
    
    
    8,262
    
    
    
    24.7Asphalt
    
    
    10,441
    
    
    
    30.3
    
    
    
    9,026
    
    
    
    32.4
    
    
    
    10,215
    
    
    
    30.2
    
    
    
    9,650
    
    
    
    28.8Light unfinished
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    467
    
    
    
    1.4
    
    
    
    
    
    
    
    Heavy unfinished
    
    
    9,546
    
    
    
    27.7
    
    
    
    7,678
    
    
    
    27.5
    
    
    
    9,409
    
    
    
    27.8
    
    
    
    10,659
    
    
    
    31.8Other
    
    
    585
    
    
    
    1.7
    
    
    
    278
    
    
    
    1.0
    
    
    
    551
    
    
    
    1.6
    
    
    
    249
    
    
    
    0.7Total refinery production (10)
    
    
    34,462
    
    
    
    100.0
    
    
    
    27,874
    
    
    
    100.0
    
    
    
    33,868
    
    
    
    100.0
    
    
    
    33,492
    
    
    
    100.0Refinery utilization (11)
    
    
    
    
    
    
    48.3
    %
    
    
    
    
    
    
    39.2
    %
    
    
    
    
    
    
    53.1
    %
    
    
    
    
    
    
    46.9
    %
 THROUGHPUT AND YIELD DATA:
KROTZ SPRINGS (A)
 For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008bpd
    
    
    %
    
    
    bpd
    
    
    %
    
    
    bpd
    
    
    %
    
    
    bpd
    
    
    %Refinery throughput:Light sweet crude
    
    
    30,741
    
    
    
    51.5
    
    
    
    37,803
    
    
    
    64.7
    
    
    
    28,755
    
    
    
    50.2
    
    
    
    37,803
    
    
    
    64.7Heavy sweet crude
    
    
    27,547
    
    
    
    46.2
    
    
    
    18,595
    
    
    
    31.9
    
    
    
    24,691
    
    
    
    43.1
    
    
    
    18,595
    
    
    
    31.9Blendstocks
    
    
    1,402
    
    
    
    2.3
    
    
    
    1,989
    
    
    
    3.4
    
    
    
    3,862
    
    
    
    6.7
    
    
    
    1,989
    
    
    
    3.4Total refinery throughput (9)
    
    
    59,690
    
    
    
    100.0
    
    
    
    58,387
    
    
    
    100.0
    
    
    
    57,308
    
    
    
    100.0
    
    
    
    58,387
    
    
    
    100.0Refinery production:Gasoline
    
    
    27,441
    
    
    
    45.4
    
    
    
    24,255
    
    
    
    41.0
    
    
    
    26,628
    
    
    
    45.8
    
    
    
    24,255
    
    
    
    41.0Diesel/jet
    
    
    26,855
    
    
    
    44.5
    
    
    
    27,910
    
    
    
    47.2
    
    
    
    25,288
    
    
    
    43.4
    
    
    
    27,910
    
    
    
    47.2Heavy oils
    
    
    1,205
    
    
    
    2.0
    
    
    
    1,260
    
    
    
    2.1
    
    
    
    1,151
    
    
    
    2.0
    
    
    
    1,260
    
    
    
    2.1Other
    
    
    4,865
    
    
    
    8.1
    
    
    
    5,700
    
    
    
    9.7
    
    
    
    5,090
    
    
    
    8.8
    
    
    
    5,700
    
    
    
    9.7Total refinery production (10)
    
    
    60,366
    
    
    
    100.0
    
    
    
    59,125
    
    
    
    100.0
    
    
    
    58,157
    
    
    
    100.0
    
    
    
    59,125
    
    
    
    100.0Refinery utilization (11)
    
    
    
    
    
    
    70.1
    %
    
    
    
    
    
    
    67.9
    %
    
    
    
    
    
    
    64.3
    %
    
    
    
    
    
    
    67.9
    %
 
 (A)
    
    For the nine months ended September 30, 2008, represents throughput and production data for
the period from July 1, 2008 through September 30, 2008. 37




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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 prices. These intersegment sales are eliminated
through consolidation of our financial statements.(2)
    
    Net costs associated with fire for the three and nine months ended September 30, 2008,
respectively, includes $17,376 and $37,422 of expenses incurred from pipeline commitment
deficiencies, crude sale losses and other incremental costs; $5,000 for the nine months ended
September 30, 2008 for our third party liability insurance deductible under the insurance
policy; and depreciation for the temporarily idled facilities of $790 for the nine months
ended September 30, 2008.(3)
    
    Business interruption recovery income for the three and nine months ended September 30, 2008
of $30,000 was recorded as a result of the Big Spring refinery fire with all proceeds received
in September and October 2008.(4)
    
    Higher 2009 depreciation amounts were attributable to  depreciation on the assets acquired in
the Krotz Springs refinery acquisition in July 2008 and assets placed in service
in September 2008 following the rebuild of the Big Spring refinery.(5)
    
    Based upon the receipt of insurance proceeds of $250,000 through September 30, 2008, an
involuntary gain on conversion of assets was recorded of $199,680 for the proceeds received in
excess of the book value of the assets impaired of $25,330 and demolition and repair expenses
of $24,990 incurred through September 30, 2008.(6)
    
    Gain on disposition of assets reported in the nine months ended September 30, 2008 includes
the recognition of deferred gain recorded primarily in connection with the HEP transaction. A
gain of $42,935 in the second quarter of 2008 represented all the recognition of the remaining
deferred gain associated with the HEP transaction and was due to the termination of an
indemnification agreement with HEP.(7)
    
    Refinery operating margin is a per barrel measurement calculated by dividing the margin
between net sales and cost of sales (exclusive of unrealized hedging gains and losses and
inventory adjustments related to acquisitions) 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 $1,019 and $151 for the Big Spring refinery for the three and nine months
ended September 30, 2009, respectively. There was an unrealized hedging gain of $58 for the
California refineries for the nine months ended September 30, 2009 and unrealized hedging
gains of $2,525 and $4,127 for the California refineries for the three and nine months ended
September 30, 2008, respectively. There was an unrealized hedging loss of $29 and
unrealized gain of $20,369 for the Krotz Springs refinery for the three and nine months ended
September 30, 2009, respectively. Additionally, the Krotz Springs refinery margin for the
nine months ended September 30, 2009 excludes realized gains related to the unwind of the
heating oil crack spread hedge of $139,290 and the refinery margin for the three months ended
September 30, 2008 excludes a charge of $61,192 to cost of sales for inventory adjustments
related to the acquisition.(8)
    
    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.(9)
    
    Total refinery throughput represents the total barrels per day of crude oil and blendstock
inputs in the refinery production process.(10)
    
    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 refinery. Light product yields were lower at the Big Spring refinery for the
three and nine months ended September 30, 2008 due to the fire on February 18, 2008 and the
re-start of the crude unit in a hydroskimming mode on April 5, 2008.(11)
    
    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 for the three and nine months ended
September 30, 2008 is due to the fire on February 18, 2008 and the re-start of the crude unit
in a hydroskimming mode on April 5, 2008. 38




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##### Table of Contents



ASPHALT SEGMENT
 For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(dollars in thousands, except per ton data)STATEMENTS OF OPERATIONS DATA:Net sales
    
    $
    175,189
    
    
    $
    261,556
    
    
    $
    351,429
    
    
    $
    542,773Operating costs and expenses:Cost of sales (1)
    
    
    139,751
    
    
    
    227,348
    
    
    
    307,881
    
    
    
    482,957Direct operating expenses
    
    
    12,805
    
    
    
    12,639
    
    
    
    33,005
    
    
    
    34,333Selling, general and administrative expenses
    
    
    1,267
    
    
    
    921
    
    
    
    3,471
    
    
    
    3,043Depreciation and amortization
    
    
    545
    
    
    
    535
    
    
    
    1,625
    
    
    
    1,603Total operating costs and expenses
    
    
    154,368
    
    
    
    241,443
    
    
    
    345,982
    
    
    
    521,936Operating income
    
    $
    20,821
    
    
    $
    20,113
    
    
    $
    5,447
    
    
    $
    20,837KEY OPERATING STATISTICS:Blended asphalt sales volume (tons in
thousands) (2)
    
    
    367
    
    
    
    401
    
    
    
    813
    
    
    
    1,028Non-blended asphalt sales volume (tons in
thousands) (3)
    
    
    60
    
    
    
    25
    
    
    
    143
    
    
    
    63Blended asphalt sales price per ton (2)
    
    $
    446.26
    
    
    $
    618.53
    
    
    $
    404.39
    
    
    $
    508.09Non-blended asphalt sales price per ton (3)
    
    
    190.23
    
    
    
    541.04
    
    
    
    158.49
    
    
    
    324.63Asphalt margin per ton (4)
    
    
    82.99
    
    
    
    80.30
    
    
    
    45.55
    
    
    
    54.83Capital expenditures
    
    $
    523
    
    
    $
    32
    
    
    $
    1,099
    
    
    $
    307
 
 (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. 39




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##### Table of Contents



RETAIL AND BRANDED MARKETING SEGMENT
 For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(dollars in thousands, except per gallon data)STATEMENTS OF OPERATIONS DATA:Net sales (1)
    
    $
    217,232
    
    
    $
    351,496
    
    
    $
    591,163
    
    
    $
    1,038,022Operating costs and expenses:Cost of sales (2)
    
    
    185,235
    
    
    
    323,549
    
    
    
    502,264
    
    
    
    959,590Selling, general and administrative expenses
    
    
    23,886
    
    
    
    24,241
    
    
    
    70,232
    
    
    
    70,405Depreciation and amortization
    
    
    3,399
    
    
    
    3,392
    
    
    
    10,179
    
    
    
    10,290Total operating costs and expenses
    
    
    212,520
    
    
    
    351,182
    
    
    
    582,675
    
    
    
    1,040,285Loss on disposition of assets
    
    
    (547
    )
    
    
    
    
    
    
    (547
    )
    
    
    Operating income (loss)
    
    $
    4,165
    
    
    $
    314
    
    
    $
    7,941
    
    
    $
    (2,263
    )KEY OPERATING STATISTICS:Integrated branded fuel sales (thousands of gallons)
(3)
    
    
    64,721
    
    
    
    54,700
    
    
    
    194,984
    
    
    
    163,789Integrated branded fuel margin (cents per gallon) (3)
    
    
    7.4
    
    
    
    2.7
    
    
    
    6.2
    
    
    
    2.2Non-Integrated branded fuel sales (thousands of
gallons) (3)
    
    
    3,558
    
    
    
    28,236
    
    
    
    9,945
    
    
    
    103,687Non-Integrated branded fuel margin (cents per
gallon) (3)
    
    
    3.1
    
    
    
    (1.3
    )
    
    
    4.2
    
    
    
    (1.2
    )Number of stores (end of period)
    
    
    305
    
    
    
    306
    
    
    
    305
    
    
    
    306Retail fuel sales (thousands of gallons)
    
    
    30,915
    
    
    
    23,807
    
    
    
    89,296
    
    
    
    73,092Retail fuel sales (thousands of gallons per site per
month)
    
    
    34
    
    
    
    26
    
    
    
    33
    
    
    
    27Retail fuel margin (cents per gallon) (4)
    
    
    16.6
    
    
    
    22.5
    
    
    
    15.0
    
    
    
    20.0Retail fuel sales price (dollars per gallon) (5)
    
    $
    2.48
    
    
    $
    3.86
    
    
    $
    2.22
    
    
    $
    3.57Merchandise sales
    
    $
    69,413
    
    
    $
    69,378
    
    
    $
    202,675
    
    
    $
    197,931Merchandise sales (per site per month)
    
    
    76
    
    
    
    76
    
    
    
    74
    
    
    
    72Merchandise margin (6)
    
    
    31.4
    %
    
    
    30.8
    %
    
    
    30.9
    %
    
    
    30.9
    %Capital expenditures
    
    $
    751
    
    
    $
    844
    
    
    $
    1,864
    
    
    $
    2,011
 
 (1)
    
    Includes excise taxes on sales by the retail and branded marketing segment of $12,073 and
$9,102 for the three months ended September 30, 2009 and 2008, respectively, and $34,887 and
$28,075 for the nine months ended September 30, 2009 and 2008, respectively. Net sales also
includes royalty and related net credit card fees of $284 and $86 for the three months ended
September 30, 2009 and 2008, respectively, and $635 and $213 for the nine months ended
September 30, 2009 and 2008, respectively.(2)
    
    Cost of sales includes intersegment purchases of motor fuels 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.(3)
    
    Marketing sales volume represents branded fuel sales to our wholesale marketing customers
located in both our integrated and non-integrated regions. The branded fuels we sell in our
integrated region are primarily supplied by the Big Spring refinery. Due to the fire on
February 18, 2008 at the Big Spring refinery, more fuel was obtained from third-party
suppliers than is typical during the three and nine months ended September 30, 2008. The
branded fuels we sell in the non-integrated region are obtained from third-party suppliers.
The marketing margin represents the difference 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. 40




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##### Table of Contents



Three Months Ended September 30, 2009 Compared to the Three Months Ended September 30, 2008
 Net Sales
 Consolidated
 Refining and Unbranded Marketing Segment
   Asphalt Segment
 Retail and Branded Marketing Segment
 Cost of Sales
 Consolidated
 Refining and Unbranded Marketing Segment.
 41




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##### Table of Contents



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
 Depreciation and Amortization
  42




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##### Table of Contents



Operating Income (Loss)
 Consolidated
 Refining and Unbranded Marketing Segment
  Asphalt Segment.
 Retail and Branded Marketing Segment.
 Interest Expense
  Income Tax Expense (Benefit)
  Non-Controlling Interest In Income (Loss) Of Subsidiaries
  43




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##### Table of Contents



Net Income (Loss)
  Nine months ended September 30, 2009 Compared to the Nine months ended September 30, 2008
 Net Sales
 Consolidated
 Refining and Unbranded Marketing Segment
   Asphalt Segment
 Retail and Branded Marketing Segment
 44




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##### Table of Contents



Cost of Sales
 Consolidated
 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
 45




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##### Table of Contents



Asphalt Segment
 Retail and Branded Marketing Segment
 Depreciation and Amortization
  Operating Income
 Consolidated
 Refining and Unbranded Marketing Segment
  Asphalt Segment.
 Retail and Branded Marketing Segment.
 46




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##### Table of Contents



Interest Expense
  Income Tax Expense (Benefit)
  Non-Controlling Interest In Income (Loss) Of Subsidiaries
  Net Income (Loss)
  Liquidity and Capital Resources
    47




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##### Table of Contents



Cash Flows
  For the Nine Months EndedSeptember 30,2009
    
    
    2008(dollars in thousands)Cash provided by (used in):Operating activities
    
    $
    325,132
    
    
    $
    (8,394
    )Investing activities
    
    
    (93,605
    )
    
    
    (583,750
    )Financing activities
    
    
    (231,903
    )
    
    
    542,205Net decrease in cash and cash equivalents
    
    $
    (376
    )
    
    $
    (49,939
    )
 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
  48




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Summary of Indebtedness
 As of September 30, 2009(dollars in thousands)Amount Outstanding
    
    
    Total Facility
    
    
    Total Availability (1)Debt, including current portion:Term loan credit facilities
    
    $
    599,194
    
    
    $
    599,194
    
    
    $
    Revolving credit facilities
    
    
    153,789
    
    
    
    790,000
    
    
    
    101,346Retail credit facilities
    
    
    82,114
    
    
    
    82,114
    
    
    
    Totals
    
    $
    835,097
    
    
    $
    1,471,308
    
    
    $
    101,346
 
 (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 September 30, 2009 which was $258.0
million, or (b) total borrowing base less outstanding borrowings and letters of credit, if
applicable, as of September 30, 2009 which was $101.3 million. Alon USA Energy, Inc. Credit Facilities
 Term Loan Credit Facility
   Letters of Credit Facility.
 Alon USA, LP Credit Facilities
 Revolving Credit Facility.
 49




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##### Table of Contents



Paramount Petroleum Corporation Credit Facility
 Revolving Credit Facility.
  Alon Refining Krotz Springs, Inc. Credit Facilities
 Term Loan Credit Facility
    1 2
 50




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##### Table of Contents



Revolving Credit Facility
       Retail Credit Facilities
   51




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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
  52




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##### Table of Contents



New Accounting Standards and Disclosures
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Commodity Price Risk
     53




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##### 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-short (Gasoline)
    
    $
    (125,015
    )
    
    $
    
    
    
    $
    68.00
    
    
    $
    (8,501
    )
    
    $
    (9,051
    )
    
    $
    (550
    )Forwards-short (Diesel)
    
    
    (75,000
    )
    
    
    
    
    
    
    74.17
    
    
    
    (5,563
    )
    
    
    (5,701
    )
    
    
    (138
    )Futures-long (Diesel)
    
    
    91,000
    
    
    
    75.32
    
    
    
    
    
    
    
    6,854
    
    
    
    7,004
    
    
    
    150
 Wtd Avg
    
    Wtd AvgDescription
    
    Contract
    
    Contract
    
    Market
    
    Contract
    
    Market
    
    Gainof Activity
    
    Volume
    
    Spread
    
    Spread
    
    Value
    
    Value
    
    (Loss)(in thousands)Futures-long (SPR Swaps)
    
    
    434,000
    
    
    $
    96.36
    
    
    $
    74.80
    
    
    $
    41,821
    
    
    $
    32,462
    
    
    $
    (9,359
    )Futures-short (SPR Swaps)
    
    
    (434,000
    )
    
    
    61.44
    
    
    
    74.80
    
    
    
    (26,664
    )
    
    
    (32,462
    )
    
    
    (5,798
    )
 Interest Rate Risk
  
 ITEM 4. CONTROLS AND PROCEDURES
 (1) Evaluation of disclosure controls and procedures.
  (2) Changes in internal control over financial reporting.
  54




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PART II. OTHER INFORMATION
 
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
  55




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##### Table of Contents



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).4.2
    
    Indenture, dated as of October 22, 2009, by and among Alon Refining Krotz Springs, Inc. and
Wilmington Trust FSB, as Trustee (incorporated by reference to Exhibit 4.1 to Form 8-K,
filed by the Company on October 23, 2009, SEC File No. 001-32567).10.1
    
    First Amendment to Earnout Agreement, dated as of August 27, 2009, by and between Valero
Refining and Marketing Company and Alon Refining Krotz Springs, Inc.10.2
    
    Purchase Agreement dated October 13, 2009, between Alon Refining Krotz Springs, Inc. and
Jefferies & Co. (incorporated by reference to Exhibit 10.1 to Form 8-K, filed by the Company
on October 19, 2009, SEC File No. 001-32567).10.3
    
    Amended and Restated Loan and Security Agreement, dated as of October 22, 2009 (as amended,
supplemented or otherwise modified from time to time), among Alon Refining Louisiana, Inc.,
Alon Refining Krotz Springs, Inc., each other party joined as a borrower thereunder from
time to time, the Lenders party thereto, and Bank of America, N.A., as Agent (incorporated
by reference to Exhibit 10.1 to Form 8-K, filed by the Company on October 23, 2009, SEC File
No. 001-32567).10.4
    
    Registration Rights Agreement, dated October 22, 2009, between Alon Refining Krotz Springs,
Inc. and Jefferies & Company, Inc. (incorporated by reference to Exhibit 10.2 to Form 8-K,
filed by the Company on October 23, 2009, SEC File No. 001-32567).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.
 
  56




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##### Table of Contents



SIGNATURES
  Alon USA Energy, Inc.Date:  November 6, 2009
    By:
    /s/ David WiessmanDavid WiessmanExecutive ChairmanDate:  November 6, 2009
    By:
    /s/ Jeff D. MorrisJeff D. MorrisChief Executive OfficerDate:  November 6, 2009
    By:
    /s/ Shai EvenShai EvenChief Financial Officer 57




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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).4.2
    
    Indenture, dated as of October 22, 2009, by and among Alon Refining Krotz Springs, Inc. and
Wilmington Trust FSB, as Trustee (incorporated by reference to Exhibit 4.1 to Form 8-K,
filed by the Company on October 23, 2009, SEC File No. 001-32567).10.1
    
    First Amendment to Earnout Agreement, dated as of August 27, 2009, by and between Valero
Refining and Marketing Company and Alon Refining Krotz Springs, Inc.10.2
    
    Purchase Agreement dated October 13, 2009, between Alon Refining Krotz Springs, Inc. and
Jefferies & Co. (incorporated by reference to Exhibit 10.1 to Form 8-K, filed by the Company
on October 19, 2009, SEC File No. 001-32567).10.3
    
    Amended and Restated Loan and Security Agreement, dated as of October 22, 2009 (as amended,
supplemented or otherwise modified from time to time), among Alon Refining Louisiana, Inc.,
Alon Refining Krotz Springs, Inc., each other party joined as a borrower thereunder from
time to time, the Lenders party thereto, and Bank of America, N.A., as Agent (incorporated
by reference to Exhibit 10.1 to Form 8-K, filed by the Company on October 23, 2009, SEC File
No. 001-32567).10.4
    
    Registration Rights Agreement, dated October 22, 2009, between Alon Refining Krotz Springs,
Inc. and Jefferies & Company, Inc. (incorporated by reference to Exhibit 10.2 to Form 8-K,
filed by the Company on October 23, 2009, SEC File No. 001-32567).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.