Alon USA Energy, Inc.

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Alon USA Reports 2008 Results

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Declares Quarterly Cash Dividend

Company schedules conference call for March 6, 2009 at 10:00 A.M. Eastern

DALLASMarch 5 /PRNewswire-FirstCall/ -- Alon USA Energy, Inc. (NYSE: ALJ) ("Alon") today announced results for the quarter and year ended December 31, 2008. Net income for the fourth quarter of 2008 was $60.9 million, or $1.30 per share, compared to net loss of ($39.9) million, or ($0.85) per share, for the same period last year. Excluding special items, Alon recorded net income of $63.1 million, or $1.35 per share, for the fourth quarter of 2008, compared to net loss of ($41.5) million, or ($0.89) per share, for the same period last year.

Net income for the year ended December 31, 2008, was $82.9 million, or $1.77 per share, compared to net income of $103.9 million, or $2.22 per share, for the year ended December 31, 2007. Excluding special items, Alon recorded net income of $2.6 million, or $0.05 per share, for the year ended December 31, 2008, compared to net income of $99.5 million, or $2.13 per share, for the same period last year.

Jeff Morris, Alon's President and CEO, commented, "We have completed one of the most trying years in the history of our company, and have emerged a much stronger organization as a result. Although we experienced a major fire at our Big Springrefinery on February 18, 2008, we were able to resume operations on April 5, 2008 in a hydro-skimming mode and were able to resume normal operations with the completion of work on the Fluid Catalytic Cracking Unit ("FCCU") on September 26, 2008. This effort substantially completed the rebuild of the units damaged in the fire. We have received funds from our insurers for the full claim of our policy of $385.0 million.

"While performing the work at the Big Spring refinery, we successfully completed the acquisition of the Krotz Springs, Louisianarefinery on July 3, 2008, increasing our crude oil refining capacity by 50% to approximately 250,000 barrels per day ("bpd"). Hurricanes Gustav and Ike presented challenges to us as our crude oil supply receipts into the refinery and product movements from the refinery were disrupted while power was restored to the area. Transportation of crude oil and products increased during the fourth quarter allowing us to run the refinery at normal rates by year end. The dramatic decrease in crude oil prices beginning in September presented challenges to our Krotz Springs subsidiary's debt facilities size. We are working with our lenders to adjust the debt to match the current environment and have agreed in principal that an additional $50.0 million of cash and letters of credit support will be provided to this subsidiary with the assistance of our parent company, to better position its liquidity going forward. In addition, our heating oil hedge at Krotz Springs, which settles on a monthly basis through October 2010, had an unrealized value at year end of approximately $167.0 million, and has a current unrealized value of approximately$200.0 million, including a $50.0 million collateral deposit.

"At our California refineries, we continued to optimize our refining economics during the fourth quarter of 2008, operating at lower throughput rates to balance production with demand for our asphalt products. While the rapid increase in crude oil prices during the year negatively affected our asphalt margins, the rapid decrease in crude oil prices enabled our asphalt margins to be highly favorable during the fourth quarter of 2008.

"Although companies in our industry experienced usage of cash in working capital during the fourth quarter due to the rapid decline in crude oil prices, I am very pleased that we were able to generate approximately $8.0 million in cash from operating activities during this period and in addition our availability under revolving credit facilities was approximately $250.0 million at year end. Also, we believe that we will collect, during the second quarter of 2009, approximately $100.0 million of income tax receivable that will enhance our cash from operating activities.

"For 2009, we look forward to increasing our synergies within our organization as we focus on continued integration of our refining facilities and on developing and enhancing the markets in which we operate. We believe these initiatives should position Alon for additional growth going forward."

FOURTH QUARTER 2008

Special items for the fourth quarter of 2008 included after-tax losses of $35.0 million associated with inventories acquired in theJuly 2008 Krotz Springs refinery acquisition due to the impact of lower commodity prices; $6.1 million incurred for costs associated with the Big Spring refinery fire and after-tax gains of $37.8 million recognized from the involuntary conversion of assets due to the Big Spring refinery fire; and $1.0 million recognized on disposition of assets. Special items for the fourth quarter of 2007 included an after-tax gain of $1.6 million recognized on disposition of assets.

Refinery operating margin at the Big Spring refinery was ($12.91) per barrel for the fourth quarter of 2008 compared to $3.79 per barrel for the same period in 2007. This decrease resulted primarily from lower industry Gulf Coast 3-2-1 crack spreads and from the rapid decline in crude oil prices affecting inventory values during the fourth quarter of 2008. Refinery operating margin at theCalifornia refineries was $11.74 per barrel for the fourth quarter of 2008 compared to ($5.04) per barrel for the same period in 2007. The Krotz Springs refinery operating margin for the fourth quarter of 2008 was $7.30 per barrel.

The combined refineries throughput for the fourth quarter of 2008 averaged 132,751 bpd, consisting of 54,156 bpd at the Big Spring refinery, 20,613 bpd at the California refineries, and 57,982 bpd at the Krotz Springs refinery compared to a combined average of 124,376 bpd in the fourth quarter of 2007, consisting of 66,633 bpd at the Big Spring refinery and 57,743 bpd at theCalifornia refineries. The Big Spring refinery had lower throughput in the fourth quarter of 2008 due to lower gasoline margins. Throughput at the California refineries was lower in the fourth quarter of 2008 to optimize our refining and asphalt economics. Throughput at the Krotz Springs refinery was negatively impacted in the fourth quarter of 2008 by crude oil supply disruptions caused by the hurricanes.

Gulf Coast 3-2-1 average crack spreads decreased to $3.49 per barrel for the fourth quarter of 2008 compared to $7.94 per barrel for the fourth quarter of 2007. West Coast 3-2-1 average crack spreads decreased to $8.79 per barrel for the fourth quarter of 2008 compared to $16.92 per barrel for the fourth quarter of 2007. The WTI/WTS crude oil differentials for the fourth quarter of 2008 decreased to $3.69 per barrel compared to $6.16 per barrel in the same period of 2007.

Asphalt margins for the fourth quarter of 2008 increased to an average of $422.29 per ton compared to ($9.03) per ton for the fourth quarter of 2007. This increase resulted primarily from a 45.7% increase in sales prices which were $504.58 per ton for the fourth quarter of 2008 compared to $346.27 per ton for the same period in 2007, as well as the drop in crude oil costs in the fourth quarter of 2008 compared to crude oil costs in the fourth quarter of 2007.

YEAR-TO-DATE 2008

Special items for the year ended December 31, 2008 included after-tax losses of $70.7 million associated with inventories acquired in the July 2008 Krotz Springs refinery acquisition; $31.6 million associated with the Big Spring refinery fire and after-tax gains of $155.3 million associated with the involuntary conversion of assets due to the Big Spring refinery fire; and $27.4 million recognized primarily from the disposition of assets in connection with the contribution of certain product pipelines and terminals to Holly Energy Partners, LP, in March 2005 ("HEP transaction"). Special items for the year ended December 31, 2007included an after-tax gain of $4.4 million recognized primarily from the HEP transaction.

Refinery operating margin at the Big Spring refinery was ($3.18) per barrel, while operating primarily in a hydroskimming mode for the year ended December 31, 2008, compared to $12.83 per barrel for the same period in 2007. This decrease resulted from both lower refinery light product yields as a result of the fire at the Big Spring refinery as well as lower industry Gulf Coast 3-2-1 crack spreads. Light product yields were approximately 70% and 83% for the years ended December 31, 2008 and 2007, respectively. Refinery operating margin at the California refineries was $1.65 per barrel for the year ended December 31, 2008compared to $2.73 per barrel for the same period in 2007. The California refineries operating margin was adversely affected by higher crude oil costs during 2008.

The combined refineries throughput for the year ended December 31, 2008, excluding the Krotz Springs refinery acquired inJuly 2008, averaged 68,892 bpd, consisting of 37,793 bpd at the Big Spring refinery and 31,099 bpd at the California refineries compared to a combined average of 129,907 bpd, consisting of 68,145 bpd at the Big Spring refinery and 61,762 bpd at theCalifornia refineries for the same period last year. The Krotz Springs refinery averaged 58,184 bpd for the period July 1, 2008through December 31, 2008. The Big Spring refinery had lower throughput due to the fire. Throughput at the California refineries was reduced during 2008 to optimize our refining and asphalt economics. Throughput at the Krotz Springs refinery was negatively impacted in 2008 by crude oil supply disruptions caused by the hurricanes.

Gulf Coast 3-2-1 average crack spreads decreased to $10.47 per barrel for the year ended December 31, 2008, compared to$15.00 per barrel for the same period in 2007. West Coast 3-2-1 average crack spreads decreased to $15.80 per barrel for the year ended December 31, 2008 compared to $27.37 per barrel for the year ended December 31, 2007. The WTI/WTS crude oil differentials for the year ended December 31, 2008 decreased to $3.78 per barrel compared to $5.00 per barrel in the same period of 2007.

Asphalt margins increased to an average of $113.43 per ton for the year ended December 31, 2008, compared to $26.07 per ton for the same period of 2007. This increase resulted primarily from a 49.4% increase in sales prices which were $498.63 per ton for the year ended December 31, 2008 compared to $333.65 per ton for the same period in 2007.

Alon also announced that its Board of Directors has approved the regular quarterly cash dividend of $0.04 per share. The dividend is payable on April 2, 2009 to shareholders of record as of March 16, 2009.

The Company has scheduled a conference call for Friday, March 6, 2009, at 10:00 a.m. Eastern, to discuss the fourth quarter 2008 results. To access the call, please dial 800-240-6709, or 303-262-2054, for international callers, and ask for the Alon USA Energy call at least 10 minutes prior to the start time. Investors may also listen to the conference live on the Alon corporate website, http://www.alonusa.com, by logging onto that site and clicking "Investors". A telephonic replay of the conference call will be available through March 20, 2009, and may be accessed by calling 800-405-2236, or 303-590-3000, for international callers, and using the passcode 11125967#. A web cast archive will also be available at http://www.alonusa.com shortly after the call and will be accessible for approximately 90 days. For more information, please contact Donna Washburn at DRG&E at 713-529-6600 or email dmw@drg-e.com.

Alon USA Energy, Inc., headquartered in Dallas, Texas, is an independent refiner and marketer of petroleum products, operating primarily in the South Central, Southwestern and Western regions of the United States. The Company owns four crude oil refineries in TexasCaliforniaLouisiana and Oregon, with an aggregate crude oil throughput capacity of approximately 250,000 barrels per day. Alon markets gasoline and diesel products under the FINA brand name and is a leading producer of asphalt. Alon also operates more than 300 convenience stores primarily in West Texas and New Mexico substantially under the 7-Eleven and FINA brand names and supplies motor fuels to these stores primarily from its Big Spring refinery. In addition, Alon markets under the FINA branded name to approximately 700 additional locations.

Any statements in this press release that are not statements of historical fact are forward-looking statements. Forward-looking statements reflect our current expectations regarding future events, results or outcomes. These expectations may or may not be realized. Some of these expectations may be based upon assumptions or judgments that prove to be incorrect. In addition, our business and operations involve numerous risks and uncertainties, many of which are beyond our control, which could result in our expectations not being realized or otherwise materially affect our financial condition, results of operations and cash flows. Additional information regarding these and other risks is contained in our filings with the Securities and Exchange Commission.

    Contacts:  Claire A. Hart, Senior Vice President
               Alon USA Energy, Inc.
               972-367-3649

               Investors:  Jack Lascar/Sheila Stuewe
               DRG&E / 713-529-6600

               Media:  Blake Lewis
               Lewis Public Relations
               214-635-3020
               Ruth Sheetrit
               SMG Public Relations
               011-972-547-555551
                   ALON USA ENERGY, INC. AND SUBSIDIARIES CONSOLIDATED
                                    EARNINGS RELEASE

    RESULTS OF OPERATIONS -
     FINANCIAL DATA (A)
     (ALL INFORMATION IN THIS
     PRESS RELEASE, EXCEPT FOR
     BALANCE SHEET DATA AS OF
     DECEMBER 31, 2007 AND
     INCOME STATEMENT DATA FOR          For the Three       For the Year
     THE YEAR ENDED DECEMBER 31,        Months Ended           Ended
     2007 IS UNAUDITED)                  December 31,        December 31,
                                       2008      2007      2008      2007
                                           (dollars in thousands, except
                                                 per share data)
    STATEMENT OF OPERATIONS
     DATA:
    Net sales                      $986,166 $1,145,342 $5,156,706 $4,542,151
    Operating costs and
     expenses:
      Cost of sales                 819,407  1,122,425  4,853,195  3,999,287
      Direct operating expenses      66,915     48,825    216,498    201,196
      Selling, general and
       administrative expenses (1)   33,499     28,867    119,852    105,352
      Net costs associated with
       fire (2)                      13,642          -     56,854          -
      Business interruption
       recovery (3)                 (25,000)         -    (55,000)         -
      Depreciation and
       amortization (4)              22,270     14,760     66,754     57,403
        Total operating costs
         and expenses               930,733  1,214,877  5,258,153  4,363,238
    Gain on involuntary
     conversion of assets (5)        80,000          -    279,680          -
    Gain on disposition of
     assets (6)                       2,239      2,618     45,244      7,206
    Operating income (loss)         137,672    (66,917)   223,477    186,119
    Interest expense                (24,665)   (11,873)   (67,550)   (47,747)
    Equity earnings (losses)
     of investees                       785      1,106     (1,522)    11,177
    Other income, net                   407      1,637      1,500      6,565
    Income (loss) before income
     tax expense (benefit) and
     minority interest in income
     (loss) of subsidiaries         114,199    (76,047)   155,905    156,114
    Income tax expense (benefit)     46,931    (33,583)    62,781     46,199
    Income (loss) before minority
     interest in income (loss)
     of subsidiaries                 67,268    (42,464)    93,124    109,915
    Minority interest in income
     (loss) of subsidiaries           4,181     (2,595)     5,941      5,979
    Accumulated dividends on
     preferred stock of subsidiary    2,150          -      4,300          -
    Net income (loss)               $60,937   $(39,869)   $82,883   $103,936

    Earnings (loss) per share,
     basic                            $1.30     $(0.85)     $1.77      $2.22
    Weighted average shares
     outstanding, basic
     (in thousands)                  46,800     46,775     46,788     46,763
    Earnings (loss) per share,
     diluted                          $1.18     $(0.85)     $1.72      $2.16
    Weighted average shares
     outstanding, diluted
     (in thousands)                  52,360     46,775     49,360     46,804

    Cash dividends per share          $0.04      $0.04      $0.16      $0.16

    CASH FLOW DATA:
    Net cash provided by
     (used in):
      Operating activities           $7,582   $(49,645)     $(812)  $123,950
      Investing activities (7)      (26,572)     3,330   (610,322)  (147,254)
      Financing activities (8)       18,768     (4,496)   560,973     27,753
    OTHER DATA:
    Adjusted net income (loss) (9)  $63,148   $(41,479)    $2,556    $99,504
    Earnings (loss) per share,
     excluding inventories
     adjustments related to
     acquisition, net of tax, net
     costs associated with fire,
     net of tax, after-tax gain
     on involuntary conversion
     of assets and after-tax
     gain on disposition of
     assets (9)                       $1.35     $(0.89)     $0.05      $2.13
    Adjusted EBITDA (10)            158,895    (52,032)   244,965    254,058
    Capital expenditures (11)        21,108     13,335     62,356     42,204
    Capital expenditures to
     rebuild the Big Spring
     refinery                        49,612          -    362,178          -
    Capital expenditures for
     turnaround and chemical
     catalyst                         7,886        485      9,958      9,842


                                                         December   December
                                                            31,        31,
                                                           2008       2007
    BALANCE SHEET DATA (end of period):
    Cash and cash equivalents and short-term
     investments                                          $18,454    $95,911
    Working capital (12)                                  278,781    290,734
    Total assets                                        2,413,433  1,581,386
    Total debt (12)                                     1,103,569    536,615
    Total stockholders' equity, minority interest in
     subsidiaries and preferred stock of subsidiary
     including accumulated dividends                      536,867    403,922



    REFINING AND UNBRANDED MARKETING
     SEGMENT (A)
                                       For the Three           For the
                                        Months Ended         Year Ended
                                         December 31,        December 31,
                                       2008      2007      2008      2007
                                        (dollars in thousands, except per
                                       barrel data and pricing statistics)
    STATEMENT OF OPERATIONS
     DATA:
    Net sales (13)                  $790,972  $866,784 $3,905,498 $3,325,090
    Operating costs and
     expenses:
      Cost of sales                  742,801   870,511  3,858,823  2,948,710
      Direct operating expenses       57,892    36,634    173,142    154,267
      Selling, general and
       administrative expenses         5,332     2,503     17,784     20,071
      Net costs associated
       with fire (2)                  13,642         -     56,854          -
      Business interruption
        recovery (3)                (25,000)         -    (55,000)         -
      Depreciation and
       amortization                   18,126     9,766     50,047     44,107
        Total operating costs
         and expenses                812,793   919,414  4,101,650  3,167,155
    Gain on involuntary
     conversion of assets (5)         80,000         -    279,680          -
    Gain on disposition of
     assets (6)                        2,239     2,507     45,244      7,138
    Operating income (loss)          $60,418  $(50,123)  $128,772   $165,073

    KEY OPERATING STATISTICS
     AND OTHER DATA:
    Total sales volume (bpd)          62,970    76,130     58,543     91,027
    Per barrel of throughput:
      Refinery operating
       margin - Big Spring (14)     $(12.91)     $3.79     $(3.18)    $12.83
      Refinery operating
       margin - CA Refineries (14)     11.74     (5.04)      1.65       2.73
      Refinery operating
       margin - Krotz Springs (14)      7.30      N/A        7.25       N/A
      Refinery direct operating
       expense - Big Spring (15)        3.35      4.29       4.40       3.67
      Refinery direct operating
       expense - CA Refineries (15)     8.59      1.95       5.81       2.79
      Refinery direct operating
       expense - Krotz Springs (15)     4.67      N/A        4.30       N/A
    Capital expenditures              19,131     8,435     57,576     28,669
    Capital expenditures to
     rebuild the Big Spring
     refinery                         49,612         -    362,178          -
    Capital expenditures for
     turnaround and chemical
     catalyst                          7,886       485      9,958      9,842

    PRICING STATISTICS:
    WTI crude oil (per barrel)        $58.51    $90.61     $99.56     $72.32
    WTS crude oil (per barrel)         54.82     84.45      95.78      67.32
    MAYA crude oil (per barrel)        44.93     75.67      83.93      59.86
    Crack spreads (3/2/1)
     (per barrel):
      Gulf Coast (16)                  $3.49     $7.94     $10.47     $15.00
      Group III (16)                    5.78      9.77      11.15      19.41
      West Coast (16)                   8.79     16.92      15.80      27.37
    Crack spreads (6/1/2/3)
     (per barrel):
      West Coast (16)                 $13.61     $1.71      $0.48      $6.33
    Crack spreads (2/1/1)
     (per barrel):
      Gulf Coast high-sulfur
       diesel (16)                     $5.70     $8.29     $11.28     $14.29
    Crude oil differentials
     (per barrel):
      WTI less WTS (17)                $3.69     $6.16      $3.78      $5.00
      WTI less MAYA (17)               13.58     14.94      15.63      12.46
    Product price (dollars
     per gallon):
      Gulf Coast unleaded
       gasoline                       $1.300    $2.256     $2.471     $2.045
      Gulf Coast ultra low-
       sulfur diesel                   1.828     2.527      2.918      2.147
      Group III unleaded gasoline      1.352     2.302      2.481      2.160
      Group III ultra low-sulfur
        diesel                         1.888     2.567      2.945      2.233
      West Coast LA CARBOB
       (unleaded gasoline)             1.521     2.548      2.679      2.442
      West Coast LA ultra
       low-sulfur diesel               1.766     2.585      2.883      2.237
      Natural gas (per MMBTU)           6.40      7.39       8.90       7.12

        (A)  In the first quarter of 2008, our branded marketing business
             was removed from the refining and marketing segment and
             combined with the retail segment. Information for the three
             months and year ended December 31, 2007 has been recast to
             provide a comparison to the current year results.



    THROUGHPUT AND
    PRODUCTION DATA:
    BIG SPRING REFINERY    For the Three Months            For the
                                  Ended                   Year Ended
                               December 31,                December 31,
                           2008           2007         2008          2007
                        bpd     %     bpd      %    bpd     %     bpd      %
    Refinery
     throughput:
      Sour crude      44,922  83.0  57,498  86.3  31,654  83.8  58,607  86.0
      Sweet crude      5,862  10.8   4,557   6.8   4,270  11.3   5,017   7.4
      Blendstocks      3,372   6.2   4,578   6.9   1,869   4.9   4,521   6.6
    Total refinery
     throughput (18)  54,156 100.0  66,633 100.0  37,793 100.0  68,145 100.0
    Refinery
     production:
      Gasoline        25,062  47.0  33,763  51.3  14,266  38.4  32,135  47.5
      Diesel/jet      17,320  32.5  17,793  27.0  10,439  28.2  19,676  29.1
      Asphalt          5,736  10.8   7,639  11.6   4,850  13.1   7,620  11.3
      Petrochemicals   2,504   4.7   3,406   5.2   1,221   3.3   3,980   5.9
      Other            2,685   5.0   3,277   5.0   6,298  17.0   4,190   6.2
    Total refinery
     production (19)  53,307 100.0  65,878 100.0  37,074 100.0  67,601 100.0
    Refinery
     utilization (20)         72.5%         88.6%         52.3%         92.5%


    THROUGHPUT AND
    PRODUCTION DATA:
    CALIFORNIA REFINERIES    For the Three                  For the
                              Months Ended                Year Ended
                               December 31,               December 31,
                           2008           2007         2008          2007
                       bpd      %     bpd     %     bpd     %     bpd     %
    Refinery
     throughput:
      Medium sour
       crude             897   4.4  14,577  25.2   8,014  25.8  20,839  33.7
      Heavy crude     19,620  95.2  42,410  73.4  22,590  72.6  40,700  65.9
      Blendstocks         96   0.5     756   1.3     495   1.6     223   0.4
    Total refinery
     throughput (18)  20,613 100.0  57,743 100.0  31,099 100.0  61,762 100.0
    Refinery
     production:
      Gasoline         2,560  12.6   7,269  12.9   4,141  13.7   7,318  12.1
      Diesel/jet       5,156  25.2  12,319  21.9   7,481  24.8  13,360  22.1
      Asphalt          7,914  38.7  17,717  31.5   9,214  30.5  19,006  31.5
      Light unfinished     -     -   2,252   4.0       -     -   3,071   5.1
      Heavy unfinished 4,783  23.4  16,616  29.5   9,182  30.4  16,793  27.9
      Other               24   0.1     133   0.2     192   0.6     793   1.3
    Total refinery
     production (19)  20,437 100.0  56,306 100.0  30,210 100.0  60,341 100.0
    Refinery
     utilization (20)         43.8%         79.9%         46.3%         85.9%


    THROUGHPUT AND
    PRODUCTION DATA:              For the Three
    KROTZ SPRINGS REFINERY (B)    Months Ended        Period Ended
                                   December 31,       December 31,
                                      2008                2008
                                  bpd        %        bpd        %
    Refinery throughput:
     Light sweet crude          48,920     84.4     43,361     74.5
     Heavy sweet crude           5,363      9.2     11,979     20.6
     Blendstocks                 3,699      6.4      2,844      4.9
    Total refinery
     throughput (18)            57,982    100.0     58,184    100.0
    Refinery production:
     Gasoline                   26,135     44.7     25,195     42.8
     Diesel/jet                 26,053     44.5     26,982     45.9
     Heavy oils                  1,543      2.6      1,402      2.4
     Other                       4,817      8.2      5,258      8.9
    Total refinery
      production (19)           58,548    100.0     58,837    100.0
    Refinery utilization (20)              65.3%               66.6%

        (B)  The period ended December 31, 2008, represents throughput
             and production data for the period from July 1, 2008 through
             December 31, 2008.



    ASPHALT SEGMENT            For the Three Months           For the
                                     Ended                  Year Ended
                                  December 31,              December 31,
                               2008         2007         2008         2007
                                (dollars in thousands, except per ton data)
    STATEMENT OF
     OPERATIONS DATA:
    Net sales                $104,448     $136,429     $647,221     $642,937
    Operating costs and
     expenses:
      Cost of sales (21)       17,035      139,987      499,992      592,709
      Direct operating
       expenses                 9,023       12,191       43,356       46,929
      Selling, general and
       administrative
       expenses                 1,249          651        4,292        2,825
      Depreciation and
       amortization               536          533        2,139        2,145
        Total operating
         costs and expenses    27,843      153,362      549,779      644,608
    Operating income
     (loss)                   $76,605     $(16,933)     $97,442      $(1,671)

    KEY OPERATING
     STATISTICS AND
     OTHER DATA:
    Total sales volume
     (tons in thousands)          207          394        1,298        1,927
    Sales price per ton       $504.58      $346.27      $498.63      $333.65
    Asphalt margin per
     ton (22)                 $422.29       $(9.03)     $113.43       $26.07
    Capital expenditures         $337         $512         $644       $2,167



    RETAIL AND BRANDED            For the Three             For the
     MARKETING SEGMENT (A)         Months Ended            Year Ended
                                   December 31,            December 31,
                                2008        2007       2008          2007
                              (dollars in thousands, except per gallon data)

    STATEMENT OF OPERATIONS
     DATA:
    Net sales                $189,297     $331,510  $1,227,319    $1,274,516
    Operating costs and
     expenses:
      Cost of sales (21)      158,122      301,308   1,117,712     1,158,260
      Selling, general and
       administrative
       expenses                26,767       25,537      97,172        81,933
      Depreciation and
       amortization             3,384        4,184      13,674        10,245
        Total operating
         costs and expenses   188,273      331,029   1,228,558     1,250,438
      Gain on disposition of
       assets                       -          111           -            68
    Operating income (loss)    $1,024         $592     $(1,239)      $24,146

    KEY OPERATING
     STATISTICS AND OTHER
     DATA:
    Integrated branded fuel
     sales (thousands of
     gallons) (23)             61,685       62,910     225,474       254,044
    Integrated branded fuel
     margin (cents per
     gallon) (23)                10.4          2.1         4.4           9.2
    Non-Integrated branded
     fuel sales (thousands
     of gallons) (23)           9,939       42,141     113,626       204,537
    Non-Integrated branded
     fuel margin (cents per
     gallon) (23)                 8.9         (0.2)       (0.3)          1.3

    Number of stores (end
     of period)                   306          307         306           307
    Retail fuel sales
     (thousands of gallons)    23,882       26,871      96,974        91,946
    Retail fuel sales
     (thousands of gallons
     per site per month)
      (24)                         27           30          27            30
    Retail fuel margin
     (cents per gallon)
      (25)                       18.8         26.8        19.7          21.2
    Retail fuel sales price
     (dollar per gallon)
      (26)                      $2.31        $2.94       $3.26         $2.82
    Merchandise sales         $63,213      $61,518    $261,144      $220,807
    Merchandise sales (per
     site per month) (24)          72           66          72            72
    Merchandise margin (27)      30.9%        35.3%       30.9%         32.0%
    Capital expenditures         $917       $3,843      $2,928        $9,797

        (A)  In the first quarter of 2008, our branded marketing business
             was removed from the refining and marketing segment and
             combined with the retail segment. Information for the three
             months and year ended December 31, 2007 has been recast to
             provide a comparison to the current year results.

    (1)  Includes corporate headquarters selling, general and administrative
         expenses of $151 and $176 for the three months ended December 31,
         2008 and 2007, respectively, and $604 and $523 for the years ended
         December 31, 2008 and 2007, respectively, which are not allocated to
         our three operating segments.

    (2)  Includes $13,642 and $51,064 for the three months and year ended
         December 31, 2008, respectively, of expenses incurred from pipeline
         commitment deficiencies, crude sale losses and other incremental
         costs; $5,000 for the year ended December 31, 2008 for our third
         party liability insurance deductible under the insurance policy; and
         depreciation for the temporarily idled facilities of $790 for the
         year ended December 31, 2008.

    (3)  Business interruption recovery of $25,000 and $55,000 was recorded
         for the three months and year ended December 31, 2008, respectively,
         as a result of the Big Spring refinery fire with all insurance
         proceeds received in 2008 and January 2009.

    (4)  Includes corporate depreciation and amortization of $224 and $277
         for the three months ended December 31, 2008 and 2007, respectively,
         and $894 and $906 for the years ended December 31, 2008 and 2007,
         respectively, which are not allocated to our three operating
         segments.

    (5)  A gain on involuntary conversion of assets has been recorded of
         $80,000 and $279,680 for the three months and year ended December
         31, 2008, 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 for the year ended December 31, 2008 as a result of
         the Big Spring refinery fire.

    (6)  Gain on disposition of assets for the years ended December 31, 2008
         and 2007, primarily includes the recognition of deferred gain
         recorded in connection with the contribution of certain product
         pipelines and terminals to Holly Energy Partners, LP, ("HEP"), in
         March 2005 ("HEP transaction").  A recognized gain of $42.9 million
         in 2008 represented all the remaining deferred gain associated with
         the HEP transaction and was due to the termination of an
         indemnification agreement with HEP.

    (7)  Cash used in investing activities for the year ended December 31,
         2008, includes the acquisition of all the capital stock of the
         refining business located in Krotz Springs, Louisiana from Valero
         Energy Corporation.  The purchase price was $333,000 in cash plus
         $141,494 for working capital, including inventories.

    (8)  Cash provided by financing activities for the year ended December
         31, 2008, includes borrowings under a $302,000 term loan credit
         facility and a $400,000 revolving credit facility.  Additionally,
         funds for a portion of the purchase price were provided through an
         $80,000 equity investment by Alon Israel Oil Company, Ltd., Alon's
         majority stockholder, in preferred stock of a new Alon holding
         company subsidiary.

    (9)  The following table provides a reconciliation of net income (loss)
         under United States generally accepted accounting principles
         ("GAAP") to adjusted net income (loss) utilized in determining
         earnings (loss) per common share, excluding the after-tax inventories
         adjustments related to acquisition, after-tax loss on net costs
         associated with fire, after-tax gain on involuntary conversion of
         assets and after-tax gain on disposition of assets.  Our management
         believes that the presentation of adjusted net income (loss) and
         earnings (loss) per common share, excluding these after-tax items, is
         useful to investors because it provides a more meaningful measurement
         for evaluation of our Company's operating results.

                                       Three Months
                                           Ended             Year Ended
                                        December 31,         December 31,
                                      2008       2007      2008        2007
                                          (dollars in thousands, except
                                               earnings per share)

     Net income (loss)              $60,937   $(39,869)   $82,883  $103,936
       Plus:  Inventories
         adjustments related to
        acquisition, net of tax      34,959          -     70,738         -
       Plus:  Net costs associated
         with fire, net of tax        6,116          -     31,566         -
       Less:  Gain on involuntary
         conversion of assets, net
        of tax                      (37,831)         -   (155,281)        -
       Less:  Gain on disposition
         of assets, net of tax       (1,033)    (1,610)   (27,350)   (4,432)
    Adjusted net income (loss)      $63,148   $(41,479)    $2,556   $99,504

     Weighted average shares
      outstanding (in thousands)     46,800     46,775     46,788    46,763
    Earnings (loss) per share,
      excluding inventories
      adjustments related to
      acquisition, net of tax,
      net costs associated with
      fire, net of tax,
      after-tax gain on
      involuntary conversion of
      assets and after-tax gain
      on disposition of assets        $1.35     $(0.89)     $0.05     $2.13

    (10) Adjusted EBITDA represents earnings before minority 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 during periods of normal operations because it is
         frequently used by securities analysts, investors, and other
         interested parties in the evaluation of companies in our industry.
         In addition, our management believes that Adjusted EBITDA is useful
         in evaluating our operating performance compared to that of other
         companies in our industry because the calculation of Adjusted EBITDA
         generally eliminates the effects of minority interest in income of
         subsidiaries, income tax expense, interest expense, gain on
         disposition of assets and the accounting effects of capital
         expenditures and acquisitions, items 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 minority
             stockholders have on the income generated by non-wholly-owned
             subsidiaries;
         --  Adjusted EBITDA does not reflect changes in or cash requirements
             for our working capital needs; and
         --  Our calculation of Adjusted EBITDA may differ from 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 months and years ended December 31, 2008 and 2007,
         respectively:
                                For the Three              For the
                                 Months Ended             Year Ended
                                  December 31,            December 31,
                                2008        2007        2008        2007
                                       (dollars in thousands)
     Net income (loss)       $60,937    $(39,869)    $82,883    $103,936
      Minority interest in
       income (loss) of
       subsidiaries
       (including
       accumulated
       dividends on
       preferred stock of
       subsidiary)             6,331      (2,595)     10,241       5,979
     Income tax expense
      (benefit)               46,931     (33,583)     62,781      46,199
     Interest expense         24,665      11,873      67,550      47,747
     Depreciation and
      amortization            22,270      14,760      66,754      57,403
     Gain on disposition
      of assets               (2,239)     (2,618)    (45,244)     (7,206)
    Adjusted EBITDA         $158,895    $(52,032)   $244,965    $254,058

         Adjusted EBITDA for the three months and year ended December 31, 2008
         includes a gain on involuntary conversion of assets of $80,000 and
         $279,680, respectively; representing insurance proceeds received
         with respect to property damage resulting from the Big Spring
         refinery fire in excess of the book value of the assets impaired; net
         costs associated with fire at the Big Spring refinery of $13,642 and
         $56,854, respectively; and a charge for inventories adjustments
         related to the Krotz Springs acquisition of $66,217 and $127,408,
         respectively.

    (11) Includes corporate capital expenditures of $723 and $565 for the
         three months ended December 31, 2008 and 2007, respectively, and
         $1,208 and $1,571 for the years ended December 31, 2008 and 2007,
         respectively, which are not included in our three operating segment
         capital expenditures.

    (12) Working capital excludes the current portion of long-term debt which
         is included as part of total debt.

    (13) Net sales include intersegment sales to our asphalt and retail and
         branded marketing segments at prices which are intended to
         approximate wholesale market prices.  These intersegment sales are
         eliminated through consolidation of our financial statements.

    (14) 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 inventories 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 $65 and $4,192
         for the California refineries for the three months and year ended
         December 31, 2008, respectively, and unrealized hedging losses of
         ($1,304) and ($4,250) for the California refineries for the three
         months and year ended December 31, 2007, respectively.  There were
         unrealized hedging gains of $1,120 for the Big Spring refinery for
         the three months ended December 31, 2007.  The refinery operating
         margin for the Krotz Springs refinery excludes a charge of $66,217
         and $127,408 to cost of sales for inventories adjustments related to
         the acquisition for the three months and year ended, respectively and
         unrealized hedging gains of $117,452 for both the three months and
         year ended, respectively.

    (15) 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.

    (16) A 3/2/1 crack spread in a given region is calculated assuming that
         three barrels of a benchmark crude oil are converted, or cracked,
         into two barrels of gasoline and one barrel of diesel.  We calculate
         the Gulf Coast 3/2/1 crack spread using the market values of Gulf
         Coast conventional gasoline and ultra low-sulfur diesel and the
         market value of West Texas Intermediate, or WTI, a light sweet crude
         oil.  We calculate the Group III 3/2/1 crack spread using the market
         values of Group III conventional gasoline and ultra low-sulfur diesel
         and the market value of WTI crude oil.  We calculate the West Coast
         3/2/1 crack spread using the market values of West Coast LA CARB
         pipeline gasoline and LA ultra low-sulfur pipeline diesel and the
         market value of WTI crude oil. A 6/1/2/3 crack spread is calculated
         assuming that six barrels of a benchmark crude oil are converted, or
         cracked, into one barrel of gasoline, two barrels of diesel and three
         barrels of fuel oil. We calculate the West Coast 6/1/2/3 crack spread
         using the market values of West Coast LA CARB pipeline gasoline, LA
         ultra low-sulfur pipeline diesel, LA 380 pipeline CST (fuel oil) and
         the market value of WTI crude oil.  We calculate the Gulf Coast 2/1/1
         crack spread using the market values of Gulf Coast conventional
         gasoline and No. 2 diesel and the market value of WTI crude oil.

    (17) The WTI/WTS, or sweet/sour, spread represents the differential
         between the average value per barrel of WTI crude oil and the average
         value per barrel of WTS crude oil.  The WTI/Maya, or light/heavy,
         spread represents the differential between the average value per
         barrel of WTI crude oil and the average value per barrel of Maya
         crude oil.

    (18) Total refinery throughput represents the total barrels per day of
         crude oil and blendstock inputs in the refinery production process.

    (19) 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 decreased at the Big Spring refinery for the
         year ended December 31, 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.

    (20) 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 year ended December 31, 2008 is
         due to the fire on February 18, 2008. Production ceased at the Big
         Spring refinery until the re-start of the crude unit in a
         hydroskimming mode on April 5, 2008.  The Big Spring refinery
         returned to normal operating mode with the re-start of the FCCU on
         September 26, 2008.  The decrease in refinery utilization at our
         California refineries is due to reduced throughput to optimize our
         refining and asphalt economics.  The low refinery utilization at our
         Krotz Springs refinery is due to shutdowns during hurricanes Gustav
         and Ike and limited crude supply and electrical outages following the
         hurricanes.

    (21) Cost of sales includes intersegment purchases of asphalt blends and
         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.

    (22) 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.

    (23) 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, but due to the fire on
         February 18, 2008 at the Big Spring refinery, more fuel has been
         purchased from third-party suppliers. The branded fuels we sell in
         the non-integrated region are obtained from third-party suppliers.
         The marketing margin represents the margin between the net sales and
         cost of sales attributable to our branded fuel sales volume,
         expressed on a cents-per-gallon basis and includes net credit card
         revenue received from these sales.

    (24) Retail fuel and merchandise sales per site for the three months and
         year ending December 31, 2007 were calculated using 307 stores for
         the three months ended and a weighted average for the year ended. We
         added 102 stores with the acquisition of Skinny's, Inc. on June 29,
         2007, which were weighted for the calculation of the year ended
         December 31, 2007.

    (25) 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.

    (26) Retail fuel sales price per gallon represents the average sales price
         for motor fuels sold through our retail convenience stores.

    (27) Merchandise margin represents the difference between merchandise
         sales revenues and the delivered cost of merchandise purchases, net
         of rebates and commissions, expressed as a percentage of merchandise
         sales revenues.  Merchandise margins, also referred to as in-store
         margins, are commonly used in the retail industry to measure
         in-store, or non-fuel, operating results.

 

SOURCE Alon USA Energy, Inc.