Alon USA Energy, Inc.

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Alon USA Reports Fourth Quarter and Full Year 2010 Results

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Company schedules conference call for March 11, 2011, at 10:00 A.M. Eastern

DALLAS, March 10, 2011 /PRNewswire/ -- Alon USA Energy, Inc. (NYSE: ALJ) ("Alon") today announced results for the quarter and year ended December 31, 2010.  Net loss for the fourth quarter of 2010 was ($25.1) million, or ($0.46) per share, compared to net loss of ($90.6) million, or ($1.93) per share, for the same period in the prior year.  Excluding special items, Alon recorded net loss of ($20.2) million, or ($0.37) per share, for the fourth quarter of 2010, compared to net loss of ($65.4) million, or ($1.39) per share, for the same period in the prior year.

Net loss for the year ended December 31, 2010, was ($122.9) million, or ($2.27) per share, compared to net loss of ($115.2) million, or ($2.46) per share, for the year ended December 31, 2009.  Excluding special items, Alon recorded net loss of ($130.6) million, or ($2.41) per share, for the year ended December 31, 2010, compared to net loss of ($82.7) million, or ($1.77) per share, for the same period in the prior year.

Jeff Morris, Alon's CEO, commented, "We are seeing positive results in our operations of the Big Spring and Krotz Springs refineries.  During the fourth quarter, the throughput at Big Spring and Krotz Springs refineries was up 8% and 9%, respectively, compared to the third quarter of 2010.  In December 2010, both refineries reached their highest average daily throughputs of 2010 with Big Spring near 61,000 barrels per day and Krotz Springs near 75,000 barrels per day.  At our California refineries, we are focusing our efforts on the integration of the Bakersfield hydrocracker unit to process vacuum gas oil produced at our California refineries.  As a result, we shut down the California refineries in December to expedite the integration efforts.  We continue to make good progress and anticipate restarting our California refineries in March with production from the Bakersfield hydrocracker unit to start by mid-year 2011.  We intend to increase the throughput of the integrated California refineries back to 2007 levels of approximately 55,000 to 60,000 barrels per day. Also, we expect substantial improvement in the operating margin primarily due to the operation of the hydrocracker unit and further improvement in the West Coast crack spreads the industry is experiencing in 2011.  

"At Krotz Springs, we continue to undertake initiatives to receive crudes such as WTI at our Krotz Springs refinery.  This new crude flexibility will enable us to reduce our crude costs during the price spikes of LLS Louisiana crude.

"Our retail and branded marketing segment had adjusted EBITDA of $8.5 million in the fourth quarter of 2010.  Our branded fuel sales volume increased 29% and our retail fuel sales volume increased 19% compared to the fourth quarter of 2009.  Our merchandise sales increased 6% while the percentage increase on merchandise margin was 8% compared to the fourth quarter of 2009.  For the 2010 year, adjusted EBITDA was $33.0 million. Our branded fuel sales volume increased 16% and our retail fuel sales volume increased 18% compared to the 2009 year.  Also, for the 2010 year, our merchandise sales increased 5% while the percentage increase on merchandise margin was 4% compared to the 2009 year.  

"As previously discussed, we were evaluating offers and opportunities to add to our liquidity resources.  We are very pleased to report we have successfully completed a number of offers and opportunities and added to our liquidity resources over $130 million during the fourth quarter of 2010 and in 2011.  In addition to the $130 million, we also signed in February 2011 a multi-year agreement with J. Aron and Company for the supply of crude oil that will support the operation of the Big Spring refinery at 70,000 barrels per day.  The structure of this new agreement is also expected to result in lower borrowing costs as we used the proceeds from the sale of inventories to repay approximately $125 million of loans under our revolving credit facility. Also, the structure will substantially reduce our need to issue letters of credit to support crude oil purchases, which we estimate based on current crude oil prices would be approximately $270 million. In addition, the structure will allow us to make crude oil purchases without the constraint of increases in crude oil prices.  

"We are making great strides in our operations and in our liquidity enhancements which will enable us to grow our businesses and accomplish our goals as a company."

FOURTH QUARTER 2010

Special items for the fourth quarter of 2010 include an after-tax loss of ($5.3) million for the unrealized loss associated with consignment inventory and an after-tax gain of $0.3 million recognized on disposition of assets.  Special items for the fourth quarter of 2009 include an after-tax loss of ($11.6) million for the write-off of unamortized debt issuance costs related to the full prepayment of the Alon Refining Krotz Springs, Inc. term loan, and an after-tax gain of $0.4 million recognized on disposition of assets.  Also, special items for the fourth quarter of 2009 include dividends of ($12.0) million associated with the conversion by Alon Israel Oil Company, Ltd. ("Alon Israel") of its preferred shares in Alon Refining Louisiana, Inc. to Alon common stock and accrued dividends of ($2.0) million on the preferred shares in Alon Refining Louisiana, Inc. prior to conversion.

Refinery operating margin at the Big Spring refinery rose to $5.16 per barrel for the fourth quarter of 2010 compared to ($2.91) per barrel for the same period in 2009.  On a cash basis ("cash basis" is the operating margin excluding inventory effects), the refinery operating margin at the Big Spring refinery was $6.85 per barrel for the fourth quarter of 2010, compared to ($0.46) per barrel for the same period in 2009.  This increase primarily resulted from improved light product yields and higher Gulf Coast 3/2/1 crack spreads.  Light product yields were approximately 91.4% for the fourth quarter of 2010 and 83.6% for the fourth quarter of 2009. This improvement is due to the operation of substantially all refinery units that were damaged in the 2008 fire.  Refinery operating margin at the California refineries was $2.13 per barrel for the fourth quarter of 2010 compared to ($1.06) per barrel for the same period in 2009.  On a cash basis the refinery operating margin at the California refineries was $0.56 per barrel for the fourth quarter of 2010, compared to $0.94 per barrel for the same period in 2009.  The Krotz Springs refinery operating margin for the fourth quarter of 2010 was $4.55 per barrel compared to ($2.03) per barrel for the same period in 2009.  On a cash basis the refinery operating margin at the Krotz Springs refinery was $2.75 per barrel for the fourth quarter 2010, compared to ($1.57) per barrel for the same period in 2009.  The increase is primarily due to higher Gulf Coast 2/1/1 crack spreads partially offset by higher LLS crude oil costs relative to WTI.

Combined refinery throughput for the fourth quarter of 2010 averaged 138,783 barrels per day ("bpd"), consisting of 57,290 bpd at the Big Spring refinery, 11,675 bpd at the California refineries, and 69,818 bpd at the Krotz Springs refinery compared to a combined average of 93,113 bpd in the fourth quarter of 2009, consisting of 50,781 bpd at the Big Spring refinery, 20,618 bpd at the California refineries and 21,714 bpd at the Krotz Springs refinery.  Throughput at the California refineries decreased relative to the same period in 2009, reflecting the shutdown of the Paramount facility in December 2010 to redeploy resources for the integration of the Bakersfield refinery acquired in June 2010.  Throughput at the Krotz Springs refinery was lower in the fourth quarter of 2009 as we accelerated a scheduled turnaround from the first quarter of 2010 to November 2009.

The average Gulf Coast 3/2/1 crack spread was $8.27 per barrel for the fourth quarter of 2010 compared to $4.55 per barrel for the fourth quarter of 2009.  The average West Coast 3/2/1 crack spread was $13.27 per barrel for the fourth quarter of 2010 compared to $8.51 per barrel for the fourth quarter of 2009.  The average Gulf Coast 2/1/1 high sulfur diesel crack spread was $8.79 per barrel for the fourth quarter of 2010 compared to $4.61 per barrel for the fourth quarter of 2009.

The average sweet/sour spread for the fourth quarter of 2010 was $2.72 per barrel compared to $2.07 per barrel for the same period in 2009.  The average light/heavy spread for the fourth quarter of 2010 was $9.39 per barrel compared to $6.67 per barrel for the same period in 2009.  The average LLS to WTI spread for the fourth quarter of 2010 increased to $4.18 per barrel compared to $1.73 per barrel for the same period in 2009.

Asphalt margins for the fourth quarter of 2010 increased to an average of $52.94 per ton compared to $48.16 per ton for the fourth quarter of 2009.  On a cash basis, asphalt margins in the fourth quarter of 2010 were $51.13 per ton compared to $22.31 per ton in the fourth quarter of 2009. The average blended asphalt sales price increased 9.4% from $434.53 per ton in the fourth quarter of 2009 to $475.56 per ton in the fourth quarter of 2010 and the average non-blended asphalt sales price increased 43.2% from $200.67 per ton in the fourth quarter of 2009 to $287.35 per ton in the fourth quarter of 2010.  The blended asphalt sales amount accounted for 89.2% of total asphalt sales in the fourth quarter of 2010 compared to 87.9% for the same period last year.  The price for WTI crude increased 11.9%, from $76.04 per barrel in the fourth quarter of 2009 to $85.07 per barrel in the fourth quarter of 2010.

In our retail and branded marketing segment, retail fuel sales gallons increased by 18.7% from 31.4 million gallons in the fourth quarter of 2009 to 37.3 million gallons in the fourth quarter of 2010.  Our branded fuel sales increased by 28.5% from 69.2 million gallons in the fourth quarter of 2009 to 88.9 million gallons in the fourth quarter of 2010.  Adjusted EBITDA for our retail and branded marketing segment was $8.5 million for the fourth quarter of 2010 compared to $3.2 million for the same period in 2009.

YEAR-TO-DATE 2010

Special items for the year ended December 31, 2010, include an after-tax loss of ($5.3) million for the unrealized loss associated with consignment inventory, $16.3 million from the bargain purchase gain recognized from the Bakersfield refinery acquisition, an after-tax loss of ($3.9) million for the write-off of debt issuance costs associated with our prepayment of the Alon Refining Krotz Springs, Inc. revolving credit facility and an after-tax gain on the disposition of assets of $0.6 million. Special items for the year ended December 31, 2009, include after-tax losses of ($11.6) million for the write-off of unamortized debt issuance costs related to the full prepayment of the Alon Refining Krotz Springs, Inc. term loan, and an after-tax loss of ($0.9) million recognized on disposition of assets.  Also, special items include dividends of ($12.0) million associated with the conversion by Alon Israel of its preferred shares in Alon Refining Louisiana, Inc. to Alon common stock and accrued dividends of ($8.0) million on the preferred shares in Alon Refining Louisiana, Inc. prior to conversion.

Refinery operating margin at the Big Spring refinery was $6.03 per barrel for the year ended December 31, 2010, compared to $4.35 per barrel for the same period in 2009.  On a cash basis the refinery operating margin at the Big Spring refinery was $5.77 per barrel for the year ended December 31, 2010, compared to $3.79 per barrel for the same period in 2009.  Light product yields increased in 2010 due to the operation of substantially all refinery units that were damaged in the 2008 fire.  Light product yields were approximately 89.4% for the year ended December 31, 2010, compared to 82.1% for the same period in 2009.  Refinery operating margin at the California refineries was $1.08 per barrel for the year ended December 31, 2010, compared to $1.83 per barrel for the same period in 2009.  On a cash basis the refinery operating margin at the California refineries was $0.62 per barrel for the year ended December 31, 2010, compared to $2.41 per barrel for the same period in 2009.  The decrease was primarily due to decreased West Coast 3/2/1 crack spreads.  The Krotz Springs refinery operating margin for the year ended December 31, 2010, was $2.24 per barrel compared to $5.66 per barrel for the year ended December 31, 2009.  On a cash basis the refinery operating margin at the Krotz Springs refinery was $1.29 per barrel for the year ended December 31, 2010, compared to $4.66 per barrel for the same period in 2009.  The lower Krotz Springs refinery operating margin is due primarily to operational effects of the extended turnaround and restart in June 2010 and a higher LLS to WTI spread.

Combined refinery throughput for the year ended December 31, 2010, averaged 105,868 bpd, consisting of 49,028 bpd at the Big Spring refinery, 17,596 bpd at the California refineries, and 39,244 bpd at the Krotz Springs refinery compared to a combined average of 139,365 bpd for the same period last year, consisting of 59,870 bpd at the Big Spring refinery, 31,158 bpd at the California refineries, and 48,337 at the Krotz Springs refinery.  The Big Spring refinery throughput was lower as a result of efforts to implement new operating procedures during 2010 and the California refineries' throughput was lower due to continued efforts to optimize asphalt production with demand and the shutdown of the Paramount facility in December 2010 for the Bakersfield integration.  The Krotz Springs refinery throughput was lower due to its shutdown for turnaround activities until June 2010.

The average Gulf Coast 3/2/1 crack spread was $8.22 per barrel for the year ended December 31, 2010, compared to $7.24 per barrel for the same period in 2009.  The average West Coast 3/2/1 crack spread for the year ended December 31, 2010, was $13.56 per barrel compared to $13.92 per barrel for the same period in 2009.  The average Gulf Coast 2/1/1 high sulfur diesel crack spread for the year ended December 31, 2010, was $7.75 per barrel compared to $6.50 per barrel for the same period in 2009.

The average sweet/sour spread for the year ended December 31, 2010, was $2.15 per barrel compared to $1.52 per barrel for the same period in 2009.  The average light/heavy spread for the year ended December 31, 2010, was $9.14 per barrel compared to $5.46 per barrel for the same period in 2009.  The average LLS to WTI spread for the year ended December 31, 2010, increased to $3.35 per barrel compared to $2.57 per barrel for the same period in 2009.

Asphalt margins increased to an average of $51.06 per ton for the year ended December 31, 2010, compared to $46.07 per ton for the same period in 2009.  On a cash basis asphalt margins for the year ended December 31, 2010, were $53.83 per ton compared to $67.34 per ton for the same period in 2009.  The average blended asphalt sales price increased 16.4% from $409.88 per ton for the year ended December 31, 2009, to $477.26 per ton for the year ended December 31, 2010, and the average non-blended asphalt sales price increased 91.8% from $170.05 per ton for the year ended December 31, 2009, to $326.16 per ton for the year ended December 31, 2010.  The blended asphalt sales accounted for 93.2% of total asphalt sales for the year ended December 31, 2010, compared to 92.4% for 2009.  The price for WTI crude increased 28.5%, from $61.82 per barrel for the year ended December 31, 2009, to $79.41 per barrel for the year ended December 31, 2010.

In our retail and branded marketing segment, retail fuel sales gallons increased by 17.8% from 120.7 million gallons for the year ended December 31, 2009, to 142.2 million gallons for the year ended December 31, 2010.  Our branded fuel sales increased by 16.4% from 274.1 million gallons for the year ended December 31, 2009, to 318.9 million gallons for the year ended December 31, 2010.  Adjusted EBITDA for our retail and branded marketing segment was $33.0 million for the year ended December 31, 2010, compared to $21.8 million for the same period in 2009.

Alon also announced on February 3, 2011, that its Board of Directors approved the regular quarterly cash dividend of $0.04 per share.  The dividend is payable on March 15, 2011, to stockholders of record at the close of business on March 1, 2011.  

CONFERENCE CALL

The Company has scheduled a conference call for Friday, March 11, 2011, at 10:00 a.m. Eastern, to discuss the fourth quarter 2010 results.  To access the call, please dial 800-762-8779, or 480-629-9721, 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 25, 2011, and may be accessed by calling 800-406-7325, or 303-590-3030, for international callers, and using the passcode 4406366#.  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&L at 713-529-6600 or email dmw@drg-l.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 Texas, California, Louisiana and Oregon, with an aggregate crude oil throughput capacity of approximately 250,000 barrels per day.  Alon is a leading producer of asphalt, which it markets through its asphalt terminals predominately in the Western United States.  Alon is the largest 7-Eleven licensee in the United States and operates more than 300 convenience stores in Texas and New Mexico.  Alon markets motor fuel products under the FINA brand at these locations and at over 600 distributor-serviced 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.

This press release does not constitute an offer to sell or the solicitation of offers to buy any security and shall not constitute an offer, solicitation or sale of any security in any jurisdiction in which such offer, solicitation or sale would be unlawful.


Contacts: Amir Barash, Vice President - IR

          Alon USA Energy, Inc.

          972-367-3808



          Investors: Jack Lascar/Sheila Stuewe

          DRG&L / 713-529-6600

          Media: Blake Lewis

          Lewis Public Relations

          214-635-3020

          Ruth Sheetrit

          SMG Public Relations

          011-972-547-555551






-Tables to follow-





ALON USA ENERGY, INC. AND SUBSIDIARIES CONSOLIDATED

EARNINGS RELEASE

RESULTS OF OPERATIONS –
FINANCIAL DATA

(ALL INFORMATION IN THIS
PRESS RELEASE, EXCEPT FOR
BALANCE SHEET DATA AS OF
DECEMBER 31, 2009, AND
INCOME STATEMENT DATA FOR    For the Three Months Ended For theYearEnded
THE YEAR ENDED DECEMBER 31,
2009, IS UNAUDITED)          December 31,               December 31,

                             2010        2009           2010        2009

                             (dollars in thousands, except per share data)

STATEMENT OF OPERATIONS
DATA:

Net sales (1)                $ 1,362,500 $ 834,041      $ 4,030,743 $ 3,915,732

Operating costs and
expenses:

Cost of sales                1,259,883   809,439        3,703,416   3,502,782

Direct operating expenses    57,117      61,202         249,933     265,502

Selling, general and
administrative expenses (2)  32,081      33,674         128,082     129,446

Unrealized loss associated
with consignment inventory
(3)                          8,942       —            8,942       —

Depreciation and
amortization (4)             23,625      26,349         102,096     97,247

Total operating costs and
expenses                     1,381,648   930,664        4,192,469   3,994,977

Gain (loss) on disposition
of assets                    471         556            945         (1,591)

Operating loss               (18,677)    (96,067)       (160,781)   (80,836)

Interest expense (5)         (22,528)    (40,398)       (94,939)    (111,137)

Equity earnings of investees 469         3,374          5,439       24,558

Gain on bargain purchase (6) —         —            17,480      —

Other income (expense), net
(7)                          (3,629)     63             9,716       331

Loss before income tax
benefit, non-controlling
interest in loss of
subsidiaries and accumulated
dividends on preferred stock
of subsidiary                (44,365)    (133,028)      (223,085)   (167,084)

Income tax benefit           (16,801)    (51,871)       (90,512)    (64,877)

Loss before non-controlling
interest in loss of
subsidiaries and accumulated
dividends on preferred stock
of subsidiary                (27,564)    (81,157)       (132,573)   (102,207)

Non-controlling interest in
loss of subsidiaries         (2,417)     (5,598)        (9,641)     (8,551)

Accumulated dividends on
preferred stock of
subsidiary (8)               —         15,050         —         21,500

Net loss available to common
stockholders                 $ (25,147)  $ (90,609)     $ (122,932) $ (115,156)



Loss per share, basic        $ (0.46)    $ (1.93)       $ (2.27)    $ (2.46)

Weighted average shares
outstanding, basic (in
thousands)                   54,215      46,890         54,186      46,829

Loss per share, diluted      $ (0.46)    $ (1.93)       $ (2.27)    $ (2.46)

Weighted average shares
outstanding, diluted (in
thousands)                   54,215      46,890         54,186      46,829

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



CASH FLOW DATA: (9)

Net cash provided by (used
in):

Operating activities         $ 58,605    $ (41,987)     $ 21,330    $ 283,145

Investing activities         (25,707)    (45,086)       (40,925)    (138,691)

Financing activities         (846)       109,432        50,845      (122,471)

OTHER DATA:

Adjusted net loss available
to common stockholders (10)  $ (20,155)  $ (65,402)     $ (130,603) $ (82,708)

Loss per share, excluding
write-off of unamortized
debt issuance costs, net of
tax, gain (loss) on
disposition of assets, net
of tax, unrealized loss
associated with consignment
inventory, net of tax, gain
on bargain purchase and
preferred shares dividends
and conversion (10)          $ (0.37)    $ (1.39)       $ (2.41)    $ (1.77)

Adjusted EBITDA (11)         1,317       (66,837)       (44,475)    42,891

Capital expenditures (12)    26,181      12,007         46,707      81,660

Capital expenditures to
rebuild the Big Spring
refinery                     —         1,697          —         46,769

Capital expenditures for
turnaround and chemical
catalyst                     463         11,694         13,131      24,699










                                    December 31, December 31,

                                    2010         2009

BALANCE SHEET DATA (end of period):

Cash and cash equivalents           $ 71,687     $ 40,437

Working capital                     990          84,257

Total assets                        2,088,521    2,132,789

Total debt                          916,305      937,024

Total equity                        341,767      431,918










REFINING AND          For the Three Months Ended For the Year Ended
UNBRANDED MARKETING
SEGMENT               December 31,               December 31,

                      2010        2009           2010        2009

                      (dollars in thousands, except per barrel data and pricing
                      statistics)

STATEMENT OF
OPERATIONS DATA:

Net sales (13)        $ 1,223,266 $ 706,126      $ 3,454,115 $ 3,359,043

Operating costs and
expenses:

Cost of sales         1,164,545   720,512        3,302,829   3,117,528

Direct operating
expenses              46,282      50,083         205,838     221,378

Selling, general and
administrative
expenses              5,399       7,876          22,764      29,376

Unrealized loss
associated with
consignment inventory
(3)                   8,942       —            8,942       —

Depreciation and
amortization          18,251      21,132         80,401      76,252

Total operating costs
and expenses          1,243,419   799,603        3,620,774   3,444,534

Gain (loss) on
disposition of assets 659         558            659         (1,042)

Operating loss        $ (19,494)  $ (92,919)     $ (166,000) $ (86,533)



KEY OPERATING
STATISTICS AND OTHER
DATA:

Per barrel of
throughput:

Refinery operating
margin – Big Spring
(14)                  $ 5.16      $ (2.91)       $ 6.03      $ 4.35

Refinery operating
margin – CA
Refineries (14)       2.13        (1.06)         1.08        1.83

Refinery operating
margin – Krotz
Springs (14)          4.55        (2.03)         2.24        5.66

Refinery direct
operating expense –
Big Spring (15)       3.78        4.07           5.06        4.21

Refinery direct
operating expense –
CA Refineries (15)    8.10        8.17           7.73        4.82

Refinery direct
operating expense –
Krotz Springs (15)    2.56        7.80           4.36        4.22

Capital expenditures  22,902      9,864          38,136      71,555

Capital expenditures
to rebuild the Big
Spring refinery       —         1,697          —         46,769

Capital expenditures
for turnaround and
chemical catalyst     463         7,852          13,131      24,699



PRICING STATISTICS:

WTI crude oil (per
barrel)               $ 85.07     $ 76.04        $ 79.41     $ 61.82

WTS crude oil (per
barrel)               82.35       73.97          77.26       60.30

MAYA crude oil (per
barrel)               75.68       69.37          70.27       56.36

LLS crude oil (per
barrel)               89.25       77.77          82.76       64.39

Crack spreads (3/2/1)
(per barrel):

Gulf Coast (16)       $ 8.27      $ 4.55         $ 8.22      $ 7.24

Group III (16)        9.16        5.37           9.49        8.10

West Coast (16)       13.27       8.51           13.56       13.92

Crack spreads (2/1/1)
(per barrel):

Gulf Coast high
sulfur diesel (16)    $ 8.79      $ 4.61         $ 7.75      $ 6.50

Crude oil
differentials (per
barrel):

WTI less WTS (17)     $ 2.72      $ 2.07         $ 2.15      $ 1.52

WTI less MAYA (17)    9.39        6.67           9.14        5.46

LLS less WTI (17)     4.18        1.73           3.35        2.57

Product price
(dollars per gallon):

Gulf Coast unleaded
gasoline              $ 2.163     $ 1.899        $ 2.052     $ 1.635

Gulf Coast ultra-low
sulfur diesel         2.340       1.957          2.156       1.664

Gulf Coast high
sulfur diesel         2.306       1.941          2.099       1.619

Group III unleaded
gasoline              2.179       1.920          2.087       1.662

Group III ultra-low
sulfur diesel         2.371       1.975          2.176       1.670

West Coast LA CARBOB
(unleaded gasoline)   2.306       2.013          2.214       1.852

West Coast LA
ultra-low sulfur
diesel                2.412       2.014          2.212       1.706

Natural gas (per
MMBTU)                3.98        4.93           4.38        4.16










THROUGHPUT AND PRODUCTION
DATA:                      For the Three Months Ended For the Year Ended

BIG SPRING REFINERY        December 31,               December 31,

                           2010         2009          2010         2009

                           bpd    %     bpd    %      bpd    %     bpd    %

Refinery throughput:

Sour crude                 46,808 81.7  42,392 83.5   39,349 80.2  48,340 80.8

Sweet crude                8,079  14.1  5,758  11.3   7,288  14.9  9,238  15.4

Blendstocks                2,403  4.2   2,631  5.2    2,391  4.9   2,292  3.8

Total refinery throughput
(18)                       57,290 100.0 50,781 100.0  49,028 100.0 59,870 100.0

Refinery production:

Gasoline                   29,160 51.1  25,051 49.8   24,625 50.7  26,826 45.0

Diesel/jet                 19,227 33.7  15,159 30.1   15,869 32.7  19,136 32.2

Asphalt                    3,392  5.9   3,538  7.0    2,827  5.8   5,289  8.9

Petrochemicals             3,755  6.6   1,865  3.7    2,939  6.0   2,928  4.9

Other                      1,513  2.7   4,744  9.4    2,341  4.8   5,327  9.0

Total refinery production
(19)                       57,047 100.0 50,357 100.0  48,601 100.0 59,506 100.0

Refinery utilization (20)         78.4%        68.8%         68.2%        82.3%










THROUGHPUT AND PRODUCTION
DATA:                      For the Three Months Ended For the Year Ended

CALIFORNIA REFINERIES (A)  December 31,               December 31,

                           2010         2009          2010         2009

                           bpd    %     bpd    %      bpd    %     bpd    %

Refinery throughput:

Medium sour crude          1,828  15.7  5,230  25.4   3,502  19.9  13,408 43.0

Heavy crude                9,553  81.8  14,934 72.4   13,688 77.8  17,420 55.9

Blendstocks                294    2.5   454    2.2    406    2.3   330    1.1

Total refinery throughput
(18)                       11,675 100.0 20,618 100.0  17,596 100.0 31,158 100.0

Refinery production:

Gasoline                   1,861  16.4  3,754  18.8   2,629  15.4  4,920  16.2

Diesel/jet                 2,623  23.1  3,857  19.3   3,704  21.6  7,123  23.5

Asphalt                    4,034  35.5  5,301  26.5   5,919  34.6  8,976  29.5

Light unfinished           —    —   —    —    —    —   117    0.4

Heavy unfinished           2,656  23.4  7,042  35.3   4,483  26.2  8,813  29.0

Other                      176    1.6   23     0.1    372    2.2   418    1.4

Total refinery production
(19)                       11,350 100.0 19,977 100.0  17,107 100.0 30,367 100.0

Refinery utilization (20)         23.7%        27.8%         25.9%        46.2%










THROUGHPUT AND PRODUCTION
DATA:                      For the Three Months Ended For the Year Ended

KROTZ SPRINGS REFINERY (B) December 31,               December 31,

                           2010         2009          2010         2009

                           bpd    %     bpd    %      bpd    %     bpd    %

Refinery throughput:

Light sweet crude          45,621 65.3  5,694  26.2   23,810 60.7  22,942 47.5

Heavy sweet crude          23,236 33.3  15,036 69.3   14,535 37.0  22,258 46.0

Blendstocks                961    1.4   984    4.5    899    2.3   3,137  6.5

Total refinery throughput
(18)                       69,818 100.0 21,714 100.0  39,244 100.0 48,337 100.0

Refinery production:

Gasoline                   27,956 39.9  9,313  42.1   15,812 40.1  22,264 45.4

Diesel/jet                 34,940 49.8  9,539  43.1   18,986 48.2  21,318 43.4

Heavy oils                 1,746  2.5   1,494  6.7    1,515  3.8   1,238  2.5

Other                      5,489  7.8   1,789  8.1    3,107  7.9   4,258  8.7

Total refinery production
(19)                       70,131 100.0 22,135 100.0  39,420 100.0 49,078 100.0

Refinery utilization (20)         82.9%        74.0%         46.1%        65.3%










(A) The throughput data for the three months and year ended December 31,
2010, reflects two months and eleven months of throughput, respectively, as
the California refineries were shutdown in December to redeploy resources for
the integration of the Bakersfield refinery acquired in June 2010.



(B) The throughput data for the year ended December 31, 2010, reflects
substantially seven months of operations beginning in June 2010 due to the
restart of the Krotz Springs refinery after major turnaround activity.








ASPHALT SEGMENT                 For the Three Months Ended For the Year Ended

                                December 31,               December 31,

                                2010      2009             2010       2009

                                (dollars in thousands, except per ton data)

STATEMENT OF OPERATIONS DATA:

Net sales                       $ 82,619  $ 89,486         $ 399,334  $ 440,915

Operating costs and expenses:

Cost of sales (21)              72,772    78,169           355,272    386,050

Direct operating expenses       10,835    11,119           44,095     44,124

Selling, general and
administrative expenses         981       1,117            5,542      4,588

Depreciation and amortization   1,727     1,708            6,875      6,807

Total operating costs and
expenses                        86,315    92,113           411,784    441,569

Operating loss                  $ (3,696) $ (2,627)        $ (12,450) $ (654)



KEY OPERATING STATISTICS AND
OTHER DATA:

Blended asphalt sales volume
(tons in thousands) (22)        155       181              780        994

Non-blended asphalt sales
volume (tons in thousands) (23) 31        54               83         197

Blended asphalt sales price per
ton (22)                        $ 475.56  $ 434.53         $ 477.26   $ 409.88

Non-blended asphalt sales price
per ton (23)                    $ 287.35  $ 200.67         $ 326.16   $ 170.05

Asphalt margin per ton (24)     $ 52.94   $ 48.16          $ 51.06    $ 46.07

Capital expenditures            $ 566     $ 1,480          $ 1,557    $ 2,579










                               For the Three Months Ended For the Year Ended
RETAIL AND BRANDED MARKETING
SEGMENT                        December 31,               December 31,

                               2010      2009             2010        2009

                               (dollars in thousands, except per gallon data)

STATEMENT OF OPERATIONS DATA:

Net sales                      $ 291,387 $ 217,058        $ 1,044,851 $ 808,221

Operating costs and expenses:

Cost of sales (21)             257,338   189,387          912,872     691,651

Selling, general and
administrative expenses        25,513    24,493           99,024      94,725

Depreciation and amortization  3,231     3,285            13,440      13,464

Total operating costs and
expenses                       286,082   217,165          1,025,336   799,840

Gain (loss) on disposition of
assets                         (188)     (2)              286         (549)

Operating income (loss)        $ 5,117   $ (109)          $ 19,801    $ 7,832



KEY OPERATING STATISTICS AND
OTHER DATA:

Branded fuel sales (thousands
of gallons) (25)               88,904    69,172           318,935     274,101

Branded fuel margin (cents per
gallon) (25)                   4.9       5.1              6.2         5.8



Number of stores (end of
period)                        304       308              304         308

Retail fuel sales (thousands
of gallons)                    37,273    31,401           142,155     120,697

Retail fuel sales (thousands
of gallons per site per month)
(26)                           41        34               39          33

Retail fuel margin (cents per
gallon) (27)                   14.8      10.8             12.9        13.9

Retail fuel sales price
(dollar per gallon) (28)       $ 2.76    $ 2.49           $ 2.70      $ 2.29

Merchandise sales              $ 70,014  $ 66,110         $ 281,674   $ 268,785

Merchandise sales (per site
per month) (26)                77        72               77          73

Merchandise margin (29)        32.4%     30.1%            31.9%       30.7%

Capital expenditures           $ 2,530   $ 1,598          $ 4,679     $ 3,822








(1) Includes excise taxes on sales by the retail and branded marketing segment
of $14,409 and $12,250 for the three months ended December 31, 2010 and 2009,
respectively, and $54,930 and $47,137 for the years ended December 31, 2010 and
2009, respectively. Net sales also include royalty and related net credit card
fees of $1,529 and $412 for the three months ended December 31, 2010 and 2009,
respectively, and $4,221 and $1,382 for the years ended December 31, 2010 and
2009, respectively.



(2) Includes corporate headquarters selling, general and administrative
expenses of $188 and $188 for the three months ended December 31, 2010 and
2009, respectively, and $752 and $757 for the years ended December 31, 2010 and
2009, respectively, which are not allocated to our three operating segments.



(3) Unrealized loss associated with consignment inventory for the three months
and year ended December 31, 2010, is a mark-to-market adjustment for the
associated consigned inventory liabilities. Crude oil consignment inventory
represents inventory located at storage facilities that was sold to third
parties with an obligation by us to repurchase the inventory at then prevailing
market prices when the respective agreements end. At December 31, 2010, we had
0.7 million barrels of crude oil inventory consigned to others with a market
value of $59,467.



(4) Includes corporate depreciation and amortization of $416 and $224 for the
three months ended December 31, 2010 and 2009, respectively, and $1,380 and
$724 for the years ended December 31, 2010 and 2009, respectively, which are
not allocated to our three operating segments.



(5) Interest expense for the year ended December 31, 2010, includes a charge of
$6,659 for the write-off of debt issuance costs associated with our prepayment
of the Alon Refining Krotz Springs, Inc. revolving credit facility. Interest
expense for the three months and year ended December 31, 2009, includes $20,482
of unamortized debt issuance costs written off as a result of prepayments of
$163,819 of term debt in October 2009. Interest expense for the year ended
December 31, 2009, also includes $5,715 related to the liquidation of the
heating oil hedge in the second quarter of 2009.



(6) In connection with the Bakersfield refinery acquisition, the acquisition
date fair value of the identifiable net assets acquired exceeded the fair value
of the consideration transferred, resulting in a $17,480 bargain purchase gain
in 2010.



(7) Other income (loss), net for the three months and year ended December 31,
2010, includes a loss on heating oil crack spread call option contracts of
$4,119. Other income (loss), net for the year ended December 31, 2010, includes
a gain from the sale of our investment in Holly Energy Partners of $7,277.



(8) Accumulated dividends on preferred stock of subsidiary for the three months
and year ended December 31, 2009, represent dividends of $12,900 for the
conversion of the preferred stock into Alon common stock. Also included for the
three months and year ended December 31, 2009, is $2,150 and $8,600,
respectively, of accumulated dividends.



(9) Cash provided by operating activities for the year ended December 31, 2009,
includes proceeds from the liquidation of the heating oil crack spread hedge of
$133,581 and proceeds from the receipt of income tax receivables of $112,952.
Cash used in financing activities for the year ended December 31, 2009,
includes repayments on long-term debt and revolving credit facilities sourced
primarily from the liquidation proceeds from the heating oil crack spread hedge
and proceeds from the receipt of income tax receivables.



(10) The following table provides a reconciliation of net loss available to
common stockholders under United States generally accepted accounting
principles ("GAAP") to adjusted net loss available to common stockholders
utilized in determining loss per common share, excluding the after-tax loss on
write-off of unamortized debt issuance costs, after-tax gain (loss) on
disposition of assets, after-tax loss on unrealized loss associated with
consignment inventory, gain on bargain purchase and accumulated dividends on
preferred stock of subsidiary. Our management believes that the presentation of
adjusted net loss available to common stockholders and loss per common share,
excluding these 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,

                              2010       2009       2010        2009

                              (dollars in thousands, except earnings per share)

Net loss available to common
stockholders                  $ (25,147) $ (90,609) $ (122,932) $ (115,156)

Plus: Write-off of
unamortized debt issuance
costs, net of tax             —        11,583     3,865       11,583

Plus: Unrealized loss
associated with consignment
inventory, net of tax         5,268      —        5,268       —

Plus: Preferred shares
dividends and conversion      —        13,975     —         19,965

Less: Gain on bargain
purchase                      —        —        (16,253)    —

Less: (Gain) loss on
disposition of assets, net of
tax                           (276)      (351)      (551)       900

Adjusted net loss available
to common stockholders        $ (20,155) $ (65,402) $ (130,603) $ (82,708)



Weighted average shares
outstanding (in thousands)    54,215     46,890     54,186      46,829

Loss per share, excluding
write-off of unamortized debt
issuance costs, net of tax,
unrealized loss associated
with consignment inventory,
net of tax, gain (loss) on
disposition of assets, net of
tax, gain on bargain purchase
and preferred shares
dividends and conversion      $ (0.37)   $ (1.39)   $ (2.41)    $ (1.77)








(11) Adjusted EBITDA represents earnings before non-controlling interest in
income of subsidiaries, income tax expense, interest expense, depreciation and
amortization, gain on bargain purchase 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, gain on bargain purchase 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 loss available to common stockholders to
Adjusted EBITDA for the three months and years ended December 31, 2010 and
2009, respectively:








                             For the Three Months Ended For the Year Ended

                             December 31,               December 31,

                             2010       2009            2010        2009

                             (dollars in thousands)

Net loss available to common
stockholders                 $ (25,147) $ (90,609)      $ (122,932) $ (115,156)

 Non-controlling interest in
loss of subsidiaries
(including accumulated
dividends on preferred stock
of subsidiary)               (2,417)    9,452           (9,641)     12,949

Income tax benefit           (16,801)   (51,871)        (90,512)    (64,877)

Interest expense             22,528     40,398          94,939      111,137

Depreciation and
amortization                 23,625     26,349          102,096     97,247

Gain on bargain purchase     —        —             (17,480)    —

(Gain) loss on disposition
of assets                    (471)      (556)           (945)       1,591

Adjusted EBITDA              $ 1,317    $ (66,837)      $ (44,475)  $ 42,891








Adjusted EBITDA for our retail and branded marketing segment 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 but is
also subject to many of the limitations discussed above; therefore, Adjusted
EBITDA for our retail and branded marketing segment 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 operating income (loss) to Adjusted EBITDA for our retail and
branded marketing segment for the three months and year ended December 31, 2010
and 2009, respectively:








                              For the Three Months Ended For the Year Ended
RETAIL AND BRANDED MARKETING
SEGMENT                       December 31,               December 31,

                              2010    2009               2010     2009

                              (dollars in thousands)

Operating income (loss)       $ 5,117 $ (109)            $ 19,801 $ 7,832

Depreciation and amortization 3,231   3,285              13,440   13,464

(Gain) loss on disposition of
assets                        188     2                  (286)    549

Adjusted EBITDA               $ 8,536 $ 3,178            $ 32,955 $ 21,845








(12) Includes corporate capital expenditures of $183 and $717 for the three
months ended December 31, 2010 and 2009, respectively, and $2,335 and $3,704
for the years ended December 31, 2010 and 2009, respectively, which are not
included in our three operating segments.



(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
substantial unrealized hedge positions 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.



The refinery operating margin for the year ended December 31, 2010, excludes a
benefit of $4,515 to cost of sales for inventory adjustments related to the
Bakersfield refinery acquisition. There were unrealized hedging gains of $5,263
and $25,632 for the Krotz Springs refinery for the three months and year ended
December 31, 2009, respectively. Additionally, the Krotz Springs refinery
margin for 2009 excludes realized gains related to the unwind of the heating
oil crack spread hedge of $139,290.



(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. Direct operating expenses
related to the Bakersfield refinery of $1,251 and $3,373 for the three months
and year ended December 31, 2010, respectively, have been excluded from the per
barrel measurement.



(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 CARBOB pipeline gasoline
and LA ultra-low sulfur pipeline diesel and the market value of WTI crude oil.



A 2/1/1 crack spread is calculated assuming that two barrels of a benchmark
crude oil are converted into one barrel of gasoline and one barrel of diesel.
We calculate the Gulf Coast high sulfur diesel 2/1/1 crack spread using the
market values of Gulf Coast conventional gasoline and Gulf Coast high sulfur
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. The Light Louisiana Sweet ("LLS") less WTI spread
represents the differential between the average value per barrel of LLS crude
oil and the average value per barrel of WTI.



(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.



(20) Refinery utilization represents average daily crude oil throughput divided
by crude oil capacity, excluding planned periods of downtime for maintenance
and turnarounds.



(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) Blended asphalt represents base asphalt that has been blended with other
materials necessary to sell the asphalt as a finished product.



(23) Non-blended asphalt represents base material asphalt and other components
that require additional blending before being sold as a finished product.



(24) 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.



(25) Branded fuel sales represent branded fuel sales to our wholesale marketing
customers that are primarily supplied by the Big Spring refinery. The branded
fuels that are not supplied by the Big Spring refinery are obtained from
third-party suppliers. The branded fuel sales 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.



(26) Retail fuel and merchandise sales per site for 2009 were calculated using
306 stores for eleven months and 308 stores for one month.



(27) 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.



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



(29) 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.