Segment Data

Alon’s revenues are derived from three operating segments: (i) refining and unbranded marketing, (ii) asphalt and (iii) retail and branded marketing. The reportable operating segments are strategic business units that offer different products and services. The segments are managed separately as each segment requires unique technology, marketing strategies and distinct operational emphasis. Each operating segment’s performance is evaluated primarily based on operating income.


(a)	Refining and Unbranded Marketing Segment

Alon’s refining and unbranded marketing segment includes sour and heavy crude oil refineries located in Big Spring, Texas, and Paramount, Bakersfield and Long Beach, California (the “California refineries”) and a light sweet crude oil refinery located in Krotz Springs, Louisiana. At these refineries, Alon refines crude oil into products including gasoline, diesel, jet fuel, petrochemicals, feedstocks, asphalts and other petroleum products, which are marketed primarily in the South Central, Southwestern and Western regions of the United States. In Bakersfield, Alon is converting intermediate products into finished products and is not refining crude oil. Finished products and blendstocks are also marketed through sales and exchanges with other major oil companies, state and federal governmental entities, unbranded wholesale distributors and various other third parties. Alon also acquires finished products through exchange agreements and third-party suppliers.


(b)	Asphalt Segment

Alon’s asphalt segment includes the Willbridge, Oregon refinery and 12 refinery/terminal locations in Texas (Big Spring), California (Paramount, Long Beach, Elk Grove, Bakersfield and Mojave), Oregon (Willbridge), Washington (Richmond Beach), Arizona (Phoenix, Flagstaff and Fredonia), and Nevada (Fernley) (50% interest) as well as a 50% interest in Wright Asphalt Products Company, LLC (“Wright”) which specializes in marketing patented tire rubber modified asphalt products. Alon produces both paving and roofing grades of asphalt and, depending on the terminal, can manufacture performance-graded asphalts, emulsions and cutbacks. The operations in which Alon has a 50% interest (Fernley and Wright), are recorded under the equity method of accounting, and the investments are included as part of total assets in the asphalt segment data.


(c)	Retail and Branded Marketing Segment

Alon’s retail and branded marketing segment operates 304 convenience stores located primarily in Central and West Texas and New Mexico. These convenience stores typically offer various grades of gasoline, diesel fuel, general merchandise and food and beverage products to the general public, primarily under the 7-Eleven and FINA brand names. Alon’s branded marketing business markets gasoline and diesel under the FINA brand name, primarily in the Southwestern and South Central United States, through a network of approximately 640 locations, including Alon’s convenience stores. Historically, substantially all of the motor fuel sold through Alon’s convenience stores and the majority of the motor fuels marketed in Alon’s branded business have been supplied by Alon’s Big Spring refinery.


(d)	Corporate

Operations that are not included in any of the three segments are included in the corporate category. These operations consist primarily of corporate headquarters operating and depreciation expenses.

Segment data as of and for the three month periods ended June 30, 2011 and 2010, are presented below:



	Refining and Unbranded Marketing		Asphalt			Retail and Branded Marketing			Corporate			Consolidated Total
Three Months ended June 30, 2011
Net sales to external customers	$	1,064,185	$	147,811		$	383,635		$	—		$	1,595,631
Intersegment sales/purchases	371,735		(94,992		)	(276,743		)	—			—
Depreciation and amortization	19,583		1,747			3,053			404			24,787
Operating income (loss)	43,854		(13,697		)	10,947			(592		)	40,512
Total assets	2,040,276		145,066			214,519			15,345			2,415,206
Turnaround, chemical catalyst and capital expenditures	42,172		673			3,149			878			46,872



	Refining and Unbranded Marketing			Asphalt			Retail and Branded Marketing			Corporate			Consolidated Total
Three Months ended June 30, 2010
Net sales to external customers	$	481,442		$	104,964		$	253,955		$	—		$	840,361
Intersegment sales/purchases	209,889			(52,643		)	(157,246		)	—			—
Depreciation and amortization	19,881			1,715			3,436			336			25,368
Operating income (loss)	(35,387		)	463			7,734			(524		)	(27,714		)
Total assets	1,767,631			208,652			188,983			17,142			2,182,408
Turnaround, chemical catalyst and capital expenditures	5,737			347			430			393			6,907



	Refining and Unbranded Marketing		Asphalt			Retail and Branded Marketing			Corporate			Consolidated Total
Six Months ended June 30, 2011
Net sales to external customers	$	2,312,862	$	234,054		$	699,819		$	—		$	3,246,735
Intersegment sales/purchases	622,082		(118,479		)	(503,603		)	—			—
Depreciation and amortization	39,620		3,477			6,330			807			50,234
Operating income (loss)	123,143		(23,325		)	15,170			(1,183		)	113,805
Total assets	2,040,276		145,066			214,519			15,345			2,415,206
Turnaround, chemical catalyst and capital expenditures	65,450		1,333			4,494			943			72,220



	Refining and Unbranded Marketing			Asphalt			Retail and Branded Marketing			Corporate			Consolidated Total
Six Months ended June 30, 2010
Net sales to external customers	$	767,586		$	172,105		$	479,983		$	—		$	1,419,674
Intersegment sales/purchases	406,785			(103,702		)	(303,083		)	—			—
Depreciation and amortization	40,835			3,432			6,856			567			51,690
Operating income (loss)	(93,905		)	(17,716		)	5,875			(943		)	(106,689		)
Total assets	1,767,631			208,652			188,983			17,142			2,182,408
Turnaround, chemical catalyst and capital expenditures	22,058			526			827			808			24,219

Operating income (loss) for each segment consists of net sales less cost of sales, direct operating expenses, selling, general and administrative expenses, depreciation and amortization, and gain (loss) on disposition of assets. Intersegment sales are intended to approximate wholesale market prices. Consolidated totals presented are after intersegment eliminations.

Total assets of each segment consist of net property, plant and equipment, inventories, cash and cash equivalents, accounts and other receivables and other assets directly associated with the segment’s operations. Corporate assets consist primarily of corporate headquarters information technology and administrative equipment.