Segment Data

Our revenues are derived from three operating segments: (i) refining and marketing, (ii) asphalt and (iii) retail. 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 Marketing Segment

Our refining and marketing segment includes a sour crude oil refinery located in Big Spring, Texas, a light sweet crude oil refinery located in Krotz Springs, Louisiana, and heavy crude oil refineries located in Paramount, Bakersfield and Long Beach, California (the “California refineries”). We refine crude oil into petroleum products including various grades of gasoline, diesel, jet fuel, petrochemicals, petrochemical feedstocks, asphalt and other petroleum-based products, which are marketed primarily in the South Central, Southwestern and Western regions of the United States. We are also shipping and selling gasoline into wholesale markets in the Southern and Eastern United States. Our California refineries have not processed crude oil since 2012 due to the high cost of crude oil relative to product yield and low asphalt demand. In February 2016, our renewable fuels project, AltAir, began commercial production.

We sell motor fuels under the Alon brand through various terminals to supply 634 Alon branded retail sites, including our retail segment convenience stores. In addition, we sell motor fuels through our wholesale distribution network on an unbranded basis.

(b)Asphalt Segment

We own or operate 11 asphalt terminals located in Texas (Big Spring), California (Paramount, Long Beach, Elk Grove, Bakersfield and Mojave), Washington (Richmond Beach), Arizona (Phoenix and Flagstaff), as well as asphalt terminals in which we own a 50% interest located in Fernley, Nevada, and Brownwood, Texas. The operations in which we have a 50% interest are recorded under the equity method of accounting and the investments are included as part of total assets in the asphalt segment data. Asphalt produced by our Big Spring refinery is transferred to the asphalt segment at prices substantially determined by reference to the cost of crude oil, which is intended to approximate wholesale market prices.

(c)Retail Segment

Our retail segment operates 306 convenience stores located in Central and West Texas and New Mexico. These convenience stores typically offer various grades of gasoline and diesel under the Alon brand name and food products, food service, tobacco products, non-alcoholic and alcoholic beverages, general merchandise as well as money orders to the public, primarily under the 7-Eleven brand name. Substantially all of the motor fuel sold through our retail segment is supplied by our 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 for the three and six month periods ended June 30, 2016 and 2015 is presented below:



	Refining and Marketing			Asphalt			Retail			Corporate			Consolidated Total
Three Months Ended June 30, 2016
Net sales to external customers	$	753,029		$	68,097		$	187,262		$	—		$	1,008,388
Intersegment sales (purchases)	76,884			(3,237		)	(73,647		)	—			—
Depreciation and amortization	31,514			1,261			3,350			860			36,985
Operating income (loss)	(23,759		)	5,194			4,797			(1,043		)	(14,811		)
Turnarounds, catalysts and capital expenditures	19,222			335			1,200			689			21,446



	Refining and Marketing		Asphalt			Retail			Corporate			Consolidated Total
Three Months Ended June 30, 2015
Net sales to external customers	$	1,024,807	$	69,900		$	206,634		$	—		$	1,301,341
Intersegment sales (purchases)	101,233		(7,925		)	(93,308		)	—			—
Depreciation and amortization	26,692		1,207			2,943			425			31,267
Operating income (loss)	83,581		(1,723		)	6,837			(601		)	88,094
Turnarounds, catalysts and capital expenditures	14,500		238			6,202			1,392			22,332



	Refining and Marketing			Asphalt			Retail			Corporate			Consolidated Total
Six Months Ended June 30, 2016
Net sales to external customers	$	1,386,532		$	121,596		$	350,233		$	—		$	1,858,361
Intersegment sales (purchases)	139,994			(8,685		)	(131,309		)	—			—
Depreciation and amortization	61,298			2,521			6,749			1,279			71,847
Operating income (loss)	(66,122		)	4,546			8,979			(1,653		)	(54,250		)
Turnarounds, catalysts and capital expenditures	54,391			1,075			3,911			2,125			61,502



	Refining and Marketing		Asphalt			Retail			Corporate			Consolidated Total
Six Months Ended June 30, 2015
Net sales to external customers	$	1,901,410	$	120,552		$	382,619		$	—		$	2,404,581
Intersegment sales (purchases)	184,122		(18,856		)	(165,266		)	—			—
Depreciation and amortization	54,003		2,352			5,980			894			63,229
Operating income (loss)	159,228		(16,154		)	13,827			(1,246		)	155,655
Turnarounds, catalysts and capital expenditures	21,239		1,644			9,518			3,013			35,414

Total assets by reportable segment consisted of the following:



	June 30, 2016		December 31, 2015
Refining and marketing	$	1,869,095	$	1,822,924
Asphalt	118,940		106,015
Retail	237,630		231,078
Corporate	19,799		16,121
Total assets	$	2,245,464	$	2,176,138

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.