As filed with the Securities and Exchange Commission on February 11, 2009

Registration No. 333-155296

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 1

Form S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Alon Brands, Inc.

(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)		5412 (Primary Standard Industrial Classification Code Number)		74-2966583 (I.R.S. Employer Identification Number)

Alon Brands, Inc.
7616 LBJ Freeway, 3rd Floor
Dallas, Texas 75251
(972) 367-3900

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Kyle McKeen
President and Chief Executive Officer
Alon Brands, Inc.
7616 LBJ Freeway, 3rd Floor
Dallas, Texas 75251
(972) 367-3900

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:


Mark E. Betzen, Esq. Jones Day 2727 North Harwood Street Dallas, Texas 75201-1515 Telephone: (214) 220-3939 Facsimile: (214) 969-5100		W. Stuart Ogg, Esq. Jones Day 555 South Flower Street Fiftieth Floor Los Angeles, California 90071 Telephone: (213) 489-3939 Facsimile: (213) 243-2539		Kris F. Heinzelman, Esq. Cravath, Swaine & Moore LLP Worldwide Plaza 825 Eighth Avenue New York, New York 10019-7475 Telephone: (212) 474-1336 Facsimile: (212) 474-3700

Approximate date of commencement of proposed sale to the public: As soon as practicable after the registration statement becomes effective.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o	Accelerated filer o	Non-accelerated filer þ	Smaller reporting company o

(Do not check if a smaller reporting company)

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED FEBRUARY 11, 2009

Alon Brands, Inc.

Common Stock

This is an initial public offering of shares of common stock of Alon Brands, Inc. We will pay a portion of the net proceeds of this offering to our parent company. See “Use of Proceeds.”

Prior to this offering, there has been no public market for our common stock. The initial public offering price of our common stock is expected to be between $ and $ per share. We have applied to list our common stock on the New York Stock Exchange under the symbol “ABO.”

The underwriters have an option to purchase a maximum of additional shares from us at the offering price less the underwriting discount, within 30 days from the date of this prospectus, to cover over-allotments of shares.

Investing in our common stock involves risks. See “Risk Factors” beginning on page 11.

Underwriting

Proceeds, Before

Discounts and

Expenses, to

Price to Public

Commissions

Alon Brands, Inc.

Per Share

Total

Delivery of the shares of common stock will be made on or about .

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

Joint Book-Running Managers


Credit Suisse	Merrill Lynch & Co.

The date of this prospectus is , 2009.

TABLE OF CONTENTS


	Page

Prospectus Summary		1
Risk Factors		11
Forward-Looking Statements		26
Use of Proceeds		27
Dividend Policy		27
Capitalization		28
Dilution		29
Selected Historical Combined Financial and Operating Data		31
Unaudited Pro Forma Condensed Combined Financial Data		35
Management’s Discussion and Analysis of Financial Condition and Results of Operations		39
Business		61
Management		73
Executive Compensation		76
Certain Relationships and Related Party Transactions		84
Principal Stockholders		90
Corporate Reorganization Transactions		91
Description of Capital Stock		93
Shares Eligible for Future Sale		99
Material U.S. Federal Tax Consequences to Non-U.S. Holders of Common Stock		101
Underwriting		104
International Selling Restrictions		107
Legal Matters		109
Experts		109
Where You Can Find More Information		109
Index to Financial Statements		F-1
EX-23.1
EX-23.2

You should rely only on the information contained in this document or to which we have referred you. We have not authorized anyone to provide you with information that is different. This document may only be used where it is legal to sell these securities. The information in this document may only be accurate on the date of this document.

Dealer Prospectus Delivery Obligation

Until , 2009 (25 days after the commencement of the offering), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to unsold allotments or subscriptions.

Industry and Market Data

In this prospectus, we rely on and refer to information and statistics regarding our industry, the size of certain markets and our position within the sectors in which we compete. Some of the market and industry data contained in this prospectus are based on information from independent industry trade associations such as the Association for Convenience and Petroleum Retailing, or NACS, or other publicly available information, while other information is based on our good faith estimates, which are derived from our review of internal surveys, and our management’s knowledge and experience in the markets in which we operate. Our estimates have also been based on information obtained from our customers, suppliers and other contacts in the markets in which we operate.

We own and use the “Alon Brands” and “Skinny’s” names and logos as our trademarks. This prospectus also refers to brand names, trademarks, service marks and trade names of other companies and organizations, and these brand names, trademarks, service marks and trade names are the property of their respective owners.

PROSPECTUS SUMMARY

This summary highlights certain information contained elsewhere in this prospectus. You should read this entire prospectus carefully, including the risks discussed under “Risk Factors” and the financial statements and related notes included elsewhere in this prospectus. In this prospectus, all references to “Alon Brands,” “we,” “us” and “our” refer to Alon Brands, Inc. and its subsidiaries except where the context otherwise requires or where otherwise indicated. All references to Alon Energy refer to Alon USA Energy, Inc., our indirect parent company, and its consolidated subsidiaries. Unless otherwise indicated, the information contained in this prospectus assumes the completion of the corporate reorganization transactions we expect to consummate with Alon Energy immediately prior to the consummation of this offering. See “Corporate Reorganization Transactions” for a description of these transactions. EBITDA is a financial measure that is not calculated in accordance with generally accepted accounting principles, or GAAP, but we believe such measure is useful to help investors understand our results of operations. However, EBITDA has limitations and should not be considered as a substitute for net income or as a better indicator of our operating performance than measures that are presented in accordance with GAAP. See “— Summary Historical Combined and Unaudited Pro Forma Condensed Combined Financial and Operating Data” and “Selected Historical Combined Financial and Operating Data” for a discussion of our use of EBITDA in this prospectus and a reconciliation of EBITDA to net income for the periods presented. Unless otherwise indicated, the pro forma financial information in this prospectus gives effect to this offering, our acquisition of Skinny’s, Inc. in June 2007, and the corporate reorganization transactions we expect to consummate with Alon Energy immediately prior to the consummation of this offering.

Our Company

We are the largest 7-Eleven licensee in the United States, and we are the sole licensee of the FINA brand for motor fuels in the South Central and Southwestern United States. Our business consists of two operating segments: retail and wholesale marketing. As of September 30, 2008, our retail segment operated 306 convenience stores in Central and West Texas and New Mexico, substantially all of which are operated under the 7-Eleven and FINA brands. Through our 7-Eleven licensing agreement, we have the exclusive right to operate 7-Eleven stores in substantially all of our existing retail markets and many surrounding areas. Our wholesale marketing segment markets and supplies motor fuels under the FINA brand and provides brand support and payment card processing services to distributors supplying over 950 retail locations, including our company-owned stores that sell motor fuel. In certain markets outside of our supply network, we also sub-license the FINA brand and provide the same brand support and payment card processing services to distributors representing approximately 100 additional retail locations. We believe our leading brand offerings, advantageous fuel supply agreement, strong market positions and complementary business model provide us with competitive advantages and position us well for continued growth.

Historically, most of our business was accounted for as an operating segment of Alon Energy, an independent refining company listed on the New York Stock Exchange, or NYSE, under the symbol “ALJ.” Alon Energy owns and operates four crude oil refineries located in Texas, California, Louisiana and Oregon. After completion of this offering, Alon Energy, through its subsidiary, Alon USA, LP, will continue to own approximately % of our common stock and all of our convertible preferred stock. Alon Energy is majority-owned by Alon Israel Oil Company, Ltd., or Alon Israel, an Israeli limited liability company and one of the largest operators of retail gasoline and convenience stores in Israel. Our ongoing relationships with Alon Energy and Alon Israel provide us with secure fuel supply and retail operating expertise, which we believe provide us with a competitive advantage.

Our 7-Eleven convenience stores offer well-known proprietary products, including Slurpee^® frozen carbonated beverages, Big Gulp^® beverages and Big Bite^® hot dogs, as well as a variety of other food products, tobacco products, alcoholic and non-alcoholic beverages, general merchandise and convenience services, such as ATMs, lottery tickets, money orders, prepaid telephone cards and gift cards. We believe customer recognition of the 7-Eleven brand provides us with a competitive advantage and its proprietary products have contributed to our merchandise margin, which is in excess of the industry average. We sell

motor fuels under the FINA brand in 295 of our convenience stores, which are supplied by our wholesale marketing segment under our long-term fuel supply agreement with Alon Energy. For the year ended December 31, 2007, our retail segment generated revenues of $480.1 million and gross profit of $88.0 million.

Immediately prior to the consummation of this offering, our wholesale marketing segment will enter into a strategic, 20-year fuel supply and licensing agreement with our parent, which will allow us to purchase motor fuels produced by its refineries. This agreement will provide us with cost-advantaged pricing, a secure fuel supply, access to distribution terminals in our primary markets and a platform for growth into existing and new markets where Alon Energy owns and operates refineries. Our third-party distributors take possession of their motor fuels directly from Alon Energy’s and other third-party terminals. As a result, our wholesale marketing segment is not subject to inventory valuation and transportation risks. In addition to motor fuels, we offer our wholesale distributors a number of ancillary services, including payment card processing, branding and construction incentives, and signage and marketing incentives, designed to support their retail fuel operations and the FINA brand. We also provide these services and sub-license the FINA brand for motor fuels in certain markets outside of our supply network. Our payment card processing and sub-licensing activities, in particular, provide us with additional sources of consistent revenue. For the year ended December 31, 2007, our wholesale marketing segment purchased and resold 458.6 million gallons of branded motor fuel and generated revenues of $794.4 million and gross profit of $28.3 million.

Our total revenues for the year ended December 31, 2007, and for the nine months ended September 30, 2008, were $1,274.5 million and $1,047.9 million, respectively. Our net income (loss) for the year ended December 31, 2007, and for the nine months ended September 30, 2008, was $11.9 million and $(4.5) million, respectively. Our EBITDA for the year ended December 31, 2007, and for the nine months ended September 30, 2008, was $34.8 million and $8.0 million, respectively. Our pro forma net income for the year ended December 31, 2007, and for the nine months ended September 30, 2008, was $ million and $ million, respectively. Our pro forma EBITDA for the year ended December 31, 2007, and for the nine months ended September 30, 2008, was $ million and $ million, respectively.

Industry Trends

Convenience Stores. Our retail segment operates within the large and growing U.S. convenience store industry. According to NACS, sales in the industry have grown from $337.0 billion in 2003 to $577.4 billion in 2007, which represents a compounded annual growth rate, or CAGR, of 14.4%. This industry is highly fragmented, with the 10 largest convenience store operators controlling less than 9% of the total convenience stores in 2007. Furthermore, convenience store operators with 50 or fewer stores accounted for approximately 75% of all convenience stores in 2007. We believe we will continue to benefit from several key industry trends and characteristics, including:


	•	Continuing shift of consumer food and general merchandise purchases away from traditional supermarkets to convenience stores and other alternative formats;

	•	Increasing size and complexity of the big box retail format, driving consumers to small box retailers, such as convenience stores, to meet their demand for speed and convenience in daily shopping needs;

	•	Changing consumer demographics and eating patterns resulting in more food consumed away from home;

	•	Increasing significance of the advantages of scale given the highly fragmented nature of the industry; and

	•	Continuing opportunities to grow through acquisitions given industry fragmentation and continued divestitures of retail convenience stores by major oil companies.

Motor Fuel Marketing and Supply. In recent years, the market for wholesale distribution of motor fuel products has experienced a number of changes that we believe provide opportunities to grow our wholesale marketing segment, including:


	•	Consolidation among major petroleum product producers over the last 25 years, which has resulted in fewer recognizable brands available to consumers;


	•	A 37% reduction in the number of operating crude oil refineries over the last 25 years, which has resulted in less access to product and increased the importance of obtaining a secure fuel supply source; and

	•	Increased scrutiny by oil companies and refiners in selecting distributors, with a preference for larger distributors capable of handling higher volumes, limiting smaller distributors’ access to product.

Our Competitive Strengths

We believe the following competitive strengths differentiate us from our competitors:

Leading 7-Eleven Convenience Store Brand. 7-Eleven is the most recognized brand for convenience stores in the United States and around the world. We are the largest 7-Eleven licensee in the United States and we have an exclusive license to use the 7-Eleven brand in substantially all of our retail markets and many surrounding areas. Our licensing arrangement allows us to offer well-known proprietary products, including Slurpee^® frozen carbonated beverages, Big Gulp^® beverages and Big Bite^® hot dogs, which contribute to our merchandise margin, which is in excess of the industry average. Additionally, we benefit from access to 7-Eleven’s successful and innovative new product development, marketing techniques, national advertising campaigns and proprietary retail information.

Exclusive FINA Brand Offering. With approximately 1,050 branded locations and a history reaching back to 1963, the FINA name is well-known in the South Central and Southwestern United States. We believe FINA-branded products are an important market differentiator for both our retail operations and for those of our distributors. We have an exclusive license to market motor fuels under the FINA brand in Texas, Oklahoma, New Mexico, Arizona, Arkansas, Louisiana, Colorado and Utah.

Attractive Wholesale Marketing Segment. Our wholesale marketing segment supplies distributors with motor fuel under the FINA brand and provides payment card processing, branding and construction incentives, and signage and marketing incentives. We provide these services only to distributors, as opposed to individual dealers or retailers, which lowers our credit risk by concentrating our customer base to a smaller number of more creditworthy accounts. Given the relatively low operating costs and capital requirements of our wholesale marketing segment, we believe this segment will generate free cash flow in the future, which can be utilized to fund our growth strategy.

Advantageous Long-Term Fuel Supply Agreement. Immediately prior to the consummation of this offering, we will enter into a long-term supply agreement with Alon Energy to secure substantially all of our motor fuel requirements. This new agreement will provide cost-advantaged pricing and a secure fuel supply. This agreement will also provide us a platform for growth in existing and new markets, such as Louisiana and Southern California, where Alon Energy owns and operates refineries.

Leading Market Position in Attractive Markets. We believe we are the largest convenience store operator by number of stores in the cities of Abilene, Big Spring, El Paso, Lubbock, Midland, Odessa and Wichita Falls, Texas. We also have a significant presence in Albuquerque, New Mexico. Approximately 92% of our stores are located in Central and West Texas, which include population and employment growth areas exceeding the national averages based on U.S. Census Bureau and other demographic information. We believe we will continue to benefit from the regional economy’s focus on energy and agriculture and the stability provided by military bases in the region.

Complementary Business Model. We believe our wholesale marketing operations and related brand sub-licensing provide us with a diverse source of revenues to complement our retail operations. In addition to increasing our overall scale and providing us with additional sales and income opportunities over other convenience store operators, our complementary wholesale operations also minimize some of the risks that convenience store-only operators face, such as higher payment card expenses and volatility in retail motor fuel margins. For example, revenues generated from our wholesale marketing segment’s payment card processing services partially offset our retail segment’s payment card expenses. Furthermore, we believe our complementary operations also enhance our flexibility to grow in existing and new markets and enhance the overall stability of our business.

Experienced Management with Significant Operating Expertise. Our senior management team averages 19 years of relevant experience in the retail and fuel marketing industries. We believe our management team’s experience and accomplishments position us well for continued growth. We also benefit from the management and transactional expertise provided through our relationships with Alon Energy and Alon Israel, which has grown since its formation in 1989 to become one of the largest operators of retail gasoline and convenience stores in Israel.

Our Growth Strategy

We believe there are significant opportunities to continue to expand our businesses and increase our sales and profitability through the implementation of the following strategies:

Improve Our Retail Operations. Following our separation from Alon Energy and this offering, we believe we will be better able to invest our capital to improve our retail operations. Specifically, we plan to drive increased volumes and overall profitability by:


	•	Introducing new products and services;

	•	Realizing the benefits of our recent fuel equipment upgrades;

	•	Optimizing our fuel pricing to improve overall retail profits and drive in-store traffic;

	•	Completing selective retail store remodels and equipment upgrades;

	•	Improving product positioning of higher margin, high volume product categories; and

	•	Better utilizing our point-of-sale technologies.

Increase Sales of Higher Margin Foodservice Products. The industry average in-store sales contribution from prepared on-site food programs was 6.6% for the year ended December 31, 2007. Our prepared on-site food contribution was 1.2% for the same period. We believe there is a significant opportunity to increase our sales from higher margin prepared food offerings, which in turn will drive ancillary revenues from other higher margin foodservice products, such as fountain and hot-dispensed beverages. Through our 7-Eleven license agreement, we have access to 7-Eleven’s entire program of proprietary foodservice products. In addition, our 7-Eleven license agreement allows us to offer third-party foodservice products. We plan to increase our foodservice sales by better leveraging 7-Eleven’s foodservice program, implementing an independent hot food program and significantly improving our beverage offerings, all of which carry higher margins than other retail products.

Grow Our Retail Store Base. Over the last three years, we have increased our retail store count from 167 to 306 by completing and integrating two acquisitions. In doing so, we have improved our profitability at these acquired stores through rebranding them to the 7-Eleven brand and realizing the benefits of increased scale. We believe our acquisition experience and our scalable infrastructure form a strong platform for future growth and that acquisitions of additional stores provide us the opportunity to increase our overall profitability. We expect to continue to grow our retail store base through acquisitions in markets where we are the exclusive licensee of the 7-Eleven brand.

Improve Our Wholesale Marketing Operations. We have implemented and continue to implement changes to our wholesale marketing programs to increase the ratability, or consistency, of our distributors’ purchases of motor fuel products, which further enhances our profitability. We plan to continue to grow our distributor network in our current markets through our offering of the FINA brand, reliable fuel supply and brand support and payment card processing services. In addition, we intend to expand our branded fuel supply offering into new markets, including markets in which Alon Energy now operates, or in the future may, acquire refineries.

Risks Related to Our Business and Strategy

Our business is subject to numerous risks that are described in more detail in the section captioned “Risk Factors.” These risks include, but are not limited to: high volatility in motor fuel prices; our dependence on one supplier for our fuel supply requirements and a limited number of suppliers for a majority of our merchandise requirements; maintaining our FINA and 7-Eleven license agreements; competition in our industries; changes in economic conditions, generally, and in the markets we serve; changes in consumer behavior and travel trends; and the effects of and cost of compliance with current and future state and federal environmental, economic, safety and other laws, policies and regulations. These risks, together with the others identified under “Risk Factors,” could prevent us from successfully executing our growth and business strategies and could materially adversely affect our business, prospects, financial condition, cash flows and result of operations.

Principal Executive Offices

Alon Brands, Inc. was converted from a Texas limited liability company, formed in September 2002, to a Delaware corporation in November 2008. Upon completion of this offering and the corporate reorganization transactions described in this prospectus, Alon Brands will become a holding company for our retail and wholesale marketing operations. Our principal executive offices are located at 7616 LBJ Freeway, 3rd Floor, Dallas, Texas 75251, and our telephone number at this address is (972) 367-3900. Our website is www.alonbrands.com. Information on, or accessible through, our website is not a part of, and is not incorporated into, this prospectus.

The Offering


Common stock offered by us		shares (or shares, if the underwriters exercise their over-allotment option in full)

Common stock to be outstanding immediately after this offering		shares (or shares, if the underwriters exercise their over-allotment option in full)

Use of proceeds		We estimate that our net proceeds from this offering, after deducting underwriting discounts, commissions and estimated offering expenses, will be approximately $ million, or approximately $ million if the underwriters exercise their over-allotment option in full.

		We intend to use these net proceeds to:

		• return $ million of parent investment to Alon USA, LP; and


		• for general corporate purposes.


Dividend policy		We intend to pay quarterly cash dividends on our common stock at an initial annual rate of $ per share commencing in the quarter of 2009. The declaration and payment of future dividends to holders of our common stock will be at the discretion of our board of directors and will depend upon many factors, including our financial condition, earnings, legal requirements, prior payments of preferred stock dividends and other factors our board of directors deems relevant.

Risk factors		You should carefully read and consider the information set forth under “Risk Factors,” together with all of the other information set forth in this prospectus, before deciding to invest in shares of our common stock.

Proposed NYSE symbol		ABO

Unless we indicate otherwise, the number of shares of common stock shown to be outstanding after this offering:


	•	excludes shares of our common stock reserved for issuance under our equity incentive plan;

	•	excludes shares of our common stock reserved for issuance upon conversion of our series A convertible preferred stock issued to Alon USA, LP in connection with the corporate reorganization transactions; and

	•	assumes that the underwriters will not exercise their over-allotment option.

Summary Historical Combined and Unaudited Pro Forma
Condensed Combined Financial and Operating Data

The following tables set forth our summary historical combined and unaudited pro forma condensed combined financial and operating data as of and for the periods indicated below. The summary historical combined financial data for the years ended December 31, 2005, 2006 and 2007, have been derived from our audited combined financial statements, which are included elsewhere in this prospectus. The summary historical combined financial data for the nine months ended September 30, 2007 and 2008 and as of September 30, 2008, are derived from our unaudited combined financial statements, which are included elsewhere in this prospectus. We have prepared our unaudited combined financial statements on the same basis as our audited combined financial statements and have included all adjustments, consisting of normal and recurring adjustments, which we consider necessary for a fair presentation of our financial position and results of operations for the unaudited periods. The summary historical combined financial and operating data for the nine months ended September 30, 2008 and as of September 30, 2008 are not necessarily indicative of the results that may be obtained for a full year.

During the periods covered by our historical financial and operating data, most of our business was accounted for as an operating segment of Alon Energy. Our combined financial statements include allocations of certain corporate functions provided to us by Alon Energy, including general corporate expenses, where allocations are based on estimates of effort or resources incurred on our behalf. Certain other costs incurred by Alon Energy for our direct benefit, such as rent, salaries and benefits, have also been included in our combined financial statements. However, our combined financial statements do not purport to represent and may not necessarily reflect what our financial position, results of operations and cash flows actually would have been if we had operated as a stand-alone company during the periods presented. Accordingly, our historical financial data also do not purport to represent, and may not be indicative of, our results of operations or cash flows for any future period or financial position as of any future date.

On June 29, 2007, we completed the acquisition of Skinny’s, Inc., or Skinny’s, a privately-held company that operated 102 stores in Central and West Texas. The aggregate purchase price for Skinny’s was approximately $75.3 million after adjustments for working capital, debt and certain other post-closing adjustments. The operations of Skinny’s have been included in our combined statements of operations since the acquisition date.

The summary unaudited pro forma condensed combined financial data for the year ended December 31, 2007, and the nine months ended September 30, 2008 and as of September 30, 2008, are derived from the unaudited pro forma condensed combined statements of operations and the unaudited pro forma condensed combined balance sheet set forth under “Unaudited Pro Forma Condensed Combined Financial Data.” The summary unaudited pro forma condensed combined financial and operating data for the year ended December 31, 2007 give effect to the Skinny’s transaction, the corporate reorganization transactions, this offering and the application of net proceeds thereof as if they had each occurred as of January 1, 2007. The summary unaudited pro forma condensed combined financial and operating data for the nine months ended September 30, 2008 give effect to the corporate reorganization transactions, this offering and the use of net proceeds therefrom as if they had each occurred as of January 1, 2008. The summary unaudited pro forma condensed combined balance sheet data as of September 30, 2008 give effect to the corporate reorganization transactions, this offering and the application of net proceeds thereof as if they had occurred as of September 30, 2008.

The unaudited pro forma condensed combined financial data are included for informational purposes only and do not purport to reflect our financial position or results of operations that would have occurred had the transactions referenced above occurred on the dates indicated. In addition, the pro forma adjustments described herein are based on available information and upon assumptions that our management believes are reasonable in order to reflect, on a pro forma basis, the impact of the above transactions on our historical combined financial data. The unaudited pro forma financial data also do not purport to represent, and may not be indicative of, our results of operations for any future period or our financial position as of any future date.

The information presented below should be read in conjunction with “Use of Proceeds,” “Capitalization,” “Selected Historical Combined Financial and Operating Data,” “Unaudited Pro Forma Condensed Combined Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited and unaudited combined financial statements and related notes included elsewhere in this prospectus.


	Historical															Pro Forma
																	Nine Months
										Nine Months Ended						Year Ended	Ended
	Year Ended December 31,									September 30,						December 31,	September 30,
	2005			2006			2007			2007			2008			2007	2008
	(Dollars in thousands, except as noted)

Statement of Operations Data:
Revenues:
Motor fuel — retail	$	193,232		$	194,025		$	259,287		$	179,989		$	261,073		$	$
Merchandise — retail		128,466			150,899			213,433			153,228			192,325
Other, net — retail(1)		4,879			6,255			7,374			5,844			5,606

Total retail		326,577			351,179			480,094			339,061			459,004
Motor fuel — wholesale		831,005			910,959			792,273			608,529			586,755
Other, net — wholesale(2)		2,431			2,455			2,149			1,451			2,175

Total wholesale		833,436			913,414			794,422			609,980			588,930

Total revenues		1,160,013			1,264,593			1,274,516			949,041			1,047,934
Gross profit:
Motor fuel — retail		14,985			14,555			19,478			12,317			14,612
Merchandise — retail		37,954			42,500			61,113			43,743			55,538
Other, net — retail		4,879			6,254			7,375			5,844			5,606

Total retail		57,818			63,309			87,966			61,904			75,756

Motor fuel — wholesale		(7,096	)		13,897			26,141			23,330			213
Other, net — wholesale		2,431			2,456			2,149			1,451			2,175

Total wholesale		(4,665	)		16,353			28,290			24,781			2,388

Total gross profit		53,153			79,662			116,256			86,685			78,144
Operating and selling expenses:
Operating, selling and administrative(3)		58,668			64,256			81,933			56,967			70,516
Depreciation, amortization and accretion		5,026			6,205			10,245			6,910			10,290

Total operating and selling expenses		63,694			70,461			92,178			63,877			80,806
Operating income (loss)		(10,541	)		9,201			24,078			22,808			(2,662	)
Interest expense		3,848			5,864			5,202			3,668			4,029
Rental, interest and other income		168			229			484			283			409
Gain (loss) on sale of assets		(55	)		(30	)		68			39			—

Income (loss) before income tax expense (benefit)		(14,276	)		3,536			19,428			19,462			(6,282	)
Income tax expense (benefit)(4)		(5,040	)		1,336			7,543			7,368			(1,769	)

Net income (loss)	$	(9,236	)	$	2,200		$	11,885		$	12,094		$	(4,513	)	$	$

Earnings per share:
Basic																$	$
Diluted																$	$
Weighted-average shares outstanding:
Basic
Diluted
Other Financial Data:
EBITDA (unaudited) (5)	$	(5,420	)	$	15,575		$	34,810		$	30,005		$	8,015		$	$
Net cash provided by (used in):
Operating activities		(16,915	)		14,860			10,143			3,693			4,542
Investing activities		(6,216	)		(38,280	)		(85,841	)		(83,052	)		(2,553	)
Financing activities		24,560			23,547			81,429			84,696			(8,115	)
Capital expenditures(6)		6,216			10,902			11,027			5,627			2,203


	Historical															Pro Forma
																		Nine Months
										Nine Months Ended						Year Ended		Ended
	Year Ended December 31,									September 30,						December 31,		September 30,
	2005			2006			2007			2007			2008			2007		2008
	(Dollars in thousands, except as noted)

Operating Data (unaudited):
Number of retail stores (end of period)		167			207			307			308			306
Retail fuel gallons sold		87,714			75,969			91,945			65,075			73,092
Average gasoline retail price (dollars per gallon sold)	$	2.20		$	2.55		$	2.82		$	2.77		$	3.57		$		$
Average per retail store(7):
Retail merchandise sales		769			806			831			638			628
Retail fuel gallons sold		535			414			364			278			247
Comparable merchandise store sales growth(8)		3.1	%		4.8	%		3.1	%		6.9	%		0.4	%		%		%
Retail merchandise gross margin(9)		33.3	%		32.3	%		32.1	%		31.2	%		30.9	%		%		%
Retail fuel margin (cents per gallon)(10)		17.1	¢		19.2	¢		21.2	¢		18.9	¢		20.0	¢		¢		¢
Number of stores supplied through wholesale distributor network (end of period)(11)		1,079			983			776			796			745
Wholesale fuel gallons sold		598,965			543,788			458,581			353,530			267,476
Sold to our retail convenience stores		87,181			72,215			88,320			61,913			69,776
Sold to unrelated parties		511,784			471,573			370,261			291,617			197,700
Wholesale fuel margin unrelated parties (cents per gallon)		(1.4	)¢		3.0	¢		7.1	¢		8.0	¢		0.0	¢		¢		¢


	Historical		Pro Forma
	As of		As of
	September 30, 2008		September 30, 2008
	(Dollars in thousands, except as noted)

Balance Sheet Data (end of period):
Cash and cash equivalents	$	4,252	$
Adjusted working capital(12)		29,948
Total assets		220,682
Total liabilities		128,099
Total member’s interest and equity/stockholders’ equity		92,583


(1)		Includes revenues from, lottery, money orders, money wire and ATM commissions, and other commissions earned on gift cards and ancillary services.

(2)		Includes payment card processing fees, broadband and equipment rents, and other marketing and trade agreement fees.


(3)		Includes allocated costs and expenses for administrative and shared services provided by Alon Energy to Alon Brands (2005 - $4,958, 2006 - $4,230, 2007 - $4,100, nine months ended September 30, 2007 - $3,015 and nine months ended September 30, 2008 - $2,486).


(4)		Reflects current and deferred taxes for the periods presented. See Note 2(r) and Note 17 to our audited combined financial statements included elsewhere in this prospectus for a detailed explanation of the components of income taxes.


(5)		We define EBITDA as net income (loss) before net interest expense, income tax expense (benefit) and depreciation, amortization and accretion. We believe that EBITDA is useful to investors in evaluating our operating performance because:


		• securities analysts and investors often use such calculations as a measure of financial performance and debt service capabilities;


		• it facilitates management’s ability to measure operating performance of our business on a consistent basis since it removes the impact of items not directly resulting from our retail and wholesale marketing operations; and

		• it is used by our management for internal planning purposes, including aspects of our consolidated operating budget, capital expenditures, as well as for segment and individual site operating targets.

		EBITDA is not a recognized term under GAAP and does not purport to be an alternative to net income as a measure of operating performance. EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for an analysis of our results as reported under GAAP. Some of these limitations include:

		• it does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;

		• it does not reflect changes in, or cash requirements for, working capital;

		• it does not reflect significant interest expense, or the cash requirements necessary to service interest or principal payments on our credit facilities;

		• it does not reflect payments made or future requirements for income taxes;

		• although depreciation, amortization and accretion are non-cash charges, the assets being depreciated and amortized may be replaced in the future, and EBITDA does not reflect cash requirements for such replacements; and

		• because not all companies use identical calculations, our presentation of EBITDA may not be comparable to similarly titled measures of other companies.

		The following table presents a reconciliation of net income (loss) to EBITDA:


	Historical												Pro Forma
								Nine Months Ended					Year Ended	Nine Months
	Year Ended December 31,							September 30,					December 31,	Ended September 30,
	2005			2006		2007		2007		2008			2007	2008

Net income (loss)	$	(9,236	)	$	2,200	$	11,885	$	12,094	$	(4,513	)	$	$
Depreciation, amortization and accretion		5,026			6,205		10,245		6,910		10,290
Interest expense, net		3,830			5,834		5,137		3,633		4,007
Income tax expense (benefit)		(5,040	)		1,336		7,543		7,368		(1,769	)

EBITDA	$	(5,420	)	$	15,575	$	34,810	$	30,005	$	8,015		$	$


(6)		Excludes capital assets acquired in business acquisitions and includes expenditures for brand image enhancement.


(7)		Average retail merchandise sales and motor fuel gallons sold are based on total merchandise sales or motor fuel gallons sold divided by total store months.


(8)		Includes merchandise and in-store revenue identified in footnote 1 only for stores operated in both periods. Excludes motor fuel sales.


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


(10)		Retail fuel margin represents the difference between motor fuel revenues and net cost of purchased 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.


(11)		Excludes convenience stores we own and operate.


(12)		Adjusted working capital is defined as total current assets, excluding cash and cash equivalents, less total current liabilities.

RISK FACTORS

An investment in our common stock involves various risks. Before making an investment in our common stock, you should carefully consider the following risks, as well as the other information contained in this prospectus. The risks described below are those which we believe are currently the material risks we face, but are not the only risks facing us and our business prospects. Any of the risk factors described below and elsewhere in this prospectus could materially adversely affect our business, prospects, financial condition, cash flows and results of operations. As a result, the trading price of our common stock could decline and you may lose part or all of your investment.

Risks Relating to Our Business

Historical prices for motor fuel have been volatile and significant changes in such prices in the future may materially adversely affect our business.

Over the past twelve months, crude oil prices have risen and fallen dramatically, resulting in unprecedented volatility in the wholesale and retail prices of motor fuels. Sustained high prices for motor fuel products and a resulting decrease in gasoline demand can negatively influence our motor fuel sales volumes, fuel margins and retail merchandise sales, which in turn could materially adversely affect our business. For example, U.S. weekly gasoline demand declined by 4.3% in the week ended September 29, 2008 versus the comparable week a year earlier as the average national retail price per gas gallon sold increased from $2.79 to $3.63. In addition, because our wholesale marketing segment sells motor fuels to distributors on credit, our credit risk increases as wholesale prices increase. Conversely, sharp declines in retail fuel prices can also reduce our retail margins per gallon if we sell inventory purchased at higher wholesale costs at lower retail prices.

Our wholesale and retail fuel margins are generally expressed on a cents per gallon, or cpg, basis, representing the difference between our sales price over our procurement costs. Since 2005, our quarterly wholesale margins have ranged between (8.5) cpg and 12.4 cpg and our quarterly retail margins have ranged between 10.6 cpg and 22.5 cpg. A significant amount of our retail segment’s sales are purchased with payment cards, which incur additional fees. Retail operating income can be negatively affected by these fees as the retail price of motor fuel increases. Payment card fees are made up of two components, a fixed transaction fee and a processing fee that ranges from 1.0% to 4.0% of the total amount charged. As a result, higher retail prices of motor fuel cause us to recognize a higher expense associated with payment card processing fees, which increases our expenses on a per gallon basis. Additionally, some customers purchase fewer gallons per visit as the retail price of motor fuels increases. As a result, the fixed amount of the transaction fee is allocated across a smaller number of gallons, which further increases our overall payment card expenses on a per gallon basis.

We depend on our parent company to supply substantially all of our motor fuel marketed through our wholesale marketing segment, which in turn supplies substantially all of the motor fuel sold through our retail segment. Any disruption in supply or any change in our relationship with our parent company could materially adverse effect our business.

Prior to the completion of this offering, we will enter into a new 20-year fuel supply agreement with our parent company to supply substantially all of the motor fuel marketed by our wholesale marketing segment, including the motor fuel sold to our retail convenience stores. Accordingly, in the event that our parent company is unable to fulfill its obligations under this agreement or otherwise fails to provide us with motor fuel, we may be unable to obtain our requirements for motor fuel through third-party suppliers or we may need to pay significantly greater costs in procuring such motor fuel. For example, on February 18, 2008, our parent company experienced an extended outage following a major fire at its Big Spring refinery. Although our parent company is required to offer alternative supply through third parties and pay related increased transportation costs, in some instances the supply from these alternative supply sources may be unavailable or inadequate to meet our requirements and our wholesale marketing segment and retail convenience stores may experience decreased sales volumes or increased procurement costs.

We sub-license the FINA brand from our parent company under our fuel supply agreement. Our parent company’s rights to the FINA brand are provided under a license agreement with Total S.A., and the loss of this license could materially adversely affect our business. Also, our ability to expand into new markets under the FINA brand could require an amendment to Alon Energy’s existing license agreement.

We sub-license the FINA brand from our parent company under our fuel supply agreement. Our parent company licenses the FINA brand from a subsidiary of Total S.A. under an agreement which gives our parent company the exclusive right to use the FINA brand for motor fuels marketing in the states of Texas, Oklahoma, New Mexico, Arizona, Arkansas, Louisiana, Colorado and Utah. The license agreement expires in 2012, and is subject to a first lien under one of our parent company’s credit facilities. Termination of the license agreement would result in our retail and wholesale marketing segments losing the use of the FINA brand name. In this event, we would need to obtain the rights to or develop a new brand, which would require the expenditure of funds to change signage and rebrand our motor fuel products. Also, there can be no assurance that a new brand will replace the FINA brand effectively.

In order for our wholesale marketing segment to use the FINA brand in additional markets not currently covered under our parent company’s existing license agreement, our parent company will need to amend the agreement to provide it the right to use the FINA brand in these additional markets. There can be no assurance that our parent company or Total S.A. will agree to such an amendment. If our parent company is not able to obtain such an amendment, we will need to develop or obtain rights to the use of an alternative fuel brand in these new markets.

The motor fuel marketing and supply industry is characterized by intense competition and fragmentation, and our failure to effectively compete could materially adversely affect our business.

The market for distribution of wholesale motor fuel is highly competitive. Some of our competitors have significantly greater resources and name recognition than we do. We rely on our strong brand name, ability to provide reliable supply, brand support and payment card processing services, and controlling our operating costs to maintain our margins and competitive position. If we fail to maintain the quality of our services, customers could choose alternative distribution sources, and our competitive position could be materially adversely affected. Furthermore, we compete against major oil companies with integrated marketing segments. Through their greater resources and access to crude oil, these companies may be better able to compete on the basis of price, which could materially adversely affect our fuel margins.

Substantially all of our convenience stores conduct their operations under a license agreement with 7-Eleven, and the loss of this license or the diminution of 7-Eleven’s brand and marketing initiatives could adversely affect our business.

We operate 282 of our convenience stores under the 7-Eleven name pursuant to our perpetual license agreement with 7-Eleven, Inc. 7-Eleven may terminate the license if we default on our obligations under the agreement, including compliance with minimum operating standards required of all 7-Eleven stores. Termination of the license agreement would result in our convenience stores losing the use of the 7-Eleven brand name, the benefits accompanying 7-Eleven’s advertising and certain other brand names and products used exclusively by 7-Eleven, including Slurpee^® and Big Gulp^® beverages and Big Bite^® hot dogs. Additionally, 7-Eleven provides our retail convenience stores with various national brand promotional and marketing initiatives for our in-store merchandise offerings. Any diminution of the national brand image or decline in marketing support initiatives made available to us by 7-Eleven could materially adversely affect our retail segment. In order for our retail segment to use the 7-Eleven brand in markets not currently covered under our existing license agreement, we will need to amend the license agreement to provide us the right to use the 7-Eleven brand in these additional markets. Such an amendment may not be obtainable if existing franchisees or licensees are operating in those markets.

The convenience store industry is highly competitive and affected by new entrants, and an increase in competition in the markets in which our stores operate could materially adversely affect our business.

The geographic areas in which we operate are highly competitive and marked by ease of entry and constant change in the number and type of retailers offering products and services of the type we sell in our convenience stores. We compete with other convenience stores, gasoline service stations, supermarket chains, discounters, wholesale clubs, drug stores, fast food operations and other retail outlets. Increasingly, national high-volume grocery and dry-goods retailers have entered the gasoline retailing business. These non-traditional motor fuel retailers have captured a significant share of the motor fuel market, and we expect their market share will continue to grow. Many of these competitors are substantially larger than we are. Because of their diversity, integration of operations and greater resources, these companies may be better able to withstand volatile market conditions or levels of low or no profitability in their retail business. In addition, these retailers may use promotional pricing or discounts, both at the pump and in the store, to encourage in-store merchandise sales.

Covenants in our retail subsidiaries’ debt instruments could limit our ability to undertake certain types of transactions and materially adversely affect our liquidity.

The amended and restated credit agreement, dated June 29, 2007, between Southwest Convenience Stores, LLC (“SCS”), one of our retail segment’s operating subsidiaries, and Wachovia Bank, N.A., as administrative agent (the “Amended Wachovia Credit Facility”), contains negative operating covenants and events of default that may limit our financial flexibility and ability to undertake certain types of transactions. For example, our retail subsidiaries are subject to negative covenants that restrict their activities, including restrictions on creating liens, engaging in mergers, consolidations, sales of assets and change-of-control transactions, incurring additional indebtedness, entering into certain lease obligations and making certain restricted payments. Should we desire to undertake a transaction that is limited by the negative covenants in our retail subsidiaries’ credit agreement, we may need to obtain the consent of those lenders or refinance the credit facility. Such refinancings may not be possible or may not be available on commercially acceptable terms, or at all.

We compete with other businesses in our market to attract and retain qualified employees, and a failure to attract or retain such qualified employees could materially adversely affect our business.

Our continued success depends on our ability to attract and retain qualified personnel in all areas of our business. Convenience store operations require a substantial number of employees and generally experience high employee turnover. We compete with other businesses in our market to attract and retain qualified employees. A tight labor market, increased overtime and a higher full-time employee ratio may cause labor costs to increase. A shortage of qualified employees may require us to enhance wage and benefits packages in order to compete effectively in the hiring and retention of qualified employees or to hire more expensive temporary employees. No assurance can be given that our labor costs will not increase or that such increases can be recovered through increased prices charged to customers.

Our payment card processing services are subject to compliance with the extensive rules and regulations under the Payment Card Industry (PCI) Data Security Standard, and failure to comply with the applicable standards may subject us to substantial fines and penalties.

A significant portion of our sales and those of our branded sub-licensee distributors are made with payment cards and processed by our wholesale marketing segment. As a Level 1 merchant, we are subject to quarterly network security scans and annual on-site audits to ensure that we are protecting confidential customer information and bank card data in accordance with the applicable PCI standards, and continuing compliance with such standards may require us to devote substantial time and incur additional costs to ensure we maintain our ability to process payment card transactions. Additionally, in the event that the card associations or our sponsoring bank determine that the manner in which we process payment card transactions is not in compliance with existing rules and regulations, or if the card associations adopt new rules or regulations, we may be subject to substantial penalties and fines or forced to modify the manner in which we process payment card transactions, which may increase our overall costs.

Wholesale cost increases in tobacco products, including excise tax increases on cigarettes, or a reduction in the use of manufacturer rebates offered to retailers on tobacco products could materially adversely affect our business.

Sales of tobacco products account for a significant portion of our retail segment’s merchandise sales. Significant increases in wholesale costs of tobacco products and tax increases on cigarettes could materially adversely affect the demand for tobacco products. Cigarettes are subject to substantial and increasing excise taxes at both a state and federal level. For example, the Texas legislature increased cigarette taxes by $1 per pack effective January 1, 2007. Further significant increases in cigarette-related taxes and fees have been proposed and are likely to continue to be proposed or enacted at the federal level. Increased excise taxes may result in declines in overall sales volume, as well as reduced gross profit margin due to lower consumption levels, a shift in consumer purchases from premium to non-premium or discount cigarettes or to other low-priced or low-taxed tobacco products, or to the import of cigarettes from territories, states or countries with lower, or no, excise taxes on such items. Moreover, regulations reducing display allowances for cigarettes may also reduce sales of cigarettes.

Currently, major manufacturers of tobacco products offer rebates to retailers. We include these rebates as a component of our gross margin from sales of tobacco products. In the event these rebates are no longer offered, or decreased, our wholesale costs of tobacco products will increase accordingly. In general, we attempt to pass price increases on to our customers; however, due to competitive pressures in our markets, we may not be able to do so. These factors could materially adversely affect our retail price of tobacco products, tobacco product unit volume and revenues, merchandise gross profit and overall customer traffic.

Future legislation and campaigns to discourage smoking could materially adversely affect our business.

Future legislation and national, state and local campaigns to discourage smoking have had, and may continue to have, a substantial effect on our business as consumers adjust their behaviors in response to such legislation and campaigns. Reduced demand for cigarettes could materially adversely affect sales of, and margins for, the cigarettes we sell.

Decreases in consumer spending resulting from changes in local economic conditions or travel in our markets could materially adversely affect our business.

In the convenience store industry, customer traffic is generally driven by consumer preferences and spending trends, growth in automobile and commercial truck traffic and trends in local economies, travel and weather. Changes in economic conditions generally or in markets in which we operate could materially adversely affect consumer spending patterns and travel in our markets.

The local economies where we have our convenience stores may be adversely affected by the recent broader general economic decline in the United States or if the current trend continues or gets worse. A weak economy could affect the purchasing patterns of consumers which could materially adversely affect our business.

Our business is subject to seasonal trends, which may cause our results of operations to fluctuate, affecting our cash flow.

We experience more demand for our merchandise, food and motor fuel during the late spring and summer months than during the fall and winter. Travel and recreation are typically higher in these months in the geographic areas in which we operate, increasing the demand for the products that we sell and distribute. Therefore, our volumes and related traffic are typically higher in the second and third quarters of our year. As a result, our results from operations may vary widely from period to period, affecting our cash flow.

Any devaluation of the Mexican peso, or imposition of restrictions on the access of citizens of Mexico to the United States, could adversely affect our business by lowering our sales volumes for our stores located near the U.S.-Mexico border.

Even though we do not accept the Mexican peso for purchases made at our convenience stores, a devaluation of the Mexican peso could negatively affect the exchange rate between the Mexican peso and the U.S. dollar, which would result in reduced purchasing power on the part of our customers who are citizens of Mexico. Approximately 28% of our convenience stores, which accounted for 12% of our 2007 retail revenues, are located in El Paso, Texas, which is on the border with Mexico. In the event of a devaluation in the Mexican peso, revenues attributable to those stores could be reduced.

In recent years, there have been a variety of legislative proposals to limit immigration to the United States. If one or more proposals were to be adopted that had the effect of curtailing the ability of citizens of Mexico to cross the border into the United States, revenues of our convenience stores in E1 Paso could be reduced.

Our growth depends in part on our ability to identify profitable new retail convenience store acquisitions and to successfully integrate acquired sites and businesses in the future.

We may not be able to identify and successfully acquire new convenience stores, as discussed in our growth strategy, and any new stores we do acquire may be unprofitable. Additionally, acquiring sites and businesses in the future involves risks that could cause our actual growth or operating results to differ adversely from expectations. There are several factors that could affect our ability to successfully identify and integrate new acquisitions. These factors include:


	•	competition in targeted market areas and limitations on re-branding acquired stores under our existing 7-Eleven and FINA license agreements;

	•	difficulties during the acquisition process in identifying all the liabilities of the businesses we acquire;

	•	difficulties associated with the expansion of our existing financial controls, information systems, management resources and human resources needed to support retail store growth;

	•	difficulties with hiring, training and retaining skilled personnel, including store managers;

	•	difficulties in adapting distribution and other operational and management systems to an expanded retail store network;

	•	difficulties in obtaining adequate financing to fund our expansion;

	•	difficulties in obtaining governmental and other third-party consents, permits and licenses needed to operate additional stores;

	•	difficulties in achieving the cost savings and financial improvements we anticipate from acquired stores;

	•	the diversion of our senior management’s attention from focusing on our core business due to an increased focus on acquisitions; and

	•	other challenges associated with the consummation and integration of any future acquisitions.

We depend on one wholesaler for a significant portion of our convenience store merchandise, and a disruption in supply by our wholesaler or change in our relationship with it could materially adversely affect our business.

For the year ended December 31, 2007, we purchased approximately 50% of our general merchandise for our retail stores, including most tobacco products and grocery items, from a single wholesale grocer, McLane Company, Inc., or McLane. We currently have a supply agreement with McLane that expires in December 2011. A change of merchandise suppliers, including as a result of our inability to renew our contract with McLane on terms acceptable to us or at all, a disruption in supply or a significant change in our relationship

with McLane could lead to an increase in our cost of goods sold or a reduction in the reliability of timely deliveries.

In addition, we receive merchandise rebates on certain items from McLane. If these merchandise rebates were discontinued, we may incur higher merchandising costs that we may not be able to pass on to our retail customers resulting in a reduction in sales volume and gross profit on these merchandise offerings.

We rely substantially on third-party providers of information technology in our retail operations, and any material failure, inadequacy, interruption or security failure of our technology systems could materially disrupt our retail operations and could materially adversely affect our business.

We rely substantially on information technology systems across our retail operations, including for management of point-of-sale processing in our stores, pump control, daily operations reporting, inventory management and various other processes and transactions. These technology systems are provided to and supported by third-party service providers. Our ability to effectively manage our retail business depends significantly on the reliability and capacity of these systems. The failure of these systems to operate effectively, problems with transitioning to upgraded or replacement systems, a dispute with or failure to perform by our third-party providers or a breach in security of these systems could materially disrupt our retail motor fuel and merchandise sales, and significant capital investments could be required to remediate the problem.

We rely on third-party transportation providers for the transportation of a portion of our motor fuel sold at our retail convenience stores, and a disruption in service or inability to timely secure transportation services could materially adversely affect our business.

Our retail convenience stores are responsible for the transportation of motor fuels purchased for resale from our wholesale marketing segment or other suppliers. Although our retail segment owns and leases trucks for the purpose of transporting motor fuel to our retail stores, we also procure approximately 6% of our motor fuel transportation needs from third-party transportation providers. If we are unable to timely arrange such transportation or find alternative transportation sources in the event of a service disruption with one of our contracted motor fuel transport providers, we may experience shortages in motor fuel supply at some of our retail convenience stores.

Compliance with or liability under the Petroleum Marketing Practices Act could materially adversely affect our business.

The Petroleum Marketing Practices Act, or PMPA, is a federal law that governs the relationship between a supplier and a distributor pursuant to which the supplier permits a distributor to use a trademark in connection with the sale or distribution of motor fuel. We are subject to the provisions of the PMPA because we sub-license the FINA brand to our distributors in connection with their distribution and sale of motor fuels. Under the PMPA, we may not terminate or fail to renew these distributor contracts unless certain enumerated preconditions or grounds for termination or nonrenewal are met, and we also comply with the prescribed notice requirements. The PMPA provides that our distributors may enforce the provisions of the act through civil actions against us. If we terminate or fail to renew one or more of our distributor contracts without complying with the PMPA, those distributors may file lawsuits against us to compel continuation of their contracts or to recover damages from us. See “Business — Governmental Regulation and Environmental Matters.”

Compliance with and liability under state and federal environmental regulations, including those that require investigation and remediation activities, may require significant expenditures or result in liabilities that could materially adversely affect our business.

exposure of persons to hazardous materials, remediation of contaminated soils and groundwater and the health and safety of our employees. For example, we store motor fuel in underground storage tanks at our retail locations and are required to make financial expenditures to comply with federal, state and local regulations governing the operation and closure of such tanks and the remediation of any leaks therefrom. In addition, the federal Clean Air Act and similar state laws regulate emissions to the air from motor fueling activities in certain areas of the country, including those that do not meet state or national ambient air quality standards. We could incur substantial costs, including cleanup costs, fines and civil or criminal sanctions, third-party property damage or personal injury claims and capital expenditures for equipment upgrades, as a result of compliance with, violations of or liabilities under applicable environmental laws and regulations. Such costs could materially adversely affect our business. Furthermore, new laws, new interpretations of existing laws, increased governmental enforcement of existing laws or other developments, including legislative, regulatory and other legal developments in various phases of discussion or implementation that may limit greenhouse gas emissions or increase fuel economy standards, could require us to make additional capital expenditures, incur additional liabilities or negatively affect the market for motor fuel. See “Business — Governmental Regulation and Environmental Matters.”

The dangers inherent in the storage and transportation of motor fuel could cause disruptions and could expose us to potentially significant losses, costs or liabilities.

We store motor fuel in underground storage tanks at our retail locations and provide or arrange for transportation for distribution to our retail locations. Our operations are subject to significant hazards and risks inherent in handling, transporting and storing motor fuel. These hazards and risks include, but are not limited to, fires, explosions, traffic accidents, spills, discharges and other releases, any of which could result in distribution difficulties and disruptions, environmental pollution, governmentally-imposed fines or cleanup obligations, personal injury or wrongful death claims and other damage to our properties and the properties of others.

Our motor fuel operations are subject to inherent risk, and insurance, if available, may not adequately cover any such exposure, which could materially adversely affect our business.

We sell motor fuel to our wholesale customers and operate retail outlets that sell refined petroleum products. The presence of flammable and combustible products at our facilities provides the potential for fires and explosions that could destroy both property and human life. These products, almost all of which are liquids, also have the potential to cause environmental damage if improperly handled or released. Insurance is not available against all operational risks, especially environmental risks, and there is no assurance that insurance will be available or adequate in the future. In addition, as a result of factors affecting insurance providers, insurance premiums with respect to renewed insurance policies may increase significantly compared to what we currently pay.

Pending or future consumer or other litigation could materially adversely affect our business.

We are periodically party to individual personal injury claims, claims of fuel being contaminated or off-specification, product liability claims and other legal actions in the ordinary course of our business. If any such action or actions shall ultimately be determined adversely to us in a material way, our business could be materially adversely affected. Additionally, we are occasionally exposed to industry-wide or class-action claims arising from the products we carry or industry-specific business practices. For example, various petroleum marketing retailers, distributors and refiners are currently defending class-action claims alleging that the sale of unadjusted volumes of fuel at temperatures in excess of 60 degrees Fahrenheit violates various state consumer protection laws due to the expansion of the fuel with the increase of fuel temperatures. While industry-specific or class action litigation of this type is less frequent in occurrence than individual consumer claims, the cost of defense and ultimate disposition could be significant.

Litigation and publicity concerning food quality, health and other related issues could result in significant liabilities or litigation costs and cause consumers to avoid our convenience stores, which could materially adversely affect our business.

Convenience store businesses and other foodservice operators can be adversely affected by litigation and complaints from customers or government agencies resulting from food quality, illness or other health or environmental concerns or operating issues stemming from one or more locations. Adverse publicity about these allegations may negatively affect us, regardless of whether the allegations are true, by discouraging customers from purchasing gasoline, merchandise or foodservice at one or more of our convenience stores. We could also incur significant liabilities if a lawsuit or claim results in a decision against us or substantial litigation costs regardless of results and may divert time and money away from our operations and hurt our performance.

If a food-borne illness or other food safety issue occurs at one of our convenience stores, we may receive negative publicity, be required to temporarily cease foodservice at that location or become subject to litigation. The occurrence of food-borne illnesses or food safety issues regarding one or more ingredients in our food products could materially adversely affect the price and availability of the affected ingredients.

Failure to comply with state laws regulating the sale of alcohol and cigarettes may result in the loss of necessary licenses and the imposition of fines, penalties or forfeitures on us.

State laws regulate the sale of alcohol and cigarettes. A violation or change of these laws could materially adversely affect our business because state and local regulatory agencies have the power to approve, revoke, suspend or deny applications for, and renewals of, permits and licenses relating to the sale of these products or to seek other remedies.

Failure to comply with the other state and federal regulations we are subject to may result in penalties or costs that could materially adversely affect our business.

Our business is subject to various other state and federal regulations including, but not limited to, employment laws and regulations, minimum wage requirements, overtime requirements, working condition requirements, citizenship requirements and other laws and regulations. Any appreciable increase in the statutory minimum wage rate or overtime pay, adoption of mandated health benefits or changes to immigration laws and citizenship requirements would likely result in an increase in our labor costs and such cost increase, or the penalties for failing to comply with such statutory minimums or regulations, could materially adversely affect our business. State or federal lawmakers or regulators may also enact new laws or regulations applicable to us that could materially adversely affect our business.

If we lose any of our key personnel, our ability to manage and grow our business could be materially adversely affected.

Our future performance depends to a significant degree upon the continued contributions of our senior management team which includes Messrs. McKeen, Potter, Dobrient and Lipman. We have entered into an employment agreement with Mr. McKeen and, prior to this offering, we expect to enter into employment agreements with the other members of our senior management team. We do not currently maintain key man life insurance with respect to any member of our senior management team. The loss or unavailability to us of any member of our senior management team could significantly harm us. We face competition for these professionals from our competitors, our customers and other companies operating in our industry. To the extent the services of members of our senior management team would be unavailable to us for any reason, we would be required to hire other personnel to manage and operate our company and to develop our products and technology. We cannot assure you we would be able to locate or employ such qualified personnel on acceptable terms, or at all.

We depend on cash flows generated by our subsidiaries, and a failure to receive distributions from our subsidiaries may mean we are unable to meet our financial obligations.

We are a holding company with no material assets other than the equity interests of our subsidiaries. Our subsidiaries conduct substantially all of our operations and own substantially all of our assets. Repayment of our indebtedness and our ability to pay cash dividends to stockholders in the future, if any, is dependent on the generation of cash flows by our subsidiaries and their ability to make such cash available to us, by dividend, debt repayment or otherwise. Each of our subsidiaries is a distinct legal entity. Under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from our subsidiaries, and our subsidiaries may not be able to, or be permitted to, make distributions to us.

It may be difficult to serve process on or enforce a United States judgment against certain of our directors.

Four of our directors reside in Israel. In addition, a substantial portion of the assets of these directors are located outside of the United States. As a result, you may have difficulty serving legal process within the United States upon any of these persons. You may also have difficulty enforcing, both in and outside the United States, judgments you may obtain in United States courts against these persons in any action, including actions based upon the civil liability provisions of United States federal or state securities laws. Furthermore, there is substantial doubt that the courts of the State of Israel would enter judgments in original actions brought in those courts predicated on United States federal or state securities laws.

Terrorist attacks and threatened or actual war could materially adversely affect our business.

Our business is affected by general economic conditions and fluctuations in consumer confidence and spending, which can decline as a result of numerous factors outside of our control. Terrorist attacks or threats, whether within the United States or abroad, rumors or threats of war, actual conflicts involving the United States or its allies or military or trade disruptions affecting our suppliers or our customers could materially adversely affect our operations. As a result, there could be delays or losses in the delivery of supplies to us, decreased sales of our products and extension of time for payment of accounts receivable from our customers. Specifically, strategic targets such as energy-related assets (which could include refineries that produce the motor fuel we purchase or ports in which crude oil is delivered) may be at greater risk of future terrorist attacks than other targets in the United States. These occurrences could materially adversely affect energy prices, including prices for our products, and an adverse effect on the margins from our operations. In addition, disruption or significant increases in energy prices could result in government-imposed price controls.

Risks Relating to Our Relationship with Alon Energy

Alon Energy controls the direction of our business, and the concentrated ownership of our common stock and certain governance arrangements will prevent you and other stockholders from influencing significant decisions.

After the completion of this offering, Alon USA, LP, a subsidiary of Alon Energy, will own % of the outstanding shares of our common stock and all of our convertible preferred stock ( % if the underwriters exercise their over-allotment option in full). As long as Alon USA, LP owns a majority of our common stock, Alon Energy will be able to control any corporate action requiring a stockholder vote irrespective of the vote of, and without prior notice to, any other stockholder. As a result, Alon Energy will have the ability to control significant corporate activities, including:


	•	the election of our board of directors and, through our board of directors, decision-making with respect to our business direction and policies, including the appointment and removal of our officers;

	•	acquisitions or dispositions of businesses or assets, mergers or other business combinations;

	•	our capital structure;

	•	payment of dividends; and

	•	the number of shares available for issuance under our equity incentive plan for our prospective and existing employees.

This voting control or influence may discourage transactions involving a change of control of our company, including transactions in which you as a holder of our common stock might otherwise receive a premium for your shares. Furthermore, Alon Energy generally has the right at any time to spin-off our common stock that Alon USA, LP owns or to sell a controlling interest in us to a third party after the expiration of the 180-day lock-up period, in either case without your approval and without providing for a purchase of your shares. See “Shares Eligible for Future Sale.”

Even if Alon USA, LP’s ownership interest is reduced to less than a majority of the outstanding shares of our common stock, so long as Alon USA, LP remains our largest shareholder, Alon Energy will have the ability to substantially influence these significant corporate activities.

Our historical and pro forma financial information as a business segment of Alon Energy may not be representative of our results as an independent public company.

The historical and pro forma financial information we have included in this prospectus may not necessarily reflect what our financial position, results of operations or cash flows would have been had we been an independent entity during the historical periods presented. The historical costs and expenses reflected in our combined financial statements include an allocation for certain corporate functions historically provided by Alon Energy, including tax, accounting, treasury, legal and human resources services. We have not adjusted our historical or pro forma financial information to reflect all of the significant changes that will occur in our cost structure, funding and operations as a result of our transition to becoming a public company, including changes in our employee base, potential increased costs associated with reduced economies of scale and increased costs associated with being a publicly traded, stand-alone company, subject to SEC reporting and NYSE requirements. Therefore, our historical and pro forma financial information may not necessarily be indicative of what our results of operations, financial position or cash flows will be in the future.

Our ability to operate our business effectively may suffer if we are unable to cost-effectively establish our own administrative and other support functions in order to operate as a stand-alone company after the expiration of our transitional services agreements with Alon Energy.

As a subsidiary of Alon Energy, we have relied on administrative and other resources of Alon Energy to operate our business. In connection with this offering, we will enter into various service agreements to retain the ability for specified periods to use these Alon Energy resources. See “Certain Relationships and Related Party Transactions.” These services may not be provided at the same level as when we were a subsidiary of Alon Energy, and we may not be able to obtain the same benefits that we received prior to this offering. These services may not be sufficient to meet our needs, and after our agreements with Alon Energy expire, we may not be able to replace these services or obtain these services at prices and on terms as favorable as we currently have with Alon Energy. We will need to create our own administrative and other support systems or contract with third parties to replace Alon Energy’s systems. In addition, we have received informal support from Alon Energy, which may not be addressed in the agreements we will enter into with Alon Energy. The level of this informal support may diminish as we become a more independent company. Any failure or significant downtime in our own administrative systems or in Alon Energy’s administrative systems during the transitional period could result in unexpected costs, materially adversely affect our results or prevent us from paying our suppliers or employees and performing other administrative services on a timely basis.

We may not be able to resolve favorably potential disputes that may arise between us and Alon Energy with respect to our past and ongoing relationships.

Disputes may arise between Alon Energy and us in a number of areas relating to our ongoing relationships, including:


	•	the terms of the fuel supply and trademark licensing agreement;

	•	labor, tax, employee benefit, indemnification and other matters arising from our separation from Alon Energy;


	•	employee retention and recruiting;

	•	business combinations involving us;

	•	sales or dispositions by Alon Energy of all or any portion of its ownership interest in us; and

	•	the nature, quality and pricing of services Alon Energy has agreed to provide us.

We may not be able to resolve any potential conflicts, and even if we do, the resolution may be less favorable than if we were dealing with an unaffiliated party.

The agreements we will enter into with Alon Energy may be amended upon agreement between the parties. While we are controlled by Alon Energy, we may not have the leverage to negotiate amendments to these agreements if required on terms as favorable to us as those we would negotiate with an unaffiliated third party.

Some of our directors and executive officers own common stock of Alon Energy and Alon Israel and, in some cases, their other subsidiaries, and options or other instruments, the value of which is related to the value of stock of Alon Energy or Alon Israel, as applicable, and, in some cases, their other subsidiaries, and hold management positions with Alon Energy and Alon Israel, which could cause conflicts of interests that result in our not acting on opportunities we otherwise may have.

Some of our directors and executive officers own Alon Energy and Alon Israel common stock and options or other instruments the value of which is related to the value of common stock of Alon Energy or Alon Israel, as applicable, and, in some cases, their other subsidiaries. In addition, some of our directors are executive officers and directors of Alon Energy and Alon Israel. The direct and indirect interests of our directors and officers in common stock of Alon Energy and Alon Israel and their other subsidiaries and the presence of executive officers or directors of Alon Energy and Alon Israel on our board of directors could create, or appear to create, conflicts of interest with respect to matters involving both us and Alon Energy or Alon Israel that could have different implications for Alon Energy or Alon Israel than they do for us. We cannot assure you that the agreements we enter into with Alon Energy and Alon Israel will adequately address potential conflicts of interest or that potential conflicts of interest will be resolved in our favor or that we will be able to take advantage of corporate opportunities presented to individuals who are officers or directors of both us and Alon Energy or Alon Israel. As a result, we may be precluded from pursuing certain growth opportunities.

We will be a “controlled company” within the meaning of the NYSE rules, and, as a result, will rely on exemptions from certain corporate governance requirements that provide protection to stockholders of other companies.

After the completion of this offering, Alon USA, LP, a subsidiary of Alon Energy, will own more than 50% of the total voting power of our common shares and we will be a “controlled company” under the NYSE corporate governance standards. As a controlled company, we will not be required to comply with certain NYSE corporate governance requirements, including the requirements:


	•	that a majority of our board of directors consists of independent directors;

	•	that we have a corporate governance and nominating committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities;

	•	that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and

	•	for an annual performance evaluation of the nominating and governance committee and compensation committee.

As a result, you will not have the same protection afforded to stockholders of companies that are subject to all of the NYSE corporate governance requirements.

Risks Related to this Offering

There is no existing market for our common stock, and we do not know if one will develop to provide you with adequate liquidity.

Prior to this offering, there has not been a public market for our common stock. We cannot predict the extent to which investor interest in our company will lead to the development of an active trading market on the NYSE or otherwise or how liquid that market might become. If an active trading market does not develop, you may have difficulty selling any of our common stock that you buy. The initial public offering price for the shares of our common stock will be determined by negotiations between us and the representatives of the underwriters and may not be indicative of prices that will prevail in the open market following this offering.

If our stock price decreases after this offering, you could lose a significant part or all of your investment. The market price of our common stock may be influenced by many factors, some of which are beyond our control, including those decisions described under “— Risks Relating to Our Business” and the following:


	•	general economic and stock market conditions;

	•	risks relating to our business and our industry, including those discussed above;

	•	strategic actions by us or our competitors;

	•	announcements by us or our competitors of significant contracts, acquisitions, joint marketing relationships, joint ventures or capital commitments;

	•	the failure of securities analysts to cover our common stock after this offering or changes in financial estimates by analysts;

	•	variations in our quarterly results of operations;

	•	future sales of our common stock or other securities; and

	•	investor perceptions of the investment opportunity associated with our common stock relative to other investment alternatives.

As a result of these factors, investors in our common stock may not be able to resell their shares at or above the initial offering price. In addition, the stock market in general has experienced extreme price and volume fluctuations that have often been unrelated to, and disproportionate to, the operating performance of the wholesale marketing and retail segments. These broad market and industry factors may materially reduce the market price of our common stock, regardless of our operating performance.

We will face new challenges, increased costs and administrative responsibilities as an independent public company.

As a public company with listed equity securities, we will need to comply with additional laws, regulations and requirements, certain provisions of the Sarbanes-Oxley Act of 2002, related regulations of the Securities and Exchange Commission and the Public Company Accounting Oversight Board and NYSE requirements. Complying with these laws, regulations and requirements will occupy a significant amount of the time of our board of directors and management and will increase our costs and expenses.

We will need to:


	•	institute a more comprehensive compliance function;

	•	design, establish, evaluate and maintain a system of internal controls over financial reporting in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and the related rules and regulations of the Securities and Exchange Commission and the Public Company Accounting Oversight Board;

	•	prepare and distribute periodic public reports in compliance with our obligations under the federal securities laws;


	•	establish new internal policies, such as those relating to disclosure controls and procedures and insider trading;

	•	involve and retain to a greater degree outside counsel and accountants in the above activities; and

	•	enhance our investor relations function.

If we do not implement such measures in a timely manner or with adequate compliance, we might fail to comply with these additional rules and regulations, which in turn could subject us to sanctions or investigation by regulatory authorities, such as the Securities and Exchange Commission or the NYSE. Any such action could harm our reputation and investor confidence in the accuracy and completeness of our financial reports, which could materially adversely affect our stock price.

In addition, we also expect that being a public company subject to these rules and regulations will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit and compensation committees, and qualified executive officers.

We will be required to report the effectiveness of the internal controls over financial reporting of our business in our annual report on Form 10-K for the year ended December 31, 2009. As a result, we will need to improve our internal controls in connection with this offering in order to timely meet our reporting requirements as a public company.

Section 404 of the Sarbanes-Oxley Act of 2002 and the rules of the Securities and Exchange Commission promulgated thereunder require our annual reports to contain a report of management’s assessment of the effectiveness of internal controls over financial reporting and an attestation report of our independent registered public accounting firm, including its opinion on the effectiveness of our internal control over financial reporting. These reports will be required to be included in our annual reports on Form 10-K commencing with our annual report on Form 10-K for the year ended December 31, 2009. The evaluation of our systems and the documentation of such systems that we will need to comply with Section 404 will be both costly and time-consuming. We cannot estimate at this time how long this process will take nor how much additional expense we will incur in completing the process necessary to comply with Section 404. We will need to improve our internal controls in connection with this offering in order to timely meet our reporting requirements as a public company. As we prepare for the completion of this offering, we are in the process of addressing these issues by hiring additional personnel with the necessary expertise. However, these and other remediation efforts may not enable us to avoid significant deficiencies or material weaknesses in our internal controls over financial reporting in the future. If we are unable to conclude that our internal control over financial reporting is effective as of the end of 2009 (or if our auditors are unable to opine that our internal control over financial reporting is effective), we could lose investor confidence in the accuracy and completeness of our financial reports, which could, in turn, have an adverse effect on our stock price.

You will incur immediate and substantial dilution as a result of this offering.

The initial public offering price per share of our common stock is substantially higher than the net tangible book value per share of our outstanding common stock immediately after the offering. As a result, you will pay a price per share that substantially exceeds the tangible book value of our assets after subtracting our liabilities. Based on the issuance and sale of million shares of common stock by us at an assumed initial public offering price of $ per share (the midpoint of the range set forth on the cover of this prospectus), you will incur immediate dilution of approximately $ in the net tangible book value per share if you purchase shares in this offering. See “Dilution.”

Shares eligible for future sale could materially adversely affect our common stock price.

Sales of substantial amounts of our common stock in the public market, or the perception that these sales may occur, could cause the market price of our common stock to decline. This could also impair our ability to

raise additional capital through the sale of our equity securities. Under our certificate of incorporation, we are authorized to issue up to shares of common stock, of which shares of common stock will be outstanding following this offering. Of these shares, the shares of common stock sold in this offering will be freely transferable without restriction or further registration under the Securities Act by persons other than “affiliates,” as that term is defined in Rule 144 under the Securities Act.

We, our officers and directors and Alon Energy have agreed, subject to certain exceptions, not to sell or transfer, directly or indirectly, any shares of our common stock for a minimum period of 180 days from the date of this prospectus, subject to certain extensions, without the prior consent of Credit Suisse. However, after the lock-up period expires, Alon Energy will be able to register the common stock it owns and shares issuable upon conversion of the shares of series A convertible preferred stock under the Securities Act pursuant to a registration rights agreement with us. Furthermore, although there is no present intention to do so, Credit Suisse may, in its sole discretion and without notice, release all or any portion of the shares subject to these lock-up agreements. See “Underwriting.”

Following completion of this offering, we intend to register an aggregate of shares of our common stock that are reserved for issuance upon the exercise of options granted or reserved for grant under our equity incentive plan. Stockholders will be able to sell these shares in the public market upon issuance, subject to restrictions under the securities laws, any applicable lock-up agreements, any stock option vesting requirements and the lapsing of restrictions on restricted stock.

Also, in the future we may issue securities in connection with investments and acquisitions. The amount of our common stock issued in connection with an investment or acquisition could constitute a material portion of our then outstanding common stock.

We cannot predict the size of future issuances of our common stock or the effect, if any, that future sales and issuances of shares of our common stock would have on the market price of our common stock. See “Shares Eligible for Future Sale.”

Provisions of our amended and restated certificate of incorporation, our amended and restated bylaws and Delaware law may impede or discourage a takeover, which could materially adversely affect the value of our common stock.

Provisions of Delaware law and our amended and restated certificate of incorporation and amended and restated bylaws may have the effect of discouraging a change of control of our company or deterring tender offers for our common stock. The anti-takeover provisions of Delaware law impose various impediments to the ability of a third party to acquire control of us, even if a change of control would be beneficial to our existing stockholders. Additionally, provisions of our amended and restated certificate of incorporation and amended and restated bylaws will impose various procedural and other requirements, which could make it more difficult for stockholders to effect some corporate actions. For example, our amended and restated certificate of incorporation will authorize our board to determine the rights, preferences and privileges and restrictions of unissued shares of preferred stock without any vote or action by our stockholders. Thus, our board will be able to authorize and issue shares of preferred stock with voting or conversion rights that could materially adversely affect the voting or other rights of holders of our common stock. Moreover, stockholders will not be permitted to call a special meeting or to require the board of directors to call a special meeting or to take action by written consent. These rights and provisions may have the effect of delaying or deterring a change of control of our company and may limit the price that investors might be willing to pay in the future for shares of our common stock. See “Description of Capital Stock.”

There is no assurance that we will declare dividends or have the available cash to make dividend payments.

Although we will have a policy of paying dividends on our common stock, there can be no assurance that funds will be available for this purpose in the future. The declaration and payment of dividends will be subject to the sole discretion of our board of directors, will not be cumulative and will depend upon our profitability, financial condition, capital needs, future prospects and other factors deemed relevant by our board of directors

at the time. No dividends will be payable in respect of our common stock unless we have first paid the stated dividends on our series A convertible preferred stock.

If we are, or become, a U.S. real property holding corporation, special tax rules may apply to a sale, exchange or other disposition of common stock by non-U.S. holders, and those holders may be less inclined to invest in our stock as they may be subject to U.S. federal income tax in certain situations.

We have not determined whether or not we currently are a “U.S. real property holding corporation,” or a USRPHC for U.S. federal income tax purposes. A non-U.S. holder will be subject to U.S. federal income tax with respect to gains recognized on the sale, exchange or other disposition of our common stock if we are, or were, a USRPHC, at any time during the shorter of the five-year period ending on the date of the sale or other disposition and the period such non-U.S. holder held our common stock (such applicable shorter period, the “lookback period”). In general, we would be a USRPHC if the fair market value of our “U.S. real property interests,” as such term is defined for U.S. federal income tax purposes, equals or exceeds 50% of the sum of the fair market value of our worldwide real property interests and our other assets used or held for use in our trade or business. However, because the determination of whether we are a USRPHC is fact-specific and depends on the composition of our assets and other factors, some of which may be beyond our control (including, for example, fluctuations in the value of our assets), it is difficult to determine or predict whether we are or will become a USRPHC. If we are or become a USRPHC, so long as our common stock is regularly traded on an established securities market (such as the NYSE), only a non-U.S. holder who, actually or constructively, holds or held during the lookback period more than 5% of our common stock will be subject to U.S. federal income tax on the disposition of our common stock.

FORWARD-LOOKING STATEMENTS

This prospectus includes forward-looking statements in addition to historical information. These forward-looking statements are included throughout this prospectus, including in the sections entitled “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and “Corporate Reorganization Transactions” and relate to matters such as our industries, business strategy, goals and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources and other financial and operating information. We have used the words “anticipate,” “assume,” “believe,” “budget,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “will,” “future” and similar terms and phrases to identify forward-looking statements in this prospectus.

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.

Actual events, results and outcomes may differ materially from our expectations due to a variety of factors. Although it is not possible to identify all of these factors, they include, among others, the following:


	•	volatility in crude oil and wholesale petroleum costs;

	•	volatility in retail fuel prices;

	•	loss of our 7-Eleven and FINA licenses;

	•	loss or adverse effect on our supplier relationships for motor fuel and merchandise;

	•	competition in the retail and wholesale marketing industries;

	•	our ability to attract and retain qualified employees;

	•	changes in economic conditions, generally, and in the markets we serve, consumer behavior and travel trends;

	•	seasonal trends in the industries in which we operate;

	•	inability to identify, acquire and integrate new stores or grow our wholesale marketing operations;

	•	the effects of and cost of compliance with current and future state and federal environmental, economic, safety and other laws, policies and regulations;

	•	dangers inherent in storing and transporting motor fuel;

	•	our ability to insure our motor fuel operations;

	•	litigation or adverse publicity concerning food quality, food safety or other health concerns related to our convenience stores;

	•	operating hazards, natural and man-made disasters, casualty losses and other matters beyond our control; and

	•	the other factors discussed in more detail under “Risk Factors.”

Many of these factors are described in greater detail under “Risk Factors.” Potential investors are urged to consider these factors and the other factors described under “Risk Factors” carefully in evaluating any forward-looking statements and are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements included herein are made only as of the date of this prospectus, and we undertake no obligation to update any information contained in this prospectus or to publicly release the results of any revisions to any forward-looking statements that may be made to reflect events or circumstances that occur, or that we become aware of, after the date of this prospectus, except as may be required by any applicable securities laws.

USE OF PROCEEDS

Based on an assumed initial public offering price of $ per share (the midpoint of the range set forth on the cover of this prospectus), we estimate that the proceeds we will receive from the sale of common stock in this offering will be approximately $ million, after deducting underwriting discounts and commissions and estimated offering expenses.

We intend to use the net proceeds:


	•	to return $ million of parent investment to Alon USA, LP; and


	•	for general corporate purposes.

The parent company investment that will be repaid with a portion of the proceeds of this offering consists of the current balance of net intercompany contributions that we have received from Alon USA, LP, our direct parent company.

A $1.00 increase (decrease) in the assumed initial public offering price of $ per share (the midpoint of the range set forth on the cover of this prospectus) would increase (decrease) the net proceeds to us from this offering by $ , assuming the number of shares offered by us, as set forth on the cover of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses.

DIVIDEND POLICY

We intend to pay quarterly cash dividends on our common stock at an initial annual rate of $ per share, commencing in the quarter of 2009. However, the declaration and payment of future dividends to holders of our common stock is at the discretion of our board of directors and will depend upon many factors, including our financial condition, earnings, legal requirements, prior payments of preferred stock dividends and other factors our board of directors deems relevant.

CAPITALIZATION

The following table sets forth our cash and cash equivalents and our capitalization as of September 30, 2008 on an actual basis, on an as adjusted basis to give effect to the corporate reorganization transactions and on an as further adjusted basis to give effect to the sale by us of shares of our common stock in this offering at an assumed initial offering price of $ per share (the midpoint of the range set forth on the cover of this prospectus) and the application of the net proceeds thereof as described in “Use of Proceeds.” You should read this table in conjunction with “Use of Proceeds,” “Selected Historical Combined Financial and Operating Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Corporate Reorganization Transactions” and our audited and unaudited combined financial statements and related notes included elsewhere in this prospectus.


	As of September 30, 2008
				As	As Further
	Historical			Adjusted(1)	Adjusted(2)
	(Dollars, in millions, except per share amounts)

Cash and cash equivalents	$	4.3		$	$

Notes payable:
Amended Wachovia Credit Facility and other indebtedness(3)	$	88.9		$	$
Member’s interest and equity/stockholders’ equity:
Net parent investment		91.0
Preferred stock, $0.01 par value; shares authorized; shares issued and outstanding, as adjusted and as further adjusted		—
Common stock, $0.01 par value; shares authorized; shares issued and outstanding, as adjusted; shares issued and outstanding, as further adjusted		—
Additional paid-in capital		—
Accumulated other comprehensive loss		(0.6	)
Retained earnings		2.2

Total member’s interest and equity/stockholders’ equity		92.6

Total capitalization	$	185.8		$	$


(1)		Reflects the conversion of $ million of net parent investment from Alon Energy to $ million of our series A convertible preferred stock and $ million of common stock.

(2)		Reflects the offering and use of proceeds therefrom as described in this prospectus. See “Use of Proceeds.”


(3)		As of September 30, 2008, (a) $87.6 million were outstanding under the Amended Wachovia Credit Facility and there were no further amounts available for borrowing and (b) $1.3 million were outstanding under mortgage loans and our capital lease obligation.

A $1.00 increase (decrease) in the assumed initial public offering price of $ per share (the midpoint of the range set forth on the cover of this prospectus) would increase (decrease) each of cash and cash equivalents, additional paid-in capital and total member’s interests and equity/stockholders’ equity by $ and would increase (decrease) total capitalization by $ , assuming the number of shares offered by us, as set forth on the cover of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

DILUTION

Dilution is the amount by which the offering price paid by the purchasers of the common stock to be sold in this offering will exceed the net tangible book value per share of common stock after this offering. If you invest in our common stock, your investment will be diluted to the extent of the difference between the initial public offering price per share of our common stock and the net tangible book value per share of our common stock after this offering. We calculate net tangible book value per share by calculating our total assets less intangible assets and total liabilities, and dividing it by the number of outstanding shares of common stock.

As of September 30, 2008, our net tangible book value was approximately $ million, or approximately $ per share of common stock, after giving pro forma effect to the corporate reorganization transactions. After giving effect to the sale of shares of common stock in this offering at an assumed initial public offering price of $ per share (the midpoint of the range set forth on the cover of this prospectus) and after deduction of the estimated underwriting discounts and commissions and estimated offering expenses payable by us, our net tangible book value as of September 30, 2008, which we refer to as our pro forma net tangible book value, would have been approximately $ million, or $ per share. This represents an immediate increase in net tangible book value of $ per share to our existing stockholders and an immediate dilution of $ per share to purchasers of common stock in this offering. The following table illustrates this dilution on a per share basis:


Assumed initial public offering price per share		$
Net tangible book value per share as of September 30, 2008 after giving pro forma effect to the corporate reorganization transactions	$
Increase in net tangible book value per share attributable to new investors

Pro forma net tangible book value per share after the offering

Dilution per share to new investors		$

Each $1.00 increase (decrease) in the assumed initial public offering price of $ per share (the midpoint of the range set forth on the cover of this prospectus) would increase (decrease) our net tangible book value after this offering by $ per share and the dilution in net tangible book value to new investors in this offering by $ per share.

The following table summarizes as of September 30, 2008, as adjusted to give effect to the corporate reorganization transactions, this offering and use of proceeds thereof, the differences between the number of shares of common stock purchased from us, the aggregate cash consideration paid to us (after giving effect to the return of parent investment in connection with this offering) and the average price per share paid by existing stockholders and new investors purchasing shares of common stock in this offering. The following table does not reflect the ownership by our parent of the series A convertible preferred stock. The calculation below is based on an offering price of $ per share (the midpoint of the range set forth on the cover of this prospectus) before deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us (after giving effect to the return of parent investment in connection with this offering):


	Shares Purchased				Total Consideration				Average Price
	Number	Percent			Amount	Percent			per Share

Existing stockholders(1)				%	$			%	$
New investors(1)									$

Total			100	%	$		100	%


(1)		If the underwriters’ over-allotment option is exercised in full, the percentage of shares of common stock held by existing stockholders after this offering would be reduced to , or % of the total number of our shares of common stock outstanding after this offering, and the number of shares of common stock held by new investors would increase to , or % of the total number of our shares of common stock outstanding after this offering.

A $1.00 increase (decrease) in the assumed initial public offering price of $ per share (the midpoint of the range set forth on the cover of this prospectus) would increase (decrease) total consideration paid by new investors in this offering and by all investors by $ million, and would increase (decrease) the average price per share paid by new investors by $ , assuming the number of shares of common stock offered by us, as set forth on the cover of this prospectus, remains the same.

SELECTED HISTORICAL COMBINED FINANCIAL AND OPERATING DATA

The following table sets forth our selected historical combined financial and operating data as of and for the periods indicated below. The selected historical combined financial data for the years ended December 31, 2005, 2006 and 2007, and the selected historical combined balance sheet data as of December 31, 2006 and 2007, have been derived from our audited combined financial statements, which are included elsewhere in this prospectus. The selected historical combined balance sheet data as of December 31, 2005 have been derived from our audited combined balance sheet as of December 31, 2005, which is not included in this prospectus.

The selected historical combined financial data for the years ended December 31, 2003 and 2004, and the selected historical combined balance sheet data as of December 31, 2003 and 2004, have been derived from our unaudited combined financial statements, which are not included in this prospectus.

The selected historical combined financial data for the nine months ended September 30, 2007 and 2008, and as of September 30, 2008 are derived from our unaudited combined financial statements, which are included elsewhere in this prospectus. We have prepared our unaudited combined financial statements on the same basis as our audited combined financial statements and have included all adjustments, consisting of normal and recurring adjustments, which we consider necessary for a fair presentation of our financial position and operating results for the unaudited periods. The selected historical combined financial and operating data for the nine months ended September 30, 2007 and 2008 and as of September 30, 2008, are not necessarily indicative of the results that may be obtained for a full year.

During the periods covered by our historical financial data, most of our business was accounted for as an operating segment of Alon Energy. Our combined financial statements include allocations of certain corporate functions provided to us by Alon Energy, including general corporate expenses. The estimates are made at the beginning of the year and applied consistently throughout the year unless there is a significant change in the allocation base. The estimates are based on management’s estimate of overall resources that we utilize. Certain other costs incurred by Alon Energy for our direct benefit, such as rent, salaries and benefits, also have been included in our financial statements and are reflected under operating, selling and administrative expense. However, our financial statements do not purport to represent and may not necessarily reflect what our financial position, cash flows and results of operations actually would have been if we had operated as a stand-alone company during the periods presented. Accordingly, our historical financial data also do not purport to represent and may not be indicative of our cash flows and results of operations for any future period or financial position at any future date.

The following selected historical combined financial and operating data should be read in conjunction with “Use of Proceeds,” “Capitalization,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited and unaudited combined financial statements and related notes included elsewhere in this prospectus.


																Nine Months Ended
	Year Ended December 31,															September 30,
	2003			2004			2005			2006			2007			2007			2008
	unaudited															unaudited
	(Dollars in thousands, except as noted)

Statement of Operations Data:
Revenues:
Motor fuel — retail	$	147,777		$	171,383		$	193,232		$	194,025		$	259,287		$	179,989		$	261,073
Merchandise — retail		126,072			125,054			128,466			150,899			213,433			153,228			192,325
Other, net — retail(1)		4,340			5,054			4,879			6,255			7,374			5,844			5,606

Total retail		278,189			301,491			326,577			351,179			480,094			339,061			459,004
Motor fuel — wholesale		605,827			703,903			831,005			910,959			792,273			608,529			586,755
Other, net — wholesale(2)		1,796			4,945			2,431			2,455			2,149			1,451			2,175

Total wholesale		607,623			708,848			833,436			913,414			794,422			609,980			588,930

Total revenues		885,812			1,010,339			1,160,013			1,264,593			1,274,516			949,041			1,047,934
Gross profit:
Motor fuel — retail		11,918			12,598			14,985			14,555			19,478			12,317			14,612
Merchandise — retail		38,644			38,548			37,954			42,500			61,113			43,743			55,538
Other, net		4,340			5,054			4,879			6,254			7,375			5,844			5,606

Total retail		54,902			56,200			57,818			63,309			87,966			61,904			75,756

Motor fuel — wholesale		10,721			2,134			(7,096	)		13,897			26,141			23,330			213
Other, net — wholesale		1,796			4,945			2,431			2,456			2,149			1,451			2,175

Total wholesale		12,517			7,079			(4,665	)		16,353			28,290			24,781			2,388

Total gross profit		67,419			63,279			53,153			79,662			116,256			86,685			78,144
Operating and selling expenses:
Operating, selling and administrative(3)		58,068			57,857			58,668			64,256			81,933			56,967			70,516
Depreciation, amortization and accretion		5,315			4,962			5,026			6,205			10,245			6,910			10,290

Total operating and selling expenses		63,383			62,819			63,694			70,461			92,178			63,877			80,806
Operating income (loss)		4,036			460			(10,541	)		9,201			24,078			22,808			(2,662	)
Interest expense		3,325			3,555			3,848			5,864			5,202			3,668			4,029
Rental, interest and other income		367			476			168			229			484			283			409
Gain (loss) on sale of assets		(23	)		(115	)		(55	)		(30	)		68			39			—

Income (loss) before income tax expense (benefit)		1,055			(2,734	)		(14,276	)		3,536			19,428			19,462			(6,282	)
Income tax expense (benefit)(4)		54			72			(5,040	)		1,336			7,543			7,368			(1,769	)

Net income (loss)	$	1,001		$	(2,806	)	$	(9,236	)	$	2,200		$	11,885		$	12,094		$	(4,513	)

Other Financial Data:
EBITDA (unaudited)(5)	$	9,695		$	5,783		$	(5,420	)	$	15,575		$	34,810		$	30,005		$	8,015
Net cash provided by (used in):
Operating activities		7,011			6,432			(16,915	)		14,860			10,143			3,693			4,542
Investing activities		(7,193	)		(3,648	)		(6,216	)		(38,280	)		(85,841	)		(83,052	)		(2,553	)
Financing activities		(158	)		(2,958	)		24,560			23,547			81,429			84,696			(8,115	)
Capital expenditures(6)		7,467			3,952			6,216			10,902			11,027			5,627			2,203


																Nine Months Ended
	Year Ended December 31,															September 30,
	2003			2004			2005			2006			2007			2007			2008
	unaudited															unaudited
	(Dollars in thousands, except as noted)

Operating Data (unaudited):
Number of retail stores (end of period)		168			167			167			207			307			308			306
Retail fuel gallons sold		100,389			97,541			87,714			75,969			91,945			65,075			73,092
Average gasoline retail price (dollars per gallon sold)	$	1.47		$	1.76		$	2.20		$	2.55		$	2.82		$	2.77		$	3.57
Average per retail store(7):
Retail merchandise sales		736			746			769			806			831			638			628
Retail fuel gallons sold		598			592			535			414			364			278			247
Comparable merchandise store sales growth(8):					1.4	%		3.1	%		4.8	%		3.1	%		6.9	%		0.4	%
Retail merchandise gross margin(9)		33.6	%		34.0	%		33.3	%		32.3	%		32.1	%		31.2	%		30.9	%
Retail fuel margin (cents per gallon)(10)		11.2	¢		11.9	¢		17.1	¢		19.2	¢		21.2	¢		18.9	¢		20.0¢
Number of stores supplied through wholesale distributor network (end of period)(11)		1,345			1,302			1,079			983			776			796			745
Wholesale fuel gallons sold		673,806			594,768			598,965			543,788			458,581			353,530			267,476
Sold to our retail convenience stores		99,916			97,328			87,181			72,215			88,320			61,913			69,776
Sold to unrelated parties		573,890			497,440			511,784			471,573			370,261			291,617			197,700
Wholesale fuel margin unrelated parties (cents per gallon)		1.9	¢		0.0	¢		(1.4	)¢		3.0	¢		7.1	¢		8.0	¢		0.0	¢

Balance Sheet Data (end of period):
Cash and cash equivalents	$	3,265		$	3,091		$	4,520		$	4,647		$	10,378					$	4,252
Adjusted working capital(12)		26,534			20,776			20,744			22,906			28,410						29,948
Total assets		108,903			105,413			113,866			141,465			237,015						220,682
Total liabilities		71,297			72,976			70,326			90,970			136,335						128,099
Total member’s interest and equity		37,606			32,437			43,540			50,495			100,680						92,583


(1)		Includes revenues from lottery, money orders, money wire and ATM commissions, and other commissions earned on gift cards and ancillary services.

(2)		Includes payment card processing fees, broadband and equipment rents, and other marketing and trade agreement fees.


(3)		Includes allocated costs and expenses for administrative and shared services provided by Alon Energy to Alon Brands (2003 - $4,046, 2004 - $5,265, 2005 - $4,958, 2006 - $4,230, 2007 - $4,100, nine months ended September 30, 2007 - $3,015 and nine months ended September 30, 2008 - $2,486).


(4)		Reflects current and deferred taxes for the periods presented. See Note 2(r) and Note 17 to our audited combined financial statements included elsewhere in this prospectus for a detailed explanation of the components of income taxes.


(5)		We define EBITDA as net income (loss) before net interest expense, income tax expense (benefit) and depreciation, amortization and accretion. We believe that EBITDA is useful to investors in evaluating our operating performance because:


	•	securities analysts and investors often use such calculations as a measure of financial performance and debt service capabilities;


	•	it facilitates management’s ability to measure operating performance of our business on a consistent basis since it removes the impact of items not directly resulting from our retail and wholesale marketing operations; and

	•	it is used by our management for internal planning purposes, including aspects of our operating budget, capital expenditures, as well as for segment and individual site operating targets.

EBITDA is not a recognized term under GAAP and does not purport to be an alternative to net income as a measure of operating performance. EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for an analysis of our results as reported under GAAP. Some of these limitations include:


	•	it does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;

	•	it does not reflect changes in, or cash requirements for, working capital;

	•	it does not reflect significant interest expense, or the cash requirements necessary to service interest or principal payments on our credit facilities;

	•	it does not reflect payments made or future requirements for income taxes;

	•	although depreciation, amortization and accretion are non-cash charges, the assets being depreciated and amortized may be replaced in the future, and EBITDA does not reflect cash requirements for such replacements; and

	•	because not all companies use identical calculations, our presentation of EBITDA may not be comparable to similarly titled measures of other companies.

The following table presents a reconciliation of net income (loss) to EBITDA:


													Nine Months Ended
	Year Ended December 31,												September 30,
	2003		2004			2005			2006		2007		2007		2008

Net income (loss)	$	1,001	$	(2,806	)	$	(9,236	)	$	2,200	$	11,885	$	12,094	$	(4,513	)
Depreciation, amortization and accretion		5,315		4,962			5,026			6,205		10,245		6,910		10,290
Interest expense, net		3,325		3,555			3,830			5,834		5,137		3,633		4,007
Income tax expense (benefit)		54		72			(5,040	)		1,336		7,543		7,368		(1,769	)

EBITDA	$	9,695	$	5,783		$	(5,420	)	$	15,575	$	34,810	$	30,005	$	8,015


(6)		Excludes capital assets acquired in business acquisitions and includes brand image enhancement expenditures.


(7)		Average retail merchandise sales and motor fuel gallons sold are based on total merchandise sales or motor fuel gallons sold divided by total store months


(8)		Includes merchandise and in-store revenue identified in footnote 1 only for stores operated in both periods. Excludes motor fuel sales.


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


(10)		Retail fuel margin represents the difference between motor fuel revenues and net cost of purchased 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.


(11)		Excludes convenience stores we own and operate.


(12)		Adjusted working capital is defined as total current assets, excluding cash and cash equivalents, less total current liabilities.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

The following unaudited pro forma condensed combined financial data for the year ended December 31, 2007 and as of and for the nine months ended September 30, 2008, are based upon our historical combined financial statements included elsewhere in this prospectus, adjusted to give pro forma effect to certain transactions. The unaudited pro forma condensed combined statement of operations data for the year ended December 31, 2007 give effect to the Skinny’s transaction, the corporate reorganization transactions, this offering and the application of net proceeds thereof as if they had each occurred as of January 1, 2007. The unaudited pro forma condensed combined statement of operations data for the nine months ended September 30, 2008 give effect to the corporate reorganization transactions, this offering and the application of net proceeds thereof as if they had each occurred as of January 1, 2008. The unaudited pro forma condensed combined balance sheet data as of September 30, 2008 give effect to the corporate reorganization transactions, this offering and the application of net proceeds thereof as if they had each occurred as of September 30, 2008.

The pro forma adjustments in the column labeled Corporate Reorganization Transactions Adjustments give effect to the corporate reorganization transactions we expect to consummate with Alon Energy immediately prior to the consummation of this offering. Following completion of these transactions, the retail and wholesale marketing segments will both be conducted by subsidiaries of Alon Brands. See “Corporate Reorganization Transactions.”

The pro forma adjustments in the column labeled Skinny’s Transaction Adjustments give effect to our acquisition on June 29, 2007 of Skinny’s. The aggregate purchase price for Skinny’s was approximately $75.3 million after adjustments for working capital, debt and certain other post-closing adjustments. The operations of Skinny’s have been included in our combined statement of operations since the acquisition date.

The unaudited pro forma condensed combined financial data is included for informational purposes only and does not purport to represent what our financial position or results of operations would actually have been had the transactions referenced above occurred on the dates indicated. In addition, the pro forma adjustments described herein are based on available information and upon assumptions that our management believes are reasonable. The unaudited pro forma financial data also do not purport to represent and may not be indicative of our results of operations for any future period or financial position at any future date.

The following unaudited pro forma condensed combined statements of operations should be read in conjunction with “Use of Proceeds,” “Capitalization,” “Selected Historical Combined Financial and Operating Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited and unaudited combined financial statements and related notes included elsewhere in this prospectus.

ALON BRANDS, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF SEPTEMBER 30, 2008


				Corporate		Pro Forma for
				Reorganization		Corporate
				Transactions		Reorganization	Offering	Pro
	Actual			Adjustments		Transactions	Adjustments	Forma
	(Dollars in thousands)

ASSETS
Current Assets
Cash and cash equivalents	$	4,252		$	—		$	$
Accounts and short-term notes receivable, net of allowance for doubtful accounts		30,016			—
Inventories		26,513			—
Deferred income tax assets		3,894			—
Prepaid expenses and other current assets		2,879			—

Total Current Assets		67,554			—

Property and Equipment, net		91,711			—

Other Non-Current Assets
Goodwill		50,450			—
Intangible assets, net		9,203			—
Other assets		1,764			—

Net Other Non-Current Assets		61,417			—

Total Assets	$	220,682		$	—		$	$

LIABILITIES AND MEMBER’S INTEREST AND EQUITY
Current Liabilities
Current portion of notes payable and capital lease obligation	$	6,628		$	—		$	$
Accounts payable		9,299			—
Accounts payable, affiliates		2,358			—
Income taxes payable		452			—
Accrued liabilities and expenses		14,617			—

Total Current Liabilities		33,354			—

Long-Term Liabilities
Notes payable		82,201			—
Capital lease obligation		106			—
Deferred income tax liability		7,765			—
Other non-current liabilities		4,673			—

Total Liabilities		128,099			—

Commitments and Contingencies
Member’s Interest and Equity
Net parent investment		91,021
Preferred Stock		—
Common Stock		—
Additional paid-in capital		—
Accumulated other comprehensive loss, net of tax		(646	)
Retained earnings		2,208

Total Members Interest and Equity/Stockholders’ Equity		92,583

Total Liabilities, Member’s Interest and Equity/Stockholders’ Equity	$	220,682		$	—		$	$


(a)		Reflects the conversion of $ of net parent investment to common stock and the conversion of $ of such investment to our series A convertible preferred stock.

(b)		Reflects gross offering proceeds of $ less estimated offering-related expenses of $ that are capitalized and $ retirement of net parent investment.

(c)		Reflects the return of $ of net parent investment to Alon USA, LP with the proceeds of the offering.

ALON BRANDS, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007


	Historical
	Alon Brands			Skinny’s						Pro Forma
	for the Year			for the Six						for
	Ended			Months Ended			Skinny’s			Skinny’s
	December 31,			June 29,			Transaction			Transaction			Offering	Pro
	2007(2)			2007			Adjustments(3)			Adjustments			Adjustments	Forma
	(Dollars in thousands, except per share amounts)

Revenues
Motor fuel	$	1,051,560			50,266		$	(38,418	)(a)	$	1,063,408		$	$
Merchandise		213,433			36,007						249,440
Other, net		9,523			832			(101	)(b)		10,254

Total Revenues		1,274,516			87,105			(38,519	)		1,323,102

Cost of Sales
Motor fuel		1,005,941			47,699			(38,418	)(a)		1,015,221
Merchandise, net		152,319			25,064						177,384

Total Cost of Sales		1,158,260			72,763			(38,418	)		1,192,605

Gross Profit		116,256			14,342			(101	)		130,497

Operating and Selling Expenses
Personnel costs, taxes, and benefits		39,884			7,437						47,321
Leases and utilities		14,117			1,687						15,804
Royalties		2,901			77						2,978
Other operating, selling, and administrative(1)		25,031			3,205			(101	)(b)		28,573
Depreciation, amortization and accretion		10,245			1,116			523	(c)		11,884

Operating and Selling Expenses		92,178			13,522			422			106,122

Operating Income (Loss)		24,078			820			(523	)		24,375

Other Income (Expense)
Interest expense		(5,202	)		(1,323	)		169	(d)		(6,356	)
Interest income		65			43						108
Rental, interest and other income		419			194						613
Gain on sale of assets		68			5						73

Other Income (Expense)		(4,650	)		(1,081	)		169			(5,562	)

Income (Loss) Before Income Tax Expense (Benefit)		19,428			(261	)		(354	)		18,813

Income Tax Expense (Benefit)		7,543			3,541			(3,986	)(e)		7,098

Net Income (Loss)	$	11,885			(3,802	)	$	3,632		$	11,715		$	$

Earnings Per Share:
Basic														$
Diluted														$
Weighted Average Shares Outstanding:
Basic
Diluted


(1)		Includes allocated costs and expenses for administrative and shared services provided by Alon Energy to Alon Brands of $4,100.


(2)		Amounts included in actual column include Alon Marketing and SCS for the twelve months ended December 31, 2007 and Skinny’s from the date of acquisition, June 29, 2007.


(3)		Related to the Skinny’s acquisition:


		(a) Elimination of motor fuel products purchased from Alon Marketing totaling $38,418;


		(b) Elimination of credit card revenue of $101.


		(c) Increase to depreciation, amortization and accretion expense on an acquired asset totaling $523;

		(d) Increase to interest expense based on increase of borrowings under the Amended Wachovia Credit Facility to $46,167 as of January 1, 2007 at 5% (LIBOR plus 1.5%) totaled $395; elimination of $564 of prepayment penalties associated with early extinguishment of Skinny’s debt; and

		(e) Decrease in income tax expense based on election to be treated as a “C” corporation and the Skinny’s operating loss for the six months ended June 29, 2007.

ALON BRANDS, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008


				Offering
	Actual			Adjustments	Pro Forma
	(Dollars in thousands, except per share amounts)

Revenues
Motor fuel	$	847,828		$	$
Merchandise		192,325
Other, net		7,781

Total Revenues		1,047,934

Cost of Sales
Motor fuel		833,003
Merchandise, net		136,787

Total Cost of Sales		969,790

Gross Profit		78,144

Operating and Selling Expenses
Personnel costs, taxes, and benefits		34,251
Leases and utilities		12,815
Royalties		2,347
Other operating, selling, and administrative(1)		21,103
Depreciation, amortization and accretion		10,290

Total Operating and Selling Expenses		80,806

Operating Income (Loss)		(2,662	)

Other Income (Expense)
Interest expense		(4,029	)
Interest income		22
Rental and other income		387
Total Other Income (Expense)		(3,620	)

Income (Loss) Before Income Taxes		(6,282	)

Income Tax Expense (Benefit)		(1,769	)

Net Income (Loss)	$	(4,513	)	$	$

Earnings Per Share(2):
Basic					$
Diluted					$
Weighted Average Shares Outstanding(3):
Basic
Diluted


(1)		Includes allocated costs and expenses for administrative and shared services provided by Alon Energy to Alon Brands of $2,486.


(2)		Pro forma earnings per share data for the nine months ended September 30, 2008 reflect the conversion of Alon USA Interests, LLC to a “C” corporation in November 2008, the issuance of common stock and series A convertible preferred stock in the corporate reorganization transactions and the issuance of shares in this offering. Pro forma earnings per share is calculated by dividing the net income by the basic and diluted shares outstanding.


(3)		Pro forma basic and diluted shares outstanding reflect the conversion of Alon USA Interests, LLC to a “C” corporation in November 2008 and issuance of common stock and series A convertible preferred stock in the corporate reorganization transactions and the issuance of shares of common stock in this offering.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion together with our audited and unaudited combined financial statements and related notes included elsewhere in this prospectus. This discussion contains forward-looking statements that are based on management’s current expectations, estimates and projections about our business and operations. See “Forward-Looking Statements.” The cautionary statements made in this prospectus should be read as applying to all related forward-looking statements wherever they appear in this prospectus. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of a number of factors, including those we discuss under “Risk Factors” and elsewhere in this prospectus. EBITDA is a non-GAAP financial measure of performance that has limitations and should not be considered as a substitute for net income. See “Prospectus Summary — Summary Historical Combined and Unaudited Pro Forma Condensed Combined Financial and Operating Data” and “Selected Historical Combined Financial and Operating Data” for a discussion of our use of EBITDA in this prospectus and a reconciliation of EBITDA to net income for the periods presented.

Overview

We are the largest 7-Eleven licensee in the United States, and we are the sole licensee of the FINA brand for motor fuels in the South Central and Southwestern United States. Our business consists of two operating segments: retail and wholesale marketing. As of September 30, 2008, our retail segment operated 306 convenience stores in Central and West Texas and New Mexico, substantially all of which are operated under the 7-Eleven and FINA brands. Through our 7-Eleven licensing agreement, we have the exclusive right to operate 7-Eleven convenience stores in substantially all of our existing retail markets and many surrounding areas. Our wholesale marketing segment markets and supplies motor fuels under the FINA brand and provides brand support and payment card processing services to distributors supplying over 950 retail locations, including all company-owned stores that sell motor fuel. In certain markets, we also sub-license the FINA brand and provide the same brand support and payment card processing services to distributors outside of our supply network representing approximately 100 additional retail locations.

Historically, most of our business was accounted for as an operating segment of Alon USA Energy, Inc., an independent refining company listed on the NYSE under the symbol “ALJ.” Alon Energy owns and operates four crude oil refineries located in Texas, California, Louisiana and Oregon.

On July 3, 2006, we completed the purchase of 40 retail stores from Good Time Stores, Inc., or Good Times, in El Paso, Texas. The aggregate purchase price for the 40 acquired stores was $27.4 million after adjustments for inventories, post-closing transaction costs and assumption of certain lease obligations.

Corporate Reorganization Transactions

In November 2008, Alon Brands was converted from a Texas limited liability company to a Delaware corporation. Alon Brands historically operated as a holding company for the retail business of Alon Energy. Prior to the consummation of this offering, Alon Energy and Alon Brands will undertake a series of corporate reorganization transactions which will result in the assets and liabilities of the wholesale marketing segment being contributed to Alon Brands from Alon USA, LP. See “Corporate Reorganization Transactions.”

Our audited and unaudited combined financial statements included elsewhere in this prospectus, which are discussed below, reflect the historical financial position, cash flows and results of operations of the business that will be transferred to us from Alon USA, LP pursuant to a series of corporate reorganization transactions. Although our combined financial statements include direct operating cost incurred by our

operating segments and certain allocated and shared service cost provided by Alon USA LP, our financial statements do not purport to represent, and may not necessarily reflect, what our financial position, cash flows and results of operations actually would have been if we had operated as a stand-alone company during the periods presented. Accordingly, our historical financial data also do not purport to represent and may not be indicative of our financial position, cash flows or results of operations for any future period or financial position at any future date.

Basis of Presentation

Prior to the effectiveness of the registration statement of which this prospectus forms a part, Alon Energy intends to “carve out” and cause the assets and liabilities associated with its FINA-branded wholesale marketing segment, operated by Alon USA, LP, to be contributed to Alon Marketing, LLC, or Alon Marketing, a newly-formed Texas limited liability company. Alon USA, LP is the direct parent of Alon Brands, and the equity interests in Alon Marketing will then be contributed to Alon Brands. The historical financial statements contained in this prospectus reflect the combined financial position and results of operations of the wholesale marketing and retail segments that will be owned and operated by Alon Brands at the time of this offering.

We conduct our business in two primary business segments, retail and wholesale marketing. The retail segment operates 306 convenience store sites located 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. Substantially all of the motor fuels sold through the retail segment are purchased from our wholesale marketing segment.

The wholesale marketing segment markets motor fuels through a network of over 950 locations under the FINA brand name, including our retail convenience stores that sell motor fuel. A majority of the fuel marketed is purchased through Alon Energy’s physically integrated system refined in Big Spring, Texas. This segment also provides its network of FINA-branded customers with brand support and payment card processing services.

Sales of motor fuels to our retail segment from our wholesale marketing segment, payment card processing fees and other fees charged or sales to our retail segment by our wholesale marketing segment are eliminated through consolidation of our financial statements.

Material Business and Industry Trends

The economy in the areas in which we operate has been more resilient to the recent economic downturn than what has been experienced in many other parts of the nation. We believe that this is due to the region’s energy-related activities and a relatively stable housing market. During the third quarter of 2008, we saw continued reductions in consumer demand for fuel even though retail fuel prices declined during that same period. Although declining fuel prices have a negative impact on revenues, our retail fuel margin, the difference between the cost to acquire motor fuel and the retail price at which it is sold, has a more significant effect to our overall profitability. We have historically been able to maintain our targeted retail fuel margins during periods in which retail fuel prices fluctuate. We expect consumer demand for fuel to recover as fuel prices stabilize, however, coupled with the current turmoil in the nation’s credit markets and the overall decline in spending in most areas of the economy, we are unable to predict the extent of the economic downturn or its impact on our operations.

Our retail segment operates within the highly fragmented U.S. convenience store industry, with the 10 largest convenience store retailers accounting for less than 9% of total convenience stores in 2007. Furthermore, operators with 50 or fewer stores accounted for approximately 75% of all convenience stores operated by retailers in 2007. In recent years, the convenience store industry has experienced many important consumer trends, including changing consumer demographics and eating patterns that have resulted in more food consumed away from home, and a shift of consumer food and general merchandise purchases away from traditional supermarkets to convenience stores and other alternative formats, including big box retailers. Additionally, the increasing size and complexity of the big box retail format has driven many consumers to smaller retailers, such as convenience stores, to meet their demand for speed and convenience in daily

shopping needs. We also believe that the highly fragmented nature of the convenience store industry provides larger chain operators significant scale advantages and opportunities to grow through acquisitions. The continued divestiture of retail operations by major oil companies may transfer advantages to medium to large retail convenience store chain operators, as we believe that the presence of major refiner operators in the industry may have depressed retail gasoline margins and this trend may reverse as major oil companies exit direct retail operations.

In recent years the market for wholesale distribution of motor fuel products has also experienced a number of changes, including the consolidation among major petroleum product producers over the last 25 years, which has resulted in fewer recognizable brands available to consumers, and a 37% reduction in the number of operating crude oil refineries, which has resulted in less access to product and increased the importance of obtaining a secure fuel supply source. In addition, an increased scrutiny by oil companies and refiners in selecting distributors, with a preference for larger distributors capable of handling higher volumes, has limited smaller distributors’ access to product.

Description of Revenues and Expenses

Retail

Revenues. Revenues in our retail segment consist primarily of merchandise sales, other in-store revenues and motor fuels. In-store retail revenues consist of merchandise sales, commissions earned on the sale of gift cards, lotteries, money orders and wire transfer fees, car wash and other miscellaneous in-store revenues. Retail motor fuel sales include federal and state motor fuel taxes. Retail merchandise sales are driven by convenience, branding and competitive pricing. Our convenience store volumes are seasonal and peak in the second and third quarters of the year.

Cost of Sales. Cost of sales for our retail segment include cost of sales for motor fuels and merchandise. Motor fuel cost of sales represents the net cost of purchased fuel, including transportation costs and associated motor fuel taxes. Merchandise cost of sales includes the delivered cost of merchandise purchases, net of merchandise rebates and commissions.

Gross Profit. Retail merchandise gross profit is equal to retail merchandise sales less the delivered cost of the retail merchandise, net of vendor discounts and rebates, and is expressed in dollars and measured as a percentage of total retail merchandise sales and other in-store revenues. Our goal is to enhance overall store profitability through new fuel pricing strategies designed to increase fuel sales volumes which are expected to generate higher customer traffic that will increase sales of higher margin retail merchandise.

Operating, Selling and Administrative Expenses. Operating, selling and administrative expenses in our retail segment consist primarily of costs relating to the operations of our convenience stores, including payment card fees, labor, utilities, maintenance and retail corporate overhead expense.

Wholesale Marketing

Revenues. Wholesale marketing revenues consist primarily of motor fuel sales, net of early payment discounts, payment card processing fees and net of payment card processing expenses. Revenues for our wholesale marketing segment excludes sales of motor fuels to our retail segment, which are eliminated through consolidation of our financial statements.

Cost of Sales. Wholesale marketing segment cost of sales consists of the cost of motor fuel purchased for resale.

Gross Profit. Motor fuel gross profit is equal to motor fuel sales less the delivered cost of fuel and motor fuel taxes, measured on a cents per gallon, or cpg, basis. Our motor fuel margins are driven by local supply, demand and competitor pricing.

Operating, Selling and Administrative Expenses. Operating, selling and administrative expenses in our wholesale marketing segment consist primarily of overhead and marketing expenses.

Our earnings and cash flows from our wholesale marketing segment are primarily affected by the motor fuel sales volumes and margins recognized on the sale of motor fuels to our distributors, payment card processing fee revenue and licensing fees. The margins recognized on sales of motor fuel are the price at which fuel is sold to our FINA-branded distributors less our delivered cost, net of any early payment discounts. Payment card processing fee revenue is the fees assessed on our wholesale customers and licensees, net of the costs we incur in providing such payment card processing services.

Costs Associated with Corporate Services Agreement

Alon Energy currently provides us with corporate and shared services functions. Our historical financial statements in this prospectus reflect an allocation of these costs within operating, selling and administrative expenses. These allocations include costs related to treasury, payroll and other financial-related services, human resources and employee benefits, legal, information systems, investment services, corporate services and procurement and sourcing support. Following our corporate reorganization transactions, we expect Alon Energy to continue to provide many of the services related to these functions. These services will be provided under the Corporate Services Agreement described in “Certain Relationships and Related Party Transactions.” We believe that the allocated costs are substantially equivalent to the cost that would be incurred by us if we were to obtain such services from third parties or hire additional personnel to perform such functions. In addition to the cost of these services, we may incur other corporate and operational costs which may be greater than historically allocated levels. For example, as a public company, we will incur costs relating to our public reporting and compliance obligations. Also, we will incur certain non-recurring expenses in connection with the corporate reorganization transactions. The costs and expenses described above are allocated among our two operating segments. Any out-of-pocket costs and expenses incurred by Alon Energy on our behalf will be reimbursed without markup.

Influences on Results of Operations

During 2008, Alon Energy, our primary supplier, suffered a major fire at its refinery located in Big Spring, Texas. As a result, a number of our wholesale marketing segment’s distributors were supplied through terminals that were inconvenient to them and our fuel sales volumes decreased. Fuel margins were also negatively affected because we purchased fuel for resale in order to honor contractual commitments to these distributors. Our supply agreement with Alon Energy will become effective immediately prior to the consummation of this offering. We believe that the benefits associated with this supply agreement will exceed the risk of experiencing similar disruptions in the future. Furthermore, we believe the additional protections in this agreement that were not afforded to us when we were operated as a segment of Alon Energy will help protect us from future disruptions because Alon Energy will be required to supply us at the contract price even if it or we are required to purchase such fuel at a higher cost from third parties. We are also in the process of reducing our exposure in markets not integrated with Alon Energy’s Big Spring refinery by allowing our fuel supply agreements to expire by their terms, which has resulted in declining fuel sales volumes over the past several years.

Over the past several years, wholesale motor fuel costs have continued to be extremely volatile and prices have increased and decreased substantially. The periods of higher motor fuel costs resulted in increases in our retail segment’s payment card expenses, since these fees are calculated as a percentage of the sales amount rather than gallons sold. We are able to partially mitigate these higher costs for our retail segment due to the payment card processing services offered by our wholesale segment, such that we are able to recoup a portion of those increased costs on a combined basis, as well as benefit from the increased fees received from third-party purchasers.

Results of Operations

The following table sets forth summary financial data from our financial statements as a percentage of total revenues for the periods indicated:


	Year Ended December 31,									Nine Months Ended September 30,
	2005			2006			2007			2007			2008

Revenues:
Motor fuel		88.3	%		87.4	%		82.5	%		83.1	%		80.9	%
Merchandise		11.1			11.9			16.7			16.1			18.4
Other, net		0.6			0.7			0.8			0.8			0.7

Total revenues		100.0			100.0			100.0			100.0			100.0

Gross profit:
Motor fuel		0.7			2.2			3.6			3.8			1.4
Merchandise		3.3			3.4			4.8			4.6			5.4
Other, net		0.6			0.7			0.8			0.7			0.7

Total gross profit		4.6			6.3			9.2			9.1			7.5
Operating, selling and administrative expenses		5.1			5.1			6.4			6.0			6.8
Depreciation, amortization and accretion		0.4			0.5			0.8			0.7			1.0
Other expense		0.3			0.4			0.4			0.3			0.3

Net income (loss) before income tax expense (benefit)		(1.2	)		0.3			1.6			2.1			(0.6	)
Income tax expense (benefit)		(0.4	)		0.1			0.6			0.8			(0.2	)

Net income (loss)		(0.8	)%		0.2	%		1.0	%		1.3	%		(0.4	)%

The following tables provide summary financial and operating data for us and our two operating segments.

Alon Brands, Inc. Combined


										Nine Months Ended
	Year Ended December 31,									September 30,
	2005			2006			2007			2007			2008
	(Dollars in thousands)
										(unaudited)

Statement of Operations Data:(1)
Revenues	$	1,160,013		$	1,264,593		$	1,274,516		$	949,041		$	1,047,934
Cost of sales		1,106,860			1,184,931			1,158,260			862,356			969,790

Gross profit		53,153			79,662			116,256			86,685			78,144

Operating and selling expenses:
Operating, selling and administrative		58,668			64,256			81,933			56,967			70,516
Depreciation, amortization and accretion		5,026			6,205			10,245			6,910			10,290

Total operating and selling expenses		63,694			70,461			92,178			63,877			80,806

Operating income (loss)		(10,541	)		9,201			24,078			22,808			(2,662	)
Interest expense		3,848			5,864			5,202			3,668			4,029
Rental, interest and other income		168			229			484			283			409
Gain (loss) on sale of assets		(55	)		(30	)		68			39			—
Income tax expense (benefit)		(5,040	)		1,336			7,543			7,368			(1,769	)

Net income (loss)	$	(9,236	)	$	2,200		$	11,885		$	12,094		$	(4,513	)

Other Financial Data:
EBITDA (unaudited)(2)	$	(5,420	)	$	15,575		$	34,810		$	30,005		$	8,015
Net cash provided by (used in):
Operating activities		(16,915	)		14,860			10,143			3,693			4,542
Investing activities		(6,216	)		(38,280	)		(85,841	)		(83,052	)		(2,553	)
Financing activities		24,560			23,547			81,429			84,696			(8,115	)
Capital expenditures(3)		6,216			10,902			11,027			5,627			(2,203	)


(1)		Excludes inter-company sales and expenses that are eliminated in the combined financial statements.

(2)		We define EBITDA as net income (loss) before net interest expense, income tax expense (benefit) and depreciation, amortization and accretion. We believe that EBITDA is useful to investors in evaluating our operating performance because:

		• securities analysts and investors often use such calculations as a measure of financial performance and debt service capabilities;

		• it facilitates management’s ability to measure operating performance of our business on a consistent basis since it removes the impact of items not directly resulting from our retail and wholesale marketing operations; and

		• it is used by our management for internal planning purposes, including aspects of our operating budget, capital expenditures, as well as for segment and individual site operating targets.

		EBITDA is not a recognized term under GAAP and does not purport to be an alternative to net income as a measure of operating performance. EBITDA has limitations as an analytical tool, and you should not


		consider it in isolation or as a substitute for an analysis of our results as reported under GAAP. Some of these limitations include:

		• it does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;

		• it does not reflect changes in, or cash requirements for, working capital;

		• it does not reflect significant interest expense, or the cash requirements necessary to service interest or principal payments on our credit facilities;

		• it does not reflect payments made or future requirements for income taxes;

		• although depreciation, amortization and accretion are non-cash charges, the assets being depreciated and amortized may be replaced in the future, and EBITDA does not reflect cash requirements for such replacements; and

		• because not all companies use identical calculations, our presentation of EBITDA may not be comparable to similarly titled measures of other companies.

The following table presents a reconciliation of net income (loss) to EBITDA:


	Year Ended December 31,							Nine Months Ended September 30,
	2005			2006		2007		2007		2008
	(Dollars in thousands)

Net income (loss)	$	(9,236	)	$	2,200	$	11,885	$	12,094	$	(4,513	)
Depreciation, amortization and accretion		5,026			6,205		10,245		6,910		10,290
Interest expense, net		3,830			5,834		5,137		3,633		4,007
Income tax expense (benefit)		(5,040	)		1,336		7,543		7,368		(1,769	)

EBITDA	$	(5,420	)	$	15,575	$	34,810	$	30,005	$	8,015


(3)		Excludes capital assets acquired in business acquisitions and includes brand image enhancement expenditures.

Retail Segment


	Year Ended December 31,									Nine Months Ended September 30,
	2005			2006			2007			2007			2008
	(Dollars in thousands, except as noted)
										(unaudited)

Statement of Operations Data:
Revenues(l)	$	326,577		$	351,179		$	480,094		$	339,061		$	459,004
Cost of sales(2)		268,759			287,870			392,128			277,157			383,248

Gross profit (loss)		57,818			63,309			87,966			61,904			75,756

Operating and selling expenses:
Operating, selling, and administrative(3)		49,813			56,158			75,642			52,712			66,642
Depreciation, amortization and accretion		4,136			5,040			8,794			5,803			9,119

Total operating and selling expenses		53,949			61,198			84,436			58,515			75,761

Operating income (loss)	$	3,869		$	2,111		$	3,530		$	3,389		$	(5	)

Operating Data (unaudited):
Number of stores (end of period)		167			207			307			308			306
Fuel sales (thousands of gallons)		87,714			75,969			91,945			65,075			73,092
Fuel sales (thousands of gallons per site per month)(4)		44.6			34.4			30.3			30.9			27.2
Fuel margin (cents per gallon)(5)		17.1	¢		19.2	¢		21.2	¢		18.9	¢		20.0	¢
Merchandise sales	$	128,466		$	150,899		$	213,433		$	153,228		$	192,325
Merchandise sales (per site per month)(6)		64.1			67.2			69.3			70.9			69.3
Merchandise margin		33.3	%		32.3	%		32.1	%		31.2	%		30.9	%
Comparable merchandise store sales growth(7)		3.1	%		4.8	%		3.1	%		6.9	%		0.4	%


(1)		Includes motor fuel sales, including federal and state excise tax, merchandise sales, and other commissions earned.


(2)		Excludes intercompany fuel rebates from our wholesale marketing segment. Intercompany fuel rebates are eliminated in our combined financial statements.


(3)		Excludes intercompany credit card processing fees from our wholesale marketing segment. Intercompany credit card processing fees are eliminated in our combined financial statements.


(4)		Motor fuel gallons sold on a per site, per month basis is calculated by the total gallons sold divided by total store months.


(5)		Retail fuel margin represents the difference between motor fuel revenues and cost of purchased fuel, net of rebates and discounts allowed, plus 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.


(6)		Merchandise sales per site, per month is calculated by merchandise sales divided by total store months.


(7)		Includes stores operated for the current and prior period.

Wholesale Marketing Segment


								Nine Months Ended
	Year Ended December 31,							September 30,
	2005			2006		2007		2007		2008
	(Dollars in thousands, except as noted)
								(unaudited)

Statement of Operations Data:
Revenues(l)	$	833,436		$	913,414	$	794,422	$	609,980	$	588,930
Cost of sales(2)		838,101			897,061		766,132		585,199		586,542

Gross profit (loss)		(4,665	)		16,353		28,290		24,781		2,388

Operating and selling expenses:
Operating, selling, and administrative		8,855			8,098		6,291		4,255		3,874
Depreciation, amortization and accretion		890			1,165		1,451		1,107		1,171

Total operating and selling expenses		9,745			9,263		7,742		5,362		5,045

Operating income (loss)	$	(14,410	)	$	7,090	$	20,548	$	19,419	$	(2,657	)

Operating Data (unaudited):
Fuel volume(l)		598,965			543,788		458,581		353,530		267,476
Sold to our retail convenience stores		87,181			72,215		88,320		61,913		69,776
Sold to unrelated parties		511,784			471,573		370,261		291,617		197,700
Fuel margin unrelated parties(cents per gallon)		(1.4	)¢		3.0¢		7.1¢		8.0¢		0.0¢
Distributor count (end of period)(3)		97			90		81		86		81
Retail outlet count (end of period)(4)		1,243			1,191		1,082		1,103		1,051
Average wholesale rack fuel price(5)	$	1.67		$	1.99	$	2.21	$	2.15	$	3.02


(1)		Includes motor fuel sales, net of rebates and discounts allowed, payment card processing fees and other marketing and trade agreement program revenues less intercompany sales.


(2)		Excludes cost of intercompany motor fuel sales to our retail segment. Intercompany motor fuel cost of sales are eliminated in our combined financial statements.


(3)		Includes all active FINA-branded distributors with retail outlets, whether or not supplied by us with motor fuels, excluding our retail subsidiaries.


(4)		Includes all active FINA-branded retail outlets operating under a distributor sales agreement or a distributor license agreement, including the convenience stores operated by our retail segment.


(5)		Average wholesale rack fuel price is calculated as the branded gasoline and diesel rack sales price per gallon, prior to any discounts given to FINA-branded distributors.

Nine Months Ended September 30, 2008 Compared to the Nine Months Ended September 30, 2007

Revenues

Combined. Revenues for the nine months ended September 30, 2008 were $1,047.9 million, compared to $949.0 million for the nine months ended September 30, 2007, an increase of $98.9 million or 10.4%. This increase was primarily attributable to higher retail motor fuel and merchandise sales from 102 convenience stores acquired in June 2007 and higher retail motor fuel prices over the comparable period in 2007. This increase was partially offset by lower retail and wholesale fuel sales in the nine months ended September 30, 2008, compared to the nine months ended September 30, 2007.

Retail Segment. Revenues for our retail segment were $459.0 million for the nine months ended September 30, 2008, compared to $339.1 million for the nine months ended September 30, 2007, an increase of $119.9 million or 35.4%. Of this increase, $90.7 million was attributable to motor fuel, merchandise and other in-store sales from 102 convenience stores acquired in June 2007. Revenues at our remaining convenience stores increased by $29.2 million, which was attributable to higher motor fuel prices, partially offset by reduced fuel sales due to lower volume. Despite lower fuel sales at our convenience stores, same-store merchandise revenues were flat over the comparable period in 2007.

Wholesale Marketing Segment. Revenues for our wholesale marketing segment were $588.9 million for the nine months ended September 30, 2008, compared to $610.0 million for the nine months ended September 30, 2007, a decrease of $21.1 million or 3.5%. This decrease was primarily attributable to reduced fuel sales due to lower volume that resulted from supply sourcing disruptions and a net decline of 60 retail outlets that we supplied with motor fuel. This net decline in retail outlets supplied by us was a result of our efforts to reduce our exposure in markets not integrated with Alon Energy’s Big Spring refinery by allowing fuel supply agreements to expire by their terms.

Cost of Sales

Combined. Cost of sales was $969.8 million for the nine months ended September 30, 2008, compared to $862.4 million for the nine months ended September 30, 2007, an increase of $107.4 million or 12.5%. This increase was primarily attributable to higher retail fuel and merchandise costs from 102 convenience stores acquired in June 2007 and higher retail and wholesale motor fuel costs. This increase was partially offset by reduced wholesale fuel sales due to lower volume.

Retail Segment. Cost of sales for our retail segment was $383.2 million for the nine months ended September 30, 2008, compared to $277.2 million for the nine months ended September 30, 2007, an increase of $106.1 million or 38.2%. Of this increase, $75.4 million was attributable to increased fuel and merchandise costs from 102 convenience stores acquired in June 2007, $29.4 million was attributable to higher motor fuel costs and approximately $1.3 million was attributable to in-store merchandise purchases.

Wholesale Marketing Segment. Cost of sales for our wholesale marketing segment was $586.6 million for the nine months ended September 30, 2008, compared to $585.2 million for the nine months ended September 30, 2007, an increase of $1.4 million or 0.2%. This increase was primarily attributable to higher fuel prices partially offset by reduced fuel sales due to lower fuel volume that resulted from a net decline of 60 retail outlets that we supplied with motor fuel. This net decline in retail outlets supplied by us was a result of our efforts to reduce our exposure in markets not integrated with Alon Energy’s Big Spring refinery by allowing fuel supply agreements to expire by their terms.

Operating and Selling Expenses, Excluding Depreciation, Amortization and Accretion

Combined. Operating and selling expenses, excluding depreciation, amortization and accretion for the nine months ended September 30, 2008 were $70.5 million, compared to $57.0 million for the nine months ended September 30, 2007, an increase of $13.5 million or 23.7%. This increase was primarily attributable to

$12.0 million of retail operating and selling expenses from the 102 convenience stores acquired in June 2007 and a $1.5 million in other operating and selling expenses. Allocated costs and expenses for administrative and shared services provided by Alon Energy totaled $2.5 million for the nine months ended September 30, 2008 compared to $3.0 million for the nine months ended September 30, 2007, a decrease of $0.5 million or 16.7%. This decrease was primarily due to an acquisition of an additional refinery by Alon Energy in 2008 that increased the allocation base.

Retail Segment. Operating and selling expenses, excluding depreciation, amortization and accretion for our retail segment for the nine months ended September 30, 2008 were $66.6 million, compared to $52.7 million for the nine months ended September 30, 2007, an increase of $13.9 million or 26.4%. Of this increase, $12.0 million was attributable to higher operating and selling expenses from 102 convenience stores acquired in June 2007 and approximately $1.9 million was attributable to higher payment card expenses resulting from higher motor fuel prices, increased repairs and maintenance costs and cash and inventory shortages. Allocated costs and expenses for administrative and shared services provided by Alon Energy totaled $1.2 million for the nine months ended September 30, 2008 compared to $0.9 million for the nine months ended September 30, 2007, an increase of $0.3 million or 33.3%. This increase was primarily due to the acquisition of Skinny’s in 2007 that increased the retail segment’s allocation base.

Wholesale Marketing Segment. Operating and selling expenses, excluding depreciation, amortization and accretion for our wholesale marketing segment for the nine months ended September 30, 2008 were $3.9 million, compared to $4.3 million for the nine months ended September 30, 2007, a decrease of $0.4 million or 9.3%. This decrease was primarily attributable to reduced fuel sales due to lower volume that resulted from a net decline of 60 retail outlets that we supplied with motor fuel. Allocated costs and expenses for administrative and shared services provided by Alon Energy totaled $1.3 million for the nine months ended September 30, 2008 compared to $2.1 million for the nine months ended September 30, 2007, a decrease of $0.8 million or 38.1%. This decrease was primarily due to an acquisition of an additional refinery by Alon Energy in 2008 that decreased the wholesale marketing segment’s portion of the allocation base.

Depreciation, Amortization and Accretion

Depreciation, amortization and accretion for the nine months ended September 30, 2008 was $10.3 million, compared to $6.9 million for the nine months ended September 30, 2007, an increase of $3.4 million or 49.3%. This increase was primarily attributable to 102 convenience stores acquired in June 2007.

Operating Income (Loss)

Combined. Operating loss was $2.7 million for the nine months ended September 30, 2008, compared to operating income of $22.8 million for the nine months ended September 30, 2007, a decrease of $25.5 million. This decrease was primarily attributable to lower fuel volumes and lower motor fuel margins.

Retail Segment. Operating income for our retail segment was $0.0 million for the nine months ended September 30, 2008, compared to operating income of $3.4 million for the nine months ended September 30, 2007, a decrease of $3.4 million. This decrease was primarily due to an increase in retail merchandise cost and credit card processing fees.

Wholesale Marketing Segment. Operating loss for our wholesale marketing segment was $2.7 million for the nine months ended September 30, 2008, compared to operating income of $19.4 million for the nine months ended September 30, 2007, a decrease of $22.1 million or 113.9%. This decrease was primarily attributable to reduced fuel sales due to lower volume and lower motor fuel margins. Fuel sales volume was lower due to a net decline of 60 retail outlets that we supplied with motor fuel and supply sourcing disruptions that forced us to supply distributors through other terminals, increasing our transportation costs. Motor fuel margins were lower due to our purchasing of fuels for resale from third party suppliers to honor our supply commitments to FINA-branded distributors and the introduction by some of our competitors of lower-cost ethanol into motor fuel for certain markets.

Interest Expense

Interest expense was $4.0 million for the nine months ended September 30, 2008, compared to $3.7 million for the nine months ended September 30, 2007, an increase of $0.3 million or 8.1%. This increase was primarily attributable to debt incurred in connection with 102 convenience stores acquired in June 2007.

Income Tax Expense (Benefit)

Income tax benefit was $1.8 million for the nine months ended September 30, 2008, compared to income tax expense of $7.4 million for the nine months ended September 30, 2007, a decrease of $9.2 million. This decrease resulted from our net loss in the nine months ended September 30, 2008, compared to net income in the nine months ended September 30, 2007. Our effective tax rate was 28.2% for the nine months ended September 30, 2008, compared to an effective tax rate of 37.9% for the nine months ended September 30, 2007. This decrease was primarily attributable to state taxes in Texas.

Net Income (Loss)

As a result of the foregoing, net loss was $4.5 million for the nine months ended September 30, 2008, compared to net income of $12.1 million for the nine months ended September 30, 2007, a decrease of $16.6 million.

Year Ended December 31, 2007 Compared to the Year Ended December 31, 2006

Revenues

Combined. Revenues for 2007 were $1,274.5 million, compared to $1,264.6 million for 2006, an increase of $9.9 million or 0.8%. This increase was primarily attributable to six months of retail motor fuel and merchandise sales from 102 convenience stores acquired in June 2007, twelve months of retail motor fuel and merchandise sales from 40 convenience stores purchased in July 2006 compared to six months of such sales reflected an additional in 2006 and higher retail motor fuel prices over the comparable period in 2006. These increases were partially offset by reduced wholesale fuel sales due to lower volume in the year ended December 31, 2007, compared to the year ended December 31, 2006.

Retail Segment. Revenues for our retail segment were $480.1 million for 2007, compared to $351.2 million for 2006, an increase of $128.9 million or 36.7%. Of this increase, $89.1 million was attributable to six months of motor fuel and merchandise sales from 102 convenience stores acquired in June 2007, $24.9 million was attributable to twelve months of motor fuel and merchandise sales from 40 convenience stores purchased in July 2006, compared to six months of sales reflected in 2006 and $14.9 million was attributable to higher motor fuel prices.

Wholesale Marketing Segment. Revenues for our wholesale marketing segment were $794.4 million for 2007, compared to $913.4 million for 2006, a decrease of $119.0 million or 13.0%. This decrease was primarily attributable to lower fuel sales volume that resulted from a net decline of 109 retail outlets that we supplied with motor fuel. This net decline in retail outlets supplied by us was a result of our efforts to reduce our exposure in markets not integrated with Alon Energy’s Big Spring refinery by allowing fuel supply agreements to expire by their terms.

Cost of Sales

Combined. Cost of sales was $1,158.3 million for 2007, compared to $1,184.9 million for 2006, a decrease of $26.6 million or 2.2%. This decrease was primarily attributable to reduced wholesale fuel sales due to lower volume. This decrease was partially offset by increased retail motor fuel and merchandise costs from 102 convenience stores acquired in June 2007 and our remaining convenience stores.

Retail Segment. Cost of sales for our retail segment was $392.1 million for 2007, compared to $287.9 million for 2006, an increase of $104.2 million or 36.2%. Of this increase, $73.8 million was attributable to higher motor fuel and merchandise costs from 102 convenience stores acquired in June 2007

and $30.4 million were attributable to higher motor fuel and merchandise costs at our remaining convenience stores.

Wholesale Marketing Segment. Cost of sales for our wholesale marketing segment was $766.1 million for 2007, compared to $897.1 million for 2006, a decrease of $131.0 million or 14.6%. This decrease was primarily attributable to reduced fuel sales due to lower volume that resulted from a net decline of 109 retail outlets that we supplied with motor fuel.

Operating and Selling Expenses, Excluding Depreciation, Amortization and Accretion

Combined. Operating and selling expenses, excluding depreciation, amortization and accretion for 2007 were $81.9 million, compared to $64.3 million for 2006, an increase of $17.6 million or 27.4%. This increase was primarily attributable to higher operating and selling expenses from convenience stores acquired in June 2007 and 40 convenience stores purchased in July 2006. This increase was partially offset by reduced wholesale fuel sales on lower volume. Allocated costs and expenses for administrative and shared services provided by Alon Energy totaled $4.1 million for the year ended December 31, 2007 compared to $4.2 million for the year ended December 31, 2006, a decrease of $0.1 million or 2.4%.

Retail Segment. Operating and selling expenses, excluding depreciation, amortization and accretion for our retail segment for 2007 were $75.6 million, compared to $56.2 million for 2006, an increase of $19.4 million or 34.5%. Of this increase, $11.9 million was attributable to higher operating and selling expenses from 102 convenience stores acquired in June 2007 and $7.5 million was attributable to additional operating and selling expenses related to 40 convenience stores purchased in July 2006. Allocated costs and expenses for administrative and shared services provided by Alon Energy totaled $1.3 million for the year ended December 31, 2007. Costs and expenses for administrative and shared services provided by Alon Energy were not allocated to our retail segment for the year ended December 31, 2006, because a limited amount of these services were used by the retail segment.

Wholesale Marketing Segment. Operating and selling expenses, excluding depreciation, amortization and accretion for our wholesale marketing segment for 2007 were $6.3 million, compared to $8.1 million for 2006, a decrease of $1.8 million or 22.2%. This decrease was primarily attributable to reduced fuel sales on lower volume that resulted from a net decline of 109 retail outlets that we supplied with motor fuel. Allocated costs and expenses for administrative and shared services provided by Alon Energy totaled $2.8 million for the year ended December 31, 2007 compared to $4.2 million for the year ended December 31, 2006, a decrease of $1.4 million or 33.3%. This decrease was primarily due to an acquisition of an additional refinery by Alon Energy in 2006 that decreased the wholesale marketing segment’s portion of the allocation base.

Depreciation, Amortization and Accretion

Depreciation, amortization and accretion for 2007 was $10.2 million, compared to $6.2 million for 2006, an increase of $4.0 million or 64.5%. This increase was primarily attributable to 102 convenience stores acquired in June 2007.

Operating Income (Loss)

Combined. Operating income was $24.1 million for 2007, compared to operating income of $9.2 million for 2006, an increase of $14.9 million or 162.0%. This increase was primarily attributable to a significant supply source disruption in our marketing areas and higher retail fuel sales margins.

Retail Segment. Operating income for our retail segment was $3.5 million for 2007, compared to operating income of $2.1 million for 2006, an increase of $1.4 million or 66.7%. This increase was primarily attributable to higher fuel sales margins, improved in-store merchandise margins and lower operating expenses on same store sales.

Wholesale Marketing Segment. Operating income for our wholesale marketing segment was $20.5 million for 2007, compared to $7.1 million for 2006, an increase of $13.4 million or 188.7%. This increase was primarily attributable to a significant supply source disruption in our marketing areas caused by an area refinery

going offline. This disruption resulted in a favorable spread between the price most often used in many of the geographic areas in which we supply motor fuel, and the Gulf Coast market, which is more representative of our motor fuel costs.

Interest Expense

Interest expense was $5.2 million for 2007, compared to $5.9 million for 2006, a decrease of $0.7 million or 11.9%. This decrease is due to the refinancing of certain of our debt, partially offset by the effects of higher overall indebtedness following the Skinny’s acquisition.

Income Tax Expense (Benefit)

Income tax expense was $7.5 million for 2007, compared to $1.3 million for 2006, an increase of $6.2 million. This increase resulted from greater operating income from the previous year. Our effective tax rate was 38.8% for 2007, compared to an effective tax rate of 37.8% for 2006.

Net Income (Loss)

As a result of the foregoing, net income was $11.9 million for 2007, compared to net income of $2.2 million for 2006, an increase of $9.7 million.

Year Ended December 31, 2006 Compared to the Year Ended December 31, 2005

Revenues

Combined. Revenues for 2006 were $1,264.6 million, compared to $1,160.0 million for 2005, an increase of $104.6 million or 9.0%. Of this increase, $80.0 million was attributable to higher wholesale motor fuel revenues and $24.6 million was primarily attributable to higher retail motor fuel and merchandise sales from 40 convenience stores acquired in July 2006 over the comparable period in 2005. This increase was partially offset by reduced retail fuel sales due to lower volume at our remaining convenience stores in the year ended December 31, 2006, compared to the year ended December 31, 2005.

Retail Segment. Revenues for our retail segment were $351.2 million for 2006, compared to $326.6 million for 2005, an increase of $24.6 million or 7.5%. This increase was primarily attributable to motor fuel, merchandise and other in-store revenues from 40 convenience stores acquired in July 2006. This increase was partially offset by reduced fuel sales due to lower volume at our remaining convenience stores.

Wholesale Marketing Segment. Revenues for our wholesale marketing segment were $913.4 million for 2006, compared to $833.4 million for 2005, an increase of $80.0 million or 9.6%. This increase was primarily attributable to higher motor fuel prices. This increase was partially offset by decreased fuel sales due to lower volume that resulted from a net decline of 52 retail outlets that we supply with motor fuel.

Cost of Sales

Combined. Cost of sales was $1,184.9 million for 2006, compared to $1,106.9 million for 2005, an increase of $78.0 million or 7.0%. This increase was primarily attributable to higher retail and wholesale motor fuel costs and additional retail motor fuel and merchandise costs related to 40 convenience stores purchased in July 2006. This increase was partially offset by decreased fuel sales due to lower volume.

Retail Segment. Cost of sales for our retail segment was $287.9 million for 2006, compared to $268.8 million for 2005, an increase of $19.1 million or 7.1%. This increase was primarily attributable to higher motor fuel costs and additional motor fuel and merchandise costs related to 40 convenience stores acquired in July 2006. This increase was partially offset by decreased fuel sales due to lower volume.

Wholesale Marketing Segment. Cost of sales for our wholesale marketing segment was $897.1 million for 2006, compared to $838.1 million for 2005, an increase of $59.0 million or 7.0%. This increase was primarily attributable to higher motor fuel costs, partially offset by lower fuel sales volume.

Operating and Selling Expense, Excluding Depreciation, Amortization and Accretion

Combined. Operating and selling expenses, excluding depreciation, amortization and accretion for 2006 were $64.3 million, compared to $58.7 million for 2005, an increase of $5.6 million or 9.5%. This increase was primarily attributable to higher lease expense related to 40 convenience stores purchased in July 2006. This increase was partially offset by decreased fuel sales due to lower volume. Allocated costs and expenses for administrative and shared services provided by Alon Energy totaled $4.2 million for the year ended December 31, 2006 compared to $5.0 million for the year ended December 31, 2005, a decrease of $0.8 million or 16.0%. This decrease was primarily due to an acquisition by Alon Energy in 2006 that increased the allocation base.

Retail Segment. Operating and selling expenses, excluding depreciation, amortization and accretion for our retail segment for 2006 were $56.2 million, compared to $49.8 million for 2005, an increase of $6.4 million or 12.9%. This increase was primarily attributable to higher lease expense related to 40 convenience stores acquired in July 2006. Costs and expenses for administrative and shared services provided by Alon Energy were not allocated to our retail segment for the years ended December 31, 2005 and 2006, because a limited amount of these services were used by the retail segment.

Wholesale Marketing Segment. Operating and selling expenses, excluding depreciation, amortization and accretion for our wholesale marketing segment for 2006 were $8.1 million, compared to $8.9 million for 2005, a decrease of $0.8 million or 9.0%. This decrease was primarily attributable to decreased fuel sales on lower volume that resulted from a net decline of 52 retail outlets that we supplied with motor fuel. Allocated costs and expenses for administrative and shared services provided by Alon Energy totaled $4.2 million for the year ended December 31, 2006 compared to $5.0 million for the year ended December 31, 2005, a decrease of $0.8 million or 16.0%. This decrease was primarily due to an acquisition of an additional refinery by Alon Energy in 2006, which decreased the wholesale marketing segment’s portion of the allocation base.

Depreciation, Amortization and Accretion

Depreciation, amortization and accretion for 2006 was $6.2 million, compared to $5.0 million for 2005, an increase of $1.2 million or 24.0%. This increase was primarily attributable to 40 convenience stores purchased in July 2006.

Operating Income (Loss)

Combined. Operating income was $9.2 million for 2006, compared to operating loss of $10.5 million for 2005, an increase of $19.7 million. This increase was primarily attributable to improved wholesale gross margins, which were negatively affected in 2005 by hurricanes Katrina and Rita and higher retail operating and selling expenses related to 40 convenience stores purchased in July 2006.

Retail Segment. Operating income for our retail segment was $2.1 million for 2006, compared to $3.9 million for 2005, a decrease of $1.8 million or 46.2%. This decrease was primarily attributable to higher operating and selling expenses related to 40 convenience stores purchased in July 2006.

Wholesale Marketing Segment. Operating income for our wholesale marketing segment was $7.1 million for 2006, compared to an operating loss of $14.4 million for 2005, an increase of $21.5 million or 149.3%. This increase was primarily attributable to greater gross margins, improved product allocation controls at terminals and the implementation of new pricing software, which were negatively affected in 2005 by hurricanes Katrina and Rita.

Interest Expense, Net

Net interest expense was $5.9 million for 2006, compared to $3.8 million for 2005, an increase of $2.1 million or 55.3%. This increase was primarily attributable to the refinancing of existing credit facilities and debt incurred in connection with the 40 convenience stores acquired in July 2006.

Income Tax Expense (Benefit)

Income tax expense was a $1.3 million for 2006, compared to a $5.0 million benefit for 2005, an increase of $6.3 million. This increase resulted from our net loss in 2005 compared to net income in 2006. Our effective tax rate was 37.8% for 2006, compared to an effective tax rate of 35.3% for 2005.

Net Income (Loss)

As a result of the foregoing, net income was $2.2 million for 2006, compared to net loss of $9.2 million for 2005, an increase of $11.4 million.

Liquidity and Capital Resources

Our primary sources of liquidity have historically included cash on hand, cash generated from operating activities, credit facilities, parent company investments and trade credit for fuel purchases provided by our parent company. After giving effect to the corporate reorganization transactions and this offering, our future sources of liquidity will primarily consist of cash on hand and cash generated from operating activities, which we believe will be sufficient to satisfy our anticipated cash requirements associated with operating our business during the next 12 months. Following the offering, we do not expect any further investments from our parent company. We believe that cash generated from operating activities and the proceeds of this offering will be sufficient to satisfy our liquidity needs for the foreseeable future.

Our ability to generate sufficient cash from our operating activities depends on our future performance, which is subject to general economic, political, financial, competitive and other factors beyond our control. In addition, our future capital expenditures and other cash requirements could be higher than we currently expect as a result of various factors, including any expansion of our business.

Depending upon conditions in the capital markets and other factors, we may consider the issuance of debt or equity securities, or other possible capital markets transactions, the proceeds of which could be used to refinance current indebtedness or for other corporate purposes. Pursuant to our growth strategy, we will also consider from time to time acquisitions of, and investments in, assets or businesses that complement our existing assets and businesses. Such transactions, if any, are expected to be financed through cash on hand and from operations, bank borrowings, the issuance of debt or equity securities or a combination of two or more of those sources. Our current credit facility was converted to a term loan in June 2007, and no further amounts are available for borrowing.

Cash Flows

The following table sets forth our combined cash flows for the years ended December 31, 2005, 2006 and 2007 and for the nine months ended September 30, 2007 and 2008:


										Nine Months Ended
	Year Ended December 31,									September 30,
	2005			2006			2007			2007			2008
	(Dollars in thousands)
										(unaudited)

Cash provided by (used in):
Operating activities	$	(16,915	)	$	14,860		$	10,143		$	3,693		$	4,542
Investing activities		(6,216	)		(38,280	)		(85,841	)		(83,052	)		(2,553	)
Financing activities		24,560			23,547			81,429			84,696			(8,115	)

Net increase (decrease) in cash and cash equivalents	$	1,429		$	127		$	5,731		$	5,337		$	(6,126	)

Cash Flows Provided By (Used In) Operating Activities. Net cash provided by operating activities for the nine months ended September 30, 2008 totaled $4.5 million compared to $3.7 million in operating activities for the nine months ended September 30, 2007. Net cash provided by operating activities for the nine months ended September 30, 2008 includes $2.9 million from operations after adjustments for non-cash

charges to depreciation, amortization, accretion, and deferred income taxes, $8.9 million cash provided by reductions in accounts and short-term notes receivable and inventories, and operating cash used in additions to prepaid and other assets totaling $2.7 million and operating cash used in the reduction of current and non-current liabilities, excluding accounts payable, totaling $7.0 million. The $3.7 million provided by operating activities for the nine months ended September 30, 2007 includes increases in accounts and short-term receivables and inventories totaling $6.4 million and operating cash used in additions to prepaid and other assets and reduction in accounts payable totaling $15.0 million. These cost were partially funded by cash generated from operations, after adjustments for non-cash expenses of depreciation, amortization, accretion and deferred income taxes, totaling $21.1 million.

Net cash provided by operating activities for the year ended December 31, 2007 was $10.1 million compared to $14.9 million for the year ended December 31, 2006. Operating cash flows in 2007 were primarily attributable to net income of $11.9 million. Adjustments to reconcile net income to cash generated from operating activities included $10.2 million of depreciation, amortization and accretion expense and $4.7 million in deferred income taxes. The operating funds generated were primarily used to fund an increase of $6.0 million in retail inventories related to the acquisition of 102 stores in June 2007, a reduction of $7.4 million in accounts payable, affiliates, net and a reduction of $6.2 million in trade payables.

Net cash generated from operating activities for the year ended December 31, 2006 was $14.9 million, including $2.2 million attributable to net income and $9.6 million attributable to adjustments from reconciling net income to cash provided to operating activities, including depreciation, amortization and accretion adjustments of $6.2 million. Working capital, net of cash, increased to $22.9 million from $20.7 million, or $2.2 million, and other non-current assets and liabilities generated $0.2 million.

Net cash used in operating activities for the year ended December 31, 2005 was $16.9 million on a net loss of $9.2 million. Other uses of operating funds in 2005 included an increase of $8.7 million in receivables from customers and $3.1 million in the payment of trade payables and other accrued liabilities.

Cash Flows Provided By (Used In) Investing Activities. Net cash used in investing activities was $2.6 million for the nine months ended September 30, 2008 compared to $83.1 million in the nine months ended September 30, 2007. The investing activities during the nine months ended September 30, 2008 included $2.1 million of property and equipment additions, $0.1 million of costs associated with brand image enhancement for our FINA-branded distributors and $0.4 million to purchase additional 7-Eleven license territories. Net cash used in investing activities during the nine months ended September 30, 2007 totaled $83.1 million including $77.4 million cash used in the acquisition of 102 convenience stores in June 2007.

Net cash used in investing activities for the year ended December 31, 2007 was $85.8 million compared to $38.3 million for the year ended December 31, 2006. In 2007, $75.3 million was used in the acquisition of 102 convenience stores in June 2007 and $10.3 million was used for sustaining building and equipment cost in our existing stores and capital expenditures made in connection with the conversion of 78 of the 102 stores acquired in June 2007. Other cash flows used in investing activities included $0.7 million on brand image enhancement for our FINA-branded distributors.

Net cash used in investing activities was $38.3 million for the year ended December 31, 2006 compared to $6.2 million used for the year ended December 31, 2005. In 2006, $27.4 million was used in the acquisition of 40 convenience stores in July 2006 and approximately $10.0 million was used for sustaining capital equipment additions, and building improvements in 7-Eleven minimum standard conversion costs for acquired stores. Other funds used in investing activities also include $0.9 million on image enhancements for our FINA-branded distributors.

Cash Flows Provided By (Used In) Financing Activities. Net cash used in financing activities totaled $8.1 million for the nine months ended September 30, 2008 compared to $84.7 million provided during the nine months ended September 30, 2007. During the nine months ended September 30, 2008, parent investment recognized from the net change in assets contributed from Alon Energy totaled $3.7 million and $4.4 million of cash was used to repay long-term debt and capital lease obligations. During the nine months ended September 30, 2007, the cash flows provided by financing activities included a $46.2 million loan from

Wachovia under the Amended Wachovia Credit Facility, and a $1.8 million repayment of notes payable. Net change in parent investment of assets contributed from Alon Energy was $40.3 million as of September 30, 2007.

Net cash provided from financing activities was $81.4 million for the year ended December 31, 2007 compared to $23.5 million for the year ended December 31, 2006. Financing funds provided for the year ended December 31, 2007 included $46.2 million in loans under the Amended Wachovia Credit Facility and repayment of long-term debt and capital lease obligations totaling $3.7 million. Net change in parent investment of assets totaled $39.0 million, including net cash advances of $10.2 million, for the year ended December 31, 2007.

Net cash provided from financing activities was $23.5 million for the year ended December 31, 2006 compared to $24.6 million for the year ended December 31, 2005. Net cash provided by financing activities in 2006 included $48.6 million in loans under the Original Wachovia Credit Facility and the repayment of $29.9 million of existing credit facilities and other long-term debt. Net change in parent investment totaled $4.8 million including net cash advances of $4.0 million, for the year ended December 31, 2006.

Net cash provided by financing activities for the year ended December 31, 2005 totaled $24.6 million including a $2.2 million repayment of long-term debt and $26.8 million of net assets contributed from Alon Energy. There were no cash advances from Alon Energy for the year ended December 31, 2005.

Summary of Indebtedness

The following table sets forth summary information related to our Amended Wachovia Credit Facility and other material indebtedness as of September 30, 2008:


	As of September 30, 2008
	Amount		Total		Total
	Outstanding		Facility		Availability
	(Dollars in thousands)

Note payable, including current portion:
Amended Wachovia Credit Facility	$	87,614	$	87,614	$	—
Other mortgage indebtedness		1,321		1,321

Total	$	88,935	$	88,935	$	—

Wachovia Credit Facility. On June 29, 2007, Southwest Convenience Stores, LLC (“SCS”), our subsidiary, entered into an amended and restated credit agreement with Wachovia Bank, N.A. (“Wachovia”), as administrative agent. The Amended Wachovia Credit Facility amends and restates the credit agreement dated June 6, 2006, among SCS, Wachovia and the other lenders a party thereto (the “Original Wachovia Credit Facility”).

Borrowings under the Amended Wachovia Credit Facility bear interest at a Eurodollar rate plus 1.5% per annum. Principal payments under the Amended Wachovia Credit Facility began August 1, 2007 with monthly installments based on a 15-year amortization term. As of September 30, 2008 and December 31, 2007, $87.6 million and $92.4 million, respectively, were outstanding under the Amended Wachovia Credit Facility and there were no further amounts available for borrowing.

Prior to the amendment, $48.8 million was outstanding under the Original Wachovia Credit Facility, consisting of a $28.8 million term loan and a $20.0 million revolving credit loan. In connection with the Skinny’s acquisition, SCS converted the existing revolving credit loan of $20.0 million to a term loan and borrowed an additional $46.2 million under the Amended Wachovia Credit Facility on June 29, 2007. All outstanding amounts were combined into a $95.0 million term loan.

The obligations under the Amended Wachovia Credit Facility are secured by a pledge of substantially all of the assets of SCS and Skinny’s, LLC and each of their subsidiaries, including cash, accounts receivable and inventory and is guaranteed by us and Alon Energy.

The Amended Wachovia Credit Facility contains customary restrictive covenants on activities, such as restrictions on liens, mergers, consolidations, sales of assets, additional indebtedness, investments, certain lease obligations and certain restricted payments.

Other Indebtedness. In 2003, we obtained $1.5 million in mortgage loans to finance the acquisition of new retail locations. The interest rates on these loans ranged between 5.5% and 9.7%, with 5- to 15-year payment terms. In September 2007, SCS entered into a lease for $0.2 million in connection with the purchase of retail store equipment. This capital lease is amortized over 60 months with title transferring for one dollar upon termination. The outstanding balance of the mortgage loans and capital lease totaled $1.3 million at September 30, 2008.

Outstanding Letters of Credit. Alon Energy has a letter of credit expiring September 9, 2009 for $2.5 million issued to Ace American Insurance Company for the purpose of our prior workers’ compensation claims. There are no specific claims related to Alon Brands. Alon Energy has an additional letter of credit expiring July 31, 2009 for $0.5 million issued to Kemper Indemnity Insurance Company for environmental claims related to SCS. In the event that these letters of credit are drawn in respect of their claims, we will have an indemnification obligation to Alon Energy for such amount.

Capital Spending

Our expected capital expenditures for 2008 is $11.5 million. As of September 30, 2008, $2.2 million of this amount had been spent. Capital expenditures in 2008 were primarily funded by cash on hand and cash generated from operations.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Contractual Obligations and Commitments

Information regarding our known contractual obligations of the types described below as of December 31, 2007 is set forth in the following table:


	Payments Due by Period
	Less Than						More Than
Contractual Obligations(1)(2)	1 Year		1-3 Years		3-5 Years		5 Years		Total
	(Dollars in thousands)

Note payable obligations	$	6,625	$	12,730	$	12,742	$	61,111	$	93,208
Interest obligation(3)		4,207		6,334		6,858		24,092		41,491
Capital lease obligation		29		62		66		—		157
Operating lease obligations		5,507		9,459		7,577		41,187		63,730
Pension benefit obligations(4)		—		280		—		400		680

Total obligations	$	16,368	$	28,865	$	27,243	$	126,790	$	199,266


(1)		Excludes royalty fees relating to our license agreement with 7-Eleven. Although we currently plan to continue using the 7-Eleven trademark until circumstances require a change, royalty payments would cease immediately upon termination of the agreement. Using our 2007 royalty payment of $2.8 million to 7-Eleven as an estimate, royalty fees over the next five years would total $14.0 million. The actual royalty fees paid to 7-Eleven in the future will vary based on the gross merchandise sales of our 7-Eleven stores and the continuation of the license agreement.


(2)		Excludes costs and expenses related to the services provided to us by Alon Energy pursuant to our corporate services agreement due to our ability to terminate the services at any time. Using the costs and expenses of $2.5 million related to these services provided by Alon Energy in 2007 as an estimate, the costs and expenses over the next five years would total $12.5 million.


(3)		Represents an estimate of the interest payable under our Amended Wachovia Credit Facility. This interest obligation is based on an estimate of $50.0 million of indebtedness subject to a fixed interest rate of 4.75% and $42.4 million of indebtedness subject to variable interest rates ranging from 2.375% in 2009 to 4.65% in 2013. The variable interest rates are based on projected LIBOR rates plus 1.5%.


(4)		Represents an estimate of future expected funding requirements related to our unfunded defined benefit pension plan for an executive of the retail segment. See Note 14 to our audited financial statements included elsewhere in this prospectus.

Quantitative and Qualitative Disclosures About Market Risk

Changes in motor fuel prices and interest rates are our primary sources of market risk. Our board of directors oversees all activities associated with the identification, assessment and management of our market risk exposure.

Motor Fuel Price Risk

We are exposed to market risks related to the volatility of motor fuel prices in our retail segment. Our financial results can be affected significantly by fluctuations in these prices, which depend on many factors, including demand for crude oil, gasoline, diesel and other refined products, changes in the economy, worldwide production levels, worldwide inventory levels and governmental regulatory initiatives.

Our retail segment maintains inventories of motor fuels, the values of which are subject to wide fluctuations in market prices driven by world economic conditions, regional and global inventory levels and seasonal conditions. As of September 30, 2008, we held approximately 2.1 million gallons of motor fuel at our retail convenience stores. The inventory cost of our motor fuel inventories is determined under the first-in, first-out (FIFO) method.

Interest Rate Risks

As of September 30, 2008, $87.6 million of our outstanding debt was at floating interest rates. Outstanding borrowings under the Amended Wachovia Credit Facility bear interest at the Eurodollar rate plus 1.5% per annum. As of September 30, 2008, we had interest rate swap agreements with a notional amount of $50.0 million and a fixed interest rate of 4.75%. An increase of 1.0% in the Eurodollar rate would result in an increase in our interest expense of approximately $0.4 million per year.

Critical Accounting Policies

We prepare our combined financial statements in conformity with GAAP. In order to apply these principles, we must make judgments, assumptions and estimates based on the best available information at the time that affect the reported amount of revenues and expenses during the reporting period and the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements. Actual results may differ based on the accuracy of the information utilized and subsequent events, some of which we may have little or no control over. Our critical accounting policies, which are discussed below, could materially adversely affect the amounts recorded in our combined financial statements.

Critical accounting policies are those we believe are both most important to the portrayal of our financial condition and results of operations, and require our most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Judgments and uncertainties affecting the application of those policies may result in materially different amounts being reported under different conditions or using different assumptions. Our accounting policies are described in the notes to our audited combined financial statements included elsewhere in this prospectus. We believe the following policies to be the most critical in understanding the judgments that are involved in preparing our combined financial statements.

Inventory. Our inventories are stated at the lower of cost or market. Materials and supplies are stated at average cost. Cost for our motor fuels inventory is determined under the first-in, first-out (FIFO) method. Our convenience store merchandise inventory is determined under the retail inventory method.

Environmental and Other Loss Contingencies. We record liabilities for loss contingencies, including environmental remediation costs, when such losses are probable and can be reasonably estimated. Our environmental liabilities represent the estimated cost to investigate and remediate contamination at our

properties. Our estimates are based upon internal and third-party assessments of contamination, available remediation technology and environmental regulations. Accruals for estimated liabilities from projected environmental remediation obligations are recognized no later than the completion of the remedial feasibility study. These accruals are adjusted as further information develops or circumstances change. We do not discount environmental liabilities to their present value unless payments are fixed and determinable, and we record them without considering potential recoveries from third parties. Recoveries of environmental remediation costs from third parties are recorded as assets when receipt is deemed probable. We update our estimates to reflect changes in factual information, available technology and applicable laws and regulations.

Goodwill and Intangible Assets. Goodwill represents the excess of the cost of an acquired entity over the fair value of the assets acquired less liabilities assumed. Intangible assets are assets that lack physical substance (excluding financial assets). Intangible assets with finite useful lives are amortized on a straight-line basis over one to 40 years. Goodwill acquired in a business combination and intangible assets with indefinite useful lives are not amortized. Goodwill and intangible assets not subject to amortization are tested for impairment annually or more frequently if events or changes in circumstances indicate the asset might be impaired. We use December 31 of each year as our valuation date for annual impairment testing purposes.

Impairment of Long-Lived Assets. We account for impairment of long-lived assets in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. In evaluating our assets, long- lived assets and certain identifiable intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying value of an asset to future net cash flows expected to be generated by the asset. If the carrying value of an asset exceeds its expected future cash flows, an impairment loss is recognized based on the excess of the carrying value of the impaired asset over its fair value. These future cash flows and fair values are estimates based on our judgment and assumptions. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs of disposition.

Recent Accounting Pronouncements

In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections (“SFAS 154”). SFAS 154 establishes, unless impracticable, retrospective application as the required method for reporting a change in accounting principle in the absence of explicit transition requirements specific to a newly adopted accounting principle. This statement is effective for all accounting changes and any error corrections occurring after January 1, 2006. The adoption of SFAS 154 did not have a material effect on the Company’s financial position or results of operations.

In June 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109 (“FIN 48”). This interpretation prescribes a “more-likely-than-not” recognition threshold and measurement attribute (the largest amount of benefit that is greater than 50.0% likely of being realized upon ultimate settlement with tax authorities) for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This interpretation also provided guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. Alon Energy performed a review of its tax positions and adopted the provisions of FIN 48 on January 1, 2007. The adoption of FIN 48 did not have a material effect on the Company’s results of operations or financial position.

In June 2006, the FASB ratified the consensus on EITF Issue No. 06-3; How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (“EITF 06-3”) (that is, gross versus net presentation). The scope of EITF 06-3 includes any tax assessed by a governmental authority that is imposed concurrent with or subsequent to a revenue-producing transaction between a seller and a customer. For taxes within the scope of this issue that are significant in amount, the consensus requires the following disclosures: (i) the accounting policy elected for these taxes and (ii) the amount of the taxes reflected gross in the income statement on an interim and annual basis for all periods presented. The disclosure of those taxes can be provided on an aggregate basis. We adopted the consensus on January 1, 2007, and it had no material effect on our results of operations or financial position. Excise taxes on motor fuel sales by the retail segment is presented on a gross basis with supplemental information regarding

the amount of such taxes included in revenues provided in Note 2 (s) to our audited combined financial statements. All other excise taxes are presented on a net basis in the Combined Statements of Operations.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS 157”), which defines fair value, establishes a framework for measuring fair value under GAAP, and expands disclosures about fair value measures. SFAS 157 is effective for fiscal years beginning after November 15, 2007, with early adoption encouraged, provided the reporting entity has not yet issued financial statements for that fiscal year, including financial statements for an interim period within that fiscal year. In February 2008, the FASB issued FASB Staff Position (“FSP”) FAS 157-2, Effective Date of FASB Statement No. 157 , to provide a one-year deferral of the effective date of SFAS 157 for nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed in financial statements at fair value on a recurring basis (that is, at least annually). For nonfinancial assets and nonfinancial liabilities subject to the deferral, the effective date of SFAS 157 is postponed to fiscal years beginning after November 15, 2008 and to interim periods within those fiscal years. The provisions of SFAS 157 are to be applied on a prospective basis, with the exception of certain financial instruments for which retrospective application is required. Except for nonfinancial assets and nonfinancial liabilities subject to the deferral, we adopted SFAS 157 on January 1, 2008, with no impact on our combined financial statements.

SEC Staff Guidance — Quantifying Financial Statement Misstatements. During September 2006, the SEC Staff issued Staff Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current year Financial Statements, which discusses the process of quantifying financial statement misstatements. During the fourth quarter of 2006, we adopted this guidance, and it had no material effect on our combined financial statements.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities including an Amendment of FASB Statement No. 115 (“SFAS 159”). SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. SFAS 159 is effective for fiscal years beginning after November 15, 2007. The adoption of SFAS 159 did not materially effect our financial position or results of operations since we did not elect to record any of our financial assets or financial liabilities at fair value.

In December 2007, the FASB issued SFAS No. 141(R), Business Combinations (“SFAS 141(R)”), which requires that the purchase method of accounting be used for all business combinations. SFAS 141(R) requires most identifiable assets, liabilities, non-controlling interests and goodwill acquired in a business combination be recorded at fair value. SFAS 141(R) applies to all business combinations, including combinations by contract alone. SFAS No. 141(R) is effective for periods beginning on or after December 15, 2008 and earlier application is prohibited. SFAS 141(R) will be applied to business combinations occurring after the effective date.

In December 2007, the FASB issued SFAS No. 160, Non-controlling Interests in Combined Financial Statements, an Amendment of ARB 51 (“SFAS 160”), which requires non-controlling interests (previously referred to as minority interests) to be treated as a separate component of equity. SFAS 160 is effective for periods beginning on or after December 15, 2008. Earlier application is prohibited. SFAS 160 will be applied prospectively to all non-controlling interests. Comparative period information must be recast to classify non-controlling interests in equity, attribute net income and other comprehensive income to non-controlling interests and provide other disclosures required by SFAS 160. We will adopt SFAS 160 on January 1, 2009 and do not expect it to materially affect our financial position or results of operations.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities (“SFAS 161”). This standard is intended to improve financial reporting by requiring transparency about the location and amounts of derivative instruments in an entity’s financial statements, how derivative instruments and related hedged items are accounted for under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, and how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. The provisions of SFAS 161 are effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. We do not believe the adoption of SFAS 161 will have a significant effect on our combined financial position, results of operations or cash flows. We will adopt SFAS 161 on January 1, 2009.

In April 2008, the FASB issued FASB Staff Position (“FSP”) No. 142-3, Determination of the Useful Life of Intangible Assets (“FSP 142-3”). FSP 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets. FSP 142-3 is effective for fiscal years beginning after December 15, 2008. Early adoption is prohibited. The adoption of this standard is not expected to have a material effect on our financial position, results of operations, or cash flows.

In December 2008, the FASB issued FSP No. 140-4 and FIN 46R-8, Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities (“FSP 140-4 and FIN 46R-8”). FSP 140-4 and FIN 46R-8 require additional disclosures about transfers of financial assets and involvement with variable interest entities. The requirements apply to transferors, sponsors, servicers, primary beneficiaries, and holders of significant variable interests in a variable interest entity or qualifying special purpose entity. FSP 140-4 and FIN 46R-8 are effective for financial statements issued for interim or annual periods ending after December 15, 2008. We will adopt FSP 140-4 and FIN 46R-8 on January 1, 2009. FSP 140-4 and FIN 46R-8 affect disclosures only and therefore have no impact on our financial position, results of operations, or cash flows.

BUSINESS

Our Company

We are the largest 7-Eleven licensee in the United States, and we are the sole licensee of the FINA brand for motor fuels in the South Central and Southwestern United States. Our business consists of two operating segments: retail and wholesale marketing. As of September 30, 2008, our retail segment operated 306 convenience stores in Central and West Texas and New Mexico, substantially all of which are operated under the 7-Eleven and FINA brands. Through our 7-Eleven licensing agreement, we have the exclusive right to operate 7-Eleven convenience stores in substantially all of our existing retail markets and many surrounding areas. Our wholesale marketing segment markets and supplies motor fuels under the FINA brand and provides brand support and payment services to distributors supplying over 950 locations, including all 295 company-owned stores that sell motor fuel. In markets where we choose not to supply fuel products we also sub-license the FINA brand and provide the same brand support and payment services to distributors supplying approximately 100 additional locations in these regions. We believe our leading brand offerings, advantageous fuel supply agreement, leading market position and complementary business model provide us with competitive advantages and position us well for continued growth.

Historically, most of our business was accounted for as an operating segment of Alon Energy, an independent refining company listed on the New York Stock Exchange, or NYSE, under the symbol “ALJ.” Alon Energy owns and operates four crude oil refineries located in Texas, California, Louisiana and Oregon. After completion of this offering, Alon USA, LP, a subsidiary of Alon Energy, will continue to own approximately % of our common stock and all of our convertible preferred stock. Alon Energy is majority-owned by Alon Israel Oil Company, Ltd., or Alon Israel, an Israeli limited liability company and one of the largest operators of retail gasoline and convenience stores in Israel. Our ongoing relationships with Alon Energy and Alon Israel provide us with secure fuel supply and retail operating expertise, which we believe provide us with a competitive advantage.

Our History

In November 2008 Alon Brands, Inc., a Delaware corporation, was formed as a result of the conversion of Alon USA Interests, LLC, which was formed as a Texas limited liability company in September 2002. See “Corporate Reorganization Transactions.” Prior to this offering, we have operated our businesses as a segment of Alon Energy. In June 2007, we completed the acquisition of Skinny’s, a privately held company that owned and operated 102 convenience stores in Central and West Texas and in July 2006, we completed the purchase of 40 retail convenience stores from Good Time Stores, Inc. in El Paso, Texas. Prior to the corporate reorganization transactions to be completed immediately prior to this offering, we have not operated independently of Alon Energy.

Our Industry

Convenience Stores. Our retail segment operates within the large and growing U.S. convenience store industry. According to NACS, sales in the industry have grown from $337.0 billion in 2003 to $577.4 billion in 2007, which represents a CAGR of 14.4%. This industry is highly fragmented, with the 10 largest convenience store operators controlling less than 9% of the total convenience stores in 2007. Furthermore, convenience store operators with 50 or fewer stores accounted for approximately 75% of all convenience stores in 2007. We believe we will continue to benefit from several key industry trends and characteristics, including:


	•	Continuing shift of consumer food and general merchandise purchases away from traditional supermarkets to convenience stores and other alternative formats;

	•	Increasing size and complexity of the big box retail format, driving consumers to small box retailers, such as convenience stores, to meet their demand for speed and convenience in daily shopping needs;


	•	Changing consumer demographics and eating patterns resulting in more food consumed away from home;

	•	Increasing significance of the advantages of scale given the highly fragmented nature of the industry; and

	•	Continuing opportunities to grow through acquisitions given industry fragmentation and continued divestitures of retail convenience stores by major oil companies.

Motor Fuel Marketing and Supply. In recent years, the market for wholesale distribution of motor fuel products has experienced a number of changes which we believe provide opportunities to grow our wholesale marketing segment, including:


	•	Consolidation among major petroleum product producers over the last 25 years, which has resulted in fewer recognizable brands available to consumers;


	•	A 37% reduction in the number of operating crude oil refineries over the last 25 years, which has resulted in less access to product and increased the importance of obtaining a secure fuel supply source; and

	•	Increased scrutiny by oil companies and refiners in selecting distributors, with a preference for larger distributors capable of handling higher volumes, limiting smaller distributors’ access to product.

Our Competitive Strengths

We believe the following competitive strengths differentiate us from our competitors:

Attractive Wholesale Marketing Segment. Our wholesale marketing segment supplies distributors with motor fuel under the FINA brand and provides payment card processing, branding and construction incentives, and signage and marketing incentives. We provide these services only to distributors, as opposed to individual dealers or retailers, which lowers our credit risk by concentrating our customer base to a smaller number of more creditworthy accounts. Given the relatively low operating costs and capital requirements of our wholesale marketing segment, we believe this segment will generate free cash flow in the future which can be utilized to fund our growth strategy.

Advantageous Long-Term Fuel Supply Agreement. Immediately prior to the consummation of this offering, we will enter into a long-term fuel supply agreement with Alon Energy to secure substantially all of our motor fuel requirements. This new agreement will provide cost-advantaged pricing and a secure fuel supply. This agreement will also provide us a platform for growth in existing and new markets, such as Louisiana and Southern California, where Alon Energy owns and operates refineries that produce motor fuels.

Wichita Falls, Texas. We also have a significant presence in Albuquerque, New Mexico. Approximately 92% of our stores are located in Central and West Texas, which include population and employment growth areas exceeding national averages based on U.S. Census data. We believe we will continue to benefit from the regional economy’s focus on energy and agriculture and the stability provided by military bases in the region.

Complementary Business Model. We believe our wholesale marketing operations and related brand sub-licensing provide us with a diverse source of revenues to compliment our retail operations. In addition to increasing our overall scale and providing us with additional sales and income opportunities over other convenience store operators, our complementary wholesale operations also minimize some of the risks that convenience store-only operators face, such as higher payment card expenses and volatility in retail motor fuel margins. For example, revenues generated from our wholesale marketing segment’s payment card processing services partially offset our retail segment’s payment card expenses. Furthermore, we believe our complementary operations also enhance our flexibility to grow in existing and new markets and enhance the overall stability of our business.

Our Strategy

We believe there are significant opportunities to continue to expand our businesses and increase our sales and profitability through the implementation of the following strategies:


	•	Introducing new products and services;

	•	Realizing the benefits of our recent fuel equipment upgrades;

	•	Optimizing our fuel pricing to improve overall retail profits and drive in-store traffic;

	•	Completing selective retail store remodels and equipment upgrades;

	•	Improving product positioning of higher margin, high volume product categories; and

	•	Better utilizing our point-of-sale technologies.

platform for future growth and that acquisitions of additional stores provides us the opportunity to increase our overall profitability. We expect to continue to grow our retail store base through acquisitions in markets where we are the exclusive licensee of the 7-Eleven brand.

Retail

As of September 30, 2008, we operated 306 retail convenience stores located in Central and West Texas and New Mexico. Our convenience stores, substantially all of which operate under the 7-Eleven and FINA brands, typically offer motor fuel, food products, tobacco products, non-alcoholic and alcoholic beverages and general merchandise to our customers. We believe we are the largest independent operator of retail convenience stores in each of the cities of Abilene, Big Spring, El Paso, Lubbock, Midland, Odessa and Wichita Falls, Texas. We also have a significant presence in Waco, Texas and Albuquerque, New Mexico. Our markets are characterized by high population and employment growth, particularly in West and Central Texas, and many of our geographic regions have remained economically robust given the regional economies’ focus on energy and agriculture and the presence of military bases. Substantially all of our motor fuel sold at our retail convenience stores is supplied by our wholesale marketing segment. We are the largest independent licensee of the 7-Eleven brand in the United States, and we have an exclusive license to use the well-known FINA brand in Texas, Oklahoma, New Mexico, Arizona, Arkansas, Louisiana, Colorado and Utah. In addition, we operate 24 stores near Waco, Texas that are outside of our 7-Eleven license area and are operated under the Skinny’s brand.

For the year ended December 31, 2007, our retail segment generated revenues of $480.1 million and gross profit of $88.0 million. For the nine months ended September 30, 2008, our retail segment generated revenues of $459.0 million and gross profit of $75.8 million. The retail segment had total assets of $184.4 million as of September 30, 2008. The following table sets forth revenues and gross profits from our retail segment for those periods:


	Year Ended December 31, 2007								Nine Months Ended September 30, 2008
	Revenues				Gross Profit				Revenues				Gross Profit
	(Dollars in thousands)

Motor fuel	$	259,287	54.0	%	$	19,478	22.1	%	$	261,073	56.9	%	$	14,612	19.3	%
Merchandise		213,433	44.5			61,114	69.5			192,325	41.9			55,538	73.3	%
Other, net		7,374	1.5			7,374	8.4			5,606	1.2			5,606	7.4	%


Total	$	480,094	100.0	%	$	87,966	100.0	%	$	459,004	100.0	%	$	75,756	100.0	%

Store Locations

As of September 30, 2008, 283 of our 306 retail convenience stores were located in Central and West Texas and 23 were located in or near Albuquerque, New Mexico. Two hundred eighty-two of our stores are operated under the 7-Eleven and FINA brands, while the remaining stores operate under the Skinny’s and FINA brands. Our stores are generally open 24 hours, 365 days a year, and substantially all of our stores sell motor fuel. Our typical store sizes range from 2,000 to 2,500 square feet.

Merchandise and Foodservice Sales

Our retail convenience stores typically offer a variety of food products, tobacco products, carbonated and non-carbonated and non-alcoholic and alcoholic beverages, snacks, groceries and non-food merchandise. Our stores generally stock merchandise that are tailored to local market preferences. Our 7-Eleven branded stores

carry products such as Slurpee^® frozen carbonated beverages, Big Gulp^® beverages and Big Bite^® hot dogs, which are unique to the 7-Eleven brand. In addition, we operate ATM and money order programs in each of our stores and also provide other products and services such as lottery, prepaid telephone cards and gift cards.

Our position as a 7-Eleven licensee allows Alon Brands full access to 7-Eleven’s foodservice programs and consulting and we are utilizing this benefit in the evaluation of 7-Eleven’s proprietary foodservice offerings. 7-Eleven has prepared on-site and commissary distributed food programs that could be introduced in many of our markets. We are also exploring third-party foodservice offerings that may have more appeal in some regional markets. In 2009, we intend to tailor our foodservice offerings to the local demographics in selected markets that we serve.

The following table sets forth the percentage by category of our retail merchandise revenues based on available category sales data for substantially all of our retail stores at the end of period:


	Nine Months
	Ended
	September 30,
	2008(1)

Beer, wine and liquor		25.3	%
Cigarettes and tobacco		27.1
Fountain and package beverages		19.9
Foodservice		0.8
Other merchandise		26.9

Total		100	%


	(1)	Category sales for the nine months ended September 30, 2008 is based on available data from our retail stores’ point-of-sale checkout or back office systems. This category sales data excludes stores that had not yet been converted to these systems during the period presented. As of January 1, 2008, 286 stores had implemented the point-of-sale or back office reporting systems, and as of September 30, 2008, 302 of our 306 stores are included in the category sales data.

Retail Management, Merchandise Distribution and Supply

Each of our stores has a store manager who supervises a staff of full-time and part-time employees. The number of employees at each convenience store varies based on the store’s size, sales volume and hours of operation. Typically, a geographic group of six to ten stores is managed by a supervisor who reports to a district manager. Five district managers are responsible for a varying number of stores, depending on the geographic size of each market and the experience of each district manager. These district managers report directly to our retail management headquarters in Odessa, Texas. We also maintain a regional retail operations office in Abilene, Texas.

The merchandise requirements of our convenience stores are serviced at least weekly by over 100 direct-store delivery, or DSD, vendors. In order to minimize costs and facilitate deliveries, we utilize a single wholesale distributor, McLane Company, Inc., for non-DSD merchandise products. We purchase our products from McLane at cost plus an agreed-upon percentage mark-up. For the year ended December 31, 2007, approximately 50% of our retail merchandise sales were purchased from McLane. Our current supply contract with McLane expires in December 2011. We typically do not have contracts with our DSD vendors.

Retail Motor Fuel Sales

We offer FINA-branded motor fuel at 295 of our retail convenience stores. We purchase substantially all of our motor fuel requirements for resale at our convenience stores from our wholesale marketing segment, a majority of which is supplied from Alon Energy’s Big Spring, Texas refinery. Fuel is purchased as needed to replenish supply at each retail store location.

The following table sets forth certain information regarding our retail motor fuel sales for the periods indicated below:


	Year Ended December 31,						Nine Months Ended September 30,
	2005		2006		2007		2007		2008

Motor fuel sales (in thousands)(1)	$	193,232	$	194,025	$	259,287	$	179,989	$	261,073
Motor fuel gallons sold (in thousands)		87,714		75,969		91,945		65,075		73,092
Average gallons sold per store (in thousands)		535		414		364		278		247
Average retail price per gallon(1)	$	2.20	$	2.55	$	2.82	$	2.77	$	3.57
Retail gross profit (cents per gallon)(2)		17.1¢		19.2¢		21.2¢		18.9¢		20.0¢
Stores selling motor fuel		164		203		297		298		295


(1)		Includes excise tax.

(2)		Before payment card expense.

7-Eleven and FINA License Agreements

We are party to a license agreement with 7-Eleven, Inc., which gives us a perpetual license to use the 7-Eleven trademark, service name and trade name in West Texas and a majority of the counties in New Mexico in connection with our retail store operations. 7-Eleven has advised us that we are the largest 7-Eleven licensee in the United States based on number of stores.

The FINA brand is a well-recognized trade name in the South Central and Southwestern United States. We sub-license the right to use the FINA name and related trademarks within Texas, Oklahoma, New Mexico, Arizona, Arkansas, Louisiana, Colorado and Utah from Alon Energy, which has an exclusive license through 2012 to use the FINA name and related trademarks in connection with the sale (including resale by distributors) of motor fuels in these areas. Prior to the expiration of this license, we intend to review our alternatives for branding our motor fuel, including seeking to extend our FINA sub-license, licensing a new brand or developing our own motor fuel brand.

Technology

We have implemented a point-of-sale checkout system at approximately two-thirds of our convenience stores and are in the process of implementing the system at our remaining stores. This system includes merchandise scanning, pump control, peripheral device integration and daily operations reporting. This system enhances our ability to offer a greater variety of promotions with a high degree of flexibility regarding definition (by store, group of stores, region or other subset of stores) and duration. We also are able to receive enhanced management reports that will assist our decision-making processes. We believe this system will allow our convenience store managers to spend less time preparing reports and more time analyzing these reports to improve convenience store operations. This system also includes shortage-control tools. We plan to use this system as a platform to support other marketing technology products, including interactive video and bar-code coupons at the pump.

Wholesale Marketing

Our wholesale marketing segment purchases motor fuel, primarily from Alon Energy, and resells the motor fuel through various terminals to supply approximately 950 locations, including both our retail locations and other FINA-branded independent locations. For the year ended December 31, 2007, our wholesale marketing segment sold 458.6 million gallons of branded motor fuel for distribution to our retail convenience stores and other retail distribution outlets. Our branded wholesale motor fuel is sold under the FINA brand, and we have an exclusive license through 2012 to use the FINA trademark in the wholesale distribution of motor fuel within Texas, Oklahoma, New Mexico, Arizona, Arkansas, Louisiana, Colorado and Utah.

The following table summarizes fuel gallons distributed to our company-owned stores and to third-party distributors for the periods indicated below:


	Year Ended December 31,															Nine Months Ended September 30,
	2005					2006					2007					2007					2008
	Gallons		%			Gallons		%			Gallons		%			Gallons		%			Gallons		%
	(Gallons in thousands)

Company-owned retail stores		87,181		14.6	%		72,215		13.3	%		88,320		19.3	%		61,913		17.5	%		69,776		26.1	%
Third-party distributors		511,784		85.4			471,573		86.7			370,261		80.7			291,617		82.5			197,700		73.9

Total		598,965		100.0	%		543,788		100.0	%		458,581		100.0	%		353,530		100.0	%		267,476		100.0	%

The following table highlights certain information regarding our wholesale marketing motor fuel sales to third-party distributors (excludes sales to retail segment) for the periods indicated below:


	Year Ended December 31,							Nine Months Ended September 30,
	2005			2006		2007		2007		2008

Motor fuel sales (in thousands)	$	831,005		$	910,959	$	792,273	$	608,529	$	586,755
Motor fuel gallons sold (in thousands)		511,784			471,573		370,261		291,617		197,700
Average wholesale price per gallon	$	1.62		$	1.93	$	2.14	$	2.09	$	2.97
Wholesale gross profit cents per gallon		(1.4	)¢		3.0¢		7.1¢		8.0¢		0.0¢

Distribution Network and Distributor Arrangements

We purchase our motor fuel from Alon Energy and then resell the fuel to our retail locations and to approximately 70 third-party distributors, who then supply and resell to other retail outlets. The supply agreements we maintain with our distributors are generally for three-year terms and usually include 10-day payment terms. All supplied distributors comply with wholesale marketing’s ratability program, which involves incentives and penalties based on the consistency of their purchases.

Supply Arrangement

Immediately prior to the consummation of this offering, we will enter into a long-term fuel supply agreement with Alon Energy. Under this agreement, pricing terms may be adjusted annually providing flexibility to respond to significant changes in the wholesale marketing segment. The agreement’s volume requirements will allow us to acquire a portion of our motor fuels from other suppliers in order to take advantage of below-market or distress pricing.

FINA Brand Sub-Licensing

Our wholesale marketing segment also sub-licenses the FINA brand and provides payment card processing services, advertising programs and loyalty and other marketing programs to 15 distributors supplying approximately 100 additional stores. We offer FINA brand sub-licensing to distributors supplying geographic areas where we choose not to supply motor fuels. This sub-licensing program allows us to expand the geographic footprint of the FINA brand, thereby increasing its recognition. Each sub-licensee pays royalties on a per gallon basis and is required to comply with the FINA minimum standards program and utilize our payment card processing services.

FINA Minimum Standards Program

Alon Brands has an established image consistency program where each FINA branded facility in our network is inspected annually by an independent third-party organization. Each facility is evaluated using specific criteria and image scores based upon these criteria are communicated to the controlling distributor. Any non-complying facilities are enrolled in a specific improvement program to bring the facility up to our FINA standards.

Payment Card Processing

We believe that offering payment card processing services to our distributors and FINA-brand sub-licensees provides us a significant advantage when marketing the FINA brand. We provide these services through a third-party provider, which acts as a clearinghouse with MasterCard, VISA, American Express, Discover and debit card issuers. Our customers’ payment card transactions are communicated directly to the third-party provider, which then transmits those transactions to the appropriate card issuers.

Our fees payable to MasterCard, VISA, American Express, Discover and debit card issuers are contracted through the third-party provider. Although our fees may vary by card type, we charge our customers, including our retail convenience stores, a percentage-based fee plus a transaction fee for each card type to simplify the fee structure. Our rates are designed to provide a margin on the difference between the fees paid by our distributors and fees charged by the various card associations. The fees are not designed to be a major profit center, but rather to cover overhead and ancillary expenses of maintaining the payment card network system.

For MasterCard, VISA, American Express, Discover and debit cards, the third-party provider provides us with daily settlement of transactions. We generally provide our customers with payment or credit for transactions within five days. We also generally retain the settlement funds for such payment and transactions that we process as a credit against any payments due to us from our distributors or sub-licensees. As a result, offering these payment services also reduces our credit risk.

Technology

Our wholesale segment relies on technology to enhance our operations and provide meaningful data and tools for management to evaluate and manage the profitability of our motor fuel distribution business. We have a licensing arrangement with a third-party provider for payment card processing and clearinghouse services for payment card purchases at many of our retail segment’s stores, as well as all of the third-party retail locations supplied by our wholesale distributors or the sub-licensed FINA stores for which we provided branded services. Under our arrangement with the third-party provider, we sub-license the proprietary software to each of these retail locations that provides secure data transfer of payment card transactions directly to the third-party provider for daily processing of each payment card transaction at these retail locations. We also license JD Edwards enterprise software tailored for our wholesale business that collects and analyzes the data from each of these payment card transactions that we process, providing our management with valuable information on consumer purchasing tendencies and trends. Additionally, we use a proprietary software program to further break-down and analyze our wholesale segment’s payment card transactions.

Our wholesale segment also licenses pricing optimization software that assists management in modeling and making timely pricing decisions in order to maximize our gross margin in motor fuel sales. In addition, we utilize licensed software to manage our customers’ motor fuel purchases and delivery arrangements.

Competition

The retail convenience store industry is highly competitive given its relative ease of entry and frequently changing competitors and offerings. Our retail segment competes not only with other retail convenience store chains and independent store operators, but also with motor fuel stations, supermarkets, discount stores, drugstores, club stores and other merchandise and motor fuel retailers. Our major retail competitors in our markets include Valero, Chevron, ConocoPhillips, Town & Country, Circle K, Western Refining and various other independent operators. The principal factors affecting competition among our retail convenience stores are location and ease of access, price, brand recognition, store appearance and cleanliness, product quality and breadth of product offering. We expect to continue to face competition from large, integrated oil companies, as well as from other convenience stores that sell motor fuels. Additionally, national grocery and dry goods stores, such as Wal-Mart, Kroger and Costco, as well as regional grocers and retailers, are increasingly entering the motor fuel retailing business. Many of these competitors are substantially larger than we are and, because of their diversity, integration of operations and greater resources, may be better able to withstand adverse market conditions and competitive pricing.

Our wholesale marketing segment competes with major oil companies that distribute their own products, as well as other independent motor fuel distributors. The principal competitive factors affecting our wholesale motor fuel marketing segment are brand, price, quality of product, service quality, reliability and availability of supply.

Trade Names, Service Marks and Trademarks

Pursuant to our license agreement, we have contractual rights to use the 7-Eleven name and certain 7-Eleven-owned trademarks, service marks and other intellectual property related to the 7-Eleven brand and store concept. We also have contractual rights pursuant to our FINA license agreement to be the exclusive marketer of motor fuel under the FINA brand in Texas, Oklahoma, New Mexico, Arizona, Arkansas, Louisiana, Colorado and Utah, and use the FINA trade name, and we own the proprietary trade dress used on our retail convenience store motor fuel canopies and other signage. We also own and use the “Alon Brands” and “Skinny’s” names and logos as our trademarks.

Governmental Regulation and Environmental Matters

We are subject to regulation under numerous federal, state and local laws. The following description highlights what we believe are the material regulatory and environmental compliance matters affecting our operations.

Motor Fuel Marketing

The Petroleum Marketing Practices Act, or PMPA, is a federal law that governs the relationship between a refiner and a distributor pursuant to which the refiner permits a distributor to use a trademark in connection with the sale or distribution of motor fuel. We are subject to the provisions of the PMPA because we sub-license the FINA brand to our distributors in connection with their distribution and sale of motor fuels. The PMPA provides that we may not terminate or fail to renew our distributor contracts unless certain preconditions or grounds for termination or nonrenewal are met and notice requirements are satisfied. If we terminate or fail to renew one or more of our distributor contracts in the absence of the specific grounds permitted by the PMPA or fail to comply with the prescribed notice requirements in effecting a termination or nonrenewal, those distributors may file lawsuits against us to compel continuation of their contracts or to recover damages from us.

Environmental Compliance

Our business is subject to various federal, state and local environmental laws and regulations, including those relating to underground storage tanks, the release or discharge of regulated materials into the air, water and soil, the generation, storage, handling, use, transportation and disposal of hazardous materials, the exposure of persons to hazardous materials, remediation of contaminated soils and groundwater and the health and safety of our employees. We have incurred and will continue to incur costs in order to comply with applicable environmental requirements.

We store motor fuel in underground storage tanks at our retail locations and are required to make financial expenditures to comply with federal, state and local regulations governing the operation and closure of such underground storage tanks. Pursuant to the Resource Conservation and Recovery Act of 1976, as amended, the Environmental Protection Agency, or EPA, has established a comprehensive regulatory program for the detection, prevention, investigation and cleanup of leaking underground storage tanks. Compliance with existing and future environmental laws regulating underground storage tank systems of the kind we use may require significant capital expenditures in the future. These expenditures may include upgrades, modifications and the replacement of underground storage tanks and related piping to comply with current and future regulatory requirements designed to ensure the detection, prevention, investigation and remediation of leaks and spills.

In addition, the Federal Clean Air Act and similar state laws impose requirements on emissions to the air from motor fueling activities in certain areas of the country, including those that do not meet state or national

ambient air quality standards. These laws may require the installation of vapor recovery systems to control emissions of volatile organic compounds to the air during the motor fueling process. The regulatory requirements with respect to underground storage tank systems of the kind we use may become more stringent or apply to an increased number of underground storage tanks in the future, which would require additional, potentially material, expenditures.

We are required to comply with federal and state financial responsibility requirements to demonstrate that we have the ability to pay for cleanups or to compensate third parties for damages incurred as a result of a release of regulated materials from our underground storage tank systems. We seek to comply with these requirements by maintaining insurance, which we purchase from private insurers, and in certain circumstances, rely on applicable state trust funds, which are funded by underground storage tank registration fees and taxes on wholesale purchase of motor fuels. The coverage afforded by each fund varies and is dependent upon the continued maintenance and solvency of each fund. More specifically, in Texas, we meet our financial responsibility requirements by state trust fund coverage for claims asserted prior to December 1998 (claims reported after that date are ineligible for reimbursement) and meet such requirements for claims asserted after that date through insurance purchased from a private insurance company. In New Mexico, we meet our financial responsibility requirements by participating in state trust fund coverage.

We are currently responsible for investigating and remediating contamination caused by leaking underground storage tanks at a number of our current and former properties. We are entitled to reimbursement for certain of these costs under various third-party contractual indemnities, state trust funds and insurances policies, subject to eligibility requirements, deductibles and per incident annual and aggregate caps. While we are not currently aware of any contaminated properties as to which material outstanding claims or obligations exist, the discovery of additional or more extensive contamination or the imposition of additional cleanup obligations at these or other sites could result in significant liability. To the extent third parties (including insurers and state trust funds) do not pay for investigation and remediation, insurance is not available or the state trust funds cease to exist or become insolvent, we will be obligated to make additional payments.

We may not have identified all of the environmental liabilities at all of our current and former locations. In the future, we may incur substantial expenditures for remediation of contamination that has not been discovered at existing locations or that may exist at locations that we may acquire. Furthermore, new laws, new interpretations of existing laws, increased governmental enforcement of existing laws or other developments, including legislative, regulatory and other legal developments in various phases of discussion or implementation that may limit greenhouse gas emissions or increase fuel economy standards, could require us to make additional capital expenditures, incur additional liabilities or negatively affect the market for motor fuel.

Certain environmental laws, including the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), impose strict, and under certain circumstances, joint and several, liability on current and former owners and operators of properties for the costs of investigation, removal or remediation of contamination and also impose liability for any related damages to natural resources, without regard to fault. In addition, under CERCLA and similar state laws, as persons who arrange for the transportation, treatment or disposal of hazardous materials, we also may be subject to similar liability at sites where such hazardous materials come to be located. We may also be subject to third-party claims alleging property damage and/or personal injury in connection with releases of or exposure to hazardous materials at, from or in the vicinity of our current or former properties or off-site waste disposal sites. The costs associated with the investigation and remediation of contamination, as well as any associated third-party claims, could be substantial and could have a material adverse effect on our business and results of operations. In addition, the presence or failure to remediate identified or unidentified contamination at our properties could potentially materially adversely affect our ability to sell or rent such property or to borrow money using such property as collateral.

Sale of Alcoholic Beverages and Tobacco Products

Our retail convenience stores are subject to state and local laws which restrict the sale of alcoholic beverages and tobacco products to persons who meet legal age requirements and in some circumstances limit

the hours of operations for the sale of alcoholic beverages. We are also subject to state and local regulatory agencies which have authority to approve, revoke, suspend or deny the renewal of permits and licenses required for the sale of alcoholic beverages, as well as issue fines and other penalties to stores and employees for the improper sale of alcoholic beverages and tobacco products. Failure to comply with these laws and regulations may result in the loss of licenses or permits or imposition of fines and penalties on our retail convenience stores or license holders, which could result in a material adverse effect on our results of operations. In addition, many states may impose liability on retailers of alcoholic beverages for damages caused by intoxicated persons who purchased alcoholic beverages from them. We seek to minimize our risk for such liability or regulatory action through staff training and company-wide policies and procedures, as well as the maintenance of general liability insurance.

Safety, Health and Employment

We are also subject to numerous federal, state and local safety and health laws and regulations relating to the operation of retail convenience stores and food preparation and sales. We are required to comply with various record retention, inspection, equipment maintenance, cleanliness and other standards in our retail operations, as well as obtaining necessary occupation and other permits, many of which vary by the jurisdiction in which our stores are located. We are also required to comply with federal and state laws regarding wage rates, overtime, working conditions and citizen requirements with respect to our employees.

Seasonality

We experience more demand for our merchandise and food during the late spring and summer months than during the fall and winter due to the increase in travel and recreation during these periods. Therefore, our in-store merchandise revenues are typically higher in the second and third quarters of the year. For example, our in-store merchandise revenues for the second and third quarters of 2008 were 5.0% and 4.7% higher, respectively, than in-store merchandise revenues reported during the first quarter ending March 31, 2008. In addition, our retail stores located near highways typically experience an increase in the number of motor fuel gallons sold during the second and third quarters.

Employees

As of September 30, 2008, we had approximately 1,992 employees. Approximately 1,970 work in our retail segment and 22 in our wholesale marketing segment. None of our employees are represented by a labor union. We believe that our relation with our employees is satisfactory.

Properties

We maintain our corporate offices in Dallas, Texas. As of September 30, 2008, we operated 306 convenience stores located in Central and West Texas and New Mexico. Our leased stores typically have non-cancelable operating leases with initial terms of 10 to 20 years and options that permit renewals for additional periods. We believe that our facilities are generally adequate for our operations in the ordinary course of business. The following table shows our owned and leased convenience stores by location:


Location	Owned		Leased		Total

Big Spring, Texas		6		1		7
Wichita Falls, Texas		8		4		12
Waco, Texas		11		3		14
Midland, Texas		9		9		18
Lubbock, Texas		17		5		22
Albuquerque, New Mexico		12		11		23
Odessa, Texas		10		25		35
Abilene, Texas		33		8		41
Other locations in Central and West Texas		29		18		47
El Paso, Texas		13		74		87

Total stores		148		158		306

Legal Proceedings

In the ordinary course of business, we are subject to lawsuits, investigations and claims, including, environmental claims and employee-related matters. Although we cannot predict with certainty the ultimate resolution of lawsuits, investigations and claims asserted against us, we do not believe any currently pending legal proceeding or proceedings to which we are a party will have a material adverse effect on our business, results of operations, cash flows or financial condition.

MANAGEMENT

Directors and Executive Officers

Prior to November 2008 and this offering, we were organized as Alon USA Interests, LLC, a Texas limited liability company. In November 2008, Alon USA Interests, LLC was converted into a Delaware corporation and the name was changed to Alon Brands, Inc. At the time of this corporate conversion, certain members of the board of managers of Alon USA Interests, LLC became the directors of Alon Brands. Following the corporate reorganization transactions and immediately prior to consummation of this offering, we will conduct our business through Alon Brands and its direct and indirect subsidiaries.

The following table sets forth the names and ages of each of our current directors and executive officers and certain of our other key employees, and the positions they hold (ages as of January 1, 2009):


Name	Age		Position

Kyle McKeen		45	Director, President and Chief Executive Officer
David Potter		53	Chief Financial Officer
Judge A. Dobrient		40	Senior Vice President — Wholesale Marketing
Joseph Lipman		62	Director and Senior Vice President — Retail
Michael Oster		36	Vice President
Andrew Pochatko		54	Chief Operating Officer of SCS
David Wiessman		54	Chairman of the Board of Directors
Shlomo Braun		52	Director
Shai Even		40	Director
Shlomo Even		52	Director
Claire A. Hart		53	Director
Jeff D. Morris		57	Director
Snir Wiessman		27	Director

Kyle McKeen has served as a director since November and was a member on the Board of Managers of Alon USA Interests, LLC from May 2008 to November 2008. Mr. McKeen has also served as President and Chief Executive Officer since May 2008. From 2005 to 2008, Mr. McKeen served as President and Chief Operating Officer of Carter Energy, an independent energy marketer supporting over 600 retailers by providing fuel supply, merchandising and marketing support, and consulting services. Prior to joining Carter Energy in 2005, Mr. McKeen was a member of the Board of Managers of Alon USA Interests, LLC from September 2002 to 2005 and held numerous positions of increasing responsibilities with Alon Energy, including Vice President of Marketing.

David Potter has served as Chief Financial Officer since May 2008, and Chief Financial Officer of SCS since October 2007. From August 1994 to September 2007, Mr. Potter was Chief Financial Officer of Thriftway Marketing Corp., an independent privately-held retail convenience store chain. Prior to joining Thriftway Marketing, Mr. Potter worked in public accounting since 1977 and as an audit partner in a public accounting firm since 1982. In addition to his public accounting certification, Mr. Potter is a certified valuation analyst and is a member of the American Institute of Certified Public Accountants, and the Oklahoma, New Mexico, and Texas Society of Certified Public Accountants.

Judge A. Dobrient has served as Senior Vice President — Wholesale Marketing since May 2008. Prior to joining us, Mr. Dobrient served as Alon Energy’s General Manager of Marketing from October 2005 to May 2008 and Manager of Unbranded Marketing & Pricing from July 2000 to October 2005. Mr. Dobrient is a former employee of Atofina Petrochemicals, Inc., with over 17 years of experience.

Joseph Lipman has served as a director since November 2008, Senior Vice President — Retail since May 2007, President and Chief Executive Officer from September 2002 to May 2007 and President and Chief Executive Officer of SCS since July 2001. Mr. Lipman was a member of the Board of Managers of Alon USA

Interests, LLC from 2003 to November 2008 when he became a director. From 1997 to July 2001, Mr. Lipman served as General Manager of Cosmos, a chain of supermarkets in Israel owned by Super-Sol Ltd., now known as Shufersal, where he was responsible for marketing and store operations.

Michael Oster has served as our Vice President since May 2006 and was our Assistant Secretary from May 2006 to November 2008. Mr. Oster has also served as Senior Vice President of Mergers and Acquisitions of Alon Energy since August 2008 and General Manager of Commercial Transactions of Alon Energy from January 2003 to August 2008. Prior to joining Alon Energy, Mr. Oster was a partner in the Israeli law firm, Yehuda Raveh and Co.

Andrew Pochatko has served as the Chief Operating Officer of SCS since 2006 and prior to that was the Vice President of Operation of SCS during 2006 and Director of Operations from October 2005 to 2006. Prior to joining SCS, Mr. Pochatko served as a District Manager for Super Valu/Save A Lot Grocery, a discount grocer, from July 2003 to October 2005.

David Wiessman has served as Chairman of the Board of Directors since November 2008 and was a member on our Board of Managers from May 2008 to November 2008. Mr. Wiessman has also served as Executive Chairman of the Board of Directors of Alon Energy since July 2000 and served as President and Chief Executive Officer of Alon Energy from its formation in 2000 until May 2005. Mr. Wiessman has over 25 years of oil industry and marketing experience. Since 1994, Mr. Wiessman has been Chief Executive Officer, President and a director of Alon Israel. In 1992, Bielsol Investments (1987) Ltd. acquired a 50.0% interest in Alon Israel. In 1987, Mr. Wiessman became Chief Executive Officer of, and a stockholder in, Bielsol Investments (1987) Ltd. In 1976, after serving in the Israeli Air Force, he became Chief Executive Officer of Bielsol Ltd., a privately-owned Israeli company that owns and operates gasoline stations and owns real estate in Israel. Mr. Wiessman is also Chairman of the Board of Directors of Blue Square-Israel, Ltd., which is listed on the New York Stock Exchange and the Tel Aviv Stock Exchange, Chairman of Blue Square Real Estate Ltd., which is listed on the Tel Aviv Stock Exchange, Acting Chairman of the Board of Directors of Blue Square Investments and Property Chain, Ltd., which is listed on the Tel Aviv Stock Exchange, and Chairman of the Board and President of Dor Alon Energy Israel (1988) Ltd., which is listed on the Tel Aviv Stock Exchange. David Wiessman is the father of Snir Wiessman, who is also a member of our board of directors.

Shlomo Braun has served as a director since November 2008 and was a member on the Board of Managers of Alon USA Interests, LLC from May 2008 to November 2008. Mr. Braun is the owner and manager of SAB Investment Group, LLC, an investment and consultancy agency. Mr. Braun is also a director of Hachsharat Hayishuv (I.L.D.) Insurance Company Ltd., a publicly traded insurance company, which is listed on the Tel Aviv Stock Exchange. Prior to joining Hachsharat Hayishuv (I.L.D.) Insurance Company Ltd., Mr. Braun worked at Bank Hapoalim Ltd., an Israeli bank. There he served as a member of the Board of Managers from 2003 to 2008, as head of the bank’s business division from 2001 to 2003 and as head of the bank’s retail business for the Tel Aviv district from 1999 to 2001.

Shai Even has served as director since November 2008. Mr. Even has also served as a Senior Vice President of Alon Energy since August 2008, Vice President of Alon Energy from May 2005 to August 2008 and as Alon Energy’s Chief Financial Officer since December 2004. Mr. Even also served as Alon Energy’s Treasurer from August 2003 until March 2007. Prior to joining Alon Energy, Mr. Even served as the Chief Financial Officer of DCL Technologies, Ltd. from 1996 to July 2003 and prior to that worked for KPMG from 1993 to 1996. Shai Even is the brother of Shlomo Even, who is also a member of our board of directors.

Shlomo Even has served as a director since November 2008. Mr. Even has been a certified public accountant and partner of the certified public accounting firm of Tiroshi Even since 1986. Mr. Even also serves as a director of Alon Israel, Dor Alon Energy in Israel (1988) Ltd. Blue Square — Israel Ltd and Rosebud Medical Ltd., which is listed on the Tel Aviv Stock Exchange. Shlomo Even is the brother of Shai Even, who is also a member of our board of directors.

Claire A. Hart has served as a director since November 2008. Mr. Hart was a member of the Board of Managers of Alon USA Interests, LLC from August 2003 to November 2008 when he became a director.

Mr. Hart has also served as Alon Energy’s Senior Vice President since January 2004 and served as Alon Energy’s Chief Financial Officer and Vice President from August 2000 to January 2004. Prior to joining Alon Energy, he held various positions in the Finance, Accounting and Operations departments of FINA for 13 years, serving as Treasurer from 1998 to August 2000 and as General Manager of Credit Operations from 1997 to 1998.

Jeff D. Morris has served as a director since November 2008. Mr. Morris was a member of the Board of Managers of Alon USA Interests, LLC from August 2003 to November 2008 when he became a director. Mr. Morris has also served as Alon Energy’s President and Chief Executive Officer since May 2005 and has served as the President and Chief Executive Officer of Alon Energy’s subsidiary, Alon USA, Inc., since its inception in August 2002 and of Alon Energy’s other operating subsidiaries since July 2000. Prior to joining Alon Energy, he held various positions at FINA, where he began his career in 1974. Mr. Morris served as Vice President of FINA’s SouthEastern Business Unit from 1998 to 2000 and as Vice President of its SouthWestern Business Unit from 1995 to 1998. In these capacities, he was responsible for both the Big Spring refinery and FINA’s Port Arthur refinery and the crude oil gathering assets and marketing activities for both business units.

Snir Wiessman has served as our director since November 2008. Mr. Wiessman has served as a Business Development and M&A Manager of Alon Israel since August 2007. Mr. Wiessman has also served as a Director of Dor Alon Fuel Stations Operation Ltd., an Israeli gas station and convenience store operator, since August 2003 and AM:PM, an Israeli convenience store operator, since January 2008. AM:PM and Dor Alon Fuel Station Operation Ltd. are both subsidiaries of Dor Alon Energy in Israel (1988) Ltd., which is listed on the Tel Aviv Stock Exchange. Snir Wiessman is the son of David Wiessman, who is also a member of our board of directors.

Committees of the Board of Directors

Our board of directors does not have a nominating and corporate governance committee or a committee performing the functions of this committee. Our board of directors has determined that we are a “controlled company” for the purposes of Section 303A of the NYSE Listed Company Manual because Alon USA, LP holds more than 50% of our common stock. As such, we are relying on exemptions from the provisions of Section 303A that would otherwise require us, among other things, to have a board of directors composed of a majority of independent directors, a compensation committee composed of independent directors and a nominating and corporate governance committee.

Audit Committee. Prior to completion of this offering, our audit committee will be composed of Mr. Braun and two additional directors to be determined prior to the offering. Our board of directors has determined that Mr. Braun is financially literate and has accounting or related financial management expertise, in each case as contemplated by applicable NYSE requirements. Our board of directors has determined that Mr. Braun satisfies applicable NYSE and SEC requirements relating to independence. We will be required to have a majority of independent members approximately 90 days after the date of this prospectus. The audit committee must be composed entirely of independent members within approximately one year from the date of this prospectus. The audit committee will oversee our accounting and financial reporting processes and the audits of our financial statements.

Compensation Committee. Our compensation committee is composed of David Wiessman and Jeff Morris. The compensation committee establishes, administers and reviews our policies, programs and procedures for compensating our executive officers and directors.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Introduction

This Compensation Discussion and Analysis provides a description of the objectives of our executive compensation policies, a description of the compensation committee and a discussion of the material elements of the compensation of our executive officers.

Prior to this offering, the elements of compensation of our executive officers were determined or approved by Alon Energy. Accordingly, certain elements of the compensation payable to our employees for services rendered in periods prior to this offering, including executive officers, relate to compensation arrangements designed by Alon Energy. These compensation arrangements, as well as the compensation arrangements we expect to adopt prior to this offering and maintain in the future, are discussed below. Our compensation committee may adopt new or alternative arrangements following the completion of this offering in addition to those discussed below.

None of our named executive officers were executive officers of Alon Energy in 2008. Accordingly, decisions with regard to compensation for those employees in 2008, except for our Chief Executive Officer, were made by recommendation of Alon Energy’s Chief Executive Officer and approval by Alon Energy’s compensation committee in the same manner as all other non-executive employees of Alon Energy. Kyle McKeen, our Chief Executive Officer, joined Alon Energy in April 2008 and entered into a Management Employment Agreement. See “— Employment Agreements.” The terms of Mr. McKeen’s employment agreement were determined by David Wiessman, and Jeff Morris, members of Alon Energy’s compensation committee. See “— Chief Executive Officer Compensation.” The elements of Mr. McKeen’s compensation were determined on the basis of the same principles described below which we expect to continue to follow after this offering.

Objectives of Compensation Policies

The objectives of our compensation policies are to attract, motivate and retain qualified management and personnel who are highly talented, while ensuring that executive officers and other employees are compensated in a manner that advances both the short- and long-term interests of stockholders. In pursuing these objectives, the compensation committee believes compensation should reward executive officers and other employees for both their personal performance and the company’s overall performance. In determining compensation levels for our executive officers, the compensation committee considers the scope of an individual’s responsibilities, external competitiveness of total compensation, an individual’s performance, prior experience and current and prior compensation, the performance of the company and the attainment of financial and strategic objectives.

Our management provides compensation recommendations to the compensation committee; however, the final determination of a compensation package (other than cash bonuses under the Annual Cash Bonus Plan described below) is made solely by the compensation committee. We do not currently engage any consultants relating to executive and/or director compensation practices. The compensation committee may consider the compensation practices of other companies when making a determination; however, we do not benchmark our compensation packages to any particular company or group of companies.

Compensation Program Elements

We compensate our employees and executive officers through a combination of base salary, annual cash bonuses and anticipate granting equity incentive awards pursuant to the proposed 2009 Equity Incentive Compensation Plan. The compensation committee considers each element of our overall compensation program applicable to an employee or executive officer when making any decision affecting that employee’s or executive officer’s compensation. The particular elements of our compensation program are explained below.

Base Salaries. Base salary levels are designed to attract and retain highly qualified individuals. In establishing salary levels, the compensation committee takes into account the scope of an individual’s responsibilities and experience and makes a subjective assessment of the nature of each individual’s performance and contribution to the company. The compensation committee may also consider available information on prevailing executive compensation at comparable companies in our industry. Base salaries are reviewed annually and adjustments are made based primarily on the individual’s performance in the prior annual period.

2009 Annual Cash Bonus Plan. Prior to the completion of this offering, we expect our Board to approve an incentive cash compensation plan (the “Annual Cash Bonus Plan”). Annual cash bonuses under the Annual Cash Bonus Plan are anticipated to be distributed to eligible employees in the first quarter of each year based on the previous year’s performance, commencing in the first quarter of 2010 based on performance during our 2009 fiscal year. Under the newly-approved Annual Cash Bonus Plan, bonus payments to eligible employees are anticipated to be based on our retail and wholesale segments’ meeting or exceeding certain target EBITDA or other performance measures. The plan targets and components have not yet been determined by the compensation committee and will be tailored to provide motivation for the eligible employees to attain our operating segments’ financial and other performance objectives.

2009 Equity Incentive Compensation Plan. Prior to completion of this offering, we expect our board of directors and our current stockholder to approve the 2009 Equity Incentive Compensation Plan, or the Equity Incentive Plan, as a component of our overall executive incentive compensation program. The Equity Incentive Plan permits the granting of awards in the form of options to purchase common stock, stock appreciation rights, restricted shares of common stock, restricted stock units, performance shares, performance units and senior executive plan bonuses to our directors, officers and key employees. The compensation committee believes that the grant of options, stock appreciation rights, and similar equity-based awards aligns executive and stockholder long-term interests by creating a strong and direct link between executive compensation and stockholder return. The grant of restricted stock and similar equity-based awards also allows our directors, officers and key employees to develop and maintain a long-term ownership position in our company.

The Equity Incentive Plan is expected to be administered, in the case of awards to participants subject to Section 16 of the Securities Exchange Act, by the board of directors and, in all other cases, by the compensation committee. Subject to the terms of the Equity Incentive Plan, the compensation committee and the board of directors have the full authority to select participants to receive awards, determine the types of awards and terms and conditions of awards, and interpret provisions of the Equity Incentive Plan. Awards may be made under the Equity Incentive Plan to eligible directors, officers and employees of Alon Brands and its subsidiaries, provided that awards qualifying as incentive stock options, as defined under the Internal Revenue Code of 1986, as amended, or the Code, may be granted only to employees.

Concurrently with this offering, we expect to grant shares of restricted stock to the following named executive officers under the Equity Incentive Plan:


		Number of
Name		Shares

Kyle McKeen
David Potter
Joseph Lipman
Judge A. Dobrient
Andrew Pochatko

Each restricted stock award will vest over a period of six years, contingent on continued employment with the company and the achievement of certain financial performance targets.

Perquisites. Our use of perquisites as an element of compensation is limited in scope and amount. We do not view perquisites as a significant element of compensation, but do believe that in certain circumstances they can be used in conjunction with base salary to attract, motivate and retain qualified management and personnel in a competitive environment. For example, during 2008, our use of perquisites were limited to a car allowance for Mr. Pochatko and housing allowances for Messrs. Lipman and Potter.

Special Bonuses. From time to time, executive officers and key employees may be awarded bonuses outside the plans described herein based on individual performance and contributions, special individual circumstances or extraordinary performance and transactions. Any such special bonus would be determined by the board of directors and at their discretion given the circumstances, but are not an ordinary component of the general compensation of our executive officers or other key employees.

Retirement Benefits. Retirement benefits to our senior management, including our executive officers, are currently expected to be provided both through a 401(k) plan, which will be available to most of our employees, and a new unfunded pension plan for certain employees. The new pension plan will also provide employees who were eligible to participate in the pension plan of Alon Energy with similar benefits.

401(k) Plan. Subject to certain qualifications, eligible employees may participate in our 401(k) plan which provides company matching of employee contributions up to 6% of the employees base salary.

Employment Agreements

As discussed more fully below in “Chief Executive Officer Compensation” and “Employment Agreements,” we have entered into an employment agreement with Mr. McKeen and, prior to this offering, we expect to enter into employment agreements with other members of our executive management team. Our decision to enter into employment agreements and the terms of those agreements are based on the facts and circumstances at the time and an analysis of competitive market practices.

Methodology of Establishing Compensation Packages

The compensation committee does not adhere to any specified formula for determining the apportionment of executive compensation between cash and non-cash awards. The compensation committee attempts to design each compensation package to provide incentive to achieve our performance objectives, appropriately compensate individuals for their experience and contributions and secure the retention of qualified employees. This is accomplished through a combination of the compensation program elements and, in certain instances, specific incentives not generally available to all of our employees.

Chief Executive Officer Compensation

The annual compensation of our Chief Executive Officer is determined by David Wiessman, the Chairman of the Board and member of the Compensation Committee, in consultation with the board of directors based on the compensation principles and programs described above. In April 2008, we entered into a Management Employment Agreement, or MEA, with Mr. McKeen in connection with his appointment as our President and Chief Executive Officer. The MEA provides for a term ending in May 2013, which automatically renews for successive one-year terms unless terminated by either party. Under the MEA, Mr. McKeen’s annual base salary will be no less than $300,000. Mr. McKeen is entitled to participate in our annual cash bonus plan and incentive compensation plan. Mr. McKeen will receive additional benefits, including life insurance and disability, medical and retirement benefits. See “— Employment Agreements.”

Mr. McKeen is subject to a covenant not to compete during the term of his employment and for one year after the date of his termination. Mr. McKeen is also prohibited from disclosing any proprietary information received as a result of his employment. In the event that we terminate Mr. McKeen’s employment without cause or Mr. McKeen terminates his employment for good reason, he is entitled to receive a cash severance payment equal to his then-current annual base salary.

Stock Ownership Policy

We do not require our directors or executive officers to own shares of our common stock.

Section 162(m)

Under Section 162(m) of the Internal Revenue Code, compensation paid to the Chief Executive Officer and the other three most highly compensated executive officers (other than the Chief Financial Officer) in

excess of $1,000,000 may not be deducted by us in determining our taxable income. This deduction limitation does not apply to certain “performance-based” compensation. The board of directors does not currently intend to award levels of non-performance-based compensation that would exceed $1,000,000. However, it may do so in the future if it determines that such compensation is in the best interest of the company and our stockholders.

Summary Compensation Table

The following table provides a summary of the compensation awarded to, earned by or paid to Messrs. McKeen and Potter, our principal executive officer (PEO) and principal financial officer (PFO), and Messrs. Lipman, Dobrient and Pochatko our three most highly compensation executive officers in 2008. We refer to these individuals as our named executive officers for 2008. The title for each individual represents the officer’s current position with our company. Kyle McKeen, our President and Chief Executive Officer, joined the company in May 2008 and the information included in the executive compensation tables reflects compensation earned by Mr. McKeen from this date until the end of 2008. In May 2008, David Potter was appointed our Chief Financial Officer and Joseph Lipman was appointed our Senior Vice President — Retail. The information included in the executive compensation tables for these individuals also includes compensation earned for services performed as executives of our subsidiary, SCS, from January 2008 to May 2008. Judge Dobrient was appointed Senior Vice President — Wholesale Marketing of our company in May 2008. The information included in the executive compensation tables includes compensation earned by Mr. Dobrient for services performed as Alon Energy’s General Manager of Marketing from January 2008 to May 2008. The information included in the executive compensation tables reflect compensation earned by Mr. Pochatko for services performed as Chief Operating Officer of our subsidiary, SCS, in 2008.

The amounts and forms of compensation reported below do not necessarily reflect the compensation our named executive officers will receive following this offering, which could be higher or lower, because historical compensation was determined by Alon Energy and future compensation levels will be determined by our compensation committee.


							Change in
							Pension Value
							and
							Nonqualified
					Option		Compensation		All Other
Name and Principal Position	Year		Salary		Awards(1)		Earnings(2)		Compensation			Total

Kyle McKeen		2008	$	192,692	$	—	$	85,232	$	51,716		$	329,640
President and Chief Executive Officer (PEO)
David Potter		2008		160,385		—		—		4,648	(3)		165,033
Chief Financial Officer (PFO)
Joseph Lipman		2008		208,654		100,460		53,274		11,756	(4)		374,144
Senior Vice President — Retail
Judge A. Dobrient		2008		147,581		30,138		32,353		—			210,072
Senior Vice President — Wholesale Marketing
Andrew Pochatko		2008		130,769		—		—		4,400	(5)		135,169
Chief Operating Officer of SCS


(1)		This column reflects the value of the awards based on the compensation cost of the award recognized by Alon Energy during the 2008 fiscal year determined in accordance with Financial Accounting Standards Board No. 123 (revised 2004), Share-Based Payment, which we refer to as SFAS No. 123R. Pursuant to the Alon Energy’s 2005 Incentive Compensation Plan (“Alon Energy 2005 Plan”), on March 7, 2007 the Company made grants of 33,333 and 10,000 Stock Appreciation Rights (SARs) to each of Messrs. Lipman and Dobrient, respectively. The SARs granted on March 7, 2007 vest as follows: 50% on March 7, 2009, 25% on March 7, 2010 and 25% on March 7, 2011 and are exercisable during the 365-day period following the date of vesting. When exercised, SARs are convertible into shares of Alon Energy common stock, the number of which will be determined at the time of exercise by calculating the difference between the closing price of Alon Energy common stock on the date immediately prior to the exercise date and the grant price of the SARs ($28.46 per share) (the “Spread”), multiplying the Spread by the number of SARs being exercised and then dividing the product by the closing price of Alon Energy


		common stock on the date immediately prior to the exercise date. The compensation cost associated with the SARs grants and recognized by Alon Energy during the 2008 fiscal year under FAS 123R was $100,460 and $30,138 for each of Messrs. Lipman and Dobrient, respectively.


(2)		Reflects the aggregate change in actuarial present value of the named executive officer’s accumulated benefit under the SCS SERP, Alon Energy Benefits Restoration Plan and Alon USA GP, LLC Pension Plan (each described in the Pension Benefits table below) calculated by (a) assuming mortality according to the applicable mortality rates prescribed by the IRS for 2008 and (b) applying a discount rate of 6.46% per annum to determine the actuarial present value of the accumulated benefit at December 31, 2007, and a discount rate of 6.07% per annum to determine the actuarial present value of the accumulated benefit at December 31, 2008.


(3)		Reflects a housing allowance.


(4)		Reflects a housing allowance in the amount of $11,506 and a matching contribution to the Alon Energy 401(k) plan in the amount of $250.


(5)		Reflects a car allowance.

Outstanding Equity Awards at Year-End

The following table provides a summary of equity awards to our named executive officers that were outstanding at December 31, 2008, including any unexercised stock options, stock that has not vested and equity incentive plan awards:


	Option Awards
	Number of		Number of
	Securities		Securities
	Underlying		Underlying
	Unexercised		Unexercised		Option		Option
	Options		Options		Exercise		Expiration
Name	Exercisable		Unexercisable(1)		Price		Date

Kyle McKeen (PEO)		—		—		—		—
David Potter (PFO)		—		—		—		—
Joseph Lipman		—		33,333		28.46		(2	)
Judge A. Dobrient		—		10,000		28.46		(2	)
Andrew Pochatko		—		—		—		—


(1)		Reflects SARs granted pursuant to the Alon Energy 2005 Plan to each of Messrs. Lipman and Dobrient on March 7, 2007, as more fully described in Note 1 to the Summary Compensation Table above. Of the 33,333 SARs granted to Mr. Lipman on March 7, 2007, 16,667 will vest on March 7, 2009, and 8,333 will vest on each of March 7, 2010 and 2011. Of the 10,000 SARs granted to Mr. Dobrient on March 7, 2007, 5,000 will vest on March 7, 2009, and 2,500 will vest on each of March 7, 2010 and 2011.

(2)		SARs may be exercised during the 365-day period following the date of vesting.

Option Exercises and Stock Vested

The following table provides a summary of each exercise of stock options, SARs or similar instruments and of each vesting of stock, including restricted stock, restricted stock units and similar instruments, during 2008 for each of the named executive officers on an aggregated basis:


	Stock Awards
	Number of Shares			Value Realized
Name	Acquired on Vesting			on Vesting

Kyle McKeen (PEO)		—			—
David Potter (PFO)		—			—
Joseph Lipman		84	(1)		(2	)
Judge A. Dobrient		—			—
Andrew Pochatko		—			—


(1)		Reflects the number of shares of restricted common stock of Alon Energy received by Mr. Lipman pursuant to awards granted under Alon Energy 2005 Plan vesting during the fiscal year ended December 31, 2008.


(2)		On August 17, 2008, the date on which the 84 shares of restricted common stock of Alon Energy vested, the reported closing price for Alon Energy’s common stock on the NYSE was $9.35 which was less than the $12.00 per share purchase price paid by Mr. Lipman on the date of grant.

Pension Benefits

The following table provides a summary of each plan that provides for payments or other benefits at, following, or in connection with retirement, for each of the named executive officers as of December 31, 2008. Joseph Lipman, our Senior Vice President — Retail, participates in a supplemental employee retirement plan with SCS. Each of Kyle McKeen, our President and Chief Executive Officer, and Judge A. Dobrient, our Senior Vice President — Wholesale Marketing, participates in the Alon USA GP, LLC Pension Plan. Mr. McKeen also participates in the Alon Energy Benefits Restoration Plan. Effective at the time of the initial public offering, Alon Brands will adopt a new unfunded pension plan and assume the obligations of Alon USA GP, LLC with respect to accumulated benefits of participants in the Alon USA GP, LLC Pension Plan and the Alon Energy Benefits Restoration Plan for certain managers and officers of the wholesale marketing segment, including Messrs. McKeen and Dobrient. The new Alon Brands unfunded pension plan will also grant years of service credit to current participants of the Alon USA GP, LLC Pension Plan and Alon Energy Benefits Restoration Plan.


						Payment
		Number of Years		Present Value of		During
Name	Plan Name	Credited Service		Accumulated Benefit		Last Year

Kyle McKeen (PEO)	Alon USA GP, LLC Pension Plan(1)		4.96	$	81,696		—
	Alon Energy Benefits Restoration Plan(2)		—		3,536		—
David Potter (PFO)	—		—		—		—
Joseph Lipman	SCS SERP(3)		7.50		262,435		—
Judge A. Dobrient	Alon USA GP, LLC Pension Plan(1)		8.42		83,102		—
Andrew Pochatko	—		—		—		—


(1)		Employees who participate in the Alon USA GP, LLC Pension Plan make no contributions to the pension plan. A participating employee becomes vested in the pension plan once that employee has completed five full years of employment, assuming a minimum of 1,000 hours of service per year. After becoming vested, a participating employee has a non-forfeitable right to his vested retirement benefit. A participant’s


		compensation for purposes of determining benefits under the Alon USA GP, LLC Pension Plan includes salary, bonus and overtime pay. The normal retirement age under the Alon USA GP, LLC Pension Plan is 65.


(2)		Alon Energy also provides additional pension benefits to its highly compensated employees through the Alon Energy Benefits Restoration Plan. If an employee is a participant in the Alon USA GP, LLC Pension Plan and is subject to the limitation on compensation pursuant to Section 401(a)(17) or 415 of the Code, then the employee can participate in the benefits restoration plan and is eligible for a benefit equal to the benefit that would be payable under the pension plan but for the limitations on compensation less the benefit actually payable under the pension plan. The Alon Energy Benefits Restoration Plan is unfunded and vests on the same schedule as the Alon USA GP, LLC Pension Plan.


(3)		Pursuant to the Supplemental Retirement Income Agreement between Mr. Lipman and SCS, Mr. Lipman makes no contributions to the SCS SERP. Additionally, Mr. Lipman is fully vested in the SCS SERP and has a non-forfeitable right to his vested retirement benefit. Mr. Lipman’s compensation for purposes of determining benefits under the SCS SERP includes salary, bonus and overtime pay. The SCS SERP is unfunded by SCS.

The following table provides the estimated annual benefits payable to eligible employees upon retirement under the SCS SERP and Alon USA GP, LLC Pension Plan, based on the eligible employee’s average annual compensation level at retirement and credited years of service. The average annual compensation level is based on averaging the highest 36 months of pay out of the 10 years prior to the employee leaving SCS or Alon Energy, as appropriate.


	Pension Plan Table(1)(2)
	Years of Service
Compensation Level	15		20		25		30		35

$125,000	$	30,938	$	41,250	$	51,563	$	61,875	$	72,188
150,000		37,125		49,500		61,875		74,250		86,625
175,000		43,313		57,750		72,188		86,625		101,063
200,000		49,500		66,000		82,500		99,000		115,500
225,000		55,688		74,250		92,813		111,375		129,938
250,000		61,875		82,500		103,125		123,750		144,375
300,000		74,250		99,000		123,750		148,500		173,250
400,000		99,000		132,000		165,000		198,000		231,000
450,000		111,375		148,500		185,625		222,750		259,875
500,000		123,750		165,000		206,250		247,500		288,750


(1)		Pension plan benefits are computed on a straight-line annuity basis.

(2)		The benefits listed in the pension plan table above are subject to a deduction for Social Security benefits.

The compensation covered by the SCS SERP and Alon USA GP, LLC Pension Plan and the credited years of service with respect to Messrs. McKeen, Lipman and Dobrient as of December 31, 2008 are set forth in the table below, assuming retirement at the normal retirement age under the plans.


		Compensation		Credit Years of
Name	Plan	Covered by Plan		Service

Kyle McKeen	Alon USA GP, LLC Pension Plan	$	192,692		4.96
Joseph Lipman	SCS SERP		246,455		7.50
Judge A. Dobrient	Alon USA GP, LLC Pension Plan		169,714		8.42

As of December 31, 2008, Mr. Lipman was eligible for early retirement under the SCS SERP. If Mr. Lipman were to elect early retirement under the pension plan, he would be eligible to receive a lump sum payment in the amount of $316,773, which is actuarily equivilent to a single life annuity benefit as determined by the Alon USA GP, LLC Pension Plan. This benefit amount is calculated based on an average annual compensation level of $224,717. Messrs. McKeen and Dobrient are not eligible for early retirement.

Employment Agreements

In April 2008, we entered into a Management Employment Agreement, or MEA, with Mr. McKeen in connection with his appointment as our President and Chief Executive Officer. The MEA provides for a term ending in May 2013, which automatically renews for successive one-year terms unless terminated by either party. Under the MEA, Mr. McKeen’s annual base salary will be no less than $300,000. Mr. McKeen is entitled to participate in our annual cash bonus plan and incentive compensation plan. Mr. McKeen will receive additional benefits, including life insurance and disability, medical and retirement benefits.

During the first year following the completion of this offering, Mr. McKeen will be permitted to purchase shares of our stock at the initial public offering price in an amount not to exceed one percent of the total number of shares outstanding. For each of the three years thereafter, Mr. McKeen will be eligible to receive a grant of restricted shares up to the number of shares purchased by him during the initial year. The actual number of restricted shares granted in each year will be determined by our performance in the prior calendar year, as compared to predetermined performance goals established by the compensation committee. All of the restricted shares will vest on the earlier of May 1, 2013 or in the event that Alon Energy ceases to own, directly or indirectly, at least 50.0% of the outstanding shares of our common stock.

Prior to this offering, we expect to enter into employment agreements with other members of our executive management team.

Potential Payments Upon Termination or Change of Control

Pursuant to their employment agreements, Messrs. McKeen and Lipman are entitled to continued salary for one year and nine months, respectively, following termination of employment for any reason other than “cause”, as defined in their respective employment agreements. In addition, Mr. Lipman is fully vested under the SCS SERP and is entitled to an annual benefit of $227,136 upon retirement or other termination of his employment.

Director Compensation

After completion of this offering, our non-employee directors will receive an annual fee of $20,000, plus an additional fee of $2,500 for each board meeting attended ($1,250 if attendance is telephonic). Each member of a board committee will receive a fee of $1,000 for each committee meeting attended and the committee chairperson will receive an additional $1,000 for serving as chair of the meeting. We reimburse all directors for expenses incurred in attending board and committee meetings. In addition, each non-employee director who is not affiliated with Alon Israel will receive $20,000 per year in restricted stock. One-third of these restricted stock awards will vest on each of the first, second and third anniversaries of the grant date.

Compensation Committee Interlocks and Insider Participation

We did not have a compensation committee prior to this offering. In connection with this offering, we established a compensation committee consisting of David Wiessman and Jeff Morris. See “Certain Relationships and Related Party Transactions” for information regarding relationships and transactions involving Alon Brands in which Messrs. Wiessman and Morris have interests.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Relationship with Alon Energy

Immediately prior to this offering, Alon USA, LP, a subsidiary of Alon Energy, is our only stockholder. After this offering, Alon USA, LP will own approximately % of our outstanding shares of common stock ( %, if the underwriters exercise their over-allotment option in full). For as long as Alon Energy, through its ownership of Alon USA, LP, continues to own a majority of our common stock and all of our preferred convertible stock, Alon Energy will have the power to determine the outcome of matters submitted to a vote of our stockholders, will have the power to prevent a change in control of us and could take other actions that might be favorable to Alon Energy. See “Description of Capital Stock.”

Prior to the completion of this offering, we will enter into a Master Agreement and a number of other agreements with Alon Energy setting forth various matters governing our separation from Alon Energy and our relationship with Alon Energy while it remains a significant stockholder in us. These agreements will govern our relationship with Alon Energy after this offering and will provide for, among other things, the allocation of employee benefit, tax and other liabilities and obligations attributable to our operations.

Review, Approval or Ratification of Transactions with Related Persons

The Board has not adopted specific policies or procedures for review or approval of related-party transactions. The Board believes that the following transactions and relationships are reasonable and in the best interest of Alon Brands.

Messrs. McKeen, Dobrient, Lipman, Oster, David Wiessman, Shai Even, Hart and Morris have ownership interests in the comment stock of Alon Energy and Mr. David Wiessman has an ownership interest in the common stock of Alon Israel. These interests could create, or appear to create, potential conflicts of interest when directors and officers are faced with decisions that could have different implications for us and Alon Brands or Alon Israel. The Board has not adopted specific policies or procedures related to these potential conflicts of interest.

Master Agreement

We will enter into a master agreement with Alon Energy prior to the completion of this offering. In this prospectus, we refer to this agreement as the Master Agreement. The Master Agreement will set forth our agreements with Alon Energy regarding the principal transactions required to effect the transfer of assets and the assumption of liabilities necessary to complete the separation of our company from Alon Energy. It also will set forth other agreements governing our relationship after the separation.

The Transfers

To effect the separation, Alon Energy will contribute to us the membership interests of Alon Marketing which will hold the assets related to our branded wholesale business, as described in this prospectus. We will assume and agree to perform, discharge and fulfill the liabilities related to our businesses for which Alon Energy or its affiliates are presently obligated, other than liabilities associated with the branded wholesale business arising prior to Alon Energy’s contribution of Alon Marketing to us. If any governmental approval or other consent required to transfer any assets to us or for us to assume any liabilities is not obtained prior to the completion of this offering, we will agree with Alon Energy that such transfer or assumption will be deferred until the necessary approvals or consents are obtained. Alon Energy will continue to hold the assets and be responsible for the liabilities for our benefit and at our expense until the necessary approvals or consents are obtained.

Except as expressly set forth in any transaction document, all assets will be transferred on an “as is, where is” basis, and we will agree to bear the economic and legal risks that any conveyance was insufficient to vest in us good title, free and clear of any security interest, and that any necessary consents or approvals are not obtained or that any requirements of laws or judgments are not complied with.

Auditors and Audits; Annual Financial Statements and Accounting

The Master Agreement provides that, for so long as Alon Energy is required to consolidate our results of operations and financial position or account for its investment in our company under the equity method of accounting, we will:


	•	maintain a fiscal year end and accounting periods the same as Alon Energy;

	•	conform our financial presentation with that of Alon Energy;

	•	not change our independent auditors without Alon Energy’s prior written consent (which will not be unreasonably withheld);

	•	use commercially reasonable efforts to enable our independent auditors to complete their audit of our financial statements in a timely manner so as to permit timely filing of Alon Energy’s financial statements;

	•	provide to Alon Energy all information required for Alon Energy to meet its schedule for the filing and distribution of its financial statements;

	•	make available to Alon Energy and its independent auditors all documents necessary for the annual audit of our company as well as access to the responsible personnel so that Alon Energy and its independent auditors may conduct their audits relating to our financial statements;

	•	provide Alon Energy with financial reports, financial statements, budgets, projections, press releases and other financial data and information with respect to our business, properties and financial positions;

	•	adhere to certain specified disclosure controls and procedures and Alon Energy accounting policies; and

	•	notify and consult with Alon Energy regarding any changes to our accounting principles and estimates used in the preparation of our financial statements, and any deficiencies in, or violations of law in connection with, our internal control over financial reporting and certain fraudulent conduct and other violations of law.

Exchange of Other Information

The Master Agreement also provides for other arrangements with respect to the mutual sharing of information between Alon Energy and us in order to comply with reporting, filing, audit or tax requirements, for use in judicial proceedings and in order to comply with our respective obligations after the separation. We will also agree to provide mutual access to historical records relating to the other’s businesses that may be in our possession.

Releases and Indemnification

Except for each party’s obligations under the Master Agreement, the other transaction documents and certain other specified liabilities, we and Alon Energy will release and discharge each other and each of our affiliates, and their directors, officers, agents and employees from all liabilities existing or arising between us on or before the separation, including in connection with the separation and this offering. The releases will not extend to obligations or liabilities under any agreements between Alon Energy and us that remain in effect following the separation.

We will indemnify, hold harmless and defend Alon Energy, each of its affiliates and each of their respective directors, officers and employees, on an after-tax basis, from and against all liabilities relating to, arising out of or resulting from:


	•	the failure by us or any of our affiliates (other than Alon Energy) or any other person or entity to pay, perform or otherwise promptly discharge any liabilities or contractual obligations associated with our businesses, whether arising before or after the separation;


	•	the operations, liabilities and contractual obligations of our retail business whether arising before or after the separation and of our branded wholesale business arising after the separation;

	•	any guarantee, indemnification obligation, surety bond or other credit support arrangement by Alon Energy or any of its affiliates for our benefit;

	•	any breach by us or any of our affiliates of the Master Agreement, the other transaction documents or our amended and restated certificate of incorporation or bylaws;

	•	any untrue statement of, or omission to state, a material fact in Alon Energy’s public filings to the extent the statement or omission was as a result of information that we furnished to Alon Energy or that Alon Energy incorporated by reference from our public filings, if the statement or omission was made or occurred after the separation; and

	•	any untrue statement of, or omission to state, a material fact in any registration statement or prospectus related to this offering, except to the extent the statement was made or omitted in reliance upon information provided to us by Alon Energy expressly for use in any such registration statement or prospectus or information relating to and provided by any underwriter expressly for use in any such registration statement or prospectus.

Alon Energy will indemnify, hold harmless and defend us, each of our affiliates and each of our and their respective directors, officers and employees, on an after-tax basis, from and against all liabilities relating to, arising out of or resulting from:


	•	the failure of Alon Energy or any of its affiliates (other than us) or any other person or entity to pay, perform or otherwise promptly discharge any liabilities of Alon Energy or its affiliates, other than liabilities associated with our businesses, whether arising before or after the separation;

	•	the liabilities of Alon Energy and its affiliates’ businesses, other than liabilities associated with our businesses;

	•	any breach by Alon Energy or any of its affiliates of the Master Agreement or the other transaction documents;

	•	any untrue statement of, or omission to state, a material fact in our public filings to the extent the statement or omission was as a result of information that Alon Energy furnished to us or that we incorporated by reference from Alon Energy’s public filings, if the statement or omission was made or occurred after the separation; and

	•	any untrue statement of, or omission to state, a material fact contained in any registration statement or prospectus related to this offering, but only to the extent the statement or omission was made or omitted in reliance upon information provided by Alon Energy expressly for use in any such registration statement or prospectus.

Expenses of the Separation and Our Initial Public Offering

The Master Agreement provides that Alon Energy will pay or reimburse us for all out-of-pocket fees, costs and expenses (including all legal, accounting and printing expenses) incurred prior to the completion of this offering in connection with our separation from Alon Energy, except that we shall be responsible for fees and expenses attributable to this offering.

Other Provisions

The Master Agreement also contains covenants between Alon Energy and us with respect to other matters, including the following:


	•	confidentiality of our and Alon Energy’s information;

	•	our right to continue coverage under Alon Energy’s insurance policies for so long as Alon Energy owns a majority of our outstanding common stock;


	•	restrictions on our ability to take any action or enter into any agreement that would cause Alon Energy to violate any law, organizational document, agreement or judgment;

	•	our obligation to comply with Alon Energy’s policies applicable to its subsidiaries for so long as Alon Energy owns a majority of our outstanding common stock, except (i) to the extent such policies conflict with our certificate of incorporation or bylaws or any of the agreements between Alon Energy and us, or (ii) as otherwise agreed with Alon Energy or superseded by any policies adopted by our board of directors; and

	•	restrictions on our ability to enter into any agreement that binds or purports to bind Alon Energy.

Corporate Services Agreement

We will enter into a corporate services agreement with Alon Energy prior to the completion of this offering to provide us certain administrative and support services and other assistance consistent with the services provided to us before this offering. In this prospectus, we refer to this agreement as the Corporate Services Agreement. The services Alon Energy will provide us, as qualified in the agreement, include the following:


	•	treasury, payroll and other financial-related services;

	•	human resources and employee benefits;

	•	legal and related services;

	•	information systems, network and related services;

	•	investment services;

	•	corporate services; and

	•	procurement and sourcing support.

The charges for the corporate services generally are intended to allow Alon Energy to fully recover the allocated direct costs of providing the services, plus all out-of-pocket costs and expenses, without markup over actual out-of-pocket costs. We believe that the allocated costs are substantially equivalent to the cost that would be incurred by us if we were to obtain such services from third parties or hire additional personnel to perform such functions. In addition to the cost of these services, we may incur other corporate and operational costs which may be greater than historically allocated levels. The allocation of cost will be based on various measures depending on the service provided.

Under the Corporate Services Agreement, we will each have the right to purchase goods or services, use intellectual property licensed from third parties and realize other benefits and rights under Alon Energy’s agreements with third-party vendors to the extent allowed by such vendor agreements. The Corporate Services Agreement also will provide for the lease or sublease of certain facilities used in the operation of our respective businesses and for access to Alon Energy’s computing and telecommunications systems to the extent necessary to perform or receive the corporate services.

The Corporate Services Agreement will require Alon Energy to continue to make available to us the range of services provided by Alon Energy prior to this offering, as qualified by such agreement. The Corporate Services Agreement may be terminated by mutual agreement of Alon Energy and us at any time, or upon no less than six months prior notice. However, the Corporate Services Agreement will require Alon Energy to provide certain specified services, generally related to information technology, for a period of time specified in the agreement after the expiration of the six-month notice period. Under the terms of the Corporate Services Agreement, Alon Energy will not be liable to us for or in connection with any services rendered pursuant to the Corporate Services Agreement or for any actions or inactions taken by Alon Energy in connection with the provision of services. However, Alon Energy will be liable for, and will indemnify a receiving party for, liabilities resulting from its gross negligence, willful misconduct, improper use or disclosure of client information or violations of law. Additionally, we will indemnify Alon Energy for any

losses arising from the provision of services, except to the extent the liabilities are caused by Alon Energy’s gross negligence or material breach of the Corporate Services Agreement.

Alon Energy Agreements with Third Parties

Historically, we have received services provided by third parties pursuant to various agreements that Alon Energy has entered into for the benefit of its affiliates. We pay the third parties directly for the services they provide to us or reimburse Alon Energy for our share of the actual costs incurred under the agreements. After this offering, we intend to continue to procure certain of these third-party services, including services related to insurance, vehicle leases, information technology and software, through contracts entered into by Alon Energy, to the extent we are permitted and elect to do so.

Registration Rights Agreement

For a description of the registration rights agreement with, and the registration rights granted to, Alon Energy, see “Shares Eligible for Future Sale — Registration Rights.”

Tax Matters Agreement

Prior to the completion of this offering, we and Alon Energy will enter into a tax matters agreement to allocate the responsibility of Alon Energy and its subsidiaries, on the one hand, and we and our subsidiaries, on the other, for the payment of taxes resulting from filings prior to the separation of tax returns on a combined, consolidated or unitary basis. In this prospectus, we refer to this agreement as the Tax Matters Agreement.

For U.S. federal income tax purposes, each member of an affiliated group of corporations that files a consolidated return is jointly and severally liable for the U.S. federal income tax liability of the entire group. Similar principles may apply with respect to members of a group that file a tax return on a combined, consolidated or unitary group basis for foreign, state and local tax purposes. Accordingly, the Tax Matters Agreement will allocate tax liabilities between Alon Energy and us during the periods in which we or any of our subsidiaries were included in the consolidated group of Alon Energy or any of its subsidiaries. The Tax Matters Agreement will provide that Alon Energy will indemnify us and our subsidiaries to the extent that, as a result of us or any of our subsidiaries being a member of a consolidated group, we or our subsidiaries become liable for the tax liability of the entire consolidated group (other than the portion of such liability for which we and our subsidiaries are liable under the Tax Matters Agreement).

Under Section 482 of the Code, the Internal Revenue Service has the authority in certain instances to redistribute, reapportion or reallocate gross income, deductions, credits or allowances between Alon Energy and us. Other taxing authorities may have similar authority under comparable provisions of foreign, state and local law. The Tax Matters Agreement will provide that we and Alon Energy will indemnify the other to the extent that, as a result of the Internal Revenue Service exercising its authority (or any other taxing authority exercising a similar authority), the tax liability of one group is reduced while the tax liability of the other group is increased.

Fuel Sales and Licensing Agreement

Prior to the completion of this offering, we and Alon USA, LP will enter into a fuel sales and licensing agreement. Under this agreement, Alon USA, LP agrees to provide us with approximately 226 million gallons of motor fuels annually, with flexibility to purchase up to 20% more or less than this amount. In the event that we do not purchase at least 181 million gallons in any contract year, Alon USA, LP’s exclusive remedy is to terminate this agreement. The fuel sales and licensing agreement also grants to us an exclusive, non-transferable license to the use of the FINA brand at our convenience stores and those of our distributors. Pricing for fuel purchased under this agreement is based upon a formula incorporating Platt’s and OPIS-based closing prices. The pricing arrangement under this agreement is comparable to our historical pricing arrangements.

Payment terms on motor fuels purchased are net 10 days. The term of the fuel sales and licensing agreement ends on December 31, 2008, although the license of the FINA brand may be earlier terminated in the event that Alon USA, LP does not extend its current license which expires in 2012.

SCS Beverage

On February 29, 2004, SCS sold 17 licenses for the sale of alcoholic beverages at 17 stores in New Mexico to SCS Beverage, Inc., a corporation treated as a pass-through entity that is wholly owned by Jeff D. Morris, Alon Energy’s President and Chief Executive Officer. Under rules and regulations of the New Mexico Alcohol and Gaming Division, or AGD, a holder of a license to sell alcoholic beverages in New Mexico must provide substantial documentation in the application for and annual renewal of the license, including detailed questionnaires and fingerprints of the officers and directors of each entity beneficially owning 10% or more of the holder of the license. SCS engaged in this transaction to expedite the process of renewing the licenses by limiting the required disclosures to one individual stockholder. The purchase price paid by SCS Beverage consisted of approximately $2.6 million for the 17 licenses and approximately $0.2 million for the inventory of alcoholic beverages on the closing date. The purchase price was paid by SCS Beverage issuing to SCS a demand promissory note in the amount of $2.8 million. The demand note is payable solely by transferring the licenses and inventory existing at the time of payment back to SCS. The demand note is secured by a pledge of the licenses and the inventory and a pledge of 100% of the stock of SCS Beverage. Pursuant to the purchase and sale agreement, SCS Beverage granted SCS an option to reacquire the licenses at any time at a purchase price equal to the same purchase price paid by SCS Beverage to acquire the licenses.

As the holder of the New Mexico licenses, SCS Beverage is the only party entitled to purchase alcoholic beverages to be sold at the locations covered by the licenses and to receive revenues from the sale of alcoholic beverages at those locations. Simultaneously with the transfer of the licenses, SCS Beverage entered into a premises lease with SCS to lease space at each of the locations covered by the licenses for the purpose of conducting the alcoholic beverages concessions. To date, the profits realized by SCS Beverage from the sale of alcoholic beverages at these locations have not exceeded lease payments by SCS Beverage to SCS and SCS anticipates that this will continue to be the case in the future. As a result, Mr. Morris has not received any economic benefit from the ownership of SCS Beverage, and SCS does not anticipate that Mr. Morris will derive any economic benefit from his ownership of SCS Beverage in the future.

Prior to this offering, we expect to transfer all 17 licenses from SCS Beverage to a pass-through entity that is wholly owned by Mr. McKeen, our President and Chief Executive Officer.

PRINCIPAL STOCKHOLDERS

The following table sets forth information regarding the beneficial ownership of our common stock as of , 2009, on both a historical basis and as adjusted to reflect the completion of this offering, for:


	•	each person known by us to beneficially own more than 5% of our common stock;

	•	each executive officer named in the Summary Compensation Table under “Executive Compensation”;

	•	each of our directors; and

	•	all of our executive officers and directors as a group.

Beneficial ownership for the purposes of the following table is determined in accordance with the rules and regulations of the Securities and Exchange Commission. These rules generally provide that a person is the beneficial owner of securities if they have or share the power to vote or direct the voting thereof, or to dispose or direct the disposition thereof or have the right to acquire such powers within 60 days.

Shares Beneficially Owned

Prior to this Offering

After this Offering

Name and Address

Alon Brands, Inc. S-1/A