Alon USA Energy (ALJ) 8-K/A Financial Statements and Exhibits

Exhibit 99.3

ALON USA ENERGY, INC
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)

Introduction

The following unaudited pro forma condensed consolidated financial statements give effect to the acquisition by Alon USA Energy, Inc. (“Alon”) of Paramount Petroleum Corporation (“PPC”) on August 4, 2006 with an effective date of July 31, 2006. The purchase price for the outstanding shares of PPC stock consists of approximately $314,000 in cash, subject to a post-closing adjustment based on changes in specified balance sheet items between December 31, 2005 and July 31, 2006, and the assumption of approximately $155,000 of net debt.

The unaudited pro forma condensed consolidated balance sheet as of June 30, 2006 is presented as if the PPC acquisition had occurred on that date. The unaudited pro forma condensed consolidated statements of operations are presented as if the acquisition occurred on January 1, 2005. The unaudited pro forma condensed consolidated financial statements include adjustments, which are based on preliminary estimates pending the completion of an independent appraisal and other evaluations, to reflect the allocation of the purchase price to PPC’s net assets as of June 30, 2006. The excess of purchase price over the estimated net fair value of assets acquired and liabilities assumed is categorized as goodwill. The final purchase accounting adjustments recorded in connection with the acquisition of PPC may differ from the pro forma adjustments set forth herein.

The unaudited pro forma condensed consolidated financial statements should be read in conjunction with (i) the audited historical consolidated financial statements of Alon included in its annual report on Form 10-K for the year ended December 31, 2005; (ii) the audited historical consolidated financial statements of PPC for the year ended December 31, 2005 and the unaudited consolidated financial statements of PPC for the six months ended June 30, 2006 included as Exhibit 99.1 and 99.2, respectively, to the current report on Form 8-K of which this Exhibit 99.3 is a part; (iii) the unaudited historical consolidated financial statements of Alon, included in its quarterly report on Form 10-Q for the period ended June 30, 2006; and (iv) the other information contained in the statements and reports filed by Alon with the Securities and Exchange Commission. The unaudited pro forma condensed consolidated financial statements are presented for illustrative purposes only and are not necessarily indicative of the financial position that would have been obtained or the financial results that would have occurred if the PPC acquisition had been consummated on the dates indicated, nor are they necessarily indicative of the financial position or results of operations of Alon in the future. The pro forma adjustments, as described in the notes to unaudited pro forma condensed consolidated financial statements, are based upon available information and certain assumptions that Alon’s management believes are reasonable.

The unaudited pro forma condensed consolidated financial statements do not give effect to any anticipated cost savings or other financial benefits expected to result from the PPC acquisition.

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ALON USA ENERGY, INC.
Pro Forma Balance Sheet
As of June 30, 2006
(dollars in thousands)
(unaudited)

									Alon
									Pro Forma
	ALON			PPC		Pro Forma			Combined
	Historical			Historical		Adjustments			With PPC
ASSETS
Current Assets:
Cash and cash equivalents		204,348			1,709		(53,797	) (a)		152,260
Accounts and other receivables, net		129,966			97,517		—			227,483
Inventories		113,393			127,605		43,000	(b)		283,998
Prepaid expenses and other current assets		7,496			9,959		—			17,455
Total current assets		455,203			236,790		(10,797	)		681,196
Equity investment		22,322			16,785		—			39,107
Property, plant, and equipment, net		211,933			181,029		247,577	(c)		640,539
Other assets		57,143			24,293		16,333	(d)		97,769
Total assets		746,601			458,897		253,113			1,458,611
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		136,004			100,432		—			236,436
Accrued liabilities		58,323			12,498		—			70,821
Current portion of deferred gain on disposition of assets		10,750			—		—			10,750
Current portion of long-term debt		2,067			120,486		(116,486	) (e)		6,067
Total current liabilities		207,144			233,416		(116,486	)		324,074
Other non-current liabilities		17,800			32,998		—			50,798
Deferred gain on disposition of assets		47,397			—		—			47,397
Long-term debt		29,096			36,747		359,253	(e)		425,096
Deferred income tax liability		76,652			38,594		127,488	(f)		242,734
Total liabilities		378,089			341,755		370,255			1,090,099
Minority interest in subsidiaries		12,571			—		—			12,571
Stockholders’ equity:
Preferred stock		—			51		(51	) (g)		—
Common stock		468			—		—	(g)		468
Additional paid-in capital		181,366			20,979		(20,979	) (g)		181,366
Accumulated other comprehensive loss, net of income tax		(2,596	)		—		—			(2,596	)
Retained earnings		176,703			96,112		(96,112	) (g)		176,703
Total stockholders’ equity		355,941			117,142		(117,142	)		355,941
Total liabilities and stockholders’ equity		746,601			458,897		253,113			1,458,611

The accompanying notes are an integral part of these consolidated financial statements.

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ALON USA ENERGY, INC.
Pro Forma Statement of Operations
Six Months Ended June 30, 2006
(dollars and weighted average shares outstanding in thousands)
(unaudited)

										Alon
										Pro Forma
	ALON			PPC			Pro Forma			Combined
	Historical			Historical			Adjustments			With PPC
Net sales		1,256,963			734,596			(3,278	) (h)		1,988,281
Operating costs and expenses:
Cost of sales		1,054,516			652,247			(3,278	) (h)		1,703,485
Direct operating expenses		45,435			41,799			—			87,234
Selling, general, and administrative expenses		37,807			11,778			—			49,585
Depreciation and amortization		10,931			3,508			4,800	(i)		19,239
Insurance recovery		—			(7,772	)		—			(7,772	)
Total operating costs and expenses		1,148,689			701,560			1,522			1,851,771
Gain on disposition of assets		57,665			—			—			57,665
Operating income		165,939			33,036			(4,800	)		194,175
Interest expense		(10,396	)		(6,360	)		(9,810	) (j)		(26,566	)
Equity earnings in subsidiaries		753			3,662			—			4,415
Other income (expense), net		4,101			(7,694	)		—			(3,593	)
Income before income tax expense and minority interest in income of subsidiaries		160,397			22,644			(14,610	)		168,431
Income tax expense		58,133			9,737			(5,844	) (k)		62,026
Income before minority interest in income of subsidiaries		102,264			12,907			(8,766	)		106,405
Minority interest in income of subsidiaries		5,009			—			—			5,009
Net income from continuing operations		97,255			12,907			(8,766	)		101,396
Earnings per share from continuing operations										$	2.17
Weighted average shares outstanding											46,732

The accompanying notes are an integral part of these consolidated financial statements.

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ALON USA ENERGY, INC.
Pro Forma Statement of Operations
Year Ended December 31, 2005
(dollars and weighted average shares outstanding in thousands)
(unaudited)

										Alon
										Pro Forma
	ALON			PPC			Pro Forma			Combined
	Historical			Historical			Adjustments			With PPC
Net sales		2,328,507			1,205,207			(874	) (h)		3,532,840
Operating costs and expenses:
Cost of sales		1,990,338			1,105,751			(874	) (h)		3,095,215
Direct operating expenses		93,843			71,022			—			164,865
Selling, general, and administrative expenses		73,219			19,615			—			92,834
Depreciation and amortization		20,935			6,016			9,600	(i)		36,551
Total operating costs and expenses		2,178,335			1,202,404			8,726			3,389,465
Gain on disposition of assets		38,591			—			—			38,591
Operating income		188,763			2,803			(9,600	)		181,966
Interest expense		(19,326	)		(7,336	)		(19,604	) (j)		(46,266	)
Equity earnings in subsidiaries		1,086			5,001			—			6,087
Other income (expense), net		4,775			(6,619	)		—			(1,844	)
Income before income tax expense (benefit)
and minority interest in income of subsidiaries		175,298			(6,151	)		(29,204	)		139,943
Income tax expense (benefit)		65,518			(2,242	)		(11,682	) (k)		51,594
Income before minority interest in income of subsidiaries		109,780			(3,909	)		(17,522	)		88,349
Minority interest in income of subsidiaries		5,792			—			—			5,792
Net income from continuing operations		103,988			(3,909	)		(17,522	)		82,557
Earnings per share from continuing operations										$	2.07
Weighted average shares outstanding											39,889

The accompanying notes are an integral part of these consolidated financial statements.

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ALON USA ENERGY, INC.
UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
Notes to Consolidated Financial Statements
(dollars in thousands except as noted)

Paramount Petroleum Corporation Pro Forma Adjustments:

(a) The pro forma adjustment to cash consists of the following:

Issuance of term debt	$	400,000
Debt issuance cost		(8,000	)
Repayment of PPC debt		(157,233	)
Estimated purchase price		(313,564	)
Escrow deposit		25,000
Total change in cash	$	(53,797	)

	The pro forma adjustment to cash includes the effect of the issuance of $400,000 principal amount of 7-year term debt and the payment of $8,000 of associated debt issuance costs, the net proceeds from which were used to acquire the outstanding shares of PPC. The debt issuance costs were capitalized and will be amortized over the life of the new term debt. The term debt requires a principal payment of 1% per annum. The pro forma balance sheet reflects $4,000 of this term debt as a current liability.
	The existing debt of PPC was repaid by Alon at the date of acquisition. The amount of debt on the PPC historical balance sheet at June 30, 2006 was $157,233, which has been removed from the pro forma balance sheet.
	The estimated purchase price of $313,564 was paid for the acquisition of 100% of the outstanding shares of PPC stock.
	At June 30, 2006, Alon had $25,000 in escrow recorded as other assets relating to the acquisition of the outstanding shares of PPC. The $25,000 has been moved from other assets to cash in connection with the preparation of the pro forma balance sheet at June 30, 2006.
(b)	PPC’s inventory was purchased by Alon at market value. The inventory was historically carried at the lower of LIFO cost or market. The estimated increase in inventory value is approximately $43,000.
	The pro forma consolidated financial statements do not reflect an estimated special adjustment of $15,000 to cost of sales resulting from the difference between the estimated fair market value recorded for the inventories acquired in the PPC acquisition under purchase accounting and the estimated amounts required to be recorded in applying Alon’s LIFO accounting policy. This estimated adjustment will be reflected in Alon’s Quarterly Report on Form 10-Q to be filed in November 2006.
(c)	The value of the property, plant and equipment, net acquired in the acquisition has been increased by $252,766 to reflect estimated fair market values. The estimated property, plant and equipment values are preliminary pending the completion of an independent appraisal and other evaluations which are currently expected to be completed by December 31, 2006.
	Property, plant and equipment of PPC at June 30, 2006 included $5,189 as land held for investment. This land was not purchased by Alon and is treated as a reduction to property, plant and equipment.

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ALON USA ENERGY, INC.
UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
Notes to Consolidated Financial Statements
(dollars in thousands except as noted)

(d) The pro forma adjustment to other assets consists of the following:

Debt issuance cost	$	8,000
Escrow deposit		(25,000	)
Estimated goodwill		33,333
Total change in other assets	$	16,333

	As noted in (a) above, approximately $8,000 of associated debt issuance costs were incurred. The debt issuance costs were capitalized and will be amortized over the life of the new term debt.
	Also noted in (a) above, $25,000 of escrow deposits has been moved from other assets to cash in connection with the preparation of the pro forma balance sheet at June 30, 2006.
	The estimated amount of purchase price in excess of net assets acquired has been recorded as goodwill in the pro forma balance sheet. This amount is preliminary pending the completion of an independent appraisal and other evaluations which are currently expected to be completed by December 31, 2006.
(e)	As noted in (a) above, the existing debt of PPC was repaid by Alon at the date of acquisition. The amount of debt on the unaudited consolidated financial statements of PPC at June 30, 2006 was $157,233, which has been removed from the pro forma balance sheet. Of the $400,000 term debt issued for the acquisition of PPC, $4,000 is included as current portion of long-term debt and $396,000 is included as long term debt in the pro forma balance sheet.
(f)	Deferred income tax liability has been increased for the estimated basis difference between the acquisition cost and the historical book value of PPC’s net assets using Alon’s estimated effective tax rate.
(g)	Stockholders’ equity has been adjusted to remove the historical stockholders’ equity of PPC.
(h)	Net sales and cost of sales have been reduced to eliminate the effects of transactions between Alon and PPC.
(i)	Depreciation and amortization has been increased to reflect additional depreciation expense related to the increase in property, plant and equipment based on the estimated fair market value of the acquired assets. The incremental amount of depreciation expense recorded was $4,800 for the six months ended June 30, 2006 and $9,600 for the year ended December 31, 2005.
(j)	To reflect interest expense at approximately 7.0% on borrowings of $400,000 at $14,100 for the six months ended June 30, 2006 and interest expense at approximately 5.7% on borrowings of $400,000 at $22,800 for the year ended December 31, 2005, as well as the amortization of deferred debt issuance costs of $570 for the six months ended June 30, 2006 and $1,140 for the year ended December 31, 2005. Letter of credit fees are estimated at $1,500 for the six months ended June 30, 2006 and $3,000 for the year ended December 31, 2005. Interest expense for PPC historical debt of $6,360 for the six months ended June 30, 2006 and $7,336 for the year ended December 31, 2005 has been eliminated in the pro forma adjustments. A 1/4% change in the interest rate associated with the term debt would have a $50 and $100 effect on interest expense for the six months ended June 30, 2006 and the year ended December 31, 2005, respectively.

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ENERGY, INC.
UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
Notes to Consolidated Financial Statements
(dollars in thousands except as noted)

(k) Income tax expense has been reduced based on increased depreciation resulting from the increase in the carrying value of property, plant and equipment and increased interest expense resulting from the increase in consolidated debt.

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