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Excluding special items, Alon recorded a net loss of $59.7 million, or $1.27 per share, for the second quarter of 2008, compared with net income of $94.1 million, or $2.01 per share, for the same period last year.
Special items included $26.3 million of after-tax gains recognized on disposition of assets in connection with the contribution of certain pipeline and terminal assets to Holly Energy Partners, LP, in the first quarter of 2005. The gain recognized in the second quarter of 2008 represented all the remaining deferred gain associated with the transaction. Additionally, special items for the second quarter of 2008 include an after-tax gain of $57.2 million recognized from the involuntary conversion of assets due to the Big Spring refinery fire. Also, $5.5 million of after-tax losses were incurred for insurance. Alon did not recognize any income from business interruption insurance during the second quarter and first half of 2008.
Net loss for the first half of 2008, was ($15.4) million, or ($0.33) per share, compared to net income of $131.2 million, or $2.81 per share, for the same period last year. Excluding special items, Alon recorded a net loss of ($84.9) million, or ($1.81) per share, for the first half of 2008, compared to net income of $129.1 million, or $2.76 per share, for the same period last year.
Alon USA president and CEO Jeff Morris said, "We successfully completed the acquisition of the Krotz Springs, Louisiana refinery on July 3, 2008. With the completion of the Krotz Springs refinery acquisition, our crude oil refining capacity increased by 50 percent to approximately 250,000 barrels per day, including four refineries located on the West Coast, West Texas and Gulf Coast. We are very pleased with the Krotz Springs acquisition and are optimistic about the opportunities at this refinery for Alon.
"The second quarter of 2008 has seen us continue to work through the challenges related to the major fire at the Big Spring, Texas refinery on February 18, 2008 and higher crude oil costs. The higher crude oil costs have reduced refinery margins industry-wide, which has continued to limit production at our California refineries. I am very pleased with our progress to return the Big Spring refinery to its full operating capacity.
"In addition to our recovery efforts at Big Spring and the Krotz Springs acquisition, we are moving forward with the initiatives discussed earlier this year. We are proceeding with an initial public offering relating to our retail and branded marketing businesses, which we will seek to complete by year end. Additionally, we are completing the detailed engineering of the hydrocracker project at our California refineries and still expect this project to be completed by the end of 2010."
Over the past year, Alon USA's share price has fallen 76 percent, and the company currently has a market cap of just $404 million. Despite the fall in profitability, the company's board declared a dividend of $0.04 per share, which will be paid on September 12.
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