UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

(Mark One)

 

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 31,November 30, 2016

or

 

¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File No. 001-06198

 

 

 

LOGO  

UNITED REFINING COMPANY

(Exact name of registrant as specified in its charter)

 

Pennsylvania 25-1411751

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

15 Bradley Street 
Warren, Pennsylvania 16365
(Address of principal executive office) (Zip Code)

814-723-1500

(Registrant’s telephone number, including area code)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 ofRegulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

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 definition of “accelerated filer” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer  ¨

  

Accelerated filer  ¨

Non-accelerated filer  x  (Do not check if a smaller reporting company)

  

Smaller reporting company  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of July 15, 2016,January 17, 2017, there were 100 shares of common stock, par value $.10 per share, of the Registrant outstanding.


TABLE OF ADDITIONAL REGISTRANTS

 

Name

  

State of Other
Jurisdiction of
Incorporation

  IRS Employer
Identification
Number
   Commission
File Number
 

Kiantone Pipeline Corporation

  New York   25-1211902     333-35083-01  

Kiantone Pipeline Company

  Pennsylvania   25-1416278     333-35083-03  

United Refining Company of Pennsylvania

  Pennsylvania   25-0850960     333-35083-02  

United Jet Center, Inc.

  Delaware   52-1623169     333-35083-06  

Kwik-Fill Corporation

  Pennsylvania   25-1525543     333-35083-05  

Independent Gas and Oil Company of Rochester, Inc.

  New York   06-1217388     333-35083-11  

Bell Oil Corp.

  Michigan   38-1884781     333-35083-07  

PPC, Inc.

  Ohio   31-0821706     333-35083-08  

Super Test Petroleum, Inc.

  Michigan   38-1901439     333-35083-09  

Kwik-Fil, Inc.

  New York   25-1525615     333-35083-04  

Vulcan Asphalt Refining Corporation

  Delaware   23-2486891     333-35083-10  

Country Fair, Inc.

  Pennsylvania   25-1149799     333-35083-12  

FORM 10-Q – CONTENTS

 

      PAGE 

PART I. FINANCIAL INFORMATION

  4

Item 1.

  

Financial StatementsStatements.

  4
  

Consolidated Balance Sheets – May 31,November 30, 2016 (unaudited) and August 31, 20152016

   4  
  

Consolidated Statements of Operations – Quarter and NineThree Months Ended May  31,November  30, 2016 and 2015 (unaudited)

   5  
  

Consolidated Statements of Comprehensive Income (Loss)LossQuarter and NineThree Months Ended May 31,November  30, 2016 and 2015 (unaudited)

   6  
  

Consolidated Statements of Cash Flows – NineThree Months Ended May  31,November  30, 2016 and 2015 (unaudited)

   7  
  

Notes to Consolidated Financial Statements (unaudited)

   8  

Item 2.

  

Management’s Discussion and Analysis of Financial Condition and Results of OperationsOperations.

   1416  

Item 3.

  

Quantitative and Qualitative Disclosures about Market RiskRisk.

   22  

Item 4.

  

Controls and ProceduresProcedures.

   22  

PART II. OTHER INFORMATION

  24

Item 1.

  

Legal ProceedingsProceedings.

   2423  

Item 1A.

  

Risk FactorsFactors.

   2423  

Item 2.

  

Unregistered Sales of Equity Securities and Use of ProceedsProceeds.

   2423  

Item 3.

  

Defaults Upon Senior SecuritiesSecurities.

   2423  

Item 4.

  

Mine Safety DisclosuresDisclosures.

   2423  

Item 5.

  

Other InformationInformation.

   2423  

Item 6.

  

ExhibitsExhibits.

   2423  

Signatures.

   2524  

PART I.

FINANCIAL INFORMATION

 

Item 1.

Financial Statements.

UNITED REFINING COMPANY AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands, except share amounts)

 

  May 31,
2016
(Unaudited)
 August 31,
2015
   November 30,
2016
(Unaudited)
 August 31,
2016
 

Assets

      

Current:

      

Cash and cash equivalents

  $78,909   $117,028    $50,589   $48,361  

Short-term investments

   10,188    10,156  

Accounts receivable, net

   67,324    81,567     60,243    71,504  

Refundable income taxes

   4,200    —       3,288    3,343  

Inventories, net

   164,112    206,066     159,936    167,062  

Prepaid income taxes

   5,147    —       11,004    4,018  

Prepaid expenses and other assets

   19,368    28,000     19,983    22,092  

Amounts due from affiliated companies, net

   3,315    393  

Amounts due from affiliated companies

   189    —    
  

 

  

 

   

 

  

 

 

Total current assets

   342,375    433,054     315,420    326,536  

Property, plant and equipment, net

   393,558    347,757     410,080    403,631  

Deferred financing costs, net

   5,379    2,667  

Goodwill

   1,349    1,349     1,349    1,349  

Tradename

   10,500    10,500     10,500    10,500  

Amortizable intangible assets, net

   839    869     776    807  

Deferred integrity and replacement costs, net

   116,307    58,634     109,505    112,892  

Deferred turnaround costs and other assets, net

   21,404    30,636     17,222    18,852  
  

 

  

 

   

 

  

 

 
  $891,711   $885,466    $864,852   $874,567  
  

 

  

 

   

 

  

 

 

Liabilities and Stockholder’s Equity

      

Current:

      

Current installments of long-term debt

  $28,103   $1,556    $28,825   $28,029  

Accounts payable

   59,276    44,833     47,044    61,832  

Accrued liabilities

   16,215    17,911     20,702    21,307  

Income taxes payable

   —      7,397  

Sales, use and fuel taxes payable

   22,410    23,373     19,942    21,649  

Deferred income taxes

   5,822    5,822  

Amounts due to affiliated companies

   44    729  
  

 

  

 

   

 

  

 

 

Total current liabilities

   131,826    100,892     116,557    133,546  

Long term debt: less current installments

   266,710    239,111  

Long-term debt, less current installments

   271,625    254,498  

Deferred income taxes

   58,376    55,921     49,870    48,173  

Deferred retirement benefits

   67,479    71,800     93,354    94,786  
  

 

  

 

   

 

  

 

 

Total liabilities

   524,391    467,724     531,406    531,003  
  

 

  

 

   

 

  

 

 

Commitments and contingencies

      

Stockholder’s equity:

      

Common stock; $.10 par value per share – shares authorized 100; issued and outstanding 100

   —      —       —      —    

Series A Preferred stock; $1,000 par value per share – shares authorized 25,000; issued and outstanding 14,116

   14,116    14,116     14,116    14,116  

Additional paid-in capital

   156,846    156,846     157,316    157,316  

Retained earnings

   214,581    263,464     198,543    208,495  

Accumulated other comprehensive loss

   (18,223  (16,684   (36,529  (36,363
  

 

  

 

   

 

  

 

 

Total stockholder’s equity

   367,320    417,742     333,446    343,564  
  

 

  

 

   

 

  

 

 
  $891,711   $885,466    $864,852   $874,567  
  

 

  

 

   

 

  

 

 

See accompanying notes to consolidated financial statements.

UNITED REFINING COMPANY AND SUBSIDIARIES

Consolidated Statements of Operations – (Unaudited)

(in thousands)

 

  Three Months Ended Nine Months Ended 
  May 31, May 31,   Three Months Ended
November 30,
 
  2016 2015 2016 2015   2016 2015 

Net sales

  $497,982   $602,877   $1,511,297   $2,008,478    $513,378   $574,941  
  

 

  

 

  

 

  

 

   

 

  

 

 

Costs and expenses:

     

Costs of goods sold (exclusive of depreciation and amortization)

   395,531    485,906    1,320,134    1,741,703     466,858    504,772  

Selling, general and administrative expenses

   43,591    42,073    127,690    124,069     43,580    42,589  

Depreciation and amortization expenses

   12,175    10,444    36,679    31,321     12,252    11,702  
  

 

  

 

  

 

  

 

   

 

  

 

 
   451,297    538,423    1,484,503    1,897,093     522,690    559,063  
  

 

  

 

  

 

  

 

   

 

  

 

 

Operating income

   46,685    64,454    26,794    111,385  

Operating (loss) income

   (9,312  15,878  
  

 

  

 

  

 

  

 

   

 

  

 

 

Other expense:

     

Interest expense, net

   (2,383  (6,639  (9,795  (19,929   (2,757  (5,173

Other, net

   (254  (907  (3,195  (3,064   (370  (301

Loss on extinguishment of debt

   —      —      (19,316  —       —      (19,316
  

 

  

 

  

 

  

 

   

 

  

 

 
   (2,637  (7,546  (32,306  (22,993   (3,127  (24,790
  

 

  

 

  

 

  

 

   

 

  

 

 

Income (loss) before income tax expense (benefit)

   44,048    56,908    (5,512  88,392  

Income tax expense (benefit)

   16,307    22,201    (2,045  34,468  

Loss before income tax benefit

   (12,439  (8,912

Income tax benefit

   (4,604  (3,300
  

 

  

 

  

 

  

 

   

 

  

 

 

Net income (loss)

  $27,741   $34,707   $(3,467 $53,924  

Net loss

  $(7,835 $(5,612
  

 

  

 

  

 

  

 

   

 

  

 

 

See accompanying notes to consolidated financial statements.

UNITED REFINING COMPANY AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)Loss – (Unaudited)

(in thousands)

 

   Three Months Ended  Nine Months Ended 
   May 31,  May 31, 
   2016  2015  2016  2015 

Net income (loss)

  $27,741   $34,707   $(3,467 $53,924  

Other comprehensive loss, net of taxes:

   

Unrecognized post retirement costs, net of taxes of $(304) and $(236) for the three months ended May 31, 2016 and 2015, respectively and $(930) and $(710) for the nine months ended May 31, 2016 and 2015, respectively

   (519  (371  (1,539  (1,111
  

 

 

  

 

 

  

 

 

  

 

 

 

Other comprehensive loss

   (519  (371  (1,539  (1,111
  

 

 

  

 

 

  

 

 

  

 

 

 

Total comprehensive income (loss)

  $27,222   $34,336   $(5,006 $52,813  
  

 

 

  

 

 

  

 

 

  

 

 

 
   Three Months Ended
November 30,
 
   2016  2015 

Net loss

  $(7,835 $(5,612

Other comprehensive loss, net of taxes:

  

Unrecognized post retirement costs, net of taxes of $(97) and $(321) for the three months ended November 30, 2016 and 2015, respectively

   (166  (502
  

 

 

  

 

 

 

Other comprehensive loss

   (166  (502
  

 

 

  

 

 

 

Total comprehensive loss

  $(8,001 $(6,114
  

 

 

  

 

 

 

See accompanying notes to consolidated financial statements.

UNITED REFINING COMPANY AND SUBSIDIARIES

Consolidated Statements of Cash Flows – (Unaudited)

(in thousands)

 

  Nine Months Ended 
  May 31,   Three Months Ended
November 30,
 
  2016 2015   2016 2015 

Cash flows from operating activities:

      

Net (loss) income

  $(3,467 $53,924  

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

   

Net loss

  $(7,835 $(5,612

Adjustments to reconcile net loss to net cash provided by operating activities:

   

Depreciation and amortization

   37,780    33,163     12,252    11,702  

Amortization of debt discount and deferred financing costs

   327    466  

Deferred income taxes

   3,385    23,604     1,794    (5,742

Noncash portion of loss on extinguishment of debt

   5,771    —       —      5,771  

Loss on asset dispositions

   840    771     1    27  

Cash provided by working capital items

   56,947    27,631  

Cash (used in) provided by working capital items

   (4,409  46,995  

Change in operating assets and liabilities:

      

Other assets, net

   406    306     169    168  

Deferred retirement benefits

   (6,790  (6,079   (1,695  (2,627
  

 

  

 

   

 

  

 

 

Total adjustments

  ��98,339    79,396     8,439    56,760  
  

 

  

 

   

 

  

 

 

Net cash provided by operating activities

   94,872    133,320     604    51,148  
  

 

  

 

   

 

  

 

 

Cash flows from investing activities:

      

Short-term investments

   (32  —    

Additions to property, plant and equipment

   (64,389  (31,202   (12,662  (18,674

Additions to amortizable intangible assets

   (60  (100

Additions to deferred turnaround costs

   (1,362  (3,318   (1,262  (1,065

Additions to deferred integrity and replacement costs

   (66,572  (28,630   —      (53,674

Proceeds from asset dispositions

   246    7     101    —    
  

 

  

 

   

 

  

 

 

Net cash used in investing activities

   (132,137  (63,243   (13,855  (73,413
  

 

  

 

   

 

  

 

 

Cash flows from financing activities:

      

Dividends to preferred shareholder and stockholder

   (45,416  (21,610   (2,117  (2,117

Proceeds from issuance of long-term debt

   301,948    —       25,000    250,475  

Principal reductions of long-term debt

   (251,593  (1,245   (7,052  (237,656

Deferred financing costs

   (5,793  —       (352  (4,613
  

 

  

 

   

 

  

 

 

Net cash used in financing activities

   (854  (22,855

Net cash provided by financing activities

   15,479    6,089  
  

 

  

 

   

 

  

 

 

Net (decrease) increase in cash and cash equivalents

   (38,119  47,222  

Net increase (decrease) in cash and cash equivalents

   2,228    (16,176

Cash and cash equivalents, beginning of year

   117,028    99,037     48,361    117,028  
  

 

  

 

   

 

  

 

 

Cash and cash equivalents, end of period

  $78,909   $146,259    $50,589   $100,852  
  

 

  

 

   

 

  

 

 

Cash provided by (used in) working capital items:

      

Accounts receivable, net

  $14,243   $17,690    $11,261   $14,903  

Refundable income taxes

   (4,200  (4,912   55    (4,200)��

Inventories, net

   41,954    (37,528   7,126    51,766  

Prepaid income taxes

   (5,147  13,674     (6,986  —    

Prepaid expenses and other assets

   8,632    45,158     2,109    (13,848

Amounts due from affiliated companies, net

   (2,922  (1,162

Amounts due from/to affiliated companies

   (874  (1,914

Accounts payable

   14,443    (19,486   (14,788  2,454  

Accrued liabilities

   (1,696  3,350     (605  362  

Income taxes payable

   (7,397  7,646     —      (2,002

Sales, use, and fuel taxes payable

   (963  3,201     (1,707  (526
  

 

  

 

   

 

  

 

 

Total change

  $56,947   $27,631    $(4,409 $46,995  
  

 

  

 

   

 

  

 

 

Cash paid during the period for:

      

Interest

  $9,160   $12,893    $2,483   $3,808  

Income taxes

  $11,314   $396    $546   $8,644  
  

 

  

 

   

 

  

 

 

Non-cash investing activities:

   

Property additions & capital leases

  $—     $285  
  

 

  

 

 

See accompanying notes to consolidated financial statements.

UNITED REFINING COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

 

1.

Description of Business and Basis of Presentation

The consolidated financial statements include the accounts of United Refining Company (“URC”) and its subsidiaries, United Refining Company of Pennsylvania and its subsidiaries and Kiantone Pipeline Corporation and its subsidiary (collectively, the “Company”). All significant intercompany balances and transactions have been eliminated in consolidation.

The Company is a petroleum refiner and marketer in its primary market area of Western New York and Northwestern Pennsylvania. Operations are organized into two business segments: wholesale and retail.

The wholesale segment is responsible for the acquisition of crude oil, petroleum refining, supplying petroleum products to the retail segment and the marketing of petroleum products to wholesale and industrial customers. The retail segment operates a network of Company operated retail units under the Red Apple Food Mart® and Country Fair® brand names selling petroleum products under the Kwik Fill®, Citgo® and Keystone® brand names, as well as convenience and grocery items.

The Company is a wholly-owned subsidiary of United Refining, Inc., a wholly-owned subsidiary of United Acquisition Corp., which in turn is a wholly-owned subsidiary of Red Apple Group, Inc. (the “Parent”).

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended May 31,November 30, 2016 are not necessarily indicative of the results that may be expected for the year ending August 31, 2016.2017. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Form 10-K for the fiscal year ended August 31, 2015.2016.

Recent Accounting Pronouncements

In May, 2014, the FASB issued ASU No. 2014-09 “Revenue from Contracts with Customers,” which provides guidance for revenue recognition. The standard’s core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU No. 2015-14 which deferred the effective date of ASU 2014-09. This guidance will now be effective for our financial statements in the annual period beginning after December 15, 2017. We are currently evaluating the effect of adopting this new accounting guidance and do not expect adoption will have a material impact on our financial statements.

In April 2015, the FASB issued ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs,” which requires debt issuance costs related directly to notes payable be deducted from the face amount of that note and the amortization of such costs be classified as interest expense. Effective November 30, 2016, the Company adopted the accounting and reporting requirements included in ASU 2015-03 and has applied these requirements retrospectively. Accordingly, the Company has included $5,150,000 of previously reported deferred financing cost assets in long-term debt, net of current installments in its August 31, 2016 consolidated balance sheet. The adoption of these accounting and reporting requirements resulted in an increase in interest expense and a decrease in other expense of $327,000 and $275,000 on the consolidated statements of operations for the three months ended November 30, 2016 and 2015, respectively.

UNITED REFINING COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities” (ASU 2016-01”). The standard addresses certain aspects of recognition, measurements, presentation and disclosure of financial instruments. ASU 2016-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 and early adoption is not permitted. The Company expects to adopt this guidance when effective and adoption is not expected to have a material effect on the financial statements.

In February 2016, the FASB issued ASU-2016-02 “Leases,” which replaces the existing guidance in Accounting Standards Codification (“ASC”) 840. This new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018 with early adoption permitted. The guidance requires a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases. Both finance leases and operating leases will result in the lessee recognizing a right-of-use (ROU) asset and a corresponding lease liability. For finance leases the lessee would recognize interest expense and amortization of the ROU asset and for operating leases the lessee would recognize a straight-line total lease expense. The Company is currently assessing the impact that adoption of this guidance will have on its financial statements and footnote disclosures.

In August 2016, the FASB issued ASU 2016-15 which includes guidance to clarify how companies present and classify certain cash receipts and cash payments in the statement of cash flows, including contingent consideration payments made after a business acquisition and debt extinguishment costs. Specifically, cash payments to settle a contingent consideration liability which are not made soon after the acquisition date should be classified as cash used in financing activities up to the initial amount of contingent consideration recognized with the remaining amount classified as cash flows from operating activities. The guidance is effective for fiscal years and interim periods beginning after December 15, 2017, with early adoption permitted. The Company expects to adopt this guidance when effective and adoption is not expected to have a material effect on the financial statements.

 

2.

Inventories

Inventories are stated at the lower of cost or market (LCM), with cost being determined under the Last-in, First-out (LIFO) method for crude oil and petroleum product inventories and the First-in, First-out (FIFO) method for merchandise. Supply inventories are stated at either the LCM or replacement cost and include various parts for the refinery operations.

Inventories consist of the following:

 

  May 31,
2016
   August 31,
2015
   November 30,
2016
   August 31,
2016
 
  (in thousands)   (in thousands) 

Crude Oil

  $33,920    $60,209    $39,847    $44,536  

Petroleum Products

   72,943     92,452     61,198     65,414  
  

 

   

 

   

 

   

 

 

Total @ Lower of LIFO Cost or Market

   106,863     152,661     101,045     109,950  
  

 

   

 

   

 

   

 

 

Merchandise

   23,906     24,277     27,379     26,293  

Supplies

   33,343     29,128     31,512     30,819  
  

 

   

 

   

 

   

 

 

Total @ FIFO

   57,249     53,405     58,891     57,112  
  

 

   

 

   

 

   

 

 

Total Inventory

  $164,112    $206,066    $159,936    $167,062  
  

 

   

 

   

 

   

 

 

UNITED REFINING COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

 

As of May 31,November 30, 2016 and August 31, 2015,2016, the replacement cost of LIFO inventories (FIFO) (was less than) exceeded their LIFO carrying values (LCM) on the balance sheets by approximately $(5,843,000)$3,397,000 and $6,201,000,$4,718,000, respectively, which includes the LCM inventory writedownwrite-down of $36,455,000$9,540,000 and $0,$13,052,000, respectively, and a LIFO increase (decrease) of $42,298,000$6,143,000 and $(6,201,000),$8,334,000, respectively.

 

3.

Long-Term Debt

Amended, Restated and Consolidated Revolving Credit, Term Loan and Security Agreement

On October 20, 2015 (the “Closing Date”), URC, United Refining Company of Pennsylvania, Kiantone Pipeline Corporation (“Kiantone”), United Refining Company of New York Inc., United Biofuels, Inc., Country Fair, Inc. and Kwik-Fill Corporation (collectively, the “Borrowers”) entered into an Amended, Restated and Consolidated Revolving Credit, Term Loan and Security Agreement (“Credit Agreement”) with a group of lenders led by PNC Bank, National Association, as Administrative Agent (the “Agent”), and PNC Capital Markets LLC, as Sole Lead Arranger and Bookrunner. The Credit Agreement amends and restates the Amended and Restated Credit Agreement, dated May 18, 2011 and last amended June 18, 2013, by and between the Company and certain subsidiaries and PNC Bank, National Association, as Administrative Agent (the “Existing Credit Facility”). The Credit Agreement will terminate on October 19, 2020 (the “Expiration Date”). Until the Expiration Date, the Company may borrow on the New Revolving Credit Facility (as defined below) on a borrowing base formula set forth in the Credit Agreement.

Pursuant to the Credit Agreement, the Company increased its existing senior secured revolving credit facility from $175,000,000 to $225,000,000. The New Revolving Credit Facility may be increased by an amount not to exceed $50,000,000 without additional approval from the lenders named in the Credit Agreement if existing lenders agree to increase their commitments or additional lenders commit to fund such increase. Interest under the New Revolving Credit Facility is calculated as follows: (a) for domestic base rate borrowings, at (i) the greater of the Agent’s prime rate, federal funds rate plus .5% or the daily LIBOR rate plus 1%, plus (ii) an applicable margin of 1.25% to 1.75%, and (b) for euro-rate borrowings, at the LIBOR rate plus an applicable margin of 2.25% to 2.75%. The applicable margin will vary depending on a formula calculating the Company’s average unused availability under the facility. As of November 30, 2016 and August 31, 2016, there were no base rate or euro-rate borrowings outstanding under the facility. Letters of credit totaling $8,753,000 were outstanding at November 30, 2016 and August 31, 2016.

In addition, pursuant to the Credit Agreement, the Company entered into a term loan in the amount of $250,000,000, which was made in a single drawing on the Closing Date (“Term Loan” and, together with the New Revolving Credit Facility, the “Credit Obligations”). Under the Term Loan, interest is calculated as follows: (a) for domestic rate borrowings, at (i) the greater of the Agent’s prime rate, federal funds rate plus .5% or the daily LIBOR rate plus 1%, plus (ii) an applicable margin of 1.75% to 2.25%, and (b) for euro-rate borrowings, at the LIBOR rate plus an applicable margin of 2.75% to 3.25%. The applicable margin will vary depending on a formula calculating the Company’s average unused availability under the facility. The Term Loan is prepayable in whole or in part at any time without premium or penalty. The Term Loan shall be paid in full on or prior to the Expiration Date and shall be paid in equal quarterly amounts based on a ten-year straight line amortization schedule.

The Credit Obligations are secured by a first priority security interest in certain cash accounts, accounts receivable, inventory, the refinery, including a related tank farm, and the capital stock of Kiantone. At such time as the Term Loan is repaid in full, and provided no event of default exists, the security interest in the refinery and the equity interest in Kiantone shall be released.

UNITED REFINING COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

The Credit Agreement requires minimum undrawn availability of $15,000,000 at all times prior to the repayment of the Term Loan and the greater of 12.5% of the maximum New Revolving Credit Facility or $25,000,000 after the repayment of the Term Loan. The Company is also required to maintain a consolidated net worth of no less than $100,000,000. The Credit Agreement includes customary mandatory prepayment

UNITED REFINING COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

provisions, including in connection with non-ordinary course asset sales, equity issuances and the incurrence of additional debt. Unless assets sold in non-ordinary course transactions were included in the borrowing base for the New Revolving Credit Facility, mandatory prepayments shall be applied first to the repayment of the Term Loan and then the New Revolving Credit Facility. The Credit Agreement also includes customary affirmative and negative covenants, including, among other things, covenants related to the fixed charge coverage ratio, payment of fees, conduct of business, maintenance of existence and assets, payment of indebtedness and the incurrence of additional indebtedness, intercompany obligations, affiliate transactions, amendments to organizational documents, and financial statements.

The proceeds of the Credit Agreement were used to (i) repay and satisfy in full those certain 10.500% senior secured notes due 2018 (the “Senior Secured Notes due 2018”), (ii) provide for the Company’s general corporate needs, including working capital requirements and capital expenditures and (iii) pay the fees and expenses associated with the Credit Agreement.

In connection with the redemption of all its Senior Secured Notes due 2018, the Company recorded a loss of $19,316,000 on the early extinguishment of debt consisting of a redemption premium of $7,009,000, a consent payment of $6,536,000, a write-off of unamortized net debt discount of $3,600,000 and a write-off of deferred finance costs of $2,171,000.

4.Term Loan – due 2022

Other Long Term Debt

On December 9, 2015, United Refining Company of New York Inc. (as Borrower) and United Refining Company of Pennsylvania (as Fee Owner), entered into a Loan Agreement with Signature Bank (as Administrative Agent),a bank, in the amount of $50,000,000 which matures on December 9, 2022. Pursuant to the Loan Agreement, interest is calculated as follows: (a) for LIBOR Loans, at either the LIBOR plus 2.50% or the Prime Rate, (b) for Reference Rate Loans, the Prime Rate and (c) for Fixed Rate Loans, at the Fixed Rate. Loans areUnder the terms of the agreement, the Company will make 84 monthly principal installments of approximately $129,000 with the remaining principal balance due on December 9, 2022. The loan is secured by a first lien mortgage on certain convenience store units owned by United Refining Company of Pennsylvania.Pennsylvania and contains various covenants applicable to the Borrower, which include, among others, maintaining a debt service coverage ratio. Payments due under a master lease between URC and the Borrower are guaranteed by the Company. Proceeds of the loan were used for general corporate purposes of the Company.

Term Loan – due 2023

On October 20, 2016, Kwik-Fil, Inc. (as Borrower) and United Refining Company of Pennsylvania (as Fee Owner), entered into a loan agreement with a bank in the amount of $25,000,000 which matures on October 20, 2023. Pursuant to the loan agreement, interest is calculated as follows: (a) for LIBOR Loans, at either the LIBOR plus 2.50% or the Prime Rate, (b) for Reference Rate Loans, the Prime Rate and (c) for Fixed Rate Loans, at the greater of the Fixed Rate or 4.25% per annum. Under the terms of the agreement, the Company will make 83 monthly principal installments of approximately $83,000 with the remaining principal balance due on October 20, 2023. The loan is secured by a first lien mortgage on certain convenience store units owned by United Refining Company of Pennsylvania and contains various covenants applicable to the Borrower, which

UNITED REFINING COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

 

include, among others, maintaining a debt service coverage ratio. Payments due under a master lease between URC and the Borrower are guaranteed by the Company. Proceeds of the loan were used for general corporate purposes of the Company.

A summary of long-term debt is as follows:

   November 30,
2016
   August 31,
2016
 
   (in thousands) 

Long-term debt:

    

PNC term loan, LIBOR rate of 3.29%, due 2020

  $225,000    $231,250  

Term loan, LIBOR rate of 3.03%, due 2022

   48,714     49,100  

Term loan, LIBOR rate of 3.06%, due 2023

   25,000     —    

Other long-term debt

   6,911     7,327  
  

 

 

   

 

 

 
   305,625     287,677  

Less:    Unamortized debt issuance costs

   5,175     5,150  

        Current installments of long-term debt

   28,825     28,029  
  

 

 

   

 

 

 

        Total long-term debt, less current installments

  $271,625    $254,498  
  

 

 

   

 

 

 

5.4.

Segments of Business

Intersegment revenues are calculated using market prices and are eliminated upon consolidation. Summarized financial information regarding the Company’s reportable segments is presented in the following tables (in thousands):

 

   Three Months Ended  Nine Months Ended 
   May 31,  May 31, 
   2016  2015  2016  2015 

Net Sales

   

Retail

  $275,638   $320,740   $810,847   $998,562  

Wholesale

   222,344    282,137    700,450    1,009,916  
  

 

 

  

 

 

  

 

 

  

 

 

 
  $497,982   $602,877   $1,511,297   $2,008,478  
  

 

 

  

 

 

  

 

 

  

 

 

 

Intersegment Sales

   

Wholesale

  $99,092   $134,881   $281,762   $431,487  
  

 

 

  

 

 

  

 

 

  

 

 

 

Operating (Loss) Income

   

Retail

  $(6,356 $(1,249 $(5,067 $16,550  

Wholesale

   53,041    65,703    31,861    94,835  
  

 

 

  

 

 

  

 

 

  

 

 

 
  $46,685   $64,454   $26,794   $111,385  
  

 

 

  

 

 

  

 

 

  

 

 

 

Depreciation and Amortization

   

Retail

  $2,132   $1,821   $6,367   $5,377  

Wholesale

   10,043    8,623    30,312    25,944  
  

 

 

  

 

 

  

 

 

  

 

 

 
  $12,175   $10,444   $36,679   $31,321  
  

 

 

  

 

 

  

 

 

  

 

 

 

  May 31,
2016
   August 31,
2015
   Three Months  Ended
November 30,
 

Total Assets

    
  2016 2015 

Net Sales

  

Retail

  $191,809    $178,200    $291,865   $290,777  

Wholesale

   699,902     707,266     221,513    284,164  
  

 

   

 

   

 

  

 

 
  $891,711    $885,466    $513,378   $574,941  
  

 

   

 

   

 

  

 

 

Intersegment Sales

  

Wholesale

  $108,058   $104,853  
  

 

  

 

 

Operating (Loss) Income

  

Retail

  $(3,280 $3,508  

Wholesale

   (6,032  12,370  
  

 

  

 

 
  $(9,312 $15,878  
  

 

  

 

 

Depreciation and Amortization

  

Retail

  $2,248   $2,109  

Wholesale

   10,004    9,593  
  

 

  

 

 
  $12,252   $11,702  
  

 

  

 

 

UNITED REFINING COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

 

   November 30,
2016
   August 31,
2016
 

Total Assets

    

Retail

  $193,304    $191,063  

Wholesale

   671,548     683,504  
  

 

 

   

 

 

 
  $864,852    $874,567  
  

 

 

   

 

 

 

6.5.

Employee Benefit Plans

For the periods ended May 31,November 30, 2016 and 2015, net pension and other postretirement benefit costs (income) were comprised of the following:

 

  Pension Benefits 
  Three Months Ended Nine Months Ended   Pension Benefits Other Post-Retirement Benefits 
  May 31, May 31,   Three Months  Ended
November 30,
 Three Months  Ended
November 30,
 
  2016 2015 2016 2015   2016 2015         2016                 2015         
  (in thousands)   (in thousands) 

Service cost

  $168   $157   $505   $470    $143   $168   $138   $109  

Interest cost on benefit obligation

   1,356    1,213    4,068    3,638     1,001    1,356    315    385  

Expected return on plan assets

   (1,508  (1,588  (4,525  (4,763   (1,448  (1,508  —      —    

Amortization and deferral of net loss

   318    180    953    541  

Amortization and deferral of net loss (income)

   427    318    (691  (1,136
  

 

  

 

  

 

  

 

   

 

  

 

  

 

  

 

 

Net periodic benefit cost (income)

  $334   $(38 $1,001   $(114  $123   $334   $(238 $(642
  

 

  

 

  

 

  

 

   

 

  

 

  

 

  

 

 
  Other Post-Retirement Benefits 
  Three Months Ended Nine Months Ended 
  May 31, May 31, 
  2016 2015 2016 2015 
  (in thousands) 

Service cost

  $109   $151   $327   $453  

Interest cost on benefit obligation

   386    413    1,156    1,239  

Amortization and deferral of net income

   (1,137  (786  (3,409  (2,358
  

 

  

 

  

 

  

 

 

Net periodic benefit income

  $(642 $(222 $(1,926 $(666
  

 

  

 

  

 

  

 

 

As of May 31,November 30, 2016, $3,592,000$885,000 of contributions have been made to the Company pension plans for the fiscal year ending August 31, 2016.2017.

The Company accrues post-retirement benefits other than pensions, during the years that the employees render the necessary service, of the expected cost of providing those benefits to an employee and the employee’s beneficiaries and covered dependents.

 

7.6.

Fair Value Measurements

The carrying values of all financial instruments classified as a current asset or a current liability approximate fair value because of the short maturity of these instruments. The fair value of marketable securities is determined by available market prices. The fair value (wasthe long-term debt was less than) exceeded thethan its carrying value of the long term debt at May 31,November 30, 2016 and August 31, 20152016 by $(775,000)$354,000 and $16,636,000,$220,000, respectively.

 

8.7.

Enbridge Agreements

On July 31, 2014, URC and Kiantone Pipeline Corporation (together the “Company Parties”), on the one hand, and Enbridge Energy Limited Partnership (“EEPL”) and Enbridge Pipelines Inc. (“EPI” and, together with EEPL, the “Carriers”), on the other hand, entered into a letter agreement (the “Letter Agreement”) with respect to approximately 88.85 miles of pipeline owned by the Carriers, which transports crude oil from Canada to the

UNITED REFINING COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

Company’s Kiantone Pipeline in West Seneca, New York and serves the Company’s refinery in Warren, Pennsylvania (“Line 10”).

UNITED REFINING COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

Pursuant to the Letter Agreement, the Company agreed to fund certain integrity costs necessary to maintain Line 10 (the “Integrity Costs”). Pursuant to the Letter Agreement theThe Carriers agreed to reconcile their actual expenses for the integrity maintenance and refund any excess payments made by the Company. The parties agreed to apply any credit to the Company as a result of such reconciliation to amounts owed by the Company for Subsequent Year Pipe Replacement Costs (as defined below). For each subsequent calendar year through the earlier of the expiration or closing of the purchase rights granted to the Company pursuant to the Put and Call Agreement (which is defined and discussed below), the Carriers will provide the Company with an invoice for the Integrity Costs for such calendar year (“Subsequent Year Integrity Costs”). The Carriers’ actual expenses with respect to the integrity maintenance and pipe replacementcosts will be reconciledrecorded against the Subsequent Year Integrity and PipeCosts paid for any subsequent year, as well as against any Replacement Costs, for each fiscal year.which are defined and discussed below.

In addition, the Company agreed to pay for half the cost of replacing certain portions of Line 10 in accordance with a plan agreed to between the Company Parties and the Carriers. The Company will pay 50% of the estimated expenses of the replacement project for each segment of Line 10 to be replaced (the “Replacement Costs”) within 30 days of its receipt of an invoice for the same, along with a project management fee of 2 1/4%2.25%. Each Carrier will initially fund the remaining 50% of the Replacement Costs during construction, provided that the Company will reimburse the Carriers for their actual cost of funds during the construction process. Once construction is complete and each replaced segment of Line 10 is put into service, and assuming the Company has not exercised its rights to purchase Line 10 pursuant to the Put and Call Agreement (as defined and discussed below), the Company will repay the Carriers the 50% of the Replacement Costs they funded over a 10 year10-year period.

Pursuant to the Letter Agreement, the Company and the Carriers agreed to negotiate the terms and conditions of a put and call option agreement for Line 10 (the “Put and Call Option Agreement” and, together with the Letter Agreement, the “Enbridge Agreement”). On JulyApril 8, 2015 (the “Execution Date”), the Company entered into the Put and Call Option Agreement with each of the Carriers as called for in the Letter Agreement. The Put and Call Option Agreement entered into with Enbridge LP (the “U.S. Agreement”) is substantially similar to the Put and Call Option Agreement entered into with Enbridge Inc.Inc (the “Canadian Agreement”, and together with the U.S. Agreement, the “Put and Call Options Agreement”). The, which agreements are substantially similar. Pursuant to the Put and Call Agreement; the Company was granted a right to purchase and the Company gave the Carriers own Line 10, including real property interests through and under which Line 10 passes,a right to put to the Company the Carriers’ assignable permits related to the ownership and operation of Line 10, as well as personal property, contract rights, records and incidental rights held solely in connection with Line 10 (collectively, the “Assets”). Pursuant

The Carrier’s Put Option is exercisable beginning on the date that is the earlier of (a) January 1, 2026 and (b) the date that is 30 days after the latest of (i) the date on which the Carriers give notice that the Line 10 replacement work performed pursuant to the Letter Agreement is sufficiently completed (as contemplated in the Call and Put Agreement) and (ii) the ninth (9th) anniversary of the Execution Date (the “Put Option Commencement Date”). The Put Option terminates on the date that is 24 months after either (a) the Put Option Commencement Date if such date is the first of a month or (b) the first day of the calendar month immediately following the Put Option Commencement Date if it is not the first day of the month (the “Put/Call Option Expiry Date”). The Company’s Call Option is exercisable at any time beginning on the Execution Date and ending on the Put/Call Option Expiry Date.

The Company considered whether the Put and Call Agreement should be separated from the Carriers grantedhost contract in accordance with ASC 815 embedded derivative guidance and concluded that it doesn’t meet the criteria for separation. The Company a right (the “Call Option”) to purchase all of the Assets and the Company granted the Carriers the right to put all the Assets to the Company (the “Put Option” and, together with the Call Option, the “Purchase Options”) subject to the terms and conditions of the Put and Call Agreement.

The Put and Call Agreement may be terminated by the mutual consent of the Company and the Carriers and shall automatically terminate if neither Purchase Option is exercised prior to the expiration dates identified in the Put and Call Agreement. Moreover, either the Company or a Carrier may terminatedetermined that the Put and Call Agreement if a closingis interdependent with the Line 10 Agreement, and therefore is not freestanding and is accounted for as part of the Asset sale shall not have occurred on or before December 31, 2028 assuming the terminating partyLine 10 Agreement. As such we concluded that there is not then in breach of the Put and Call Agreement and if a party has breached a representation, such breach has not been cured within the time periods allotted by the Put and Call Agreement. Finally, the Company may terminate the Put and Call Agreement by notifying the Carriers to cease the replacement work contemplated in the Letter Agreement. The Company has assessed theno separate accounting impact of the Put and Call Agreement and determined there is no impact until the time when it becomes probable that the Put or Callit will be exercised. As of November 30, 2016, neither the Company nor the Carrier have exercised their rights under the Put and Call Agreement.

8.

Subsequent Events

On December 30, 2016, Kwik-Fil, Inc. (as Borrower) and United Refining Company of Pennsylvania (as Fee Owner), entered into a loan agreement with a bank in the amount of $25,000,000 which matures on October 20, 2023. Pursuant to the loan agreement, interest is calculated as follows: (a) for LIBOR Loans, at

UNITED REFINING COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

either the LIBOR plus 2.50% or the Prime Rate, (b) for Reference Rate Loans, the Prime Rate and (c) for Fixed Rate Loans, at the greater of the Fixed Rate or 4.25% per annum. Under the terms of the agreement, the Company will make 83 monthly principal installments of approximately $83,000 with the remaining principal balance due on October 20, 2023. The loan is secured by a first lien mortgage on certain convenience store units owned by United Refining Company of Pennsylvania and contains various covenants applicable to the Borrower, which include, among others, maintaining a debt service coverage ratio. Payments due under a master lease between URC and the Borrower are guaranteed by the Company. Proceeds of the loan were used for general corporate purposes of the Company.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward Looking Statements

This Quarterly Report on Form 10-Q contains certain statements that constitute “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements may include, among other things, United Refining Company and its subsidiaries current expectations with respect to future operating results, future performance of its refinery and retail operations, capital expenditures and other financial items. Words such as “expects”, “intends”, “plans”, “projects”, “believes”, “estimates”, “may”, “will”, “should”, “shall”, “anticipates”, “predicts”, and similar expressions typically identify such forward looking statements in this Quarterly Report on Form 10-Q.

By their nature, all forward looking statements involve risk and uncertainties. All phases of the Company’s operations involve risks and uncertainties, many of which are outside of the Company’s control, and any one of which, or a combination of which, could materially affect the Company’s results of operations and whether the forward looking statements ultimately prove to be correct. Actual results may differ materially from those contemplated by the forward looking statements for a number of reasons.

Although we believe our expectations are based on reasonable assumptions within the bounds of its knowledge, investors and prospective investors are cautioned that such statements are only projections and that actual events or results may differ materially depending on a variety of factors described in greater detail in the Company’s filings with the SEC, including quarterly reports on Form 10-Q, annual reports on Form 10-K, current reports on Form 8-K, etc. In addition to the factors discussed elsewhere in this Quarterly Report on Form 10-Q, the Company’s actual consolidated quarterly or annual operating results have been affected in the past, or could be affected in the future, by additional factors.

Prices of crude oil, other feedstocks and refined products depend on numerous factors beyond our control, including without limitation:the supply of and demand for crude oil, other feedstocks, gasoline, diesel, asphalt and other refined products. Such supply and demand are affected by, among other things:

changes in global and local economic conditions;

domestic and foreign demand for fuel products, especially in the United States, China and India;

worldwide political conditions, particularly in significant oil producing regions such as the Middle East, West Africa and Latin America;

 

the demand forlevel of foreign and supplydomestic production of crude oil and refined products;products and the volume of crude oil, feedstock and refined products imported into the United States;

availability of and access to transportation infrastructure;

utilization rates of U.S. refineries;

 

the spread between marketability of the members of the Organization of Petroleum Exporting Countries (“OPEC”) to affect oil prices for refined products and market prices for crude oil;maintain production controls;

 

repaymentdevelopment and marketing of debt;alternative and competing fuels;

 

general economic, business and market conditions;commodities speculation;

 

risksnatural disasters (such as hurricanes and uncertainties with respect to the actions of actualtornadoes), accidents, interruptions in transportation, inclement weather or potential competitive suppliers of refined petroleum products inother events that can cause unscheduled shutdowns or otherwise adversely affect our markets;refinery;

 

the possibility of inefficiencies or shutdowns in refinery operations or pipelines;

the availabilityfederal and cost of financing to us;

environmental, taxstate government regulations and tobacco legislation or regulation;

volatility of gasoline prices, margins and supplies;

merchandising margins;

labor costs;

level of capital expenditures;

customer traffic;

weather conditions;

acts of terrorism and war;

business strategies;

expansion and growth of operations;

future projects and investments;

future exposure to currency devaluations or exchange rate fluctuations;

expected outcomes of legal and administrative proceedings and their expected effects on our financial position, results of operations and cash flows;taxes; and

 

futurelocal factors, including market conditions, weather conditions and the level of operations of other refineries and pipelines in our markets.

Our direct operating resultsexpense structure also impacts our earnings. Our major direct operating expenses include employee and financial condition.contract labor, maintenance and energy costs. Our predominant variable direct operating cost is energy, which is comprised primarily of fuel and other utility services. The volatility in costs of fuel, principally natural gas, and other utility services, principally electricity, used by our refinery and other operations affect our operating costs. Fuel and utility prices have been, and will continue to be, affected by factors outside our control, such as supply and demand for fuel and utility services in both local and regional markets. Natural gas prices have historically been volatile and, typically, electricity prices fluctuate with natural gas prices. Future increases in fuel and utility prices may have a negative effect on our earnings and cash flows.

All subsequent written and oral forward looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the foregoing. We undertake no obligation to update any information contained herein or to publicly release the results of any revisions to any such forward looking statements that may be made to reflect events or circumstances that occur, or which we become aware of, after the date of this Quarterly Report on Form 10-Q.

Recent Developments

The lagged 3-2-1 crackspread is measured by the difference between the prices of crude oil contracts traded on the NYMEX for the preceding month to the prices of NYMEX gasoline and heating oil contracts in the current trading month. The Company uses a lagged crackspread as a margin indicator as it reflects the margin during the time period between the purchase of crude oil and its delivery to the refinery for processing. The lagged crackspread for the thirdfirst quarter of fiscal 2016 was $23.33.2017 averaged $13.96/barrel (“bbl”). Through July 1, 2016January 6, 2017 the indicated lagged crackspread for the fourthsecond quarter ending August 31, 2016 was $15.94,February 28, 2017 averaged $18.52/bbl, a $7.39 decrease$4.56 increase from the average for the thirdfirst quarter of fiscal 2016.2017.

NYMEX crude fluctuated during the first quarter of fiscal 2017 from a low of $43.03/bbl to a high of $54.06/bbl and closed on January 6, 2017 at $53.99/bbl.

Results of Operations

The Company is a petroleum refiner and marketer in its primary market area of Western New York and Northwestern Pennsylvania. Operations are organized into two business segments: wholesale and retail.

The wholesale segment is responsible for the acquisition of crude oil, petroleum refining, supplying petroleum products to the retail segment and the marketing of petroleum products to wholesale and industrial customers. The retail segment sells petroleum products under the Kwik Fill®, Citgo® and Keystone® brand names through a network of Company-operated retail units and convenience and grocery items through Company-owned gasoline stations and convenience stores under the Red Apple Food Mart® and Country Fair® brand names.

A discussion and analysis of the factors contributing to the Company’s results of operations are presented below. The accompanying Consolidated Financial Statements and related Notes, together with the following information, are intended to supply investorsinterested parties with a reasonable basis for evaluating the Company’s operations, but does not serve to predict the Company’s future performance.

Retail Operations:

 

   Three Months Ended  Nine Months Ended 
   May 31,  May 31, 
   2016  2015  2016  2015 
   (dollars in thousands) 

Net Sales

     

Petroleum

  $205,411   $251,640   $605,871   $798,590  

Merchandise and other

   70,227    69,100    204,976    199,972  
  

 

 

  

 

 

  

 

 

  

 

 

 

Total Net Sales

   275,638    320,740    810,847    998,562  

Costs of goods sold

   243,658    284,205    703,153    871,657  

Selling, general and administrative expenses

   36,204    35,963    106,394    104,978  

Depreciation and amortization expenses

   2,132    1,821    6,367    5,377  
  

 

 

  

 

 

  

 

 

  

 

 

 

Segment Operating (Loss) Income

  $(6,356 $(1,249 $(5,067 $16,550  
  

 

 

  

 

 

  

 

 

  

 

 

 

Retail Operating Data:

     

Petroleum sales (thousands of gallons)

   91,901    92,917    272,306    275,099  

Petroleum margin (a)

  $13,188   $18,711   $53,381   $75,652  

Petroleum margin ($/gallon) (b)

   .1435    .2014    .1960    .2750  

Merchandise and other margins

  $18,898   $17,825   $54,419   $51,254  

Merchandise margin (percent of sales)

   26.9  25.8  26.6  25.6
  

 

 

  

 

 

  

 

 

  

 

 

 

(a)

Includes the effect of intersegment purchases from the Company’s wholesale segment at prices which approximate market.

(b)

Company management calculates petroleum margin per gallon by dividing petroleum gross margin by petroleum sales volumes. Management uses fuel margin per gallon calculations to compare profitability to other companies in the industry. Petroleum margin per gallon may not be comparable to similarly titled measures used by other companies in the industry.

   Three Months Ended 
   November 30, 
   2016   2015 
   (dollars in thousands) 

Net Sales

    

Petroleum

  $220,673    $220,968  

Merchandise and other

   71,192     69,809  
  

 

 

   

 

 

 

Total Net Sales

   291,865     290,777  

Costs of goods sold

   256,580     249,583  

Selling, general and administrative expenses

   36,317     35,577  

Depreciation and amortization expenses

   2,248     2,109  
  

 

 

   

 

 

 

Segment Operating (Loss) Income

  $(3,280  $3,508  
  

 

 

   

 

 

 

Comparison of Fiscal Quarters Ended May 31,November 30, 2016 and 2015

Net Sales

Retail sales decreasedincreased during the fiscal quarter ended May 31,November 30, 2016 by $45.1$1.1 million or 14.1%.4% from the comparable period in fiscal 2015 from $320.7$290.8 million to $275.6$291.9 million. The decreaseincrease was due to a $46.2$1.4 million increase in merchandise sales offset by a $.3 million decrease in petroleum sales offset by an increase in merchandise sales of $1.1 million.sales. The petroleum sales decrease resulted from a 17.5%1.0% decrease in retail selling prices per gallon and a 1.0offset by .8 million gallon or a 1.1% decrease.9% increase in petroleum volume.

Costs of Goods Sold

Retail costs of goods sold decreasedincreased during the fiscal quarter ended May 31,November 30, 2016 by $40.6$7.0 million or 14.3%2.8% from the comparable period in fiscal 2015 from $284.2$249.6 million to $243.6$256.6 million. The decreaseincrease was primarily due to decreasesincreases of $38.8$6.2 million in petroleum purchase costs, and fuel taxes of $1.9$.1 million, offset by an increasefreight costs of $.1 million and $.6 million in merchandise costs.

Selling, General and Administrative Expenses

Retail Selling, General and Administrative (“SG&A”) expenses remained relatively constant during the fiscal quarters ended May 31, 2016 and 2015.

Comparison of Nine Months Ended May 31, 2016 and 2015

Net Sales

Retail sales decreased during the nine months ended May 31, 2016 by $187.7 million or 18.8% from the comparable period in fiscal 2015 from $998.5 million to $810.8 million. The decrease was primarily due to $192.7 million in petroleum sales, offset by an increase of $5.0 million in merchandise sales. The petroleum sales decrease resulted from a 23.4% decrease in retail selling prices per gallon and a 2.8 million gallon or 1.0% decrease in sales volume.

Costs of Goods Sold

Retail costs of goods sold decreased during the nine months ended May 31, 2016 by $168.5 million or 19.3% from the comparable period in fiscal 2015 from $871.7 million to $703.2 million. The decrease was primarily due to decreases of $170.9 million in petroleum purchase costs and freight costs of $.1 million, offset by increases in fuel taxes of $.7 million and merchandise costs of $1.8 million.

Selling, General and Administrative Expenses

Retail SG&A expenses remained relatively constant during the nine months ended May 31,November 30, 2016 and 2015.

Wholesale Operations:

 

  Three Months Ended   Nine Months Ended   Three Months Ended 
  May 31,   May 31,   November 30, 
  2016   2015   2016   2015   2016   2015 
  (dollars in thousands)   (dollars in thousands) 

Net Sales (a)

  $222,344    $282,137    $700,450    $1,009,916    $221,513    $284,164  

Costs of goods sold (exclusive of depreciation and amortization)

   151,873     201,701     616,981     870,046     210,278     255,189  

Selling, general and administrative expenses

   7,387     6,110     21,296     19,091     7,263     7,012  

Depreciation and amortization expenses

   10,043     8,623     30,312     25,944     10,004     9,593  
  

 

   

 

   

 

   

 

   

 

   

 

 

Segment Operating Income

  $53,041    $65,703    $31,861    $94,835  

Segment Operating (Loss) Income

  $(6,032  $12,370  
  

 

   

 

   

 

   

 

   

 

   

 

 

Key Wholesale Operating Statistics:

   Three Months Ended  Nine Months Ended 
   May 31,  May 31, 
   2016  2015  2016  2015 

Refinery Product Yield (thousands of barrels)

     

Gasoline and gasoline blendstock

   2,603    2,421    8,184    7,613  

Distillates

   1,409    1,306    4,161    3,937  

Asphalt

   1,791    1,698    5,457    5,286  

Butane, propane, residual products, internally produced fuel and other (“Other”)

   710    682    1,765    1,896  
  

 

 

  

 

 

  

 

 

  

 

 

 

Total Product Yield

   6,513    6,107    19,567    18,732  
  

 

 

  

 

 

  

 

 

  

 

 

 

% Heavy Crude Oil of Total Refinery Throughput (b)

   60  61  61  61

Crude throughput (thousand barrels per day)

   65.6    61.0    65.5    62.5  
  

 

 

  

 

 

  

 

 

  

 

 

 

Product Sales (thousand of barrels) (a)

     

Gasoline and gasoline blendstock

   1,723    1,430    5,312    4,598  

Distillates

   1,214    1,017    3,512    3,201  

Asphalt

   1,696    1,639    5,276    4,746  

Other

   173    146    498    499  
  

 

 

  

 

 

  

 

 

  

 

 

 

Total Product Sales Volume

   4,806    4,232    14,598    13,044  
  

 

 

  

 

 

  

 

 

  

 

 

 

Product Sales (dollars in thousands) (a)

     

Gasoline and gasoline blendstock

  $99,050   $105,247   $288,106   $361,379  

Distillates

   67,098    82,421    190,911    293,101  

Asphalt

   54,109    91,104    214,574    337,626  

Other

   2,087    3,365    6,859    17,810  
  

 

 

  

 

 

  

 

 

  

 

 

 

Total Product Sales

  $222,344   $282,137   $700,450   $1,009,916  
  

 

 

  

 

 

  

 

 

  

 

 

 

(a)

Sources of total product sales include products manufactured at the refinery located in Warren, Pennsylvania and products purchased from third parties.

(b)

The Company defines “heavy” crude oil as crude oil with an American Petroleum Institute specific gravity of 26 or less.

Comparison of Fiscal Quarters Ended May 31,November 30, 2016 and 2015

Net Sales

Wholesale sales decreased during the quarter ended May 31,November 30, 2016 by $59.8$62.7 million or 21.2%22.0% from the comparable period in fiscal 2015 from $282.1$284.2 million to $222.3$221.5 million. The decrease was due primarily to a 30.6%10.8% decrease in wholesale prices offset by an increase of 13.6%and 12.6% in wholesale volume.

Costs of Goods Sold (exclusive of depreciation and amortization)

Wholesale costs of goods sold decreased during the quarter ended May 31,November 30, 2016 by $49.8$44.9 million or 24.7%17.6% from the comparable period in fiscal 2015 from $201.7$255.2 million to $151.9$210.3 million. The decrease in wholesale costs of goods sold during this period was primarily due to a decrease in cost of raw materials.

Selling, General and Administrative Expenses

Wholesale SG&A expenses remained relatively constant during the quarter ended May 31, 2016 and 2015.

Comparison of Nine Months Ended May 31, 2016 and 2015

Net Sales

Wholesale sales decreased during the nine months ended May 31, 2016 by $309.5 million or 30.6% from the comparable period in fiscal 2015 from $1,009.9 million to $700.4 million. The decrease was due to a 38.0% decrease in wholesale prices offset by an 11.9% increase in wholesale volume.

Costs of Goods Sold (exclusive of depreciation and amortization)

Wholesale costs of goods sold decreased during the nine months ended May 31, 2016 by $253.1 million or 29.1% from the comparable period in fiscal 2015 from $870.1 million to $617.0 million. The decrease in wholesale costs of goods sold was primarily due to a decrease in the cost of raw materials.

Selling, General and Administrative Expenses

Wholesale SG&A expenses remained relatively constant during the nine months ended May 31,November 30, 2016 and 2015.

Consolidated Expenses:

Depreciation and Amortization

Depreciation and amortization increased during the three months ended May 31,November 30, 2016 by $1.7$.6 million from the comparable period in fiscal 2015 from $10.5$11.7 million to $12.2$12.3 million. The increase was primarily due to increases of $1.8$1.2 million in amortization of integrity and replacement costs and miscellaneous depreciation costs of $.6$.3 million offset by a reduction in amortization of turnaround expense of $.7 million.

Depreciation and amortization increased during the nine months ended May 31, 2016 by $5.4 million from the comparable period in fiscal 2015 from $31.3 million to $36.7 million. The increase was primarily due to increases of $4.2 million in amortization of integrity and replacement costs and miscellaneous depreciation costs of $1.9 million offset by a reduction in amortization of turnaround expense of $.7$.9 million.

Interest Expense, net

Net interest expense (interest expense less interest income) decreased during the three months ended May 31,November 30, 2016 by $4.2 million from the comparable period in fiscal 2015. The decrease was primarily due to early redemption of Senior Notes due 2018 and the lower interest rate on the Term Loan outstanding.

Net interest expense (interest expense less interest income) decreased during the nine months ended May 31, 2016 by $10.0$2.4 million from the comparable period in fiscal 2015. The decrease was primarily due to early redemption of Senior Notes due 2018 and the lower interest rate on the Term Loan outstanding.

Income Tax Expense (Benefit)Benefit

The Company’s effective tax rate was 37% and 39% for the three months and nine months ended May 31,November 30, 2016 and 2015, respectively.2015.

Liquidity and Capital Resources

We operate in an environment where our liquidity and capital resources are impacted by changes in the price of crude oil and refined petroleum products, availability of credit, market uncertainty and a variety of additional factors beyond our control. Included in such factors are, among others, the level of customer product demand,

weather conditions, governmental regulations, worldwide political conditions and overall market and economic conditions.

The following table summarizes selected measures of liquidity and capital resources (in thousands):

 

  May 31, 2016   November 30, 2016 

Cash and cash equivalents

  $78,909    $50,589  

Short-term investments

  $10,188  

Working capital

  $210,549    $198,863  

Current ratio

   2.6     2.7  

Debt

  $294,813    $300,450  
  

 

   

 

 

Primary sources of liquidity have been cash and cash equivalents, and borrowing availability under our revolving credit facility (the “Amended and Restated Revolving Credit Facility”) with PNC Bank, N.A. as Administrator (the “Agent Bank”). We believe available capital resources are adequate to meet our working capital, debt service, and capital expenditure requirements for existing operations.

Our cash and cash equivalents consist of bank balances and investments in money market funds. These investments have staggered maturity dates, none of which exceed three months. They have a high degree of liquidity since the securities are traded in public markets.

Significant Uses of Cash

The changes in cash for the ninethree months ended MayNovember 31, 2016 are described below.

The cash provided byused in working capital is shown below:

 

  Nine Months Ended
May 31, 2016
   Three Months  Ended
November 30, 2016
 
  (in millions)   (in millions) 

Cash provided by (used in) working capital items:

    

Accounts receivable decrease

  $11.3  

Inventory decrease

  $42.0     7.1  

Accounts payable increase

   14.4  

Accounts receivable decrease

   14.2  

Prepaid expense decrease

   8.6     2.1  

Income taxes payable decrease

   (7.4

Refundable income taxes decrease

   .1  

Accounts payable decrease

   (14.8

Prepaid income taxes increase

   (5.1   (7.0

Refundable income taxes increase

   (4.2

Amounts due from affiliated companies, net increase

   (2.9

Sales, use and fuel taxes payable decrease

   (1.7

Amounts due to affiliated companies, net decrease

   (.9

Accrued liabilities decrease

   (1.7   (.6

Sales, use and fuel taxes payable decrease

   (1.0
  

 

   

 

 

Total change

  $56.9    $(4.4
  

 

   

 

 

Available cash on hand decreased by $38.1 million. Other cash uses included:

 

Fund capital expenditures and deferred turnaround costs of $65.8$13.9 million

 

Fund dividends to preferred shareholder and common stockholder of $45.4 million

Fund deferred integrity and replacement costs of $66.6$2.1 million

 

Fund principal reductions of long-term debt $251.6$7.1 million

 

Fund deferred financing costs $5.8$.4 million

We require a substantial investment in working capital which is susceptible to large variations during the year resulting from purchases of inventory and seasonal demands. Inventory purchasing activity is a function of sales activity and turnaround cycles for the different refinery units.

Maintenance and non-discretionary capital expenditures have averaged approximately $6.0 million annually over the last three years for the refining and marketing operations. Management does not foresee any material increase in these maintenance and non-discretionary capital expenditures during fiscal year 20162017 at this time.

Future liquidity, both short and long-term, will continue to be primarily dependent on realizing a refinery margin sufficient to cover fixed and variable expenses, including planned capital expenditures. We expect to be able to meet our working capital, capital expenditure, contractual obligations, letter of credit and debt service requirements out of cash flow from operations, cash on hand and borrowings under our Credit Agreement of $225,000,000. This provides the Company with flexibility relative to its cash flow requirements in light of market fluctuations, particularly involving crude oil prices and seasonal business cycles and will assist the Company in meeting its working capital, ongoing capital expenditure needs and for general corporate purposes.

On October 20, 2015, URC, United Refining Company of Pennsylvania, Kiantone, United Refining Company of New York Inc., United Biofuels, Inc., Country Fair, Inc. and Kwik-Fill Corporation (collectively, the “Borrowers”) entered into the Credit Agreement with a group of lenders led by PNC Bank, National Association, and PNC Capital Markets LLC, as Sole Lead Arranger and Bookrunner. The Credit Agreement amends and restates the Existing Credit Facility. The Credit Agreement will terminate on October 19, 2020. Until the Expiration Date, the Company may borrow on the New Revolving Credit Facility (as defined below) on a borrowing base formula set forth in the Credit Agreement.

Pursuant to the Credit Agreement, the Company increased its existing senior secured revolving credit facility from $175,000,000 to $225,000,000. The New Revolving Credit Facility may be increased by an amount not to exceed $50,000,000 without additional approval from the lenders named in the Credit Agreement if existing lenders agree to increase their commitments or additional lenders commit to fund such increase. Interest under the New Revolving Credit Facility is calculated as follows: (a) for domestic rate borrowings, at (i) the greater of the Agent’s prime rate, federal funds rate plus .5% or the daily LIBOR rate plus 1%, plus (ii) an applicable margin of 1.25% to 1.75%, and (b) for euro-rate borrowings, at the LIBOR rate plus an applicable margin of 2.25% to 2.75%. The applicable margin will vary depending on a formula calculating the Company’s average unused availability under the facility. In addition, pursuant to the Credit Agreement, the Company entered into a term loan in the amount of $250,000,000, which was made in a single drawing on the Closing Date (“Term Loan” and, together with the New Revolving Credit Facility, the “Credit Obligations”). Under the Term Loan, interest is calculated as follows: (a) for domestic rate borrowings, at (i) the greater of the Agent’s prime rate, federal funds rate plus .5% or the daily LIBOR rate plus 1%, plus (ii) an applicable margin of 1.75% to 2.25%, and (b) for euro-rate borrowings, at the LIBOR rate plus an applicable margin of 2.75% to 3.25%. The applicable margin will vary depending on a formula calculating the Company’s average unused availability under the facility. The Term Loan is prepayable in whole or in part at any time without premium or penalty. The Term Loan shall be paid in full on or prior to the Expiration Date and shall be paid in equal quarterly amounts based on a ten-year straight line amortization schedule. Prepayment of the Term Loan in whole or in part may be made at any time without premium or penalty.

The Credit Obligations are secured by a first priority security interest in certain cash accounts, accounts receivable, inventory, the refinery, including a related tank farm, and the capital stock of Kiantone. At such time as the Term Loan is repaid in full, and provided no event of default exists, the security interest in the refinery and the equity interests in Kiantone shall be released.

Until maturity, we may borrow on a borrowing base formula as set forth in the facility. We had standby letters of credit of $8.8 million as of May 31,November 30, 2016 and there were no outstanding borrowings under the Credit Agreement resulting in net availability of $216.2 million. As of July 15, 2016,January 17, 2017, there were no outstanding

borrowings under the Credit Agreement and there were standby letters of credit in the amount of $8.8$7.4 million, resulting in a net availability of $216.2$217.6 million and the Company had full access to it.

Although we are not aware of any pending circumstances which would change our expectation, changes in the tax laws, the imposition of and changes in federal and state clean air and clean fuel requirements and other changes in environmental laws and regulations may also increase future capital expenditure levels. Future capital expenditures are also subject to business conditions affecting the industry. We continue to investigate strategic acquisitions and capital improvements to our existing facilities.

Federal, state and local laws and regulations relating to the environment affect nearly all of our operations. As is the case with all the companies engaged in similar industries, we face significant exposure from actual or potential claims and lawsuits involving environmental matters. Future expenditures related to environmental matters cannot be reasonably quantified in many circumstances due to the uncertainties as to required remediation methods and related clean-up cost estimates. We cannot predict what additional environmental legislation or regulations will be enacted or become effective in the future or how existing or future laws or regulations will be administered or interpreted with respect to products or activities to which they have not been previously applied.

Seasonal Factors

Seasonal factors affecting the Company’s business may cause variation in the prices and margins of some of the Company’s products. For example, demand for gasoline tends to be highest in spring and summer months, while demand for home heating oil and kerosene tends to be highest in winter months.

As a result, the margin on gasoline prices versus crude oil costs generally tends to increase in the spring and summer, while margins on home heating oil and kerosene tend to increase in the winter.

Inflation

The effect of inflation on the Company has not been significant during the last five fiscal years.

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk.

The Company uses its Amended and Restated Revolving Credit Facility to finance a portion of its operations. This on-balance sheet financial instrument, to the extent it provides for variable rates, exposes the Company to interest rate risk resulting from changes in the Agent Bank’s Prime rate, the Federal Funds or LIBOR rate. As of July 15, 2016,January 17, 2017, there were no outstanding borrowings under the Amended and Restated Revolving Credit Facility.

From time to time, the Company uses derivatives to reduce its exposure to fluctuations in crude oil purchase costs and refining margins. Derivative products, specifically crude oil option contracts and crack spread option contracts are used to hedge the volatility of these items. The Company accounts for changes in the fair value of its contracts by marking them to market and recognizing any resulting gains or losses in its Consolidated Statements of Operations. There has been no derivative activity in fiscal 2016.2017.

 

Item 4.

Controls and Procedures.

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of May 31,November 30, 2016. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company is reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures

include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of May 31,November 30, 2016, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

There have not been any changes in the Company’s internal controls over financial reporting that occurred during the Company’s fiscal quarter ended May 31,November 30, 2016 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

Part II

OTHER INFORMATION

 

Item 1.

Legal Proceedings.

None.

 

Item 1A.

Risk Factors.

There have been no material changes in our Risk Factors disclosed in the Form 10-K for the year ended August 31, 2015.2016.

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

None.

 

Item 3.

Defaults Upon Senior Securities.

None.

 

Item 4.

Mine Safety Disclosures.

Not applicable.

 

Item 5.

Other Information.

None.

 

Item 6.

Exhibits.

 

Exhibit 31.1

  

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 31.2

  

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 32.1

  

Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Exhibit 101

  

Interactive XBRL Data

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date:July 15, 2016January 17, 2017

 

UNITED REFINING COMPANY

(Registrant)

/s/ Myron L. Turfitt

Myron L. Turfitt

President

/s/ James E. Murphy

James E. Murphy

Chief Financial Officer

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date:July 15, 2016January 17, 2017

 

KIANTONE PIPELINE CORPORATION

(Registrant)

/s/ Myron L. Turfitt

Myron L. Turfitt

President

/s/ James E. Murphy

James E. Murphy

Chief Financial Officer

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date:July 15, 2016January 17, 2017

 

UNITED REFINING COMPANY OF PENNSYLVANIA

(Registrant)

/s/ Myron L. Turfitt

Myron L. Turfitt

President

/s/ James E. Murphy

James E. Murphy

Chief Financial Officer

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date:July 15, 2016January 17, 2017

 

KIANTONE PIPELINE COMPANY

(Registrant)

/s/ Myron L. Turfitt

Myron L. Turfitt

President

/s/ James E. Murphy

James E. Murphy

Chief Financial Officer

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date:July 15, 2016January 17, 2017

 

UNITED JET CENTER, INC.

(Registrant)

/s/ Myron L. Turfitt

Myron L. Turfitt

President

/s/ James E. Murphy

James E. Murphy

Chief Financial Officer

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date:July 15, 2016January 17, 2017

 

KWIK-FILL CORPORATION

(Registrant)

/s/ Myron L. Turfitt

Myron L. Turfitt

President

/s/ James E. Murphy

James E. Murphy

Chief Financial Officer

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date:July 15, 2016January 17, 2017

 

INDEPENDENT GASOLINE AND OIL COMPANY OF ROCHESTER, INC.

(Registrant)

/s/ Myron L. Turfitt

Myron L. Turfitt

President

/s/ James E. Murphy

James E. Murphy

Chief Financial Officer

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date:July 15, 2016January 17, 2017

 

BELL OIL CORP.

(Registrant)

/s/ Myron L. Turfitt

Myron L. Turfitt

President

/s/ James E. Murphy

James E. Murphy

Chief Financial Officer

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date:July 15, 2016January 17, 2017

 

PPC, INC.

(Registrant)

/s/ Myron L. Turfitt

Myron L. Turfitt

President

/s/ James E. Murphy

James E. Murphy

Chief Financial Officer

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date:July 15, 2016January 17, 2017

 

SUPER TEST PETROLEUM, INC.

(Registrant)

/s/ Myron L. Turfitt

Myron L. Turfitt

President

/s/ James E. Murphy

James E. Murphy

Chief Financial Officer

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date:July 15, 2016January 17, 2017

 

KWIK-FIL, INC.

(Registrant)

/s/ Myron L. Turfitt

Myron L. Turfitt

President

/s/ James E. Murphy

James E. Murphy

Chief Financial Officer

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date:July 15, 2016January 17, 2017

 

VULCAN ASPHALT REFINING CORPORATION

(Registrant)

/s/ Myron L. Turfitt

Myron L. Turfitt

President

/s/ James E. Murphy

James E. Murphy

Chief Financial Officer

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date:July 15, 2016January 17, 2017

 

COUNTRY FAIR, INC.

(Registrant)

/s/ Myron L. Turfitt

Myron L. Turfitt

President and Chief Operating Officer

/s/ James E. Murphy

James E. Murphy

Vice President Finance

 

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