United Refining 10-Q 2006 Q2 Quarterly report

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 FEBRUARY 28, 2006

¨ 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. 333-35083

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 is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ¨ Accelerated filer  ¨ Non-accelerated filer  x

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

Number of shares outstanding of Registrant’s Common Stock as of April 12, 2006: 100.

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

2

		PAGE(S)
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets – February 28, 2006 (unaudited) and August 31, 2005	4
	Consolidated Statements of Operations – Quarter and Six Months Ended February 28, 2006 and 2005 (unaudited)	5
	Consolidated Statements of Cash Flows – Quarter and Six Months Ended February 28, 2006 and 2005 (unaudited)	6
	Notes to Consolidated Financial Statements (unaudited)	7-13
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14-22
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	22
Item 4.	Controls and Procedures	22
PART II.	OTHER INFORMATION	23
Item 1.	Legal Proceedings (None)	23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds (None)	23
Item 3.	Defaults Upon Senior Securities (None)	23
Item 4.	Submission of Matters to a Vote of Security Holders (N/A)	23
Item 5.	Other Information (None)	23
Item 6.	Exhibits	23

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

3

UNITED REFINING COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

	February 28, 2006 (Unaudited)			August 31, 2005
Assets
Current:
Cash and cash equivalents	$	14,873		$	43,204
Accounts receivable, net		55,162			69,581
Inventories		120,009			73,136
Prepaid expenses and other assets		39,647			17,521
Total current assets		229,691			203,442
Property, plant and equipment, net		187,372			183,643
Investment in affiliated company		2,614			1,709
Deferred financing costs, net		6,247			6,769
Goodwill		1,349			1,349
Tradename		10,500			10,500
Amortizable intangible assets, net		2,958			3,284
Deferred turnaround costs and other assets, net		6,509			8,141
	$	447,240		$	418,837
Liabilities and Stockholder’s Equity
Current:
Revolving credit facility	$	25,000		$	—
Current installments of long-term debt		230			304
Accounts payable		60,948			49,638
Accrued liabilities		13,356			17,112
Income tax payable		498			1,968
Sales, use and fuel taxes payable		14,585			20,541
Deferred income taxes		4,112			4,112
Amounts due to affiliated companies, net		4,112			711
Total current liabilities		122,841			94,386
Long term debt: less current installments		226,793			226,837
Deferred income taxes		3,353			2,760
Deferred gain on settlement of pension plan obligations		592			700
Deferred retirement benefits		44,940			42,023
Other noncurrent liabilities		866			1,258
Total liabilities		399,385			367,964
Commitments and contingencies
Stockholder’s equity:
Common stock; $.10 par value per share – shares authorized 100; issued and outstanding 100		—			—
Additional paid-in capital		16,648			16,648
Retained earnings		37,913			40,931
Accumulated other comprehensive loss		(6,706	)		(6,706	)
Total stockholder’s equity		47,855			50,873
	$	447,240		$	418,837

4

UNITED REFINING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS—(Unaudited)

(in thousands)

	Three Months Ended February 28,						Six Months Ended February 28,
	2006			2005			2006			2005
Net sales	$	506,485		$	384,789		$	1,080,477		$	810,842
Costs of goods sold		472,662			372,449			994,634			750,894
Gross profit		33,823			12,340			85,843			59,948
Expenses:
Selling, general and administrative expenses		30,624			28,569			62,003			56,708
Depreciation and amortization expenses		3,293			3,343			6,582			6,685
Total operating expenses		33,917			31,912			68,585			63,393
Operating income (loss)		(94	)		(19,572	)		17,258			(3,445	)
Other income (expense):
Interest expense, net		(6,190	)		(5,941	)		(12,213	)		(11,654	)
Other, net		(482	)		(511	)		131			(1,034	)
Equity in net earnings of affiliate		303			462			905			668
		(6,369	)		(5,990	)		(11,177	)		(12,020	)
Income (loss) before income tax expense (benefit)		(6,463	)		(25,562	)		6,081			(15,465	)
Income tax expense (benefit)		(2,566	)		(10,212	)		2,540			(6,178	)
Net income (loss)	$	(3,897	)	$	(15,350	)	$	3,541		$	(9,287	)

5

UNITED REFINING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS—(Unaudited)

(in thousands)

	Six Months Ended
	February 28, 2006			February 28, 2005
Cash flows from operating activities:
Net income (loss)	$	3,541		$	(9,287	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization		8,931			8,668
Equity in net earnings of affiliate		(905	)		(668	)
Deferred income taxes		593			(6,479	)
(Gain) loss on asset dispositions		(180	)		749
Cash used in working capital items		(51,051	)		(34,505	)
Other, net		24			—
Change in operating assets and liabilities:
Deferred retirement benefits		2,917			1,843
Other assets		(2	)		(187	)
Other noncurrent liabilities		(392	)		(179	)
Total adjustments		(40,065	)		(30,758	)
Net cash used in operating activities		(36,524	)		(40,045	)
Cash flows from investing activities:
Additions to property, plant and equipment		(10,968	)		(4,565	)
Additions to deferred turnarounds costs		(82	)		(761	)
Proceeds from asset dispositions		1,179			—
Net cash used in investing activities		(9,871	)		(5,326	)
Cash flows from financing activities:
Net borrowings on revolving credit facility		25,000			25,000
Proceeds from issuance of long term debt		—			25,750
Dividends to stockholder		(6,559	)		(1,743	)
Principal reductions of long term debt		(305	)		(410	)
Deferred financing costs		(72	)		(792	)
Net cash provided by financing activities		18,064			47,805
Net (decrease) increase in cash and cash equivalents		(28,331	)		2,434
Cash and cash equivalents, beginning of year		43,204			11,552
Cash and cash equivalents, end of period	$	14,873		$	13,986
Cash used in working capital items:
Accounts receivable, net	$	14,419		$	(865	)
Inventories		(46,873	)		(28,481	)
Prepaid expenses and other assets		(22,126	)		(20,379	)
Accounts payable		11,310			22,558
Accrued liabilities		(3,756	)		(4,158	)
Income taxes payable		(1,470	)		(795	)
Sales, use and fuel taxes payable		(5,956	)		(4,142	)
Amounts due to affiliated companies, net		3,401			1,757
Total change	$	(51,051	)	$	(34,505	)
Cash paid during the period for:
Interest	$	12,100		$	11,954
Income taxes	$	3,110		$	1,738
Non-cash investing activities:
Property additions and capital leases	$	71		$	—

6

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 and its subsidiaries, United Refining Company of Pennsylvania and its subsidiaries, and Kiantone Pipeline Corporation (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 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 gasoline stations and convenience stores under the Red Apple Food Mart^® and Country Fair^® brand names.

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 six months ended February 28, 2006 are not necessarily indicative of the results that may be expected for the year ending August 31, 2006. 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, 2005.

2. Recent Accounting Pronouncements

In May 2005, the FASB issued FASB Statement No. 154, “Accounting Changes and Error Corrections” (“Statement 154”). Statement 154 requires companies to recognize changes in accounting principle, including changes required by a new accounting pronouncement when the pronouncement does not include specific transition provisions, retrospectively to prior periods’ financial statements.

Statement 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The Company does not expect that the adoption of Statement 154 will have a material effect on its financial position or results of operations.

3. Inventories

As of February 28, 2006 and August 31, 2005, the replacement cost of LIFO inventories exceeded their LIFO carrying values by approximately $26,132,000 and $38,396,000, respectively. The February 28, 2006 LIFO calculation was computed using quantities and prices which are not necessarily indicative of the actual quantities and prices which will exist at fiscal year-end. Due to anticipated decreases in inventory levels and the many factors which enter into the LIFO calculation which are beyond management’s control, it is the policy of the Company to record the LIFO inventory adjustment only at fiscal year-end.

7

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

4. Subsidiary Guarantors

Certain of United Refining Company’s (the “issuer”) subsidiaries function as guarantors under the terms of the $225,000,000 Senior Unsecured Note Indenture due August 15, 2012. Financial information for the issuer and its wholly owned subsidiary guarantors is as follows:

CONDENSED CONSOLIDATING BALANCE SHEETS

(in thousands)

	February 28, 2006												August 31, 2005
	Issuer			Guarantors			Eliminations			Consolidated			Issuer			Guarantors			Eliminations			Consolidated
Assets
Current:
Cash and cash equivalents	$	7,553		$	7,320		$	—		$	14,873		$	31,195		$	12,009		$	—		$	43,204
Accounts receivable, net		37,548			17,614			—			55,162			51,491			18,090			—			69,581
Inventories		97,750			22,259			—			120,009			48,972			24,164			—			73,136
Prepaid expenses and other assets		34,273			5,374			—			39,647			12,858			4,663			—			17,521
Intercompany		106,912			19,892			(126,804	)		—			109,420			19,718			(129,138	)		—
Total current assets		284,036			72,459			(126,804	)		229,691			253,936			78,644			(129,138	)		203,442
Property, plant and equipment, net		117,408			69,964			—			187,372			112,538			71,105			—			183,643
Investment in affiliated company		2,614			—			—			2,614			1,709			—			—			1,709
Deferred financing costs, net		6,247			—			—			6,247			6,769			—			—			6,769
Goodwill and other non-amortizable assets		—			11,849			—			11,849			—			11,849			—			11,849
Amortizable intangible assets, net		—			2,958			—			2,958			—			3,284			—			3,284
Deferred turnaround costs & other assets, Net		6,123			1,557			(1,171	)		6,509			7,650			1,662			(1,171	)		8,141
	$	416,428		$	158,787		$	(127,975	)	$	447,240		$	382,602		$	166,544		$	(130,309	)	$	418,837
Liabilities and Stockholder’s Equity
Current:
Revolving credit facility	$	25,000		$	—		$	—		$	25,000		$	—		$	—		$	—		$	—
Current installments of long-term debt		(57	)		287			—			230			(59	)		363			—			304
Accounts payable		46,166			14,782			—			60,948			32,030			17,608			—			49,638
Accrued liabilities		8,557			4,799			—			13,356			11,527			5,585			—			17,112
Income taxes payable		1,820			(1,322	)		—			498			5,551			(3,583	)		—			1,968
Sales, use and fuel taxes payable		12,028			2,557			—			14,585			16,662			3,879			—			20,541
Deferred income taxes		4,821			(709	)		—			4,112			4,821			(709	)		—			4,112
Amounts due to affiliated companies, net		3,908			204			—			4,112			945			(234	)		—			711
Intercompany		—			126,804			(126,804	)		—			—			129,138			(129,138	)		—
Total current liabilities		102,243			147,402			(126,804	)		122,841			71,477			152,047			(129,138	)		94,386
Long term debt: less current installments		223,931			2,862			—			226,793			223,837			3,000			—			226,837
Deferred income taxes		(685	)		4,038			—			3,353			(1,247	)		4,007			—			2,760
Deferred gain on settlement of pension plan obligations		592			—			—			592			700			—			—			700
Deferred retirement benefits		44,440			500			—			44,940			41,130			893			—			42,023
Other noncurrent liabilities		—			866			—			866			—			1,258			—			1,258
Total liabilities		370,521			155,668			(126,804	)		399,385			335,897			161,205			(129,138	)		367,964
Commitment and contingencies
Stockholder’s equity
Common stock, $.10 par value per share—shares authorized 100; issued and outstanding 100		—			18			(18	)		—			—			18			(18	)		—
Additional paid-in capital		7,150			10,651			(1,153	)		16,648			7,150			10,651			(1,153	)		16,648
Retained earnings		45,331			(7,418	)		—			37,913			46,129			(5,198	)		—			40,931
Accumulated other comprehensive loss		(6,574	)		(132	)		—			(6,706	)		(6,574	)		(132	)		—			(6,706	)
Total stockholder’s equity		45,907			3,119			(1,171	)		47,855			46,705			5,339			(1,171	)		50,873
	$	416,428		$	158,787		$	(127,975	)	$	447,240		$	382,602		$	166,544		$	(130,309	)	$	418,837

8

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(in thousands)

	Three Months Ended February 28, 2006												Three Months Ended February 28, 2005
	Issuer			Guarantors			Eliminations			Consolidated			Issuer			Guarantors			Eliminations			Consolidated
Net sales	$	369,286		$	241,068		$	(103,869	)	$	506,485		$	259,700		$	199,685		$	(74,596	)	$	384,789
Costs of goods sold		356,041			220,490			(103,869	)		472,662			271,618			175,427			(74,596	)		372,449
Gross profit (loss)		13,245			20,578			—			33,823			(11,918	)		24,258			—			12,340
Expenses:
Selling, general and administrative expenses		5,201			25,423			—			30,624			4,443			24,126			—			28,569
Depreciation and amortization expenses		2,134			1,159			—			3,293			2,217			1,126			—			3,343
Total operating expenses		7,335			26,582			—			33,917			6,660			25,252			—			31,912
Operating income (loss)		5,910			(6,004	)		—			(94	)		(18,578	)		(994	)		—			(19,572	)
Other income (expense):
Interest expense, net		(4,007	)		(2,183	)		—			(6,190	)		(4,543	)		(1,398	)		—			(5,941	)
Other, net		(487	)		5			—			(482	)		(546	)		35			—			(511	)
Equity in net earnings of affiliate		303			—			—			303			462			—			—			462
		(4,191	)		(2,178	)		—			(6,369	)		(4,627	)		(1,363	)		—			(5,990	)
Income (loss) before income tax expense (benefit)		1,719			(8,182	)		—			(6,463	)		(23,205	)		(2,357	)		—			(25,562	)
Income tax expense (benefit)		649			(3,215	)		—			(2,566	)		(9,316	)		(896	)		—			(10,212	)
Net income (loss)	$	1,070		$	(4,967	)	$	—		$	(3,897	)	$	(13,889	)	$	(1,461	)	$	—		$	(15,350	)

9

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(in thousands)

	Six Months Ended February 28, 2006												Six Months Ended February 28, 2005
	Issuer			Guarantors			Eliminations			Consolidated			Issuer			Guarantors			Eliminations			Consolidated
Net sales	$	785,640		$	514,175		$	(219,338	)	$	1,080,477		$	553,905		$	418,104		$	(161,167	)	$	810,842
Costs of goods sold		752,631			461,341			(219,338	)		994,634			544,468			367,593			(161,167	)		750,894
Gross profit		33,009			52,834			—			85,843			9,437			50,511			—			59,948
Expenses:
Selling, general and administrative expenses		11,230			50,773			—			62,003			8,871			47,837			—			56,708
Depreciation and amortization expenses		4,268			2,314			—			6,582			4,435			2,250			—			6,685
Total operating expenses		15,498			53,087			—			68,585			13,306			50,087			—			63,393
Operating income (loss)		17,511			(253	)		—			17,258			(3,869	)		424			—			(3,445	)
Other income (expense):
Interest expense, net		(7,935	)		(4,278	)		—			(12,213	)		(8,986	)		(2,668	)		—			(11,654	)
Other, net		(998	)		1,129			—			131			(1,159	)		125			—			(1,034	)
Equity in net earnings of affiliate		905			—			—			905			668			—			—			668
		(8,028	)		(3,149	)		—			(11,177	)		(9,477	)		(2,543	)		—			(12,020	)
Income (loss) before income tax expense (benefit)		9,483			(3,402	)		—			6,081			(13,346	)		(2,119	)		—			(15,465	)
Income tax expense (benefit)		3,722			(1,182	)		—			2,540			(5,415	)		(763	)		—			(6,178	)
Net income (loss)	$	5,761		$	(2,220	)	$	—		$	3,541		$	(7,931	)	$	(1,356	)	$	—		$	(9,287	)

10

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in thousands)

	Six Months Ended February 28, 2006											Six Months Ended February 28, 2005
	Issuer			Guarantors			Eliminations		Consolidated			Issuer			Guarantors			Eliminations		Consolidated
Net cash (used in) provided by operating activities	$	(32,945	)	$	(3,579	)	$	—	$	(36,524	)	$	(44,123	)	$	4,078		$	—	$	(40,045	)
Cash flows from investing activities:
Additions to property, plant and equipment		(8,897	)		(2,071	)		—		(10,968	)		(2,673	)		(1,892	)		—		(4,565	)
Additions to deferred turnaround costs		(79	)		(3	)		—		(82	)		(761	)		—			—		(761	)
Proceeds from asset dispositions		1			1,178			—		1,179			—			—			—		—
Net cash used in investing activities		(8,975	)		(896	)		—		(9,871	)		(3,434	)		(1,892	)		—		(5,326	)
Cash flows from financing activities:
Net borrowings on revolving credit facility		25,000			—			—		25,000			25,000			—			—		25,000
Proceeds from issuance of long term debt		—			—			—		—			25,750			—					25,750
Dividends to stockholder		(6,559	)		—			—		(6,559	)		(1,743	)		—			—		(1,743	)
Principal reductions of long-term debt		(91	)		(214	)		—		(305	)		(79	)		(331	)		—		(410	)
Deferred financing costs		(72	)		—			—		(72	)		(792	)		—			—		(792	)
Net cash provided by (used in) financing activities		18,278			(214	)		—		18,064			48,136			(331	)		—		47,805
Net (decrease) increase in cash and cash equivalents		(23,642	)		(4,689	)		—		(28,331	)		579			1,855			—		2,434
Cash and cash equivalents, beginning of year		31,195			12,009			—		43,204			4,709			6,843			—		11,552
Cash and cash equivalents, end of period	$	7,553		$	7,320		$	—	$	14,873		$	5,288		$	8,698		$	—	$	13,986

11

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

5. Segments of Business

Intersegment revenues are calculated using estimated 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 February 28,						Six Months Ended February 28,
	2006			2005			2006			2005
Net Sales
Retail	$	239,829		$	198,514		$	511,670		$	415,791
Wholesale		266,656			186,275			568,807			395,051
	$	506,485		$	384,789		$	1,080,477		$	810,842
Intersegment Sales
Wholesale	$	102,630		$	73,425		$	216,833		$	158,854
Operating Income (loss)
Retail	$	(6,245	)	$	(900	)	$	(345	)	$	315
Wholesale		6,151			(18,672	)		17,603			(3,760	)
	$	(94	)	$	(19,572	)	$	17,258		$	(3,445	)
Depreciation and Amortization
Retail	$	1,109		$	1,076		$	2,214		$	2,150
Wholesale		2,184			2,267			4,368			4,535
	$	3,293		$	3,343		$	6,582		$	6,685

	February 28, 2006		August 31, 2005
Total Assets
Retail	$	130,265	$	138,162
Wholesale		316,975		280,675
	$	447,240	$	418,837
Capital Expenditures (including non-cash)
Retail	$	1,965	$	6,354
Wholesale		9,074		6,438
	$	11,039	$	12,792

12

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

6. Employee Benefit Plans

For the periods ended February 28, 2006 and February 28, 2005, net pension and other postretirement benefit costs were comprised of the following:

	Pension Benefits						Other Post-Retirement Benefits
	Six Months Ended February 28,						Six Months Ended February 28,
	2006			2005			2006		2005
	(in thousands)
Service cost	$	1,531		$	1,261		$	1,185	$	794
Interest cost on benefit obligation		2,052			1,878			1,367		1,226
Expected return on plan assets		(1,891	)		(1,699	)		—		—
Amortization of transition obligation		35			35			298		298
Amortization and deferral of net loss		828			405			486		250
Net periodic benefit cost	$	2,555		$	1,880		$	3,336	$	2,568

As of February 28, 2006, $4,400,000 of contributions have been made to the Company pension plans. The Company presently anticipates no additional contribution to its pension plans in fiscal 2006.

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UNITED REFINING COMPANY AND SUBSIDIARIES

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, reports on Form 8-K, etc. In addition to the factors discussed elsewhere in this Quarterly Report 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, including, without limitation:

• the demand for and supply of crude oil and refined products;

• the spread between market prices for refined products and market prices for crude oil;

• repayment of debt;

• general economic, business and market conditions;

• risks and uncertainties with respect to the actions of actual or potential competitive suppliers of refined petroleum products in our markets;

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

• the availability and cost of financing to us;

• environmental, tax 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;

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• 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;

• future operating results and financial condition; and

• the effectiveness of our disclosure controls and procedures and internal control over financial reporting.

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 becomes aware of, after the date of this Quarterly Report on Form 10-Q.

Recent Developments

The Company continues to be impacted by the world crude market as it continues to remain volatile with prices on the New York Mercantile Exchange (NYMEX) ranging from a low of $57.34/BBL in December to a high of $68.35/BBL in January. Average crude oil prices for delivery in the third fiscal quarter of 2006 as of April 7, 2006 were averaging $64.11/BBL as compared to an average of $61.11/BBL for the second fiscal quarter of 2006, a $3.00 increase.

Industry-wide wholesale margins of gasoline have increased in the third fiscal quarter of 2006 while distillate margins have decreased. As of April 7, 2006, margins, as indicated by the difference between prices of crude oil contracts traded on the NYMEX and the prices of NYMEX gasoline and heating oil contracts, were averaging $10.07 and $10.77 respectively for the third fiscal quarter. This represents a $3.26 or 48% increase in wholesale margins for gasoline and a $1.78 or 14% decrease for heating oil as compared to the second fiscal quarter of 2006.

We continue to benefit from our ability to process a significant percentage of heavy, high sulfur grades of crude oil. Our average crude cost relative to the NYMEX average crude cost was lower by $11.96/BBL for the second quarter of 2006. For the second fiscal quarter of 2005, our average crude cost was $8.98 lower than the NYMEX average crude cost. For third quarter of fiscal 2006, as of April 7, 2006, our average crude cost is $13.11 lower than the NYMEX average.

The Company continues its preparation to meet low sulfur requirements for diesel fuel effective June 1, 2006. It is the Company’s intention to produce only 15 parts per million (PPM) diesel fuel after June 1^st. In preparation for this, it undertook a 17 day shutdown of its distillate hydrotreater in March during which time a new catalyst was put in place which will enable the Company to meet the new standard.

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 gasoline stations and convenience stores under the Red Apple Food Mart^® and Country Fair^® brand names.

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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 investors with a reasonable basis for evaluating the Company’s operations, but should not serve as the only criteria for predicting the Company’s future performance.

Retail Operations:

	Three Months Ended February 28,						Six Months Ended February 28,
	2006			2005			2006			2005
	(dollars in thousands)
Net Sales
Petroleum	$	195,089		$	155,799		$	418,505		$	326,830
Merchandise and other		44,740			42,715			93,165			88,961
Total Net Sales	$	239,829		$	198,514		$	511,670		$	415,791
Costs of Goods Sold	$	219,662		$	174,327		$	459,276		$	365,718
Gross Profit	$	20,167		$	24,187		$	52,394		$	50,073
Operating Expenses	$	26,412		$	25,087		$	52,739		$	49,758
Segment Operating Income / (Loss)	$	(6,245	)	$	(900	)	$	(345	)	$	315
Petroleum Sales (thousands of gallons)		82,436			80,325			167,162			165,848
Gross Profit
Petroleum (a)	$	8,068		$	12,469		$	26,933		$	25,279
Merchandise and other		12,099			11,718			25,461			24,794
	$	20,167		$	24,187		$	52,394		$	50,073
Petroleum margin ($/gallon) (b)		.0979			.1553			.1611			.1525
Merchandise margin (percent of sales)		27.0	%		27.4	%		27.3	%		27.9	%

(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.

Comparison of Fiscal Quarters Ended February 28, 2006 and February 28, 2005

Net Sales

Retail sales increased during the fiscal quarter ended February 28, 2006 by $41.3 million or 20.8% from $198.5 million to $239.8 million over the comparable period in fiscal 2005. The retail sales increase resulted from a $39.3 million increase in petroleum sales and a $2.0 million increase in merchandise sales. This merchandise sales increase is primarily due to increased prepared food, beverages and cigarette sales due to promotional campaigns and increased selling prices. The petroleum sales increase results from a 22.0% increase in retail selling prices per gallon, and a 2.1 million gallon or 2.6% increase in retail petroleum volume.

Costs of Goods Sold

Retail costs of goods sold increased during the fiscal quarter ended February 28, 2006 by $45.3 million or 26.0% over the comparable period in fiscal 2005 from $174.3 million to $219.7 million. The increase of $45.3 million is due to the following: petroleum purchases increased $39.1 million due to an increase in prices and

16

volume, fuel taxes increased $3.5 million, freight costs increased $.8 million, merchandise costs increased $1.6 million directly related to increase in sales, inventory change of $.2 million due mainly to a 20.8% increase in petroleum product costs, and other miscellaneous costs increased by $.1 million.

Gross Profit

Retail gross profit decreased during the fiscal quarter ended February 28, 2006 by $4.0 million or 16.6% over the comparable period in fiscal 2005. The Company decreased its petroleum margins by $4.4 million offset by a merchandise margin increase of $.4 million. The decrease in petroleum margin was due to retail selling prices increasing 22% while cost of petroleum products increased 40%.

Operating Expenses

Retail operating expenses increased during the fiscal quarter ended February 28, 2006 by $1.3 million or 5.0% over the comparable period in fiscal 2005. Primarily contributing to the increases were increased payroll and related payroll costs of $.6 million. This increase was due in part to an increase in New York State minimum wage from $6.00 to $6.75 an hour effective January 1, 2006 which affected about 500 retail employees. The remaining increase was attributed to increased credit/customer service costs of $.4 million due to increase in retail petroleum prices of approximately $.40 per gallon, increased pension/post-retirement costs of $.1 million and other miscellaneous costs $.2 million.

Comparison of Six Months Ended February 28, 2006 and February 28, 2005

Net Sales

Retail sales increased during the six months ended February 28, 2006 by $95.9 million, or 23.1% from $415.8 million to $511.7 million. The retail sales increase was primarily due to a $91.7 million increase in petroleum sales, and a $4.2 million increase in merchandise sales. This merchandise sales increase is primarily due to increased prepared food, beverages and cigarette sales due to promotional campaigns and increased selling prices. The petroleum sales increase results from a 27.0% increase in retail selling prices per gallon, and a 1.3 million gallon or .8% increase in retail petroleum volume.

Costs of Goods Sold

Retail costs of goods sold increased during the six months ended February 28, 2006 by $93.6 million or 25.6% from $365.7 million to $459.3 million. The increase of $93.6 million is due to the following: petroleum purchases increased $81.3 million due to an increase in prices and volume, fuel taxes increased $6.9 million, freight costs increased $1.4 million, merchandise costs increased $3.5 million directly related to the increase in sales, an inventory change of $.4 million due mainly to a 20.8% increase in petroleum product costs, and other miscellaneous costs increased by $.1 million.

Gross Profit

Retail gross profit increased during the six months ended February 28, 2006 by $2.3 million or 4.6%. The Company increased its petroleum margins by $1.7 million or 6.5% and merchandise margin increased by $.7 million or 2.7%.

Operating Expenses

Retail operating expenses increased during the six months ended February 28, 2006 by $2.9 million or 5.9%. Primarily contributing to the increases were increased payroll and related payroll costs of $1.3 million due to minimum wage increase in New York State effective January 1, 2005 from $5.15 to $6.00 per hour and another increase effective January 1, 2006 from $6.00 to $6.75 per hour affecting approximately 500 retail

17

employees. The total number of retail employees also affected payroll and related payroll costs as total retail employment increased by 129 people from February 28, 2005 to February 28, 2006. Other increases were related to increased credit/customer service costs of $.8 million due to increase in retail petroleum prices of approximately $.53 per gallon, increased pension/post-retirement costs of $.2 million, increased insurance/utilities/taxes of $.2 million, increased advertising/promotion costs of $.3 million and other miscellaneous costs of $.1 million.

Wholesale Operations:

	Three Months Ended February 28,					Six Months Ended February 28,
	2006		2005			2006		2005
	(dollars in thousands)
Net Sales (a)	$	266,656	$	186,275		$	568,807	$	395,051
Costs of Goods Sold		253,000		198,122			535,358		385,176
Gross Profit / (Loss)	$	13,656	$	(11,847	)	$	33,449	$	9,875
Operating Expenses		7,505		6,825			15,846		13,635
Segment Operating Income / (Loss)	$	6,151	$	(18,672	)	$	17,603	$	(3,760	)
Crude throughput (thousand barrels per day)		66.4		62.3			66.8		61.4

Refinery Product Yield

(thousands of barrels)

	Three Months Ended February 28,				Six Months Ended February 28,
	2006		2005		2006		2005
Gasoline and gasoline blendstock	2,623		2,432		5,347		4,890
Distillates	1,789		1,546		3,474		3,056
Asphalt	1,629		1,694		3,344		3,205
Butane, propane, residual products, internally produced fuel and other (“Other”)	505		504		1,048		1,070
Total Product Yield	6,546		6,176		13,213		12,221
% Heavy Crude Oil of Total Refinery Throughput (b)	53	%	58	%	52	%	55	%

Product Sales

(dollars in thousands) (a)

	Three Months Ended February 28,				Six Months Ended February 28,
	2006		2005		2006		2005
Gasoline and gasoline blendstock	$	108,156	$	74,100	$	229,884	$	155,889
Distillates		108,533		75,571		217,664		144,688
Asphalt		46,309		33,085		112,685		87,251
Other		3,658		3,519		8,574		7,223
	$	266,656	$	186,275	$	568,807	$	395,051

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Product Sales

(thousand of barrels) (a)

	Three Months Ended February 28,		Six Months Ended February 28,
	2006	2005	2006	2005
Gasoline and gasoline blendstock	1,575	1,427	3,183	2,879
Distillates	1,458	1,323	2,762	2,458
Asphalt	1,580	1,490	3,573	3,365
Other	97	129	220	253
	4,710	4,369	9,738	8,955

(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 February 28, 2006 and February 28, 2005

Net Sales

Wholesale sales increased during the three months ended February 28, 2006 by $80.4 million or 43.2% over the comparable period in fiscal 2005 from $186.3 million to $266.7 million. The wholesale sales increase was due to a 32.8% increase in wholesale prices and a 7.8% increase in wholesale volume.

Costs of Goods Sold

Wholesale costs of goods sold increased during the three months ended February 28, 2006 by $54.9 million or 27.7% over the comparable period in fiscal 2005 from $198.1 million to $253.0 million. The increase in wholesale costs of goods sold was primarily due to a 32.1% increase in the Company’s average crude oil purchase price and a 7.8% increase in wholesale sales volume. Worldwide crude oil prices, as indicated by NYMEX crude oil contract prices, increased 32.3% as compared to the prior year period.

Gross Profit / (Loss)

Wholesale gross profit increased $25.5 million from $(11.8) million for the fiscal quarter ended February 28, 2005 to $13.7 million for fiscal quarter ended February 28, 2006. This increase was primarily due to an increase in sales volume, selling prices and related margins.

Operating Expenses

Operating expenses increased during the three months ended February 28, 2006 by $.7 million over such expenses for the comparable period in fiscal 2005. This increase was primarily due to increased pension expense and corporate administrative overhead for three months ended February 28, 2006. For 2006 operating expenses were $7.5 million, or 2.8% of net wholesale sales, compared to $6.8 million, or 3.7% of net wholesale sales for February 28, 2005.

Comparison of Six Months Ended February 28, 2006 and February 28, 2005

Net Sales

Wholesale sales increased during the six months ended February 28, 2006 by $173.8 million or 44.0% from $395.0 million to $568.8 million. The wholesale sales increase was due to a 32.4% increase in wholesale prices and also an 8.7% increase in wholesale volume.

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Costs of Goods Sold

Wholesale costs of goods sold increased during 2006 by $150.2 million or 39.0% from $385.2 million to $535.4 million. The increase in wholesale costs of goods was primarily due to a 33.6% increase in the Company’s average crude oil purchase price and an 8.7% increase in wholesale sales volume. Worldwide crude oil prices, as indicated by NYMEX crude oil contract prices, increased 33.2% as compared to the prior year period.

Gross Profit

Wholesale gross profit increased $23.6 million from $9.9 million for the six months ended February 28, 2005 to $33.5 million for the six months ended February 28, 2006. This increase was primarily due to increased sales volume and selling prices.

Operating Expenses

Operating expenses increased during the six months ended February 28, 2006 by $2.2 million over such expenses for 2005. This increase was primarily due to executive officers bonuses incurred, increased pension expense and corporate administrative overhead. For 2006 operating expenses were $15.8 million, or 2.8% of net wholesale sales, compared to $13.6 million, or 3.5% of net wholesale sales for six months ended February 28, 2005.

Consolidated Expenses:

Interest Expense, net

Net interest expense (interest expense less interest income) for the three months ended February 28, 2006 increased $.3 million or 5.1% to $6.2 million from $5.9 million for the comparable period in fiscal 2005.

Net interest expense increased $.5 million or 4.3% to $12.2 million from $11.7 million between the six months ended February 28, 2005 and the six months ended February 28, 2006.

The increase in interest expense for both the three month and six month periods ended February 28, 2006 was primarily due to an increase in the principal amount of Senior Unsecured Notes outstanding as a result of the additional $25 million in notes issued in February 2005.

Income Tax Expense / (Benefit)

The Company’s effective tax rate for the three months ended February 28, 2006 was approximately 39.7% compared to a rate of 39.9% for the three months ended February 28, 2005.

The Company’s effective tax rate for the six months ended February 28, 2006 was approximately 41.8% compared to a rate of 39.9% for the six months ended February 28, 2005. The change in both the three month period and the six month period ended February 28, 2006 is primarily due to a change in various permanent tax differences and an increase in corporate state income taxes.

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.

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

	February 28, 2006		August 31, 2005
Cash and cash equivalents	$	14,873	$	43,204
Working capital	$	106,850	$	109,056
Current ratio		1.9		2.2
Debt	$	252,023	$	227,141

Primary sources of liquidity have been cash and cash equivalents, cash flows from operations and borrowing availability under a revolving line of credit. We believe available capital resources will be 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. During the six months ended February 28, 2006, significant uses of cash include $11.0 million for purchases of property, plant and equipment, $.3 million for reductions to debt, $.1 million for additions to deferred turnaround costs, a $6.6 million dividend to stockholder, $.1 million for deferred financing costs and $36.5 million used in operating activities principally for increased inventories and prepaid expenses. This use of cash was funded primarily from net borrowings of $25.0 million under the revolving credit facility.

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 $4 million annually over the last three years for the refining and marketing operations. Management may increase these maintenance and non-discretionary capital expenditures during fiscal year 2006.

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 revolving credit facility (the “facility”) with PNC Bank, N.A. as Agent Bank. This is a $100,000,000 revolving facility, which expires May 9, 2007. The Revolving Credit Facility is secured primarily by certain cash accounts, accounts receivable, and inventory. Until maturity, we may borrow on a borrowing base formula as set forth in the facility. For Base Rate borrowings, interest is calculated at the greater of the agent bank’s prime rate or federal fund rate plus 1%, plus an applicable margin of .25% to .75% (7.75% at February 28, 2006). For Euro-Rate borrowings, interest is calculated at the LIBOR rate plus an applicable margin of 1.75% to 3.00%. The applicable margin varies with our facility leverage ratio calculation. As of February 28, 2006, no Euro-Rate borrowings and $25,000,000 of Base Rate borrowings were outstanding under the agreement.

We had outstanding letters of credit under our Revolving Credit Facility of $650,000 as of February 28, 2006.

As of February 28, 2006 the outstanding borrowings under our Revolving Credit Facility were $25,000,000 resulting in net availability of $74,350,000 based on the borrowing base calculation.

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.

21

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 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 revolving credit facility to finance a portion of its operations. These on-balance sheet financial instruments, to the extent they provide for variable rates, expose the Company to interest rate risk resulting from changes in the PNC Prime rate, the Federal Funds or LIBOR rate.

The Company has exposure to price fluctuations of crude oil and refined products. The Company does not manage the price risk related to all of its inventories of crude oil and refined products with a permanent formal hedging program, but does manage its risk exposures by managing inventory levels. At February 28, 2006 the Company was exposed to the risk of market price declines with respect to a substantial portion of its crude oil and refined product inventories.

See also Recent Developments section of Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations.

ITEM 4. CONTROLS AND PROCEDURES

(a) Based on an evaluation by management of the Company’s disclosure controls and procedures (as defined in Rules 13(a) – 15(e) and 15(d) – 15(e) of the Securities Exchange Act of 1934, as amended), as of the end of the Company’s fiscal quarter ended February 28, 2006, (the “Evaluation Date”) the Company’s Chief Executive Officer and Chief Financial Officer (its principal executive officer and principal financial officer, respectively) have concluded that the Company’s disclosure controls and procedures were effective as of the Evaluation Date.

(b) There have not been any changes in the Company’s internal controls over financial reporting that occurred during the Company’s fiscal quarter ended February 28, 2006 that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

22

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

(None)

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(None)

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

(None)

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

(N/A)

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

23

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: April 12, 2006

UNITED REFINING COMPANY

(Registrant)

/s/  Myron L. Turfitt

Myron L. Turfitt

President

/s/  James E. Murphy

James E. Murphy

Chief Financial Officer

24

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: April 12, 2006

KIANTONE PIPELINE CORPORATION

(Registrant)

/s/  Myron L. Turfitt

Myron L. Turfitt

President

/s/  James E. Murphy

James E. Murphy

Chief Financial Officer

25

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: April 12, 2006

UNITED REFINING COMPANY OF PENNSYLVANIA

(Registrant)

/s/  Myron L. Turfitt

Myron L. Turfitt

President

/s/  James E. Murphy

James E. Murphy

Chief Financial Officer

26

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: April 12, 2006

KIANTONE PIPELINE COMPANY

(Registrant)

/s/  Myron L. Turfitt

Myron L. Turfitt

President

/s/  James E. Murphy

James E. Murphy

Chief Financial Officer

27

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: April 12, 2006

UNITED JET CENTER, INC.

(Registrant)

/s/  Myron L. Turfitt

Myron L. Turfitt

President

/s/  James E. Murphy

James E. Murphy

Chief Financial Officer

28

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: April 12, 2006

KWIK-FILL CORPORATION

(Registrant)

/s/  Myron L. Turfitt

Myron L. Turfitt

President

/s/  James E. Murphy

James E. Murphy

Chief Financial Officer

29

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: April 12, 2006

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

30

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: April 12, 2006

BELL OIL CORP.

(Registrant)

/s/  Myron L. Turfitt

Myron L. Turfitt

President

/s/  James E. Murphy

James E. Murphy

Chief Financial Officer

31

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: April 12, 2006

PPC, INC.

(Registrant)

/s/  Myron L. Turfitt

Myron L. Turfitt

President

/s/  James E. Murphy

James E. Murphy

Chief Financial Officer

32

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: April 12, 2006

SUPER TEST PETROLEUM, INC.

(Registrant)

/s/  Myron L. Turfitt

Myron L. Turfitt

President

/s/  James E. Murphy

James E. Murphy

Chief Financial Officer

33

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: April 12, 2006

KWIK-FIL, INC.

(Registrant)

/s/  Myron L. Turfitt

Myron L. Turfitt

President

/s/  James E. Murphy

James E. Murphy

Chief Financial Officer

34

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: April 12, 2006

VULCAN ASPHALT REFINING CORPORATION

(Registrant)

/s/  Myron L. Turfitt

Myron L. Turfitt

President

/s/  James E. Murphy

James E. Murphy

Chief Financial Officer

35

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: April 12, 2006

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

36