United Store 10-Q 2011 Q3 Quarterly report

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, 2011

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

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 of Regulation 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  ¨    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 8, 2011, 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

2

FORM 10-Q – CONTENTS

		PAGE(S)
PART I.	FINANCIAL INFORMATION		4
Item 1.	Financial Statements.		4
	Consolidated Balance Sheets – May 31, 2011 (unaudited) and August 31, 2010		4
	Consolidated Statements of Operations – Quarter and Nine Months Ended May 31, 2011 and 2010 (unaudited)		5
	Consolidated Statements of Cash Flows – Nine Months Ended May 31, 2011 and 2010 (unaudited)		6
	Notes to Consolidated Financial Statements (unaudited)		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.		18
Item 3.	Quantitative and Qualitative Disclosures about Market Risk.		27
Item 4.	Controls and Procedures.		27
PART II.	OTHER INFORMATION		29
Item 1.	Legal Proceedings.		29
Item 1A.	Risk Factors.		29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.		29
Item 3.	Defaults Upon Senior Securities.		29
Item 4.	(Removed and Reserved).		29
Item 5.	Other Information.		29
Item 6.	Exhibits.		29
Signatures.			31

3

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

UNITED REFINING COMPANY AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands, except share amounts)

	May 31, 2011 (Unaudited)			August 31, 2010
Assets
Current:
Cash and cash equivalents	$	27,710		$	17,170
Accounts receivable, net		123,184			64,192
Refundable income taxes		—			36,390
Inventories		200,163			206,838
Prepaid expenses and other assets		42,713			27,941
Amounts due from affiliated companies, net		1,966			2,972
Total current assets		395,736			355,503
Property, plant and equipment, net		271,737			261,775
Deferred financing costs, net		10,036			2,114
Goodwill		1,349			1,349
Tradename		10,500			10,500
Amortizable intangible assets, net		1,296			1,376
Deferred turnaround costs and other assets, net		15,566			3,894
Deferred income taxes		414			592
	$	706,634		$	637,103
Liabilities and Stockholder’s Equity
Current:
Revolving credit facility – non-controlling interest	$	10,900		$	—
Current installments of long-term debt		956			1,888
Accounts payable		55,015			65,620
Accrued liabilities		22,793			15,569
Income taxes payable		3,097			552
Sales, use and fuel taxes payable		18,989			18,455
Deferred income taxes		5,997			5,997
Total current liabilities		117,747			108,081
Revolving credit facility		102,000			83,000
Long term debt: less current installments		355,384			328,165
Deferred retirement benefits		88,292			91,620
Total liabilities		663,423			610,866
Commitments and contingencies
Stockholder’s equity:
Common stock; $.10 par value per share – shares authorized 100; issued and outstanding 100		—			—
Additional paid-in capital		22,500			22,500
Retained earnings		19,494			18,231
Accumulated other comprehensive loss		(14,094	)		(14,494	)
Controlling interest equity		27,900			26,237
Non-controlling interest		15,311			—
Total stockholder’s equity		43,211			26,237
	$	706,634		$	637,103

See accompanying notes to consolidated financial statements.

4

UNITED REFINING COMPANY AND SUBSIDIARIES

Consolidated Statements of Operations – (Unaudited)

(in thousands)

	Three Months Ended May 31,						Nine Months Ended May 31,
	2011			2010			2011			2010
Net sales	$	808,115		$	705,322		$	2,119,541		$	1,920,996
Costs and expenses:
Costs of goods sold (exclusive of depreciation and amortization)		736,968			674,641			1,957,646			1,862,603
Selling, general and administrative expenses		37,512			37,191			110,117			111,634
Depreciation and amortization expenses		5,256			5,467			16,243			16,435
		779,736			717,299			2,084,006			1,990,672
Operating income (loss)		28,379			(11,977	)		35,535			(69,676	)
Other income (expense):
Interest expense, net and financing costs		(11,761	)		(8,983	)		(29,570	)		(26,162	)
Other, net		(805	)		(620	)		(2,196	)		(1,432	)
Loss on early extinguishment of debt		(1,245	)		—			(1,245	)		—
		(13,811	)		(9,603	)		(33,011	)		(27,594	)
Income (loss) before income tax expense (benefit)		14,568			(21,580	)		2,524			(97,270	)
Income tax expense (benefit)		5,259			(4,728	)		950			(35,763	)
Net income (loss)		9,309			(16,852	)		1,574			(61,507	)
Less net income attributable to non-controlling interest		218			—			311			—
Net income (loss) attributable to United Refining Company’s Stockholder	$	9,091		$	(16,852	)	$	1,263		$	(61,507	)

See accompanying notes to consolidated financial statements.

5

UNITED REFINING COMPANY AND SUBSIDIARIES

Consolidated Statements of Cash Flows – (Unaudited)

(in thousands)

	Nine Months Ended May 31,
	2011			2010
Cash flows from operating activities:
Net income (loss)	$	1,263		$	(61,507	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization		17,410			16,686
Deferred income taxes		(100	)		(5,413	)
Non-cash portion of loss on early extinguishment of debt		330			—
Loss on asset dispositions		239			825
Cash used in working capital items		(29,995	)		(37,794	)
Net income attributable to non-controlling interest		311			—
Other, net		(2	)		2
Change in operating assets and liabilities:
Deferred retirement benefits		(2,649	)		9,387
Other noncurrent liabilities		—			(4	)
Total adjustments		(14,456	)		(16,311	)
Net cash used in operating activities		(13,193	)		(77,818	)
Cash flows from investing activities:
Additions to property, plant and equipment		(23,178	)		(19,559	)
Additions to deferred turnaround costs		(14,702	)		(1,060	)
Proceeds from asset dispositions		57			25
Net cash used in investing activities		(37,823	)		(20,594	)
Cash flows from financing activities:
Net borrowings on revolving credit facilities		29,900			93,000
Proceeds from issuance of common stock of non-controlling interest		15,000			—
Proceeds from issuance of long term debt		352,021			—
Principal reductions of long term debt		(324,809	)		(1,290	)
Deferred financing costs		(10,556	)		(10	)
Net cash provided by financing activities		61,556			91,700
Net increase (decrease) in cash and cash equivalents		10,540			(6,712	)
Cash and cash equivalents, beginning of year		17,170			31,062
Cash and cash equivalents, end of period	$	27,710		$	24,350
Cash provided by (used in) working capital items:
Accounts receivable, net	$	(58,992	)	$	94
Refundable income taxes		36,390			—
Inventories		6,675			38,213
Prepaid expenses and other assets		(14,772	)		(43,023	)
Amounts due from affiliated companies, net		1,006			2,253
Accounts payable		(10,605	)		(35,552	)
Accrued liabilities		7,224			6,761
Income taxes payable		2,545			(5,149	)
Sales, use and fuel taxes payable		534			(1,391	)
Total change	$	(29,995	)	$	(37,794	)
Cash paid during the period for:
Interest	$	22,068		$	18,072
Income taxes	$	1,351		$	5,651
Non-cash investing activities:
Property additions & capital leases	$	212		$	805

See accompanying notes to consolidated financial statements.

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, Kiantone Pipeline Corporation (collectively, the “Company”), and United Refining Asphalt, Inc. (“URA”) a variable interest entity that was created in January 2011 for which the Company is the primary beneficiary. All significant intercompany balances and transactions have been eliminated in consolidation.

A variable interest entity (“VIE”) is defined as an entity that either has investor voting rights that are not proportional to their economic interests or has equity investors that do not provide sufficient financial resources for the entity to support its activities. A VIE is required to be consolidated by a company if that company is the primary beneficiary. The primary beneficiary of the VIE is the company that controls the VIE’s activities and is subject to a majority of the risk of loss from the VIE’s activities or, if no company is subject to a majority of such risk, the company that is entitled to receive a majority of the VIE’s residual returns.

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 at 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.

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, 2011 are not necessarily indicative of the results that may be expected for the year ending August 31, 2011. 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, 2010.

Certain items have been reclassified to conform to current period presentation.

2. Derivative Financial Instruments

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 Statement of Operations.

7

UNITED REFINING COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(Unaudited)

During the quarter ended May 31, 2011, the Company had 5,250,000 barrels of heating oil and gasoline crackspread swaps outstanding as part of its risk management strategy. The crackspread swaps expire sequentially beginning June 2011 through December 2012. These derivative instruments are being used by the Company to lock in margins on future sales of diesel fuel and gasoline.

The fair value gain position (recorded in the Consolidated Statements of Operations) of our derivatives at May 31, 2011 are as follows:

	May 31, 2011
	Notional Balance	Maturity Date		Prepaid Expenses
Designated as hedges under ASC 815
None
Not designated as hedges under ASC 815
Heating oil and gasoline crackspread swaps	5,250,000 barrels		Monthly June 2011 thru December 2012	$	897,123
Total derivative instruments				$	897,123

During the three months ended May 31, 2011 net gains of $1.3 million from the realized net gains and changes in the fair value of our forward contracts were recognized as a reduction of cost of goods sold in the Company’s Consolidated Statement of Operations. The Company has included the carrying amount of the contract in prepaid expenses and other assets in its Consolidated Balance Sheet.

3. Inventories

Inventories are stated at the lower of cost or market, 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 lower of cost or market or replacement cost and include various parts for the refinery operations.

Inventories consist of the following:

	May 31, 2011		August 31, 2010
	(in thousands)
Crude Oil	$	39,019	$	78,165
Petroleum Products		103,826		86,993
Total @ LIFO		142,845		165,158
Asphalt – URA		15,290		—
Merchandise		19,310		20,403
Supplies		22,718		21,277
Total @ FIFO		57,318		41,680
Total Inventory	$	200,163	$	206,838

As of May 31, 2011 and August 31, 2010, the replacement cost of LIFO inventories exceeded their LIFO carrying values by approximately $105,729,000 and $50,265,000, respectively.

8

UNITED REFINING COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(Unaudited)

4. Credit Facility

On May 18, 2011, the Company, United Refining Company of Pennsylvania, Kiantone Pipeline Corporation, Country Fair, Inc. and Kwik-Fill Corporation (as Guarantor) entered into an amended and restated Revolving Credit Facility (“Amended and Restated Revolving Credit Facility”) with PNC Bank, National Association as Administrator (the “Agent”) increasing the maximum facility commitment from $130,000,000 to $175,000,000 and extending the term to May 18, 2016. Under the Amended and Restated Revolving Credit Facility, interest is calculated as follows: (a) for base rate borrowings, at the greater of the Agent’s prime rate, federal funds open rate plus 0.5% or the daily LIBOR rate plus 1.0% plus the applicable margin of 1.25% to 1.75% 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 unused availability under the facility. The Amended and Restated Revolving Credit Facility continues to be secured primarily by certain cash accounts, accounts receivable and inventory. Until expiration on May 18, 2016, we may borrow on a borrowing base formula as set forth in the facility. The participating banks in the Amended and Restated Revolving Credit Facility are PNC Bank, National Association, Bank of America, N.A., Manufacturers and Traders Trust Company, and Bank Leumi USA.

5. Long Term Debt

On March 8, 2011, the Company sold $365,000,000 of 10.500% First Priority Senior Secured Notes due 2018 (the “Senior Secured Notes”) for $352,020,600, resulting in original issue discount of $12,979,400, which will be amortized over the life of the Senior Secured Notes using the interest method. The net proceeds of the offering of $344,249,000 were used to retire all of its outstanding 10 ¹/2% Senior Notes due 2012, pay accrued interest of $3,400,000 and a redemption premium related thereto. A loss of $1,245,000 on the early extinguishment of debt was recorded consisting of a redemption premium of $915,000, a write-off of unamortized net debt premium of $1,153,000 and a write-off of deferred financing costs of $1,483,000. The Senior Secured Notes are guaranteed on an unsecured basis by all of our domestic subsidiaries existing at March 8, 2011. The Senior Secured Notes are secured on a first-priority basis by our assets comprising our refinery located in Warren, Pennsylvania and the capital stock of our pipeline subsidiary, subject to permitted liens. The Senior Secured Notes will rank equally with all of our existing and future senior indebtedness that is not subordinate in right of payment to the Senior Secured Notes.

On February 22, 2011 the Company announced the launch of a cash tender offer (the “Tender Offer”) for any and all of its outstanding 10 ¹/2 % Senior Notes due 2012 issued under an indenture dated as of August 6, 2004 (the “2012 Indenture”) and consent solicitation (the “Solicitation”) for certain proposed amendments to the 2012 Indenture (the “Proposed Amendments”). Each holder who validly tendered its Senior Notes due 2012 and delivered consents to the Proposed Amendments prior to 5:00 pm, New York City time, on March 7, 2011, (the “Consent Date”), received the total consideration of $1,005, which included $975 as the tender offer consideration and $30 as a consent payment. In addition, accrued but unpaid interest up to, but not including, the applicable payment date of the Senior Notes due 2012 was paid in cash on all validly tendered and accepted the Senior Notes due 2012. The Company paid a total of $188,607,726 on March 8, 2011 for $181,764,375 principal amount of the Senior Notes due 2012, $5,592,750 for consent payment (which is included in interest expense, net and financing costs), and $1,250,601 for accrued interest on those Senior Notes due 2012 tendered.

The Tender Offer expired at 12:00 midnight, New York City time, on March 21, 2011. Holders who validly tendered their Senior Notes due 2012 after the Consent Date received only the tender offer consideration and were not entitled to receive a consent payment pursuant to the Tender Offer. The Company paid the total consideration or tender offer consideration, as the case may be, plus accrued but unpaid interest, for the Senior Notes due 2012 accepted for purchase promptly following the date of such acceptance (such date, the “Final

9

UNITED REFINING COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(Unaudited)

Payment Date”). On March 22, 2011, the Company paid a total of $678,225 for $670,800 principal amount of the Senior Notes due 2012 and $7,425 for accrued interest on those Senior Notes due 2012 tendered between the Consent Date (March 7, 2011) and the Final Payment Date (March 21, 2011).

On March 9, 2011, the Company issued a Notice of Redemption to all holders of its 10 ¹/2 % Senior Notes due 2012 redeeming these Senior Notes due 2012 at 100% par value plus accrued but unpaid interest on the redemption date of April 8, 2011. On April 8, 2011, $138,962,427 was paid in total, of which $136,847,000 was for principal amount of Senior Notes due 2012 and $2,115,427 was for accrued interest.

6. Subsidiary Guarantors

All the Company’s wholly-owned subsidiaries fully and unconditionally guarantee on an unsecured basis, on a joint and several basis, the Company’s Senior Secured Notes. There are no restrictions within the consolidated group on the ability of the Company or any of its subsidiaries to obtain loans from or pay dividends to other members of the consolidated group. Financial information of the Company’s wholly-owned subsidiary guarantors is as follows:

Condensed Consolidating Balance Sheets

(in thousands)

	May 31, 2011
	United Refining Company		Guarantors			Eliminations			United Refining Company & Subsidiaries		United Refining Asphalt, Inc			Eliminations			United Refining Company Consolidated
Assets
Current:
Cash and cash equivalents	$	11,992	$	14,745		$	—		$	26,737	$	973		$	—		$	27,710
Accounts receivable, net		60,248		47,174			—			107,422		15,762			—			123,184
Inventories		155,457		29,416			—			184,873		15,290			—			200,163
Prepaid expenses and other assets		52,198		5,805			—			58,003		—			(15,290	)		42,713
Amounts due from affiliated companies		9,194		(1,489	)		—			7,705		(5,739	)		—			1,966
Intercompany		137,218		16,261			(153,479	)		—		—			—			—
Total current assets		426,307		111,912			(153,479	)		384,740		26,286			(15,290	)		395,736
Property, plant and equipment, net		196,100		75,637			—			271,737		—			—			271,737
Deferred financing costs, net		9,842		—			—			9,842		194			—			10,036
Goodwill and other non-amortizable assets		—		11,849			—			11,849		—			—			11,849
Amortizable intangible assets, net		—		1,296			—			1,296		—			—			1,296
Deferred turnaround costs & other assets		15,089		477			—			15,566		—			—			15,566
Deferred income taxes		8,671		(8,257	)		—			414		—			—			414
Investment in subsidiaries		5,825		—			(5,825	)		—		—			—			—
	$	661,834	$	192,914		$	(159,304	)	$	695,444	$	26,480		$	(15,290	)	$	706,634
Liabilities and Stockholder’s Equity
Current:
Revolving credit facility – non-controlling interest	$	—	$	—		$	—		$	—	$	10,900		$	—		$	10,900
Current installments of long-term debt		577		379			—			956		—			—			956
Accounts payable		32,414		22,601			—			55,015		—			—			55,015
Accrued liabilities		17,141		5,599			—			22,740		53			—			22,793
Income taxes payable		4,909		(2,028	)		—			2,881		216			—			3,097
Sales, use and fuel taxes payable		14,412		4,577			—			18,989		—			—			18,989
Deferred revenue		15,290		—			—			15,290		—			(15,290	)		—
Deferred income taxes		7,049		(1,052	)		—			5,997		—			—			5,997
Intercompany		—		153,479			(153,479	)		—		—			—			—
Total current liabilities		91,792		183,555			(153,479	)		121,868		11,169			(15,290	)		117,747
Revolving credit facility		102,000		—			—			102,000		—			—			102,000
Long term debt: less current installments		353,735		1,649			—			355,384		—			—			355,384
Deferred retirement benefits		86,407		1,885			—			88,292		—			—			88,292
Total liabilities		633,934		187,089			(153,479	)		667,544		11,169			(15,290	)		663,423

10

UNITED REFINING COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(Unaudited)

	May 31, 2011
	United Refining Company			Guarantors			Eliminations			United Refining Company & Subsidiaries			United Refining Asphalt, Inc		Eliminations			United Refining Company Consolidated
Commitment and contingencies
Stockholder’s equity
Common stock, $.10 par value per share – shares authorized 100; issued and outstanding 100		—			18			(18	)		—			—		—			—
Additional paid-in capital		22,500			10,651			(10,651	)		22,500			15,000		(15,000	)		22,500
Retained earnings		19,494			(3,685	)		3,685			19,494			311		(311	)		19,494
Accumulated other comprehensive loss		(14,094	)		(1,159	)		1,159			(14,094	)		—		—			(14,094	)
Controlling interest equity		27,900			5,825			(5,825	)		27,900			15,311		(15,311	)		27,900
Non-controlling interest		—			—			—			—			—		15,311			15,311
Total stockholder’s equity		27,900			5,825			(5,825	)		27,900			15,311		—			43,211
	$	661,834		$	192,914		$	(159,304	)	$	695,444		$	26,480	$	(15,290	)	$	706,634

11

UNITED REFINING COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(Unaudited)

Condensed Consolidating Balance Sheets

(in thousands)

	August 31, 2010
	United Refining Company			Guarantors			Eliminations			United Refining Company & Subsidiaries			United Refining Asphalt, Inc		Eliminations		United Refining Company Consolidated
Assets
Current:
Cash and cash equivalents	$	7,765		$	9,405		$	—		$	17,170		$	—	$	—	$	17,170
Accounts receivable, net		30,266			33,926			—			64,192			—		—		64,192
Refundable income taxes		37,921			(1,531	)		—			36,390			—		—		36,390
Inventories		176,748			30,090			—			206,838			—		—		206,838
Prepaid expenses and other assets		22,461			5,480			—			27,941			—		—		27,941
Amounts due from affiliated companies		3,455			(483	)		—			2,972			—		—		2,972
Intercompany		111,228			16,374			(127,602	)		—			—		—		—
Total current assets		389,844			93,261			(127,602	)		355,503			—		—		355,503
Property, plant and equipment, net		185,349			76,426			—			261,775			—		—		261,775
Deferred financing costs, net		2,114			—			—			2,114			—		—		2,114
Goodwill and other non-amortizable assets		—			11,849			—			11,849			—		—		11,849
Amortizable intangible assets, net		—			1,376			—			1,376			—		—		1,376
Deferred turnaround costs & other assets		3,233			661			—			3,894			—		—		3,894
Deferred income taxes		7,909			(7,317	)		—			592			—		—		592
Investment in subsidiaries		9,263			—			(9,263	)		—			—		—		—
	$	597,712		$	176,256		$	(136,865	)	$	637,103		$	—	$	—	$	637,103
Liabilities and Stockholder’s Equity
Current:
Current installments of long-term debt	$	1,390		$	498		$	—		$	1,888		$	—	$	—	$	1,888
Accounts payable		40,689			24,931			—			65,620			—		—		65,620
Accrued liabilities		9,457			6,112			—			15,569			—		—		15,569
Income taxes payable		196			356			—			552			—		—		552
Sales, use and fuel taxes payable		14,461			3,994			—			18,455			—		—		18,455
Deferred income taxes		7,049			(1,052	)		—			5,997			—		—		5,997
Intercompany		—			127,602			(127,602	)		—			—		—		—
Total current liabilities		73,242			162,441			(127,602	)		108,081			—		—		108,081
Revolving credit facility		83,000			—			—			83,000			—		—		83,000
Long term debt: less current installments		326,239			1,926			—			328,165			—		—		328,165
Deferred retirement benefits		88,994			2,626			—			91,620			—		—		91,620
Total liabilities		571,475			166,993			(127,602	)		610,866			—		—		610,866
Commitment and contingencies
Stockholder’s equity
Common stock, $.10 par value per share – shares authorized 100; issued and outstanding 100		—			18			(18	)		—			—		—		—
Additional paid-in capital		22,500			10,651			(10,651	)		22,500			—		—		22,500
Retained earnings		18,231			(140	)		140			18,231			—		—		18,231
Accumulated other comprehensive loss		(14,494	)		(1,266	)		1,266			(14,494	)		—		—		(14,494	)
Controlling interest equity		26,237			9,263			(9,263	)		26,237			—		—		26,237
Non-controlling interest		—			—			—			—			—		—		—
Total stockholder’s equity		26,237			9,263			(9,263	)		26,237			—		—		26,237
	$	597,712		$	176,256		$	(136,865	)	$	637,103		$	—	$	—	$	637,103

12

UNITED REFINING COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(Unaudited)

Condensed Consolidating Statements of Operations

(in thousands)

	Three Months Ended May 31, 2011
	United Refining Company			Guarantors			Eliminations			United Refining Company & Subsidiaries			United Refining Asphalt, Inc			Eliminations			United Refining Company Consolidated
Net sales	$	605,334		$	445,692		$	(240,683	)	$	810,343		$	23,620		$	(25,848	)	$	808,115
Costs and expenses:
Costs of goods sold (exclusive of depreciation and amortization)		575,266			405,284			(240,683	)		739,867			22,949			(25,848	)		736,968
Selling, general and administrative expenses		4,129			33,380			—			37,509			3			—			37,512
Depreciation and amortization expenses		3,704			1,552			—			5,256			—			—			5,256
		583,099			440,216			(240,683	)		782,632			22,952			(25,848	)		779,736
Operating income		22,235			5,476			—			27,711			668			—			28,379
Other income (expense):
Interest expense, net		(11,333	)		(277	)		—			(11,610	)		(151	)		—			(11,761	)
Other, net		(936	)		278			—			(658	)		(147	)		—			(805	)
Loss on early extinguishment of debt		(1,245	)		—			—			(1,245	)		—			—			(1,245	)
Equity in net income of subsidiaries		2,978			—			(2,978	)		—			—			—			—
		(10,536	)		1			(2,978	)		(13,513	)		(298	)		—			(13,811	)
Income before income tax expense		11,699			5,477			(2,978	)		14,198			370			—			14,568
Income tax expense		2,608			2,499			—			5,107			152			—			5,259
Net income		9,091			2,978			(2,978	)		9,091			218			—			9,309
Less net income attributable to non-controlling interest		—			—			—			—			—			218			218
Net income attributable to United Refining Company’s Stockholder	$	9,091		$	2,978		$	(2,978	)	$	9,091		$	218		$	(218	)	$	9,091
	Three Months Ended May 31, 2010
	United Refining Company			Guarantors			Eliminations			United Refining Company & Subsidiaries			United Refining Asphalt, Inc			Eliminations			United Refining Company Consolidated
Net sales	$	520,558		$	355,218		$	(170,454	)	$	705,322		$	—		$	—		$	705,322
Costs and expenses:
Costs of goods sold (exclusive of depreciation and amortization)		524,448			320,647			(170,454	)		674,641			—			—			674,641
Selling, general and administrative expenses		4,771			32,420			—			37,191			—			—			37,191
Depreciation and amortization expenses		3,973			1,494			—			5,467			—			—			5,467
		533,192			354,561			(170,454	)		717,299			—			—			717,299
Operating (loss) income		(12,634	)		657			—			(11,977	)		—			—			(11,977	)
Other income (expense):
Interest expense, net		(8,676	)		(307	)		—			(8,983	)		—			—			(8,983	)
Other, net		(842	)		222			—			(620	)		—			—			(620	)
Equity in net loss of subsidiaries		(2,805	)		—			2,805			—			—			—			—
		(12,323	)		(85	)		2,805			(9,603	)		—			—			(9,603	)
(Loss) income before income tax (benefit) expense		(24,957	)		572			2,805			(21,580	)		—			—			(21,580	)
Income tax (benefit) expense		(8,105	)		3,377			—			(4,728	)		—			—			(4,728	)
Net loss		(16,852	)		(2,805	)		2,805			(16,852	)		—			—			(16,852	)
Less net income attributable to non-controlling interest		—			—			—			—			—			—			—
Net loss attributable to United Refining Company’s Stockholder	$	(16,852	)	$	(2,805	)	$	2,805		$	(16,852	)	$	—		$	—		$	(16,852	)

13

UNITED REFINING COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(Unaudited)

Condensed Consolidating Statements of Operations

(in thousands)

	Nine Months Ended May 31, 2011
	United Refining Company			Guarantors			Eliminations			United Refining Company & Subsidiaries			United Refining Asphalt, Inc			Eliminations			United Refining Company Consolidated
Net sales	$	1,569,734		$	1,163,498		$	(611,718	)	$	2,121,514		$	23,875		$	(25,848	)	$	2,119,541
Costs and expenses:
Costs of goods sold (exclusive of depreciation and amortization)		1,506,148			1,066,115			(611,718	)		1,960,545			22,949			(25,848	)		1,957,646
Selling, general and administrative expenses		12,701			97,411			—			110,112			5			—			110,117
Depreciation and amortization expenses		11,519			4,724			—			16,243			—			—			16,243
		1,530,368			1,168,250			(611,718	)		2,086,900			22,954			(25,848	)		2,084,006
Operating income (loss)		39,366			(4,752	)		—			34,614			921			—			35,535
Other income (expense):
Interest expense, net		(28,707	)		(690	)		—			(29,397	)		(173	)		—			(29,570	)
Other, net		(2,656	)		681			—			(1,975	)		(221	)		—			(2,196	)
Loss on early extinguishment of debt		(1,245	)		—			—			(1,245	)		—			—			(1,245	)
Equity in net loss of subsidiaries		(3,546	)		—			3,546			—			—			—			—
		(36,154	)		(9	)		3,546			(32,617	)		(394	)		—			(33,011	)
Income (loss) before income tax expense (benefit)		3,212			(4,761	)		3,546			1,997			527			—			2,524
Income tax expense (benefit)		1,949			(1,215	)		—			734			216			—			950
Net income (loss)		1,263			(3,546	)		3,546			1,263			311			—			1,574
Less net income attributable to non-controlling interest		—			—			—			—			—			311			311
Net income (loss) attributable to United Refining Company’s Stockholder	$	1,263		$	(3,546	)	$	3,546		$	1,263		$	311		$	(311	)	$	1,263

	Nine Months Ended May 31, 2010
	United Refining Company			Guarantors			Eliminations			United Refining Company & Subsidiaries			United Refining Asphalt, Inc		Eliminations		United Refining Company Consolidated
Net sales	$	1,390,833		$	999,659		$	(469,496	)	$	1,920,996		$	—	$	—	$	1,920,996
Costs and expenses:
Costs of goods sold (exclusive of depreciation and amortization)		1,430,586			901,513			(469,496	)		1,862,603			—		—		1,862,603
Selling, general and administrative expenses		16,476			95,158			—			111,634			—		—		111,634
Depreciation and amortization expenses		11,918			4,517			—			16,435			—		—		16,435
		1,458,980			1,001,188			(469,496	)		1,990,672			—		—		1,990,672
Operating loss		(68,147	)		(1,529	)		—			(69,676	)		—		—		(69,676	)
Other income (expense):
Interest expense, net		(25,200	)		(962	)		—			(26,162	)		—		—		(26,162	)
Other, net		(2,326	)		894			—			(1,432	)		—		—		(1,432	)
Equity in net loss of subsidiaries		(4,105	)		—			4,105			—			—		—		—
		(31,631	)		(68	)		4,105			(27,594	)		—		—		(27,594	)
Loss before income tax (benefit) expense		(99,778	)		(1,597	)		4,105			(97,270	)		—		—		(97,270	)
Income tax (benefit) expense		(38,271	)		2,508			—			(35,763	)		—		—		(35,763	)
Net loss		(61,507	)		(4,105	)		4,105			(61,507	)		—		—		(61,507	)
Less net income attributable to non-controlling interest		—			—			—			—			—		—		—
Net loss attributable to United Refining Company’s Stockholder	$	(61,507	)	$	(4,105	)	$	4,105		$	(61,507	)	$	—	$	—	$	(61,507	)

14

UNITED REFINING COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(Unaudited)

Condensed Consolidating Statements of Cash Flows

(in thousands)

	Nine Months Ended May 31, 2011
	United Refining Company			Guarantors			Eliminations		United Refining Company & Subsidiaries			United Refining Asphalt, Inc			Eliminations		United Refining Company Consolidated
Net cash provided by (used in) by operating activities	$	1,950		$	9,369		$	—	$	11,319		$	(24,512	)	$	—	$	(13,193	)
Cash flows from investing activities:
Additions to property, plant and equipment		(19,544	)		(3,634	)		—		(23,178	)		—			—		(23,178	)
Additions to deferred turnaround costs		(14,702	)		—			—		(14,702	)		—			—		(14,702	)
Proceeds from asset dispositions		56			1			—		57			—			—		57
Net cash used in investing activities		(34,190	)		(3,633	)		—		(37,823	)		—			—		(37,823	)
Cash flows from financing activities:
Net borrowings on revolving credit facilities		19,000			—			—		19,000			10,900			—		29,900
Proceeds from issuance of common stock of non-controlling interest		—			—			—		—			15,000			—		15,000
Proceeds from issuance of long term debt		352,021			—			—		352,021			—			—		352,021
Principal reductions of long-term debt		(324,413	)		(396	)		—		(324,809	)		—			—		(324,809	)
Deferred financing costs		(10,141	)		—			—		(10,141	)		(415	)		—		(10,556	)
Net cash provided by (used in) financing activities		36,467			(396	)		—		36,071			25,485			—		61,556
Net increase in cash and cash equivalents		4,227			5,340			—		9,567			973			—		10,540
Cash and cash equivalents, beginning of year		7,765			9,405			—		17,170			—			—		17,170
Cash and cash equivalents, end of period	$	11,992		$	14,745		$	—	$	26,737		$	973		$	—	$	27,710

	Nine Months Ended May 31, 2010
	United Refining Company			Guarantors			Eliminations		United Refining Company & Subsidiaries			United Refining Asphalt, Inc		Eliminations		United Refining Company Consolidated
Net cash (used in) provided by operating activities	$	(91,725	)	$	13,907		$	—	$	(77,818	)	$	—	$	—	$	(77,818	)
Cash flows from investing activities:
Additions to property, plant and equipment		(15,116	)		(4,443	)		—		(19,559	)		—		—		(19,559	)
Additions to deferred turnaround costs		(1,009	)		(51	)		—		(1,060	)		—		—		(1,060	)
Proceeds from asset dispositions		25			—			—		25			—		—		25
Net cash used in investing activities		(16,100	)		(4,494	)		—		(20,594	)		—		—		(20,594	)
Cash flows from financing activities:
Net borrowings on revolving credit facility		93,000			—			—		93,000			—		—		93,000
Principal reductions of long-term debt		(513	)		(777	)		—		(1,290	)		—		—		(1,290	)
Deferred financing costs		(10	)		—			—		(10	)		—		—		(10	)
Net cash provided by (used in) financing activities		92,477			(777	)		—		91,700			—		—		91,700
Net (decrease) increase in cash and cash equivalents		(15,348	)		8,636			—		(6,712	)		—		—		(6,712	)
Cash and cash equivalents, beginning of year		21,265			9,797			—		31,062			—		—		31,062
Cash and cash equivalents, end of period	$	5,917		$	18,433		$	—	$	24,350		$	—	$	—	$	24,350

15

UNITED REFINING COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(Unaudited)

7. 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 May 31,					Nine Months Ended May 31,
	2011		2010			2011			2010
Net Sales
Retail	$	444,800	$	354,064		$	1,160,800		$	996,382
Wholesale		363,315		351,258			958,741			924,614
	$	808,115	$	705,322		$	2,119,541		$	1,920,996
Intersegment Sales
Wholesale	$	239,791	$	169,300		$	609,020		$	466,219
Operating Income (Loss)
Retail	$	4,078	$	988		$	(6,274	)	$	(1,333	)
Wholesale		24,301		(12,965	)		41,809			(68,343	)
	$	28,379	$	(11,977	)	$	35,535		$	(69,676	)
Depreciation and Amortization
Retail	$	1,380	$	1,314		$	4,207		$	3,976
Wholesale		3,876		4,153			12,036			12,459
	$	5,256	$	5,467		$	16,243		$	16,435

	May 31, 2011		August 31, 2010
Total Assets
Retail	$	162,431	$	146,932
Wholesale		544,203		490,171
	$	706,634	$	637,103
Capital Expenditures (including non-cash)
Retail	$	3,197	$	5,180
Wholesale		20,193		22,233
	$	23,390	$	27,413

16

UNITED REFINING COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(Unaudited)

8. Employee Benefit Plans

For the periods ended May 31, 2011 and 2010, net pension and other postretirement benefit costs were comprised of the following:

	Pension Benefits
	Three Months Ended May 31,						Nine Months Ended May 31,
	2011			2010			2011			2010
	(in thousands)
Service cost	$	447		$	918		$	1,342		$	2,724
Interest cost on benefit obligation		1,245			1,481			3,734			4,397
Expected return on plan assets		(1,135	)		(1,016	)		(3,405	)		(3,016	)
Amortization and deferral of net loss		508			850			1,523			2,594
Net periodic benefit cost	$	1,065		$	2,233		$	3,194		$	6,699

	Other Post-Retirement Benefits
	Three Months Ended May 31,					Nine Months Ended May 31,
	2011			2010		2011			2010
	(in thousands)
Service cost	$	377		$	892	$	1,131		$	2,624
Interest cost on benefit obligation		630			1,257		1,889			3,702
Amortization of transition obligation		—			—		—			149
Amortization and deferral of net loss		(282	)		488		(846	)		1,436
Net periodic benefit cost	$	725		$	2,637	$	2,174		$	7,911

As of May 31, 2011, $5,390,000 of contributions have been made to the Company pension plans for the fiscal year ending August 31, 2011.

9. Fair Value Measurements

The carrying values of all financial instruments classified as a current asset or 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 exceeded (was less than) the carrying value of the notes at May 31, 2011 and August 31, 2010 by $5,622,000 and ($29,846,000), respectively.

10. Subsequent Events

The URA credit facility with Bank of America, N.A., acting as the Agent bank (“Agent Bank”) is secured by URA’s cash accounts, accounts receivable and inventory. The applicable margin under the facility is: (a) for base rate borrowings the Agent Bank’s prime rate plus an applicable margin of 2.75%; (b) for euro-rate based borrowings, at the LIBOR Rate plus an applicable margin of 3.75%. The Agent Bank’s prime rate at May 31, 2011 was 3.25%. The $30 million facility is due to expire September 30, 2011.

As of June 14, 2011 the URA credit facility was paid in full. As of June 21, 2011 the $15.0 million advance from URA’s parent URI was paid in full, all URA inventory was liquidated and all URA sales were completed. URA has terminated its credit facility as of the close of business on June 28, 2011.

17

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 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, 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;

• future projects and investments;

18

• 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; and

• future operating results and financial condition.

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 Company continues to be impacted by the extreme volatility of daily pricing changes in the petroleum market in fiscal year 2011. Average crude prices for the fourth quarter of fiscal year 2011 have fallen as compared to the third quarter of fiscal year 2011. The average NYMEX price for crude oil for the fourth quarter of fiscal year 2011 was $97.53 per barrel as measured on July 1, 2011, a $3.39 decrease over the third quarter average of $100.92 per barrel.

The lagged 3-2-1 crackspread for the fourth fiscal quarter of 2011, as measured by the difference between the price of crude oil contracts traded on the NYMEX for the proceeding month to the prices for NYMEX gasoline and heating oil contracts in the current trading month, has decreased as compared to the third quarter of fiscal year 2011. The lagged 3-2-1 crackspread for the fourth quarter of fiscal 2011 as measured on July 1, 2011, was $26.33 as compared to $29.45 for the third fiscal quarter of 2011, a $3.12 or 11% reduction.

On July 26, 2010, a rupture occurred in Line 6B pipeline on Enbridge’s Lakehead system in Michigan. The Company’s heavy crude oil purchases are shipped on Line 6B from western Canada. As a result, the Company was forced to reduce production in its crude processing unit until such time as the Enbridge Line 6B could be repaired and returned to normal service. As a result of the pipeline rupture, the Company filed a claim with its insurance carriers under its property insurance coverage which contains a provision for contingent business interruption in the maximum amount of $15 million plus up to $5 million towards expenses. The Company is currently in discussions with its insurance carriers to settle the claim. The Company intends to seek restitution from Enbridge for all of the losses that the Company incurred above any payments it receives from its insurance carriers.

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.

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.

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Retail Operations:

	Three Months Ended May 31,							Nine Months Ended May 31,
	2011			2010				2011			2010
	(dollars in thousands)
Net Sales
Petroleum	$	380,032		$	288,066			$	971,733		$	809,509
Merchandise and other		64,768			65,998		��		189,067			186,873
Total Net Sales		444,800			354,064				1,160,800			996,382
Costs of goods sold		406,067			319,512				1,065,794			899,131
Selling, general and administrative expenses		33,275			32,250				97,073			94,608
Depreciation and amortization expenses		1,380			1,314				4,207			3,976
Segment Operating (Loss) Income	$	4,078		$	988			$	(6,274	)	$	(1,333	)
Retail Operating Data:
Petroleum sales (thousands of gallons)		99,042			98,424				292,543			289,850
Petroleum margin (a)	$	22,257		$	17,804			$	47,032		$	50,012
Petroleum margin ($/gallon) (b)		.2247			.1809				.1608			.1725
Merchandise and other margins	$	16,476		$	16,750			$	47,974		$	47,239
Merchandise margin (percent of sales)		25.4	%		25.4	%			25.4	%		25.3	%

(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 May 31, 2011 and 2010

Net Sales

Retail sales increased during the fiscal quarter ended May 31, 2011 by $90.7 million or 25.6% for the comparable period in fiscal 2010 from $354.1 million to $444.8 million. The increase was primarily due to $92.0 million in petroleum sales offset by a decrease of $1.3 million in merchandise sales. The petroleum sales increase resulted from a 31.1% increase in retail selling prices per gallon, and a .6 million gallon or .6% increase in retail petroleum volume. The merchandise sales decrease is primarily due to a decrease in beverage sales due to inclement weather and cigarette sales primarily in New York State as a result of higher taxes and selling prices.

Costs of Goods Sold

Retail costs of goods sold increased during the fiscal quarter ended May 31, 2011 by $86.6 million or 27.1% for the comparable period in fiscal 2010 from $319.5 million to $406.1 million. The increase was primarily due to $85.4 million in petroleum purchase prices, fuel tax of $2.1 million, offset by a decrease in merchandise cost of $.9 million.

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Selling, General and Administrative Expenses

Retail Selling, General and Administrative (“SG&A”) expenses increased during the fiscal quarter ended May 31, 2011 by $1.0 million or 3.2% for the comparable period in fiscal 2010 from $32.3 million to $33.3 million. The increase was primarily due to payroll costs of $.2 million, credit/customer service costs of $1.1 million and legal/professional fees of $.1 million, offset by a reduction in pension/post retirement costs of $.4 million. The decrease was primarily due to changes made in pension/post retirement benefits. Effective September 1, 2010, postretirement medical benefits for new hires and active salaried employees retiring after September 1, 2010 were eliminated. Additionally, effective January 1, 2011, deductibles and co-payments were added to the medical benefits plan for all plan participants. For salaried employees meeting certain age and service requirements, the Company will contribute a defined dollar amount towards the cost of retiree healthcare based upon the employee’s length of service. Similarly, effective September 1, 2010, benefits under the Company’s defined benefit pension plan were frozen for all salaried employees, including the Company’s Chief Executive Officer and Chief Financial Officer. The Company will provide an enhanced contribution under its defined contribution 401(k) plan for all eligible employees as well as a transition contribution for older employees.

Comparison of Nine Months Ended May 31, 2011 and 2010

Net Sales

Retail sales increased during the nine months ended May 31, 2011 by $164.4 million or 16.5% for the comparable period in fiscal 2010 from $996.4 million to $1,160.8 million. The increase was primarily due to $162.2 million in petroleum sales, and $2.2 million in merchandise sales. The petroleum sales increase resulted from an 18.9% increase in retail selling prices per gallon and a 2.7 million gallon or .9% increase in sales volume. The merchandise sales increase is primarily due to increased prepared food, beverages and increased selling prices.

Costs of Goods Sold

Retail costs of goods sold increased during the nine months ended May 31, 2011 by $166.7 million or 18.5% for the comparable period in fiscal 2010 from $899.1 million to $1,065.8 million. The increase was primarily due to $160.0 million in petroleum purchase prices, merchandise costs of $1.6 million, fuel taxes of $4.1 million and freight costs of $1.0 million. This increase in petroleum purchase prices resulted in lower petroleum retail margins, which is typical in a rising market when retail pricing does not keep pace with the rising market.

Selling, General and Administrative Expenses

Retail SG&A expenses increased during the nine months ended May 31, 2011 by $2.5 million or 2.6% for the comparable period in fiscal 2010 from $94.6 million to $97.1 million. The increase was due to payroll costs of $1.1 million, credit/customer service costs of $1.9 million, insurance/utilities/taxes of $.4 million and maintenance costs of $.3 million offset by a reduction in pension/post retirement costs of $1.2 million. The decrease was primarily due to changes made in pension/post retirement benefits, as discussed above.

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Wholesale Operations:

	Three Months Ended May 31,					Nine Months Ended May 31,
	2011		2010			2011		2010
	(dollars in thousands)
Net Sales (a)	$	363,315	$	351,258		$	958,741	$	924,614
Costs of goods sold (exclusive of depreciation and amortization)		330,901		355,129			891,852		963,472
Selling, general and administrative expenses		4,237		4,941			13,044		17,026
Depreciation and amortization expenses		3,876		4,153			12,036		12,459
Segment Operating (Loss) Income	$	24,301	$	(12,965	)	$	41,809	$	(68,343	)

Key Wholesale Operating Statistics:

	Three Months Ended May 31,						Nine Months Ended May 31,
	2011			2010			2011			2010
Refinery Product Yield (thousands of barrels)
Gasoline and gasoline blendstock		1,774			2,400			5,724			6,909
Distillates		975			1,341			3,322			3,585
Asphalt		1,323			1,628			3,443			4,709
Butane, propane, residual products, internally produced fuel and other (“Other”)		411			597			1,718			1,678
Total Product Yield		4,483			5,966			14,207			16,881
% Heavy Crude Oil of Total Refinery Throughout (b)		60	%		58	%		49	%		60	%
Crude throughput (thousand barrels per day)		46.6			60.5			47.7			57.8
Product Sales (thousand of barrels) (a)
Gasoline and gasoline blendstock		1,277			1,482			3,711			4,014
Distillates		727			1,115			2,619			2,807
Asphalt		1,215			1,416			3,284			4,647
Other		123			253			441			799
Total Product Sales Volume		3,342			4,266			10,055			12,267
Product Sales (dollars in thousands) (a)
Gasoline and gasoline blendstock	$	164,048		$	132,501		$	402,431		$	342,812
Distillates		99,469			103,939			302,020			247,570
Asphalt		91,412			102,224			228,847			294,099
Other		8,386			12,594			25,443			40,133
Total Product Sales	$	363,315		$	351,258		$	958,741		$	924,614

(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, 2011 and 2010

During the three months ended May 31, 2011 the refinery incurred a 21 day scheduled maintenance turnaround. Refinery crude throughput decreased by 13.9 thousand barrels per day (bpd) or 23.2% for the comparable period in fiscal 2010 from 60.0 bpd to 46.6 bpd. Refinery product yields decreased 1.5 thousand barrels or 24.9% from 6.0 to 4.5 thousand barrels during the same comparable period.

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Net Sales

Wholesale sales increased during the three months ended May 31, 2011 by $12.1 million or 3.4% for the comparable period in fiscal 2010 from $351.2 million to $363.3 million. The increase was due to a 32.08% increase in wholesale prices offset by a 21.7% decrease in wholesale volume.

Costs of Goods Sold (exclusive of depreciation and amortization)

Wholesale costs of goods sold decreased during the three months ended May 31, 2011 by $24.2 million or 6.8% for the comparable period in fiscal 2010 from $355.1 million to $330.9 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 decreased during the three months ended May 31, 2011 by $.7 million or 14.2% for the comparable period in fiscal 2010 from $4.9 million or 1.4% of net wholesale sales to $4.2 million or 1.2% of net wholesale sales. The decrease was primarily due to changes made in pension/post retirement benefits, as discussed above.

Comparison of Nine Months Ended May 31, 2011 and 2010

During the first and second fiscal quarters of 2011, wholesale sales were negatively affected by the Enbridge Pipeline disruption and the 30-day scheduled refinery maintenance turnaround in October 2010. These two events resulted in the Company running an average crude throughput of 40,500 bbl per day for the first fiscal quarter 2011 versus 56,500 bbl per day for the comparable period in fiscal 2010.The average crude throughput for the second quarter of fiscal year 2011 was 55,900 bbl per day as compared to 56,500 bbl per day for the second quarter of fiscal year 2010. The Enbridge Pipeline disruption also resulted in the Company running 22% of heavy crude oil for the first fiscal quarter of 2011 versus 61% for the comparable period in fiscal 2010. Heavy crude oil usage for the second quarter of fiscal year 2011 was 60%, the same percentage as the comparable period in fiscal year 2010. The Company experienced no material effects in the third quarter of fiscal year 2011 as a result of the Enbridge Pipeline disruption.

Net Sales

Wholesale sales increased during the nine months ended May 31, 2011 by $34.1 million or 3.7% for the comparable period in fiscal 2010 from $924.6 million to $958.7 million. The increase was due to a 26.5% increase in wholesale prices offset by a 18.0% decrease 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, 2011 by $71.6 million or 7.4% for the comparable period in fiscal 2010 from $963.5 million to $891.9 million. The decrease in wholesale costs of goods sold was primarily due to a decrease in the costs of product purchased and refinery expenses.

Selling, General and Administrative Expenses

Wholesale SG&A expenses decreased during the nine months ended May 31, 2011 by $4.0 million or 23.4% for the comparable period in fiscal 2010 from $17.0 million or 1.8% of net wholesale sales to $13.0 million or 1.4% of net wholesale sales. The decrease was primarily due to changes made in pension/post retirement benefits, as discussed above.

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Consolidated Expenses:

Interest Expense, net

Net interest expense (interest expense less interest income) for the three months ended May 31, 2011 increased $2.8 million or 30.9% for the comparable period in fiscal 2010 from $9.0 million to $11.8 million. The increase was primarily due to the Company concurrently accruing interest expense on the new issue of First Priority Senior Secured Notes due 2018 from the issue date of March 5, 2011 until the final redemption of the Senior Notes due 2012 on April 7, 2011.

Net interest expense (interest expense less interest income) for the nine months ended May 31, 2011 increased $3.4 million or 13.0% for the comparable period in fiscal 2010 from $26.2 million to $29.6 million. The increase was primarily due to the Company concurrently accruing interest expense on the new issue of First Priority Senior Secured Notes due 2018 from the issue date of March 5, 2011 until the final redemption of the Senior Notes due 2012 on April 7, 2011.

Income Tax Expense / (Benefit)

The Company’s effective tax rate for the three months ended May 31, 2011 and 2010 was approximately 36% and 22% respectively and for the nine month periods was approximately 38% and 37% respectively.

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 sources (in thousands):

	May 31, 2011
Cash and cash equivalents	$	27,710
Working capital	$	277,989
Current ratio		3.4
Debt	$	469,240

Primary sources of liquidity have been cash and cash equivalents, 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.

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	Nine Months Ended May 31, 2011
	(in millions)
Significant uses of cash
Investing activities:
Additions to deferred turnaround costs	$	(14.7	)
Property, plant and equipment
Other general capital items (tank repairs, refinery piping, etc)		(10.1	)
Retail maintenance (blacktop, roof, HVAC, rehab)		(2.0	)
Environmental		(1.9	)
Computers and equipment upgrade		(1.4	)
Retail petroleum upgrade		(.6	)
State and federal mandates:
Renewable fuels		(4.0	)
Reduction of benzene and gasoline		(3.1	)
Total property, plant and equipment	$	(23.1	)
Net cash used in investing activities	$	(37.8	)
Financing activities:
Net proceeds from issuance of long term debt	$	352.0
Net borrowings on revolving credit facility		29.9
Proceeds from issuance of common stock of non-controlling interest		15.0
Principal reductions of long term debt		(324.8	)
Deferred financing costs		(10.5	)
Net cash provided by financing activities	$	61.6
Working capital items:
Refundable income taxes	$	36.4
Accrued liabilities decrease		7.2
Decrease in inventory		6.7
Income taxes payable decrease		2.6
Amounts due from affiliated companies, net		1.0
Sales, use and fuel taxes payable increase		.5
Accounts receivable increase		(59.0	)
Prepaid expense increase		(14.8	)
Accounts payable decrease		(10.6	)
Cash provided by working capital items	$	(30.0	)

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 increase in these maintenance and non-discretionary capital expenditures during fiscal year 2011.

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 Amended and Restated Revolving Credit Facility is $175,000,000. 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

25

and will assist the Company in meeting its working capital, ongoing capital expenditure needs and for general corporate purposes. The agreement expires on May 18, 2016. Under the Amended and Restated Revolving Credit Facility, the applicable margin is calculated on the average unused availability as follows: (a) for base rate borrowing, at the greater of the Agent Bank’s prime rate the Federal Funds Open Rate plus 1.5%; or the Daily LIBOR rate plus 3%; plus an applicable margin of 0% to .5%; (b) for euro-rate based borrowings, at the LIBOR Rate plus an applicable margin of 2.75% to 3.25%. The Agent Bank’s prime rate at May 31, 2011 was 3.25%.

The Amended and Restated 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. We had standby letters of credit of $4.4 million as of May 31, 2011 and there were outstanding borrowings under the Amended and Restated Revolving Credit Facility in the amount of $102.0 million resulting in net availability of $68.6 million. As of July 7, 2011 there was $96.0 million outstanding on the $175 million Amended and Restated Revolving Credit Facility and standby letters of credit in the amount of $4.4 million, resulting in a net availability of $74.6 million and the Company had full access to it. The Company’s working capital ratio was 3.4 as of May 31, 2011.

On January 14, 2011, we entered into an Asphalt Purchase and Sale Agreement and Asphalt Product Throughput and Terminal Services Agreement (together, the “Asphalt Agreements”) with United Refining Asphalt, Inc. (“URA”), a special purpose entity formed by United Refining, Inc. (our “Parent”) in connection with the Asphalt Agreements, under the terms of which, we may sell asphalt to URA during the winter months at such times and in such amounts as may be mutually agreed by the parties, and are required to provide storage and related services until such asphalt is resold and delivered to third parties during the summer months. URA received financing for up to $30 million in purchases under the agreements, and was capitalized with $15 million in cash by our Parent.

We have determined that URA meets the definition of a variable interest entity and, in connection with the Asphalt Agreements, the Company is the primary beneficiary. Therefore we are required to treat URA similar to a consolidated subsidiary for financial reporting purposes. As a result, we have consolidated the financial results of URA, including its entire balance sheet with the shareholder’s equity of URA displayed as a component of equity (noncontrolling interest) and its entire income statement (after intercompany eliminations). The net income (loss) of URA will not increase (or decrease) our net income, but rather will be included in our equity section as an increase (or decrease) to noncontrolling interest.

The URA credit facility with Bank of America, N.A., acting as the Agent bank (“Agent Bank”) is secured by URA’s cash accounts, accounts receivable and inventory. The applicable margin under this facility is; (a) for base rate borrowings the Agent Bank’s prime rate plus an applicable margin of 2.75%; (b) for euro-rate based borrowings, at the LIBOR Rate plus an applicable margin of 3.75%. The Agent Bank’s prime rate at May 31, 2011 was 3.25%. The $30 million facility is due to expire September 30, 2011.

As of June 14, 2011 the URA credit facility was paid in full. As of June 21, 2011 the $15.0 million advance from URA’s parent URI was paid in full, all URA inventory was liquidated and all URA sales were complete. URA has terminated its credit facility, as of the close of business on June 28, 2011.

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

26

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 Amended and Restated Revolving Credit Facility to finance a portion of its operations. As of July 7, 2011, there was $96.0 million outstanding under the Amended and Restated Revolving Credit Facility. 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.

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 Statement of Operations.

During the quarter ended May 31, 2011, the Company had 5,250,000 barrels of heating oil and gasoline crackspread swaps outstanding as part of its risk management strategy. The crackspread swaps expire sequentially beginning June 2011 through December 2012. These derivative instruments are being used by the Company to lock in margins on future sales of diesel fuel and gasoline. See Footnote 2, in the Company’s Consolidated Financial Statements.

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, 2011. 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 in the 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

27

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, 2011, 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, 2011 that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

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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, 2010 and in the Form 10-Q for the quarter ended February 28, 2011.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. (Removed and Reserved).

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibit 4.1*	Supplemental Indenture, dated as of March 8, 2011, between the Company, the Subsidiary Guarantors and The Bank of New York Mellon (f/k/a The Bank of New York), as trustee.
Exhibit 4.2**	Indenture, dated as of March 8, 2011, between the Company, the Subsidiary Guarantors and The Bank of New York Mellon Trust Company, N.A., as Trustee.
Exhibit 10.1*	Security Agreement, dated as of March 8, 2011, between the Company and The Bank of New York Mellon Trust Company, N.A., as Collateral Agent.
Exhibit 10.2*	Intercreditor Agreement dated as of March 8, 2011, The Bank of New York Mellon Trust Company, N.A., as Collateral Agent, PNC, Bank National Association, as Agent, the Company, United Refining Company of Pennsylvania, Kiantone Pipeline Corporation, Country Fair, Inc., and Kwik-Fill Corporation.
Exhibit 10.3*	Open-End Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Filing, dated as of March 8, 2011, between the Company and The Bank of New York Mellon Trust Company, N.A., as Collateral Agent.
Exhibit 10.4***	Amended and Restated Credit Agreement, dated May 18, 2011, by and among United Refining Company, United Refining Company of Pennsylvania, Kiantone Pipeline Corporation, Country Fair, Inc., the lenders party thereto, PNC Capital Markets LLC and Merrill Lynch, Pierce, Fenner & Smith Inc., as Co-Lead Arrangers and Joint Bookrunners, PNC Bank, National Association, as Administrative Agent and Bank of America, N.A., as Documentation Agent.

29

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

* Incorporated by reference to the Company’s Current Report on Form 8-K (dated March 8, 2011), filed on March 11, 2011

** Incorporated by reference to the Company’s Current Report on Form 8-K/A (dated March 8, 2011), filed on March 22, 2011

*** Incorporated by reference to the Company’s Registration Statement of Form S-4, as amended on May 19, 2011

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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 8, 2011

UNITED REFINING COMPANY

(Registrant)

/s/ Myron L. Turfitt

Myron L. Turfitt

President

/s/ James E. Murphy

James E. Murphy

Chief Financial Officer

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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 8, 2011

KIANTONE PIPELINE CORPORATION

(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:July 8, 2011

UNITED REFINING COMPANY OF

PENNSYLVANIA

(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:July 8, 2011

KIANTONE PIPELINE COMPANY

(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:July 8, 2011

UNITED JET CENTER, INC.

(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:July 8, 2011

KWIK-FILL CORPORATION

(Registrant)

/s/ Myron L. Turfitt

Myron L. Turfitt

President

/s/ James E. Murphy

James E. Murphy

Chief Financial Officer

36

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 8, 2011

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

37

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 8, 2011

BELL OIL CORP.

(Registrant)

/s/ Myron L. Turfitt

Myron L. Turfitt

President

/s/ James E. Murphy

James E. Murphy

Chief Financial Officer

38

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 8, 2011

PPC, INC.

(Registrant)

/s/ Myron L. Turfitt

Myron L. Turfitt

President

/s/ James E. Murphy

James E. Murphy

Chief Financial Officer

39

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 8, 2011

SUPER TEST PETROLEUM, INC.

(Registrant)

/s/ Myron L. Turfitt

Myron L. Turfitt

President

/s/ James E. Murphy

James E. Murphy

Chief Financial Officer

40

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 8, 2011

KWIK-FIL, INC.

(Registrant)

/s/ Myron L. Turfitt

Myron L. Turfitt

President

/s/ James E. Murphy

James E. Murphy

Chief Financial Officer

41

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 8, 2011

VULCAN ASPHALT REFINING CORPORATION

(Registrant)

/s/ Myron L. Turfitt

Myron L. Turfitt

President

/s/ James E. Murphy

James E. Murphy

Chief Financial Officer

42

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 8, 2011

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

43