FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Period Ended May 31, 2002
[ ] 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 (I.R.S. Employer
incorporation or organization) Identification No.)
15 Bradley Street
Warren, Pennsylvania 16365
- -------------------- -----
(address of principal (Zip Code)
executive office)
Registrant's telephone number, including area code 814-726-4674
------------
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
----- -----
Number of shares outstanding of Registrant's Common Stock as of
July 15, 2002: 100.
- ------------------------------------------------------------------------------------------------------------------------------
TABLE OF ADDITIONAL REGISTRANTS
- ------------------------------------------------------------------------------------------------------------------------------
State of Other Primary Standard IRS Employer
Jurisdiction of Industrial Identification Commission File
Name Incorporation Classification Number Number Number
- ------------------------------------------------------------------------------------------------------------------------------
Kiantone Pipeline Corporation New York 4612 25-1211902 333-35083-01
- ------------------------------------------------------------------------------------------------------------------------------
Kiantone Pipeline Company Pennsylvania 4600 25-1416278 333-35083-03
- ------------------------------------------------------------------------------------------------------------------------------
United Refining Company of Pennsylvania 5541 25-0850960 333-35083-02
Pennsylvania
- ------------------------------------------------------------------------------------------------------------------------------
United Jet Center, Inc. Delaware 4500 52-1623169 333-35083-06
- ------------------------------------------------------------------------------------------------------------------------------
Kwik Fill Corporation Pennsylvania 5541 25-1525543 333-35083-05
- ------------------------------------------------------------------------------------------------------------------------------
Independent Gas and Oil Company of New York 5170 06-1217388 333-35083-11
Rochester, Inc.
- ------------------------------------------------------------------------------------------------------------------------------
Bell Oil Corp. Michigan 5541 38-1884781 333-35083-07
- ------------------------------------------------------------------------------------------------------------------------------
PPC, Inc. Ohio 5541 31-0821706 333-35083-08
- ------------------------------------------------------------------------------------------------------------------------------
Super Test Petroleum, Inc. Michigan 5541 38-1901439 333-35083-09
- ------------------------------------------------------------------------------------------------------------------------------
Kwik-Fil, Inc. New York 5541 25-1525615 333-35083-04
- ------------------------------------------------------------------------------------------------------------------------------
Vulcan Asphalt Refining Corporation Delaware 2911 23-2486891 333-35083-10
- ------------------------------------------------------------------------------------------------------------------------------
Country Fair, Inc. Pennsylvania 5541 25-1149799 333-35083-12
- ------------------------------------------------------------------------------------------------------------------------------
2
PART I. FINANCIAL INFORMATION PAGE(S)
- --------------------------------
Item 1. Financial Statements
Consolidated Balance Sheets -
May 31, 2002 and August 31, 2001 4
Consolidated Statements of Operations -
Nine Months and Quarters Ended May 31, 2002 and 2001 5
Consolidated Statements of Cash Flows -
Nine Months Ended May 31, 2002 and 2001 6
Notes to Consolidated Financial Statements 7-14
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 15-20
PART II. OTHER INFORMATION 21
- -----------------------------
3
UNITED REFINING COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
- -------------------------------------------------------------------------------------------------------------------
MAY 31,
2002 AUGUST 31,
(UNAUDITED) 2001
-----------------------------------------------------------------------------------------------------------
ASSETS
CURRENT:
Cash and cash equivalents $ 8,330 $ 35,224
Accounts receivable, net 32,762 41,937
Inventories 103,966 62,554
Prepaid expenses and other assets 21,514 13,312
-----------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 166,572 153,027
PROPERTY, PLANT AND EQUIPMENT, NET 189,419 190,951
INVESTMENT IN AFFILIATED COMPANY 2,329 1,529
DEFERRED FINANCING COSTS 3,670 4,102
OTHER ASSETS 21,359 5,948
-----------------------------------------------------------------------------------------------------------
$ 383,349 $ 355,557
===========================================================================================================
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT:
Revolving credit facility $ 29,000 $ -
Current installments of long-term debt 101 121
Accounts payable 36,302 22,206
Income taxes payable - 2,373
Accrued liabilities 20,368 12,411
Sales, use and fuel taxes payable 18,777 16,686
Deferred income taxes 4,157 4,157
Amounts due affiliated companies 1,121 1,905
-----------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 109,826 59,859
LONG TERM DEBT: LESS CURRENT INSTALLMENTS 180,906 180,979
DEFERRED INCOME TAXES 9,671 17,573
DEFERRED GAIN ON SETTLEMENT OF PENSION PLAN OBLIGATIONS 1,399 1,560
DEFERRED RETIREMENT BENEFITS 21,446 19,356
OTHER NONCURRENT LIABILITIES 2,608 264
-----------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 325,856 279,591
-----------------------------------------------------------------------------------------------------------
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 40,845 59,318
-----------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDER'S EQUITY 57,493 75,966
-----------------------------------------------------------------------------------------------------------
$ 383,349 $ 355,557
===========================================================================================================
4
UNITED REFINING COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - (UNAUDITED)
(IN THOUSANDS)
- --------------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED NINE MONTHS ENDED
MAY 31, MAY 31,
--------------------------------------------------------
2002 2001 2002 2001
-------------------------------------------------------------------------------------------------------------------------
NET SALES $ 278,408 $ 272,383 $ 721,640 $ 814,784
COSTS OF GOODS SOLD 244,739 232,200 657,433 717,788
-------------------------------------------------------------------------------------------------------------------------
GROSS PROFIT 33,669 40,183 64,207 96,996
-------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Selling, general and administrative expenses 25,249 18,086 67,561 54,697
Depreciation and amortization expenses 3,222 2,732 9,180 8,197
-------------------------------------------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES 28,471 20,818 76,741 62,894
-------------------------------------------------------------------------------------------------------------------------
OPERATING INCOME (LOSS) 5,198 19,365 (12,534) 34,102
-------------------------------------------------------------------------------------------------------------------------
OTHER INCOME (EXPENSE):
Interest income 22 335 310 1,251
Interest expense (5,026) (5,142) (14,830) (16,094)
Other, net (189) (219) (983) (739)
Costs associated with acquisition - - - (1,300)
Equity in net earnings of affiliate 211 - 801 -
-------------------------------------------------------------------------------------------------------------------------
(4,982) (5,026) (14,702) (16,882)
-------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAX EXPENSE (BENEFIT) 216 14,339 (27,236) 17,220
INCOME TAX EXPENSE (BENEFIT) 87 6,020 (10,893) 7,230
-------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEM 129 8,319 (16,343) 9,990
EXTRAORDINARY ITEM, NET OF TAX OF $1,389 - 31 - 1,919
-------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 129 $ 8,350 $ (16,343) $ 11,909
=========================================================================================================================
5
UNITED REFINING COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - (UNAUDITED)
(IN THOUSANDS)
- --------------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED
MAY 31,
----------------------------
2002 2001
------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (16,343) $ 11,909
Adjustments to reconcile net income (loss) to net
cash used in operating activities:
Depreciation and amortization 11,613 10,991
Post-retirement benefits 1,634 3,040
Change in deferred income taxes (4,541) 3,635
Gain on extinguishment of debt - (3,308)
Equity in net earnings of affiliate (801) -
Gain (loss) on asset dispositions 210 231
Cash used in working capital items (20,043) (3,632)
Other, net (1,177) (3,691)
------------------------------------------------------------------------------------------------------
TOTAL ADJUSTMENTS (13,105) 7,266
------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (29,448) 19,175
------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of business, net of cash acquired (16,900) -
Purchase of investment securities - (3,714)
Sale of investment securities - 3,497
Additions to property, plant and equipment (7,182) (7,640)
Proceeds from asset dispositions 3 23,533
------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (24,079) 15,676
------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings on revolving credit facility 29,000 -
Dividends (2,130) (1,637)
Deferred financing costs (144) -
Principal reductions of long-term debt (93) (6,701)
------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 26,633 (8,338)
------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (26,894) 26,513
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 35,224 7,430
------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 8,330 $ 33,943
======================================================================================================
CASH PROVIDED BY (USED IN) WORKING CAPITAL ITEMS:
Accounts receivable, net $ 9,980 $ 3,483
Inventories (35,412) (35,892)
Prepaid expenses and other assets (6,605) 2,526
Accounts payable 7,437 19,349
Accrued liabilities 7,063 3,065
Amounts due affiliated companies (784) -
Income taxes payable (2,542) 4,119
Sales, use and fuel taxes payable 820 (282)
------------------------------------------------------------------------------------------------------
TOTAL CHANGE $ (20,043) $ (3,632)
======================================================================================================
6
UNITED REFINING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
1. BASIS OF PRESENTATION 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
month periods ended May 31, 2002 are not
necessarily indicative of the results
that may be expected for the year ending
August 31, 2002. For further
information, refer to the consolidated
financial statements and footnotes
thereto incorporated by reference in the
Company's Form 10-K filing dated
November 29, 2001.
2. RECENT ACCOUNTING STANDARDS In June 2001, the Financial Accounting
Standards Board ("FASB") finalized
Statements No. 141, "Business
Combinations," ("Statement 141") and No.
142, "Goodwill and Other Intangible
Assets" ("Statement 142"). Statement 141
requires the use of the purchase method
of accounting and prohibits the use of
the pooling-of-interests method of
accounting for business combinations
initiated after June 30, 2001. Statement
141 also requires that the Company
recognize acquired intangible assets
apart from goodwill if the acquired
intangible assets meet certain criteria.
Statement 141 applies to all business
combinations initiated after June 30,
2001 and for purchase business
combinations completed on or after July
1, 2001. It also requires, upon adoption
of Statement 142 that the Company
reclassify the carrying amounts of
intangible assets and goodwill based on
the criteria in Statement 141.
Statement 142 requires, among other
things, that companies no longer
amortize goodwill, but instead test
goodwill for impairment at least
annually. In addition, Statement 142
requires that the Company identify
reporting units for the purposes of
assessing potential future impairments
of goodwill, reassess the useful lives
of other existing recognized intangible
assets, and cease amortization of
intangible assets with an indefinite
useful life. An intangible asset with an
indefinite useful life should be tested
for impairment in accordance with the
guidance in Statement 142. Statement 142
is required to be applied in fiscal
years beginning after December 15, 2001
to all goodwill and other intangible
assets recognized at that date,
regardless of when those assets were
initially recognized. Statement 142
requires the Company to complete a
transitional goodwill impairment test
six months from the date of adoption.
The Company
7
UNITED REFINING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
is also required to reassess the useful
lives of other intangible assets within
the first interim quarter after adoption
of Statement 142.
The Company anticipates that the
adoption of Statements 141 and 142 will
not have a material effect on the
Company's financial position or results
of operations.
In October 2001, the FASB issued
Statement No. 144, "Accounting for the
Impairment or Disposal of Long-Lived
Assets" ("Statement 144"). Statement 144
supersedes Statement No. 121,
"Accounting for the Impairment of
Long-Lived Assets and for Long-Lived
Assets to be Disposed of" ("Statement
121") and retains the basic requirements
of Statement 121 regarding when and how
to measure an impairment loss. Statement
144 provides additional implementation
guidance on accounting for an impairment
loss. Statement 144 is effective for all
fiscal years beginning after December
15, 2001.
The Company anticipates that the
adoption of Statement 144 will not have
a material effect on the Company's
financial position or results of
operations.
3. RECLASSIFICATION Certain amounts in the prior year's
consolidated financial statements have
been reclassified to conform with the
presentation in the current year.
4. INVENTORIES Inventories consist of the following:
MAY 31, 2002
(UNAUDITED) AUGUST 31, 2001
==================================================================================
Crude Oil $ 22,892 $ 15,236
Petroleum Products 51,616 24,412
---------------------------------
Total @ LIFO 74,508 39,648
---------------------------------
Merchandise 15,809 10,099
Supplies 13,649 12,807
---------------------------------
Total @ FIFO 29,458 22,906
---------------------------------
Total Inventory $ 103,966 $ 62,554
==================================================================================
5. SUBSIDIARY GUARANTORS Certain of United Refining Company's
(the "issuer") subsidiaries function as
guarantors under the terms of the
$200,000,000 Senior Unsecured Note
Indenture due June 9, 2007. Financial
information for the Company's wholly
owned subsidiary guarantors is as
follows:
8
UNITED REFINING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
Condensed Consolidating Balance Sheets
(in thousands)
May 31, 2002 August 31, 2001
---------------------------------------------- -----------------------------------------------
Issuer Guarantors Eliminations Consolidated Issuer Guarantors Eliminations Consolidated
---------------------------------------------- -----------------------------------------------
Assets
Current:
Cash and cash equivalents $ 3,563 $ 4,767 $ -- $ 8,330 $ 29,197 $ 6,027 $ -- $ 35,224
Accounts receivable, net 22,244 10,518 -- 32,762 32,669 9,268 -- 41,937
Inventories 81,671 22,295 -- 103,966 47,177 15,377 -- 62,554
Prepaid expenses and other assets 17,653 3,861 -- 21,514 11,154 2,158 -- 13,312
Intercompany 98,048 18,236 (116,284) -- 81,308 18,345 (99,653) --
-------------------------------------------- --------------------------------------------
Total current assets 223,179 59,677 (116,284) 166,572 201,505 51,175 (99,653) 153,027
Property, plant and equipment, net 119,079 70,340 -- 189,419 121,074 69,877 -- 190,951
Investment in affiliated company 2,329 -- -- 2,329 1,529 -- -- 1,529
Deferred financing costs, net 3,670 -- -- 3,670 4,102 -- -- 4,102
Other assets 5,389 17,141 (1,171) 21,359 6,665 454 (1,171) 5,948
-------------------------------------------- --------------------------------------------
$ 353,646 $ 147,158 $(117,455) $ 383,349 $ 334,875 $ 121,506 $(100,824) $ 355,557
============================================ ============================================
Liabilities and Stockholder's Equity
Current:
Revolving credit facility $ 29,000 $ -- $ -- $ 29,000 $ -- $ -- $ -- $ --
Current installments of long-term
debt -- 101 -- 101 -- 121 -- 121
Accounts payable 23,063 13,239 -- 36,302 16,857 5,349 -- 22,206
Income taxes payable -- -- -- -- 2,413 (40) -- 2,373
Accrued liabilities 16,769 3,599 -- 20,368 9,739 2,672 -- 12,411
Sales, use and fuel taxes payable 16,267 2,510 -- 18,777 16,542 144 -- 16,686
Deferred income taxes 4,507 (350) -- 4,157 4,507 (350) -- 4,157
Amounts due affiliated companies 310 811 -- 1,121 1,495 410 -- 1,905
Intercompany -- 116,284 (116,284) -- -- 99,653 (99,653) --
-------------------------------------------- --------------------------------------------
Total current liabilities 89,916 136,194 (116,284) 109,826 51,553 107,959 (99,653) 59,859
Long term debt: less current 180,135 771 -- 180,906 180,135 844 -- 180,979
installments
Deferred income taxes 7,209 2,462 -- 9,671 11,009 6,564 -- 17,573
Deferred gain on settlement of 1,399 -- -- 1,399 1,560 -- -- 1,560
pension plan obligations
Deferred retirement benefits 20,240 1,206 -- 21,446 18,610 746 -- 19,356
Other noncurrent liabilities -- 2,608 -- 2,608 -- 264 -- 264
-------------------------------------------- --------------------------------------------
Total liabilities 298,899 143,241 (116,284) 325,856 262,867 116,377 (99,653) 279,591
-------------------------------------------- --------------------------------------------
Commitment and contingencies
Stockholder's equity
Common stock, $.10 par value per
share - shares authorized 100;
issued and -- 18 (18) -- -- 18 (18) --
outstanding, 100
Additional paid-in capital 7,150 10,651 (1,153) 16,648 7,150 10,651 (1,153) 16,648
Retained earnings 47,597 (6,752) -- 40,845 64,858 (5,540) -- 59,318
-------------------------------------------- --------------------------------------------
Total stockholder's equity 54,747 3,917 (1,171) 57,493 72,008 5,129 (1,171) 75,966
-------------------------------------------- --------------------------------------------
$ 353,646 $ 147,158 $(117,455) $ 383,349 $ 334,875 $ 121,506 $(100,824) $ 355,557
============================================ ============================================
9
UNITED REFINING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
Condensed Consolidating Statements of Operations
(in thousands)
Nine Months Ended May 31, 2002 Nine Months Ended May 31, 2001
---------------------------------------------- ---------------------------------------------
Issuer Guarantors Eliminations Consolidated Issuer Guarantors Eliminations Consolidated
---------------------------------------------- ---------------------------------------------
Net sales $ 450,661 $ 403,101 $(132,122) $ 721,640 $ 612,561 $ 389,637 $(187,414) $ 814,784
Costs of goods sold 445,315 344,240 (132,122) 657,433 561,457 343,745 (187,414) 717,788
--------------------------------------------- ---------------------------------------------
Gross profit 5,346 58,861 -- 64,207 51,104 45,892 -- 96,996
--------------------------------------------- ---------------------------------------------
Expenses:
Selling, general and
administrative expenses 12,321 55,240 -- 67,561 11,923 42,774 -- 54,697
Depreciation and amortization
expenses 6,180 3,000 -- 9,180 5,764 2,433 -- 8,197
--------------------------------------------- ---------------------------------------------
Total operating expenses 18,501 58,240 -- 76,741 17,687 45,207 -- 62,894
--------------------------------------------- ---------------------------------------------
Operating income (loss) (13,155) 621 -- (12,534) 33,417 685 -- 34,102
--------------------------------------------- ---------------------------------------------
Other income (expense):
Interest income 3,981 770 (4,441) 310 7,575 1,247 (7,571) 1,251
Interest expense (15,486) (3,785) 4,441 (14,830) (17,203) (6,462) 7,571 (16,094)
Other, net (1,382) 399 -- (983) (841) 102 -- (739)
Costs associated with
acquisition -- -- -- -- (1,300) -- -- (1,300)
Equity in net earnings of
affiliate 801 -- -- 801 -- -- -- --
--------------------------------------------- ---------------------------------------------
(12,086) (2,616) -- (14,702) (11,769) (5,113) -- (16,882)
--------------------------------------------- ---------------------------------------------
Income (loss) before income tax (25,241) (1,995) -- (27,236) 21,648 (4,428) -- 17,220
expense (benefit)
Income tax expense (benefit) (10,110) (783) -- (10,893) 8,982 (1,752) -- 7,230
--------------------------------------------- ---------------------------------------------
Net income (loss) before
extraordinary item (15,131) (1,212) -- (16,343) 12,666 (2,676) -- 9,990
Extraordinary item -- -- -- -- 1,919 -- -- 1,919
--------------------------------------------- ---------------------------------------------
Net income (loss) $ (15,131) $ (1,212) $ -- $ (16,343) $ 14,585 $ (2,676) $ -- $ 11,909
============================================= =============================================
10
UNITED REFINING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
Condensed Consolidating Statements of Operations
(in thousands)
Three months Ended May 31, 2002 Three Months Ended May 31, 2001
---------------------------------------------- ---------------------------------------------
Issuer Guarantors Eliminations Consolidated Issuer Guarantors Eliminations Consolidated
---------------------------------------------- ---------------------------------------------
Net sales $ 167,307 $ 161,608 $ (50,507) $ 278,408 $ 203,552 $ 131,420 $ (62,589) $ 272,383
Costs of goods sold 157,557 137,689 (50,507) 244,739 179,200 115,589 (62,589) 232,200
--------------------------------------------- ---------------------------------------------
Gross profit 9,750 23,919 -- 33,669 24,352 15,831 -- 40,183
--------------------------------------------- ---------------------------------------------
Expenses:
Selling, general and
administrative expenses 3,712 21,537 -- 25,249 3,650 14,436 -- 18,086
Depreciation and amortization
expenses 2,060 1,162 -- 3,222 1,920 812 -- 2,732
--------------------------------------------- ---------------------------------------------
Total operating expenses 5,772 22,699 -- 28,471 5,570 15,248 -- 20,818
--------------------------------------------- ---------------------------------------------
Operating income (loss) 3,978 1,220 -- 5,198 18,782 583 -- 19,365
--------------------------------------------- ---------------------------------------------
Other income (expense):
Interest income 1,328 249 (1,555) 22 2,167 367 (2,199) 335
Interest expense (5,234) (1,347) 1,555 (5,026) (5,470) (1,871) 2,199 (5,142)
Other, net (415) 226 -- (189) (209) (10) -- (219)
Equity in net earnings of
affiliate 211 -- -- 211 -- -- -- --
--------------------------------------------- ---------------------------------------------
(4,110) (872) -- (4,982) (3,512) (1,514) -- (5,026)
--------------------------------------------- ---------------------------------------------
Income (loss) before income tax (132) 348 -- 216 15,270 (931) -- 14,339
expense (benefit)
Income tax expense (benefit) (53) 140 -- 87 6,399 (379) -- 6,020
--------------------------------------------- ---------------------------------------------
Net income (loss) before
extraordinary item (79) 208 -- 129 8,871 (552) -- 8,319
Extraordinary item -- -- -- -- 31 -- -- 31
--------------------------------------------- ---------------------------------------------
Net income (loss) $ (79) $ 208 $ -- $ 129 $ 8,902 $ (552) $ -- $ 8,350
============================================= =============================================
11
UNITED REFINING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
Condensed Consolidating Statements of Cash Flows
(in thousands)
Nine Months Ended May 31, 2002 Nine Months Ended May 31, 2001
---------------------------------------------- ---------------------------------------------
Issuer Guarantors Eliminations Consolidated Issuer Guarantors Eliminations Consolidated
---------------------------------------------- ---------------------------------------------
Net cash provided by (used in)
operating activities $(30,894) $ 1,446 $ -- $(29,448) $ 38,109 $(18,934) $ -- $ 19,175
------------------------------------------ -------------------------------------------
Cash flows from investing
activities:
Purchase of business, net
of cash acquired (17,281) 381 -- (16,900) -- -- -- --
Purchase of investment
securities -- -- -- -- (3,714) -- -- (3,714)
Sale of investment securities -- -- -- -- 3,497 -- -- 3,497
Additions to property, plant
and equipment (4,185) (2,997) -- (7,182) (5,195) (2,445) -- (7,640)
Proceeds from asset dispositions -- 3 -- 3 -- 23,533 -- 23,533
------------------------------------------ -------------------------------------------
Net cash provided by (used
in) investing activities (21,466) (2,613) -- (24,079) (5,412) 21,088 -- 15,676
------------------------------------------ -------------------------------------------
Cash flows from financing activities:
Net borrowings on revolving
credit facility 29,000 -- -- 29,000 -- -- -- --
Dividends (2,130) -- -- (2,130) (1,637) -- -- (1,637)
Deferred financing costs (144) -- -- (144) -- -- -- --
Principal reductions of
long-term debt -- (93) -- (93) (6,607) (94) -- (6,701)
------------------------------------------ -------------------------------------------
Net cash provided by (used
in) financing activities 26,726 (93) -- 26,633 (8,244) (94) -- (8,338)
------------------------------------------ -------------------------------------------
Net increase (decrease) in cash and
cash equivalents (25,634) (1,260) -- (26,894) 24,453 2,060 -- 26,513
Cash and cash equivalents, beginning
of period 29,197 6,027 -- 35,224 4,107 3,323 -- 7,430
------------------------------------------ -------------------------------------------
Cash and cash equivalents,
end of period $ 3,563 $ 4,767 $ -- $ 8,330 $ 28,560 $ 5,383 $ -- $ 33,943
========================================== ===========================================
12
UNITED REFINING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
6. SEGMENTS OF BUSINESS
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, and the marketing of petroleum products to wholesale and
industrial customers. The retail segment sells petroleum products and
convenience and grocery items through company owned gasoline stations and
convenience stores under the Kwik Fill(R), Red Apple Food Mart(R) and Country
Fair(R) brand names.
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 NINE MONTHS ENDED
MAY 31, MAY 31,
(UNAUDITED) (UNAUDITED)
--------------------------------------------------------
2002 2001 2002 2001
- -------------------------------------------------------------------------------------------
Net Sales
Retail $ 160,405 $ 130,209 $ 399,613 $ 386,117
Wholesale 118,003 142,174 322,027 428,667
--------------------------------------------------------
$ 278,408 $ 272,383 $ 721,640 $ 814,784
========================================================
Intersegment Sales
Wholesale $ 49,304 $ 61,378 $ 128,634 $ 183,894
========================================================
Operating Income (Loss)
Retail $ 610 $ 300 $ (77) $ (270)
Wholesale 4,588 19,065 (12,457) 34,372
--------------------------------------------------------
$ 5,198 $ 19,365 $ (12,534) $ 34,102
========================================================
Depreciation and Amortization
Retail $ 1,112 $ 765 $ 2,850 $ 2,295
Wholesale 2,110 1,967 6,330 5,902
--------------------------------------------------------
$ 3,222 $ 2,732 $ 9,180 $ 8,197
========================================================
13
UNITED REFINING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
MAY 31, 2002
(UNAUDITED) AUGUST 31, 2001
- ----------------------------------------------------------------------
Total Assets
Retail $ 121,899 $ 103,161
Wholesale 261,450 252,396
-------------------------------
$ 383,349 $ 355,557
===============================
Capital Expenditures
Retail $ 3,002 $ 3,704
Wholesale 4,180 6,348
-------------------------------
$ 7,182 $ 10,052
===============================
7. ACQUISITION
The Company completed the acquisition of Country Fair, Inc. on December
21, 2001. United Refining Company acquired the operations and working capital
assets of Country Fair, Inc., for approximately $16.9 million. The fixed assets
of Country Fair, Inc., which consist of 69 convenience stores throughout
northwestern Pennsylvania, southwestern New York and eastern Ohio, were acquired
by related entities controlled by John Catsimatidis, the principle shareholder
of United Refining Company. The assets are being leased to United Refining
Company at an annual aggregate rental of approximately $5.2 million over a
period ranging from 10 to 20 years. United Refining Company is not a guarantor
of the underlying mortgages on the properties.
The acquisition was accounted for by the purchase method of accounting
and, accordingly, the results of operations for the period subsequent to the
acquisition are included in the consolidated financial statements. The excess of
purchase price over the net assets acquired, in the amount of approximately $1.3
million has been recorded as goodwill. The pro forma effect assuming the
acquisition of Country Fair at the beginning of fiscal 2002 and 2001 is not
material.
14
UNITED REFINING COMPANY
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
- --------------------------------------------------------------------------------
Recent Developments
By the end of the nine month period ended May 31, 2002, industry-wide
margins on gasoline and distillate, as indicated by the difference between the
prices of crude oil contracts traded on the New York Mercantile Exchange (NYMEX)
and the prices of NYMEX gasoline and heating oil contracts, improved
significantly compared to the earlier months of fiscal 2002, primarily for the
months of April and May. This contributed to improved gross profit, operating
income and net income for the Company when compared to the first two quarters of
fiscal 2002. Commodity prices and U.S. refining margins strengthened this
quarter on a stronger outlook for global economic growth and tensions in the
Middle East. However, downstream margins remain weak for this time of year. On a
same fiscal quarter basis, current quarter industry margins are about 35% lower
which contributed to lower gross margin, operating income and net income. The
lower margins are attributed to higher gasoline inventories and record levels of
imports even as gasoline consumption stretched to record levels.
Refining margins are expected to stay under pressure for the remainder
of the year due to high product inventories, higher domestic production, and
record gasoline imports in addition to the market's belief that there is
adequate gasoline supply for the summer driving season. After increasing to over
$6 per barrel in April and May, the current 3/2/1 crack spread has decreased to
about $5 per barrel and may fall below this level later this year with
significant improvement not expected until summer of 2003.
After a fiscal 2002 second quarter average of $19.60 per barrel, the
current NYMEX crude pricing is $26 to $27 per barrel and most analysts expect
NYMEX crude oil prices to stay in this range for the last half of 2002 and to
average a little over $26 per barrel for 2002 or about the same as 2001.
The Company's results continued to be negatively influenced by the
weaker discounts on heavy sour crude oils. Since the refinery crude supply is
comprised of approximately equal proportions of sour and sweet crude, the
difference between their prices ("sweet-sour differential") impacts the costs of
goods sold and hence gross profit. For the recent quarter compared to the prior
year quarter, the Company realized a 57% decrease in the light/heavy crude price
differential. This differential is expected to improve later this year.
Results of Operations
Comparison of Fiscal Quarters ended May 31, 2002 and May 31, 2001
Net Sales. Net sales increased $6.0 million or 2.2% from $272.4 million
for the fiscal quarter ended May 31, 2001 to $278.4 million for the fiscal
quarter ended May 31, 2002. Retail sales increased $30.2 million, or 23.2% from
$130.2 million to $160.4 million, while wholesale sales decreased $24.2 million
or 17.0% from $142.2 million to $118.0 million. The retail sales increase was
due to a retail sales volume increase of 17.7 million gallons or 25.3%
(including Country Fair, Inc.), offset by a significant decline in retail
selling prices of 11.2%. The wholesale sales decrease was due to an 18.6%
decrease in wholesale prices combined with a 0.3% decrease in wholesale volume.
Retail sales were increased by the acquisition of Country Fair, Inc. in
December 2001. Country Fair, Inc. retail sales totaled $43.4 million for the
quarter ended May 31, 2002. Country Fair, Inc. sales volume contributed 18.5
million gallons to the total retail sales volume of 87.7 million gallons for the
quarter ended May 31, 2002.
15
UNITED REFINING COMPANY
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
- --------------------------------------------------------------------------------
Costs of Goods Sold. Costs of goods sold increased $12.5 million or
5.4% from $232.2 million for the fiscal quarter ended May 31, 2001 to $244.7
million for the fiscal quarter ended May 31, 2002. Retail costs of goods sold
increased $22.4 million or 19.6% from $114.8 million to $137.2 million, while
wholesale costs of goods sold decreased $9.9 million or 8.4% from $117.4 million
to $107.5 million.
The increase in retail costs of goods sold is largely attributed to the
acquisition of Country Fair, Inc. Country Fair, Inc.'s costs of goods sold for
the quarter ended May 31, 2002 was $34.4 million. The decrease in wholesale
costs of goods was primarily due to the 7.7% decrease in the Company's average
crude oil purchase price for the quarter ended May 31, 2002 as compared to the
prior year quarter. Worldwide crude oil prices, as indicated by NYMEX crude oil
contract prices, decreased 15.5% as compared to the prior year quarter. Costs of
goods sold for the quarter ended May 31, 2002 was positively impacted by an
approximate $12.8 million increase in the value of the Company's working
inventories on a market valuation basis, which decreased costs of goods sold. In
the quarter ended May 31, 2001, costs of goods was positively impacted by an
approximately $.3 million increase in the value of the Company's working
inventories on a market valuation basis, which decreased costs of goods sold.
This was reinforced by a $1.3 million reduction in the LIFO reserve, which had
the effect of further increasing the value of the Company's inventories and
reducing costs of goods sold.
Gross Profit. Gross Profit decreased $6.5 million from $40.2 million
for the fiscal quarter ended May 31, 2001 to $33.7 million for the fiscal
quarter ended May 31, 2002. This decrease was primarily due to $14.3 million
lower wholesale margins and the 57.0% lower discounts on heavy high-sulfur crude
oil grades processed by the Company. Retail margins increased $7.7 million with
Country Fair, Inc. contributing $9.0 million. Excluding Country Fair, Inc.,
retail petroleum margins decreased $0.7 million and merchandise margins
decreased $0.6 million for a total decrease of $1.3 million. The merchandise
margin decreased $0.4 million for non-tobacco and $0.2 million for tobacco
related merchandise. The gross profit decrease was partially offset by the
positive impact on costs of goods sold due to an increase in the value of the
Company's working inventories on a market value basis.
Operating Expenses. Operating expenses increased $7.7 million or 37.0%
from $20.8 million for the fiscal quarter ended May 31, 2001 to $28.5 million
for the fiscal quarter ended May 31, 2002. This increase was primarily due to
the acquisition of Country Fair, Inc. Country Fair, Inc.'s operating expenses
for the quarter ending May 31, 2002 were $7.3 million. Country Fair, Inc.'s
operating expense includes $1.3 million of rental expense primarily for the
lease of fixed assets from related entities controlled by the principle
shareholder of United Refining Company (see Notes to Consolidated Financial
Statements, footnote number 7 from Part 1, Item 1 of Form 10Q for the period
ended May 31, 2002). The remaining increases to operating expenses were due to
increased depreciation and increased payroll and payroll costs offset by lower
utility costs and lower post retirement expenses. Increased depreciation was
primarily due to capital equipment installed as part of the Company's on-going
maintenance and project upgrades.
Operating Income. As a result of the above, operating income decreased
$14.2 million from $19.4 million for the fiscal quarter ended May 31, 2001 to
$5.2 million for the fiscal quarter ended May 31, 2002.
Interest Expense. Net interest expense (interest expense less interest
income) increased $0.2 million from $4.8 million for the fiscal quarter ended
May 31, 2001 to $5.0 million for the fiscal quarter
16
UNITED REFINING COMPANY
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
- --------------------------------------------------------------------------------
ended May 31, 2002. The increased net interest expense was due to $0.2 million
increased interest expense for borrowings on the Company's revolving credit
facility, and a $0.3 million reduction in interest income earned, but partially
offset by a $0.3 million reduction in interest expense relating to the Company's
outstanding amount of long term Senior Unsecured Notes.
Income Taxes. The Company's effective tax rate for the fiscal quarter
ended May 31, 2002 was approximately 40.3% compared to a rate of 42.0% for the
fiscal quarter ended May 31, 2001.
Comparison of the Nine Months ended May 31, 2002 and May 31, 2001
Net Sales. Net sales decreased $93.2 million or 11.4% from $814.8
million for the nine months ended May 31, 2001 to $721.6 million for the nine
months ended May 31, 2002. Retail sales increased $13.5 million, or 3.5% from
$386.1 million to $399.6 million, while wholesale sales decreased $106.6 million
or 24.9% from $428.7 million to $322.0 million. The retail sales increase was
primarily due to a $31.1 million increase in merchandise sales offset by a $17.8
million decrease in petroleum sales. The petroleum sales decrease results from a
16.9% decrease in retail selling prices (on a same store basis and including
Country Fair, Inc.) offset by a 16.1% increase in retail petroleum volume (on a
same store basis and including Country Fair, Inc.). The wholesale sales decrease
was due to a 26.6% decrease in wholesale prices offset by a 2.1% increase in
wholesale volume.
Retail sales were increased by the acquisition of Country Fair, Inc in
December 2001. Country Fair, Inc. retail sales totaled $71.2 million for the
nine months ended May 31, 2002. Country Fair, Inc. sales volume contributed 31.4
million gallons to the total retail sales volume of 234.4 million gallons for
the nine months ended May 31, 2002.
Costs of Goods Sold. Costs of goods sold decreased $60.4 million or
8.4% from $717.8 million for the nine months ended May 31, 2001 to $657.4
million for the nine months ended May 31, 2002. Retail costs of goods sold
increased $0.3 million or 0.09% from $341.6 million to $341.9 million, while
wholesale costs of goods sold decreased $60.7 million or 16.1% from $376.2
million to $315.5 million.
The significant decrease in consolidated costs of goods sold was
consistent with the decrease of approximately 25.1% in worldwide crude oil
prices, as indicated by NYMEX crude oil contract prices for the nine months
ended May 31, 2002 as compared to the prior year period. The Company's average
crude oil purchase price decreased 20.7% compared to the prior year period
consistent with the previously mentioned 25.1% decline in world crude oil prices
as indicated by NYMEX.
The increase in retail costs of goods sold is largely attributed to the
acquisition of Country Fair, Inc. Country Fair, Inc.'s costs of goods sold for
the period ended May 31, 2002 was $57.0 million. The decrease in wholesale costs
of goods was primarily due to the 20.7% decrease in the Company's average crude
oil purchase price for the nine months ended May 31, 2002 as compared to the
prior year period. Worldwide crude oil prices, as indicated by NYMEX crude oil
contract prices, decreased 25.1% as compared to the prior year period. Costs of
goods sold for the nine months ended May 31, 2002 was positively impacted by an
approximate $1.7 million increase in the value of the Company's working
inventories on a market valuation basis, which decreased costs of goods sold.
For the nine months ended May 31, 2001, costs of goods was negatively impacted
by an approximately $4.8 million decrease in the value of the Company's working
inventories on a market valuation basis, which increased costs of goods
17
UNITED REFINING COMPANY
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
- --------------------------------------------------------------------------------
sold. However, costs of goods sold was offset by a reduction in the LIFO
reserve, which increased the value of the Company's total inventories by $4.8
million.
Gross Profit. Gross Profit decreased $32.8 million from $97.0 million
for the nine months ended May 31, 2001 to $64.2 million for the nine months
ended May 31, 2002. This decrease was primarily due to $46.0 million lower
wholesale margins and the 36.5% lower discounts on heavy high-sulfur crude oil
grades processed by the Company. Retail margins increased $13.2 million with
Country Fair, Inc. contributing $14.1 million. Excluding Country Fair, Inc.,
retail petroleum margins decreased $0.5 million and merchandise margins
decreased $0.4 million for a total decrease of $0.9 million. The merchandise
margin decreased $0.2 million for non-tobacco and $0.2 million for tobacco
related merchandise. The gross profit decrease was partially offset by the
positive impact on costs of goods sold due to an increase in the value of the
Company's working inventories on a market value basis.
Operating Expenses. Operating expenses increased $13.8 million or 21.9%
from $62.9 million for the nine months ended May 31, 2001 to $76.7 million for
the nine months ended May 31, 2002. This increase was primarily due to the
acquisition of Country Fair, Inc. Country Fair, Inc.'s operating expenses for
the period ending May 31, 2002 were $12.8 million. Country Fair Inc.'s operating
expenses included $2.9 million of rental expense primarily for the lease of
fixed assets from related entities controlled by the principle shareholder of
United Refining Company (see Notes to Consolidated Financial Statements,
footnote number 7 from Part 1, Item 1 of Form 10Q for the period ended May 31,
2002). The remaining increases to operating expenses were due to increased
depreciation, increased advertising costs and increased payroll and payroll
costs offset by lower utility costs. Increased depreciation was primarily due to
capital equipment installed as part of the Company's on-going maintenance and
project upgrades.
Operating Income. As a result of the above, operating income decreased
$46.6 million from $34.1 million for the nine months ended May 31, 2001 to
$(12.5) million for the nine months ended May 31, 2002.
Interest Expense. Net interest expense (interest expense less interest
income) decreased $0.3 million from $14.8 million for the nine months ended May
31, 2001 to $14.5 million for the nine months ended May 31, 2002. The decreased
net interest expense was due to a $1.4 million interest expense reduction
relating to the Company's outstanding amount of long term Senior Unsecured Notes
offset by $0.2 million increased interest expense for borrowings on the
Company's revolving credit facility and a $0.9 million reduction in interest
income earned.
Income Taxes. The Company's effective tax rate for the nine months
ended May 31, 2002 was approximately 40.1% compared to a rate of 42.0% for the
nine months ended May 31, 2001.
Liquidity and Capital Resources
Working capital (current assets minus current liabilities) at May 31,
2002 was $56.7 million and at August 31, 2001 was $93.2 million. The Company's
current ratio (current assets divided by current liabilities) was 1.5:1 at May
31, 2002 and 2.6:1 at August 31, 2001.
Net cash used in operating activities totaled $29.4 million for the
nine months ended May 31, 2002 and net cash provided by operating activities
totaled $19.2 for the nine months ended May 31, 2001.
18
UNITED REFINING COMPANY
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
- --------------------------------------------------------------------------------
Net cash used in investing activities for purchases of property, plant
and equipment totaled $7.2 million and $7.6 million for the nine months ended
May 31, 2002 and 2001 respectively. Net cash used in investing activities during
the nine months ended May 31, 2002 included $16.9 million for the acquisition of
all outstanding shares of stock of Country Fair, Inc. Net cash provided by
investing activities was $23.5 million from the sale of assets for the nine
months ended May 31, 2001. Also, net cash used in investing activities for the
purchase of stock of potential acquisition candidate totaled $3.7 million for
the nine months ended May 31, 2001.
The Company reviews its capital expenditures on an ongoing basis.
Maintenance and non-discretionary capital expenditures have averaged
approximately $4 million annually over the last three years for the refining and
marketing operations. Management does not foresee any increase in maintenance
and non-discretionary capital expenditures during fiscal 2002.
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. The Company expects
to be able to meet its working capital, capital expenditure and debt service
requirements out of cash flow from operations, cash on hand and borrowings under
the Company's secured revolving credit facility (the "Facility") with PNC Bank,
N.A. as Agent Bank. This is a $50,000,000 revolving credit facility which was
renewed on July 12, 2002 and expires on May 9, 2007. At July 12, 2002, there was
approximately $25,000,000 unused and available on the facility. The Facility is
secured by certain qualifying cash accounts, accounts receivable, and inventory.
The interest rate on borrowings varies with the Company's earnings and is based
on the higher of the bank's prime rate or Federal funds rate for base rate
borrowings and the LIBOR rate for Euro-Rate borrowings, which was 4.34% as of
May 31, 2002.
Although the Company is not aware of any pending circumstances which
would change its 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. The Company continues to investigate
strategic acquisitions and capital improvements to its existing facilities.
Federal, state and local laws and regulations relating to the
environment affect nearly all the operations of the Company. As is the case with
all the companies engaged in similar industries, the Company faces 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. The Company
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.
19
UNITED REFINING COMPANY
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
- --------------------------------------------------------------------------------
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.
20
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8K
(a) Exhibit 10.21 - Amended and Restated
Credit Agreement.
(b) No reports on Forms 8-K have been filed
for the quarter for which this report is
being filed.
21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: July 15, 2002
UNITED REFINING COMPANY
--------------------------------------
(Registrant)
/s/ Myron L. Turfitt
--------------------------------------
Myron L. Turfitt
President
/s/ James E. Murphy
--------------------------------------
James E. Murphy
Chief Financial Officer
22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: July 15, 2002
KIANTONE PIPELINE CORPORATION
-----------------------------------------
(Registrant)
/s/ Myron L. Turfitt
-----------------------------------------
Myron L. Turfitt
President
/s/ James E. Murphy
-----------------------------------------
James E. Murphy
Chief Financial Officer
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: July 15, 2002
UNITED REFINING COMPANY OF PENNSYLVANIA
-------------------------------------------
(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: July 15, 2002
KIANTONE PIPELINE COMPANY
-----------------------------------------
(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: July 15, 2002
UNITED JET CENTER, INC.
-------------------------------------------
(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: July 15, 2002
KWIK FILL CORPORATION
-------------------------------------------
(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: July 15, 2002
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
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: July 15, 2002
BELL OIL CORP.
------------------------------------------
(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: July 15, 2002
PPC, 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: July 15, 2002
SUPER TEST PETROLEUM, INC.
------------------------------------------
(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: July 15, 2002
KWIK-FIL, 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: July 15, 2002
VULCAN ASPHALT REFINING CORPORATION
-------------------------------------------
(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 15, 2002
COUNTRY FAIR, INC.
------------------------------------------
(Registrant)
/s/ Myron L. Turfitt
------------------------------------------
Myron L. Turfitt
President
/s/ James E. Murphy
------------------------------------------
James E. Murphy
Vice President - Finance
34