10-Q 1 j9523801e10vq.txt UNITED REFINING COMPANY 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