-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BH2kWb4fTIh/4nt7XmWGcd/BDpZOYa9uRIVQGJfe5POZe8sv5MpF3V4tAglnWgzv h+XxgrgVK0BFkzu5F9lvlw== 0000950128-99-000864.txt : 19990715 0000950128-99-000864.hdr.sgml : 19990715 ACCESSION NUMBER: 0000950128-99-000864 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990531 FILED AS OF DATE: 19990714 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED REFINING CO CENTRAL INDEX KEY: 0000101462 STANDARD INDUSTRIAL CLASSIFICATION: PETROLEUM REFINING [2911] IRS NUMBER: 251411751 STATE OF INCORPORATION: PA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-06198 FILM NUMBER: 99664440 BUSINESS ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 BUSINESS PHONE: 8147231500 MAIL ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KIANTONE PIPELINE CORP CENTRAL INDEX KEY: 0000830253 STANDARD INDUSTRIAL CLASSIFICATION: PETROLEUM REFINING [2911] IRS NUMBER: 251211902 STATE OF INCORPORATION: NY FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-35083-01 FILM NUMBER: 99664441 BUSINESS ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 BUSINESS PHONE: 8147231500 MAIL ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED REFINING CO /PA/ CENTRAL INDEX KEY: 0001040270 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 250850960 STATE OF INCORPORATION: PA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-35083-02 FILM NUMBER: 99664442 BUSINESS ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 BUSINESS PHONE: 8147231500 MAIL ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KIANTONE PIPELINE CO CENTRAL INDEX KEY: 0001045539 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: PA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-35083-03 FILM NUMBER: 99664443 BUSINESS ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 BUSINESS PHONE: 8147231500 MAIL ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KWIK FIL INC CENTRAL INDEX KEY: 0001045540 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: PA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-35083-04 FILM NUMBER: 99664444 BUSINESS ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 BUSINESS PHONE: 8147231500 MAIL ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KWIK FILL INC CENTRAL INDEX KEY: 0001045541 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: PA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-35083-05 FILM NUMBER: 99664445 BUSINESS ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 BUSINESS PHONE: 8147231500 MAIL ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED JET CENTER INC CENTRAL INDEX KEY: 0001045542 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: PA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-35083-06 FILM NUMBER: 99664446 BUSINESS ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 BUSINESS PHONE: 8147231500 MAIL ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BELL OIL CORP CENTRAL INDEX KEY: 0001045543 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: PA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-35083-07 FILM NUMBER: 99664447 BUSINESS ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 BUSINESS PHONE: 8147231500 MAIL ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PPC INC CENTRAL INDEX KEY: 0001045544 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: PA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-35083-08 FILM NUMBER: 99664448 BUSINESS ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 BUSINESS PHONE: 8147231500 MAIL ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUPER TEST PETROLEUM INC CENTRAL INDEX KEY: 0001045545 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: PA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-35083-09 FILM NUMBER: 99664449 BUSINESS ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 BUSINESS PHONE: 8147231500 MAIL ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VULCAN ASPHALT REFINING CORP CENTRAL INDEX KEY: 0001045546 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: PA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-35083-10 FILM NUMBER: 99664450 BUSINESS ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 BUSINESS PHONE: 8147231500 MAIL ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INDEPENDENT GASOLINE & OIL CO OF ROCHESTER CENTRAL INDEX KEY: 0001045547 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: PA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-35083-11 FILM NUMBER: 99664451 BUSINESS ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 BUSINESS PHONE: 8147231500 MAIL ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 10-Q 1 UNITED REFINING COMPANY FORM 10-Q 1 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, 1999 [ ] 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 14, 1999: 100. 1 2
- ---------------------------------------------------------------------------------------------------------------------------- TABLE OF ADDITIONAL REGISTRANTS Primary Standard State of Other Industrial IRS Employer Jurisdiction of Classification Identification Commission File Name Incorporation 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, Inc. 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 - ----------------------------------------------------------------------------------------------------------------------------
2 3 UNITED REFINING COMPANY AND SUBSIDIARIES INDEX ================================================================================ PART I. FINANCIAL INFORMATION PAGE(S) -------------------------------- Item 1. Financial Statements Consolidated Balance Sheets - May 31, 1999 and August 31, 1998 4 Consolidated Statements of Operations - Nine Months and Quarters Ended May 31, 1999 and 1998 5 Consolidated Statements of Cash Flows - Nine Months Ended May 31, 1999 and 1998 6 Notes to Consolidated Financial Statements 7-8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9-14 PART II. OTHER INFORMATION 15 ---------------------------- 3 4 PART 1 -- FINANCIAL INFORMATION - ------------------------------- ITEM 1. FINANCIAL STATEMENTS UNITED REFINING COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS --------------------------- (IN THOUSANDS)
====================================================================================================== MAY 31, 1999 AUGUST 31, (UNAUDITED) 1998 - ------------------------------------------------------------------------------------------------------ ASSETS CURRENT: Cash and cash equivalents $ 11,705 $ 26,400 Accounts receivable, net 32,241 27,017 Inventories 78,881 55,124 Prepaid expenses and other assets 9,189 7,727 Deferred income taxes 5,024 5,024 - ------------------------------------------------------------------------------------------------------ TOTAL CURRENT ASSETS 137,040 121,292 - ------------------------------------------------------------------------------------------------------ PROPERTY, PLANT AND EQUIPMENT: Cost 271,224 256,895 Less: accumulated depreciation 64,633 58,918 - ------------------------------------------------------------------------------------------------------ NET PROPERTY, PLANT AND EQUIPMENT 206,591 197,977 - ------------------------------------------------------------------------------------------------------ RESTRICTED CASH AND CASH EQUIVALENTS AND INVESTMENTS 7,060 15,289 DEFERRED FINANCING COSTS, NET 6,579 7,244 OTHER ASSETS 7,163 777 - ------------------------------------------------------------------------------------------------------ $364,433 $342,579 ====================================================================================================== LIABILITIES AND STOCKHOLDER'S EQUITY CURRENT: Revolving credit facility $ 27,500 $ -- Current installments of long-term debt 247 283 Accounts payable 21,908 25,298 Accrued liabilities 16,036 11,823 Sales, use and fuel taxes payable 15,698 26,026 - ------------------------------------------------------------------------------------------------------ TOTAL CURRENT LIABILITIES 81,389 63,430 LONG TERM DEBT: LESS CURRENT INSTALLMENTS 200,815 201,026 DEFERRED INCOME TAXES 18,647 16,889 DEFERRED GAIN ON SETTLEMENT OF PENSION PLAN OBLIGATIONS 2,044 2,205 DEFERRED RETIREMENT BENEFITS 13,721 12,350 OTHER NONCURRENT LIABILITIES 468 1,442 - ------------------------------------------------------------------------------------------------------ TOTAL LIABILITIES 317,084 297,342 - ------------------------------------------------------------------------------------------------------ COMMITMENTS AND CONTINGENCIES STOCKHOLDER'S EQUITY: Common stock, $.10 par value per share - shares authorized 100; issued and outstanding 100 -- -- Additional paid-in capital 7,150 7,150 Retained earnings 40,199 38,087 - ------------------------------------------------------------------------------------------------------ TOTAL STOCKHOLDER'S EQUITY 47,349 45,237 - ------------------------------------------------------------------------------------------------------ $364,433 $342,579 ======================================================================================================
See accompanying notes to consolidated financial statements. 4 5 UNITED REFINING COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS - (UNAUDITED) ------------------------------------- (IN THOUSANDS)
===================================================================================================================== THREE MONTHS ENDED NINE MONTHS ENDED MAY 31, MAY 31, -------------------------------------------------------------- 1999 1998 1999 1998 - --------------------------------------------------------------------------------------------------------------------- NET SALES $185,313 $175,246 $517,067 $551,811 COSTS OF GOODS SOLD 152,468 152,541 442,059 492,976 - --------------------------------------------------------------------------------------------------------------------- GROSS PROFIT 32,845 22,705 75,008 58,835 - --------------------------------------------------------------------------------------------------------------------- EXPENSES: Selling, general and administrative expenses 17,939 19,186 57,133 56,479 Depreciation and amortization expenses 2,358 2,273 7,070 6,820 - --------------------------------------------------------------------------------------------------------------------- TOTAL OPERATING EXPENSES 20,297 21,459 64,203 63,299 - --------------------------------------------------------------------------------------------------------------------- OPERATING INCOME/(LOSS) 12,548 1,246 10,805 (4,464) - --------------------------------------------------------------------------------------------------------------------- OTHER INCOME (EXPENSE): Interest income 162 560 905 2,274 Interest expense (5,654) (5,649) (16,545) (16,665) Other, net (78) 1 458 285 - --------------------------------------------------------------------------------------------------------------------- (5,570) (5,088) (15,182) (14,106) - --------------------------------------------------------------------------------------------------------------------- INCOME/(LOSS) BEFORE INCOME TAX 6,978 (3,842) (4,377) (18,570) INCOME TAX EXPENSE (BENEFIT) 2,764 (1,528) (1,706) (7,424) - --------------------------------------------------------------------------------------------------------------------- INCOME/(LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE 4,214 (2,314) (2,671) (11,146) CUMULATIVE EFFECT OF ACCOUNTING CHANGE, NET OF TAXES OF $3,122 4,783 -- 4,783 -- - --------------------------------------------------------------------------------------------------------------------- NET INCOME/(LOSS) $ 8,997 $ (2,314) $ 2,112 $(11,146) =====================================================================================================================
See accompanying notes to consolidated financial statements. 5 6 UNITED REFINING COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS -- (UNAUDITED) ------------------------------------- (IN THOUSANDS)
================================================================================================== NINE MONTHS ENDED MAY 31, ------------------------- 1999 1998 - -------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income/(loss) $ 2,112 $(11,146) Adjustments to reconcile net income/(loss) to net cash used in operating activities: Cumulative effect of accounting change (7,905) -- Depreciation and amortization 9,295 7,295 Post-retirement benefits 1,371 1,372 Change in deferred income taxes 1,758 (8,582) (Gain) loss on asset dispositions (906) 33 Cash used in working capital items (41,107) (2,300) Other, net (18) (121) - -------------------------------------------------------------------------------------------------- TOTAL ADJUSTMENTS (37,512) (2,303) - -------------------------------------------------------------------------------------------------- NET CASH USED IN OPERATING ACTIVITIES (35,400) (13,449) - -------------------------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Decrease in restricted cash, cash equivalents and investments 8,229 18,768 Additions to property, plant and equipment (17,216) (22,917) Proceeds from asset dispositions 2,439 560 - -------------------------------------------------------------------------------------------------- NET CASH USED IN INVESTING ACTIVITIES (6,548) (3,589) - -------------------------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings on revolving credit facility 27,500 12,000 Proceeds from issuance of long term debt -- 156 Principal reductions of long-term debt (247) (164) Deferred financing costs -- (283) - -------------------------------------------------------------------------------------------------- NET CASH PROVIDED BY FINANCING ACTIVITIES 27,253 11,709 - -------------------------------------------------------------------------------------------------- NET DECREASE IN CASH AND CASH EQUIVALENTS (14,695) (5,329) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 26,400 11,024 - -------------------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 11,705 $ 5,695 ================================================================================================== CASH PROVIDED BY (USED IN) WORKING CAPITAL ITEMS: Accounts receivable, net $ (5,224) $ 2,061 Inventories (23,757) 5,953 Prepaid expenses and other assets (1,462) 956 Accounts payable (3,390) (13,272) Accrued liabilities 3,054 1,556 Sales, use and fuel taxes payable (10,328) 446 - -------------------------------------------------------------------------------------------------- TOTAL CHANGE $(41,107) $ (2,300) ==================================================================================================
See accompanying notes to consolidated financial statements. 6 7 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 generally accepted accounting principles 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 generally accepted accounting principles 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, 1999 are not necessarily indicative of the results that may be expected for the year ending August 31, 1999. 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 30, 1998. 2. ACCOUNTING CHANGE Effective March 1, 1999, the Company changed its method of accounting for major maintenance turnarounds and recorded a $4.8 million credit, net of income taxes of $3.1 million as the cumulative effect change as of September 1, 1998. Under the new accounting principle, the Company defers the cost of turnarounds when incurred and amortizes the costs to operations on a straight-line basis over the period of benefit. Previously, turnaround costs were estimated and accrued and charged to operations over the period preceding the next scheduled turnaround. The change was due to the increasingly difficult estimation process of determining the accurate costs charged to operations, due in part to the numerous and ever changing environmental rules and regulations. This change enables the Company to more accurately charge costs to production over the period most clearly benefited by the turnaround. Pro forma amounts assuming the new accounting method is applied retroactively are as follows (in thousands):
THREE MONTHS ENDED NINE MONTHS ENDED MAY 31, 1998 MAY 31, 1998 ---------------------------------------------------------------------------------------- As reported Proforma adjusted As reported Proforma adjusted Pretax loss $(3,842) $(3,642) $(18,570) $(17,997) Net loss $(2,314) $(2,194) $(11,146) $(10,802)
The effect of this change on the prior quarters previously reported are as follows (in thousands):
THREE MONTHS ENDED THREE MONTHS ENDED NOVEMBER 30, 1998 FEBRUARY 28, 1999 --------------------------------------------------------------------------------------------- As reported Proforma adjusted As reported Proforma adjusted -------------------------------------------------------------------------------------------------------------- Pretax loss $(893) $(734) $(10,908) $(10,621) Net loss $(546) $(450) $( 6,609) $( 6,435)
7 8 UNITED REFINING COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) ================================================================================ 3. COMPREHENSIVE INCOME The Company has adopted Statement of Financial Accounting Standards (SFAS) No. 130, REPORTING COMPREHENSIVE INCOME, which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, SFAS No. 130 requires that all items that are required to be recognized under current accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. For interim reporting purposes, SFAS No. 130 requires disclosure of total comprehensive income. Total comprehensive income for the three and nine month periods ended May 31, 1999 and 1998 is the same as the reported net income. 4. SUBSIDIARY GUARANTORS Summarized financial information for the Company's wholly owned subsidiary guarantors is as follows (in thousands):
MAY 31, 1999 (UNAUDITED) AUGUST 31, 1998 ----------------------------------------------------------------------------------------- Current assets $ 46,359 $ 39,901 Noncurrent assets 82,776 73,666 Current liabilities 121,797 103,977 Noncurrent liabilities 10,484 10,651 -----------------------------------------------------------------------------------------
THREE MONTHS ENDED NINE MONTHS ENDED MAY 31, MAY 31, --------------------------------------------------------------------------- 1999 1998 1999 1998 - -------------------------------------------------------------------------------------------------------------------- Net sales $111,887 $109,573 $313,573 $326,502 Gross profit 18,896 15,046 53,182 47,820 Operating income/(loss) 1,247 (2,219) 90 (3,276) Net loss (291) (1,938) (2,196) (3,907) - --------------------------------------------------------------------------------------------------------------------
8 9 UNITED REFINING COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) ================================================================================ Recent Developments During the month of June 1999, the Company's margins on wholesale gasoline and distillate were negatively affected by worldwide petroleum margins, as indicated by prices of NYMEX contracts for crude oil and petroleum products, which were unusually low for that month. Because of the low June margins, the Company operated its refinery slightly below capacity in June 1999. However, in early July, margins improved sufficiently that the Company expects to return refinery operations to maximum rates in mid July. Results of Operations For the fiscal quarter ended May 31, 1999, the Company's results were significantly affected by a recovery in world crude oil prices, as indicated by prices of NYMEX crude oil contracts, which had reached a low in December 1998, after declining almost continuously since October 1997. During the fiscal quarter ended May 31, 1999, the prices of these contracts increased substantially, with prices of NYMEX crude oil contracts which traded in May 1999 averaging more than $5.50 per barrel higher than those traded in February 1999. These rising crude oil prices, and corresponding increases in product prices, benefited the Company's margins on wholesale gasoline and distillate, as refined products were produced and sold from crude oil purchased approximately one month earlier at significantly lower prices. The Company also benefited from higher refinery operating rates in the fiscal quarter ended May 31, 1999 as compared to the fiscal quarter ended May 31, 1998, when the refinery crude oil distillation unit and certain other processing units had undergone a 22 day scheduled shutdown for maintenance and upgrading. For the fiscal quarter ended May 31, 1999, Costs of Goods Sold, Gross Profit and Operating Income benefited from an increase in the valuation of working inventories as a result of rising petroleum prices. The increase in the valuation of working inventories for the fiscal quarter ended May 31, 1999 was approximately $8.8 million compared to an increase in the valuation of approximately $0.7 million for the fiscal quarter ended May 31, 1998. For the nine months ended May 31, 1999, Costs of Goods Sold, Gross Profit, and Operating Income also benefited from an increase in the valuation of working inventories, as the valuation increase in the fiscal quarter ended May 31, 1999 more than offset valuation declines in the two preceding fiscal quarters. The increase in the valuation of working inventories for the nine months ended May 31, 1999 was approximately $5.2 million compared to a reduction in the valuation of working inventories of approximately $8.9 million for the nine months ended May 31, 1998. However, such changes in inventory valuation did not have a material effect on the Company's operating cash flow. Matters discussed below should be read in conjunction with the accompanying unaudited financial information. Certain statements contained in this report are forward-looking. Although management believes that its expectations are based on reasonable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results will not differ materially from its expectations. Factors that could cause actual results to differ from expectations include general economic, business and market conditions, volatility of gasoline prices, merchandise margins, customer traffic, weather conditions, labor costs and the level of capital expenditures. For other important factors that may cause actual results to differ materially from expectations and underlying assumptions, see the Company's periodic filings with the Securities and Exchange Commission. 9 10 UNITED REFINING COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) ================================================================================ Comparison of Fiscal Quarters ended May 31, 1999 and May 31, 1998 Net Sales. Net sales increased $10.1 million or 5.7% from $175.2 million for the fiscal quarter ended May 31, 1998 to $185.3 million for the fiscal quarter ended May 31, 1999. The increase was primarily due to a 16.4% increase in wholesale petroleum sales volume and an 18.5% increase in retail merchandise sales, partially offset by a 3.6% decrease in wholesale petroleum prices, and by a 2.8% decrease in retail petroleum sales volume. The increased wholesale volume was primarily due to higher refinery runs in the fiscal quarter ended May 31, 1999 as compared to the fiscal quarter ended May 31, 1998, when certain refinery processing units underwent a scheduled 22 day maintenance shutdown. The decreased retail petroleum volume was due in part to the permanent shutdown of some underperforming retail stations since the fiscal quarter ended May 31, 1998. An additional cause of the decreased retail petroleum volume was a larger number of retail stations shut down for rebuilding or upgrading under the Company's Capital Improvement Plan ("the Plan") during the fiscal quarter ended May 31, 1999 than was the case during the quarter ended May 31, 1998. However, strong gains in merchandise sales at stations previously improved under the Plan enabled the Company in the quarter ended May 31, 1999, to continue to increase merchandise sales versus prior year levels. The decrease in wholesale petroleum prices was primarily the result of lower world petroleum prices, as indicated by NYMEX contract prices, which in the fiscal quarter ended May 31, 1999, despite a significant recovery from the level of the immediately preceding quarter, still averaged lower than for the fiscal quarter ended May 31, 1998. Costs of Goods Sold. Costs of goods sold was substantially unchanged at $152.5 million for both the fiscal quarter ended May 31, 1998 and for the fiscal quarter ended May 31, 1999. This was the result of a larger positive impact on costs of goods sold from changes in the working inventory valuation in the quarter ended May 31, 1999 than in the quarter ended May 31, 1998, which offset higher refinery runs for the quarter ended May 31, 1999 as compared to the quarter ended May 31, 1998. The change in the impact of the working inventory valuation on costs of goods sold was the result of a significant increase in world petroleum prices during the quarter ended May 31, 1999. Operating Expenses. Operating expenses decreased $1.2 million or 5.4% from $21.5 million for the fiscal quarter ended May 31, 1998 to $20.3 million for the fiscal quarter ended May 31, 1999. The decrease was primarily due to reductions in contract service fees and in retail wages, partially offset by increased retail promotion expenses. The reduction in contract service fees was primarily due to a reduction in contract services connected with the Plan as implementation of the Plan nears completion. The reduction in retail wages was primarily due to the closure of some nonperforming retail stations. The increased retail promotion expenses were primarily in connection with a "frequent fueler" program which has been effective in increasing retail gasoline volume. Operating Income. Operating income increased $11.3 million from $1.2 million for the fiscal quarter ended May 31, 1998 to $12.5 million for the fiscal quarter ended May 31, 1999. This improvement was due to an increase in gross profit and to a decrease in operating expenses. The increased gross profit was primarily the result of higher refinery runs and a larger positive impact on Costs of Goods Sold from changes in the valuation of working inventory. 10 11 UNITED REFINING COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) ================================================================================ Interest Expense. Net interest expense (interest expense less interest income) increased $0.4 million from $5.1 million for the fiscal quarter ended May 31, 1998 to $5.5 million for the fiscal quarter ended May 31, 1999. The increased net interest expense was due to a decrease in interest income earned, as a result of lower balances of restricted cash and investments. Income Taxes. The provisions for income taxes for the fiscal quarters ended May 31, 1998 and May 31, 1999 have been computed based upon management's estimate of its annualized effective tax rate of approximately 39.8% and 39.6% respectively. Accounting Change. Effective March 1, 1999, the Company changed its method of accounting for turnaround costs from estimating and accruing costs to income to capitalizing costs incurred and amortizing expenses over the period between turnarounds. This change resulted in a $4.8 million (net of taxes of $3.1 million) adjustment to increase net income. Comparison of the Nine Months ended May 31, 1999 and May 31, 1998 Net Sales. Net sales decreased $34.7 million or 6.3% from $551.8 million for the nine months ended May 31, 1998 to $517.1 million for the nine months ended May 31, 1999. The decline was primarily due to 21.3% and 17.7% decrease in wholesale and retail petroleum sales prices, respectively, partially offset by 15.2% and 2.3% increase in wholesale and retail petroleum volume, respectively, and by a 16.8% increase in retail merchandise sales. The price decreases were primarily due to lower prices for petroleum products worldwide which accompanied a 24.1% decrease in world crude oil prices, as indicated by average prices of NYMEX crude oil contracts for the nine months ended May 31, 1999 as compared to average prices of these contracts for the nine months ended May 31, 1998. Increases in wholesale volume were primarily due to higher refinery runs, while increased retail petroleum and merchandise volumes were in large part the result of the ongoing program of retail upgrades, partially offset by the closure of some underperforming retail stations. The size of the retail petroleum volume increase was limited by retail stations shut down for rebuilding or upgrading, but particularly strong merchandise sales at stations already upgraded allowed excellent merchandise sales gains despite these temporary shutdowns. Costs of Goods Sold. Costs of goods sold decreased $50.9 million or 10.3% from $493.0 million for the nine months ended May 31, 1998 to $442.1 million for the nine months ended May 31, 1999. This decrease was primarily due to the decline in world crude oil prices for the nine months ended May 31, 1999 as compared to crude oil prices for the nine months ended May 31, 1998 and to a favorable impact on costs of goods sold from changes in the working inventory valuation in the nine months ended May 31, 1999 versus an unfavorable impact on costs of goods sold in the nine months ended May 31, 1998. The decrease in the Company's costs of goods due to these factors was partially offset by an increase in the volume of crude oil processed. Operating Expenses. Operating expenses increased $0.9 million or 1.4% from $63.3 million for the nine months ended May 31, 1998 to $64.2 million for the nine months ended May 31, 1999. The increase was primarily due to higher retail expenses for sales promotion, partially offset by reductions in contract service fees and in retail wages. Increased retail promotion expenses were 11 12 UNITED REFINING COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) ================================================================================ primarily in connection with a "frequent fueler" program which has been effective in increasing retail gasoline volume. The reduction in contract service fees was primarily due to a reduction in contract services connected with the Capital Improvement Plan as implementation of the Plan nears completion. The reduction in retail wages was primarily due to the closure of some nonperforming retail stations. Operating Income. Operating income increased $15.3 million from a $4.5 million operating loss for the nine months ended May 31, 1998 to a $10.8 million operating income for the nine months ended May 31, 1999. This improvement was due to an increase in gross profit, partially offset by an increase in operating expense. The increase in gross profit was primarily the result of higher refinery runs and of a positive impact on Costs of Goods Sold from changes in the valuation of working inventory. Interest Expense. Net interest expense (interest expense less interest income) increased $1.2 million from $14.4 million for the nine months ended May 31, 1998 to $15.6 million for the nine months ended May 31, 1999. The increased net interest expense was due to a decrease in interest income earned, as the result of lower balances of restricted cash and investments. Income Taxes. The provisions for income taxes for the nine months ended May 31, 1998 and May 31, 1999 have been computed based upon management's estimate of its annualized effective tax rate of approximately 40.0% and 39.0% respectively. Accounting Change. Effective March 1, 1999, the Company changed its method of accounting for turnaround costs from estimating and accruing costs to income to capitalizing costs incurred and amortizing expenses over the period between turnarounds. This change resulted in a $4.8 million (net of taxes of $3.1 million) adjustment to increase net income. Liquidity and Capital Resources Working capital (current assets minus current liabilities) at May 31, 1999 was $55.7 million and at August 31, 1998 was $57.9 million. The Company's current ratio (current assets divided by current liabilities) was 1.7:1 at May 31, 1999 and 1.9:1 at August 31, 1998. Net cash used in operating activities totaled $35.4 million for the nine months ended May 31, 1999 compared to net cash used in operating activities of $13.4 million for the nine months ended May 31, 1998. Net cash used in investing activities for purchases of property, plant and equipment totaled $17.2 million and $22.9 million for the nine months ended May 31, 1999 and 1998, respectively. For the nine months ended May 31, 1999, the Company used $8.2 million of restricted cash, cash equivalents and investments to fund the Company's Capital Improvement Plan compared to $18.8 million for the nine months ended May 31, 1998. Net cash provided by financing activities was $27.3 million for the nine months ended May 31, 1999 compared to cash provided of $11.7 million for the nine months ended May 31, 1998. Net borrowings on the Company's revolving credit facility were $27.5 million at May 31, 1999. 12 13 UNITED REFINING COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) ================================================================================ The Company reviews its capital expenditures on an ongoing basis. The Company currently has budgeted approximately $25.0 million for capital expenditures in fiscal 1999. As of May 31, 1999, the capital expenditure escrow balance was $7.1 million. Of this balance, approximately $2.1 million is reserved for refining projects and $5.0 million is reserved for retail projects. The refinery and retail capital improvement program is expected to be completed by August 31, 1999. Maintenance and non-discretionary capital expenditures have averaged approximately $4.0 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 1999. 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 bank credit facility with PNC Bank, N.A. as Agent Bank. 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 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 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 the winter months. As a result, the margin on gasoline prices versus crude oil costs generally tends to increase in the spring and summer, while margins on home heating oil and kerosene tend to increase in winter. Also, because winter weather in the Company's market is not favorable for paving activity, the Company's asphalt sales in winter months are composed of a much lower percentage of paving asphalt and a correspondingly higher percentage of roofing asphalt whose demand is much less seasonal. In addition, the Company stores a significant portion of winter asphalt production for sale the following spring and summer. 13 14 UNITED REFINING COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) ================================================================================ Inflation The effect of inflation on the Company has not been significant during the last two fiscal years. Year 2000 Computer Issues The year 2000 presents many challenges to our industry with respect to, among other things, date-related functions in some computer systems. Historically, certain computer programs have been written using two digits rather than four to define the applicable year, which could result in the computer recognizing a date using "00" as the year 1900 rather than the year 2000. This in turn could result in major system failures or miscalculations and is generally referred to as the "Year 2000" problem. The Company is examining all areas of its business to ensure Year 2000 readiness, including computer hardware and software applications. The Company is addressing Year 2000 issues primarily with internal resources to ensure that the transition to the Year 2000 will not disrupt the Company's operations. The Company anticipates that essentially all of its systems will be compliant by calendar year end 1999, including its non-information technology systems. In addition, the Company has communicated with and evaluated the systems of its customers, suppliers, financial institutions and others with which it does business to identify any Year 2000 issues. Costs incurred by the Company to date to implement its plan have not been material and are not expected to have a material effect on the Company's financial condition or results of operations. There can be no assurance, however, that the Year 2000 issue will not adversely affect the Company and its business. 14 15 PART II - OTHER INFORMATION - --------------------------- Item 1. Legal Proceedings None 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 11 - Letter of Independent Certified Public Accountants Relative to Accounting Change Exhibit 27 - Financial Data Schedule (b) No reports on Forms 8-K have been filed for the quarter for which this report is being filed. 15 16 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 14, 1999 UNITED REFINING COMPANY ------------------------------------------ (Registrant) /s/ MYRON L. TURFITT ------------------------------------------ Myron L. Turfitt President /s/ JAMES E. MURPHY ------------------------------------------ James E. Murphy Chief Financial Officer 16 17 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 14, 1999 KIANTONE PIPELINE CORPORATION ------------------------------------------ (Registrant) /s/ MYRON L. TURFITT ------------------------------------------ Myron L. Turfitt President /s/ JAMES E. MURPHY ------------------------------------------ James E. Murphy Chief Financial Officer 17 18 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 14, 1999 UNITED REFINING COMPANY OF PENNSYLVANIA ------------------------------------------ (Registrant) /s/ MYRON L. TURFITT ------------------------------------------ Myron L. Turfitt President /s/ JAMES E. MURPHY ------------------------------------------ James E. Murphy Chief Financial Officer 18 19 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 14, 1999 KIANTONE PIPELINE COMPANY ------------------------------------------ (Registrant) /s/ MYRON L. TURFITT ------------------------------------------ Myron L. Turfitt President /s/ JAMES E. MURPHY ------------------------------------------ James E. Murphy Chief Financial Officer 19 20 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 14, 1999 UNITED JET CENTER, INC. ------------------------------------------ (Registrant) /s/ MYRON L. TURFITT ------------------------------------------ Myron L. Turfitt President /s/ JAMES E. MURPHY ------------------------------------------ James E. Murphy Chief Financial Officer 20 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 14, 1999 KWIK-FILL, INC. ------------------------------------------ (Registrant) /s/ MYRON L. TURFITT ------------------------------------------ Myron L. Turfitt President /s/ JAMES E. MURPHY ------------------------------------------ James E. Murphy Chief Financial Officer 21 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 14, 1999 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 22 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 14, 1999 BELL OIL CORP. ------------------------------------------ (Registrant) /s/ MYRON L. TURFITT ------------------------------------------ Myron L. Turfitt President /s/ JAMES E. MURPHY ------------------------------------------ James E. Murphy Chief Financial Officer 23 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 14, 1999 PPC, INC. ------------------------------------------ (Registrant) /s/ MYRON L. TURFITT ------------------------------------------ Myron L. Turfitt President /s/ JAMES E. MURPHY ------------------------------------------ James E. Murphy Chief Financial Officer 24 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 14, 1999 SUPER TEST PETROLEUM, INC. ------------------------------------------ (Registrant) /s/ MYRON L. TURFITT ------------------------------------------ Myron L. Turfitt President /s/ JAMES E. MURPHY ------------------------------------------ James E. Murphy Chief Financial Officer 25 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 14, 1999 KWIK-FIL, INC. ------------------------------------------ (Registrant) /s/ MYRON L. TURFITT ------------------------------------------ Myron L. Turfitt President /s/ JAMES E. MURPHY ------------------------------------------ James E. Murphy Chief Financial Officer 26 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 14, 1999 VULCAN ASPHALT REFINING CORPORATION ------------------------------------------ (Registrant) /s/ MYRON L. TURFITT ------------------------------------------ Myron L. Turfitt President /s/ JAMES E. MURPHY ------------------------------------------ James E. Murphy Chief Financial Officer 27 EX-11 2 LETTER FROM BDO SEIDMAN, LLP 1 Exhibit 11.0 July 9, 1999 United Refining Company 15 Bradley Street Warren, Pennsylvania 16365 Gentlemen: We are providing this letter to you for inclusion as an exhibit to your Form 10-Q for the quarterly period ended May 31, 1999 pursuant to Item 601 of Regulation S-K. Note 2 of the notes to the interim condensed financial statements of United Refining Company (the "Company"), describes a change in the method of accounting for turnaround costs. Turnaround costs, which consist of complete shutdown and inspection of significant units of the refinery at intervals of three or more years for necessary repairs and replacement, were estimated during the units' operating cycles and were charged against income currently. Turnaround costs will now be capitalized as incurred and amortized over the period between turnarounds. Management has advised us that the change is necessary because it has become increasingly difficult, if not impossible, to reasonably estimate the amount of turnaround costs which will be incurred due to the numerous and ever-changing environmental rules and regulations which impact their facilities. Management has also advised us that they believe the new method is preferable because (1) the costs extend the life of the assets which comprise the refinery; (2) the change will result in a better matching of revenues and expenses; and (3) the change is consistent with industry practices. Although there are no authoritative criteria for determining a "preferable" method in the circumstances, we conclude that the change in the method of accounting for turnaround costs is to an acceptable alternative method, which based on management's business judgement to make this change for the reasons cited above, is preferable in the circumstances. We have not conducted an audit in accordance with generally accepted auditing standards of any financial statements of the Company as of any date or for any period subsequent to August 31, 1998, and therefore we do not express any opinion on any financial statements of United Refining Company subsequent to that date. /s/ BDO SEIDMAN, LLP - -------------------- BDO Seidman, LLP New York, New York EX-27 3 FINANCIAL DATA SCHEDULE
5 0000101462 UNITED REFINING CO. 1,000 U.S. DOLLARS 9-MOS AUG-31-1999 SEP-01-1998 MAY-31-1999 1 11,705 0 32,241 384 78,881 137,040 271,224 64,633 364,433 81,389 200,815 0 0 0 47,349 364,433 517,067 517,067 442,059 57,133 0 104 17,210 (4,377) (1,706) (2,671) 0 0 4,783 2,112 0 0
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