-----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, K7CptEaAp2kpDW7kSZhfYULgzAcaXm0DTN82FXZc/ZqKffmMYYmKFng3yQd4uHFK sPmNrE2LWjD2/TFo3JpxHg== 0001014865-98-000005.txt : 19980115 0001014865-98-000005.hdr.sgml : 19980115 ACCESSION NUMBER: 0001014865-98-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971130 FILED AS OF DATE: 19980114 SROS: NONE 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: 98506749 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: 98506750 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: 98506751 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: 98506752 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: 98506753 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: 98506754 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: 98506755 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: 98506756 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: 98506757 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: 98506758 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: 98506759 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: 98506760 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'S 10-Q (11/30/97) 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 November 30, 1997 [ ] 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 (see Table of Additional Registrants) ------------------------------------------------------------- (Exact name of registrant as specified in its charter) Pennsylvania 25-1411751 ------------ ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Idenfication No.) 15 Bradley Street Warren, Pennsylvania 16365 -------------------- ----- (address of principal (Zip Code) executive office) 814-726-4674 ------------ Registrant's telephone number, including area code Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Number of shares outstanding of Registrant's Common Stock as of January 14, 1998: 100. 1
- -------------------------------------------------------------------------------------------------------------------------------- TABLE OF ADDITIONAL REGISTRANTS - -------------------------------------------------------------------------------------------------------------------------------- State of Other Primary Standard IRS Employer Jurisdiction of Industrial Classification Identification Commission File Name Incorporation Number Number Number - -------------------------------------------------------------------------------------------------------------------------------- Kiantone Pipeline New York 4612 25-1211902 333-35083-01 Corporation - -------------------------------------------------------------------------------------------------------------------------------- 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 New York 5170 06-1217388 333-35083-11 Company of 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 Delaware 2911 23-2486891 333-35083-10 Corporation - --------------------------------------------------------------------------------------------------------------------------------
2 UNITED REFINING COMPANY AND SUBSIDIARIES Index PART 1. FINANCIAL INFORMATION PAGE(S) Item 1. Financial Statements Consolidated Balance Sheets - November 30, 1997 and August 31, 1997 4 Consolidated Statements of Operations - Quarters Ended November 30, 1997 and 1996 5 Consolidated Statements of Cash Flows - Quarters Ended November 30, 1997 and 1996 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-10 PART II. OTHER INFORMATION 11 3 Part 1 -- Financial Information Item 1. Financial Statements
UNITED REFINING COMPANY AND SUBSIDIARIES Consolidated Balance Sheets (in thousands) November 30, August 31, 1997 1997 (Unaudited) -------- -------- Assets Current: Cash and cash equivalents .......................................................... $ 13,077 $ 11,024 Accounts receivable, net ........................................................... 24,015 29,762 Inventories ........................................................................ 65,725 67,096 Prepaid expenses and other assets .................................................. 6,184 6,786 Deferred income taxes .............................................................. 703 712 -------- -------- Total current assets .................................................... 109,704 115,380 -------- -------- Property, plant and equipment: Cost ............................................................................... 242,120 234,956 Less: accumulated depreciation .................................................... 63,021 60,757 -------- -------- Net property, plant and equipment ....................................... 179,099 174,199 -------- -------- Restricted cash and cash equivalents and investments .................................... 44,790 48,168 Deferred financing costs ................................................................ 7,715 7,807 Other assets ............................................................................ 902 838 -------- -------- $342,210 $346,392 -------- -------- Liabilities and Stockholder's Equity Current: Current installments of long-term debt ............................................. $ 220 $ 218 Accounts payable ................................................................... 20,614 29,010 Accrued liabilities ................................................................ 20,175 13,753 Sales, use and fuel taxes payable .................................................. 11,568 13,056 -------- -------- Total current liabilities ............................................... 52,577 56,037 -------- -------- Long term debt: less current installments .............................................. 200,998 201,054 Deferred income taxes ................................................................... 17,862 17,390 Deferred gain on settlement of pension plan obligations ................................. 2,366 2,420 Deferred retirement benefits ............................................................ 10,546 10,797 Other noncurrent liabilities ............................................................ 4,199 5,757 -------- -------- Total liabilities ....................................................... 288,548 293,455 -------- -------- 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 .................................................................. 46,512 45,787 -------- -------- Total stockholder's equity .............................................. 53,662 52,937 -------- -------- $342,210 $346,392 -------- -------- See accompanying notes to consolidated financial statements.
4
UNITED REFINING COMPANY AND SUBSIDIARIES Consolidated Statements of Operations - Unaudited (in thousands) Three Months Ended November 30, 1997 1996 --------- --------- Net sales ....................................................................... $ 213,302 $ 227,264 Cost of goods sold .............................................................. 186,121 201,725 --------- --------- Gross profit .......................................................... 27,181 25,539 --------- --------- Expenses: Selling, general and administrative expenses ............................... 19,116 17,850 Depreciation and amortization expenses ..................................... 2,274 2,133 --------- --------- Total operating expenses .............................................. 21,390 19,983 --------- --------- Operating income ...................................................... 5,791 5,556 --------- --------- Other income (expense): Interest income ............................................................ 338 954 Interest expense ........................................................... (5,508) (4,225) Other, net ................................................................. (30) (175) --------- --------- (4,584) (4,062) --------- --------- Income before income tax expense ...................................... 1,207 1,494 Income tax expense .............................................................. 482 592 --------- --------- Net income ...................................................................... $ 725 $ 902 See accompanying notes to consolidated financial statements.
5
UNITED REFINING COMPANY AND SUBSIDIARIES Consolidated Statements of Cash Flows -- (Unaudited) (in thousands) Three Months Ended November 30, 1997 1996 -------- -------- Cash flows from operating activities: Net income ...................................................................... $ 725 $ 902 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization ............................................. 2,436 2,188 Post-retirement benefits .................................................. (251) 18 Change in deferred income taxes ........................................... 472 512 (Gain) loss on asset dispositions ......................................... (72) (121) Cash used in working capital items ........................................ 2,812 (5,116) Other, net ................................................................ (167) (67) -------- -------- Total adjustments ................................................... 5,230 (2,586) -------- -------- Net cash provided by (used in) operating ............................ 5,955 (1,684) activities -------- -------- Cash flows from investing activities: Additions to property, plant and equipment ...................................... (7,222) (1,029) Proceeds from asset dispositions ................................................ 120 123 Net cash provided by restricted cash, cash equivalents and investments ........................................................... 3,378 -- -------- -------- Net cash used in investing activities ............................... (3,724) (906) -------- -------- Cash flows from financing activities: Principal reductions of long-term debt .......................................... (54) (63) Deferred financing costs ........................................................ (124) -- -------- -------- Net cash used in financing activities ............................... (178) (63) -------- -------- Net increase (decrease) in cash and cash equivalents .................................. 2,053 (2,653) Cash and cash equivalents, beginning of year .......................................... 11,024 15,511 -------- -------- Cash and cash equivalents, end of year ................................................ $ 13,077 $ 12,858 -------- -------- Cash provided by (used in) working capital items Accounts receivable, net ........................................................ $ 5,747 $ 356 Inventories ..................................................................... 1,371 (3,892) Prepaid expenses and other assets ............................................... 611 (235) Accounts payable ................................................................ (8,396) (3,254) Accrued liabilties .............................................................. 4,967 4,942 Sales, use and fuel taxes payable ............................................... (1,488) (3,033) -------- -------- Total change .............................................................. $ 2,812 $ (5,116) See accompanying notes to consolidated financial statements.
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 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 month period ended November 30, 1997 are not necessarily indicative of the results that may be expected for the year ending August 31, 1998. For further information, refer to the consolidated financial statements and footnotes thereto incorporated in the Company's Form 10-K filing dated November 28, 1997. 7 UNITED REFINING COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Unaudited) Recent Developments World crude oil prices, as indicated by the price of crude oil contracts trading on the New York Mercantile Exchange (NYMEX), declined approximately $1.90 per barrel or 9.4% in December NYMEX trading of contracts for January and February delivery as compared to prices for contracts traded in November. This will negatively impact December results, as accompanying declines in industry petroleum product prices reduced the Company's December selling prices. The Company has improved yields and increased the capacity of certain major refinery processing units as the result of maintenance and upgrading activities performed during scheduled shutdowns of these units in the quarter ended November 30, 1997. The upgrading activities completed during the quarter included those associated with the first phase of the refinery expansion and upgrade portion of the Company's Capital Improvement Plan. As of January 1, 1998 the Company had completed upgrades of 17 retail outlets under the retail network improvement portion of the Capital Improvement Plan. Results of Operations 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. Comparison of the Fiscal Quarters ended November 30, 1997 and November 30, 1996. Net Sales. Net sales decreased $14.0 million or 6.1% from $227.3 million for the fiscal quarter ended November 30, 1996 to $213.3 million for the fiscal quarter ended November 30, 1997. The decrease was primarily due to generally lower industry wide prices for gasoline and distillate and to lower production and sales volumes due to the scheduled shutdown of certain major refinery processing units for maintenance and capital upgrades during the most recent quarter. These factors were partially offset by higher asphalt prices for the quarter ended November 30, 1997 as compared to the quarter ended November 30, 1996. The lower gasoline and distillate prices in the quarter ended November 30, 1997 were the result of lower industry-wide crude oil and petroleum product prices as compared to the year earlier period. Cost of Goods Sold. Cost of goods sold decreased $15.6 million or 7.7% from $201.7 million for the fiscal quarter ended November 30, 1996 to $186.1 million for the fiscal quarter ended November 30, 1997. This decrease was primarily due to a $4.17 per barrel decrease in the Company's crude oil cost and to a 4.4% reduction in crude oil processing costs related to the processing unit shutdowns for maintenance and upgrading. 8 UNITED REFINING COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Unaudited) Operating Expenses. Operating expenses increased $1.4 million or 7.0% from $20.0 million for the fiscal quarter ended November 30, 1996 to $21.4 million for the fiscal quarter ended November 30, 1997. The increase was primarily in the Company's retail operations for items including sales promotions, retail station wages, maintenance and environmental expenses. Increased sales promotion expenses were primarily due to the Company's introduction of a new "frequent fueler" program to increase retail gasoline volume. Increased retail wages were the result of an 8% statutory increase in the federal minimum wage effective September 1, 1997. Retail environmental expenses were primarily connected with the upgrading of underground storage tanks to new federal standards and will be partially recovered through future reimbursement received from indemnification funds from the states of Ohio and Pennsylvania. Operating Income. Operating income increased $0.2 million or 4.2% from $5.6 million for the fiscal quarter ended November 30, 1996 to $5.8 million for the fiscal quarter ended November 30, 1997. This was primarily the result of improved refining margins for gasoline and asphalt, partially offset by reduced refining margins for distillate and by increased retail operating expenses. Interest Expense. Net interest expense (interest expense less interest income) increased $0.7 million from $3.9 million for the fiscal quarter ended November 30, 1996 to $4.6 million for the fiscal quarter ended November 30, 1997. The increase was due to an increase in the amount of long-term debt outstanding following the Company's sale of $200 million of Senior Notes in June 1997. This was partially offset by a reduction in the average interest rate for long-term debt outstanding. Income Taxes. The provisions for income taxes for the fiscal quarters ended November 30, 1996 and November 30, 1997, has been based upon management's estimate of its annualized effective tax rate. Liquidity and Capital Resources Working capital (current assets minus current liabilities) at November 30, 1997 was $57.1 million and at August 31, 1997 was $59.3 million. The Company's current ratio (current assets divided by current liabilities) was 2.09:1 at November 30, 1997, and was 2.06:1 at August 31, 1997. Net cash provided by operating activities totalled $6.0 million for the three months ended November 30, 1997 compared to net cash used in operating activities of $1.7 million for the three months ended November 30, 1996. Net cash used in investing activities for purchases of property, plant and equipment totalled $7.2 million and $1.0 million for the three months ended November 30, 1997 and 1996, respectively. For the three months ended November 30, 1997, the Company used $3.4 million of restricted cash, cash equivalents and investments to fund the Company's Capital Improvement Plan. The Company reviews its capital expenditures on an ongoing basis. The Company currently has budgeted approximately $28.2 million for capital expenditures in fiscal 1998 with $3.3 million for completion of projects relating to underground storage tanks. The remaining $24.9 million for fiscal 1998 is budgeted for the refinery expansion and retail capital improvement program, refinery environmental compliance and routine maintenance. The refinery 9 UNITED REFINING COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Unaudited) expansion and retail capital improvement program is expected to be completed in fiscal 1999. 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 the maintenance and non-discretionary capital expenditures during fiscal 1998. 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, National Association. Although the Company is not aware of any pending circumstances which would change its expectation, changes in 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 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 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. 10 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 8-K (a) 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. 11 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: January 14, 1998 UNITED REFINING COMPANY --------------------------------------- (Registrant) /s/ Myron L. Turfitt --------------------------------------- Myron L. Turfitt President /s/ James E. Murphy --------------------------------------- James E. Murphy Chief Financial Officer 12 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: January 14, 1998 KIANTONE PIPELINE CORPORATION --------------------------------------- (Registrant) /s/ Myron L. Turfitt --------------------------------------- Myron L. Turfitt President /s/ James E. Murphy --------------------------------------- James E. Murphy Chief Financial Officer 13 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: January 14, 1998 UNITED REFINING COMPANY OF PENNSYLVANIA --------------------------------------- (Registrant) /s/ Myron L. Turfitt --------------------------------------- Myron L. Turfitt President /s/ James E. Murphy --------------------------------------- James E. Murphy Chief Financial Officer 14 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: January 14, 1998 KIANTONE PIPELINE COMPANY --------------------------------------- (Registrant) /s/ Myron L. Turfitt --------------------------------------- Myron L. Turfitt Executive Vice President /s/ James E. Murphy --------------------------------------- James E. Murphy Chief Financial Officer 15 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: January 14, 1998 UNITED JET CENTER, INC. --------------------------------------- (Registrant) /s/ Myron L. Turfitt --------------------------------------- Myron L. Turfitt Executive Vice President /s/ James E. Murphy --------------------------------------- James E. Murphy Chief Financial Officer 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: January 14, 1998 KWIK-FILL, INC. --------------------------------------- (Registrant) /s/ Myron L. Turfitt --------------------------------------- Myron L. Turfitt Executive Vice President /s/ James E. Murphy --------------------------------------- James E. Murphy Chief Financial Officer 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: January 14, 1998 INDEPENDENT GASOLINE AND OIL COMPANY OF ROCHESTER, INC. --------------------------------------- (Registrant) /s/ Myron L. Turfitt --------------------------------------- Myron L. Turfitt Executive Vice President /s/ James E. Murphy --------------------------------------- James E. Murphy Chief Financial Officer 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: January 14, 1998 BELL OIL CORP. --------------------------------------- (Registrant) /s/ Myron L. Turfitt --------------------------------------- Myron L. Turfitt Executive Vice President /s/ James E. Murphy --------------------------------------- James E. Murphy Chief Financial Officer 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: January 14, 1998 PPC, INC. --------------------------------------- (Registrant) /s/ Myron L. Turfitt --------------------------------------- Myron L. Turfitt Executive Vice President /s/ James E. Murphy --------------------------------------- James E. Murphy Chief Financial Officer 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: January 14, 1998 SUPER TEST PETROLEUM, INC. --------------------------------------- (Registrant) /s/ Myron L. Turfitt --------------------------------------- Myron L. Turfitt Executive Vice President /s/ James E. Murphy --------------------------------------- James E. Murphy Chief Financial Officer 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: January 14, 1998 KWIK-FIL, INC. --------------------------------------- (Registrant) /s/ Myron L. Turfitt --------------------------------------- Myron L. Turfitt Executive Vice 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: January 14, 1998 VULCAN ASPHALT REFINING CORPORATION --------------------------------------- (Registrant) /s/ Myron L. Turfitt --------------------------------------- Myron L. Turfitt Executive Vice President /s/ James E. Murphy --------------------------------------- James E. Murphy Chief Financial Officer 23 EX-27 2 11/30/97 FINANCIALS WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 3-MOS Aug-31-1998 Sep-01-1997 Nov-30-1997 $13,077 $0 $24,015 $543 $65,725 $109,704 $242,120 $63,021 $342,210 $52,577 $200,988 0 0 0 $53,662 $342,210 $213,302 $213,302 $186,121 $19,116 $0 $75 $5,724 $1,207 $482 $725 $0 $0 $0 $725 $0 $0
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