10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 31, 2012

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File No. 001-06198

UNITED REFINING COMPANY (Exact name of registrant as specified in its charter)

Pennsylvania	25-1411751
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
15 Bradley Street
Warren, Pennsylvania	16365
(Address of principal executive office)	(Zip Code)

814-723-1500

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “accelerated filer” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ¨	Accelerated filer  ¨
Non-accelerated filer  x  (Do not check if a smaller reporting company)	Smaller reporting company  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of July 16, 2012, there were 100 shares of common stock, par value $.10 per share, of the Registrant outstanding.

TABLE OF ADDITIONAL REGISTRANTS

Name	State of Other Jurisdiction of Incorporation	IRS Employer Identification Number		Commission File Number
Kiantone Pipeline Corporation	New York		25-1211902		333-35083-01
Kiantone Pipeline Company	Pennsylvania		25-1416278		333-35083-03
United Refining Company of Pennsylvania	Pennsylvania		25-0850960		333-35083-02
United Jet Center, Inc.	Delaware		52-1623169		333-35083-06
Kwik-Fill Corporation	Pennsylvania		25-1525543		333-35083-05
Independent Gas and Oil Company of Rochester, Inc.	New York		06-1217388		333-35083-11
Bell Oil Corp.	Michigan		38-1884781		333-35083-07
PPC, Inc.	Ohio		31-0821706		333-35083-08
Super Test Petroleum, Inc.	Michigan		38-1901439		333-35083-09
Kwik-Fil, Inc.	New York		25-1525615		333-35083-04
Vulcan Asphalt Refining Corporation	Delaware		23-2486891		333-35083-10
Country Fair, Inc.	Pennsylvania		25-1149799		333-35083-12

2

FORM 10-Q – CONTENTS

		PAGE(S)
PART I.	FINANCIAL INFORMATION		4
Item 1.	Financial Statements		4
	Consolidated Balance Sheets – May 31, 2012 (unaudited) and August 31, 2011		4
	Consolidated Statements of Operations – Quarter and Nine Months Ended May 31, 2012 and 2011 (unaudited)		5
	Consolidated Statements of Cash Flows – Nine Months Ended May 31, 2012 and 2011 (unaudited)		6
	Notes to Consolidated Financial Statements (unaudited)		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		17
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		25
Item 4.	Controls and Procedures		26
PART II.	OTHER INFORMATION		27
Item 1.	Legal Proceedings		27
Item 1A.	Risk Factors		27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		27
Item 3.	Defaults Upon Senior Securities		27
Item 4.	Mine Safety Disclosures		27
Item 5.	Other Information		27
Item 6.	Exhibits		27
Signatures			28

3

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

UNITED REFINING COMPANY AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands, except share amounts)

	May 31, 2012 (Unaudited)			August 31, 2011
Assets
Current:
Cash and cash equivalents	$	51,228		$	16,660
Accounts receivable, net		122,323			111,426
Inventories		170,081			171,880
Prepaid expenses and other assets		44,884			40,387
Deferred income taxes		—			14,458
Amounts due from affiliated companies, net		—			3,104
Total current assets		388,516			357,915
Property, plant and equipment, net		273,230			270,974
Deferred financing costs, net		8,888			10,148
Goodwill		1,349			1,349
Tradename		10,500			10,500
Amortizable intangible assets, net		1,427			1,270
Deferred turnaround costs and other assets, net		20,341			18,455
	$	704,251		$	670,611
Liabilities and Stockholder’s Equity
Current:
Current installments of long-term debt	$	1,199		$	978
Accounts payable		41,688			79,946
Derivative liability		1,817			55,720
Accrued liabilities		22,257			15,358
Income taxes payable		26,290			2,627
Sales, use and fuel taxes payable		21,859			16,637
Deferred income taxes		5,632			—
Amounts due to affiliated companies, net		1,473			—
Total current liabilities		122,215			171,266
Revolving credit facility		—			24,000
Long term debt: less current installments		357,800			356,109
Deferred income taxes		27,309			11,353
Deferred retirement benefits		67,290			87,130
Total liabilities		574,614			649,858
Commitments and contingencies
Stockholder’s equity:
Common stock; $.10 par value per share – shares authorized 100; issued and outstanding 100		—			—
Additional paid-in capital		24,789			24,789
Retained earnings		109,014			10,112
Accumulated other comprehensive loss		(4,166	)		(14,148	)
Total stockholder’s equity		129,637			20,753
	$	704,251		$	670,611

See accompanying notes to consolidated financial statements.

4

UNITED REFINING COMPANY AND SUBSIDIARIES

Consolidated Statements of Operations – (Unaudited)

(in thousands)

	Three Months Ended May 31,						Nine Months Ended May 31,
	2012			2011			2012			2011
Net sales	$	935,798		$	808,115		$	2,728,673		$	2,119,541
Costs and expenses:
Costs of goods sold (exclusive of depreciation, amortization and losses/(gains) on derivative contracts)		762,810			738,305			2,378,062			1,958,983
Losses/(gains) on derivative contracts (See Note 3)		1,957			(1,337	)		(37,495	)		(1,337	)
Selling, general and administrative expenses		37,986			37,512			116,573			110,117
Depreciation and amortization expenses		6,132			5,256			18,069			16,243
		808,885			779,736			2,475,209			2,084,006
Operating income		126,913			28,379			253,464			35,535
Other income (expense):
Interest expense, net		(10,275	)		(11,761	)		(30,788	)		(29,570	)
Other, net		(1,053	)		(805	)		(2,333	)		(2,196	)
Loss on early extinguishment of debt		—			(1,245	)		—			(1,245	)
		(11,328	)		(13,811	)		(33,121	)		(33,011	)
Income before income tax expense		115,585			14,568			220,343			2,524
Income tax expense		47,484			5,259			90,433			950
Net income		68,101			9,309			129,910			1,574
Less net income attributable to non-controlling interest		—			218			—			311
Net income attributable to United Refining Company’s Stockholder	$	68,101		$	9,091		$	129,910		$	1,263

See accompanying notes to consolidated financial statements.

5

UNITED REFINING COMPANY AND SUBSIDIARIES

Consolidated Statements of Cash Flows – (Unaudited)

(in thousands)

	Nine Months Ended May 31,
	2012			2011
Cash flows from operating activities:
Net income	$	129,910		$	1,263
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		20,720			17,410
Unrealized gain on derivative contracts		(49,941	)		—
Deferred income taxes		29,108			(100	)
Non-cash portion of loss on early extinguishment of debt		—			330
(Gain) loss on asset dispositions		(1,517	)		239
Cash used in working capital items		(15,454	)		(29,995	)
Net income attributable to non-controlling interest		—			311
Change in operating assets and liabilities:
Additions to other assets, net		(3,257	)		(2	)
Deferred retirement benefits		(2,920	)		(2,649	)
Total adjustments		(23,261	)		(14,456	)
Net cash provided by (used in) operating activities		106,649			(13,193	)
Cash flows from investing activities:
Additions to property, plant and equipment		(15,653	)		(23,178	)
Additions to amortizable intangible assets		(240	)		—
Additions to deferred turnaround costs		(2,810	)		(14,702	)
Proceeds from asset dispositions		2,484			57
Net cash used in investing activities		(16,219	)		(37,823	)
Cash flows from financing activities:
Net (reductions) borrowings on revolving credit facilities		(24,000	)		29,900
Proceeds from issuance of common stock of non-controlling interest		—			15,000
Dividend to stockholder		(31,008	)		—
Proceeds from issuance of long term debt		—			352,021
Principal reductions of long term debt		(854	)		(324,809	)
Deferred financing costs		—			(10,556	)
Net cash (used in) provided by financing activities		(55,862	)		61,556
Net increase in cash and cash equivalents		34,568			10,540
Cash and cash equivalents, beginning of year		16,660			17,170
Cash and cash equivalents, end of period	$	51,228		$	27,710
Cash provided by (used in) working capital items:
Accounts receivable, net	$	(10,897	)	$	(58,992	)
Derivative asset / liability		(3,962	)		—
Refundable income taxes		—			36,390
Inventories		1,799			6,675
Prepaid expenses and other assets		(4,497	)		(14,772	)
Amounts due from affiliated companies, net		4,577			1,006
Accounts payable		(38,258	)		(10,605	)
Accrued liabilities		6,899			7,224
Income taxes payable		23,663			2,545
Sales, use and fuel taxes payable		5,222			534
Total change	$	(15,454	)	$	(29,995	)
Cash paid during the period for:
Interest	$	20,088		$	22,068
Income taxes	$	38,034		$	1,351
Non-cash investing activities:
Property additions & capital leases	$	1,375		$	212

See accompanying notes to consolidated financial statements.

6

UNITED REFINING COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

1. Description of Business and Basis of Presentation

The consolidated financial statements include the accounts of United Refining Company and its subsidiaries, United Refining Company of Pennsylvania and its subsidiaries, and Kiantone Pipeline Corporation (collectively, the “Company”). All significant intercompany balances and transactions have been eliminated in consolidation.

The Company is a petroleum refiner and marketer in its primary market area of Western New York and Northwestern Pennsylvania. Operations are organized into two business segments: wholesale and retail.

The wholesale segment is responsible for the acquisition of crude oil, petroleum refining, supplying petroleum products to the retail segment and the marketing of petroleum products to wholesale and industrial customers. The retail segment operates a network of Company operated retail units under the Red Apple Food Mart^® and Country Fair^® brand names selling petroleum products under the Kwik Fill^®, Citgo^® and Keystone^® brand names, as well as convenience and grocery items.

The Company is a wholly-owned subsidiary of United Refining, Inc., a wholly-owned subsidiary of United Acquisition Corp., which in turn is a wholly-owned subsidiary of Red Apple Group, Inc. (the “Parent”).

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended May 31, 2012 are not necessarily indicative of the results that may be expected for the year ending August 31, 2012. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Form 10-K for the fiscal year ended August 31, 2011.

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

2. Recent Accounting Pronouncements

In May 2011, the FASB issued amended guidance on fair value measurement and related disclosures. The new guidance clarifies the concepts applicable for fair value measurement of non-financial assets and requires the disclosure of quantitative information about the unobservable inputs used in a fair value measurement. This guidance was effective for interim and annual periods beginning after December 15, 2011, and was applied prospectively. The adoption of this amended guidance did not have a material impact on our consolidated financial statements.

In June 2011, the FASB issued amended guidance on the presentation of comprehensive income. The amended guidance eliminates one of the presentation options provided by current U.S. GAAP, that is, to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. In addition, it gives an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. This guidance was effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2011 and will be applied retrospectively. The adoption of this guidance will not have a material impact on our consolidated financial statements.

7

UNITED REFINING COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

In September 2011, the FASB issued an accounting standard update that amends the accounting guidance on goodwill impairment testing. The amendments are intended to reduce complexity and costs by allowing an entity the option to make a qualitative evaluation about the likelihood of goodwill impairment to determine whether it should calculate the fair value of a reporting unit. The amendments also improve previous guidance by expanding upon the examples of events and circumstances that an entity should consider between annual impairment tests in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The amendments in this accounting standard update are effective for interim and annual goodwill impairment tests performed for fiscal years beginning after December 15, 2011. We do not anticipate that the adoption of this accounting standard update will have a material impact on our consolidated financial statements.

3. Derivative Financial Instruments

From time to time, the Company uses derivatives to reduce its exposure to fluctuations in crude oil purchase costs and refining margins. Derivative products, historically crude oil option contracts (puts) and crackspread option contracts have been used to hedge the volatility of these items. The Company does not enter such contracts for speculative purposes. The Company accounts for changes in the fair value of its contracts by marking them to market and recognizing any resulting gains or losses in its Statement of Operations. The Company includes the carrying amounts of the contracts in derivative asset or derivative liability in its Consolidated Balance Sheet.

At May 31, 2012, the Company had 1,365,000 barrels of heating oil crackspread swaps outstanding as part of its risk management strategy. This represents approximately 43.0% of the Company’s scheduled distillate production through December 2012. These crackspread swap contracts expire sequentially beginning June 2012 through December 2012. These derivative instruments are being used by the Company to lock in margins on future sales by the Company of heating oil.

The fair value and balance sheet classification of our derivative instruments at May 31, 2012 and August 31, 2011 are as follows:

	May 31, 2012
	Notional Balance		Maturity Date		Derivative Liability
	(in thousands)
Not designated as hedges under ASC 815
Heating oil crackspread swaps		1,365 barrels		Monthly June 2012 through December 2012	$	1,817
Total derivative instruments		1,365 barrels			$	1,817
	August 31, 2011
	Notional Balance		Maturity Date		Derivative Liability
	(in thousands)
Not designated as hedges under ASC 815
Heating oil and gasoline crackspread swaps		4,575 barrels		Monthly September 2011 through December 2012	$	55,720
Total derivative instruments		4,575 barrels			$	55,720

8

UNITED REFINING COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

For the three months ended May 31, 2012, the Company recognized $(3,285,000) of realized losses and $1,328,000 unrealized gains in its Consolidated Statement of Operations, respectively. For the nine months ended May 31, 2012, the Company recognized $(12,445,000) of realized losses and $49,940,000 of unrealized gains in its Consolidated Statement of Operations, respectively.

For the three and nine month periods ended May 31, 2011, the Company recognized $440,000 and $897,000 of realized and unrealized gains in its Consolidated Statement of Operations, respectively.

4. Inventories

Inventories are stated at the lower of cost or market, with cost being determined under the Last-in, First-out (LIFO) method for crude oil and petroleum product inventories and the First-in, First-out (FIFO) method for merchandise. Supply inventories are stated at either lower of cost or market or replacement cost and include various parts for the refinery operations.

Inventories consist of the following:

	May 31, 2012		August 31, 2011
	(in thousands)
Crude Oil	$	19,769	$	32,829
Petroleum Products		103,435		95,370
Total @ LIFO		123,204		128,199
Merchandise		21,581		21,408
Supplies		25,296		22,273
Total @ FIFO		46,877		43,681
Total Inventory	$	170,081	$	171,880

As of May 31, 2012 and August 31, 2011, the replacement cost of LIFO inventories exceeded their LIFO carrying values by approximately $81,504,000 and $92,059,000, respectively.

5. Subsidiary Guarantors

All the Company’s wholly-owned subsidiaries fully and unconditionally guarantee on an unsecured basis, on a joint and several basis, the Company’s Senior Secured Notes. There are no restrictions within the

9

UNITED REFINING COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

consolidated group on the ability of the Company or any of its subsidiaries to obtain loans from or pay dividends to other members of the consolidated group. Financial information of the Company’s wholly-owned subsidiary guarantors is as follows:

Condensed Consolidating Balance Sheets

(in thousands)

	May 31, 2012												August 31, 2011
	United Refining Company			Guarantors			Eliminations			United Refining Company  & Subsidiaries			United Refining Company			Guarantors			Eliminations			United Refining Company  & Subsidiaries
Assets
Current:
Cash and cash equivalents	$	41,114		$	10,114		$	—		$	51,228		$	5,927		$	10,733		$	—		$	16,660
Accounts receivable, net		79,921			42,402			—			122,323			66,758			44,668			—			111,426
Inventories		145,375			24,706			—			170,081			145,713			26,167			—			171,880
Prepaid expenses and other assets		40,159			4,725			—			44,884			36,731			3,656			—			40,387
Deferred income taxes		—			—			—			—			13,120			1,338			—			14,458
Amounts due from affiliated companies		—			—			—			—			2,586			518			—			3,104
Intercompany		117,026			18,994			(136,020	)		—			121,933			20,882			(142,815	)		—
Total current assets		423,595			100,941			(136,020	)		388,516			392,768			107,962			(142,815	)		357,915
Property, plant and equipment, net		196,206			77,024			—			273,230			196,521			74,453			—			270,974
Deferred financing costs, net		8,888			—			—			8,888			10,148			—			—			10,148
Goodwill and other non-amortizable assets		—			11,849			—			11,849			—			11,849			—			11,849
Amortizable intangible assets, net		—			1,427			—			1,427			—			1,270			—			1,270
Deferred turnaround costs & other assets		18,346			1,995			—			20,341			17,803			652			—			18,455
Investment in subsidiaries		12,235			—			(12,235	)		—			9,267			—			(9,267	)		—
	$	659,270		$	193,236		$	(148,255	)	$	704,251		$	626,507		$	196,186		$	(152,082	)	$	670,611
Liabilities and Stockholder’s Equity
Current:
Current installments of long-term debt	$	945		$	254		$	—		$	1,199		$	654		$	324		$	—		$	978
Accounts payable		22,064			19,624			—			41,688			58,246			21,700			—			79,946
Derivative liability		1,817			—			—			1,817			55,720			—			—			55,720
Accrued liabilities		16,727			5,530			—			22,257			8,726			6,632			—			15,358
Income taxes payable		25,145			1,145			—			26,290			3,181			(554	)		—			2,627
Sales, use and fuel taxes payable		17,597			4,262			—			21,859			12,322			4,315			—			16,637
Deferred income taxes		6,970			(1,338	)		—			5,632			—			—			—			—
Amounts due to affiliated companies, net		(1,851	)		3,324			—			1,473			—			—			—			—
Intercompany		—			136,020			(136,020	)		—			—			142,815			(142,815	)		—
Total current liabilities		89,414			168,821			(136,020	)		122,215			138,849			175,232			(142,815	)		171,266
Revolving credit facility		—			—			—			—			24,000			—			—			24,000
Long term debt: less current installments		356,082			1,718			—			357,800			354,264			1,845			—			356,109
Deferred income taxes		18,122			9,187			—			27,309			3,245			8,108			—			11,353
Deferred retirement benefits		66,015			1,275			—			67,290			85,396			1,734			—			87,130
Total liabilities		529,633			181,001			(136,020	)		574,614			605,754			186,919			(142,815	)		649,858
Commitment and contingencies
Stockholder’s equity
Common stock, $.10 par value per share – shares authorized 100; issued and outstanding 100		—			18			(18	)		—			—			18			(18	)		—
Additional paid-in capital		24,789			10,651			(10,651	)		24,789			24,789			10,651			(10,651	)		24,789
Retained earnings		109,014			2,539			(2,539	)		109,014			10,112			(354	)		354			10,112
Accumulated other comprehensive loss		(4,166	)		(973	)		973			(4,166	)		(14,148	)		(1,048	)		1,048			(14,148	)
Total stockholder’s equity		129,637			12,235			(12,235	)		129,637			20,753			9,267			(9,267	)		20,753
	$	659,270		$	193,236		$	(148,255	)	$	704,251		$	626,507		$	196,186		$	(152,082	)	$	670,611

10

UNITED REFINING COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

Condensed Consolidating Statements of Operations

(in thousands)

	Three Months Ended May 31, 2012
	United Refining Company			Guarantors			Eliminations			United Refining Company & Subsidiaries
Net sales	$	722,897		$	458,135		$	(245,234	)	$	935,798
Costs and expenses:
Costs of goods sold (exclusive of depreciation, amortization and losses on derivative contracts)		590,847			417,197			(245,234	)		762,810
Losses on derivative contracts		1,957			—			—			1,957
Selling, general and administrative expenses		5,203			32,783			—			37,986
Depreciation and amortization expenses		4,590			1,542			—			6,132
		602,597			451,522			(245,234	)		808,885
Operating income		120,300			6,613			—			126,913
Other income (expense):
Interest expense, net		(10,145	)		(130	)		—			(10,275	)
Other, net		(1,234	)		181			—			(1,053	)
Equity in net income of subsidiaries		3,985			—			(3,985	)		—
		(7,394	)		51			(3,985	)		(11,328	)
Income before income tax expense		112,906			6,664			(3,985	)		115,585
Income tax expense		44,805			2,679			—			47,484
Net income	$	68,101		$	3,985		$	(3,985	)	$	68,101

	Three Months Ended May 31, 2011
	United Refining Company			Guarantors			Eliminations			United Refining Company & Subsidiaries			United Refining Asphalt, Inc			Eliminations			United Refining Company Consolidated
Net sales	$	605,334		$	445,692		$	(240,683	)	$	810,343		$	23,620		$	(25,848	)	$	808,115
Costs and expenses:
Costs of goods sold (exclusive of depreciation, amortization and gains on derivative contracts)		576,603			405,284			(240,683	)		741,204			22,949			(25,848	)		738,305
Gains on derivative contracts		(1,337	)		—			—			(1,337	)		—			—			(1,337	)
Selling, general and administrative expenses		4,129			33,380			—			37,509			3			—			37,512
Depreciation and amortization expenses		3,704			1,552			—			5,256			—			—			5,256
		583,099			440,216			(240,683	)		782,632			22,952			(25,848	)		779,736
Operating income		22,235			5,476			—			27,711			668			—			28,379
Other income (expense):
Interest expense, net		(11,333	)		(277	)		—			(11,610	)		(151	)		—			(11,761	)
Other, net		(936	)		278			—			(658	)		(147	)		—			(805	)
Loss on early extinguishment of debt		(1,245	)		—			—			(1,245	)		—			—			(1,245	)
Equity in net income of subsidiaries		2,978			—			(2,978	)		—			—			—			—
		(10,536	)		1			(2,978	)		(13,513	)		(298	)		—			(13,811	)
Income before income tax expense		11,699			5,477			(2,978	)		14,198			370			—			14,568
Income tax expense		2,608			2,499			—			5,107			152			—			5,259
Net income		9,091			2,978			(2,978	)		9,091			218			—			9,309
Less net income attributable to non-controlling interest		—			—			—			—			—			218			218
Net income attributable to United Refining Company’s Stockholder	$	9,091		$	2,978		$	(2,978	)	$	9,091		$	218		$	(218	)	$	9,091

11

UNITED REFINING COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

Condensed Consolidating Statements of Operations

(in thousands)

	Nine Months Ended May 31, 2012
	United Refining Company			Guarantors			Eliminations			United Refining Company & Subsidiaries
Net sales	$	2,122,791		$	1,280,800		$	(674,918	)	$	2,728,673
Costs and expenses:
Costs of goods sold (exclusive of depreciation, amortization and gains on derivative contracts)		1,880,948			1,172,032			(674,918	)		2,378,062
Gains on derivative contracts		(37,495	)		—			—			(37,495	)
Selling, general and administrative expenses		17,294			99,279			—			116,573
Depreciation and amortization expenses		13,411			4,658			—			18,069
		1,874,158			1,275,969			(674,918	)		2,475,209
Operating income		248,633			4,831			—			253,464
Other income (expense):
Interest expense, net		(30,427	)		(361	)		—			(30,788	)
Other, net		(2,963	)		630			—			(2,333	)
Equity in net income of subsidiaries		2,893			—			(2,893	)		—
		(30,497	)		269			(2,893	)		(33,121	)
Income before income tax expense		218,136			5,100			(2,893	)		220,343
Income tax expense		88,226			2,207			—			90,433
Net income	$	129,910		$	2,893		$	(2,893	)	$	129,910

	Nine Months Ended May 31, 2011
	United Refining Company			Guarantors			Eliminations			United Refining Company & Subsidiaries			United Refining Asphalt, Inc			Eliminations			United Refining Company Consolidated
Net sales	$	1,569,734		$	1,163,498		$	(611,718	)	$	2,121,514		$	23,875		$	(25,848	)	$	2,119,541
Costs and expenses:
Costs of goods sold (exclusive of depreciation, amortization and gains on derivative contracts)		1,507,485			1,066,115			(611,718	)		1,961,882			22,949			(25,848	)		1,958,983
Gains on derivative contracts		(1,337	)		—			—			(1,337	)		—			—			(1,337	)
Selling, general and administrative expenses		12,701			97,411			—			110,112			5			—			110,117
Depreciation and amortization expenses		11,519			4,724			—			16,243			—			—			16,243
		1,530,368			1,168,250			(611,718	)		2,086,900			22,954			(25,848	)		2,084,006
Operating income (loss)		39,366			(4,752	)		—			34,614			921			—			35,535
Other income (expense):
Interest expense, net		(28,707	)		(690	)		—			(29,397	)		(173	)		—			(29,570	)
Other, net		(2,656	)		681			—			(1,975	)		(221	)		—			(2,196	)
Loss on early extinguishment of debt		(1,245	)		—			—			(1,245	)		—			—			(1,245	)
Equity in net loss of subsidiaries		(3,546	)		—			3,546			—			—			—			—
		(36,154	)		(9	)		3,546			(32,617	)		(394	)		—			(33,011	)
Income (loss) before income tax expense (benefit)		3,212			(4,761	)		3,546			1,997			527			—			2,524
Income tax expense (benefit)		1,949			(1,215	)		—			734			216			—			950
Net income (loss)		1,263			(3,546	)		3,546			1,263			311			—			1,574
Less net income attributable to non-controlling interest		—			—			—			—			—			311			311
Net income (loss) attributable to United Refining Company’s Stockholder	$	1,263		$	(3,546	)	$	3,546		$	1,263		$	311		$	(311	)	$	1,263

12

UNITED REFINING COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

Condensed Consolidating Statements of Cash Flows

(in thousands)

	Nine Months Ended May 31, 2012
	United Refining Company			Guarantors			Eliminations		United Refining Company & Subsidiaries
Net cash provided by operating activities	$	100,173		$	6,476		$	—	$	106,649
Cash flows from investing activities:
Additions to property, plant and equipment		(8,106	)		(7,547	)		—		(15,653	)
Additions to amortizable intangible assets		—			(240	)		—		(240	)
Additions to deferred turnaround costs		(1,325	)		(1,485	)		—		(2,810	)
Proceeds from asset dispositions		40			2,444			—		2,484
Net cash used in investing activities		(9,391	)		(6,828	)		—		(16,219	)
Cash flows from financing activities:
Net reductions on revolving credit facility		(24,000	)		—			—		(24,000	)
Dividend to stockholder		(31,008	)		—			—		(31,008	)
Principal reductions of long-term debt		(587	)		(267	)		—		(854	)
Net cash used in financing activities		(55,595	)		(267	)		—		(55,862	)
Net increase (decrease) in cash and cash equivalents		35,187			(619	)		—		34,568
Cash and cash equivalents, beginning of year		5,927			10,733			—		16,660
Cash and cash equivalents, end of period	$	41,114		$	10,114		$	—	$	51,228

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

13

UNITED REFINING COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

6. Segments of Business

Intersegment revenues are calculated using market prices and are eliminated upon consolidation. Summarized financial information regarding the Company’s reportable segments is presented in the following tables (in thousands):

	Three Months Ended May 31,				Nine Months Ended May 31,
	2012		2011		2012		2011
Net Sales
Retail	$	457,005	$	444,800	$	1,277,162	$	1,160,800
Wholesale		478,793		363,315		1,451,511		958,741
	$	935,798	$	808,115	$	2,728,673	$	2,119,541
Intersegment Sales
Wholesale	$	244,104	$	239,791	$	671,280	$	609,020
Operating Income (Loss)
Retail	$	6,514	$	4,078	$	4,698	$	(6,274	)
Wholesale		120,399		24,301		248,766		41,809
	$	126,913	$	28,379	$	253,464	$	35,535
Depreciation and Amortization
Retail	$	1,385	$	1,380	$	4,183	$	4,207
Wholesale		4,747		3,876		13,886		12,036
	$	6,132	$	5,256	$	18,069	$	16,243
Capital Expenditures (including non-cash)
Retail	$	3,273	$	1,264	$	6,773	$	3,197
Wholesale		3,050		3,906		10,255		20,193
	$	6,323	$	5,170	$	17,028	$	23,390

	May 31, 2012		August 31, 2011
Total Assets
Retail	$	164,228	$	167,359
Wholesale		540,023		503,252
	$	704,251	$	670,611

14

UNITED REFINING COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

7. Employee Benefit Plans

For the periods ended May 31, 2012 and 2011, net pension and other postretirement benefit costs were comprised of the following:

	Pension Benefits
	Three Months Ended May  31,						Nine Months Ended May 31,
	2012			2011			2012			2011
	(in thousands)
Service cost	$	215		$	447		$	978		$	1,342
Interest cost on benefit obligation		914			1,245			4,904			3,734
Expected return on plan assets		(860	)		(1,135	)		(4,582	)		(3,405	)
Amortization and deferral of net loss		124			508			549			1,523
Net periodic benefit cost	$	393		$	1,065		$	1,849		$	3,194
	Other Post-Retirement Benefits
	Three Months Ended May  31,						Nine Months Ended May  31,
	2012			2011			2012			2011
	(in thousands)
Service cost	$	249		$	377		$	866		$	1,131
Interest cost on benefit obligation		543			630			1,886			1,889
Amortization and deferral of net loss		(149	)		(282	)		(515	)		(846	)
Net periodic benefit cost	$	643		$	725		$	2,237		$	2,174

As of May 31, 2012, $4,534,000 of contributions have been made to the Company pension plans for the fiscal year ending August 31, 2012.

In November 2011, the Company reached an agreement with the International Union of Operating Engineers Local 95, which represents the employees operating the refinery. The new agreement was effective February 1, 2012 and expires on February 1, 2017. Under the new collective bargaining agreement (Agreement), changes were made to healthcare and pension benefits provided by the Company. Effective February 1, 2012, medical benefits in retirement for new hires and active employees covered under the Agreement were eliminated. For employees covered under the Agreement meeting certain age and service requirements, the Company will contribute a defined dollar amount towards the cost of retiree healthcare based upon the employee’s length of service. Similarly, effective February 1, 2012, benefits under the Company’s defined benefit pension plan sponsored for employees covered under the agreement were frozen. The Company will provide an enhanced contribution under its defined contribution 401 (k) plan as well as a transition contribution for older employees. Additionally, deductibles and co-payments will be added to the medical benefits for employees covered under the Agreement.

As a result of the November 2011 agreement and related plan design changes, a remeasurement of fiscal year 2012 expense pursuant to ASC 715-30 and ASC 715-60 was required, resulting in plan curtailments. As a result of such curtailments during the quarter ended November 30, 2011, the pension liability was reduced by $4,743,000 with a credit to accumulated other comprehensive loss (AOCL) of $4,552,000 and a credit to income of $191,000. Further, the postretirement welfare plan liability was reduced by $12,161,000 and AOCL credited for $12,298,000, with a charge to income of $137,000. The activity in AOCL was recorded net of related income tax effects.

15

UNITED REFINING COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

The Company accrues post-retirement benefits other than pensions, during the years that the employees render the necessary service, of the expected cost of providing those benefits to an employee and the employee’s beneficiaries and covered dependents.

8. Fair Value Measurements

The carrying values of all financial instruments classified as a current asset or current liability approximate fair value because of the short maturity of these instruments. The fair value of marketable securities is determined by available market prices. The fair value exceeded the carrying value of the 10.50% Senior Secured Notes at May 31, 2012 and August 31, 2011 by $7,566,000 and $6,684,000, respectively.

16

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward Looking Statements

This Quarterly Report on Form 10-Q contains certain statements that constitute “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements may include, among other things, United Refining Company and its subsidiaries current expectations with respect to future operating results, future performance of its refinery and retail operations, capital expenditures and other financial items. Words such as “expects”, “intends”, “plans”, “projects”, “believes”, “estimates”, “may”, “will”, “should”, “shall”, “anticipates”, “predicts”, and similar expressions typically identify such forward looking statements in this Quarterly Report on Form 10-Q.

By their nature, all forward looking statements involve risk and uncertainties. All phases of the Company’s operations involve risks and uncertainties, many of which are outside of the Company’s control, and any one of which, or a combination of which, could materially affect the Company’s results of operations and whether the forward looking statements ultimately prove to be correct. Actual results may differ materially from those contemplated by the forward looking statements for a number of reasons.

Although we believe our expectations are based on reasonable assumptions within the bounds of its knowledge, investors and prospective investors are cautioned that such statements are only projections and that actual events or results may differ materially depending on a variety of factors described in greater detail in the Company’s filings with the SEC, including quarterly reports on Form 10-Q, annual reports on Form 10-K, reports on Form 8-K, etc. In addition to the factors discussed elsewhere in this Quarterly Report on Form 10-Q, the Company’s actual consolidated quarterly or annual operating results have been affected in the past, or could be affected in the future, by additional factors, including, without limitation:

• the demand for and supply of crude oil and refined products;

• the spread between market prices for refined products and market prices for crude oil;

• repayment of debt;

• general economic, business and market conditions;

• risks and uncertainties with respect to the actions of actual or potential competitive suppliers of refined petroleum products in our markets;

• the possibility of inefficiencies or shutdowns in refinery operations or pipelines;

• the availability and cost of financing to us;

• environmental, tax and tobacco legislation or regulation;

• volatility of gasoline prices, margins and supplies;

• merchandising margins;

• labor costs;

• level of capital expenditures;

• customer traffic;

• weather conditions;

• acts of terrorism and war;

• business strategies;

• expansion and growth of operations;

• future projects and investments;

17

• future exposure to currency devaluations or exchange rate fluctuations;

• expected outcomes of legal and administrative proceedings and their expected effects on our financial position, results of operations and cash flows; and

• future operating results and financial condition.

All subsequent written and oral forward looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the foregoing. We undertake no obligation to update any information contained herein or to publicly release the results of any revisions to any such forward looking statements that may be made to reflect events or circumstances that occur, or which we become aware of, after the date of this Quarterly Report on Form 10-Q.

Recent Developments

The Company continues to be impacted by the extreme volatility of daily pricing changes in the petroleum market in fiscal year 2012. Average crude prices for the fourth quarter of fiscal year 2012 have fallen as compared to the third quarter of fiscal year 2012. The average NYMEX price for crude oil in the fourth quarter of fiscal year 2012 was $87.19 per barrel as measured on July 6, 2012, a $16.75 decrease from the third quarter average of $103.94 per barrel.

The lagged 3-2-1 crackspread in the fourth fiscal quarter of 2012, as measured by the difference between the price of crude oil contracts traded on the NYMEX for the proceeding month to the prices for NYMEX gasoline and heating oil contracts in the current trading month, has decreased as compared to the third quarter of fiscal year 2012. The lagged 3-2-1 crackspread in the fourth quarter of fiscal 2012 as measured on July 6, 2012, was $24.69 as compared to $28.57 for the third fiscal quarter of 2012, a $3.88 or 13.6% reduction.

The average light/heavy differential for the third quarter was $27.79 per barrel while the fourth quarter average has declined to an expected $19.76 per barrel.

Results of Operations

The Company is a petroleum refiner and marketer in its primary market area of Western New York and Northwestern Pennsylvania. Operations are organized into two business segments: wholesale and retail.

The wholesale segment is responsible for the acquisition of crude oil, petroleum refining, supplying petroleum products to the retail segment and the marketing of petroleum products to wholesale and industrial customers. The retail segment sells petroleum products under the Kwik Fill^®, Citgo^® and Keystone^® brand names through a network of Company-operated retail units and convenience and grocery items through gasoline stations and convenience stores under the Red Apple Food Mart^® and Country Fair^® brand names.

A discussion and analysis of the factors contributing to the Company’s results of operations are presented below. The accompanying Consolidated Financial Statements and related Notes, together with the following information, are intended to supply investors with a reasonable basis for evaluating the Company’s operations, but should not serve as the only criteria for predicting the Company’s future performance.

18

Retail Operations:

	Three Months Ended May 31,						Nine Months Ended May 31,
	2012			2011			2012			2011
	(dollars in thousands)
Net Sales
Petroleum	$	386,768		$	380,032		$	1,075,015		$	971,733
Merchandise and other		70,237			64,768			202,147			189,067
Total Net Sales		457,005			444,800			1,277,162			1,160,800
Costs of goods sold		416,432			406,067			1,169,340			1,065,794
Selling, general and administrative expenses		32,674			33,275			98,941			97,073
Depreciation and amortization expenses		1,385			1,380			4,183			4,207
Segment Operating (Loss) Income	$	6,514		$	4,078		$	4,698		$	(6,274	)
Retail Operating Data:
Petroleum sales (thousands of gallons)		98,765			99,042			290,635			292,543
Petroleum margin (a)	$	22,946		$	22,257		$	56,964		$	47,032
Petroleum margin ($/gallon) (b)		.2323			.2247			.1960			.1608
Merchandise and other margins	$	17,625		$	16,476		$	50,858		$	47,974
Merchandise margin (percent of sales)		25.1	%		25.4	%		25.2	%		25.4	%

(a) Includes the effect of intersegment purchases from the Company’s wholesale segment at prices which approximate market.

(b) Company management calculates petroleum margin per gallon by dividing petroleum gross margin by petroleum sales volumes. Management uses fuel margin per gallon calculations to compare profitability to other companies in the industry. Petroleum margin per gallon may not be comparable to similarly titled measures used by other companies in the industry.

Comparison of Fiscal Quarters Ended May 31, 2012 and 2011

Net Sales

Retail sales increased during the fiscal quarter ended May 31, 2012 by $12.2 million or 2.7% from the comparable period in fiscal 2011 from $444.8 million to $457.0 million. The increase was primarily due to $6.7 million in petroleum sales and $5.5 million in merchandise sales. The petroleum sales increase resulted from a 2.1% increase in retail selling prices per gallon, offset by a .3 million gallon or .3% decrease in retail petroleum volume. The merchandise sales increase is primarily due to increased sales of prepared food and beverages and increased selling prices.

Costs of Goods Sold

Retail costs of goods sold increased during the fiscal quarter ended May 31, 2012 by $10.3 million or 2.6% from the comparable period in fiscal 2011 from $406.1 million to $416.4 million. The increase was primarily due to $4.5 million in petroleum purchase prices, fuel tax of $.3 million, freight cost of $1.2 million and merchandise cost of $4.3 million.

Selling, General and Administrative Expenses

Retail Selling, General and Administrative (“SG&A”) expenses decreased during the fiscal quarter ended May 31, 2012 by $.6 million or 1.8% from the comparable period in fiscal 2011 from $33.3 million to $32.7 million. This decrease was primarily due to a sale of fixed assets offset by an increase in payroll costs and credit card processing fees due to increased credit card usage

19

Comparison of Nine Months Ended May 31, 2012 and 2011

Net Sales

Retail sales increased during the nine months ended May 31, 2012 by $116.4 million or 10.0% from the comparable period in fiscal 2011 from $1,160.8 million to $1,277.2 million. The increase was primarily due to $103.3 million in petroleum sales, and $13.1 million in merchandise sales. The petroleum sales increase resulted from an 11.4% increase in retail selling prices per gallon offset by a decrease of 1.9 million gallon or .7% decrease in sales volume. The merchandise sales increase is primarily due to increased sales of prepared food and beverages and increased selling prices.

Costs of Goods Sold

Retail costs of goods sold increased during the nine months ended May 31, 2012 by $103.5 million or 9.7% from the comparable period in fiscal 2011 from $1,065.8 million to $1,169.3 million. The increase was primarily due to $88.6 million in petroleum purchase prices, merchandise costs of $10.2 million, fuel taxes of $1.3 million and freight costs of $3.4 million.

Selling, General and Administrative Expenses

Retail SG&A expenses increased during the nine months ended May 31, 2012 by $1.8 million or 1.8% from the comparable period in fiscal 2011 from $97.1 million to $98.9 million. The increase was primarily due to payroll costs and credit card processing fees for increased credit card usage, offset by a sale of fixed assets.

Wholesale Operations:

	Three Months Ended May 31,					Nine Months Ended May 31,
	2012		2011			2012			2011
	(dollars in thousands)
Net Sales (a)	$	478,793	$	363,315		$	1,451,511		$	958,741
Costs of goods sold (exclusive of depreciation and amortization and losses/gains on derivative contracts)		346,378		332,238			1,208,722			893,189
Losses/(Gains) on derivative contracts		1,957		(1,337	)		(37,495	)		(1,337	)
Selling, general and administrative expenses		5,312		4,237			17,632			13,044
Depreciation and amortization expenses		4,747		3,876			13,886			12,036
Segment Operating Income	$	120,399	$	24,301		$	248,766		$	41,809

20

Key Wholesale Operating Statistics:

	Three Months Ended May 31,						Nine Months Ended May 31,
	2012			2011			2012			2011
Refinery Product Yield (thousands of barrels)
Gasoline and gasoline blendstock		2,353			1,774			7,568			5,724
Distillates		1,248			975			4,127			3,322
Asphalt		1,664			1,323			5,372			3,443
Butane, propane, residual products, internally produced fuel and other (“Other”)		570			411			1,727			1,718
Total Product Yield		5,835			4,483			18,794			14,207
% Heavy Crude Oil of Total Refinery Throughput (b)		58	%		60	%		60	%		49	%
Crude throughput (thousand barrels per day)		59.0			46.6			63.8			47.7
Product Sales (thousand of barrels) (a)
Gasoline and gasoline blendstock		1,455			1,277			4,627			3,711
Distillates		1,056			727			3,291			2,619
Asphalt		1,568			1,215			5,190			3,284
Other		188			123			559			441
Total Product Sales Volume		4,267			3,342			13,667			10,055
Product Sales (dollars in thousands) (a)
Gasoline and gasoline blendstock	$	183,785		$	164,048		$	549,574		$	402,431
Distillates		139,001			99,469			428,119			302,020
Asphalt		143,461			91,412			438,572			228,847
Other		12,546			8,386			35,246			25,443
Total Product Sales	$	478,793		$	363,315		$	1,451,511		$	958,741

(a) Sources of total product sales include products manufactured at the refinery located in Warren, Pennsylvania and products purchased from third parties.

(b) The Company defines “heavy” crude oil as crude oil with an American Petroleum Institute specific gravity of 26 or less.

Comparison of Fiscal Quarters Ended May 31, 2012 and 2011

During the three months ended May 31, 2012, we had a 15-day catalyst regeneration and added a second reactor to the DHT2 to expand hydrotreating capacity. This regeneration was different than the 24-day scheduled maintenance turnaround of the crude unit during the comparable period of Fiscal 2011 that required us to shut down the entire refinery. Refinery crude throughput increased 12.4 thousand barrels per day (bpd) or 26.6% over the comparable period in fiscal 2011 from 46.6 bpd to 59.0 bpd. Refinery product yields increased 1.4 thousand barrels or 30.2% over the comparable period in fiscal 2011 from 4,483 to 5,835 thousand barrels.

Net Sales

Wholesale sales increased during the three months ended May 31, 2012 by $115.5 million or 31.8% from the comparable period in fiscal 2011 from $363.3 million to $478.8 million. The increase was due to a 3.2% increase in wholesale prices and a 27.7% increase in wholesale volume.

Costs of Goods Sold (exclusive of depreciation and amortization and losses/gains on derivative contracts)

Wholesale costs of goods sold increased during the three months ended May 31, 2012 by $14.1 million or 4.3% from the comparable period in fiscal 2011 from $332.2 million to $346.3 million. The increase in wholesale costs of goods sold during this period was primarily due to an increase in cost and volume of raw materials.

21

Losses / (Gains) on Derivative Contracts

For the three months ended May 31, 2012 the Company recognized $3.3 million of realized losses and $1.3 million of unrealized gains in its Consolidated Statement of Operations, respectively. See also Footnote 3 to the Company’s Consolidated Financial Statements.

Selling, General and Administrative Expenses

Wholesale SG&A expenses increased during the three months ended May 31, 2012 by $1.1 million or 25.4% from the comparable period in fiscal 2011 from $4.2 million or 1.2% of net wholesale sales to $5.3 million or 1.1% of net wholesale sales. The increase was primarily due to payroll costs and professional services.

Comparison of Nine Months Ended May 31, 2012 and 2011

During the nine months of fiscal 2011, crude runs and wholesale sales were negatively impacted by the Enbridge Pipeline disruption and the 30-day scheduled refinery maintenance turnaround in October 2010 and the 21-day scheduled crude unit turnaround in the spring. These events resulted in the Company running an average crude throughput of 63,800 bpd for the nine months of fiscal 2012, versus 47,700 bpd during the comparable period in fiscal 2011. Refinery crude throughput increased 16.1 thousand bpd or 33.8% over the comparable period in fiscal 2011 from 47.7 bpd to 63.8 bpd. Refinery product yields increased 4.6 thousand barrels or 32.3% over the comparable period in fiscal 2011 from 14,207 to 18,794 thousand barrels.

Net Sales

Wholesale sales increased during the nine months ended May 31, 2012 by $492.8 million or 51.4% from the comparable period in fiscal 2011 from $958.7 million to $1,451.5 million. The increase was due to a 11.4% increase in wholesale prices and a 35.9% increase in wholesale volume.

Costs of Goods Sold (exclusive of depreciation and amortization and losses/gains on derivative contracts)

Wholesale costs of goods sold increased during the nine months ended May 31, 2012 by $315.5 million or 35.3% from the comparable period in fiscal 2011 from $893.2 million to $1,208.7 million. The increase in wholesale costs of goods sold was primarily due to an increase in the costs and volume of product purchased and refinery expenses.

Losses / (Gains) on Derivative Contracts

For the nine months ended May 31, 2012, the Company recognized $12.4 million of realized losses and $49.9 million of unrealized gains in its Consolidated Statement of Operations, respectively. See also Footnote 3 to the Company’s Consolidated Financial Statements.

Selling, General and Administrative Expenses

Wholesale SG&A expenses increased during the nine months ended May 31, 2012 by $4.6 million or 35.2% from the comparable period in fiscal 2011 from $13.0 million or 1.4% of net wholesale sales to $17.6 million or 1.2% of net wholesale sales. The increase was primarily due to additional payroll costs and professional services.

Consolidated Expenses:

Interest Expense, net

Net interest expense (interest expense less interest income) for the three months ended May 31, 2012 decreased $1.5 million or 13.0% from the comparable period in fiscal 2011 from $11.8 million to $10.3 million. This was due to decreased borrowing on our revolving credit facility.

22

Net interest expense (interest expense less interest income) for the nine months ended May 31, 2012 increased $1.2 million or 4.0% from the comparable period in fiscal 2011 from $29.6 million to $30.8 million. In March 2011, the Company refinanced its outstanding Senior Note principal balance of $324.0 million due 2012 with Senior Notes due 2018 with a principal amount of $365.0 million. The increased interest expense incurred between first fiscal quarter 2011 and 2012 is due to the increased principal amount of the senior notes outstanding.

Income Tax Expense / (Benefit)

The Company’s effective tax rate for the three months ended May 31, 2012 and 2011 was approximately 41% and 36% respectively and for the nine month periods was approximately 41% and 38%, respectively. This change is primarily due to recording valuation allowances for state Net Operating Losses recorded in fiscal 2011.

Liquidity and Capital Resources

We operate in an environment where our liquidity and capital resources are impacted by changes in the price of crude oil and refined petroleum products, availability of credit, market uncertainty and a variety of additional factors beyond our control. Included in such factors are, among others, the level of customer product demand, weather conditions, governmental regulations, worldwide political conditions and overall market and economic conditions.

The following table summarizes selected measures of liquidity and capital sources (in thousands):

	May 31, 2012
Cash and cash equivalents	$	51,228
Working capital	$	266,301
Current ratio		3.2
Debt	$	358,999

Primary sources of liquidity have been cash and cash equivalents, and borrowing availability under a revolving line of credit. We believe available capital resources will be adequate to meet our working capital, debt service, and capital expenditure requirements for existing operations.

Our cash and cash equivalents consist of bank balances and investments in money market funds. These investments have staggered maturity dates, none of which exceed three months. They have a high degree of liquidity since the securities are traded in public markets.

23

	Nine Months Ended May 31, 2012
	(in millions)
Significant uses of cash
Investing activities:
Additions to amortizable intangible assets	$	(.2	)
Proceeds from asset dispositions		2.5
Additions to deferred turnaround costs		(2.8	)
Property, plant and equipment
Other general capital items (tank repairs, refinery piping, etc)		(6.2	)
DHT 2 second reactor		(3.0	)
Retail petroleum upgrade		(2.7	)
Retail maintenance (blacktop, roof, HVAC, rehab)		(1.8	)
Non refinery capital equipment		(1.2	)
Environmental		(.4	)
State and federal mandates:
Renewable fuels		(.4	)
Total property, plant and equipment	$	(15.7	)
Net cash used in investing activities	$	(16.2	)
Financing activities:
Dividend to stockholder	$	(31.0	)
Net reductions on revolving credit facility		(24.0	)
Principal reductions of long term debt		(.9	)
Net cash used in financing activities	$	(55.9	)
Working capital items:
Income taxes payable increase	$	23.7
Accrued liabilities increase		6.9
Sales, use and fuel taxes payable increase		5.2
Amounts due from affiliated companies, net		4.6
Decrease in inventory		1.8
Accounts payable decrease		(38.3	)
Accounts receivable increase		(10.9	)
Prepaid expense increase		(4.5	)
Derivative asset/liability		(4.0	)
Cash used in working capital items	$	(15.5	)

We require a substantial investment in working capital which is susceptible to large variations during the year resulting from purchases of inventory and seasonal demands. Inventory purchasing activity is a function of sales activity and turnaround cycles for the different refinery units.

Maintenance and non-discretionary capital expenditures have averaged approximately $6.0 million annually over the last three years for the refining and marketing operations. Management does not foresee any increase in these maintenance and non-discretionary capital expenditures during fiscal year 2011.

Future liquidity, both short and long-term, will continue to be primarily dependent on realizing a refinery margin sufficient to cover fixed and variable expenses, including planned capital expenditures. We expect to be able to meet our working capital, capital expenditure, contractual obligations, letter of credit and debt service requirements out of cash flow from operations, cash on hand and borrowings under our Amended and Restated Revolving Credit Facility of $175,000,000. This provides the Company with flexibility relative to its cash flow requirements in light of market fluctuations, particularly involving crude oil prices and seasonal business cycles

24

and will assist the Company in meeting its working capital, ongoing capital expenditure needs and for general corporate purposes. The agreement expires on May 18, 2016. Under the Amended and Restated Revolving Credit Facility, the applicable margin is calculated on the average unused availability as follows: (a) for base rate borrowing, at the greater of the Agent Bank’s prime rate the Federal Funds Open Rate plus 1.5%; or the Daily LIBOR rate plus 3%; plus an applicable margin of 0% to .5%; (b) for euro-rate based borrowings, at the LIBOR Rate plus an applicable margin of 2.75% to 3.25%. The Agent Bank’s prime rate at May 31, 2012 was 3.25%.

The Amended and Restated Revolving Credit Facility is secured primarily by certain cash accounts, accounts receivable and inventory. Until maturity, we may borrow on a borrowing base formula as set forth in the facility. We had standby letters of credit of $6.5 million as of May 31, 2012 and there were no outstanding borrowings under the Amended and Restated Revolving Credit Facility resulting in net availability of $168.5 million. As of July 16, 2012, there were no outstanding borrowings under the $175 million Amended and Restated Revolving Credit Facility and there were standby letters of credit in the amount of $6.5 million, resulting in a net availability of $168.5 million and the Company had full access to it. The Company’s working capital ratio was 3.2 as of May 31, 2012.

Although we are not aware of any pending circumstances which would change our expectation, changes in the tax laws, the imposition of and changes in federal and state clean air and clean fuel requirements and other changes in environmental laws and regulations may also increase future capital expenditure levels. Future capital expenditures are also subject to business conditions affecting the industry. We continue to investigate strategic acquisitions and capital improvements to our existing facilities.

Federal, state and local laws and regulations relating to the environment affect nearly all of our operations. As is the case with all the companies engaged in similar industries, we face significant exposure from actual or potential claims and lawsuits involving environmental matters. Future expenditures related to environmental matters cannot be reasonably quantified in many circumstances due to the uncertainties as to required remediation methods and related clean-up cost estimates. We cannot predict what additional environmental legislation or regulations will be enacted or become effective in the future or how existing or future laws or regulations will be administered or interpreted with respect to products or activities to which they have not been previously applied.

Seasonal Factors

Seasonal factors affecting the Company’s business may cause variation in the prices and margins of some of the Company’s products. For example, demand for gasoline tends to be highest in spring and summer months, while demand for home heating oil and kerosene tends to be highest in winter months.

As a result, the margin on gasoline prices versus crude oil costs generally tends to increase in the spring and summer, while margins on home heating oil and kerosene tend to increase in winter.

Inflation

The effect of inflation on the Company has not been significant during the last five fiscal years.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

The Company uses its Amended and Restated Revolving Credit Facility to finance a portion of its operations. These on-balance sheet financial instruments, to the extent they provide for variable rates, expose the Company to interest rate risk resulting from changes in the PNC Prime rate, the Federal Funds or LIBOR rate. As of July 16, 2012, there were no outstanding borrowings under the Amended and Restated Revolving Credit Facility.

25

From time to time, the Company uses derivatives to reduce its exposure to fluctuations in crude oil purchase costs and refining margins. Derivative products, specifically crude oil option contracts and crack spread option contracts are used to hedge the volatility of these items. The Company accounts for changes in the fair value of its contracts by marking them to market and recognizing any resulting gains or losses in its Statement of Operations.

At the quarter ended May 31, 2012, the Company had 1,365,000 barrels of heating oil crackspread swaps outstanding as part of its risk management strategy. The crackspread swaps expire sequentially beginning June 2012 through December 2012. These derivative instruments are being used by the Company to lock in margins on future sales by the Company of heating oil. See also Footnote 3 in the Company’s Consolidated Financial Statements.

Item 4. Controls and Procedures.

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of May 31, 2012. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of May 31, 2012, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

There have not been any changes in the Company’s internal controls over financial reporting that occurred during the Company’s fiscal quarter ended May 31, 2012 that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

26

Part II OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

There have been no material changes in our Risk Factors disclosed in the Form 10-K for the year ended August 31, 2011.

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

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibit 31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 101	Interactive XBRL Data

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 16, 2012

UNITED REFINING COMPANY

(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 16, 2012

KIANTONE PIPELINE CORPORATION

(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 16, 2012

UNITED REFINING COMPANY OF PENNSYLVANIA

(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 16, 2012

KIANTONE PIPELINE COMPANY

(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 16, 2012

UNITED JET CENTER, 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 16, 2012

KWIK-FILL 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 16, 2012

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

34

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: July 16, 2012

BELL OIL CORP.

(Registrant)

/s/ Myron L. Turfitt

Myron L. Turfitt

President

/s/ James E. Murphy

James E. Murphy

Chief Financial Officer

35

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: July 16, 2012

PPC, INC.

(Registrant)

/s/ Myron L. Turfitt

Myron L. Turfitt

President

/s/ James E. Murphy

James E. Murphy

Chief Financial Officer

36

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: July 16, 2012

SUPER TEST PETROLEUM, INC.

(Registrant)

/s/ Myron L. Turfitt

Myron L. Turfitt

President

/s/ James E. Murphy

James E. Murphy

Chief Financial Officer

37

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: July 16, 2012

KWIK-FIL, INC.

(Registrant)

/s/ Myron L. Turfitt

Myron L. Turfitt

President

/s/ James E. Murphy

James E. Murphy

Chief Financial Officer

38

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: July 16, 2012

VULCAN ASPHALT REFINING CORPORATION

(Registrant)

/s/ Myron L. Turfitt

Myron L. Turfitt

President

/s/ James E. Murphy

James E. Murphy

Chief Financial Officer

39

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: July 16, 2012

COUNTRY FAIR, INC.

(Registrant)

/s/ Myron L. Turfitt

Myron L. Turfitt

President and Chief Operating Officer

/s/ James E. Murphy

James E. Murphy

Vice President Finance

40

EX-31.1

Exhibit 31.1

CERTIFICATION

Pursuant to 18 U.S.C. Section 1350,

As adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, John A. Catsimatidis, certify that:

1. I have reviewed this quarterly report on Form 10-Q of United Refining Company (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 16, 2012	Signature:	/s/ John A. Catsimatidis
		John A. Catsimatidis
		Principal Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

Pursuant to 18 U.S.C. Section 1350,

As adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, James E. Murphy, certify that:

1. I have reviewed this quarterly report on Form 10-Q of United Refining Company (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 16, 2012	Signature:	/s/ James E. Murphy
		James E. Murphy
		Principal Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of United Refining Company, a Pennsylvania corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:

The Quarterly Report on Form 10-Q for the quarter ended May 31, 2012 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: July 16, 2012	By:	/s/ John A. Catsimatidis
		John A. Catsimatidis
		Principal Executive Officer

Dated: July 16, 2012	By:	/s/ James E. Murphy
		James E. Murphy
		Principal Financial Officer

XML

Inventories

9 Months Ended

May 31, 2012

Inventories [Abstract]

Inventories

4. Inventories

Inventories are stated at the lower of cost or market, with cost being determined under the Last-in, First-out (LIFO) method for crude oil and petroleum product inventories and the First-in, First-out (FIFO) method for merchandise. Supply inventories are stated at either lower of cost or market or replacement cost and include various parts for the refinery operations.

Inventories consist of the following:

	May 31, 2012		August 31, 2011
	(in thousands)
Crude Oil	$	19,769	$	32,829
Petroleum Products		103,435		95,370
Total @ LIFO		123,204		128,199
Merchandise		21,581		21,408
Supplies		25,296		22,273
Total @ FIFO		46,877		43,681
Total Inventory	$	170,081	$	171,880

As of May 31, 2012 and August 31, 2011, the replacement cost of LIFO inventories exceeded their LIFO carrying values by approximately $81,504,000 and $92,059,000, respectively.

XML

Derivative Financial Instruments

9 Months Ended

May 31, 2012

Derivative Financial Instruments [Abstract]

Derivative Financial Instruments

3. Derivative Financial Instruments

From time to time, the Company uses derivatives to reduce its exposure to fluctuations in crude oil purchase costs and refining margins. Derivative products, historically crude oil option contracts (puts) and crackspread option contracts have been used to hedge the volatility of these items. The Company does not enter such contracts for speculative purposes. The Company accounts for changes in the fair value of its contracts by marking them to market and recognizing any resulting gains or losses in its Statement of Operations. The Company includes the carrying amounts of the contracts in derivative asset or derivative liability in its Consolidated Balance Sheet.

At May 31, 2012, the Company had 1,365,000 barrels of heating oil crackspread swaps outstanding as part of its risk management strategy. This represents approximately 43.0% of the Company’s scheduled distillate production through December 2012. These crackspread swap contracts expire sequentially beginning June 2012 through December 2012. These derivative instruments are being used by the Company to lock in margins on future sales by the Company of heating oil.

The fair value and balance sheet classification of our derivative instruments at May 31, 2012 and August 31, 2011 are as follows:

	May 31, 2012
	Notional Balance		Maturity Date		Derivative Liability
	(in thousands)
Not designated as hedges under ASC 815
Heating oil crackspread swaps		1,365 barrels		Monthly June 2012 through December 2012	$	1,817
Total derivative instruments		1,365 barrels			$	1,817
	August 31, 2011
	Notional Balance		Maturity Date		Derivative Liability
	(in thousands)
Not designated as hedges under ASC 815
Heating oil and gasoline crackspread swaps		4,575 barrels		Monthly September 2011 through December 2012	$	55,720
Total derivative instruments		4,575 barrels			$	55,720

For the three months ended May 31, 2012, the Company recognized $(3,285,000) of realized losses and $1,328,000 unrealized gains in its Consolidated Statement of Operations, respectively. For the nine months ended May 31, 2012, the Company recognized $(12,445,000) of realized losses and $49,940,000 of unrealized gains in its Consolidated Statement of Operations, respectively.

For the three and nine month periods ended May 31, 2011, the Company recognized $440,000 and $897,000 of realized and unrealized gains in its Consolidated Statement of Operations, respectively.

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	May 31, 2012	Aug. 31, 2011
Current:
Cash and cash equivalents	$ 51,228	$ 16,660
Accounts receivable, net	122,323	111,426
Inventories	170,081	171,880
Prepaid expenses and other assets	44,884	40,387
Deferred income taxes		14,458
Amounts due from affiliated companies, net		3,104
Total current assets	388,516	357,915
Property, plant and equipment, net	273,230	270,974
Deferred financing costs, net	8,888	10,148
Goodwill	1,349	1,349
Tradename	10,500	10,500
Amortizable intangible assets, net	1,427	1,270
Deferred turnaround costs and other assets, net	20,341	18,455
Total assets	704,251	670,611
Current:
Current installments of long-term debt	1,199	978
Accounts payable	41,688	79,946
Derivative liability	1,817	55,720
Accrued liabilities	22,257	15,358
Income taxes payable	26,290	2,627
Sales, use and fuel taxes payable	21,859	16,637
Deferred income taxes	5,632
Amounts due to affiliated companies, net	1,473
Total current liabilities	122,215	171,266
Revolving credit facility		24,000
Long term debt: less current installments	357,800	356,109
Deferred income taxes	27,309	11,353
Deferred retirement benefits	67,290	87,130
Total liabilities	574,614	649,858
Commitments and contingencies
Stockholder's equity:
Common stock; $.10 par value per share - shares authorized 100; issued and outstanding 100
Additional paid-in capital	24,789	24,789
Retained earnings	109,014	10,112
Accumulated other comprehensive loss	(4,166)	(14,148)
Total stockholder's equity	129,637	20,753
Total liabilities and stockholder's equity	$ 704,251	$ 670,611

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Description of Business and Basis of Presentation

9 Months Ended

May 31, 2012

Description of Business and Basis of Presentation [Abstract]

Description of Business and Basis of Presentation

1. Description of Business and Basis of Presentation

The consolidated financial statements include the accounts of United Refining Company and its subsidiaries, United Refining Company of Pennsylvania and its subsidiaries, and Kiantone Pipeline Corporation (collectively, the “Company”). All significant intercompany balances and transactions have been eliminated in consolidation.

The Company is a petroleum refiner and marketer in its primary market area of Western New York and Northwestern Pennsylvania. Operations are organized into two business segments: wholesale and retail.

The wholesale segment is responsible for the acquisition of crude oil, petroleum refining, supplying petroleum products to the retail segment and the marketing of petroleum products to wholesale and industrial customers. The retail segment operates a network of Company operated retail units under the Red Apple Food Mart^® and Country Fair ^® brand names selling petroleum products under the Kwik Fill ^®, Citgo^® and Keystone ^® brand names, as well as convenience and grocery items.

The Company is a wholly-owned subsidiary of United Refining, Inc., a wholly-owned subsidiary of United Acquisition Corp., which in turn is a wholly-owned subsidiary of Red Apple Group, Inc. (the “Parent”).

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended May 31, 2012 are not necessarily indicative of the results that may be expected for the year ending August 31, 2012. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Form 10-K for the fiscal year ended August 31, 2011.

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

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Recent Accounting Pronouncements

9 Months Ended

May 31, 2012

Recent Accounting Pronouncements [Abstract]

Recent Accounting Pronouncements

2. Recent Accounting Pronouncements

In May 2011, the FASB issued amended guidance on fair value measurement and related disclosures. The new guidance clarifies the concepts applicable for fair value measurement of non-financial assets and requires the disclosure of quantitative information about the unobservable inputs used in a fair value measurement. This guidance was effective for interim and annual periods beginning after December 15, 2011, and was applied prospectively. The adoption of this amended guidance did not have a material impact on our consolidated financial statements.

In June 2011, the FASB issued amended guidance on the presentation of comprehensive income. The amended guidance eliminates one of the presentation options provided by current U.S. GAAP, that is, to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. In addition, it gives an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. This guidance was effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2011 and will be applied retrospectively. The adoption of this guidance will not have a material impact on our consolidated financial statements.

In September 2011, the FASB issued an accounting standard update that amends the accounting guidance on goodwill impairment testing. The amendments are intended to reduce complexity and costs by allowing an entity the option to make a qualitative evaluation about the likelihood of goodwill impairment to determine whether it should calculate the fair value of a reporting unit. The amendments also improve previous guidance by expanding upon the examples of events and circumstances that an entity should consider between annual impairment tests in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The amendments in this accounting standard update are effective for interim and annual goodwill impairment tests performed for fiscal years beginning after December 15, 2011. We do not anticipate that the adoption of this accounting standard update will have a material impact on our consolidated financial statements.

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Consolidated Balance Sheets (Parenthetical) (USD $)	May 31, 2012	Aug. 31, 2011
Consolidated Balance Sheets [Abstract]
Common stock, par value per share	$ 0.10	$ 0.10
Common stock, shares authorized	100	100
Common stock, shares issued	100	100
Common stock, shares outstanding	100	100

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Document And Entity Information	9 Months Ended
	May 31, 2012	Jul. 16, 2012
Document And Entity Information [Abstract]
Entity Registrant Name	UNITED REFINING COMPANY
Entity Central Index Key	0000101462
Document Type	10-Q
Document Period End Date	May 31, 2012
Amendment Flag	false
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--08-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		100

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Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	May 31, 2012	May 31, 2011	May 31, 2012	May 31, 2011
Consolidated Statements of Operations [Abstract]
Net sales	$ 935,798	$ 808,115	$ 2,728,673	$ 2,119,541
Costs and expenses:
Costs of goods sold (exclusive of depreciation, amortization and losses/(gains) on derivative contracts)	762,810	738,305	2,378,062	1,958,983
Losses/(gains) on derivative contracts (See Note 3)	1,957	(1,337)	(37,495)	(1,337)
Selling, general and administrative expenses	37,986	37,512	116,573	110,117
Depreciation and amortization expenses	6,132	5,256	18,069	16,243
Total costs and expenses	808,885	779,736	2,475,209	2,084,006
Operating income	126,913	28,379	253,464	35,535
Other income (expense):
Interest expense, net	(10,275)	(11,761)	(30,788)	(29,570)
Other, net	(1,053)	(805)	(2,333)	(2,196)
Loss on early extinguishment of debt		(1,245)		(1,245)
Total other income (expense)	(11,328)	(13,811)	(33,121)	(33,011)
Income before income tax expense	115,585	14,568	220,343	2,524
Income tax expense	47,484	5,259	90,433	950
Net income	68,101	9,309	129,910	1,574
Less net income attributable to non-controlling interest		218		311
Net income attributable to United Refining Company's Stockholder	$ 68,101	$ 9,091	$ 129,910	$ 1,263

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Employee Benefit Plans

9 Months Ended

May 31, 2012

Employee Benefit Plans [Abstract]

Employee Benefit Plans

7. Employee Benefit Plans

For the periods ended May 31, 2012 and 2011, net pension and other postretirement benefit costs were comprised of the following:

	Pension Benefits
	Three Months Ended May  31,						Nine Months Ended May 31,
	2012			2011			2012			2011
	(in thousands)
Service cost	$	215		$	447		$	978		$	1,342
Interest cost on benefit obligation		914			1,245			4,904			3,734
Expected return on plan assets		(860	)		(1,135	)		(4,582	)		(3,405	)
Amortization and deferral of net loss		124			508			549			1,523
Net periodic benefit cost	$	393		$	1,065		$	1,849		$	3,194
	Other Post-Retirement Benefits
	Three Months Ended May  31,						Nine Months Ended May  31,
	2012			2011			2012			2011
	(in thousands)
Service cost	$	249		$	377		$	866		$	1,131
Interest cost on benefit obligation		543			630			1,886			1,889
Amortization and deferral of net loss		(149	)		(282	)		(515	)		(846	)
Net periodic benefit cost	$	643		$	725		$	2,237		$	2,174

As of May 31, 2012, $4,534,000 of contributions have been made to the Company pension plans for the fiscal year ending August 31, 2012.

In November 2011, the Company reached an agreement with the International Union of Operating Engineers Local 95, which represents the employees operating the refinery. The new agreement was effective February 1, 2012 and expires on February 1, 2017. Under the new collective bargaining agreement (Agreement), changes were made to healthcare and pension benefits provided by the Company. Effective February 1, 2012, medical benefits in retirement for new hires and active employees covered under the Agreement were eliminated. For employees covered under the Agreement meeting certain age and service requirements, the Company will contribute a defined dollar amount towards the cost of retiree healthcare based upon the employee’s length of service. Similarly, effective February 1, 2012, benefits under the Company’s defined benefit pension plan sponsored for employees covered under the agreement were frozen. The Company will provide an enhanced contribution under its defined contribution 401 (k) plan as well as a transition contribution for older employees. Additionally, deductibles and co-payments will be added to the medical benefits for employees covered under the Agreement.

As a result of the November 2011 agreement and related plan design changes, a remeasurement of fiscal year 2012 expense pursuant to ASC 715-30 and ASC 715-60 was required, resulting in plan curtailments. As a result of such curtailments during the quarter ended November 30, 2011, the pension liability was reduced by $4,743,000 with a credit to accumulated other comprehensive loss (AOCL) of $4,552,000 and a credit to income of $191,000. Further, the postretirement welfare plan liability was reduced by $12,161,000 and AOCL credited for $12,298,000, with a charge to income of $137,000. The activity in AOCL was recorded net of related income tax effects.

The Company accrues post-retirement benefits other than pensions, during the years that the employees render the necessary service, of the expected cost of providing those benefits to an employee and the employee’s beneficiaries and covered dependents.

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Segments of Business

9 Months Ended

May 31, 2012

Segments of Business [Abstract]

Segments of Business

6. Segments of Business

Intersegment revenues are calculated using market prices and are eliminated upon consolidation. Summarized financial information regarding the Company’s reportable segments is presented in the following tables (in thousands):

	Three Months Ended May 31,				Nine Months Ended May 31,
	2012		2011		2012		2011
Net Sales
Retail	$	457,005	$	444,800	$	1,277,162	$	1,160,800
Wholesale		478,793		363,315		1,451,511		958,741
	$	935,798	$	808,115	$	2,728,673	$	2,119,541
Intersegment Sales
Wholesale	$	244,104	$	239,791	$	671,280	$	609,020
Operating Income (Loss)
Retail	$	6,514	$	4,078	$	4,698	$	(6,274	)
Wholesale		120,399		24,301		248,766		41,809
	$	126,913	$	28,379	$	253,464	$	35,535
Depreciation and Amortization
Retail	$	1,385	$	1,380	$	4,183	$	4,207
Wholesale		4,747		3,876		13,886		12,036
	$	6,132	$	5,256	$	18,069	$	16,243
Capital Expenditures (including non-cash)
Retail	$	3,273	$	1,264	$	6,773	$	3,197
Wholesale		3,050		3,906		10,255		20,193
	$	6,323	$	5,170	$	17,028	$	23,390

	May 31, 2012		August 31, 2011
Total Assets
Retail	$	164,228	$	167,359
Wholesale		540,023		503,252
	$	704,251	$	670,611

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Fair Value Measurements

9 Months Ended

May 31, 2012

Fair Value Measurements [Abstract]

Fair Value Measurements

8. Fair Value Measurements

The carrying values of all financial instruments classified as a current asset or current liability approximate fair value because of the short maturity of these instruments. The fair value of marketable securities is determined by available market prices. The fair value exceeded the carrying value of the 10.50% Senior Secured Notes at May 31, 2012 and August 31, 2011 by $7,566,000 and $6,684,000, respectively.

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Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	May 31, 2012	May 31, 2011
Cash flows from operating activities:
Net income	$ 129,910	$ 1,263
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	20,720	17,410
Unrealized gain on derivative contracts	(49,941)
Deferred income taxes	29,108	(100)
Non-cash portion of loss on early extinguishment of debt		330
(Gain) loss on asset dispositions	(1,517)	239
Cash used in working capital items	(15,454)	(29,995)
Net income attributable to non-controlling interest		311
Change in operating assets and liabilities:
Additions to other assets, net	(3,257)	(2)
Deferred retirement benefits	(2,920)	(2,649)
Total adjustments	(23,261)	(14,456)
Net cash provided by (used in) operating activities	106,649	(13,193)
Cash flows from investing activities:
Additions to property, plant and equipment	(15,653)	(23,178)
Additions to amortizable intangible assets	(240)
Additions to deferred turnaround costs	(2,810)	(14,702)
Proceeds from asset dispositions	2,484	57
Net cash used in investing activities	(16,219)	(37,823)
Cash flows from financing activities:
Net (reductions) borrowings on revolving credit facilities	(24,000)	29,900
Proceeds from issuance of common stock of non-controlling interest		15,000
Dividend to stockholder	(31,008)
Proceeds from issuance of long term debt		352,021
Principal reductions of long term debt	(854)	(324,809)
Deferred financing costs		(10,556)
Net cash (used in) provided by financing activities	(55,862)	61,556
Net increase in cash and cash equivalents	34,568	10,540
Cash and cash equivalents, beginning of year	16,660	17,170
Cash and cash equivalents, end of period	51,228	27,710
Cash provided by (used in) working capital items:
Accounts receivable, net	(10,897)	(58,992)
Derivative asset / liability	(3,962)
Refundable income taxes		36,390
Inventories	1,799	6,675
Prepaid expenses and other assets	(4,497)	(14,772)
Amounts due from affiliated companies, net	4,577	1,006
Accounts payable	(38,258)	(10,605)
Accrued liabilities	6,899	7,224
Income taxes payable	23,663	2,545
Sales, use and fuel taxes payable	5,222	534
Total change	(15,454)	(29,995)
Cash paid during the period for:
Interest	20,088	22,068
Income taxes	38,034	1,351
Non-cash investing activities:
Property additions & capital leases	$ 1,375	$ 212

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Subsidiary Guarantors

9 Months Ended

May 31, 2012

Subsidiary Guarantors [Abstract]

Subsidiary Guarantors

5. Subsidiary Guarantors

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

Condensed Consolidating Balance Sheets

(in thousands)

	May 31, 2012												August 31, 2011
	United Refining Company			Guarantors			Eliminations			United Refining Company  & Subsidiaries			United Refining Company			Guarantors			Eliminations			United Refining Company  & Subsidiaries
Assets
Current:
Cash and cash equivalents	$	41,114		$	10,114		$	—		$	51,228		$	5,927		$	10,733		$	—		$	16,660
Accounts receivable, net		79,921			42,402			—			122,323			66,758			44,668			—			111,426
Inventories		145,375			24,706			—			170,081			145,713			26,167			—			171,880
Prepaid expenses and other assets		40,159			4,725			—			44,884			36,731			3,656			—			40,387
Deferred income taxes		—			—			—			—			13,120			1,338			—			14,458
Amounts due from affiliated companies		—			—			—			—			2,586			518			—			3,104
Intercompany		117,026			18,994			(136,020	)		—			121,933			20,882			(142,815	)		—
Total current assets		423,595			100,941			(136,020	)		388,516			392,768			107,962			(142,815	)		357,915
Property, plant and equipment, net		196,206			77,024			—			273,230			196,521			74,453			—			270,974
Deferred financing costs, net		8,888			—			—			8,888			10,148			—			—			10,148
Goodwill and other non-amortizable assets		—			11,849			—			11,849			—			11,849			—			11,849
Amortizable intangible assets, net		—			1,427			—			1,427			—			1,270			—			1,270
Deferred turnaround costs & other assets		18,346			1,995			—			20,341			17,803			652			—			18,455
Investment in subsidiaries		12,235			—			(12,235	)		—			9,267			—			(9,267	)		—
	$	659,270		$	193,236		$	(148,255	)	$	704,251		$	626,507		$	196,186		$	(152,082	)	$	670,611
Liabilities and Stockholder’s Equity
Current:
Current installments of long-term debt	$	945		$	254		$	—		$	1,199		$	654		$	324		$	—		$	978
Accounts payable		22,064			19,624			—			41,688			58,246			21,700			—			79,946
Derivative liability		1,817			—			—			1,817			55,720			—			—			55,720
Accrued liabilities		16,727			5,530			—			22,257			8,726			6,632			—			15,358
Income taxes payable		25,145			1,145			—			26,290			3,181			(554	)		—			2,627
Sales, use and fuel taxes payable		17,597			4,262			—			21,859			12,322			4,315			—			16,637
Deferred income taxes		6,970			(1,338	)		—			5,632			—			—			—			—
Amounts due to affiliated companies, net		(1,851	)		3,324			—			1,473			—			—			—			—
Intercompany		—			136,020			(136,020	)		—			—			142,815			(142,815	)		—
Total current liabilities		89,414			168,821			(136,020	)		122,215			138,849			175,232			(142,815	)		171,266
Revolving credit facility		—			—			—			—			24,000			—			—			24,000
Long term debt: less current installments		356,082			1,718			—			357,800			354,264			1,845			—			356,109
Deferred income taxes		18,122			9,187			—			27,309			3,245			8,108			—			11,353
Deferred retirement benefits		66,015			1,275			—			67,290			85,396			1,734			—			87,130
Total liabilities		529,633			181,001			(136,020	)		574,614			605,754			186,919			(142,815	)		649,858
Commitment and contingencies
Stockholder’s equity
Common stock, $.10 par value per share – shares authorized 100; issued and outstanding 100		—			18			(18	)		—			—			18			(18	)		—
Additional paid-in capital		24,789			10,651			(10,651	)		24,789			24,789			10,651			(10,651	)		24,789
Retained earnings		109,014			2,539			(2,539	)		109,014			10,112			(354	)		354			10,112
Accumulated other comprehensive loss		(4,166	)		(973	)		973			(4,166	)		(14,148	)		(1,048	)		1,048			(14,148	)
Total stockholder’s equity		129,637			12,235			(12,235	)		129,637			20,753			9,267			(9,267	)		20,753
	$	659,270		$	193,236		$	(148,255	)	$	704,251		$	626,507		$	196,186		$	(152,082	)	$	670,611

Condensed Consolidating Statements of Operations

(in thousands)

	Three Months Ended May 31, 2012
	United Refining Company			Guarantors			Eliminations			United Refining Company & Subsidiaries
Net sales	$	722,897		$	458,135		$	(245,234	)	$	935,798
Costs and expenses:
Costs of goods sold (exclusive of depreciation, amortization and losses on derivative contracts)		590,847			417,197			(245,234	)		762,810
Losses on derivative contracts		1,957			—			—			1,957
Selling, general and administrative expenses		5,203			32,783			—			37,986
Depreciation and amortization expenses		4,590			1,542			—			6,132
		602,597			451,522			(245,234	)		808,885
Operating income		120,300			6,613			—			126,913
Other income (expense):
Interest expense, net		(10,145	)		(130	)		—			(10,275	)
Other, net		(1,234	)		181			—			(1,053	)
Equity in net income of subsidiaries		3,985			—			(3,985	)		—
		(7,394	)		51			(3,985	)		(11,328	)
Income before income tax expense		112,906			6,664			(3,985	)		115,585
Income tax expense		44,805			2,679			—			47,484
Net income	$	68,101		$	3,985		$	(3,985	)	$	68,101

	Three Months Ended May 31, 2011
	United Refining Company			Guarantors			Eliminations			United Refining Company & Subsidiaries			United Refining Asphalt, Inc			Eliminations			United Refining Company Consolidated
Net sales	$	605,334		$	445,692		$	(240,683	)	$	810,343		$	23,620		$	(25,848	)	$	808,115
Costs and expenses:
Costs of goods sold (exclusive of depreciation, amortization and gains on derivative contracts)		576,603			405,284			(240,683	)		741,204			22,949			(25,848	)		738,305
Gains on derivative contracts		(1,337	)		—			—			(1,337	)		—			—			(1,337	)
Selling, general and administrative expenses		4,129			33,380			—			37,509			3			—			37,512
Depreciation and amortization expenses		3,704			1,552			—			5,256			—			—			5,256
		583,099			440,216			(240,683	)		782,632			22,952			(25,848	)		779,736
Operating income		22,235			5,476			—			27,711			668			—			28,379
Other income (expense):
Interest expense, net		(11,333	)		(277	)		—			(11,610	)		(151	)		—			(11,761	)
Other, net		(936	)		278			—			(658	)		(147	)		—			(805	)
Loss on early extinguishment of debt		(1,245	)		—			—			(1,245	)		—			—			(1,245	)
Equity in net income of subsidiaries		2,978			—			(2,978	)		—			—			—			—
		(10,536	)		1			(2,978	)		(13,513	)		(298	)		—			(13,811	)
Income before income tax expense		11,699			5,477			(2,978	)		14,198			370			—			14,568
Income tax expense		2,608			2,499			—			5,107			152			—			5,259
Net income		9,091			2,978			(2,978	)		9,091			218			—			9,309
Less net income attributable to non-controlling interest		—			—			—			—			—			218			218
Net income attributable to United Refining Company’s Stockholder	$	9,091		$	2,978		$	(2,978	)	$	9,091		$	218		$	(218	)	$	9,091

Condensed Consolidating Statements of Operations

(in thousands)

	Nine Months Ended May 31, 2012
	United Refining Company			Guarantors			Eliminations			United Refining Company & Subsidiaries
Net sales	$	2,122,791		$	1,280,800		$	(674,918	)	$	2,728,673
Costs and expenses:
Costs of goods sold (exclusive of depreciation, amortization and gains on derivative contracts)		1,880,948			1,172,032			(674,918	)		2,378,062
Gains on derivative contracts		(37,495	)		—			—			(37,495	)
Selling, general and administrative expenses		17,294			99,279			—			116,573
Depreciation and amortization expenses		13,411			4,658			—			18,069
		1,874,158			1,275,969			(674,918	)		2,475,209
Operating income		248,633			4,831			—			253,464
Other income (expense):
Interest expense, net		(30,427	)		(361	)		—			(30,788	)
Other, net		(2,963	)		630			—			(2,333	)
Equity in net income of subsidiaries		2,893			—			(2,893	)		—
		(30,497	)		269			(2,893	)		(33,121	)
Income before income tax expense		218,136			5,100			(2,893	)		220,343
Income tax expense		88,226			2,207			—			90,433
Net income	$	129,910		$	2,893		$	(2,893	)	$	129,910

	Nine Months Ended May 31, 2011
	United Refining Company			Guarantors			Eliminations			United Refining Company & Subsidiaries			United Refining Asphalt, Inc			Eliminations			United Refining Company Consolidated
Net sales	$	1,569,734		$	1,163,498		$	(611,718	)	$	2,121,514		$	23,875		$	(25,848	)	$	2,119,541
Costs and expenses:
Costs of goods sold (exclusive of depreciation, amortization and gains on derivative contracts)		1,507,485			1,066,115			(611,718	)		1,961,882			22,949			(25,848	)		1,958,983
Gains on derivative contracts		(1,337	)		—			—			(1,337	)		—			—			(1,337	)
Selling, general and administrative expenses		12,701			97,411			—			110,112			5			—			110,117
Depreciation and amortization expenses		11,519			4,724			—			16,243			—			—			16,243
		1,530,368			1,168,250			(611,718	)		2,086,900			22,954			(25,848	)		2,084,006
Operating income (loss)		39,366			(4,752	)		—			34,614			921			—			35,535
Other income (expense):
Interest expense, net		(28,707	)		(690	)		—			(29,397	)		(173	)		—			(29,570	)
Other, net		(2,656	)		681			—			(1,975	)		(221	)		—			(2,196	)
Loss on early extinguishment of debt		(1,245	)		—			—			(1,245	)		—			—			(1,245	)
Equity in net loss of subsidiaries		(3,546	)		—			3,546			—			—			—			—
		(36,154	)		(9	)		3,546			(32,617	)		(394	)		—			(33,011	)
Income (loss) before income tax expense (benefit)		3,212			(4,761	)		3,546			1,997			527			—			2,524
Income tax expense (benefit)		1,949			(1,215	)		—			734			216			—			950
Net income (loss)		1,263			(3,546	)		3,546			1,263			311			—			1,574
Less net income attributable to non-controlling interest		—			—			—			—			—			311			311
Net income (loss) attributable to United Refining Company’s Stockholder	$	1,263		$	(3,546	)	$	3,546		$	1,263		$	311		$	(311	)	$	1,263

Condensed Consolidating Statements of Cash Flows

(in thousands)

	Nine Months Ended May 31, 2012
	United Refining Company			Guarantors			Eliminations		United Refining Company & Subsidiaries
Net cash provided by operating activities	$	100,173		$	6,476		$	—	$	106,649
Cash flows from investing activities:
Additions to property, plant and equipment		(8,106	)		(7,547	)		—		(15,653	)
Additions to amortizable intangible assets		—			(240	)		—		(240	)
Additions to deferred turnaround costs		(1,325	)		(1,485	)		—		(2,810	)
Proceeds from asset dispositions		40			2,444			—		2,484
Net cash used in investing activities		(9,391	)		(6,828	)		—		(16,219	)
Cash flows from financing activities:
Net reductions on revolving credit facility		(24,000	)		—			—		(24,000	)
Dividend to stockholder		(31,008	)		—			—		(31,008	)
Principal reductions of long-term debt		(587	)		(267	)		—		(854	)
Net cash used in financing activities		(55,595	)		(267	)		—		(55,862	)
Net increase (decrease) in cash and cash equivalents		35,187			(619	)		—		34,568
Cash and cash equivalents, beginning of year		5,927			10,733			—		16,660
Cash and cash equivalents, end of period	$	41,114		$	10,114		$	—	$	51,228

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