INDEPENDENT GASOLINE & OIL CO OF ROCHESTER - 10-Q Quarterly Report

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

FOR THE PERIOD ENDED NOVEMBER 30, 2003

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

For the transition period from to

Commission File No. 333-35083

UNITED REFINING COMPANY

(Exact name of registrant as specified in its charter)

Pennsylvania		25-1411751
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

15 Bradley Street Warren, Pennsylvania		16365
(Address of principal executive office)		(Zip Code)

814-726-4674

Registrant’s telephone number, including area code

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

Number of shares outstanding of Registrant’s Common Stock as of January 14, 2004: 100.

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

TABLE OF ADDITIONAL REGISTRANTS

Name	State of Other Jurisdiction of Incorporation	Primary Standard Industrial Classification Number	IRS Employer Identification Number	Commission File Number
Kiantone Pipeline Corporation	New York	4612	25-1211902	333-35083-01
Kiantone Pipeline Company	Pennsylvania	4600	25-1416278	333-35083-03
United Refining Company of Pennsylvania	Pennsylvania	5541	25-0850960	333-35083-02
United Jet Center, Inc.	Delaware	4500	52-1623169	333-35083-06
Kwik-Fill Corporation	Pennsylvania	5541	25-1525543	333-35083-05
Independent Gas and Oil Company of Rochester, Inc.	New York	5170	06-1217388	333-35083-11
Bell Oil Corp.	Michigan	5541	38-1884781	333-35083-07
PPC, Inc.	Ohio	5541	31-0821706	333-35083-08
Super Test Petroleum, Inc.	Michigan	5541	38-1901439	333-35083-09
Kwik-Fil, Inc.	New York	5541	25-1525615	333-35083-04
Vulcan Asphalt Refining Corporation	Delaware	2911	23-2486891	333-35083-10

				PAGE(S)
*PART I.*	*FINANCIAL INFORMATION*

Item 1.	Financial Statements

	Consolidated Balance Sheets – November 30, 2003 (unaudited) and August 31, 2003			4

	Consolidated Statements of Operations – Three Months Ended November 30, 2003 and 2002 (unaudited)			5

	Consolidated Statements of Cash Flows – Three Months Ended November 30, 2003 and 2002 (unaudited)			6

	Notes to Consolidated Financial Statements (unaudited)			7-14

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations			15-21

Item 3.	Quantitative and Qualitative Disclosures about Market Risk			22

Item 4.	Controls and Procedures			22

*PART II.*	*OTHER INFORMATION*			23

Item 6.	Exhibits and Reports on Form 8-K			23

		Signatures		24-35

	(a)	Exhibit Index

		Exhibit 31.1	Certification of Chief Executive Officer pursuant to Section 302

		Exhibit 31.2	Certification of Chief Financial Officer pursuant to Section 302

		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

		Exhibit 99.1	Press release announcing first fiscal quarter operating results

	(b)	No reports on Forms 8-K have been filed for the quarter for which this report is being filed.

UNITED REFINING COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

	November 30, 2003 (Unaudited)			August 31, 2003
Assets
Current:
Cash and cash equivalents	$	11,811		$	13,819
Accounts receivable, net		37,278			42,732
Inventories		89,543			76,123
Prepaid expenses and other assets		16,423			10,336
Amounts due from affiliated companies, net		—			639

Total current assets		155,055			143,649
Property, plant and equipment, net		185,947			186,879
Investment in affiliated company		640			574
Deferred financing costs, net		2,739			2,963
Goodwill		1,349			1,349
Tradename		10,500			10,500
Amortizable intangible assets, net		3,561			3,588
Deferred turnaround costs and other assets, net		8,088			8,217
Deferred income taxes		—			3,709

	$	367,879		$	361,428

Liabilities and Stockholder’s Equity
Current:
Revolving credit facility	$	30,500		$	31,500
Current installments of long-term debt		649			683
Accounts payable		34,852			35,111
Accrued liabilities		20,590			15,707
Sales, use and fuel taxes payable		16,250			17,853
Deferred income taxes		4,168			5,157
Amounts due to affiliated companies, net		426			—

Total current liabilities		107,435			106,011
Long term debt: less current installments		182,062			182,227
Deferred income taxes		161			—
Deferred gain on settlement of pension plan obligations		1,076			1,130
Deferred retirement benefits		28,680			28,398
Other noncurrent liabilities		2,033			1,687

Total liabilities		321,447			319,453

Commitments and contingencies
Stockholder’s equity:
Common stock; $.10 par value per share—shares authorized 100; issued and outstanding 100		—			—
Additional paid-in capital		16,648			16,648
Retained earnings		30,824			26,367
Accumulated other comprehensive loss		(1,040	)		(1,040	)

Total stockholder’s equity		46,432			41,975

	$	367,879		$	361,428

UNITED REFINING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS—(Unaudited)

(in thousands)

	Three Months Ended November 30,
	2003			2002
Net sales	$	330,815		$	293,305
Costs of goods sold		287,004			265,319

Gross profit		43,811			27,986

Expenses:
Selling, general and administrative expenses		27,503			26,328
Depreciation and amortization expenses		3,204			3,303

Total operating expenses		30,707			29,631

Operating income (loss)		13,104			(1,645	)

Other income (expense):
Interest expense, net		(5,170	)		(5,201	)
Other, net		(532	)		(68	)
Equity in net earnings of affiliate		66			51

		(5,636	)		(5,218	)

Income (loss) before income tax expense (benefit)		7,468			(6,863	)
Income tax expense (benefit)		3,011			(2,645	)

Net income (loss)	$	4,457		$	(4,218	)

UNITED REFINING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS—(Unaudited)

(in thousands)

	Three Months Ended November 30,
	2003			2002
Cash flows from operating activities:
Net income (loss)	$	4,457		$	(4,218	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		4,146			4,214
Equity in net earnings of affiliate		(66	)		(51	)
Deferred income taxes		2,881			(3,110	)
Loss on asset dispositions		94			33
Cash used in working capital items		(9,967	)		(1,789	)
Change in operating assets and liabilities:
Deferred retirement benefits		282			(609	)
Other noncurrent liabilities		224			(316	)

Total adjustments		(2,406	)		(1,628	)

Net cash provided by (used in) operating activities		2,051			(5,846	)

Cash flows from investing activities:
Additions to property, plant and equipment		(2,217	)		(2,048	)
Additions to turnaround costs		(643	)		(1,930	)

Net cash used in investing activities		(2,860	)		(3,978	)

Cash flows from financing activities:
Net (reductions) borrowings on revolving credit facility		(1,000	)		5,686
Principal reductions of long-term debt		(199	)		(49	)

Net cash (used in) provided by financing activities		(1,199	)		5,637

Net decrease in cash and cash equivalents		(2,008	)		(4,187	)
Cash and cash equivalents, beginning of year		13,819			13,515

Cash and cash equivalents, end of year	$	11,811		$	9,328

Cash used in working capital items:
Accounts receivable, net