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Table of Contents

 

 

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 February 29, 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

 

 

 

LOGO

 

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

 

 

 


Table of Contents

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


Table of Contents

FORM 10-Q – CONTENTS

 

          PAGE(S)  

PART I.

  

FINANCIAL INFORMATION

     4   

Item 1.

  

Financial Statements

     4   
  

Consolidated Balance Sheets – February 29, 2012 (unaudited) and August 31, 2011

     4   
  

Consolidated Statements of Operations – Quarter and Six Months Ended February 29, 2012 and February 28, 2011 (unaudited)

     5   
  

Consolidated Statements of Cash Flows – Six Months Ended February 29, 2012 and February 28, 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

     25   

PART II.

  

OTHER INFORMATION

     26   

Item 1.

  

Legal Proceedings

     26   

Item 1A.

  

Risk Factors

     26   

Item 2.

  

Unregistered Sales of Equity Securities and Use of Proceeds

     26   

Item 3.

  

Defaults Upon Senior Securities

     26   

Item 4.

  

Mine Safety Disclosures

     26   

Item 5.

  

Other Information

     26   

Item 6.

  

Exhibits

     26   

Signatures

     27   

 

3


Table of Contents

PART I.

FINANCIAL INFORMATION

 

Item 1.

Financial Statements.

 

UNITED REFINING COMPANY AND SUBSIDIARIES

 

Consolidated Balance Sheets

(in thousands, except share and per share amounts)

 

     February 29,
2012
(unaudited)
    August 31,
2011
 

Assets

    

Current:

    

Cash and cash equivalents

   $ 17,462      $ 16,660   

Accounts receivable, net

     113,247        111,426   

Inventories

     194,425        171,880   

Prepaid expenses and other assets

     22,587        40,387   

Deferred income taxes

     —          14,458   

Amounts due from affiliated companies, net

     2,416        3,104   
  

 

 

   

 

 

 

Total current assets

     350,137        357,915   

Property, plant and equipment, net

     271,763        270,974   

Deferred financing costs, net

     9,308        10,148   

Goodwill

     1,349        1,349   

Tradename

     10,500        10,500   

Amortizable intangible assets, net

     1,217        1,270   

Deferred turnaround costs and other assets, net

     20,310        18,455   
  

 

 

   

 

 

 
   $ 664,584      $ 670,611   
  

 

 

   

 

 

 

Liabilities and Stockholder’s Equity

    

Current:

    

Current installments of long-term debt

   $ 1,088      $ 978   

Accounts payable

     44,047        79,946   

Derivative liability

     5,295        55,720   

Accrued liabilities

     12,437        15,358   

Income taxes payable

     —          2,627   

Sales, use and fuel taxes payable

     18,337        16,637   

Deferred income taxes

     4,206        —     
  

 

 

   

 

 

 

Total current liabilities

     85,410        171,266   

Revolving credit facility

     66,000        24,000   

Long term debt: less current installments

     357,116        356,109   

Deferred income taxes

     25,469        11,353   

Deferred retirement benefits

     69,044        87,130   
  

 

 

   

 

 

 

Total liabilities

     603,039        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

     40,913        10,112   

Accumulated other comprehensive loss

     (4,157     (14,148
  

 

 

   

 

 

 

Total stockholder’s equity

     61,545        20,753   
  

 

 

   

 

 

 
   $ 664,584      $ 670,611   
  

 

 

   

 

 

 

 

See accompanying notes to consolidated financial statements.

 

4


Table of Contents

UNITED REFINING COMPANY AND SUBSIDIARIES

 

Consolidated Statements of Operations – (Unaudited)

(in thousands)

 

    Three Months Ended     Six Months Ended  
    February 29,
2012
    February 28,
2011
    February 29,
2012
    February 28,
2011
 

Net sales

  $ 848,844      $ 692,279      $ 1,792,875      $ 1,311,426   
 

 

 

   

 

 

   

 

 

   

 

 

 

Costs and expenses:

       

Costs of goods sold (exclusive of depreciation, amortization and losses/(gains) on derivative contracts)

    782,540        639,841        1,615,252        1,220,678   

Losses/(gains) on derivative contracts (See Note 3)

    11,839        —          (39,452     —     

Selling, general and administrative expenses

    37,940        36,819        78,587        72,605   

Depreciation and amortization expenses

    5,964        5,351        11,937        10,987   
 

 

 

   

 

 

   

 

 

   

 

 

 
    838,283        682,011        1,666,324        1,304,270   
 

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

    10,561        10,268        126,551        7,156   
 

 

 

   

 

 

   

 

 

   

 

 

 

Other income (expense):

       

Interest expense, net

    (10,260     (8,895     (20,513     (17,809

Other, net

    (703     (810     (1,280     (1,391
 

 

 

   

 

 

   

 

 

   

 

 

 
    (10,963     (9,705     (21,793     (19,200
 

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income tax expense (benefit)

    (402     563        104,758        (12,044

Income tax expense (benefit)

    (165     209        42,949        (4,309
 

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

    (237     354        61,809        (7,735

Less net income attributable to non-controlling interest

    —          93        —          93   
 

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to United Refining Company’s Stockholder

  $ (237   $ 261      $ 61,809      $ (7,828
 

 

 

   

 

 

   

 

 

   

 

 

 

 

 

See accompanying notes to consolidated financial statements.

 

5


Table of Contents

UNITED REFINING COMPANY AND SUBSIDIARIES

 

Consolidated Statements of Cash Flows – (Unaudited)

(in thousands)

 

     Six Months Ended  
     February 29,
2012
    February 28,
2011
 

Cash flows from operating activities:

    

Net income (loss)

   $ 61,809      $ (7,828

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

    

Depreciation and amortization

     13,704        11,227   

Unrealized gain on derivative contracts

     (48,612     —     

Deferred income taxes

     25,837        1,282   

Loss on asset dispositions

     695        238   

Cash (used in) provided by working capital items

     (47,438     21,936   

Net income attributable to non-controlling interest

     —          93   

Other, net

     —          (4

Change in operating assets and liabilities:

    

Additions to other assets, net

     (3,264     —     

Deferred retirement benefits

     (1,152     (1,649
  

 

 

   

 

 

 

Total adjustments

     (60,230     33,123   
  

 

 

   

 

 

 

Net cash provided by operating activities

     1,579        25,295   
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Additions to property, plant and equipment

     (9,955     (18,183

Additions to deferred turnaround costs

     (1,261     (6,029

Proceeds from asset dispositions

     7        57   
  

 

 

   

 

 

 

Net cash used in investing activities

     (11,209     (24,155
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Net borrowings (reductions) on revolving credit facilities

     42,000        (7,700

Proceeds from issuance of common stock of non-controlling interest

     —          15,000   

Dividend to stockholder

     (31,008     —     

Principal reductions of long term debt

     (560     (599

Deferred financing costs

     —          (424
  

 

 

   

 

 

 

Net cash provided by financing activities

     10,432        6,277   
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

     802        7,417   

Cash and cash equivalents, beginning of year

     16,660        17,170   
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 17,462      $ 24,587   
  

 

 

   

 

 

 

Cash provided by (used in) working capital items:

    

Accounts receivable, net

   $ (1,821   $ (16,040

Derivative asset/liability

     (1,813     —     

Refundable income taxes

     —          36,390   

Inventories

     (22,545     25,786   

Prepaid expenses and other assets

     17,800        (7,329

Amounts due from affiliated companies, net

     688        (642

Accounts payable

     (35,899     (8,657

Accrued liabilities

     (2,921     (1,292

Income taxes payable

     (2,627     (488

Sales, use and fuel taxes payable

     1,700        (5,792
  

 

 

   

 

 

 

Total change

   $ (47,438   $ 21,936   
  

 

 

   

 

 

 

Cash paid during the period for:

    

Interest

   $ 19,674      $ 18,225   

Income taxes

   $ 22,733      $ 995   
  

 

 

   

 

 

 

Non-cash investing activities:

    

Property additions & capital leases

   $ 750      $ 34   
  

 

 

   

 

 

 

 

See accompanying notes to consolidated financial statements.

 

6


Table of Contents

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 six months ended February 29, 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 will be effective for reporting periods beginning after December 15, 2011, and will be applied prospectively. We do not anticipate that the adoption of this amended guidance will 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 will be effective for reporting periods 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


Table of Contents

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 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 February 29, 2012, the Company had 2,130,000 barrels of heating oil and gasoline crackspread swaps outstanding as part of its risk management strategy. This represents approximately 26.7% of the Company’s scheduled motor gasoline production through March 2012 and approximately 43.0% of scheduled distillate production through December 2012. These crackspread swap contracts expire sequentially beginning March 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 and gasoline.

 

The fair value and balance sheet classification of our derivative instruments at February 29, 2012 and August 31, 2011 are as follows:

 

      February 29, 2012  
      Notional
Balance
     Maturity Date      Derivative
Liability
 
     (in thousands)  

Designated as hedges under
ASC 815

        

None

     —           —         $ —     

Not designated as hedges under
ASC 815

        

Heating oil and gasoline crackspread swaps

     2,130 barrels         Monthly March 2012 through December 2012         5,295   
  

 

 

       

 

 

 

Total derivative instruments

     2,130 barrels          $ 5,295   
  

 

 

       

 

 

 

 

8


Table of Contents

UNITED REFINING COMPANY AND SUBSIDIARIES

 

Notes to Consolidated Financial Statements

(Unaudited)

 

      August 31, 2011  
      Notional
Balance
     Maturity Date      Derivative
Liability
 
     (in thousands)  

Designated as hedges under
ASC 815

        

None

     —           —         $ —     

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   
  

 

 

       

 

 

 

 

During the three months ended February 29, 2012, the Company recognized $(814,000) and $(11,025,000) of realized and unrealized losses in its Consolidated Statement of Operations, respectively. For the six months ended February 29, 2012, the Company recognized $(9,160,000) of realized losses and $48,612,000 of unrealized gains in its Consolidated Statement of Operations, respectively.

 

At February 28, 2011, the Company had no derivative financial instruments outstanding and did not recognize any gains or losses from its risk management strategy for the three and six month periods then ended.

 

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:

 

     February 29,
2012
     August 31,
2011
 
     (in thousands)  

Crude Oil

   $ 30,959       $ 32,829   

Petroleum Products

     119,076         95,370   
  

 

 

    

 

 

 

Total @ LIFO

     150,035         128,199   
  

 

 

    

 

 

 

Merchandise

     21,278         21,408   

Supplies

     23,112         22,273   
  

 

 

    

 

 

 

Total @ FIFO

     44,390         43,681   
  

 

 

    

 

 

 

Total Inventory

   $ 194,425       $ 171,880   
  

 

 

    

 

 

 

 

As of February 29, 2012 and August 31, 2011, the replacement cost of LIFO inventories exceeded their LIFO carrying values by approximately $108,483,000 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 consolidated

 

9


Table of Contents

UNITED REFINING COMPANY AND SUBSIDIARIES

 

Notes to Consolidated Financial Statements

(Unaudited)

 

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, except share and per share amounts)

 

    February 29, 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

  $ 6,727      $ 10,735      $ —        $ 17,462      $ 5,927      $ 10,733      $ —        $ 16,660   

Accounts receivable, net

    75,786        37,461        —          113,247        66,758        44,668        —          111,426   

Inventories

    168,752        25,673        —          194,425        145,713        26,167        —          171,880   

Prepaid expenses and other assets

    16,052        6,535        —          22,587        36,731        3,656        —          40,387   

Deferred income taxes

    —          —          —          —          13,120        1,338        —          14,458   

Amounts due from affiliated companies

    1,851        565        —          2,416        2,586        518        —          3,104   

Intercompany

    121,858        19,132        (140,990     —          121,933        20,882        (142,815     —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total current assets

    391,026        100,101        (140,990     350,137        392,768        107,962        (142,815     357,915   

Property, plant and equipment, net

    196,394        75,369        —          271,763        196,521        74,453        —          270,974   

Deferred financing costs, net

    9,308        —          —          9,308        10,148        —          —          10,148   

Goodwill and other non-amortizable assets

    —          11,849        —          11,849        —          11,849        —          11,849   

Amortizable intangible assets, net

    —          1,217        —          1,217        —          1,270        —          1,270   

Deferred turnaround costs & other assets

    18,560        1,750        —          20,310        17,803        652        —          18,455   

Investment in subsidiaries

    8,225        —          (8,225     —          9,267        —          (9,267     —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  $ 623,513      $ 190,286      $ (149,215   $ 664,584      $ 626,507      $ 196,186      $ (152,082   $ 670,611   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and Stockholder’s Equity

               

Current:

               

Current installments of long-term debt

  $ 808      $ 280      $ —        $ 1,088      $ 654      $ 324      $ —        $ 978   

Accounts payable

    23,788        20,259        —          44,047        58,246        21,700        —          79,946   

Derivative liability

    5,295        —          —          5,295        55,720        —          —          55,720   

Accrued liabilities

    6,753        5,684        —          12,437        8,726        6,632        —          15,358   

Income taxes payable

    —          —          —          —          3,181        (554     —          2,627   

Sales, use and fuel taxes payable

    14,604        3,733        —          18,337        12,322        4,315        —          16,637   

Deferred income taxes

    5,544        (1,338     —          4,206        —          —          —          —     

Intercompany

    —          140,990        (140,990     —          —          142,815        (142,815     —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total current liabilities

    56,792        169,608        (140,990     85,410        138,849        175,232        (142,815     171,266   

Revolving credit facility

    66,000        —          —          66,000        24,000        —          —          24,000   

Long term debt: less current installments

    355,341        1,775        —          357,116        354,264        1,845        —          356,109   

Deferred income taxes

    16,415        9,054        —          25,469        3,245        8,108        —          11,353   

Deferred retirement benefits

    67,420        1,624        —          69,044        85,396        1,734        —          87,130   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

    561,968        182,061        (140,990     603,039        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

    40,913        (1,446     1,446        40,913        10,112        (354     354        10,112   

Accumulated other comprehensive loss

    (4,157     (998     998        (4,157     (14,148     (1,048     1,048        (14,148
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total stockholder’s equity

    61,545        8,225        (8,225     61,545        20,753        9,267        (9,267     20,753   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  $ 623,513      $ 190,286      $ (149,215   $ 664,584      $ 626,507      $ 196,186      $ (152,082   $ 670,611   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

10


Table of Contents

UNITED REFINING COMPANY AND SUBSIDIARIES

 

Notes to Consolidated Financial Statements

(Unaudited)

 

Condensed Consolidating Statements of Operations

(in thousands)

 

     Three Months Ended February 29, 2012  
     United
Refining
Company
    Guarantors     Eliminations     United
Refining
Company &
Subsidiaries
 

Net sales

   $ 661,665      $ 401,067      $ (213,888   $ 848,844   
  

 

 

   

 

 

   

 

 

   

 

 

 

Costs and expenses:

        

Costs of goods sold (exclusive of depreciation, amortization and losses on derivative contracts)

     621,933        374,495        (213,888     782,540   

Losses on derivative contracts

     11,839        —          —          11,839   

Selling, general and administrative expenses

     4,783        33,157        —          37,940   

Depreciation and amortization expenses

     4,411        1,553        —          5,964   
  

 

 

   

 

 

   

 

 

   

 

 

 
     642,966        409,205        (213,888     838,283   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     18,699        (8,138     —          10,561   
  

 

 

   

 

 

   

 

 

   

 

 

 

Other income (expense):

        

Interest expense, net

     (10,147     (113     —          (10,260

Other, net

     (866     163        —          (703

Equity in net loss of subsidiaries

     (4,956     —          4,956        —     
  

 

 

   

 

 

   

 

 

   

 

 

 
     (15,969     50        4,956        (10,963
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income tax expense (benefit)

     2,730        (8,088     4,956        (402

Income tax expense (benefit)

     2,967        (3,132     —          (165
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income

   $ (237   $ (4,956   $ 4,956      $ (237
  

 

 

   

 

 

   

 

 

   

 

 

 

 

    Three Months Ended February 28, 2011  
    United
Refining
Company
    Guarantors     Eliminations     United
Refining
Company &
Subsidiaries
    United
Refining
Asphalt, Inc
    Eliminations     United
Refining
Company
Consolidated
 

Net sales

  $ 519,256      $ 365,825      $ (193,057   $ 692,024      $ 255      $ —        $ 692,279   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Costs and expenses:

             

Costs of goods sold (exclusive of depreciation and amortization)

    492,399        340,499        (193,057     639,841        —          —          639,841   

Selling, general and administrative expenses

    4,348        32,469        —          36,817        2        —          36,819   

Depreciation and amortization expenses

    3,764        1,587        —          5,351        —          —          5,351   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    500,511        374,555        (193,057     682,009        2        —          682,011   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

    18,745        (8,730     —          10,015        253        —          10,268   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other income (expense):

             

Interest expense, net

    (8,659     (214     —          (8,873     (22     —          (8,895

Other, net

    (913     177        —          (736     (74     —          (810

Equity in net loss of subsidiaries

    (5,528     —          5,528        —          —          —          —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    (15,100     (37     5,528        (9,609     (96     —          (9,705
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income tax expense (benefit)

    3,645        (8,767     5,528        406        157        —          563   

Income tax expense (benefit)

    3,384        (3,239     —          145        64        —          209   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

    261        (5,528     5,528        261        93        —          354   

Less net income attributable to non-controlling interest

    —          —          —          —          —          93        93   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to United Refining Company’s Stockholder

  $ 261      $ (5,528   $ 5,528      $ 261      $ 93      $ (93   $ 261   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

11


Table of Contents

UNITED REFINING COMPANY AND SUBSIDIARIES

 

Notes to Consolidated Financial Statements

(Unaudited)

 

Condensed Consolidating Statements of Operations

(in thousands)

 

     Six Months Ended February 29, 2012  
     United
Refining
Company
    Guarantors     Eliminations     United
Refining
Company &
Subsidiaries
 

Net sales

   $ 1,399,894      $ 822,665      $ (429,684   $ 1,792,875   
  

 

 

   

 

 

   

 

 

   

 

 

 

Costs and expenses:

        

Costs of goods sold (exclusive of depreciation, amortization and gains

on derivative contracts)

     1,290,101        754,835        (429,684     1,615,252   

Gains on derivative contracts

     (39,452     —          —          (39,452

Selling, general and administrative expenses

     12,091        66,496        —          78,587   

Depreciation and amortization expenses

     8,821        3,116        —          11,937   
  

 

 

   

 

 

   

 

 

   

 

 

 
     1,271,561        824,447        (429,684     1,666,324   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     128,333        (1,782     —          126,551   
  

 

 

   

 

 

   

 

 

   

 

 

 

Other income (expense):

        

Interest expense, net

     (20,282     (231     —          (20,513

Other, net

     (1,729     449        —          (1,280

Equity in net loss of subsidiaries

     (1,092     —          1,092        —     
  

 

 

   

 

 

   

 

 

   

 

 

 
     (23,103     218        1,092        (21,793
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income tax expense (benefit)

     105,230        (1,564     1,092        104,758   

Income tax expense (benefit)

     43,421        (472     —          42,949   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 61,809      $ (1,092   $ 1,092      $ 61,809   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

    Six Months Ended February 28, 2011  
    United
Refining
Company
    Guarantors     Eliminations     United
Refining
Company &
Subsidiaries
    United
Refining
Asphalt, Inc
    Eliminations     United
Refining
Company
Consolidated
 

Net sales

  $ 964,400      $ 717,806      $ (371,035   $ 1,311,171      $ 255      $ —        $ 1,311,426   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Costs and expenses:

             

Costs of goods sold (exclusive of depreciation and amortization)

    930,882        660,831        (371,035     1,220,678        —          —          1,220,678   

Selling, general and administrative expenses

    8,572        64,031        —          72,603        2        —          72,605   

Depreciation and amortization expenses

    7,815        3,172        —          10,987        —          —          10,987   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    947,269        728,034        (371,035     1,304,268        2        —          1,304,270   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

    17,131        (10,228     —          6,903        253        —          7,156   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other income (expense):

             

Interest expense, net

    (17,374     (413     —          (17,787     (22     —          (17,809

Other, net

    (1,720     403        —          (1,317     (74     —          (1,391

Equity in net loss of subsidiaries

    (6,524     —          6,524        —          —          —          —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    (25,618     (10     6,524        (19,104     (96     —          (19,200
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income before income tax (benefit) expense

    (8,487     (10,238     6,524        (12,201     157        —          (12,044

Income tax (benefit) expense

    (659     (3,714     —          (4,373     64        —          (4,309
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income

    (7,828     (6,524     6,524        (7,828     93        —          (7,735

Less net income attributable to non-controlling interest

    —          —          —          —          —          93        93   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income attributable to United Refining Company’s Stockholder

  $ (7,828   $ (6,524   $ 6,524      $ (7,828   $ 93      $ (93   $ (7,828
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

12


Table of Contents

UNITED REFINING COMPANY AND SUBSIDIARIES

 

Notes to Consolidated Financial Statements

(Unaudited)

 

Condensed Consolidating Statements of Cash Flows

(in thousands)

 

     Six Months Ended February 29, 2012  
     United
Refining
Company
    Guarantors     Eliminations      United
Refining
Company &
Subsidiaries
 

Net cash (used in) provided by operating activities

   $ (3,981   $ 5,560      $ —         $ 1,579   
  

 

 

   

 

 

   

 

 

    

 

 

 

Cash flows from investing activities:

         

Additions to property, plant and equipment

     (5,769     (4,186     —           (9,955

Additions to deferred turnaround costs

     (66     (1,195     —           (1,261

Proceeds from asset dispositions

     —          7        —           7   
  

 

 

   

 

 

   

 

 

    

 

 

 

Net cash used in investing activities

     (5,835     (5,374     —           (11,209
  

 

 

   

 

 

   

 

 

    

 

 

 

Cash flows from financing activities:

         

Net borrowings on revolving credit facility

     42,000        —          —           42,000   

Dividend to stockholder

     (31,008     —          —           (31,008

Principal reductions of long-term debt

     (376     (184     —           (560
  

 

 

   

 

 

   

 

 

    

 

 

 

Net cash provided by (used in) financing activities

     10,616        (184     —           10,432   
  

 

 

   

 

 

   

 

 

    

 

 

 

Net increase in cash and cash equivalents

     800        2        —           802   

Cash and cash equivalents, beginning of year

     5,927        10,733        —           16,660   
  

 

 

   

 

 

   

 

 

    

 

 

 

Cash and cash equivalents, end of period

   $ 6,727      $ 10,735      $ —         $ 17,462   
  

 

 

   

 

 

   

 

 

    

 

 

 

 

    Six Months Ended February 28, 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

  $ 50,962      $ 3,987      $ —        $ 54,949      $ (29,654   $ —        $ 25,295   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from investing activities:

             

Additions to property, plant and equipment

    (16,089     (2,094     —          (18,183     —          —          (18,183

Additions to deferred turnaround costs

    (6,029     —          —          (6,029     —          —          (6,029

Proceeds from asset dispositions

    56        1        —          57        —          —          57   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

    (22,062     (2,093     —          (24,155     —          —          (24,155
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from financing activities:

             

Net (reductions) borrowings on revolving credit facilities

    (23,000     —          —          (23,000     15,300        —          (7,700

Proceeds from issuance of common stock of non-controlling interest

    —          —          —          —          15,000        —          15,000   

Principal reductions of long-term debt

    (306     (293     —          (599     —          —          (599

Deferred financing costs

    (9     —          —          (9     (415     —          (424
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash (used in) provided by financing activities

    (23,315     (293     —          (23,608     29,885        —          6,277   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase in cash and cash equivalents

    5,585        1,601        —          7,186        231        —          7,417   

Cash and cash equivalents, beginning of year

    7,765        9,405        —          17,170        —          —          17,170   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents, end of period

  $ 13,350      $ 11,006      $ —        $ 24,356      $ 231      $ —        $ 24,587   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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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     Six Months Ended  
     February 29,
2012
    February 28,
2011
    February 29,
2012
    February 28,
2011
 

Net Sales

        

Retail

   $ 399,838      $ 364,781      $ 820,157      $ 716,000   

Wholesale

     449,006        327,498        972,718        595,426   
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 848,844      $ 692,279      $ 1,792,875      $ 1,311,426   
  

 

 

   

 

 

   

 

 

   

 

 

 

Intersegment Sales

        

Wholesale

   $ 212,659      $ 192,013      $ 427,176      $ 369,229   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating Income (Loss)

        

Retail

   $ (8,036   $ (9,079   $ (1,816   $ (10,352

Wholesale

     18,597        19,347        128,367        17,508   
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 10,561      $ 10,268      $ 126,551      $ 7,156   
  

 

 

   

 

 

   

 

 

   

 

 

 

Depreciation and Amortization

        

Retail

   $ 1,397      $ 1,414      $ 2,798      $ 2,827   

Wholesale

     4,567        3,937        9,139        8,160   
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 5,964      $ 5,351      $ 11,937      $ 10,987   
  

 

 

   

 

 

   

 

 

   

 

 

 

Capital Expenditures (including non-cash)

        

Retail

   $ 1,097      $ 791      $ 3,500      $ 1,933   

Wholesale

     2,906        6,506        7,205        16,284   
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 4,003      $ 7,297      $ 10,705      $ 18,217   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

     February 29, 2012      August 31, 2011  

Total Assets

     

Retail

   $ 161,387       $ 167,359   

Wholesale

     503,197         503,252   
  

 

 

    

 

 

 
   $ 664,584       $ 670,611   
  

 

 

    

 

 

 

 

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UNITED REFINING COMPANY AND SUBSIDIARIES

 

Notes to Consolidated Financial Statements

(Unaudited)

 

7.

Employee Benefit Plans

 

For the periods ended February 29, 2012 and February 28, 2011, net pension and other postretirement benefit costs were comprised of the following:

 

     Pension Benefits  
     Three Months Ended     Six Months Ended  
     February 29,
2012
    February 28,
2011
    February 29,
2012
    February 28,
2011
 
     (in thousands)  

Service cost

   $ 340      $ 448      $ 763      $ 895   

Interest cost on benefit obligation

     2,672        1,245        3,990        2,489   

Expected return on plan assets

     (2,543     (1,135     (3,722     (2,270

Amortization and deferral of net loss

     49        506        425        1,015   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net periodic benefit cost

   $ 518      $ 1,064      $ 1,456      $ 2,129   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

     Other Post-Retirement Benefits  
     Three Months Ended     Six Months Ended  
     February 29,
2012
    February 28,
2011
    February 29,
2012
    February 28,
2011
 
     (in thousands)  

Service cost

   $ 151      $ 377      $ 617      $ 754   

Interest cost on benefit obligation

     595        629        1,343        1,259   

Amortization and deferral of net loss

     (102     (282     (366     (564
  

 

 

   

 

 

   

 

 

   

 

 

 

Net periodic benefit cost

   $ 644      $ 724      $ 1,594      $ 1,449   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

As of February 29, 2012, $2,686,000 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 is 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.

 

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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 (was less than) exceeded the carrying value of the senior notes at February 29, 2012 and August 31, 2011 by $(9,199,000) and $6,684,000, respectively.

 

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Table of Contents

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;

 

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Table of Contents
 

 

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;

 

 

 

future operating results and financial condition; and

 

 

 

the effectiveness of our disclosure controls and procedures and internal control over financial reporting.

 

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 volatility of the petroleum market in fiscal year 2012. The average NYMEX crude price for the third fiscal quarter based on values published on April 5, 2012 was $103.93/bbl, a $5.24/bbl or 5.3% increase from the average price for the second fiscal quarter of 2012 which was $98.69/bbl.

 

The lagged 3-2-1 crackspread, as measured by the difference between the price of crude oil contracts traded on the NYMEX for the preceding month to the prices of NYMEX gasoline and heating oil contracts in the current trading month, benefited from the rising petroleum market. The Company uses a lagged crackspread as a margin indicator as it reflects the time period between the purchase of crude oil and its delivery to the refinery for processing. The lagged crackspread for the third quarter of fiscal year 2012 based on values as of April 5, 2012, was $33.71/bbl or a 50.2% increase from the lagged crackspread for the second quarter of fiscal year 2012 which was $22.45/bbl.

 

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 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.

 

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.

 

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Table of Contents

Retail Operations:

 

     Three Months Ended     Six Months Ended  
     February 29,
2012
    February 28,
2011
    February 29,
2012
    February 28,
2011
 
     (dollars in thousands)  

Net Sales

        

Petroleum

   $ 336,383      $ 305,221      $ 688,247      $ 591,702   

Merchandise and other

     63,455        59,560        131,910        124,298   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Net Sales

   $ 399,838      $ 364,781      $ 820,157      $ 716,000   

Costs of goods sold

   $ 373,427      $ 340,102      $ 752,908      $ 659,727   

Selling, general and administrative expenses

     33,050        32,344        66,267        63,798   

Depreciation and amortization expenses

     1,397        1,414        2,798        2,827   
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating (Loss) Income

   $ (8,036   $ (9,079   $ (1,816   $ (10,352
  

 

 

   

 

 

   

 

 

   

 

 

 

Retail Operating Data:

        

Petroleum sales (thousands of gallons)

     94,371        94,390        191,870        193,502   

Petroleum margin (a)

   $ 10,478      $ 9,670      $ 34,018      $ 24,775   

Petroleum margin ($/gallon) (b)

     .1110        .1024        .1773        .1280   

Merchandise and other margins

   $ 15,935      $ 15,009      $ 33,233      $ 31,498   

Merchandise margin (percent of sales)

     25.1     25.2     25.2     25.3

 

(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 February 29, 2012 and February 28, 2011

 

Net Sales

 

Retail sales increased during the fiscal quarter ended February 29, 2012 by $35.0 million or 9.6% from the comparable period in fiscal 2011 from $364.8 million to $399.8 million. The increase was due to $31.1 million in petroleum sales and $3.9 million in merchandise sales. The petroleum sales increase resulted from a 10.2% increase in retail selling prices per gallon. The merchandise sales increase is primarily due to increased prepared food, beverages and cigarette sales due to promotional campaigns and increased selling prices.

 

Costs of Goods Sold

 

Retail costs of goods sold increased during the fiscal quarter ended February 29, 2012 by $33.3 million or 9.8% from the comparable period in fiscal 2011 from $340.1 million to $373.4 million. The increase was due to $28.9 million in petroleum cost, merchandise cost of $3.0 million, freight cost of $.8 million and fuel tax of $.6 million.

 

Selling, General and Administrative Expenses

 

Retail Selling, General and Administrative (“SG&A”) expenses increased during the fiscal quarter ended February 29, 2012 by $.7 million or 2.2% from the comparable period in fiscal 2011 from $32.3 million to $33.0 million. The increase was primarily due to payroll costs of $.6 million and credit/customer service costs of $.1 million.

 

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Table of Contents

Comparison of Six Months Ended February 29, 2012 and February 28, 2011

 

Net Sales

 

Retail sales increased during the six months ended February 29, 2012 by $104.1 million or 14.5% for the comparable period in fiscal 2011 from $716.0 million to $820.1 million. The increase was primarily due to $96.5 million in petroleum sales, and $7.6 million in merchandise sales. The petroleum sales increase resulted from a 17.3% increase in retail selling prices per gallon offset by a 1.6 million gallon or .8% decrease in sales volume. The merchandise sales increase is primarily due to increased prepared food, beverages and cigarette sales due to promotional campaigns and increased selling prices.

 

Costs of Goods Sold

 

Retail costs of goods sold increased during the six months ended February 29, 2012 by $93.2 million or 14.1% for the comparable period in fiscal 2011 from $659.7 million to $752.9 million. The increase was primarily due to $84.2 million in petroleum purchase prices, merchandise costs of $5.9 million, fuel taxes of $.9 million and freight costs of $2.2 million. This increase in petroleum purchase prices resulted in lower petroleum retail margins, which is typical in a rising market when retail pricing does not keep pace with the rising market.

 

Selling, General and Administrative Expenses

 

Retail SG&A expenses increased during the six months ended February 29, 2012 by $2.5 million or 3.9% for the comparable period in fiscal 2011 from $63.8 million to $66.3 million. The increase was due to payroll costs of $.9 million, credit/customer service costs of $.8 million, advertising costs of $.2 million, supplies cost of $.2 million, maintenance costs of $.2 million and other costs of $.2 million.

 

Wholesale Operations:

 

     Three Months Ended      Six Months Ended  
     February 29,
2012
     February 28,
2011
     February 29,
2012
    February 28,
2011
 
     (dollars in thousands)  

Net Sales (a)

   $ 449,006       $ 327,498       $ 972,718      $ 595,426   

Costs of goods sold (exclusive of depreciation and amortization and losses /(gain) on derivative contracts)

     409,113         299,739         862,344        560,951   

Losses / (gain) on derivative contracts

     11,839         —           (39,452     —     

Selling, general and administrative expenses

     4,890         4,475         12,320        8,807   

Depreciation and amortization expenses

     4,567         3,937         9,139        8,160   
  

 

 

    

 

 

    

 

 

   

 

 

 

Segment Operating Income

   $ 18,597       $ 19,347       $ 128,367      $ 17,508   
  

 

 

    

 

 

    

 

 

   

 

 

 

 

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Table of Contents

Key Wholesale Operating Statistics:

 

     Three Months Ended     Six Months Ended  
     February 29,
2012
    February 28,
2011
    February 29,
2012
    February 28,
2011
 

Refinery Product Yield (thousands of barrels)

        

Gasoline and gasoline blendstock

     2,648        2,321        5,275        3,950   

Distillates

     1,468        1,216        2,917        2,347   

Asphalt

     1,787        1,488        3,724        2,120   

Butane, propane, residual products, internally produced fuel and other (“Other”)

     468        538        947        1,307   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Product Yield

     6,371        5,563        12,863        9,724   
  

 

 

   

 

 

   

 

 

   

 

 

 

% Heavy Crude Oil of Total Refinery Throughput (b)

     59     60     59     44

Crude throughput (thousand barrels per day)

     64.9        55.9        66.2        48.2   
  

 

 

   

 

 

   

 

 

   

 

 

 

Product Sales (thousand of barrels) (a)

        

Gasoline and gasoline blendstock

     1,470        1,342        3,172        2,434   

Distillates

     1,131        984        2,234        1,892   

Asphalt

     1,501        995        3,622        2,070   

Other

     144        193        371        317   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Product Sales Volume

     4,246        3,514        9,399        6,713   
  

 

 

   

 

 

   

 

 

   

 

 

 

Product Sales (dollars in thousands) (a)

        

Gasoline and gasoline blendstock

   $ 169,560      $ 139,992      $ 365,789      $ 238,384   

Distillates

     146,022        113,587        289,118        202,551   

Asphalt

     124,512        63,073        295,111        137,435   

Other

     8,912        10,846        22,700        17,056   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Product Sales

   $ 449,006      $ 327,498      $ 972,718      $ 595,426   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(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 February 29, 2012 and February 28, 2011

 

Net Sales

 

Wholesale sales increased during the three months ended February 29, 2012 by $121.5 million or 37.1% from the comparable period in fiscal 2011 from $327.5 million to $449.0 million. This was due to a 20.8% increase in wholesale volume and a 13.5% increase in wholesale prices.

 

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

 

Wholesale costs of goods sold increased during the three months ended February 29, 2012 by $109.4 million or 36.5% from the comparable period in fiscal 2011 from $299.7 million to $409.1 million. The increase in wholesale costs of goods sold during this period was primarily due to an increase in cost of raw materials and volume.

 

Losses / (Gain) on Derivative Contracts

 

During the three months ended February 29, 2012, the Company recognized $(814,000) and $(11,025,000) of realized and unrealized losses in its Consolidated Statement of Operations.

 

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Table of Contents

Selling, General and Administrative Expenses

 

Wholesale SG&A expenses increased during the three months ended February 29, 2012 by $.4 million or 9.3% from the comparable period in fiscal 2011 from $4.5 million or 1.4% of net wholesale sales to $4.9 million or 1.1% of net wholesale sales. The increase was due primarily to additional payroll costs of $.2 million, charitable contributions of $.1 million and professional fees of $.1 million.

 

Comparison of Six Months Ended February 29, 2012 and February 28, 2011

 

Net Sales

 

Wholesale sales increased during the six months ended February 29, 2012 by $377.3 million or 63.4% from the comparable period in fiscal 2011 from $595.4 million to $972.7 million. The increase was due to a 16.7% increase in wholesale prices and a 40.0% increase in wholesale volume.

 

Costs of Goods Sold (exclusive of depreciation and amortization)

 

Wholesale costs of goods sold increased during the six months ended February 29, 2012 by $301.4 million or 53.7% for the comparable period in fiscal 2011 from $560.9 million to $862.3 million. The increase in wholesale costs of goods sold was primarily due to an increase in the cost of raw materials and volumes.

 

Losses / (Gain) on Derivative Contracts

 

For the six months ended February 29, 2012, the Company recognized $(9,160,000) of realized losses and $48,612,000 of unrealized gains in its Consolidated Statement of Operations.

 

Selling, General and Administrative Expenses

 

Wholesale SG&A expenses increased during the six months ended February 29, 2012 by $3.5 million or 39.9% for the comparable period in fiscal 2011 from $8.8 million or 1.5% of net wholesale sales to $12.3 million or 1.3% 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 February 29, 2012 increased $1.3 million or 15.6% from the comparable period in fiscal 2011 from $8.9 million to $10.3 million.

 

Net interest expense (interest expense less interest income) for the six months ended February 29, 2012 increased $2.7 million or 15.0% from the comparable period in fiscal 2011 from $17.8 million to $20.5 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 notes outstanding.

 

Income Tax Expense / (Benefit)

 

The Company’s effective tax rate for both three months and six months ended February 29, 2012 and February 28, 2011 were approximately 41% and 36% respectively. The lower effective tax rate in the prior period was due to the Company recording a valuation allowance for Pennsylvania Net Operating tax losses.

 

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

 

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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):

 

     February 29, 2012  

Cash and cash equivalents

   $ 17,462   

Working capital

   $ 264,727   

Current ratio

     4.1   

Debt

   $ 424,204   
  

 

 

 

 

Primary sources of liquidity have been cash and cash equivalents, cash flows from operations 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.

 

     Six Months Ended
February 29, 2012
 
     (in millions)  

Significant uses of cash

  

Investing activities:

  

Additions to deferred turnaround costs

   $ (1.3

Property, plant and equipment

  

Other general capital items (tank repairs, refinery piping, etc)

     (3.7

DHT2 second reactor

     (2.5

Retail petroleum upgrade

     (1.7

Retail maintenance (blacktop, roof, HVAC, rehab, piping)

     (1.4

Environmental

     (.2

State and federal mandates:

  

Renewable fuels

     (.4
  

 

 

 

Total property, plant and equipment

   $ (9.9
  

 

 

 

Net cash used in investing activities

   $ (11.2
  

 

 

 

Financing activities:

  

Dividend to stockholder

   $ (31.0

Principal reductions of long term debt

     (.6

Net borrowings on revolving credit facility

     42.0   
  

 

 

 

Net cash provided by financing activities

   $ 10.4   
  

 

 

 

Working capital items:

  

Accounts payable decrease

   $ (35.9

Increase in inventory

     (22.6

Accrued liabilities decrease

     (2.9

Income taxes payable decrease

     (2.6

Derivative asset/liability

     (1.8

Accounts receivable increase

     (1.8

Prepaid expense decrease

     17.8   

Sales, use and fuel taxes payable increase

     1.7   

Amounts due from affiliated companies, net decrease

     .7   
  

 

 

 

Cash used in working capital items

   $ (47.4
  

 

 

 

 

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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 retail operations. Management does not foresee any increase in these maintenance and non-discretionary capital expenditures during fiscal year 2012.

 

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 $175,000,000 Amended and Restated Revolving Credit Facility. 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 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 February 29, 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 February 29, 2012 and there were $66.0 million outstanding borrowings under the Amended and Restated Revolving Credit Facility resulting in net availability of $102.5 million. As of April 11, 2012, there were no outstanding borrowings on the $175 million Amended and Restated Revolving Credit Facility and standby letters of credit in the amount of $6.5 million, resulting in a net availability of $168.5 million. The Company’s working capital ratio was 4.1 as of February 29, 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.

 

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Table of Contents

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 April 11, 2012, there were no outstanding borrowings under the Amended and Restated Revolving Credit Facility.

 

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.

 

During the quarter ended February 29, 2012, the Company had 2,130,000 barrels of heating oil and gasoline crackspread swaps outstanding as part of its risk management strategy. The crackspread swaps expire sequentially beginning March 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 and gasoline. 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 February 29, 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 February 29, 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 February 29, 2012 that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

 

25


Table of Contents

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

 

26


Table of Contents

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: April 16, 2012

 

UNITED REFINING COMPANY

(Registrant)

/s/ Myron L. Turfitt

Myron L. Turfitt

President

/s/ James E. Murphy

James E. Murphy

Chief Financial Officer

 

27


Table of Contents

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: April 16, 2012

 

KIANTONE PIPELINE CORPORATION

(Registrant)

/s/ Myron L. Turfitt

Myron L. Turfitt

President

/s/ James E. Murphy

James E. Murphy

Chief Financial Officer

 

28


Table of Contents

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: April 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

 

29


Table of Contents

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: April 16, 2012

 

KIANTONE PIPELINE COMPANY

(Registrant)

/s/ Myron L. Turfitt

Myron L. Turfitt

President

/s/ James E. Murphy

James E. Murphy

Chief Financial Officer

 

30


Table of Contents

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: April 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

 

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Table of Contents

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: April 16, 2012

 

KWIK-FILL CORPORATION

(Registrant)

/s/ Myron L. Turfitt

Myron L. Turfitt

President

/s/ James E. Murphy

James E. Murphy

Chief Financial Officer

 

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Table of Contents

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: April 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

 

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Table of Contents

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: April 16, 2012

 

BELL OIL CORP.

(Registrant)

/s/ Myron L. Turfitt

Myron L. Turfitt

President

/s/ James E. Murphy

James E. Murphy

Chief Financial Officer

 

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Table of Contents

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: April 16, 2012

 

PPC, INC.

(Registrant)

/s/ Myron L. Turfitt

Myron L. Turfitt

President

/s/ James E. Murphy

James E. Murphy

Chief Financial Officer

 

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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: April 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

 

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Table of Contents

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: April 16, 2012

 

KWIK-FIL, INC.

(Registrant)

/s/ Myron L. Turfitt

Myron L. Turfitt

President

/s/ James E. Murphy

James E. Murphy

Chief Financial Officer

 

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Table of Contents

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: April 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

 

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Table of Contents

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: April 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

 

39