##### 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
November 30, 2010



or



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES 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   ̈    No  x



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 January 14, 2011, there were 100
shares of common stock, par value $.10 per share, of the Registrant outstanding.









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##### Table of Contents

TABLE OF ADDITIONAL REGISTRANTS



|                                                   |  |                                            |  |                                  |            |  |                       |  |              | 
|-------------------------------------------------- |  | ------------------------------------------ |  | -------------------------------- | ---------- |  | --------------------- |  | ------------ | 
|Name                                               |  | State of OtherJurisdiction ofIncorporation |  | IRS EmployerIdentificationNumber |            |  | CommissionFile 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



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FORM 10-Q  CONTENTS



|            |  |                                                                                                    |    |         |    | 
|----------- |  | -------------------------------------------------------------------------------------------------- | -- | ------- | -- | 
|            |  |                                                                                                    |    | PAGE(S) |   
|PART I.     |  | FINANCIAL INFORMATION                                                                              |    |         | 4  | 
|            |  |                                                                                                   
|Item 1.     |  | Financial Statements.                                                                              |    |         | 4  | 
|            |  |                                                                                                   
|            |  | Consolidated Balance Sheets  November 30, 2010 (unaudited) and August 31, 2010                    |    |         | 4  | 
|            |  |                                                                                                   
|            |  | Consolidated Statements of Operations  Three Months Ended November 30, 2010 and 2009
 (unaudited) |    |         | 5  | 
|            |  |                                                                                                   
|            |  | Consolidated Statements of Cash Flows  Three Months Ended November 30, 2010 and 2009
 (unaudited) |    |         | 6  | 
|            |  |                                                                                                   
|            |  | Notes to Consolidated Financial Statements (unaudited)                                             |    |         | 7  | 
|            |  |                                                                                                   
|Item 2.     |  | Managements Discussion and Analysis of Financial Condition and Results of Operations.             |    |         | 14 | 
|            |  |                                                                                                   
|Item 3.     |  | Quantitative and Qualitative Disclosures about Market Risk.                                        |    |         | 21 | 
|            |  |                                                                                                   
|Item 4.     |  | Controls and Procedures.                                                                           |    |         | 22 | 
|            |  |                                                                                                   
|PART II.    |  | OTHER INFORMATION                                                                                  |    |         | 23 | 
|            |  |                                                                                                   
|Item 1.     |  | Legal Proceedings.                                                                                 |    |         | 23 | 
|            |  |                                                                                                   
|Item 1A.    |  | Risk Factors.                                                                                      |    |         | 23 | 
|            |  |                                                                                                   
|Item 2.     |  | Unregistered Sales of Equity Securities and Use of Proceeds.                                       |    |         | 23 | 
|            |  |                                                                                                   
|Item 3.     |  | Defaults Upon Senior Securities.                                                                   |    |         | 23 | 
|            |  |                                                                                                   
|Item 4.     |  | (Removed and Reserved).                                                                            |    |         | 23 | 
|            |  |                                                                                                   
|Item 5.     |  | Other Information.                                                                                 |    |         | 23 | 
|            |  |                                                                                                   
|Item 6.     |  | Exhibits.                                                                                          |    |         | 23 | 
|            | 
|Signatures. |  |                                                                                                    | 24 |        



3



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|PART I. | FINANCIAL INFORMATION
|------- | ---------------------



ITEM 1. FINANCIAL STATEMENTS.



UNITED REFINING COMPANY AND
SUBSIDIARIES



CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)



|                                                                                           |  |                             |         |   |                |   |         |  
|------------------------------------------------------------------------------------------ |  | --------------------------- | ------- | - | -------------- | - | ------- | -
|                                                                                           |  | November 30,2010(Unaudited) |         |   | August 31,2010 |  
|Assets                                                                                     |  |                             |         |   |                |   |         |  
|Current:                                                                                   |  |                             |         |   |                |   |         |  
|Cash and cash equivalents                                                                  |  | $                           | 19,479  |   |                | $ | 17,170  |  
|Accounts receivable, net                                                                   |  |                             | 71,975  |   |                |   | 64,192  |  
|Refundable income taxes                                                                    |  |                             | 36,390  |   |                |   | 36,390  |  
|Inventories                                                                                |  |                             | 143,830 |   |                |   | 206,838 |  
|Prepaid expenses and other assets                                                          |  |                             | 38,586  |   |                |   | 27,941  |  
|Amounts due from affiliated companies, net                                                 |  |                             | 3,284   |   |                |   | 2,972   |  
|                                                                                           |  |                             |         |   |                |   |         |  
|Total current assets                                                                       |  |                             | 313,544 |   |                |   | 355,503 |  
|Property, plant and equipment, net                                                         |  |                             | 268,305 |   |                |   | 261,775 |  
|Deferred financing costs, net                                                              |  |                             | 1,826   |   |                |   | 2,114   |  
|Goodwill                                                                                   |  |                             | 1,349   |   |                |   | 1,349   |  
|Tradename                                                                                  |  |                             | 10,500  |   |                |   | 10,500  |  
|Amortizable intangible assets, net                                                         |  |                             | 1,349   |   |                |   | 1,376   |  
|Deferred turnaround costs and other assets, net                                            |  |                             | 6,316   |   |                |   | 3,894   |  
|Deferred income taxes                                                                      |  |                             |        |   |                |   | 592     |  
|                                                                                           |  |                             |         |   |                |   |         |  
|                                                                                           |  | $                           | 603,189 |   |                | $ | 637,103 |  
|                                                                                           |  |                             |         |   |                |   |         |  
|                                                                                           |  |                            
|Liabilities and Stockholders Equity                                                       |  |                             |         |   |                |   |         |  
|Current:                                                                                   |  |                             |         |   |                |   |         |  
|Revolving credit facility                                                                  |  | $                           | 74,000  |   |                | $ | 83,000  |  
|Current installments of long-term debt                                                     |  |                             | 1,796   |   |                |   | 1,888   |  
|Accounts payable                                                                           |  |                             | 42,653  |   |                |   | 65,620  |  
|Accrued liabilities                                                                        |  |                             | 25,035  |   |                |   | 15,569  |  
|Income taxes payable                                                                       |  |                             |        |   |                |   | 552     |  
|Sales, use and fuel taxes payable                                                          |  |                             | 16,664  |   |                |   | 18,455  |  
|Deferred income taxes                                                                      |  |                             | 5,997   |   |                |   | 5,997   |  
|                                                                                           |  |                             |         |   |                |   |         |  
|Total current liabilities                                                                  |  |                             | 166,145 |   |                |   | 191,081 |  
|Long term debt: less current installments                                                  |  |                             | 327,760 |   |                |   | 328,165 |  
|Deferred retirement benefits                                                               |  |                             | 90,108  |   |                |   | 91,620  |  
|Deferred income taxes                                                                      |  |                             | 894     |   |                |   |        |  
|                                                                                           |  |                             |         |   |                |   |         |  
|Total liabilities                                                                          |  |                             | 584,907 |   |                |   | 610,866 |  
|                                                                                           |  |                             |         |   |                |   |         |  
|                                                                                           |  |                            
|Commitments and contingencies                                                              |  |                             |         |   |                |   |         |  
|Stockholders equity:                                                                      |  |                             |         |   |                |   |         |  
|Common stock; $.10 par value per share  shares authorized 100; issued and outstanding 100 |  |                             |        |   |                |   |        |  
|Additional paid-in capital                                                                 |  |                             | 22,500  |   |                |   | 22,500  |  
|Retained earnings                                                                          |  |                             | 10,142  |   |                |   | 18,231  |  
|Accumulated other comprehensive loss                                                       |  |                             | (14,360 | ) |                |   | (14,494 | )
|                                                                                           |  |                             |         |   |                |   |         |  
|Total stockholders equity                                                                 |  |                             | 18,282  |   |                |   | 26,237  |  
|                                                                                           |  |                             |         |   |                |   |         |  
|                                                                                           |  | $                           | 603,189 |   |                | $ | 637,103 |  
|                                                                                           |  |                             |         |   |                |   |         |  



See accompanying notes to
consolidated financial statements.



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UNITED REFINING COMPANY AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF OPERATIONS  (Unaudited)

(in thousands)



|                                                                 |  |                                |         |   |      |   |         |  
|---------------------------------------------------------------- |  | ------------------------------ | ------- | - | ---- | - | ------- | -
|                                                                 |  | Three Months
EndedNovember 30, |        
|                                                                 |  | 2010                           |         |   | 2009 |  
|Net sales                                                        |  | $                              | 619,147 |   |      | $ | 620,926 |  
|                                                                 |  |                                |         |   |      |   |         |  
|                                                                 |  |                               
|Costs and expenses:                                              |  |                                |         |   |      |   |         |  
|Costs of goods sold (exclusive of depreciation and amortization) |  |                                | 580,837 |   |      |   | 602,340 |  
|Selling, general and administrative expenses                     |  |                                | 35,786  |   |      |   | 36,759  |  
|Depreciation and amortization expenses                           |  |                                | 5,636   |   |      |   | 5,481   |  
|                                                                 |  |                                |         |   |      |   |         |  
|                                                                 |  |                                | 622,259 |   |      |   | 644,580 |  
|                                                                 |  |                                |         |   |      |   |         |  
|Operating loss                                                   |  |                                | (3,112  | ) |      |   | (23,654 | )
|                                                                 |  |                                |         |   |      |   |         |  
|                                                                 |  |                               
|Other expense:                                                   |  |                                |         |   |      |   |         |  
|Interest expense, net                                            |  |                                | (8,914  | ) |      |   | (8,467  | )
|Other, net                                                       |  |                                | (581    | ) |      |   | (606    | )
|                                                                 |  |                                |         |   |      |   |         |  
|                                                                 |  |                                | (9,495  | ) |      |   | (9,073  | )
|                                                                 |  |                                |         |   |      |   |         |  
|Loss before income tax benefit                                   |  |                                | (12,607 | ) |      |   | (32,727 | )
|Income tax benefit                                               |  |                                | (4,518  | ) |      |   | (13,417 | )
|                                                                 |  |                                |         |   |      |   |         |  
|Net loss                                                         |  | $                              | (8,089  | ) |      | $ | (19,310 | )
|                                                                 |  |                                |         |   |      |   |         |  







See accompanying notes to consolidated financial statements.



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UNITED REFINING COMPANY AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF CASH FLOWS  (Unaudited)

(in thousands)



|                                                                                          |  |                                |         |   |      |   |         |  
|----------------------------------------------------------------------------------------- |  | ------------------------------ | ------- | - | ---- | - | ------- | -
|                                                                                          |  | Three Months EndedNovember
30, |        
|                                                                                          |  | 2010                           |         |   | 2009 |  
|Cash flows from operating activities:                                                     |  |                                |         |   |      |   |         |  
|Net loss                                                                                  |  | $                              | (8,089  | ) |      | $ | (19,310 | )
|Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |  |                                |         |   |      |   |         |  
|Depreciation and amortization                                                             |  |                                | 5,718   |   |      |   | 5,565   |  
|Deferred income taxes                                                                     |  |                                | 1,392   |   |      |   | (3,238  | )
|Loss on asset dispositions                                                                |  |                                | 2       |   |      |   | 266     |  
|Cash provided by (used in) working capital items                                          |  |                                | 28,423  |   |      |   | (1,677  | )
|Other, net                                                                                |  |                                | 1       |   |      |   | (1      | )
|Change in operating assets and liabilities:                                               |  |                                |         |   |      |   |         |  
|Deferred retirement benefits                                                              |  |                                | (1,285  | ) |      |   | 3,645   |  
|Other noncurrent liabilities                                                              |  |                                |        |   |      |   | (3      | )
|                                                                                          |  |                                |         |   |      |   |         |  
|Total adjustments                                                                         |  |                                | 34,251  |   |      |   | 4,557   |  
|                                                                                          |  |                                |         |   |      |   |         |  
|Net cash provided by (used in) operating activities                                       |  |                                | 26,162  |   |      |   | (14,753 | )
|                                                                                          |  |                                |         |   |      |   |         |  
|Cash flows from investing activities:                                                     |  |                                |         |   |      |   |         |  
|Additions to property, plant and equipment                                                |  |                                | (10,886 | ) |      |   | (6,546  | )
|Additions to deferred turnaround costs                                                    |  |                                | (3,642  | ) |      |   | (29     | )
|Proceeds from asset dispositions                                                          |  |                                | 1       |   |      |   | 5       |  
|                                                                                          |  |                                |         |   |      |   |         |  
|Net cash used in investing activities                                                     |  |                                | (14,527 | ) |      |   | (6,570  | )
|                                                                                          |  |                                |         |   |      |   |         |  
|Cash flows from financing activities:                                                     |  |                                |         |   |      |   |         |  
|Net (reductions) borrowings on revolving credit facility                                  |  |                                | (9,000  | ) |      |   | 12,000  |  
|Principal reductions of long term debt                                                    |  |                                | (326    | ) |      |   | (463    | )
|                                                                                          |  |                                |         |   |      |   |         |  
|Net cash (used in) provided by financing activities                                       |  |                                | (9,326  | ) |      |   | 11,537  |  
|                                                                                          |  |                                |         |   |      |   |         |  
|Net increase (decrease) in cash and cash equivalents                                      |  |                                | 2,309   |   |      |   | (9,786  | )
|Cash and cash equivalents, beginning of year                                              |  |                                | 17,170  |   |      |   | 31,062  |  
|                                                                                          |  |                                |         |   |      |   |         |  
|Cash and cash equivalents, end of period                                                  |  | $                              | 19,479  |   |      | $ | 21,276  |  
|                                                                                          |  |                                |         |   |      |   |         |  
|Cash provided by (used in) working capital items:                                         |  |                                |         |   |      |   |         |  
|Accounts receivable, net                                                                  |  | $                              | (7,784  | ) |      | $ | 7,784   |  
|Inventories                                                                               |  |                                | 63,008  |   |      |   | 61,067  |  
|Prepaid expenses and other assets                                                         |  |                                | (10,645 | ) |      |   | (31,938 | )
|Amounts due from affiliated companies, net                                                |  |                                | (312    | ) |      |   | (4,055  | )
|Accounts payable                                                                          |  |                                | (22,967 | ) |      |   | (33,808 | )
|Accrued liabilities                                                                       |  |                                | 9,466   |   |      |   | 7,769   |  
|Income taxes payable                                                                      |  |                                | (552    | ) |      |   | (5,149  | )
|Sales, use and fuel taxes payable                                                         |  |                                | (1,791  | ) |      |   | (3,347  | )
|                                                                                          |  |                                |         |   |      |   |         |  
|Total change                                                                              |  | $                              | 28,423  |   |      | $ | (1,677  | )
|                                                                                          |  |                                |         |   |      |   |         |  
|Cash paid during the period for:                                                          |  |                                |         |   |      |   |         |  
|Interest                                                                                  |  | $                              | 662     |   |      | $ | 162     |  
|Income taxes                                                                              |  | $                              | 291     |   |      | $ | 3,538   |  
|                                                                                          |  |                                |         |   |      |   |         |  
|Non-cash investing activities:                                                            |  |                                |         |   |      |   |         |  
|Property additions & capital leases                                                       |  | $                              | 34      |   |      | $ | 715     |  
|                                                                                          |  |                                |         |   |      |   |         |  



See accompanying notes to
consolidated financial statements.



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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 sells petroleum
products under the Kwik Fill®, Citgo® and Keystone® brand names at
a network of Company-operated retail units and convenience and grocery items through Company-owned gasoline stations and convenience stores under the Red Apple Food Mart® and Country Fair® brand
names.



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



The accompanying unaudited consolidated
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting
of only normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended November 30, 2010 are not necessarily indicative of the results that may be expected for
the year ending August 31, 2011. 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, 2010.



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



|2. | Recent Accounting Pronouncements
|-- | --------------------------------



In June 2009, the FASB issued a standard that amends previous guidance on variable interest entities. The standard
modifies the criteria for determining the primary beneficiary of a variable interest entity and requires ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity and an analysis to determine whether the
enterprises variable interest or interests give it a controlling financial interest in a variable interest entity. This standard is effective as of September 1, 2010 and will not impact our financial position or results of operations.



|3. | 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. If the cost of inventories exceeds this market value, provisions are made currently for the difference between the cost and market value.



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UNITED REFINING COMPANY AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

(Unaudited)



Inventories consist of the following:



|                                |  |                  |         |   |                |   |         | 
|------------------------------- |  | ---------------- | ------- | - | -------------- | - | ------- | 
|                                |  | November 30,2010 |         |   | August 31,2010 |  
|                                |  | (in thousands)   |        
|Crude Oil                       |  | $                | 34,749  |   |                | $ | 78,165  | 
|Petroleum Products              |  |                  | 69,314  |   |                |   | 86,993  | 
|Lower of cost or market reserve |  |                  | (786    | ) |                |   |        | 
|                                |  |                  |         |   |                |   |         | 
|Total @ LIFO                    |  |                  | 103,277 |   |                |   | 165,158 | 
|                                |  |                  |         |   |                |   |         | 
|Merchandise                     |  |                  | 20,498  |   |                |   | 20,403  | 
|Supplies                        |  |                  | 20,055  |   |                |   | 21,277  | 
|                                |  |                  |         |   |                |   |         | 
|Total @ FIFO                    |  |                  | 40,553  |   |                |   | 41,680  | 
|                                |  |                  |         |   |                |   |         | 
|Total Inventory                 |  | $                | 143,830 |   |                | $ | 206,838 | 
|                                |  |                  |         |   |                |   |         | 



Inventories at
the lower of last-in, first-out (LIFO) cost or market reflect a market valuation reserve of $786,000 and $0 at November 30, 2010 and August 31, 2010, respectively. As of November 30, 2010 and August 31, 2010, the
replacement cost of LIFO inventories exceeded their LIFO carrying values by approximately $51,083,000 and $50,265,000, respectively.



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UNITED REFINING COMPANY AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

(Unaudited)



|4. | Subsidiary Guarantors
|-- | ---------------------



All the Companys wholly-owned subsidiaries fully and unconditionally guarantee, on a joint and several basis, the
Companys $350,000,000 Senior Unsecured Note Indenture due August 15, 2012. There are no restrictions within the consolidated group on the ability of the Company or any of its subsidiaries to obtain loans from or pay dividends to other
members of the consolidated group. Financial information of the Companys wholly-owned subsidiary guarantors is as follows:



CONDENSED CONSOLIDATING BALANCE SHEETS

(in thousands)



|                                                                                           |  |                   |         |   |                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|------------------------------------------------------------------------------------------ |  | ----------------- | ------- | - | --------------- | - | ------- | ------------ |  | - | ------------ | - |  | ------ | ------- | - | ---------- | - | ------- | ------------ |  | - | ------------ | - |  | - | -------- | - |  | - | ------- | -
|                                                                                           |  | November 30, 2010 |         |   | August 31, 2010 |  
|                                                                                           |  | Issuer            |         |   | Guarantors      |   |         | Eliminations |  |   | Consolidated |   |  | Issuer |         |   | Guarantors |   |         | Eliminations |  |   | Consolidated |  
|Assets                                                                                     |  |                   |         |   |                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Current:                                                                                   |  |                   |         |   |                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Cash and cash equivalents                                                                  |  | $                 | 8,152   |   |                 | $ | 11,327  |              |  | $ |             |   |  | $      | 19,479  |   |            | $ | 7,765   |              |  | $ | 9,405        |   |  | $ |         |   |  | $ | 17,170  |  
|Accounts receivable, net                                                                   |  |                   | 37,945  |   |                 |   | 34,030  |              |  |   |             |   |  |        | 71,975  |   |            |   | 30,266  |              |  |   | 33,926       |   |  |   |         |   |  |   | 64,192  |  
|Refundable income taxes                                                                    |  |                   | 37,921  |   |                 |   | (1,531  | )            |  |   |             |   |  |        | 36,390  |   |            |   | 37,921  |              |  |   | (1,531       | ) |  |   |         |   |  |   | 36,390  |  
|Inventories                                                                                |  |                   | 113,202 |   |                 |   | 30,628  |              |  |   |             |   |  |        | 143,830 |   |            |   | 176,748 |              |  |   | 30,090       |   |  |   |         |   |  |   | 206,838 |  
|Prepaid expenses and other assets                                                          |  |                   | 32,288  |   |                 |   | 6,298   |              |  |   |             |   |  |        | 38,586  |   |            |   | 22,461  |              |  |   | 5,480        |   |  |   |         |   |  |   | 27,941  |  
|Amounts due from affiliated companies                                                      |  |                   | 3,455   |   |                 |   | (171    | )            |  |   |             |   |  |        | 3,284   |   |            |   | 3,455   |              |  |   | (483         | ) |  |   |         |   |  |   | 2,972   |  
|Intercompany                                                                               |  |                   | 121,821 |   |                 |   | 16,026  |              |  |   | (137,847     | ) |  |        |        |   |            |   | 111,228 |              |  |   | 16,374       |   |  |   | (127,602 | ) |  |   |        |  
|                                                                                           |  |                   |         |   |                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Total current assets                                                                       |  |                   | 354,784 |   |                 |   | 96,607  |              |  |   | (137,847     | ) |  |        | 313,544 |   |            |   | 389,844 |              |  |   | 93,261       |   |  |   | (127,602 | ) |  |   | 355,503 |  
|Property, plant and equipment, net                                                         |  |                   | 192,090 |   |                 |   | 76,215  |              |  |   |             |   |  |        | 268,305 |   |            |   | 185,349 |              |  |   | 76,426       |   |  |   |         |   |  |   | 261,775 |  
|Deferred financing costs, net                                                              |  |                   | 1,826   |   |                 |   |        |              |  |   |             |   |  |        | 1,826   |   |            |   | 2,114   |              |  |   |             |   |  |   |         |   |  |   | 2,114   |  
|Goodwill and other non-amortizable assets                                                  |  |                   |        |   |                 |   | 11,849  |              |  |   |             |   |  |        | 11,849  |   |            |   |        |              |  |   | 11,849       |   |  |   |         |   |  |   | 11,849  |  
|Amortizable intangible assets, net                                                         |  |                   |        |   |                 |   | 1,349   |              |  |   |             |   |  |        | 1,349   |   |            |   |        |              |  |   | 1,376        |   |  |   |         |   |  |   | 1,376   |  
|Deferred turnaround costs & other assets                                                   |  |                   | 5,716   |   |                 |   | 600     |              |  |   |             |   |  |        | 6,316   |   |            |   | 3,233   |              |  |   | 661          |   |  |   |         |   |  |   | 3,894   |  
|Deferred income taxes                                                                      |  |                   |        |   |                 |   |        |              |  |   |             |   |  |        |        |   |            |   | 7,909   |              |  |   | (7,317       | ) |  |   |         |   |  |   | 592     |  
|Investment in subsidiaries                                                                 |  |                   | 8,303   |   |                 |   |        |              |  |   | (8,303       | ) |  |        |        |   |            |   | 9,263   |              |  |   |             |   |  |   | (9,263   | ) |  |   |        |  
|                                                                                           |  |                   |         |   |                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|                                                                                           |  | $                 | 562,719 |   |                 | $ | 186,620 |              |  | $ | (146,150     | ) |  | $      | 603,189 |   |            | $ | 597,712 |              |  | $ | 176,256      |   |  | $ | (136,865 | ) |  | $ | 637,103 |  
|                                                                                           |  |                   |         |   |                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Liabilities and Stockholders Equity                                                       |  |                   |         |   |                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Current:                                                                                   |  |                   |         |   |                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Revolving credit facility                                                                  |  | $                 | 74,000  |   |                 | $ |        |              |  | $ |             |   |  | $      | 74,000  |   |            | $ | 83,000  |              |  | $ |             |   |  | $ |         |   |  | $ | 83,000  |  
|Current installments of long-term debt                                                     |  |                   | 1,371   |   |                 |   | 425     |              |  |   |             |   |  |        | 1,796   |   |            |   | 1,390   |              |  |   | 498          |   |  |   |         |   |  |   | 1,888   |  
|Accounts payable                                                                           |  |                   | 22,970  |   |                 |   | 19,683  |              |  |   |             |   |  |        | 42,653  |   |            |   | 40,689  |              |  |   | 24,931       |   |  |   |         |   |  |   | 65,620  |  
|Accrued liabilities                                                                        |  |                   | 18,826  |   |                 |   | 6,209   |              |  |   |             |   |  |        | 25,035  |   |            |   | 9,457   |              |  |   | 6,112        |   |  |   |         |   |  |   | 15,569  |  
|Income taxes payable                                                                       |  |                   |        |   |                 |   |        |              |  |   |             |   |  |        |        |   |            |   | 196     |              |  |   | 356          |   |  |   |         |   |  |   | 552     |  
|Sales, use and fuel taxes payable                                                          |  |                   | 12,888  |   |                 |   | 3,776   |              |  |   |             |   |  |        | 16,664  |   |            |   | 14,461  |              |  |   | 3,994        |   |  |   |         |   |  |   | 18,455  |  
|Deferred income taxes                                                                      |  |                   | 7,049   |   |                 |   | (1,052  | )            |  |   |             |   |  |        | 5,997   |   |            |   | 7,049   |              |  |   | (1,052       | ) |  |   |         |   |  |   | 5,997   |  
|Intercompany                                                                               |  |                   |        |   |                 |   | 137,847 |              |  |   | (137,847     | ) |  |        |        |   |            |   |        |              |  |   | 127,602      |   |  |   | (127,602 | ) |  |   |        |  
|                                                                                           |  |                   |         |   |                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Total current liabilities                                                                  |  |                   | 137,104 |   |                 |   | 166,888 |              |  |   | (137,847     | ) |  |        | 166,145 |   |            |   | 156,242 |              |  |   | 162,441      |   |  |   | (127,602 | ) |  |   | 191,081 |  
|Long term debt: less current installments                                                  |  |                   | 325,933 |   |                 |   | 1,827   |              |  |   |             |   |  |        | 327,760 |   |            |   | 326,239 |              |  |   | 1,926        |   |  |   |         |   |  |   | 328,165 |  
|Deferred retirement benefits                                                               |  |                   | 87,490  |   |                 |   | 2,618   |              |  |   |             |   |  |        | 90,108  |   |            |   | 88,994  |              |  |   | 2,626        |   |  |   |         |   |  |   | 91,620  |  
|Deferred income taxes                                                                      |  |                   | (6,090  | ) |                 |   | 6,984   |              |  |   |             |   |  |        | 894     |   |            |   |        |              |  |   |             |   |  |   |         |   |  |   |        |  
|                                                                                           |  |                   |         |   |                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Total liabilities                                                                          |  |                   | 544,437 |   |                 |   | 178,317 |              |  |   | (137,847     | ) |  |        | 584,907 |   |            |   | 571,475 |              |  |   | 166,993      |   |  |   | (127,602 | ) |  |   | 610,866 |  
|                                                                                           |  |                   |         |   |                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|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                                                                 |  |                   | 22,500  |   |                 |   | 10,651  |              |  |   | (10,651      | ) |  |        | 22,500  |   |            |   | 22,500  |              |  |   | 10,651       |   |  |   | (10,651  | ) |  |   | 22,500  |  
|Retained earnings                                                                          |  |                   | 10,142  |   |                 |   | (1,136  | )            |  |   | 1,136        |   |  |        | 10,142  |   |            |   | 18,231  |              |  |   | (140         | ) |  |   | 140      |   |  |   | 18,231  |  
|Accumulated other comprehensive loss                                                       |  |                   | (14,360 | ) |                 |   | (1,230  | )            |  |   | 1,230        |   |  |        | (14,360 | ) |            |   | (14,494 | )            |  |   | (1,266       | ) |  |   | 1,266    |   |  |   | (14,494 | )
|                                                                                           |  |                   |         |   |                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Total stockholders equity                                                                 |  |                   | 18,282  |   |                 |   | 8,303   |              |  |   | (8,303       | ) |  |        | 18,282  |   |            |   | 26,237  |              |  |   | 9,263        |   |  |   | (9,263   | ) |  |   | 26,237  |  
|                                                                                           |  |                   |         |   |                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|                                                                                           |  | $                 | 562,719 |   |                 | $ | 186,620 |              |  | $ | (146,150     | ) |  | $      | 603,189 |   |            | $ | 597,712 |              |  | $ | 176,256      |   |  | $ | (136,865 | ) |  | $ | 637,103 |  
|                                                                                           |  |                   |         |   |                 |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  



9



---

##### Table of Contents

UNITED REFINING COMPANY AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

(Unaudited)



CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(in thousands)



|                                                                 |  |                                      |         |   |                                      |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|---------------------------------------------------------------- |  | ------------------------------------ | ------- | - | ------------------------------------ | - | ------- | ------------ |  | - | ------------ | - |  | ------ | ------- | - | ---------- | - | ------- | ------------ |  | - | ------------ | - |  | - | -------- | - |  | - | ------- | -
|                                                                 |  | Three Months Ended November 30, 2010 |         |   | Three Months Ended November 30, 2009 |  
|                                                                 |  | Issuer                               |         |   | Guarantors                           |   |         | Eliminations |  |   | Consolidated |   |  | Issuer |         |   | Guarantors |   |         | Eliminations |  |   | Consolidated |  
|Net sales                                                        |  | $                                    | 445,144 |   |                                      | $ | 351,981 |              |  | $ | (177,978     | ) |  | $      | 619,147 |   |            | $ | 443,974 |              |  | $ | 324,695      |   |  | $ | (147,743 | ) |  | $ | 620,926 |  
|Costs and expenses:                                              |  |                                      |         |   |                                      |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Costs of goods sold (exclusive of depreciation and amortization) |  |                                      | 438,483 |   |                                      |   | 320,332 |              |  |   | (177,978     | ) |  |        | 580,837 |   |            |   | 459,910 |              |  |   | 290,173      |   |  |   | (147,743 | ) |  |   | 602,340 |  
|Selling, general and administrative expenses                     |  |                                      | 4,224   |   |                                      |   | 31,562  |              |  |   |             |   |  |        | 35,786  |   |            |   | 5,841   |              |  |   | 30,918       |   |  |   |         |   |  |   | 36,759  |  
|Depreciation and amortization expenses                           |  |                                      | 4,051   |   |                                      |   | 1,585   |              |  |   |             |   |  |        | 5,636   |   |            |   | 4,043   |              |  |   | 1,438        |   |  |   |         |   |  |   | 5,481   |  
|                                                                 |  |                                      |         |   |                                      |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|                                                                 |  |                                      | 446,758 |   |                                      |   | 353,479 |              |  |   | (177,978     | ) |  |        | 622,259 |   |            |   | 469,794 |              |  |   | 322,529      |   |  |   | (147,743 | ) |  |   | 644,580 |  
|                                                                 |  |                                      |         |   |                                      |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Operating (loss) income                                          |  |                                      | (1,614  | ) |                                      |   | (1,498  | )            |  |   |             |   |  |        | (3,112  | ) |            |   | (25,820 | )            |  |   | 2,166        |   |  |   |         |   |  |   | (23,654 | )
|                                                                 |  |                                      |         |   |                                      |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Other income (expense):                                          |  |                                      |         |   |                                      |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Interest expense, net                                            |  |                                      | (8,715  | ) |                                      |   | (199    | )            |  |   |             |   |  |        | (8,914  | ) |            |   | (8,132  | )            |  |   | (335         | ) |  |   |         |   |  |   | (8,467  | )
|Other, net                                                       |  |                                      | (807    | ) |                                      |   | 226     |              |  |   |             |   |  |        | (581    | ) |            |   | (816    | )            |  |   | 210          |   |  |   |         |   |  |   | (606    |  
|Equity in net (loss) income of subsidiaries                      |  |                                      | (996    | ) |                                      |   |        |              |  |   | 996          |   |  |        |        |   |            |   | 1,210   |              |  |   |             |   |  |   | (1,210   | ) |  |   |        |  
|                                                                 |  |                                      |         |   |                                      |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|                                                                 |  |                                      | (10,518 | ) |                                      |   | 27      |              |  |   | 996          |   |  |        | (9,495  | ) |            |   | (7,738  | )            |  |   | (125         | ) |  |   | (1,210   | ) |  |   | (9,073  | )
|                                                                 |  |                                      |         |   |                                      |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|(Loss) income before income tax (benefit) expense                |  |                                      | (12,132 | ) |                                      |   | (1,471  | )            |  |   | 996          |   |  |        | (12,607 | ) |            |   | (33,558 | )            |  |   | 2,041        |   |  |   | (1,210   | ) |  |   | (32,727 | )
|Income tax (benefit) expense                                     |  |                                      | (4,043  | ) |                                      |   | (475    | )            |  |   |             |   |  |        | (4,518  | ) |            |   | (14,248 | )            |  |   | 831          |   |  |   |         |   |  |   | (13,417 | )
|                                                                 |  |                                      |         |   |                                      |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Net (loss) income                                                |  | $                                    | (8,089  | ) |                                      | $ | (996    | )            |  | $ | 996          |   |  | $      | (8,089  | ) |            | $ | (19,310 | )            |  | $ | 1,210        |   |  | $ | (1,210   | ) |  | $ | (19,310 | )
|                                                                 |  |                                      |         |   |                                      |   |         |              |  |   |              |   |  |        |         |   |            |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  



10



---

##### Table of Contents

UNITED REFINING COMPANY AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

(Unaudited)



CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in thousands)



|                                                         |  |                                      |         |   |                                      |   |        |              |  |   |              |  |  |        |         |   |            |   |         |              |  |   |              |   |  |   |   |  |  |   |         |  
|-------------------------------------------------------- |  | ------------------------------------ | ------- | - | ------------------------------------ | - | ------ | ------------ |  | - | ------------ |  |  | ------ | ------- | - | ---------- | - | ------- | ------------ |  | - | ------------ | - |  | - | - |  |  | - | ------- | -
|                                                         |  | Three Months Ended November 30, 2010 |         |   | Three Months Ended November 30, 2009 |  
|                                                         |  | Issuer                               |         |   | Guarantors                           |   |        | Eliminations |  |   | Consolidated |  |  | Issuer |         |   | Guarantors |   |         | Eliminations |  |   | Consolidated |  
|Net cash provided by (used in) operating activities      |  | $                                    | 22,781  |   |                                      | $ | 3,381  |              |  | $ |             |  |  | $      | 26,162  |   |            | $ | (20,574 | )            |  | $ | 5,821        |   |  | $ |  |  |  | $ | (14,753 | )
|                                                         |  |                                      |         |   |                                      |   |        |              |  |   |              |  |  |        |         |   |            |   |         |              |  |   |              |   |  |   |   |  |  |   |         |  
|Cash flows from investing activities:                    |  |                                      |         |   |                                      |   |        |              |  |   |              |  |  |        |         |   |            |   |         |              |  |   |              |   |  |   |   |  |  |   |         |  
|Additions to property, plant and equipment               |  |                                      | (9,598  | ) |                                      |   | (1,288 | )            |  |   |             |  |  |        | (10,886 | ) |            |   | (4,225  | )            |  |   | (2,321       | ) |  |   |  |  |  |   | (6,546  | )
|Additions to deferred turnaround costs                   |  |                                      | (3,642  | ) |                                      |   |       |              |  |   |             |  |  |        | (3,642  | ) |            |   | (16     | )            |  |   | (13          | ) |  |   |  |  |  |   | (29     | )
|Proceeds from asset dispositions                         |  |                                      |        |   |                                      |   | 1      |              |  |   |             |  |  |        | 1       |   |            |   | 5       |              |  |   |             |   |  |   |  |  |  |   | 5       |  
|                                                         |  |                                      |         |   |                                      |   |        |              |  |   |              |  |  |        |         |   |            |   |         |              |  |   |              |   |  |   |   |  |  |   |         |  
|Net cash used in investing activities                    |  |                                      | (13,240 | ) |                                      |   | (1,287 | )            |  |   |             |  |  |        | (14,527 | ) |            |   | (4,236  | )            |  |   | (2,334       | ) |  |   |  |  |  |   | (6,570  | )
|                                                         |  |                                      |         |   |                                      |   |        |              |  |   |              |  |  |        |         |   |            |   |         |              |  |   |              |   |  |   |   |  |  |   |         |  
|Cash flows from financing activities:                    |  |                                      |         |   |                                      |   |        |              |  |   |              |  |  |        |         |   |            |   |         |              |  |   |              |   |  |   |   |  |  |   |         |  
|Net (reductions) borrowings on revolving credit facility |  |                                      | (9,000  | ) |                                      |   |       |              |  |   |             |  |  |        | (9,000  | ) |            |   | 12,000  |              |  |   |             |   |  |   |  |  |  |   | 12,000  |  
|Principal reductions of long-term debt                   |  |                                      | (154    | ) |                                      |   | (172   | )            |  |   |             |  |  |        | (326    | ) |            |   | (193    | )            |  |   | (270         | ) |  |   |  |  |  |   | (463    | )
|                                                         |  |                                      |         |   |                                      |   |        |              |  |   |              |  |  |        |         |   |            |   |         |              |  |   |              |   |  |   |   |  |  |   |         |  
|Net cash (used in) provided by financing activities      |  |                                      | (9,154  | ) |                                      |   | (172   | )            |  |   |             |  |  |        | (9,326  | ) |            |   | 11,807  |              |  |   | (270         | ) |  |   |  |  |  |   | 11,537  |  
|                                                         |  |                                      |         |   |                                      |   |        |              |  |   |              |  |  |        |         |   |            |   |         |              |  |   |              |   |  |   |   |  |  |   |         |  
|Net increase (decrease) in cash and cash equivalents     |  |                                      | 387     |   |                                      |   | 1,922  |              |  |   |             |  |  |        | 2,309   |   |            |   | (13,003 | )            |  |   | 3,217        |   |  |   |  |  |  |   | (9,786  | )
|Cash and cash equivalents, beginning of year             |  |                                      | 7,765   |   |                                      |   | 9,405  |              |  |   |             |  |  |        | 17,170  |   |            |   | 21,265  |              |  |   | 9,797        |   |  |   |  |  |  |   | 31,062  |  
|                                                         |  |                                      |         |   |                                      |   |        |              |  |   |              |  |  |        |         |   |            |   |         |              |  |   |              |   |  |   |   |  |  |   |         |  
|Cash and cash equivalents, end of period                 |  | $                                    | 8,152   |   |                                      | $ | 11,327 |              |  | $ |             |  |  | $      | 19,479  |   |            | $ | 8,262   |              |  | $ | 13,014       |   |  | $ |  |  |  | $ | 21,276  |  
|                                                         |  |                                      |         |   |                                      |   |        |              |  |   |              |  |  |        |         |   |            |   |         |              |  |   |              |   |  |   |   |  |  |   |         |  



11



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##### Table of Contents

UNITED REFINING COMPANY AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

(Unaudited)



|5. | 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
EndedNovember 30, |        
|                                          |  | 2010                           |         |   | 2009           |  
|Net Sales                                 |  |                                |         |   |                |   |         |  
|Retail                                    |  | $                              | 351,219 |   |                | $ | 323,629 |  
|Wholesale                                 |  |                                | 267,928 |   |                |   | 297,297 |  
|                                          |  |                                |         |   |                |   |         |  
|                                          |  | $                              | 619,147 |   |                | $ | 620,926 |  
|                                          |  |                                |         |   |                |   |         |  
|Intersegment Sales                        |  |                                |         |   |                |   |         |  
|Wholesale                                 |  | $                              | 177,216 |   |                | $ | 146,677 |  
|                                          |  |                                |         |   |                |   |         |  
|Operating (Loss) Income                   |  |                                |         |   |                |   |         |  
|Retail                                    |  | $                              | (1,273  | ) |                | $ | 1,929   |  
|Wholesale                                 |  |                                | (1,839  | ) |                |   | (25,583 | )
|                                          |  |                                |         |   |                |   |         |  
|                                          |  | $                              | (3,112  | ) |                | $ | (23,654 | )
|                                          |  |                                |         |   |                |   |         |  
|Depreciation and Amortization             |  |                                |         |   |                |   |         |  
|Retail                                    |  | $                              | 1,413   |   |                | $ | 1,328   |  
|Wholesale                                 |  |                                | 4,223   |   |                |   | 4,153   |  
|                                          |  |                                |         |   |                |   |         |  
|                                          |  | $                              | 5,636   |   |                | $ | 5,481   |  
|                                          |  |                                |         |   |                |   |         |  
|                                          |  |                               
|                                          |  | November 30,2010               |         |   | August 31,2010 |  
|Total Assets                              |  |                                |         |   |                |   |         |  
|Retail                                    |  | $                              | 157,342 |   |                | $ | 146,932 |  
|Wholesale                                 |  |                                | 445,847 |   |                |   | 490,171 |  
|                                          |  |                                |         |   |                |   |         |  
|                                          |  | $                              | 603,189 |   |                | $ | 637,103 |  
|                                          |  |                                |         |   |                |   |         |  
|Capital Expenditures (including non-cash) |  |                                |         |   |                |   |         |  
|Retail                                    |  | $                              | 1,142   |   |                | $ | 5,180   |  
|Wholesale                                 |  |                                | 9,778   |   |                |   | 22,233  |  
|                                          |  |                                |         |   |                |   |         |  
|                                          |  | $                              | 10,920  |   |                | $ | 27,413  |  
|                                          |  |                                |         |   |                |   |         |  



12



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##### Table of Contents

UNITED REFINING COMPANY AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

(Unaudited)



|6. | Employee Benefit Plans
|-- | ----------------------



For the periods ended November 30, 2010 and 2009, net pension and other postretirement benefit costs were comprised
of the following:



|                                      |  |                                |        |   |                                |   |       |      |  |   |      |   |  |   |       | 
|------------------------------------- |  | ------------------------------ | ------ | - | ------------------------------ | - | ----- | ---- |  | - | ---- | - |  | - | ----- | 
|                                      |  | Pension Benefits               |        |   | OtherPost-RetirementBenefits   |  
|                                      |  | Three Months EndedNovember 30, |        |   | Three Months EndedNovember 30, |  
|                                      |  | 2010                           |        |   | 2009                           |   |       | 2010 |  |   | 2009 |  
|                                      |  | (in thousands)                 |       
|Service cost                          |  | $                              | 447    |   |                                | $ | 888   |      |  | $ | 377  |   |  | $ | 841   | 
|Interest cost on benefit obligation   |  |                                | 1,244  |   |                                |   | 1,434 |      |  |   | 630  |   |  |   | 1,187 | 
|Expected return on plan assets        |  |                                | (1,135 | ) |                                |   | (984  | )    |  |   |     |   |  |   |      | 
|Amortization of transition obligation |  |                                |       |   |                                |   |      |      |  |   |     |   |  |   | 149   | 
|Amortization and deferral of net loss |  |                                | 509    |   |                                |   | 895   |      |  |   | (282 | ) |  |   | 460   | 
|                                      |  |                                |        |   |                                |   |       |      |  |   |      |   |  |   |       | 
|Net periodic benefit cost             |  | $                              | 1,065  |   |                                | $ | 2,233 |      |  | $ | 725  |   |  | $ | 2,637 | 
|                                      |  |                                |        |   |                                |   |       |      |  |   |      |   |  |   |       | 



As of
November 30, 2010, $2,157,000 of contributions have been made to the Company pension plans for the fiscal year ending August 31, 2011.



|7. | 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 carrying value exceeded the fair value of the senior notes at November 30, 2010 and August 31, 2010
by $33,102,000 and $29,846,000, respectively.



13



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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;
| | - |  | -----------------------------------



14



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##### Table of Contents

| |  |  | future projects and investments;
| | - |  | --------------------------------



| |  |  | 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 2011. Average crude prices for the first quarter of fiscal year 2011 has risen as compared to the fourth quarter of fiscal year 2010. The average NYMEX crude price for the second fiscal quarter based
on values published on January 7, 2011 was $87.19/bbl, a $9.13/bbl or a 11.7% increase from the average price for the first fiscal quarter of 2011 which was $78.06/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 proceeding month to the prices of NYMEX gasoline and heating oil contracts in the current trading month, benefited from the rising crude 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 second quarter of fiscal year 2011 based on values as of
January 7, 2011, was $14.74/bbl, a $3.24/bbl or a 28.2% increase from the lagged crackspread for the first quarter of fiscal year 2011 which was $11.50/bbl.



The Company conducted a scheduled maintenance
turnaround of the west end of the refinery consisting of the FCC Unit and related units. The turnaround began on October 4, 2010 and was completed on November 4, 2010. The major activity in addition to normal shutdown maintenance was
upgrading of the regenerator, flue gas line and electrostatic precipitator at the FCC Unit.



On July 26, 2010, a rupture occurred in Line 6B pipeline on Enbridges Lakehead system in Michigan. The
Companys heavy crude oil purchases are shipped on Line 6B from western Canada. As a result, on August 5, 2010, the Company was forced to reduce production in its crude processing unit until such time as the Enbridge Line 6B could be
repaired. Crude runs for the first quarter of fiscal 2011 were 40,533 bpd versus crude runs of 56,500 bpd for the first quarter of fiscal 2010. The interruption of heavy crude deliveries via Line 6B also negatively affected asphalt production during
the asphalt selling season. The Companys supply group maintained crude sourcing at a reduced rate for the refinery during the disruption to Line 6B through other Enbridge pipelines. On September 28, 2010, Enbridge began a phased restart
and return to service of Line 6B.



The Companys property insurance covering the refinery operation contains a provision for contingent business
interruption in the maximum amount of $15 million plus up to $5 million towards expenses. As such, the limits of coverage are separate from the general limits applying to direct damage to the refinery. The Company has placed the insurers on notice
of the Enbridge loss and, in connection therewith, is preparing its claim.



15



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##### Table of Contents

The Company is in the process of determining the losses it suffered as a
result of the pipeline rupture, and intends to seek restitution from Enbridge for all of the losses it has incurred. The Company believes that the estimated losses due to this disruption, based on the most current information available to it, is
between $50 and $60 million dollars.



Results
of Operations



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



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



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



Retail Operations:



|                                             |  |                                |         |   |      |   |         |  
|-------------------------------------------- |  | ------------------------------ | ------- | - | ---- | - | ------- | -
|                                             |  | Three Months
EndedNovember 30, |        
|                                             |  | 2010                           |         |   | 2009 |  
|                                             |  | (dollars in thousands)         |        
|Net Sales                                    |  |                                |         |   |      |   |         |  
|Petroleum                                    |  | $                              | 286,481 |   |      | $ | 261,343 |  
|Merchandise and other                        |  |                                | 64,738  |   |      |   | 62,286  |  
|                                             |  |                                |         |   |      |   |         |  
|Total Net Sales                              |  |                                | 351,219 |   |      |   | 323,629 |  
|Costs of goods sold                          |  |                                | 319,625 |   |      |   | 289,636 |  
|Selling, general and administrative expenses |  |                                | 31,454  |   |      |   | 30,736  |  
|Depreciation and amortization expenses       |  |                                | 1,413   |   |      |   | 1,328   |  
|                                             |  |                                |         |   |      |   |         |  
|Segment Operating (Loss) Income              |  | $                              | (1,273  | ) |      | $ | 1,929   |  
|                                             |  |                                |         |   |      |   |         |  
|Retail Operating Data:                       |  |                                |         |   |      |   |         |  
|Petroleum sales (thousands of gallons)       |  |                                | 99,111  |   |      |   | 97,454  |  
|                                             |  |                               
|Petroleum margin (a)                         |  | $                              | 15,105  |   |      | $ | 18,032  |  
|Petroleum margin ($/gallon) (b)              |  |                                | .1524   |   |      |   | .1850   |  
|                                             |  |                               
|Merchandise and other margins                |  | $                              | 16,489  |   |      | $ | 15,961  |  
|Merchandise margin (percent of sales)        |  |                                | 25.5    | % |      |   | 25.6    | %



|(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.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



16



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##### Table of Contents

Comparison of Fiscal Quarters Ended November 30, 2010 and 2009



Net Sales



Retail sales increased during the fiscal
quarter ended November 30, 2010 by $27.6 million or 8.5% for the comparable period in fiscal 2010 from $323.6 million to $351.2 million. The increase was primarily due to $25.1 million in petroleum sales and $2.5 million in merchandise sales.
The petroleum sales increase resulted from a 7.8% increase in retail selling prices per gallon, and a 1.7 million gallon or 1.7% increase in retail petroleum 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 fiscal quarter ended November 30, 2010 by $30.0 million or 10.4% for the comparable period in fiscal 2010 from $289.6 million to $319.6 million. The
increase was primarily due to $26.0 million in petroleum purchase prices, merchandise cost of $1.9 million, fuel tax of $1.0 million, and inventory costs of $1.1 million.



Selling, General and Administrative Expenses



Retail Selling, General and
Administrative (SG&A) expenses increased during the fiscal quarter ended November 30, 2010 by $.8 million or 2.0% for the comparable period in fiscal 2010 from $30.7 million to $31.5 million. The increase was primarily due to
payroll costs of $.6 million, credit/customer service costs of $.4 million, maintenance costs of $.1 million, and insurance/utilities/taxes of $.1 million offset by a decrease in pension/post retirement costs of $.4 million.



Wholesale Operations:



|                                                                 |  |                                |         |   |      |   |         |  
|---------------------------------------------------------------- |  | ------------------------------ | ------- | - | ---- | - | ------- | -
|                                                                 |  | Three Months
EndedNovember 30, |        
|                                                                 |  | 2010                           |         |   | 2009 |  
|                                                                 |  | (dollars in thousands)         |        
|Net Sales (a)                                                    |  | $                              | 267,928 |   |      | $ | 297,297 |  
|Costs of goods sold (exclusive of depreciation and amortization) |  |                                | 261,212 |   |      |   | 312,704 |  
|Selling, general and administrative expenses                     |  |                                | 4,332   |   |      |   | 6,023   |  
|Depreciation and amortization expenses                           |  |                                | 4,223   |   |      |   | 4,153   |  
|                                                                 |  |                                |         |   |      |   |         |  
|Segment Operating Loss                                           |  | $                              | (1,839  | ) |      | $ | (25,583 | )
|                                                                 |  |                                |         |   |      |   |         |  



17



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##### Table of Contents

Key Wholesale Operating Statistics:



|                                                                                 |  |                                |         |   |      |   |         |  
|-------------------------------------------------------------------------------- |  | ------------------------------ | ------- | - | ---- | - | ------- | -
|                                                                                 |  | Three Months EndedNovember 31, |        
|                                                                                 |  | 2010                           |         |   | 2009 |  
|Refinery Product Yield (thousands of barrels)                                    |  |                                |         |   |      |   |         |  
|Gasoline and gasoline blendstock                                                 |  |                                | 1,629   |   |      |   | 2,281   |  
|Distillates                                                                      |  |                                | 1,131   |   |      |   | 1,139   |  
|Asphalt                                                                          |  |                                | 632     |   |      |   | 1,556   |  
|Butane, propane, residual products, internally produced fuel and other (Other) |  |                                | 768     |   |      |   | 527     |  
|                                                                                 |  |                                |         |   |      |   |         |  
|Total Product Yield                                                              |  |                                | 4,160   |   |      |   | 5,503   |  
|                                                                                 |  |                                |         |   |      |   |         |  
|% Heavy Crude Oil of Total Refinery Throughout (b)                               |  |                                | 22      | % |      |   | 61      | %
|Crude throughput (thousand barrels per day)                                      |  |                                | 40.5    |   |      |   | 56.5    |  
|                                                                                 |  |                                |         |   |      |   |         |  
|                                                                                 |  |                               
|Product Sales (thousand of barrels) (a)                                          |  |                                |         |   |      |   |         |  
|Gasoline and gasoline blendstock                                                 |  |                                | 1,092   |   |      |   | 1,263   |  
|Distillates                                                                      |  |                                | 908     |   |      |   | 852     |  
|Asphalt                                                                          |  |                                | 1,075   |   |      |   | 1,940   |  
|Other                                                                            |  |                                | 124     |   |      |   | 251     |  
|                                                                                 |  |                                |         |   |      |   |         |  
|Total Product Sales Volume                                                       |  |                                | 3,199   |   |      |   | 4,306   |  
|                                                                                 |  |                                |         |   |      |   |         |  
|                                                                                 |  |                               
|Product Sales (dollars in thousands) (a)                                         |  |                                |         |   |      |   |         |  
|Gasoline and gasoline blendstock                                                 |  | $                              | 98,392  |   |      | $ | 102,529 |  
|Distillates                                                                      |  |                                | 88,964  |   |      |   | 70,313  |  
|Asphalt                                                                          |  |                                | 74,362  |   |      |   | 113,247 |  
|Other                                                                            |  |                                | 6,210   |   |      |   | 11,208  |  
|                                                                                 |  |                                |         |   |      |   |         |  
|Total Product Sales                                                              |  | $                              | 267,928 |   |      | $ | 297,297 |  
|                                                                                 |  |                                |         |   |      |   |         |  



|(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 November 30, 2010 and 2009



During the three months ended November 30, 2010, wholesale sales were negatively affected by the Enbridge Pipeline disruption and the 30-day scheduled refinery maintenance turnaround in October. These two
events resulted in the Company running an average crude throughput of 40,500 bbl per day versus 56,500 bbl per day for the comparable period in fiscal 2010. The Enbridge Pipeline disruption also resulted in the Company running 22% of heavy crude oil
versus 61% for the comparable period in fiscal 2010.



Net Sales



Wholesale sales decreased during the three months ended November 30, 2010 by $29.4 million or 9.9% for the comparable period in fiscal 2010 from $297.3 million to $267.9 million. This was due to a
25.7% decrease in wholesale volume offset by a 21.3% increase in wholesale prices.



Costs of Goods Sold (exclusive of depreciation and amortization)



Wholesale costs of goods sold decreased during the three months ended November 30, 2010 by $51.5 million or 16.5% for
the comparable period in fiscal 2010 from $312.7 million to $261.2 million. The decrease in wholesale costs of goods sold during this period was primarily due to a decrease in cost of raw materials.



18



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##### Table of Contents

Selling, General and Administrative Expenses



Wholesale SG&A expenses decreased during
the three months ended November 30, 2010 by $1.7 million or 28.1% for the comparable period in fiscal 2010 from $6.0 million or 1.8% of net wholesale to $4.3 million or 1.6% of net wholesale sales. The decrease was primarily due to changes made
in pension/post retirement benefits. Effective September 1, 2010, postretirement medical benefits for new hires and active salaried employees retiring after September 1, 2010 were eliminated. Additionally, effective
January 1, 2011, deductibles and co-payments will be added to the medical benefits plan for all plan participants. For salaried employees 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 August 31, 2010, benefits under the Companys defined benefit pension plan were frozen for all salaried
employees, including the Companys Chief Executive Officer and Chief Financial Officer. The Company will provide an enhanced contribution under its defined contribution 401(k) plan for all eligible employees as well as a transition
contribution for older employees.



Consolidated Expenses:



Interest Expense, net



Net interest expense (interest expense less interest income) for the three months ended November 30, 2010 increased
$.4 million or 4.7% for the comparable period in fiscal 2010 from $8.5 million to $8.9 million. The increase was due in part to increased borrowings on the PNC Credit Facility during the period.



Income Tax Expense / (Benefit)



The Companys effective tax rate for
the three months ended November 30, 2010 and 2009 was approximately 36% and 41% respectively. This reduction in the effective tax rate was due to the Company recording a valuation allowance for Pennsylvania Net Operating tax losses in the
November 2010 period.



Liquidity and Capital
Resources



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



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



|                          |  |                  |         | 
|------------------------- |  | ---------------- | ------- | 
|                          |  | November 30,2010 |        
|Cash and cash equivalents |  | $                | 19,479  | 
|Working capital           |  | $                | 147,399 | 
|Current ratio             |  |                  | 1.9     | 
|Debt                      |  | $                | 403,556 | 



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. These investments have staggered maturity dates, none of which exceed three months. They have a high degree of liquidity since the securities are traded in public markets.



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|                                                                 |  |                                   |       |  
|---------------------------------------------------------------- |  | --------------------------------- | ----- | -
|                                                                 |  | Three MonthsEndedNovember 30,2010 |      
|                                                                 |  | (in millions)                     |      
|Significant uses of cashInvesting activities:                    |  |                                   |       |  
|Additions to deferred turnaround costs                           |  | $                                 | (3.6  | )
|Property, plant and equipment                                    |  |                                   |       |  
|FCC feed hydrotreater                                            |  | $                                 | (4.1  | )
|Other general capital items (tank repairs, refinery piping, etc) |  |                                   | (1.9  | )
|Retail maintenance (blacktop, roof, HVAC, rehab)                 |  |                                   | (.6   | )
|Computers and equipment upgrade                                  |  |                                   | (.3   | )
|Retail petroleum upgrade                                         |  |                                   | (.2   | )
|Capital equipment                                                |  |                                   | (.1   | )
|State and federal mandates:                                      |  |                                   |       |  
|Renewable fuels  cost estimates                                 |  |                                   | (2.1  | )
|Reduction of benzene and gasoline                                |  |                                   | (1.6  | )
|                                                                 |  |                                   |       |  
|Total property, plant and equipment                              |  | $                                 | (10.9 | )
|                                                                 |  |                                   |       |  
|Net cash used in investing activities                            |  | $                                 | (14.5 | )
|                                                                 |  |                                   |       |  
|Financing activities:                                            |  |                                   |       |  
|Net borrowings on revolving credit facility                      |  | $                                 | (9.0  | )
|Principal reductions of long term debt                           |  |                                   | (.3   | )
|                                                                 |  |                                   |       |  
|Net cash provided by financing activities                        |  | $                                 | (9.3  | )
|                                                                 |  |                                   |       |  
|Working capital items:                                           |  |                                   |       |  
|Decrease in inventory                                            |  | $                                 | 63.0  |  
|Accrued liabilities increase                                     |  |                                   | 9.5   |  
|Accounts payable decrease                                        |  |                                   | (23.0 | )
|Prepaid expense increase                                         |  |                                   | (10.7 | )
|Accounts receivable increase                                     |  |                                   | (7.8  | )
|Sales, use and fuel taxes payable decrease                       |  |                                   | (1.8  | )
|Income taxes payable decrease                                    |  |                                   | (.5   | )
|Amounts due from affiliated companies, net increase              |  |                                   | (.3   | )
|                                                                 |  |                                   |       |  
|Cash provided by working capital items                           |  | $                                 | 28.4  |  
|                                                                 |  |                                   |       |  



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



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



Future liquidity, both short and long-term, will continue to be primarily dependent on
realizing a refinery margin sufficient to cover fixed and variable expenses, including planned capital expenditures. We expect to be able to meet our working capital, capital expenditure, contractual obligations, letter of credit and debt service
requirements out of cash flow from operations, cash on hand and borrowings under our Revolving Credit Facility with PNC Bank, N.A. as Agent Bank. Our revolving credit facility with PNC Bank, N.A., as Agent Bank (the Revolving Credit
Facility) is $130,000,000. This provides the Company with flexibility relative to its cash flow requirements in light of market fluctuations, particularly involving crude oil prices and seasonal business cycles and will assist the Company in
meeting its working capital, ongoing capital expenditure needs and for general corporate purposes. The agreement expires on November 27, 2011. Under the Revolving Credit Facility, the applicable margin is calculated on the average unused
availability as follows: (a) for base rate borrowing, at the



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greater of the Agent Banks prime rate plus an applicable margin of 0% to .5%; the Federal Funds Open Rate plus .5%; or the Daily LIBOR rate plus 1%; (b) for euro-rate based borrowings,
at the LIBOR Rate plus an applicable margin of 2.35% to 1.75%. The Agent Banks prime rate at November 30, 2010 was 3.25%.



The 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 $4.4 million as of November 30, 2010 and there were outstanding borrowings under the Revolving Credit Facility in the amount
of $74.0 million resulting in net availability of $51.6 million. As of January 14, 2011 there was $80.0 million outstanding on the $130 million Revolving Credit Facility and standby letters of credit in the amount of $4.4 million, resulting in
a net availability of $45.6 million and the Company had full access to it. The Companys working capital ratio was 1.9 as of November 30, 2010.



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



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



Seasonal Factors



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



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



Inflation



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



|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
|------- | -----------------------------------------------------------



The Company uses its revolving credit facility to finance a portion of its operations. As of
January 14, 2011, there was $80.0 million outstanding under the revolving line of credit. 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.



The Company has exposure to price fluctuations of crude oil and refined products. The Company does not manage the price risk related to all of its inventories of crude oil and refined products with a
permanent formal hedging program, but does manage its risk exposures by managing inventory levels.The Company had no open future positions at November 30, 2010.



See also Recent Developments section of
Item 2Managements Discussion and Analysis of Financial Condition and Results of Operations.



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|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 November 30, 2010. 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 November 30, 2010, 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 November 30, 2010 that has materially affected, or is reasonably likely to materially affect, the Companys internal
controls over financial reporting.



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|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,
2010.



|ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
|------- | ------------------------------------------------------------



None.



|ITEM 3. | DEFAULTS UPON SENIOR SECURITIES.
|------- | --------------------------------



None.



|ITEM 4. | (REMOVED AND RESERVED).
|------- | -----------------------



|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



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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: January 14, 2011



UNITED REFINING COMPANY
(Registrant)/s/ Myron L. TurfittMyron L. Turfitt
President/s/ James E.
MurphyJames 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: January 14, 2011



KIANTONE PIPELINE CORPORATION
(Registrant)/s/ Myron L. TurfittMyron L. Turfitt
President/s/ James E.
MurphyJames 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: January 14, 2011



UNITED REFINING COMPANY OF PENNSYLVANIA
(Registrant)/s/ Myron L. TurfittMyron L. Turfitt
President/s/ James E.
MurphyJames 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: January 14, 2011



KIANTONE PIPELINE COMPANY
(Registrant)/s/ Myron L. TurfittMyron L. Turfitt
President/s/ James E.
MurphyJames 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: January 14, 2011



UNITED JET CENTER, INC.
(Registrant)/s/ Myron L. TurfittMyron L. Turfitt
President/s/ James E.
MurphyJames 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: January 14, 2011



KWIK-FILL CORPORATION
(Registrant)/s/ Myron L. TurfittMyron L. Turfitt
President/s/ James E.
MurphyJames 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: January 14, 2011



INDEPENDENT GASOLINE AND OIL COMPANY OF ROCHESTER, INC.
(Registrant)/s/ Myron L. TurfittMyron L. Turfitt
President/s/ James E.
MurphyJames 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: January 14, 2011



BELL OIL CORP.
(Registrant)/s/ Myron L. TurfittMyron L. Turfitt
President/s/ James E.
MurphyJames 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: January 14, 2011



PPC, INC.
(Registrant)/s/ Myron L. TurfittMyron L. Turfitt
President/s/ James E.
MurphyJames 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: January 14, 2011



SUPER TEST PETROLEUM, INC.
(Registrant)/s/ Myron L. TurfittMyron L. Turfitt
President/s/ James E.
MurphyJames 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: January 14, 2011



KWIK-FIL, INC.
(Registrant)/s/ Myron L. TurfittMyron L. Turfitt
President/s/ James E.
MurphyJames 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: January 14, 2011



VULCAN ASPHALT REFINING CORPORATION
(Registrant)/s/ Myron L. TurfittMyron L. Turfitt
President/s/ James E.
MurphyJames 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: January 14, 2011



COUNTRY FAIR, INC.
(Registrant)/s/ Myron L. TurfittMyron L. Turfitt
President and Chief Operating Officer/s/ James E.
MurphyJames E. Murphy
Vice President  Finance




36