---

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 PERIOD ENDED NOVEMBER 30, 2003
| |  | --------------------------------------



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



| |  | For the transition period fromto
| |  | --------------------------------



Commission File No. 333-35083



---



UNITED REFINING COMPANY

(Exact name of registrant as specified in its charter)



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



814-726-4674

Registrants telephone number, including area code



---



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



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



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



---



---

TABLE OF ADDITIONAL REGISTRANTS



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





2



---

|         |  | PAGE(S)                                                                                          
|-------- |  | -------------------------------------------------------------------------------------------------
|PART I.  |  | FINANCIAL INFORMATION                                                                            
|         |  |                                                                                                  
|Item 1.  |  | Financial Statements                                                                             
|         |  |                                                                                                  
|         |  | Consolidated Balance Sheets  November 30, 2003 (unaudited) and August 31, 2003                  
|         |  |                                                                                                  
|         |  | Consolidated Statements of Operations  Three Months Ended November 30, 2003 and 2002 (unaudited)
|         |  |                                                                                                  
|         |  | Consolidated Statements of Cash Flows  Three Months Ended November 30, 2003 and 2002 (unaudited)
|         |  |                                                                                                  
|         |  | Notes to Consolidated Financial Statements (unaudited)                                           
|         |  |                                                                                                  
|Item 2.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations            
|         |  |                                                                                                  
|Item 3.  |  | Quantitative and Qualitative Disclosures about Market Risk                                       
|         |  |                                                                                                  
|Item 4.  |  | Controls and Procedures                                                                          
|         |  |                                                                                                  
|PART II. |  | OTHER INFORMATION                                                                                
|         |  |                                                                                                  
|Item 6.  |  | Exhibits and Reports on Form 8-K                                                                 
|         |  |                                                                                                  
|         |  |                                                                                                  
|         |  |                                                                                                  
|         |  | (a)                                                                                              
|         |  |                                                                                                  
|         |  |                                                                                                  
|         |  |                                                                                                  
|         |  |                                                                                                  
|         |  |                                                                                                  
|         |  |                                                                                                  
|         |  |                                                                                                  
|         |  |                                                                                                  
|         |  |                                                                                                  
|         |  | (b)                                                                                              



3



---

UNITED REFINING COMPANY AND SUBSIDIARIES



CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)



|                                                                                         |  | November 30, 2003 (Unaudited) |         |   | August 31, 2003 |  
|---------------------------------------------------------------------------------------- |  | ----------------------------- | ------- | - | --------------- | -
|Assets                                                                                   |  |                               |         |   |                 |  
|Current:                                                                                 |  |                               |         |   |                 |  
|Cash and cash equivalents                                                                |  | $                             | 11,811  |   |                 | $
|Accounts receivable, net                                                                 |  |                               | 37,278  |   |                 |  
|Inventories                                                                              |  |                               | 89,543  |   |                 |  
|Prepaid expenses and other assets                                                        |  |                               | 16,423  |   |                 |  
|Amounts due from affiliated companies, net                                               |  |                               |        |   |                 |  
|                                                                                         |  |                               |         |   |                 |  
|Total current assets                                                                     |  |                               | 155,055 |   |                 |  
|Property, plant and equipment, net                                                       |  |                               | 185,947 |   |                 |  
|Investment in affiliated company                                                         |  |                               | 640     |   |                 |  
|Deferred financing costs, net                                                            |  |                               | 2,739   |   |                 |  
|Goodwill                                                                                 |  |                               | 1,349   |   |                 |  
|Tradename                                                                                |  |                               | 10,500  |   |                 |  
|Amortizable intangible assets, net                                                       |  |                               | 3,561   |   |                 |  
|Deferred turnaround costs and other assets, net                                          |  |                               | 8,088   |   |                 |  
|Deferred income taxes                                                                    |  |                               |        |   |                 |  
|                                                                                         |  |                               |         |   |                 |  
|                                                                                         |  | $                             | 367,879 |   |                 | $
|                                                                                         |  |                               |         |   |                 |  
|Liabilities and Stockholders Equity                                                     |  |                               |         |   |                 |  
|Current:                                                                                 |  |                               |         |   |                 |  
|Revolving credit facility                                                                |  | $                             | 30,500  |   |                 | $
|Current installments of long-term debt                                                   |  |                               | 649     |   |                 |  
|Accounts payable                                                                         |  |                               | 34,852  |   |                 |  
|Accrued liabilities                                                                      |  |                               | 20,590  |   |                 |  
|Sales, use and fuel taxes payable                                                        |  |                               | 16,250  |   |                 |  
|Deferred income taxes                                                                    |  |                               | 4,168   |   |                 |  
|Amounts due to affiliated companies, net                                                 |  |                               | 426     |   |                 |  
|                                                                                         |  |                               |         |   |                 |  
|Total current liabilities                                                                |  |                               | 107,435 |   |                 |  
|Long term debt: less current installments                                                |  |                               | 182,062 |   |                 |  
|Deferred income taxes                                                                    |  |                               | 161     |   |                 |  
|Deferred gain on settlement of pension plan obligations                                  |  |                               | 1,076   |   |                 |  
|Deferred retirement benefits                                                             |  |                               | 28,680  |   |                 |  
|Other noncurrent liabilities                                                             |  |                               | 2,033   |   |                 |  
|                                                                                         |  |                               |         |   |                 |  
|Total liabilities                                                                        |  |                               | 321,447 |   |                 |  
|                                                                                         |  |                               |         |   |                 |  
|Commitments and contingencies                                                            |  |                               |         |   |                 |  
|Stockholders equity:                                                                    |  |                               |         |   |                 |  
|Common stock; $.10 par value per shareshares authorized 100; issued and outstanding 100 |  |                               |        |   |                 |  
|Additional paid-in capital                                                               |  |                               | 16,648  |   |                 |  
|Retained earnings                                                                        |  |                               | 30,824  |   |                 |  
|Accumulated other comprehensive loss                                                     |  |                               | (1,040  | ) |                 |  
|                                                                                         |  |                               |         |   |                 |  
|Total stockholders equity                                                               |  |                               | 46,432  |   |                 |  
|                                                                                         |  |                               |         |   |                 |  
|                                                                                         |  | $                             | 367,879 |   |                 | $
|                                                                                         |  |                               |         |   |                 |  



4



---

UNITED REFINING COMPANY AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)

(in thousands)



|                                                  |  | Three Months Ended November 30, |        
|------------------------------------------------- |  | ------------------------------- | -------
|                                                  |  | 2003                            |        
|Net sales                                         |  | $                               | 330,815
|Costs of goods sold                               |  |                                 | 287,004
|                                                  |  |                                 |        
|Gross profit                                      |  |                                 | 43,811 
|                                                  |  |                                 |        
|Expenses:                                         |  |                                 |        
|Selling, general and administrative expenses      |  |                                 | 27,503 
|Depreciation and amortization expenses            |  |                                 | 3,204  
|                                                  |  |                                 |        
|Total operating expenses                          |  |                                 | 30,707 
|                                                  |  |                                 |        
|Operating income (loss)                           |  |                                 | 13,104 
|                                                  |  |                                 |        
|Other income (expense):                           |  |                                 |        
|Interest expense, net                             |  |                                 | (5,170 
|Other, net                                        |  |                                 | (532   
|Equity in net earnings of affiliate               |  |                                 | 66     
|                                                  |  |                                 |        
|                                                  |  |                                 | (5,636 
|                                                  |  |                                 |        
|Income (loss) before income tax expense (benefit) |  |                                 | 7,468  
|Income tax expense (benefit)                      |  |                                 | 3,011  
|                                                  |  |                                 |        
|Net income (loss)                                 |  | $                               | 4,457  
|                                                  |  |                                 |        



5



---

UNITED REFINING COMPANY AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)

(in thousands)



|                                                                                                   |  | Three Months Ended November 30, |        
|-------------------------------------------------------------------------------------------------- |  | ------------------------------- | -------
|                                                                                                   |  | 2003                            |        
|Cash flows from operating activities:                                                              |  |                                 |        
|Net income (loss)                                                                                  |  | $                               | 4,457  
|Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |  |                                 |        
|Depreciation and amortization                                                                      |  |                                 | 4,146  
|Equity in net earnings of affiliate                                                                |  |                                 | (66    
|Deferred income taxes                                                                              |  |                                 | 2,881  
|Loss on asset dispositions                                                                         |  |                                 | 94     
|Cash used in working capital items                                                                 |  |                                 | (9,967 
|Change in operating assets and liabilities:                                                        |  |                                 |        
|Deferred retirement benefits                                                                       |  |                                 | 282    
|Other noncurrent liabilities                                                                       |  |                                 | 224    
|                                                                                                   |  |                                 |        
|Total adjustments                                                                                  |  |                                 | (2,406 
|                                                                                                   |  |                                 |        
|Net cash provided by (used in) operating activities                                                |  |                                 | 2,051  
|                                                                                                   |  |                                 |        
|Cash flows from investing activities:                                                              |  |                                 |        
|Additions to property, plant and equipment                                                         |  |                                 | (2,217 
|Additions to turnaround costs                                                                      |  |                                 | (643   
|                                                                                                   |  |                                 |        
|Net cash used in investing activities                                                              |  |                                 | (2,860 
|                                                                                                   |  |                                 |        
|Cash flows from financing activities:                                                              |  |                                 |        
|Net (reductions) borrowings on revolving credit facility                                           |  |                                 | (1,000 
|Principal reductions of long-term debt                                                             |  |                                 | (199   
|                                                                                                   |  |                                 |        
|Net cash (used in) provided by financing activities                                                |  |                                 | (1,199 
|                                                                                                   |  |                                 |        
|Net decrease in cash and cash equivalents                                                          |  |                                 | (2,008 
|Cash and cash equivalents, beginning of year                                                       |  |                                 | 13,819 
|                                                                                                   |  |                                 |        
|Cash and cash equivalents, end of year                                                             |  | $                               | 11,811 
|                                                                                                   |  |                                 |        
|Cash used in working capital items:                                                                |  |                                 |        
|Accounts receivable, net                                                                           |  | $                               | 5,454  
|Inventories                                                                                        |  |                                 | (13,420
|Prepaid expenses and other assets                                                                  |  |                                 | (6,087 
|Refundable income taxes                                                                            |  |                                 |       
|Accounts payable                                                                                   |  |                                 | (259   
|Accrued liabilities                                                                                |  |                                 | 4,883  
|Amounts due to affiliated companies, net                                                           |  |                                 | 1,065  
|Income taxes payable                                                                               |  |                                 |       
|Sales, use and fuel taxes payable                                                                  |  |                                 | (1,603 
|                                                                                                   |  |                                 |        
|Total change                                                                                       |  | $                               | (9,967 
|                                                                                                   |  |                                 |        
|Cash paid (received) during the period for:                                                        |  |                                 |        
|Interest                                                                                           |  | $                               | 515    
|Income taxes                                                                                       |  | $                               | (14    
|                                                                                                   |  |                                 |        



6



---

UNITED REFINING COMPANY AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



1.    Description of Business and Basis of Presentation



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



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



The wholesale segment is responsible for the acquisition of crude oil, petroleum refining, supplying petroleum products to
the retail segment and the marketing of petroleum products to wholesale and industrial customers. The retail segment 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
Corporation, which in turn is a wholly-owned subsidiary of Red Apple Group, Inc. (the Parent).



2.    Recent Accounting Pronouncements



In January 2003, the Financial Accounting Standards Board (FASB) issued Interpretation No. 46, Consolidation of Variable Interest
Entities (Interpretation 46). Interpretation 46 clarifies the application of Accounting Research Bulletin No. 51, Consolidated Financial Statements, to certain entities in which equity investors do not have the
characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. Interpretation 46 is applicable immediately
for variable interest entities created after January 31, 2003. For variable interest entities created prior to February 1, 2003, the provisions of Interpretation 46 are applicable no later than the end of the first reporting period ending after
December 15, 2003.



If any entity is determined to be a
variable interest entity, it must be consolidated by the enterprise that absorbs the majority of the entitys expected losses if they occur, receives a majority of the entitys expected residual returns if they occur, or both. Where it is
reasonably possible that the enterprise will consolidate or disclose information about a variable interest entity, the enterprise must disclose the nature, purpose, size and activity of the variable interest entity and the enterprises maximum
exposure to loss as a result of its involvement with the variable interest entity in all financial statements issued after January 31, 2003. On October 9, 2003, the FASB issued FASB Staff Position No. FIN 46-6 Effective Date of FASB
Interpretation No. 46, Consolidation of Variable Interest Entities, which defers the implementation date for public entities that hold an interest in a variable interest entity or potential variable interest entity from the first fiscal year
or interim period beginning after June 15, 2003 to the end of the first interim period or annual period ending after December 15, 2003. This deferral applies only if (1) the variable interest entity was created before February 1, 2003 and (2) the
public entity has not issued financial statements reporting that variable interest entity in accordance with FIN 46, other than disclosures required by paragraph 26 of FIN 46.



The Company does not expect Interpretation 46 to have a material impact on its consolidated financial position or results of
operations.



3.    Subsidiary Guarantors



Certain of United Refining Companys (the issuer)
subsidiaries function as guarantors under the terms of the $200,000,000 Senior Unsecured Note Indenture due June 9, 2007. Financial information for the issuer and its wholly owned subsidiary guarantors is as follows:



7



---

UNITED REFINING COMPANY AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited)



CONDENSED CONSOLIDATING BALANCE SHEETS

(in thousands)



|                                                                                         |  | November 30, 2003 |        
|---------------------------------------------------------------------------------------- |  | ----------------- | -------
|                                                                                         |  | Issuer            |        
|Assets                                                                                   |  |                   |        
|Current:                                                                                 |  |                   |        
|Cash and cash equivalents                                                                |  | $                 | 2,859  
|Accounts receivable, net                                                                 |  |                   | 27,175 
|Inventories                                                                              |  |                   | 69,875 
|Prepaid expenses and other assets                                                        |  |                   | 12,956 
|Amounts due from affiliated companies, net                                               |  |                   |       
|Intercompany                                                                             |  |                   | 86,284 
|                                                                                         |  |                   |        
|Total current assets                                                                     |  |                   | 199,149
|                                                                                         |  |                   |        
|Property, plant and equipment, net                                                       |  |                   | 116,430
|Investment in affiliated company                                                         |  |                   | 640    
|Deferred financing costs, net                                                            |  |                   | 2,739  
|Goodwill and other non-amortizable assets                                                |  |                   |       
|Amortizable intangible assets, net                                                       |  |                   |       
|Deferred turnaround costs & other assets, net                                            |  |                   | 7,606  
|Deferred income taxes                                                                    |  |                   |       
|                                                                                         |  |                   |        
|                                                                                         |  | $                 | 326,564
|                                                                                         |  |                   |        
|Liabilities and Stockholders Equity                                                     |  |                   |        
|Current:                                                                                 |  |                   |        
|Revolving credit facility                                                                |  | $                 | 30,500 
|Current installments of long-term debt                                                   |  |                   | 91     
|Accounts payable                                                                         |  |                   | 22,015 
|Accrued liabilities                                                                      |  |                   | 15,993 
|Sales, use and fuel taxes payable                                                        |  |                   | 13,830 
|Deferred income taxes                                                                    |  |                   | 4,134  
|Amounts due to affiliated companies, net                                                 |  |                   | 10     
|Intercompany                                                                             |  |                   |       
|                                                                                         |  |                   |        
|Total current liabilities                                                                |  |                   | 86,573 
|                                                                                         |  |                   |        
|Long term debt: less current installments                                                |  |                   | 180,352
|Deferred income taxes                                                                    |  |                   | (3,373 
|Deferred gain on settlement of pension plan obligations                                  |  |                   | 1,076  
|Deferred retirement benefits                                                             |  |                   | 27,659 
|Other noncurrent liabilities                                                             |  |                   |       
|                                                                                         |  |                   |        
|Total liabilities                                                                        |  |                   | 292,287
|                                                                                         |  |                   |        
|Commitment and contingencies                                                             |  |                   |        
|Stockholders equity                                                                     |  |                   |        
|Common stock, $.10 par value per shareshares authorized 100; issued and outstanding 100 |  |                   |       
|Additional paid-in capital                                                               |  |                   | 7,150  
|Retained earnings                                                                        |  |                   | 28,167 
|Accumulated other comprehensive loss                                                     |  |                   | (1,040 
|                                                                                         |  |                   |        
|Total stockholders equity                                                               |  |                   | 34,277 
|                                                                                         |  |                   |        
|                                                                                         |  | $                 | 326,564
|                                                                                         |  |                   |        



8



---

UNITED REFINING COMPANY AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited)



|                                                                                         |  | August 31, 2003 |        
|---------------------------------------------------------------------------------------- |  | --------------- | -------
|                                                                                         |  | Issuer          |        
|Assets                                                                                   |  |                 |        
|Current:                                                                                 |  |                 |        
|Cash and cash equivalents                                                                |  | $               | 3,383  
|Accounts receivable, net                                                                 |  |                 | 31,780 
|Inventories                                                                              |  |                 | 55,435 
|Prepaid expenses and other assets                                                        |  |                 | 9,453  
|Amounts due from affiliated companies, net                                               |  |                 | 1,186  
|Intercompany                                                                             |  |                 | 88,123 
|                                                                                         |  |                 |        
|Total current assets                                                                     |  |                 | 189,360
|                                                                                         |  |                 |        
|Property, plant and equipment, net                                                       |  |                 | 117,149
|Investment in affiliated company                                                         |  |                 | 574    
|Deferred financing costs, net                                                            |  |                 | 2,963  
|Goodwill and other non-amortizable assets                                                |  |                 |       
|Amortizable intangible assets, net                                                       |  |                 |       
|Deferred turnaround costs & other assets, net                                            |  |                 | 8,204  
|Deferred income taxes                                                                    |  |                 | 7,455  
|                                                                                         |  |                 |        
|                                                                                         |  | $               | 325,705
|                                                                                         |  |                 |        
|Liabilities and Stockholders Equity                                                     |  |                 |        
|Current:                                                                                 |  |                 |        
|Revolving credit facility                                                                |  | $               | 31,500 
|Current installments of long-term debt                                                   |  |                 | 89     
|Accounts payable                                                                         |  |                 | 19,906 
|Accrued liabilities                                                                      |  |                 | 11,708 
|Sales, use and fuel taxes payable                                                        |  |                 | 14,891 
|Deferred income taxes                                                                    |  |                 | 5,123  
|Amounts due to affiliated companies, net                                                 |  |                 |       
|Intercompany                                                                             |  |                 |       
|                                                                                         |  |                 |        
|Total current liabilities                                                                |  |                 | 83,217 
|                                                                                         |  |                 |        
|Long term debt: less current installments                                                |  |                 | 180,375
|Deferred income taxes                                                                    |  |                 | 1,037  
|Deferred gain on settlement of pension plan obligations                                  |  |                 | 1,130  
|Deferred retirement benefits                                                             |  |                 | 27,174 
|Other noncurrent liabilities                                                             |  |                 |       
|                                                                                         |  |                 |        
|Total liabilities                                                                        |  |                 | 292,933
|                                                                                         |  |                 |        
|Commitment and contingencies                                                             |  |                 |        
|Stockholders equity                                                                     |  |                 |        
|Common stock, $.10 par value per shareshares authorized 100; issued and outstanding 100 |  |                 |       
|Additional paid-in capital                                                               |  |                 | 7,150  
|Retained earnings                                                                        |  |                 | 26,662 
|Accumulated other comprehensive loss                                                     |  |                 | (1,040 
|                                                                                         |  |                 |        
|Total stockholders equity                                                               |  |                 | 32,772 
|                                                                                         |  |                 |        
|                                                                                         |  | $               | 325,705
|                                                                                         |  |                 |        



9



---

UNITED REFINING COMPANY AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited)



CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(in thousands)



|                                                  |  | Three Months Ended November 30, 2003 |        
|------------------------------------------------- |  | ------------------------------------ | -------
|                                                  |  | Issuer                               |        
|Net sales                                         |  | $                                    | 205,274
|Costs of goods sold                               |  |                                      | 191,224
|                                                  |  |                                      |        
|Gross profit                                      |  |                                      | 14,050 
|                                                  |  |                                      |        
|Expenses:                                         |  |                                      |        
|Selling, general and administrative expenses      |  |                                      | 4,698  
|Depreciation and amortization expenses            |  |                                      | 2,144  
|                                                  |  |                                      |        
|Total operating expenses                          |  |                                      | 6,842  
|                                                  |  |                                      |        
|Operating income (loss)                           |  |                                      | 7,208  
|                                                  |  |                                      |        
|Other income (expense):                           |  |                                      |        
|Interest expense, net                             |  |                                      | (4,231 
|Other, net                                        |  |                                      | (572   
|Equity in net earnings of affiliate               |  |                                      | 66     
|                                                  |  |                                      |        
|                                                  |  |                                      | (4,737 
|                                                  |  |                                      |        
|Income (loss) before income tax expense (benefit) |  |                                      | 2,471  
|Income tax expense (benefit)                      |  |                                      | 966    
|                                                  |  |                                      |        
|Net income (loss)                                 |  | $                                    | 1,505  
|                                                  |  |                                      |        



10



---

UNITED REFINING COMPANY AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited)



|                                                  |  | Three Months Ended November 30, 2002 |        
|------------------------------------------------- |  | ------------------------------------ | -------
|                                                  |  | Issuer                               |        
|Net sales                                         |  | $                                    | 173,260
|Costs of goods sold                               |  |                                      | 170,769
|                                                  |  |                                      |        
|Gross profit                                      |  |                                      | 2,491  
|                                                  |  |                                      |        
|Expenses:                                         |  |                                      |        
|Selling, general and administrative expenses      |  |                                      | 4,035  
|Depreciation and amortization expenses            |  |                                      | 2,170  
|                                                  |  |                                      |        
|Total operating expenses                          |  |                                      | 6,205  
|                                                  |  |                                      |        
|Operating income (loss)                           |  |                                      | (3,714 
|                                                  |  |                                      |        
|Other income (expense):                           |  |                                      |        
|Interest expense, net                             |  |                                      | (4,125 
|Other, net                                        |  |                                      | (270   
|Equity in net earnings of affiliate               |  |                                      | 51     
|                                                  |  |                                      |        
|                                                  |  |                                      | (4,344 
|                                                  |  |                                      |        
|Income (loss) before income tax expense (benefit) |  |                                      | (8,058 
|Income tax expense (benefit)                      |  |                                      | (3,189 
|                                                  |  |                                      |        
|Net income (loss)                                 |  | $                                    | (4,869 
|                                                  |  |                                      |        



11



---

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, 2003 |       
|-------------------------------------------------------- |  | ------------------------------------ | ------
|                                                         |  | Issuer                               |       
|Net cash provided by (used in) operating activities      |  | $                                    | 2,071 
|                                                         |  |                                      |       
|Cash flows from investing activities:                    |  |                                      |       
|Additions to property, plant and equipment               |  |                                      | (1,425
|Additions to deferred turnaround costs                   |  |                                      | (149  
|                                                         |  |                                      |       
|Net cash used in investing activities                    |  |                                      | (1,574
|                                                         |  |                                      |       
|Cash flows from financing activities:                    |  |                                      |       
|Net (reductions) borrowings on revolving credit facility |  |                                      | (1,000
|Principal reductions of long-term debt                   |  |                                      | (21   
|                                                         |  |                                      |       
|Net cash (used in) provided by financing activities      |  |                                      | (1,021
|                                                         |  |                                      |       
|Net decrease in cash and cash equivalents                |  |                                      | (524  
|Cash and cash equivalents, beginning of year             |  |                                      | 3,383 
|                                                         |  |                                      |       
|Cash and cash equivalents, end of period                 |  | $                                    | 2,859 
|                                                         |  |                                      |       



12



---

UNITED REFINING COMPANY AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited)



|                                                         |  | Three Months Ended November 30, 2002 |       
|-------------------------------------------------------- |  | ------------------------------------ | ------
|                                                         |  | Issuer                               |       
|Net cash provided by (used in) operating activities      |  | $                                    | (4,863
|                                                         |  |                                      |       
|Cash flows from investing activities:                    |  |                                      |       
|Additions to property, plant and equipment               |  |                                      | (1,709
|Additions to deferred turnaround costs                   |  |                                      | (1,907
|                                                         |  |                                      |       
|Net cash used in investing activities                    |  |                                      | (3,616
|                                                         |  |                                      |       
|Cash flows from financing activities:                    |  |                                      |       
|Net (reductions) borrowings on revolving credit facility |  |                                      | 5,686 
|Principal reductions of long-term debt                   |  |                                      | (11   
|                                                         |  |                                      |       
|Net cash (used in) provided by financing activities      |  |                                      | 5,675 
|                                                         |  |                                      |       
|Net decrease in cash and cash equivalents                |  |                                      | (2,804
|Cash and cash equivalents, beginning of year             |  |                                      | 4,254 
|                                                         |  |                                      |       
|Cash and cash equivalents, end of period                 |  | $                                    | 1,450 
|                                                         |  |                                      |       



13



---

UNITED REFINING COMPANY AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited)



4.    Segments of Business



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



|                              |  | Three Months Ended November 30, |        
|----------------------------- |  | ------------------------------- | -------
|                              |  | 2003                            |        
|Net Sales                     |  |                                 |        
|Retail                        |  | $                               | 181,863
|Wholesale                     |  |                                 | 148,952
|                              |  |                                 |        
|                              |  | $                               | 330,815
|                              |  |                                 |        
|Intersegment Sales            |  |                                 |        
|Wholesale                     |  | $                               | 56,322 
|                              |  |                                 |        
|Operating Income (Loss)       |  |                                 |        
|Retail                        |  | $                               | 5,789  
|Wholesale                     |  |                                 | 7,315  
|                              |  |                                 |        
|                              |  | $                               | 13,104 
|                              |  |                                 |        
|Depreciation and Amortization |  |                                 |        
|Retail                        |  | $                               | 1,012  
|Wholesale                     |  |                                 | 2,192  
|                              |  |                                 |        
|                              |  | $                               | 3,204  
|                              |  |                                 |        



|                                          |  | November 30, 2003 |         | August 31, 2003
|----------------------------------------- |  | ----------------- | ------- | ---------------
|Total Assets                              |  |                   |         |                
|Retail                                    |  | $                 | 122,165 |                
|Wholesale                                 |  |                   | 245,714 |                
|                                          |  |                   |         |                
|                                          |  | $                 | 367,879 |                
|                                          |  |                   |         |                
|Capital Expenditures (including non-cash) |  |                   |         |                
|Retail                                    |  | $                 | 762     |                
|Wholesale                                 |  |                   | 1,455   |                
|                                          |  |                   |         |                
|                                          |  | $                 | 2,217   |                
|                                          |  |                   |         |                



5.    Secured
Credit Facility



The Companys secured credit
facility currently provides for revolving credit loans and letters of credit in the amount of $50,000,000. The Company is currently negotiating with the Agent Bank to increase the facility commitment to $75,000,000 on a permanent basis; however,
there are no assurances that such increase will be granted.



14



---

UNITED REFINING COMPANY AND SUBSIDIARIES



|ITEM 2. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- |  | -------------------------------------------------------------------------------------



Forward Looking Statements



This Quarterly Report on Form 10Q includes statements that constitute forward looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and that are intended to come within the safe harbor protection provided by those sections. By their nature, all forward looking statements
involve risk and uncertainties. Actual results may differ materially from those contemplated by the forward looking statements for a number of reasons.



Although the Company believes that its 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 from those expressed in any such forward-looking statements. In addition to the factors discussed elsewhere in this report, 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, 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 the Companys markets, 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, the possibility of inefficiencies or shutdowns in refinery operations or pipelines, the availability and cost of financing to the Company, 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 .



Recent Developments



Fiscal first quarter 2004 worldwide crude oil prices, as indicated by prices of crude oil contracts on the New York
Mercantile Exchange (NYMEX), averaged $30.09/BBL and remained volatile. NYMEX crude oil prices for the second fiscal quarter of 2004 have continued to be volatile as seen by the current high price for February delivered crude oil, which has averaged
almost $34/BBL for the first nine days of January.NYMEX average crude oil price for calendar 2003 was $30.81/BBL, $5.56/BBL above the prior year, and the highest average price in 20 years  reflecting a year of geopolitical tensions,
especially in the Middle East, supply disruptions from producers such as Venezuela, Nigeria and Iraq, increased speculation and lean crude oil stocks in the US.



The recent crude oil price is uncharacteristically high and is due partially to the current cold weather, which fosters expectations that the already
lean crude oil stocks may decrease further and that the cold Northeast may significantly reduce the current product stock inventories.



For first quarter fiscal 2004 compared to the prior year quarter, the Companys average crude run cost per barrel increased 3.0% reflecting the 4.1%
market trend mentioned above. The higher crude prices are keeping gasoline and diesel prices high, despite a comfortable supply.



Compared to the prior year quarter, retail gasoline margins per gallon increased 39.6% and retail distillate margins per gallon increased 41.8%, which
contributed to increased gross profit. Additionally, when comparing the first quarter fiscal 2004 to the fourth quarter fiscal 2003, the Company realized a 33.1% increase in retail gasoline margins per gallon and a 14.6% increase in retail
distillate margins per gallon.



Positive results were also seen
in the wholesale sector as price increases were realized for wholesale gasoline (11.0%) and distillate (3.5%) while asphalt prices remained essentially unchanged. This profit improvement is due to a combination of market factors including the August
2003 electrical power blackout in the Northeast and Midwest, certain unplanned and scheduled refinery maintenance in regional refineries, higher



15



---

light-heavy crude differential, and a more optimistic outlook for the U.S. economy. The pace of the economic recovery will be an important factor in
determining future refinery margins.



The Companys
results continued to be influenced by the price discounts on heavy, sour crude oils. Since the refinery crude supply is comprised of approximately equal proportions of sour and sweet crude, the difference between their prices (sweet-sour
differential) impacts the costs of goods sold and hence gross profit. For the recent quarter compared to the prior year quarter, the Company realized a favorable 25% increase in the light/heavy crude price differential. For the second fiscal
quarter of 2004, this differential is expected to remain essentially the same or slightly better than the average for the first fiscal quarter.



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 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.



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 Ended November 30, |        
|-------------------------------------- |  | ------------------------------- | -------
|                                       |  | 2003                            |        
|                                       |  | (dollars in thousands)          |        
|Net Sales                              |  |                                 |        
|Petroleum                              |  | $                               | 137,268
|Merchandise and other                  |  |                                 | 44,595 
|                                       |  |                                 |        
|Total Net Sales                        |  | $                               | 181,863
|                                       |  |                                 |        
|Costs of Goods Sold                    |  | $                               | 152,365
|                                       |  |                                 |        
|Gross Profit                           |  | $                               | 29,498 
|                                       |  |                                 |        
|Operating Expenses                     |  | $                               | 23,709 
|                                       |  |                                 |        
|Segment Operating Income               |  | $                               | 5,789  
|                                       |  |                                 |        
|Petroleum Sales (thousands of gallons) |  |                                 | 86,013 
|                                       |  |                                
|Gross Profit                           |  |                                 |        
|Petroleum(a)                           |  | $                               | 16,668 
|Merchandise and other                  |  |                                 | 12,830 
|                                       |  |                                 |        
|                                       |  | $                               | 29,498 
|                                       |  |                                 |        
|Petroleum margin ($/gallon)(b)         |  |                                 | .1938  
|                                       |  |                                
|Merchandise margin (percent of sales)  |  |                                 | 28.8   

---

|(a) |  | Includes the effect of intersegment purchases from our 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



---

Comparison of Fiscal Quarters ended November 30, 2003 and November 30, 2002



Net Sales



Retail sales increased during 2003 by $6.2 million, or 3.5% from $175.7 million to $181.9 million. The retail sales increase
was primarily due to a $7.0 million increase in petroleum sales, offset by a $.8 million decrease in merchandise sales. The petroleum sales increase results from a 10% increase in retail selling prices per gallon, offset by a 3.8 million gallon or
4% decrease in retail petroleum volume.



Costs of Goods Sold



Retail costs of goods sold increased during the fiscal quarter ended
November 30, 2003 by $2.2 million or 1.4% from $150.2 million to $152.4 million. The cost of gasoline increased 11.6%, on a per gallon basis, over fiscal quarter ended November 30, 2002. The cost of distillates increased 3.3%, on a per gallon basis,
over the prior fiscal quarter. As a result costs of goods sold for petroleum purchases increased $4.2 million. Another increase to costs of goods sold was increased freight costs of $.1 million. Offsetting these increases were decreased fuel taxes
of $1.5 million and decreased merchandise purchases of $.6 million.



Gross
Profit/(Loss)



Retail gross profit increased during 2003
by $4.0 million or 16%. The Company increased its petroleum margins by $4.2 million offset by a merchandise margin decrease of $.2 million. These margin increases were a result of a 34% increase in petroleum margins.



Operating Expenses



Retail operating expenses increased during 2003 by $.4 million or 2%. Primarily contributing to the increases to operating
expenses were increased environmental costs of $.1 million, increased credit/customer service costs of $.1 million, increased rent expense of $.1 million and other costs of $.1 million.



Wholesale Operations:



|                                            |  | Three Months Ended November 30, |        
|------------------------------------------- |  | ------------------------------- | -------
|                                            |  | 2003                            |        
|                                            |  | (dollars in thousands)          |        
|Net Sales(a)                                |  | $                               | 148,952
|Costs of Goods Sold                         |  |                                 | 134,639
|                                            |  |                                 |        
|Gross Profit                                |  | $                               | 14,313 
|                                            |  |                                 |        
|Operating Expenses                          |  |                                 | 6,998  
|                                            |  |                                 |        
|Segment Operating Income / (Loss)           |  | $                               | 7,315  
|                                            |  |                                 |        
|Crude throughput (thousand barrels per day) |  |                                 | 64.3   
|                                            |  |                                 |        



17



---

Refinery Product Yield

(thousands of barrels)



|                                                                       |  | Three Months Ended November 30, |  
|---------------------------------------------------------------------- |  | ------------------------------- | -
|                                                                       |  | 2003                            |  
|Gasoline and gasoline blendstock                                       |  | 2,668                           |  
|Distillates                                                            |  | 1,458                           |  
|Asphalt                                                                |  | 1,586                           |  
|Butane, propane, residual products, internally produced fuel and other |  | 630                             |  
|                                                                       |  |                                 |  
|Total Product Yield                                                    |  | 6,342                           |  
|                                                                       |  |                                 |  
|% Heavy Crude Oil of Total Refinery Throughput(b)                      |  | 53                              | %



Product Sales

(dollars in thousands) (a)



|                                 |  | Three Months Ended November 30,
|-------------------------------- |  | -------------------------------
|                                 |  | 2003                           
|Gasoline and gasoline blendstock |  | $                              
|Distillates                      |  |                                
|Asphalt                          |  |                                
|Other                            |  |                                
|                                 |  |                                
|                                 |  | $                              
|                                 |  |                                



Product Sales

(thousand of barrels) (a)



|                                 |  | Three Months Ended November 30,
|-------------------------------- |  | -------------------------------
|                                 |  | 2003                           
|Gasoline and gasoline blendstock |  | 1,435                          
|Distillates                      |  | 1,084                          
|Asphalt                          |  | 2,010                          
|Other                            |  | 145                            
|                                 |  |                                
|                                 |  | 4,674                          
|                                 |  |                                



Average Prices ($ /
gallon)



|                                 |  | Three Months Ended November 30,
|-------------------------------- |  | -------------------------------
|                                 |  | 2003                           
|Gasoline and gasoline blendstock |  | .9391                          
|Distillates                      |  | .8710                          
|Asphalt                          |  | .5884                          
|Other                            |  | .4959                          

---

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



18



---

Comparison of Fiscal Quarters ended November 30, 2003 and November 30, 2002



Net Sales



Wholesale sales increased during 2003 by $31.3 million or 26.6% from $117.6 million to $148.9 million. The wholesale sales
increase was due to a 4.8% increase in wholesale prices and a 20.8% increase in wholesale volume. Contributing to the increased sales volume was a 35.3% increase in crude runs for the three months ended November 30, 2003 as compared to the prior
year period.



Costs of Goods Sold



Wholesale costs of goods sold increased during 2003 by $19.6 million or
17.0% from $115.0 million to $134.6 million. The increase in wholesale costs of goods was primarily due to a 35.3% increase in crude throughput volume and a 2.2% increase in the Companys average crude oil purchase price for the fiscal quarter
ended November 30, 2003 as compared to the prior year period. The refinery throughput volume increase for the first fiscal quarter of 2004 resulted from the fact that the Company had a 21 day shutdown of units at the refinery during the prior year
period ending November 30, 2002. Worldwide crude oil prices, as indicated by NYMEX crude oil contract prices, increased 4.1% as compared to the prior year period.



Gross Profit/(Loss)



Wholesale gross profit increased $11.7 million from $2.6 million for fiscal quarter ended November 30, 2002 to $14.3 million for the fiscal quarter ended
November 30, 2003. This increase was primarily due to the increase in wholesale sales volume, increased wholesale selling prices and to 25.3% higher discounts on heavy high-sulfur crude oil grades processed by the Company.



Operating Expenses



Operating expenses increased during 2003 by $.6 million over such expenses for 2002. For 2003 operating expenses were $7.0
million, or 4.7% of net wholesale sales, compared to $6.4 million, or 5.4% of net wholesale sales for 2002. Operating expenses declined as a percentage of net sales from 5.4% to 4.7%.



Interest Expense



Net interest expense (interest expense less interest income) remained relatively consistent between fiscal quarter ended
November 30, 2003 and fiscal quarter ended November 30, 2002. The Company did reduce the amount of interest expense for borrowings on its revolving credit facility; however, offsetting this decrease was a reduction in interest income earned.



Income Tax Expense/(Benefit)



The Companys effective tax rate for the fiscal quarter ended November
30, 2003 was approximately 40.3% compared to a rate of 38.5% for fiscal quarter ended November 30, 2002. The increase is primarily due to an increase in permanent differences.



Liquidity and Capital Resources



The Company operates in an environment where its 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 the Companys 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. For further information related to risks and other factors, see Forward-Looking Statements in Item 2.



19



---

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



|                          |  | November 30, 2003 |         | August 31, 2003
|------------------------- |  | ----------------- | ------- | ---------------
|Cash and cash equivalents |  | $                 | 11,811  |                
|Working capital           |  |                   | 47,620  |                
|Debt                      |  | $                 | 213,211 |                



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



The
Companys 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. During the fiscal quarter ended November 30, 2003, significant uses of cash includes $2.2 million for purchases of property, plant and equipment, $1.2 million of reductions to debt and $.6 million for additions to
refinery turnaround costs.



The Company requires 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 $4 million annually over the last three years for the refining and marketing operations. Management does not foresee any increase in maintenance and
non-discretionary capital expenditures during fiscal 2004. The Company spent approximately $4 million as part of its Tier 2 Gasoline Sulfur Program under 40 CFR Part 80, Subpart H during fiscal year 2003, and expects to spend approximately $1
million during fiscal 2004, primarily during activities requiring a shutdown of the FCC Unit, which is scheduled for April 2004.



Working capital (current assets minus current liabilities) at November 30, 2003 was $47.6 million and at August 31, 2003 was $37.6 million. The
Companys current ratio (current assets divided by current liabilities) was 1.4:1 at November 30, 2003 and 1.4:1 at August 31, 2003.



Future liquidity, both short and long-term, will continue to be primarily dependent on realizing a refinery margin sufficient to cover fixed and variable
expenses, including planned capital expenditures. The Company expects to be able to meet its working capital, capital expenditure, contractual obligations, letter of credit and debt service requirements out of cash flow from operations, cash on hand
and borrowings under the Companys secured revolving credit facility (the facility) with PNC Bank, N.A. as Agent Bank. This is a $50,000,000 revolving facility, which was renewed for five years on July 12, 2002 and amended on
November 27, 2002 and February 19 and March 24, 2003. At November 30, 2003, there was approximately $18,885,000 unused and available on the facility.



The facility expires on May 9, 2007, and is secured by certain cash accounts, accounts receivable, and inventory. The interest rate on borrowings varies
with the Companys earnings and is based on the higher of the banks prime rate or Federal funds rate for base rate borrowings and the LIBOR rate for Euro-Rate borrowings. The Company and the participating banks amended the facility on
March 24, 2003, allowing for a temporary increase in the facility commitment from $50,000,000 to $70,000,000. The temporary increase expired as of September 30, 2003 and the facility has reverted to the original $50,000,000. Additionally, the
amendment revised select covenant calculations, including the fixed charge coverage ratio and redefined select definitions. The Company is currently negotiating with the Agent Bank to increase the facility commitment to $75,000,000 on a permanent
basis; however, there are no assurances that such increase will be granted.



In addition, the Company had outstanding letters of credit of $615,000 as of November 30, 2003.



20



---

Although the Company is not aware of any pending circumstances which would change its 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. The Company continues to investigate strategic acquisitions and capital improvements to its existing facilities.



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



Seasonal Factors



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



Recent Accounting Pronouncements



In January 2003, the FASB issued Interpretation No. 46, Consolidation
of Variable Interest Entities (Interpretation 46). Interpretation 46 clarifies the application of Accounting Research Bulletin No. 51, Consolidated Financial Statements, to certain entities in which equity investors do
not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. Interpretation 46 is applicable
immediately for variable interest entities created after January 31, 2003. For variable interest entities created prior to February 1, 2003, the provisions of Interpretation 46 are applicable no later than the end of the first reporting period
ending after December 15, 2003.



If any entity is determined to
be a variable interest entity, it must be consolidated by the enterprise that absorbs the majority of the entitys expected losses if they occur, receives a majority of the entitys expected residual returns if they occur, or both. Where
it is reasonably possible that the enterprise will consolidate or disclose information about a variable interest entity, the enterprise must disclose the nature, purpose, size and activity of the variable interest entity and the enterprises
maximum exposure to loss as a result of its involvement with the variable interest entity in all financial statements issued after January 31, 2003. On October 9, 2003, the FASB issued FASB Staff Position No. FIN 46-6 Effective Date of FASB
Interpretation No. 46, Consolidation of Variable Interest Entities, which defers the implementation date for public entities that hold an interest in a variable interest entity or potential variable interest entity from the first fiscal year
or interim period beginning after June 15, 2003 to the end of the first interim period or annual period ending after December 15, 2003. This deferral applies only if (1) the variable interest entity was created before February 1, 2003 and (2) the
public entity has not issued financial statements reporting that variable interest entity in accordance with FIN 46, other than disclosures required by paragraph 26 of FIN 46.



The Company does not expect Interpretation 46 to have a material impact on its consolidated financial position or results of
operations.



21



---

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



The Company uses its revolving credit facility to finance a portion of its operations. These on-balance sheet financial instruments, to the extent they
provide for variable rates, expose the Company to interest rate risk resulting from changes in the PNC Prime rate, the Federal Funds or LIBOR rate.



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. At November 30, 2003, the Company was exposed to the risk of market price declines with respect
to a substantial portion of its crude oil and refined product inventories.



|ITEM 4. |  | CONTROLS AND PROCEDURES
|------- |  | -----------------------



|(a) |  | Based on an evaluation of the Companys disclosure controls and procedures (as defined in Rules 13(a)  15(e) and 15(d)  15(e) of the Securities Exchange Act of
1934, as amended), as of the end of the Companys fiscal quarter ended November 30, 2003, the Companys Chief Executive Officer and Chief Financial Officer (its principal executive officer and principal financial officer, respectively)
have concluded that the Companys disclosure controls and procedures were effective.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) |  | There have not been any significant changes in the Companys internal controls over financial reporting that occurred during the Companys fiscal quarter ended November
30, 2003 that has materially affected, or is reasonably likely to materially affect, the Companys internal controls over financial reporting.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



22



---

PART IIOTHER INFORMATION



|ITEM 6. |  | EXHIBITS AND REPORTS ON FORM 8-K
|------- |  | --------------------------------
|        |  |                                 
|        |  | (a)                             
|        |  |                                 
|        |  |                                 
|        |  |                                 
|        |  |                                 
|        |  |                                 
|        |  |                                 
|        |  | (b)                             



23



---

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, 2004



UNITED REFINING COMPANY(Registrant)/s/  Myron L. TurfittMyron L. TurfittPresident/s/  James E. MurphyJames E. MurphyChief Financial Officer




24



---

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, 2004



KIANTONE PIPELINE CORPORATION(Registrant)/s/  Myron L. TurfittMyron L. TurfittPresident/s/  James E. MurphyJames E. MurphyChief Financial Officer




25



---

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, 2004



UNITED REFINING COMPANY OF PENNSYLVANIA(Registrant)/s/  Myron L. TurfittMyron L. TurfittPresident/s/  James E. MurphyJames E. MurphyChief Financial Officer




26



---

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, 2004



KIANTONE PIPELINE COMPANY(Registrant)/s/  Myron L. TurfittMyron L. TurfittPresident/s/  James E. MurphyJames E. MurphyChief Financial Officer




27



---

SIGNATURES



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



Date:
January 14, 2004



UNITED JET CENTER, INC.(Registrant)/s/  Myron L. TurfittMyron L. TurfittPresident/s/  James E. MurphyJames E. MurphyChief Financial Officer




28



---

SIGNATURES



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



Date:
January 14, 2004



KWIK FILL CORPORATION(Registrant)/s/  Myron L. TurfittMyron L. TurfittPresident/s/  James E. MurphyJames E. MurphyChief Financial Officer




29



---

SIGNATURES



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



Date:
January 14, 2004



INDEPENDENT GASOLINE AND OIL COMPANY OF ROCHESTER, INC.(Registrant)/s/  Myron L. TurfittMyron L. TurfittPresident/s/  James E. MurphyJames E. MurphyChief Financial Officer




30



---

SIGNATURES



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



Date:
January 14, 2004



BELL OIL CORP.(Registrant)/s/  Myron L. TurfittMyron L. TurfittPresident/s/  James E. MurphyJames E. MurphyChief Financial Officer




31



---

SIGNATURES



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



Date:
January 14, 2004



PPC, INC.(Registrant)/s/  Myron L. TurfittMyron L. TurfittPresident/s/  James E. MurphyJames E. MurphyChief Financial Officer




32



---

SIGNATURES



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



Date:
January 14, 2004



SUPER TEST PETROLEUM, INC.(Registrant)/s/  Myron L. TurfittMyron L. TurfittPresident/s/  James E. MurphyJames E. MurphyChief Financial Officer




33



---

SIGNATURES



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



Date:
January 14, 2004



KWIK-FIL, INC.(Registrant)/s/  Myron L. TurfittMyron L. TurfittPresident/s/  James E. MurphyJames E. MurphyChief Financial Officer




34



---

SIGNATURES



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



Date:
January 14, 2004



VULCAN ASPHALT REFINING CORPORATION(Registrant)/s/  Myron L. TurfittMyron L. TurfittPresident/s/  James E. MurphyJames E. MurphyChief Financial Officer




35