United Refining Company Announces First Quarter 2009 Operating Results



    WARREN, Pa., Jan. 20 /CNW/ -- United Refining Company, a leading regional
refiner and marketer of petroleum products announces operating results for the
first fiscal quarter ended November 30, 2008.
    

    
    Net sales for the three months ended November 30, 2008 and November 30,
2007 were $770.5 million and $693.6 million, respectively.  This was an
increase of $76.9 million or 11.1% over the comparable quarter for the prior
year.  Increases in net sales for the quarter were due primarily to increases
in selling prices.
    

    
    Operating loss for the three months ended November 30, 2008 was $91.5
million, a decrease of $120.6 million from operating income of $29.1 million
for the quarter ended November 30, 2007.  The operating loss for the current
reporting period was primarily the result of negative margins due to the
rapidly declining prices for crude and petroleum products.  The Company
purchases crude oil approximately one month in advance of its delivery to the
refinery for processing into refined products.  This "lag" effect creates
negative margins in a declining market.
    

    
    Net loss for the three months ended November 30, 2008 was $59.6 million,
a decrease of $73.0 million from net income of $13.4 million for the quarter
ended November 30, 2007.
    

    
    Because of the extreme volatility in the oil markets, it is important to
understand the LIFO/FIFO impact.  We have historically recorded LIFO inventory
on a year-end basis and utilized FIFO inventory valuations in our non year-end
quarterly financial statements.  In the fourth quarter of fiscal 2008, the
Company recorded a non-cash LIFO charge of $90.1 million.  If we had utilized
the same LIFO methodology for this first quarter of 2009 by using quantities
and prices as of November 30, 2008 quarter end, which are not necessarily
indicative of the actual quantities and prices which will exist at our August
31, 2009 fiscal year-end, we would have recognized a non-cash LIFO gain of
$108.2 million.  This would have resulted in an EBITDA of $22.5 million and
Net Income of $4.2 million.
    

    
    The liquidity position of the Company remains strong.  As of November 30,
2008, the Company's working capital was $132.6 million and the current ratio
was 2.2.  Borrowings on the Bank Revolving Credit facility at November 30,
2008 were $19.0 million with unused availability of $110.6 million.  As of
January 20, 2009, there are no borrowings on the $130.0 million Credit
facility and the Company has full access to it.
    

    
    Earnings before interest, taxes, depreciation and amortization (EBITDA)
for the three months ended November 30, 2008 decreased $122.8 million to
$(85.6) million from $37.2 million for the three months ended November 30,
2007.  United Refining Company uses the term EBITDA or Earnings Before
Interest, Income Taxes, Depreciation and Amortization, which is a term not
defined under United States Generally Accepted Accounting Principles.  The
Company uses this term because it is a widely accepted financial indicator
utilized to analyze and compare companies on the basis of operating
performance and is used to calculate certain debt coverage ratios included in
several of the Company's debt agreements.  See reconciliation of EBITDA to net
income in footnote (1) in table set forth below. The reconciliation of EBITDA
also includes a Pro Forma adjustment for LIFO to calculate Adjusted EBITDA. 
The Company's method of computation of EBITDA may or may not be comparable to
other similarly titled measures used by other companies.
    


    

    
                               UNITED REFINING COMPANY
                                (dollars in thousands)
                                  Three Months Ended
                              November 30,    November 30,
                                  2008           2007
    

    
    Net Sales                  $ 770,471      $ 693,568
    Operating (loss) Income    $ (91,531)     $  29,075
    Net (loss) Income          $ (59,637)     $  13,413
    EBITDA (1)                 $ (85,635)     $  37,215
    Adjusted EBITDA            $  22,539      $  20,613
    

    
    (1)    EBITDA Reconciliation:
    

    
                                UNITED REFINING COMPANY
                                (dollars in thousands)
                                  Three Months Ended
                               November 30,   November 30,
                                  2008           2007
    

    
    Net (loss) Income          $ (59,637)      $ 13,413
    Interest Expense               9,412          9,103
    Income Tax (Benefit)
     Expense                     (41,448)         9,321
    Depreciation                   4,119          4,039
    Amortization                   1,919          1,339
                                   -----          -----
    EBITDA                     $ (85,635)      $ 37,215
      Pro Forma LIFO
       Adjustment              $ 108,174        (16,602)
                               ---------       --------
    Adjusted EBITDA            $  22,539       $ 20,613
                               =========       ========


    
    United operates a 70,000 bpd refinery in Warren, Pennsylvania.  In
addition to its wholesale markets, the Company also operates 369 Kwik Fill(R)
/ Red Apple(R) and Country Fair(R) retail gasoline and convenience stores
located primarily in western New York and western Pennsylvania.
    

    
    Certain statements contained in this release are forward looking, such as
statements regarding the Company's plans and strategies or future financial
performance.  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, 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;
environmental, tax and tobacco legislation or regulation; volatility of
gasoline prices, margins and supplies; merchandising margins; customer
traffic, weather conditions; labor costs and the level of capital
expenditures.
    

    
    Company Contact:  James E. Murphy, Chief Financial Officer Telephone:
(814) 723-1500.
    


    




For further information:

For further information: James E. Murphy, Chief Financial Officer of
United Refining Company, +1-814-723-1500

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United Refining Company

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