United Refining Company Reports Second Quarter Fiscal 2009 Operating Results



    WARREN, Pa., April 20 /CNW/ -- United Refining Company, a leading
regional refiner and marketer of petroleum products announces operating
results for the second fiscal quarter and six month period ended February 28,
2009.
    

    
    Effective for the fiscal reporting period ended February 28, 2009, the
Company is changing its method of accounting for inventories during interim
periods from adjusting the inventory LIFO reserve on an annual basis to
adjusting the inventory LIFO reserve on a quarterly basis.  Accordingly, the
Company has reflected the change in accounting in the current quarter and
retrospectively applied this policy to its previously issued financial
statements for the three months ended November 30, 2008 and 2007; and for the
three and six month periods ended February 29, 2008.  The Company believes
this change in accounting method better reflects interim results consistent
with the annual LIFO calculation.  This change is a non-cash accounting
adjustment, does not impact cash flows and does not impact annual financial
statements.
    

    
    Net sales for the three months ended February 28, 2009 and February 29,
2008 were $434.8 million and $663.7 million, respectively.  This was a
decrease of $228.9 million or 34.5% over the prior year period.  The decrease
was primarily due to lower quarter to quarter retail and wholesale petroleum
selling prices, reflecting the overall market decline in petroleum products,
while volumes stayed relatively constant.  Retail merchandise sales increased
$3.0 million and although retail petroleum sales gallons increased 3.6 million
gallons for the period, retail petroleum sales dollars decreased $103.3
million.  Wholesale sales revenues decreased $128.6 million for the quarter
ended February 28, 2009 compared to the comparable quarter of 2008.  Although
wholesale sales volume decreased slightly, the decrease in sales revenue was
primarily due to a 35.3% decrease in wholesale average sales prices for all
wholesale products.
    

    
    Operating income for the second quarter ended February 28, 2009 increased
$34.9 million from an operating loss of $30.7 million for the quarter ended
February 29, 2008 to operating income of $4.2 million for the quarter ended
February 28, 2009.  Operating income for the six months ended February 28,
2009 increased $38.4 million from a loss of $19.1 million for the six months
ended February 29, 2008 to operating income of $19.3 for the six months ended
February 28, 2009.
    

    
    Net loss for the second quarter ended February 28, 2009 decreased $19.8
million from a net loss of $22.9 million for the quarter ended February 29,
2008 to net loss of $3.1 million for the quarter ended February 28, 2009.  Net
loss for the six months ended February 28, 2009 decreased $19.8 from a net
loss of $19.8 million for the six months ended February 29, 2008 to net income
of twelve thousand dollars  for the six month ended February 28, 2009.
    

    
    Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)
for the three months ended February 28, 2009 increased $33.9 million to $9.7
million compared to a negative $24.2 million for the three months ended
February 29, 2008.  EBITDA increased $35.0 million for the six months ended
February 28, 2009 to $30.6 million from a negative $4.4 million for the six
months ended February 29, 2008.
    

    
    United Refining Company uses the term EBITDA or Earnings Before Interest,
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 the table set forth below.  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      Six Months Ended
                                    February 28 and         February 28 and
                                      February 29,            February 29,
                                    2009      2008*        2009       2008*
                                    ----      ----         ----       ----
    Net Sales                      $434,809  $663,718  $1,205,280  $1,357,286
    Operating Income (Loss)          $4,232  $(30,730)    $19,263    $(19,107)
    Net Income (Loss)               $(3,147) $(22,905)       $(12)   $(19,789)
    Income Tax Expense (Benefit)    $(2,351) $(15,916)        $(9)   $(13,750)
    EBITDA (1)                       $9,672  $(24,181)    $30,599     $(4,418)
    

    
    (1) EBITDA Reconciliation:
    

    
                                 UNITED REFINING COMPANY
                                 (Dollars in thousands)
    

    
                                     Three Months Ended   Six Months Ended
                                      February 28 and      February 28 and
                                        February 29,         February 29,
                                        2009     2008*      2009     2008*
                                        ----     ----       ----     ----
    

    
    Net Income (Loss)               $(3,147) $(22,905)       $(12) $(19,789)
    Interest Expense                  9,120     9,226      18,532    18,329
    Income Tax Expense (Benefit)     (2,351)  (15,916)         (9)  (13,750)
    Depreciation                      5,856     5,221      11,701    10,405
    Amortization                        194       193         387       387
                                        ---       ---         ---       ---
    EBITDA                           $9,672  $(24,181)     $30,599  $(4,418)
                                      =====    ======       ======    =====

    
    * As noted above, during the second quarter of fiscal year 2009 the
company changed its method of accounting for inventories at interim periods
and applied such change retrospectively.
    


    
    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.
    



    




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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