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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
- - --- ACT OF 1934
For the fiscal year ended JANUARY 31, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
- - --- EXCHANGE ACT OF 1934
Commission file number 001-13777
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GETTY REALTY CORP.
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(Exact name of registrant as specified in its charter)
Maryland 11-3412575
- - ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
125 Jericho Turnpike, Jericho, New York 11753
- - --------------------------------------- -----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 516-338-2600
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Securities registered pursuant to Section 12 (b) of the Act:
Name of each exchange on
Title of each class which registered
- - ---------------------------- ------------------------
Common Stock, $.01 par value New York Stock Exchange
Series A Participating Convertible
Redeemable Preferred Stock, $.01 par value New York Stock Exchange
Securities registered pursuant to Section 12 (g) of the Act:
None
----
(Title of Class)
Indicate by check mark whether 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 registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the voting stock held by nonaffiliates (7,783,187
shares of common stock and 1,743,150 shares of preferred stock) of the Company
was $135,122,192 as of April 22, 1999.
The registrant had outstanding 13,566,233 shares of common stock and 2,888,798
shares of preferred stock as of April 22, 1999.
DOCUMENTS INCORPORATED BY REFERENCE
Document Part of Form 10-K
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Annual Report to Stockholders for the fiscal year
ended January 31, 1999 (the "Annual Report")
(pages 6 through 24). II
Definitive Proxy Statement for the 1999 Annual
Meeting of Stockholders (the "Proxy Statement")
which will be filed by the registrant on or prior
to 120 days following the end of the registrant's
fiscal year ended January 31, 1999 pursuant to
Regulation 14A. III
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PART I
Item 1. Business
General
Prior to the spin-off of its petroleum marketing business on March 21, 1997 (as
described below), Getty Realty Corp., known prior to March 31, 1997 as Getty
Petroleum Corp. (hereinafter, together with its subsidiaries, called "Getty" or
the "Company"), was one of the nation's largest independent marketers of
petroleum products. Prior to the spin-off, the Company served retail and
wholesale customers through a distribution and marketing network of Getty(R) and
other branded retail outlets (also referred to as service stations) located in
12 Northeastern and Middle-Atlantic states.
On March 21, 1997, the Company effected a spin-off of its petroleum marketing
business to its stockholders (the "spin-off"), and stockholders of record on
that date received a tax-free dividend of one share of common stock of Getty
Petroleum Marketing Inc. ("Marketing") for each share of common stock of the
Company. The Company transferred to Marketing the assets and liabilities of the
petroleum marketing business and the New York Mid-Hudson Valley home heating oil
business. In December 1998, the Company sold its heating oil business, Aero Oil
Company. The Company retained its real estate assets and leased most of its
properties on a long-term net basis to Marketing. The Company is now engaged in
the ownership, leasing and management of real estate. For additional information
regarding the spin-off and the sold heating oil business, see Notes 2 and 3 to
the consolidated financial statements contained in the accompanying Annual
Report.
The Company and its predecessors had been in the petroleum marketing business
for over 40 years. Mr. Leo Liebowitz, President and Chief Executive Officer and
a director of the Company, and Mr. Milton Safenowitz, a former director and
Executive Vice President of the Company, founded the business in 1955 with one
service station and pursued a strategy of expanding the business principally
through acquisitions. By 1985, the Company had expanded into five states under
various brand names, principally Power Test(R). On February 1, 1985, the Company
acquired the marketing and distribution assets of Getty Oil Company in the
Northeastern and Middle-Atlantic states from a subsidiary of Texaco Inc. This
acquisition added service stations, distribution terminals and a wholesale
heating oil and middle distillate marketing network in six additional states.
From 1985 until the time of the spin-off, the Company's operations expanded to a
marketing region encompassing 12 Northeastern and Middle-Atlantic states through
additional acquisitions of numerous small regional distributors, service
stations and convenience food stores.
Reorganization
On January 30, 1998, the Company was reorganized as a Maryland corporation
pursuant to an Agreement and Plan of Reorganization and Merger dated as of
December 16, 1997. Also on January 30, 1998, Getty Realty Corp., a Delaware
corporation, changed its name to Getty
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Properties Corp. and became a wholly-owned subsidiary of the Company. When we
refer to the Company, we mean Getty Realty Corp., a Maryland corporation, and
for periods prior to January 30, 1998, we mean Getty Realty Corp., a Delaware
corporation (also referred to as "Old Getty"). In connection with the
transaction, stockholders of Old Getty received one share of common stock of the
Company for each share of Old Getty's common stock tendered for exchange. The
Company's common stock is listed on the New York Stock Exchange under the ticket
symbol "GTY".
Merger with Power Test Investors Limited Partnership and Issuance of Preferred
Stock
Also on January 30, 1998, the Company acquired Power Test Investors Limited
Partnership (the "Partnership"), as a result of which the Company acquired fee
title to 295 properties which Old Getty had previously leased from the
Partnership. See "Item 2. Properties" below. In connection with the transaction,
2,888,798 shares of Series A Participating Convertible Redeemable Preferred
Stock, $.01 par value, ("Preferred Stock") of the Company were issued to the
former unitholders of the Partnership and to CLS General Partnership Corp., the
Partnership's general partner. On February 11, 1998, the Preferred Stock
commenced trading on the New York Stock Exchange under the ticker symbol "GTY
PrA".
Real Estate Business
The Company specializes in the ownership of properties in the petroleum industry
since it has substantial knowledge and expertise in this industry. The Company's
acquisition program includes acquiring properties outright, acquiring properties
and leasing them back to the existing operators, building to suit for qualified
operators and providing financial resources to qualified operators for
expansion.
On February 1, 1997, the Company and Marketing entered into a Master Lease
Agreement (the "Master Lease") under which, as of January 31, 1999, 1,013
service station and convenience store properties and 10 distribution terminals
and bulk plants were leased or subleased by the Company as the lessor to
Marketing as the lessee. The initial term of the Master Lease is 15 years, with
four ten-year renewal options (or with respect to leased properties, such
shorter period as the underlying lease may provide). The Master Lease is a
"triple-net" lease, so Marketing is responsible for the cost of all taxes,
maintenance, repairs, insurance and other operating expenses. Rent for each of
the properties was set using the then fair market value of each property,
assuming the properties were free of certain environmental conditions for which
the Company is responsible.
The Company received lease payments from Marketing aggregating approximately
$56.4 million (of the $58.9 million total revenues from rental properties) for
the fiscal year ended January 31, 1999, and is therefore materially dependent
upon the ability of Marketing to meet its obligations under the Master Lease.
Marketing's financial results depend largely on retail marketing margins and
rental income from its dealers. The petroleum marketing industry has been and
continues to
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be volatile and highly competitive; however, the Company does not anticipate
that Marketing will have difficulty making all required rental payments for the
foreseeable future.
As of January 31, 1999, the Company had additional properties not included under
the Master Lease, most of which are leased for non-petroleum use, for which
there are 69 tenants. The Company also had 29 properties being held for
disposition.
Regulation
The Company is subject to numerous federal, state and local laws and
regulations. The costs related to compliance with those laws and regulations
have not had and are not expected to have a material adverse effect on the
financial position of the Company, although such costs may have a significant
impact on the Company's results of operations or liquidity for any single fiscal
year or interim period.
The operation of petroleum properties are governed by numerous federal, state
and local environmental laws and regulations. These laws have included (i)
requirements to report to governmental authorities discharges of petroleum
products into the environment and, under certain circumstances, to remediate the
soil and/or groundwater contamination pursuant to governmental order and
directive, (ii) requirements to remove and replace underground storage tanks
which have exceeded governmental-mandated age limitations and (iii) the
requirement to provide a certificate of financial responsibility with respect to
claims relating to underground storage tank failures.
Environmental expenses have been attributable to remediation, monitoring, soil
disposal and governmental agency reporting (collectively, "Remediation Costs")
incurred in connection with contaminated sites and the replacement or upgrading
of underground storage tanks, related piping, underground pumps, wiring and
monitoring devices (collectively, "USTs") to meet federal, state and local
environmental standards, as well as routine monitoring and tank testing. Under
the Master Lease, the Company committed to a program to bring scheduled leased
properties to regulatory closure and, thereafter, transfer all environmental
risks from the Company to Marketing. In order to establish the Remediation Costs
obligation and estimate the incremental cost of accelerated remediation, the
Company commissioned a detailed property-by-property environmental study of all
retail outlets in fiscal 1997, with the objective of achieving closure in
approximately five years. As a result, the Company revised its estimate of
future Remediation Costs in the fourth quarter of fiscal 1997 and recorded a
pre-tax charge in that quarter for Remediation Costs of $21.2 million. The
pre-tax charge resulted from the acceleration of remediation activities to be
paid by the Company through more aggressive means of treating contaminated sites
to bring them to closure in approximately five years, which resulted in
significant incremental Remediation Costs, changes in estimated Remediation
Costs at previously identified properties, including costs to be incurred in
connection with UST upgrades, and additional charges to comply with AICPA
Statement of Position 96-1, "Environmental Remediation Liabilities."
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The Company believes that it is in substantial compliance with federal, state
and local provisions enacted or adopted pertaining to environmental matters.
Although the Company is unable to predict what legislation or regulations may be
adopted in the future with respect to environmental protection and waste
disposal, existing legislation and regulations have had no material adverse
effect on its competitive position. See "Item 3. Legal Proceedings."
Personnel
As of January 31, 1999, the Company had 11 employees. Under a Services
Agreement, Marketing provides certain administrative and technical services to
the Company and the Company provides certain limited services to Marketing. The
net fees paid by the Company to Marketing for services performed (after
deducting the fees paid by Marketing to the Company for services provided by the
Company) were $960,000 for each of the years ended January 31, 1999 and 1998 and
are included in selling, general and administrative expenses in the consolidated
statements of operations.
Special Factors Regarding Forward-Looking Statements
Certain statements in this Annual Report on Form 10-K may constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. When we use the words "believes", "expects",
"plans", "estimates" and similar expressions, we intend to identify
forward-looking statements. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance and achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by
these forward-looking statements. These factors include, but are not limited to:
risks associated with owning and leasing real estate generally; dependence on
Marketing as a lessee and on rentals from companies engaged in the petroleum
marketing and convenience store businesses; competition for locations and
tenants; risk of tenant non-renewal; the effects of regulation; the Company's
expectations as to the cost of completing environmental remediation; the
remediation and testing phases of the Year 2000 program as well as its Year 2000
contingency plan; and the Company's belief that the internal systems and
equipment will be Year 2000 compliant in a timely manner. For a more detailed
discussion of risk factors, see the information set forth under the caption
"Risk Factors" in the Company's Proxy Statement/Prospectus dated January 13,
1998.
As a result of these and other factors, the Company may experience material
fluctuations in future operating results on a quarterly or annual basis, which
could materially and adversely effect its business, financial condition,
operating results and stock price. An investment in the Company involves various
risks, including those mentioned above and elsewhere in this report and those
which are detailed from time to time in the Company's other filings with the
Securities and Exchange Commission.
Readers should not place undue reliance on forward-looking statements, which
reflect the
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Company's view only as of the date hereof. The Company undertakes no obligation
to publicly release revisions to these forward-looking statements that reflect
events or circumstances after the date hereof or reflect the occurrence of
unanticipated events.
Item 2. Properties
The properties owned in fee or leased by the Company for each of the five fiscal
years ended January 31, 1999 are as follows:
January 31,
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1999 1998 1997 1996 1995
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Owned 740 736 441 439 444
Leased 379 404 732 734 752
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Total 1,119 1,140 1,173 1,173 1,196
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The following table sets forth certain information regarding lease expirations
for the properties:
Fiscal Year Number of Leases Expiring (a) Percent of Total
- - ----------- ----------------------------- ----------------
2000 30 7.9%
2001 56 14.8
2002 60 15.8
2003 49 12.9
2004 45 11.9
Thereafter 139 36.7
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379 100.0%
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(a) The lease expiration schedule does not include lease extension options.
On January 30, 1998, the Company acquired the Partnership, a publicly traded
real estate limited partnership, in a transaction accounted for as a purchase.
As a result of the transaction, the Company acquired 295 fee properties,
consisting of 290 service station and convenience store properties and five
terminals, which were previously leased by the Company from the Partnership.
As of January 31, 1999, the Company owned in fee 7 distribution terminals and
leased 3 bulk plants (on a long-term net lease basis) located in New York, New
Jersey, Rhode Island, Pennsylvania and Connecticut. The terminals and bulk
plants owned or leased by the Company have an aggregate storage capacity of
approximately 57 million gallons. The terminals located in
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East Providence (Rhode Island) and Rensselaer (New York) are deep-water
terminals, capable of handling large vessels. The ten distribution terminals and
bulk plants are leased or sub-leased to Marketing.
As of January 31, 1999, the Company leases approximately 32,000 square feet of
office space at 125 Jericho Turnpike, Jericho, New York, where it currently
maintains its corporate headquarters, most of which has been subleased to
Marketing.
The Company believes that substantially all of its owned and leased properties
are in good condition.
For a description of the Company's lease arrangements with Marketing after the
spin-off, see discussion above under the caption "Real Estate Business."
Item 3. Legal Proceedings
(a) Information in response to this item is incorporated herein by reference
from Notes 5 and 12 of the Notes to Consolidated Financial Statements set forth
on pages 17 and 18, and page 23, respectively, of the Annual Report.
In 1986, the State of New York brought an action against the Company which was
filed in New York State Supreme Court in Albany County for an alleged
underground discharge of petroleum products at a service station. The State is
seeking reimbursement in the amount of $179,000 for cleanup costs, plus interest
and a penalty of $10,000 for the alleged discharge. On March 23, 1998, the
insurance carrier, who had been defending the Company under a reservation of
rights, advised the Company that it will continue to defend the Company but will
not indemnify it. The Company has asserted a claim against the carrier for its
refusal to indemnify the Company.
In 1986, the State of New York brought an action against the Company which was
filed in New York State Supreme Court in Albany County for an alleged
underground discharge of petroleum products at a service station. The State is
seeking reimbursement in the amount of $57,000 for cleanup costs, plus interest
and a penalty of $500,000 for the alleged discharge. On March 23, 1998, the
insurance carrier, who had been defending the Company under a reservation of
rights, advised the Company that it will continue to defend the Company but will
not indemnify it. The Company has asserted a claim against the carrier for its
refusal to indemnify the Company.
In 1991, the State of New York brought an action in the New York State Supreme
Court in Albany County against one of the Company's former subsidiaries seeking
reimbursement in the amount of $189,000 for cleanup costs incurred at a service
station. The State is also seeking penalties of $200,000 and interest. There has
been no activity in this proceeding in the past several years.
In 1992, the State of New York asserted a claim for reimbursement of cleanup
costs against the Company and another petroleum company, in the amount of
$121,000, together with statutory
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penalties of $100,000, pertaining to an alleged spill at a service station in
1984. In 1996, the State of New York brought an action in the New York State
Supreme Court in Albany County against the Company and the other petroleum
company seeking cleanup costs of $209,000, together with interest and penalties
of $200,000. This lawsuit was settled in April 1999 by the payment by the
Company of $292,500.
In 1993, the State of New York asserted a claim against the Company for cleanup
costs incurred at a service station and for statutory penalties. In 1994, an
action was filed in New York State Supreme Court in Albany County to recover
$522,000 for cleanup costs and unspecified penalties and interest.
In 1994, a subsidiary of the Company was served with an Amended Complaint naming
the Company's subsidiary as one of many defendants in the Keystone Superfund
case pending in the U.S. District Court for the Middle District of Pennsylvania,
pertaining to the subsidiary's miscellaneous office refuse and used furnace air
and oil filters which were disposed of at the site. In 1995, another subsidiary
of the Company was brought into the same action pertaining to convenience store
refuse. In August 1997, the Company and its subsidiaries paid into escrow
$40,000 in full settlement. The settlement, which has been approved by the U.S.
EPA, has not yet been approved by the Court.
In 1995, Pennsauken Solid Waste Management Authority, its successor-in-interest,
the Pollution Control Financing Authority of Camden County and the Township of
Pennsauken, New Jersey commenced an action for unspecified amounts against
certain defendants for all costs and damages incurred for the remediation of the
Pennsauken Sanitary Landfill. In November 1996, one of the defendants filed a
third party complaint in the Superior Court of New Jersey, Camden County,
against its former customers, including a former construction company subsidiary
of the Company, seeking indemnification from the third party defendants for all
costs it incurred or will incur in response to the release of hazardous
substances in the landfill plus attorneys' fees. The Company believes that the
exposure is not material because the quantities of construction fill deposited
at the waste site were small.
In 1996, the State of New York asserted three separate claims against the
Company for reimbursement of cleanup costs incurred at service stations in the
amount of (i) $291,000, plus statutory penalties of $150,000, (ii) $112,000,
plus interest and (iii) $463,000, plus interest.
In April 1998, the State of New York asserted a claim against a former
subsidiary of the Company for reimbursement in the amount of $185,000 for
cleanup costs that were incurred at a heating oil customer's home in 1991. On
August 12, 1998, an action was filed in the New York Supreme Court to recover
$185,000 for cleanup costs plus interest and penalties.
In June 1998, the Company was sued as a third-party defendant in the Superfund
case of U.S. v. Champion Chemical Co. and Imperial Oil Co., pending in the U.S.
District Court for New Jersey. The Company's defense is being conducted by
Texaco Inc., which has agreed to fully indemnify
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the Company. In August 1998, the Company was sued as a third-party defendant in
the Superfund case of U.S. v. Manzo, pending in the U. S. District Court for New
Jersey. The Company's defense is being conducted by Texaco Inc., which has
agreed to fully indemnify the Company. These two matters involve a period of
time prior to 1985 when the properties were purchased from Texaco Inc. pursuant
to an agreement which provides that Texaco will indemnify the Company for
environmental matters of this kind.
In December 1998, the New York State Department of Environmental Conservation
filed an administrative complaint against the Company for civil penalties for
alleged groundwater contamination and gasoline migration into a residence
basement in April 1997. The action was filed in response to a citizen's lawsuit
filed against the Company in the U.S. District Court for the Southern District
of New York.
In March 1999, the State of New York filed two lawsuits against the Company in
the amounts of $114,000 and $497,000, respectively, in the New York Supreme
Court , Albany County, seeking reimbursement for cleanup costs incurred at two
service stations, plus interest and penalties.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of security holders during the fourth quarter
of the Company's fiscal year ended January 31, 1999.
Executive Officers of Registrant
The following table lists the executive officers of the Company as of January
31, 1999, their respective ages, the offices and positions held with the Company
and the year in which each was elected an officer of the Company or its
predecessor.
Name Age Position Officer Since
Leo Liebowitz 71 President and Chief Executive
Officer 1971
John J. Fitteron 57 Senior Vice President, Treasurer
and Chief Financial Officer 1986
Mr. Liebowitz has been President and Chief Executive Officer and a director of
the Company or its predecessor since 1971. He is also the Chairman, Chief
Executive Officer and a director of Marketing. He is also a director of the
Regional Banking Advisory Board of Chase Banking Corp.
Mr. Fitteron joined the Company's predecessor in 1986 as Senior Vice President
and Chief Financial Officer and assumed the additional position of Treasurer in
1994. Prior to joining Getty, he was a Senior Vice President at Beker Industries
Corp., a chemical and natural resource company.
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Management is not aware of any family relationships between the foregoing
executive officers.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Information in response to this item is incorporated herein by reference from
material under the heading "Capital Stock" on page 24 of the Annual Report.
Item 6. Selected Financial Data
Information in response to this item is incorporated herein by reference from
material under the heading "Selected Financial Data" on page 6 of the Annual
Report.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Information in response to this item is incorporated herein by reference from
material under the heading "Management's Discussion and Analysis of Financial
Condition and Results of Operations" on pages 7 through 10 of the Annual Report.
Item 7A. Market Risk
Information in response to this item is incorporated herein by reference from
Note 5 of the Notes to Consolidated Financial Statements set forth on page 17 of
the Annual Report.
Item 8. Financial Statements and Supplementary Data
Information in response to this item is incorporated herein by reference from
the financial information set forth on pages 11 through 24 of the Annual Report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
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PART III
Item 10. Directors and Executive Officers of the Registrant
Information with respect to directors in response to this item is incorporated
herein by reference from material under the headings "Election of Directors" and
"Compliance with Section 16(a) of the Securities Exchange Act of 1934" on pages
2 and 5, and page 14, respectively, of the Proxy Statement.
Information regarding executive officers is included in Part I hereof.
Item 11. Executive Compensation
Information in response to this item is incorporated herein by reference from
material under the headings "Directors' Meetings, Committees and Executive
Officers" and "Compensation" through, and including the material under the
heading, "Compensation Committee Interlocks and Insider Participation" on pages
5 through 9 of the Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information in response to this item is incorporated herein by reference from
material under the heading "Beneficial Ownership of Capital Stock" on pages 3
and 4 of the Proxy Statement.
Item 13. Certain Relationships and Related Transactions
Information in response to this item is incorporated herein by reference from
material under the heading "Certain Transactions" on pages 11 and 12 of the
Proxy Statement.
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PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial statements
The financial statements listed in the Index to
Financial Statements and Financial Statement
Schedules on page 13 are filed as part of this annual
report.
2. Financial statement schedule
The financial statement schedule listed in the Index
to Financial Statements and Financial Statement
Schedules on page 13 is filed as part of this annual
report.
3. Exhibits
The exhibits listed in the Exhibit Index on pages 16
through 23 are filed as part of this annual report.
4. Reports on Form 8-K
None.
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GETTY REALTY CORP.
INDEX TO FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
COVERED BY REPORT OF INDEPENDENT ACCOUNTANTS
Items 14(a) 1 & 2
Reference
-------------------------
Form 10-K 1999 Annual
(pages) Report (pages)
-------------------------
Data incorporated by reference from attached
1999 Annual Report to Stockholders of Getty
Realty Corp.:
Report of Independent Accountants 24
Consolidated Statements of Operations for the
years ended January 31, 1999, 1998 and 1997 11
Consolidated Balance Sheets as of January 31,
1999 and 1998 12
Consolidated Statements of Cash Flows for the
years ended January 31, 1999, 1998 and 1997 13
Notes to Consolidated Financial Statements 14 - 23
Report of Independent Accountants - Supplemental
Schedule 14
Schedule II - Valuation and Qualifying Accounts and
Reserves for the years ended January 31, 1999,
1998 and 1997 15
All other schedules are omitted for the reason that they are either not
required, not applicable, not material or the information is included in the
consolidated financial statements or notes thereto.
The financial statements listed in the above index which are included in the
1999 Annual Report to Stockholders are hereby incorporated by reference. With
the exception of the pages listed in the above index and the information
incorporated by reference included in Part II, Items 5, 6, 7 and 8, the 1999
Annual Report to Stockholders is not deemed filed as part of this report.
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of Getty Realty Corp.:
Our report on our audits of the consolidated financial statements of Getty
Realty Corp. and Subsidiaries has been incorporated by reference in this Form
10-K from page 24 of the 1999 Annual report to Stockholders of Getty Realty
Corp. and Subsidiaries. In connection with our audits of such financial
statements, we have also audited the related financial statement schedule listed
in the index in Item 14(a) on page 13 of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as whole,
presents fairly, in all material respects, the information required to be
included therein.
PricewaterhouseCoopers LLP
New York, New York
March 11, 1999
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GETTY REALTY CORP. and SUBSIDIARIES
SCHEDULE II - VALUATION and QUALIFYING ACCOUNTS and RESERVES
for the years ended January 31, 1999, 1998 and 1997
(in thousands)
Balance at Balance at
beginning end of
of period Additions Deductions period
--------- --------- ---------- ------
1999:
Allowance for
doubtful accounts* $ 171 $113 $ 172 $ 112
====== ==== ====== ======
1998:
Allowance for
doubtful accounts* $1,369 $ 68 $1,266(a) $ 171
====== ==== ====== ======
1997:
Allowance for
doubtful accounts* $1,409 $485 $ 525 $1,369
====== ==== ====== ======
*Relates to accounts receivable.
(a) Includes $1,185 transferred to Marketing in connection with the spin-off.
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EXHIBIT INDEX
GETTY REALTY CORP.
Annual Report on Form 10-K
for the fiscal year ended January 31, 1999
Exhibit
No. Description
--- -----------
1.1 Agreement and Plan of Filed as Exhibit 2.1 to Company's
Reorganization and Merger, Registration Statement on Form S-4,
dated as of December 16, filed on January 12, 1998 (File No.
1997 (the "Merger 333-44065), included as Appendix A to
Agreement") by and among the Joint Proxy Statement/Prospectus
Getty Realty Corp., Power that is a part thereof, and
Test Investors Limited incorporated herein by reference.
Partnership and CLS
General Partnership Corp.
3.1 Articles of Incorporation of Filed as Exhibit 3.1 to Company's
Getty Realty Holding Corp. Registration Statement on Form S-4,
("Holdings"), now known as filed on January 12, 1998 (File No.
Getty Realty Corp., filed 333-44065), included as Appendix D to
December 23, 1997. the Joint Proxy Statement/Prospectus
that is a part thereof, and
incorporated herein by reference.
3.2 Articles Supplementary to Filed as Exhibit 3.2 to Company's
Articles of Incorporation of Annual Report on Form 10-K for the
Holdings, filed January fiscal year ended January 31, 1998
21, 1998. (File No. 001-13777) and incorporated
herein by reference.
3.3 By-Laws of Holdings. Filed as Exhibit 3.2 to Company's
Registration Statement on Form S-4,
filed on January 12, 1998 (File No.
333-44065), included as Appendix F to
the Joint Proxy Statement/Prospectus
that is a part thereof, and
incorporated herein by reference.
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3.4 Articles of Amendment of Filed as Exhibit 3.4 to Company's
Holdings, changing its name Annual Report on Form 10-K for the
to Getty Realty Corp., fiscal year ended January 31, 1998
filed January 30, 1998. (File No. 001-13777) and incorporated
herein by reference.
4.1 $35,000,000 reducing Filed as Exhibit 4.7 to the Quarterly
revolving Loan Agreement Report on Form 10-Q for the quarter
between Leemilt's Petroleum, ended October 31, 1987 (File No. 1-8059)
Inc. and Bank of New of Getty Petroleum Corp., and
England, N.A. dated as of incorporated herein by reference.
December 7, 1987, and
related Guaranty Agreement,
dated as of December 7,
1987, by and between Getty
Petroleum Corp. (now known
as Getty Properties Corp.)
and Bank of New England,
N.A.
4.2 Amended and Restated Loan Filed as Exhibit 4.8 to the Annual
Agreement between Leemilt's Report on Form 10-K for the fiscal
Petroleum, Inc. and Fleet year ended January 31, 1996 (File No.
Bank of Massachusetts, N.A., 1-8059) of Getty Petroleum Corp. and
as successor to Bank of New incorporated herein by reference.
England, N.A., dated as of
October 31, 1995 (the
"Leemilt's Loan").
4.3 First Amendment to Amended Filed as Exhibit 4.3 to Company's Annual
and Restated Loan Agreement Report on Form 10-K for the fiscal year
between Leemilt's Petroleum, ended January 31, 1998 (File No.
Inc. and Fleet National Bank 001-13777) and incorporated herein by
(formerly known as Fleet reference.
Bank of Massachusetts, N.A.)
dated as of April 18, 1997.
4.4 Second Amendment to Amended Filed as Exhibit 4.4 to Company's Annual
and Restated Loan Agreement Report on Form 10-K for the fiscal year
between Leemilt's Petroleum, ended January 31, 1998 (File No.
Inc. and Fleet National Bank 001-13777) and incorporated herein by
dated as of January 30, reference.
1998.
4.5 Amended and Restated Loan Filed as Exhibit 10.27 to Power Test
Agreement between Power Test Investors Limited Partnership's ("PT
Realty Company Limited Investors") Annual Report on Form 10-K
Partnership ("PT Realty") for the fiscal year ended December 31,
and
17
<PAGE> 18
Fleet Bank of Massachusetts, 1995 (File No. 0-14557) and incorporated
N.A. dated as of October 31, herein by reference.
1995 (the "PT Realty Loan").
4.6 First Amendment to Amended Filed as Exhibit 4.6 to Company's Annual
and Restated Loan Agreement Report on Form 10-K for the fiscal year
between PT Realty and Fleet ended January 31, 1998 (File No.
National Bank dated as of 001-13777) and incorporated herein by
April 18, 1997. reference.
4.7 Second Amendment to Amended Filed as Exhibit 4.7 to Company's Annual
and Restated Loan Agreement Report on Form 10-K for the fiscal year
between PT Realty and Fleet ended January 31, 1998 (File No.
National Bank dated as of 001-13777) and incorporated herein by
January 30, 1998. reference.
10.1 Retirement and Profit Filed as Exhibit 10.2(b) to Company's
Sharing Plan (amended and Annual Report on Form 10-K for the
restated as of September 19, fiscal year ended January 31, 1997 (File
1996), adopted by the No. 1-8059) and incorporated herein by
Company on December 16, reference.
1997.
10.2 1998 Stock Option Plan, Filed as Exhibit 10.1 to Company's
effective as of January 30, Registration Statement on Form S-4,
1998. filed on January 12, 1998 (File No.
333-44065), included as Appendix H to
the Joint Proxy Statement/Prospectus
that is a part thereof, and incorporated
herein by reference.
10.3 Asset Purchase Agreement Filed as Exhibit 2(a) to the Current
among Power Test Corp. (now Report on Form 8-K of Power Test Corp.,
known as Getty Properties filed February 19, 1985 (File No.
Corp.), Texaco Inc., Getty 1-8059) and incorporated herein by
Oil Company and Getty reference.
Refining and Marketing
Company, dated as of
December 21, 1984.
18
<PAGE> 19
<TABLE>
<S> <C> <C>
10.4 Trademark License Agreement among Power Filed as Exhibit 2(b) to the Current Report on
Test Corp., Texaco Inc., Getty Oil Form 8-K of Power Test Corp., filed February 19,
Company and Getty Refining and 1985 (File No. 1-8059) and incorporated herein
Marketing Company, dated as of February by reference.
1, 1985.
10.5 Three Party Lease Agreement among Getty Filed as Exhibit 10.5 to Company's Annual Report
Realty Corp. (now known as Getty on Form 10-K for the fiscal year ended January
Properties Corp.), Leemilt's Petroleum, 31, 1998 (File No. 001-13777) and incorporated
Inc. and Fleet National Bank dated as herein by reference.
of April 18, 1997, amending and restating
the Lease dated February 1, 1985 between
Leemilt's Petroleum, Inc., as lessor,
and Getty Petroleum Corp. (now known as
Getty Properties Corp.), as lessee.
10.6 Amendment to Three Party Lease Agreement Filed as Exhibit 10.6 to Company's Annual Report
among Getty Properties Corp., Leemilt's on Form 10-K for the fiscal year ended January
Petroleum, Inc. and Fleet National Bank 31, 1998 (File No. 001-13777) and incorporated
dated as of January 30, 1998. herein by reference.
1998.
10.7 Amended and Restated Hazardous Waste Filed as Exhibit 10.17 to the Annual Report on
and PMPA Indemnification Agreement, Form 10-K for the fiscal year ended January 31,
dated as of October 31, 1995, among 1996 (File No. 1-8059) of Getty Petroleum Corp.
Getty Petroleum Corp. (now known as and incorporated herein by reference.
Getty Properties Corp.), Power Test
Realty Company Limited Partnership and
Fleet Bank of Massachusetts, N.A.
10.8 Affirmation and Acknowledgement of Filed as Exhibit 10.8 to Company's Annual Report
Amended and Restated Hazardous Waste and on Form 10-K for the fiscal year ended January
PMPA Indemnification Agreement, between 31, 1998 (File No. 001-13777) and incorporated
Getty Realty Corp. and Fleet National herein by reference.
Bank dated as of April 18, 1997.
</TABLE>
19
<PAGE> 20
<TABLE>
<S> <C> <C>
10.9 Second Affirmation and Acknowledgement Filed as Exhibit 10.9 to Company's Annual Report
of Amended and Restated Hazardous Waste on Form 10-K for the fiscal year ended January
and PMPA Indemnification Agreement 31, 1998 (File No. 001-13777) and incorporated
between the Company and Fleet National herein by reference.
Bank, dated as of January 30, 1998.
10.10 Amended and Restated Guaranty Agreement, Filed as Exhibit 10.10 to Company's Annual
dated as of October 31, 1995 between Report on Form 10-K for the fiscal year ended
Getty Petroleum Corp. and Fleet Bank of January 31, 1998 (File No. 001-13777) and
Fleet Bank of Massachusetts, N.A. incorporated herein by reference.
pertaining to the Leemilt's Loan.
10.11 Affirmation and Acknowledgment of Amended Filed as Exhibit 10.11 to Company's Annual
and Restated Guaranty Agreement between Report on Form 10-K for the fiscal year ended
Getty Realty Corp. and Fleet National Bank, January 31, 1998 (File No. 001-13777) and
dated as of April 18, 1997, pertaining incorporated herein by reference.
to the Leemilt's Loan.
10.12 Guaranty Agreement between the Company Filed as Exhibit 10.12 to Company's Annual
and Fleet National Bank, dated as of Report on Form 10-K for the fiscal year ended
January 30, 1998, pertaining to the January 31, 1998 (File No. 001-13777) and
Leemilt's Loan. incorporated herein by reference.
10.13 Guaranty Agreement between the Company Filed as Exhibit 10.13 to Company's Annual
and Fleet National Bank, dated as of Report on Form 10-K for the fiscal year ended
January 30, 1998, pertaining to the PT January 31, 1998 (File No. 001-13777) and
Realty Loan. incorporated herein by reference.
10.14 Guaranty Agreement between Getty Filed as Exhibit 10.14 to Company's Annual
Properties Corp. and Fleet National Report on Form 10-K for the fiscal year ended
Bank dated as of January 30, 1998, January 31, 1998 (File No. 001-13777) and
pertaining to the PT Realty Loan. incorporated herein by reference.
10.15 Form of Indemnification Agreement Filed as Exhibit 10.15 to Company's Annual
between the Company and its directors. Report on Form 10-K for the fiscal year ended
January 31, 1998 (File No. 001-13777) and
incorporated herein by reference.
</TABLE>
20
<PAGE> 21
<TABLE>
<S> <C> <C>
10.16 Supplemental Retirement Plan for Filed as Exhibit 10.22 to the Annual
Executives of the Company (then known as Report on Form 10-K for the fiscal year
Getty Petroleum Corp.) and Participating ended January 31, 1990 (File No. 1-8059)
Subsidiaries (adopted by the Company on of Getty Petroleum Corp. and
December 16, 1997). incorporated herein by reference.
10.17 Form of Agreement dated December 9, 1994 Filed as Exhibit 10.23 to the Annual
between Getty Petroleum Corp. and its Report on Form 10-K for the fiscal year
non-director officers and certain key ended January 31, 1995 (File No. 1-8059)
employees regarding compensation upon of Getty Petroleum Corp. and
change in control. incorporated herein by reference.
10.18 Form of Agreement dated as of March 7, Filed as Exhibit 10.27 to the Annual
1996 amending Agreement dated as of Report on Form 10-K for the fiscal year
December 9, 1994 between Getty Petroleum ended January 31, 1996 (File No. 1-8059)
Corp. (now known as Getty Properties of Getty Petroleum Corp. and
Corp.) and its non-director officers and incorporated herein by reference.
certain key employees regarding
compensation upon change in control (See
Exhibit 10.17).
10.19 Form of letter from Getty Petroleum Filed as Exhibit 10.19 to Company's
Corp. dated April 8, 1997, confirming Annual Report on Form 10-K for the
that a change of control event had fiscal year ended January 31, 1998 (File
occurred pursuant to the change of No. 001-13777) and incorporated herein
control agreements. (See Exhibits 10.17 by reference.
and 10.18).
10.20 Form of Agreement dated March 9, 1998, Filed as Exhibit 10.20 to Company's
from the Company to certain officers and Annual Report on Form 10-K for the
key employees, adopting the prior change fiscal year ended January 31, 1998 (File
of control agreements, as amended, and No. 001-13777) and incorporated herein
further amending those agreements. (See by reference.
Exhibits 10.17, 10.18 and 10.19).
</TABLE>
21
<PAGE> 22
<TABLE>
<S> <C> <C>
10.21 Form of Master Lease Agreement dated February 1, Filed as Exhibit 10.28 to the Annual Report on
1997 between Getty Petroleum Corp. (now known as Form 10-K for the fiscal year ended January 31,
Getty Properties Corp.) and Getty Petroleum 1997 (File No. 1-8059) of Getty Petroleum Corp.
Marketing Inc. and incorporated herein by reference.
10.22 Form of Reorganization and Distribution Agreement Filed as Exhibit 10.29 to the Annual Report on
between Getty Petroleum Corp. (now known as Getty Form 10-K for the fiscal year ended January 31,
Properties Corp.) and Getty Petroleum Marketing 1997 (File No. 1-8059) of Getty Petroleum Corp.
Inc. dated as of February 1, 1997. and incorporated herein by reference.
10.23 Form of Trademark License Agreement between Getty Filed as Exhibit 10.30 to the Annual Report on
Petroleum Corp. (now known as Getty Properties Form 10-K for the fiscal year ended January 31,
Corp.) and Getty Petroleum Marketing Inc. 1997 (File No. 1-8059) of Getty Petroleum Corp.
and incorporated herein by reference.
10.24 Form of Services Agreement dated as of February Filed as Exhibit 10.31 to the Annual Report on
1, 1997 between Getty Petroleum Corp. (now known Form 10-K for the fiscal year ended January 31,
as Getty Properties Corp.) and Getty Petroleum 1997 (File No. 1-8059) of Getty Petroleum Corp.
Marketing Inc. and incorporated herein by reference.
10.24A Form of Services Agreement dated as of February *
1, 1999 between Getty Realty Corp. and Getty
Petroleum Marketing Inc.
10.25 Form of Tax Sharing Agreement between Getty Filed as Exhibit 10.32 to the Annual Report on
Petroleum Corp. (now known as Getty Properties Form 10-K for the fiscal year ended January 31,
Corp.) and Getty Petroleum Marketing Inc. 1997 (File No. 1-8059) of Getty Petroleum Corp.
and incorporated herein by reference.
10.26 Form of Stock Option Reformation Agreement made Filed as Exhibit 10.33 to the Annual Report on
and entered into as of March 21, 1997 by and Form 10-K for the fiscal year ended January 31,
between Getty Petroleum Corp. (now known as Getty 1997 (File No. 1-8059) of Getty Petroleum Corp.
and incorporated herein by reference.
</TABLE>
22
<PAGE> 23
Properties Corp.) and Getty
Petroleum Marketing Inc.
13 Annual Report to Stockholders for the *
fiscal year ended January 31, 1999.
22 Subsidiaries of the Company. *
24 Consent of Independent *
Accountants.
27 Financial Data Schedule. *
- - -----------------------
*Filed herewith
23
<PAGE> 24
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Getty Realty Corp.
------------------
(Registrant)
By /s/ John J. Fitteron
--------------------------------
John J. Fitteron,
Senior Vice President,
Treasurer and Chief Financial
Officer
April 30, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
By /s/ Leo Liebowitz By /s/ John J. Fitteron
------------------------- --------------------------------
Leo Liebowitz, President, John J. Fitteron,
Chief Executive Officer Senior Vice President,
and Director Treasurer and Chief Financial
April 30, 1999 Officer (Principal Financial and
and Accounting Officer)
April 30, 1999
By /s/ Milton Cooper By /s/ Philip E. Coviello
------------------------- --------------------------------
Milton Cooper, Philip E. Coviello,
Director Director
April 30, 1999 April 30, 1999
By /s/ Howard Safenowitz By /s/ Warren G. Wintrub
------------------------- --------------------------------
Howard Safenowitz, Warren G. Wintrub,
Director Director
April 30, 1999 April 30, 1999
24
<PAGE> 1
EXHIBIT 10.24A
SERVICES AGREEMENT
AGREEMENT, dated as of February 1, 1999 between GETTY REALTY CORP., a
Maryland corporation ("Realty"), and GETTY PETROLEUM MARKETING INC., a Maryland
corporation ("Marketing").
SUMMARY
Pursuant to a Reorganization and Distribution Agreement dated as of
January 31, 1997, (the "Distribution Agreement") between Getty Properties Corp.
(f/k/a Getty Realty Corp. hereinafter "Properties") and Marketing, Properties on
the date thereof transferred to Marketing the Marketing Assets and Marketing
Business (as such terms are defined in the Distribution Agreement) in
anticipation of a distribution by Properties of the common stock of Marketing to
the stockholders of Properties. A condition of the closing of the transactions
contemplated by the Distribution Agreement was that Properties and Marketing
enter into a services agreement pursuant to which Marketing shall provide
certain services as agent for Properties and Properties shall provide certain
services as agent for Marketing.
A Services Agreement dated as of February 1, 1997 was entered into
between Properties and Marketing which Agreement was for a term of two (2) years
and which expired January 31, 1999.
The parties hereto wish to enter into a new agreement to cover the
services to be performed.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants hereinafter set forth, and intending to be legally bound
hereby, the parties agree as follows:
1. MARKETING SERVICES. Marketing agrees, as agent for Realty, to utilize
its employees and assets to provide certain services consistent with
the type, quality and level of such services required by Realty and
provided by Getty Petroleum Corp. immediately prior to the Distribution
Date, in connection therewith. The services to be provided are set
forth below, together with the applicable monthly charge for each such
service:
SERVICES MONTHLY CHARGE
-------- --------------
Financial Reporting $ 8,900.00
Accounting/Payroll $10,700.00
Data Processing/Computer $10,900.00
Tax $ 5,600.00
Legal $13,900.00
Treasury $ 4,400.00
Office Services $ 2,300.00
Human Resources $ 2,900.00
Engineering/Environmental $ 7,900.00
Investor Relations $ 3,900.00
Purchasing $ 700.00
1
<PAGE> 2
Servicing of Non-Petroleum
Class "37" Leases $ 5,500.00
2. INVOICE AND PAYMENT. Marketing shall invoice Realty once each month for
the services performed during the prior month and Realty shall pay
Marketing for such services not later than ten (10) days from the
receipt of invoice. The amount paid shall be net of the amount owing to
Realty under Paragraphs 3 and 4.
3. REALTY SERVICES. Realty agrees that as agent for Marketing (i)
Realty will act as the permittee or licensee under all permits and
licenses until such time(s) as all permits and licenses are either
transferred to Marketing or new ones are issued therefor; (ii) Realty
will continue to act as the party at interest in all instances where
contracts, leases or the like are not assignable to Marketing or Realty
has been unable to obtain consent to assignment where consent is
required; and (iii) Realty will draw on all electronic funds transfer
authorizations ("EFT") issued by third parties to Realty and letters of
credit in favor of Realty (collectively hereinafter "draws") until such
time as new EFT agreements and letters of credit are issued, all for
the benefit of Marketing. Marketing (x) will reimburse Realty for any
out-of-pocket expenses it may incur in performing such services, and
(y) will defend, indemnify and hold harmless Realty in the event that
any such draws made at Marketing's direction result in claims for
damages for wrongful draws made under clause (iii) above. The services
to be provided are set forth below together with the applicable monthly
charge for each such service.
Services Monthly Charge
-------- --------------
Servicing of Permits and Licenses $ 700.00
Servicing of Non-Assignable Contracts and Leases $ 700.00
Servicing of EFT Transfers and Letters of Credit $ 500.00
4. OUTSIDE SERVICES; ADJUSTMENTS TO CHARGES. The charges for the
foregoing services to be performed hereunder shall be all-inclusive of
supplies and utilities required for such services, provided, however,
that, if the level of activity for any service should increase above
the level required prior to the date hereof, the party providing such
service (the "providing party") shall have the right to charge the
other party for the additional supplies and utilities being used, on a
cost-plus 10% basis. In the event that the providing party is required
to retain outside consultant/contractor assistance to perform any of
the services hereunder, the providing party shall first obtain the
consent of the other party to such retention and the other party shall
pay directly the fees of such consultant/contractor. The providing
party shall not be held responsible for the performance of such
consultant/contractor services and the other party assumes the risk
thereof. At any time the other party desires reports, software, files
or the like, the providing party shall provide them to the other party
at cost.
The services to be performed hereunder shall be performed and used in
compliance with the applicable provisions of the Distribution
Agreement.
The parties hereto agree that once every six (6) months they will
review the foregoing monthly
2
<PAGE> 3
charges and, if it is mutually determined in good faith that certain
monthly charge(s) do not correctly compensate the providing party for
the service(s) rendered, the monthly charge(s) shall be increased or
reduced, as the case may be.
5. CONTRACTUAL RELATIONSHIP. The relationship between Realty and Marketing
under this Agreement shall be that of principal and agent in respect of
the services to be performed hereunder. In no event is the relationship
of the parties intended to be that of employer and employee and in no
event is either party to be deemed or purported to be the partner or
joint venturer of the other for any purpose whatsoever.
6. TERM. The term of this Agreement shall be one (1) year from the date
hereof, and shall renew automatically for successive periods of one (1)
year each, provided, however, that, upon thirty (30) days notice (i) to
Realty, Marketing shall have the right to terminate any or all of the
services set forth in Paragraph 1; and (ii) to Marketing, Realty shall
have the right to terminate any or all of the services set forth in
Paragraph 3. In the event of partial termination, the monthly charge
for such terminated service shall cease upon the effective date of the
partial termination. Realty understands and agrees that certain
services (e.g. Data Processing) cannot be terminated if other services
(e.g. Accounting ) are to continue and that "Office Services" cannot be
terminated while Realty is subleasing office space in the Jericho
Building. Upon the termination of all services, payment therefor and
payment of all consultants/contractors, this Agreement shall terminate.
7. LIMITATION OF LIABILITY. Neither party shall have any liability
whatsoever to the other party or to any third party for any loss,
liability, damage, cost or deficiency (collectively "Losses"), or for
any claim for Losses, including, without limitation, Losses or claims
for personal injury, death or property damage, warranty, tort or
products liability, resulting from, caused by or arising out of a
party's performance under this Agreement except for claims arising out
of the negligence or willful default or breach of such party hereunder.
In no event shall any party have liability to the other party or to any
third party for indirect, special or consequential damages or loss of
profits (except with respect to its willful default or breach), or for
punitive damages for any reason whatsoever.
8. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by
facsimile transmission, telexed or mailed by overnight delivery service
or by registered or certified mail (return receipt requested), postage
prepaid, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice; provided that
notices of a change of address shall be effective only upon receipt
thereof):
(a) if to Getty Realty Corp.:
125 Jericho Turnpike
Jericho, New York 11753
Attention: President
(b) if to Getty Petroleum Marketing Inc.:
125 Jericho Turnpike
Jericho, New York 11753
Attention: President
3
<PAGE> 4
9. ASSIGNMENT. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns but neither this Agreement
nor any of the rights, interests or obligations hereunder shall be
assigned by any party hereto without the prior written consent of the
other party (other than to an affiliate of Marketing ). Any purported
assignment in violation of the provisions hereof shall be void.
10. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of New York (regardless of the laws that might otherwise govern
under applicable New York conflict of laws principles) as to all
matters, including but not limited to matters of validity,
construction, effect, performance and remedies.
11. SUITS IN NEW YORK. The parties agree that any action or proceeding
relating in any way to this Agreement shall be brought and enforced in
the Supreme Court of the State of New York for Nassau County or the
United States District Court for the Eastern District of New York and
the parties hereby waive any objection to jurisdiction or venue in any
such proceeding commenced in such court.
12. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
13. INTERPRETATION. The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.
14. SEVERANCE. In the event that any provision of this Agreement is
declared illegal, invalid or unenforceable or contrary to law, it shall
not affect any other provision in the Agreement.
15. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding of the parties hereto in respect of the subject matter
hereof. This Agreement supersedes all prior agreements and
understandings between the parties with respect to the transactions
contemplated hereby.
IN WITNESS WHEREOF, each of Realty and Marketing has caused this
Agreement to be executed by its duly authorized officer as of the date
first above written.
GETTY REALTY CORP.
By: _________________________
Leo Liebowitz, President
GETTY PETROLEUM MARKETING INC.
By: __________________________
Vincent J. DeLaurentis, President
4
<PAGE> 1
SELECTED FINANCIAL DATA
Getty Realty Corp.
and Subsidiaries
<TABLE>
<CAPTION>
CONSOLIDATED FINANCIAL DATA Years Ended January 31,
- - ------------------------------------------------------------------------------------------------------------
(in thousands, except per share amounts) 1999 1998(a) 1997(a) 1996(a) 1995(a)
- - ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total revenues $ 61,341 $ 62,817 $892,456 $798,967 $760,896
Earnings (loss) from continuing
operations before income taxes,
extraordinary item and cumulative
effect of accounting changes 12,838 13,546(b) (14,395)(c) 21,058 9,823
Net earnings (loss) 10,056 7,944 (9,176) 12,634(d) 6,339(e)
Diluted earnings (loss) per common share:
Continuing operations .17 .59 (.74) .97(d) .43(e)
Discontinued operations .19 .01 .01 .02 .07
Net earnings (loss) .36 .60 (.72) 1.00(d) .50(e)
Cash dividends per share:
Preferred 1.775 -- -- -- --
Common .40 .12 .12 .06 --
Total assets 261,084 265,661 290,664 275,006 276,389
Total debt 39,742 40,526 41,592 51,586 71,316
Stockholders' equity 138,031 138,593 100,472 110,574 98,480
</TABLE>
(a) Includes financial results of the petroleum marketing business prior to
the spin-off to the Company's stockholders on March 21, 1997.
(b) Includes $7,918 of aggregate pre-tax charges consisting of $8,683 of stock
compensation expense and $2,166 of change of control charges, net of
$2,931 of equity in earnings of petroleum marketing business for the
period from February 1, 1997 to March 21, 1997.
(c) Includes pre-tax charges aggregating $28,677 consisting of $21,182 related
to revision of estimate of future environmental remediation costs, $5,802
related to the settlement of a dispute involving the Company's former
construction Company subsidiary and $1,693 of expenses related to the
spin-off transaction.
(d) Includes after-tax charge of $794 or $.06 per share from the cumulative
effect of adopting Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of."
(e) Includes extraordinary charge of $775 or $.06 per share in connection with
the early retirement of debt and a credit of $183 or $.01 per share from
the cumulative effect of adopting Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities."
<TABLE>
<CAPTION>
PRO FORMA SUPPLEMENTAL FINANCIAL HIGHLIGHTS AND SELECTED DATA (f)
- - --------------------------------------------------------------------------------------------------------------------
(in thousands, except number of properties) 1999 1998 1997 1996 1995
- - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FISCAL YEAR ENDED JANUARY 31,
Revenues from rental properties $ 58,869 $ 59,449 $ 58,653 $ 57,177 $ 56,954
Other income 2,472 3,368 1,570 5,726 5,559
- - --------------------------------------------------------------------------------------------------------------------
Total revenues 61,341 62,817 60,223 62,903 62,513
Adjusted EBITDA (g) 39,874 41,516 45,259 41,048 41,564
Net earnings 10,056 6,213 6,049 8,970(d) 8,773(e)
Capital expenditures 25,222 11,259 6,913 6,260 5,206
AS OF JANUARY 31,
Real estate before accumulated
depreciation 307,793 284,092 190,524 183,621 182,481
Total assets 261,084 265,661 155,164 150,508 159,292
Capitalization:
Total debt 39,742 40,526 41,592 51,586 71,316
Stockholders' equity 138,031 138,593 45,931 60,263 61,419
- - --------------------------------------------------------------------------------------------------------------------
Total capitalization 177,773 179,119 87,523 111,849 132,735
NUMBER OF PROPERTIES:
Owned 740 736 441 439 444
Leased 379 404 732 734 752
- - --------------------------------------------------------------------------------------------------------------------
Total properties 1,119 1,140 1,173 1,173 1,196
</TABLE>
(f) Excludes the petroleum marketing business which was spun-off on March 21,
1997. This data is presented for informational purposes only and is not
necessarily indicative of the financial results that would have occurred
had realty been operated as a separate, stand-alone entity during such
periods nor is the information presented necessarily indicative of future
results.
(g) Adjusted EBITDA is defined as earnings from continuing operations before
equity in earnings of petroleum marketing business, interest expense,
income taxes, depreciation and amortization, adjusted to exclude
environmental expense, stock option expense, change of control charge,
litigation charge and other income (except mortgage receivable interest
income). Adjusted EBITDA provides additional information for evaluating
financial results and is presented solely as a supplemental measure.
Adjusted EBITDA is not intended to represent cash flow and should not be
construed as an alternative to either cash flow, net income, or any other
measure of financial performance presented in accordance with generally
accepted accounting principles.
6
<PAGE> 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Getty Realty Corp.
and Subsidiaries
GENERAL
Prior to the spin-off of its petroleum marketing business to its stockholders
on March 21, 1997, Getty Realty Corp. (the "Company") was principally engaged
in the ownership and leasing of real estate as well as the marketing and
distribution of petroleum products. In December 1998, the Company sold the
Pennsylvania and Maryland heating oil business. Proceeds from the sale amounted
to $7.7 million and resulted in an after-tax gain of $2.7 million. The net
assets and results of operations of the heating oil business have been
reclassified as discontinued in the accompanying financial statements for each
of the periods presented. The Company is now a real estate company specializing
in service stations, convenience stores and petroleum Marketing terminals. The
Company leases most of its properties on a long-term net basis to the spun-off
company, Getty Petroleum Marketing Inc. ("Marketing").
RESULTS OF OPERATIONS
In order to make the following discussion of the Company's results of
operations more meaningful, the financial results of the spun-off petroleum
marketing business and the sold heating oil business, which is shown as a
discontinued operation, have been excluded from the narrative presented below.
The net earnings (loss) of Marketing included in the accompanying consolidated
statements of operations for the period prior to its spin-off, February 1, 1997
to March 21, 1997 and the fiscal year ended January 31, 1997, were $1.7 million
and ($15.2) million, respectively. The net earnings of the discontinued heating
oil business were $2.6 million, $0.1 million and $0.2 million for the fiscal
years ended January 31, 1999, 1998 and 1997, respectively. See Notes 2 and 3 to
the consolidated financial statements for separate financial information
relating to the spun-off petroleum marketing business and the discontinued
heating oil business.
The Company's financial results largely depend on rental income from
Marketing and other lessees and sublessees. The Company's financial results are
materially dependent upon the ability of Marketing to meet its obligations
under the Master Lease entered into on February 1, 1997 (the "Master Lease");
however, the Company does not anticipate that Marketing will have difficulty in
making all required rental payments in the foreseeable future.
Fiscal year ended January 31, 1999 compared to fiscal year ended
January 31, 1998
Revenues from rental properties for the year ended January 31, 1999 ("fiscal
1999") were $58.9 million, a 1.0% decrease from the $59.4 million realized for
the year ended January 31, 1998 ("fiscal 1998"). Approximately $56.4 million
and $57.0 million of such rentals for fiscal 1999 and 1998, respectively, were
from properties leased to Marketing under the Master Lease.
Other income amounted to $2.5 million for fiscal 1999 as compared with
$3.4 million for fiscal 1998. The $0.9 million decrease was primarily due to
$0.7 million of management fees for administrative and other services provided
to Power Test Investors Limited Partnership ("PTI") in fiscal 1998, which fees
were eliminated as a result of the merger of PTI into the Company on January
30, 1998.
Rental property expenses, which are principally comprised of rent
expense and real estate taxes, decreased from fiscal 1998 by $0.7 million
(5.0%) to $12.9 million for fiscal 1999 due to a decrease in the number of
properties leased.
Environmental and maintenance expenses for fiscal 1999 amounted to
$17.3 million, an increase of $8.7 million from the prior year. The current
year included an environmental charge of $16.9 million, of which $14.8 million
represented a change in estimated remediation costs associated with
contamination discovered during work being performed to meet the federal
underground storage tank standards and revisions to estimates on previously
identified sites where remediation is ongoing. The prior year included an
environmental charge of $8.3 million.
Selling, general and administrative expenses for fiscal 1999 amounted
to $6.1 million, a decrease of $7.2 million from the prior year. The decrease
was principally due to a charge of $8.7 million recorded during fiscal 1998 for
stock compensation resulting from a change in the Company's stock price,
partially offset by higher insurance costs, legal and other professional fees
during the current year.
Depreciation and amortization for fiscal 1999 amounted to $9.4
million, which was comparable to fiscal 1998.
Interest expense for fiscal 1999 amounted to $2.7 million, a decrease
of $2.3 million from the prior year. The decrease was principally due to the
elimination of the capitalized lease obligations as a result of the merger of
PTI into the Company on January 30, 1998.
7
<PAGE> 3
MANAGEMENT'S DISCUSSION
And Analysis Of Financial Condition And Results Of Operations
Getty Realty Corp.
and Subsidiaries
During fiscal 1998, the Company recorded a charge of $2.2 million
related to change of control agreements in connection with the spin-off.
Fiscal year ended January 31, 1998 compared to fiscal year ended
January 31, 1997
Revenues from rental properties for fiscal 1998 were $59.4 million, a 1.4%
Increase over the $58.7 million realized for the year ended January 31, 1997
("fiscal 1997"). Approximately $57.0 million and $56.3 million of such rentals
for fiscal 1998 and 1997, respectively, were from properties leased to
marketing.
Other income amounted to $3.4 million for fiscal 1998 as compared with
$1.7 million for fiscal 1997. The increase was primarily due to $1.7 million of
expenses incurred in fiscal 1997 related to the spin-off transaction.
Rental property expenses, which are principally comprised of rent
expense and real estate taxes, increased by $0.6 million (4.7%) For fiscal 1998
over rental property expenses of $13.0 million for fiscal 1997.
Environmental and maintenance expenses for fiscal 1998 amounted to $8.6
million, a decrease of $3.3 million from the prior year. Fiscal 1998 included a
change in estimated remediation costs of $6.2 million and related environmental
legal charges of $1.8 million whereas fiscal 1997 had higher environmental
charges.
Selling, general and administrative expenses for fiscal 1998 amounted
to $13.3 million, an increase of $10.1 million over the prior year. The
increase was principally due to $8.7 million of expense relating to stock
options resulting from appreciation of the Company's stock price and $1.0
million of fees paid to Marketing under the administrative services agreement
entered into at the time of the spin-off.
Depreciation and amortization for fiscal 1998 amounted to $9.5 million,
an increase of $0.5 million over the prior year as a result of capital
expenditures and property acquisitions.
Interest expense for fiscal 1998 amounted to $5.0 million, a decrease
of $1.4 million from the prior year. The decrease was principally due to
reduced capital lease obligations and debt outstanding during fiscal 1998.
During fiscal 1998, the Company recorded a charge of $2.2 million
related to change of control agreements in connection with the spin-off.
During fiscal 1997, the Company recorded a pre-tax charge of $5.8
million related to a judgment against a former construction company subsidiary
which the Company sold in 1989.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of liquidity are cash flows from operations and
its short-term uncommitted lines of credit with two banks. Management believes
that cash requirements for operations, capital expenditures and debt service
can be met by cash flows from operations, available cash and equivalents and
credit lines. As of January 31, 1999, such lines of credit amounted to $25
million, which may be utilized for working capital borrowings and letters of
credit. As of January 31, 1999, $4.5 million of the lines of credit were
utilized for short-term borrowings and $5.9 million were utilized in connection
with outstanding letters of credit. Borrowings under such lines of credit are
unsecured and bear interest at the prime rate or, at the Company's option,
LIBOR plus 1.0% or 1.1%. Such lines of credit are subject to renewal at the
discretion of the banks. Although it is expected that the existing sources of
liquidity will be sufficient to meet its expected operating and debt service
requirements, the Company may be required to obtain additional sources of
capital in the future to fund property acquisitions, which capital sources it
believes are available.
During fiscal 1999, the Company declared quarterly cash common stock
dividends of $.10 per share and quarterly preferred stock dividends of $.44375
per share. Such dividends aggregated $10.6 million for fiscal 1999. During
fiscal 1998, the Company paid quarterly cash common stock dividends in the
amount of $.03 per share and no preferred stock dividends since the preferred
shares were first issued on January 30, 1998. Such dividends aggregated $1.6
million for fiscal 1998.
The Company's capital expenditures, including acquisitions, for fiscal
1999, 1998 and 1997 amounted to $25.2 million, $11.3 million and $24.8 million,
respectively, which included $17.9 million, $8.0 million and $10.4 million,
respectively, for the replacement of underground storage tanks and vapor
recovery facilities at gasoline stations. Through March 21, 1997, the date of
the spin-off, capital expenditures also included discretionary expenditures
related to the spun-off petroleum marketing business to improve the image of
the service stations, to improve the terminal facilities and for routine
replacement of service station equipment at existing and newly acquired
locations. Expenditures with respect to tank replacements required to meet the
December 22, 1998 federal standards and certain environmental liabilities and
obligations have continued to be the responsibility of the Company after the
spin-off. As of January 31, 1999, the Company estimates that in connection
8
<PAGE> 4
Continued
Getty Realty Corp.
and Subsidiaries
therewith, it will expend $4.3 million in capital expenditures and $23.9
million, net of estimated recoveries, for environmental remediation liabilities
and obligations.
ENVIRONMENTAL MATTERS
The Company is subject to numerous existing federal, state and local laws and
regulations, including matters relating to the protection of the environment.
Environmental expenses have been attributable to remediation, monitoring, soil
disposal and governmental agency reporting (collectively, "Remediation Costs")
incurred in connection with contaminated sites and the replacement or upgrading
of underground storage tanks, related piping, underground pumps, wiring and
monitoring devices (collectively, "USTs") to meet federal, state and local
environmental standards, as well as routine monitoring and tank testing.
Under the Master Lease with Marketing, the Company committed to a
program to bring the leased properties with known environmental problems to
regulatory closure and, thereafter, transfer all future environmental risks
from the Company to Marketing. In order to establish the Remediation Costs
obligation and estimate the incremental cost of accelerated remediation, the
Company commissioned a detailed property-by-property environmental study of all
retail outlets in fiscal 1997, with the objective of achieving closure in
approximately five years. This acceleration program, utilizing new, more
effective remediation techniques, resulted in a substantial increase in
environmental costs over those that had been previously identified and accrued,
as the acceleration program contemplated the use of additional active
remediation systems at many sites in lieu of relying on periodic monitoring and
natural attenuation permitted by applicable environmental regulations. As a
result, the Company revised its estimate of future Remediation Costs in the
fourth quarter of fiscal 1997 and recorded a pre-tax charge in such quarter for
Remediation Costs of $21.2 million. The pre-tax charge resulted from the
acceleration of remediation activities to be paid by the Company through more
aggressive means of treating contaminated sites to bring them to closure in
approximately five years, which resulted in significant incremental Remediation
Costs, changes in estimated Remediation Costs at previously identified
properties, including costs to be incurred in connection with UST upgrades, and
additional charges to comply with AICPA Statement of Position 96-1,
"Environmental Remediation Liabilities."
The Company has agreed to pay all costs relating to, and to indemnify
Marketing for, all known pre-spin-off environmental liabilities and obligations
as scheduled in the Master Lease, upgrades necessary to cause USTs to conform
to the 1998 federal standards as scheduled in the Master Lease and all
environmental liabilities and obligations arising out of discharges with
respect to properties containing USTs that have not been upgraded to meet the
1998 federal standards that are discovered prior to the date such USTs are
upgraded to meet the 1998 federal standards (collectively, the "Realty
Environmental Liabilities"). The Company will also collect recoveries from
state UST remediation funds related to the Realty Environmental Liabilities.
Environmental exposures are difficult to assess and estimate for
numerous reasons, including the extent of contamination, alternative treatment
methods that may be applied, location of the property which subjects it to
differing local laws and regulations and their interpretations, as well as the
time it takes to remediate contamination. In developing the estimates of
environmental remediation costs, consideration is given to, among other things,
enacted laws and regulations, assessments of contamination, currently available
technologies for treatment, alternative methods of remediation and prior
experience. Estimates of such costs are subject to change as contingencies
become more clearly defined and remediation treatment progresses. For fiscal
1999, 1998 and 1997, net environmental expenses included in the Company's
consolidated statements of operations amounted to $16.9 million, $8.3 million
and $34.2 million, respectively, which amounts were net of probable recoveries
from state UST remediation funds.
As of January 31, 1999 and 1998, the Company had accrued $34.3 million
and $38.3 million, respectively, as management's best estimate for
environmental remediation costs. As of January 31, 1999 and 1998, the Company
had also recorded $10.4 million and $15.4 million, respectively, as
management's best estimate for recoveries from state UST remediation funds
related to environmental obligations and liabilities. In view of the
uncertainties associated with environmental expenditures, however, the Company
believes it is possible that such expenditures could be substantially higher.
Any additional amounts will be reflected in the Company's financial statements
as they become known. Although environmental costs may have a significant
impact on results of operations for any single fiscal year or interim period,
the Company believes that such costs will not have a material adverse effect on
the Company's financial position.
The Company cannot predict what environmental legislation or
regulations may be enacted in the future or how existing laws or regulations
will be administered or interpreted with respect to products or activities to
9
<PAGE> 5
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Getty Realty Corp.
and Subsidiaries
which they have not previously been applied. Compliance with more stringent laws
or regulations as well as more vigorous enforcement policies of the regulatory
agencies or stricter interpretation of existing laws which may develop in the
future, could have an adverse effect on the financial position or operations of
the Company or its lessees and could require substantial additional expenditures
for future remediation or the installation and operation of required
environmental or pollution control systems and equipment by the Company or its
lessees.
Year 2000
The Year 2000 issue has arisen because for many years some computer software
programs and systems have utilized only two digits to specify the year. As a
result, these programs and systems may not be able to recognize and process
dates beyond 1999, which may cause these programs to malfunction or not be able
to accurately process information.
Marketing provides the Company with data processing services pursuant
to the administrative services agreement. In connection therewith, a Year 2000
program has been implemented for internal systems and equipment relating to
information technology systems and non-information technology systems which has
four phases: (1) identification; (2) assessment; (3) remediation (including
modification, upgrading and replacement); and (4) testing. The identification
and assessment phases for all significant internal business systems and
equipment are complete. Of the information technology systems that require
modification, approximately 90% have been remediated as of January 31, 1999.
The remediation phase is expected to be completed in April 1999. Most of the
remediation phase consists of modifying existing systems and programs. Testing
of systems and programs following remediation is expected to be completed by
July 31, 1999.
The Company is also reviewing the Year 2000 readiness of third parties
who provide services which are essential to the Company's operations. The
Company has initiated formal communications with material third parties in
order to determine the extent to which the Company is vulnerable to any failure
by such third parties to remediate their respective Year 2000 problems and
resolve such problems to the extent practicable.
The Company is developing a contingency Plan to address issues specific
to the Year 2000 problem. The Plan is expected to include performing certain
processes manually, obtaining replacement systems as well as other appropriate
measures.
The Company's senior management and the Board of Directors receive
regular updates on the status of the Company's Year 2000 program. The Company
does not expect the cost of these Year 2000 efforts to be material since most
of the work is being performed by Marketing personnel under the administrative
services agreement.
The Year 2000 issue presents a number of risks and uncertainties that
could affect the Company or Marketing, which include, but are not limited to,
the availability of qualified personnel and other information technology
resources; the ability to identify and remediate all date sensitive lines of
computer code or to replace embedded computer chips in affected systems or
equipment; and the ability of third parties to remediate their respective
systems. The failure to correct a material Year 2000 problem could result in an
interruption in, or a failure of, certain normal business activities or
operations. Such failures could adversely affect the Company's results of
operations, liquidity and financial condition. Due to the general uncertainty
inherent in the Year 2000 problem, resulting in part from the uncertainty of
the Year 2000 readiness of third-party suppliers and customers, the Company is
unable to determine at this time whether the consequences of Year 2000 failures
will have a material impact on the Company's results of operations, liquidity
or financial condition.
SPECIAL FACTORS REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Annual Report may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. When used herein, the words "believes", "expects", "Plans",
"estimates" and similar expressions are intended to identify forward-looking
statements. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
and achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. These factors include, but are not limited to:
risks associated with owning and leasing real estate generally; dependence on
Marketing as a lessee and on rentals from companies engaged in the petroleum
marketing and convenience store businesses; competition for locations and
tenants; risk of tenant non-renewal; the effects of regulation; the Company's
expectations as to the cost of completing environmental remediation; the
remediation and testing phases of the Year 2000 program as well as its Year
2000 contingency Plan; and the Company's belief that internal systems and
equipment will be Year 2000 compliant in a timely manner.
10
<PAGE> 6
CONSOLIDATED STATEMENT OF OPERATIONS
Getty Realty Corp.
and Subsidiaries
<TABLE>
<CAPTION>
For the years ended January 31,
- - ------------------------------------------------------------------------------------------------------------
(in thousands, except per share amounts) 1999 1998(*) 1997(*)
- - ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues:
Revenues from rental properties $ 58,869 $ 59,449 $ 35,655
Net sales of petroleum products -- -- 855,076
Other income 2,472 3,368 1,725
- - ------------------------------------------------------------------------------------------------------------
61,341 62,817 892,456
Equity in earnings of Getty Petroleum Marketing Inc -- 2,931 --
- - ------------------------------------------------------------------------------------------------------------
61,341 65,748 892,456
- - ------------------------------------------------------------------------------------------------------------
Cost of sales of petroleum products
(excluding depreciation and amortization) -- -- 785,398
Rental property expenses 12,910 13,583 21,566
Environmental and maintenance expenses 17,320 8,634 40,820
Selling, general and administrative expenses 6,129 13,297 23,525
Depreciation and amortization 9,418 9,514 22,934
Interest expense 2,726 5,008 6,806
Change of control charge -- 2,166 --
Litigation charge -- -- 5,802
- - ------------------------------------------------------------------------------------------------------------
48,503 52,202 906,851
- - ------------------------------------------------------------------------------------------------------------
Earnings (loss) from continuing operations before
provision (credit) for income taxes 12,838 13,546 (14,395)
Provision (credit) for income taxes 5,337 5,697 (5,067)
- - ------------------------------------------------------------------------------------------------------------
Net earnings (loss) from continuing operations 7,501 7,849 (9,328)
- - ------------------------------------------------------------------------------------------------------------
Discontinued operations:
Earnings (loss) from operations, net of income taxes (119) 95 152
Gain on disposal, net of income taxes 2,674 -- --
- - ------------------------------------------------------------------------------------------------------------
Net earnings from discontinued operations 2,555 95 152
- - ------------------------------------------------------------------------------------------------------------
Net earnings (loss) 10,056 7,944 (9,176)
Preferred stock dividends 5,128 -- --
- - ------------------------------------------------------------------------------------------------------------
Net earnings (loss) applicable to common stockholders $ 4,928 $ 7,944 $ (9,176)
============================================================================================================
Basic earnings (loss) per common share:
Continuing operations $ .17 $ .60 $ (.74)
Discontinued operations .19 .01 .01
Net earnings (loss) .36 .60 (.72)
Diluted earnings (loss) per common share:
Continuing operations .17 .59 (.74)
Discontinued operations .19 .01 .01
Net earnings (loss) .36 .60 (.72)
============================================================================================================
Weighted average common shares outstanding:
Basic 13,566 13,152 12,674
Diluted 13,571 13,348 12,674
</TABLE>
(*) Includes financial results of the petroleum marketing business prior to
the spin-off to the Company's stockholders on March 21, 1997.
See accompanying notes.
11
<PAGE> 7
CONSOLIDATED BALANCE SHEETS
Getty Realty Corp.
and Subsidiaries
<TABLE>
<CAPTION>
January 31,
- - --------------------------------------------------------------------------------------------------------
(in thousands, except share data) 1999 1998
- - --------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Real estate:
Land $ 131,976 $ 129,133
Buildings and improvements 175,817 154,959
- - --------------------------------------------------------------------------------------------------------
307,793 284,092
Less--accumulated depreciation and amortization 68,045 59,023
- - --------------------------------------------------------------------------------------------------------
Real estate, net 239,748 225,069
Cash and equivalents 657 10,032
Mortgages and accounts receivable, net 6,975 7,522
Recoveries from state underground storage tank funds 10,369 15,387
Prepaid expenses and other assets 3,335 3,825
Net assets of discontinued operations -- 3,826
- - --------------------------------------------------------------------------------------------------------
Total assets $ 261,084 $ 265,661
========================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY:
Borrowings under credit lines $ 4,500 $ --
Mortgages payable 35,242 40,526
Accounts payable and accrued expenses 18,042 18,526
Environmental remediation costs 34,251 38,297
Deferred income taxes 30,210 29,719
Income taxes payable 808 --
- - --------------------------------------------------------------------------------------------------------
Total liabilities 123,053 127,068
- - --------------------------------------------------------------------------------------------------------
Commitments and contingencies (Notes 4 and 5)
Stockholders' equity:
Preferred stock, par value $.01 per share; authorized
20,000,000 shares for issuance in series of which 3,000,000 shares
are classified as Series A Participating Convertible Redeemable
Preferred; issued 2,888,798 at January 31, 1999
and 1998 72,220 72,220
Common stock, par value $.01 per share; authorized
50,000,000 shares; issued 13,566,233 at January 31, 1999
and 13,563,468 at January 31, 1998 136 136
Paid-in capital 67,021 67,085
Accumulated deficit (1,346) (848)
- - --------------------------------------------------------------------------------------------------------
Total stockholders' equity 138,031 138,593
- - --------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 261,084 $ 265,661
========================================================================================================
</TABLE>
12
<PAGE> 8
CONSOLIDATED STATEMENTS OF CASH FLOWS
Getty Realty Corp.
and Subsidiaries
<TABLE>
<CAPTION>
For the years ended January 31,
- - -----------------------------------------------------------------------------------------------------------------
(in thousands) 1999 1998 1997
- - -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ 10,056 $ 7,944 $ (9,176)
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities:
Depreciation and amortization 9,418 9,514 22,934
Deferred income taxes 491 (1,061) (11,012)
Net earnings from discontinued operations (2,555) (95) (152)
Gain on dispositions of real estate (1,495) (730) (1,420)
Equity in net earnings of Getty Petroleum Marketing Inc. -- (1,731) --
Change of control charge -- 2,166 --
Stock option (credit) charge (110) 6,432 --
Changes in assets and liabilities, net of effect of
acquisitions and dispositions:
Mortgages and accounts receivable 547 (940) (3,247)
Recoveries from state underground storage tank funds 5,018 830 (339)
Prepaid expenses and other assets 327 (1,184) 4,079
Accounts payable and accrued expenses (484) (1,878) 2,825
Environmental remediation costs (4,046) (7,837) 26,160
Income taxes payable 808 (1,426) 1,251
- - -----------------------------------------------------------------------------------------------------------------
Net cash provided by continuing operating activities 17,975 10,004 31,903
Net cash provided by (used in) discontinued operations (1,916) 1,636 (620)
- - -----------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 16,059 11,640 31,283
- - -----------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (18,860) (8,057) (23,913)
Property acquisitions (6,362) (3,202) (839)
Proceeds from disposition of discontinued operations 7,661 -- --
Proceeds from dispositions of real estate 3,419 2,234 2,329
Cash from acquisition of Power Test
Investors Limited Partnership, net -- 1,757 --
Proceeds from sale of short-term investments -- -- 1,286
Cash transferred to Getty Petroleum Marketing Inc. -- -- (7,517)
- - -----------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (14,142) (7,268) (28,654)
- - -----------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under credit lines 4,500 -- --
Mortgage borrowings -- 306 --
Repayment of mortgages payable (5,284) (5,287) (4,660)
Payments under capital lease obligations -- (6,373) (5,334)
Cash dividends (10,554) (1,577) (1,520)
Stock options, common and treasury stock, net 46 7,208 462
- - -----------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (11,292) (5,723) (11,052)
- - -----------------------------------------------------------------------------------------------------------------
Net decrease in cash and equivalents (9,375) (1,351) (8,423)
Cash and equivalents at beginning of year 10,032 11,383 19,806
- - -----------------------------------------------------------------------------------------------------------------
Cash and equivalents at end of year $ 657 $ 10,032 $ 11,383
=================================================================================================================
Supplemental disclosures of cash flow information
Cash paid during the year for:
Interest $ 2,794 $ 5,009 $ 6,815
Income taxes, net 4,653 3,834 3,911
</TABLE>
See accompanying notes.
13
<PAGE> 9
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
Getty Realty Corp.
and Subsidiaries
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION: The consolidated financial statements include the accounts of
Getty Realty Corp. and its wholly-owned subsidiaries (the "Company"). The
Company is a real estate company specializing in the ownership and leasing of
service stations, convenience stores and petroleum marketing terminals. All
significant intercompany accounts and transactions have been eliminated.
Prior to the spin-off of its petroleum marketing business to its
stockholders on March 21, 1997, the Company was principally engaged in the
ownership and leasing of real estate as well as the marketing and distribution
of petroleum products. In December 1998, the Company sold its heating oil
business, Aero Oil Company. The Company now leases most of its properties on a
long-term net basis to the spun-off Company, Getty Petroleum Marketing Inc.
("Marketing"). The consolidated statement of operations of the Company for the
year ended January 31, 1998 includes the financial results of the marketing
business under the caption "Equity in earnings of Getty Petroleum Marketing
Inc." for the period from February 1, 1997 to March 21, 1997. The financial
results of the Marketing business for the year ended January 31, 1997 have been
consolidated with the financial results of the Company. For additional
information regarding the spin-off, see Note 2. The net assets and results of
operations of the heating oil business have been reclassified as discontinued
in the accompanying financial statements for each of the periods presented. For
additional information regarding the sold heating oil business, see Note 3.
Certain reclassifications have been made in the financial statements
for 1998 and 1997 to conform to the presentation for 1999.
USE OF ESTIMATES: The financial statements have been prepared in conformity
with generally accepted accounting principles and include amounts that are
based on management's best estimates and judgments. While all available
information has been considered, actual results could differ from those
estimates.
CASH AND EQUIVALENTS: The Company considers highly liquid investments purchased
with an original maturity of three months or less to be cash equivalents.
REAL ESTATE: Real estate assets are stated at cost less accumulated
depreciation and amortization. When real estate is sold or retired, the cost
and related accumulated depreciation and amortization is eliminated from the
respective accounts and any gain or loss is credited or charged to income.
Expenditures for maintenance and repairs are charged to income when incurred.
DEPRECIATION AND AMORTIZATION: Depreciation of real estate is computed on the
straight-line method based upon the estimated useful lives of the assets which
generally range from 16 to 25 years for buildings and improvements.
INSURANCE: Prior to the spin-off, the Company was self-insured for workers'
compensation, general liability and vehicle liability up to predetermined
amounts above which third-party insurance applies. Since the spin-off, the
Company has maintained insurance coverage subject to modest deductibles.
Accruals are based on claims experience and actuarial assumptions followed in
the insurance industry. Due to uncertainties inherent in the estimation
process, actual losses could differ from accrued amounts.
ENVIRONMENTAL COSTS: The estimated future costs for known environmental
remediation requirements are accrued when it is probable that a liability has
been incurred and the amount of remediation costs can be reasonably estimated.
Recoveries of environmental costs, principally from state underground storage
tank remediation funds, are accrued as income when such recoveries are
considered probable. Such accruals are adjusted as further information develops
or circumstances change.
INCOME TAXES: Deferred income taxes are provided for the effect of items which
are reported for income tax purposes in years different from that in which they
are recorded for financial statement purposes.
REVENUE RECOGNITION: Revenue is recognized from rentals as earned.
14
<PAGE> 10
Getty Realty Corp.
and Subsidiaries
Continued
EARNINGS (LOSS) PER COMMON SHARE: Basic earnings (loss) per common share is
computed by dividing net earnings (loss) less preferred dividends by the
weighted average number of common shares outstanding during the year. Diluted
earnings (loss) per common share also gives effect to the potential dilution
from the exercise of stock options in the amounts of 5,000 shares and 196,000
shares for the years ended January 31, 1999 and 1998, respectively.
For the year ended January 31, 1999, conversion of the Series A
Participating Convertible Redeemable Preferred stock (which was issued on
January 30, 1998) into common stock utilizing the if-converted method would
have been anti-dilutive and therefore conversion was not assumed for purposes
of computing diluted earnings per common share. For the year ended January 31,
1997, basic and diluted weighted average common shares outstanding are the same
since the assumed exercise of stock options would have been anti-dilutive.
ACCOUNTING CHANGE: In fiscal 1999, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income." The
Statement establishes standards for the reporting and display of comprehensive
income and its components. Comprehensive income (loss) consists of earnings
(loss) and a net unrealized gain on equity securities (see Note 9). The
adoption of SFAS No. 130 had no effect on the Company's net earnings (loss) or
stockholders' equity.
2. SPIN-OFF
On March 21, 1997, the Company spun-off its petroleum marketing business to its
stockholders. The Company retained its real estate business and leased most of
its properties on a long-term net basis to Marketing.
As part of the separation of the petroleum marketing business from the
real estate business, the Company and Marketing entered into various agreements
which addressed the allocation of assets and liabilities between them and
govern future relationships. These agreements include the Reorganization and
Distribution Agreement, Master Lease Agreement, Tax Sharing Agreement and
Trademark License Agreement.
Under the Services Agreement, Marketing provides certain
administrative and technical services to the Company and the Company provides
certain limited services to Marketing. The net fees paid by the Company to
Marketing for services performed (after deducting the fees paid by Marketing to
the Company for services provided by the Company) were $960,000 for each of the
years ended January 31, 1999 and 1998 and are included in selling, general and
administrative expenses in the consolidated statements of operations.
The Company's results for the fiscal year ended January 31, 1997
include a pre-tax charge of $1,693,000 for expenses related to the spin-off
transaction. The charge is included in other income in the consolidated
statement of operations.
The following is a summary of the financial results of the Marketing
business included in the accompanying consolidated statements of operations for
the fiscal 1998 period from February 1, 1997 to March 21, 1997 and the fiscal
year ended January 31, 1997. The financial information is presented for
informational purposes only and is not necessarily indicative of the financial
results that would have occurred had Marketing been operated as a separate,
stand-alone entity during such periods.
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------
Years ended January 31,
- - ------------------------------------------------------------------------------
(in thousands) 1998 1997
- - ------------------------------------------------------------------------------
<S> <C> <C>
Revenues $ -- $ 888,543
==============================================================================
Earnings (loss) before income taxes $ 2,931 $ (25,299)(a)
Provision (credit) for income taxes 1,200 (10,074)
- - ------------------------------------------------------------------------------
Net earnings (loss) $ 1,731 $ (15,225)
==============================================================================
</TABLE>
(a) Includes charge of $21,182 related to revision of estimate of future
environmental remediation costs.
3. DISCONTINUED OPERATIONS
In December 1998, the Company sold its heating oil and propane business, Aero
Oil Company. Proceeds from the sale amounted to $7,661,000 and resulted in a
pre-tax gain of $4,576,000 ($2,674,000 after-tax).
15
<PAGE> 11
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
Getty Realty Corp.
and Subsidiaries
Summary operating results of the discontinued heating oil operations
is as follows (in thousands):
- - -------------------------------------------------------------------------------
Years ended January 31,
- - -------------------------------------------------------------------------------
1999 1998 1997
- - -------------------------------------------------------------------------------
Revenues $ 18,169 $ 27,022 $ 33,389
===============================================================================
Earnings before income taxes $ 4,373(a) $ 164 $ 281
Provision for income taxes 1,818 69 129
- - -------------------------------------------------------------------------------
Net earnings $ 2,555 $ 95 $ 152
===============================================================================
(a) Includes pre-tax gain of $4,576 on disposal of the business.
A summary of the net assets of the discontinued heating oil operations
as of January 31, 1998 is as follows (in thousands):
- - -----------------------------------------------------------------------------
Real estate, net $ 2,954
Accounts receivable 1,928
Prepaid expenses and other assets 1,826
Accounts payable and accrued expenses (2,882)
- - -----------------------------------------------------------------------------
Net assets $ 3,826
=============================================================================
4. LEASES
Effective February 1, 1997, the Company and Marketing entered into the Master
Lease Agreement (the "Master Lease") under which, as of January 31, 1999, 1,013
retail outlets and 10 terminal facilities (the "Properties") were leased or
subleased by the Company as the lessor to Marketing as the lessee. The
Properties are used for gasoline sales, convenience store uses and other
complementary or related lawful uses in conjunction with the sale of petroleum
products and convenience store items, except when the provisions of any
underlying lease are more restrictive. Marketing may sublet any property,
provided that Marketing remains fully responsible for a sublessee's performance
and, except in cases of economic abandonment (as described below), a sublease
for non-petroleum purposes will require the Company's consent. The Master Lease
is a "triple-net" lease, with Marketing having responsibility for all taxes,
maintenance, repairs and insurance except for certain retained environmental
obligations, and obligations pertaining to certain underground storage tanks,
related piping, underground pumps, wiring and monitoring devices (collectively,
the "USTs"). For financial statement purposes, the Master Lease has been
accounted for as an operating lease.
Rent for each of the Properties was set using the fair market value of
each such Property, assuming the USTs had been upgraded to meet the 1998
federal standards and such Properties were free of known environmental
contamination, since the Company is responsible for such items known at the
date of the spin-off. Rent for each Property will increase at the end of each
five-year period by the net increase in the Consumer Price Index for all items
in the Northeast Region for such five-year period, such increase not to exceed
fifteen percent (15%). Rents for all Properties are payable in advance on the
first day of the month. The initial term of the Master Lease is (i) fifteen
years with respect to Properties owned in fee by the Company and leased to
Marketing and (ii) the length of time remaining (which ranges up to fifteen
years under the Master Lease) with respect to Properties leased by the Company
from third parties and subleased to Marketing. The Master Lease includes four
ten-year renewal options (or, with respect to category (ii) above, such shorter
period as the underlying lease may provide), which may be exercised by
Marketing with two years advance notice on an individual property basis for all
Properties then subject to the Master Lease. For the subleased Properties, the
Company has agreed to use reasonable efforts to extend the underlying lease
terms upon conditions acceptable to Marketing. In the event that Marketing
desires not to renew the sublease upon terms (including any underlying lease
term extension negotiated by the Company) available to it, the Company may
extend or renew the lease and sublease the property to a third party after the
end of Marketing's term.
The Master Lease provides that if during the lease term Marketing
determines that any of the leased premises have become uneconomic or unsuitable
for their use as a service station or convenience store and has discontinued
use of the property or intends to discontinue use of the property as a service
station or convenience
16
<PAGE> 12
Getty Realty Corp.
and Subsidiaries
Continued
store within one year of the date of said determination, Marketing has the
right to sublet the property for any lawful use without the Company's consent.
However, prior to the commencement of any such sublease term, Marketing must
remove any USTs on the Property and thereafter perform all requisite
environmental investigations and/or remediations. Marketing has this right of
economic abandonment with respect to no more than ten properties during any
fiscal year of the lease term. Marketing has no right of economic abandonment
for the terminal premises and the premises subject to third party leases.
Revenues from rental properties for the years ended January 31, 1999
and 1998, amounted to $58,869,000 and $59,449,000, respectively, of which
$56,411,000 and $57,001,000, respectively, was received from Marketing under
the Master Lease. For the year ended January 31, 1997, revenues from rental
properties of $35,655,000 principally represented rental income from
Marketing's dealers prior to the spin-off.
Future minimum annual rentals receivable under the Master Lease, which
have terms in excess of one year as of January 31, 1999, are as follows (in
thousands):
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------
Years ending January 31,
- - -------------------------------------------------------------------------
<S> <C>
2000 $ 56,200
2001 55,797
2002 55,475
2003 54,794
2004 53,933
Thereafter 402,792
- - -------------------------------------------------------------------------
$678,991
=========================================================================
</TABLE>
The Company has obligations to lessors under noncancelable operating
leases which have terms (excluding options) in excess of one year, principally
for gasoline stations. Substantially all of these leases contain renewal
options and escalation clauses. Future minimum annual rentals payable under
such leases are as follows (in thousands):
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------
Years ending January 31,
- - ------------------------------------------------------------------------
<S> <C>
2000 $11,578
2001 10,316
2002 8,853
2003 6,620
2004 5,541
Thereafter 18,383
- - ------------------------------------------------------------------------
$61,291
========================================================================
</TABLE>
5. COMMITMENTS AND CONTINGENCIES
The Company is subject to various legal proceedings and claims which arise in
the ordinary course of its business. In addition, the Company has retained
responsibility for all pre-spin-off legal proceedings and claims relating to
Marketing's business. Such matters are not expected to have a material adverse
effect on the Company's financial condition or results of operations.
In order to minimize the Company's exposure to credit risk associated
with financial instruments, the Company places its temporary cash investments
with high credit quality institutions and, by policy, limits the amount
invested with any one institution other than the U.S. Government.
Prior to the spin-off, the Company was self-insured for workers'
compensation, general liability and vehicle liability up to predetermined
amounts above which third-party insurance applies. Since the spin-off, the
Company has maintained insurance coverage subject to modest deductibles. The
Company's consolidated statements of operations for the fiscal years ended
January 31, 1999, 1998 and 1997 included expenses of $518,000, $161,000 and
$2,814,000, respectively, for insurance. As of January 31, 1999 and 1998, the
Company's consolidated balance sheets included, in accounts payable and accrued
expenses, $4,361,000 and $4,913,000, respectively, relating to insurance
obligations arising prior to the spin-off of the Marketing business.
The Company's financial results largely depend on rental income from
Marketing and to a lesser extent on other lessees and sublessees, and are
therefore materially dependent upon the ability of Marketing to meet
17
<PAGE> 13
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
Getty Realities Corp.
and Subsidiaries
its obligations under the Master Lease. Marketing's financial results depend
largely on retail marketing margins and rental income from its dealers. The
petroleum marketing industry has been and continues to be volatile and highly
competitive. The Company, however, does not anticipate that Marketing will have
difficulty in making all required rental payments for the foreseeable future.
6. DEBT
Mortgages payable consists of (in thousands):
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------------------
1999 1998
- - ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Mortgage loans due through November 1, 2000 $ 33,074 $ 38,015
Real estate mortgages, bearing interest at a weighted average interest rate of 8.28%,
due in varying amounts through May 1, 2019 2,168 2,437
Other -- 74
- - ----------------------------------------------------------------------------------------------------------------------
$ 35,242 $ 40,526
======================================================================================================================
</TABLE>
Aggregate principal payments in subsequent fiscal years are as follows
(in thousands): 2000-$4,290; 2001-$29,441; 2002-$97; 2003-$544; 2004-$73 and
$797 thereafter.
As of January 31, 1999, the mortgage loans due through November 1, 2000
provide for interest at LIBOR plus .875% To 1.75% per annum, depending on the
ratio of Funded Debt, as defined. Based on such ratio as of January 31, 1999,
the interest rate is LIBOR plus 1.125% which amounted to 6.06%. Principal
payments aggregate $303,000 per month through December 1, 1999 and $393,000
thereafter through October 1, 2000 with the balance of $25,811,000 due on
November 1, 2000.
Certain mortgages payable are collateralized by real estate having an
aggregate net book value of approximately $161,136,000 as of January 31, 1999.
As of January 31, 1999, the Company had uncommitted lines of credit
with two banks in the aggregate amount of $25,000,000, of which $4,500,000 was
utilized for short-term borrowings and $5,885,000 was utilized in the form of
outstanding letters of credit relating to insurance obligations. Borrowings
under such lines of credit are unsecured and bear interest at the bank's prime
rate or, at the Company's option, 1.0% to 1.1% above LIBOR. Such lines of
credit are subject to renewal at the discretion of each bank.
7. ENVIRONMENTAL REMEDIATION COSTS
The Company is subject to numerous existing federal, state and local laws and
regulations, including matters relating to the protection of the environment.
Environmental expenses have been attributable to remediation, monitoring, soil
disposal and governmental agency reporting (collectively, "Remediation Costs")
incurred in connection with contaminated sites and the replacement or upgrading
of USTs to meet federal, state and local environmental standards, as well as
routine monitoring and tank testing. For the years ended January 31, 1999, 1998
and 1997, net environmental expenses included in the Company's consolidated
statements of operations amounted to $16,905,000, $8,255,000 and $34,162,000,
respectively, which amounts were net of probable recoveries from state UST
remediation funds.
Under the Master Lease with Marketing, the Company committed to a
program to bring the leased properties with known environmental problems to
regulatory closure and, thereafter, transfer all future environmental risks
with respect to such properties from the Company to Marketing. In order to
establish the Remediation Costs obligation and estimate the incremental cost of
accelerated remediation, the Company commissioned a detailed
property-by-property environmental study of all retail outlets in fiscal 1997,
with the objective of achieving closure in approximately five years. As a
result, the Company revised its estimate of future Remediation Costs in the
fourth quarter of fiscal 1997 and recorded a pre-tax charge in such quarter for
Remediation Costs of $21,182,000. The pre-tax charge resulted from the
acceleration of remediation activities to be paid by the Company through more
aggressive means of treating contaminated sites to bring them to closure in
approximately five years, which resulted in significant incremental Remediation
Costs, changes in estimated Remediation Costs at previously identified
properties, including costs to be incurred in connection with UST upgrades, and
additional charges to comply with AICPA Statement of Position 96-1,
"Environmental Remediation Liabilities."
18
<PAGE> 14
Getty Realty Corp.
and Subsidiaries
Continued
The Company has agreed to pay all costs relating to, and to indemnify
Marketing for, all known pre-spin-off environmental liabilities and obligations
as scheduled in the Master Lease, upgrades necessary to cause USTs to conform
to the 1998 federal standards (the "1998 Standards") as scheduled in the Master
Lease, and all environmental liabilities and obligations arising out of
discharges with respect to properties containing USTs that had not been
upgraded to meet the 1998 Standards that are discovered prior to the date such
USTs are upgraded to meet the 1998 Standards (collectively, the "Realty
Environmental Liabilities"). The Company will also collect recoveries from
state UST remediation funds related to the Realty Environmental Liabilities.
As of January 31, 1999 and 1998, the Company had accrued $34,251,000
and $38,297,000, respectively, as management's best estimate for environmental
remediation costs. As of January 31, 1999 and 1998, the Company had also
recorded $10,369,000 and $15,387,000, respectively, as management's best
estimate for recoveries from state UST remediation funds related to such
environmental obligations and liabilities. In addition, as of January 31, 1999,
the Company estimates that capital expenditures with respect to tank
replacements will approximate $4,300,000. In view of the uncertainties
associated with environmental expenditures, however, the Company believes it is
possible that such expenditures could be substantially higher. Any additional
amounts will be reflected in the Company's financial statements as they become
known. Although future environmental expenditures may have a significant impact
on results of operations for any single fiscal year or interim period, the
Company currently believes that such costs will not have a material adverse
effect on the Company's financial position.
8. INCOME TAXES
The provision (credit) for income taxes is summarized as follows (in
thousands):
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------
1999 1998 1997
- - --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Continuing operations $ 5,337 $ 5,697 $ (5,067)
Discontinued operations:
Operations (84) 69 129
Disposal 1,902 -- --
- - --------------------------------------------------------------------------------------------------
1,818 69 129
- - --------------------------------------------------------------------------------------------------
Provision (credit) for income taxes $ 7,155 $ 5,766 $ (4,938)
==================================================================================================
</TABLE>
The provision (credit) for income taxes is comprised as follows (in
thousands):
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------
1999 1998 1997
- - --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal:
Current $ 5,314 $ 2,697 $ 3,880
Deferred (120) 1,557 (7,718)
State and local:
Current 966 990 1,487
Deferred 995 522 (2,587)
- - --------------------------------------------------------------------------------------------------
Provision (credit) for income taxes $ 7,155 $ 5,766 $ (4,938)
==================================================================================================
</TABLE>
The tax effects of temporary differences which comprise the deferred
tax assets and liabilities are as follows (in thousands):
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------
1999 1998
- - --------------------------------------------------------------------------------------------------
<S> <C> <C>
Real estate $ (44,028) $ (46,133)
Environmental remediation costs, net 13,257 13,322
Other accruals 1,576 1,671
Other (1,015) 1,421
- - --------------------------------------------------------------------------------------------------
Net deferred tax liabilities $ (30,210) $ (29,719)
==================================================================================================
</TABLE>
19
<PAGE> 15
NOTES TO CONSOLIDATED
FINANCIAL STATEMENT
Getty Realty Corp.
and Subsidiaries
The following is a reconciliation of the expected statutory federal
income tax provision (credit) and the actual provision (credit) for income
taxes (in thousands):
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------------------
1999 1998 1997
- - ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Expected provision (credit) at statutory federal income tax rate $ 5,910 $ 4,661 $ (4,799)
State and local income taxes, net of federal benefit 1,288 994 (726)
Nondeductible expenses -- -- 576
Other (43) 111 11
- - ----------------------------------------------------------------------------------------------------------------------
Provision (credit) for income taxes $ 7,155 $ 5,766 $ (4,938)
======================================================================================================================
</TABLE>
9. STOCKHOLDERS' EQUITY:
A summary of the changes in stockholders' equity for the three years ended
January 31, 1999 is as follows:
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------------------------------
Accumulated
Retained Treasury Stock, Other
(in thousands, Preferred Stock Common Stock Paid-in Earnings at Cost Comprehensive
except per share amounts) Shares Amount Shares Amount Capital (Deficit) Shares Amount Earnings (Loss) Total
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, February 1, 1996 -- $ -- 13,553 $ 1,355 $119,960 $ 3,481 (894) $(14,090) $(132) $110,574
Comprehensive loss:
Net loss (9,176) (9,176)
Net unrealized gain on
equity securities 132 132
--------
Total (9,044)
--------
Cash dividends--
Common--$.12 per share (1,520) (1,520)
Issuance of treasury
stock, net (6) 8 126 120
Stock options 30 3 339 342
- - ----------------------------------------------------------------------------------------------------------------------------------
Balance, January 31, 1997 -- -- 13,583 1,358 120,293 (7,215) (886) (13,964) -- 100,472
Net earnings 7,944 7,944
Spin-off of Marketing (56,272) (56,272)
Cash dividends--
Common--$.12 per share (1,577) (1,577)
Issuance of treasury
stock, net (1) 3 41 40
Stock options 863 87 15,679 15,766
Merger transaction 2,889 72,220 (883) (1,309) (12,614) 883 13,923 72,220
- - ----------------------------------------------------------------------------------------------------------------------------------
Balance, January 31, 1998 2,889 72,220 13,563 136 67,085 (848) -- -- -- 138,593
Net earnings 10,056 10,056
Cash dividends:
Common--$.40 per share (5,426) (5,426)
Preferred--$1.775 per share (5,128) (5,128)
Issuance of common stock 2 33 33
Stock options 1 (97) (97)
- - ----------------------------------------------------------------------------------------------------------------------------------
Balance, January 31, 1999 2,889 $ 72,220 13,566 $ 136 $ 67,021 $(1,346)(a) -- $ -- $ -- $138,031
==================================================================================================================================
</TABLE>
(a) Net of $103,803 transferred from retained earnings to common stock and
paid-in capital as a result of accumulated stock dividends.
On January 30, 1998, the Company and Power Test Investors Limited
Partnership (the "Partnership"), a publicly traded real estate limited
partnership, completed a merger transaction to combine their assets and
operations. As a result of the transaction, the Company acquired 295 fee
properties, consisting of 290 service station and convenience store properties
and five terminals, which were previously leased by the Company from the
Partnership.
20
<PAGE> 16
Getty Realty Corp.
and Subsidiaries
Continued
In connection with the merger, a new Maryland holding company was
created which adopted the name Getty Realty Corp. Unitholders of the
Partnership received 2,888,798 shares of Series A Participating Convertible
Redeemable Preferred Stock of new Getty Realty Corp. in exchange for their
Partnership units. Each share of this new issue of preferred stock has voting
rights of and is convertible into 1.1312 shares of common stock of Getty Realty
Corp. and pays stated cumulative dividends of $1.775 per annum, or if greater,
the per share dividends paid on Getty Realty Corp. common stock. Commencing
February 1, 2001, the Company may redeem all or a portion of the preferred
stock at a purchase price of $25.00 per share plus accumulated, accrued and
unpaid dividends, if the closing price of the Company's common stock exceeds
$22.10 per share for a period of ten cumulative trading days within 90 days
prior to the date of notice of redemption. In the event of a liquidation,
dissolution or winding up of the Company, holders of the preferred stock will
have the right to liquidation preferences in the amount of $25.00 per share,
plus accumulated, accrued and unpaid dividends, before any payment to holders
of the Company's common stock. Common stockholders of the Company exchanged
their shares of common stock on a one-for-one share basis for new Getty Realty
Corp. common stock. The former Getty Realty Corp. changed its name to Getty
Properties Corp. and is now a wholly-owned subsidiary of new Getty Realty Corp.
The merger has been accounted for as a purchase with the purchase
price being assigned to the net assets acquired based on the fair value of such
assets and liabilities at the date of acquisition as follows (in thousands):
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------
<S> <C>
Real estate, net $ 135,633
Cash 1,757
Debt (26,625)
Deferred income taxes (44,768)
Other 6,223
- - --------------------------------------------------------------------
Net assets acquired $ 72,220
====================================================================
</TABLE>
The following unaudited pro forma summary presents the combined
results of operations of the Company and the Partnership, after eliminating the
financial effects of the spun-off Marketing business, as if the acquisition had
occurred on February 1, 1996:
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------
Years ended January 31,
- - --------------------------------------------------------------------------------------------
(in thousands, except per share amounts) 1998 1997
- - --------------------------------------------------------------------------------------------
<S> <C> <C>
Revenues $ 63,203 $ 60,666
Net earnings from continuing operations 6,978 7,446
Diluted earnings per common share from continuing operations .14 .18
</TABLE>
These unaudited pro forma results are not necessarily indicative of
the financial results that would have occurred had the acquisition been
completed at the beginning of the earliest period presented, nor do they
purport to be indicative of future results.
10. EMPLOYEE BENEFIT PLANS
The Company has a retirement and profit sharing plan with deferred 401(k)
savings plan provisions (the "Retirement Plan") for employees meeting certain
service requirements and a Supplemental Plan for executives. Under the terms of
these plans, the annual discretionary contributions to the plans are determined
by the Board of Directors. Also, under the Retirement Plan, employees may make
voluntary contributions and the Company has elected to match an amount equal to
50% of such contributions but in no event more than 3% of the employee's
eligible compensation. Under the Supplemental Plan, a participating executive
may receive an amount equal to 10% of his compensation, reduced by the amount
of any contributions allocated to such executive under the Retirement Plan.
Contributions, net of forfeitures, under the plans approximated $126,000,
$89,000 and $623,000 for the years ended January 31, 1999, 1998 and 1997,
respectively, the latter year of which included $557,000 for Marketing. In
addition, the Company contributed $328,000 to a union welfare plan for the year
ended January 31, 1997 related to Marketing. Such amounts are included in the
accompanying consolidated statements of operations.
The Company has a Stock Option Plan (the "Plan") which authorizes the
Company to grant options to purchase shares of the Company's common stock. The
aggregate number of shares of the Company's common
21
<PAGE> 17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Getty Realty Corp.
and Subsidiaries
stock which may be made the subject of options under the Plan shall not exceed
1,100,000 shares, subject to further adjustment for stock dividends and stock
splits. The Plan provides that options are exercisable starting one year from
the date of grant, on a cumulative basis at the annual rate of 25 percent of
the total number of shares covered by the option.
Immediately prior to the spin-off of its petroleum marketing business
to its stockholders, each holder of an option to acquire shares of the
Company's common stock received, in exchange therefor, two separately
exercisable options: one to purchase shares of the Company's common stock (a
"Realty Option") and one to purchase shares of Marketing common stock (a
"Marketing Option"), each exercisable for the same number of shares and
containing substantially equivalent terms as the pre-distribution option. The
exercise price of each Realty Option and Marketing Option was set so as to
preserve the Aggregate Spread (as defined below) in value attributed to the
options currently held by such directors, officers and key employees. The
"Aggregate Spread" is an amount representing the difference between the
exercise price of an option and the price of a share of Company common stock
immediately prior to the spin-off multiplied by the number of shares underlying
such option. Certain unexercisable options covering a total of 223,587 shares
became immediately exercisable at the date of the spin-off for persons covered
by change of control agreements. Accordingly, in the year ended January 31,
1998, the Company recognized a charge to earnings of $2,166,000 at the date of
the spin-off equal to the product of the number of such options and the
difference between their exercise price and the then market price.
The following is a schedule of stock option prices and activity
relating to the Company's stock option plans for the three years ended January
31, 1999:
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------------------------------
1999 1998 1997
- - ---------------------------------------------------------------------------------------------------------------------
Weighted Weighted Weighted
Number Average Number Average Number Average
of Exercise of Exercise of Exercise
Shares Price Shares Price(a) Shares Price(a)
- - ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 363,553 $ 23.15 1,014,226 $ 10.28 927,428 $ 10.06
Granted --(b) -- 349,236 23.65 166,400 11.40
Exercised (1,215) 10.89 (864,535) 10.15 (29,519) 8.97
Cancelled (4,219) 22.43 (135,374) 11.06 (50,083) 10.78
- - ---------------------------------------------------------------------------------------------------------------------
Outstanding at end of year 358,119 $22.63 363,553 $ 23.15 1,014,226 $ 10.28
=====================================================================================================================
Exercisable at end of year 277,706 $23.14 242,779 $23.29 687,761 $ 10.34
=====================================================================================================================
Available for grant at end of year 740,666 736,447 176,881
=====================================================================================================================
</TABLE>
(a) In connection with the spin-off, each Realty Option was reformed into
separate options for Realty common stock and Marketing common stock. The
exercise price of each reformed Realty Option shown herein, except new grants
in 1998, represents 77.29% of the original exercise price.
(b) On December 14, 1998, the Company repriced 50,000 options granted in
fiscal 1998 with an exercise price of $21.313 per share to $17.188 per share,
as compared to the then market price of $13.063 per share.
The following table summarizes information concerning options
outstanding and exercisable at January 31, 1999:
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------------------------
Options Outstanding Options Exercisable
- - -------------------------------------------------------------------------------------------------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Range of Number Contractual Exercise Number Exercise
Exercise Prices Outstanding Life (Years) Price Exercisable Price
- - -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$9.56-14.40 13,102 5 $11.01 13,102 $11.01
17.19 50,000 9 17.19 12,500 17.19
24.06 295,017 5 24.06 252,104 24.06
- - -------------------------------------------------------------------------------------------------------------
358,119 277,706
=============================================================================================================
</TABLE>
The Company accounts for its stock-based employee compensation plans
under Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued
to Employees." The Company recorded a stock compensation charge (credit) of
($199,000) and $8,683,000 for the years ended January 31, 1999 and 1998,
respectively, since certain options required variable plan accounting
treatment.
22
<PAGE> 18
Getty Realty Corp.
and Subsidiaries
Continued
Had compensation cost for the Company's Plans been determined based
upon the fair value methodology prescribed under SFAS No. 123, "Accounting for
Stock-Based Compensation," the Company's net earnings (loss) and net earnings
(loss) per share on a diluted basis would have been reduced to the following
pro forma amounts:
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------------
1999 1998 1997
- - --------------------------------------------------------------------------------------------------------------------
As Reported Pro Forma As Reported Pro Forma As Reported Pro Forma
- - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net earnings
(loss) (in thousands) $ 10,056 $ 9,054 $ 7,944 $ 7,513 $ (9,176) $ (9,791)
Net earnings
(loss) per common share .36 .29 .60 .56 (.72) (.77)
</TABLE>
The fair value of the options granted during the years ended January
31, 1998 and 1997 were estimated as $10.32 and $5.86 per share, respectively,
on the date of grant using the Black-Scholes option pricing model with the
following weighted average assumptions:
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------
1998 1997
- - ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Expected dividend yield .5% .8%
Expected volatility 35% 35%
Risk-free interest rate 5.5% 6.2%
Expected life of options (years) 7 6
- - ------------------------------------------------------------------------------------------------------
</TABLE>
11. QUARTERLY FINANCIAL DATA
The following is a summary of the quarterly results of operations for the years
ended January 31, 1999 and 1998 (unaudited as to quarterly information):
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED YEAR ENDED
- - ------------------------------------------------------------------------------------------------------------------------------
FISCAL 1999: APRIL 30 JULY 31 OCTOBER 31 JANUARY 31 JANUARY 31
- - ------------------------------------------------------------------------------------------------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Revenues from rental properties $ 14,795 $ 14,733 $ 14,711 $ 14,630 $ 58,869
Earnings from continuing operations 5,769 3,505 1,486 2,078 12,838
before income taxes
Net earnings from continuing operations 3,306 2,048 861 1,286 7,501
Net earnings (loss) from discontinued operations 223 (147) (137) 2,616 2,555
Net earnings 3,529 1,901 724 3,902 10,056
Diluted earnings (loss) per common share:
Continuing operations .15(a) .06(a) (.03)(a) --(a) .17(a)
Discontinued operations .02 (.01) (.01) .19 .19
Net earnings (loss) .17 .05 (.04) .19 .36
- - ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------
Three months ended Year ended
- - ------------------------------------------------------------------------------------------------------------------------------
Fiscal 1998: April 30 July 31 October 31 January 31 January 31
- - ------------------------------------------------------------------------------------------------------------------------------
(in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Revenues from rental properties $ 14,918 $ 14,906 $ 14,835 $ 14,790 $ 59,449
Earnings (loss) from continuing operations 5,040(b) 3,503 5,577 (574)(c) 13,546(b)
before income taxes
Net earnings (loss) from continuing operations 2,949 2,183 3,199 (482) 7,849
Net earnings (loss) from discontinued operations 258 (233) (178) 248 95
Net earnings (loss) 3,207 1,950 3,021 (234) 7,944
Diluted earnings (loss) per common share:
Continuing operations .23 .16 .24 (.04) .59
Discontinued operations .02 (.02) (.01) .02 .01
Net earnings (loss) .25 .15 .22 (.02) .60
- - ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) After giving effect to preferred stock dividends of $1,282 for each of the
four quarters aggregating $5,128 for the year ended January 31, 1999.
(b) Includes equity in earnings of Marketing prior to the spin-off of $2,931.
(c) Includes $4,048 of stock compensation charges.
12. LITIGATION CHARGE
In May 1996, a federal judge in the U. S. District Court for the Eastern
District of New York entered a judgment in the amount of $8,400,000, plus
interest, against the Company's former construction company subsidiary, which
was sold in 1989. During the year ended January 31, 1997, the Company recorded
a pre-tax charge of $5,802,000 related to the settlement of this litigation
which is separately reflected in the accompanying consolidated statement of
operations.
23
<PAGE> 19
------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
------------------------------------
To the Board of Directors
and Stockholders of Getty Realty Corp.:
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations and cash flows present fairly, in
all material respects, the financial position of Getty Realty Corp. and
Subsidiaries (the "Company") at January 31, 1999 and January 31, 1998, and the
results of their operations and their cash flows for each of the three years in
the period ended January 31, 1999, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
/s/ PRICEWATERHOUSECOOPERS LLP
New York, New York
March 11, 1999
------------------------------------
CAPITAL STOCK
------------------------------------
The common stock of Getty Realty Corp. is traded on the New York Stock
Exchange (symbol: "GTY"). At April 22, 1999, there were approximately 2,800
holders of record of Getty Realty's common stock. The price range of common
stock and cash dividends paid with respect to each share of common stock during
the past two fiscal years were as follows:
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------
Price Range
----------------- Cash Dividends
Quarter Ending High Low Per Share
- - ------------------------------------------------------------------------------
<S> <C> <C> <C>
January 31, 1999 $16 1/2 $12 1/8 $ .10
October 31, 1998 18 11/16 13 1/4 .10
July 31, 1998 22 5/16 18 1/2 .10
April 30, 1998 24 3/4 22 1/4 .10
January 31, 1998 24 5/16 18 7/16 .03
October 31, 1997 19 1/16 17 1/8 .03
July 31, 1997 18 3/8 16 5/8 .03
April 30, 1997 21 3/8 15 1/2 .03
</TABLE>
The preferred stock of Getty Realty Corp. commenced trading in
February 1998 on the New York Stock Exchange (symbol: "GTY PrA"). At April 22,
1999, there were approximately 400 holders of record of Getty Realty's
preferred stock. The price range of preferred stock and cash dividends paid
with respect to each share of preferred stock during the past fiscal year were
as follows:
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------
Price Range
----------------- Cash Dividends
Quarter Ending High Low Per Share
- - ---------------------------------------------------------------------
<S> <C> <C> <C>
January 31, 1999 $ 22 $ 20 $ .44375
October 31, 1998 24 18 1/4 .44375
July 31, 1998 27 23 1/2 .44375
April 30, 1998 29 26 1/2 .44375
</TABLE>
24
<PAGE> 1
Exhibit 22. Subsidiaries of the Company.
STATE OF
SUBSIDIARY INCORPORATION
---------- -------------
GETTY PROPERTIES CORP. Delaware
AOC TRANSPORT, INC. Delaware
DONNA OIL CORP. New York
GETTYMART INC. Delaware
LEEMILT'S FLATBUSH AVENUE, INC. New York
LEEMILT'S PETROLEUM, INC. New York
RECO PETROLEUM, INC. Pennsylvania
ROSEDALE HOLDING, LLC* Delaware
SLATTERY GROUP INC. New Jersey
ENERGY RESOURCE & RECOVERY CORPORATION New York
HSCO GROUP, INC. New York
POWER TEST REALTY COMPANY LIMITED PARTNERSHIP** New York
- - -------------
*50% ownership
**99% owned by the Company, representing the limited partner units, and 1%
owned by Getty Properties Corp., representing the general partner interest.
<PAGE> 1
EXHIBIT 24
CONSENT OF INDPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
Getty Realty Corp. on Form S-8 (Registration Nos. 333-45249 and 333-45251) of
our reports dated March 11, 1999, on our audits of the consolidated financial
statements and financial statement schedule of Getty Realty Corp. and
Subsidiaries as of January 31, 1999 and 1998 and for each of the three years in
the period ended January 31, 1999 which reports have been included or
incorporated by reference in this Annual Report on Form 10-K.
PricewaterhouseCoopers LLP
New York, New York
March 11, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF GETTY REALTY CORP. AND SUBSIDIARIES AS OF
JANUARY 31, 1999 AND FOR THE YEAR THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-31-1999
<PERIOD-END> JAN-31-1999
<CASH> 657
<SECURITIES> 0
<RECEIVABLES> 7,087
<ALLOWANCES> 112
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 307,793
<DEPRECIATION> 68,045
<TOTAL-ASSETS> 261,084
<CURRENT-LIABILITIES> 0
<BONDS> 39,742
0
72,220
<COMMON> 144
<OTHER-SE> 65,667
<TOTAL-LIABILITY-AND-EQUITY> 261,084
<SALES> 0
<TOTAL-REVENUES> 61,341
<CGS> 0
<TOTAL-COSTS> 39,648
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 89
<INTEREST-EXPENSE> 2,726
<INCOME-PRETAX> 12,838
<INCOME-TAX> 5,337
<INCOME-CONTINUING> 7,501
<DISCONTINUED> 2,555
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,056
<EPS-PRIMARY> .36
<EPS-DILUTED> .36
</TABLE>
