SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For quarter ended April 30, 1994 Commission file number 1-8059
-------------- ------
GETTY PETROLEUM CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 11-2232705
----------- --------------
(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)
(516) 338-6000
-----------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
----- ----
Registrant has 12,639,026 shares of Common Stock, par value $.10 per share,
outstanding as of April 30, 1994.
GETTY PETROLEUM CORP.
INDEX
Part I. FINANCIAL INFORMATION Page Number
- - - ------------------------------ -----------
Item 1. Financial Statements
Consolidated Balance Sheets as of April 30,
1994 and January 31, 1994 1
Consolidated Statements of Operations for
the three months ended April 30, 1994 and 1993 2
Consolidated Statements of Cash Flows for
the three months ended April 30, 1994 and 1993 3
Notes to Consolidated Financial Statements 4-5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6-7
Part II. OTHER INFORMATION
- - - ---------------------------
Item 6. Exhibits and Reports on Form 8-K 8
Signatures 8
GETTY PETROLEUM CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
April 30, January 31,
1994 1994
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $53,366 $ 42,334
Short-term investments 353 8,250
Accounts receivable, net 20,697 21,242
Inventories 10,601 10,017
Deferred income taxes 5,823 6,700
Prepaid expenses and other current assets 2,545 3,686
-------- --------
Total current assets 93,385 92,229
Property, plant and equipment, at cost, less
accumulated depreciation and amortization 188,411 189,975
Other assets 9,796 10,184
-------- --------
Total assets $291,592 $292,388
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt
and capital lease obligations $ 11,771 $ 9,877
Accounts payable 39,944 32,320
Accrued expenses 28,871 32,812
Gasoline taxes payable 8,504 8,658
Income taxes payable - 2,371
------ -------
Total current liabilities 89,090 86,038
Long-term debt 46,861 50,403
Obligations under capital leases 33,113 34,177
Deferred income taxes 15,929 16,359
Other, principally deposits 13,380 13,259
Stockholders' equity:
Preferred stock - -
Common stock, par value $.10 per share 1,354 1,354
Other stockholders' equity 91,865 90,798
-------- --------
93,219 92,152
======== ========
Total liabilities and stockholders' equity $291,592 $292,388
======== ========
See accompanying notes.
-1-
GETTY PETROLEUM CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts)
(unaudited)
Three Months Ended April 30,
----------------------------
1994 1993
---- ----
Net sales $170,701 $208,027
Rental and other income 8,759 8,120
-------- --------
179,460 216,147
-------- --------
Cost of sales 162,648 199,465
Selling, general and administrative expenses 6,548 5,834
Interest expense 3,273 3,750
Depreciation and amortization 5,298 5,504
-------- --------
177,767 214,553
-------- --------
Income before provision for income taxes
and cumulative effect of accounting changes 1,693 1,594
Provision for income taxes 705 652
-------- --------
Income before cumulative effect of
accounting changes 988 942
Cumulative effect of accounting changes 183 860
-------- --------
Net income $ 1,171 $ 1,802
======== ========
Per share data:
Income before cumulative effect of
accounting changes $ .08 $ .07
Cumulative effect of accounting changes .01 .07
-------- --------
Net income per share $ .09 $ .14
======== ========
Weighted average shares outstanding 12,638 12,613
======== ========
See accompanying notes.
-2-
GETTY PETROLEUM CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three months ended April 30,
----------------------------
1994 1993
---- ----
Cash flows from operating activities:
Net income $ 1,171 $ 1,802
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Cumulative effect of accounting changes (183) (860)
Depreciation and amortization 5,298 5,504
Deferred income taxes 462 598
(Gain) loss on dispositions of property,
plant and equipment 98 (314)
Gain on investments - (1)
Sale of short-term investments, net 7,860 127
Changes in assets and liabilities:
Accounts receivable 545 3,374
Inventories (584) (2,925)
Prepaid expenses and other current assets 1,082 1,021
Other assets 291 288
Accounts payable, accrued expenses and
gasoline taxes payable 3,529 (10,082)
Income taxes payable (2,371) -
Other, principally deposits 121 246
-------- --------
Net cash provided by (used in)
operating activities 17,319 (1,222)
-------- --------
Cash flows from investing activities:
Property acquisitions (113) (201)
Capital expenditures (3,735) (2,595)
Proceeds from dispositions of property,
plant and equipment 172 490
-------- --------
Net cash used in investing activities (3,676) (2,306)
-------- --------
Cash flows from financing activities:
Repayment of long-term debt (1,783) (1,180)
Payments under capital lease obligations (929) (775)
Treasury stock and stock options, net 101 63
-------- --------
Net cash used in financing activities (2,611) (1,892)
-------- --------
Net increase (decrease) in cash
and cash equivalents 11,032 (5,420)
Cash and cash equivalents at beginning of period 42,334 38,684
-------- --------
Cash and cash equivalents at end of period $ 53,366 $ 33,264
======== ========
Supplemental disclosures of cash flow information-
Cash paid during the period for:
Interest $ 3,847 $ 4,787
Income taxes 2,933 407
See accompanying notes.
-3-
GETTY PETROLEUM CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. General:
The accompanying consolidated financial statements include the
accounts of Getty Petroleum Corp. and all majority-owned subsidiaries (the
"Company"). The consolidated financial statements are unaudited but, in
the opinion of management, reflect all adjustments (consisting of normal
recurring accruals) necessary for a fair presentation.
2. Earnings per share:
Earnings per share of common stock is computed by dividing net income
by the weighted average number of shares of common stock outstanding during
the period. Common stock equivalents are not included in earnings per
share computations since their effect is immaterial.
3. Inventories:
Inventories, primarily finished petroleum products, are principally
accounted for under the lower of last-in, first-out ("LIFO") cost or
market. As of April 30, 1994 and January 31, 1994, the carrying value of
the Company's LIFO inventories approximated the first-in, first-out
("FIFO") method or replacement cost.
4. Accounting Changes:
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments
in Debt and Equity Securities", which requires that such investments be
classified into three categories, namely, held-to-maturity, trading and
available-for-sale securities. Currently, the Company's short-term
investments are all considered available-for-sale and are carried at fair
value with unrealized gains or losses excluded from earnings and reported
as a separate component of stockholders' equity.
The Company adopted SFAS No. 115 as of the beginning of fiscal 1995
and has reported the cumulative effect of the change in accounting
principle as a credit of $183,000 in the consolidated statement
of operations. During the quarter ended April 30, 1994, the market value
of the Company's short-term investments declined and a net unrealized loss
of $22,000 was excluded from earnings and reported as a separate component
of stockholders' equity (see Note 5).
The Company adopted SFAS No. 109, "Accounting for Income Taxes",
during the quarter ended April 30, 1993 and reported the cumulative effect
of the change in accounting principle as a credit of $860,000
in the consolidated statement of operations.
-4-
5. Stockholders' equity:
A summary of the changes in stockholders' equity for the three months
ended April 30, 1994 is as follows (in thousands):
<TABLE>
<CAPTION>
Treasury Net Unrealized
Common Paid-in Accumulated Stock, Loss on Equity
Stock Capital Deficit at cost Securities Total
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 31,
1994 $1,354 $119,915 $(14,732) $14,385 $ - $92,152
Net income 1,171 1,171
Cumulative effect of
accounting change 183 (183)
Net unrealized loss
on equity securities 22 (22)
Purchase of
treasury stock 9 (9)
Issuance of
treasury stock (18) (109) 91
Stock options
exercised 19 19
--------------------------------------------------------------------------------------
Balance, April 30, 1994 $1,354 $119,916 $(13,561) $ 14,285 $205 $ 93,219
======================================================================================
</TABLE>
6. Subsequent Event:
On May 16, 1994, the Company redeemed all of its outstanding 14%
subordinated debentures due August 1, 2000 at a call price of 102.8%.
The redemption of $21.7 million of debentures was made with existing
funds, $10.0 million of which was funded on June 13, 1994 under a five
year term loan agreement with two banks. The principal is payable in
quarterly installments of $500,000, together with interest payable, at
the option of the Company, at LIBOR plus 1.25% or a base rate, as
defined. In the second quarter of fiscal 1995, the Company will record
an extraordinary charge of approximately $.7 million, net of taxes,
resulting from the redemption.
-5-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Net sales for the first fiscal quarter ended April 30, 1994 were
$170.7 million as compared with $208.0 million for the same quarter last
year. The decrease in net sales was principally due to a 12% decrease in
average selling prices, and a decrease in wholesale gallonage sold,
partially offset by an increase in retail gallonage sold. Gross
profit (excluding rental and other income) was $8.1 million for the quarter
ended April 30, 1994 compared to $8.6 million in the comparable period last
year. The decrease in gross profit was principally due to lower gross
margins.
Rental and other income for the three months ended April 30, 1994
amounted to $8.8 million as compared with $8.1 million for the quarter
ended April 30, 1993. The increase was primarily due to $.6 million of
additional rental income earned as a result of increased lease rental
rates from capital improvements in Company owned and leased locations
and lease renewals.
Selling, general and administrative expenses for the quarter ended
April 30, 1994 amounted to $6.5 million as compared with $5.8 million for
the quarter ended April 30, 1993. The increase was principally due to
higher employee and advertising expenses.
Interest expense for the three months ended April 30, 1994 amounted to
$3.3 million as compared with $3.8 million for the quarter ended April 30,
1993. The decrease was principally due to reduced debt outstanding during
the current fiscal quarter.
Depreciation and amortization decreased by $.2 million in the quarter
ended April 30, 1994 as compared to the same quarter last year. The
reduction was due to a decrease in amortization of deferred charges of
$.5 million, partially offset by an increase in depreciation of $.3 million
as a result of additions to property, plant and equipment.
The Company adopted SFAS No. 115, "Accounting for Certain Investments
in Debt and Equity Securities", as of the beginning of fiscal 1995 and
has reported the cumulative effect of the change in accounting principle as
a credit of $.2 million in the consolidated statement of operations.
The Company adopted SFAS No. 109, "Accounting for Income Taxes" during
the quarter ended April 30, 1993 and reported the cumulative effect of
the change in accounting principle as a credit of $.9 million in the
consolidated statement of operations.
Liquidity and Capital Resources
- - - -------------------------------
As of April 30, 1994, working capital amounted to $4.3 million as
compared to $6.2 million as of January 31, 1994. The decrease in working
capital was primarily due to $3.7 million of capital expenditures and the
reduction of $2.7 million in long-term indebtedness, partially offset by
funds generated from operations.
-6-
The Company's principal sources of liquidity are cash flows from
operations which amounted to $17.3 million during the three months ended
April 30, 1994, and its short-term unsecured lines of credit. As of April
30, 1994, lines of credit amounted to $60 million, of which $39.0 million
was utilized in connection with outstanding letters of credit. Management
believes that cash requirements for operations and debt service can be met
by its available cash balances, cash flows from operations and
its credit lines.
On May 16, 1994, the Company redeemed all of the outstanding 14%
subordinated debentures due August 1, 2000 at a call price of 102.8%. The
redemption of $21.7 million of debentures was made with existing funds,
$10.0 million of which was funded on June 13, 1994 under a five year term
loan agreement.
-7-
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: None
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter for
which this report is filed.
SIGNATURES
------------
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
GETTY PETROLEUM CORP.
-----------------------
(Registrant)
Dated: June 13, 1994 BY:_________________________
(Signature)
MICHAEL K. HANTMAN
Vice President and
Corporate Controller
(Chief Accounting Officer)
Dated: June 13, 1994 BY:_________________________
(Signature)
JOHN J. FITTERON
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
Dated: June 13, 1994 BY:_________________________
(Signature)
LEO LIEBOWITZ
President (Chief Executive
Officer)
-8-
