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 October 31, 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 12,638,318 shares of Common Stock, par value $.10 per share,
outstanding as of October 31, 1994.
<PAGE>
GETTY PETROLEUM CORP.
INDEX
Part I. FINANCIAL INFORMATION Page Number
- - ------------------------------- -----------
Item 1. Financial Statements
Consolidated Balance Sheets as of October 31, 1994 and
January 31, 1994 1
Consolidated Statements of Operations for the three and nine
months ended October 31, 1994 and 1993 2
Consolidated Statements of Cash Flows for the nine months
ended October 31, 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 - 8
Part II. OTHER INFORMATION
- - ---------------------------
Item 6. Exhibits and Reports on Form 8-K 9
Signatures 9
<PAGE>
GETTY PETROLEUM CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
- - ------------------------------------------------------------------------------
October 31, January 31,
Assets: 1994 1994
- - ------------------------------------------------------------------------------
(unaudited)
Current assets:
Cash and cash equivalents $37,548 $42,334
Short-term investments 415 8,250
Accounts receivable, net 18,933 21,242
Inventories 11,169 10,017
Deferred income taxes 4,957 6,700
Prepaid expenses and other current assets 6,958 3,686
-------- --------
Total current assets 79,980 92,229
Property, plant and equipment, at cost, less
accumulated depreciation and amortization 186,295 189,975
Other assets 10,237 10,184
-------- --------
Total assets $276,512 $292,388
======== ========
- - ------------------------------------------------------------------------------
Liabilities and Stockholders' Equity:
- - ------------------------------------------------------------------------------
Current liabilities:
Current portion of long-term debt and
capital lease obligations $11,409 $9,877
Accounts payable 38,261 32,320
Accrued expenses 31,714 32,812
Gasoline taxes payable 9,186 8,658
Income taxes payable -- 2,371
-------- --------
Total current liabilities 90,570 86,038
Long-term debt 32,308 50,403
Obligations under capital leases 30,559 34,177
Deferred income taxes 16,984 16,359
Other, principally deposits 13,996 13,259
Stockholders' equity:
Preferred stock -- --
Common stock, par value $.10 per share 1,354 1,354
Other stockholders' equity 90,741 90,798
-------- --------
92,095 92,152
-------- --------
Total liabilities and stockholders' equity $276,512 $292,388
======== ========
See accompanying notes.
-1-
<PAGE>
<TABLE>
GETTY PETROLEUM CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts)
(unaudited)
<CAPTION>
- - ----------------------------------------------------------------------------------------------------
Three months ended Nine months ended
October 31, October 31,
- - ----------------------------------------------------------------------------------------------------
1994 1993 1994 1993
- - ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $195,292 $182,373 $545,951 $586,037
Rental and other income 7,623 8,729 25,801 25,473
-------- -------- -------- --------
202,915 191,102 571,752 611,510
-------- -------- -------- --------
Cost of sales 182,651 172,881 525,404 558,932
Selling, general and administrative expenses 7,447 7,547 20,508 20,845
Interest expense 2,664 3,576 8,736 11,059
Depreciation and amortization 5,442 5,499 16,089 16,429
-------- -------- -------- --------
198,204 189,503 570,737 607,265
-------- -------- -------- --------
Income before provision for
income taxes, extraordinary item and
cumulative effect of accounting changes 4,711 1,599 1,015 4,245
Provision for income taxes 1,697 717 404 1,796
-------- -------- -------- --------
Income before extraordinary item
and cumulative effect of accounting changes 3,014 882 611 2,449
Extraordinary item, net of income taxes -- -- (775) --
Cumulative effect of accounting changes -- -- 183 860
-------- -------- -------- --------
Net income $3,014 $882 $19 $3,309
======== ======== ======== ========
Per Share Data:
Income before extraordinary item and
cumulative effect of accounting changes $0.24 $0.07 $0.05 $0.19
Extraordinary item -- -- (0.06) --
Cumulative effect of accounting changes -- -- 0.01 0.07
-------- -------- -------- --------
Net income per share $0.24 $0.07 $-- $0.26
======== ======== ======== ========
Weighted average shares outstanding 12,639 12,618 12,639 12,617
======== ======== ======== ========
See accompanying notes.
</TABLE>
-2-
<PAGE>
GETTY PETROLEUM CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine months ended
October 31,
- - ----------------------------------------------------------------------------
1994 1993
- - ----------------------------------------------------------------------------
Cash flows from operating activities:
Net income $19 $3,309
Adjustments to reconcile net income to net cash
provided by operating activities:
Extraordinary item, before tax 1,232 --
Cumulative effect of accounting changes (183) --
Depreciation and amortization 16,089 16,429
Deferred income taxes 2,358 (1,007)
Gain on dispositions of property, plant
and equipment (818) (744)
Gain on investments -- (386)
Sale of short-term investments, net 7,860 487
Changes in assets and liabilities:
Accounts receivable 2,309 4,494
Inventories (1,152) (2,263)
Prepaid expenses and other current assets (3,527) 6,572
Other assets (835) 45
Accounts payable, accrued expenses and
gasoline taxes payable 5,371 (2,008)
Income taxes payable (2,371) --
Other, principally deposits 737 636
------- -------
Net cash provided by operating activities 27,089 25,564
------- -------
Cash flows from investing activities:
Property acquisitions (536) (667)
Capital expenditures (14,203) (12,978)
Proceeds from dispositions of property,
plant and equipment 3,560 2,271
------- -------
Net cash used in investing activities (11,179) (11,374)
------- -------
Cash flows from financing activities:
Long-term borrowings 10,000 --
Repayment of long-term debt (26,951) (6,357)
Payments under capital lease obligations (3,230) (2,433)
Premium paid on early retirement of debt (607) --
Treasury stock and stock options, net 92 196
------- -------
Net cash used in financing activities (20,696) (8,594)
------- -------
Net increase (decrease) in cash and cash equivalents (4,786) 5,596
Cash and cash equivalents at beginning of period 42,334 38,684
------- -------
Cash and cash equivalents at end of period $37,548 $44,280
======= =======
Supplemental disclosures of cash flow information--
Cash paid (received) during the period for:
Interest $9,542 $11,623
Income taxes, net 3,714 (4,074)
See accompanying notes.
-3-
<PAGE>
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 October 31, 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 the current
fiscal year 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 and nine months ended October 31, 1994,
the market value of the Company's short-term investments changed and a net
unrealized gain (loss) of ($14,000) and $15,000, respectively, 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-
<PAGE>
5. Stockholders' equity:
A summary of the changes in stockholders' equity for the nine months
ended October 31, 1994 is as follows (in thousands):
<TABLE>
<CAPTION>
Treasury Net Unrealized
Common Paid-in Accumulated Stock, Gain (Loss) on
Stock Capital Deficit at cost Equity 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 19 19
Cumulative effect of
accounting change (183) (183)
Net unrealized gain
on equity securities 15 15
Purchase of
treasury stock 18 (18)
Issuance of
treasury stock (18) (109) 91
Stock options
exercised 19 19
-------------------------------------------------------------------------------
Balance, October 31, 1994 $1,354 $119,916 $(14,713) $ 14,294 $(168) $92,095
===============================================================================
</TABLE>
6. Debt:
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 $21,666,000 of debentures was made with existing funds,
$10,000,000 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. During the
nine months ended October 31, 1994, the Company recorded an extraordinary
charge of $1,232,000 ($775,000 after taxes) resulting from the redemption.
The extraordinary charge consists of the write-off of deferred finance
costs associated with the debentures and a redemption premium paid to
holders of the retired debentures.
7. Restructuring Charge:
In the third quarter of the current fiscal year, the Company recorded a
pre-tax restructuring charge of $2.3 million to provide for severance and
other related restructuring costs. The charge is included in Rental and
other income in the Consolidated Statements of Operations.
-5-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations - Quarter ended October 31, 1994 Compared
with Quarter Ended October 31, 1993
- - -----------------------------------
Net sales for the quarter ended October 31, 1994 were $195.3 million as
compared with $182.4 million for the same quarter last year. The increase
in net sales was principally due to a 3% increase in average selling prices
and an increase in retail gallonage sold. Gross profit (excluding rental
and other income) increased by $3.1 million in the quarter ended October
31, 1994 as compared to the same quarter last year. The increase in gross
profit was principally due to higher gross margins.
Rental and other income for the three months ended October 31, 1994
amounted to $7.6 million as compared with $8.7 million for the quarter
ended October 31, 1993. The decrease was primarily due to a charge of $2.3
million relating to severance and other restructuring costs, partially
offset by $.5 million of additional rental income earned during the current
period and $.6 million of additional gains recognized from dispositions of
properties. The Company expects that the restructuring will result in
annual savings of approximately $3.0 million.
Selling, general and administrative expenses for the quarter ended
October 31, 1994 amounted to $7.4 million, a $1.3% reduction from the
comparable period last year.
Interest expense for the three months ended October 31, 1994 amounted to
$2.7 million as compared with $3.6 million for the quarter ended October
31, 1993. The decrease was principally due to reduced debt outstanding
during the current fiscal quarter, principally related to the redemption in
May 1994 of the Company's 14% subordinated debentures.
Depreciation and amortization decreased by $.1 million in the quarter
ended October 31, 1994 as compared to the same quarter last year. The
reduction was due to a decrease in amortization of deferred charges of $.3
million, partially offset by an increase in depreciation of $.2 million as
a result of additions to property, plant and equipment.
-6-
<PAGE>
Results of Operations - Nine Months Ended October 31, 1994 Compared
with Nine Months Ended October 31, 1993
- - ---------------------------------------
Net sales for the nine months ended October 31, 1994 were $546.0 million
as compared with $586.0 million for the same period last year. The
decrease in net sales was principally due to a 5.4% 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 $20.5 million for the nine months ended October 31,
1994 compared to $27.1 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 nine months ended October 31, 1994
amounted to $25.8 million as compared with $25.5 million for the nine
months ended October 31, 1993. The increase was principally due to $1.6
million of additional rental income earned during the current nine month
period and $1.0 million of income recognized by the Company for a claim
settlement, partially offset by a charge of $2.3 million relating to
severance and other restructuring costs.
Selling, general and administrative expenses for the nine months ended
October 31, 1994 amounted to $20.5 million, a 1.6% reduction from the
comparable period last year.
Interest expense for the nine months ended October 31, 1994 amounted to
$8.7 million, a decrease of $2.3 million from the comparable period last
year. The decrease was principally due to reduced debt outstanding during
the current period, principally related to the redemption in May 1994 of
the Company's 14% subordinated debentures.
Depreciation and amortization decreased by $.3 million in the current
nine month period as compared to the nine months ended October 31, 1993.
The reduction was due to a decrease in amortization of deferred charges of
$1.0 million, partially offset by an increase in depreciation of $.7
million as a result of additions to property, plant and equipment.
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. During the nine months ended October 31, 1994, the Company
recorded an extraordinary charge of $1.2 million ($.8 million after taxes)
in connection with the early retirement of debt.
The Company adopted SFAS No. 115, "Accounting for Certain Investments in
Debt and Equity Securities", as of the beginning of the current fiscal year
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.
-7-
<PAGE>
Liquidity and Capital Resources
- - -------------------------------
As of October 31, 1994, working capital amounted to a deficit of $10.6
million, as compared to positive working capital of $6.2 million as of
January 31, 1994. The decrease in working capital was primarily due to the
reduction of $21.7 million in long-term indebtedness including the effect
of redeeming the subordinated debentures in May 1994 and $14.2 million of
capital expenditures, partially offset by funds generated from operations.
The Company's principal sources of liquidity are cash flows from
operations which amounted to $27.1 million during the nine months ended
October 31, 1994, and its short-term unsecured lines of credit. As of
October 31, 1994, lines of credit amounted to $60 million, of which $33.9
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.
-8-
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Designation of Exhibit
in this Quarterly Report
on Form 10-Q Description of Exhibit
--------------------------- ------------------------
27 Financial Data Schedule
(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: December 12, 1994 BY:___________________________
(Signature)
MICHAEL K. HANTMAN
Vice President and
Corporate Controller
(Chief Accounting Officer)
Dated: December 12, 1994 BY:___________________________
(Signature)
JOHN J. FITTERON
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
Dated: December 12, 1994 BY:___________________________
(Signature)
LEO LIEBOWITZ
President (Chief Executive
Officer)
-9-
<PAGE>
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF GETTY PETROLEUM CORP. AND SUBSIDIARIES
AS OF OCTOBER 31, 1994 AND FOR THE NINE MONTHS THEN ENDED AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-END> OCT-31-1994
<CASH> 37,548
<SECURITIES> 415
<RECEIVABLES> 20,758
<ALLOWANCES> 1,825
<INVENTORY> 11,169
<CURRENT-ASSETS> 79,980
<PP&E> 328,125
<DEPRECIATION> 141,830
<TOTAL-ASSETS> 276,512
<CURRENT-LIABILITIES> 90,570
<BONDS> 62,867
<COMMON> 1,354
0
0
<OTHER-SE> 90,741
<TOTAL-LIABILITY-AND-EQUITY> 276,512
<SALES> 545,951
<TOTAL-REVENUES> 571,752
<CGS> 525,404
<TOTAL-COSTS> 541,493
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,736
<INCOME-PRETAX> 1,015
<INCOME-TAX> 404
<INCOME-CONTINUING> 611
<DISCONTINUED> 0
<EXTRAORDINARY> (775)
<CHANGES> 183
<NET-INCOME> 19
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
