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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, 1995 Commission file number 1-8059
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GETTY PETROLEUM CORP.
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(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
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(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
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Registrant has 12,652,887 shares of Common Stock, par value $.10 per share,
outstanding as of October 31, 1995.
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<PAGE>
GETTY PETROLEUM CORP.
INDEX
Part I. FINANCIAL INFORMATION Page Number
- - ------------------------------ -----------
Item 1. Financial Statements
Consolidated Balance Sheets as of October 31, 1995 and
January 31, 1995 1
Consolidated Statements of Operations for the three and
nine months ended October 31, 1995 and 1994 2
Consolidated Statements of Cash Flows for the nine months
ended October 31, 1995 and 1994 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: 1995 1995
- - -----------------------------------------------------------------------------
(unaudited)
Current assets:
Cash and cash equivalents $30,825 $41,576
Short-term investments 428 415
Accounts receivable, net 13,401 18,338
Inventories 20,717 11,117
Deferred income taxes 6,031 6,004
Prepaid expenses and other current assets 3,777 3,536
-------- --------
Total current assets 75,179 80,986
Property, plant and equipment, at cost, less
accumulated depreciation and amortization 187,848 188,527
Other assets 10,107 9,444
-------- --------
Total assets $273,134 $278,957
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Liabilities and Stockholders' Equity:
- - -----------------------------------------------------------------------------
Current liabilities:
Current portion of long-term debt
and capital lease obligations $10,506 $11,118
Accounts payable 28,244 39,326
Accrued expenses 30,303 32,570
Gasoline taxes payable 15,959 8,318
Income taxes payable - 377
-------- --------
Total current liabilities 85,012 91,709
Long-term debt 26,484 30,849
Obligations under capital leases 24,349 29,349
Deferred income taxes 15,915 14,120
Other, principally deposits 14,962 14,450
Stockholders' equity:
Preferred stock - -
Common stock, par value $.10 per share 1,355 1,354
Other stockholders' equity 105,057 97,126
-------- --------
106,412 98,480
-------- --------
Total liabilities and stockholders' equity $273,134 $278,957
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See accompanying notes.
1
<PAGE>
<TABLE>
<CAPTION>
GETTY PETROLEUM CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts)
(unaudited)
Three months Nine months
ended October 31, ended October 31,
- - -------------------------------------------------------------------------------------------
1995 1994 1995 1994
- - -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $212,043 $195,292 $591,605 $545,951
Rental income 8,687 8,104 25,671 23,900
Other income (loss), net 1,568 (481) 4,882 1,901
-------- -------- -------- --------
222,298 202,915 622,158 571,752
-------- -------- -------- --------
Cost of sales 201,200 182,651 565,216 525,404
Selling, general and administrative expenses 6,525 7,447 19,471 20,508
-------- -------- -------- --------
207,725 190,098 584,687 545,912
-------- -------- -------- --------
Earnings before interest, taxes,
depreciation and amortization 14,573 12,817 37,471 25,840
Interest expense 2,322 2,664 7,273 8,736
Depreciation and amortization 5,681 5,442 16,761 16,089
-------- -------- -------- --------
Earnings before provision for
income taxes, extraordinary item and
cumulative effect of accounting change 6,570 4,711 13,437 1,015
Provision for income taxes 2,531 1,697 5,231 404
-------- -------- -------- --------
Earnings before extraordinary item
and cumulative effect of accounting change 4,039 3,014 8,206 611
Extraordinary item, net of income taxes - - - (775)
Cumulative effect of accounting change - - - 183
-------- -------- -------- --------
Net earnings $4,039 $3,014 $8,206 $19
======== ======== ======== ========
Per Share Data:
Earnings before extraordinary item
and cumulative effect of accounting change $0.32 $0.24 $0.65 $0.05
Extraordinary item - - - (0.06)
Cumulative effect of accounting change - - - 0.01
-------- -------- -------- --------
Net earnings per share $0.32 $0.24 $0.65 $-
======== ======== ======== ========
Dividends per share $0.03 $- $0.03 $-
======== ======== ======== ========
Weighted average shares outstanding 12,650 12,639 12,646 12,639
======== ======== ======== ========
See accompanying notes.
2
</TABLE>
<PAGE>
GETTY PETROLEUM CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine months ended
October 31,
--------------------------
1995 1994
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Cash flows from operating activities:
Net income $8,206 $19
Adjustments to reconcile net income to net
cash provided by operating activities:
Extraordinary item, before tax - 1,232
Cumulative effect of accounting change - (183)
Depreciation and amortization 16,761 16,089
Deferred income taxes 1,762 2,358
Gain on dispositions of property, plant
and equipment (1,301) (818)
Sale of trading securities - 7,860
Changes in assets and liabilities:
Accounts receivable 4,937 2,309
Inventories (9,600) (1,152)
Prepaid expenses and other current assets (298) (3,527)
Other assets (851) (835)
Accounts payable, accrued expenses and
gasoline taxes payable (5,708) 5,371
Income taxes payable (377) (2,371)
Other, principally deposits 512 737
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Net cash provided by operating activities 14,043 27,089
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Cash flows from investing activities:
Capital expenditures (15,387) (14,203)
Property acquisitions (2,734) (536)
Proceeds from dispositions of property,
plant and equipment 2,330 3,560
-------- --------
Net cash used in investing activities (15,791) (11,179)
-------- --------
Cash flows from financing activities:
Long-term borrowings - 10,000
Repayment of long-term debt (5,443) (26,951)
Payments under capital lease obligations (3,279) (3,230)
Premium paid on early retirement of debt - (607)
Cash dividends (380) -
Treasury stock and stock options, net 99 92
-------- --------
Net cash used in financing activites (9,003) (20,696)
-------- --------
Net decrease in cash and cash equivalents (10,751) (4,786)
Cash and cash equivalents at beginning of period 41,576 42,334
-------- --------
Cash and cash equivalents at end of period $30,825 $37,548
======== ========
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest $7,107 $9,542
Income taxes, net 4,261 3,714
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 its wholly-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 is computed by dividing net earnings 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, 1995 and January 31, 1995, the carrying value of the
Company's LIFO inventories approximated the first-in, first-out ("FIFO")
method or replacement cost.
4. Debt:
As of October 27, 1995, the Company refinanced a mortgage loan which was
originally payable through January 1, 1998. The loan had an outstanding
balance of $18,320,000 at an interest rate of prime (8.75% at October 27,
1995). The amended and restated loan agreement provides for interest at
LIBOR plus 1.0% to 1.625% per annum, depending on the Funded Debt Ratio of
the Company. As of October 31, 1995, the interest rate was LIBOR plus 1.25%
or 7.12%. Principal payments are $218,000 per month through October 1, 2000
with the balance of $5,194,625 due on November 1, 2000.
5. Restructuring Charge:
In the third quarter of the prior 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 Other income
(loss), net in the 1994 Consolidated Statements of Operations.
<PAGE>
6. Stockholders' equity:
A summary of the changes in stockholders' equity for the nine months
ended October 31, 1995 is as follows (in thousands):
<TABLE>
<CAPTION>
Retained Treasury Net Unrealized
Common Paid-in Earnings Stock, Gain (Loss) on
Stock Capital (Deficit) at cost Equity Securities Total
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<S> <C> <C> <C> <C> <C> <C>
Balance, January 31, 1995 $1,354 $119,890 $(8,393) $14,203 $(168) $ 98,480
Net earnings 8,206 8,206
Cash dividends (380) (380)
Net unrealized gain
on equity securities 7 7
Purchase of treasury stock 5 (5)
Issuance of treasury stock (6) (22) 16
Stock options exercised 1 87 88
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Balance, October 31, 1995 $1,355 $119,971 $ (567) $14,186 $(161) $106,412
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</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations - Quarter ended October 31, 1995 compared
with quarter ended October 31, 1994
- - ------------------------------------
Net sales for the quarter ended October 31, 1995 were $212.0 million as
compared with $195.3 million for the same quarter last year. The increase in
net sales was principally due to a 14% increase in average selling prices and
an increase in retail gallonage sold, partially offset by a decrease in
wholesale gallonage sold. Gross profit (excluding rental and other income)
decreased by $1.8 million in the quarter ended October 31, 1995 as compared
to the same quarter last year. The decrease in gross profit was principally
due to lower product margins and higher environmental expenditures.
Rental income for the three months ended October 31, 1995 amounted to
$8.7 million as compared with $8.1 million for the quarter ended October 31,
1994. The increase was due to increased lease rental rates in Company owned
and leased locations and lease renewals.
Other income, net was $1.6 million for the three months ended October
31, 1995 as compared with a loss of $.5 million for the quarter ended October
31, 1994. The increase in other income was primarily due to a charge of $2.3
million recorded last year relating to severance and other restructuring
costs.
Selling, general and administrative expenses for the quarter ended
October 31, 1995 amounted to $6.5 million as compared with $7.4 million for
the quarter ended October 31, 1994. The decrease was principally due to lower
expenses as a result of the restructuring of the Company's organization and
its operations in October 1994.
Interest expense for the three months ended October 31, 1995 amounted to
$2.3 million as compared with $2.7 million for the quarter ended October 31,
1994. The decrease was principally due to reduced interest on capitalized
leases and lower average debt outstanding during the current fiscal quarter.
Depreciation and amortization increased by $.2 million in the quarter
ended October 31, 1995 as compared with the quarter ended October 31, 1994
principally as a result of additions to property, plant and equipment.
<PAGE>
Results of Operations - Nine months ended October 31, 1995 compared
with nine months ended October 31, 1994
- - ----------------------------------------
Net sales for the nine months ended October 31, 1995 were $591.6 million
as compared with $546.0 million for the same period last year. The increase
in net sales was principally due to a 13.8% increase in average selling
prices and an increase in retail gallonage sold, partially offset by a
decrease in wholesale gallonage sold. Gross profit (excluding rental and
other income) was $26.4 million for the nine months ended October 31, 1995
compared to $20.5 million in the comparable period last year. The increase
in gross profit was principally due to higher product margins, partially
offset by higher environmental expenditures.
Rental income for the nine months ended October 31, 1995 amounted to
$25.7 million as compared with $23.9 million for the nine months ended
October 31, 1994. The increase was due to increased lease rental rates in
Company owned and leased locations and lease renewals.
Other income, net was $4.9 million for the nine months ended October 31,
1995 as compared with $1.9 million for the nine months ended October 31,
1994. The increase in other income was primarily due to $2.7 million of
severance and other restructuring costs recorded in the prior year period.
In addition, $.7 million of higher investment income and $.5 million of
increased gains on dispositions of assets realized during the current year
were partially offset by $1 million of income recognized by the Company in
the prior year period from a claim settlement.
Selling, general and administrative expenses for the nine months ended
October 31, 1995 amounted to $19.5 million as compared with $20.5 million for
the nine months ended October 31, 1994. The decrease was principally due to
lower expenses as a result of the restructuring of the Company's organization
and its operations in October 1994.
Interest expense for the nine months ended October 31, 1995 amounted to
$7.3 million, a decrease of $1.5 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 subordinated debentures, and lower interest on capitalized leases.
Depreciation and amortization increased by $.7 million in the current
nine month period as compared with the nine months ended October 31, 1994.
The increase was due to $.9 million of higher depreciation as a result of
additions to property, plant and equipment, partially offset by a decrease in
amortization of deferred charges of $.2 million.
During the nine months ended October 31, 1994, the Company recorded an
extraordinary charge of $.8 million after taxes resulting from the early
retirement of the Company's subordinated debentures.
The Company adopted Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities", as of the
<PAGE>
beginning of the prior fiscal year and reported the cumulative effect of the
change in accounting principle as a credit to earnings of $.2 million in the
Consolidated Statement of Operations for the quarter ended April 30, 1994.
Liquidity and Capital Resources
- - -------------------------------
As of October 31, 1995, working capital amounted to a deficit of $9.8
million as compared to a deficit of $10.7 million as of January 31, 1995.
The improvement in working capital was primarily due to funds from operations
during the nine month period, partially offset by $18.1 million of capital
expenditures, including property acquisitions, and the reduction of $9.4
million in long-term indebtedness.
As of October 27, 1995, the Company refinanced through November 1, 2000
a mortgage loan in the amount of $18,320,000 which was originally payable
through January 1, 1998. The Company expects that the refinancing will
result in interest savings of approximately $278,000 over the next twelve
months.
The Company's principal sources of liquidity are cash flows from
operations, which amounted to $14.0 million during the nine months ended
October 31, 1995, and its short-term unsecured lines of credit. As of
October 31, 1995, lines of credit amounted to $60.0 million, of which $8.4
million was utilized in connection with outstanding letters of credit.
Management believes that cash requirements for operations and debt service
can be met by cash generated from operations, cash balances and short-term
investments which amounted to $31.3 million at October 31, 1995, and its
available credit lines.
<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 11, 1995 BY: _________________________________
(Signature)
MICHAEL K. HANTMAN
Vice President and
Corporate Controller
(Chief Accounting Officer)
Dated: December 11, 1995 BY: _________________________________
(Signature)
JOHN J. FITTERON
Senior Vice President, Treasurer
and Chief Financial Officer
(Principal Financial Officer)
Dated: December 11, 1995 BY: ________________________________
(Signature)
LEO LIEBOWITZ
President (Chief Executive
Officer)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF GETTY PETROLEUM CORP. AND SUBSIDIARIES
AS OF OCTOBER 31, 1995 AND FOR THE NINE MONTHS THEN ENDED AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-END> OCT-31-1995
<CASH> 30,825
<SECURITIES> 428
<RECEIVABLES> 15,355
<ALLOWANCES> 1,954
<INVENTORY> 20,717
<CURRENT-ASSETS> 75,179
<PP&E> 347,102
<DEPRECIATION> 159,254
<TOTAL-ASSETS> 273,134
<CURRENT-LIABILITIES> 85,012
<BONDS> 50,833
<COMMON> 1,355
0
0
<OTHER-SE> 105,057
<TOTAL-LIABILITY-AND-EQUITY> 273,134
<SALES> 591,605
<TOTAL-REVENUES> 622,158
<CGS> 565,216
<TOTAL-COSTS> 581,977
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 437
<INTEREST-EXPENSE> 7,273
<INCOME-PRETAX> 13,437
<INCOME-TAX> 5,231
<INCOME-CONTINUING> 8,206
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,206
<EPS-PRIMARY> .65
<EPS-DILUTED> .65
</TABLE>
