<PAGE> 1
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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 July 31, 1997 Commission file number 1-8059
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GETTY REALTY CORP.
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(Exact name of registrant as specified in its charter)
Delaware 11-2232705
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
125 Jericho Turnpike, Jericho, New York 11753
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(Address of principal executive offices) (Zip Code)
(516) 338 - 2600
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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
--- ---
Registrant has 13,260,275 shares of Common Stock, par value $.10 per share,
outstanding as of July 31, 1997.
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<PAGE> 2
GETTY REALTY CORP.
INDEX
<TABLE>
<S> <C>
Part I. FINANCIAL INFORMATION Page Number
- ------------------------------ -----------
Item 1. Financial Statements
Consolidated Balance Sheets as of July 31, 1997 and
January 31, 1997 1
Consolidated Statements of Operations for the three and
six months ended July 31, 1997 and 1996 2
Consolidated Statements of Cash Flows for the
six months ended July 31, 1997 and 1996 3
Notes to Consolidated Financial Statements 4 - 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8 - 11
Part II. OTHER INFORMATION
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Item 6. Exhibits and Reports on Form 8-K 12
Signatures 12
</TABLE>
<PAGE> 3
GETTY REALTY CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands except share amounts)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
July 31, January 31,
- ---------------------------------------------------------------------------------------------------------------
Assets: 1997 1997
- ---------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
Real Estate:
Land $ 40,949 $ 40,647
Buildings 59,271 59,229
Equipment 19,928 16,180
Leasehold improvements 31,417 31,703
Assets recorded under
capital leases 51,084 51,233
-------- --------
202,649 198,992
Less, accumulated depreciation
and amortization 104,826 101,058
-------- --------
Real estate, net 97,823 97,934
Cash and equivalents 8,443 11,385
Accounts receivable, net 1,857 2,731
Mortgages receivable 6,654 6,602
Recoveries from state
underground storage tank funds 14,940 16,217
Deferred income taxes 20,996 18,485
Prepaid expenses and other assets 5,662 4,010
Assets of Getty Petroleum
Marketing Inc. - 135,500
-------- --------
Total assets $156,375 $292,864
======== ========
- ---------------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity:
- ---------------------------------------------------------------------------------------------------------------
Mortgages payable $ 16,515 $ 18,882
Obligations under capital leases 19,678 22,710
Accounts payable and accrued expenses 20,457 22,281
Environmental remediation costs 41,887 46,134
Income taxes payable - 1,426
Liabilities of Getty Petroleum Marketing Inc. - 80,959
Stockholders' equity:
Preferred stock, par value $1.00 per share; authorized
10,000,000 shares for issuance in series (none of which is issued) - -
Common stock, par value $.10 per share; authorized
30,000,000 shares; issued 14,143,691 at July 31, 1997
and 13,582,394 at January 31, 1997 1,414 1,358
Paid-in capital 73,180 120,293
Retained deficit (2,834) (7,215)
Treasury stock, at cost (883,416 shares at July 31, 1997
and 885,893 shares at January 31, 1997) (13,922) (13,964)
-------- --------
Total stockholders' equity 57,838 100,472
-------- --------
Total liabilities and stockholders' equity $156,375 $292,864
======== ========
</TABLE>
See accompanying notes.
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<PAGE> 4
GETTY REALTY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Three months ended July 31, Six months ended July 31,
- --------------------------------------------------------------------------------------------------------------------------
1997 1996 1997 1996
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Revenues from rental property $14,932 $8,796 $29,878 $17,777
Net sales of petroleum products 5,263 219,515 13,644 423,799
Other income 1,439 1,881 1,893 2,584
----------------------- -------------------
21,634 230,192 45,415 444,160
Equity in earnings of Getty Petroleum Marketing Inc. - - 2,931 -
----------------------- -------------------
21,634 230,192 48,346 444,160
----------------------- -------------------
Cost of sales of petroleum products
(excluding depreciation and amortization) 5,019 192,436 12,418 383,607
Rental property expenses 3,572 5,332 6,882 10,669
Environmental and maintenance expenses 2,331 6,219 3,571 10,672
Selling, general and administrative expenses 3,886 6,804 7,230 13,141
Change of control charge - - 2,166 -
Litigation charge - 127 - 7,585
Depreciation and amortization 2,419 5,743 4,806 11,412
Interest expense 1,309 1,758 2,689 3,613
----------------------- -------------------
18,536 218,419 39,762 440,699
----------------------- -------------------
Earnings before provision for
income taxes 3,098 11,773 8,584 3,461
Provision for income taxes 1,148 4,604 3,427 1,457
----------------------- -------------------
Net earnings $ 1,950 $7,169 $5,157 $2,004
======================= ===================
Net earnings per share $0.15 $0.57 $0.40 $0.16
======================= ===================
Weighted average shares outstanding 13,118 12,676 12,944 12,672
======================= ===================
</TABLE>
See accompanying notes.
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<PAGE> 5
GETTY REALTY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Six months ended
July 31,
---------------------------------
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings $5,157 $2,004
Adjustments to reconcile net earnings to
net cash provided by (used in) operating activities:
Depreciation and amortization 4,806 11,412
Deferred income taxes (2,511) (3)
Gain on dispositions of real estate (692) (1,260)
Equity in net earnings of Getty Petroleum Marketing Inc. (1,731) -
Changes in assets and liabilities:
Accounts receivable 874 2,383
Mortgages receivable (52) -
Recoveries from state underground storage tank funds 1,277 -
Prepaid expenses and other assets (1,686) (2,131)
Accounts payable and accrued expenses (1,824) 9,810
Environmental remediation costs (4,247) -
Income taxes payable (1,426) 24
---------------------------------
Net cash provided by (used in) operating activities (2,055) 22,239
---------------------------------
Cash flows from investing activities:
Capital expenditures (4,189) (10,734)
Property acquisitions (1,027) (753)
Proceeds from dispositions of real estate 1,247 1,871
---------------------------------
Net cash used in investing activities (3,969) (9,616)
---------------------------------
Cash flows from financing activities:
Mortgage borrowings 165 -
Repayment of mortgages payable (2,532) (2,409)
Payments under capital lease obligations (3,032) (2,630)
Cash dividends (776) (760)
Stock options and treasury stock, net 9,257 206
---------------------------------
Net cash provided by (used in) financing activities 3,082 (5,593)
---------------------------------
Net increase (decrease) in cash and equivalents (2,942) 7,030
Cash and equivalents at beginning of period 11,385 19,808
---------------------------------
Cash and equivalents at end of period $8,443 $26,838
=================================
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest $2,686 $3,616
Income taxes, net 2,891 1,435
</TABLE>
See accompanying notes.
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<PAGE> 6
GETTY REALTY CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. General:
The accompanying consolidated financial statements include the accounts of
Getty Realty Corp., known prior to March 31, 1997 as Getty Petroleum Corp., and
its wholly-owned subsidiaries (the "Company") (See Note 2). The consolidated
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 amounts could differ from those estimates. 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. These statements should be read in conjunction with the
consolidated financial statements and related notes which appear in the
Company's Annual Report on Form 10-K for the fiscal year ended January 31,
1997.
Certain reclassifications have been made in the financial statements as of
January 31, 1997 and for the periods ended July 31, 1996, to conform to the
July 31, 1997 presentation.
2. Spin-off:
On March 21, 1997, the Company effected the spin-off of Getty Petroleum
Marketing Inc. ("Marketing") to its stockholders. Stockholders of record of
the Company on March 21, 1997 received a tax-free dividend of one share of
Marketing common stock for each share of common stock of the Company.
Prior to the spin-off, 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 previously conducted by a subsidiary of the
Company. The Company has retained its fee and leased properties, including
service stations and supply terminals, substantially all of which are leased or
subleased to Marketing on a long-term net basis. The Company also has retained
the Pennsylvania and Maryland home heating oil business.
The consolidated statement of operations of the Company for the six months
ended July 31, 1997 include 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, amounting to pre-tax income
of $2.9 million ($1.7 million after-tax). The financial results of the
Marketing business for the quarter and six months ended July 31, 1996 are
included in the consolidated financial results of the Company for the
respective periods and amounted to a pre-tax profit of $7.9 million and $2.2
million, respectively ($4.6 million and $1.3 million after-tax, respectively).
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<PAGE> 7
The financial results of the real estate and retained heating oil
businesses for the quarters and six months ended July 31, 1997 and 1996 are set
forth below. The following financial information does not include the
financial results of Marketing and is presented for informational purposes only
and is not necessarily indicative of the financial results that would have
occurred had the real estate and heating oil businesses been operated as
separate, stand-alone entities during such periods, nor are they necessarily
indicative of future results.
<TABLE>
<CAPTION>
Quarter ended July 31, 1997 Quarter ended July 31, 1996
--------------------------- ---------------------------
Real Heating Real Heating
Estate Oil Total Estate Oil Total
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Revenues from rental property $14,906 $26 $14,932 $14,541 $51 $14,592
Net sales of petroleum products - 5,263 5,263 - 6,293 6,293
Other income (expense) 1,471 (32) 1,439 1,821 18 1,839
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16,377 5,257 21,634 16,362 6,362 22,724
-----------------------------------------------------------
Cost of sales of petroleum
products (excluding depreciation
and amortization) - 5,019 5,019 - 6,069 6,069
Rental property expenses 3,566 6 3,572 3,222 7 3,229
Environmental and maintenance
expenses 2,331 - 2,331 3,987 - 3,987
Selling, general and
administrative expenses 3,380 506 3,886 1,001 433 1,434
Litigation charge - - - 127 - 127
Depreciation and amortization 2,288 131 2,419 2,245 127 2,372
Interest expense 1,309 - 1,309 1,633 - 1,633
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12,874 5,662 18,536 12,215 6,636 18,851
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Earnings (loss) before provision
(credit) for income taxes 3,503 (405) 3,098 4,147 (274) 3,873
Provision (credit) for
income taxes 1,320 (172) 1,148 1,400 (120) 1,280
-----------------------------------------------------------
Net earnings (loss) $ 2,183 ($233) $ 1,950 $ 2,747 ($154) $ 2,593
===========================================================
</TABLE>
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<PAGE> 8
<TABLE>
<CAPTION>
Six months ended July 31, 1997 Six months ended July 31, 1996
------------------------------ ------------------------------
Real Heating Real Heating
Estate Oil Total Estate Oil Total
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Revenues from rental property $29,824 $54 $29,878 $29,079 $115 $29,194
Net sales of petroleum products - 13,644 13,644 - 15,304 15,304
Other income (expense) 1,898 (5) 1,893 2,440 37 2,477
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31,722 13,693 45,415 31,519 15,456 46,975
-----------------------------------------------------------------
Cost of sales of petroleum
products (excluding depreciation
and amortization) - 12,418 12,418 - 14,107 14,107
Rental property expenses 6,873 9 6,882 6,396 16 6,412
Environmental and maintenance
expenses 3,571 - 3,571 6,720 - 6,720
Selling, general and
administrative expenses 6,263 967 7,230 1,887 961 2,848
Change of control charge 2,166 - 2,166 - - -
Litigation charge - - - 7,585 - 7,585
Depreciation and amortization 4,548 258 4,806 4,465 245 4,710
Interest expense 2,689 - 2,689 3,354 - 3,354
-----------------------------------------------------------------
26,110 13,652 39,762 30,407 15,329 45,736
-----------------------------------------------------------------
Earnings before provision
for income taxes 5,612 41 5,653 1,112 127 1,239
Provision for
income taxes 2,211 16 2,227 468 54 522
-----------------------------------------------------------------
Net earnings $ 3,401 $25 $ 3,426 $644 $73 $717
=================================================================
</TABLE>
3. 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.
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<PAGE> 9
4. Stockholders' equity:
A summary of the changes in stockholders' equity for the six months ended
July 31, 1997 is as follows (in thousands):
<TABLE>
<CAPTION>
Retained Treasury
Common Paid-in Earnings Stock,
Stock Capital (Deficit) at cost Total
- --------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance,
January 31, 1997 $1,358 $120,293 ($7,215) ($13,964) $100,472
Distribution to
Marketing (56,272) (56,272)
Net earnings 5,157 5,157
Cash dividends (776) (776)
Purchase of
treasury stock (4) (4)
Issuance of
treasury stock (1) 46 45
Stock options 56 9,160 9,216
------------------------------------------------
Balance,
July 31, 1997 $1,414 $ 73,180 ($2,834) ($13,922) $ 57,838
================================================
</TABLE>
5. 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 $8.4 million, plus
interest, in favor of Morrison-Knudsen Company, Inc. against the Company's
former construction company subsidiary, Slattery Associates, Inc., which was
sold in 1989.
The case arose out of a joint venture between Slattery Associates and
Morrison-Knudsen which was established to reconstruct a portion of an
expressway in Philadelphia in 1986. The judgment represents Slattery's share
of joint venture construction costs which the Court held Slattery owed.
Slattery had contended that Morrison-Knudsen had mismanaged the project and had
failed to disclose material facts. Slattery also had contended that certain
costs were improperly charged to the joint venture.
During the six months ended July 31, 1996, the Company recorded a pre-tax
charge of $7.6 million in addition to a previously established reserve of $3.6
million for this litigation. The pre-tax charge is included under the caption
"Litigation charge" in the July 31, 1996 consolidated statement of operations.
During the quarter ended October 31, 1996, the Company reversed into income
$1.8 million of this charge as a result of the settlement of this litigation.
-7-
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The accompanying consolidated financial statements include the accounts of
Getty Realty Corp., known prior to March 31, 1997 as Getty Petroleum Corp., and
its wholly-owned subsidiaries (the "Company").
Spin-off
On March 21, 1997, the Company effected the spin-off of its petroleum
marketing business to its stockholders. The Company retained its real estate
business and leases most of its properties on a long-term net basis to the
distributed company, which is named Getty Petroleum Marketing Inc.
("Marketing"). The Company also retained the Pennsylvania and Maryland home
heating oil business. Stockholders of record of the Company on March 21, 1997
received a tax-free dividend of one share of Marketing common stock for each
share of common stock of the Company.
The consolidated statement of operations of the Company for the six months
ended July 31, 1997 include 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, amounting to pre-tax income
of $2.9 million ($1.7 million after-tax). The financial results of the
Marketing business for the quarter and six months ended July 31, 1996 are
included in the consolidated financial results of the Company for the
respective periods and amounted to a pre-tax profit of $7.9 million and $2.2
million, respectively ($4.6 million and $1.3 million after-tax, respectively).
For additional information regarding the spin-off, see Note 2 to the
consolidated financial statements.
Results of Operations - Quarter ended July 31, 1997 compared with quarter ended
July 31, 1996
Revenues from rental property for the quarter ended July 31, 1997
principally represent rental income from Marketing ($14.3 million) with the
remainder from other lessees and sublessees. Revenues from rental property for
the quarter ended July 31, 1996 principally represented rental income from
Marketing's dealers prior to the spin-off.
Net sales for the second fiscal quarter ended July 31, 1997 were $5.3
million, all of which were attributable to the Company's retained heating oil
business (most of which revenues occur in the first and fourth fiscal
quarters), as compared with $219.5 million during the same quarter last year,
which were attributable to the heating oil business and Marketing's business.
After excluding $213.2 million of net sales of the Marketing business for the
quarter ended July 31, 1996, the prior year's quarterly net sales for the
retained heating oil business amounted to $6.3 million. The decrease in net
sales of $1.0 million was principally due to a decrease in gallonage sold
during the quarter ended July 31, 1997, and lower sales prices, in comparison
to the quarter ended July 31, 1996. Gross profit for the retained heating oil
business was $.2 million for each of the quarters ended July 31, 1997 and 1996.
Lower gallonage sales were offset by higher margins during the current period.
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<PAGE> 11
Other income was $1.4 million for the three months ended July 31, 1997
as compared with $1.9 million for the quarter ended July 31, 1996. After
excluding $.1 million of other income of Marketing for the quarter ended July
31, 1996, other income amounted to $1.8 million. The decrease in other income
of $.4 million was principally due to $.4 million of lower gains on asset sales
and $.2 million of lower investment income, offset by $.1 million of expenses
incurred in the quarter ended July 31, 1996 related to the spin-off.
Rental property expenses, which are comprised of rent expense and real
estate taxes, were $3.6 millon for the quarter ended July 31, 1997 as compared
with $5.3 million for the quarter ended July 31, 1996. After excluding $2.0
million of real estate taxes payable by Marketing during the quarter ended July
31, 1996, rental property expenses increased $.3 million over the prior year's
comparable quarter.
Environmental and maintenance expenses for the quarter ended July 31, 1997
were $2.3 million as compared with $6.2 million for the quarter ended July 31,
1996. After excluding $2.2 million of Marketing expenses for the quarter ended
July 31, 1996 (principally maintenance), the decrease in environmental and
maintenance expense during the current quarterly period amounted to $1.7
million. The current period charge is principally due to a revision to the
Company's estimate of future remediation costs. As of July 31, 1997, the
Company had an accrual of $41.9 million representing management's best estimate
for future environmental remediation costs and had recorded $14.9 million as
management's best estimate for recoveries from state underground storage tank
remediation funds. Such accruals are reviewed on a regular basis and any
revisions thereto will be reflected in the Company's financial statements as
they become known.
Selling, general and administrative expenses for the quarter ended July
31, 1997 amounted to $3.9 million as compared with $6.8 million for the quarter
ended July 31, 1996. After excluding $5.4 million of selling, general and
administrative expenses of Marketing for the quarter ended July 31, 1996,
selling, general and administrative expenses increased by $2.5 million
primarily due to $1.9 million of expense relating to stock options resulting
from appreciation of the Company's stock price.
Depreciation and amortization was $2.4 million for the quarter ended July
31, 1997 as compared with $5.7 million for the quarter ended July 31, 1996.
After excluding $3.4 million of depreciation and amortization of Marketing for
the quarter ended July 31, 1996, depreciation and amortization increased by $.1
million over the prior quarterly period as a result of additions to property
and equipment.
Interest expense for the three months ended July 31, 1997 amounted to $1.3
million as compared with $1.8 million for the quarter ended July 31, 1996.
After excluding $.1 million of interest expense of Marketing for the quarter
ended July 31, 1996, the decrease in interest expense of $.4 million was
principally due to reduced capitalized lease obligations and debt outstanding
during the quarter ended July 31, 1997.
-9-
<PAGE> 12
Results of Operations - Six months ended July 31, 1997 compared
with six months ended July 31, 1996
Revenues from rental property for the six months ended July 31, 1997
principally represent rental income from Marketing ($28.5 million) with the
remainder from other lessees and sublessees. Revenues from rental property for
the six months ended July 31, 1996 principally represented rental income from
Marketing's dealers prior to the spin-off.
Net sales for the six months ended July 31, 1997 were $13.6 million,
all of which were attributable to the Company's retained heating oil business,
as compared with $423.8 million during the same period last year, which were
attributable to both the heating oil business and Marketing business. After
excluding $408.5 million of net sales of the Marketing business for the six
months ended July 31, 1996, the prior year's net sales for the retained heating
oil business amounted to $15.3 million. The decrease in net sales of $1.7
million was due to a decrease in gallonage sold during the six months ended
July 31 1997, due to warmer weather, and lower sales prices, in comparison to
the six months ended July 31, 1996. Gross profit for the retained heating oil
business was $1.2 million for each of the six month periods ended July 31, 1997
and 1996. Lower gallonage sales were offset by higher margins during the
current period.
Other income was $1.9 million for the six months ended July 31, 1997 as
compared with $2.6 million for the six months ended July 31, 1996. After
excluding $.1 million of other income of Marketing for the six months ended
July 31, 1996, other income amounted to $2.5 million. The decrease in other
income of $.6 million was principally due to $.5 milion of lower gains on
dispositions of asset sales and $.4 million of lower investment income, offset
by $.3 million of expenses incurred in the six months ended July 31, 1996
related to the spin-off.
Rental property expenses, which are comprised of rent expense and real
estate taxes, were $6.9 million for the six months ended July 31, 1997 as
compared with $10.7 million for the six months ended July 31, 1996. After
excluding $4.3 million of real estate taxes payable by Marketing during the six
months ended July 31, 1996, rental property expenses increased $.5 million over
the prior year's comparable period.
Environmental and maintenance expenses for the six months ended July 31,
1997 were $3.6 million as compared with $10.7 million for the six months ended
July 31, 1996. After excluding $4.0 million of Marketing expenses for the six
months ended July 31, 1996 (principally maintenance), the decrease in
environmental and maintenance expense during the current six month period
amounted to $3.1 million. The current period charge is principally due to a
revision to the Company's estimate of future remediation costs.
Selling, general and administrative expenses for the six months ended July
31, 1997 amounted to $7.2 million as compared with $13.1 million for the six
months ended July 31, 1996. After excluding $10.3 million of selling, general
and administrative expenses of Marketing for the six months ended July 31,
1996, selling, general and administrative expenses increased by $4.4 million
primarily due to $3.7 million of expense relating to stock options resulting
from appreciation of the Company's stock price.
-10-
<PAGE> 13
The Company recorded a change of control charge for the six months ended
July 31, 1997 of $2.2 million relating to certain "change of control"
agreements related to the spin-off.
The Company recorded a litigation charge of $7.6 million during the six
months ended July 31, 1996 related to a judgment against Slattery Associates,
Inc., a former construction company subsidiary, which the Company sold in 1989.
During the quarter ended October 31, 1996, the Company reversed into income
$1.8 million of this charge as a result of the settlement of this matter.
Depreciation and amortization was $4.8 million for the six months ended
July 31, 1997 as compared with $11.4 million for the six months ended July 31,
1996. After excluding $6.7 million of depreciation and amortization of
Marketing for the six months ended July 31, 1996, depreciation and amortization
increased by $.1 million over the prior period as a result of additions to
property and equipment.
Interest expense for the six months ended July 31, 1997 amounted to $2.7
million as compared with $3.6 million for the six months ended July 31, 1996.
After excluding $.2 million of interest expense of Marketing for the six months
ended July 31, 1996, the decrease in interest expense of $.7 million was
principally due to reduced capitalized lease obligations and debt outstanding
during the six months ended July 31, 1997.
Liquidity and Capital Resources
The Company's principal sources of liquidity are cash flows from
operations and its short-term unsecured 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 its credit lines. As of July 31, 1997, such lines of credit
amounted to $25 million, of which $7.6 million was 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, a
rate tied to the bank's cost of funds or LIBOR plus 1.0% or 1.1%. Each
uncommitted line of credit is subject to renewal at the discretion of each
bank. 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 certain of its capital expenditures and property acquisitions,
which capital sources it believes are available.
During the six months ended July 31, 1997 and 1996, respectively, the
Company paid quarterly cash dividends in the amount of $.03 per share.
The Company's capital expenditures for the six months ended July 31,
1997 amounted to $5.2 million, which included $3.7 million for the replacement
of underground storage tanks and vapor recovery facilities at gasoline stations
and terminals. Capital expenditures with respect to tank replacements required
to meet 1998 federal environmental standards and certain environmental
liabilities and obligations continue to be the responsibility of the Company
after the spin-off. As of July 31, 1997, the Company estimates that in
connection therewith, it will expend approximately $17 million in capital
expenditures and $27 million, net of estimated recoveries, for environmental
liabilities and obligations.
-11-
<PAGE> 14
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
Reports on Form 8-K:
None
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 REALTY CORP.
------------------
(Registrant)
Dated: September 11, 1997 BY: /s/ John J. Fitteron
---------------------
(Signature)
JOHN J. FITTERON
Senior Vice President, Treasurer
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
Dated: September 11, 1997 BY: /s/ Leo Liebowitz
---------------------
(Signature)
LEO LIEBOWITZ
President (Chief Executive
Officer)
-12-
<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
JULY 31, 1997 AND FOR THE SIX MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> JUL-31-1997
<CASH> 8,443
<SECURITIES> 0
<RECEIVABLES> 2,079
<ALLOWANCES> 222
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 202,649
<DEPRECIATION> 104,826
<TOTAL-ASSETS> 156,375
<CURRENT-LIABILITIES> 0
<BONDS> 36,193
0
0
<COMMON> 1,414
<OTHER-SE> 56,424
<TOTAL-LIABILITY-AND-EQUITY> 156,375
<SALES> 13,644
<TOTAL-REVENUES> 45,415
<CGS> 12,418
<TOTAL-COSTS> 27,677
<OTHER-EXPENSES> 2,166
<LOSS-PROVISION> 33
<INTEREST-EXPENSE> 2,689
<INCOME-PRETAX> 8,584
<INCOME-TAX> 3,427
<INCOME-CONTINUING> 5,157
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,157
<EPS-PRIMARY> .40
<EPS-DILUTED> .40
</TABLE>
