-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VC6nKi1uaeQJcBkTFgiDPwAm/magTaEb7oDmCdBjSd6Ql2BjM2A/3A6MRtkS6/eY ggLNFwhl1z25h2vIuFoTrA== 0000920049-98-000030.txt : 19980624 0000920049-98-000030.hdr.sgml : 19980624 ACCESSION NUMBER: 0000920049-98-000030 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980430 FILED AS OF DATE: 19980611 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GETTY REALTY CORP /MD/ CENTRAL INDEX KEY: 0001052752 STANDARD INDUSTRIAL CLASSIFICATION: 5171 IRS NUMBER: 113412575 STATE OF INCORPORATION: MD FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13777 FILM NUMBER: 98646690 BUSINESS ADDRESS: STREET 1: 125 JERICHO TURNPIKE CITY: JERICHO STATE: NY ZIP: 11753 BUSINESS PHONE: 5163382600 MAIL ADDRESS: STREET 1: 125 JERICHO TURNPIKE CITY: JERICHO STATE: NY ZIP: 11753 10-Q 1 QUARTERLY REPORT ================================================================================ 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, 1998 Commission file number 001-13777 -------------- --------- GETTY REALTY CORP. (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) (516) 338 - 2600 ---------------- (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 had outstanding 13,564,873 shares of Common Stock, par value $.01 per share, and 2,888,799 shares of Series A Participating Convertible Redeemable Preferred Stock, par value $.01 per share, as of April 30, 1998. ================================================================================ GETTY REALTY CORP. INDEX Part I. FINANCIAL INFORMATION Page Number - - ------------------------------ ----------- Item 1. Financial Statements Consolidated Balance Sheets as of April 30, 1998 and January 31, 1998 1 Consolidated Statements of Operations for the three months ended April 30, 1998 and 1997 2 Consolidated Statements of Cash Flows for the three months ended April 30, 1998 and 1997 3 Notes to Consolidated Financial Statements 4 - 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 - 9 Part II. OTHER INFORMATION - - --------------------------- Item 6. Exhibits and Reports on Form 8-K 10 Signatures 10
GETTY REALTY CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share data) - - -------------------------------------------------------------------------------------------- April 30, January 31, - - -------------------------------------------------------------------------------------------- Assets: 1998 1998 - - -------------------------------------------------------------------------------------------- (unaudited) Real Estate: Land $129,317 $129,461 Buildings and improvements 165,663 162,162 -------- -------- 294,980 291,623 Less - accumulated depreciation and amortization 65,864 63,600 -------- -------- Real estate, net 229,116 228,023 Cash and equivalents 6,356 10,034 Accounts receivable, net 2,282 2,524 Mortgages receivable 6,824 6,926 Recoveries from state underground storage tank funds 14,440 15,387 Prepaid expenses and other assets 4,152 5,649 -------- --------- Total assets $263,170 $268,543 ======== ======== - - ----------------------------------------------------------------------------------------- Liabilities and Stockholders' Equity: - - ----------------------------------------------------------------------------------------- Mortgages payable $38,981 $40,526 Accounts payable and accrued expenses 18,537 21,408 Environmental remediation costs 35,284 38,297 Deferred income taxes 30,653 29,719 Income taxes payable 201 - -------- -------- Total liabilities 123,656 129,950 -------- -------- 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 2,888,799 at April 30, 1998 and January 31, 1998 72,220 72,220 Common stock, par value $.01 per share; authorized 50,000,000 shares; issued 14,448,334 at April 30, 1998 and 144 144 14,446,929 at January 31, 1998 Paid-in capital 81,030 81,000 Retained earnings (deficit) 43 (848) Treasury stock, at cost (883,461 shares at April 30, 1998 and January 31, 1998) (13,923) (13,923) -------- -------- Total stockholders' equity 139,514 138,593 -------- -------- Total liabilities and stockholders' equity $263,170 $268,543 ======== ========
See accompanying notes. -1- GETTY REALTY CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (unaudited) - - -------------------------------------------------------------------------------- Three months ended April 30, - - -------------------------------------------------------------------------------- 1998 1997 - - -------------------------------------------------------------------------------- Revenues: Revenues from rental properties $14,824 $14,946 Net sales of petroleum products 6,509 8,381 Other income 279 454 ------- ------- 21,612 23,781 Equity in earnings of Getty Petroleum Marketing Inc. - 2,931 ------- ------- 21,612 26,712 ------- ------- Cost of sales of petroleum products (excluding depreciation and amortization) 5,512 7,399 Rental property expense 3,271 3,310 Environmental and maintenance expenses 1,640 1,240 Selling, general and administrative expenses 1,964 3,344 Depreciation and amortization 2,333 2,387 Interest expense 733 1,380 Change of control charge - 2,166 ------- ------- 15,453 21,226 ------- ------- Earnings before provision for income taxes 6,159 5,486 Provision for income taxes 2,630 2,279 ------- ------- Net earnings 3,529 3,207 Preferred stock dividend 1,282 - ------- ------- Net earnings applicable to common stockholders $2,247 $3,207 ======= ======= Net earnings per common share: Basic $.17 $.25 Diluted $.17 $.25 Weighted average common shares outstanding: Basic 13,565 12,765 Diluted 13,575 13,067 See accompanying notes. -2- GETTY REALTY CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Three months ended April 30, ------------------ 1998 1997 ---- ---- Cash flows from operating activities: Net earnings $3,529 $3,207 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation and amortization 2,333 2,387 Deferred income taxes 934 (4,444) Loss (gain) on dispositions of real estate 40 (1) Change of control charge - 2,166 Equity in net earnings of Getty Petroleum Marketing Inc. - (1,731) Changes in assets and liabilities: Accounts receivable 242 86 Mortgages receivable 102 40 Recoveries from state underground storage tank funds 947 796 Prepaid expenses and other assets 1,456 24 Accounts payable and accrued expenses (2,871) 1,234 Environmental remediation costs (3,013) (2,869) Income taxes payable 201 (1,426) ------ ------- Net cash provided by (used in) operating activities 3,900 (531) ------ ------- Cash flows from investing activities: Capital expenditures (4,110) (2,138) Proceeds from dispositions of real estate 685 272 ------ ------- Net cash used in investing activities (3,425) (1,866) ------ ------- Cash flows from financing activities: Mortgage borrowings - 165 Repayment of mortgages payable (1,545) (1,119) Payments under capital lease obligations - (1,449) Cash dividends (2,638) (383) Stock options, common and treasury stock, net 30 2,284 ------ ------- Net cash used in financing activities (4,153) (502) ------ ------- Net decrease in cash and equivalents (3,678) (2,899) Cash and equivalents at beginning of period 10,034 11,385 ------ ------- Cash and equivalents at end of period $6,356 $8,486 ====== ======= Supplemental disclosures of cash flow information Cash paid during the period for: Interest $745 $1,379 Income taxes, net 293 2,425 See accompanying notes. -3- 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. and its wholly-owned subsidiaries (the "Company"). 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, 1998. 2. 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 the Pennsylvania and Maryland home heating oil business, and leased most of its properties on a long-term net basis to the spun-off company, which is named Getty Petroleum Marketing Inc. ("Marketing"). The consolidated statement of operations of the Company for the three months ended April 30, 1997 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, amounting to pre-tax income of $2.9 million ($1.7 million after-tax). -4- The financial results of the retained real estate and heating oil businesses for the quarters ended April 30, 1998 and 1997 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.
(in thousands) Quarter ended April 30, 1998 Quarter ended April 30, 1997 ---------------------------- ---------------------------- Real Heating Real Heating Estate Oil Total Estate Oil Total ------ -------- ------ ------- ------- ----- Revenues from rental properties $14,795 $ 29 $14,824 $14,819 $127 $14,946 Net sales of petroleum products - 6,509 6,509 - 8,381 8,381 Other income 257 22 279 427 27 454 ------------------------------------------------------------------ 15,052 6,560 21,612 15,246 8,535 23,781 ------------------------------------------------------------------ Cost of sales of petroleum products (excluding depreciation and amortization) - 5,512 5,512 - 7,399 7,399 Rental property expenses 3,266 5 3,271 3,263 47 3,310 Environmental and maintenance expenses 1,640 - 1,640 1,240 - 1,240 Selling, general and administrative expenses 1,448 516 1,964 2,828 516 3,344 Depreciation and amortization 2,196 137 2,333 2,260 127 2,387 Interest expense 733 - 733 1,380 - 1,380 Change of control charge - - - 2,166 - 2,166 ------------------------------------------------------------------ 9,283 6,170 15,453 13,137 8,089 21,226 ------------------------------------------------------------------ Earnings before provision for income taxes 5,769 390 6,159 2,109 446 2,555 Provision for income taxes 2,463 167 2,630 891 188 1,079 ------------------------------------------------------------------ Net earnings $ 3,306 $223 $ 3,529 $ 1,218 $258 $ 1,476 ==================================================================
3. Earnings per share: Basic earnings per share is computed by dividing net earnings less preferred dividends by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects the potential dilution from the exercise of stock options in the amounts of 10,000 shares and 302,000 shares for the quarters ended April 30, 1998 and 1997, respectively. For the quarter ended April 30, 1998, 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 antidilutive and conversion was not assumed for purposes of computing diluted earnings per common share. -5- 4. Stockholders' equity: A summary of the changes in stockholders' equity for the three months ended April 30, 1998 is as follows (in thousands):
Retained Treasury Preferred Common Paid-in Earnings Stock, Stock Stock Capital (Deficit) at cost Total - - ------------------------------------------------------------------------------------------- Balance, January 31, 1998 $72,220 $144 $81,000 ($848) ($13,923) $138,593 Net earnings 3,529 3,529 Cash dividends (2,638) (2,638) Issuance of common stock 30 30 --------------------------------------------------------------------- Balance, April 30, 1998 $72,220 $144 $ 81,030 $43 ($13,923) $139,514 =====================================================================
-6- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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 the Pennsylvania and Maryland home heating oil business, and leased most of its properties on a long-term net basis to the spun-off company, which is named Getty Petroleum Marketing Inc. ("Marketing"). The consolidated statement of operations of the Company for the three months ended April 30, 1997 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, amounting to pre-tax income of $2.9 million ($1.7 million after-tax). Results of Operations - - --------------------- Revenues from rental properties for the quarters ended April 30, 1998 and 1997 principally represent rental income from Marketing ($14.2 million and $14.3 million, respectively) with the remainder from other lessees and sublessees. Net sales of petroleum products from the Company's retained heating oil business for the first fiscal quarter ended April 30, 1998 were $6.5 million (most of which revenues occur in the first and fourth fiscal quarters), as compared with $8.4 million during the same quarter last year. The $1.9 million decrease in petroleum product sales was principally due to a 15.8% decrease in average selling prices and 7.7% of lower gallonage sold due to a warmer than normal season. Gross profit from such sales before depreciation and amortization was $1.0 million for each of the quarters ended April 30, 1998 and 1997 as higher product margins offset the lower sales volumes. Other income was $.3 million for the three months ended April 30, 1998 as compared with $.5 million for the quarter ended April 30, 1997. The decrease in other income of $.2 million was principally due to a management fee for administrative and other services paid by Power Test Investors Limited Partnership ("Partnership") during the quarter ended April 30, 1997 which was eliminated as a result of the merger of the Partnership into the Company on January 30, 1998. Rental property expense, which is comprised principally of rent expense, was $3.3 millon for each of the quarters ended April 30, 1998 and 1997. -7- Environmental and maintenance expenses for the quarter ended April 30, 1998 were $1.6 million as compared with $1.2 million for the quarter ended April 30, 1997. The current quarter included a revision to the Company's estimate of future remediation costs of $1.1 million as compared to $.8 million during the prior year quarter. As of April 30, 1998, the Company had an accrual of $35.3 million representing management's best estimate for future environmental remediation costs and had recorded $14.4 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 April 30, 1998 amounted to $2.0 million, a decrease of $1.4 million as compared with the quarter ended April 30, 1997. The decrease was primarily due to a $1.8 million charge recorded in the prior year quarter relating to stock options. Depreciation and amortization was $2.3 million for the quarter ended April 30, 1998, which was comparable to the quarter ended April 30, 1997. Interest expense for the three months ended April 30, 1998 amounted to $.7 million as compared with $1.4 million for the quarter ended April 30, 1997. The decrease in interest expense of $.7 million was principally due to the elimination of capitalized lease obligations as a result of the merger of the Partnership into the Company on January 30, 1998. During the quarter ended April 30, 1997, the Company recorded a charge of $2.2 million related to change of control agreements in connection with the spin-off. 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 April 30, 1998, such lines of credit amounted to $25 million, of which $7.4 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, 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 certain property acquisitions, which capital sources it believes are available. During the quarter ended April 30, 1998, the Company declared a quarterly cash dividend of $.10 per common share and the first quarterly dividend of $.44375 per preferred share. -8- The Company's capital expenditures for the quarter ended April 30, 1998 amounted to $4.1 million, primarily related to the replacement of underground storage tanks and vapor recovery facilities at gasoline stations. Expenditures with respect to tank replacements required to meet the December 22, 1998 federal environmental standards and certain environmental liabilities and obligations continue to be the responsibility of the Company after the spin-off. As of April 30, 1998, the Company estimates that in connection therewith, it will expend $14.2 million in capital expenditures and $20.8 million, net of estimated recoveries, for environmental liabilities and obligations, the latter of which has been fully accrued for. -9- 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 filed 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: June 11, 1998 BY: /s/ John J. Fitteron -------------------- (Signature) JOHN J. FITTERON Senior Vice President, Treasurer and Chief Financial Officer (Principal Financial and Accounting Officer) Dated: June 11, 1998 BY: /s/ Leo Liebowitz ----------------- (Signature) LEO LIEBOWITZ President (Chief Executive Officer) -10- EX-27 2 ART. 5 FDS FOR 1ST QUARTER 1998 10-Q
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF GETTY REALTY CORP. AND SUBSIDIARIES AS OF APRIL 30, 1998 AND FOR THE THREE MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS. 1,000 3-MOS JAN-31-1999 APR-30-1998 6,356 0 2,475 193 0 0 294,980 65,864 263,170 0 38,981 144 0 72,220 67,150 263,170 6,509 21,612 5,512 12,756 0 14 733 6,159 2,630 3,529 0 0 0 3,529 .17 .17
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