1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended JANUARY 31, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 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) Registrant's telephone number, including area code: 516-338-2600 Securities registered pursuant to Section 12 (b) of the Act: Name of each exchange on Title of each class which registered Common Stock, $.01 par value New York Stock Exchange Series A Participating Convertible Redeemable Preferred Stock, $.01 par value New York Stock Exchange Securities registered pursuant to Section 12 (g) of the Act: None (Title of Class) Indicate by check mark whether 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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] The aggregate market value of the voting stock held by nonaffiliates (7,929,034 shares of common stock and 1,514,219 shares of preferred stock) of the Company was $221,035,417 as of April 22, 1998. The registrant had outstanding 13,564,873 shares of common stock and 2,888,799 shares of preferred stock as of April 22, 1998. DOCUMENTS INCORPORATED BY REFERENCE <TABLE> <CAPTION> Document Part of Form 10-K -------- ----------------- <S> <C> Annual Report to Stockholders for the fiscal year ended January 31, 1998 (the "Annual Report")(pages 9 through 28). II Definitive Proxy Statement for the 1998 Annual Meeting of Stockholders (the "Proxy Statement") which will be filed by the registrant on or prior to 120 days following the end of the registrant's fiscal year ended January 31, 1998 pursuant to Regulation 14A. III </TABLE>
2 PART I Item 1. Business General Prior to the spin-off of its petroleum marketing business on March 21, 1997 (as described below), Getty Realty Corp., known prior to March 31, 1997 as Getty Petroleum Corp., (hereinafter, together with its subsidiaries, called "Getty" or the "Company") was one of the nation's largest independent marketers of petroleum products. Prior to the spin-off, the Company served retail and wholesale customers through a distribution and marketing network of Getty(R) and other branded retail outlets (also referred to as service stations) located in 12 Northeastern and Middle-Atlantic states. The Company purchased gasoline, fuel oil and related petroleum products from a number of Northeast suppliers. These products were delivered by cargo ship, barge, pipeline and truck to the Company's distribution terminals and bulk plants located in the Company's marketing region for distribution and sale throughout the 12 state region. The Company also sold on a wholesale basis gasoline, fuel oil, diesel fuel and kerosene from distribution terminals and bulk plants in truckload and barge quantities and sold fuel oil, kerosene and propane to residential, commercial and governmental customers in Maryland, Pennsylvania and upstate New York. On March 21, 1997, the Company effected the spin-off (the "spin-off") of its petroleum marketing business to its stockholders, and stockholders of record on that date received a tax-free dividend of one share of common stock of Marketing (as defined below) for each share of common stock of the Company. The Company retained its real estate assets 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"), and the Company is now principally engaged in the ownership, leasing and management of real estate. The Company also retained the Pennsylvania and Maryland home heating oil business. 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. For additional information regarding the spin-off, see Note 2 to the accompanying consolidated financial statements. The Company and its predecessors had been in the petroleum marketing business for over 40 years. Mr. Leo Liebowitz, President and Chief Executive Officer and a director of the Company, and Mr. Milton Safenowitz, a director and former Executive Vice President of the Company, founded the business in 1955 with one service station and pursued a strategy of expanding the business principally through acquisitions. By 1985, the Company had expanded into five states under various brand names, principally Power Test(R). On February 1, 1985, the Company acquired the marketing and distribution assets of Getty Oil Company in the Northeastern and Middle-Atlantic states from a subsidiary of Texaco Inc. The Getty acquisition added service stations, distribution terminals and a wholesale heating oil and middle distillate marketing network in six additional states. From 1985 until the time of the spin-off, the Company's operations expanded to a marketing region encompassing 12 Northeastern and Middle-Atlantic states through additional acquisitions of numerous small regional distributors, 2
3 service stations and convenience food stores. Reorganization On January 30, 1998, the Company was reorganized as a Maryland corporation pursuant to an Agreement and Plan of Reorganization and Merger dated as of December 16, 1997. See Item 4. "Submission of Matters to a Vote of Security Holders" below and the Joint Proxy Statement/Prospectus of Getty Realty Corp. and Power Test Investors Limited Partnership filed as part of the Company's Registration Statement on Form S-4 dated January 12, 1998 (Registration No. 333-44065). Also on January 30, 1998, Getty Realty Corp., a Delaware corporation, changed its name to Getty Properties Corp. and became a wholly-owned subsidiary of the Company. As used herein, the Company means Getty Realty Corp., a Maryland corporation, and with respect to periods prior to January 30, 1998, it means Getty Realty Corp., a Delaware corporation (also referred to as "Old Getty"). In connection with the transaction, stockholders of Old Getty received one share of common stock of the Company for each share of Old Getty's common stock tendered for exchange. The Company's common stock is listed on the New York Stock Exchange. Merger with Power Test Investors Limited Partnership and Issuance of Preferred Stock Also on January 30, 1998, the Company merged with Power Test Investors Limited Partnership (the "Partnership"), as a result of which the Company acquired fee title to 295 properties which Old Getty had previously leased from the Partnership. See Item 2. "Properties" below. In connection with the transaction, 2,888,799 shares of Series A Participating Convertible Redeemable Preferred Stock, ($.01 par value), ("Preferred Stock") of the Company were issued to the former limited partnership unitholders of the Partnership and to CLS General Partnership Corp., the Partnership's general partner. On February 11, 1998, the Preferred Stock commenced trading on the New York Stock Exchange. Operating Strategy As a result of the spin-off, the Company is now an independent real estate company which will utilize its skills and knowledge of the petroleum industry to make acquisitions and enter into lease transactions nationwide. The Company intends to specialize in the ownership of properties in the petroleum industry since it has substantial knowledge and expertise in this industry. The Company has divided the United States into five regions, each to be managed by experienced regional real estate directors with acquisition responsibility, reporting to the national real estate director. The acquisition program includes acquiring properties outright, acquiring properties and leasing them back to the existing operators, building to suit for qualified operators and providing financial resources to qualified operators for expansion. In addition to the acquisition of the Partnership's 295 properties, the Company also acquired 15 individual fee properties during the year ended January 31, 1998. 3
4 Real Estate Business Effective February 1, 1997, the Company and Marketing entered into a Master Lease Agreement (the "Master Lease") under which, as of January 31, 1998, 1,024 service station and convenience store properties and 10 distribution terminals and bulk plants are leased or subleased by the Company as the lessor to Marketing as the lessee. The initial term of the Master Lease is 15 years, with four ten-year renewal options (or with respect to leased properties, such shorter period as the underlying lease may provide). The Master Lease is a "triple-net" lease, so Marketing is responsible for the cost of all taxes, maintenance, repairs, insurance and other operating expenses. Rent for each of the properties was set using the then fair market value of each such property, assuming the properties were free of certain environmental conditions for which the Company is responsible. The Company received net lease payments from Marketing aggregating approximately $57 million (of the $59.6 million total revenues from rental properties) for the fiscal year ended January 31, 1998 and is therefore materially dependent upon the ability of Marketing to meet its obligations under the Master Lease with the Company. Marketing's financial results depend largely on retail marketing margins and rental income from its dealers. The petroleum marketing industry has been and continues to be volatile and highly competitive; however, the Company does not anticipate that Marketing will have difficulty making all required rental payments for the foreseeable future. As of January 31, 1998, the Company had additional properties not under the Master Lease, most of which are leased for non-petroleum use, for which there are 153 tenants. The Company also had 32 properties being held for disposition. Heating Oil Business During the year ended January 31, 1998, the Company's retained heating oil business in Pennsylvania and Maryland sold heating oil, propane (LPG) and related services directly to approximately 19,100 retail and commercial customers. Regulation The Company is subject to numerous federal, state and local laws and regulations. The costs related to compliance with those laws and regulations have not had and are not expected to have a material adverse effect on the competitive or financial position of the Company, although such costs may have a significant impact on the Company's results of operations or liquidity for any single fiscal year or interim period. The Company's operations have been governed by numerous federal, state and local environmental laws and regulations. These laws have included (i) requirements to report to governmental authorities discharges of petroleum products into the environment and, under certain circumstances, to remediate the soil and/or groundwater contamination pursuant to 4
5 governmental order and directive, (ii) requirements to remove and replace underground storage tanks which have exceeded governmental-mandated age limitations and (iii) the requirement to provide a certificate of financial responsibility with respect to claims relating to underground storage tank failures. Environmental expenses have been attributable to remediation, monitoring, soil disposal and governmental agency reporting (collectively, "Remediation Costs") incurred in connection with contaminated sites and the replacement or upgrading of underground storage tanks, related piping, underground pumps, wiring and monitoring devices (collectively, "USTs") to meet federal, state and local environmental standards, as well as routine monitoring and tank testing. Under the Master Lease, the Company committed to a program to bring scheduled leased properties to regulatory closure and, thereafter, transfer all environmental risks from the Company to Marketing. In order to establish the Remediation Costs obligation and estimate the incremental cost of accelerated remediation, the Company in fiscal 1997 commissioned a detailed property-by-property environmental study of all retail outlets, with the objective of achieving closure in approximately five years. As a result, the Company revised its estimate of future Remediation Costs in the fourth quarter of fiscal 1997 and recorded a pre-tax charge in such quarter for Remediation Costs of $21.2 million. The pre-tax charge resulted from the acceleration of remediation activities to be paid by the Company through more aggressive means of treating contaminated sites to bring them to closure in approximately five years, which resulted in significant incremental Remediation Costs, changes in estimated Remediation Costs at previously identified properties, including costs to be incurred in connection with UST upgrades, and additional charges to comply with AICPA Statement of Position 96-1, "Environmental Remediation Liabilities". The Company believes that it is in substantial compliance with federal, state and local provisions enacted or adopted pertaining to environmental matters. Although the Company is unable to predict what legislation or regulations may be adopted in the future with respect to environmental protection and waste disposal, existing legislation and regulations have had no material adverse effect on its competitive position. See "Item 3. Legal Proceedings". Personnel As of January 31, 1998, the Company had 154 employees, of which 79 employees, consisting of truck drivers and service technicians at its heating oil business, were represented by Amalgamated Local Union 355. The Company considers its relationships with its employees and the union to be satisfactory. 5
6 Item 2. Properties The properties owned in fee or leased by the Company for each of the five fiscal years ended January 31, 1998 are as follows: <TABLE> <CAPTION> January 31, -------------------------------------------------------------------------- 1998 1997 1996 1995 1994 ---- ---- ---- ---- ---- <S> <C> <C> <C> <C> <C> Owned 736 441 439 444 457 Leased 404 732 734 752 772 ----- --- ----- ----- ----- Total 1,140 1,173 1,173 1,196 1,229 ===== ===== ===== ===== ===== </TABLE> The following table sets forth certain information regarding lease expirations for the properties: <TABLE> <CAPTION> Fiscal Year Number of Leases Expiring(a) Percent of Total - ----------- ------------------------- ---------------- <S> <C> <C> 1999 46 11.4% 2000 43 10.6% 2001 55 13.6% 2002 59 14.6% 2003 55 13.6% Thereafter 146 36.2% --- ----- 404 100.0% === ====== </TABLE> - ---------- (a) The lease expiration schedule does not include lease extension options. On January 30, 1998, the Company merged with the Partnership, a publicly traded real estate limited partnership, in a transaction accounted for as a purchase. As a result of the transaction, the Company acquired 295 fee properties, consisting of 290 service station and convenience store properties and five terminals, which were previously leased by the Partnership to the Company. Prior to the merger, the Partnership was managed by the then general partner, CLS General Partnership Corp. ("CLS"). The directors and stockholders of CLS are also directors and the principal stockholders of the Company. As a result of the merger, CLS received 28,890 shares of Preferred Stock of the Company in consideration for its general and limited partnership interest in the Partnership and its general partnership interest in Power Test Realty Company Limited Partnership. See "Merger with Power Test Investors Limited Partnership and Issuance of Preferred Stock" above. During the fiscal years ended January 31, 1998, 1997 and 1996, the Company made net lease payments to the Partnership of $10,032,000, $10,061,000 and $10,553,000, respectively. In addition, during the fiscal years ended January 31, 1998, 1997 and 1996, the Company billed the Partnership and reflected in other income $672,000, $672,000 and $648,000, respectively, for administrative and other services rendered to the Partnership. 6
7 As of January 31, 1998, the Company also owned in fee 15 distribution terminals and bulk plants and leased 3 distribution terminals and bulk plants (on a long-term net lease basis) located in New York, New Jersey, Rhode Island, Pennsylvania, Connecticut and Maryland. The terminals and bulk plants owned or leased by the Company have an aggregate storage capacity of approximately 59 million gallons. The terminals located in East Providence (Rhode Island) and Rensselaer (New York) are deep-water terminals, capable of handling large vessels. Some of the Company's terminals have excess capacity and land that could be developed or adapted to handle products, such as residual fuel, jet fuel and lube blending. Ten of the distribution terminals and bulk plants are leased or sub-leased to Marketing with the remaining eight bulk plants utilized in the Company's retained heating oil business. As of January 31, 1998, the Company leases approximately 30,500 square feet of office space at 125 Jericho Turnpike, Jericho, New York, where it currently maintains its corporate headquarters, most of which has been subleased to Marketing. The Company believes that substantially all of its owned and leased properties are in good condition. For a description of the Company's lease arrangements with Marketing after the spin-off, see discussion above under the caption "Real Estate Business". Item 3. Legal Proceedings (a) Information in response to this item is incorporated herein by reference from Notes 5 and 12 of the Notes to Consolidated Financial Statements set forth on pages 22 and 23, and page 27, respectively, of the Annual Report. The Company's legal proceedings have been appropriately reserved for in the Company's consolidated financial statements. In 1986, the State of New York brought an action against the Company which was filed in New York State Supreme Court in Albany County for an alleged underground discharge of petroleum products at a service station. The State is seeking reimbursement in the amount of $179,000 for cleanup costs, plus interest and a penalty of $10,000 for the alleged discharge. On March 23, 1998, the insurance carrier, who had been defending the Company under a reservation of rights, advised the Company that it will continue to defend the Company but will not indemnify it. In 1991, the State of New York brought an action in the New York State Supreme Court in Albany County against one of the Company's former subsidiaries seeking reimbursement in the amount of $189,000 for cleanup costs incurred at a service station. The State is also seeking penalties of $200,000 and interest. There has been no activity in this proceeding in the past several years. In 1992, the State of New York asserted a claim for reimbursement of cleanup costs against the Company and another petroleum company, in the amount of $121,000, together with statutory penalties of $100,000, pertaining to an alleged spill at a service station in 1984. In 1996, the 7
8 State of New York brought an action in the New York State Supreme Court in Albany County against the Company and the other petroleum company seeking cleanup costs of $209,000, together with interest and penalties of $200,000. In 1993, the State of New York asserted a claim against the Company for cleanup costs incurred at a service station and for statutory penalties. In 1994, an action was filed in New York State Supreme Court in Albany County to recover $522,000 for cleanup costs and unspecified penalties and interest. In 1994, a subsidiary of the Company was served with an Amended Complaint naming the Company's subsidiary as one of many defendants in the Keystone Superfund case pending in the U.S. District Court for the Middle District of Pennsylvania, pertaining to the subsidiary's miscellaneous office refuse and used furnace air and oil filters which were disposed of at the site. In 1995, another subsidiary of the Company was brought into the same action pertaining to convenience store refuse. In August 1997, the Company and its subsidiaries paid into escrow $40,000 in full settlement. The settlement, which has been approved by the U. S. EPA, has not yet been approved by the Court. In December 1995, Pennsauken Solid Waste Management Authority, its successor-in-interest, the Pollution Control Financing Authority of Camden County and the Township of Pennsauken, New Jersey commenced an action for unspecified amounts against certain defendants for all costs and damages incurred for the remediation of the Pennsauken Sanitary Landfill. In November 1996, one of the defendants filed a third party complaint in the Superior Court of New Jersey, Camden County, against its former customers, including a former construction company subsidiary of the Company, seeking indemnification from the third party defendants for all costs it incurred or will incur in response to the release of hazardous substances in the landfill plus attorneys' fees. The Company believes that the exposure is not material inasmuch as the quantities of construction fill deposited at the waste site were small. In 1996, the State of New York asserted three separate claims against the Company for reimbursement of cleanup costs incurred at service stations in the amount of (i) $291,000, plus statutory penalties of $150,000, (ii) $112,000, plus interest and (iii) $463,000, plus interest. On April 1, 1998, the State of New York asserted a claim against a former subsidiary of the Company for reimbursement in the amount of $185,000 for cleanup costs that were incurred at a heating oil customer's home in 1991. Item 4. Submission of Matters to a Vote of Security Holders On January 30, 1998, a Special Meeting of Stockholders was held to vote on proposals to approve and adopt (i) an Agreement and Plan of Reorganization and Merger, dated as of December 16, 1997, by and between Getty Realty Corp., a Delaware corporation, Power Test Investors Limited Partnership, a New York limited partnership and CLS General Partnership Corp., a Delaware corporation, and (ii) the Company's 1998 Stock Option Plan. Both of the 8
9 aforementioned proposals were approved and adopted by the Company with the following votes: <TABLE> <CAPTION> Proposal (i): Proposal (ii): - ------------- -------------- <S> <C> <C> <C> For 10,874,949 For 9,852,123 Against 55,106 Against 1,008,074 Abstain 2,822 Abstain 72,680 </TABLE> See "Reorganization". Executive Officers of Registrant The following table lists the executive officers of the Company as of January 31, 1998, their respective ages, the offices and positions held with the Company and the year in which each was elected an officer of the Company or its predecessor. <TABLE> <CAPTION> Name Age Position Officer Since ---- --- -------- ------------- <S> <C> <C> <C> Leo Liebowitz 70 President and Chief Executive Officer 1971 John J. Fitteron 56 Senior Vice President, Treasurer and Chief Financial Officer 1986 </TABLE> Mr. Liebowitz has been President and Chief Executive Officer and a director of the Company or its predecessor since 1971. He is also the Chairman, Chief Executive Officer and a director of Marketing. He is also a director of the Regional Banking Advisory Board of Chase Banking Corp. Mr. Fitteron joined the Company's predecessor in 1986 as Senior Vice President and Chief Financial Officer and assumed the additional position of Treasurer in 1994. Prior to joining Getty, he was a Senior Vice President at Beker Industries Corp., a chemical and natural resource company. Management is not aware of any family relationships between the foregoing executive officers. 9
10 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters Information in response to this item is incorporated herein by reference from material under the heading "Capital Stock" on page 28 of the Annual Report. Item 6. Selected Financial Data Information in response to this item is incorporated herein by reference from material under the heading "Selected Financial Data" on page 9 of the Annual Report. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Information in response to this item is incorporated herein by reference from material under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 10 through 13 of the Annual Report. Item 8. Financial Statements and Supplementary Data Information in response to this item is incorporated herein by reference from the financial information set forth on pages 14 through 28 of the Annual Report. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. 10
11 PART III Item 10. Directors and Executive Officers of the Registrant Information with respect to directors in response to this item is incorporated herein by reference from material under the headings "Election of Directors" and "Compliance with Section 16(a) of the Securities Exchange Act of 1934" on pages 2 and 5, and page 18, respectively, of the Proxy Statement. Information regarding executive officers is included in Part I hereof. Item 11. Executive Compensation Information in response to this item is incorporated herein by reference from material under the headings "Directors' Meetings, Committees and Executive Officers" and "Compensation" through, and including the material under the heading, "Compensation Committee Interlocks and Insider Participation" on pages 6 through 9 of the Proxy Statement. Item 12. Security Ownership of Certain Beneficial Owners and Management Information in response to this item is incorporated herein by reference from material under the heading "Beneficial Ownership of Capital Stock" on pages 3 and 4 of the Proxy Statement. Item 13. Certain Relationships and Related Transactions Information in response to this item is incorporated herein by reference from material under the heading "Certain Transactions" on pages 11 and 12 of the Proxy Statement. 11
12 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) 1. Financial statements The financial statements listed in the Index to Financial Statements and Financial Statement Schedules on page 13 are filed as part of this annual report. 2. Financial statement schedule The financial statement schedule listed in the Index to Financial Statements and Financial Statement Schedules on page 13 is filed as part of this annual report. 3. Exhibits The exhibits listed in the Exhibit Index on pages 16 through 22 are filed as part of this annual report. 4. Reports on Form 8-K Old Getty and the Partnership each filed Current Reports on Form 8-K dated December 17, 1997 reporting under Item 5, Other Events, that on December 16, 1997, Old Getty, the Partnership and CLS General Partnership Corp., a Delaware corporation and the general partner of the Partnership, entered into an Agreement and Plan of Reorganization and Merger. The registrant also filed on February 9, 1998, a Current Report on Form 8-K dated January 30, 1998 reporting under Item 5, Other Events, that the transactions contemplated by the Agreement and Plan of Reorganization and Merger had been consummated. 12
13 GETTY REALTY CORP. INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES COVERED BY REPORT OF INDEPENDENT ACCOUNTANTS Items 14(a) 1 & 2 <TABLE> <CAPTION> Reference --------------------------- Form 10-K 1998 Annual (pages) Report (pages) --------------------------- <S> <C> <C> Data incorporated by reference from attached 1998 Annual Report to Stockholders of Getty Realty Corp.: Report of Independent Accountants 28 Consolidated Statements of Operations for the years ended January 31, 1998, 1997 and 1996 14 Consolidated Balance Sheets as of January 31, 1998 and 1997 15 Consolidated Statements of Cash Flows for the years ended January 31, 1998, 1997 and 1996 16 Notes to Consolidated Financial Statements 17-27 Report of Independent Accountants - Supplemental Schedule 14 Schedule II - Valuation and Qualifying Accounts and Reserves for the years ended January 31, 1998, 1997 and 1996 15 </TABLE> All other schedules are omitted for the reason that they are either not required, not applicable, not material or the information is included in the consolidated financial statements or notes thereto. The financial statements listed in the above index which are included in the 1998 Annual Report to Stockholders are hereby incorporated by reference. With the exception of the pages listed in the above index and the information incorporated by reference included in Part II, Items 5, 6, 7 and 8, the 1998 Annual Report to Stockholders is not deemed filed as part of this report. 13
14 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of Getty Realty Corp.: Our report on the consolidated financial statements of Getty Realty Corp. and Subsidiaries has been incorporated by reference in this Form 10-K from page 28 of the 1998 Annual Report to Stockholders of Getty Realty Corp. and Subsidiaries. In connection with our audits of such financial statements, we have also audited the related financial statement schedule listed in the index on page 13 of this Form 10-K. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein. Coopers & Lybrand L.L.P. New York, New York March 12, 1998 14
15 GETTY REALTY CORP. and SUBSIDIARIES SCHEDULE II - VALUATION and QUALIFYING ACCOUNTS and RESERVES for the years ended January 31, 1998, 1997 and 1996 (in thousands) <TABLE> <CAPTION> Balance at Balance at beginning end of of period Additions Deductions period --------- --------- ---------- ------ <S> <C> <C> <C> <C> 1998: Allowance for doubtful accounts* $1,369 $ 68 $1,266(a) $ 171 ====== ==== ====== ====== 1997: Allowance for doubtful accounts* $1,409 $485 $ 525 $1,369 ====== ==== ====== ====== 1996: Allowance for doubtful accounts* $1,509 $561 $ 661 $1,409 ====== ==== ====== ====== </TABLE> *Relates to accounts receivable. (a) Includes $1,185 transferred to Marketing in connection with the spin-off. 15
16 EXHIBIT INDEX GETTY REALTY CORP. Annual Report on Form 10-K for the fiscal year ended January 31, 1998 <TABLE> <CAPTION> Exhibit No. Description --- ----------- <S> <C> <C> 1.1 Agreement and Plan of Reorganization Filed as Exhibit 2.1 to registrant's and Merger, dated as of December 16, Registration Statement on Form S-4, 1997 (the "Merger Agreement") by and filed on January 12, 1998 (File No. among Getty Realty Corp., Power Test 333-44065), included as Appendix A to Investors Limited Partnership and CLS the Joint Proxy Statement/Prospectus General Partnership Corp. that is a part thereof, and incorporated herein by reference. 3.1 Articles of Incorporation of Getty Realty Filed as Exhibit 3.1 to registrant's Holding Corp. ("Holdings"), now known as Registration Statement on Form S-4, filed on Getty Realty Corp., filed December 23, 1997. January 12, 1998 (File No. 333- 44065), included as Appendix D to the Joint Proxy Statement/Prospectus that is a part thereof, and incorporated herein by reference. 3.2 Articles Supplementary to Articles of * Incorporation of Holdings, filed January 21, 1998. 3.3 By-Laws of Holdings. Filed as Exhibit 3.2 to registrant's Registration Statement on Form S-4, filed on January 12, 1998 (File No. 333- 44065), included as Appendix F to the Joint Proxy Statement/Prospectus that is a part thereof, and incorporated herein by reference. 3.4 Articles of Amendment of Holdings, * changing its name to Getty Realty Corp., filed January 30, 1998. 4.1 $35,000,000 reducing revolving Loan Filed as Exhibit 4.7 to the Quarterly Report Agreement between Leemilt's Petroleum, Inc. on Form 10-Q for the quarter ended October and Bank of New England, N.A. dated as of 31, 1987 (File No. 1- 8059) of Getty December 7, 1987, and related Guaranty Petroleum Corp., and incorporated herein by Agreement, dated as of December 7, 1987, by reference. and between Getty Petroleum Corp. (now known as Getty </TABLE> 16
17 <TABLE> <S> <C> Properties Corp.) and Bank of New England, N.A. 4.2 Amended and Restated Loan Agreement between Filed as Exhibit 4.8 to the Annual Report on Leemilt's Petroleum, Inc. and Fleet Bank of Form 10-K for the fiscal year ended January Massachusetts, N.A., as successor to Bank of 31, 1996 (File No. 1- 8059) of Getty New England, N.A., dated as of October 31, Petroleum Corp. and incorporated herein by 1995 (the "Leemilt's Loan"). reference. 4.3 First Amendment to Amended and Restated Loan * Agreement between Leemilt's Petroleum, Inc. and Fleet National Bank (formerly known as Fleet Bank of Massachusetts, N.A.) dated as of April 18, 1997. 4.4 Second Amendment to Amended and Restated * Loan Agreement between Leemilt's Petroleum, Inc. and Fleet National Bank dated as of January 30, 1998. 4.5 Amended and Restated Loan Agreement between Filed as Exhibit 10.27 to Power Test Power Test Realty Company Limited Investors Limited Partnership's ("PT Partnership ("PT Realty") and Fleet Bank of Investors") Annual Report on Form 10- K for Massachusetts, N.A. dated as of October 31, the fiscal year ended December 31, 1995 1995 (the "PT Realty Loan"). (File No. 0-14557) and incorporated herein by reference. 4.6 First Amendment to Amended and Restated Loan * Agreement between PT Realty and Fleet National Bank dated as of April 18, 1997. 4.7 Second Amendment to Amended and Restated * Loan Agreement between PT Realty and Fleet National Bank dated as of </TABLE> 17
18 <TABLE> <S> <C> <C> January 30, 1998. 10.1 Retirement and Profit Sharing Plan (amended Filed as Exhibit 10.2(b) to registrant's and restated as of September 19, 1996), Annual Report on Form 10-K for the fiscal adopted by the registrant on December 16, year ended January 31, 1998 (File No. 1997. 1-8059) and incorporated herein by reference. 10.2 1998 Stock Option Plan, effective as of Filed as Exhibit 10.1 to registrant's January 30, 1998. Registration Statement on Form S-4, filed on January 12, 1998 (File No. 333- 44065), included as Appendix H to the Joint Proxy Statement/Prospectus that is a part thereof, and incorporated herein by reference. 10.3 Asset Purchase Agreement among Power Test Filed as Exhibit 2(a) to the Current Report Corp. (now known as Getty Properties Corp.), on Form 8-K of Power Test Corp., filed Texaco Inc., Getty Oil Company and Getty February 19, 1985 (File No. 1-8059) and Refining and Marketing Company, dated as of incorporated herein by reference. December 21, 1984. 10.4 Trademark License Agreement among Power Test Filed as Exhibit 2(b) to the Current Report Corp., Texaco Inc., Getty Oil Company and on Form 8-K of Power Test Corp., filed February 19, Getty Refining and Marketing Company, dated 1985 (File No. 1-8059) and incorporated herein as of February 1, 1985. by reference. 10.5 Three Party Lease Agreement among Getty * Realty Corp. (now known as Getty Properties Corp.), Leemilt's Petroleum, Inc. and Fleet National Bank dated as of April 18, 1997, amending and restating the Lease dated February 1, 1985 between Leemilt's Petroleum, Inc., as lessor, and Getty Petroleum Corp. (now known as Getty Properties Corp.), as lessee. </TABLE> 18
19 <TABLE> <S> <C> <C> 10.6 Amendment to Three Party Lease Agreement * among Getty Properties Corp., Leemilt's Petroleum, Inc. and Fleet National Bank dated as of January 30, 1998. 10.7 Amended and Restated Hazardous Waste and Filed as Exhibit 10.17 to the Annual Report PMPA Indemnification Agreement, dated as of on Form 10-K for the fiscal year ended October 31, 1995, among Getty Petroleum January 31, 1996 (File No. 1- 8059) of Getty Corp.(now known as Getty Properties Corp.), Petroleum Corp. and incorporated herein by Power Test Realty Company Limited reference. Partnership and Fleet Bank of Massachusetts, N.A. 10.8 Affirmation and Acknowledgement of Amended * and Restated Hazardous Waste and PMPA Indemnification Agreement, between Getty Realty Corp. and Fleet National Bank dated as of April 18, 1997. 10.9 Second Affirmation and Acknowledgement of * Amended and Restated Hazardous Waste and PMPA Indemnification Agreement between the registrant and Fleet National Bank, dated as of January 30, 1998. 10.10 Amended and Restated Guaranty Agreement, * dated as of October 27, 1995, between Getty Petroleum Corp. and Fleet Bank of Massachusetts, N.A. pertaining to the Leemilt's Loan. 10.11 Affirmation and * </TABLE> 19
20 <TABLE> <S> <C> <C> Acknowledgment of Amended and Restated Guaranty Agreement between Getty Realty Corp. and Fleet National Bank, dated as of April 18, 1997, pertaining to the Leemilt's Loan. 10.12 Guaranty Agreement between the registrant * and Fleet National Bank, dated as of January 30, 1998, pertaining to the Leemilt's Loan. 10.13 Guaranty Agreement between the registrant * and Fleet National Bank, dated as of January 30, 1998, pertaining to the PT Realty Loan. 10.14 Guaranty Agreement between Getty Properties * Corp. and Fleet National Bank dated as of January 30, 1998, pertaining to the PT Realty Loan. 10.15 Form of Indemnification Agreement between * the registrant and its directors. 10.16 Supplemental Retirement Plan for Executives Filed as Exhibit 10.22 to the Annual Report of the registrant (then known as Getty on Form 10-K for the fiscal year ended Petroleum Corp.) and Participating January 31, 1990 (File No. 1- 8059) of Getty Subsidiaries (adopted by the registrant on Petroleum Corp. and incorporated herein by December 16, 1997). reference. 10.17 Form of Agreement dated December 9, 1994 Filed as Exhibit 10.23 to the Annual Report between Getty Petroleum Corp. and its non- on Form 10-K for the fiscal year ended director officers and certain key employees January 31, 1995 (File No. 1- 8059) of Getty regarding compensation upon change in Petroleum Corp. and incorporated herein by control. reference. </TABLE> 20
21 <TABLE> <S> <C> <C> 10.18 Form of Agreement dated as of March 7, 1996 Filed as Exhibit 10.27 to the Annual amending Agreement dated as of December 9, Report on Form 10-K for the fiscal year 1994 between Getty Petroleum Corp. (now ended January 31, 1996 (File No. 1- 8059) of known as Getty Properties Corp.) and its Getty Petroleum Corp. and incorporated non-director officers and certain key herein by reference. employees regarding compensation upon change in control (See Exhibit 10.17). 10.19 Form of letter from Getty Petroleum Corp. * dated April 8, 1997, confirming that a change of control event had occurred pursuant to the change of control agreements. (See Exhibits 10.17 and 10.18). 10.20 Form of Agreement dated March 9, 1998, from * the registrant to certain officers and key employees, adopting the prior change of control agreements, as amended, and further amending those agreements. (See Exhibits 10.17, 10.18 and 10.19). 10.21 Form of Master Lease Agreement dated Filed as Exhibit 10.28 to the Annual Report February 1, 1997 between Getty Petroleum on Form 10-K for the fiscal year ended Corp. (now known as Getty Properties Corp.) January 31, 1997 (File No. 1- 8059) of Getty and Getty Petroleum Marketing Inc. Petroleum Corp. and incorporated herein by reference. 10.22 Form of Reorganization and Distribution Filed as Exhibit 10.29 to the Annual Report Agreement between Getty Petroleum Corp. (now on Form 10-K for the fiscal year ended known as Getty Properties Corp.) and Getty January 31, 1997 (File No. 1-8059) of Getty Petroleum Marketing Inc. dated as of Petroleum Corp. and incorporated herein by February 1, 1997. reference. 10.23 Form of Trademark License Filed as Exhibit 10.30 to the Annual </TABLE> 21
22 <TABLE> <S> <C> <C> Agreement between Getty Petroleum Corp. (now Report on Form 10-K for the fiscal year known as Getty Properties Corp.) and Getty ended January 31, 1997 (File No. 1- 8059) of Petroleum Marketing Inc. Getty Petroleum Corp. and incorporated herein by reference. 10.24 Form of Services Agreement dated as of Filed as Exhibit 10.31 to the Annual Report February 1, 1997 between Getty Petroleum on Form 10-K for the fiscal year ended Corp. (now known as Getty Properties Corp.) January 31, 1997 (File No. 1- 8059) of Getty and Getty Petroleum Marketing Inc. Petroleum Corp. and incorporated herein by reference. 10.25 Form of Tax Sharing Agreement between Getty Filed as Exhibit 10.32 to the Annual Report Petroleum Corp. (now known as Getty on Form 10-K for the fiscal year ended Properties Corp.) and Getty Petroleum January 31, 1997 (File No. 1- 8059) of Getty Marketing Inc. Petroleum Corp. and incorporated herein by reference. 10.26 Form of Stock Option Reformation Agreement Filed as Exhibit 10.33 to the Annual Report made and entered into as of March 21, 1997 on Form 10-K for the fiscal year ended by and between Getty Petroleum Corp. (now January 31, 1997 (File No. 1- 8059) of Getty known as Getty Properties Corp.) and Getty Petroleum Corp. and incorporated herein by Petroleum Marketing Inc. reference. 13 Annual Report to Stockholders for the fiscal * year ended January 31, 1998. 22 Subsidiaries of the registrant. * 24 Consent of Independent Accountants. * 27 Financial Data Schedule. * </TABLE> - ----------------------- *Filed herewith 22
23 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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) By /s/ John J. Fitteron ------------------------------ John J. Fitteron, Senior Vice President, Treasurer and Chief Financial Officer April 30, 1998 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. By /s/ Leo Liebowitz By /s/ John J. Fitteron ------------------------------ ------------------------------ Leo Liebowitz, President, John J. Fitteron, Chief Executive Officer Senior Vice President, and Director Treasurer and Chief Financial April 30, 1998 Officer (Principal Financial and Accounting Officer) April 30, 1998 By /s/ Milton Cooper By /s/ Philip E. Coviello ------------------------------ ------------------------------ Milton Cooper, Philip E. Coviello, Director Director April 30, 1998 April 30, 1998 By /s/ Milton Safenowitz By /s/ Warren G. Wintrub ------------------------------ ------------------------------ Milton Safenowitz, Warren G. Wintrub, Director Director April 30, 1998 April 30, 1998 23