##### 



EXHIBIT 13
GETTY REALTY CORP. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(in thousands, except per share amounts and number of properties)
 FOR THE YEARS ENDED DECEMBER 31,2007 (a)
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003OPERATING DATA:Revenues from rental properties
    
    $
    78,462
    
    
    $
    71,904
    
    
    $
    70,881
    
    
    $
    65,850
    
    
    $
    66,144Earnings before income taxes and discontinued operations
    
    
    28,103
    (e)
    
    
    41,620
    
    
    
    43,573
    
    
    
    38,996
    
    
    
    36,656Income tax benefit
    
    
    
    
    
    
    700
    (b)
    
    
    1,494
    (b)
    
    
    
    
    
    
    Earnings from continuing operations
    
    
    28,103
    
    
    
    42,320
    
    
    
    45,067
    
    
    
    38,996
    
    
    
    36,656Earnings from discontinued operations
    
    
    5,791
    
    
    
    405
    
    
    
    381
    
    
    
    356
    
    
    
    231Net earnings
    
    
    33,894
    
    
    
    42,725
    
    
    
    45,448
    
    
    
    39,352
    
    
    
    36,887Diluted earnings per common share:Earnings from continuing operations
    
    
    1.13
    
    
    
    1.71
    
    
    
    1.82
    
    
    
    1.59
    
    
    
    1.48
    (c)Net earnings
    
    
    1.37
    
    
    
    1.73
    
    
    
    1.84
    
    
    
    1.59
    
    
    
    1.49
    (c)Diluted weighted-average common shares outstanding
    
    
    24,787
    
    
    
    24,759
    
    
    
    24,729
    
    
    
    24,721
    
    
    
    23,082Cash dividends declared per share:Common
    
    
    1.850
    
    
    
    1.820
    
    
    
    1.760
    
    
    
    1.700
    
    
    
    1.675Preferred
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.159
    (d)FUNDS FROM OPERATIONS (e)(f):Net earnings
    
    
    33,894
    
    
    
    42,725
    
    
    
    45,448
    
    
    
    39,352
    
    
    
    36,887Preferred stock dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,538
    )Net earnings applicable to common shareholders
    
    
    33,894
    
    
    
    42,725
    
    
    
    45,448
    
    
    
    39,352
    
    
    
    34,349Depreciation and amortization of real estate assets
    
    
    9,794
    
    
    
    7,883
    
    
    
    8,113
    
    
    
    7,490
    
    
    
    8,411Gains on dispositions of real estate
    
    
    (6,179
    )
    
    
    (1,581
    )
    
    
    (1,309
    )
    
    
    (618
    )
    
    
    (928
    )Cumulative effect of accounting change
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    550
    (g)Funds from operations available to common shareholders
    
    
    37,509
    
    
    
    49,027
    
    
    
    52,252
    
    
    
    46,224
    
    
    
    42,382Deferred rental revenue, net of allowance (straight-line rent)
    
    
    7,382
    
    
    
    (3,010
    )
    
    
    (4,170
    )
    
    
    (4,464
    )
    
    
    (5,537
    )Amortization of above-market and below-market leases
    
    
    (1,047
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income tax benefit
    
    
    
    
    
    
    (700
    ) (b)
    
    
    (1,494
    ) (b)
    
    
    --
    
    
    
    Adjusted Funds From Operations available to common
shareholders
    
    
    43,844
    
    
    
    45,317
    
    
    
    46,588
    
    
    
    41,760
    
    
    
    36,845
  5




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##### 



GETTY REALTY CORP. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(in thousands, except per share amounts and number of properties)


FOR THE YEARS ENDED DECEMBER 31,2007 (a)
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003BALANCE SHEET DATA (AT END OF YEAR):Real estate before accumulated depreciation and amortization
    
    $
    474,254
    
    
    $
    383,558
    
    
    $
    370,495
    
    
    $
    346,590
    
    
    $
    318,222Total assets
    
    
    396,911
    
    
    
    310,922
    
    
    
    301,468
    
    
    
    292,088
    
    
    
    273,596Debt
    
    
    132,500
    
    
    
    45,194
    
    
    
    34,224
    
    
    
    24,509
    
    
    
    844Shareholders equity
    
    
    212,178
    
    
    
    225,575
    
    
    
    227,883
    
    
    
    225,503
    
    
    
    228,025NUMBER OF PROPERTIES:Owned
    
    
    880
    
    
    
    836
    
    
    
    814
    
    
    
    795
    
    
    
    772Leased
    
    
    203
    
    
    
    216
    
    
    
    241
    
    
    
    250
    
    
    
    256Total properties
    
    
    1,083
    
    
    
    1,052
    
    
    
    1,055
    
    
    
    1,045
    
    
    
    1,028
 
 (a)
    
    Includes (from the date of the acquisition) the effect of the $84.6 million acquisition of
convenience stores and gas station properties from FF-TSY Holding Company II LLC (successor to
Trustreet Properties, Inc.) which was substantially completed by the end of the first quarter
of 2007.(b)
    
    The years ended 2006 and 2005 include income tax benefits recognized due to the elimination
of, or reduction in, amounts accrued for uncertain tax positions related to being taxed as a
C-corp. prior to our election to be treated as a REIT under the federal income tax laws in
2001. Income taxes have not had a significant impact on our earnings since we first elected to
be treated as a REIT.(c)
    
    Diluted earnings per common share of $1.51 before the impact of the cumulative effect of
accounting change (see note (f) below).(d)
    
    In August 2003, we called for redemption of our outstanding preferred stock. Prior to the
September 24, 2003 redemption date, shareholders with 98% of the preferred stock exercised
their right to convert their shares of preferred stock into 3.2 million shares of common
stock. The remaining shares of outstanding preferred stock were redeemed for an aggregate
amount of $1.2 million.(e)
    
    Includes the effect of a $10.5 million non-cash reserve for the full amount of the deferred
rent receivable recorded as of December 31, 2007 related to approximately 40% of the
properties under leases with our primary tenant, Getty Petroleum Marketing, Inc. (See recent
developments related to Marketing and the Marketing Leases in Recent Developments above for
additional information.)(f)
    
    In addition to measurements defined by generally accepted accounting principles (GAAP), our
management also focuses on funds from operations available to common shareholders (FFO) and
adjusted funds from operations available to common shareholders (AFFO) to measure our
performance. FFO is generally considered to be an appropriate supplemental non-GAAP measure of
the performance of real estate investment trusts (REITs). FFO is defined by the National
Association of Real Estate Investment Trusts as net earnings before depreciation and
amortization of real estate assets, gains or losses on dispositions of real estate, (including
such non-FFO items reported in discontinued operations), extraordinary items, and cumulative
effect of accounting change. Other REITs may use definitions of FFO and/or AFFO that are
different than ours and; accordingly, may not be comparable.
We believe that FFO is helpful to investors in measuring our performance because FFO excludes
various items included in GAAP net earnings that do not relate to, or are not indicative of, our
fundamental operating performance such as gains or losses from property dispositions and
depreciation and amortization of real estate assets. In our case, however, GAAP net earnings and
FFO include the significant impact of deferred rental revenue (straight-line rental revenue) and
the net amortization of above-market and below-market leases on our recognition of revenue from
rental properties, as offset by the impact of related collection reserves. Deferred rental
revenue results primarily from fixed rental increases scheduled under certain leases with our
tenants. In accordance with GAAP, the aggregate minimum rent due over the current term of these
leases is recognized on a straight-line basis rather than when the payment is due. The present
value of the difference between the fair market rent and the contractual rent for in-place leases
at the time properties are acquired is amortized into revenue from rental properties over the
remaining lives of the in-place leases. GAAP net earnings and FFO also include income tax
benefits recognized due to the elimination of, or reduction in, amounts accrued for uncertain tax
positions related to being taxed as a C-corp. rather than as a REIT prior to 2001 (see note (b)
above). As a result, management pays particular attention to AFFO, a supplemental non-GAAP
performance measure that we define as FFO less straight-line rental revenue, net amortization of
above-market and below-market leases and income tax benefit. In managements view, AFFO provides
a more accurate depiction than FFO of the impact of the scheduled rent increases under these
leases, rental revenue from acquired in-place leases and our election to be treated as a REIT
under the federal income tax laws beginning in 2001. Neither FFO nor AFFO represent cash
generated from operating activities calculated in accordance with generally accepted accounting
principles and therefore should not be considered an alternative for GAAP net earnings or as a
measure of liquidity.(g)
    
    In June 2001, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. (SFAS) 143, Accounting for Asset Retirement Obligations. SFAS 143
requires that legal obligations associated with the retirement of tangible long-lived assets
be recognized at their fair value if the asset retirements obligations results from the normal
operation of those assets and a reasonable estimate of fair value can be made. Due to the
adoption of SFAS 143 effective January 1, 2003, accrued environmental remediation costs and
recoveries from state underground storage tank funds were adjusted to their estimated fair
value resulting in a one-time cumulative effect of change in accounting charge of $550,000. 6




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##### 



GETTY REALTY CORP. AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS
of Financial Condition and Results of Operations
 The following discussion and analysis should be read in conjunction with Selected Financial
Data on page 5 and 6, the consolidated financial statements and related notes and the forward-looking
disclaimer language included elsewhere in this Annual Report to Shareholders.
 RECENT DEVELOPMENTS
    ®
 7




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##### 



8




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##### 



GENERAL
 Real Estate Investment Trust
  Retail Petroleum Marketing Business
   9




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##### 



Unresolved Staff Comments
  ®
 Supplemental Non-GAAP Measures
   10




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##### 



Non-adjusted
    
    
    Reserve
    
    
    As AdjustedNet earnings
    
    $
    33,894
    
    
    $
    10,494
    
    
    $
    44,388Earnings from continuing operations
    
    
    28,103
    
    
    
    10,494
    
    
    
    38,597Funds from operations
    
    
    37,509
    
    
    
    10,494
    
    
    
    48,003
 2006 and 2007 Acquisitions
   RESULTS OF OPERATIONS
 Year ended December 31, 2007 compared to year ended December 31, 2006
  11




---



##### 



12




---



##### 



Year ended December 31, 2006 compared to year ended December 31, 2005
         13




---



##### 



LIQUIDITY AND CAPITAL RESOURCES
   14




---



##### 



CONTRACTUAL OBLIGATIONS
  15




---



##### 





MORELESS
    
    
    ONE TO
    
    
    THREE TO
    
    
    THANTHAN ONE
    
    
    THREE
    
    
    FIVE
    
    
    FIVETOTAL
    
    
    YEAR
    
    
    YEARS
    
    
    YEARS
    
    
    YEARSOperating leases
    
    $
    29,373
    
    
    $
    8,034
    
    
    $
    11,329
    
    
    $
    5,563
    
    
    $
    4,447Borrowing under the Credit Agreement (a)
    
    
    132,500
    
    
    
    
    
    
    
    132,500
    
    
    
    
    
    
    
    Estimated environmental remediation expenditures (b)
    
    
    18,523
    
    
    
    7,113
    
    
    
    6,987
    
    
    
    2,453
    
    
    
    1,970Estimated recoveries from state underground storage tank funds (b)
    
    
    (4,652
    )
    
    
    (1,228
    )
    
    
    (1,859
    )
    
    
    (1,047
    )
    
    
    (518
    )Estimated net environmental remediation expenditures (b)
    
    
    13,871
    
    
    
    5,885
    
    
    
    5,128
    
    
    
    1,406
    
    
    
    1,452Total
    
    $
    175,744
    
    
    $
    13,919
    
    
    $
    148,957
    
    
    $
    6,969
    
    
    $
    5,899
 
 (a)
    
    Excludes related interest payments. See Liquidity and Capital Resources above and
Disclosures About Market Risk below.(b)
    
    Estimated environmental remediation expenditures and estimated recoveries from state UST
funds have been adjusted for inflation and discounted to present value.   CRITICAL ACCOUNTING POLICIES AND ESTIMATES
     16




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##### 



17




---



##### 



ENVIRONMENTAL MATTERS
      18




---



##### 



19




---



##### 



DISCLOSURES ABOUT MARKET RISK
    20




---



##### 



FORWARD-LOOKING STATEMENTS
  21




---



##### 



22




---



##### 



23




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##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
     
 24




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##### 



GETTY REALTY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
 YEAR ENDED DECEMBER 31,2007
    
    
    2006
    
    
    2005Revenues from rental properties
    
    $
    78,462
    
    
    $
    71,904
    
    
    $
    70,881Operating expenses:Rental property expenses
    
    
    9,356
    
    
    
    9,684
    
    
    
    11,723Environmental expenses, net
    
    
    8,247
    
    
    
    5,476
    
    
    
    2,398General and administrative expenses
    
    
    6,669
    
    
    
    5,607
    
    
    
    4,925Allowance for deferred rent receivable
    
    
    10,494
    
    
    
    
    
    
    
    Depreciation and amortization expense
    
    
    9,756
    
    
    
    7,849
    
    
    
    8,075Total expenses
    
    
    44,522
    
    
    
    28,616
    
    
    
    27,121Operating income
    
    
    33,940
    
    
    
    43,288
    
    
    
    43,760Other income, net
    
    
    1,923
    
    
    
    1,859
    
    
    
    1,578Interest expense
    
    
    (7,760
    )
    
    
    (3,527
    )
    
    
    (1,765
    )Earnings before income taxes and discontinued operations
    
    
    28,103
    
    
    
    41,620
    
    
    
    43,573Income tax benefit
    
    
    
    
    
    
    700
    
    
    
    1,494Earnings from continuing operations
    
    
    28,103
    
    
    
    42,320
    
    
    
    45,067Discontinued operations:Earnings from operating activities
    
    
    1,226
    
    
    
    405
    
    
    
    381Gains on dispositions of real estate
    
    
    4,565
    
    
    
    
    
    
    
    Earnings from discontinued operations
    
    
    5,791
    
    
    
    405
    
    
    
    381Net earnings
    
    $
    33,894
    
    
    $
    42,725
    
    
    $
    45,448Basic earnings per common share:Earnings from continuing operations
    
    $
    1.13
    
    
    $
    1.71
    
    
    $
    1.82Earnings from discontinued operations
    
    $
    .23
    
    
    $
    .02
    
    
    $
    .02Net earnings
    
    $
    1.37
    
    
    $
    1.73
    
    
    $
    1.84Diluted earnings per common share:Earnings from continuing operations
    
    $
    1.13
    
    
    $
    1.71
    
    
    $
    1.82Earnings from discontinued operations
    
    $
    .23
    
    
    $
    .02
    
    
    $
    .02Net earnings
    
    $
    1.37
    
    
    $
    1.73
    
    
    $
    1.84Weighted-average shares outstanding:Basic
    
    
    24,765
    
    
    
    24,735
    
    
    
    24,711Stock options and restricted stock units
    
    
    22
    
    
    
    24
    
    
    
    18Diluted
    
    
    24,787
    
    
    
    24,759
    
    
    
    24,729Dividends declared per share
    
    $
    1.85
    
    
    $
    1.82
    
    
    $
    1.76
 
 
 GETTY REALTY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
 YEAR ENDED DECEMBER 31,2007
    
    
    2006
    
    
    2005Net earnings
    
    $
    33,894
    
    
    $
    42,725
    
    
    $
    45,448Other comprehensive loss:Net unrealized loss on interest rate swap
    
    
    (1,478
    )
    
    
    (821
    )
    
    
    Comprehensive Income
    
    $
    32,416
    
    
    $
    41,904
    
    
    $
    45,448
 25




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##### 



GETTY REALTY CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
 DECEMBER 31,2007
    
    
    2006ASSETS:Real Estate:Land
    
    $
    222,194
    
    
    $
    180,409Buildings and improvements
    
    
    252,060
    
    
    
    203,149474,254
    
    
    
    383,558Less  accumulated depreciation and amortization
    
    
    (122,465
    )
    
    
    (116,089
    )Real estate, net
    
    
    351,789
    
    
    
    267,469Deferred
rent receivable (net of allowance of $10,494 at December 31, 2007)
    
    
    24,915
    
    
    
    32,297Cash and cash equivalents
    
    
    2,071
    
    
    
    1,195Recoveries from state underground storage tank funds, net
    
    
    4,652
    
    
    
    3,845Mortgages and accounts receivable, net
    
    
    1,473
    
    
    
    1,784Prepaid expenses and other assets
    
    
    12,011
    
    
    
    4,332Total assets
    
    $
    396,911
    
    
    $
    310,922LIABILITIES AND SHAREHOLDERS EQUITY:Debt
    
    $
    132,500
    
    
    $
    45,194Environmental remediation costs
    
    
    18,523
    
    
    
    17,201Dividends payable
    
    
    11,534
    
    
    
    11,284Accounts payable and accrued expenses
    
    
    22,176
    
    
    
    11,668Total liabilities
    
    
    184,733
    
    
    
    85,347Commitments
and contingencies (notes 2, 3, 5 and 6)
Shareholders equity:Common stock, par value $.01 per share; authorized 50,000,000 shares; issued
24,765,065 at December 31, 2007 and 24,764,765 at December 31, 2006
    
    
    248
    
    
    
    248Paid-in capital
    
    
    258,734
    
    
    
    258,647Dividends paid in excess of earnings
    
    
    (44,505
    )
    
    
    (32,499
    )Accumulated other comprehensive loss
    
    
    (2,299
    )
    
    
    (821
    )Total shareholders equity
    
    
    212,178
    
    
    
    225,575Total liabilities and shareholders equity
    
    $
    396,911
    
    
    $
    310,922
  26




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##### 



GETTY REALTY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 YEAR ENDED DECEMBER 31,2007
    
    
    2006
    
    
    2005CASH FLOWS FROM OPERATING ACTIVITIES:Net earnings
    
    $
    33,894
    
    
    $
    42,725
    
    
    $
    45,448Adjustments to reconcile net earnings to net cash flow provided by operating activities:Depreciation and amortization expense
    
    
    9,794
    
    
    
    7,883
    
    
    
    8,113Gain on dispositions of real estate
    
    
    (6,179
    )
    
    
    (1,581
    )
    
    
    (1,309
    )Deferred rental revenue, net of allowance
    
    
    (3,112
    )
    
    
    (3,010
    )
    
    
    (4,170
    )Allowance for Deferred Rent Receivable
    
    
    10,494
    
    
    
    
    
    
    
    Amortization of above-market and below-market leases
    
    
    (1,047
    )
    
    
    
    
    
    
    Accretion expense
    
    
    974
    
    
    
    923
    
    
    
    925Stock-based employee compensation expense
    
    
    492
    
    
    
    186
    
    
    
    134Changes in assets and liabilities:Recoveries from state underground storage tank funds, net
    
    
    (379
    )
    
    
    772
    
    
    
    1,557Mortgages and accounts receivable, net
    
    
    44
    
    
    
    (172
    )
    
    
    (132
    )Prepaid expenses and other assets
    
    
    (130
    )
    
    
    170
    
    
    
    (1,100
    )Environmental remediation costs
    
    
    (80
    )
    
    
    (1,425
    )
    
    
    (4,585
    )Accounts payable and accrued expenses
    
    
    (249
    )
    
    
    545
    
    
    
    1,541Accrued income taxes
    
    
    
    
    
    
    (700
    )
    
    
    (1,494
    )Net cash flow provided by operating activities
    
    
    44,516
    
    
    
    46,316
    
    
    
    44,928CASH FLOWS FROM INVESTING ACTIVITIES:Property acquisitions and capital expenditures
    
    
    (90,636
    )
    
    
    (15,538
    )
    
    
    (29,573
    )Proceeds from dispositions of real estate
    
    
    8,420
    
    
    
    2,462
    
    
    
    2,201(Increase) decrease in cash held for property acquisitions
    
    
    (2,079
    )
    
    
    (465
    )
    
    
    629Collection of mortgages receivable, net
    
    
    267
    
    
    
    326
    
    
    
    335Net cash flow used in investing activities
    
    
    (84,028
    )
    
    
    (13,215
    )
    
    
    (26,408
    )CASH FLOWS FROM FINANCING ACTIVITIES:Borrowings under credit agreement, net
    
    
    87,500
    
    
    
    11,000
    
    
    
    10,000Cash dividends paid
    
    
    (45,650
    )
    
    
    (44,819
    )
    
    
    (43,025
    )Credit agreement origination costs
    
    
    (863
    )
    
    
    
    
    
    
    Cash paid in settlement of restricted stock units
    
    
    (405
    )
    
    
    
    
    
    
    Repayment of mortgages payable, net
    
    
    (194
    )
    
    
    (30
    )
    
    
    (285
    )Proceeds from exercise of stock options
    
    
    
    
    
    
    696
    
    
    
    337Net cash flow provided by (used in) financing activities
    
    
    40,388
    
    
    
    (33,153
    )
    
    
    (32,973
    )Net increase
(decrease) in cash and cash equivalents
    
    
    876
    
    
    
    (52
    )
    
    
    (14,453
    )Cash and cash equivalents at beginning of year
    
    
    1,195
    
    
    
    1,247
    
    
    
    15,700Cash and cash equivalents at end of year
    
    $
    2,071
    
    
    $
    1,195
    
    
    $
    1,247Supplemental
disclosures of cash flow information
Cash paid (refunded) during the year for:Interest
    
    $
    7,021
    
    
    $
    2,638
    
    
    $
    1,464Income taxes, net
    
    
    488
    
    
    
    576
    
    
    
    582Recoveries from state underground storage tank funds
    
    
    (1,644
    )
    
    
    (2,128
    )
    
    
    (2,304
    )Environmental remediation costs
    
    
    6,314
    
    
    
    5,132
    
    
    
    5,822
  27




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##### 



GETTY REALTY CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
         28




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29




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2. LEASES
     30




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##### 



OTHERYEAR ENDING DECEMBER 31,
    
    MARKETING
    
    
    TENANTS
    
    
    TOTAL (a)2008
    
    $
    60,473
    
    
    $
    17,523
    
    
    $
    77,9962009
    
    
    60,570
    
    
    
    17,497
    
    
    
    78,0672010
    
    
    60,658
    
    
    
    17,337
    
    
    
    77,9952011
    
    
    60,790
    
    
    
    17,379
    
    
    
    78,1692012
    
    
    61,120
    
    
    
    17,165
    
    
    
    78,285Thereafter
    
    
    181,050
    
    
    
    130,869
    
    
    
    311,919
 
 (a)
    
    Includes $95,991 of future minimum annual rentals receivable under subleases.   3. COMMITMENTS AND CONTINGENCIES
     31




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®
   32




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33




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##### 



4. CREDIT AGREEMENT
   34




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##### 



5. ENVIRONMENTAL EXPENSES
   35




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36




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##### 



6. INCOME TAXES
    37




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##### 



7. SHAREHOLDERS EQUITY
  DIVIDENDS
    
    
    ACCUMULATEDPAID
    
    
    OTHERCOMMON STOCK
    
    
    PAID-IN
    
    
    IN EXCESS
    
    
    COMPREHENSIVESHARES
    
    
    AMOUNT
    
    
    CAPITAL
    
    
    OF EARNINGS
    
    
    LOSS
    
    
    TOTALBALANCE, DECEMBER 31, 2004
    
    
    24,694
    
    
    $
    247
    
    
    $
    257,295
    
    
    $
    (32,039
    )
    
    $
    
    
    
    $
    225,503Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,448
    
    
    
    
    
    
    
    45,448Dividends  $1.76 per common share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (43,539
    )
    
    
    
    
    
    
    (43,539
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    134
    
    
    
    
    
    
    
    
    
    
    
    134Stock options exercised
    
    
    23
    
    
    
    
    
    
    
    337
    
    
    
    
    
    
    
    
    
    
    
    337BALANCE, DECEMBER 31, 2005
    
    
    24,717
    
    
    
    247
    
    
    
    257,766
    
    
    
    (30,130
    )
    
    
    
    
    
    
    227,883Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42,725
    
    
    
    
    
    
    
    42,725Dividends  $1.82 per common share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (45,094
    )
    
    
    
    
    
    
    (45,094
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    186
    
    
    
    
    
    
    
    
    
    
    
    186Net unrealized loss on
interest rate swap
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (821
    )
    
    
    (821
    )Stock options exercised
    
    
    48
    
    
    
    1
    
    
    
    695
    
    
    
    
    
    
    
    
    
    
    
    696BALANCE, DECEMBER 31, 2006
    
    
    24,765
    
    
    
    248
    
    
    
    258,647
    
    
    
    (32,499
    )
    
    
    (821
    )
    
    
    225,575Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,894
    
    
    
    
    
    
    
    33,894Dividends  $1.85 per common share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (45,900
    )
    
    
    
    
    
    
    (45,900
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    87
    
    
    
    
    
    
    
    
    
    
    
    87Net unrealized loss on
interest rate swap
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,478
    )
    
    
    (1,478
    )BALANCE, DECEMBER 31, 2007
    
    
    24,765
    
    
    $
    248
    
    
    $
    258,734
    
    
    $
    (44,505)
    (a)
    
    $
    (2,299
    )
    
    $
    212,178
 (a)
    
    Net of $103,803 transferred from retained earnings to common stock and paid-in capital as a
result of accumulated stock dividends.
  8. SEVERANCE AGREEMENT AND EMPLOYEE BENEFIT PLANS
    38




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39




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YEAR ENDED DECEMBER 31,2007
    
    
    2006
    
    
    2005WEIGHTED-WEIGHTED-
    
    
    AVERAGE
    
    
    AGGREGATE
    
    
    
    
    
    
    WEIGHTED-
    
    
    
    
    
    
    WEIGHTED-AVERAGE
    
    
    REMAINING
    
    
    INTRINSIC
    
    
    
    
    
    
    AVERAGE
    
    
    
    
    
    
    AVERAGENUMBER
    
    
    EXERCISE
    
    
    CONTRACTUAL
    
    
    VALUE
    
    
    NUMBER
    
    
    EXERCISE
    
    
    NUMBER
    
    
    EXERCISEOF SHARES
    
    
    PRICE
    
    
    TERM
    
    
    (IN THOUSANDS)
    
    
    OF SHARES
    
    
    PRICE
    
    
    OF SHARES
    
    
    PRICEOutstanding at
beginning of year
    
    
    12,750
    
    
    $
    18.00
    
    
    
    
    
    
    
    
    
    
    
    84,378
    
    
    $
    19.48
    
    
    
    110,549
    
    
    $
    18.64Issued
    
    
    5,000
    
    
    
    27.68
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised (a)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (71,628
    )
    
    
    19.74
    
    
    
    (23,374
    )
    
    
    15.50Cancelled
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,797
    )
    
    
    19.94Outstanding at end
of year
    
    
    17,750
    
    
    $
    20.73
    
    
    
    6.3
    
    
    $
    111
    
    
    
    12,750
    
    
    $
    18.00
    
    
    
    84,378
    
    
    $
    19.48Exercisable at end
of year (b)
    
    
    12,750
    
    
    $
    18.00
    
    
    
    4.9
    
    
    $
    111
    
    
    
    12,750
    
    
    $
    18.00
    
    
    
    69,503
    
    
    $
    19.73
 (a)
    
    The total intrinsic value of the options exercised during the years ended December 31, 2006
and 2005 was $704,000 and $276,000, respectively.
 (b)
    
    No options vested during the year ended December 31, 2007, 29,375 options vested in 2005 and
14,875 options vested in 2006.
 9. QUARTERLY FINANCIAL DATA
  THREE MONTHS ENDED
    
    YEAR ENDEDYEAR ENDED DECEMBER 31, 2007 (a)
    
    MARCH 31,
    
    JUNE 30,
    
    SEPTEMBER 30,
    
    DECEMBER 31,
    
    DECEMBER 31,Revenues from rental properties
    
    $
    17,870
    
    
    $
    20,405
    
    
    $
    20,135
    
    
    $
    20,052
    
    
    $
    78,462Earnings (loss) from continuing operations (b)(c)
    
    
    10,326
    
    
    
    8,552
    
    
    
    9,983
    
    
    
    (758
    )
    
    
    28,103Net earnings (b)(c)
    
    
    10,437
    
    
    
    10,024
    
    
    
    12,846
    
    
    
    587
    
    
    
    33,894Diluted earnings (loss) per common share:Earnings (loss) from continuing operations (b)(c)
    
    
    .42
    
    
    
    .35
    
    
    
    .40
    
    
    
    (.03
    )
    
    
    1.13Net earnings (b)(c)
    
    
    .42
    
    
    
    .40
    
    
    
    .52
    
    
    
    .02
    
    
    
    1.37
 THREE MONTHS ENDED
    
    
    YEAR ENDEDYEAR ENDED DECEMBER 31, 2006
    
    MARCH 31,
    
    
    JUNE 30,
    
    
    SEPTEMBER 30,
    
    
    DECEMBER 31,
    
    
    DECEMBER 31,Revenues from rental properties
    
    $
    17,943
    
    
    $
    18,055
    
    
    $
    17,975
    
    
    $
    17,931
    
    
    $
    71,904Earnings from continuing operations
    
    
    10,441
    
    
    
    11,002
    
    
    
    11,201
    
    
    
    9,676
    
    
    
    42,320Net earnings
    
    
    10,531
    
    
    
    11,112
    
    
    
    11,276
    
    
    
    9,806
    
    
    
    42,725Diluted earnings per common share:Earnings from continuing operations
    
    
    .42
    
    
    
    .44
    
    
    
    .45
    
    
    
    .39
    
    
    
    1.71Net earnings
    
    
    .43
    
    
    
    .45
    
    
    
    .46
    
    
    
    .40
    
    
    
    1.73
 (a)
    
    Includes (from the date of the acquisition) the effect of the $84.6 million acquisition of
convenience stores and gas station properties from FF-TSY Holding Company II LLC (successor to
Trustreet Properties, Inc.) which was substantially completed by the end of the first quarter
of 2007 (see footnote 10).
 (b)
    
    The quarter ended December 31, 2007 includes the effect of a $10.5 million non-cash reserve
for the full amount of the deferred rent receivable recorded as of December 31, 2007 related
to approximately 40% of the properties under leases with Marketing, (see footnote 3).
 (c)
    
    The quarter ended December 31, 2007 includes a net expense of $447,000 related to Mr. Andy
Smiths resignation (see footnote 8).
 10. PROPERTY ACQUISITIONS
   40




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##### 



2007
    
    
    2006Revenues from rental properties
    
    $
    81,344
    
    
    $
    81,724Net earnings
    
    $
    34,348
    
    
    $
    43,900Net earnings per shareBasic
    
    $
    1.39
    
    
    $
    1.77Diluted
    
    $
    1.39
    
    
    $
    1.77
  41




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MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
   42




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##### 



CAPITAL STOCK, STOCK PERFORMANCE GRAPH AND CERTIFICATIONS
 CAPITAL STOCK
  CASHPRICE RANGE
    
    
    DIVIDENDSPERIOD ENDED
    
    HIGH
    
    
    LOW
    
    
    PER SHAREDecember 31, 2007
    
    $
    29.23
    
    
    $
    25.21
    
    
    $
    .4650September 30, 2007
    
    
    28.72
    
    
    
    23.80
    
    
    
    .4650June 30, 2007
    
    
    30.33
    
    
    
    26.17
    
    
    
    .4650March 31, 2007
    
    
    32.10
    
    
    
    27.80
    
    
    
    .4550December 31, 2006
    
    $
    33.85
    
    
    $
    28.84
    
    
    $
    .4550September 30, 2006
    
    
    30.43
    
    
    
    27.16
    
    
    
    .4550June 30, 2006
    
    
    29.10
    
    
    
    25.42
    
    
    
    .4550March 31, 2006
    
    
    29.99
    
    
    
    26.12
    
    
    
    .4550
  STOCK PERFORMANCE GRAPH
   
 2002
    
    
    2003
    
    
    2004
    
    
    2005
    
    
    2006
    
    
    2007Getty Realty Corp.
    
    
    
    100.00
    
    
    
    
    148.32
    
    
    
    
    173.75
    
    
    
    
    169.60
    
    
    
    
    212.14
    
    
    
    
    195.90Standard & Poors 500
    
    
    
    100.00
    
    
    
    
    126.38
    
    
    
    
    137.75
    
    
    
    
    141.88
    
    
    
    
    161.20
    
    
    
    
    166.89Old Peer Group
    
    
    
    100.00
    
    
    
    
    127.48
    
    
    
    
    157.62
    
    
    
    
    146.41
    
    
    
    
    188.69
    
    
    
    
    169.03New Peer Group
    
    
    
    100.00
    
    
    
    
    130.00
    
    
    
    
    163.24
    
    
    
    
    152.85
    
    
    
    
    201.50
    
    
    
    
    179.34
 
 43