FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2003
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission file number 1-3647
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J.W. Mays, Inc.
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(Exact name of registrant as specified in its charter)
New York 11-1059070
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9 Bond Street, Brooklyn, New York 11201-5805
- ----------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) 718-624-7400
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Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
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 .
Number of shares outstanding of the issuer's common stock as of the latest
practicable date.
Class Outstanding at June 5, 2003
----- ---------------------------
Common Stock, $1 par value 2,015,780 shares
This report contains 19 pages.
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J. W. MAYS, INC.
INDEX
Page No.
Part I - Financial Information:
Consolidated Balance Sheet 3
Consolidated Statement of Income
and Retained Earnings 4
Consolidated Statement of Comprehensive Income 4
Consolidated Statement of Cash Flows 5
Notes to Consolidated Financial Statements 6 - 11
Management's Discussion and Analysis of Results
of Operations and Financial Condition 12 - 14
Controls and Procedures 14
Part II - Other Information 15
Signatures 16
Certifications - Chief Executive Officer 17
- Chief Financial Officer 18
Exhibits - 99(i) 19
- 99(ii) 19
- 2-
J. W. MAYS, INC.
CONSOLIDATED BALANCE SHEET
April 30, July 31,
ASSETS 2003 2002
------ ------------- -------------
(Unaudited) (Audited)
Property and Equipment - Net (Notes 6 and 8) $32,933,292 $32,367,513
------------- -------------
Current Assets:
Cash and cash equivalents 2,919,815 2,951,013
Marketable securities (Note 4) 45,035 44,653
Receivables (Note 9) 400,532 551,678
Deferred income taxes 82,000 107,000
Income taxes refundable 202,813 -
Prepaid expenses 735,565 1,431,240
Real estate taxes refundable - 82,769
Security deposits 52,841 14,745
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Total current assets 4,438,601 5,183,098
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Other Assets:
Deferred charges 2,918,455 2,858,009
Less accumulated amortization 1,959,629 1,629,773
------------- -------------
Net 958,826 1,228,236
Security deposits 722,690 701,455
Unbilled receivables (Note 9) 4,284,785 4,313,327
Receivables (Note 9) - 193,444
Marketable securities (Note 4) 3,903,193 4,278,813
------------- -------------
Total other assets 9,869,494 10,715,275
------------- -------------
TOTAL ASSETS $47,241,387 $48,265,886
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Long-Term Debt:
Mortgages payable (Note 6) $7,279,144 $7,778,871
Other (Note 7) 419,148 399,328
------------- -------------
Total long-term debt 7,698,292 8,178,199
------------- -------------
Deferred Income Taxes 3,004,000 3,093,000
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Current Liabilities:
Accounts payable 44,837 55,605
Payroll and other accrued liabilities 649,239 808,807
Income taxes payable - 747,268
Other taxes payable 6,762 3,676
Current portion of long-term debt - mortgages payable (Note 6) 662,805 712,864
Current portion of long-term debt - other (Note 7) 52,841 14,745
------------- -------------
Total current liabilities 1,416,484 2,342,965
------------- -------------
Total liabilities 12,118,776 13,614,164
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Shareholders' Equity:
Common stock, par value $1 each share (shares - 5,000,000
authorized; 2,178,297 issued) 2,178,297 2,178,297
Additional paid in capital 3,346,245 3,346,245
Unrealized gain on available for sale securities 765,570 880,810
Retained earnings 30,120,351 29,306,722
------------- -------------
36,410,463 35,712,074
Less common stock held in treasury, at cost - 162,517
shares at April 30, 2003 and 145,017 at July 31, 2002 1,287,852 1,060,352
------------- -------------
Total shareholders' equity 35,122,611 34,651,722
------------- -------------
Contingencies (Note 12)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $47,241,387 $48,265,886
============= =============
See Notes to Consolidated Financial Statements.
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J. W. MAYS, INC.
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
Three Months Ended Nine Months Ended
April 30, April 30,
--------------- ---------------- --------------- -------------
2003 2002 2003 2002
-------------- -------------- -------------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues
Rental income (Notes 5 and 9) $3,209,984 $3,163,369 $9,862,241 $9,301,241
Rental income - affiliated company (Note 9) - 122,871 69,629 329,676
-------------- -------------- -------------- -----------
Total revenues 3,209,984 3,286,240 9,931,870 9,630,917
-------------- -------------- -------------- -----------
Expenses
Real estate operating expenses 1,830,098 1,494,739 5,208,676 4,493,946
Administrative and general expenses 713,102 633,114 2,274,218 1,967,319
Bad debt (recovery) - - (163,009) -
Depreciation and amortization 296,788 288,405 886,730 850,015
-------------- -------------- -------------- -----------
Total expenses 2,839,988 2,416,258 8,206,615 7,311,280
-------------- -------------- -------------- -----------
Income from operations before investment income,
interest expense and income taxes 369,996 869,982 1,725,255 2,319,637
-------------- -------------- -------------- -----------
Investment income, interest expense and other expenses:
Loss on disposition of asset (100,172) - (100,172) -
Investment income (Note 4) 86,635 24,807 222,069 161,717
Interest expense (Notes 6 and 11) (134,438) (174,150) (414,523) (535,714)
-------------- -------------- -------------- -----------
(147,975) (149,343) (292,626) (373,997)
-------------- -------------- -------------- -----------
Income before income taxes 222,021 720,639 1,432,629 1,945,640
Income taxes provided 76,000 384,000 619,000 876,000
-------------- -------------- -------------- -----------
Net income 146,021 336,639 813,629 1,069,640
Retained earnings, beginning of period 29,974,330 28,785,533 29,306,722 28,052,532
-------------- -------------- -------------- -----------
Retained earnings, end of period $30,120,351 $29,122,172 $30,120,351 29,122,172
============== ============== ============== ===========
Income per common share (Note 2) $.07 $.17 $.40 $.53
============== ============== ============== ===========
Dividends per share $- $- $- $-
============== ============== ============== ===========
Average common shares outstanding 2,025,022 2,033,280 2,030,588 2,033,280
============== ============== ============== ===========
See Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Three Months Ended Nine Months Ended
April 30, April 30,
--------------- ---------------- --------------- -------------
2003 2002 2003 2002
-------------- -------------- -------------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net Income $146,021 $336,639 $813,629 $1,069,640
-------------- -------------- -------------- -----------
Other comprehensive income, net of taxes (Note 3)
Unrealized gain (loss) on available-for-sale securities:
Net of taxes (benefit) of $8,000 and $134,000 for the three
months ended April 30, 2003 and 2002, respectively,
and ($60,000) and $224,000 for the nine months ended
April 30, 2003 and 2002, respectively. 15,952 310,386 (115,240) 484,375
Less reclassification adjustment - (2,270) (3,993) (18,475)
-------------- -------------- -------------- -----------
Other comprehensive income (loss) 15,952 308,116 (119,233) 465,900
-------------- -------------- -------------- -----------
Comprehensive Income $161,973 $644,755 $694,396 $1,535,540
============== ============== ============== ===========
See Notes to Consolidated Financial Statements.
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J. W. MAYS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Nine Months Ended
April 30,
-------------- ---------------
2003 2002
-------------- ---------------
(Unaudited) (Unaudited)
Cash Flows From Operating Activities:
Net income $813,629 $1,069,640
Adjustments to reconcile income to
net cash provided by operating activities:
Realized loss on marketable securities 3,993 17,705
Impairment of marketable securities - 49,770
Depreciation and amortization 886,730 850,015
Amortization of deferred expenses 371,443 194,701
Other assets - deferred expenses (102,033) (74,296)
- unbilled receivables 28,542 87,228
- unbilled receivables - affiliated company - 136,453
- receivables 193,444 175,979
Deferred income taxes (4,000) 108,000
Changes in:
Receivables 151,146 314,927
Prepaid expenses 695,675 402,227
Income taxes refundable (202,813) -
Real estate taxes refundable 82,769 -
Accounts payable (10,768) (1,410)
Payroll and other accrued liabilities (159,568) (50,767)
Income taxes payable (747,268) 270,531
Other taxes payable 3,086 3,562
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Cash provided by operating activities 2,004,007 3,554,265
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Cash Flows From Investing Activities:
Capital expenditures (1,452,509) (1,200,602)
Security deposits (59,331) (50,531)
Marketable securities:
Receipts from sales or maturities 268,887 298,794
Payments for purchases (72,882) (473,281)
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Cash (used) by investing activities (1,315,835) (1,425,620)
------------- -------------
Cash Flows From Financing Activities:
Borrowing - mortgage - 1,200,000
Increase - security deposits 57,916 48,126
Payments - mortgages and other debt (549,786) (788,617)
Purchase of treasury stock (227,500) -
------------- -------------
Cash provided (used) by financing activities (719,370) 459,509
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Increase (decrease) in cash (31,198) 2,588,154
Cash and cash equivalents at beginning of period 2,951,013 1,003,130
------------- -------------
Cash and cash equivalents at end of period $2,919,815 $3,591,284
============= =============
See Notes to Consolidated Financial Statements.
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J. W. MAYS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Accounting Records and Use of Estimates:
The accounting records are maintained in accordance with accounting
principles generally accepted in the United States of America ("GAAP").
The preparation of the Company's financial statements in accordance with
GAAP requires management to make estimates that affect the reported
consolidated statements of income and retained earnings, comprehensive
income, and the consolidated balance sheets and related disclosures.
Actual results could differ from those estimates.
The interim financial statements are prepared pursuant to the requirements
for reporting on Form 10-Q. The July 31, 2002 balance sheet was derived
from audited financial statements but does not include all disclosures
required by GAAP. The interim financial statements and notes thereto
should be read in conjunction with the financial statements and notes
included in the Company's latest Form 10-K Annual Report for the fiscal
year ended July 31, 2002. In the opinion of management, the interim
financial statements reflect all adjustments of a normal recurring nature
necessary for a fair statement of the results for interim periods. The
results of operations for the current period are not necessarily indicative
of the results for the entire fiscal year ending July 31, 2003.
2. Income Per Share of Common Stock:
Income per share has been computed by dividing the net income for the
periods by the weighted average number of shares of common stock
outstanding during the periods, adjusted for the purchase of treasury
stock. Shares used in computing income per share were 2,025,022 and
2,033,280 for the three and nine months ended April 30, 2003, respectively,
and 2,030,588 and 2,035,280 for the nine months ended April 30, 2002,
respectively.
3. Comprehensive Income:
SFAS No. 130, "Reporting Comprehensive Income", establishes standards for
the reporting of comprehensive income and its components. It requires all
items that are required to be recognized as components of comprehensive
income be reported in a financial statement that is displayed with the same
prominence as other income statement information. Comprehensive income is
defined to include all changes in equity except those resulting from
investments by and distributions to shareholders.
4. Marketable Securities:
The Company categorizes marketable securities as either trading, available-
for-sale or held-to-maturity. Trading securities are carried at fair value
with unrealized gains and losses included in income. Available-for-sale
securities are carried at fair value with unrealized gains and losses
recorded as a separate component of shareholders' equity. Held-to-maturity
securities are carried at amortized cost. Dividends and interest income
are accrued as earned.
- 6-
As of April 30, 2003, the Company's marketable securities were classified as follows:
Gross Gross
Unrealized Unrealized Fair
Cost Gains Losses Value
------------- ------------- ------------- -------------
Current:
Certificate of deposit $45,035 $- $- $45,035
============= ============= ============= =============
Noncurrent:
Available-for-sale:
Equity securities $2,743,623 $1,159,570 $- $3,903,193
============= ============= ============= =============
Investment income consists of the following:
Three Months Ended Nine Months Ended
April 30, April 30,
------------- ------------- ------------- -------------
2003 2002 2003 2002
------------- ------------- ------------- -------------
Interest income $34,353 $24,156 $69,817 $83,719
Dividend income 52,282 51,921 156,245 145,473
(Loss) on sale of marketable securities - (51,270) (3,993) (67,475)
------------- ------------- ------------- -------------
Total $86,635 $24,807 $222,069 $161,717
============= ============= ============= =============
5. Financial Instruments and Credit Risk Concentrations:
Financial instruments that are potentially subject to concentrations of
credit risk consist principally of marketable securities, cash and cash
equivalents and receivables. Marketable securities and cash and cash
equivalents are placed with high credit quality financial institutions and
instruments to minimize risk.
The Company derives rental income from thirty-nine tenants, of which one
tenant accounted for 17.93% and another tenant accounted for 15.04% of
rental income during the nine months ended April 30, 2003. No other
tenant accounted for more than 10% of rental income during the same
period.
-7-
6. Long-Term Debt:
April 30, 2003 July 31, 2002
------------------------------- --------------------------------
Current
Annual Final Due Due Due Due
Interest Payment Within After Within After
Rate Date One Year One Year One Year One Year
------- -------- -------------- -------------- -------------- ---------------
Mortgages:
Jamaica, New York property (a) 5 % 4/01/07 $266,666 $2,133,334 $266,667 $2,333,333
Jamaica, New York property (b) 6.98% 8/01/06 152,442 3,125,398 145,257 3,240,406
Jowein building, Brooklyn, N.Y. (c) 9 % 3/31/05 131,726 143,987 123,220 243,872
Fishkill, New York property (d) 8.25% 7/01/04 111,971 1,876,425 105,275 1,961,260
Circleville, Ohio property (e) 7 % 9/30/02 - - 72,445 -
-------------- -------------- -------------- ---------------
Total $662,805 $7,279,144 $712,864 $7,778,871
============== ============== ============== ===============
(a) The Company, on September 11, 1996, closed a loan with a bank in the
amount of $4,000,000. The loan is secured by a first mortgage lien covering
the entire leasehold interest of the Company, as tenant, in a certain ground
lease and building in the Jamaica, New York property. The interest rate on
the loan was 8.50% for a period of five (5) years and six (6) months, with
such rate to change on the first day of the sixty-seventh (67th) month of the
term to a rate equal to the then prime rate plus .25%, fixed for the balance
of the term. As of April 1, 2002, the effective rate was reduced to 5.00%
per annum. The loan is to become due and payable on the first day of the
month following the expiration of ten (10) years and six (6) months from the
closing date.
(b) The Company, on December 13, 2000, closed a loan with a bank in the
amount of $3,500,000. The loan is secured by a second position leasehold
mortgage covering the entire leasehold interest of the Company as tenant in
a certain ground lease and building in the Jamaica, New York property.
The loan proceeds were utilized by the Company toward its costs of capital
improvements of the premises in connection with the Company's lease of a
significant portion of a floor in the building to the State of New York.
The loan is structured in two phases:
1.) A fifteen-month construction term with interest only on the
amount owing at a floating rate per annum equal to the prime rate.
2.) Upon completion of the renovations, the construction loan was
converted to a ten (10) year second mortgage permanent loan on a
fifteen (15) year level amortization, plus interest. The interest
rate on the permanent loan during the first five (5) years is fixed at
6.98% per annum. The interest rate during the five (5) year renewal
term is at a fixed rate per annum equal to 2.25% above the five (5)
year Treasury Note Rate then in effect.
Payments are to be made, in arrears, on the first day of each and every
month calculated (a) during the period of the construction loan,
interest only, and (b) during the ten (10) year period of the term loan,
at the sum of the interest rate plus amortization sufficient to fully
liquidate the loan over a fifteen (15) year period. As additional
collateral security, the Company will conditionally assign to the bank
all leases and rents on the premises, or portions thereof, whether now
existing or hereafter consummated. The Company has an option to prepay
- 8-
principal, in whole or in part, plus interest accrued thereon, at any
time during the term, without premium or penalty. Other provisions of
the loan agreement provide certain restrictions on the incurrence of
indebtedness and the sale or transfer of the Company's ground lease
interest in the premises. Both credit facilities are subject to the
bank's existing first position mortgage loan on the premises. On August
2, 2001, the Company took down the balance of the loan of $1,200,000.
(c)Mortgage is held by an affiliated corporation owned by members,
including certain directors of the Company, of the family of the late
Joe Weinstein, former Chairman of the Board of Directors. Interest and
amortization of principal are paid quarterly. Effective April 1, 2000,
the maturity date of the mortgage was extended to March 31, 2005. The
interest rate remained at 9% per annum. During the extended period the
constant quarterly payments of interest and principal increased from
$37,263 to $38,044. The mortgage loan is self-amortizing.
(d)On June 2, 1999, the existing first mortgage loan balance on the
Fishkill, New York property was extended for a period of five years.
Under the terms of the extension agreement the annual interest rate was
reduced from 9% to 8.25% and the interest and principal payments are to
be made in constant monthly amounts based upon a fifteen (15) year
payout period.
(e)The mortgage loan, which was self-amortizing, matured September 30,
2002. The final payment was made September 1, 2002.
- 9-
7. Long-Term Debt - Other:
Long-Term debt - Other consists of the following:
April 30, 2003 July 31, 2002
------------------------------ -------------------------------
Due Due Due Due
Within After Within After
One Year One Year One Year One Year
------------- ------------- ------------- -------------
Lease security deposits $52,841 $419,148 $14,745 $399,328
============= ============= ============= =============
Does not include three irrevocable letters of credit totaling $319,000 at
April 30, 2003 and July 31, 2002, provided by three tenants.
8. Property and Equipment - at cost:
April 30, July 31,
2003 2002
--------------- ---------------
Property:
Buildings and improvements $45,330,586 $43,962,492
Improvements to leased property 9,158,009 9,158,009
Land 4,008,835 4,008,835
Construction in progress 79,137 68,520
------------- -------------
58,576,567 57,197,856
Less accumulated depreciation 25,949,531 25,104,318
------------- -------------
Property - net 32,627,036 32,093,538
------------- -------------
Fixtures and equipment and other:
Fixtures and equipment 688,071 657,013
Other fixed assets 220,084 216,702
------------- -------------
908,155 873,715
Less accumulated depreciation 601,899 599,740
------------- -------------
Fixtures and equipment and other - net 306,256 273,975
------------- -------------
Property and equipment - net $32,933,292 $32,367,513
============= =============
-10-
9. Unbilled Receivables and Rental Income:
Unbilled receivables represent the excess of scheduled rental income
recognized on a straight-line basis over rental income as it becomes
receivable according to the provisions of each lease.
The Company had leased from an affiliate one of the stores which was
closed in connection with its reorganization proceedings in 1982. The
Company, by agreement with the affiliate, modified and assigned its lease
to a third party. The agreement with the affiliate provided for certain
monthly payments to be made to the Company through August 30, 2002, the
termination date of the agreement. Rental income includes $69,629 for the
nine months ended April 30, 2003, and $329,676 for the nine months ended
January 31, 2002, representing rentals from the affiliated company.
Rental income from the affiliate includes $122,871 for the quarter ended
April 30, 2002. There was no rental income from the affiliate for the
quarter ended April 30, 2003 since the agreement with the affiliate
terminated on August 30, 2002.
10. Employees' Retirement Plan:
The Company sponsors a noncontributory Money Purchase Plan covering
substantially all of its employees. Operations were charged $64,367 and
$202,513 as contributions to the Plan for the three and nine months ended
April 30, 2003, respectively, and $65,653 and $196,890 as contributions to
the plan for the three and nine months ended April 30, 2002, respectively.
11. Cash Flow Information:
For purposes of reporting cash flows, the Company considers cash
equivalents to consist of short-term highly liquid investments with
maturities of three months or less, which are readily convertible into
cash.
Supplemental disclosure: Nine Months Ended
April 30,
-------------- -------------
2003 2002
-------------- -------------
Interest paid $417,904 $533,583
Income taxes paid $1,573,081 $497,470
12. Contingencies:
There are various lawsuits and claims pending against the Company. It is
the opinion of management that the resolution of these matters will not
have a material adverse effect on the Company's Consolidated Financial
Statements.
-11-
J. W. MAYS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
Results of Operations:
Three Months Ended April 30, 2003 Compared to the Three Months
Ended April 30, 2002:
In the three months ended April 30, 2003, the Company reported net income of
$146,021, or $.07 per share. In the comparable three months ended April 30,
2002, the Company reported net income of $336,639, or $.17 per share.
Revenues in the current three months decreased to $3,209,984 from $3,286,240
in the comparable 2002 three months.
Real estate operating expenses in the current three months increased to
$1,830,098 from $1,494,739 in the comparable 2002 three months primarily due
to an increase in payroll, real estate taxes, insurance, maintenance and
utility costs. The real estate taxes increased due to the rate increase by
the City of New York, and the insurance increased due to the terrorist attacks
of September 11, 2001.
Administrative and general expenses in the current three months increased to
$713,102 from $633,114 in the comparable 2002 three months due to an increase
in payroll, insurance, and legal and professional costs.
Depreciation and amortization expense in the current three months increased to
$296,788 from $288,405 in the comparable 2002 three months.
Interest expense and other expenses in the current three months exceeded
investment income by $147,975 and by $149,343 in the comparable 2002 three
months. The increase was due to a loss on disposition of asset on a portion of
the Company's Fishkill, New York property offset by a reduction of the
interest rate on a mortgage on the Jamaica, New York property and by scheduled
repayments of debt.
Nine Months Ended April 30, 2003 Compared to the Nine Months
Ended April 30, 2002:
In the nine months ended April 30, 2003, the Company reported net income of
$813,629, or $.40 per share. In the comparable nine months ended April 30,
2002, the Company reported net income of $1,069,640, or $.53 per share.
Revenues in the current nine months increased to $9,931,870 from $9,630,917 in
the comparable 2002 nine months.
Real estate operating expenses in the current nine months increased to
$5,208,676 from $4,493,946 in the comparable 2002 nine months primarily due to
an increase in payroll, real estate taxes, insurance, maintenance and utility
costs. The real estate taxes increased due to the rate increase by the City
of New York, and the insurance increased due to the terrorist attacks of
September 11, 2001.
Administrative and general expenses in the current nine months increased to
$2,274,218 from $1,967,319 in the comparable 2002 nine months due to an
increase in insurance, and legal and professional costs.
Depreciation and amortization expense in the current nine months increased to
$886,730 from $850,015 in the comparable 2002 nine months.
Interest expense and other expenses in the current nine months exceeded
investment income by $292,626 and by $373,997 in the comparable 2002 nine
months. The increase was due to a loss on disposition of asset on a portion of
the Company's Fishkill, New York property offset by a reduction of the
interest rate on a mortgage on the Jamaica, New York property and by scheduled
repayments of debt.
-12-
The bad debt recovery in the amount of $163,009 in the nine months ended April
30, 2003 relates to a prior year's bad debt write-off of one of the retail
tenants at the Jamaica, New York property.
Liquidity and Capital Resources:
The Company has been operating as a real estate enterprise since the
discontinuance of the retail department store segment of its operations on
January 3, 1989.
Management considers current working capital and borrowing capabilities
adequate to cover the Company's planned operating and capital requirements.
The Company's cash and cash equivalents amounted to $2,919,815 at April 30,
2003.
One tenant occupies the entire Circleville, Ohio property comprising a
warehouse distribution building of approximately 193,000 square feet on
approximately 11.66 acreage of land. The lease which commenced September 24,
1992, terminated September 30, 2002. An extension and modification of lease
(term and rental) for the entire premises has been executed for a three year
period to September 30, 2005. The tenant has the option to surrender up to
73,350 square feet of the 193,000 square feet, on or after May 31, 2003, upon
sixty days prior written notice.
The Company has obtained a judgment at a Trial Court in the New York State
Court of Claims in the amount of $4,147,500, plus interest and legal fees,
against the State of New York in connection with a condemnation by the State
affecting a portion of the Fishkill, New York property. On appeal by the
State of New York to the Appellate Division of the State of New York, the
judgment was reversed and the award reduced to $24,105. The Company had made
a motion to the Appellate Division to: (1) increase the award; and (2) for
leave to appeal to the Court of Appeals, both of which were denied, except
that the Appellate Division increased the award from $24,105 to $81,677. The
Company motion seeking leave to appeal directly to the New York State Court of
Appeals was denied. The Company does not intend to appeal this matter any
further. The final award with interest amounts to $101,925 which amount is
recorded in the financial statements, before legal and professional expense.
As of July 31, 2002, one of the retail tenants at the Company's Jamaica, New
York location, under lease dated March 29, 1990, as amended, was in arrears in
the payment of fixed rent, additional rent and other operating expenses of
$163,009. The tenant filed under Chapter 11 of United States Bankruptcy Code
on October 7, 2002. The Company at the time had reason to believe that the
tenant did not intend to pay the $163,009 and, accordingly, elected at July
31, 2002, to write off the amount due of $163,009 as a bad debt. The bad debt
recovery in the amount of $163,009 in the nine months ended April 30, 2003
represents payment by the tenant of the above amount.
At December 4, 2002, the date of the Quarterly Report on Form 10-Q for the
Quarter ended October 31, 2002, the retail tenant at the Company's Jamaica,
New York location that filed under Chapter 11 of the United States Bankruptcy
Code on October 7, 2002, had not paid the fixed rent and the additional rent
and other operating expenses due for the period August 1, 2002 through October
6, 2002, totaling $186,766. At the time, the Company had reason to believe
that the tenant did not intend to pay such amount and, accordingly, did not
record as income, during the three months ended October 31, 2002, the amount
of $186,766. The tenant paid the amount of $186,766 less $100,000 credit to
vacate the premises by February 10, 2003, during the nine months ended April
30, 2003, and accordingly the Company has recorded the amount as income during
the nine month period ended April 30, 2003. The tenant has paid the fixed
rent and additional rent and other operating expenses for the period October
7, 2002 through February 28, 2003. The tenant vacated the premises in March,
2003. The annual fixed rent, additional rent and other operating costs paid
by the tenant were approximately $1,000,000. The Company is actively seeking
a tenant(s) for the vacated space.
The City of New York, a tenant in the Company's Jowein building in Brooklyn,
New York, whose lease expires April 29, 2010, has elected to exercise its
option to terminate the Lease Agreement effective May 31, 2004. The
approximate loss in annual revenue to the Company commencing June 1, 2004,
relating to the termination of the lease will approximate $2,350,000. Upon
the termination of the lease agreement, the Company will be due $295,695 from
the City of New York representing the unamortized portion of the Company's
work cost to prepare the leased premises for occupancy. The Company is
actively seeking, through brokers, tenants to occupy the space to be vacated
as well as the additional 95,000 square feet of available rentable space in
the building.
-13-
Cash Flows From Operating Activities:
Receivables: The Company is due the amount of $254,935 as of April 30, 2003
as reimbursement for expenditures for renovations made on behalf of a tenant
at the Jamaica, New York building. The amount of $254,935 is to be paid in
installments through April, 2004. The original amount of the reimbursement
was $1,591,753 of which $1,336,818 has been received. The Company recorded a
receivable in the amount of $101,925 which is due from the State of New York
due to the disposition of asset on a portion of the Fishkill, New York
property.
Deferred Expenses: The Company wrote-off legal and professional expenses in
the amount of $181,849 due to the disposition of asset on a portion of the
Fishkill, New York property.
Prepaid Expenses: Expenditures for the nine months ended April 30, 2003
increased by $119,815 compared to the nine months ended April 30, 2002, due to
an increase in real estate taxes offset by a decrease in insurance premiums
paid.
Cash Flows From Investing Activities:
Capital expenditures: The Company had expenditures of $611,614 for the nine
months ended April 30, 2003 for the upgrading of electrical service and the
renovation of a portion of the exterior of its Brooklyn, New York building.
The total cost was $680,134. The project was completed in January, 2003. The
Company had expenditures of $287,617 for the nine months ended April 30, 2003
for the renovation of a portion of the exterior of its Jamaica, New York
building. The total cost was $287,617. The project was completed in
December, 2002. The Company also had expenditures of $73,378 for the dividing
of space into three separate stores which was formerly occupied by one
department store that vacated the premises in March, 2003, at its Jamaica, New
York building. The total cost of the project is approximately $650,000. The
project is anticipated to be completed in June, 2003.
Cash Flows From Financing Activities:
The Company purchased 17,500 shares of its outstanding common stock in a
private transaction for a total purchase price of $227,500 in the three months
ended April 30, 2003. The effect on earnings per share for the three and nine
months ended April 30, 2003 was to increase the earnings by $0.0003 and
$0.0005, respectively.
Controls and Procedures
We currently have in place systems relating to internal controls with respect
to our financial information. We also have in place disclosure controls and
procedures with respect to ensuring that all material information required to
be filed in this Report on Form 10-Q for the quarterly period ended April 30,
2003, has been made known to management, and especially the Chief Executive
Officer and Chief Financial Officer, in a timely fashion. Our management
periodically reviews and evaluates these internal controls and disclosure
controls and procedures with our internal auditor and our independent auditors
and has done so within 90 days of filing of this Quarterly Report on Form 10-
Q. We have determined that the internal controls and the disclosure controls
and procedures were effective as of the date of their evaluation in timely
alerting them to material information (both of a financial and a non-financial
nature) relating to the Company, including its consolidated subsidiaries.
We have determined that there have been no significant changes in our internal
controls and our disclosure controls and procedures or in other factors that
could significantly affect these controls subsequent to our most recent
evaluation. While we believe that our internal controls and our disclosure
controls and procedures are effective, we understand that the SEC may be
promulgating additional rules relating to disclosure controls and procedures.
We cannot provide assurance that either our internal controls or our
disclosure controls and procedures will not change in the future to reflect
new rules of the SEC.
-14-
Part II - Other Information
Item 3 - Quantitative and Qualitative Disclosures About Market Risks
It is the opinion of the Company that there are no quantitative and
qualitative disclosures required about market risks in this Report on Form
10-Q.
Item 6 - Exhibits and Reports on Form 8-K
(a) List of Exhibits:
Sequentially
Exhibit Numbered
Number Exhibit Page
------- ------- ------------
(2) Plan of acquisition, reorganization, arrangement,
liquidation or succession. N/A
(4) Instruments defining the rights of security holders,
including indentures. N/A
(10) Material contracts. N/A
(11) Statement re computation of per share earnings. N/A
(15) Letter re unaudited interim financial information. N/A
(18) Letter re change in accounting principles. N/A
(19) Report furnished to security holders. N/A
(22) Published report regarding matters submitted to vote
of security holders. N/A
(24) Power of attorney. N/A
(27) Financial data schedule. N/A
(99) Additional exhibits
Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002; 18 U.S.C. sec. 1350
(i) Chief Executive Officer
(ii) Chief Financial Officer
(b) Reports on Form 8-K - No report on Form 8-K was required to be filed
by the Company during the three months ended April 30, 2003.
-15-
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.
J.W. MAYS, Inc.
-----------------------------
(Registrant)
Date June 5, 2003 Lloyd J. Shulman
-----------------------------
Lloyd J. Shulman
President
Chief Executive Officer
Date June 5, 2003 Alex Slobodin
-----------------------------
Alex Slobodin
Exec. Vice-President
(Principal Financial Officer)
-16-
CERTIFICATION PURSUANT TO RULE 13a-14 UNDER THE SECURITIES EXCHANGE ACT OF 1934
In connection with the Report on Form 10-Q of J.W. Mays, Inc. (the "Company")
and its subsidiaries for the Quarterly Period ended April 30, 2003 as filed
with the Securities and Exchange Commission (the "Report"), I, Lloyd J.
Shulman, Chief Executive Officer of the Company, certify under oath that:
1. I have reviewed the Report being filed;
2. Based on my knowledge, the Report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by the Report;
3. Based on my knowledge, the financial statements, and other financial
information included in the Report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the Company as of, and for, the period presented in the Report;
4. I and the other certifying officers are responsible for establishing
and maintaining disclosure controls and procedures (as such term is
defined in paragraph (c) of Rule 13a-14) for the Company and have:
i. Designed such disclosure controls and procedures to ensure that
material information relating to the Company, including its
consolidated subsidiaries, is made known to them by others within
those entities, particularly during the period in which the
periodic reports are being prepared;
ii.Evaluated the effectiveness of the Company's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of the Report ("Evaluation Date"); and
iii. Presented in the Report their conclusions about the effectiveness
of the disclosure controls and procedures based on their evaluation
as of the Evaluation Date;
5. I and the other certifying officers have disclosed, based on their
most recent evaluation, to the Company's auditors and the audit
committee of the board of directors (or persons fulfilling the
equivalent function):
i. All significant deficiencies in the design or operation of internal
controls which could adversely affect the Company's ability to
record, process, summarize and report financial data and have
identified for the Company's auditors any material weaknesses in
internal controls; and
ii.Any fraud, whether or not material, that involves management or
other employees who have a significant role in the Company's
internal controls; and
6. I and the other certifying officers have indicated in the report
whether or not there were significant changes in internal controls or
in other factors that could significantly affect internal controls
subsequent to the date of their most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Lloyd J. Shulman
-----------------------
Lloyd J. Shulman
President
Chief Executive Officer
-17-
CERTIFICATION PURSUANT TO RULE 13a-14 UNDER THE SECURITIES EXCHANGE ACT OF 1934
In connection with the Report on Form 10-Q of J.W. Mays, Inc. (the "Company")
and its subsidiaries for the Quarterly Period ended April 30, 2003 as filed
with the Securities and Exchange Commission (the "Report"), I, Alex Slobodin,
Principal Financial Officer of the Company, certify under oath that:
1. I have reviewed the Report being filed;
2. Based on my knowledge, the Report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by the Report;
3. Based on my knowledge, the financial statements, and other financial
information included in the Report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the Company as of, and for, the period presented in the Report;
4. I and the other certifying officers are responsible for establishing
and maintaining disclosure controls and procedures (as such term is
defined in paragraph (c) of Rule 13a-14) for the Company and have:
i. Designed such disclosure controls and procedures to ensure that
material information relating to the Company, including its
consolidated subsidiaries, is made known to them by others within
those entities, particularly during the period in which the
periodic reports are being prepared;
ii.Evaluated the effectiveness of the Company's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of the Report ("Evaluation Date"); and
iii. Presented in the Report their conclusions about the effectiveness
of the disclosure controls and procedures based on their evaluation
as of the Evaluation Date;
5. I and the other certifying officers have disclosed, based on their
most recent evaluation, to the Company's auditors and the audit
committee of the board of directors (or persons fulfilling the
equivalent function):
i. All significant deficiencies in the design or operation of internal
controls which could adversely affect the Company's ability to
record, process, summarize and report financial data and have
identified for the Company's auditors any material weaknesses in
internal controls; and
ii.Any fraud, whether or not material, that involves management or
other employees who have a significant role in the Company's
internal controls; and
6. I and the other certifying officers have indicated in the report
whether or not there were significant changes in internal controls or
in other factors that could significantly affect internal controls
subsequent to the date of their most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Alex Slobodin
------------------------
Alex Slobodin
Executive Vice President
Chief Financial Officer
-18-
EXHIBIT 99(i)
CERTIFICATION
PURSUANT TO SECTION 1350 OF CHAPTER 63 OF TITLE 18 OF THE
UNITED STATES CODE AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the filing of the Report on Form 10-Q of J.W. Mays, Inc.
and its subsidiaries for the Quarterly Period ended April 30, 2003, as filed
with the Securities and Exchange Commission (the Report), Lloyd J. Shulman,
Chairman, President, Chief Executive Officer and Chief Operating Officer of
J.W. Mays, Inc., hereby certifies, pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002, 18 U.S.C. sec. 1350, that:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d), as applicable, of the Securities Exchange Act of 1934, and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of
J.W. Mays, Inc.
Dated: June 5, 2003
Lloyd J. Shulman
------------------------------------
Lloyd J. Shulman
Chairman, President, Chief Executive
Officer and Chief Operating Officer
EXHIBIT 99(ii)
CERTIFICATION
PURSUANT TO SECTION 1350 OF CHAPTER 63 OF TITLE 18 OF THE
UNITED STATES CODE AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the filing of the Report on Form 10-Q of J.W. Mays, Inc.
and its subsidiaries for the Quarterly Period ended April 30, 2003, as filed
with the Securities and Exchange Commission (the Report), Alex Slobodin,
Executive Vice President and Chief Financial Officer of J.W. Mays, Inc.,
hereby certifies, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
18 U.S.C. sec. 1350, that:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d), as applicable, of the Securities Exchange Act of 1934, and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of
J.W. Mays, Inc.
Dated: June 5, 2003
Alex Slobodin
----------------------------
Alex Slobodin
Executive Vice President and
Chief Financial Officer
-19-