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 January 31, 2005 [ ] 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 J.W. Mays, Inc. (Exact name of registrant as specified in its charter) New York 11-1059070 (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 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 . Indicate by check mark whether the registrant is an accelerated filer (as defined in rule 12b-2 of the Exchange Act) . Yes . No X . Number of shares outstanding of the issuer's common stock as of the latest practicable date. Class Outstanding at March 9, 2005 Common Stock, $1 par value 2,015,780 shares This report contains 19 pages. -1- 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 - 10 Management's Discussion and Analysis of Results of Operations and Financial Condition 11 - 14 Controls and Procedures 14 - 15 Part II - Other Information 15 Signatures 16 (31) Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (31.1) - Chief Executive Officer 17 (31.2) - Chief Financial Officer 18 (32) Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of Sarbanes-Oxley Act of 2002 18 U.S.C. Section 1350 19 -2- J. W. MAYS, INC. CONSOLIDATED BALANCE SHEET January 31, July 31, ASSETS 2005 2004 --------------------------------------------------------------- --------------- --------------- (Unaudited) (Audited) Property and Equipment - Net (Notes 6 and 7) $42,889,870 $40,153,977 ------------- ------------- Current Assets: Cash and cash equivalents 662,024 603,289 Marketable securities (Note 4) 45,532 45,395 Receivables 101,718 181,407 Deferred income taxes 120,000 79,000 Income taxes refundable 258,616 126,911 Prepaid expenses 1,315,377 1,532,163 Security deposits 6,776 191,118 ------------- ------------- Total current assets 2,510,043 2,759,283 ------------- ------------- Other Assets: Deferred charges 2,567,773 2,005,894 Less accumulated amortization 1,054,116 956,805 ------------- ------------- Net 1,513,657 1,049,089 Security deposits 1,224,569 946,183 Unbilled receivables (Note 10) 4,366,912 4,316,666 Marketable securities (Note 4) 2,727,305 2,583,812 ------------- ------------- Total other assets 9,832,443 8,895,750 ------------- ------------- TOTAL ASSETS $55,232,356 $51,809,010 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY --------------------------------------------------------------- Long-Term Debt: Mortgages payable (Note 6) $10,393,515 $7,830,160 Notes payable - related party (Note 9) 1,000,000 - Security deposits payable 916,131 641,209 ------------- ------------- Total long-term debt 12,309,646 8,471,369 ------------- ------------- Deferred Income Taxes 3,230,000 3,175,000 ------------- ------------- Current Liabilities: Payable to securities broker (Note 8) 655,894 1,434,025 Accounts payable 105,732 87,581 Payroll and other accrued liabilities 1,152,237 936,048 Other taxes payable 6,648 4,764 Current portion of mortgages payable (Note 6) 523,660 587,634 Current portion of security deposits payable 6,776 116,118 ------------- ------------- Total current liabilities 2,450,947 3,166,170 ------------- ------------- Total liabilities 17,990,593 14,812,539 ------------- ------------- 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 - net of deferred taxes of $652,000 at January 31, 2005 and $603,000 at July 31, 2004 1,265,055 1,170,562 Retained earnings 31,740,018 31,589,219 ------------- ------------- 38,529,615 38,284,323 Less common stock held in treasury, at cost - 162,517 shares at January 31, 2005 and at July 31, 2004 (Note 13) 1,287,852 1,287,852 ------------- ------------- Total shareholders' equity 37,241,763 36,996,471 ------------- ------------- Contingencies (Note 14) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $55,232,356 $51,809,010 ============= ============= See Notes to Consolidated Financial Statements. -3- J. W. MAYS, INC. CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS Three Months Ended Six Months Ended January 31, January 31, --------------- ---------------- --------------- ------------ 2005 2004 2005 2004 -------------- -------------- -------------- ---------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenues Rental income (Notes 5 and 10) $3,171,903 $3,441,183 $6,328,846 $6,765,477 Loss on sale of fixed assets - - - (4,353) -------------- -------------- -------------- ---------- Total revenues 3,171,903 3,441,183 6,328,846 6,761,124 -------------- -------------- -------------- ---------- Expenses Real estate operating expenses 1,868,003 2,014,490 3,649,137 3,882,297 Administrative and general expenses 748,881 755,417 1,443,509 1,350,286 Depreciation and amortization 388,899 328,161 712,709 639,322 -------------- -------------- -------------- ---------- Total expenses 3,005,783 3,098,068 5,805,355 5,871,905 -------------- -------------- -------------- ---------- Income from operations before investment income, interest expense, other expenses and income taxes 166,120 343,115 523,491 889,219 -------------- -------------- -------------- ---------- Investment income, interest expense and other expenses: Investment income (Note 4) 19,553 64,586 40,925 130,808 Interest expense (Notes 6, 8, 9 and 12) (173,750) (129,330) (330,617) (259,868) -------------- -------------- -------------- ---------- (154,197) (64,744) (289,692) (129,060) -------------- -------------- -------------- ---------- Income before income taxes 11,923 278,371 233,799 760,159 Income taxes provided (benefit) (24,000) 130,000 83,000 331,000 -------------- -------------- -------------- ---------- Net income 35,923 148,371 150,799 429,159 Retained earnings, beginning of period 31,704,095 30,734,541 31,589,219 30,453,753 -------------- -------------- -------------- ---------- Retained earnings, end of period $31,740,018 $30,882,912 $31,740,018 30,882,912 ============== ============== ============== ========== Income per common share (Note 2) $.01 $.07 $.07 $.21 ============== ============== ============== ========== Dividends per share $- $- $- $- ============== ============== ============== ========== Average common shares outstanding 2,015,780 2,015,780 2,015,780 2,015,780 -------------- -------------- -------------- ---------- See Notes to Consolidated Financial Statements. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Three Months Ended Six Months Ended January 31, January 31, -------------- -------------- -------------- ----------- 2005 2004 2005 2004 -------------- -------------- -------------- ----------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) Net Income $35,923 $148,371 $150,799 $429,159 -------------- -------------- -------------- ----------- Other comprehensive income, net of taxes (Note 3) Unrealized gain on available-for-sale securities: Net of taxes of $39,000 and $56,000 for the three months ended January 31, 2005 and 2004, respectively, and $49,000 and $135,000 for the six months ended January 31, 2005 and 2004, respectively. 74,277 61,252 94,493 263,062 Less reclassification adjustment - (9,240) - (17,990) -------------- -------------- -------------- ---------- Net change in comprehensive income 74,277 52,012 94,493 245,072 -------------- -------------- -------------- ---------- -------------- -------------- -------------- ---------- Comprehensive Income $110,200 $200,383 $245,292 $674,231 ============== ============== ============== ========== See Notes to Consolidated Financial Statements. -4- J. W. MAYS, INC. CONSOLIDATED STATEMENT OF CASH FLOWS Six Months Ended January 31, -------------- --------------- 2005 2004 --------------- --------------- (Unaudited) (Unaudited) Cash Flows From Operating Activities: Net income $150,799 $429,159 Adjustments to reconcile income to net cash provided by operating activities: Realized (gain) on marketable securities - (17,990) (Loss) on sale of fixed assets - (4,353) Depreciation and amortization 712,709 639,322 Amortization of deferred expenses 149,398 127,615 Other assets - deferred expenses (613,966) (72,983) - unbilled receivables (50,246) 14,326 Deferred income taxes (35,000) (127,000) Changes in: Receivables 79,689 249,111 Prepaid expenses 216,786 262,305 Income taxes refundable (131,705) 210,382 Accounts payable 18,151 30,817 Payroll and other accrued liabilities 216,189 533,818 Income taxes payable - 1,985 Other taxes payable 1,884 2,059 ------------- ------------- Cash provided by operating activities 714,688 2,278,573 ------------- ------------- Cash Flows From Investing Activities: Capital expenditures (3,448,602) (4,009,813) Security deposits (94,044) (64,572) Marketable securities: Receipts from sales or maturities - 312,500 Payments for purchases (137) (149) ------------- ------------- Cash (used) by investing activities (3,542,783) (3,762,034) ------------- ------------- Cash Flows From Financing Activities: Borrowings - security broker 658,144 451,517 Payments - security broker (1,436,275) (116,952) Borrowings - mortgage and other debt 3,820,000 - Increase - security deposits 165,580 64,677 Payments - mortgage and other debt (320,619) (330,745) ------------- ------------- Cash provided by financing activities 2,886,830 68,497 ------------- ------------- Increase (decrease) in cash 58,735 (1,414,964) Cash and cash equivalents at beginning of period 603,289 1,862,444 ------------- ------------- Cash and cash equivalents at end of period $662,024 $447,480 ============= ============= See Notes to Consolidated Financial Statements. -5- 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, 2004 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, 2004. 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, 2005. 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 2,015,780 for each of the three and six months ended January 31, 2005 and January 31, 2004. 3. Comprehensive Income: Statement of Financial Accounting Standards (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 January 31, 2005, the Company's marketable securities were classified as follows: Gross Gross Unrealized Unrealized Fair Cost Gains Losses Value ------------- ------------- ------------- ------------- Current: Held-to-maturity: Certificate of deposit $45,532 $- $- $45,532 ============= ============= ============= ============= Noncurrent: Available-for-sale: Equity securities $810,250 $1,917,055 $- $2,727,305 ============= ============= ============= ============= Investment income consists of the following: Three Months Ended Six Months Ended January 31, January 31, ------------- ------------- ------------- ------------- 2005 2004 2005 2004 ------------- ------------- ------------- ------------- Interest income $1,168 $4,612 $4,801 $10,802 Dividend income 18,385 50,734 36,124 102,016 Gain on sale of marketable securities - 9,240 - 17,990 ------------- ------------- ------------- ------------- Total $19,553 $64,586 $40,925 $130,808 ============= ============= ============= ============= 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 forty-four tenants, of which one tenant accounted for 17.14% of rental income during the six months ended January 31, 2005. No other tenant accounted for more than 10% of rental income during the same period. The Company has two irrevocable Letters of Credit totaling $137,500 at January 31, 2005, provided by two tenants, and had three irrevocable Letters of Credit totaling $319,000 at July 31, 2004, provided by three tenants. -7- 6. Long-Term Debt - Mortgages: January 31, 2005 July 31, 2004 -------------------------------- --------------------------------- 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 $266,667 $1,666,667 $266,667 $1,800,000 Jamaica, New York property (b) 6.98% 8/01/06 172,866 2,831,297 166,907 2,918,389 Jowein building, Brooklyn, NY (c) 9 % 3/31/05 37,207 - 109,183 - Jowein building, Brooklyn, NY (d) 9 % 4/01/09 46,920 1,240,825 44,877 1,264,807 Fishkill, New York property (e,f) Variable 2/18/08 - 1,834,726 - 1,846,964 Bond St. building, Brooklyn, NY (f) Variable 2/18/08 - 2,820,000 - - -------------- -------------- -------------- --------------- Total $523,660 $10,393,515 $587,634 $7,830,160 ============== ============== ============== =============== (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 outstanding balance of the loan, totaling $1,355,555 will become due and payable on April 1, 2007. (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 outstanding balance of the loan, totaling $2,739,453 will become due and payable on August 1, 2006. Payments are to be made, in arrears, on the first day of each and every month calculated 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 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. (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. The constant quarterly payments of interest and principal are $38,044. The mortgage loan is self-amortizing. (d) The Company, on May 7, 2004, closed a loan with an affiliated corporation (see Note 6(c)) in the amount of $1,350,000. The term of the loan is for a period of five (5) years at an interest rate of 9.00% per annum. Interest and amortization of principal are paid quarterly based on a fifteen (15) year level amortization period. The constant quarterly payments of interest and principal will be $40,316. The funds were used to purchase a one-half interest in a property that is part of the Company's Brooklyn, New York building (Fulton Street at Bond Street). The outstanding balance of the loan, totaling $1,056,007, will become due and payable on April 1, 2009. (e) 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 were made in constant monthly amounts based upon a fifteen (15) year payout period. On August 19, 2004, the Company extended the loan for an additional forty-two (42) months, with an option to convert the loan to a seven (7) year permanent mortgage loan. The payments for the extended period of forty-two (42) months will be interest only on the amount owing at a -8- floating rate per annum equal to the one-month LIBOR rate plus 2.25%, but not less than 3.40%. The payments for the seven-year permanent mortgage loan would be on a seventeen (17) year level amortization, plus interest. The interest rate on the permanent loan would be a fixed rate equal to the Federal Home Loan Bank of New York's seven-year (7) fixed interest rate plus 2.25% per annum. (See Note 6(f)). (f) The Company, on August 19, 2004, closed a loan with a bank for a $12,000,000 multiple draw term loan. This loan will finance seventy-five (75%) percent of the cost of capital improvements for an existing lease to a tenant and capital improvements to future tenant leases at the Company's Brooklyn, New York (9 Bond Street) and Fishkill, New York properties. The loan will also refinance the existing mortgage on the Company's Fishkill, New York property which matured on July 1, 2004 (see Note 6 (e)). The Company will have three and one-half years to draw down amounts under this loan. The loan will consist of: a) a permanent, first mortgage loan to refinance an existing first mortgage loan affecting the Fishkill Property (the 'First Permanent Loan') (see Note 6(e)), b) a permanent subordinate mortgage loan in the amount of $1,870,000 (the 'Second Permanent Loan'), and c) multiple, successively subordinate loans in the amount $8,295,274 ('Subordinate Building Loans'). The loan is structured in two phases: 1) a forty-two month loan with payments of interest only at the floating one-month LIBOR rate plus 2.25% per annum, but not less than 3.40%; and 2) after the forty-two month period, the loan would convert to a seven-year (7) permanent mortgage loan on a seventeen (17) year level amortization, plus interest, at the option of the Company. The interest rate on the permanent loan would be at a fixed rate equal to the Federal Home Loan Bank of New York's seven-year (7) fixed interest rate plus 2.25% per annum. As of August 19, 2004, the Company refinanced the existing mortgage on the Company's Fishkill, New York property, which balance was $1,834,726 and took down an additional $2,820,000 for capital improvements for two tenants at the Company's 9 Bond Street property in Brooklyn, New York. The outstanding balance as of January 31, 2005 was $4,654,726. 7. Property and Equipment - at cost: January 31, July 31, 2005 2004 --------------- --------------- Property: Buildings and improvements $55,609,305 $53,533,121 Improvements to leased property 9,158,009 9,158,009 Land 6,019,172 4,713,503 Construction in progress 28,272 - ------------- ------------- 70,814,758 67,404,633 Less accumulated depreciation 28,181,631 27,497,555 ------------- ------------- Property - net 42,633,127 39,907,078 ------------- ------------- Fixtures and equipment and other: Fixtures and equipment 719,322 711,001 Other fixed assets 242,902 212,747 ------------- ------------- 962,224 923,748 Less accumulated depreciation 705,481 676,849 ------------- ------------- Fixtures and equipment and other - net 256,743 246,899 ------------- ------------- Property and equipment - net $42,889,870 $40,153,977 ============= ============= -9- 8. Payable to Securities Broker: The Company borrowed funds, payable on demand, from a securities broker. The loan balance at January 31, 2005 in the amount of $655,894, secured by the Company's marketable securities, accrues interest at a floating rate, which at January 31, 2005, was at the annual rate of 4.625%. 9. Notes Payable: On December 15, 2004, the Company borrowed $1,000,000 from a director of the Company, who is also a greater than 10% beneficial owner of the outstanding common stock of the Company. The term of the loan is for a period of three (3) years maturing on December 15, 2007, at an interest rate of 7.50% per annum. The loan is unsecured. The funds were used towards the purchase of a one-half interest in a parcel which is part of the Company's Brooklyn, New York properties. The total purchase price was $1,500,000. 10. 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. 11. Employees' Retirement Plan: The Company sponsors a noncontributory Money Purchase Plan covering substantially all of its employees. Operations were charged $72,390 and $142,393 as contributions to the Plan for the three and six months ended January 31, 2005, respectively, and $68,806 and $137,510 as contributions to the plan for the three and six months ended January 31, 2004, respectively. 12. 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: Six Months Ended January 31, ------------------------------ 2005 2004 --------------- ------------- Interest paid $318,284 $261,738 Income taxes paid $249,705 $245,633 13. Capitalization: The Company is capitalized entirely through common stock with identical voting rights and rights to liquidation. Treasury stock is recorded at cost and consists of 162,517 shares at January 31, 2005 and at July 31, 2004. 14. 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. -10- J. W. MAYS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations: Three Months Ended January 31, 2005 Compared to the Three Months Ended January 31, 2004: In the three months ended January 31, 2005, the Company reported net income of $35,923, or $.01 per share. In the comparable three months ended January 31, 2004, the Company reported net income of $148,371, or $.07 per share. Revenues in the current three months decreased to $3,171,903 from $3,441,183 in the comparable 2004 three months. The decrease in revenues was due to the New York City Department of Finance vacating the Company's Jowein building in Brooklyn, New York in June 2004, and the tenant vacating the Levittown, New York premises in September 2004, partially offset by the revenues from the Company's leasing to two office tenants at its Nine Bond Street building in Brooklyn, New York, and the leasing to three office tenants at its Jowein building in Brooklyn, New York. Real estate operating expenses in the current three months decreased to $1,868,003 from $2,014,490 in the comparable 2004 three months primarily due to decreases in rental expense, maintenance costs, insurance costs and licenses and permits, partially offset by increases in real estate taxes. Administrative and general expenses in the current three months decreased to $748,881 from $755,417 in the comparable 2004 three months primarily due to decreases in legal and professional costs, partially offset by increases in payroll, and insurance costs. Depreciation and amortization expense in the current three months increased to $388,899 from $328,161 in the comparable 2004 three months primarily due to depreciation on the additional improvements to the Brooklyn, New York and the Jamaica, New York properties. Interest expense and other expenses in the current three months exceeded investment income by $154,197 and by $64,744 in the comparable 2004 three months. The increase was due primarily to increased interest expense on the additional loan with a bank, a note payable from a director, and a decrease in dividend income due to the sale of the Company's marketable securities, partially offset by scheduled repayments of debt. Six Months Ended January 31, 2005 Compared to the Six Months Ended January 31, 2004: In the six months ended January 31, 2005, the Company reported net income of $150,799, or $.07 per share. In the comparable six months ended January 31, 2004, the Company reported net income of $429,159, or $.21 per share. Revenues in the current six months decreased to $6,328,846 from $6,761,124 in the comparable 2004 six months. The decrease in revenues was due to the New York City Department of Finance vacating the Company's Jowein building in Brooklyn, New York in June 2004, and the tenant vacating the Levittown, New York premises in September 2004, partially offset by the revenues from the Company's leasing to two office tenants at its Nine Bond Street building in Brooklyn, New York, and the leasing to three office tenants at its Jowein building in Brooklyn, New York. Real estate operating expenses in the current six months decreased to $3,649,137 from $3,882,297 in the comparable 2004 six months primarily due to decreases in rental expense, maintenance costs, insurance costs and licenses and permits, partially offset by increases in real estate taxes and payroll costs. Administrative and general expenses in the current six months increased to $1,443,509 from $1,350,286 in the comparable 2004 six months primarily due to increases in payroll, and insurance costs. Depreciation and amortization expense in the current six months increased to $712,709 from $639,322 in the comparable 2004 six months primarily due to depreciation on the additional improvements to the Brooklyn, New York and the Jamaica, New York properties. -11- Interest expense and other expenses in the current six months exceeded investment income by $289,692 and by $129,060 in the comparable 2004 six months. The increase was due primarily to increased interest expense on the additional loan with a bank, a note payable from a director, and a decrease in dividend income due to the sale of the Company's marketable securities, partially offset by scheduled repayments of debt. 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 $662,024 at January 31, 2005. The Company leased 24,109 square feet for retail use at its Jamaica, New York property. The space was formerly a retail store which vacated the Jamaica, New York property in March 2003. The Company divided the premises into three retail stores. As of January 31, 2005, the Company has leased the entire 78,398 square feet to three tenants. Rent commenced in September 2003 for two tenants and rent will commence in March 2005 for the other tenant. In January 2005, the Company leased 28,801 square feet for office use to a tenant at the Company's Jowein building in Brooklyn, New York. This space was a portion of the space previously leased to the City of New York Department of Finance, which vacated the premises in June 2004. Rent is anticipated to commence in June 2005. In February 2005, the Company also leased 4,320 square feet to an existing tenant at its 9 Bond Street building in Brooklyn, New York. Rent is anticipated to commence in April 2005. The first mortgage loan balance on the Fishkill, New York property matured on July 1, 2004, with a balloon payment due of $1,856,852. The Company on August 19, 2004, extended this mortgage with the bank. (See Note 6(e) to the Consolidated Financial Statements). The Company, on August 19, 2004, closed a loan with a bank for a $12,000,000 multiple draw term loan. This loan will finance seventy-five (75%) percent of the cost of capital improvements for an existing lease to a tenant and capital improvements to future tenant leases at the Company's Brooklyn, New York (9 Bond Street) and Fishkill, New York properties. The loan will also refinance the existing mortgage on the Company's Fishkill, New York property which matured on July 1, 2004 (see Note 6(e) to the Consolidated Financial Statements). The Company will have three and one-half years to draw down amounts under this loan. The loan will consist of: a) a permanent, first mortgage loan to refinance an existing first mortgage loan affecting the Fishkill Property (the 'First Permanent Loan') (see Note 6(e) to the Consolidated Financial Statements); b) a permanent subordinate mortgage loan in the amount of $1,870,000 (the 'Second Permanent Loan'); and c) multiple, successively subordinate building loans in the amount of $8,295,274 ('Subordinate Building Loans'). The loan is structured in two phases: 1) a forty-two month loan with payments of interest only at the floating one month LIBOR rate plus 2.25% per annum, but not less than 3.40%; and 2) after the forty-two month period, the loan would convert to a seven-year (7) permanent mortgage loan on a seventeen (17) year level amortization, plus interest, at the option of the Company. The interest rate on the permanent loan would be at a fixed rate equal to the Federal Home Loan Bank of New York's seven-year (7) fixed interest rate plus 2.25% per annum. As of August 19, 2004, the Company refinanced the existing mortgage on the Company's Fishkill, New York property, which balance was $1,834,726 and took down an additional $2,820,000 for capital improvements for two tenants at the Company's 9 Bond Street property in Brooklyn, New York. The outstanding balance as of January 31, 2005 was $4,654,726. The Company on October 1, 2004 purchased a one-quarter interest in a parcel, which is part of its Brooklyn, New York properties. The parcel was leased to the Company. The purchase price was $750,000. The Company on November 4, 2004 purchased a one-third interest in a parcel, which is part of its Brooklyn, New York properties. The parcel was leased to the Company. The purchase price was $940,000. The Company on December 17, 2004 purchased a one-half interest in a parcel which is part of its Brooklyn, New York properties. The parcel was leased to the Company. The purchase price was $1,500,000. -12- The Company on August 23, 2004 paid the total amount due on the loan to a securities broker, which was $1,423,458. In December 2004, the Company borrowed an additional $655,000 on this loan (see Note 8 to the Consolidated Financial Statements). On December 15, 2004, the Company borrowed $1,000,000 from a director of the Company, who is also a greater than 10% beneficial owner of the outstanding common stock of the Company. The term of the loan is for a period of three (3) years maturing on December 15, 2007, at an interest rate of 7.50% per annum. The funds were used towards the purchase of a one-half interest in a parcel which is part of the Company's Brooklyn, New York properties. The total purchase price was $1,500,000 (see Note 9 to the Consolidated Financial Statements). The tenant at the Company's Levittown, New York property, whose lease expired September 30, 2004, did not renew the lease and vacated the premises. The annual loss in rental income from this tenant is approximately $350,000. The Company is actively seeking, through brokers, tenants to occupy the vacated space. On February 18, 2005, the Company secured financing in the amount of $1,800,000, from a bank whose president is a director of the Company. The loan will be used to finance the construction costs and brokerage commissions associated with the leasing of 28,801 square feet for office use to a tenant at the Company's Jowein building, in Brooklyn, New York. The loan will be a multiple draw loan, secured by the assignment of lease of 28,801 square feet. The loan is for a period of four (4) years, and is self-amortizing, at an interest rate of prime plus 1.00% per annum. Cash Flows From Operating Activities: Prepaid Expenses: Expenditures for the six months ended January 31, 2005 increased by $70,681 compared to the period ended January 31, 2004, due to increases in real estate taxes paid offset by decreases in insurance premiums paid. Deferred Expenses: The Company had expenditures of $138,679 in the six months ended January 31, 2005 for costs incurred to obtain loan financing for renovations to be performed at the Brooklyn, New York building (9 Bond Street) to accommodate new tenants and the refinancing of the existing mortgage on the Company's Fishkill, New York property. The Company also had expenditures for brokerage commissions in the amount of $416,883 relating to tenants at its Jamaica, New York and Brooklyn, New York properties. Payroll and Other Accrued Liabilities: The Company paid $165,654 for commissions incurred in order to lease space at the Company's properties in the six months ended January 31, 2005. The original amount of the brokerage commissions was $481,294. As of January 31, 2005, $466,442 had been paid. The Company also incurred additional brokerage commissions in the amount of $416,883 relating to two new tenants. Cash Flows From Investing Activities: Capital expenditures: The Company had an expenditure of $675,000 for the six months ended January 31, 2005 for the purchase of a one-quarter interest in a parcel which is part of its Brooklyn, New York properties. The total purchase price was $750,000. The Company had an expenditure of $1,500,000 for the six months ended January 31, 2005 for the purchase of a one-half interest in a parcel which is part of its Brooklyn, New York properties. The total purchase price was $1,500,000. The Company had expenditures of $28,272 for the six months ended January 31, 2005 for the renovation of 28,801 square feet for office space for a tenant at its Jowein building in Brooklyn, New York. The total cost of the project is estimated to be $1,550,000. The project is anticipated to be completed in April 2005. The Company had an expenditure of $940,000 for the six months ended January 31, 2005 for the purchase of a one-third interest in a parcel which is part of its Brooklyn, New York properties. The total purchase price was $940,000. Cash Flows From Financing Activities: Borrowing: Mortgage - The Company secured financing from one of the Company's directors in the principal amount of $1,000,000. (See Note 9 to the Consolidated Financial Statements). The funds were used towards the purchase of a one-half interest in a parcel which is part of the Company's Brooklyn, New York properties. The total purchase price was $1,500,000. -13- The Company also secured financing from a bank in the principal amount of $2,820,000 (See Note 6(f) to the Consolidated Financial Statements). Borrowing: Payable to securities broker - The Company in the six months ended January 31, 2005, paid down, net of borrowing, $778,131 of the amount payable to a securities broker. Lease security: The Company increased tenant security deposits by $173,537 due to the leasing of space to two tenants, one at the Company's Jowein building, in Brooklyn, New York, and one at its building in Jamaica, New York. Quantitative and Qualitative Disclosures About Market Risks: The Company uses both fixed-rate and variable-rate debt to finance its capital requirements. These transactions expose the Company to market risk related to changes in interest rates. The Company does not use derivative financial instruments. At January 31, 2005, the Company had fixed-rate debt of $7,262,449 and variable-rate debt of $5,310,620. Because of the extension of the Fishkill, New York property loan and the 9 Bond Street Brooklyn, New York loan (presently with balances of $1,834,726 and $2,820,000, respectively), if interest rates were to increase 100 basis points, the effect to net income from operations and future cash flows would be a decrease of $46,547 and if it were to decrease 100 basis points, the effect would be an increase of $46,547 for these loans. In connection with the loan payable to securities broker in the amount of $655,894, if interest rates were to increase 100 basis points, the effect to net income from operations and future cash flows would be a decrease of $6,559 and if it were to decrease 100 basis points, the effect would be an increase of $6,559 for this loan. Cautionary Statement Regarding Forward-Looking Statements: This Quarterly Report on Form 10-Q may contain forward-looking statements which include assumptions about future market conditions, operations and financial results. These statements are based on current expectations and are subject to risks and uncertainties. They are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company's actual results, performance or achievements in the future could differ significantly from the results, performance or achievements discussed or implied in such forward-looking statements herein and in prior Securities and Exchange Commission filings by the Company. The Company assumes no obligation to update these forward-looking statements or to advise of changes in the assumptions on which they were based. Factors that could cause or contribute to such differences include, but are not limited to, changes in the competitive environment of the Company, general economic and business conditions, industry trends, changes in government rules and regulations and environmental rules and regulations. Statements concerning interest rates and other financial instrument fair values and their estimated contribution to the Company's future results of operations are based upon market information as of a specific date. This market information is often a function of significant judgment and estimation. Further, market interest rates are subject to significant volatility. Controls and Procedures: The Company's management reviewed the Company's internal controls and procedures and the effectiveness of these controls. As of January 31, 2005, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Rules 13a-14(c) and 15d-14(c) of the Securities Exchange Act of 1934. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective in timely alerting them to material information relating to the Company required to be included in its periodic SEC filings. There was no change in the Company's internal controls over financial reporting or in other factors during the Company's last fiscal quarter that materially affected, or are reasonably likely to materially affect, the Company's internal controls over financial reporting. There were no significant deficiencies or material weaknesses, and therefore there were no corrective actions taken. -14- Our Accounting Department is comprised of four persons. Due to such a limited number of persons, a complete segregation of all of the duties as to which the department is responsible is not possible. In order to make sure that the inability to segregate all duties does not affect our timely and accurate financial reporting, we need to remain vigilant in maintaining compensating controls. These compensating controls will continue to be monitored in order to assure us that our internal controls over financial reporting remain at a high level despite the limited number of accounting department personnel. Part II - Other Information 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 (31) Additional exhibits--Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (31.1) Chief Executive Officer 17 (31.2) Chief Financial Officer 18 (32) Certification Pursuant to Section 906 of the Sarbanes- Oxley Act of 2002, 18 U.S.C. Section. 1350. 19 (b) Reports on Form 8-K - A report on Form 8-K was filed by the registrant during the three months ended January 31, 2005. Item reported - The Company reported its financial results for the three months ended October 31, 2004. Date of report filed - December 9, 2004. -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 March 9, 2005 Lloyd J. Shulman ---------------------------- Lloyd J. Shulman President Chief Executive Officer Date March 9, 2005 Mark S. Greenblatt ---------------------------- Mark S. Greenblatt Vice President Chief Financial Officer -16- EXHIBIT 31.1 CERTIFICATION I, Lloyd J. Shulman, certify that: 1. I have reviewed this Quarterly Report on Form 10-Q of J.W. Mays, Inc.; 2. Based on my knowledge, this 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 this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 9, 2005 /s/ Lloyd J. Shulman --------------------------- Lloyd J. Shulman President Chief Executive Officer -17- EXHIBIT 31.2 CERTIFICATION I, Mark S. Greenblatt, certify that: 1. I have reviewed this Quarterly Report on Form 10-Q of J.W. Mays, Inc.; 2. Based on my knowledge, this 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 this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 9, 2005 /s/ Mark S. Greenblatt --------------------------- Mark S. Greenblatt Vice President Chief Financial Officer -18- EXHIBIT 32 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 The following certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. Section 1350 and in accordance with SEC Release No. 33- 8238. This certification shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, whether made before or after the date hereof, regardless of any general incorporation language in such filing. In connection with the Quarterly Report of J. W. Mays, Inc. (the "Company") on Form 10-Q for the period ending January 31, 2005 as filed with the Securities and Exchange Commission (the "Report"), we, Lloyd J. Shulman and Mark S. Greenblatt, Chief Executive Officer and Chief Financial Officer, respectively, of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to our knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) 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 the Company. March 9, 2005 /s/ Lloyd J. Shulman --------------------------- Lloyd J. Shulman Chief Executive Officer /s/ Mark S. Greenblatt --------------------------- Mark S. Greenblatt Chief Financial Officer A signed original of this written statement required by Section 906 has been provided to J.W. Mays, Inc. and will be retained by J. W. Mays, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. -19-