FORM 10-Q
UNITED STATES
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 October 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 .
Indicate by check mark whether the registrant is a shell company (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 December 7, 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 - 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
(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
2002;
18 U.S.C. Section 1350 19
- 2-
J. W. MAYS, INC.
CONSOLIDATED BALANCE SHEET
October 31, July 31,
ASSETS 2005 2005
--------------------------------------------------------------- --------------- ---------------
(Unaudited) (Audited)
Property and Equipment - Net (Notes 6 and 7) $45,028,563 $44,636,667
------------- -------------
Current Assets:
Cash and cash equivalents 700,014 522,897
Marketable securities (Note 4) 45,737 45,668
Receivables 286,915 141,192
Deferred income taxes 82,000 104,000
Income taxes refundable 130,716 234,616
Prepaid expenses 854,578 1,552,114
Security deposits 16,162 66,998
------------- -------------
Total current assets 2,116,122 2,667,485
------------- -------------
Other Assets:
Deferred charges 2,847,374 2,830,730
Less accumulated amortization 1,276,962 1,188,451
------------- -------------
Net 1,570,412 1,642,279
Security deposits 1,311,543 1,233,116
Unbilled receivables (Note 9) 4,362,984 4,422,984
Marketable securities (Note 4) 2,726,438 2,574,514
------------- -------------
Total other assets 9,971,377 9,872,893
------------- -------------
TOTAL ASSETS $57,116,062 $57,177,045
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
---------------------------------------------------------------
Long-Term Debt:
Mortgages and term loan payable (Note 6) $12,212,171 $12,476,347
Note payable - related party (Note 8) 1,000,000 1,000,000
Security deposits payable 1,002,636 924,341
------------- -------------
Total long-term debt 14,214,807 14,400,688
------------- -------------
Deferred Income Taxes 3,152,000 3,151,000
------------- -------------
Current Liabilities:
Accounts payable 110,827 65,539
Payroll and other accrued liabilities 1,004,042 1,133,918
Other taxes payable 3,096 5,188
Current portion of mortgages payable (Note 6) 1,044,353 1,015,173
Current portion of security deposits payable 16,162 66,998
------------- -------------
Total current liabilities 2,178,480 2,286,816
------------- -------------
Total liabilities 19,545,287 19,838,504
------------- -------------
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
$647,000 at October 31, 2005 and $600,000 at July 31, 2005 1,269,189 1,164,264
Retained earnings 32,064,896 31,937,587
------------- -------------
38,858,627 38,626,393
Less common stock held in treasury, at cost - 162,517
shares at October 31, 2005 and at July 31, 2005 (Note 12) 1,287,852 1,287,852
------------- -------------
Total shareholders' equity 37,570,775 37,338,541
------------- -------------
Contingencies (Note 13)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $57,116,062 $57,177,045
============= =============
See Notes to Consolidated Financial Statements.
- 3-
J. W. MAYS, INC.
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
Three Months Ended
October 31,
--------------- ---------------
2005 2004
-------------- --------------
(Unaudited) (Unaudited)
Revenues
Rental income (Notes 5 and 9) $3,340,919 $3,156,943
-------------- --------------
Total revenues 3,340,919 3,156,943
-------------- --------------
Expenses
Real estate operating expenses 1,842,091 1,781,134
Administrative and general expenses 700,012 694,628
Depreciation and amortization 379,200 323,810
-------------- --------------
Total expenses 2,921,303 2,799,572
-------------- --------------
Income from operations before investment income,
interest expense and income taxes 419,616 357,371
-------------- --------------
Investment income and interest expense
Investment income (Note 4) 20,452 21,372
Interest expense (Notes 6, 8 and 11) (232,759) (156,867)
-------------- --------------
(212,307) (135,495)
-------------- --------------
Income before income taxes 207,309 221,876
Income taxes provided 80,000 107,000
-------------- --------------
Net income 127,309 114,876
Retained earnings, beginning of period 31,937,587 31,589,219
-------------- --------------
Retained earnings, end of period $32,064,896 $31,704,095
============== ==============
Income per common share (Note 2) $.06 $.06
============== ==============
Dividends per share $- $-
============== ==============
Average common shares outstanding 2,015,780 2,015,780
-------------- --------------
See Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Three Months Ended
October 31,
------------------------------
2005 2004
-------------- --------------
(Unaudited) (Unaudited)
Net Income $127,309 $114,876
-------------- --------------
Other comprehensive income,
net of taxes (Note 3)
Unrealized gain on available-for-sale securities:
Net of taxes of $ 47,000 and $10,000 for the three
months ended October 31, 2005 and 2004, respectively. 104,925 20,216
-------------- --------------
Net change in comprehensive income 104,925 20,216
-------------- --------------
-------------- --------------
Comprehensive Income $232,234 $135,092
============== ==============
See Notes to Consolidated Financial Statements.
- 4-
J. W. MAYS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Three Months Ended
October 31,
--------------------------------
2005 2004
--------------- ---------------
(Unaudited) (Unaudited)
Cash Flows From Operating Activities:
Net income $127,309 $114,876
Adjustments to reconcile income to
net cash provided by operating activities:
Depreciation and amortization 379,200 323,810
Amortization of deferred expenses 88,511 70,451
Other assets - deferred expenses (16,644) (138,679)
- unbilled receivables 60,000 16,608
Deferred income taxes (24,000) 1,000
Changes in:
Receivables (145,723) (28,629)
Prepaid expenses 697,536 727,291
Income taxes refundable 103,900 94,714
Accounts payable 45,288 34,193
Payroll and other accrued liabilities (129,876) (295,553)
Other taxes payable (2,092) (1,185)
------------- -------------
Cash provided by operating activities 1,183,409 918,897
------------- -------------
Cash Flows From Investing Activities:
Capital expenditures (771,096) (935,058)
Security deposits (27,591) 8,526
Marketable securities:
Payments for purchases (68) (67)
------------- -------------
Cash (used) by investing activities (798,755) (926,599)
------------- -------------
Cash Flows From Financing Activities:
Payments - security broker - (1,434,025)
Increase - security deposits 27,459 100,732
Borrowings - mortgage and other debt - 2,820,000
Decrease - mortgage and other debt payments (234,996) (274,984)
------------- -------------
Cash provided (used) by financing activities (207,537) 1,211,723
------------- -------------
Increase in cash 177,117 1,204,021
Cash and cash equivalents at beginning of period 522,897 603,289
------------- -------------
Cash and cash equivalents at end of period $700,014 $1,807,310
============= =============
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 October 31, 2005 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, 2005. 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, 2006.
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 the
three months ended October 31, 2005 and October 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 October 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 $45,737 $- $- $45,737
============= ============= ============= =============
Noncurrent:
Available-for-sale:
Equity securities $810,250 $1,916,188 $- $2,726,438
============= ============= ============= =============
Investment income consists of the following:
Three Months Ended
October 31,
------------- -------------
2005 2004
------------- -------------
Interest income $777 $3,633
Dividend income 19,675 17,739
------------- -------------
Total $20,452 $21,372
============= =============
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-five tenants, of which one
tenant accounted for 16.18% and another tenant accounted for 11.63% of
rental income during the three months ended October 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
October 31, 2005 and July 31, 2005, provided by two tenants.
- 7-
6. Long-Term Debt - Mortgages and Term Loan:
Long Term Debt - Mortgages and Term Loan:
October 31, 2005 July 31, 2005
-------------------------------- ---------------------------------
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) 5.00% 4/01/07 $266,667 $1,466,667 $266,667 $1,533,333
Jamaica, New York property (b) 6.98% 8/01/06 182,103 2,693,125 178,937 2,739,452
Jowein building, Brooklyn, NY (c) 9.00% 4/01/09 50,159 1,202,791 49,055 1,215,752
Fishkill, New York property (d,e) Variable 2/18/08 - 1,834,726 - 1,834,726
Bond St. building, Brooklyn, NY (e) Variable 2/18/08 - 2,820,000 - 2,820,000
Term-loan payable to bank (f) 6.50% 5/01/10 305,424 1,274,862 300,514 1,353,084
Jowein building, Brooklyn, NY (g) Variable 8/01/10 240,000 920,000 220,000 980,000
-------------- -------------- -------------- ---------------
Total $1,044,353 $12,212,171 $1,015,173 $12,476,347
============== ============== ============== ===============
(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 $2,739,452, will become due and
payable on August 1, 2006. The Company has the option to extend this loan
for an additional five (5) years. The interest rate for the extended period
will be 2.25% above the 5-year treasury rate in effect on the first maturity
date. It is the intention of the Company to exercise its option to extend
the loan for the additional five (5) years.
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 on the Jamaica property and the sale or transfer of the
Company's ground lease interest in the premises.
(c) The Company, on May 7, 2004, closed a loan with 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, 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 are
$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 (Bond Street
building). The outstanding balance of the loan, totaling $1,056,007, will
become due and payable on April 1, 2009.
(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 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
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(e)).
- 8-
(e) The Company, on August 19, 2004, closed a loan with a bank for a
$12,000,000 multiple draw term loan. This loan finances seventy-five (75%)
percent of the cost of capital improvements for an existing lease to a
tenant and capital improvements for future tenant leases at the Company's
Brooklyn, New York (Bond Street building) and Fishkill, New York
properties. The loan also refinances the existing mortgage on the
Company's Fishkill, New York property which matured on July 1, 2004 (see
Note 6 (d)). The Company will have three and one-half years to draw down
amounts under this loan. The loan consists 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(d)), 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 at the time of conversion. 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 Bond
Street building in Brooklyn, New York. The outstanding balance as of
October 31, 2005 was $4,654,726.
(f)On February 18, 2005, the Company secured financing in the amount of
$1,700,000, 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 is a multiple draw demand loan, for a period of five (5) years,
and is self-amortizing, at an interest rate of 6.50% per annum.
(g)The Company, on July 22, 2005, closed a loan with a bank for $1,200,000.
The loan will be used to finance the construction costs and brokerage
commissions associated with the leasing of 15,000 square feet for office
use to a tenant at the Company's Jowein building in Brooklyn, New York.
The loan will be secured by the assignment of lease of 15,000 square feet.
The loan is for a period of five (5) years and is self-amortizing, at a
floating interest rate of prime plus 1.00% per annum.
- 9-
7. Property and Equipment - at cost:
October 31, July 31,
2005 2005
--------------- ---------------
Property:
Buildings and improvements $58,561,421 $57,368,282
Improvements to leased property 9,158,009 9,158,009
Land 6,146,554 6,146,554
Construction in progress 170,502 592,545
------------- -------------
74,036,486 73,265,390
Less accumulated depreciation 29,259,047 28,895,827
------------- -------------
Property - net 44,777,439 44,369,563
------------- -------------
Fixtures and equipment and other:
Fixtures and equipment 719,322 719,322
Other fixed assets 257,472 257,472
------------- -------------
976,794 976,794
Less accumulated depreciation 725,670 709,690
------------- -------------
Fixtures and equipment and other - net 251,124 267,104
------------- -------------
Property and equipment - net $45,028,563 $44,636,667
============= =============
8. Note 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 note is prepayable
in whole or in part at any time without penalty. 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. The constant quarterly payments of interest are $18,750.
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.
10. Employees' Retirement Plan:
The Company sponsors a noncontributory Money Purchase Plan covering
substantially all of its employees. Operations were charged $72,864 and
$70,003 as contributions to the Plan for the three months ended October
31, 2005, and October 31, 2004, respectively.
-10-
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: Three Months Ended
October 31,
---------------------------
2005 2004
---------------------------
Interest paid, net of capitalized interest of
$7,683 (2005) $225,739 $155,348
Income taxes paid $100 $11,286
12. 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 October 31, 2005 and at July 31,
2005.
13. 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 October 31, 2005 Compared to the Three Months Ended October
31, 2004:
In the three months ended October 31, 2005, the Company reported net income of
$127,309, or $.06 per share. In the comparable three months ended October 31,
2004, the Company reported net income of $114,876, or $.06 per share.
Revenues in the current three months increased to $3,340,919 from $3,156,943
in the comparable 2004 three months. The increase in revenues was due to the
Company's leasing to two office tenants at its Jowein building in Brooklyn,
New York, and the leasing to a retail tenant at its Jamaica, New York
building, partially offset by a tenant vacating the Levittown, New York
premises in September 2004.
Real estate operating expenses in the current three months increased to
$1,842,091 from $1,781,134 in the comparable 2004 three months primarily due
to increases in real estate taxes, utilities, and lease commission expense,
partially offset by decreases in payroll costs, insurance costs and rental
expense.
Administrative and general expenses in the current three months increased to
$700,012 from $694,628 in the comparable 2004 three months primarily due to
increases in payroll costs, partially offset by decreases in legal and
professional costs.
Depreciation and amortization expense in the current three months increased to
$379,200 from $323,810 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 and acquisitions of the three parcels in
Brooklyn, New York.
Interest expense and other expenses in the current three months exceeded
investment income by $212,307 and by $135,495 in the comparable 2004 three
months. The increase was due primarily to increased interest expense on the
additional loans with banks, a note payable from a director, 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 $700,014 at October 31,
2005.
In March 2005 and in October 2005, the Company leased 15,000 square feet and
10,000 square feet, respectively, for office use to two tenants 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 commenced in October 2005 for
both tenants.
The Company, in August 2005, entered into two lease agreements with an
existing tenant at the Company's 9 Bond Street building in Brooklyn, New York.
One lease agreement is for 12,000 square feet and will be used for offices and
the rent is anticipated to commence in March 2006. The other lease agreement
is for 2,505 square feet and will be used as part of the tenant's retail
operation, and rent commenced in November 2005.
The Company has been informed by a tenant, who occupies 47,100 square feet of
rental space at its Jamaica, New York property, that the tenant would not be
exercising its option to extend its lease agreement. The tenant will vacate
the premises on February 28, 2006. The annual loss in rental income to the
Company will be approximately $575,000. The Company is actively seeking,
through brokers, tenants to occupy the space when it is vacated.
-12-
The lease with the tenant that leased the entire premises at the Company's
Circleville, Ohio building, under a triple-net lease, lease extension and
modification expired September 30, 2005. The tenant entered into a further
lease extension and modification agreement for part of the premises, 75,000
square feet, for a period of five years, with a right to cancel after three
years, to expire on November 11, 2010. The Company has engaged brokers to
pursue tenants for the remaining 118,000 square feet of space available for
leasing.
On October 11, 2005, a tenant in our Jowein building filed for Chapter 11
protection. This tenant is expected to account for 6% of our projected annual
income for the year ending July 31, 2006. While we cannot ascertain what the
effect of this filing will be on the Company, cash flows would be adversely
affected by approximately $70,000 per month should the tenant reject the lease
and vacate the premises.
The tenant at the Company's Fishkill, New York property, whose lease expired
on November 26, 2005, did not renew the lease and vacated the premises. The
annual loss in rental income from this tenant is approximately $180,000. The
Company is actively seeking, through brokers, tenants to occupy the vacated
space.
Cash Flows From Operating Activities:
Prepaid Expenses: Expenditures for the three months ended October 31, 2005
increased by $38,714 compared to the period ended October 31, 2004, due to
increases in insurance premiums paid offset by decreases in real estate taxes
paid.
Payroll and Other Accrued Liabilities: The Company paid $12,925 for
commissions incurred in order to lease space at the Company's properties in
the three months ended October 31, 2005. The original amount of the brokerage
commissions was $1,092,665. As of October 31, 2005, $911,102 had been paid.
Cash Flows From Investing Activities:
The Company had an expenditure of $472,444 for the three months ended October
31, 2005 for the renovation of 15,000 square feet for office space for a
tenant at its Jowein building in Brooklyn, New York. The cost of the project
was $1,054,989 and was completed in September 2005.
The Company had expenditures of $94,703 for the three months ended October 31,
2005 for the renovations to an existing tenant at the Company's Jamaica, New
York property. The tenant is currently on a month to month lease agreement
and upon completion of the renovations the lease agreement will become a ten-
year lease with increased rental income. The total cost of the project was
$234,511 and was completed in December 2005.
Cash Flows From Financing Activities:
Lease security: The Company increased tenant security deposits by $33,256
during the three months ended October 31, 2005, due to the leasing of space to
three tenants at the Company's Brooklyn, New York properties.
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 October 31, 2005, the Company had fixed-rate debt of
$8,441,798 and variable-rate debt of $5,814,726. Because of the extension of
the Fishkill, New York property loan, the Bond Street building, Brooklyn, New
York and the Jowein building, Brooklyn, New York loans (presently with
balances of $1,834,726, $2,820,000, and $1,160,000, respectively), if interest
rates were to change 100 basis points, the effect on net income from
operations and future cash flows would be a decrease, should the rates
increase, or an increase, should the rates decline, of $58,147 for these
loans.
-13-
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 October 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.
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.
-14-
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 October 31, 2005.
Item reported - The Company reported its financial results
for the three and twelve months ended July 31, 2005.
Date of report filed - October 14, 2005
-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 December 7, 2005 Lloyd J. Shulman
------------------------
Lloyd J. Shulman
President
Chief Executive Officer
Date December 7, 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: December 7, 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: December 7, 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 October 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.
December 7, 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-