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, 2004
----------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-3647
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J.W. Mays, Inc.
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(Exact name of registrant as specified in its charter)
New York 11-1059070
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9 Bond Street, Brooklyn, New York 11201-5805
--------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) 718-624-7400
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Not Applicable
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X]. No [ ].
Number of shares outstanding of the issuer's common stock as of the latest
practicable date.
Class Outstanding at March 10, 2004
----- -----------------------------
Common Stock, $1 par value 2,015,780 shares
This report contains 19 pages.
-1-
J. W. MAYS, INC.
INDEX
Page No.
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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 - 13
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
January 31, July 31,
2004 2003
----------- -----------
(Unaudited) (Audited)
ASSETS
Property and Equipment - Net (Notes 6 and 7) $36,857,228 $33,482,384
----------- -----------
Current Assets:
Cash and cash equivalents 447,480 1,862,444
Marketable securities (Note 4) 1,626,046 45,111
Receivables (Note 9) 184,384 433,495
Deferred income taxes 145,000 116,000
Income taxes refundable -- 210,382
Prepaid expenses 1,300,693 1,562,998
Security deposits 116,046 20,836
----------- -----------
Total current assets 3,819,649 4,251,266
----------- -----------
Other Assets:
Deferred charges 3,041,222 3,018,471
Less accumulated amortization 1,760,097 1,682,714
----------- -----------
Net 1,281,125 1,335,757
Security deposits 841,798 872,436
Unbilled receivables (Note 9) 4,233,486 4,247,812
Marketable securities (Note 4) 2,678,657 4,155,891
----------- -----------
Total other assets 9,035,066 10,611,896
----------- -----------
TOTAL ASSETS $49,711,943 $48,345,546
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Long-Term Debt:
Mortgages payable (Note 6) $ 4,974,706 $ 5,261,146
Security deposits payable 537,888 568,421
----------- -----------
Total long-term debt 5,512,594 5,829,567
----------- -----------
Deferred Income Taxes 3,172,000 3,135,000
----------- -----------
Current Liabilities:
Payable to securities broker (Note 8) 334,565 --
Accounts payable 77,646 46,829
Payroll and other accrued liabilities 1,619,799 1,085,981
Income taxes payable 1,985 --
Other taxes payable 6,323 4,264
Current portion of mortgages payable (Note 6) 2,473,420 2,517,725
Current portion of security deposits payable 116,046 20,836
----------- -----------
Total current liabilities 4,629,784 3,675,635
----------- -----------
Total liabilities 13,314,378 12,640,202
----------- -----------
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 1,277,963 1,014,901
Retained earnings 30,882,912 30,453,753
----------- -----------
37,685,417 36,993,196
Less common stock held in treasury, at cost - 162,517
shares at January 31, 2004 and at July 31, 2003 (Note 12) 1,287,852 1,287,852
----------- -----------
Total shareholders' equity 36,397,565 35,705,344
----------- -----------
Contingencies (Note 13)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $49,711,943 $48,345,546
=========== ===========
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,
------------------------- -------------------------
2004 2003 2004 2003
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues
Rental income (Notes 5 and 9) $ 3,441,183 $ 3,476,508 $ 6,765,477 $ 6,652,257
Rental income - affiliated company (Note 9) -- -- -- 69,629
Loss on sale of fixed assets -- -- (4,353) --
----------- ----------- ----------- -----------
Total revenues 3,441,183 3,476,508 6,761,124 6,721,886
----------- ----------- ----------- -----------
Expenses
Real estate operating expenses 2,014,490 1,738,281 3,882,297 3,378,578
Administrative and general expenses 755,417 864,355 1,350,286 1,561,116
Bad debt (recovery) -- (163,009) -- (163,009)
Depreciation and amortization 328,161 298,032 639,322 589,942
----------- ----------- ----------- -----------
Total expenses 3,098,068 2,737,659 5,871,905 5,366,627
----------- ----------- ----------- -----------
Income from operations before investment income,
interest expense and income taxes 343,115 738,849 889,219 1,355,259
----------- ----------- ----------- -----------
Investment income and interest expense:
Investment income (Note 4) 64,586 65,203 130,808 135,434
Interest expense (Notes 6 and 11) (129,330) (138,520) (259,868) (280,085)
----------- ----------- ----------- -----------
(64,744) (73,317) (129,060) (144,651)
----------- ----------- ----------- -----------
Income before income taxes 278,371 665,532 760,159 1,210,608
Income taxes provided 130,000 315,000 331,000 543,000
----------- ----------- ----------- -----------
Net income 148,371 350,532 429,159 667,608
Retained earnings, beginning of period 30,734,541 29,623,798 30,453,753 29,306,722
----------- ----------- ----------- -----------
Retained earnings, end of period $30,882,912 $29,974,330 $30,882,912 $29,974,330
=========== =========== =========== ===========
Income per common share (Note 2) $ .07 $ .17 $ .21 $ .33
=========== =========== =========== ===========
Dividends per share $ -- $ -- $ -- $ --
=========== =========== =========== ===========
Average common shares outstanding 2,015,780 2,033,280 2,015,780 2,033,280
----------- ----------- ----------- -----------
See Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Three Months Ended Six Months Ended
January 31, January 31,
------------------------- -------------------------
2004 2003 2004 2003
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net Income $148,371 $350,532 $429,159 $667,608
-------- -------- -------- --------
Other comprehensive income, net of taxes (Note 3)
Unrealized gain (loss) on available-for-sale securities:
Net of taxes (benefit) of $56,000 and $31,000 for
the three months ended January 31, 2004 and 2003,
respectively, and $135,000 and $(68,000) for the six
months ended January 31, 2004 and 2003, respectively 61,252 61,460 263,062 (131,192)
Less reclassification adjustment 9,240 (155) 17,990 (3,993)
-------- -------- -------- --------
Other comprehensive income (loss) 70,492 61,305 281,052 (135,185)
-------- -------- -------- --------
Comprehensive Income $218,863 $411,837 $710,211 $532,423
======== ======== ======== ========
See Notes to Consolidated Financial Statements
-4-
J. W. MAYS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Six Months Ended
January 31,
-------------------------
2004 2003
----------- -----------
(Unaudited) (Unaudited)
Cash Flows From Operating Activities:
Net income $ 429,159 $ 667,608
Adjustments to reconcile income to net cash provided by
operating activities:
Realized loss (gain) on marketable securities (17,990) 3,993
(Loss) on sale of fixed assets (4,353) --
Depreciation and amortization 639,322 589,942
Amortization of deferred expenses 127,615 123,874
Other assets - deferred expenses (72,983) (53,540)
- unbilled receivables 14,326 20,175
- receivables -- 127,431
Deferred income taxes (127,000) (22,000)
Changes in:
Receivables 249,111 (27,220)
Prepaid expenses 262,305 105,419
Real estate taxes refundable -- 82,769
Income taxes refundable 210,382 --
Accounts payable 30,817 8,899
Payroll and other accrued liabilities 533,818 (78,124)
Income taxes payable 1,985 (733,433)
Other taxes payable 2,059 759
----------- -----------
Cash provided by operating activities 2,278,573 816,552
----------- -----------
Cash Flows From Investing Activities:
Capital expenditures (4,009,813) (1,204,413)
Security deposits (64,572) (50,752)
Marketable securities:
Receipts from sales or maturities 312,500 168,887
Payments for purchases (149) (12,772)
----------- -----------
Cash (used) by investing activities (3,762,034) (1,099,050)
----------- -----------
Cash Flows From Financing Activities:
Borrowings - security broker 451,517 --
Payments - security broker (116,952) --
Increase - security deposits 64,677 49,703
Decrease - mortgage and other debt payments (330,745) (387,981)
----------- -----------
Cash provided (used) by financing activities 68,497 (338,278)
----------- -----------
(Decrease) in cash (1,414,964) (620,776)
Cash and cash equivalents at beginning of period 1,862,444 2,951,013
----------- -----------
Cash and cash equivalents at end of period $ 447,480 $ 2,330,237
=========== ===========
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, 2003 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, 2003. 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, 2004.
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 and six months ended January 31, 2004, and 2,033,280 for the three
and six months ended January 31, 2003.
3. Comprehensive Income:
SFAS No. 130, "Reporting Comprehensive Income", establishes standards for
the reporting of comprehensive income and its components. It requires all
items that are required to be recognized as components of comprehensive
income be reported in a financial statement that is displayed with the same
prominence as other income statement information. Comprehensive income is
defined to include all changes in equity except those resulting from
investments by and distributions to shareholders.
4. Marketable Securities:
The Company categorizes marketable securities as either trading,
available-for-sale or held-to-maturity. Trading securities are carried at
fair value with unrealized gains and losses included in income.
Available-for-sale securities are carried at fair value with unrealized
gains and losses recorded as a separate component of shareholders' equity.
Held-to-maturity securities are carried at amortized cost. Dividends and
interest income are accrued as earned.
-6-
As of January 31, 2004, 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 $ 45,260 $ -- $-- $ 45,260
Available-for-sale:
Equity Securities 1,463,120 117,666 -- 1,580,786
---------- ---------- --- ----------
Total Current $1,508,380 $ 117,666 $-- $1,626,046
========== ========== === ==========
Noncurrent:
Available-for-sale:
Equity securities $ 835,360 $1,843,297 $-- $2,678,657
========== ========== === ==========
Investment income consists of the following:
Three Months Ended Six Months Ended
January 31, January 31,
------------------ -------------------
2004 2003 2004 2003
------- ------- -------- --------
Interest income $ 4,612 $14,921 $ 10,802 $ 35,464
Dividend income 50,734 50,437 102,016 103,963
Gain (loss) on sale of marketable securities 9,240 (155) 17,990 (3,993)
------- ------- -------- --------
Total $64,586 $65,203 $130,808 $135,434
======= ======= ======== ========
5. Financial Instruments and Credit Risk Concentrations:
Financial instruments that are potentially subject to concentrations of
credit risk consist principally of marketable securities, cash and cash
equivalents and receivables. Marketable securities and cash and cash
equivalents are placed with high credit quality financial institutions and
instruments to minimize risk.
The Company derives rental income from thirty-nine tenants, of which one
tenant accounted for 17.93% and another tenant accounted for 14.92% of
rental income during the six months ended January 31, 2004. No other tenant
accounted for more than 10% of rental income during the same period.
The Company has three irrevocable Letters of Credit totaling $319,000 at
January 31, 2004 and July 31, 2003, provided by three tenants.
-7-
6. Long-Term Debt:
January 31, 2004 July 31, 2003
----------------------- -----------------------
Current
Annual Final Due Due Due Due
Interest Payment Within After Within After
Rate Date One Year One Year One Year One Year
-------- ------- ---------- ---------- ---------- ----------
Mortgages:
Jamaica, New York property (a) 5% 4/01/07 $ 266,666 $1,933,334 $ 266,666 $2,066,667
Jamaica, New York property (b) 6.98% 8/01/06 160,648 3,004,165 155,110 3,085,296
Jowein building, Brooklyn, N.Y. (c) 9% 3/31/05 140,819 37,207 134,689 109,183
Fishkill, New York property (d) 8.25% 7/01/04 1,905,287 -- 1,961,260 --
---------- ---------- ---------- ----------
Total $2,473,420 $4,974,706 $2,517,725 $5,261,146
========== ========== ========== ==========
(a) The Company, on September 11, 1996, closed a loan with a bank in the amount
of $4,000,000. The loan is secured by a first mortgage lien covering the
entire leasehold interest of the Company, as tenant, in a certain ground
lease and building in the Jamaica, New York property. The interest rate on
the loan was 8.50% for a period of five (5) years. As of April 1, 2002, the
effective rate was reduced to 5.00% per annum. 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
loan proceeds were utilized by the Company toward its costs of capital
improvements of the premises in connection with the Company's lease of
42,250 square feet of a floor in the building to the State of New York.
The loan is structured in two phases:
1.) A fifteen-month construction term with interest only on the amount
owing at a floating rate per annum equal to the prime rate.
2.) Upon completion of the renovations, the construction loan was
converted to a ten (10) year second mortgage permanent loan on a
fifteen (15) year level amortization, plus interest. The interest rate
on the permanent loan during the first five (5) years is fixed at
6.98% per annum. The interest rate during the five (5) year renewal
term is at a fixed rate per annum equal to 2.25% above the five (5)
year Treasury Note Rate then in effect.
Payments are to be made, in arrears, on the first day of each and every
month calculated (a) during the period of the construction loan, interest
only, and (b) during the ten (10) year period of the term loan, at the sum
of the interest rate plus amortization sufficient to fully liquidate the
loan over a fifteen (15) year period. As additional collateral security,
the Company will conditionally assign to the bank all leases and rents on
the premises, or portions thereof, whether now existing or hereafter
consummated. The Company has an option to prepay 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
-8-
transfer of the Company's ground lease interest in the premises. Both
credit facilities are subject to the bank's existing first position
mortgage loan on the premises. On August 2, 2001, the Company took down the
balance of the loan of $1,200,000.
(c) Mortgage is held by an affiliated corporation owned by members, including
certain directors of the Company, of the family of the late Joe Weinstein,
former Chairman of the Board of Directors. Interest and amortization of
principal are paid quarterly. Effective April 1, 2000, the maturity date of
the mortgage was extended to March 31, 2005. The interest rate remained at
9% per annum. During the extended period the constant quarterly payments of
interest and principal increased from $37,263 to $38,044. The mortgage loan
is self-amortizing.
(d) On June 2, 1999, the existing first mortgage loan balance on the Fishkill,
New York property was extended for a period of five years. Under the terms
of the extension agreement the annual interest rate was reduced from 9% to
8.25% and the interest and principal payments are to be made in constant
monthly amounts based upon a fifteen (15) year payout period.
7. Property and Equipment - at cost:
January 31, July 31,
2004 2003
----------- -----------
Property:
Buildings and improvements $50,100,088 $46,181,865
Improvements to leased property 9,158,009 9,158,009
Land 4,008,835 4,008,835
Construction in progress 168,925 62,436
----------- -----------
63,435,857 59,411,145
Less accumulated depreciation 26,847,063 26,240,399
----------- -----------
Property - net 36,588,794 33,170,746
----------- -----------
Fixtures and equipment and other:
Fixtures and equipment 704,827 694,520
Other fixed assets 212,747 242,538
----------- -----------
917,574 937,058
Less accumulated depreciation 649,140 625,420
----------- -----------
Fixtures and equipment and other - net 268,434 311,638
----------- -----------
Property and equipment - net $36,857,228 $33,482,384
=========== ===========
8. Payable to Securities Broker:
The Company borrowed funds, payable on demand, from a securities broker.
The loan balance at January 31, 2004 in the amount of $334,565, secured by
the Company's marketable securities, accrues interest at a floating rate,
which at January 31, 2004, was at the annual rate of 3.375%.
-9-
9. Unbilled Receivables and Rental Income:
Unbilled receivables represent the excess of scheduled rental income
recognized on a straight-line basis over rental income as it becomes
receivable according to the provisions of each lease.
The Company had leased from an affiliate one of the stores which was closed
in connection with its reorganization proceedings in 1982. The Company, by
agreement with the affiliate, modified and assigned its lease to a third
party. The agreement with the affiliate provided for certain monthly
payments to be made to the Company through August 30, 2002, the termination
date of the agreement. Rental income includes $69,629 for the six months
ended January 31, 2003, representing rental from the affiliated company.
There was no rental income from the affiliated company for the six months
ended January 31, 2004.
10. Employees' Retirement Plan:
The Company sponsors a noncontributory Money Purchase Plan covering
substantially all of its employees. Operations were charged $68,806 and
$137,510 as contributions to the Plan for the three and six months ended
January 31, 2004, respectively, and $73,158 and $138,146 as contributions
to the Plan for the three and six months ended January 31, 2003,
respectively.
11. Cash Flow Information:
For purposes of reporting cash flows, the Company considers cash
equivalents to consist of short-term highly liquid investments with
maturities of three months or less, which are readily convertible into
cash.
Supplemental disclosure: Six Months Ended
January 31,
---------------------
2004 2003
-------- ----------
Interest paid $261,738 $ 282,210
Income taxes paid $245,633 $1,298,433
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 January 31, 2004 and at July 31, 2003.
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.
-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, 2004 Compared to the Three Months Ended January
31, 2003:
In the three months ended January 31, 2004, the Company reported net income of
$148,371, or $.07 per share. In the comparable three months ended January 31,
2003, the Company reported net income of $350,532, or $.17 per share.
Revenues in the current three months decreased to $3,441,183 from $3,476,508 in
the comparable 2003 three months. The decrease in revenue was due primarily to
the loss of the retail tenant at the Company's Jamaica, New York property,
partially offset by the leasing to two retail tenants at the same property.
Real estate operating expenses in the current three months increased to
$2,014,490 from $1,738,281 in the comparable 2003 three months primarily due to
increases in rental expense, real estate taxes, payroll, maintenance and utility
costs, partially offset by a decrease in insurance costs.
Administrative and general expenses in the current three months decreased to
$755,417 from $864,355 in the comparable 2003 three months due to decreases in
payroll, insurance, and legal and professional costs.
Depreciation and amortization expense in the current three months increased to
$328,161 from $298,032 in the comparable 2003 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 $64,744 and by $73,317 in the comparable 2003 three months.
The decrease was due primarily to scheduled repayments of debt.
The bad debt recovery in the amount of $163,009 in the three months ended
January 31, 2003 relates to a prior years bad debt write-off of one of the
retail tenants at the Jamaica, New York Property.
Six Months Ended January 31, 2004 Compared to the Six Months Ended January 31,
2003:
In the six months ended January 31, 2004, the Company reported net income of
$429,159, or $.21 per share. In the comparable six months ended January 31,
2003, the Company reported net income of $667,608, or $.33 per share.
Revenues in the current six months increased to $6,761,124 from $6,721,886 in
the comparable 2003 six months.
Real estate operating expenses in the current six months increased to $3,882,297
from $3,378,578 in the comparable 2003 six months primarily due to increases in
rental expense, real estate taxes, payroll, maintenance and utility costs,
partially offset by a decrease in insurance costs.
Administrative and general expenses in the current six months decreased to
$1,350,286 from $1,561,116 in the comparable 2003 six months due to decreases in
payroll, insurance, and legal and professional costs.
Depreciation and amortization expense in the current six months increased to
$639,322 from $589,942 in the comparable 2003 six 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 six months exceeded
investment income by $129,060 and by $144,651 in the comparable 2003 six months.
The decrease was due primarily to scheduled repayments of debt.
-11-
The bad debt recovery in the amount of $163,009 in the six months ended January
31, 2003 relates to a prior years bad debt write-off of one of the retail
tenants at the Jamaica, New York Property.
Liquidity and Capital Resources:
The Company has been operating as a real estate enterprise since the
discontinuance of the retail department store segment of its operations on
January 3, 1989.
Management considers current working capital and borrowing capabilities adequate
to cover the Company's planned operating and capital requirements. The Company's
cash and cash equivalents amounted to $447,480 at January 31, 2004.
The City of New York, a tenant in the Company's Jowein building in Brooklyn, New
York, whose lease expires April 29, 2010, has elected to exercise its option to
terminate the Lease Agreement effective May 31, 2004. The loss in annual revenue
to the Company commencing June 1, 2004, relating to the termination of the
lease, will approximate $2,440,000. Upon the termination of the lease agreement,
the Company will be due $295,695 from the City of New York representing the
unamortized portion of the Company's work cost to prepare the leased premises
for occupancy. The Company is actively seeking, through brokers, tenants to
occupy the space to be vacated as well as the additional 87,000 square feet of
available space in the building.
The Company leased 22,192 square feet for office use to a tenant in the
Company's Brooklyn, New York property. Rent is anticipated to commence in May
2004. The Company anticipates leasing 25,423 square feet in the same building
for office use to a tenant. Rent is anticipated to commence in April 2004. The
Company also leased 8,300 square feet for office use to two tenants in the
Company's Jowein building in Brooklyn, New York. Rent commenced in December 2003
for one tenant and is anticipated to commence in April 2004 for the other
tenant. To replace the retail store which vacated the Jamaica, New York location
in March 2003, the Company divided the space into three retail stores. As of
January 31, 2004, the Company has leased 54,289 square feet to two tenants. Rent
commenced in September 2003.
The first mortgage loan balance on the Fishkill, New York property matures on
July 1, 2004, with a balloon payment due of $1,856,852. The Company is presently
having discussions with the bank to extend this mortgage (See Note 6(d) to the
Consolidated Financial Statements).
The Company entered into a contract to purchase a one half interest in a parcel
which is part of its Brooklyn, New York property. The parcel is currently leased
to the Company. The purchase price is $1,500,000 and will be financed by an
affiliated company. The terms of the financing will be comparable to terms that
the Company would receive from unrelated parties.
The Company has decided to liquidate its portfolio of preferred securities in
order to fund tenant improvements.
Cash Flows From Operating Activities:
Receivables: The Company is due the amount of $66,013 as of January 31, 2004 as
reimbursement for expenditures for renovations made on behalf of a tenant at the
Jamaica, New York building. The amount of $66,013 is to be paid in installments
through April 2004. The original amount of the reimbursement was $1,591,753 of
which $1,525,740 has been received.
Prepaid Expenses: Expenditures for the six months ended January 31, 2004
increased by $41,420 compared to the period ended January 31, 2003, due to
increases in real estate taxes offset by a decrease in insurance premiums paid.
Payroll and other accrued liabilities: The Company paid $146,353 for commissions
incurred in order to lease space at the Company's properties in the six months
ended January 31, 2004. The original amount of the brokerage leasing commissions
was $409,629. As of January 31, 2004, $198,896 has been paid. There are also
amounts due outside contractors totaling $527,043 for construction work
completed at the Brooklyn, New York and Jamaica, New York properties.
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Cash Flows From Investing Activities:
Capital expenditures: The Company had expenditures of $168,719 for the six
months ended January 31, 2004 for the renovation of a portion of the exterior of
its Brooklyn, New York building. The total cost was $203,000. The project was
completed in December 2003.
The Company had expenditures of $370,369 for the six months ended January 31,
2004 for the dividing of space into three separate stores, which was formerly
occupied by one department store that vacated the premises in March 2003, at its
Jamaica, New York building. The total cost of the project was $883,518. The
project was completed in October 2003.
The Company had expenditures of $935,800 for the six months ended January 31,
2004 for the renovation of 8,300 square feet to office space for two tenants at
its Jowein building in Brooklyn, New York. The total cost of the project was
$961,655. The project was completed in October 2003.
The Company also had expenditures of $2,292,293 for the six months ended January
31, 2004 for the renovation of 22,192 square feet to office space for a tenant
at its Brooklyn, New York building. The total cost of the project was
$2,460,751. The project was completed in January 2004.
Quantitative and Qualitative Disclosures About Market Risks:
The Company primarily uses fixed-rate debt to finance its capital requirements.
These transactions do not expose the Company to market risk related to changes
in interest rates. The Company does not use derivative financial instruments. At
January 31, 2004, the Company had fixed-rate debt of $7,448,126. Because of the
negotiations on the Fishkill, New York property loan, 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 $19,053 and if it were to decrease 100 basis
points, the effect would be an increase of $19,053 for this loan. Due to the
loan payable to securities broker in the amount of $334,565, 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 $3,346 and if it were to decrease 100
basis points, the effect would be an increase of $3,346 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.
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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, 2004, 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.
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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, 2004.
Item reported - The Company reported its financial results for
the three months ended October 31, 2003.
Date of report filed - December 12, 2003.
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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 10, 2004 Lloyd J. Shulman
--------------------------- ----------------------------
Lloyd J. Shulman
President
Chief Executive Officer
Date March 10, 2004 Mark S. Greenblatt
--------------------------- ----------------------------
Mark S. Greenblatt
Vice President
(Chief Financial Officer)
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