<Page> J.W. MAYS, INC. ANNUAL REPORT 2005 Year Ended July 31, 2005 <Page> J.W. MAYS, INC. CONTENTS <Table> <Caption> PAGE NO. - --------------------------------------------------------------------- Summary of Selected Financial Data 2 The Company 2 Message to Shareholders 3 Consolidated Balance Sheets 4-5 Consolidated Statements of Income and Retained Earnings 6 Consolidated Statements of Comprehensive Income 6 Consolidated Statements of Cash Flows 7 Notes to Consolidated Financial Statements 8-16 Report of Management 17 Report of Independent Registered Public Accounting Firm 17 Five Year Summary of Consolidated Operations 18 Management's Discussion and Analysis of Financial Condition and Results of Operations 19-23 Controls and Procedures 23 Quarterly Financial Information (Unaudited) 23 Common Stock and Dividend Information 24 Officers and Directors 25 EXECUTIVE OFFICES 9 Bond Street, Brooklyn, N.Y. 11201-5805 TRANSFER AGENT AND REGISTRAR American Stock Transfer & Trust Company 59 Maiden Lane New York, New York 10038-4502 SPECIAL COUNSEL Holland & Knight LLP 195 Broadway New York, N.Y. 10007-3189 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM D'Arcangelo & Co., LLP 3000 Westchester Avenue Purchase, N.Y. 10577-2538 ANNUAL MEETING The Annual Meeting of Shareholders will be held on Tuesday, November 22, 2005, at 10:00 A.M., New York time, at J.W. MAYS, INC., 9 Bond Street, Brooklyn, New York. </Table> <Page> J.W. MAYS, INC. SUMMARY OF SELECTED FINANCIAL DATA (dollars in thousands except per share data) <Table> <Caption> 2005 2004 2003 2002 2001 - ----------------------------------------------------------------------------------------------------- Rental Income $12,879 $14,025 $13,120 $12,533 $11,281 Rental Income -- Affiliated Company -- -- 70 462 414 Recovery of Real Estate Taxes -- -- -- 69 -- Gain (loss) on Disposition of Fixed Assets 4 (4) -- -- -- - ----------------------------------------------------------------------------------------------------- Total Revenues 12,883 14,021 13,190 13,064 11,695 - ----------------------------------------------------------------------------------------------------- Net Income 348 1,135 1,147 1,254 1,291 - ----------------------------------------------------------------------------------------------------- Real Estate-Net 44,370 39,907 33,171 32,094 31,525 - ----------------------------------------------------------------------------------------------------- Total Assets 57,177 51,809 48,346 48,266 45,578 - ----------------------------------------------------------------------------------------------------- Long-Term Debt: Mortgages Payable 12,476 7,830 5,261 7,779 7,332 Notes Payable 1,000 -- -- -- -- Other 925 641 569 399 364 ------- ------- ------- ------- ------- Total 14,401 8,471 5,830 8,178 7,696 - ----------------------------------------------------------------------------------------------------- Shareholders' Equity 37,339 36,996 35,705 34,652 33,033 - ----------------------------------------------------------------------------------------------------- Net Income Per Common Share $ .17 $ .56 $ .57 $ .62 $ .62 - ----------------------------------------------------------------------------------------------------- Cash Dividends Declared Per Share -- -- -- -- -- - ----------------------------------------------------------------------------------------------------- </Table> Average common shares outstanding for fiscal 2005, 2,015,780; 2004, 2,015,780; 2003, 2,026,855; 2002, 2,033,280; 2001, 2,066,390. THE COMPANY - -------------------------------------------------------------------------------- J.W. Mays, Inc. was founded in 1924 and incorporated under the laws of the State of New York on July 6, 1927. The Company operates a number of commercial real estate properties located in Brooklyn and Jamaica in New York City, in Levittown and Massapequa, Long Island, New York, in Fishkill, Dutchess County, New York and in Circleville, Ohio. The major portion of these properties is owned and the balance is leased. A substantial percentage of these properties are leased to tenants while the remainder is available for lease. More comprehensive information concerning the Company appears in its Form 10-K Annual Report for the fiscal year ended July 31, 2005. 2 <Page> J.W. MAYS, INC. TO OUR SHAREHOLDERS: - -------------------------------------------------------------------------------- The financial position of our Company continued to be positive during the fiscal year ended July 31, 2005 with profits earned in each of the four quarters. In fiscal 2005, our revenues were $12,882,965 compared to $14,020,571 in the 2004 fiscal year. Net income for fiscal 2005 was $348,368 or $.17 per share. This compares to net income of $1,135,466 or $.56 per share for fiscal 2004. During fiscal 2005, the Company leased 43,801 square feet for office use to two tenants in the Company's Jowein building in Brooklyn, New York. One tenant leased 28,801 square feet and its rent commenced May, 2005. The second tenant leased 15,000 square feet and its rent will commence in October, 2005. The Company also leased 4,320 square feet to an existing tenant at its 9 Bond Street building in Brooklyn, New York. Rent commenced in April, 2005. To replace the retail store which vacated the Jamaica, New York property in March, 2003, the Company divided the premises into three retail stores. As of July 31, 2005, the Company has leased the entire space to three tenants. Rent commenced in September, 2003 for two tenants and March, 2005 for the third tenant. The rental income from the additional tenants will partially offset the loss in rental income created by the loss of the City of New York as a tenant at the Company's Jowein building in Brooklyn, New York in June, 2004 and the loss of the tenant at the Company's Levittown, New York property in September, 2004. The Company, on August 19, 2004, closed on a $12,000,000 multiple draw term loan. The loan will refinance the existing mortgage on the Company's Fishkill, New York property which matured on July 1, 2004, and fund capital improvements for new tenants at the Company's properties at 9 Bond Street in Brooklyn, New York and Fishkill, New York. The Company also secured financing from two banks in the amounts of $1,700,000 and $1,200,000. These loans will finance the construction costs and brokerage commissions associated with the leasing of the 28,801 square feet and the 15,000 square feet, respectively, at the Company's Jowein building in Brooklyn, New York. The increased rentals from the additional tenants and the additional financing should adequately cover the Company's planned operating and capital requirements. We are continuing to actively pursue government agencies, educational institutions and prospective corporate tenants which may be seeking office or retail space in our properties. I believe our Company is well-positioned to continue its growth, and I want to thank the personnel of Mays and our Board colleagues for their continuing commitment and support. LLOYD J. SHULMAN Lloyd J. Shulman Chairman, President and Chief Executive Officer October 7, 2005 3 <Page> J.W. MAYS, INC. CONSOLIDATED BALANCE SHEETS July 31, 2005 and 2004 ASSETS <Table> <Caption> 2005 2004 - ------------------------------------------------------------------------------------------ Property and Equipment-at cost (Notes 1 and 3): Buildings and improvements.............................. $57,368,282 $53,533,121 Improvements to leased property......................... 9,158,009 9,158,009 Fixtures and equipment.................................. 719,322 711,001 Land.................................................... 6,146,554 4,713,503 Other................................................... 257,472 212,747 Construction in progress................................ 592,545 -- ----------- ----------- 74,242,184 68,328,381 Less accumulated depreciation and amortization.......... 29,605,517 28,174,404 ----------- ----------- Property and equipment-net.......................... 44,636,667 40,153,977 ----------- ----------- Current Assets: Cash and cash equivalents (Notes 9 and 10).............. 522,897 603,289 Marketable securities (Notes 1, 2 and 10)............... 45,668 45,395 Receivables (Note 6).................................... 141,192 181,407 Income taxes refundable (Notes 1 and 4)................. 234,616 126,911 Deferred income taxes (Notes 1 and 4)................... 104,000 79,000 Security deposits....................................... 66,998 191,118 Prepaid expenses........................................ 1,552,114 1,532,163 ----------- ----------- Total current assets................................ 2,667,485 2,759,283 ----------- ----------- Other Assets: Deferred charges (Notes 1 and 11)....................... 2,830,730 2,005,894 Less accumulated amortization (Note 11)................. 1,188,451 956,805 ----------- ----------- Net................................................. 1,642,279 1,049,089 Security deposits....................................... 1,233,116 946,183 Unbilled receivables (Note 1)........................... 4,422,984 4,316,666 Marketable securities (Notes 1, 2 and 10)............... 2,574,514 2,583,812 ----------- ----------- Total other assets.................................. 9,872,893 8,895,750 ----------- ----------- TOTAL ASSETS........................................ $57,177,045 $51,809,010 ----------- ----------- ----------- ----------- </Table> See Notes to Consolidated Financial Statements. 4 <Page> LIABILITIES AND SHAREHOLDERS' EQUITY <Table> <Caption> 2005 2004 - --------------------------------------------------------------------------------------- Long-Term Debt: Mortgages and term loan payable (Notes 3 and 10)........ $12,476,347 $ 7,830,160 Note Payable -- related party (Notes 10 and 13)......... 1,000,000 -- Security deposits payable (Note 10)..................... 924,341 641,209 ----------- ----------- Total long-term debt................................ 14,400,688 8,471,369 ----------- ----------- Deferred Income Taxes (Notes 1 and 4)....................... 3,151,000 3,175,000 ----------- ----------- Current Liabilities: Payable to securities broker............................ -- 1,434,025 Accounts payable........................................ 65,539 87,581 Payroll and other accrued liabilities (Note 7).......... 1,133,918 936,048 Other taxes payable..................................... 5,188 4,764 Current portion of mortgages payable (Notes 3 and 10)... 1,015,173 587,634 Current portion of security deposits payable (Note 10)............................................. 66,998 116,118 ----------- ----------- Total current liabilities........................... 2,286,816 3,166,170 ----------- ----------- Total liabilities................................... 19,838,504 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 $600,000 at July 31, 2005 and $603,000 at July 31, 2004. (Notes 1 and 2)............ 1,164,264 1,170,562 Retained earnings....................................... 31,937,587 31,589,219 ----------- ----------- 38,626,393 38,284,323 Less common stock held in treasury, at cost-162,517 shares at July 31, 2005 and July 31, 2004 (Note 12)............................................. 1,287,852 1,287,852 ----------- ----------- Total shareholders' equity.......................... 37,338,541 36,996,471 ----------- ----------- Commitments (Notes 5 and 6) and Contingencies (Note 14) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.......... $57,177,045 $51,809,010 ----------- ----------- ----------- ----------- </Table> See Notes to Consolidated Financial Statements. 5 <Page> J.W. MAYS, INC. CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS <Table> <Caption> Years Ended July 31, --------------------------------------- 2005 2004 2003 - ----------------------------------------------------------------------------------------------------- Revenues Rental income (Notes 1 and 6)............................. $12,879,226 $14,024,924 $13,120,360 Rental income-affiliated company (Note 6)................. -- -- 69,629 Gain (loss) on disposition of equipment................... 3,739 (4,353) -- ----------- ----------- ----------- Total revenues........................................ 12,882,965 14,020,571 13,189,989 ----------- ----------- ----------- Expenses Real estate operating expenses (Note 5)................... 7,321,272 7,715,493 6,914,941 Administrative and general expenses....................... 2,764,210 2,771,106 2,929,578 Bad debts (recovery)...................................... -- -- (163,009) Depreciation and amortization (Note 1).................... 1,464,883 1,317,522 1,201,119 ----------- ----------- ----------- Total expenses........................................ 11,550,365 11,804,121 10,882,629 ----------- ----------- ----------- Income from operations before investment income, interest expense, other expenses and income taxes.................. 1,332,600 2,216,450 2,307,360 ----------- ----------- ----------- Investment income, interest expense and other expenses: Loss on disposition of asset.............................. -- -- (80,301) Investment income (Notes 1 and 2)......................... 84,307 253,116 300,287 Investment expense (Notes 3 and 9)........................ (725,539) (547,100) (548,315) ----------- ----------- ----------- (641,232) (293,984) (328,329) ----------- ----------- ----------- Income before income taxes.................................. 691,368 1,922,466 1,979,031 Income taxes provided (Notes 1 and 4)....................... 343,000 787,000 832,000 ----------- ----------- ----------- Net income.................................................. 348,368 1,135,466 1,147,031 Retained earnings, beginning of year........................ 31,589,219 30,453,753 29,306,722 ----------- ----------- ----------- Retained earnings, end of year.............................. $31,937,587 $31,589,219 $30,453,753 ----------- ----------- ----------- Income per common share (Note 1)............................ $ .17 $ .56 $ .57 ----------- ----------- ----------- ----------- ----------- ----------- Dividends per share......................................... -- -- -- ----------- ----------- ----------- ----------- ----------- ----------- Average common shares outstanding........................... 2,015,780 2,015,780 2,026,855 ----------- ----------- ----------- ----------- ----------- ----------- </Table> See Notes to Consolidated Financial Statements. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME <Table> <Caption> Years Ended July 31, --------------------------------------- 2005 2004 2003 - ----------------------------------------------------------------------------------------------------- Net income.................................................. $ 348,368 $ 1,135,466 $ 1,147,031 ----------- ----------- ----------- Other comprehensive income, net of tax Unrealized gain (loss) on available-for-sale securities, net of taxes (benefit) of ($3,000), $55,000 and $94,000 for the fiscal years 2005, 2004 and 2003, respectively.... (6,298) 250,275 131,395 Reclassification adjustment................................. -- (94,614) 2,696 ----------- ----------- ----------- Net change in comprehensive income.......................... (6,298) 155,661 134,091 ----------- ----------- ----------- Comprehensive income........................................ $ 342,070 $ 1,291,127 $ 1,281,122 ----------- ----------- ----------- ----------- ----------- ----------- </Table> See Notes to Consolidated Financial Statements. 6 <Page> J.W. MAYS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS <Table> <Caption> Years Ended July 31, --------------------------------------- 2005 2004 2003 - ----------------------------------------------------------------------------------------------------- Cash Flows From Operating Activities Net Income................................................ $ 348,368 $ 1,135,466 $ 1,147,031 Adjustments to reconcile net income to net cash provided by operating activities: Deferred income taxes................................. (46,000) 22,000 (61,000) Realized (gain) loss on marketable securities......... -- (94,614) 2,696 Gain (loss) on disposition of equipment............... 3,739 (4,353) -- Depreciation and amortization......................... 1,464,883 1,317,522 1,201,119 Amortization of deferred expenses..................... 310,695 519,058 446,019 Other assets -- deferred expenses..................... (903,885) (232,390) (553,540) -- unbilled receivables................... (106,318) (68,854) 65,515 -- receivables............................ -- -- 193,444 Changes in: Receivables............................................... 40,215 252,088 118,183 Prepaid expenses.......................................... (19,951) 30,835 (131,758) Income taxes refundable................................... (107,705) 83,471 (210,382) Real estate taxes refundable.............................. -- -- 82,769 Accounts payable.......................................... (22,042) 40,752 (8,776) Payroll and other accrued liabilities..................... 197,870 (149,933) 277,174 Income taxes payable...................................... -- -- (747,268) Other taxes payable....................................... 424 500 588 ----------- ----------- ----------- Net cash provided by operating activities............. 1,160,293 2,851,548 1,821,814 ----------- ----------- ----------- Cash Flows From Investing Activities Acquisition of property and equipment..................... (5,951,312) (7,984,762) (2,315,990) Security deposits......................................... (162,813) (244,029) (177,072) Marketable securities: Receipts from sales or maturities..................... -- 1,877,354 420,817 Payments for purchases................................ (273) (284) (72,958) ----------- ----------- ----------- Net cash (used) by investing activities............. (6,114,398) (6,351,721) (2,145,203) ----------- ----------- ----------- Cash Flows From Financing Activities Borrowings -- security broker............................. 981,062 3,151,518 -- Payments -- security broker............................... (2,415,087) (1,717,493) -- Increase -- security deposits............................. 234,012 168,070 175,184 Borrowing -- mortgage and other debt...................... 6,720,000 1,350,000 -- Payments -- mortgage and other debt payments.............. (646,274) (711,077) (712,864) Purchase of treasury stock................................ -- -- (227,500) ----------- ----------- ----------- Net cash provided (used) by financing activities...... 4,873,713 2,241,018 (765,180) ----------- ----------- ----------- Net (decrease) in cash and cash equivalents............... (80,392) (1,259,155) (1,088,569) Cash and cash equivalents at beginning of year............ 603,289 1,862,444 2,951,013 ----------- ----------- ----------- Cash and cash equivalents at end of year.................. $ 522,897 $ 603,289 $ 1,862,444 ----------- ----------- ----------- ----------- ----------- ----------- </Table> See Notes to Consolidated Financial Statements. 7 <Page> J.W. MAYS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: CONSOLIDATION: The consolidated financial statements include the accounts of the Company, a New York corporation and its subsidiaries, which are wholly-owned. Material intercompany items have been eliminated in consolidation. 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. RENTAL INCOME: All of the real estate owned by the Company is held for leasing to tenants except for a small portion used for Company offices. Rent is recognized from tenants under executed leases no later than on an established date or on an earlier date if the tenant should commence conducting business. 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 the lease. Contingent rental income is recorded when earned and is not based on tenant revenue. Based upon its periodic accessment of the quality of the receivables, management, using its historical knowledge of the tenants and industry experience, determines whether a reserve or write-off is required. 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. Realized gains and losses are determined on a specific identification basis. The Company reviews marketable securities for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recovered. The Company did not classify any securities as trading during the three years ended July 31, 2005. PROPERTY AND EQUIPMENT: Property and equipment are stated at cost. Depreciation is calculated using the straight-line method and the declining-balance method. Amortization of improvements to leased property is calculated over the shorter of the life of the lease or the estimated useful life of the improvements. Lives used to determine depreciation and amortization are generally as follows: <Table> Buildings and improvements.................................. 18-40 years Improvements to leased property............................. 3-40 years Fixtures and equipment...................................... 7-12 years Other....................................................... 3-5 years </Table> Maintenance, repairs, renewals and improvements of a non-permanent nature are charged to expense when incurred. Expenditures for additions and major renewals or improvements are capitalized. The cost of assets sold or retired and the accumulated depreciation or amortization thereon are eliminated from the respective accounts in the year of disposal, and the resulting gain or loss is credited or charged to income. Capitalized interest is recorded as part of the asset to which it relates and is amortized over the asset's estimated useful life. The Company reviews long-lived assets for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recovered. At July 31, 2005 and 2004, there were no impairments of its property and equipment. 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. 8 <Page> - -------------------------------------------------------------------------------- Comprehensive income is defined to include all changes in equity except those resulting from investments by and distributions to shareholders. DEFERRED CHARGES: Deferred charges consist principally of costs incurred in connection with the leasing of property to tenants. Such costs are amortized over the related lease periods, ranging from 1 to 21 years, using the straight-line method. INCOME TAXES: Deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities. Deferred tax assets result principally from the recording of certain accruals and reserves which currently are not deductible for tax purposes. Deferred tax liabilities result principally from temporary differences in the recognition of gains and losses from certain investments and from the use, for tax purposes, of accelerated depreciation. INCOME PER SHARE OF COMMON STOCK: Income per share has been computed by dividing net income for the year by the weighted average number of shares of common stock outstanding during the year, adjusted for the purchase of treasury stock. Shares used in computing income per share were 2,015,780 in fiscal 2005 and fiscal 2004 and 2,026,855 in fiscal 2003. 2. MARKETABLE SECURITIES: As of July 31, 2005 and 2004, the Company's marketable securities were classified as follows: <Table> <Caption> 2005 2004 ------------------------------------------------- --------------------------------------------- GROSS GROSS GROSS GROSS UNREALIZED UNREALIZED FAIR UNREALIZED UNREALIZED FAIR COST GAINS LOSSES VALUE COST GAINS LOSSES VALUE ---- ----- ------ ----- ---- ----- ------ ----- Current: Held-to-Maturity: Certificate of deposit... $ 45,668 $ -- -$- $ 45,668 $ 45,395 $ -- -$- $ 45,395 -------- ---------- ---- ---------- -------- ---------- ---- ---------- -------- ---------- ---- ---------- -------- ---------- ---- ---------- Non-current: Available-for-sale: Equity securities........ $810,250 $1,764,264 -$- $2,574,514 $810,250 $1,773,562 -$- $2,583,812 -------- ---------- ---- ---------- -------- ---------- ---- ---------- -------- ---------- ---- ---------- -------- ---------- ---- ---------- </Table> Investment income for the years ended July 31, 2005, 2004 and 2003 consists of the following: <Table> <Caption> 2005 2004 2003 ---- ---- ---- Interest income............................... $ 9,446 $ 14,085 $ 99,094 Dividend income............................... 74,861 144,417 203,889 Gain (loss) on sale of securities............. -- 94,614 (2,696) ------- -------- -------- Total..................................... $84,307 $253,116 $300,287 ------- -------- -------- ------- -------- -------- </Table> 9 <Page> - -------------------------------------------------------------------------------- 3. LONG-TERM DEBT -- MORTGAGES AND TERM LOAN: <Table> <Caption> JULY 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 $ 1,533,333 $266,667 $1,800,000 Jamaica, New York property....... (b) 6.98% 8/01/06 178,937 2,739,452 166,907 2,918,389 Jowein building, Brooklyn, NY.... (c) 9 % 3/31/05 -- -- 109,183 -- Jowein building, Brooklyn, NY.... (d) 9 % 4/01/09 49,055 1,215,752 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 -- -- Term loan payable to bank........ (g) 6.50% 5/01/10 300,514 1,353,084 -- -- Jowein building, Brooklyn, NY.... (h) Variable 8/01/10 220,000 980,000 -- -- ---------- ----------- -------- ---------- Total.......................... $1,015,173 $12,476,347 $587,634 $7,830,160 ---------- ----------- -------- ---------- ---------- ----------- -------- ---------- </Table> (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. Payments are 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) 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 was self-amortizing. As of July 31, 2005, the mortgage loan was paid in full. (d) The Company, on May 7, 2004, closed a loan with an affiliated corporation (see Note 3(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 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. (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. 10 <Page> - -------------------------------------------------------------------------------- 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 3(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 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 3(e)). 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 3(e)), b) a permanent subordinate mortgage loan in the amount $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 July 31, 2005 was $4,654,726. (g) 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 was 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 loan, for a period of five (5) years, and is self-amortizing, at an interest rate of 6.50% per annum. As of July 31, 2005, the Company drew down the $1,700,000. (h) 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 an interest rate of prime plus 1.00% per annum floating. Maturities of long-term debt-mortgages payable outstanding at July 31, 2005, are as follows: Years ending July 31, 2006 (included in current liabilities), $1,015,173; 2007, $4,887,045; 2008, $5,295,452; 2009 $1,708,544; 2010, $565,306; and 2011, $20,000. Interest paid to related parties for the three years ended July 31, 2005 was $120,179, $44,862, and $28,033, respectively. 11 <Page> - -------------------------------------------------------------------------------- 4. INCOME TAXES: Significant components of the Company's deferred tax assets and liabilities as of July 31, 2005 and 2004 are a result of temporary differences related to the items described as follows: <Table> <Caption> 2005 2004 ---------------------------- ---------------------------- DEFERRED DEFERRED DEFERRED DEFERRED TAX ASSETS TAX LIABILITIES TAX ASSETS TAX LIABILITIES ---------- --------------- ---------- --------------- Rental income received in advance................ $ 82,604 $ -- $51,594 $ -- Unbilled receivables............................. -- 1,503,815 -- 1,467,666 Property and equipment........................... -- 1,048,421 -- 1,105,526 Unrealized gain on available-for-sale securities..................................... -- 599,850 -- 603,011 Other............................................ 22,482 -- 27,609 -- -------- ---------- ------- ---------- $105,086 $3,152,086 $79,203 $3,176,203 -------- ---------- ------- ---------- -------- ---------- ------- ---------- </Table> The Company has determined, based on its history of operating earnings and expectations for the future, that it is more likely than not that future taxable income will be sufficient to fully utilize the deferred tax assets at July 31, 2005. Income taxes provided for the years ended July 31, 2005, 2004 and 2003 consist of the following: <Table> <Caption> 2005 2004 2003 ---- ---- ---- Current: Federal................................................ $218,665 $506,500 $586,000 State and City......................................... 170,335 258,500 307,000 Deferred taxes........................................... (46,000) 22,000 (61,000) -------- -------- -------- Total provision...................................... $343,000 $787,000 $832,000 -------- -------- -------- -------- -------- -------- </Table> Components of the deferred tax provision for the years ended July 31, 2005, 2004 and 2003 consist of the following: <Table> <Caption> 2005 2004 2003 ---- ---- ---- Book depreciation (under) tax depreciation................ $(57,105) $(45,913) $(29,206) Reduction (increase) of rental income received in advance................................................. (31,010) 32,239 (9,420) Increase (decrease) in unbilled receivables............... 36,149 23,410 (22,275) Capital loss carry forward................................ -- (8,506) -- Increase in impairment of marketable securities........... -- 16,962 -- Other..................................................... 5,966 3,808 (99) -------- -------- -------- $(46,000) $ 22,000 $(61,000) -------- -------- -------- -------- -------- -------- </Table> 12 <Page> - -------------------------------------------------------------------------------- Taxes provided for the years ended July 31, 2005, 2004 and 2003 differ from amounts which would result from applying the federal statutory tax rate to pre-tax income, as follows: <Table> <Caption> 2005 2004 2003 ---- ---- ---- Income before income taxes............................ $691,368 $1,922,466 $1,979,031 Dividends received deduction.......................... (52,403) (100,000) (103,600) Other-net............................................. 6,962 11,100 8,000 -------- ---------- ---------- Adjusted pre-tax income............................... $645,927 $1,833,566 $1,883,431 -------- ---------- ---------- -------- ---------- ---------- Statutory rate........................................ 34% 34% 34% Income tax provision at statutory rate................ $219,620 $ 623,420 $ 640,370 State and City income taxes, net of federal income tax benefit............................................. 123,380 163,580 191,630 -------- ---------- ---------- Income taxes provided................................. $343,000 $ 787,000 $ 832,000 -------- ---------- ---------- -------- ---------- ---------- </Table> 5. LEASES: The Company's real estate operations encompass both owned and leased properties. The current leases on leased property, most of which have options to extend the terms, range from 1 year to 26 years. Certain of the leases provide for additional rentals under certain circumstances and obligate the Company for payments of real estate taxes and other expenses. Rental expense for leased real property for each of the three fiscal years ended July 31, 2005 was exceeded by sublease rental income, as follows: <Table> <Caption> 2005 2004 2003 ---- ---- ---- Minimum rental expense.............................. $1,119,336 $1,230,929 $1,164,109 Contingent rental expense........................... 1,339,355 1,316,308 1,164,601 ---------- ---------- ---------- 2,458,691 2,547,237 2,328,710 Sublease rental income.............................. 6,947,617 7,580,001 7,121,713 ---------- ---------- ---------- Excess of sublease income over expense.......... $4,488,926 $5,032,764 $4,793,003 ---------- ---------- ---------- ---------- ---------- ---------- </Table> Rent expense paid to an affiliate principally owned by certain directors of the Company totaled $169,800 for fiscal years ended July 31, 2005, 2004 and 2003. Rent expense is recognized on a straight-line basis over the lives of the leases. Future minimum non-cancelable rental commitments for operating leases with initial or remaining terms of one year or more are payable as follows: <Table> <Caption> FISCAL OPERATING YEAR LEASES ---- ------ 2006 ............................................................ $1,189,188 2007 ............................................................ 1,282,688 2008 ............................................................ 1,282,688 2009 ............................................................ 1,224,870 2010 ............................................................ 884,848 After 2010......................................................... 2,527,375 ---------- Total required*............................................ $8,391,657 ---------- ---------- </Table> * Minimum payments have not been reduced by minimum sublease rentals of $32,466,925 under operating leases due in the future under non-cancelable leases. 13 <Page> - -------------------------------------------------------------------------------- 6. RENTAL INCOME: Rental income for each of the fiscal years 2005, 2004 and 2003 is as follows: <Table> <Caption> July 31, --------------------------------------- 2005 2004 2003 ---- ---- ---- Minimum rentals Company owned property....................... $ 5,376,270 $ 5,418,020 $ 5,288,068 Operating leases............................. 6,048,649 6,391,641 6,178,459 ----------- ----------- ----------- 11,424,919 11,809,661 11,466,527 ----------- ----------- ----------- Contingent rentals Company owned property....................... 555,339 1,026,903 780,208 Operating leases............................. 898,968 1,188,360 943,254 ----------- ----------- ----------- 1,454,307 2,215,263 1,723,462 ----------- ----------- ----------- Total.................................... $12,879,226 $14,024,924 $13,189,989 ----------- ----------- ----------- ----------- ----------- ----------- </Table> Future minimum non-cancelable rental income for leases with initial or remaining terms of one year or more is as follows: <Table> <Caption> FISCAL COMPANY LEASED YEAR OWNED PROPERTY PROPERTY TOTAL ---- -------------- -------- ----- 2006 ........................................ $ 5,157,067 $ 6,320,709 $11,477,776 2007 ........................................ 4,743,385 5,799,963 10,543,348 2008 ........................................ 4,256,361 4,862,428 9,118,789 2009 ........................................ 3,986,809 4,550,485 8,537,294 2010 ........................................ 3,638,638 4,028,268 7,666,906 After 2010.................................... 3,642,577 6,905,072 10,547,649 ----------- ----------- ----------- Total.................................. $25,424,837 $32,466,925 $57,891,762 ----------- ----------- ----------- ----------- ----------- ----------- </Table> Rental income from an affiliate principally owned by certain directors of the Company totaled $69,629 for fiscal year 2003. The lease with the affiliate ended in August 2002 and was not renewable. Rental income is recognized on a straight-line basis over the lives of the leases. 7. PAYROLL AND OTHER ACCRUED LIABILITIES: Payroll and other accrued liabilities for the fiscal years ended July 31, 2005, and 2004 consist of the following: <Table> <Caption> 2005 2004 ---- ---- Payroll..................................................... $ 144,345 $128,907 Interest.................................................... 76,931 51,830 Professional fees........................................... 97,097 129,900 Rents received in advance................................... 242,953 151,747 Utilities................................................... 57,400 53.500 Brokers commissions......................................... 194,488 180,506 Construction costs.......................................... 188,000 3,000 Other....................................................... 132,704 236,658 ---------- -------- Total............................................... $1,133,918 $936,048 ---------- -------- ---------- -------- </Table> 14 <Page> - -------------------------------------------------------------------------------- 8. EMPLOYEE'S RETIREMENT PLAN: The Company sponsors a non-contributory Money Purchase Plan covering substantially all of its employees. Operations were charged $287,777, $265,174 and $271,089 as contributions to the Plan for fiscal years 2005, 2004 and 2003, respectively. 9. 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 disclosures: <Table> <Caption> Years Ended July 31, -------------------------------- 2005 2004 2003 ---- ---- ---- Interest paid, net of capitalized interest of $24,966 (2005)............................................... $700,438 $539,414 $ 546,994 Income taxes paid...................................... $496,705 $681,529 $1,850,650 </Table> 10. FINANCIAL INSTRUMENTS AND CREDIT RISK CONCENTRATIONS: The following disclosure of estimated fair value was determined by the Company, using available market information and appropriate valuation methods. Considerable judgment is necessary to develop estimates of fair value. The estimates presented herein are not necessarily indicative of the amounts that could be realized upon disposition of the financial instruments. The Company estimates the fair value of its financial instruments using the following methods and assumptions: (i) quoted market prices, when available, are used to estimate the fair value of investments in marketable debt and equity securities; (ii) discounted cash flow analyses are used to estimate the fair value of long-term debt, using the Company's estimate of current interest rates for similar debt; and (iii) carrying amounts in the balance sheet approximate fair value for cash and cash equivalents and tenant security deposits due to their high liquidity. <Table> <Caption> JULY 31, 2005 ------------------------- CARRYING FAIR VALUE VALUE ----- ----- Cash and cash equivalents......................... $ 522,897 $ 522,897 Marketable securities............................. $ 2,620,182 $ 2,620,182 Tenant security deposits payable.................. $ 991,339 $ 991,339 Mortgages and notes payable....................... $14,491,520 $13,870,215 </Table> 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 16.86% and another tenant accounted for 11.62% of rental income during the year ended July 31, 2005. No other tenant accounted for more than 10% of rental income during the year ended July 31, 2005. The Company has two irrevocable letters of credit totaling $137,500 at July 31, 2005 provided by two tenants, and had three irrevocable letters of credit totaling $319,000 at July 31, 2004 provided by three tenants. 15 <Page> - -------------------------------------------------------------------------------- 11. DEFERRED CHARGES: Deferred charges for the fiscal years ended July 31, 2005, and 2004 consist of the following: <Table> <Caption> JULY 31, 2005 JULY 31, 2004 ----------------------------- ----------------------------- GROSS CARRYING ACCUMULATED GROSS CARRYING ACCUMULATED AMOUNT AMORTIZATION AMOUNT AMORTIZATION ------ ------------ ------ ------------ Leasing brokerage commissions........... $1,656,326 $ 537,918 $1,044,955 $405,040 Professional fees for leasing........... 429,836 265,178 374,086 230,789 Financing costs......................... 625,115 344,914 472,734 283,382 Other................................... 119,453 40,441 114,119 37,594 ---------- ---------- ---------- -------- Total............................... $2,830,730 $1,188,451 $2,005,894 $956,805 ---------- ---------- ---------- -------- ---------- ---------- ---------- -------- </Table> The aggregate amortization expense for the three years ended July 31, 2005 was $310,695, $519,058, and $446,019, respectively. The estimated aggregate amortization expense for each of the five succeeding fiscal years is as follows: <Table> <Caption> FISCAL YEAR ---- 2006....................................................... $324,662 2007....................................................... $243,685 2008....................................................... $197,578 2009....................................................... $196,219 2010....................................................... $190,664 </Table> 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 July 31, 2005 and at July 31, 2004. 13. 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. The interest paid for the year ended July 31, 2005 was $46,875. 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. 15. SUBSEQUENT EVENT: Levitz Home Furnishings, Inc. (formerly Seaman Furniture Company, Inc.) which occupies retail space at the Company's Jowein building in Brooklyn, New York and is estimated to account for approximately 6% of the annual rental income of the Company for the fiscal year ended July 31, 2006, filed for Chapter 11 bankruptcy protection from creditors on October 11, 2005. Levitz Home Furnishings, Inc. has not expressed its intentions as to what actions it may take with respect to such property, and the Company is unable to determine the effect, if any, of such filing on its operations. 16 <Page> J.W. MAYS, INC. REPORT OF MANAGEMENT - -------------------------------------------------------------------------------- Management is responsible for the preparation and reliability of the financial statements and the other financial information in this Annual Report. Management has established systems of internal control over financial reporting designed to provide reasonable assurance that the financial records used for preparing financial statements are reliable and reflect the transactions of the Company and that established policies and procedures are carefully followed. The Company reviews, modifies and improves its system of internal controls in response to changes in operations. The Board of Directors, acting through the Audit Committee, which is comprised solely of independent directors who are not employees of the Company, oversees the financial reporting process. The financial statements have been prepared in accordance with accounting standards generally accepted in the United States of America and include amounts based on judgments and estimates made by management. Actual results could differ from estimated amounts. To ensure complete independence, D'Arcangelo & Co., LLP, the independent registered public accounting firm, has full and free access to meet with the Audit Committee, without management representatives present, to discuss results of the audit, the adequacy of internal controls and the quality of financial reporting. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - -------------------------------------------------------------------------------- To the Board of Directors and Shareholders J.W. Mays, Inc. and Subsidiaries We have audited the accompanying consolidated balance sheets of J.W. Mays, Inc. and subsidiaries as of July 31, 2005 and 2004, and the related consolidated statements of income and retained earnings, comprehensive income, and cash flows for each of the three years in the period ended July 31, 2005. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of J.W. Mays, Inc. and subsidiaries as of July 31, 2005 and 2004, and the results of its operations and its cash flows for each of the three years in the period ended July 31, 2005, in conformity with U.S. generally accepted accounting principles. D'ARCANGELO & CO., LLP Purchase, New York October 7, 2005 except for Note 15 as to which the date is October 12, 2005 17 <Page> J.W. MAYS, INC. FIVE YEAR SUMMARY OF CONSOLIDATED OPERATIONS (dollars in thousands except per share data) <Table> <Caption> Years Ended July 31, --------------------------------------------------------- 2005 2004 2003 2002 2001 - -------------------------------------------------------------------------------------------------------- Revenues Rental income............................ $ 12,879 $ 14,025 $ 13,120 $ 12,533 $ 11,281 Rental income-affiliated company......... -- -- 70 462 414 Recovery of real estate taxes............ -- -- -- 69 -- Gain (loss) on disposition of fixed assets................................. 4 (4) -- -- -- --------- --------- --------- --------- --------- Total revenues....................... 12,883 14,021 13,190 13,604 11,695 --------- --------- --------- --------- --------- Expenses Real estate operating expenses........... 7,321 7,716 6,915 6,025 5,885 Administrative and general expenses...... 2,764 2,771 2,930 2,600 2,392 Bad debts (recovery)..................... -- -- (163) 483 (48) Depreciation and amortization............ 1,465 1,318 1,201 1,142 1,080 --------- --------- --------- --------- --------- Total expenses....................... 11,550 11,805 10,883 10,250 9,309 --------- --------- --------- --------- --------- Income from operations before investment income, interest expense, other expenses and income taxes........................... 1,333 2,216 2,307 2,814 2,386 --------- --------- --------- --------- --------- Investment income, interest expense and other expenses: Loss on disposition of asset............. -- -- (80) -- -- Investment income........................ 84 253 300 233 264 Interest expense......................... (726) (547) (548) (674) (573) --------- --------- --------- --------- --------- (642) (294) (328) (441) (309) --------- --------- --------- --------- --------- Income before income taxes................... 691 1,922 1,979 2,373 2,077 Income taxes provided........................ 343 787 832 1,119 786 --------- --------- --------- --------- --------- Net Income................................... $ 348 $ 1,135 $ 1,147 $ 1,254 $ 1,291 --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Net income per common share.................. $ .17 $ .56 $ .57 $ .62 $ .62 --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Dividends per share.......................... -- -- -- -- -- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Average common shares outstanding............ 2,015,780 2,015,780 2,026,855 2,033,280 2,066,390 --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- </Table> 18 <Page> J.W. MAYS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -------------------------------------------------------------------------------- FISCAL 2005 COMPARED TO FISCAL 2004 Net income for the year ended July 31, 2005 amounted to $348,368, or $.17 per share, compared to net income for the year ended July 31, 2004 of $1,135,466, or $.56 per share. Revenues in the current year decreased to $12,882,965 from $14,020,571 in the comparable 2004 fiscal year. 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 Bond Street building in Brooklyn, New York, the leasing to three office tenants at its Jowein building in Brooklyn, New York, and the leasing to a retail tenant at its Jamaica, New York building. Real estate operating expenses in the current year decreased to $7,321,272 from $7,715,493 in the comparable 2004 year primarily due to decreases in rental expense, insurance costs, maintenance costs, leasing commissions and licenses and permits, partially offset by increases in real estate taxes, payroll costs, and utility costs. Administrative and general expenses in the current year decreased to $2,764,210 from $2,771,106 in the comparable 2004 year primarily due to decreases in medical costs and legal and professional costs, partially offset by an increase in payroll costs. Depreciation and amortization expense in the current year increased to $1,464,883 from $1,317,522 in the comparable 2004 year primarily due to depreciation on the additional improvements to the Jamaica, New York property, the 9 Bond Street Brooklyn, New York property and the Jowein building in Brooklyn, New York and acquisitions of the three parcels in Brooklyn, New York. Interest expense and other expenses exceeded investment income by $641,232 in fiscal 2005 and by $293,984 in the comparable 2004 year. The increase was due primarily to increased interest expense on the additional loans with banks, a note payable from a director, a decrease in income due to the gains on the sale of the Company's marketable securities in the 2004 year, and a decrease in dividend income due to the sale of the Company's marketable securities, partially offset by scheduled repayments of debt. The income tax provision for the year ended July 31, 2005 is approximately fifty percent of income before income taxes, compared to approximately forty-one percent in the year ended July 31, 2004. The increase in the tax percent was caused by the state and city tax provision in the year ended July 31, 2005 being based on capital and in the year ended July 31, 2004, it was based on income. FISCAL 2004 COMPARED TO FISCAL 2003 Net income for the year ended July 31, 2004 amounted to $1,135,466, or $.56 per share, compared to net income for the year ended July 31, 2003 of $1,147,031, or $.57 per share. Revenues in fiscal 2004 increased to $14,020,571 from $13,189,989 in the comparable 2003 fiscal year. The increase was primarily due to the leasing of two retail tenants at the Company's Jamaica, New York property, two office tenants at the Company's 9 Bond Street building in Brooklyn, New York and two office tenants at the Company's Jowein building in Brooklyn, New York. Real estate operating expenses in fiscal 2004 increased to $7,715,493 from $6,914,941 in the comparable 2003 year primarily due to increases in real estate taxes, rental expense, payroll, maintenance, licenses and permits and leasing commissions, partially offset by a decrease in insurance costs. Administrative and general expenses in fiscal 2004 decreased to $2,771,106 from $2,929,578 in the comparable 2003 year primarily due to decreases in payroll, insurance and legal costs. Depreciation and amortization expense in fiscal 2004 increased to $1,317,522 from $1,201,119 in the comparable 2003 year primarily due to depreciation on the additional improvements to the Jamaica, New York property, the 9 Bond Street Brooklyn, New York property and the Jowein building in Brooklyn, New York. 19 <Page> - -------------------------------------------------------------------------------- Interest expense and other expenses exceeded investment income by $293,984 in fiscal 2004 and by $328,329 in the comparable 2003 year. The decrease was due primarily to scheduled repayments of debt, the gain on sales of the Company's marketable securities and the loss on disposition of asset on a portion of the Company's Fishkill, New York property which was recorded in the comparable 2003 year. The bad debt recovery in the amount of $163,009 in the 2003 year relates to a prior year's bad debt write-off of one of the retail tenants at the Jamaica, New York property. LIQUIDITY AND CAPITAL RESOURCES: The Company has been operating as a real estate enterprise since the discontinuance of the retail department store segment of its operations on January 3, 1989. Management considers current working capital and borrowing capabilities adequate to cover the Company's planned operating and capital requirements. The Company's cash and cash equivalents amounted to $522,897 at July 31, 2005. In November 2004, 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 property in March 2003. The Company divided the premises into three retail stores. As of July 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 commenced in March 2005 for the other tenant. In January 2005 and in March 2005, the Company leased 28,801 square feet and 15,000 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 May 2005 for one tenant and will commence in October 2005 for the other tenant. 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 commenced 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 3(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 finances 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 (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 3(e) to the Consolidated Financial Statements). 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 3(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 Bond Street building in Brooklyn, New York. The outstanding balance as of July 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. 20 <Page> - -------------------------------------------------------------------------------- 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. 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 13 to the Consolidated Financial Statements). The Company on August 23, 2004 paid the total amount due on the loan to a securities broker, which was $1,423,458. 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 $1,700,000 from a bank whose president is a director of the Company. The loan was 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 for a period of five (5) years, and is self-amortizing at an interest rate of 6.50% per annum. As of July 31, 2005, the Company drew down the $1,700,000. (See Note 3(g) to the Consolidated Financial Statements). 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 an interest rate of prime plus 1.00% per annum floating. (See Note 3(h) to the Consolidated Financial Statements). 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 will commence 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 upon the expiration of its lease agreement on January 31, 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. 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 has informed the Company that it will enter 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 September 30, 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 ended 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 $60,000 per month should the tenant vacate the premises. CONTRACTUAL OBLIGATIONS: At July 31, 2005, the Company had certain contractual cash obligations, as set forth in the following tables: <Table> <Caption> Payment Due by Period ----------------------------------------------------------------- Contractual Cash Less than 1 1-3 4-5 After 5 Obligations Total Year Years Years Years ----------- ----------- ----------- ----------- ---------- ---------- Mortgages payable................ $13,491,520 $1,015,173 $10,182,497 $2,273,850 $ 20,000 Note payable..................... 1,000,000 -- 1,000,000 -- -- Security deposits payable........ 991,339 66,998 33,553 258,496 632,292 Operating leases................. 8,391,657 1,189,188 2,565,376 2,109,718 2,527,375 ----------- ---------- ----------- ---------- ---------- Total contractual cash obligations.................... $23,874,516 $2,271,359 $13,781,426 $4,642,064 $3,179,667 ----------- ---------- ----------- ---------- ---------- ----------- ---------- ----------- ---------- ---------- </Table> 21 <Page> - -------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Prepaid Expenses: Expenditures for the year ended July 31, 2005 increased by $154,306 compared to the period ended July 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 year ended July 31, 2005 for costs incurred to obtain loan financing for renovations to be performed at the Brooklyn, New York building (Bond Street building) 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 $611,371 relating to tenants at its Jamaica, New York and Brooklyn, New York properties. Payroll and Other Accrued Liabilities: The Company paid $582,537 for commissions incurred in order to lease space at the Company's properties in the year ended July 31, 2005. The original amount of the brokerage commissions was $1,092,665. As of July 31, 2005, $898,177 had been paid. The Company incurred additional brokerage commissions in the amount of $611,371 relating to four new tenants, which is included in the $1,092,665, in the year ended July 31, 2005. CASH FLOWS FROM INVESTING ACTIVITIES: In addition to the acquisition of the 3 parcels in Brooklyn, New York for $3,190,000 ($3,015,000 expended in fiscal 2005), the Company had the following expenditures: The Company had expenditures of $582,545 for the year ended July 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 $1,028,300 and was completed in September 2005. The Company had expenditures of $1,559,732 for the year ended July 31, 2005 for the renovation of 28,801 square feet for office space for a tenant and the renovation of the buildings lobby at its Jowein building in Brooklyn, New York. The total cost of the project was $1,559,732. The project was completed in May 2005. CASH FLOWS FROM FINANCING ACTIVITIES: Borrowing: The Company secured financing from one of the Company's directors in the principal amount of $1,000,000. (See Note 13 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. The Company also secured financing from a bank in the principal amount of $2,820,000. (See Note 3(f) to the Consolidated Financial Statements). The Company secured financing in the amount of $1,700,000 from a bank whose president is a director of the Company. The loan was 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. (See Note 3(g) to the Consolidated Financial Statements). 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. (See Note 3(h) to the Consolidated Financial Statements). Borrowing: Payable to securities broker -- The Company in the year ended July 31, 2005, paid down, net of borrowing, $1,434,025 of the amount payable to a securities broker. Lease security: The Company increased tenant security deposits by $233,577 due to the leasing of space to tenants, three at the Company's Brooklyn, New York properties, and one at its building in Jamaica, New York. CONTROLS AND PROCEDURES: The Company's management reviewed the Company's internal controls and procedures and the effectiveness of these controls. As of July 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 22 <Page> - -------------------------------------------------------------------------------- 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. QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (dollars in thousands except per share data) <Table> <Caption> Three Months Ended ----------------------------------------------------------------------- Oct. 31, 2004 Jan. 31, 2005 Apr. 30, 2005 July 31, 2005 ------------- ------------- ------------- ------------- Revenues..................................... $3,157 $3,172 $3,177 $3,377 Revenues less expenses....................... 222 12 72 385 Net income................................... 115 36 43 154 Net income per common share.................. $ .06 $ .01 $ .02 $ .08 </Table> <Table> <Caption> Three Months Ended ----------------------------------------------------------------------- Oct. 31, 2003 Jan. 31, 2004 Apr. 30, 2004 July 31, 2004 ------------- ------------- ------------- ------------- Revenues..................................... $3,320 $3,441 $3,490 $3,770 Revenues less expenses....................... 482 278 559 603 Net income................................... 281 148 274 432 Net income per common share.................. $ .14 $ .07 $ .14 $ .21 </Table> Income per share is computed independently for each of the quarters presented on the basis described in Note 1 to the Consolidated Financial Statements. 23 <Page> - -------------------------------------------------------------------------------- COMMON STOCK AND DIVIDEND INFORMATION Effective November 8, 1999, the Company's common stock commenced trading on The Nasdaq Capital Market tier of The Nasdaq Stock Market under the Symbol: 'Mays'. Such shares were previously traded on The Nasdaq National Market. Following is the sales price range per share of J.W. Mays, Inc. common stock during the fiscal years ended July 31, 2005 and 2004: <Table> <Caption> Sales Price ----------------------- Three Months Ended High Low ------------------ ---- --- October 31, 2004...................................... $14.100 $12.210 January 31, 2005...................................... 16.100 13.500 April 30, 2005........................................ 17.700 15.160 July 31, 2005......................................... 16.760 15.020 October 31, 2003...................................... $13.850 $13.000 January 31, 2004...................................... 14.200 13.250 April 30, 2004........................................ 14.400 13.200 July 31, 2004......................................... 14.390 13.060 </Table> The quotations were obtained for the respective periods from the National Association of Securities Dealers, Inc. There were no dividends declared in either of the two fiscal years. On September 16, 2005, the Company had approximately 3,500 shareholders of record. 24 <Page> J.W. MAYS, INC. - -------------------------------------------------------------------------------- OFFICERS <Table> Lloyd J. Shulman Chairman of the Board, Chief Executive Officer and President and Chief Operating Officer Mark S. Greenblatt Vice President and Treasurer Ward N. Lyke, Jr. Vice President and Assistant Treasurer George Silva Vice President-Operations Salvatore Cappuzzo Secretary BOARD OF DIRECTORS Mark S. Greenblatt(3),(5) Vice President and Treasurer, J.W. Mays, Inc. Lance D. Myers(1),(3),(4),(5),(6) Partner, Holland & Knight LLP Dean L. Ryder(2),(3),(4),(6) President, Putnam County National Bank Jack Schwartz(1),(2),(3),(4),(6) Private Consultant Lloyd J. Shulman(1),(3) Chairman of the Board, Chief Executive Officer and President and Chief Operating Officer, J.W. Mays, Inc. Sylvia W. Shulman(3) Retired Lewis D. Siegel(2),(3),(4),(6) Senior Vice President-Investments, Smith Barney Citigroup </Table> COMMITTEE ASSIGNMENTS KEY: (1) Member of Executive Committee (2) Member of Audit Committee (3) Member of Investment Advisory Committee (4) Member of Executive Compensation Committee (5) Member of Disclosure Committee (Mr. Lyke is also a member) (6) Member of Nominating Committee FORM 10-K ANNUAL REPORT Copies of the Company's Form 10-K Annual Report to the Securities and Exchange Commission for the fiscal year ended July 31, 2005, will be furnished without charge to shareholders upon written request to: Secretary, J.W. Mays, Inc., 9 Bond Street, Brooklyn, New York 11201-5805. 25