FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2008
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission file number 1-3647
J.W. Mays, Inc.
(Exact name of registrant as specified in its charter)
New York 11-1059070
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9 Bond Street, Brooklyn, New York 11201-5805
(Address of principal executive offices) (Zip Code)
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(Registrant's telephone number, including area code) 718-624-7400
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X . No .
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.
Large accelerated filer . Accelerated filer . Non-accelerated
filer X .
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes . No X .
Indicate the number of shares outstanding of the issuer's common stock, as of
the latest practicable date.
Class Outstanding at June 11, 2008
Common Stock, $1 par value 2,015,780 shares
This report contains 20 pages.
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INDEX
Page No.
Part I - Financial Information:
Consolidated Balance Sheet 3
Consolidated Statement of Income
and Retained Earnings 4
Consolidated Statement of Comprehensive Income 4
Consolidated Statement of Cash Flows 5
Notes to Consolidated Financial Statements 6 - 11
Management's Discussion and Analysis of Results
of Operations and Financial Condition 12 - 15
Controls and Procedures 15
Part II - Other Information 16
Signatures 17
(31) Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
(31.1) - Chief Executive Officer 18
(31.2) - Chief Financial Officer 19
(32) Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002;
18 U.S.C. Section 1350 20
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J. W. MAYS, INC.
CONSOLIDATED BALANCE SHEET
April 30 July 31
ASSETS 2008 2007
--------------------------------------------------------------- --------------- ---------------
(Unaudited) (Audited)
Property and Equipment - Net (Notes 6 and 7) $45,367,793 $44,970,367
------------- -------------
Current Assets:
Cash and cash equivalents 2,376,235 5,965,350
Marketable securities (Note 4) 48,818 47,418
Receivables 98,449 126,253
Deferred income taxes 327,000 129,000
Income taxes refundable 243,058 -
Prepaid expenses 791,002 1,703,539
Security deposits 20,163 16,903
------------- -------------
Total current assets 3,904,725 7,988,463
------------- -------------
Other Assets:
Deferred charges 3,526,345 3,410,592
Less accumulated amortization 1,530,384 1,219,123
------------- -------------
Net 1,995,961 2,191,469
Receivables 3,067 4,667
Security deposits 1,432,932 1,385,606
Unbilled receivables (Note 9) 2,925,806 3,461,147
Marketable securities (Note 4) 1,831,420 160,500
------------- -------------
Total other assets 8,189,186 7,203,389
------------- -------------
TOTAL ASSETS $57,461,704 $60,162,219
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
---------------------------------------------------------------
Long-Term Debt:
Mortgages and term loan payable (Note 6) $10,808,782 $11,553,510
Note payable - related party (Note 8) 1,000,000 1,000,000
Security deposits payable 1,085,528 1,078,006
Payroll and other accrued liabilities 357,696 -
------------- -------------
Total long-term debt 13,252,006 13,631,516
------------- -------------
Deferred Income Taxes 2,075,000 2,250,000
------------- -------------
Current Liabilities:
Accounts payable 169,898 89,621
Payroll and other accrued liabilities 1,455,574 2,147,708
Income taxes payable (Note 11) - 1,456,558
Other taxes payable 4,826 7,909
Current portion of mortgages payable (Note 6) 1,020,491 865,158
Current portion of security deposits payable 20,163 16,903
------------- -------------
Total current liabilities 2,670,952 4,583,857
------------- -------------
Total liabilities 17,997,958 20,465,373
------------- -------------
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
$7,000 at April 30, 2008 and $17,000 at July 31, 2007 14,169 33,248
Retained earnings 35,212,887 35,426,908
------------- -------------
40,751,598 40,984,698
Less common stock held in treasury, at cost - 162,517
shares at April 30, 2008 and at July 31, 2007 (Note 12) 1,287,852 1,287,852
------------- -------------
Total shareholders' equity 39,463,746 39,696,846
------------- -------------
Contingencies (Note 13)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $57,461,704 $60,162,219
============= =============
See Notes to Consolidated Financial Statements.
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J. W. MAYS, INC.
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
Three Months Ended Nine Months Ended
April 30 April 30
-----------------------------------------------------------
2008 2007 2008 2007
------------- ------------- ------------- -------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues
Rental income (Notes 5 and 9) $3,505,773 $3,450,801 $10,627,381 $10,144,066
Recovery of real estate taxes - 25,487 91,043 39,483
Loss on disposition of fixed assets (16,999) - (16,999) -
------------- ------------- ------------- -------------
Total revenues 3,488,774 3,476,288 10,701,425 10,183,549
------------- ------------- ------------- -------------
Expenses
Real estate operating expenses 2,259,838 2,191,194 6,798,639 6,411,896
Administrative and general expenses 822,555 760,432 2,673,445 2,187,700
Depreciation and amortization 394,924 395,382 1,188,573 1,184,185
------------- ------------- ------------- -------------
Total expenses 3,477,317 3,347,008 10,660,657 9,783,781
------------- ------------- ------------- -------------
Income from operations before investment income,
interest expense and income taxes 11,457 129,280 40,768 399,768
------------- ------------- ------------- -------------
Investment income and interest expense
Investment income (Note 4) 47,132 18,422 159,649 60,742
Interest expense (Notes 6, 8, and 11) (187,792) (251,272) (657,438) (764,740)
------------- ------------- ------------- -------------
(140,660) (232,850) (497,789) (703,998)
------------- ------------- ------------- -------------
(Loss) before income taxes (129,203) (103,570) (457,021) (304,230)
Income taxes (benefit) (196,000) (122,000) (243,000) (136,000)
------------- ------------- ------------- -------------
Net income (loss) 66,797 18,430 (214,021) (168,230)
Retained earnings, beginning of period 35,146,090 33,184,309 35,426,908 33,370,969
------------- ------------- ------------- -------------
Retained earnings, end of period $35,212,887 $33,202,739 $35,212,887 33,202,739
============= ============= ============= =============
Income (loss) per common share (Note 2) $.03 $.01 $(.11) $(.08)
============= ============= ============= =============
Dividends per share $- $- $- $-
============= ============= ============= =============
Average common shares outstanding 2,015,780 2,015,780 2,015,780 2,015,780
------------- ------------- ------------- -------------
See Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Three Months Ended Nine Months Ended
April 30 April 30
---------------------------- ----------------------------
2008 2007 2008 2007
------------- ------------- ------------- -------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net Income (loss) $66,797 $18,430 $(214,021) $(168,230)
------------- ------------- ------------- -------------
Other comprehensive income, net of taxes (Note 3)
Unrealized gain (loss) on available-for-sale securities:
Net of taxes (benefit) of ($26,000) and $0 for the three
months ended April 30, 2008 and 2007, respectively,
and ($10,000) and $4,000 for the nine months
ended April 30, 2008 and 2007, respectively. (49,120) (1,000) (19,079) 8,000
------------- ------------- ------------- -------------
Net change in comprehensive income (49,120) (1,000) (19,079) 8,000
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Comprehensive income (loss) $17,677 $17,430 $(233,100) $(160,230)
============= ============= ============= =============
See Notes to Consolidated Financial Statements.
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J. W. MAYS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Nine Months Ended
April 30
--------------------------------
2008 2007
------------- --------------
(Unaudited) (Unaudited)
Cash Flows From Operating Activities:
Net (loss) $(214,021) $(168,230)
Adjustments to reconcile income to
net cash provided by operating activities:
Loss on disposition of fixed assets 16,999 -
Depreciation and amortization 1,188,573 1,184,185
Amortization of deferred expenses 311,261 218,537
Other assets - deferred expenses (115,753) (730,786)
- unbilled receivables 535,341 414,000
Deferred income taxes (363,000) (77,000)
Changes in:
Receivables 29,404 (107,169)
Prepaid expenses 912,537 899,782
Income taxes refundable (243,058) (434,615)
Accounts payable 80,277 189,269
Payroll and other accrued liabilities (334,438) 200,730
Income taxes payable (1,456,558) (794,314)
Other taxes payable (3,083) (2,030)
------------- -------------
Cash provided by operating activities 344,481 792,359
------------- -------------
Cash Flows From Investing Activities:
Capital expenditures (1,602,998) (369,513)
Security deposits (50,586) (102,497)
Marketable Securities
Payments for purchases (1,701,399) (949)
------------- -------------
Cash (used) by investing activities (3,354,983) (472,959)
------------- -------------
Cash Flows From Financing Activities:
Increase - security deposits 10,782 102,497
Borrowings - mortgage and other debt 41,955 315,706
Decrease - mortgage and other debt payments (631,350) (735,277)
------------- -------------
Cash (used) by financing activities (578,613) (317,074)
------------- -------------
Increase (decrease) in cash (3,589,115) 2,326
Cash and cash equivalents at beginning of period 5,965,350 2,335,328
------------- -------------
Cash and cash equivalents at end of period $2,376,235 $2,337,654
============= =============
See Notes to Consolidated Financial Statements.
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J. W. MAYS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Accounting Records and Use of Estimates:
The accounting records are maintained in accordance with accounting
principles generally accepted in the United States of America ("GAAP").
The preparation of the Company's financial statements in accordance with
GAAP requires management to make estimates that affect the reported
consolidated statements of income and retained earnings, comprehensive
income, and the consolidated balance sheets and related disclosures.
Actual results could differ from those estimates. The rent expense paid to
a related party is considered a significant estimate and may vary
materially from the amount recorded in the financial statements.
The interim financial statements are prepared pursuant to the requirements
for reporting on Form 10-Q. The July 31, 2007 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, 2007. 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, 2008.
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
nine months ended April 30, 2008 and April 30, 2007.
3. Comprehensive Income:
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income", establishes standards for the reporting of
comprehensive income and its components. It requires all items that are
required to be recognized as components of comprehensive income be reported
in a financial statement that is displayed with the same prominence as
other income statement information. Comprehensive income is defined to
include all changes in equity except those resulting from investments by
and distributions to shareholders.
4. Marketable Securities:
The Company categorizes marketable securities as either trading, available-
for-sale or held-to-maturity. Trading securities are carried at fair value
with unrealized gains and losses included in income. Available-for-sale
securities are carried at fair value with unrealized gains and losses
recorded as a separate component of shareholders' equity. Held-to-maturity
securities are carried at amortized cost. Dividends and interest income
are accrued as earned.
-6-
As of April 30, 2008, 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 $48,818 $- $- $48,818
============= ============= ============= =============
Noncurrent:
Available-for-sale:
Equity securities $1,810,252 $21,168 $- $1,831,420
============= ============= ============= =============
Investment income consists of the following:
Three Months Ended Nine Months Ended
April 30 April 30
------------------------------ ------------------------------
2008 2007 2008 2007
------------- ------------- ------------- -------------
Interest income $2,485 $6,490 $87,602 $15,661
Dividend income 44,647 11,932 72,047 45,081
------------- ------------- ------------- -------------
Total $47,132 $18,422 $159,649 $60,742
============= ============= ============= =============
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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, cash and cash
equivalents are placed with high credit quality financial institutions and
instruments to minimize risk.
The Company derives rental income from fifty tenants, of which one tenant
accounted for 12.08% and another tenant accounted for 13.58% of rental
income during the nine months ended April 30, 2008. No other tenant
accounted for more than 10% of rental income during the same period.
The Company has three irrevocable Letters of Credit totaling $367,500 at
April 30, 2008, provided by three tenants and two irrevocable Letters of
Credit totaling $137,500 at July 31, 2007, provided by two tenants. These
Letters of Credit from the tenants are in lieu of security deposits.
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6. Long-Term Debt - Mortgages and Term Loan:
April 30, 2008 July 31, 2007
-------------------------------- ---------------------------------
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) 6% 4/01/12 $61,045 $1,237,013 $58,365 $1,283,137
Jamaica, New York property (b) 6.81% 10/01/11 118,375 2,411,705 112,037 2,501,111
Jowein building, Brooklyn, NY (c) 9 % 4/01/09 62,658 1,056,007 58,612 1,103,520
Fishkill, New York property (d,e) 6.98% 2/18/15 59,028 1,766,782 17,928 1,816,798
Bond St. building, Brooklyn, NY (e) 6.98% 2/18/15 120,227 3,598,483 36,102 3,658,613
Term-loan payable to bank (f) 6.50% 5/01/10 359,158 418,792 342,114 690,331
Jowein building, Brooklyn, NY (g) Variable 8/01/10 240,000 320,000 240,000 500,000
-------------- -------------- -------------- ---------------
Total $1,020,491 $10,808,782 $865,158 $11,553,510
============== ============== ============== ===============
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(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. In
March 2007, the Company extended the loan for five years with an option
for an additional five year period. The interest rate for the initial
five years is 6.00% per annum. Interest and amortization of principal
will be made in constant monthly amounts based on a fifteen year (15)
payout period. The outstanding balance of the loan totaling $1,036,602
will become due and payable on April 1, 2012.
(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, became due and
payable on October 1, 2006. The Company exercised its option to extend
the loan for a additional five (5) years to October 1, 2011. The interest
rate for the extended period is 6.81% per annum. At the end of the five
year period there will be a balance due on the loan of $2,077,680.
As additional collateral security, the Company conditionally assigned to
the bank all leases and rents on the premises, or portions thereof,
whether now existing or hereafter consummated. The Company has an option
to prepay principal, in whole or in part, plus interest accrued thereon,
at any time during the term, without premium or penalty. Other provisions
of the loan agreement provide certain restrictions on the incurrence of
indebtedness on the Jamaica property and the sale or transfer of the
Company's ground lease interest in the premises.
(c) The Company, on May 7, 2004, closed a loan with an affiliated
corporation owned by members, including certain directors of the Company,
of the family of the late Joe Weinstein, former Chairman of the Board of
Directors, in the amount of $1,350,000. The term of the loan is for a
period of five (5) years at an interest rate of 9.00% per annum. Interest
and amortization of principal are paid quarterly based on a fifteen (15)
year level amortization period. The constant quarterly payments of
interest and principal are $40,316. The outstanding balance of the loan,
totaling $1,056,007, will become due and payable on April 1, 2009.
Interest paid for the nine months ended April 30, 2008 and April 30, 2007
was $77,154 and $80,884, respectively.
(d) On June 2, 1999, the existing first mortgage loan balance on the
Fishkill, New York property was extended for a period of five years.
Under the terms of the extension agreement, the annual interest rate was
reduced from 9% to 8.25% and the interest and principal payments were made
in constant monthly amounts based upon a fifteen (15) year payout period.
On August 19, 2004 the Company extended the loan for an additional
forty-two (42) months, with an option to convert the loan to a seven (7)
year permanent mortgage loan. (See Note 6(e) below). The Company in
February 2008 converted the loan to a seven (7) year permanent mortgage
loan. The interest rate on conversion was 6.98%.
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(e) The Company, on August 19, 2004, closed a loan with a bank for a
$12,000,000 multiple draw term loan. This loan finances seventy-five
(75%) percent of the cost of capital improvements for an existing lease to
a tenant and capital improvements for future tenant leases at the
Company's Brooklyn, New York (Bond Street building) and Fishkill, New York
properties. The loan will also finance $850,000 towards the construction
of two new elevators at the Company's Brooklyn, New York property (Bond
Street building). The loan also refinanced the existing mortgage on the
Company's Fishkill, New York property which matured on July 1, 2004 (see
Note 6(d)). The Company had three and one-half years to draw down amounts
under this loan. The loan consists of: a) a permanent, first mortgage
loan to refinance an existing first mortgage loan affecting the Fishkill
Property (the "First Permanent Loan") (see Note 6(d)), b) a permanent
subordinate mortgage loan in the amount $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 (42) 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. In fiscal 2006, 2007 and 2008, the
Company drew down additional amounts totaling $916,670, on its multiple
draw term loan to finance tenant improvements and brokerage commissions
for the leasing of 13,026 square feet for office use at the Company's Bond
Street building in Brooklyn, New York. The total amount financed was
$916,670. The outstanding balance of the multiple draw term loan as of
April 30, 2008 was $5,544,520 which were for both the Bond Street and
Fishkill properties. The Company in February 2008 converted the loan to a
seven (7) year permanent mortgage loan. The interest rate on conversion
was 6.98%. Since the loan has been converted to a permanent mortgage
loan, the balance of the financing on this loan is for the new elevators
at the Company's Bond Street building in Brooklyn, New York in the amount
of $850,000 referred to above. As of April 30, 2008, the Company has not
drawn down any of the $850,000.
(f) On February 18, 2005, the Company secured financing in the amount of
$1,700,000, from a bank whose president is a director of the Company. The
loan 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.
(g) The Company, on July 22, 2005, closed a loan with a bank for
$1,200,000. The loan will be used to finance the construction costs and
brokerage commissions associated with the leasing of 15,000 square feet
for office use to a tenant at the Company's Jowein building in Brooklyn,
New York. The loan will be secured by the assignment of lease of 15,000
square feet. The loan is for a period of five (5) years and is
self-amortizing, at a floating interest rate of prime plus 1.00% per
annum. The interest rate at April 30, 2008 was 6.00% per annum.
-9-
7. Property and Equipment - at cost:
April 30 July 31
2008 2007
--------------- ---------------
Property:
Buildings and improvements $61,438,745 $60,896,956
Improvements to leased property 9,154,777 9,089,969
Land 6,067,805 6,037,134
Construction in progress 1,212,883 544,636
------------- -------------
77,874,210 76,568,695
Less accumulated depreciation 32,668,860 31,790,146
------------- -------------
Property - net 45,205,350 44,778,549
------------- -------------
Fixtures and equipment and other:
Fixtures and equipment 543,769 726,966
Other fixed assets 227,582 227,747
------------- -------------
771,351 954,713
Less accumulated depreciation 608,908 762,895
------------- -------------
Fixtures and equipment and other - net 162,443 191,818
------------- -------------
Property and equipment - net $45,367,793 $44,970,367
============= =============
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8. Note Payable:
On December 15, 2004, the Company borrowed $1,000,000 from a director of
the Company, who is also a greater than 10% beneficial owner of the
outstanding common stock of the Company. The term of the loan was 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 constant quarterly
payments of interest are $18,750. The Company extended the note for an
additional three (3) years maturing on December 15, 2010, at an interest
rate of 7.50% per annum.
9. Unbilled Receivables and Rental Income:
Unbilled receivables represent the excess of scheduled rental income
recognized on a straight-line basis over rental income as it becomes
receivable according to the provisions of each lease.
10. Employees' Retirement Plan:
The Company sponsors a noncontributory Money Purchase Plan covering
substantially all of its employees. Operations were charged $73,337 and
$234,211 as contributions to the Plan for the three and nine months ended
April 30, 2008, respectively, and $69,448 and $207,343 as contributions to
the Plan for the three and nine months ended April 30, 2007, respectively.
-10-
11. Cash Flow Information:
For purposes of reporting cash flows, the Company considers cash
equivalents to consist of short-term highly liquid investments with
maturities of nine months or less, which are readily convertible into
cash.
Supplemental disclosure: Nine Months Ended
April 30
------------------------------
2008 2007
--------------- -------------
Interest paid, net of capitalized interest of $56,469 (2008), $667,095 $768,464
there was no capitalized interest for 2007.
Income taxes paid $1,779,616 $1,169,928
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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 April 30, 2008 and at July 31,
2007.
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.
In response to a termination notice that the Company received concerning
its tenancy in a portion of the Jowein building, Brooklyn, New York, on
April 25, 2007, the Company filed a lawsuit against its landlords in New
York State Supreme Court, Kings County. In the lawsuit, the Company seeks
a judgment declaring that the landlords' termination notice was improperly
issued and that the Company is not required to correct or cure the
purported defaults cited in the termination notice. In addition, the
Company seeks an order temporarily, preliminarily and permanently
enjoining the landlords from taking any action to terminate the lease or
otherwise interfere with the Company's possession of the premises.
On May 16, 2007, the New York State Supreme Court granted the Company's
motion for preliminary injunctive relief and enjoined the landlords,
during the pendency of this action, from taking any action to evict the
Company, terminate the Company's lease which is scheduled to expire on
April 30, 2010, and/or commencing summary action adverse to the Company's
rights or otherwise disturb the Company's possession of the premises. The
landlords have answered the complaint denying the allegations and
asserting counterclaims against the Company relating to the premises.
Discovery is ongoing. Management of the Company is unable to predict the
outcome of this matter or whether the Company will be required to expend
significant amounts of money in order to correct any of the purported
defaults.
-11
J. W. MAYS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
Results of Operations:
Three Months Ended April 30, 2008 Compared to the Three Months Ended April 30,
2007:
In the three months ended April 30, 2008, the Company reported net income of
$66,797, or $.03 per share. In the comparable three months ended April 30,
2007, the Company reported net income of $18,430, or $.01 per share.
Revenues in the current three months increased to $3,488,774 from $3,476,288
in the comparable 2007 three months. The increase in revenues was due to the
Company's leasing to five additional tenants at the Company's Brooklyn,
Jamaica and Levittown, New York properties, offset by the vacating of a tenant
at the Company's Brooklyn, New York property in July 2007 and the reduced rent
received by the tenant that replaced Levitz Home Furnishings, Inc., at the
Company's Jowein building in Brooklyn, New York.
The recovery of real estate taxes in the 2007 three months in the amount of
$25,487, net of legal expenses, represents prior years' real estate taxes from
one of the Company's properties. The comparable 2008 three months did not
have a recovery of real estate taxes.
Real estate operating expenses in the current three months increased to
$2,259,838 from $2,191,194 in the comparable 2007 three months primarily due
to increases in real estate taxes, utility costs, payroll costs and lease
commission expense, partially offset by decreases in maintenance costs.
Administrative and general expenses in the current three months increased to
$822,555 from $760,432 in the comparable 2007 three months primarily due to
increases in payroll costs, insurance costs, medical costs, and legal and
professional costs.
Depreciation and amortization expense in the current three months decreased to
$394,924 from $395,382 in the comparable 2007 three months.
Interest expense and other expenses in the current three months exceeded
investment income by $140,660 and by $232,850 in the comparable 2007 three
months. The decrease in the excess of interest expense over investment income
was due primarily to increased investment income and scheduled repayments of
debt.
Nine Months Ended April 30, 2008 Compared to the Nine Months Ended April 30,
2007:
In the nine months ended April 30, 2008, the Company reported a net loss of
($214,021), or ($.11) per share. In the comparable nine months ended April
30, 2007, the Company reported a net loss of ($168,230), or ($.08) per share.
Revenues in the current nine months increased to $10,701,425 from $10,183,549
in the comparable 2007 nine months. The increase in revenues was due to the
Company's leasing to five additional tenants at the Company's Brooklyn,
Jamaica and Levittown, New York properties, offset by the vacating of a tenant
at the Company's Brooklyn, New York property in July 2007, and the reduced
rent received by the tenant that replaced Levitz Home Furnishings, Inc., at
the Company's Jowein building in Brooklyn, New York.
The recovery of real estate taxes in the current nine months in the amount of
$91,043, net of legal expenses, represents prior years' real estate taxes from
one of the Company's properties. The comparable 2007 nine months had a
recovery of real estate taxes in the amount of $39,483.
Real estate operating expenses in the current nine months increased to
$6,798,639 from $6,411,896 in the comparable 2007 nine months primarily due to
increases in rental expense, utility costs, payroll costs and lease commission
expense, partially offset by decreases in real estate taxes and insurance
costs.
-12-
Administrative and general expenses in the current nine months increased to
$2,673,445 from $2,187,700 in the comparable 2007 nine months primarily due to
increases in payroll costs, insurance costs, legal and professional costs,
pension costs, and a bad debt expense due to a tenant vacating the premises at
the Company's Jowein building in Brooklyn, New York.
Depreciation and amortization expense in the current nine months increased to
$1,188,573 from $1,184,185 in the comparable 2007 nine months.
Interest expense and other expenses in the current nine months exceeded
investment income by $497,789 and by $703,998 in the comparable 2007 nine
months. The decrease in the excess of interest expense over investment income
was due primarily to increased investment income and scheduled repayments of
debt.
Liquidity and Capital Resources:
The Company has been operating as a real estate enterprise since the
discontinuance of the retail department store segment of its operations on
January 3, 1989.
Management considers current working capital and borrowing capabilities
adequate to cover the Company's planned operating and capital requirements.
The Company's cash and cash equivalents amounted to $2,376,235 at April 30,
2008.
In October 2006, the Company entered into a lease agreement with a restaurant
at the Company's Levittown premises. The restaurant intends to construct a
new building. The tenant opened the restaurant in May 2008. The tenant began
paying partial rent in September 2007 and full rent in May 2008. This will
replace the tenant that vacated the premises in September 2004. The annual
rental income from this lease agreement will more than offset the annual
rental income lost from the previous tenant.
In July 2007, a tenant who occupied 22,192 square feet of office space at the
Company's Brooklyn, New York property, vacated the premises. The annual loss
in rental income to the Company will be approximately $470,000. In March
2008, the Company entered into a lease agreement with a tenant for 11,128
square feet of the vacated space. Rent will commence in July 2008. The
Company is actively seeking, through brokers, tenants to occupy the balance of
11,064 square feet of the vacated space.
In May 2007, the Company entered into a lease agreement with a tenant for
15,900 square feet of office space at its Jowein building in Brooklyn, New
York. Rent commenced in March 2008.
In March 2008, the Company entered into a lease agreement with a tenant for
60,000 square feet for warehouse space at its Circleville, Ohio property.
Rent commenced in March 2008.
Levitz Home Furnishings, Inc. whose lease was assigned to PLVTZ, LLC, d/b/a
Levitz Home Furnishings ("Levitz") which occupies retail space at the
Company's Jowein building in Brooklyn, New York and which accounted for 5.60%
of the annual rental income of the Company for the fiscal year ended July 31,
2007, filed for Chapter 11 bankruptcy protection from creditors on November 8,
2007. Levitz vacated the premises on January 31, 2008 and informed the
Company in February 2008, of its intentions to reject the lease. The annual
rental income from Levitz was approximately $800,000. The Company, in March
2008, rented the premises to a tenant for the remaining term of the Levitz
lease (through April 2010) at slightly less than half the Levitz rental.
As part of the $12,000,000 multiple draw term loan, the bank agreed to finance
the cost of two new elevators at the Company's Bond Street building in
Brooklyn, New York. The amount to be financed will be $850,000. (See Note
6(e) to the Consolidated Financial Statements). The total cost of the
elevator project is estimated to be $1,100,000 and is anticipated to be
completed in 2008. In February 2008, the Company converted the multiple draw
term loan to a permanent mortgage loan. The $850,000 for elevators is the
remaining amount of financing due under this loan.
-13-
Cash Flows From Operating Activities:
Deferred Expenses: The Company had expenditures for a brokerage commission in
the nine months ended April 30, 2008, in the amount of $28,080, relating to a
tenant of the Company's Circleville, Ohio Property.
Payroll and Other Accrued Liabilities: The Company paid $282,628 for
commissions incurred in order to lease space at the Company's properties in
the nine months ended April 30, 2008. The original amount of the brokerage
commissions was $2,394,823. As of April 30, 2008, $1,944,005 had been paid.
The Company also incurred additional brokerage commissions in the amount of
$28,080 related to a new tenant and referred to above.
A tenant at the Company's Jowein building in Brooklyn, New York paid the rent
in advance to the end of the lease term which is April 2010. The amount paid
in advance as of April 30, 2008 is $715,384.
The Company has paid an additional $784,350 in rent expense to its landlord
for the period of August 1, 2006 through April 30, 2008, which is an
affiliated Company, on its Jamaica, New York property. The rent expense is
based upon a estimate. The final amount of rent expense has not yet been
determined and may be submitted to an independent arbitrator for resolution.
Cash Flows From Investing Activities:
The Company had expenditures of $285,242 in the nine months ended April 30,
2008 for the renovation of 32,890 square feet for office space for a tenant at
its Jamaica, New York building. The cost of the project was $564,937 and was
completed in December 2007.
The Company had expenditures of $91,972 in the nine months ended April 30,
2008 for the construction of two new elevators. The total cost of the project
is approximately $1,100,000, of which $850,000 will be financed by a bank. As
of April 30, 2008, $322,590 has been paid. The project is anticipated to be
completed in 2008.
The Company had expenditures of $702,212 in the nine months ended April 30,
2008 for the installation of new heat, ventilation and air conditioning
equipment along with the corresponding electrical service required at the
Company's Jamaica, New York building. The cost of the project was $910,212
and was completed in May 2008.
Cash Flows From Financing Activities:
Borrowing: The Company drew down an additional $41,955 on its multiple draw
term loan, to finance tenant improvements and brokerage commissions for the
leasing of 13,026 square feet for office use at the Company's Bond Street
building in Brooklyn, New York. The total amount financed was $916,670. (See
Note 6(e) to the Consolidated Financial Statements).
Quantitative and Qualitative Disclosures About Market Risks:
The Company uses both fixed-rate and variable-rate debt to finance its capital
requirements. These transactions expose the Company to market risk related to
changes in interest rates. The Company does not use derivative financial
instruments. At April 30, 2008, the Company had fixed-rate debt of
$12,269,273 and variable-rate debt of $560,000. With regards to the Jowein
building, Brooklyn, New York loan (presently with a balance of $560,000), if
interest rates were to change 100 basis points, the effect on net income from
operations and future cash flows would be a decrease, should the rates
increase, or an increase, should the rates decline, of $5,600 for this loan.
-14-
Cautionary Statement Regarding Forward-Looking Statements:
This Quarterly Report on Form 10-Q may contain forward-looking statements
which include assumptions about future market conditions, operations and
financial results. These statements are based on current expectations and are
subject to risks and uncertainties. They are made pursuant to safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. The
Company's actual results, performance or achievements in the future could
differ significantly from the results, performance or achievements discussed
or implied in such forward-looking statements herein and in prior Securities
and Exchange Commission filings by the Company. The Company assumes no
obligation to update these forward-looking statements or to advise of changes
in the assumptions on which they were based.
Factors that could cause or contribute to such differences include, but are
not limited to, changes in the competitive environment of the Company, general
economic and business conditions, industry trends, changes in government rules
and regulations and environmental rules and regulations. Statements concerning
interest rates and other financial instrument fair values and their estimated
contribution to the Company's future results of operations are based upon
market information as of a specific date. This market information is often a
function of significant judgment and estimation. Further, market interest
rates are subject to significant volatility.
Controls and Procedures:
The Company's management reviewed the Company's internal controls and
procedures and the effectiveness of these controls. As of April 30, 2008, the
Company carried out an evaluation, under the supervision and with the
participation of the Company's management, including its Chief Executive
Officer and Chief Financial Officer, of the effectiveness of the design and
operation of the Company's disclosure controls and procedures pursuant to
Rules 13a-14(c) and 15d-14(c) of the Securities Exchange Act of 1934. Based
upon that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that the Company's disclosure controls and procedures are effective
in timely alerting them to material information relating to the Company
required to be included in its periodic SEC filings.
There was no change in the Company's internal controls over financial
reporting or in other factors during the Company's last fiscal quarter that
materially affected, or are reasonably likely to materially affect, the
Company's internal controls over financial reporting. There were no
significant deficiencies or material weaknesses, and therefore there were no
corrective actions taken.
Our Accounting Department is comprised of four persons. Due to such a limited
number of persons, a complete segregation of all of the duties as to which the
department is responsible is not possible. In order to make sure that the
inability to segregate all duties does not affect our timely and accurate
financial reporting, we need to remain vigilant in maintaining compensating
controls. These compensating controls will continue to be monitored in order
to assure us that our internal controls over financial reporting remain at a
high level despite the limited number of Accounting Department personnel.
-15-
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 18
(31.2) Chief Financial Officer 19
(32) Certification Pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002,
18 U.S.C. Section. 1350. 20
|
(b) Reports on Form 8-K - One report on Form 8-K was filed by the
registrant during the three months ended April 30, 2008.
Item reported:
The Company reported its financial results for the three months
ended January 31, 2008.
Date of report filed - March 12, 2008.
-16-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
J.W. MAYS, Inc.
(Registrant)
Date June 11, 2008 Lloyd J. Shulman
-----------------------------
Lloyd J. Shulman
President
Chief Executive Officer
Date June 11, 2008 Mark S. Greenblatt
-----------------------------
Mark S. Greenblatt
Vice President
Chief Financial Officer
|
-17-
EXHIBIT 31.1
CERTIFICATION
I, Lloyd J. Shulman, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of J.W. Mays, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
(c) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.
Date: June 11, 2008
/s/ Lloyd J. Shulman
---------------------------
Lloyd J. Shulman
President
Chief Executive Officer
-18-
|
EXHIBIT 31.2
CERTIFICATION
I, Mark S. Greenblatt, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of J.W. Mays, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
(c) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.
Date: June 11, 2008
/s/ Mark S. Greenblatt
---------------------------
Mark S. Greenblatt
Vice President
Chief Financial Officer
-19-
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EXHIBIT 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The following certification is being furnished solely to accompany the Report
pursuant to 18 U.S.C. Section 1350 and in accordance with SEC Release No. 33-
8238. This certification shall not be deemed "filed" for purposes of Section
18 of the Securities Exchange Act of 1934, as amended, nor shall it be
incorporated by reference in any filing of the Company under the Securities
Act of 1933, as amended, whether made before or after the date hereof,
regardless of any general incorporation language in such filing.
In connection with the Quarterly Report of J. W. Mays, Inc. (the "Company") on
Form 10-Q for the period ending April 30, 2008 as filed with the Securities
and Exchange Commission (the "Report"), we, Lloyd J. Shulman and Mark S.
Greenblatt, Chief Executive Officer and Chief Financial Officer, respectively,
of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to our
knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
June 11, 2008
/s/ Lloyd J. Shulman
---------------------------
Lloyd J. Shulman
Chief Executive Officer
/s/ Mark S. Greenblatt
---------------------------
Mark S. Greenblatt
Chief Financial Officer
|
A signed original of this written statement required by Section 906 has been
provided to J.W. Mays, Inc. and will be retained by J. W. Mays, Inc. and
furnished to the Securities and Exchange Commission or its staff upon request.
-20-
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