================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended: July 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from _____________to
Commission file number: 1-3647
J. W. MAYS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
New York 11-1059070
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9 Bond Street, Brooklyn, New York 11201-5805
- ---------------------------------------- -----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (718) 624-7400
Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $1 per share
------------------------------------
(TITLE OF CLASS)
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 IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. [X] NO DELINQUENT FILERS.
THE AGGREGATE MARKET VALUE OF VOTING STOCK HELD BY NONAFFILIATES OF THE
REGISTRANT WAS APPROXIMATELY $11,317,922 AS OF SEPTEMBER 27, 1996 BASED UPON THE
CLOSING PRICE ON THE NASDAQ NATIONAL MARKET SYSTEM REPORTED FOR SUCH DATE.
SHARES OF COMMON STOCK HELD BY EACH OFFICER AND DIRECTOR AND BY EACH PERSON WHO
OWNS 5% OR MORE OF THE OUTSTANDING COMMON STOCK HAVE BEEN EXCLUDED IN THAT SUCH
PERSONS MAY BE DEEMED TO BE AFFILIATES. THIS DETERMINATION OF AFFILIATE STATUS
IS NOT NECESSARILY A CONCLUSIVE DETERMINATION FOR OTHER PURPOSES.
THE NUMBER OF SHARES OUTSTANDING OF THE REGISTRANT'S COMMON STOCK AS OF
SEPTEMBER 27, 1996 WAS 2,136,397.
DOCUMENTS INCORPORATED BY REFERENCE
Part of Form 10-K
in which the Document
Document is incorporated
-------- ---------------
Annual Report to Shareholders for
Fiscal Year Ended July 31, 1996 Parts I and II
Definitive Proxy Statement for
the 1996 Annual Meeting of Shareholders Part III
================================================================================
<PAGE>
<TABLE>
J. W. MAYS, INC.
FORM 10-K FOR THE FISCAL YEAR ENDED JULY 31, 1996
TABLE OF CONTENTS
<CAPTION>
PAGE
PART I ----
<S> <C> <C>
Item 1. Business .................................................................... 3
Item 2. Properties .................................................................. 3
Item 3. Legal Proceedings ........................................................... 4
Item 4. Submission of Matters to a Vote of Security Holders ......................... 5
Executive Officers of the Registrant ................................................. 5
PART II
Item 5. Market for Registrant's Common Stock and Related Shareholder Matters ........ 5
Item 6. Selected Financial Data ..................................................... 5
Item 7. Management's Discussion and Analysis of Financial Condition and Results of
Operations ................................................................ 5
Item 8. Financial Statements and Supplementary Data ................................. 5
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure ................................................................ 6
PART III
Item 10. Directors and Executive Officers of the Registrant ......................... 6
Item 11. Executive Compensation ..................................................... 6
Item 12. Security Ownership of Certain Beneficial Owners and Management ............. 6
Item 13. Certain Relationships and Related Transactions ............................. 6
PART IV
Item 14 Exhibits, Financial Statement Schedules, and Reports on Form 8-K .......... 6
</TABLE>
2
<PAGE>
PART I
ITEM 1. BUSINESS.
J. W. Mays, Inc. (the "Company" or "Registrant") with executive offices at
9 Bond Street, Brooklyn, New York 11201, operates a number of commercial real
estate properties. See below for the description of these properties (Item 2.
Properties). The Company's business was founded in 1924 and incorporated under
the laws of the State of New York on July 6, 1927.
The Company discontinued its department store business which operated under
the name of "MAYS," in the year ended July 31, 1989, and has continued the
leasing of real estate. The Company has no foreign operations.
The Company employs approximately 30 employees and has a contract with a
union covering rates of pay, hours of employment and other conditions of
employment for approximately 20% of its employees. The Company considers that
its labor relations with its employees and union are good.
ITEM 2. PROPERTIES.
The table below sets forth certain information as to each of the properties
currently operated by the Company:
<TABLE>
<CAPTION>
Approximate
Location Owned or leased(1) Square Feet
-------- ------------------ -----------
<S> <C> <C>
Brooklyn, New York
Fulton Street at Bond Street ................. (2) 380,000(5)
Jamaica, New York
Jamaica Avenue at 169th Street ............... Own Building, Lease Fee 297,000(6)
Fishkill, New York
Route 9 at Interstate Highway 84 ............. (3) 211,000(7)
(located on
14.9 acres)
Brooklyn, New York
Jowein Building
Fulton Street and Elm Place .................. (4) 430,000(8)
Levittown, New York
Hempstead Turnpike ........................... (3) 85,800(9)
Massapequa, New York
Sunrise Highway .............................. (10) 133,400(10)
Circleville, Ohio
Tarlton Road ................................. (3) 193,350(11)
(located on
11.6 acres)
</TABLE>
- -------------------
(1) Properties leased are under long-term leases for varying periods, the
longest of which extends to 2013, and in most instances renewal options are
included. Reference is made to Note 6 to the Consolidated Financial
Statements contained in the 1996 Annual Report to Shareholders,
incorporated herein by reference. The properties indicated as owned which
are held subject to mortgage are the Jowein building, the Fishkill
property, the Ohio property and a small part of the Company's former
Brooklyn store.
(Footnotes continued)
3
<PAGE>
(2) A major portion of these premises is owned.
(3) The entire premises is owned.
(4) Approximately 50% of these premises is owned and the remainder is leased.
(5) Approximately 99,000 square feet of the street floor and basement are
leased to one tenant for retail and approximately 9,000 square feet, in the
aggregate, are leased to four separate tenants for retail and offices.
Approximately 232,000 square feet of the building are available for lease.
(6) Approximately 75,100 square feet are leased to one tenant, 47,100 square
feet to another tenant and 2,700 square feet to a third tenant, all for
retail. Approximately 137,000 square feet of the building are available for
lease.
(7) Approximately 25,000 square feet are leased to one tenant for offices and
186,000 square feet of the building are available for lease.
(8) All of the building, except for 149,000 square feet, has been leased for
retail and offices. The 149,000 square feet are available for lease.
(9) Leased to one tenant for retail.
(10) Leased by the Company and sub-leased to two tenants for a bank and a
gasoline service station.
(11) Leased to one tenant for use as a distribution facility.
The City of New York through its Economic Development Administration ("New
York City") constructed a municipal garage at Livingston Street opposite the
Company's Brooklyn properties. The Company has a long-term lease with New York
City expiring in 2013 with renewal options, the last of which expires in 2073,
under which:
(1) Such garage, available to the public, provides truck bays and
passage facilities through a tunnel for the exclusive use of the Company,
to the structure referred to in (2) below; the bays, passage facilities and
tunnel, totaling approximately 17,000 square feet, are included in the
lease from New York City mentioned in the preceding paragraph and are in
full use.
(2) The Company constructed a six-story building and basement on a
20 x 75-foot plot (acquired and made available by New York City and leased
to the Company for a term expiring in 2013 with renewal options, the last
of which expires in 2073) adjacent to and connected with the Company's
Brooklyn properties, which provides the other end of the tunnel with the
truck bays in the municipal garage.
See Note 11 to the Consolidated Financial Statements of the 1996 Annual
Report to Shareholders, which information is incorporated herein by reference,
for information concerning those tenants the rental income from which equals 10%
or more of the Company's rental income.
ITEM 3. LEGAL PROCEEDINGS.
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.
4
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
During the fourth quarter of the fiscal year covered by this report, no
matter was submitted to a vote of security holders of the Company.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following information is furnished with respect to each Executive
Officer of the Registrant (each of whom is elected annually) whose present term
of office will expire upon the election and qualification of his successor:
<TABLE>
<CAPTION>
First Became
Business Experience During Such Officer
Name Age the Past Five Years or Director
---- --- -------------------------- ------------
<S> <C> <C> <C>
Max L. Shulman ................... 87 Chairman of the Board June, 1963
Co-Chairman of the Board June, 1995
Director January, 1946
Lloyd J. Shulman ................. 54 President November, 1978
Co-Chairman of the Board and
President June, 1995
Director November, 1977
Alex Slobodin .................... 81 Executive Vice President November, 1965
Treasurer September, 1955
Director November, 1963
Ward N. Lyke, Jr. ................ 45 Vice President February, 1984
George Silva ..................... 46 Vice President March, 1995
Salvatore Cappuzzo ............... 37 Secretary November, 1981
</TABLE>
No family relationship exists among the foregoing persons except that Lloyd
J. Shulman is the son of Max L. Shulman.
All of the above mentioned officers have been appointed as such by the
directors and, except for Mr. Silva, have been employed as Executive Officers of
the Company during the past five years.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS.
The information appearing under the heading "Common Stock Prices and
Dividends" on page 20 of the Registrant's 1996 Annual Report to Shareholders is
incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA.
The information appearing under the heading "Summary of Selected Financial
Data" on page 2 of the Registrant's 1996 Annual Report to Shareholders is
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The information appearing under the heading "Management's Discussion and
Analysis of Financial Condition and Results of Operations" on pages 18 and 19 of
the Registrant's 1996 Annual Report to Shareholders is incorporated herein by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Registrant's Consolidated Financial Statements, together with the
reports of D'Arcangelo & Co., LLP and of Lipsky, Goodkin & Co., P.C.,
Independent Public Accountants, dated October 11, 1996 and October 12, 1995,
respectively, appearing on pages 4 through 16 of the Registrant's 1996 Annual
Report to Shareholders is incorporated
5
<PAGE>
herein by reference. With the exception of the aforementioned information and
the information incorporated by reference in Items 2, 5, 6, 7 and 8 hereof, the
1996 Annual Report to Shareholders is not to be deemed filed as part of this
Form 10-K Annual Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
The information required by that part of this item relating to Changes in
Registrant's Certifying Accountants appears in the Registrant's Form 8-K dated
January 11, 1996, amended February 6, 1996 by Form 8-K/A, and such information
is incorporated herein by reference.
Response to that part of this item relating to Disagreements with
Accountants and Financial Disclosures--None, as it applies to both the former
and present accountants.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information relating to directors of the Registrant is contained in the
Definitive Proxy Statement for the 1996 Annual Meeting of Shareholders and such
information is incorporated herein by reference.
The information with respect to Executive Officers of the Registrant is set
forth in Part I hereof.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this item appears under the heading "Executive
Compensation and Related Matters" in the Definitive Proxy Statement for the 1996
Annual Meeting of Shareholders and such information is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by this item appears under the headings "Security
Ownership of Certain Beneficial Owners and Management" and "Information
Concerning Nominees for Election as Directors" in the Definitive Proxy Statement
for the 1996 Annual Meeting of Shareholders and such information is incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this item appears under the heading "Executive
Compensation and Related Matters" in the Definitive Proxy Statement for the 1996
Annual Meeting of Shareholders and such information is incorporated herein by
reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) The following documents are filed as part of this report:
1. (i) The Consolidated Financial Statements and report of
D'Arcangelo & Co., LLP, Independent Public Accountants, dated
October 11, 1996, set forth on pages 4 through 16 of the
Registrant's 1996 Annual Report to Shareholders.
(ii) The report of Lipsky, Goodkin & Co., P.C. Independent Public
Accountants, dated October 12, 1995, (except with respect to the
matter discussed in Note 16(b), as to which the date is October
20, 1995), set forth on page 16 of the Registrant's 1995 Annual
Report to Shareholders.
2. See accompanying Index to Registrant's Financial Statements and
Schedules.
3. Exhibits:
(2) Plan of acquisition, reorganization, arrangement,
liquidation or succession--not applicable.
(3) Articles of incorporation and by-laws:
6
<PAGE>
(i) Certificate of Incorporation, as amended, incorporated
by reference to Registrant's Form 8-K dated December 3,
1973.
(ii) By-laws, as amended June 1, 1995, incorporated by
reference to Registrant's Form 10-K dated October 23,
1995.
(4) Instruments defining the rights of security holders,
including indentures--see Exhibit (3) above.
(9) Voting trust agreement--not applicable.
(10) Material contracts:
(i) Agreement of Lease dated March 29, 1990 pursuant to
which the basement and a portion of the street floor,
approximately 32% of the total area of the Registrant's
former Jamaica store, has been leased to a tenant for
retail space, incorporated by reference to Registrant's
Form 10-K dated October 29, 1990.
(ii) Agreement of Lease dated July 5, 1990, as amended
February 25, 1992, pursuant to which a portion of the
street floor and basement, approximately 35% of the
total area of the Registrant's former Brooklyn store,
has been leased to a tenant for the retail sale of
general merchandise and for a restaurant, incorporated
by reference to Registrant's Form 10-K dated October
29, 1990.
(iii) The J.W. Mays, Inc. Retirement Plan and Trust, Summary
Plan Description, effective August 1, 1991,
incorporated by reference to Registrant's Form 10-K
dated October 23, 1992 and, as amended, effective
August 1, 1993, incorporated by reference to
Registrant's Form 10-Q for the Quarter ended October
31, 1993 dated December 2, 1993.
(11) Statement re computation of per share earnings--not
applicable.
(12) Statement re computation of ratios--not applicable.
(13) Annual report to security holders.
(16) Letter re change in certifying accountant--the information
required by this item appears in the Registrant's Form 8-K
dated January 11, 1996, amended February 6, 1996 by Form
8-K/A, and such information is incorporated herein by
reference.
(18) Letter re change in accounting principles--not applicable.
(21) Subsidiaries of the registrant.
(22) Published report regarding matters submitted to vote of
security holders--not applicable.
(24) Power of attorney--none.
(28) Information from reports furnished to state insurance
regulatory authorities--not applicable.
(99) Additional exhibits--none.
(b) Reports on Form 8-K -- No reports on Form 8-K were required to be
filed by the Registrant during the three months ended July 31,
1996.
7
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTIONS 13 OR 15(D) 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)
October 21, 1996 By: LLOYD J. SHULMAN
--------------------------------
Lloyd J. Shulman
Co-Chairman of the Board
Principal Executive Officer
President
Principal Operating Officer
October 21, 1996 By: ALEX SLOBODIN
--------------------------------
Alex Slobodin
Executive Vice President
and Treasurer
Principal Financial Officer
October 21, 1996 By: MARK GREENBLATT
--------------------------------
Mark Greenblatt
Controller
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT IN THE CAPACITIES AND ON THE DATE INDICATED.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
MAX L. SHULMAN Co-Chairman of the Board October 21, 1996
- ----------------------------- and Director
Max L. Shulman
LLOYD J. SHULMAN Co-Chairman of the Board, October 21, 1996
- ----------------------------- Chief Executive Officer,
Lloyd J. Shulman President, Chief Operating Officer
and Director
ALEX SLOBODIN Executive Vice President, October 21, 1996
- ----------------------------- Treasurer and Director
Alex Slobodin
FRANK J. ANGELL Director October 21, 1996
- -----------------------------
Frank J. Angell
JACK SCHWARTZ Director October 21, 1996
- -----------------------------
Jack Schwartz
SYLVIA W. SHULMAN Director October 21, 1996
- -----------------------------
Sylvia W. Shulman
LEWIS D. SIEGEL Director October 21, 1996
- -----------------------------
Lewis D. Siegel
</TABLE>
8
<PAGE>
INDEX TO REGISTRANT'S FINANCIAL STATEMENTS AND SCHEDULES
Reference is made to the following sections of the Registrant's Annual
Report to Shareholders for the fiscal year ended July 31, 1996, which are
incorporated herein by reference:
Reports of Independent Accountants (page 16)
Consolidated Balance Sheets (pages 4 and 5)
Consolidated Statements of Operations and Retained Earnings (page 6)
Consolidated Statements of Cash Flows (page 7)
Notes to Consolidated Financial Statements (pages 8-15)
Page
----
Financial Statement Schedules:
Reports of Independent Accountants ................... 9
II Valuation and Qualifying Accounts .................... 10
III Real Estate and Accumulated Depreciation ............... 11
All other schedules for which provision is made in the applicable
regulations of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable and, accordingly, are omitted.
The separate financial statements and schedules of J. W. Mays, Inc. (not
consolidated) are omitted because the Company is primarily an operating company
and its subsidiaries are wholly-owned.
----------------------
REPORTS OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors and Shareholders
J. W. Mays, Inc. and Subsidiaries
We have audited the consolidated financial statements of J.W. Mays, Inc.
and subsidiaries as of July 31, 1996 and for the year then ended, and have
issued our report thereon dated October 11, 1996; such consolidated financial
statements and report are incorporated by reference in this Form 10-K Annual
Report. Our audit also included the consolidated financial statement schedules
of J.W. Mays, Inc. and subsidiaries listed in Item 14(a)2 of this Form 10-K.
These consolidated financial statement schedules are the responsibility of the
Corporation's management. Our responsibility is to express an opinion based on
our audit. In our opinion, such consolidated financial statement schedules, when
considered in relation to the basic consolidated financial statements taken as a
whole, present fairly, in all material respects, the information set forth
therein.
D'ARCANGELO & CO., LLP
Purchase, N.Y
October 11, 1996
----------------------
To the Board of Directors and Shareholders
of J. W. Mays, Inc.:
Our audits of the Consolidated Financial Statements referred to in our
report dated October 12, 1995, appearing on page 16 of the 1995 Annual Report to
Shareholders of J.W. Mays, Inc., (which report and Consolidated Financial
Statements are incorporated by reference in this Form 10-K Annual Report) also
included an audit of the Summarized Financial Information contained in Item 8
and Financial Statement Schedules listed in Item 14(a)(2) of this Form 10-K. Our
report on the Consolidated Financial Statements includes explanatory paragraphs
with respect to the change in the method of accounting for marketable
securities--other investments in 1995 and a change in the method of accounting
for income taxes in 1994 as discussed in Note 1 to the Consolidated Financial
Statements. In our opinion, this Summarized Financial Information and these
Financial Statement Schedules present fairly, in all material respects, the
information set forth therein when read in conjunction with the related
Consolidated Financial Statements.
LIPSKY, GOODKIN & Co., P.C.
New York, N.Y
October 12, 1995 (except with respect to the matter discussed in Note 16(b)
to the 1995 Consolidated Financial Statements, as to which the date is
October 20, 1995). See paragraph 6 of Note 11 to the 1996 Consolidated
Financial Statements for events subsequent to October 20, 1995.
9
<PAGE>
SCHEDULE II
J.W. MAYS, INC.
VALUATION AND QUALIFYING ACCOUNTS
Year ended July 31,
--------------------------------
1996 1995 1994
-------- -------- --------
Allowance for net unrealized gains
(losses) on marketable securities--
other investments:
Balance, beginning of period ............ $ 42,010 $(31,769) $ --
Additions charged to expense ............ -- -- (31,769)
Reductions .............................. 16,749 73,779 --
-------- -------- --------
Balance, end of period .................. $ 25,261 $ 42,010 $(31,769)
======== ======== ========
Deferred income tax asset
valuation allowance:
Balance, beginning of period ............ $117,098 $169,698 $ --
Additions charged to expense ............ -- -- 169,698
Reductions .............................. 75,501 52,600 --
-------- -------- --------
Balance, end of period .................. $ 41,597 $117,098 $169,698
======== ======== ========
10
<PAGE>
<TABLE>
SCHEDULE III
J. W. MAYS, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION
July 31, 1996
<CAPTION>
Col. A Col. B Col. C Col. D
- --------------------------------------------------------------------------------------------------------------
Cost Capitalized
Initial Cost to Company Subsequent to Acquisition
---------------------------------------------------------
Encum- Building & Carrying
Description brances Land Improvements Improvements Cost
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Office and Rental Buildings
Brooklyn, New York
Fulton Street at Bond Street ... $ 208,989 $1,703,157 $ 3,862,454 $ 6,237,539 $ --
Jamaica, New York
Jamaica Avenue at
169th Street ................... -- -- 3,215,699 4,321,362 --
Fishkill, New York
Route 9 at Interstate
Highway 84 ..................... 2,670,079 467,341 7,212,116 1,726,320 --
Brooklyn, New York
Jowein Building
Fulton Street and Elm Place .... 2,415,385 1,622,232 770,561 9,111,808 --
Levittown, New York
Hempstead Turnpike ............. -- 95,256 200,560 72,990 --
Circleville, Ohio
Tarlton Road ................... 2,153,714 120,849 4,388,456 -- --
---------- ---------- ----------- ----------- --------
Total (A) ...................... $7,448,167 $4,008,835 $19,649,846 $21,470,019 $ --
========== ========== =========== =========== ========
<CAPTION>
====================================================================================================================================
Col. A Col. E Col. F Col. G Col. H Col. I
- ------------------------------------------------------------------------------------------------------------------------------------
Gross Amount at Which Carried Life on Which
at Close of Period Depreciation in
------------------------------------------ Latest Income
Buildings & Accumulated Date of Date Statement Is
Land Improvements Total Depreciation Construction Acquired Computed
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Office and Rental Buildings
Brooklyn, New York
Fulton Street at Bond Street .. $1,703,157 $10,099,993 $11,803,150 $ 4,399,495 Various Various (1) (2)
Jamaica, New York
Jamaica Avenue at
169th Street .................. -- 7,537,061 7,537,061 4,922,320 1959 1959 (1) (2)
Fishkill, New York
Route 9 at Interstate
Highway 84 .................... 467,341 8,938,436 9,405,777 4,203,402 10/74 11/72 (1)
Brooklyn, New York
Jowein Building
Fulton Street and Elm Place ... 1,622,232 9,882,369 11,504,601 5,084,510 1915 1950 (1) (2)
Levittown, New York
Hempstead Turnpike ............ 95,256 273,550 368,806 239,881 4/69 6/62 (1)
Circleville, Ohio
Tarlton Road .................. 120,849 4,388,456 4,509,305 383,990 9/92 12/92 (1)
---------- ----------- ----------- -----------
Total (A) ..................... $4,008,835 $41,119,865 $45,128,700 $19,233,598
========== =========== =========== ===========
</TABLE>
- -------------
(1) Building and improvements 18-40 years
(2) Improvements to leased property 3-40 years
(A) Does not include Office Furniture and Equipment and Transportation Equipment
in the amount of $664,930 and Accumulated Depreciation thereon of $479,526
at July 31, 1996.
<TABLE>
<CAPTION>
Years Ended July 31,
-----------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Investment in Real Estate
Balance at Beginning of Year .................... $43,475,739 $42,529,020 $40,821,164
Improvements .................................... 1,652,961 946,719 1,707,856
----------- ----------- -----------
Balance at End of Year .......................... $45,128,700 $43,475,739 $42,529,020
=========== =========== ===========
Accumulated Depreciation
Balance at Beginning of Year .................... $18,398,773 $17,617,239 $16,857,024
Additions Charged to Costs and Expenses ......... 834,825 781,534 760,215
----------- ----------- -----------
Balance at End of Year .......................... $19,233,598 $18,398,773 $17,617,239
=========== =========== ===========
</TABLE>
11
<PAGE>
EXHIBIT INDEX TO FORM 10-K
(2) Plan of acquisition, reorganization, arrangement, liquidation or
succession--not applicable
(3) (i) Articles of incorporation--incorporated by reference
(ii) By-laws--incorporated by reference
(4) Instruments defining the rights of security holders, including
indentures--see Exhibit (3) above
(9) Voting trust agreement--not applicable
(10) Material contracts--(i) through (iii) incorporated by reference
(11) Statement re computation of per share earnings--not applicable
(12) Statement re computation of ratios--not applicable
(13) Annual report to security holders
(16) Letter re change in certifying accountant
(18) Letter re change in accounting principles--not applicable
(21) Subsidiaries of the registrant
(22) Published report regarding matters submitted to vote of security
holders--not applicable
(24) Power of attorney--none
(28) Information from reports furnished to state insurance regulatory
authorities--not applicable
(99) Additional exhibits--none
EXHIBIT 13
(Copy of Annual Report to Shareholders attached hereto)
Fiscal Year Ended July 31, 1996
(NEXT PAGE)
EXHIBIT 21
Subsidiaries of the Registrant
The Registrant owns all of the outstanding stock of the following
corporations, which are included in the Consolidated Financial Statements filed
with this report:
DUTCHESS MALL SEWAGE PLANT, INC. (a New York corporation)
J. W. M. Realty Corp. (an Ohio corporation)
12
J. W. MAYS, INC.
ANNUAL REPORT
1996
Year Ended July 31, 1996
<PAGE>
CONTENTS
Page No.
--------
Summary of Selected Financial Data 2
Company Profile 2
Message to Shareholders 3
Consolidated Balance Sheets 4-5
Consolidated Statements of Operations
and Retained Earnings 6
Consolidated Statements of Cash Flows 7
Notes to Consolidated Financial Statements 8-15
Reports of Independent Accountants 16
Five Year Summary of
Consolidated Operations 17
Management's Discussion and
Analysis of Financial Condition
and Results of Operations 18-19
Quarterly Financial Information (Unaudited) 20
Common Stock Prices and Dividends 20
Officers and Directors 21
EXECUTIVE OFFICES
9 Bond Street, Brooklyn, N.Y. 11201
TRANSFER AGENT AND REGISTRAR
American Stock Transfer & Trust Company
40 Wall Street
New York, N.Y. 10005
SPECIAL COUNSEL
Cullen and Dykman
177 Montague Street
Brooklyn, N.Y. 11201
INDEPENDENT ACCOUNTANTS
D'Arcangelo & Co., LLP
3010 Westchester Avenue
Purchase, N.Y. 10577
COMMON STOCK
The Company's common stock trades on the Nasdaq National Market tier of The
Nasdaq Stock Market under the symbol: "Mays".
ANNUAL MEETING
The Annual Meeting of Shareholders will be held on Tuesday, November 26, 1996,
at 10:00 A.M., New York time, at J. W. MAYS, INC., 9 Bond Street, Brooklyn, New
York.
<PAGE>
J.W. MAYS, INC.
SUMMARY OF SELECTED FINANCIAL DATA
(dollars in thousands except per share data)
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Rental Income ........................................ $ 9,269 $ 8,330 $ 9,523 $10,030 $ 9,299
Gain on Sale of Property and Equipment ............... -- -- -- 1 --
Gain on Condemnation Award ........................... -- -- -- 639 --
- ----------------------------------------------------------------------------------------------------------------
Total Revenues ....................................... 9,269 8,330 9,523 10,670 9,299
- ----------------------------------------------------------------------------------------------------------------
Income (Loss) from Continuing Operations Before
Cumulative Effect of Changes in Accounting
Principles and Extraordinary Item ................... (141) (394) (32) 1,464 856
(Loss) from Discontinued Operations .................. -- -- -- -- (47)
Cumulative Effect of Changes in Accounting Principles:
Accounting for Certain Investments in Debt
and Equity Securities ............................. -- 22 -- -- --
Accounting for Income Taxes ........................ -- -- (275) -- --
Extraordinary Item--Utilization of Net Operating
Loss Carryforward ................................... -- -- -- 709 416
- ----------------------------------------------------------------------------------------------------------------
Net Income (Loss) .................................... (141) (372) (307) 2,173 1,225
- ----------------------------------------------------------------------------------------------------------------
Working Capital ...................................... 2,152 2,478 4,629 3,816 7,457
- ----------------------------------------------------------------------------------------------------------------
Total Assets ......................................... 37,771 36,144 37,290 36,384 32,245
- ----------------------------------------------------------------------------------------------------------------
Long-Term Debt:
Mortgages Payable .................................. 6,965 5,954 6,359 4,315 4,509
Other .............................................. 1,039 678 672 668 664
- ----------------------------------------------------------------------------------------------------------------
Total ............................................ 8,004 6,632 7,031 4,983 5,173
- ----------------------------------------------------------------------------------------------------------------
Shareholders' Equity ................................. 27,141 27,293 27,637 28,028 26,056
- ----------------------------------------------------------------------------------------------------------------
Income (Loss) Per Common Share:
Continuing Operations .............................. (.07) (.18) (.02) .67 .39
Discontinued Operations ............................ -- -- -- -- (.02)
Cumulative Effect of Changes in Accounting
Principles:
Accounting for Certain Investments in Debt
and Equity Securities ........................... -- .01 -- -- --
Accounting for Income Taxes ...................... -- -- (.13) -- --
Extraordinary Item--Utilization of
Net Operating Loss Carryforward ................... -- -- -- .33 .19
- ----------------------------------------------------------------------------------------------------------------
Net Income (Loss) Per Common Share ............... $ (.07) $ (.17) $ (.15) $ 1.00 $ .56
- ----------------------------------------------------------------------------------------------------------------
Cash Dividends Declared Per Share .................... -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
Average common shares outstanding for 1996, 2,136,397; 1995, 2,136,397; 1994,
2,137,440; 1993, 2,171,124; and 1992, 2,178,297.
COMPANY PROFILE
- -------------------------------------------------------------------------------
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, 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 is leased to tenants while the remainder is
available for lease.
More comprehensive information concerning the Company appears in its Annual
Report on Form 10-K for the fiscal year ended July 31, 1996.
2
<PAGE>
J.W. MAYS, INC.
TO OUR SHAREHOLDERS:
- -------------------------------------------------------------------------------
The current year has shown an improvement over the 1995 fiscal year.
Revenues for the current fiscal year increased to $9,268,768, from $8,330,182 in
the 1995 fiscal year, while revenues for the three months ended July 31, 1996
increased to $2,344,431, from $2,053,733 in the 1995 comparable quarter.
For the fiscal year ended July 31, 1996, our Company reported a loss of
$141,286, or $.07 per share, compared with a loss of $372,039, or $.17 per
share, in the year ended July 31, 1995. The current year's loss of $141,286
includes a pre-tax write-off of a bad debt of $424,011, due to a lease rejection
by a tenant in bankruptcy under Chapter 11.
In the three months ended July 31, 1996, the Company reported net income of
$90,701, or $.04 per share, against a quarterly loss in the previous year of
$172,500, or $.08 per share.
The Company has recently signed two leases with the State of New York for
approximately 46,000 square feet of office space in the Company's former store
in Jamaica, New York. Occupancy by the two tenants is anticipated to commence in
April 1997. To defray the costs of renovations for the State occupancy, the
Company borrowed from a bank the principal amount of $2,500,000.
As we review the progress made in fiscal 1996, we are confident that the
Company is better positioned today then it was one year ago when we were
absorbing the loss of two major tenants, and a rent concession to a third
tenant, as previously reported. While we cannot control the real estate market,
we believe we have made significant progress in the areas we can control. We
look forward to being able to report a profitable 1997 fiscal year.
We are appreciative of the continued support and confidence of our
shareholders, the counsel of our Board of Directors and the loyal service of our
employees.
Sincerely,
/s/ MAX L. SHULMAN
Max L. Shulman
Co-Chairman
/S/ LLOYD J. SHULMAN
Lloyd J. Shulman
Co-Chairman, Chief Executive
Officer and President and
Chief Operating Officer
3
<PAGE>
J.W. MAYS, INC.
CONSOLIDATED BALANCE SHEETS
July 31, 1996 and 1995
Assets
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Property and Equipment--At cost (Notes 1 and 3):
Buildings and improvements ........................................................ $31,988,028 $30,867,736
Improvements to leased property ................................................... 9,131,836 8,215,035
Fixtures and equipment ............................................................ 493,748 483,208
Land .............................................................................. 4,008,835 4,008,835
Other ............................................................................. 171,183 167,223
Construction in progress .......................................................... -- 384,133
----------- -----------
45,793,630 44,126,170
Less accumulated depreciation and amortization .................................... 19,713,124 18,840,235
----------- -----------
Property and equipment--net ................................................... 26,080,506 25,285,935
----------- -----------
Current Assets:
Cash and cash equivalents (Notes 11 and 12) ....................................... 412,653 490,315
Marketable securities--other investments (Notes 1, 2, 9 and 11) ................... 2,792,800 2,799,712
Receivables ....................................................................... 315,179 244,992
Deferred income taxes (Note 5) .................................................... 67,000 27,000
Prepaid expenses .................................................................. 1,171,896 1,121,694
Income taxes refundable ........................................................... 4,496 --
Real estate taxes refundable ...................................................... 13,409 --
----------- -----------
Total current assets .......................................................... 4,777,433 4,683,713
----------- -----------
Other Assets:
Deferred charges (Note 1) ......................................................... 2,414,194 2,329,140
Less accumulated amortization ..................................................... 883,229 913,311
----------- -----------
Net ........................................................................... 1,530,965 1,415,829
Security deposits (Note 11) ....................................................... 887,121 458,641
Unbilled receivables (Note 1) ..................................................... 4,126,436 4,026,435
Receivables (Note 7) .............................................................. 194,453 109,687
Marketable securities--other investments (Notes 1, 2, 9 and 11) ................... 98,056 164,063
Deferred income taxes (Note 5) .................................................... 76,000 --
----------- -----------
Total other assets ............................................................ 6,913,031 6,174,655
----------- -----------
TOTAL ASSETS .................................................................. $37,770,970 $36,144,303
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE>
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Long-Term Debt:
Mortgages payable (Notes 3 and 11) ............................................... $ 6,964,717 $ 5,954,306
Other (Note 4) ................................................................... 1,039,709 677,597
----------- -----------
Total long-term debt ......................................................... 8,004,426 6,631,903
----------- -----------
Deferred Income Taxes (Note 5) ..................................................... -- 14,000
----------- -----------
Current Liabilities:
Payable to securities broker (Notes 9 and 11) .................................... 1,497,320 1,225,100
Accounts payable ................................................................. 32,460 64,744
Payroll and other accrued liabilities (Note 8) ................................... 607,037 487,956
Income taxes payable (Note 5) .................................................... -- 18,588
Other taxes payable .............................................................. 5,194 4,081
Current portion of long-term debt--mortgages payable (Notes 3 and 11) ............ 483,450 404,813
----------- -----------
Total current liabilities .................................................... 2,625,461 2,205,282
----------- -----------
Total liabilities ............................................................ 10,629,887 8,851,185
----------- -----------
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 (Note 2) ........................ 17,261 28,010
Retained earnings ................................................................ 21,883,520 22,024,806
----------- -----------
27,425,323 27,577,358
Less common stock held in treasury, at cost--
41,900 shares at 1996 and 1995 .................................................. 284,240 284,240
----------- -----------
Total shareholders' equity ................................................... 27,141,083 27,293,118
----------- -----------
Commitments and Contingencies (Notes 6 and 14)
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ................................... $37,770,970 $36,144,303
=========== ===========
</TABLE>
5
<PAGE>
J.W. MAYS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
<TABLE>
<CAPTION>
Years Ended July 31,
-----------------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Revenues
Rental income (Notes 1 and 7) ..................................... $ 9,268,768 $ 8,330,182 $ 9,522,528
----------- ----------- -----------
Expenses
Real estate operating expenses .................................... 5,678,653 5,580,161 5,611,835
Administrative and general expenses ............................... 2,431,998 2,157,610 2,840,030
Depreciation and amortization ..................................... 888,932 838,063 822,727
----------- ----------- -----------
Total expenses .............................................. 8,999,583 8,575,834 9,274,592
----------- ----------- -----------
Income (loss) from operations before investment income,
interest expense and income taxes ................................. 269,185 (245,652) 247,936
----------- ----------- -----------
Investment income and interest expense
Investment income (Note 2) ........................................ 249,479 366,911 384,545
Interest expense (Note 3) ......................................... 681,950 641,067 596,947
----------- ----------- -----------
(432,471) (274,156) (212,402)
----------- ----------- -----------
Income (loss) from operations before income taxes .................. (163,286) (519,808) 35,534
Income taxes provided (benefit) (Note 5) ........................... (22,000) (126,000) 68,000
----------- ----------- -----------
(Loss) from operations before cumulative effect
of changes in accounting principles ............................... (141,286) (393,808) (32,466)
Cumulative effect of changes in accounting principles:
Accounting for certain investments in debt and
equity securities (Note 1) ....................................... -- 21,769 --
Accounting for income taxes (Notes 1 and 5) ....................... -- -- (275,000)
----------- ----------- -----------
Net (loss) ......................................................... (141,286) (372,039) (307,466)
Retained earnings, beginning of year ............................... 22,024,806 22,396,845 22,704,311
----------- ----------- -----------
Retained earnings, end of year ..................................... $21,883,520 $22,024,806 $22,396,845
=========== =========== ===========
Income (loss) per common share:
(Loss) from operations ............................................ $ (.07) $ (.18) $ (.02)
Cumulative effect of change in accounting principles:
Accounting for certain investments in debt and
equity securities ............................................... -- .01 --
Accounting for income taxes ...................................... -- -- (.13)
----------- ----------- -----------
Net (loss) per common share ................................. $ (.07) $ (.17) $ (.15)
=========== =========== ===========
Dividends per share ................................................ -- -- --
=========== =========== ===========
Average common shares outstanding .................................. 2,136,397 2,136,397 2,137,440
=========== =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
6
<PAGE>
J.W. MAYS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended July 31,
-----------------------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Cash Flows From Operating Activities
(Loss) from operations .............................................. $ (141,286) $ (393,808) $ (32,466)
Adjustments to reconcile net income (loss) to net cash
provided from (used in) operating activities:
Deferred income taxes ............................................. (124,000) (251,000) (61,000)
Amortization of premium on marketable debt
securities ....................................................... 723 2,171 4,986
Unrealized loss on marketable securities .......................... -- -- 31,769
Realized (gain) loss on marketable securities ..................... 6,642 (13,643) (18,924)
Depreciation and amortization ..................................... 888,932 838,063 822,727
Amortization of deferred expenses ................................. 238,134 127,131 230,823
Other assets--deferred expenses ................................... (353,270) (107,469) (231,767)
--security deposits ................................... (428,480) (200,505) (57,762)
--unbilled receivables ................................ (100,001) (704,496) (7,204)
--receivables ......................................... (84,766) 26,211 (135,898)
Changes in:
Receivables ....................................................... (70,187) 128,011 (10,153)
Prepaid expenses .................................................. (50,202) 40,925 21,497
Real estate taxes refundable ...................................... (13,409) -- --
Income taxes refundable ........................................... (4,496) 22,005 (22,005)
Accounts payable .................................................. (32,284) (26,786) (36,511)
Payroll and other accrued liabilities ............................. 119,081 (77,888) (60,250)
Income taxes payable .............................................. (18,588) 18,588 (29,898)
Other taxes payable ............................................... 1,113 433 364
---------- ---------- ----------
Net cash provided (used) by operating activities ............... (166,344) (572,057) 408,328
---------- ---------- ----------
Cash Flows From Investing Activities
Acquisition of property and equipment ............................... (1,683,503) (982,150) (1,719,703)
Marketable securities--other investments:
Receipts from sales or maturities .................................. 476,497 2,333,962 699,798
Payments for purchases ............................................. (427,692) (415,708) (760,503)
---------- ---------- ----------
Net cash provided (used) by investing activities ............... (1,634,698) 936,104 (1,780,408)
---------- ---------- ----------
Cash Flows From Financing Activities
Borrowings--securities broker ....................................... 1,348,262 2,697,663 2,551,633
Payments--securities broker ......................................... (1,076,042) (2,596,076) (3,819,903)
Increase (reduction) of mortgage debt--short-term ................... 78,637 (178,354) 389,102
Increase (reduction) of mortgage and other
debt--long-term .................................................... 1,372,523 (399,254) 2,048,556
Purchase of treasury stock .......................................... -- -- (83,300)
---------- ---------- ----------
Net cash provided (used) by financing activities ................ 1,723,380 (476,021) 1,086,088
---------- ---------- ----------
Net (decrease) in cash and cash equivalents ......................... (77,662) (111,974) (285,992)
Cash and cash equivalents at beginning of year ...................... 490,315 602,289 888,281
---------- ---------- ----------
Cash and cash equivalents at end of year ............................ $ 412,653 $ 490,315 $ 602,289
========== ========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
7
<PAGE>
J.W. MAYS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
NATURE OF OPERATIONS: The Company operates a number of commercial real
estate properties located in Brooklyn and Jamaica in New York City, in
Levittown, 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 is leased to
tenants while the remainder is available for lease.
CONSOLIDATION: The consolidated financial statements include the accounts
of the Company and its subsidiaries, which are wholly-owned. Material
intercompany items have been eliminated in consolidation.
USE OF ESTIMATES: The preparation of the Company's financial statements
requires management to make estimates and judgements that affect the reported
consolidated statements of operations and 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
to be 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.
MARKETABLE SECURITIES--OTHER INVESTMENTS: Effective August 1, 1994, the
Company adopted Statement of Financial Accounting Standards No. 115, "Accounting
for Certain Investments in Debt and Equity Securities" ("FAS 115"). FAS 115
requires certain securities to be categorized 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.
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:
Building and improvements ...................... 18-40 years
Improvements to leased property ................ 3-40 years
Fixtures and equipment ......................... 7-12 years
Other .......................................... 3-5 years
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.
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 using the straight-line method.
INCOME TAXES: Effective August 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("FAS
109"). The adoption of FAS 109 changes the Company's method of accounting for
income taxes from the deferred method previously used under APB Opinion No. 11
to an asset and liability approach. This approach requires the recognition of
deferred tax assets and liabilities with respect to the expected future tax
consequences of events that have been recognized in the Company's financial
statements and income tax returns. As permitted by FAS 109, the Company has
elected not to restate prior years' consolidated financial statements.
INCOME (LOSS) PER SHARE OF COMMON STOCK: Income (loss) per share has been
computed by dividing net income or loss 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 or (loss) per share
were 2,136,397 in fiscal 1996 and 1995, and 2,137,440 in fiscal 1994.
8
<PAGE>
- --------------------------------------------------------------------------------
2. MARKETABLE SECURITIES -- OTHER INVESTMENTS:
As of July 31, 1996 and 1995, the Company's marketable securities were
classified as follows:
<TABLE>
<CAPTION>
1996 1995
---------------------------------------------- -----------------------------------------------
Gross Gross Gross Gross
Unrealized Unrealized Fair Unrealized Unrealized Fair
Cost Gains Losses Value Cost Gains Losses Value
---------- ---------- ---------- --------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Current:
Available for sale:
Equity securities ............. $2,675,300 $25,261 $ -- $2,700,561 $2,531,940 $42,010 $ -- $ 2,573,950
Certificate of deposit ........ 26,996 -- -- 26,996 25,804 -- -- 25,804
---------- ------- ----- ---------- ---------- ------- ------ -----------
Total ....................... 2,702,296 25,261 -- 2,727,557 2,557,744 42,010 -- 2,599,754
Held to maturity:
Corporate debt securities
due within one year .......... 65,243 79 -- 65,322 199,958 3,372 -- 203,330
---------- ------- ----- ---------- ---------- ------- ------ -----------
Total current ............... $2,767,539 $25,340 $ -- $2,792,879 $2,757,702 $45,382 $ -- $ 2,803,084
========== ======= ====== ========== ========== ======= ====== ==========
Noncurrent:
Held to maturity:
Corporate debt
securities .................. $ 98,056 $ 3,644 $ -- $ 101,700 $ 164,063 $ 4,210 $ -- $ 168,273
========== ======= ====== ========== ========== ======= ====== ==========
</TABLE>
At July 31, 1994, marketable securities consisted of $120,010 of
certificates of deposit, $2,387,548 of debt securities and $2,289,220 of equity
securities, and the aggregate cost of debt and equity securities exceeded the
aggregate market value by $31,769.
Effective August 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" ("FAS 115"). The impact of adopting FAS 115 was to increase
shareholders' equity, net of taxes, by $28,010 at July 31, 1995 representing
unrealized gain on available for sale securities, net of taxes.
Investment income consists of the following:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Interest income ........................................ $ 43,294 $157,788 $239,951
Dividend income ........................................ 212,827 195,480 157,439
(Loss) Gain on sale of securities ...................... (6,642) 13,643 18,924
Unrealized loss on marketable securities .............. -- -- (31,769)
-------- -------- --------
Total ............................................... $249,479 $366,911 $384,545
======== ======== ========
</TABLE>
9
<PAGE>
- --------------------------------------------------------------------------------
3. LONG-TERM DEBT--MORTGAGES PAYABLE:
<TABLE>
<CAPTION>
July 31, 1996 July 31, 1995
----------------------- ------------------------
Current
Annual Final Due Due Due Due
Interest Payment Within After Within After
Rate Date One Year One Year One Year One Year
-------- -------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Term-loan payable to bank .......... (a) 8 1/2% 2/1/07 $ 20,682 $1,479,318 $ -- $ --
Mortgages:
Jowein Building, Brooklyn, N.Y. ... (b) 7 3/8% 3/31/98 83,825 831,560 53,513 921,524
Fishkill, New York Property ....... (c) 9 % 11/01/99 108,651 2,561,428 99,333 2,670,079
Circleville, Ohio Property ........ (d) 7 % 9/30/02 262,767 1,890,947 245,053 2,153,714
Other ............................. 8 1/2% 5/01/01 7,525 201,464 6,914 208,989
-------- ---------- -------- ----------
Total .......................... $483,450 $6,964,717 $404,813 $5,954,306
======== ========== ======== ==========
</TABLE>
(a) On August 17, 1995 the Company entered into an agreement with a bank
wherein the bank approved a $1,500,000 loan facility for the Company to use to
fund building construction/renovation costs to accommodate tenants under lease.
There is no prepayment penalty for early payoff of the loan. The Company took
down the $1,500,000 and repaid the amount on September 11, 1996 (See Note 15 to
Consolidated Financial Statements).
(b) 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. On September 6, 1995 the maturity date of the
mortgage was extended from March 31, 1996 to March 31, 1998. The interest rate
of 10% continued until March 31, 1996 and from April 1, 1996 the interest rate
was established at a bank's prevailing rate as at March 31, 1996 at 7 3/8%.
During the renewal period there will be no change in the constant quarterly
payments of interest and principal in the amount of $37,263.
(c) On October 28, 1994, the existing first mortgage loan balance on the
Fishkill property was paid down by a $200,000 payment and the due date of the
mortgage loan was extended for a period of five years from November 1, 1994. The
annual interest rate was reduced from 10% to 9% and the principal and interest
payments are to be made in constant monthly amounts of $28,712 based upon a
fifteen year payout period.
(d) The mortgage loan, which is self-amortizing, matures September 30,
2002. The loan is payable at an annual interest rate of 7%. Under the terms of
the loan, constant monthly payments, including interest and principal, commenced
April 1, 1994 in the amount of $33,767, until October 1, 1997, at which time the
monthly payments of interest and principal increase to $36,540.
Maturities of long-term debt--mortgages payable, outstanding at July 31,
1996, are as follows: Years ending July 31, 1997 (included in current
liabilities), $483,450; 1998, $1,322,436; 1999, $535,808; 2000, $578,422; 2001,
$788,572, and thereafter, $3,739,479.
4. LONG-TERM DEBT--OTHER:
Long-Term debt--Other consists of the following:
1996 1995
---------- --------
Deferred compensation ......... $ 459,333* $520,000*
Lease security deposits ....... 580,376** 157,597**
---------- --------
Total ..................... $1,039,709 $677,597
========== ========
Maturities of long-term debt--other, outstanding at July 31, 1996, are as
follows: Years ending July 31, 1997, $305,737; 1998, $104,000; 1999, $112,004;
2000, $198,851; 2001, $187,080 and thereafter, $132,037.
- ----------
* In fiscal 1964 the Company entered into a deferred compensation agreement
with its then Chairman of the Board. This agreement, as amended, provides for
the $520,000 to be paid in monthly installments of $8,666.67 for a period of
60 months, payable upon the expiration of his employment, retirement or
permanent disability as defined in the agreement, or death.
** Does not include two irrevocable letters of credit totaling $110,000 at July
31, 1996 and three irrevocable letters of credit totaling $410,000 at July
31, 1995, provided by two and three tenants, respectively.
10
<PAGE>
================================================================================
5. INCOME TAXES:
Effective August 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109--"Accounting for Income Taxes" ("FAS 109").
Significant components of the Company's deferred tax assets and liabilities
as of July 31, 1996 and 1995, are a result of temporary differences related to
the items described as follows:
<TABLE>
<CAPTION>
1996 1995
-------------------------------- ------------------------------
Deferred Deferred Deferred Deferred
Tax Assets Tax Liabilities Tax Assets Tax Liabilities
------------ --------------- ----------- ---------------
<S> <C> <C> <C> <C>
Net operating loss carryforward .................... $2,108,362 $ -- $1,994,301 $ --
Alternative minimum tax credit carryforward ........ 246,369 -- 246,369 --
Investment tax credit carryforward ................. 41,597 -- 117,098 --
Deferred compensation not currently deductible ..... 176,800 -- 176,800 --
Rental income received in advance .................. 16,601 -- 18,274 --
Bad debts .......................................... 44,138 -- 44,138 --
Unbilled receivables ............................... -- 1,402,988 -- 1,368,988
Property and equipment ............................. -- 1,068,094 -- 1,093,241
Unrealized gain on available for sale securities ... -- 8,589 -- 14,000
Other .............................................. 30,438 37 10,118 771
---------- ---------- ---------- ----------
2,664,305 2,479,708 2,607,098 2,477,000
Valuation allowance ................................ 41,597 -- 117,098 --
---------- ---------- ---------- ----------
$2,622,708 $2,479,708 $2,490,000 $2,477,000
========== ========== ========== ==========
</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,
1996, except for investment tax credit carryforwards, for which a 100% valuation
allowance has been provided. The valuation allowance was reduced by $116,156 in
1996 and $52,600 in 1995 due to the expiration of investment tax credit
carryforwards.
Income taxes provided (benefit) in fiscal 1996, 1995 and 1994 consisted of:
1996 1995 1994
---- ---- ----
Current:
Federal ........................... $ (7,000) $ -- $ --
State and City .................... 109,000 125,000 129,000
Deferred taxes ..................... (124,000) (251,000) (61,000)
--------- --------- --------
Total provision or (benefit) .... $ (22,000) $(126,000) $ 68,000
========= ========= ========
Components of the deferred tax provision (benefit) for the years ended July
31, 1996, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- --------
<S> <C> <C> <C>
Excess of book depreciation over tax depreciation ......... $ (25,000) $ (3,000) $ (4,000)
Reduction of rental income received in advance ............ 2,000 5,000 46,000
Increase in unbilled receivables .......................... 34,000 240,000 2,000
Unrealized gain (loss) on marketable securities ........... -- 14,000 (11,000)
Net operating loss carryforwards .......................... (114,000) (474,000) (59,000)
Bad debts ................................................. -- (15,000) (29,000)
Other ..................................................... (21,000) (18,000) (6,000)
--------- --------- --------
$(124,000) $(251,000) $(61,000)
========= ========= ========
</TABLE>
Taxes provided (benefit) for the years ended July 31, 1996, 1995 and 1994
differ from amounts which would result from applying the federal statutory tax
rate to pre-tax income (loss), as follows:
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- --------
<S> <C> <C> <C>
Income (loss) from operations before
income taxes ............................. $(163,286) $(519,808) $ 35,534
Dividends received deduction .............. (110,259) (96,442) (79,702)
Other-net ................................. (1,600) 3,015 (5,832)
--------- --------- --------
Adjusted pre-tax (loss) ................... $(275,145) $(613,235) $(50,000)
Statutory rate ............................ 34% 34% 34%
--------- --------- --------
Income tax provision (benefit) at
statutory rate ........................... $ (93,500) $(208,500) $(17,000)
State and City income taxes, net of
federal income tax benefit ............... 71,500 82,500 85,000
--------- --------- --------
Income taxes provided (benefit) ........... $ (22,000) $(126,000) $ 68,000
========= ========= ========
</TABLE>
11
<PAGE>
================================================================================
As a result of the Tax Reform Act of 1986, a separate parallel tax system,
"Alternative Minimum Tax" ("AMT"), was created. AMT is calculated separately
from the regular Federal income tax and is based on a flat rate applied to a
base which is broader than the regular tax base. The higher of the two taxes is
paid. The excess of the AMT over regular tax is a tax credit, which can be
carried forward indefinitely to reduce regular tax liabilities of future years.
The Company was subject to AMT in 1993 and 1989 in the amounts of $23,000 and
$230,000, respectively.
At July 31, 1996, the Company had tax net operating loss carryforwards of
$6,201,000 available to offset future regular taxable income. Of this amount
$1,210,000 is available until the year 2003, $2,057,000 until 2005, $1,028,000
until 2006, $175,000 until 2009, $1,395,000 until 2010, and $336,000 until 2011.
Although the Tax Reform Act of 1986 eliminated investment tax credits, for
non-transitional property placed in service after December 31, 1985, the Company
has investment tax credit carryforwards of $42,000 that expire as follows:
$15,000 in 1997, $2,000 in 1998, $16,000 in 1999 and $9,000 in 2000.
6. 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 term, range from 2 years to 21 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, 1996 was exceeded by sublease rental income, as follows:
1996 1995 1994
---------- ---------- ----------
Minimum rental expense ........... $1,155,120 $1,133,896 $1,113,872
Contingent rental expense ........ 1,252,684 1,278,773 1,267,918
---------- ---------- ----------
2,407,804 2,412,669 2,381,790
Sublease rental income ........... 4,108,307 3,540,588 3,934,133
---------- ---------- ----------
Excess ....................... $1,700,503 $1,127,919 $1,552,343
========== ========== ==========
Rent expense for operating leases include $160,800 for fiscal 1996,
$141,300 for fiscal 1995 and $121,800 for fiscal 1994, representing rentals with
affiliated companies.
Future minimum non-cancellable rental commitments for operating leases with
initial or remaining terms of one year or more are payable as follows:
Fiscal Operating
Year Leases
------ -----------
1997 ................................ $ 1,143,340
1998 ................................ 1,143,340
1999 ................................ 1,143,340
2000 ................................ 1,143,340
2001 ................................ 1,087,174
After 2001 .......................... 9,961,173
-----------
Total required* ................. $15,621,707
===========
* Minimum payments have not been reduced by minimum sublease rentals of
$38,642,064 under operating leases due in the future under non-cancellable
leases.
12
<PAGE>
================================================================================
7. RENTAL INCOME:
Rental income from Company owned property includes $413,609 per annum for
the fiscal year 1996, $385,720 for the fiscal year 1995 and $415,934 for the
fiscal year 1994 representing rentals from an affiliated company.
Amounts due from the affiliated company included in unbilled receivables
and noncurrent receivables are as follows:
July 31,
----------------------------------------
1996 1995 1994
---------- ---------- ----------
Unbilled receivables ............ $ 954,516 $ 999,344 $1,025,578
Receivables-noncurrent .......... 194,453 109,687 109,687
-current ............. -- -- --
---------- ---------- ----------
Total ....................... $1,148,969 $1,109,031 $1,135,265
========== ========== ==========
Rental income for the years 1996, 1995 and 1994 is as follows:
July 31,
----------------------------------------
1996 1995 1994
---------- ---------- ----------
Minimum rentals
Company owned property ........ $4,584,959 $4,254,489 $4,816,853
Operating leases .............. 3,443,822 2,955,906 3,265,820
---------- ---------- ----------
8,028,781 7,210,395 8,082,673
---------- ---------- ----------
Contingent rentals
Company owned property ........ 575,502 535,105 771,542
Operating leases .............. 664,485 584,682 668,313
---------- ---------- ----------
1,239,987 1,119,787 1,439,855
---------- ---------- ----------
Total ....................... $9,268,768 $8,330,182 $9,522,528
========== ========== ==========
Future minimum non-cancellable rental income for leases with initial or
remaining terms of one year or more is as follows:
Fiscal Company Operating
Year Owned Property Leases Total
---- -------------- ----------- -----------
1997 ........................... $ 4,662,742 $ 3,821,118 $ 8,483,860
1998 ........................... 4,327,930 3,486,306 7,814,236
1999 ........................... 3,898,307 3,083,576 6,981,883
2000 ........................... 3,788,257 3,081,836 6,870,093
2001 ........................... 3,612,332 3,015,676 6,628,008
After 2001 ..................... 24,224,529 22,153,552 46,378,081
----------- ----------- -----------
Total ...................... $44,514,097 $38,642,064 $83,156,161
=========== =========== ===========
8. PAYROLL AND OTHER ACCRUED LIABILITIES:
Payroll and other accrued liabilities consist of the following:
1996 1995
-------- --------
Payroll .............................. $183,102 $114,290
Interest ............................. 93,337 98,031
Professional fees .................... 75,317 86,996
Rents received in advance ............ 93,271 53,749
Utilities ............................ 20,570 83,036
Insurance premiums ................... -- 5,304
Construction costs ................... 42,869 2,025
Brokers commissions .................. 63,368 18,143
Other ................................ 35,203 26,382
-------- --------
Total ........................... $607,037 $487,956
======== ========
9. PAYABLE TO SECURITIES BROKER:
The Company borrowed funds, payable on demand, from a securities broker.
The loan balance at July 31, 1996 in the amount of $1,497,320, secured by the
Company's marketable securities, accrues interest, which at July 31, 1996, was
at the annual rate of 7 1/2%.
10. EMPLOYEES' RETIREMENT PLAN:
The Company sponsors a noncontributory Money Purchase Plan covering
substantially all of its employees. Operations were charged $132,234, $137,474
and $125,750, as contributions to the Plan for fiscal 1996, 1995 and 1994,
respectively.
13
<PAGE>
================================================================================
11. FINANCIAL INSTRUMENTS AND CREDIT RISK CONCENTRATIONS:
Financial instruments that are potentially subject to concentrations of
credit risk consist principally of marketable securities-other investments, cash
equivalents and receivables. Marketable securities-other investments and cash
equivalents are placed with high credit quality financial institutions and
instruments to minimize risk.
The following disclosure of estimated fair value was determined by the
Company, using available market information and appropriate valuation methods.
Considerable judgement 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: (1) quoted market prices, when available, are
used to estimate the fair value of investments in marketable debt and equity
securities; (2) 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 (3) carrying amounts in the balance sheet approximate fair
value for cash and cash equivalents due to their high liquidity.
July 31, 1996
---------------------------
Carrying Fair
Value Value
---------- ----------
Cash and cash equivalents ............... $ 412,653 $ 412,653
Marketable securities ................... 2,890,856 2,894,579
Tenant security deposits ................ 580,376 580,376
Payable to securities broker ............ (1,497,320) (1,497,320)
Long-term debt-mortgages payable ........ (7,448,167) (7,558,024)
The Company derives rental income from twenty six tenants, of which three
tenants each accounted for more than 10% of rental income during the year ended
July 31, 1996. The City of New York is one of the three tenants and the other
two tenants are 510 Fulton Street Realty Associates and its related 168-21
Jamaica Avenue Store Corporation, the owners of which are long established in
business.
McCrory Stores Corporation ("McCrory"), which occupied space in the Fulton
Mall in downtown Brooklyn, New York, and whose lease extended to April 29, 2010
and accounted for approximately 14% of the 1993 annual rental income of the
Company, filed for Chapter 11 bankruptcy protection from creditors on February
26, 1992. McCrory made application to the United States Bankruptcy Court for
authorization to reject the lease agreement, as amended, between the Company, as
landlord, and McCrory, as tenant, effective as of January 31, 1994. The United
States Bankruptcy Court authorized McCrory to reject such lease agreement
effective January 31, 1994 by order signed on January 21, 1994. The Company has
filed a Proof of Claim with the United States Bankruptcy Court, Southern
District of New York in the total amount of $7,753,732 for damages arising from
the rejection of the lease ("Lease Rejection Claim") and a proof of claim in the
amount of $86,650 for pre-petition rental obligations. The Company has also
filed an administrative claim in the amount of approximately $296,000
("Administrative Claim") for damages resulting from McCrory's failure to repair
and maintain the premises as required by the lease. The Company's claim for
pre-petition unpaid rent in the amount of approximately $86,650 has been
allowed in the reduced amount of $85,354.39 without prejudice to McCrory's
right to assert other and further objections. McCrory has filed an objection to
the Company's Lease Rejection Claim and Administrative Claim. The Company has
not included its claim against McCrory in its financial statements due to the
pending litigation over the Lease Rejection Claim and Administrative Claim and
the uncertainty of the amount that may ultimately be allowed and collected.
McCrory has filed a Plan of Reorganization with the Bankruptcy Court. The
Company has leased approximately 64,000 square feet of the approximate 99,000
square feet of space surrendered by McCrory.
Jamesway Corporation, which occupied retail space in the Fishkill, New York
property, filed for Chapter 11 bankruptcy protection from creditors on July 19,
1993. Jamesway emerged from bankruptcy on January 28, 1995. Jamesway, which was
expected to account for approximately 5.2% of the annual rental income of the
Company for the fiscal year ended July 31, 1996, and whose lease extended to
January 31, 2005, filed for Chapter 11 bankruptcy protection from creditors
again on October 18, 1995. Jamesway rejected its lease in the Fishkill location
with the approval of the United States Bankruptcy Court, effective February 29,
1996, but continued occupancy until March 22, 1996. The Company has filed an
unsecured claim in the amount of approximately $981,255 for damages resulting
from the rejection of the lease and an administrative priority claim in the
amount of approximately $189,000 for certain amounts due under the lease after
the filing of Jamesway's Chapter 11 petition and for the costs of repairs
resulting from Jamesway's failure to fulfill its repair and maintenance
obligations under the lease. The Company has made no provision in its financial
statements for the claims filed against Jamesway due to the uncertainty of the
amount that may ultimately be allowed and collected, except for the pre-petition
rental obligations claim of $31,971 which amount is included in the unsecured
claim of approximately $981,255.
14
<PAGE>
================================================================================
12. CASH FLOW INFORMATION:
For purposes of reporting cash flows, the Company considers cash
equivalents to consist of short-term highly liquid investments with maturities
of three months or less, which are readily convertible into cash.
Supplemental disclosure:
Years Ended July 31,
-------------------------------------
1996 1995 1994
-------- -------- --------
Interest paid ................. $686,644 $647,348 $623,222
Income taxes paid ............. $125,084 $ 84,407 $180,903
13. FINANCIAL ACCOUNTING STANDARDS NO. 121:
In May 1995, the Financial Accounting Standards Board issued Statement of
Financial Standards No. 121 ("FAS 121"), "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of", effective for
fiscal years beginning after December 15, 1995. FAS 121 requires the recognition
of an impairment loss related to long-lived assets and certain identifiable
intangibles whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. The Company believes that
the adoption of the new accounting standard will not have any effect on the
consolidated financial statements.
14. COMMITMENTS AND 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:
The Company, on September 11, 1996, closed a loan with a bank in the amount
of $4,000,000, the loan to be 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 property. The financial statements do not give
effect to the loan. The loan proceeds are to be utilized by the Company toward
(a) payment in full of the outstanding term loan by the Company in favor of the
same bank in the amount of $1,500,000 plus interest (see Note 3(a) to
Consolidated Financial Statements) and (b) its costs for the renovations to the
portions of the premises in connection with the Company's sublease of a
significant portion of the building. The interest rate on the loan is 8 1/2% for
a period of five (5) years and six (6) months, with such rate to change on the
first day of the sixty-seventh (67th) month of the term to a rate equal to the
then prime rate plus 1/4%, fixed for the balance of the term. The loan is to
become due and payable on the first day of the month following the expiration of
ten (10) years and six (6) months from the closing date. During the first six
(6) months of the term, the Company is to have the option to secure advances
against the loan amount with the loan to convert to a ten year term at the
expiration of the initial six (6) month period thereof.
Payments are to be made, in arrears, on the first day of each and every
month during the term, calculated (a) during the initial six (6) month period of
the term, interest only, and (b) during the final ten (10) year period of the
term, at the sum of the interest plus amortization sufficient to fully liquidate
the loan over a fifteen (15) year period. As additional security, the Company
conditionally assigned to the bank all leases and rents on the premises, or
portions thereof, now existing and will assign all leases on the premises
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, upon
thirty (30) days prior notice to the bank, without premium or penalty. Other
provisions of the loan agreement provide certain restrictions on the incurrence
of indebtedness and the sale or transfer of the Company's ground lease interest
in the premises.
15
<PAGE>
================================================================================
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholders
J.W. Mays, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheet of J.W. Mays,
Inc. and subsidiaries as of July 31, 1996, and the related consolidated
statements of operations and retained earnings and cash flows for the year then
ended. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the 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 audit provides 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 its subsidiaries as of July 31, 1996, and the results of their
operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.
D'ARCANGELO & CO., LLP
Purchase, New York
October 11, 1996
================================================================================
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
J.W. Mays, Inc.
We have audited the accompanying consolidated balance sheet of J.W. Mays,
Inc. and its subsidiaries as of July 31, 1995 and the related consolidated
statements of operations and retained earnings, and cash flows for each of the
years in the two year period ended July 31, 1995. These consolidated financial
statements were the responsibility of the Company's management. Our
responsibility was to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the 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 its subsidiaries as at July 31, 1995 and the results of their
operations and their cash flows for each of the years in the two year period
ended July 31, 1995, in conformity with generally accepted accounting
principles.
As described in Note 1 to the consolidated financial statements, on August
1, 1994, the Company changed its method of accounting for marketable
securities--other investments, and on August 1, 1993, the Company changed its
method of accounting for income taxes.
LIPSKY, GOODKIN & CO., P.C.
New York, New York
October 12, 1995 (except with respect to the matter discussed in
Note 16(b) to the 1995 Consolidated Financial Statements, as to
which the date is October 20, 1995). See paragraph 6 of Note 11
to the 1996 Consolidated Financial Statements for events subsequent
to October 20, 1995.
16
<PAGE>
J.W. MAYS, INC.
FIVE YEAR SUMMARY OF CONSOLIDATED OPERATIONS
(dollars in thousands except per share data)
<TABLE>
<CAPTION>
Years Ended July 31,
-----------------------------------------------------------------
1996 1995 1994 1993 1992
===========================================================================================================================
<S> <C> <C> <C> <C> <C>
Revenues
Rental income ........................................ $ 9,269 $ 8,330 $ 9,523 $ 10,030 $ 9,299
Gain on sale of property and equipment ............... -- -- -- 1 --
Gain on condemnation award ........................... -- -- -- 639 --
------- ------- ------- -------- -------
Total revenues ..................................... 9,269 8,330 9,523 10,670 9,299
------- ------- ------- -------- -------
Expenses
Real estate operating expenses ....................... 5,679 5,580 5,612 5,509 5,311
Administrative and general expenses .................. 2,432 2,158 2,840 2,075 2,105
Depreciation and amortization ........................ 889 838 823 748 669
------- ------- ------- -------- -------
Total expenses ..................................... 9,000 8,576 9,275 8,332 8,085
------- ------- ------- -------- -------
Income (loss) from continuing operations before
investment income, interest expense and
income taxes ......................................... 269 (246) 248 2,338 1,214
------- ------- ------- -------- -------
Investment income and interest expense
Investment income .................................... 250 367 385 562 678
Interest expense ..................................... 682 641 597 564 471
------- ------- ------- -------- -------
(432) (274) (212) (2) 207
------- ------- ------- -------- -------
Income (loss) from continuing operations before
income taxes ......................................... (163) (520) 36 2,336 1,421
Income taxes provided (benefit) ....................... (22) (126) 68 872 565
------- ------- ------- -------- -------
Income (loss) from continuing operations .............. (141) (394) (32) 1,464 856
------- ------- ------- -------- -------
Discontinued Operations
(Loss) from disposal of retail segment--net
of taxes ............................................ -- -- -- -- (47)
------- ------- ------- -------- -------
Total (loss) from discontinued operations .......... -- -- -- -- (47)
------- ------- ------- -------- -------
Income (loss) from operations before extraordinary
item and cumulative effect of changes in
accounting principles ................................ (141) (394) (32) 1,464 809
Accounting for certain investments in debt
and equity securities .............................. -- 22 -- -- --
Accounting for income taxes ......................... -- -- (275) -- --
Extraordinary Item--utilization of net operating
loss carryforward .................................... -- -- -- 709 416
------- ------- ------- -------- -------
Net Income (loss) ..................................... $ (141) $ (372) $ (307) $ 2,173 $ 1,225
======= ======= ======= ======== =======
Income (loss) per common share
Income (loss) from continuing operations ............. $ (.07) $ (.18) $ (.02) $ .67 $ .39
(Loss) from discontinued operations ................... -- -- -- -- (.02)
Cumulative effect of change in accounting principles:
Accounting for certain investments in debt
and equity securities ............................... -- .01 -- -- --
Accounting for income taxes .......................... -- -- (.13) -- --
Extraordinary item--utilization of net operating
loss carryforward ................................... -- -- -- .33 .19
------- ------- ------- -------- -------
Net income (loss) per common share ................. $ (.07) $ (.17) $ (.15) $ 1.00 $ .56
======= ======= ======= ======== ========
Dividends per share ................................... -- -- -- -- --
======= ======= ======= ======== ========
Average common shares outstanding ..................... 2,136,397 2,136,397 2,137,440 2,171,124 2,178,297
========= ========= ========= ========= =========
</TABLE>
17
<PAGE>
J.W. MAYS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
================================================================================
FISCAL 1996 COMPARED TO FISCAL 1995
Loss from operations and the overall net loss for the year ended July 31,
1996 amounted to $141,286, or $.07 per share, after a pre-tax write-off of a bad
debt amounting to $424,011 relating to the rejection by a tenant of its lease,
discussed below. There was no comparable item in the 1995 twelve month period.
Operations for the comparable 1995 twelve month period resulted in an after tax
net loss of $393,808, or $.18 per share. The overall net loss for the 1995
twelve month period amounted to $372,039, or $.17 per share, after the
cumulative effect (an increase in income) of a change in accounting for certain
investments in debt and equity securities, in the amount of $21,769, or $.01 per
share. There was no comparable item in the 1996 twelve month period.
Rental income in the current year increased to $9,268,768 from $8,330,182
in the 1995 twelve month period principally due to the addition of new tenants.
Real estate operating expenses in the current year increased to $5,678,653
from $5,580,161 in the 1995 comparable year principally due to increased
maintenance and fuel costs, partially offset, by an allowed credit for utility
costs and a decrease in real estate taxes in the 1996 fiscal year.
Administrative and general expenses increased to $2,431,998 from $2,157,610
principally due to the bad debt write-off of $424,011, discussed below,
partially offset by a decrease in insurance expense.
The Company reports scheduled rental income recognized on a straight-line
basis rather than rental income as it becomes receivable according to the
provisions of the lease, in compliance with the provisions of Statement of
Financial Accounting Standards No. 13, "Accounting for Leases". The excess of
the scheduled rental income of Jamesway recognized on a straight-line basis over
rental income amounts to $424,011 and such amount has been written off and
classified as a bad debt.
Depreciation and amortization expense in the current year increased to
$888,932 from $838,063 in the 1995 year because of additional improvements to
property.
Interest expense exceeded interest income in the amount of $432,471 in the
current year and by $274,156 in the 1995 year principally due to the increased
interest on the broker loan discussed in Note 9 and the loan facility discussed
in Note 3(a) to Consolidated Financial Statements.
FISCAL 1995 COMPARED TO FISCAL 1994
Operations for the fiscal year ended July 31, 1995 resulted in an after tax
net loss of $393,808, or $.18 per share, compared to an after tax net loss of
$32,466, or $.02 per share, after the write-off of a bad debt amounting to
$708,673, discussed below, in the 1994 fiscal year.
The excess of the scheduled rental income of McCrory, recognized on a
straight-line basis over rental income reported through January 31, 1994, the
effective date of McCrory's rejection of its lease, amounted to $622,023 which,
together with the pre-petition claim of $86,650, were written off as a bad debt
and reported as an administrative expense in fiscal 1994.
In the twelve months ended July 31, 1995, the Company reported an overall
net loss in the amount of $372,039, or $.17 per share, after the cumulative
effect (an increase of income) of a change in accounting for certain investments
in debt and equity securities, in the amount of $21,769, or $.01 per share.
There was no comparable item in the 1994 fiscal year. The overall net loss for
the 1994 twelve month period amounted to $307,466, or $.15 per share, after a
charge for the cumulative effect of a change in accounting for income taxes of
$275,000, or $.13 per share. There was no comparable item in the 1995 fiscal
year.
Rental income in the 1995 fiscal year decreased to $8,330,182 from
$9,522,528 in the 1994 twelve months, principally due to the loss of two tenants
and the concession of rent for another tenant (See Note 11 to Consolidated
Financial Statements), partially offset by rental income from a new tenant.
18
<PAGE>
================================================================================
Real estate operating expenses decreased to $5,580,161 in the 1995 fiscal
year from $5,611,835 in the 1994 twelve months principally due to decreased real
estate taxes, maintenance costs, and fuel, partially offset by an increase in
insurance expense and electricity.
Administrative and general expenses decreased to $2,157,610 in the 1995
fiscal year from $2,840,030 in the 1994 twelve month period, principally due to
the recording of the bad debt in 1994, discussed above, and a reduction of legal
and professional expenses.
Depreciation and amortization expense in the 1995 fiscal year increased to
$838,063 from $822,727 in the 1994 twelve month period because of additional
improvements to property.
Interest expense exceeded investment income by $274,156 in the 1995 fiscal
year and by $212,402 in the twelve months ended July 31, 1994 principally due to
the increased interest on the broker loan discussed in Note 9 to Consolidated
Financial Statements.
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.
The leasing of 58,000 square feet of space in the Jowein Building located
in the Fulton Mall in downtown Brooklyn, New York to two chain store tenants for
retail space and one tenant for office space, the leasing of 25,000 square feet
to the U.S. Post Office in Fishkill, New York and the leasing to the State of
New York of approximately 46,000 square feet of office space for two tenants in
the Company's former store in Jamaica, New York, will provide additional working
capital for the Company. Two of the Brooklyn leases commenced in November 1995
and one in October 1996, the term of the Fishkill lease commenced in December
1995 and the Jamaica leases are anticipated to commence in April 1997. To defray
the costs of renovations for the State occupancy, the Company borrowed from a
bank the principal amount of $2,500,000.
The Company had working capital of $2,151,972 with a ratio of current
assets to current liabilities of 1.8 to 1 at July 31, 1996.
Management considers current working capital and borrowing capabilities
adequate to cover the Company's planned operating and capital requirements.
19
<PAGE>
J.W. MAYS, INC.
<TABLE>
===========================================================================================================================
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
(dollars in thousands except per share data)
<CAPTION>
Three months ended
-------------------------------------------------------------
Oct. 31, 1995 Jan. 31, 1996 Apr. 30, 1996 July 31, 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues ................................................ $2,026 $2,468 $2,430 $2,345
Revenues less expenses .................................. (87) (261) 36 149
Net income (loss) ....................................... (70) (167) 4 91
------ ------ ------ ------
Net income (loss) per common share ...................... $ (.03) $ (.08) $ -- $ .04
<CAPTION>
Three months ended
-------------------------------------------------------------
Oct. 31, 1994 Jan. 31, 1995 Apr. 30, 1995 July 31, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues ................................................ $2,071 $2,109 $2,097 $2,053
Revenues less expenses .................................. (78) (60) (151) (231)
(Loss) from operations .................................. (57) (53) (111) (173)
Cumulative effect of change in accounting for
income taxes ........................................... 22 -- -- --
Net (loss) .............................................. (35) (53) (111) (173)
(Loss) per common share:
From operations ........................................ $ (.03) $ (.02) $ (.05) $ (.08)
Cumulative effect of change in accounting for
income taxes .......................................... .01 -- -- --
------ ------ ------ ------
Net (loss) per common share ............................ $ (.02) $ (.02) $ (.05) $ (.08)
====== ====== ====== ======
</TABLE>
- -----------
Income (loss) per share is computed independently for each of the quarters
presented, on the basis described inNote 1 to Consolidated Financial Statements.
COMMON STOCK PRICES AND DIVIDENDS
The Company's common stock trades on the Nasdaq Stock Market tier of The
Nasdaq Stock Market under the symbol: "Mays".
Following is the sales price range per share of J.W. Mays, Inc. common
stock during the fiscal years ended July 31, 1996 and 1995:
Sales Price
-----------------
Three months ended High Low
------------------ ----- -----
October 31, 1995 .................. 7 3/4 5 3/4
January 31, 1996 .................. 8 6 3/8
April 30, 1996 .................... 8 1/2 6 15/16
July 31, 1996 ..................... 8 1/2 7 1/2
October 31, 1994 .................. 7 3/8 6 3/4
January 31, 1995 .................. 7 1/2 6 1/2
April 30, 1995 .................... 7 5 1/2
July 31, 1995 ..................... 7 1/2 5 1/2
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 27, 1996, the Company had approximately 3,700 shareholders of
record.
20
<PAGE>
J.W. MAYS, INC.
<TABLE>
====================================================================================================
<S> <C>
OFFICERS
Lloyd J. Shulman Co-Chairman of the Board, Chief Executive Officer and
President and Chief Operating Officer
Alex Slobodin Executive Vice President and Treasurer
Ward N. Lyke, Jr. Vice President--Management Information Services
George Silva Vice President--Operations
Salvatore Cappuzzo Secretary
Mark Greenblatt Controller and Assistant Treasurer
BOARD OF DIRECTORS
Frank J. Angell 1,2,3,5 Professor Emeritus, New York University Leonard N. Stern School
of Business
Jack Schwartz 2,3,4,5 Private Consultant
Lloyd J. Shulman 1,3,4,5 Co-Chairman of the Board, Chief Executive Officer and
President and Chief Operating Officer, J.W. Mays, Inc.
Max L. Shulman 1,3,4,5 Co-Chairman of the Board, J.W. Mays, Inc.
Sylvia W. Shulman Retired Fashion Director and Merchandiser of Boutique Shops,
J.W. Mays, Inc.
Lewis D. Siegel 2,3,5 First Vice President, Smith Barney, Inc.
Alex Slobodin 1,3 Executive Vice President and Treasurer, J.W. Mays, Inc.
</TABLE>
COMMITTEE ASSIGNMENTS KEY:
1 Member of Executive Committee
2 Member of Audit Committee
3 Member of Investment Advisory Committee
4 Member of Advisory Real Estate Committee
5 Member of Executive Compensation Committee
ANNUAL REPORT ON FORM 10-K
The Company's Annual Report on Form 10-K,
filed with the Securities and Exchange Commission
for the fiscal year ended July 31, 1996,
will be furnished without charge to
shareholders upon written request
to: Secretary, J.W. Mays, Inc.,
9 Bond Street, Brooklyn, New York 11201.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Annual
Report for the year ended July 31, 1996 and is qualified in its entirety by
reference to such Annual Report.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-01-1995
<PERIOD-END> JUL-31-1996
<CASH> 412,653
<SECURITIES> 2,792,800
<RECEIVABLES> 315,179
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,777,433
<PP&E> 45,793,630
<DEPRECIATION> 19,713,124
<TOTAL-ASSETS> 37,770,970
<CURRENT-LIABILITIES> 2,625,461
<BONDS> 0
0
0
<COMMON> 2,178,297
<OTHER-SE> 24,962,786
<TOTAL-LIABILITY-AND-EQUITY> 37,770,970
<SALES> 0
<TOTAL-REVENUES> 9,268,768
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 8,999,583
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 681,950
<INCOME-PRETAX> (163,286)
<INCOME-TAX> (22,000)
<INCOME-CONTINUING> (141,286)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (141,286)
<EPS-PRIMARY> (0.07)
<EPS-DILUTED> .00
</TABLE>
