FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission file number 1-3647
J.W. Mays, Inc.
(Exact name of registrant as specified in its charter)
New York 11-1059070
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9 Bond Street, Brooklyn, New York 11201-5805
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) 718-624-7400
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X . No .
Number of shares outstanding of the issuer's common stock as of the latest
practicable date.
Class Outstanding at March 4, 1998
Common Stock, $1 par value 2,135,780 shares
This report contains 18 pages.
<PAGE>
J. W. MAYS, INC.
INDEX
Page No.
Part I - Financial Information:
Consolidated Balance Sheet 3
Consolidated Statement of Income
and Retained Earnings 4
Consolidated Statement of Cash Flows 5
Notes to the Consolidated Financial Statements 6 - 13
Management's Discussion and Analysis of Results
of Operations and Financial Condition 14 - 16
Part II - Other Information 17
<PAGE>
<TABLE>
<CAPTION>
J. W. MAYS, INC.
CONSOLIDATED BALANCE SHEET
January 31, July 31,
ASSETS 1998 1997
--------------------------------------------------------------- --------------- ---------------
(Unaudited) (Audited)
<S> <C> <C>
Property and Equipment - Net (Notes 5 and 7) $28,188,407 $28,125,834
------------- -------------
Current Assets:
Cash and cash equivalents 1,065,418 234,288
Marketable securities - other investments (Notes 4 and 8) 3,221,326 2,721,127
Receivables (Note 9) 281,529 563,410
Real estate taxes refundable 267,972 -
Deferred income taxes 104,000 67,000
Security deposits 8,404 -
Prepaid expenses 1,334,755 1,150,916
------------- -------------
Total current assets 6,283,404 4,736,741
------------- -------------
Other Assets:
Deferred charges 2,798,163 2,745,524
Less accumulated amortization 1,138,683 1,030,351
------------- -------------
Net 1,659,480 1,715,173
Security deposits 610,989 589,492
Unbilled receivables (Note 9) 3,834,854 3,651,795
Unbilled receivables - affiliated company (Note 9) 818,719 909,688
Receivables 284,357 384,088
Receivables - affiliated company (Note 9) 120,677 194,453
Marketable securities - other investments (Notes 4 and 8) 99,049 98,716
------------- -------------
Total other assets 7,428,125 7,543,405
------------- -------------
TOTAL ASSETS $41,899,936 $40,405,980
============= =============
LIABILITIES AND SHAREHOLDERS ' EQUITY
---------------------------------------------------------------
Long-Term Debt:
Mortgages payable (Note 5) $8,233,431 $8,641,833
Other (Note 6) 607,265 640,868
------------- -------------
Total long-term debt 8,840,696 9,282,701
------------- -------------
Deferred Income Taxes 702,000 326,000
------------- -------------
Current Liabilities:
Payable to securities broker (Note 8) 1,582,495 1,270,053
Accounts payable 79,806 46,256
Payroll and other accrued liabilities 1,032,341 553,215
Income taxes payable 6,868 11,436
Other taxes payable 2,647 1,918
Current portion of long-term debt - mortgages payable (Note 5) 806,357 780,365
Current portion of long-term debt - other (Note 6) 112,404 104,000
------------- -------------
Total current liabilities 3,622,918 2,767,243
------------- -------------
Total liabilities 13,165,614 12,375,944
------------- -------------
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 133,676 101,151
Retained earnings 23,366,206 22,694,445
------------- -------------
29,024,424 28,320,138
Less common stock held in treasury, at cost - 42,517
shares at January 31, 1998 and July 31, 1997 290,102 290,102
------------- -------------
Total shareholders' equity 28,734,322 28,030,036
------------- -------------
Contingencies (Note 13)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $41,899,936 $40,405,980
============= =============
See Notes to the Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
J. W. MAYS, INC.
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
Three Months Ended Six Months Ended
January 31, January 31,
<S> <C> <C> <C> <C>
--------------- ---------------- --------------- ----------------
1998 1997 1998 1997
-------------- -------------- -------------- --------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues
Rental income (Note 9) $2,577,520 $2,369,256 $5,115,702 $4,707,862
Rental income - affiliated company (Note 9) 103,402 103,402 206,805 206,805
Recovery of real estate taxes 123,809 - 283,085 -
-------------- -------------- -------------- --------------
Total revenues 2,804,731 2,472,658 5,605,592 4,914,667
-------------- -------------- -------------- --------------
Expenses
Real estate operating expenses 1,446,866 1,539,028 2,793,243 2,963,144
Administrative and general expenses 477,488 462,803 1,006,025 968,039
Bad debts (recovery) (Note 13) (41,453) - (41,453) -
Depreciation and amortization 255,108 238,119 504,216 471,587
-------------- -------------- -------------- --------------
Total expenses 2,138,009 2,239,950 4,262,031 4,402,770
-------------- -------------- -------------- --------------
Income from operations before investment income,
interest expense and income taxes 666,722 232,708 1,343,561 511,897
-------------- -------------- -------------- --------------
Investment income and interest expense:
Investment income 58,429 64,104 132,632 125,960
Interest expense (Notes 5 and 11) (202,401) (173,935) (418,432) (351,980)
-------------- -------------- -------------- --------------
(143,972) (109,831) (285,800) (226,020)
-------------- -------------- -------------- --------------
Income before income taxes 522,750 122,877 1,057,761 285,877
Income taxes provided 196,000 23,000 386,000 86,000
-------------- -------------- -------------- --------------
Income from operations 326,750 99,877 671,761 199,877
Retained earnings, beginning of period 23,039,456 21,983,520 22,694,445 21,883,520
-------------- -------------- -------------- --------------
Retained earnings, end of period $23,366,206 $22,083,397 $23,366,206 $22,083,397
============== ============== ============== ==============
Income per common share (Note 2) $.15 $.05 $.31 $.09
============== ============== ============== ==============
Dividends per share $- $- $- $-
============== ============== ============== ==============
Weighted average common shares outstanding 2,135,780 2,136,397 2,135,780 2,136,397
============== ============== ============== ==============
See Notes to the Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
J. W. MAYS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Six Months Ended
January 31,
-------------- ---------------
1998 1997
------------- -------------
<S> <C> <C>
(Unaudited) (Unaudited)
Cash Flows From Operating Activities:
Income $671,761 $199,877
Adjustments to reconcile income to
net cash provided by operating activities:
Amortization of premium on marketable debt securities (333) (89)
Realized loss on marketable securities 13,481 1,630
Depreciation and amortization 504,216 471,587
Amortization of deferred expenses 139,948 113,659
Other assets - deferred expenses (84,255) (203,742)
- security deposits (21,497) 306,158
- unbilled receivables (183,059) (222,904)
- unbilled receivables - affiliated company 90,969 22,414
- receivables 99,731 (41,764)
- receivables - affiliated company 73,776 15,938
Deferred income taxes 322,000 27,000
Changes in:
Receivables 281,881 150,371
Prepaid expenses (183,839) 107,198
Income taxes refundable - 4,496
Security deposits (8,404) -
Real estate taxes refundable (267,972) 13,409
Accounts payable 33,550 113,616
Payroll and other accrued liabilities 479,126 (89,939)
Income taxes payable (4,568) 4,015
Other taxes payable 729 (2,839)
------------- -------------
Cash provided by operating activities 1,957,241 990,091
------------- -------------
Cash Flows From Investing Activities:
Capital expenditures (566,789) (1,310,313)
Marketable securities - other investments:
Receipts from sales or maturities 86,524 140,000
Payments for purchases (550,679) (50,645)
------------- -------------
Cash (used) by investing activities (1,030,944) (1,220,958)
------------- -------------
Cash Flows From Financing Activities:
Borrowings - mortgage debt - 800,000
Borrowings - securities broker 1,680,299 104,451
Payments - securities broker (1,367,857) (260,072)
Increase in long-term debt 26,665 109,943
(Decrease) in long-term debt (434,274) (648,829)
------------- -------------
Cash provided (used) by financing activities (95,167) 105,493
------------- -------------
Increase (decrease) in cash 831,130 (125,374)
Cash and cash equivalents at beginning of period 234,288 412,653
------------- -------------
Cash and cash equivalents at end of period $1,065,418 $287,279
============= =============
See Notes to the Consolidated Financial Statements.
</TABLE>
<PAGE>
J. W. MAYS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Accounting Records:
The accounting records are maintained in accordance with generally accepted
accounting principles (GAAP). The preparation of the Company's financial
statements in accordance with GAAP, requires management to make estimates
that affect the reported consolidated statements of operations and
consolidated balance sheets and related disclosures. Actual results could
differ from those estimates.
The interim financial statements are prepared pursuant to the requirements
for reporting on Form 10-Q. The July 31, 1997 balance sheet was derived
from audited financial statements but does not include all disclosures
required by GAAP. The interim financial statements and notes thereto
should be read in conjunction with the financial statements and notes
included in the Company's latest Annual Report on Form 10-K for the year
ended July 31, 1997. In the opinion of management, the interim financial
statements reflect all adjustments of a normal recurring nature necessary
for a fair statement of the results for interim periods. The results of
operations for the current period are not necessarily indicative of the
results for the entire year ending July 31, 1998.
2. Income per common share:
Income per common share has been computed by dividing the income for the
periods by the weighted average number of shares of common stock
outstanding during the periods, adjusted for the purchase of treasury
stock. Shares used in computing income per common share were 2,135,780 and
2,136,397 in the six months ended January 31, 1998 and January 31, 1997,
respectively.
3. 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
adoption of this accounting standard has had no effect on the consolidated
financial statements.
4. Marketable Securities - Other Investments:
Effective August 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 115 ("FAS 115"), "Accounting for Certain
Investments in Debt and Equity Securities". 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.
<TABLE>
<CAPTION>
Marketable Securities - Other Investments (continued)
As of January 31, 1998, the Company's marketable securities were classified as follows:
Gross Gross
Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C> <C>
------------- ------------- ------------- -------------
Current
Available for sale:
Equity securities $2,490,683 $201,676 $- $2,692,359
Certificate of deposit 528,967 - - 528,967
------------- ------------- ------------- -------------
Total current $3,019,650 $201,676 $- $3,221,326
============= ============= ============= =============
Noncurrent
Held to maturity:
Corporate debt securities $99,049 $3,151 $- $102,200
============= ============= ============= =============
Investment income consists of the following:
Three Months Ended Six Months Ended
January 31, January 31,
------------------------------ ------------------------------
1998 1997 1998 1997
________ ________ ________ ________
Interest income $22,990 $6,641 $43,592 $17,065
Dividend income 48,920 59,093 102,521 110,525
(Loss) on sale of marketable securities (13,481) (1,630) (13,481) (1,630)
------------- ------------- ------------- -------------
Total $58,429 $64,104 $132,632 $125,960
============= ============= ============= =============
</TABLE>
<PAGE>
5. Long-Term Debt:
<TABLE>
<CAPTION>
January 31, 1998 July 31, 1997
-------------------------------- ------------------------------
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>
Mortgages:
Jamaica, New York property (a) 8 1/2 % 4/01/07 $266,667 $3,533,333 $266,667 $3,666,666
Jowein Building, Brooklyn, N.Y. (b) 9 % 3/31/00 79,909 717,752 76,431 758,595
Fishkill, New York property (c) 9 % 11/01/99 124,293 2,379,045 118,844 2,442,584
Circleville, Ohio property (d) 7 % 9/30/02 326,944 1,414,390 310,233 1,580,714
Other 8 1/2 % 5/01/01 8,544 188,911 8,190 193,274
-------------- -------------- -------------- ------------
Total $806,357 $8,233,431 $780,365 $8,641,833
============== ============== ============== ============
</TABLE>
(a) The Company, on September 11, 1996, closed a loan with a bank in the
amount of $4,000,000. The loan is secured by a first mortgage lien
covering the entire leasehold interest of the Company, as tenant, in a
certain ground lease and building in the Jamaica property. The loan
proceeds were utilized by the Company toward (i) 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 and (ii) 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. Although the loan was closed on
September 11, 1996 the entire $4,000,000 was not drawn down until March 31,
1997. 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 had the option to secure advances
against the loan amount with the loan to convert to a ten (10) year term at
the expiration of the initial six (6) month period thereof.
Payments are payable 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 certain leases and
rents on the premises, or portions thereof, now existing and assigned
certain 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.
(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. Effective April 1, 1997, the maturity date of
the mortgage which was scheduled to be on March 31, 1998, was extended to
March 31, 2000. The interest rate increased from 7 3/8% to 9% commencing
April 1, 1997. 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 (5) 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
based upon a fifteen (15) 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 increased to
$36,540.
6. Long-Term Debt - Other:
Long-Term debt - other consists of the following:
<TABLE>
<CAPTION>
January 31, 1998 July 31, 1997
------------------------------- -------------------------------
Due Within Due After Due Within Due After
One Year One Year One Year One Year
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Deferred compensation * $104,000 $303,333 $104,000 $355,333
Lease security deposits ** 8,404 303,932 - 285,535
------------- ------------- ------------- -------------
Total $112,404 $607,265 $104,000 $640,868
============= ============= ============= =============
</TABLE>
* In fiscal 1964 the Company entered into a deferred compensation
agreement with Max L. Shulman, its then Chairman of the Board. This
agreement, as amended, provides for a total of $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. Mr Shulman retired
as an employee on December 31, 1996.
**Does not include three irrevocable letters of credit totaling $275,000
at January 31, 1998 provided by three tenants as lease security
deposits.
<PAGE>
7. Property and Equipment - Net:
<TABLE>
<CAPTION>
January 31, July 31,
1998 1997
--------------- ---------------
<S> <C> <C>
Property:
Buildings and improvements $35,453,361 $34,944,039
Improvements to leased property 9,143,369 9,143,369
Land 4,008,835 4,008,835
------------- -------------
48,605,565 48,096,243
Less accumulated depreciation 20,622,633 20,143,617
------------- -------------
Property - net 27,982,932 27,952,626
------------- -------------
Fixtures and equipment and other:
Fixtures and equipment 520,043 510,108
Other fixed assets 203,671 180,382
------------- -------------
723,714 690,490
Less accumulated depreciation 518,239 517,282
------------- -------------
Fixtures and equipment and other - net 205,475 173,208
------------- -------------
Property and equipment - net $28,188,407 $28,125,834
============= =============
</TABLE>
8. Payable to Securities Broker:
The Company borrowed funds, payable on demand, from a securities broker.
The loan balance at January 31, 1998 in the amount of $1,582,495, secured
by the Company's marketable securities, accrues interest, which at January
31, 1998, was at the annual rate of 7 3/4%.
<PAGE>
9. Unbilled Receivables and Rental Income:
Unbilled receivables represent the excess of scheduled rental income
recognized on a straight-line basis over rental income as it becomes
receivable according to the provisions of each lease.
Rental income includes $103,402 for each of the quarters ended January 31,
1998 and January 31, 1997 and $206,805 for the six months ended January
31, 1998 and January 31, 1997, representing rentals from an affiliated
company.
Amounts due from the affiliated company are as follows:
<TABLE>
<CAPTION>
January 31, July 31,
1998 1997
------------------------------
<S> <C> <C>
Unbilled receivables $818,719 $909,688
Receivables - noncurrent 120,677 194,453
------------- -------------
</TABLE> $939,396 $1,104,141
10. Employees' Retirement Plan:
The Company sponsors a noncontributory Money Purchase Plan covering
substantially all of its employees. Operations were charged $35,000 and
$70,000 as contributions to the Plan for the three and six months ended
January 31, 1998, respectively, and $33,750 and $68,175 as contributions
to the plan for the three and six months ended January 31, 1997,
respectively.
11. Cash Flow Information:
For purposes of reporting cash flows, the Company considers cash
equivalents to consist of short-term highly liquid investments with
maturities of three months or less, which are readily convertible into
cash.
<TABLE>
Supplemental disclosure:
<CAPTION>
Six Months Ended
January 31,
------------------------------
1998 1997
__________ __________
<S> <C> <C>
Interest paid $420,429 $353,538
Income taxes paid $68,568 $50,489
</TABLE>
12. 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 Company derives rental income from thirty-five tenants, of which two
tenants each accounted for more than 10% of rental income during the
quarter ended January 31, 1998. The City of New York is one of the two
tenants and the other tenant is 510 Fulton Street Realty Associates, the
owners of which are long established in business.
13. Contingencies:
McCrory Stores Corporation ("McCrory"), which occupied space in the
Company's Jowein Building in the Fulton Mall in downtown Brooklyn, New
York, and whose lease, as amended, extended to April 29, 2010, filed for
relief under Chapter 11 of the Bankruptcy Code in February 1992. McCrory
rejected its lease, as amended, with the Company with the approval of the
Bankruptcy Court effective January 31, 1994. The Company has filed a
proof of claim with the United States Bankruptcy Court, Southern District
of New York for a general unsecured claim 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 unpaid rent, which amount has been allowed in the reduced amount
of $84,354, without prejudice to McCrory's right to assert other and
further objections. 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. McCrory objected to the Company's Lease Rejection
Claim and Administrative Claim, and asserts that no amount is due and
owing. The Company has not included its claim against McCrory in its
financial statements due to (a) the fact that McCrory has disclosed that
it has sold substantially all of its assets and that the proceeds of sale
are insufficient to make any distributions to unsecured creditors or to
satisfy in full the administrative claims asserted against McCrory, (b)
the pending litigation over the Lease Rejection Claim and Administrative
Claim and (c) the uncertainty of the amount that may ultimately be allowed
and collected. The Company has leased approximately 69,000 square feet of
the approximate 99,000 square feet of space surrendered by McCrory. The
remainder of the space of approximately 30,000 square feet is not
leaseable due to the renovations required to accommodate six tenants where
formerly there was one. The rental income to be derived from the six
tenants over the terms of their leases will be approximately $5,040,000
less than the total rental income that would have been due from McCrory
for the period February 1, 1994 through April 29, 2010, the termination
date of the McCrory lease.
Jamesway Corporation ("Jamesway"), which occupied retail space in the
Fishkill, New York property and whose lease extended to January 31, 2005,
filed for relief under Chapter 11 of the Bankruptcy Code on October 18,
1995. Jamesway rejected its lease for the Fishkill location with the
approval of the Bankruptcy Court, effective February 29, 1996 but
continued occupancy until March 22, 1996. The Company filed an amended
unsecured claim in the amount of $883,635 for damages resulting from the
breach and 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. Pursuant to a settlement
that was approved by the Bankruptcy Court, the Company has an allowed
unsecured claim in the amount of $950,635 and an allowed administrative
claim in the amount of $54,887. The Company has realized, to date,
$465,811, or 49% on account of its unsecured claim and 100% of its allowed
administrative claim of $54,887 for a total of $520,698. At July 31,
1997, the amount of $418,789 was recorded in Bad Debt Recovery which
amount represents the amount realized of $473,166 less legal expenses of
$22,406 and a previously recorded pre-petition rental claim of $31,971.
At January 31, 1998 the Company recorded an additional amount in Bad Debt
Recovery of $41,453, which amount represents the amount realized of
$47,532 less legal expenses of $6,079. The Company has made no provision
in its financial statements for the balance of its unsecured claim filed
against Jamesway due to the uncertainty of the amount that may ultimately
be collected.
The Company reports scheduled rental income recognized on a straight-line
basis rather than rental income as it becomes a 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 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, amounts to
$708,673 and such amount was written off and classified as a bad debt
during the twelve month period ended July 31, 1994. The excess of the
scheduled rental income of Jamesway recognized on a straight-line basis
over rental income receivable according to the lease reported through
January 31, 1996, amounted to $424,011 and such amount was written off and
classified as a bad debt during the twelve month period ended July 31,
1996.
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.
<PAGE>
J. W. MAYS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
Results of Operations:
Three Months Ended January 31, 1998 Compared to the Three Months Ended January
31, 1997:
In the three months ended January 31, 1998, the Company reported income in the
amount of $326,750, or $.15 per share. In the comparable three months ended
January 31, 1997, the Company reported income in the amount of $99,877, or
$.05 per share. The 1998 quarter includes a pre-tax net recovery of real
estate taxes in the amount of $123,809 (see below). There was no comparable
item in the 1997 three month period.
Revenues in the current three months increased to $2,804,731 from $2,472,658
in the comparable 1997 three months, primarily due to the addition of new
tenants and the pre-tax net recovery of prior years' real estate taxes.
Interest expense in the current quarter exceeded investment income by $143,972
and by $109,831 in the comparable 1997 quarter. The increase of $34,141 was
primarily due to the interest on the Jamaica Building loan discussed in Note
5(a) to the Consolidated Financial Statements.
Real estate operating expenses in the current three months decreased to
$1,446,866 from $1,539,028 in the comparable 1997 quarter principally due to a
decrease in real estate taxes and fuel costs, partially offset by an increase
in payroll costs, maintenance costs and leasing commissions.
Administrative and general expenses increased to $477,488 from $462,803.
The recovery of real estate taxes in the current quarter in the amount of
$123,809, net of legal expenses and a credit to a tenant in accordance with
the terms of its lease, represents prior years' real estate taxes from the
Town of Fishkill, New York.
Depreciation and amortization expense in the current three months increased to
$255,108 from $238,119 in the three months ended January 31, 1997 because of
additional improvements to property.
The bad debt recovery in the amount of $41,453 in the three months ended
January 31, 1998 relates to the bad debt write-off of $424,011 in the 1996
year. See Note 13 to the Consolidated Financial Statements (Jamesway).
Six Months Ended January 31, 1998 Compared to the Six Months Ended January 31,
1997:
In the six months ended January 31, 1998, the Company reported income in the
amount of $671,761, or $.31 per share. In the comparable six months ended
January 31, 1997, the Company reported income in the amount of $199,877, or
$.09 per share. The 1998 six months includes a pre-tax net recovery of real
estate taxes in the amount of $283,085 (see below). There was no comparable
item in the 1997 six month period.
Revenues in the current six months increased to $5,605,592 from $4,914,667 in
the comparable 1997 six months, primarily due to the addition of new tenants
and the pre-tax net recovery of prior years' real estate taxes.
Interest expense in the current six months exceeded investment income by
$285,800 and by $226,020 in the comparable 1997 quarter. The increase of
$59,780 was primarily due to the interest on the Jamaica Building loan
discussed in Note 5(a) to the Consolidated Financial Statements.
Real estate operating expenses in the current six months decreased to
$2,793,243 from $2,963,144 in the comparable 1997 six months principally due
to a decrease in real estate taxes and fuel costs, partially offset by an
increase in payroll costs, maintenance costs and leasing commissions.
Administrative and general expenses in the current six months increased to
$1,006,025 from $968,039 in the comparable 1997 six months principally due to
an increase in payroll, and legal and professional costs.
The recovery of real estate taxes in the current six month period in the
amount of $283,085, net of legal expenses and credits to tenants in accordance
with the terms of their leases, represents prior years' real estate taxes from
the City of New York and the Town of Fishkill, New York.
Depreciation and amortization expense in the current six months increased to
$504,216 from $471,587 in the six months ended January 31, 1997 because of
additional improvements to property.
The bad debt recovery in the amount of $41,453 in the six months ended January
31, 1998 relates to the bad debt write-off of $424,011 in the 1996 year. See
Note 13 to the Consolidated Financial Statements (Jamesway).
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 City of New York and the Company have agreed to a settlement which
substantially reduces the real property tax assessments applicable to the
Jowein Building, Brooklyn, New York from the 1991/92 through the 1995/96 tax
years. The Company's portion of the tax refund, after legal expenses and
credits to tenants in accordance with the terms of their leases, is in the
amount of approximately $919,000. The Company is currently awaiting the
court's execution of an order covering this settlement. The Company has not
included the refund in its financial statements due to the pending execution
of the order by the court.
<PAGE>
Cash Flows From Operating Activities:
Deferred Expenses: The Company had an expenditure of approximately $37,700
for brokerage leasing commissions relating to two new tenants at the Jamaica,
New York building during the six months ended January 31, 1998.
Real estate taxes refundable increased by $267,972 due to a refund of prior
years' real estate taxes on the Fishkill, New York property.
Payroll and other accrued liabilities: Included in the increase of $479,126
is an amount of $440,300 representing attorneys' fees and amounts payable to
six tenants, in accordance with the terms of their leases, due to the recovery
of prior years' real estate taxes from the City of New York and the Town of
Fishkill, New York.
Cash Flows From Investing Activities:
Capital Expenditures: The Company had expenditures of approximately $422,000
for renovations at its Jamaica, New York building to accommodate two new
tenants during the six months ended January 31, 1998.
Cash Flows From Financing Activities:
Lease Security: The Company received approximately $22,000 in additional
lease security due to the leasing of space to three new tenants at its
Jamaica, New York building during the six months ended January 31, 1998.
Borrowings - Security Broker: The Company borrowed $700,000 to be used for
the subscription offering to purchase a new issue of common stock of a banking
institution. Of this amount, $500,000 was transferred to a certificate of
deposit account and $200,000 to a cash operating account pending the
determination as to the number of shares available to the Company.
The leasing of 69,000 square feet of space in the Jowein Building located in
the Fulton Mall in downtown Brooklyn, New York to three chain store tenants
and two additional 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 and 8,000 square feet of office space to
two additional tenants in the Company's former store in Jamaica, New York,
will provide additional working capital for the Company. The Jamaica leases
commenced May 1, 1997. To defray the costs of renovations for the State
occupancy, the Company borrowed from a bank the principal amount of $2,500,000
(see Note 5(a) to the Consolidated Financial Statements).
The Company had working capital of $2,660,486, with a ratio of current
assets to current liabilities of 1.73 to 1 at January 31, 1998.
Management considers current working capital and borrowing capabilities
adequate to cover the Company's planned operating and capital requirements.
<PAGE>
Part II - Other Information
Item 6 - Exhibits and Reports on Form 8-K
(a) List of Exhibits:
Sequentially
Exhibit Numbered
Number Exhibit Page _
(2) Plan of acquisition, reorganization, arrangement,
liquidation or succession. N/A
(4) Instruments defining the rights of security holders,
including indentures. N/A
(10) Material contracts. N/A
(11) Statement re computation of per share earnings. N/A
(15) Letter re unaudited interim financial information. N/A
(18) Letter re change in accounting principles. N/A
(19) Report furnished to security holders. N/A
(22) Published report regarding matters submitted to vote
of security holders. N/A
(24) Power of attorney. N/A
(27) Financial data schedule. N/A
(99) Additional exhibits. N/A
(b) Reports on Form 8-K - No report on Form 8-K was required to be filed
by the Company during the six months ended January 31, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
J.W. MAYS, Inc.
(Registrant)
Date March 4, 1998 Lloyd J. Shulman
----------------------------
Lloyd J. Shulman
Chairman
Date March 4, 1998 Alex Slobodin
----------------------------
Alex Slobodin
Exec. Vice-President
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from the contained quarterly 10-Q and is qualified in its
entirety by reference to such Form 10-Q.
</LEGEND>
<MULTIPLIER> 1
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Jul-31-1998
<PERIOD-START> Aug-01-1997
<PERIOD-END> Jan-31-1998
<CASH> 1,065,418
<S>
<SECURITIES> 3,221,326
<RECEIVABLES> 281,529
<ALLOWANCES> 0
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<PP&E> 49,329,279
<DEPRECIATION> 21,140,872
<TOTAL-ASSETS> 41,899,936
<CURRENT-LIABILITIES> 3,622,918
<BONDS> 0
<COMMON> 2,178,297
0
0
<OTHER-SE> 26,556,025
<TOTAL-LIABILITY-AND-EQUITY> 41,899,936
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<INCOME-TAX> 386,000
<INCOME-CONTINUING> 671,761
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