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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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, 1999
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.
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(Exact name of registrant as specified in its charter)
NEW YORK 11-1059070
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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 $3,880,806 AS OF SEPTEMBER 24, 1999 BASED ON THE
AVERAGE OF THE BID AND ASKED PRICE OF THE STOCK REPORTED FOR SUCH DATE. FOR THE
PURPOSE OF THE FOREGOING CALCULATION, THE 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 24, 1999 was 2,135,780.
DOCUMENTS INCORPORATED BY REFERENCE
PART OF FORM 10-K
IN WHICH THE DOCUMENT
DOCUMENT IS INCORPORATED
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Annual Report to Shareholders for Fiscal Year
Ended July 31, 1999 Parts I and II
Definitive Proxy Statement for the 1999 Annual
Meeting of Shareholders Part III
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<PAGE>
J. W. MAYS, INC.
FORM 10-K FOR THE FISCAL YEAR ENDED JULY 31, 1998
TABLE OF CONTENTS
PART I PAGE
----
Item 1. Business ................................................. 3
Item 2. Properties ............................................... 3
Item 3. Legal Proceedings ........................................ 7
Item 4. Submission of Matters to a Vote of Security Holders ...... 7
Executive Officers of the Registrant .............................. 8
PART II
Item 5. Market for Registrant's Common Stock and Related
Shareholder Matters .................................... 8
Item 6. Selected Financial Data .................................. 8
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations .................... 8
Item 8. Financial Statements and Supplementary Data .............. 8
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure ................. 9
PART III
Item 10. Directors and Executive Officers of the Registrant ...... 9
Item 11. Executive Compensation .................................. 9
Item 12. Security Ownership of Certain Beneficial Owners
and Management ........................................ 9
Item 13. Certain Relationships and Related Transactions .......... 9
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K ............................... 9
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 31 employees and has a contract with a
union covering rates of pay, hours of employment and other conditions of
employment for approximately 19% 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:
Approximate
Location Square Feet
-------- -----------
1. Brooklyn, New York
Fulton Street at Bond Street ............................. 380,000
2. Brooklyn, New York
Jowein Building
Fulton Street and Elm Place .............................. 430,000
3. Jamaica, New York
Jamaica Avenue at 169th Street ........................... 297,000
4. Fishkill, New York
Route 9 at Interstate Highway 84 ......................... 211,000
(located on
14.9 acres)
5. Levittown, New York
Hempstead Turnpike ....................................... 85,800
6. Massapequa, New York
Sunrise Highway .......................................... 133,400
7. Circleville, Ohio
Tarlton Road ............................................. 193,350
(located on
11.6 acres)
8. Brooklyn, New York
Truck Bays, passage facilities and tunnel
--Schermehorn Street ................................... 17,000
Building--Livingston Street .............................. 10,500
Properties leased are under long-term leases for varying periods, the
longest of which extends to 2073, and in most instances renewal options are
included. Reference is made to Note 6 to the Consolidated Financial Statements
contained in the 1999 Annual Report to Shareholders, incorporated herein by
reference. The properties owned which are held subject to mortgage are the
Jowein building, Jamaica building, Fishkill property, Ohio property and a small
part of the Company's former Brooklyn store.
3
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1. BROOKLYN, NEW YORK--FULTON STREET AT BOND STREET
15% of the premises is leased by the Company under eight separate leases.
Expiration dates are as follows: 1/31/2001 (2 leases); 4/30/2011 (4
leases); 6/30/2011 (1 lease); and 12/8/2013 (1 lease). One lease which
expires 1/31/2001 has a 10 year option and the lease which expires
12/8/2013 has two thirty year options through 12/8/2073. The present
construction of a new lobby entrance in the 19-23 Bond Street building is
the only present plan for the additional improvement of this property.
The property is currently leased to eight tenants of which six are retail
tenants and two occupy office space. One tenant occupies in excess of 10%
of the rentable square footage (26.11%). This tenant subleases to a flea
market, department store, shoe store and various other retail shops. The
lease expires April 30, 2011 with no renewal options.
Occupancy Lease Expiration
-------------------- -------------------------------------
Year Year Number of Area
Ended Rate Ended Leases Sq. Ft.
------- ------ --------- -------- -------
7/31/95 28.77% 7/31/2000 1 2,140
7/31/96 28.77% 7/31/2001 2 3,718
7/31/97 28.77% 7/31/2003 1 63
7/31/98 28.77% 7/31/2004 1 1,140
7/31/99 31.57% 7/31/2009 1 3,080
7/31/2011 2 109,819
-- -------
8 119,960
== =======
The federal tax basis is $8,989,881 with accumulated depreciation of
$4,764,580 for a net carrying value of $4,225,301 as of July 31, 1999. The
life taken for depreciation varies between 18-40 years and the methods used
are the straight-line and the declining balance.
The real estate taxes for this property are $678,479 and the rate used is
averaged at $10.236 per $100 of assessed valuation.
2. BROOKLYN, NEW YORK--JOWEIN BUILDING, FULTON ST. & ELM PLACE
Approximately 50% of the premises is owned and 50% is leased. The lease is
with one landlord and expires April 30, 2010. There are no renewal options.
There are no present plans for additional improvement of this property.
Approximately 280,000 square feet of the property is currently leased to
twelve tenants of which eight are retail stores, one is a restaurant and
three leases are for office space. One tenant is a New York City agency
which occupies in excess of 10% of the rentable square footage (31.19%).
The lease expires April 29, 2010 with no renewal options. Approximately
110,000 square feet of the building is available for lease.
Occupancy Lease Expiration
-------------------- -------------------------------------
Year Year Number of Area
Ended Rate Ended Leases Sq. Ft.
------- ------ --------- -------- -------
7/31/95 50.34% 7/31/2001 2 34,110
7/31/96 63.67% 7/31/2004 1 23,603
7/31/97 65.19% 7/31/2007 1 5,500
7/31/98 65.19% 7/31/2008 1 500
7/31/99 65.19% 7/31/2010 7 216,613
-- -------
12 280,326
== =======
The federal tax basis is $10,036,438 with accumulated depreciation of
$5,467,326 for a net carrying value of $4,569,112 as of July 31, 1999. The
life taken for depreciation varies between 18-40 years and the methods used
are the straight-line and the declining balance.
The real estate taxes for this property are $797,516 and the rate used is
averaged at $10.236 per $100 of assessed valuation.
4
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3. JAMAICA, NEW YORK--JAMAICA AVENUE AT 169TH STREET
The building is owned and the fee is leased from an affiliated company. The
lease expires July 31, 2027. Approximately 54,000 square feet was renovated
for office space for four tenants. Occupancy commenced May 1, 1997 for two
tenants, November 1997 for one tenant and January 1998 for the fourth
tenant. The renovation of the exterior facade of the building is the only
present plan for the additional improvement of this property. The property
is currently leased to nine tenants: five are retail tenants and four
leases are for office space. Two tenants occupy in excess of 10% of the
rentable square footage. One of the tenants is a department store that
occupies 27.50% of the rentable space with a lease that expires August 31,
2005 and has one five year renewal option. The other tenant is a major
retail toy store which occupies 15.95% of the rentable space. The lease
expires January 31, 2006 with six renewal options of five years each and
2,700 square feet to another tenant for retail space. Approximately 83,000
square feet of the building are available for lease.
Occupancy Lease Expiration
-------------------- -------------------------------------
Year Year Number of Area
Ended Rate Ended Leases Sq. Ft.
------- ------ --------- -------- -------
7/31/95 45.55% 7/31/2002 1 2,680
7/31/96 44.72% 7/31/2006 2 128,342
7/31/97 59.59% 7/31/2007 4 46,107
7/31/98 62.34% 7/31/2008 2 8,021
-- -------
7/31/99 62.34% 9 185,150
== =======
The federal tax basis is $12,055,377 with accumulated depreciation of
$5,568,311 for a net carrying value of $6,487,066 as of July 31, 1999. The
life taken for depreciation varies between 18-40 years and the methods used
are the straight-line and the declining balance.
The real estate taxes for this property are $268,860 and the rate used is
averaged at $10.236 per $100 of assessed valuation.
4. FISHKILL, NEW YORK--ROUTE 9 AT INTERSTATE HIGHWAY 84
The Company owns the entire premises. The replacement of heating,
ventilating and air conditioning units is the only present plan for the
additional improvement of this property. Approximately 26,000 square feet
are leased to one tenant for office space and 186,000 square feet of the
building are available for lease.
Occupancy Lease Expiration
-------------------- -------------------------------------
Year Year Number of Area
Ended Rate Ended Leases Sq. Ft.
------- ------ --------- -------- -------
7/31/95 42.75% 7/31/2001 1 25,915
7/31/96 55.03%
7/31/97 12.28%
7/31/98 12.28%
7/31/99 12.28%
The federal tax basis is $9,034,639 with accumulated depreciation of
$5,350,057 for a net carrying value of $3,684,582 as of July 31, 1999. The
life taken for depreciation varies between 18-40 years and the methods used
are the straight-line and the declining balance.
The real estate taxes for this property are $154,658 and the rate used is
averaged at $4.18 per $100 of assessed valuation.
5
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5. LEVITTOWN, NEW YORK--HEMPSTEAD TURNPIKE
The Company owns the entire premises. There are no present plans for
additional improvement of this property. The property is currently leased
to one tenant that operates the premises as a game room and fast food
restaurant. The lease expires September 30, 2004 with one five year renewal
option.
Occupancy Lease Expiration
-------------------- -------------------------------------
Year Year Number of Area
Ended Rate Ended Leases Sq. Ft.
------- ------ --------- -------- -------
7/31/95 100% 7/31/2005 Building 15,243
7/31/96 100% Land 70,557
------
7/31/97 100% 1 85,800
======
7/31/98 100%
7/31/99 100%
The federal tax basis is $273,550 with accumulated depreciation of $264,037
for a net carrying value of $9,513 as of July 31, 1999. The life taken for
depreciation varies between 18-40 years and the methods used are the
straight-line and the declining balance.
The real estate taxes for this property are $95,064 and the rate used is
averaged at $90.87 per $100 of assessed valuation.
6. MASSAPEQUA, NEW YORK--SUNRISE HIGHWAY
The Company leases the entire premises under one lease. The lease expires
May 14, 2009. There are no renewal options. There are no present plans for
additional improvement of this property. The property is currently
sub-leased to two tenants; one, a gasoline service station and the other, a
bank. Each of these tenants occupies in excess of 10% of the rentable
square footage. The gasoline service station lease expires April 29, 2009
with no renewal options. The sub-lease to the bank expires May 14, 2009
with no renewal options.
Occupancy Lease Expiration
-------------------- -------------------------------------
Year Year Number of Area
Ended Rate Ended Leases Sq. Ft.
------- ------ --------- -------- -------
7/31/95 100% 7/31/2009 2 133,400
7/31/96 100%
7/31/97 100%
7/31/98 100%
7/31/99 100%
The real estate taxes for this property are $257,622 and the rate used is
averaged at $81.20 per $100 of assessed valuation.
The Company does not own this property. Improvements to the property are
made by the tenants.
6
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7. CIRCLEVILLE, OHIO--TARLTON ROAD
The Company owns the entire premises. There are no present plans for
additional improvement of this property. The entire property is currently
leased to one tenant. The tenant is a manufacturer and uses these premises
as a warehouse and distribution facility. The lease expires September 30,
2002. There are three five year renewal options.
Occupancy Lease Expiration
-------------------- -------------------------------------
Year Year Number of Area
Ended Rate Ended Leases Sq. Ft.
------- ------ --------- -------- -------
7/31/95 100% 7/31/2003 1 193,350
7/31/96 100%
7/31/97 100%
7/31/98 100%
7/31/99 100%
The federal tax basis is $4,388,456 with accumulated depreciation of
$922,969 for a net carrying value of $3,465,487 as of July 31, 1999. The
life taken for depreciation varies between 18-40 years and the methods used
are the straight-line and the declining balance.
The real estate taxes for this property are $311,964 and the rate used is
averaged at $65.68 per $1,000 of assessed valuation.
8. BROOKLYN, NEW YORK--LIVINGSTON STREET
The City of New York through its Economic Development Administration
constructed a municipal garage at Livingston Street opposite the Company's
Brooklyn properties. The Company has a long-term lease with the City of New
York 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, both for the exclusive use of the
Company, to the structure referred to in (2) below. The truck bays,
passage facilities and tunnel, totaling approximately 17,000 square
feet, are included in the lease from the City of New York referred to
in the preceding paragraph and are in full use.
(2) The Company constructed a building of six stories and
basement on a 20 x 75-foot plot (acquired and made available by the
City of New York and leased to the Company for a term expiring in 2013
with renewal options, the last of which expires in 2073). The plot is
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.
In the opinion of management, all of the Company's properties are adequately
covered by insurance.
See Note 11 to the Consolidated Financial Statements of the 1999 Annual
Report to Shareholders, which information is incorporated herein by
reference, for information concerning the tenant, 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.
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.
7
<PAGE>
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:
First Became
Business Experience During Such Officer
Name Age the Past Five Years or Director
---- --- -------------------------- --------------
Lloyd J. Shulman ...... 57 President November, 1978
Co-Chairman of the Board
and President June, 1995
Chairman of the Board and
President November, 1996
Director November, 1977
Alex Slobodin ......... 84 Executive Vice President November, 1965
Treasurer September, 1955
Director November, 1963
Ward N. Lyke, Jr. ..... 48 Vice President February, 1984
George Silva .......... 49 Vice President March, 1995
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 and Dividend
Information" on page 20 of the Registrant's 1999 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 1999 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 17 through
19 of the Registrant's 1999 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
report of D'Arcangelo & Co., LLP, Independent Auditors, dated October 12, 1999,
appearing on pages 4 through 15 of the Registrant's 1999 Annual Report to
Shareholders is incorporated 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 1999 Annual Report to Shareholders is not to
be deemed filed as part of this Form 10-K Annual Report.
8
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Response to that part of this item relating to Disagreements with
Accountants and Financial Disclosures--None.
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 1999 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" in the Definitive Proxy Statement for the 1999 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 1999 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 headings "Executive
Compensation" and "Certain Relationships and Related Transactions" in the
Definitive Proxy Statement for the 1999 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. The Consolidated Financial Statements and report of D'Arcangelo &
Co., LLP, Independent Auditors, dated October 12, 1999, set forth
on pages 4 through 15 of the Registrant's 1999 Annual Report to
Shareholders.
2. See accompanying Index to Registrant's Financial Statements and
Schedules.
9
<PAGE>
3. Exhibits:
(2) Plan of acquisition, reorganization, arrangement,
liquidation or succession--not applicable.
(3) Articles of incorporation and by-laws:
(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 auditors--not applicable.
(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, 1999.
10
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 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 18, 1999 By: /s/ LLOYD J. SHULMAN
-----------------------------
Lloyd J. Shulman
Chairman of the Board
Principal Executive Officer
President
Principal Operating Officer
October 18, 1999 By: /s/ ALEX SLOBODIN
-----------------------------
Alex Slobodin
Executive Vice President
and Treasurer
Principal Financial Officer
October 18, 1999 By: /s/ 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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ LLOYD J. SHULMAN Chairman of the Board, October 18, 1999
- ------------------------ Chief Executive Officer,
Lloyd J. Shulman President, Chief Operating
Officer and Director
/s/ ALEX SLOBODIN Executive Vice President, October 18, 1999
- ------------------------ Treasurer and Director
Alex Slobodin
/s/ FRANK J. ANGELL Director October 18, 1999
- ------------------------
Frank J. Angell
/s/ LANCE D. MYERS Director October 18, 1999
- ------------------------
Lance D. Myers
/s/ JACK SCHWARTZ Director October 18, 1999
- ------------------------
Jack Schwartz
/s/ SYLVIA W. SHULMAN Director October 18, 1999
- ------------------------
Sylvia W. Shulman
/s/ LEWIS D. SIEGEL Director October 18, 1999
- ------------------------
Lewis D. Siegel
11
<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, 1999, which are
incorporated herein by reference:
Report of Independent Auditors (page 15)
Consolidated Balance Sheets (pages 4 and 5)
Consolidated Statements of Income and Retained Earnings (page 6)
Consolidated Statements of Comprehensive Income (page 6)
Consolidated Statements of Cash Flows (page 7)
Notes to Consolidated Financial Statements (pages 8-15)
PAGE
----
Financial Statement Schedules:
Report of Independent Auditors ........................... 12
II Valuation and Qualifying Accounts ........................ 13
III Real Estate and Accumulated Depreciation ................. 14
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.
----------
REPORT OF INDEPENDENT AUDITORS 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, 1999 and 1998, and for the three years ended
July 31, 1999 and have issued our report thereon dated October 12, 1999; such
consolidated financial statements and report are incorporated by reference in
this Form 10-K Annual Report. Our audits 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 audits. 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 12, 1999
12
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SCHEDULE II
J. W. MAYS, INC.
VALUATION AND QUALIFYING ACCOUNTS
Year Ended July 31,
------------------------------
1999 1998 1997
-------- -------- --------
Allowance for net unrealized gains
(losses) on marketable securities:
Balance, beginning of period ............ $423,879 $152,151 $ 25,261
Additions (Reductions) .................. (216,881) 271,728 126,890
-------- -------- --------
Balance, end of period .................. $206,998 $423,879 $152,151
======== ======== ========
Deferred income tax asset
valuation allowance:
Balance, beginning of period ............ $ 24,991 $ 26,952 $ 41,597
(Reductions) ............................ (15,820) (1,961) (14,645)
-------- -------- --------
Balance, end of period .................. $ 9,171 $ 24,991 $ 26,952
======== ======== ========
13
<PAGE>
<TABLE>
SCHEDULE III
J. W. MAYS, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION
JULY 31, 1999
<CAPTION>
====================================================================================================================================
Col. A Col. B Col. C Col. D Col. E
- ------------------------------------------------------------------------------------------------------------------------------------
Cost Capitalized Gross Amount At Which Carried
Initial Cost to Company Subsequent to Acquisition At Close of Period
------------------------------------------------------ -------------------------
Encum- Building & Carrying Building &
Description Brances Land Improvements Improvements Cost Land Improvements
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OFFICE AND RENTAL BUILDINGS
Brooklyn, New York
Fulton Street at Bond Street.. $ 184,360 $1,703,157 $ 3,862,454 $ 6,919,426 $ -- $1,703,157 $10,781,880
Jamaica, New York
Jamaica Avenue at
169th Street ................. 3,400,000 -- 3,215,699 8,839,679 -- -- 12,055,378
Fishkill, New York
Route 9 at Interstate
Highway 84 ................... 2,335,075 467,341 7,212,116 1,864,844 -- 467,341 9,076,960
Brooklyn, New York
Jowein Building
Fulton Street and Elm Place .. 675,050 1,622,232 770,561 9,265,877 -- 1,622,232 10,036,438
Levittown, New York
Hempstead Turnpike ........... -- 95,256 200,560 72,990 -- 95,256 273,550
Circleville, Ohio
Tarlton Road ................. 1,242,159 120,849 4,388,456 -- -- 120,849 4,388,456
---------- ---------- ----------- ----------- ----- ---------- -----------
Total (A) .................... $7,836,644 $4,008,835 $19,649,846 $26,962,816 $ -- $4,008,835 $46,612,662
========== ========== =========== =========== ===== ========== ===========
<CAPTION>
====================================================================================================
Col. A Col. F Col. G Col. H Col. I
- ----------------------------------------------------------------------------------------------------
Life On Which
Depreciaton in
Latest Income
Accumulated Date of Date Statement is
Description Total Depreciation Construction Acquired Computed
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OFFICE AND RENTAL BUILDINGS
Brooklyn, New York
Fulton Street at Bond Street.. $12,485,037 $ 4,940,829 Various Various (1)(2)
Jamaica, New York
Jamaica Avenue at
169th Street ................. 12,055,378 5,528,720 1959 1959 (1)(2)
Fishkill, New York
Route 9 at Interstate
Highway 84 ................... 9,544,301 4,874,438 10/74 11/72 (1)
Brooklyn, New York
Jowein Building
Fulton Street and Elm Place .. 11,658,670 5,736,916 1915 1950 (1)(2)
Levittown, New York
Hempstead Turnpike ........... 368,806 241,853 4/69 6/62 (1)
Circleville, Ohio
Tarlton Road ................. 4,509,305 713,124 9/92 12/92 (1)
----------- -----------
Total (A) .................... $50,621,497 $22,035,880
=========== ===========
- ----------
(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 $775,832 and
Accumulated Depreciation thereon of $575,414 at July 31, 1999.
Year Ended July 31,
----------------------------------------
1999 1998 1997
---------- ----------- -----------
<S> <C> <C> <C>
INVESTMENT IN REAL ESTATE
Balance at Beginning of Year ....................... $49,120,806 $48,096,243 $45,128,700
Improvements ....................................... 1,500,691 1,024,563 2,967,543
----------- ----------- -----------
Balance at End of Year ............................. $50,621,497 $49,120,806 $48,096,243
=========== =========== ===========
ACCUMULATED DEPRECIATION
Balance at Beginning of Year ....................... $21,097,162 $20,143,617 $19,233,598
Additions Charged to Costs and Expenses ............ 938,718 953,545 910,019
----------- ----------- -----------
Balance at End of Year ............................. $22,035,880 $21,097,162 $20,143,617
=========== =========== ===========
</TABLE>
14
<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 auditors-not applicable
(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, 1999
(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)
================================================================================
J. W. MAYS, INC.
ANNUAL REPORT
1999
Year Ended July 31, 1999
================================================================================
<PAGE>
J.W. MAYS, INC.
Contents
Page No.
================================================================================
Summary of Selected Financial Data 2
The Company 2
Message to Shareholders 3
Consolidated Balance Sheets 4-5
Consolidated Statements of Income and
Retained Earnings 6
Consolidated Statements of Comprehensive
Income 6
Consolidated Statements of Cash Flows 7
Notes to Consolidated Financial Statements 8-15
Report of Independent Auditor 15
Five Year Summary of Consolidated Operations 16
Management's Discussion and Analysis of
Financial Condition and Results of Operations 17-19
Quarterly Financial Information (Unaudited) 20
Common Stock and Dividend Information 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 AUDITORS
D'Arcangelo & Co., LLP
3020 Westchester Avenue
Purchase, N.Y. 10577
ANNUAL MEETING
The Annual Meeting of Shareholders will be
held on Tuesday, November 23, 1999, at
10:00 A.M., New York time, at J. W. MAYS, INC.,
9 Bond Street, Brooklyn, New York.
1
<PAGE>
J.W. MAYS, INC.
<TABLE>
Summary of Selected Financial Data
(dollars in thousands except per share data)
<CAPTION>
1999 1998 1997 1996 1995
==============================================================================================================================
<S> <C> <C> <C> <C> <C>
Rental Income $10,250 $10,249 $ 9,666 $ 8,855 $ 7,944
Rental Income--Affiliated Company 411 414 414 414 386
Recovery of Real Estate Taxes -- 1,219 -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
Total Revenues 10,661 11,882 10,080 9,269 8,330
- ------------------------------------------------------------------------------------------------------------------------------
Income (Loss) Before Cumulative Effect of
Changes in Accounting Principles 1,164 1,838 811 (141) (394)
Accounting for Certain Investments in Debt
and Equity Securities -- -- -- -- 22
- ------------------------------------------------------------------------------------------------------------------------------
Net Income (Loss) 1,164 1,838 811 (141) (372)
- ------------------------------------------------------------------------------------------------------------------------------
Real Estate--Net 28,586 28,024 27,953 25,895 25,077
- ------------------------------------------------------------------------------------------------------------------------------
Total Assets 41,657 41,375 40,406 37,771 36,144
- ------------------------------------------------------------------------------------------------------------------------------
Long-Term Debt:
Mortgages Payable 6,440 7,814 8,642 6,965 5,954
Other 491 582 641 734 678
------- ------- ------- ------- -------
Total 6,931 8,396 9,283 7,699 6,632
- ------------------------------------------------------------------------------------------------------------------------------
Shareholders' Equity 31,067 30,059 28,030 27,141 27,293
- ------------------------------------------------------------------------------------------------------------------------------
Income (Loss) Per Common Share:
Income (Loss) Before Cumulative Effect of
Changes in Accounting Principles .54 .86 .38 (.07) (.18)
Accounting for Certain Investments in Debt
and Equity Securities -- -- -- -- .01
------- ------- ------- ------- -------
Net Income (Loss) Per Common Share $ .54 $ .86 $ .38 $ (.07) $ (.17)
- ------------------------------------------------------------------------------------------------------------------------------
Cash Dividends Declared Per Share -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
Average common shares outstanding for 1999 and 1998, 2,135,780; 1997, 2,136,175;
1996 and 1995, 2,136,397.
</TABLE>
THE COMPANY
================================================================================
J.W. Mays, Inc. was founded in 1924 and incorporated under the laws of the
State of New York on July 6, 1927.
The Company operates a number of commercial real estate properties located
in Brooklyn and Jamaica in New York City, in Levittown, 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, 1999.
2
<PAGE>
J.W. MAYS, INC.
TO OUR SHAREHOLDERS:
================================================================================
The financial position of our Company continued to improve in the fiscal
year ended July 31, 1999 with profits earned in each of the four quarters.
Revenues for the current fiscal year were $10,661,297 compared to
$11,881,859 in the 1998 fiscal year. The 1998 year's revenues included recovery
of prior years' real estate taxes of $1,218,600 from The City of New York and
Town of Fishkill, New York. There was no comparable item in the 1999 fiscal
year.
In fiscal 1999 our Company's net income was $1,163,822, or $.54 per share.
In fiscal 1998 net income was $1,837,733, or $.86 per share, which included
the benefit of the recovery of real estate taxes, above.
The solicitation for prospective tenants for available space is being
actively pursued by the Company and by several experienced real estate brokerage
firms.
Although we are now in fiscal 2000, which began August 1, 1999, we would
like to share with you some of the things which occurred during fiscal 1999:
On June 2, 1999 we extended the mortgage with a bank on the Fishkill, New
York property for a period of five years with a fifteen year payout period, at a
favorable interest rate.
On May 4, 1999 we leased approximately 10,600 square feet of the second
floor of our former Brooklyn store to an existing sub-tenant. Rent commenced
September 1, 1999.
We are constructing a new lobby entrance in the 19-23 Bond Street building,
a part of our former Brooklyn store. The new lobby will provide separate access
to the upper floors for prospective large user tenants through two high speed
elevators. The anticipated completion date of the new lobby is January 2000.
There has already been significant interest shown by potential office space
users.
The Fishkill roadway expansion and redesign of the Route 84/Route 9
Interchange by New York State at our Fishkill location has been completed. The
continual improvement of the Route 84/Route 9 corridor is evident with the
addition of new hotels, a ten-screen multi-theater, a new large restaurant, a
major gas station, and a GAP Northeast Distribution Center in the immediate
vicinity. The completion of renovation to these roadways has provided greater
visibility and ease of access to our Fishkill property.
As always, our thanks go to our employees for their dedication and hard
work, and to our directors for their advice and guidance.
/s/ LLOYD J. SHULMAN
- ---------------------------
Lloyd J. Shulman
Chairman/President
October 12, 1999
3
<PAGE>
<TABLE>
J.W. MAYS, INC.
CONSOLIDATED BALANCE SHEETS
July 31, 1999 and 1998
<CAPTION>
ASSETS
1999 1998
============================================================================================================
<S> <C> <C>
Property and Equipment--at cost (Notes 1 and 3):
Buildings and improvements ............................................... $36,775,251 $35,622,806
Improvements to leased property .......................................... 9,143,369 9,143,369
Fixtures and equipment ................................................... 567,057 539,422
Land ..................................................................... 4,008,835 4,008,835
Other .................................................................... 208,775 209,293
Construction in progress ................................................. 694,042 345,796
----------- -----------
51,397,329 49,869,521
Less accumulated depreciation and amortization ........................... 22,611,294 21,628,465
----------- -----------
Property and equipment--net ...................................... 28,786,035 28,241,056
----------- -----------
Current Assets:
Cash and cash equivalents (Notes 10 and 11) .............................. 1,489,843 1,047,979
Marketable securities (Notes 1, 2 and 11) ................................ 39,993 137,721
Receivables (Note 7) ..................................................... 415,243 461,770
Income taxes refundable (Notes 1 and 5) .................................. 38,727 --
Deferred income taxes (Notes 1 and 5) .................................... 79,000 100,000
Security deposits ........................................................ 6,165 8,540
Prepaid expenses ......................................................... 960,614 953,728
----------- -----------
Total current assets ............................................. 3,029,585 2,709,738
----------- -----------
Other Assets:
Deferred charges (Note 1) ................................................ 2,562,715 2,793,022
Less accumulated amortization ............................................ 1,341,887 1,186,957
----------- -----------
Net .............................................................. 1,220,828 1,606,065
Security deposits (Note 11) .............................................. 633,424 615,107
Unbilled receivables (Notes 1 and 7) ..................................... 4,423,417 4,017,915
Unbilled receivable--affiliated company (Notes 1 and 7) .................. 545,812 727,750
Receivables .............................................................. 12,534 180,311
Receivable--affiliated company (Note 7) .................................. -- 87,943
Marketable securities (Notes 1, 2 and 11) ................................ 3,005,401 3,189,039
----------- -----------
Total other assets ............................................... 9,841,416 10,424,130
----------- -----------
TOTAL ASSETS ..................................................... $41,657,036 $41,374,924
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
1999 1998
============================================================================================================
<S> <C> <C>
Long-Term Debt:
Mortgages payable (Notes 3 and 11) ....................................... $ 6,439,933 $ 7,814,161
Other (Note 4) ........................................................... 490,716 581,673
----------- -----------
Total long-term debt ............................................. 6,930,649 8,395,834
----------- -----------
Deferred Income Taxes (Notes 1 and 5) ........................................ 1,740,000 1,293,000
----------- -----------
Current Liabilities:
Accounts payable ......................................................... 29,728 42,782
Payroll and other accrued liabilities (Note 8) ........................... 380,140 559,344
Income taxes payable (Notes 1 and 5) ..................................... -- 82,348
Other taxes payable ...................................................... 2,205 1,907
Current portion of long-term debt--mortgages payable (Notes 3 and 11) .... 1,396,711 827,672
Current portion of long-term debt--other (Note 4) ........................ 110,165 112,540
----------- -----------
Total current liabilities ........................................ 1,918,949 1,626,593
----------- -----------
Total liabilities ................................................ 10,589,598 11,315,427
----------- -----------
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 (Notes 1 and 2) ......... 136,998 292,879
Retained earnings ........................................................ 25,696,000 24,532,178
----------- -----------
31,357,540 30,349,599
Less common stock held in treasury, at cost--
42,517 shares at 1999 and 1998 ......................................... 290,102 290,102
----------- -----------
Total shareholders' equity ....................................... 31,067,438 30,059,497
----------- -----------
Commitments (Notes 6 and 7) and Contingencies (Note 12)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ....................... $41,657,036 $41,374,924
=========== ===========
5
</TABLE>
<PAGE>
<TABLE>
J.W. MAYS, INC.
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
<CAPTION>
Years Ended July 31,
--------------------------------------------
1999 1998 1997
===========================================================================================================
<S> <C> <C> <C>
Revenues
Rental income (Notes 1 and 7) ........................... $10,250,423 $10,249,650 $ 9,666,773
Rental income--affiliated company (Note 7) .............. 410,874 413,609 413,609
Recovery of real estate taxes ........................... -- 1,218,600 --
----------- ----------- -----------
Total revenues .............................. 10,661,297 11,881,859 10,080,382
----------- ----------- -----------
Expenses
Real estate operating expenses (Note 6) ................. 5,312,787 5,416,292 5,873,719
Administrative and general expenses ..................... 2,119,558 2,076,614 1,939,303
Bad debts (recovery) (Note 12) .......................... (17,115) (52,749) (418,789)
Depreciation and amortization (Note 1) .................. 1,002,733 1,011,318 966,628
----------- ----------- -----------
Total expenses .............................. 8,417,963 8,451,475 8,360,861
----------- ----------- -----------
Income from operations before investment income,
interest expense and income taxes ....................... 2,243,334 3,430,384 1,719,521
----------- ----------- -----------
Investment income and interest expense
Investment income (Notes 1 and 2) ....................... 278,162 269,646 267,876
Interest expense (Notes 3 and 10) ....................... 683,674 812,297 696,472
----------- ----------- -----------
(405,512) (542,651) (428,596)
----------- ----------- -----------
Income before income taxes ................................ 1,837,822 2,887,733 1,290,925
Income taxes provided (Notes 1 and 5) ..................... 674,000 1,050,000 480,000
----------- ----------- -----------
Net income ................................................ 1,163,822 1,837,733 810,925
Retained earnings, beginning of year ...................... 24,532,178 22,694,445 21,883,520
----------- ----------- -----------
Retained earnings, end of year ............................ $25,696,000 $24,532,178 $22,694,445
=========== =========== ===========
Income per common share (Note 1) .......................... $ .54 $ .86 $ .38
=========== =========== ===========
Dividends per share ..................................... -- -- --
=========== =========== ===========
Average common shares outstanding ......................... 2,135,780 2,135,780 2,136,175
=========== =========== ===========
See Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
<CAPTION>
Years Ended July 31,
--------------------------------------------
1999 1998 1997
===========================================================================================================
<S> <C> <C> <C>
Net Income ................................................ $ 1,163,822 $ 1,837,733 $ 810,925
----------- ----------- -----------
Other comprehensive income, net of tax (Note 5)
Unrealized gain (loss) on available-for-sale
securities, net of taxes (benefit) of $(61,000),
$80,000 and $43,000 for the fiscal years 1999,
1998 and 1997, respectively ............................. (155,881) 191,728 83,890
Reclassification adjustment ............................... (2,202) 14,997 2,618
----------- ----------- -----------
Other comprehensive income (loss) ......................... (158,083) 206,725 86,508
----------- ----------- -----------
Comprehensive income ...................................... $ 1,005,739 $ 2,044,458 $ 897,433
----------- ----------- -----------
See Notes to Consolidated Financial Statements.
</TABLE>
6
<PAGE>
<TABLE>
J.W. MAYS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Years Ended July 31,
-------------------------------------------
1999 1998 1997
================================================================================================================
<S> <C> <C> <C>
Cash Flows From Operating Activities
Net income .................................................... $ 1,163,822 $ 1,837,733 $ 810,925
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Deferred income taxes ....................................... 529,000 854,000 359,000
Amortization of premium on marketable debt
securities ................................................ (623) (661) (417)
Realized (gain) loss on marketable securities ............... (2,202) 14,997 2,618
Depreciation and amortization ............................... 1,002,733 1,011,318 966,628
Amortization of deferred expenses ........................... 240,818 248,601 229,344
Other assets--deferred expenses ............................. (81,372) (139,493) (413,552)
--unbilled receivables .......................... (405,502) (366,120) (479,875)
--unbilled receivable--affiliated company ....... 181,938 181,938 44,828
--receivables ................................... 167,777 203,777 (384,088)
--receivable--affiliated company ................ 87,943 106,510 --
Changes in:
Receivables ................................................. 46,527 101,640 (248,231)
Prepaid expenses ............................................ (6,886) 197,188 20,980
Real estate taxes refundable ................................ -- -- 13,409
Income taxes refundable ..................................... (38,727) -- 4,496
Accounts payable ............................................ (13,054) (3,474) 13,796
Payroll and other accrued liabilities ....................... (179,204) 6,129 6,845
Income taxes payable ........................................ (82,348) 70,912 11,436
Other taxes payable ......................................... 298 (11) (3,276)
----------- ----------- -----------
Net cash provided by operating activities ............. 2,610,938 4,324,984 954,866
----------- ----------- -----------
Cash Flows From Investing Activities
Acquisition of property and equipment ......................... (1,321,921) (1,126,540) (3,011,956)
Security deposits ............................................. (15,942) (34,155) 297,629
Marketable securities:
Receipts from sales or maturities ........................... 644,714 486,524 246,994
Payments for purchases ...................................... (577,404) (736,049) (51,292)
----------- ----------- -----------
Net cash (used) by investing activities ............. (1,270,553) (1,410,220) (2,518,625)
----------- ----------- -----------
Cash Flows From Financing Activities
Borrowings--securities broker ................................. -- 1,708,595 655,020
Payments--securities broker ................................... -- (2,978,648) (882,287)
Borrowing--mortgage ........................................... -- -- 2,500,000
Increase--security deposits ................................... 10,668 54,513 340,248
Payments--mortgage and other debt ............................. (909,189) (885,533) (1,221,725)
Purchase of treasury stock .................................... -- -- (5,862)
----------- ----------- -----------
Net cash provided (used) by financing activities ...... (898,521) (2,101,073) 1,385,394
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents .......... 441,864 813,691 (178,365)
Cash and cash equivalents at beginning of year ................ 1,047,979 234,288 412,653
----------- ----------- -----------
Cash and cash equivalents at end of year ...................... $ 1,489,843 $ 1,047,979 $ 234,288
=========== =========== ===========
See Notes to Consolidated Financial Statements.
7
</TABLE>
<PAGE>
J.W. MAYS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
CONSOLIDATION: The consolidated financial statements include the accounts
of the Company, a New York corporation, and its subsidiaries, which are
wholly-owned. Material intercompany items have been eliminated in consolidation.
ACCOUNTING RECORDS AND USE OF ESTIMATES: The accounting records are
maintained in accordance with 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 income and retained earnings, comprehensive income and the
consolidated balance sheets and related disclosures. Actual results could differ
from those estimates.
RENTAL INCOME: All of the real estate owned by the Company is held for
leasing to tenants except for a small portion used for Company offices. Rent is
recognized from tenants under executed leases no later than on an established
date or on an earlier date if the tenant should commence conducting business.
Unbilled receivables represent the excess of scheduled rental income recognized
on a straight-line basis over rental income as it becomes receivable according
to the provisions of the lease.
MARKETABLE SECURITIES: The Company categorizes marketable securities as
either trading, available for sale or held to maturity. Trading securities are
carried at fair value with unrealized gains and losses included in income.
Available for sale securities are carried at fair value with unrealized gains
and losses recorded as a separate component of shareholders' equity. Held to
maturity securities are carried at amortized cost. Dividends and interest income
are accrued as earned.
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. Interest is capitalized in connection with the
construction/renovations of real property. The capitalized interest is recorded
as part of the asset to which it relates and will be amortized over the asset's
estimated useful life.
LONG-LIVED ASSETS: The Financial Accounting Standards Board issued
Statement of Financial Standards No. 121 ("SFAS 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. SFAS 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 the
new accounting standard has not had an effect on the consolidated financial
statements. The Company did not incur any impairment losses related to
long-lived assets and identifiable intangibles. Such losses are incurred
whenever the carrying amount of an asset is determined to be unrecoverable.
RECENT ACCOUNTING PRONOUNCEMENTS: In June 1997, SFAS No. 130, "Reporting
Comprehensive Income", ("SFAS 130") was issued. SFAS 130 establishes standards
for the reporting of comprehensive income and its components. It requires all
items that are required to be recognized as components of comprehensive income
be reported in a financial statement that is displayed with the same prominence
as other income statement information. SFAS 130 is effective for financial
statements for periods beginning after December 15, 1997. Reclassification of
financial statements for earlier periods presented for comparative purposes was
required upon adoption.
In June 1997, SFAS No. 131, "Disclosures About Segments of an Enterprise
and Related Information", ("SFAS 131") was issued. SFAS 131 establishes
standards for the way that public business enterprises report information about
operating segments in annual financial statements and requires that those
enterprises report selected information about operating segments in annual
financial statements and in interim financial reports issued to shareholders.
SFAS 131 is effective for financial statements for periods beginning after
December 15, 1997.
8
<PAGE>
================================================================================
In February 1998, the Financial Accounting Standards Board issued Statement
of Financial Standards No. 132 "Employers' Disclosure about Pensions and Other
Post-Retirement Benefits", ("SFAS 132"), effective for fiscal years beginning
after December 15, 1997. The Company's Retirement Plan is 100% funded, with
Company contributions made quarterly, and there will be no additional liability
recognized by the Company.
The adoption of SFAS 131 and SFAS 132 did not have an effect on the 1999
financial statements, and SFAS 130 is reflected in the 1999 financial
statements.
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: Deferred income taxes are provided for the temporary
differences between the financial reporting basis and the tax basis of the
Company's assets and liabilities. Deferred tax assets result principally from
the recording of certain accruals and reserves which currently are not
deductible for tax purposes. Deferred tax liabilities result principally from
temporary differences in the recognition of gains and losses from certain
investments and from the use, for tax purposes, of accelerated depreciation.
INCOME PER SHARE OF COMMON STOCK: Income per share has been computed by
dividing net income for the year by the weighted average number of shares of
common stock outstanding during the year, adjusted for the purchase of treasury
stock. Shares used in computing income per share were 2,135,780 in fiscal 1999
and fiscal 1998, and 2,136,175 in fiscal 1997. The Company's adoption of FASB
128 "Earnings per Share" has had no effect on the computation of previously
reported earnings per share.
RECLASSIFICATIONS: Certain accounts for the years ended July 31, 1998 and
1997 have been reclassified to reflect comparability with account
classifications adopted for the year ended July 31, 1999 with no effect on
previously reported net income.
2. MARKETABLE SECURITIES:
As of July 31, 1999 and 1998, the Company's marketable securities were
classified as follows:
<TABLE>
<CAPTION>
1999 1998
----------------------------------------------- -----------------------------------------------
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:
Certificate of deposit ... $ 39,993 $ -- $ -- $ 39,993 $ 38,344 $ -- $ -- $ 38,344
Held to maturity:
Corporate debt
securities due
within one year ...... -- -- -- -- 99,377 1,840 -- 101,217
---------- -------- ---- ---------- ---------- -------- ---- ----------
Total current ...... $ 39,993 $ -- $ -- $ 39,993 $ 137,721 $ 1,840 $ -- $ 139,561
========== ======== ==== ========== ========== ======== ==== ==========
Non-current:
Available for sale:
Equity securities ...... $2,798,403 $206,998 $ -- $3,005,401 $2,765,160 $423,879 $ -- $3,189,039
========== ======== ==== ========== ========== ======== ==== ==========
Investment income consists of the following:
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Interest income .......................................................... $ 82,344 $ 81,746 $ 48,642
Dividend income .......................................................... 193,616 202,897 221,852
Gain (loss) on sale of securities ........................................ 2,202 (14,997) (2,618)
-------- -------- --------
Total ................................................................ $278,162 $269,646 $267,876
======== ======== ========
9
</TABLE>
<PAGE>
<TABLE>
===========================================================================================================================
3. LONG-TERM DEBT:
<CAPTION>
July 31, 1999 July 31, 1998
------------------------ ------------------------
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 $3,133,333 $266,666 $3,400,000
Jowein Building, Brooklyn, N.Y. ... (b) 9 % 3/31/00 675,050 -- 83,545 675,050
Fishkill, New York Property ....... (c) 8-1/4% 7/01/04 82,263 2,252,812 129,992 2,312,592
Circleville, Ohio Property ........ (d) 7 % 9/30/02 363,029 879,130 338,555 1,242,159
Other ............................. 8-1/2% 5/01/01 9,702 174,658 8,914 184,360
---------- ---------- -------- ----------
Total ....................... $1,396,711 $6,439,933 $827,672 $7,814,161
========== ========== ======== ==========
</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.
(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 was increased from 7-3/8% to 9% commencing April 1,
1997. During the extended period there will be no change in the constant
quarterly payments of interest and principal in the amount of $37,263.
(c) On June 2, 1999, the existing first mortgage loan balance on the
Fishkill property was extended for a period of five years. The annual interest
rate was reduced from 9% to 8-1/4% and the interest and principal 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 were increased to $36,540.
Maturities of long-term debt--mortgages payable, outstanding at July 31,
1999, are as follows: Years ending July 31, 2000 (included in current
liabilities), $1,396,711; 2001, $919,909; 2002, $781,045; 2003, $444,387; 2004,
$2,227,926, and thereafter, $2,066,666.
4. LONG-TERM DEBT--OTHER:
Long-Term debt--Other consists of the following:
July 31, 1999 July 31, 1998
---------------------- ----------------------
DUE WITHIN DUE AFTER DUE WITHIN DUE AFTER
ONE YEAR ONE YEAR ONE YEAR ONE YEAR
---------- -------- ---------- --------
Deferred compensation* ........ $104,000 $147,333 $104,000 $251,333
Lease security deposits** ..... 6,165 343,383 8,540 330,340
-------- -------- -------- --------
Total ................. $110,165 $490,716 $112,540 $581,673
======== ======== ======== ========
Maturities of long-term debt--other, outstanding at July 31, 1999, are as
follows: Years ending July 31, 2000 (included in current liabilities), $110,165;
2001, $182,980; 2002, $43,333; 2003, $934; 2004, $5,675, and thereafter,
$257,794.
- ----------
* The Company entered into a deferred compensation agreement with Max L.
Shulman, its then Chairman of the Board. This agreement, as amended,
provides for $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 December 31, 1996 and the monthly payments commenced
January, 1997.
** Does not include three irrevocable letters of credit totaling $275,000 at
July 31, 1999, and at July 31, 1998, provided by three tenants.
10
<PAGE>
================================================================================
5. INCOME TAXES:
Significant components of the Company's deferred tax assets and liabilities
as of July 31, 1999 and 1998, are a result of temporary differences related to
the items described as follows:
<TABLE>
<CAPTION>
1999 1998
----------------------------- ----------------------------
DEFERRED DEFERRED DEFERRED DEFERRED
TAX ASSETS TAX LIABILITIES TAX ASSETS TAX LIABILITIES
----------- --------------- ---------- ---------------
<S> <C> <C> <C> <C>
Net operating loss carryforward ........................ $ 763,563 $ -- $1,056,762 $ --
Alternative minimum tax credit carryforward ............ 327,293 -- 305,814 --
Investment tax credit carryforward ..................... 9,171 -- 24,991 --
Deferred compensation not currently deductible ......... 85,453 -- 120,813 --
Rental income received in advance ...................... 13,411 -- 31,248 --
Unbilled receivables ................................... -- 1,689,538 -- 1,613,526
Property and equipment ................................. -- 1,129,908 -- 981,750
Unrealized gain on available for sale securities ....... -- 70,379 -- 144,119
Other .................................................. 39,105 -- 31,758 --
---------- ---------- ---------- ----------
1,237,996 2,889,825 1,571,386 2,739,395
Valuation allowance .................................... (9,171) -- (24,991) --
---------- ---------- ---------- ----------
$1,228,825 $2,889,825 $1,546,395 $2,739,395
========== ========== ========== ==========
</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,
1999, except for investment tax credit carryforwards, for which a 100% valuation
allowance has been provided. The valuation allowance was reduced by $15,820 in
1999 and $1,961 in 1998, due to the expiration of investment tax credit
carryforwards.
Income taxes provided for the years ended July 31, 1999, 1998 and 1997
consisted of:
1999 1998 1997
-------- ---------- --------
Current:
Federal ............................. $ 21,400 $ 54,000 $ 6,000
State and City ...................... 123,600 142,000 115,000
Deferred taxes ........................ 529,000 854,000 359,000
-------- ---------- --------
Total provision ................. $674,000 $1,050,000 $480,000
======== ========== ========
Components of the deferred tax provision for the years ended July 31, 1999,
1998 and 1997 consisted of:
1999 1998 1997
-------- ---------- --------
Excess of book depreciation over
tax depreciation .................... $174,842 $ (29,000) $(58,000)
Reduction (increase) of rental income
received in advance ................. 17,837 (24,000) 9,000
Increase in unbilled receivables ...... 76,012 63,000 148,000
Deferred compensation ................. 35,360 35,000 21,000
Net operating loss carryforwards ...... 293,200 869,000 193,000
Bad debts ............................. -- -- 44,000
Alternative minimum tax ............... (21,479) (53,000) (6,000)
Other ................................. (46,772) (7,000) 8,000
-------- ---------- --------
$529,000 $ 854,000 $359,000
======== ========= ========
11
<PAGE>
================================================================================
Taxes provided for the years ended July 31, 1999, 1998 and 1997 differ from
amounts which would result from applying the federal statutory tax rate to
pre-tax income, as follows:
1999 1998 1997
---------- ---------- ----------
Income before income taxes ........... $1,837,822 $2,887,733 $1,290,925
Dividends received deduction ......... (52,820) (98,530) (117,959)
Other-net ............................ (38,600) 22,663 13,777
---------- ---------- ----------
Adjusted pre-tax income .............. 1,746,402 2,811,866 1,186,743
Statutory rate ....................... 34% 34% 34%
Income tax provision at
statutory rate ..................... 594,000 956,300 403,500
State and City income taxes,
net of federal
income tax benefit ................. 80,000 93,700 76,500
---------- ---------- ----------
Income taxes provided ................ $ 674,000 $1,050,000 $ 480,000
========== ========== ==========
The Company's 1999 and 1998 federal income tax liability of $21,000 and
$54,000, respectively, were determined using the Alternative Minimum Tax
("AMT"), a separate parallel tax system. The excess of the AMT over the regular
tax is a credit which can be carried forward indefinitely to reduce future
regular tax liabilities. The Company has additional AMT credits from prior years
totaling $250,000 resulting in total AMT credits of $326,000 at July 31, 1999.
At July 31, 1999, the Company had net operating tax loss carryforwards of
$2,236,000 available to offset future regular taxable income. Of this amount
$65,000 is available until the year 2006, $278,000 until 2009, $1,471,000 until
2010, and $422,000 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 $9,000 that expire in fiscal year
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 1 years to 28 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, 1999 was exceeded by sublease rental income, as follows:
1999 1998 1997
---------- ---------- ----------
Minimum rental expense .................. $1,155,118 $1,156,168 $1,155,644
Contingent rental expense ............... 1,032,643 1,051,884 1,266,880
---------- ---------- ----------
2,187,761 2,208,052 2,422,524
Sublease rental income .................. 5,437,421 5,399,129 4,798,895
---------- ---------- ----------
Excess of rental income
over expense ...................... $3,249,660 $3,191,077 $2,376,371
========== ========== ==========
Rent expense paid to an affiliated company totaled $160,800 for each of the
fiscal years.
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
------ -----------
2000 ......................................... $ 1,143,340
2001 ......................................... 1,087,174
2002 ......................................... 1,031,007
2003 ......................................... 1,031,007
2004 ......................................... 1,031,007
After 2004 ................................... 6,868,152
-----------
Total required* ...................... $12,191,687
===========
- ----------
* Minimum payments have not been reduced by minimum sublease rentals of
$32,635,316 under operating leases due in the future under non-cancellable
leases.
12
<PAGE>
================================================================================
7. RENTAL INCOME:
Rental income from an affiliated company totaled $410,874 for fiscal year
1999 and $413,609 for each of the fiscal years 1998 and 1997.
Amounts due from the affiliated company are as follows:
July 31,
--------------------------------------
1999 1998 1997
-------- -------- ----------
Unbilled receivables .................. $545,812 $727,750 $ 909,688
Receivables-noncurrent ................ -- 87,943 194,453
-------- -------- ----------
Total ......................... $545,812 $815,693 $1,104,141
======== ======== ==========
Rental income for each of the fiscal years 1999, 1998 and 1997 is as
follows:
July 31,
-----------------------------------------
1999 1998 1997
----------- ----------- -----------
Minimum rentals
Company owned property ......... $ 4,803,089 $ 4,800,127 $ 4,713,783
Operating leases ............... 4,733,897 4,686,130 4,036,156
----------- ----------- -----------
9,536,986 9,486,257 8,749,939
----------- ----------- -----------
Contingent rentals
Company owned property ......... 420,787 464,003 567,704
Operating leases ............... 703,524 712,999 762,739
----------- ----------- -----------
1,124,311 1,177,002 1,330,443
----------- ----------- -----------
Total $10,661,297 $10,663,259 $10,080,382
=========== =========== ===========
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
------ -------------- ----------- ------------
2000 ....................... $ 4,876,730 $ 4,740,066 $ 9,616,796
2001 ....................... 4,335,242 4,282,532 8,617,774
2002 ....................... 3,785,186 3,707,824 7,493,010
2003 ....................... 2,989,076 3,683,965 6,673,041
2004 ....................... 2,898,389 3,678,847 6,577,236
After 2004 ................. 16,464,453 12,542,082 29,006,535
----------- ----------- -----------
Total .............. $35,349,076 $32,635,316 $67,984,392
=========== =========== ===========
8. PAYROLL AND OTHER ACCRUED LIABILITIES:
Payroll and other accrued liabilities consist of the following:
1999 1998
-------- --------
Payroll ........................................ $ 93,704 $ 89,428
Interest ....................................... 54,555 61,068
Professional fees .............................. 52,115 50,659
Rents received in advance ...................... 39,443 91,907
Utilities ...................................... 79,065 67,907
Brokers commissions ............................ 4,712 145,997
Other .......................................... 56,546 52,378
-------- --------
Total ................................ $380,140 $559,344
======== ========
13
<PAGE>
================================================================================
9. EMPLOYEES' RETIREMENT PLAN:
The Company sponsors a noncontributory Money Purchase Plan covering
substantially all of its employees. Operations were charged $225,353, $202,432
and $132,273 as contributions to the Plan for fiscal years 1999, 1998 and 1997,
respectively.
10. CASH FLOW INFORMATION:
For purpose 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,
------------------------------
1999 1998 1997
-------- -------- --------
Interest paid, net of capitalized interest
of $45,845 in fiscal 1997 .................. $690,187 $820,577 $720,461
Income taxes paid ............................ $266,075 $125,088 $105,068
11. FINANCIAL INSTRUMENTS AND CREDIT RISK CONCENTRATIONS:
The following disclosure of estimated fair value was determined by the
Company, using available market information and appropriate valuation methods.
Considerable judgment is necessary to develop estimates of fair value. The
estimates presented herein are not necessarily indicative of the amounts that
could be realized upon disposition of the financial instruments.
The Company estimates the fair value of its financial instruments using the
following methods and assumptions: (i) quoted market prices, when available, are
used to estimate the fair value of investments in marketable debt and equity
securities; (ii) discounted cash flow analyses are used to estimate the fair
value of long-term debt, using the Company's estimate of current interest rates
for similar debt; and (iii) carrying amounts in the balance sheet approximate
fair value for cash and cash equivalents and tenant security deposits due to
their high liquidity.
JULY 31, 1999
---------------------------
CARRYING FAIR
VALUE VALUE
---------- ----------
Cash and cash equivalents ............. $1,489,843 $1,489,843
Marketable securities ................. $3,045,394 $3,045,394
Tenant security deposits .............. $ 349,548 $ 349,548
Long-term debt-mortgages payable ...... $7,836,644 $8,065,849
Financial instruments that are potentially subject to concentrations of
credit risk consist principally of marketable securities, cash and cash
equivalents and receivables. Marketable securities and cash and cash equivalents
are placed with high credit quality financial institutions and instruments to
minimize risk.
The Company derives rental income from thirty-eight tenants, of which one
tenant accounted for 16.10% of rental income during the year ended July 31,
1999. No other tenant accounted for more than 10% of rental income during the
year ended July 31, 1999.
12. 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.
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 has realized from Jamesway $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. The Company has also realized from McCrory $36,602 or 21.53%
on account of its administrative claim of $170,000. McCrory sold substantially
all of its assets and the proceeds of sale were insufficient to make any
distribution to unsecured creditors.
The Company has made no provision in its financial statements for the
balance of its claims filed against Jamesway and McCrory due to the fact that
there are not likely to be any further distributions by either company.
14
<PAGE>
================================================================================
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.
13. SUBSEQUENT EVENT:
In October 1999, the Company made application to NASDAQ AMEX for inclusion
of the Company's common stock on The NASDAQ SmallCap Market. The Company's
common stock has been listed on The NASDAQ National Market. The Company has been
notified by NASDAQ AMEX that the Company's market value of its public float
relating to its common stock has not been sufficient to maintain the listing on
The NASDAQ National Market. The Company has applied for listing on The NASDAQ
SmallCap Market.
================================================================================
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholders
J.W. Mays, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of J.W. Mays,
Inc. and subsidiaries as of July 31, 1999 and 1998, and the related consolidated
statements of income and retained earnings, comprehensive income and cash flows
for the three years ended July 31, 1999. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of J.W. Mays,
Inc. and its subsidiaries as of July 31, 1999 and 1998, and the results of their
operations and their cash flows for the three years ended July 31, 1999 in
conformity with generally accepted accounting principles.
D'ARCANGELO & CO., LLP
Purchase, New York
October 12, 1999
15
<PAGE>
J.W. MAYS, INC.
FIVE YEAR SUMMARY OF CONSOLIDATED OPERATIONS
(dollars in thousands except per share data)
<TABLE>
<CAPTION>
Years Ended July 31,
------------------------------------------------------------------
1999 1998 1997 1996 1995
==============================================================================================================================
<S> <C> <C> <C> <C> <C>
Revenues
Rental income ......................................... $ 10,250 $ 10,249 $ 9,666 $ 8,855 $ 7,944
Rental income--affiliated company ..................... 411 414 414 414 386
Recovery of real estate taxes ......................... -- 1,219 -- -- --
---------- ---------- ---------- ---------- ----------
Total revenues .................................... 10,661 11,882 10,080 9,269 8,330
---------- ---------- ---------- ---------- ----------
Expenses
Real estate operating expenses ........................ 5,312 5,416 5,874 5,679 5,580
Administrative and general expenses ................... 2,119 2,077 1,939 2,008 2,101
Bad debts (recovery) .................................. (17) (53) (419) 424 57
Depreciation and amortization ......................... 1,003 1,011 967 889 838
---------- ---------- ---------- ---------- ----------
Total expenses .................................... 8,417 8,451 8,361 9,000 8,576
---------- ---------- ---------- ---------- ----------
Income (loss) from operations before
investment income, interest expense and
income taxes .......................................... 2,244 3,431 1,719 269 (246)
---------- ---------- ---------- ---------- ----------
Investment income and interest expense
Investment income ..................................... 278 269 268 250 367
Interest expense ...................................... 684 812 696 682 641
---------- ---------- ---------- ---------- ----------
(406) (543) (428) (432) (274)
---------- ---------- ---------- ---------- ----------
Income (loss) before income taxes ....................... 1,838 2,888 1,291 (163) (520)
Income taxes provided (benefit) ......................... 674 1,050 480 (22) (126)
---------- ---------- ---------- ---------- ----------
Income (loss) before cumulative effect of changes
in accounting principles .............................. 1,164 1,838 811 (141) (394)
Accounting for certain investments in debt
and equity securities ............................. -- -- -- -- 22
---------- ---------- ---------- ---------- ----------
Net Income (loss) ....................................... $ 1,164 $ 1,838 $ 811 $ (141) $ (372)
========== ========== ========== ========== ==========
Income (loss) per common share
Income (loss) before cumulative effect of
changes in accounting principles ...................... $ .54 $ .86 $ .38 $ (.07) $ (.18)
Accounting for certain investments in debt
and equity securities ............................... -- -- -- -- .01
---------- ---------- ---------- ---------- ----------
Net income (loss) per common share ................ $ .54 $ .86 $ .38 $ (.07) $ (.17)
========== ========== ========== ========== ==========
Dividends per share ..................................... -- -- -- -- --
========== ========== ========== ========== ==========
Average common shares outstanding ....................... 2,135,780 2,135,780 2,136,175 2,136,397 2,136,397
========== ========== ========== ========== ==========
</TABLE>
16
<PAGE>
J.W. MAYS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
================================================================================
FISCAL 1999 COMPARED TO FISCAL 1998
Net income for the year ended July 31, 1999 amounted to $1,163,822, or
$.54, per share compared to net income for the year ended July 31, 1998 of
$1,837,733, or $.86 per share. The 1998 figures include a pre-tax net recovery
of real estate taxes of $1,218,600 (see below) and a bad debt recovery of
$52,749. The 1999 figures include a bad debt recovery of $17,115. There was no
comparable pre-tax net recovery of real estate taxes in the 1999 year.
Revenues in the current year decreased to $10,661,297 from $11,881,859 in
the comparable 1998 fiscal year, primarily due to the pre-tax net recovery of
prior years' real estate taxes of $1,218,600 in the 1998 year.
The recovery of real estate taxes in the 1998 fiscal year of $1,218,600,
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.
Real estate operating expenses in the current year decreased to $5,312,787
from $5,416,292 in the comparable 1998 year primarily due to a decrease in real
estate taxes, fuel costs, vault charges, insurance costs, maintenance costs,
water and sewer costs and leasing commissions, partially offset by an increase
in payroll and licenses and permits costs.
Administrative and general expenses in the current year increased to
$2,119,558 from $2,076,614 in the comparable 1998 year primarily due to an
increase in payroll costs, pension costs and medical costs, partially offset by
a decrease in insurance costs and legal and professional costs.
Depreciation and amortization expense in the current year decreased to
$1,002,733 from $1,011,318 in the 1998 year.
Interest expense in the current year exceeded investment income by $405,512
and by $542,651 in the comparable 1998 year. The decrease was primarily due to
the elimination of the loan payable to a securities broker and scheduled
repayments.
The bad debt recovery in the amount of $17,115 in the 1999 year and $52,749
in the 1998 year relates to prior years' bad debt write-offs from McCrory and
Jamesway.
FISCAL 1998 COMPARED TO FISCAL 1997
Net income for the year ended July 31, 1998 amounted to $1,837,733, or $.86
per share. The figures include a pre-tax net recovery of real estate taxes of
$1,218,600 (see below). There was no comparable item in the 1997 year. The 1998
year also includes a bad debt recovery amounting to $52,749. In the comparable
1997 year, net income amounted to $810,925, or $.38 per share, after a pre-tax
bad debt recovery of $418,789.
Revenues in the 1998 year increased to $11,881,859 from $10,080,382 in the
comparable 1997 fiscal year, primarily due to the addition of new tenants and
the pre-tax net recovery of prior years' real estate taxes in the amount of
$1,218,600.
The recovery of real estate taxes in the 1998 fiscal year in the amount of
$1,218,600, 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.
Real estate operating expenses in the 1998 year decreased to $5,416,292
from $5,873,719 in the comparable 1997 year principally due to a decrease in
real estate taxes and fuel costs, partially offset by an increase in payroll,
maintenance costs and leasing commissions.
Administrative and general expenses in the 1998 year increased to
$2,076,614 from $1,939,303 in the comparable 1997 year principally due to an
increase in payroll, legal and professional costs and retirement plan costs;
partially offset by a decrease in insurance expense.
The bad debt recovery in the amount of $52,749 in the 1998 year and
$418,789 in the 1997 year relates to prior years' bad debt write-offs from
McCrory and Jamesway. See Note 12 to the Consolidated Financial Statements.
17
<PAGE>
================================================================================
Depreciation and amortization expense in the 1998 year increased to
$1,011,318 from $966,628 in the 1997 year because of additional improvements to
property.
Interest expense in the 1998 year exceeded investment income by $542,651
and by $428,596 in the comparable 1997 year. The increase of $114,055 was
primarily due to the interest on the Jamaica Building loan discussed in Note
3(a) to the Consolidated Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES
Management considers current working capital and borrowing capabilities
adequate to cover the Company's planned operating and capital requirements. The
Company's cash and cash equivalents amounted to $1,489,843 at July 31, 1999.
CASH FLOWS FROM OPERATING ACTIVITIES
Deferred Expenses: The Company expended a total of $17,201 in order to
extend the existing first mortgage loan on the Fishkill property during the year
ended July 31, 1999. See Note 3(c) to the Consolidated Financial Statements.
Prepaid Expenses: Cash expenditures for the year ended July 31, 1999
increased by $136,824 due to an increase in real estate taxes in the amount of
$157,924 partially offset by a reduction in insurance premiums in the amount of
$21,100.
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures: The Company had expenditures of $711,263 for the year
ended July 31, 1999 for the exterior renovations at its Jamaica, New York
building. The expenditures at the Jamaica building are part of the exterior
facade renovation which the Company anticipates will cost approximately
$1,200,000. As of July 31, 1999, the Company has expended a total of $1,057,060.
The renovations were completed during October 1999.
The Company had expenditures of $63,122 for renovations at its Brooklyn,
New York building to accommodate one new tenant. The Company is building a new
lobby at this location to enable the Company to attract additional tenants to
the property. The cost of the new lobby is estimated to be $600,000. Work
commenced in April 1999 and is expected to be completed by January 2000. As of
July 31, 1999, the Company has expended a total of $228,791 for the lobby.
The Company had expenditures of $100,000 for heating, ventilating and air
conditioning units at its Fishkill, New York building. The cost of the equipment
will be approximately $320,000. The work is expected to be completed by November
1999.
CASH FLOWS FROM FINANCING ACTIVITIES
Lease Security: The Company received approximately $10,600 in additional
lease security due to the leasing of space to one new tenant at its Brooklyn,
New York building, during the year ended July 31, 1999.
18
<PAGE>
================================================================================
YEAR 2000 COMPLIANCE:
The Company uses a computerized accounting system purchased from a vendor.
The vendor has released a Year 2000 compliant version of the accounting system
which the Company is in the process of implementing. No material expenditures
will be required to resolve the Year 2000 issue. Much of the Company's internal
software programs have been purchased from third parties. Failure of the third
parties' computer systems would not have a material impact on the Company's
ability to conduct business. Furthermore, the Company is not dependant on third
party computer systems and applications. The Company has no suppliers or
significant customers that "link" up to its computer systems. The Company does
not anticipate any problems with its hardware or its software.
The Company has communicated with its major tenants, financial
institutions, contractors and utility companies to determine the extent to which
the Company is vulnerable to third parties' failures to resolve their Year 2000
issues. Based on the representations received to date from these third parties,
the Company does not believe this represents a material risk to the Company.
Nevertheless, the Company has no guarantee that such third party systems will
operate as represented. In the event significant systems of one of these third
parties fails, the Company's operations and financial results could be adversely
affected.
19
<PAGE>
J.W. MAYS, INC.
================================================================================
<TABLE>
QUARTERLY FINANCIAL INFORMATION (Unaudited)
(dollars in thousands except per share data)
<CAPTION>
Three months ended
---------------------------------------------------------
Oct. 31, 1998 Jan. 31, 1999 Apr. 30, 1999 July 31, 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues ..................... $2,680 $2,625 $2,667 $2,689
Revenues less expenses ....... 490 323 486 539
Net income ................... 321 177 326 340
Net income per common share .. $ .15 $ .08 $ .16 $ .15
<CAPTION>
Three months ended
---------------------------------------------------------
Oct. 31, 1997 Jan. 31, 1998 Apr. 30, 1998 July 31, 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues ..................... $2,801 $2,805 $3,589 $2,687
Revenues less expenses ....... 535 523 1,299 531
Net income ................... 345 327 847 319
Net income per common share .. $ .16 $ .15 $ .40 $ .15
</TABLE>
Income per share is computed independently for each of the quarters
presented, on the basis described in Note 1 to the Consolidated Financial
Statements.
COMMON STOCK AND DIVIDEND INFORMATION
The Company's common stock trades on the Nasdaq National Market tier of The
Nasdaq Stock Market under the Symbol: "Mays". On October 13, 1999 the Company
made application to Nasdaq Amex to transfer the listing of the Company's common
stock to The Nasdaq SmallCap Market.
Following is the sales price range per share of J.W. Mays, Inc. common
stock during the fiscal years ended July 31, 1999 and 1998:
Sales Price
------------------
Three months ended High Low
- ------------------ ------ ------
October 31, 1998 ..................................... 12.500 6.875
January 31, 1999 ..................................... 8.500 6.531
April 30, 1999 ....................................... 9.000 3.250
July 31, 1999 ........................................ 8.000 4.688
October 31, 1997 ..................................... 10.125 8.000
January 31, 1998 ..................................... 15.500 9.500
April 30, 1998 ....................................... 16.000 12.500
July 31, 1998 ........................................ 14.250 12.000
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 24, 1999, the Company had approximately 3,600 shareholders of
record.
20
<PAGE>
J.W. MAYS, INC.
================================================================================
OFFICERS
Lloyd J. Shulman 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 (1,2,3,4) President, University Applied Management
Consultants Corp. (consultants on portfolio
management and estate planning); Professor
Emeritus, New York University Leonard N. Stern
School of Business
Lance D. Myers (2,3,4) Partner in the law firm of Cullen and Dykman
Jack Schwartz (1,2,3,4) Private Consultant
Lloyd J. Shulman (1,3,4) Chairman of the Board, Chief Executive Officer
and President and Chief Operating Officer,
J.W. Mays, Inc.
Sylvia W. Shulman (3) Retired
Lewis D. Siegel (2,3,4) First Vice President--Investments,
Salomon Smith Barney
Alex Slobodin (1,3) Executive Vice President and Treasurer,
J.W. Mays, Inc.
COMMITTEE ASSIGNMENTS KEY:
(1) Member of Executive Committee
(2) Member of Audit Committee
(3) Member of Investment Advisory Committee
(4) Member of Executive Compensation Committee
FORM 10-K ANNUAL REPORT
Copies of the Company's Form 10-K Annual Report
to the Securities and Exchange Commission
for the fiscal year ended July 31, 1999,
will be furnished without charge to
shareholders upon written request
to: Secretary, J.W. Mays, Inc.,
9 Bond Street, Brooklyn, New York 11201.
21
<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
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-START> AUG-01-1998
<PERIOD-END> JUL-31-1999
<CASH> 1,489,843
<SECURITIES> 39,993
<RECEIVABLES> 415,243
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,029,585
<PP&E> 51,397,329
<DEPRECIATION> 22,611,294
<TOTAL-ASSETS> 41,657,036
<CURRENT-LIABILITIES> 1,918,949
<BONDS> 0
<COMMON> 2,178,297
0
0
<OTHER-SE> 28,889,141
<TOTAL-LIABILITY-AND-EQUITY> 41,657,036
<SALES> 0
<TOTAL-REVENUES> 10,661,297
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 8,417,963
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 683,674
<INCOME-PRETAX> 1,837,822
<INCOME-TAX> 674,000
<INCOME-CONTINUING> 1,163,822
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,163,822
<EPS-BASIC> 0.54
<EPS-DILUTED> 0.00
</TABLE>
