FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission file number 1-3647
J.W. Mays, Inc.
(Exact name of registrant as specified in its charter)
New York 11-1059070
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9 Bond Street, Brooklyn, New York 11201-5805
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) 718-624-7400
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X . No .
Number of shares outstanding of the issuer's common stock as of the latest
practicable date.
Class Outstanding at March 5, 1999
Common Stock, $1 par value 2,135,780 shares
This report contains 17 pages.
<PAGE>
J. W. MAYS, INC.
INDEX
Page No.
Part I - Financial Information:
Consolidated Balance Sheet 3
Consolidated Statement of Income
and Retained Earnings 4
Consolidated Statement of Comprehensive Income 4
Consolidated Statement of Cash Flows 5
Notes to the Consolidated Financial Statements 6 - 12
Management's Discussion and Analysis of Results
of Operations and Financial Condition 13 - 15
Part II - Other Information 16
<PAGE>
<TABLE>
<CAPTION>
J. W. MAYS, INC.
CONSOLIDATED BALANCE SHEET
January 31, July 31,
ASSETS 1999 1998
--------------------------------------------------------------- --------------- ---------------
(Unaudited) (Audited)
<S> <C> <C>
Property and Equipment - Net (Notes 6 and 8) $28,414,437 $28,241,056
------------- -------------
Current Assets:
Cash and cash equivalents 1,277,355 1,047,979
Marketable securities (Note 5) 138,908 137,721
Receivables (note 9) 270,140 461,770
Income taxes refundable 16,727 -
Deferred income taxes 85,000 100,000
Security deposits - 8,540
Prepaid expenses 829,832 953,728
------------- -------------
Total current assets 2,617,962 2,709,738
------------- -------------
Other Assets:
Deferred charges 2,795,181 2,793,022
Less accumulated amortization 1,264,449 1,186,957
------------- -------------
Net 1,530,732 1,606,065
Security deposits 622,518 615,107
Unbilled receivables (note 9) 4,216,510 4,017,915
Unbilled receivables - affiliated company (note 9) 636,781 727,750
Receivables 71,765 180,311
Receivables - affiliated company (note 9) - 87,943
Marketable securities (Note 5) 3,390,261 3,189,039
------------- -------------
Total other assets 10,468,567 10,424,130
------------- -------------
TOTAL ASSETS $41,500,966 $41,374,924
============= =============
LIABILITIES AND SHAREHOLDERS ' EQUITY
---------------------------------------------------------------
Long-Term Debt:
Mortgages payable (Note 6) $5,140,495 $7,814,161
Other (Note 7) 534,351 581,673
------------- -------------
Total long-term debt 5,674,846 8,395,834
------------- -------------
Deferred Income Taxes 1,526,000 1,293,000
------------- -------------
Current Liabilities:
Accounts payable 59,454 42,782
Payroll and other accrued liabilities 469,661 559,344
Income taxes payable - 82,348
Other taxes payable 3,153 1,907
Current portion of long-term debt - mortgages payable (Note 6) 3,092,936 827,672
Current portion of long-term debt - other (Note 7) 104,000 112,540
------------- -------------
Total current liabilities 3,729,204 1,626,593
------------- -------------
Total liabilities 10,930,050 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 305,854 292,879
Retained earnings 25,030,622 24,532,178
------------- -------------
30,861,018 30,349,599
Less common stock held in treasury, at cost - 42,517
shares at January 31, 1999 and July 31, 1998 290,102 290,102
------------- -------------
Total shareholders' equity 30,570,916 30,059,497
------------- -------------
Contingencies (Note 13)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $41,500,966 $41,374,924
============= =============
See Notes to the Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
J. W. MAYS, INC.
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
Three Months Ended Six Months Ended
January 31, January 31,
<S> <C> <C> <C> <C>
--------------- ---------------- --------------- ----------------
1999 1998 1999 1998
-------------- -------------- -------------- --------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues
Rental income (Note 9) $2,521,114 $2,577,520 $5,097,616 $5,115,702
Rental income - affiliated company 103,402 103,402 206,805 206,805
Recovery of real estate taxes - 123,809 - 283,085
-------------- -------------- -------------- --------------
Total revenues 2,624,516 2,804,731 5,304,421 5,605,592
-------------- -------------- -------------- --------------
Expenses
Real estate operating expenses 1,405,044 1,446,866 2,720,181 2,793,243
Administrative and general expenses 541,826 477,488 1,061,325 1,006,025
Bad debts (recovery) (Note 13) - (41,453) - (41,453)
Depreciation and amortization 254,369 255,108 500,572 504,216
-------------- -------------- -------------- --------------
Total expenses 2,201,239 2,138,009 4,282,078 4,262,031
-------------- -------------- -------------- --------------
Income from operations before investment income,
interest expense and income taxes 423,277 666,722 1,022,343 1,343,561
-------------- -------------- -------------- --------------
Investment income and interest expense:
Investment income 75,561 58,429 139,659 132,632
Interest expense (Notes 6 and 11) (175,709) (202,401) (348,558) (418,432)
-------------- -------------- -------------- --------------
(100,148) (143,972) (208,899) (285,800)
-------------- -------------- -------------- --------------
Income before income taxes 323,129 522,750 813,444 1,057,761
Income taxes provided 146,000 196,000 315,000 386,000
-------------- -------------- -------------- --------------
Net income 177,129 326,750 498,444 671,761
Retained earnings, beginning of period 24,853,493 23,039,456 24,532,178 22,694,445
-------------- -------------- -------------- --------------
Retained earnings, end of period $25,030,622 $23,366,206 $25,030,622 $23,366,206
============== ============== ============== ==============
Net income per common share (Note 2) $.08 $.15 $.23 $.31
============== ============== ============== ==============
Dividends per share $- $- $- $-
============== ============== ============== ==============
Weighted average common shares outstanding 2,135,780 2,135,780 2,135,780 2,135,780
============== ============== ============== ==============
See Notes to the Consolidated Financial Statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Three Months Ended Six Months Ended
January 31, January 31,
--------------- ---------------- --------------- ---------------
1999 1998 1999 1998
-------------- -------------- -------------- --------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net Income $177,129 $326,750 $498,444 $671,761
-------------- -------------- -------------- --------------
Other comprehensive income, net of tax (Note 4)
Unrealized gain (loss) on available-for-sale securities:
Net of taxes of $17,000 and $19,000 for the three months
ended January 31, 1999 and 1998, respectively,
and $6,000 and $17,000 for the six months ended
Janurary 31, 1999 and 1998, respectively.
71,880 36,429 12,975 32,525
Less: reclassification adjustment (8,366) 13,481 (8,366) 13,481
-------------- -------------- -------------- --------------
Other comprehensive income 63,514 49,910 4,609 46,006
-------------- -------------- -------------- --------------
Comprehensive Income $240,643 $376,660 $503,053 $717,767
-------------- -------------- -------------- --------------
See Notes to the Consolidated Financial Statements.
-4-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
J. W. MAYS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Six Months Ended
January 31,
-------------- ---------------
1999 1998
-------------- ---------------
<S> <C> <C>
(Unaudited) (Unaudited)
Cash Flows From Operating Activities:
Net income $498,444 $671,761
Adjustments to reconcile income to
net cash provided by operating activities:
Amortization of premium on marketable debt securities (333) (333)
Realized (gain) loss on marketable securities (8,366) 13,481
Depreciation and amortization 500,572 504,216
Amortization of deferred expenses 110,910 139,948
Other assets - deferred expenses (35,577) (84,255)
- unbilled receivables (198,595) (183,059)
- unbilled receivables - affiliated company 90,969 90,969
- receivables 108,546 99,731
- receivables - affiliated company 87,943 73,776
Deferred income taxes 242,000 322,000
Changes in:
Receivables 191,630 281,881
Prepaid expenses 123,896 (183,839)
Real estate taxes refundable - (267,972)
Income taxes refundable (16,727) -
Accounts payable 16,672 33,550
Payroll and other accrued liabilities (89,683) 479,126
Income taxes payable (82,348) (4,568)
Other taxes payable 1,246 729
------------- -------------
Cash provided by operating activities 1,541,199 1,987,142
------------- -------------
Cash Flows From Investing Activities:
Capital expenditures (673,953) (566,789)
Security deposits 1,129 (29,901)
Marketable securities: available for sale
Receipts from sales or maturities 150,874 86,524
Payments for purchases (325,609) (550,679)
------------- -------------
Cash (used) by investing activities (847,559) (1,060,845)
------------- -------------
Cash Flows From Financing Activities:
Borrowings - securities broker - 1,680,299
Payments - securities broker - (1,367,857)
Increase (decrease) - security deposits (3,862) 26,665
Payments - mortgage and other debt (460,402) (434,274)
------------- -------------
Cash (used) by financing activities (464,264) (95,167)
------------- -------------
Increase in cash 229,376 831,130
Cash and cash equivalents at beginning of period 1,047,979 234,288
------------- -------------
Cash and cash equivalents at end of period $1,277,355 $1,065,418
============= =============
See Notes to the Consolidated Financial Statements.
-5-
</TABLE>
<PAGE>
J. W. MAYS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Accounting Records:
The accounting records are maintained in accordance with generally accepted
accounting principles (GAAP). The preparation of the Company's financial
statements in accordance with GAAP, requires management to make estimates
that affect the reported consolidated balance sheets, consolidated
statements of income and retained earnings and consolidated statements of
comprehensive income, and related disclosures. Actual results could differ
from those estimates.
The interim financial statements are prepared pursuant to the requirements
for reporting on Form 10-Q. The July 31, 1998 balance sheet was derived
from audited financial statements but does not include all disclosures
required by GAAP. The interim financial statements and notes thereto
should be read in conjunction with the financial statements and notes
included in the Company's latest Annual Report on Form 10-K for the year
ended July 31, 1998. In the opinion of management, the interim financial
statements reflect all adjustments of a normal recurring nature necessary
for a fair statement of the results for interim periods. The results of
operations for the current period are not necessarily indicative of the
results for the entire year ending July 31, 1999.
2. Income Per Share of Common Stock:
Income per share has been computed by dividing the net income for the
periods by the weighted average number of shares of common stock
outstanding during the periods, adjusted for the purchase of treasury
stock. Shares used in computing income per share were 2,135,780 in each of
the three and six month periods ended January 31, 1999 and January 31,
1998. In February, 1997, the Financial Accounting Standards Board issued
Statement of Financial Standards No. 128 ("SFAS 128"), "Earnings Per
Share", effective for periods ending after December 15, 1997. The adoption
of this accounting standard has had no effect on the consolidated financial
statements.
3. Statement of Financial Standards No. 121:
In May 1995, 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 this accounting standard has had no effect on the consolidated
financial statements.
4. Comprehensive Income:
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Standards No. 130 ("SFAS 130"), "Reporting Comprehensive Income".
SFAS 130 establishes standards for the reporting of comprehensive income
and its components. It requires that all items that are required to be
recognized under accounting standards as components of comprehensive income
be reported in a financial statement that is displayed with the same
prominence as other financial statements. 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 is required upon adoption.
5. 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.
<TABLE>
<CAPTION>
Marketable Securities (continued)
As of January 31, 1999, the Company's marketable securities were classified as follows:
Gross Gross
Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C> <C>
------------- ------------- ------------- -------------
Current:
Certificate of deposit $39,198 $- $- $39,198
Held to maturity:
Corporate debt securities
due within one year 99,710 895 - 100,605
------------- ------------- ------------- -------------
Total current $138,908 $895 $- $139,803
============= ============= ============= =============
Noncurrent:
Available for sale:
Equity securities $2,947,407 $442,854 $- $3,390,261
============= ============= ============= =============
Investment income consists of the following:
Three Months Ended Six Months Ended
January 31, January 31,
---------------------------- ----------------------------
1999 1998 1999 1998
------------- ------------- ------------- -------------
Interest income $17,948 $22,990 $39,074 $43,592
Dividend income 49,243 48,920 92,219 102,521
Gain (Loss) on sale of securities 8,370 (13,481) 8,366 (13,481)
------------- ------------- ------------- -------------
Total $75,561 $58,429 $139,659 $132,632
============= ============= ============= =============
-7-
</TABLE>
<PAGE>
6. Long-Term Debt:
<TABLE>
<CAPTION>
January 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 $266,666 $3,266,667 $266,666 $3,400,000
Jowein building, Brooklyn, N.Y. (b) 9 % 3/31/00 87,347 630,405 83,545 675,050
Fishkill, New York property (c) 9 % 11/01/99# 2,379,045 - 129,992 2,312,592
Circleville, Ohio property (d) 7 % 9/30/02 350,578 1,063,812 338,555 1,242,159
Other 8 1/2 % 5/01/01 9,300 179,611 8,914 184,360
-------------- -------------- -------------- ------------
Total $3,092,936 $5,140,495 $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 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)The mortgage loan matures November 1, 1999. The annual interest rate is 9%
and the principal and interest payments are made in constant monthly
amounts based upon a fifteen (15) year payout period.
(d)The mortgage loan, which is self-amortizing, matures September 30, 2002.
The loan is payable at an annual interest rate of 7%. Under the terms of
the loan, constant monthly payments, including interest and principal,
commenced April 1, 1994 in the amount of $33,767, until October 1, 1997, at
which time the monthly payments of interest and principal increased to
$36,540.
<PAGE>
7. Long-Term Debt - Other:
Long-Term debt - Other consists of the following:
<TABLE>
<CAPTION>
January 31, 1999 July 31, 1998
------------------------------- -------------------------------
Due Within Due After Due Within Due After
One Year One Year One Year One Year
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Deferred compensation * $104,000 $199,333 $104,000 $251,333
Lease security deposits ** - 335,018 8,540 330,340
------------- ------------- ------------- -------------
Total $104,000 $534,351 $112,540 $581,673
============= ============= ============= =============
</TABLE>
* In fiscal 1964 the Company entered into a deferred compensation
agreement with Max L. Shulman, its then Chairman of the Board. This
agreement, as amended, provides for a total of $520,000 to be paid in
monthly installments of $8,666.67 for a period of 60 months, payable
upon the expiration of his employment, retirement or permanent
disability as defined in the agreement, or death. Mr. Shulman retired
as an employee on December 31, 1996 and the monthly payments commenced
January, 1997.
**Does not include three irrevocable letters of credit totaling $275,000
at January 31, 1999 and at July 31, 1998, provided by three tenants as
lease security deposits.
8. Property and Equipment - at cost:
<TABLE>
<CAPTION>
January 31, July 31,
1999 1998
--------------- ---------------
<S> <C> <C>
Property:
Buildings and improvements $36,560,884 $35,622,806
Improvements to leased property 9,143,369 9,143,369
Land 4,008,835 4,008,835
Construction in progress 34,650 345,796
------------- -------------
49,747,738 49,120,806
Less accumulated depreciation 21,564,466 21,097,162
------------- -------------
Property - net 28,183,272 28,023,644
------------- -------------
Fixtures and equipment and other:
Fixtures and equipment 567,057 539,422
Other fixed assets 208,776 209,293
------------- -------------
775,833 748,715
Less accumulated depreciation 544,668 531,303
------------- -------------
Fixtures and equipment and other - net 231,165 217,412
------------- -------------
Property and equipment - net $28,414,437 $28,241,056
============= =============
</TABLE>
<PAGE>
9. Unbilled Receivables and Rental Income:
Unbilled receivables represent the excess of scheduled rental income
recognized on a straight-line basis over rental income as it becomes
receivable according to the provisions of each lease.
Rental income includes $103,402 for each of the quarters ended January 31,
1999 and January 31, 1998, and $206,805 for each of the six month periods
ended January 31, 1999 and January 31, 1998, representing rentals from an
affiliated company.
Amounts due from the affiliated company are as follows:
<TABLE>
<CAPTION>
January 31, July 31,
1999 1998
------------------------------
<S> <C> <C>
Unbilled receivables $636,781 $727,750
Receivables - noncurrent - 87,943
------------- -------------
</TABLE> $636,781 $815,693
10. Employees' Retirement Plan:
The Company sponsors a noncontributory Money Purchase Plan covering
substantially all of its employees. Operations were charged $59,147 and
$109,647 as contributions to the Plan for the three and six months ended
January 31, 1999, respectively, and $35,000 and $70,000 as contributions
to the Plan for the three and six months ended January 31, 1998,
respectively. In February 1998, the Financial Accounting Standards Board
issued Statement of Financial Standards No. 132 ("SFAS 132"), "Employers'
Disclosure about Pensions and Other Post-Retirement Benefits", effective
for fiscal years beginning after December 15, 1997. The adoption of this
accounting standard will have no effect on the consolidated financial
statements since the Company's Retirement Plan is 100% funded, with
Company contributions made quarterly, and there will be no additional
liability recognized by the Company.
11. Cash Flow Information:
For purposes of reporting cash flows, the Company considers cash
equivalents to consist of short-term highly liquid investments with
maturities of three months or less, which are readily convertible into
cash.
<TABLE>
Supplemental disclosure:
<CAPTION>
Six Months Ended
January 31,
------------------------------
1999 1998
__________ __________
<S> <C> <C>
Interest paid $351,288 $420,429
Income taxes paid $172,033 $68,568
</TABLE>
12. Financial Instruments and Credit Risk Concentrations:
Financial instruments that are potentially subject to concentrations of
credit risk consist principally of marketable securities, cash and cash
equivalents and receivables. Marketable securities 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-six tenants, of which one
tenant accounted for more than 10% of rental income during the six months
ended January 31, 1999. That tenant accounted for 16.26%.
13. Contingencies:
McCrory Stores Corporation ("McCrory"), which occupied space in the
Company's Jowein building in the Fulton Mall in downtown Brooklyn, New
York, and whose lease, as amended, extended to April 29, 2010, filed for
relief under Chapter 11 of the Bankruptcy Code in February 1992. McCrory
rejected its lease, as amended, with the Company with the approval of the
Bankruptcy Court effective January 31, 1994. The Company has filed an
unsecured proof of claim with the United States Bankruptcy Court, Southern
District of New York for the lease rejection damages in the amount of
$7,753,732 ("Lease Rejection Claim"), and an administrative claim in the
amount of approximately $296,000, reduced by agreement to $170,000
("Administrative Claim") for damages resulting from McCrory's failure to
repair and maintain the premises as required by the lease. McCrory
objected to the Company's Lease Rejection Claim but has acknowledged the
administrative claim in the amount of $170,000. The Company has not
included the lease rejection claims against McCrory in its financial
statements due to (i) the fact that McCrory has disclosed that it has sold
substantially all of its assets and that the proceeds of sale are
insufficient to make any distributions to unsecured creditors and (ii) the
uncertainty of the amount that may ultimately be allowed and collected.
The Company has leased approximately 69,000 square feet of the approximate
99,000 square feet of space surrendered by McCrory. The remainder of the
space of approximately 30,000 square feet is not leaseable due to the
renovations required to accommodate six tenants where formerly there was
one. The rental income to be derived from the six tenants over the terms
of their leases will be approximately $5,040,000 less than the total
rental income that would have been due from McCrory for the period
February 1, 1994 through April 29, 2010, the termination date of the
McCrory lease.
Jamesway Corporation ("Jamesway"), which occupied retail space in the
Fishkill, New York property and whose lease extended to January 31, 2005,
filed for relief under Chapter 11 of the Bankruptcy Code on October 18,
1995. Jamesway rejected its lease for the Fishkill location with the
approval of the Bankruptcy Court, effective February 29, 1996, but
continued occupancy until March 22, 1996. The Company filed an amended
unsecured claim in the amount of $883,635 for damages resulting from the
breach and rejection of the lease and an administrative priority claim in
the amount of approximately $189,000 for certain amounts due under the
lease after the filing of Jamesway's Chapter 11 petition and for the
costs of repairs resulting from Jamesway's failure to fulfill its repair
and maintenance obligations under the lease. Pursuant to a settlement
that was approved by the Bankruptcy Court, the Company has an allowed
unsecured claim in the amount of $950,635 and an allowed administrative
claim in the amount of $54,887.
The Company has realized to date from Jamesway $465,811 or 49% on account
of its unsecured claim and 100% of its allowed administrative claim for a
total of $520,698. The Company has also realized to date from McCrory
$19,304 or 11.36% on account of its Administrative Claim in the amount of
$170,000. McCrory has advised creditors that holders of allowed
Administrative Claims may receive an additional distribution of
approximately 9% of the allowed amount of the Administrative Claim. The
Company has made no provision in its financial statements for the balance
of its claims filed against Jamesway and McCrory due to the uncertainty of
the amount that may ultimately be collected.
The Company reports scheduled rental income recognized on a straight-line
basis rather than rental income as it becomes a receivable according to
the provisions of the lease, in compliance with the provisions of
Statement of Financial Accounting Standards No. 13, "Accounting for
Leases". The excess of the scheduled rental income of McCrory, recognized
on a straight-line basis over rental income reported through January 31,
1994, the effective date of McCrory's rejection of its lease, amounts to
$708,673 and such amount was written off and classified as a bad debt
during the twelve month period ended July 31, 1994. The excess of the
scheduled rental income of Jamesway recognized on a straight-line basis
over rental income receivable according to the lease through January 31,
1996, amounted to $424,011 and such amount was written off and classified
as a bad debt during the twelve month period ended July 31, 1996.
There are various lawsuits and claims pending against the Company. It is
the opinion of management that the resolution of these matters will not
have a material adverse effect on the Company's Consolidated Financial
Statements.
<PAGE>
J. W. MAYS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
Results of Operations:
Three Months Ended January 31, 1999 Compared to the Three Months Ended January
31, 1998:
In the three months ended January 31, 1999, the Company reported net income in
the amount of $177,129, or $.08 per share. In the comparable three months
ended January 31, 1998, the Company reported net income of $326,750, or $.15
per share. The 1998 three months includes a pre-tax net recovery of real
estate taxes of $123,809 (see below). There was no comparable item in the
1999 three month period.
Revenues in the current three months decreased to $2,624,516 from $2,804,731
in the comparable 1998 three months, primarily due to the pre-tax net recovery
of prior years' real estate taxes in the 1998 three month period. There was
no comparable item in the 1999 three month period.
Real estate operating expenses in the current three months decreased to
$1,405,044 from $1,446,866 in the comparable 1998 three months primarily due
to a decrease in real estate taxes, fuel costs, vault charges, maintenance
costs and leasing commissions, partially offset by an increase in payroll
costs.
Administrative and general expenses in the current three months increased to
$541,826 from $477,488 in the comparable 1998 three months primarily due to an
increase in payroll and pension costs.
The recovery of real estate taxes in the 1998 three month period of $123,809,
net of legal expenses and credits to tenants in accordance with the terms of
their leases, represents prior years' real estate taxes from the City of New
York and the Town of Fishkill, New York.
Depreciation and amortization expense in the current three months decreased to
$254,369 from $255,108 in the three months ended January 31, 1998.
Interest expense in the current three months exceeded investment income by
$100,148 and by $143,972 in the comparable 1998 three months. 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 $41,453 in the three months ended
January 31, 1998 relates to the bad debt write-off of $424,011 in the 1996
year. See Note 13 to the Consolidated Financial Statements (Jamesway).
Six Months Ended January 31, 1999 Compared to the Six Months Ended January 31,
1998:
In the six months ended January 31, 1999, the Company reported net income in
the amount of $498,444, or $.23 per share. In the comparable six months ended
January 31, 1998, the Company reported net income of $671,761, or $.31 per
share. The 1998 six months includes a pre-tax net recovery of real estate
taxes of $283,085 (see below). There was no comparable item in the 1999 six
month period.
Revenues in the current six months decreased to $5,304,421 from $5,605,592 in
the comparable 1998 six months, primarily due to the pre-tax net recovery of
prior years' real estate taxes in the 1998 six month period. There was no
comparable item in the 1999 six month period.
Real estate operating expenses in the current six months decreased to
$2,720,181 from $2,793,243 in the comparable 1998 six months primarily due to
a decrease in real estate taxes, fuel costs, vault charges, maintenance costs
and leasing commissions, partially offset by an increase in payroll costs.
Administrative and general expenses in the current six months increased to
$1,061,325 from $1,006,025 in the comparable 1998 six months primarily due to
an increase in payroll and pension costs.
The recovery of real estate taxes in the 1998 six month period of $283,085,
net of legal expenses and credits to tenants in accordance with the terms of
their leases, represents prior years' real estate taxes from the City of New
York and the Town of Fishkill, New York.
Depreciation and amortization expense in the current six months decreased to
$500,572 from $504,216 in the six months ended January 31, 1998.
Interest expense in the current six months exceeded investment income by
$208,899 and by $285,800 in the comparable 1998 six months. 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 $41,453 in the six months ended January
31, 1998 relates to the bad debt write-off of $424,011 in the 1996 year. See
Note 13 to the Consolidated Financial Statements (Jamesway).
Liquidity and Capital Resources:
The Company has been operating as a real estate enterprise since the
discontinuance of the retail department store segment of its operations on
January 3, 1989.
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 $1,277,355 at January 31,
1999.
<PAGE>
Cash Flows From Operating Activities:
Prepaid expenses: Cash expenditures for the six months ended January 31, 1999
were reduced by $63,024 due to a reduction in real estate taxes on the
Fishkill property in Fishkill, New York in the amount of $42,948 and a
reduction in insurance premiums in the amount of $20,076.
Cash Flows From Investing Activities:
Capital Expenditures: The Company had expenditures of approximately $550,453
for the six months ended January 31, 1999 for renovations at its Jamaica, New
York building. The expenditure at the Jamaica building is part of the
exterior facade renovation which the Company anticipates will cost
approximately $1,100,000. As of January 31, 1999, the Company has expended a
total of $885,435. The renovations are anticipated to be completed by May
1999.
The Company had expenditures of $76,480 for renovations at its Brooklyn, New
York building to accommodate one new tenant. The Company also plans to build
a new lobby at this location to attract additional tenants to the property.
The cost is estimated to be $500,000 and work is expected to commence in March
1999 and is expected to be completed by October 1999.
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.
<PAGE>
Part II - Other Information
Item 6 - Exhibits and Reports on Form 8-K
(a) List of Exhibits:
Sequentially
Exhibit Numbered
Number Exhibit Page _
(2) Plan of acquisition, reorganization, arrangement,
liquidation or succession. N/A
(4) Instruments defining the rights of security holders,
including indentures. N/A
(10) Material contracts. N/A
(11) Statement re computation of per share earnings. N/A
(15) Letter re unaudited interim financial information. N/A
(18) Letter re change in accounting principles. N/A
(19) Report furnished to security holders. N/A
(22) Published report regarding matters submitted to vote
of security holders. N/A
(24) Power of attorney. N/A
(27) Financial data schedule. N/A
(99) Additional exhibits. N/A
(b) Reports on Form 8-K - No report on Form 8-K was required to be filed
by the Company during the six months ended January 31, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
J.W. MAYS, Inc.
(Registrant)
Date March 5, 1999 Lloyd J. Shulman
----------------------
Lloyd J. Shulman
Chairman
Date March 5, 1999 Alex Slobodin
----------------------
Alex Slobodin
Exec. Vice-President
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from the contained quarterly 10-Q and is qualified in its
entirety by reference to such Form 10-Q.
</LEGEND>
<MULTIPLIER> 1
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Jul-31-1999
<PERIOD-START> Aug-01-1998
<PERIOD-END> Jan-31-1999
<CASH> 1,277,355
<S>
<SECURITIES> 138,908
<RECEIVABLES> 270,140
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,617,962
<PP&E> 50,523,571
<DEPRECIATION> 22,109,134
<TOTAL-ASSETS> 41,500,966
<CURRENT-LIABILITIES> 3,729,204
<BONDS> 0
<COMMON> 2,178,297
0
0
<OTHER-SE> 28,392,619
<TOTAL-LIABILITY-AND-EQUITY> 41,500,966
<SALES> 0
<TOTAL-REVENUES> 5,304,421
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,282,078
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 348,558
<INCOME-PRETAX> 0
<INCOME-TAX> 315,000
<INCOME-CONTINUING> 498,444
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<NET-INCOME> 498,444
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