-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RIQrl8HUmo8dpU3jjkafK548qbkswF1K/nbZ342xjQswIY0TYzZ8iRzYALEMinPO wh0q0Uz6bckWTZlqr/jTSA== 0000054187-99-000002.txt : 19990310 0000054187-99-000002.hdr.sgml : 19990310 ACCESSION NUMBER: 0000054187-99-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990131 FILED AS OF DATE: 19990309 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MAYS J W INC CENTRAL INDEX KEY: 0000054187 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 111059070 STATE OF INCORPORATION: NY FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-03647 FILM NUMBER: 99560336 BUSINESS ADDRESS: STREET 1: 9 BOND ST CITY: BROOKLYN STATE: NY ZIP: 11201-5805 BUSINESS PHONE: 7186247400 MAIL ADDRESS: STREET 1: 9 BOND STREET CITY: BROOKLYN STATE: NY ZIP: 11201-5805 10-Q 1 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. 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
J. W. MAYS, INC. CONSOLIDATED BALANCE SHEET January 31, July 31, ASSETS 1999 1998 --------------------------------------------------------------- --------------- --------------- (Unaudited) (Audited) 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.
J. W. MAYS, INC. CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS Three Months Ended Six Months Ended January 31, January 31, --------------- ---------------- --------------- ---------------- 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-
J. W. MAYS, INC. CONSOLIDATED STATEMENT OF CASH FLOWS Six Months Ended January 31, -------------- --------------- 1999 1998 -------------- --------------- (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-
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.
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 ------------- ------------- ------------- ------------- 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-
6. Long-Term Debt:
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 ------- -------- -------------- -------------- -------------- ------------ 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 ============== ============== ============== ============
(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. 7. Long-Term Debt - Other: Long-Term debt - Other consists of the following:
January 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 $199,333 $104,000 $251,333 Lease security deposits ** - 335,018 8,540 330,340 ------------- ------------- ------------- ------------- Total $104,000 $534,351 $112,540 $581,673 ============= ============= ============= =============
* 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:
January 31, July 31, 1999 1998 --------------- --------------- 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 ============= =============
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:
January 31, July 31, 1999 1998 ------------------------------ Unbilled receivables $636,781 $727,750 Receivables - noncurrent - 87,943 ------------- -------------
$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. Supplemental disclosure:
Six Months Ended January 31, ------------------------------ 1999 1998 __________ __________ Interest paid $351,288 $420,429 Income taxes paid $172,033 $68,568
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. 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. 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. 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. 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) EX-27 2 ARTICLE 5 FIN. DATA SCHEDULE FOR 2ND QTR 10-Q
5 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. 1 6-MOS Jul-31-1999 Aug-01-1998 Jan-31-1999 1,277,355 138,908 270,140 0 0 2,617,962 50,523,571 22,109,134 41,500,966 3,729,204 0 2,178,297 0 0 28,392,619 41,500,966 0 5,304,421 0 0 4,282,078 0 348,558 0 315,000 498,444 0 0 0 498,444 0.23 0.00
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