FORM 10-Q
UNITED STATES
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, 2009
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[ ] 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
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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 (I.R.S. Employer Identification No.)
of incorporation or organization
9 Bond Street, Brooklyn, New York 11201-5805
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(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) 718-624-7400
--------------
Not Applicable
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(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 ____
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
See the definitions of "large accelerated filer," "accelerated filer" and
"smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ____ Accelerated filer ____
Non-accelerated filer ---X--- Smaller reporting company ____
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes ___ No ---X---
Indicate the number of shares outstanding of the issuer's common stock, as of
the latest practicable date.
Class Outstanding at March 11, 2009
--------------------------- -----------------------------
Common Stock, $1 par value 2,015,780 shares
This report contains 20 pages.
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J. W. MAYS, INC.
INDEX
Page No.
Part I - Financial Information:
Consolidated Balance Sheet 3
Consolidated Statement of Operations
and Retained Earnings 4
Consolidated Statement of Comprehensive Income (Loss) 4
Consolidated Statement of Cash Flows 5
Notes to Consolidated Financial Statements 6 - 11
Management's Discussion and Analysis of Results
of Operations and Financial Condition 12 - 15
Controls and Procedures 15
Part II - Other Information 16
Signatures 17
(31) Certifications Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
(31.1) - Chief Executive Officer 18
(31.2) - Chief Financial Officer 19
(32) Certification Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
18 U.S.C. Section 1350 20
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J. W. MAYS, INC.
CONSOLIDATED BALANCE SHEET
January 31 July 31
ASSETS 2009 2008
--------------------------------------------------------------- --------------- ---------------
(Unaudited) (Audited)
Property and Equipment - Net (Notes 6 and 7) $45,182,895 $45,424,107
------------- -------------
Current Assets:
Cash and cash equivalents 1,229,063 1,475,390
Marketable securities (Note 4) 49,594 49,097
Receivables 172,194 171,031
Real estate taxes refundable 582,827 -
Deferred income taxes 272,000 320,000
Prepaid expenses 1,550,901 1,833,569
Security deposits - 13,674
------------- -------------
Total current assets 3,856,579 3,862,761
------------- -------------
Other Assets:
Deferred charges 3,461,708 3,461,708
Less accumulated amortization 1,594,515 1,361,804
------------- -------------
Net 1,867,193 2,099,904
Receivables 32,267 3,067
Security deposits 1,442,307 1,428,573
Unbilled receivables (Note 9) 2,613,076 2,859,076
Marketable securities (Note 4) 1,072,080 1,605,840
------------- -------------
Total other assets 7,026,923 7,996,460
------------- -------------
TOTAL ASSETS $56,066,397 $57,283,328
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
---------------------------------------------------------------
Long-Term Debt:
Mortgages and term loan payable (Note 6) $9,015,242 $9,513,528
Note payable - related party (Note 8) 1,000,000 1,000,000
Security deposits payable 1,120,507 1,102,134
Payroll and other accrued liabilities 89,424 268,272
------------- -------------
Total long-term debt 11,225,173 11,883,934
------------- -------------
Deferred Income Taxes 1,687,000 1,935,000
------------- -------------
Current Liabilities:
Accounts payable 162,657 39,364
Payroll and other accrued liabilities 1,623,259 1,785,336
Income taxes payable (Note 11) 184,864 102,945
Other taxes payable 3,480 1,891
Current portion of mortgages payable (Note 6) 1,753,268 2,067,639
Current portion of security deposits payable - 13,674
------------- -------------
Total current liabilities 3,727,528 4,010,849
------------- -------------
Total liabilities 16,639,701 17,829,783
------------- -------------
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 (loss) on available for sale securities
- net of deferred taxes (benefit) of $(153,000)
at January 31, 2009 and $(70,000) at July 31, 2008 (482,195) (134,412)
Retained earnings 35,672,201 35,351,267
------------- -------------
40,714,548 40,741,397
Less common stock held in treasury, at cost - 162,517
shares at January 31, 2009 and at July 31, 2008 (Note 12) 1,287,852 1,287,852
------------- -------------
Total shareholders' equity 39,426,696 39,453,545
------------- -------------
Contingencies (Note 13)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $56,066,397 $57,283,328
============= =============
See Notes to Consolidated Financial Statements.
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J. W. MAYS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS AND RETAINED EARNINGS
Three Months Ended Six Months Ended
January 31 January 31
----------------------------- --------------------------
2009 2008 2009 2008
------------- ------------- ------------- ------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues
Rental income (Notes 5 and 9) $3,960,068 $3,613,731 $7,882,914 $7,121,608
Recovery of real estate taxes 536,827 91,043 536,827 91,043
Gain on disposition of fixed assets - 30,670 - -
------------- ------------- ------------- ------------
Total revenues 4,496,895 3,735,444 8,419,741 7,212,651
------------- ------------- ------------- ------------
Expenses
Real estate operating expenses 2,427,370 2,393,221 4,670,057 4,538,801
Administrative and general expenses 1,011,808 1,070,534 1,884,213 1,850,890
Depreciation and amortization 404,406 397,608 809,498 793,649
------------- ------------- ------------- ------------
Total expenses 3,843,584 3,861,363 7,363,768 7,183,340
------------- ------------- ------------- ------------
Income (loss) from operations before investment income,
interest expense and income taxes 653,311 (125,919) 1,055,973 29,311
------------- ------------- ------------- ------------
Investment income and interest expense
Investment income (loss) (Note 4) 36,267 48,072 (26,632) 112,517
Interest expense (Notes 6, 8, and 11) (180,982) (229,833) (386,407) (469,646)
------------- ------------- ------------- ------------
(144,715) (181,761) (413,039) (357,129)
------------- ------------- ------------- ------------
Income (loss) before income taxes 508,596 (307,680) 642,934 (327,818)
Income taxes provided (benefit) 248,000 (63,000) 322,000 (47,000)
------------- ------------- ------------- ------------
Net income (loss) 260,596 (244,680) 320,934 (280,818)
Retained earnings, beginning of period 35,411,605 35,390,770 35,351,267 35,426,908
------------- ------------- ------------- ------------
Retained earnings, end of period $35,672,201 $35,146,090 $35,672,201 35,146,090
============= ============= ============= ============
Income (loss) per common share (Note 2) $.13 $(.12) $.16 $(.14)
============= ============= ============= ============
Dividends per share $- $- $- $-
============= ============= ============= ============
Average common shares outstanding 2,015,780 2,015,780 2,015,780 2,015,780
------------- ------------- ------------- ------------
See Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
Three Months Ended Six Months Ended
January 31 January 31
-------------- -------------- -------------- -------------
2009 2008 2009 2008
------------- ------------- ------------- -------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net Income (Loss) $260,596 $(244,680) $320,934 $(280,818)
------------- ------------- ------------- ------------
Other comprehensive income, net of taxes (Note 3)
Unrealized gain (loss) on available-for-sale securities:
Net of taxes (benefit) of $(31,000) and $13,000
for the three months ended January 31, 2009 and 2008,
respectively, and $(148,000) and $16,000 for the six
months ended January 31, 2009 and 2008, respectively. (221,599) 25,641 (347,783) 30,041
Reclassification adjustment - - 99,976 -
------------- ------------- ------------- ------------
Net change in comprehensive income (221,599) 25,641 (247,807) 30,041
------------- ------------- ------------- ------------
Comprehensive income (loss) $38,997 $(219,039) $73,127 $(250,777)
============= ============= ============= ============
See Notes to Consolidated Financial Statements.
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J. W. MAYS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Six Months Ended
January 31
--------------------------------
2009 2008
------------- -------------
(Unaudited) (Unaudited)
Cash Flows From Operating Activities:
Net income (loss) $320,934 $(280,818)
Adjustments to reconcile net income (loss) to
net cash provided (used) by operating activities:
Impairment of marketable securities 99,976 -
Depreciation and amortization 809,498 793,649
Amortization of deferred charges 232,711 209,235
Other assets - deferred charges - (79,001)
- unbilled receivables 246,000 427,341
Deferred income taxes (114,000) (135,000)
Changes in:
Receivables (30,363) (67,151)
Real estate taxes refundable (582,827) -
Prepaid expenses 282,668 302,776
Income taxes refundable - (217,058)
Accounts payable 123,293 52,832
Payroll and other accrued liabilities (340,925) (888,317)
Income taxes payable 81,919 (1,456,558)
Other taxes payable 1,589 (5,620)
------------- -------------
Cash provided (used) by operating activities 1,130,473 (1,343,690)
------------- -------------
Cash Flows From Investing Activities:
Capital expenditures (568,286) (833,064)
Security deposits (60) (49,253)
Marketable Securities
Payments for purchases (496) (1,501,047)
------------- -------------
Cash (used) by investing activities (568,842) (2,383,364)
------------- -------------
Cash Flows From Financing Activities:
Increase - security deposits 4,699 (3,553)
Borrowings - mortgage and other debt - 41,955
Decrease - mortgage and other debt payments (812,657) (400,271)
------------- -------------
Cash (used) by financing activities (807,958) (361,869)
------------- -------------
Decrease in cash and cash equivalents (246,327) (4,088,923)
Cash and cash equivalents at beginning of period 1,475,390 5,965,350
------------- -------------
Cash and cash equivalents at end of period $1,229,063 $1,876,427
============= =============
See Notes to Consolidated Financial Statements.
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J. W. MAYS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Accounting Records and Use of Estimates:
The accounting records are maintained in accordance with accounting
principles generally accepted in the United States of America ("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.
The interim financial statements are prepared pursuant to the requirements
for reporting on Form 10-Q. The July 31, 2008 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 Form 10-K Annual Report for the fiscal
year ended July 31, 2008. 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 fiscal year ending July 31, 2009.
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 2,015,780 for the
three and six months ended January 31, 2009 and January 31, 2008.
3. Comprehensive Income:
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income", 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. Comprehensive income is defined to
include all changes in equity except those resulting from investments by
and distributions to shareholders.
4. 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 measurements using quoted prices in
active markets for identical assets or liabilities (level 1) 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. Realized gains
and losses are determined on a specific identification basis. The Company
reviews marketable securities for impairment whenever circumstances and
situations change such that there is an indication that the carrying
amounts may not be recovered. The Company did not classify any securities
as trading during the six months ended January 31, 2009 and January 31,
2008. The implementation of Statement of Financial Accounting Standards
No. 157, Fair Value Measurements, had no impact on the presentation of
marketable securities in the Company's financial statements.
- 6-
As of January 31, 2009, the Company's marketable securities were classified as follows:
January 31, 2009 July 31, 2008
------------------------------------------------ ------------------------------------------------
Gross Gross Gross Gross
Unrealized Unrealized Fair Unrealized Unrealized Fair
Cost Gains Losses Value Cost Gains Losses Value
------------ --------- ------------ ------------ ------------ --------- ------------ ------------
Current:
Held-to-maturity:
Certificate of deposit $49,594 $- $- $49,594 $49,097 $- $- $49,097
============ ========= ============ ============ ============ ========= ============ ============
Noncurrent:
Available-for-sale:
Equity securities $1,710,276 $- $(638,196) $1,072,080 $1,810,252 $- $(204,412) $1,605,840
============ ========= ============ ============ ============ ========= ============ ============
The gross unrealized losses have been in existence for less than twelve months and management
does not anticipate selling any of the securities at a loss, although it is possible that the Company
may, depending upon market conditions, sell certain of the securities at a loss.
Investment income consists of the following:
Three Months Ended Six Months Ended
January 31 January 31
------------------------------ ------------------------------
2009 2008 2009 2008
------------- ------------- ------------- -------------
Interest income $4,129 $36,065 $10,456 $85,117
Dividend income 32,138 12,007 62,888 27,400
(Loss) on writedown or
impairment of securities - - (99,976) -
------------- ------------- ------------- -------------
Total $36,267 $48,072 $(26,632) $112,517
============= ============= ============= =============
5. 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, cash and cash
equivalents are placed with high credit quality financial institutions and
instruments to minimize risk. No assurance can be made that such
financial institutions and instruments will minimize all such risk.
The Company derives rental income from fifty-three tenants, of which one
tenant accounted for 11.16% and another tenant accounted for 16.86% of
rental income during the six months ended January 31, 2009. No other
tenant accounted for more than 10% of rental income during the same
period.
The Company has three irrevocable Letters of Credit totaling $367,500 at
January 31, 2009 and July 31, 2008, provided by three tenants.
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6. Long-Term Debt - Mortgages and Term Loan:
January 31, 2009 July 31, 2008
-------------------------------- ---------------------------------
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) 6.00% 4/01/12 $63,847 $1,188,772 $61,964 $1,221,173
Jamaica, New York property (b) 6.81% 10/01/11 124,589 2,318,034 120,396 2,380,715
Jowein building, Brooklyn, NY (c) 9.00% 4/01/09 764,648 - 1,103,520 -
Fishkill, New York property (d,e) 6.98% 2/18/15 60,306 1,723,790 58,199 1,753,961
Bond St. building, Brooklyn, NY (e) 6.98% 2/18/15 122,828 3,510,920 118,535 3,572,373
Term-loan payable to bank (f) 6.50% 5/01/10 377,050 133,726 365,025 325,306
Jowein building, Brooklyn, NY (g) Variable 8/01/10 240,000 140,000 240,000 260,000
-------------- -------------- -------------- ---------------
Total $1,753,268 $9,015,242 $2,067,639 $9,513,528
============== ============== ============== ===============
(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, New York property. In
March 2007, the Company extended the loan for five years with an option for
an additional five year period. The interest rate for the initial five
years is 6.00% per annum. Interest and amortization of principal will be
made in constant monthly amounts based on a fifteen year (15) payout
period. The outstanding balance of the loan totaling $1,036,602 will
become due and payable on April 1, 2012.
(b) The Company, on December 13, 2000, closed a loan with a bank in the
amount of $3,500,000. The loan is secured by a second position leasehold
mortgage covering the entire leasehold interest of the Company, as tenant,
in a certain ground lease and building in the Jamaica, New York property.
The outstanding balance of the loan, totaling $2,739,452, became due and
payable on October 1, 2006. The Company exercised its option to extend the
loan for a additional five (5) years to October 1, 2011. The interest rate
for the extended period is 6.81% per annum. At the end of the five year
period there will be a balance due on the loan of $2,077,680.
As additional collateral security, the Company conditionally assigned to
the bank all leases and rents on the premises, or portions thereof, whether
now existing or hereafter consummated. The Company has an option to prepay
principal, in whole or in part, plus interest accrued thereon, at any time
during the term, without premium or penalty. Other provisions of the loan
agreement provide certain restrictions on the incurrence of indebtedness on
the Jamaica property and the sale or transfer of the Company's ground lease
interest in the premises.
(c) The Company, on May 7, 2004, closed a loan with 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, in the amount of $1,350,000. The term of the loan is for a
period of five (5) years at an interest rate of 9.00% per annum. Interest
and amortization of principal are paid quarterly based on a fifteen (15)
year level amortization period. The constant quarterly payments of
interest and principal are $40,316. The outstanding balance of the loan,
totaling $764,648, will become due and payable on April 1, 2009. Interest
paid for the six months ended January 31, 2009 and January 31, 2008 was
$39,218 and $51,762, respectively. On September 22, 2008, the Company made
a payment in the amount $300,000, which was a partial payment towards the
principal amount of the loan.
(d) On August 19, 2004, the Company extended the then existing loan for an
additional forty-two (42) months, with an option to convert the loan to a
seven (7) year permanent mortgage loan. (See Note 6(e) below). The
Company in February 2008 converted the loan to a seven (7) year permanent
mortgage loan. The interest rate on conversion was 6.98%.
- 8-
(e) The Company, on August 19, 2004, closed a loan with a bank for a
$12,000,000 multiple draw term loan. This loan finances seventy-five (75%)
percent of the cost of capital improvements for an existing lease to a
tenant and capital improvements for future tenant leases at the Company's
Brooklyn, New York (Bond Street building) and Fishkill, New York
properties. The loan will also finance $850,000 towards the construction
of two new elevators at the Company's Brooklyn, New York property (Bond
Street building). The Company had three and one-half years to draw down
amounts under this loan. The loan consists of: a) a permanent, first
mortgage loan to refinance an existing first mortgage loan affecting the
Fishkill Property, which matured on July 1, 2004 (the "First Permanent
Loan")(see Note 6(d)), b) a permanent subordinate mortgage loan in the
amount of $1,870,000 (the "Second Permanent Loan"), and c) multiple,
successively subordinate loans in the amount $8,295,274 ("Subordinate
Building Loans"). The loan is structured in two phases: 1) a forty-two
(42) month loan with payments of interest only at the floating one-month
LIBOR rate plus 2.25% per annum, but not less than 3.40%; and 2) after the
forty-two month period, the loan would convert to a seven-year (7)
permanent mortgage loan on a seventeen (17) year level amortization, plus
interest, at the option of the Company. The interest rate on the permanent
loan would be at a fixed rate equal to the Federal Home Loan Bank of New
York's seven-year (7) fixed interest rate plus 2.25% per annum at the time
of conversion. As of August 19, 2004, the Company refinanced the existing
mortgage on the Company's Fishkill, New York property, which balance was
$1,834,726 and took down an additional $2,820,000 for capital improvements
for two tenants at the Company's Bond Street building in Brooklyn, New
York. In fiscal 2006, 2007 and 2008, the Company drew down additional
amounts totaling $916,670, on its multiple draw term loan to finance tenant
improvements and brokerage commissions for the leasing of 13,026 square
feet for office use at the Company's Bond Street building in Brooklyn, New
York. The Company in February 2008 converted the loan to a seven (7) year
permanent mortgage loan. The interest rate on conversion was 6.98%. Since
the loan has been converted to a permanent mortgage loan, the balance of
the financing on this loan is for the new elevators at the Company's Bond
Street building in Brooklyn, New York in the amount of $850,000 referred to
above. As of January 31, 2009, the Company has not drawn down any of the
$850,000. The $850,000 is available until the elevator work is completed.
The monthly payments to the bank will increase once the $850,000 is drawn
down.
(f) On February 18, 2005, the Company secured financing in the amount of
$1,700,000, from a bank whose president is a director of the Company. The
loan is a multiple draw loan, for a period of five (5) years, and is self-
amortizing, at an interest rate of 6.50% per annum.
(g) The Company, on July 22, 2005, closed a loan with a bank for
$1,200,000. The loan was used to finance the construction costs and
brokerage commissions associated with the leasing of 15,000 square feet for
office use to a tenant at the Company's Jowein building in Brooklyn, New
York. The loan is secured by the assignment of lease of 15,000 square
feet. The loan is for a period of five (5) years and is self-amortizing,
at a floating interest rate of prime plus 1.00% per annum. The interest
rate at January 31, 2009 was 4.25% per annum.
- 9-
7. Property and Equipment - at cost:
January 31 July 31
2009 2008
--------------- ---------------
Property:
Buildings and improvements $62,536,995 $62,488,206
Improvements to leased property 9,154,777 9,154,777
Land 6,067,805 6,067,805
Construction in progress 1,096,468 634,869
------------- -------------
78,856,045 78,345,657
Less accumulated depreciation 33,852,142 33,069,044
------------- -------------
Property - net 45,003,903 45,276,613
------------- -------------
Fixtures and equipment and other:
Fixtures and equipment 547,084 544,384
Other fixed assets 234,120 227,582
------------- -------------
781,204 771,966
Less accumulated depreciation 602,212 624,472
------------- -------------
Fixtures and equipment and other - net 178,992 147,494
------------- -------------
Property and equipment - net $45,182,895 $45,424,107
============= =============
8. Note Payable:
On December 15, 2004, the Company borrowed $1,000,000 from a former
director of the Company, who is also a greater than 10% beneficial owner
of the outstanding common stock of the Company. The term of the loan was
for a period of three (3) years maturing on December 15, 2007, at an
interest rate of 7.50% per annum. The loan is unsecured. The note is
prepayable in whole or in part at any time without penalty. The constant
quarterly payments of interest are $18,750. The Company extended the note
for an additional three (3) years maturing on December 15, 2010, at an
interest rate of 7.50% per annum.
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.
10. Employees' Retirement Plan:
The Company sponsors a noncontributory Money Purchase Plan covering
substantially all of its non-union employees. Operations were charged
$77,000 and $152,000 as contributions to the Plan for the three and six
months ended January 31, 2009, respectively, and $85,170 and $160,875 as
contributions to the plan for the three and six months ended January 31,
2008, respectively.
-10-
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
------------------------------
2009 2008
------------------------------
Interest paid, net of capitalized interest of
$38,299 (2009) and $16,398 (2008) $392,027 $474,736
Income taxes paid $354,078 $1,721,616
12. Capitalization:
The Company is capitalized entirely through common stock with identical
voting rights and rights to liquidation. Treasury stock is recorded at
cost and consists of 162,517 shares at January 31, 2009 and at July 31,
2008.
13. Contingencies:
There are various lawsuits and claims pending against the Company. It is
the opinion of management that the resolution of these matters will not
have a material adverse effect on the Company's Consolidated Financial
Statements.
In response to a termination notice that the Company received concerning
its tenancy in a portion of the Jowein building, Brooklyn, New York, on
April 25, 2007, the Company filed a lawsuit against its landlords in New
York State Supreme Court, Kings County. In the lawsuit, the Company seeks
a judgment declaring that the landlords' termination notice was improperly
issued and that the Company is not required to correct or cure the
purported defaults cited in the termination notice. In addition, the
Company seeks an order temporarily, preliminarily and permanently
enjoining the landlords from taking any action to terminate the lease or
otherwise interfere with the Company's possession of the premises.
On May 16, 2007, the New York State Supreme Court granted the Company's
motion for preliminary injunctive relief and enjoined the landlords,
during the pendency of this action, from taking any action to evict the
Company, terminate the Company's lease which is scheduled to expire on
April 30, 2010, and/or commencing summary action adverse to the Company's
rights or otherwise disturb the Company's possession of the premises. The
landlords have answered the complaint denying the allegations and
asserting counterclaims against the Company relating to the premises.
Discovery has been completed and the case is awaiting the scheduling of a
trial date. Management of the Company is unable to predict the outcome of
this matter or whether the Company will be required to expend significant
amounts of money in order to correct any of the purported defaults.
-11-
J. W. MAYS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
Management's Discussion and Analysis of Financial Condition and Results of
Operations should be read in conjunction with our financial statements and
related notes thereto contained in this report. In this discussion, the words
"Company", "we", "our" and "us" refer to J.W. Mays, Inc. and subsidiaries.
The following can be interpreted as including forward-looking statements under
the Private Securities Litigation Reform Act of 1995. The words "outlook",
"intend", "plans", "efforts", "anticipates", "believes", "expects" or words of
similar import typically identify such statements. Various important factors
that could cause actual results to differ materially from those expressed in
the forward-looking statements are identified under the heading "Cautionary
Statement Regarding Forward-Looking Statements" below. Our actual results may
vary significantly from the results contemplated by these forward-looking
statements based on a number of factors including, but not limited to,
availability of labor, marketing success, competitive conditions and the
change in economic conditions of the various markets we serve.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires us to make
estimates and judgments that affect the reported amounts of assets,
liabilities, revenues, expenses and related disclosure of contingent assets
and liabilities. We believe the critical accounting policies in Note 1 to the
Consolidated Financial Statements affect our more significant judgments and
estimates used in the preparation of our financial statements. Actual results
may differ from these estimates under different assumptions and conditions.
(See Note 1 on page 6 to the Consolidated Financial Statements herein and Note
1 on pages 8 and 9 to the Consolidated Financial Statements in the Annual
Report to Shareholders for the fiscal year ended July 31, 2008).
Results of Operations:
Three Months Ended January 31, 2009 Compared to the Three Months
Ended January 31, 2008:
In the three months ended January 31, 2009, the Company reported net income of
$260,596, or $.13 per share. In the comparable three months ended January 31,
2008, the Company reported a net loss of ($244,680), or ($.12) per share.
Revenues in the current three months increased to $4,496,895 from $3,735,444
in the comparable 2008 three months. The increase in revenues was due to the
Company's leasing to five additional tenants at the Company's Brooklyn, New
York and Circleville, Ohio properties.
The recovery of real estate taxes in the current three months in the amount
of $536,827, net of legal expenses, represents prior years' real estate taxes
from one of the Company's properties. The comparable 2008 three months had a
recovery of real estate taxes in the amount of $91,043, net of legal expenses,
from one of the Company's properties.
Real estate operating expenses in the current three months increased to
$2,427,370 from $2,393,221 in the comparable 2008 three months primarily due
to increases in real estate taxes and payroll costs, partially offset by
decreases in utility costs and leasing commission costs.
Administrative and general expenses in the current three months decreased to
$1,011,808 from $1,070,534 in the comparable 2008 three months primarily due
to a bad debt expense due to a tenant vacating the premises at the Company's
Jowein building in Brooklyn, New York in the 2008 three months, partially
offset by increases in payroll costs, insurance costs and legal and
professional costs.
-12-
Depreciation and amortization expense in the current three months increased to
$404,406 from $397,608 in the comparable 2008 three months.
Interest expense and other expenses in the current three months exceeded
investment income by $144,715 and by $181,761 in the comparable 2008 three
months. The decrease in the excess of interest expense over investment income
was due primarily to scheduled repayments of debt.
Six Months Ended January 31, 2009 Compared to the Six Months
Ended January 31, 2008:
In the six months ended January 31, 2009, the Company reported net income of
$320,934, or $.16 per share. In the comparable six months ended January 31,
2008, the Company reported a net loss of ($280,818), or ($.14) per share.
Revenues in the current six months increased to $8,419,741 from $7,212,651 in
the comparable 2008 six months. The increase in revenues was due to the
Company's leasing to five additional tenants at the Company's Brooklyn, New
York and Circleville, Ohio properties.
The recovery of real estate taxes in the current six months in the amount of
$536,827, net of legal expenses, represents prior years' real estate taxes
from one of the Company's properties. The comparable 2008 six months had a
recovery of real estate taxes in the amount of $91,043, net of legal expenses,
from one of the Company's properties.
Real estate operating expenses in the current six months increased to
$4,670,057 from $4,538,801 in the comparable 2008 six months primarily due to
increases in rental expense, real estate taxes and payroll costs, partially
offset by decreases in utility costs and leasing commission costs.
Administrative and general expenses in the current six months increased to
$1,884,213 from $1,850,890 in the comparable 2008 six months primarily due to
increases in payroll costs, insurance costs and legal and professional costs
partially offset by a bad debt expense due to a tenant vacating the premises
at the Company's Jowein building in Brooklyn, New York in the 2008 six months.
Depreciation and amortization expense in the current six months increased to
$809,498 from $793,649 in the comparable 2008 six months.
Interest expense and other expenses in the current six months exceeded
investment income by $413,039 and by $357,129 in the comparable 2008 six
months. The increase in the excess of interest expense over investment income
was due to the principal write-down of $99,976 due to the impairment of the
Company's investment in Lehman Brothers Holdings Inc. preferred stock,
partially offset by increased investment income and scheduled repayments of
debt.
-13-
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 $1,229,063 at January 31,
2009.
In July 2008, the Company entered into a lease agreement with a tenant for
57,209 square feet of office space at its Bond Street, Brooklyn, New York
property. Rent commenced in February 2009. The cost of construction to the
Company for this tenant was insignificant.
On September 22, 2008, the Company made a payment in the amount of $300,000,
which was a partial payment towards the principal amount of its loan on the
Jowein Building in Brooklyn, New York. (See Note 6(c) to the Consolidated
Financial Statements.)
As part of the $12,000,000 multiple draw term loan, the bank agreed to finance
the cost of two new elevators at the Company's Bond Street building in
Brooklyn, New York. The amount to be financed will be $850,000. (See Note
6(e) to the Consolidated Financial Statements). The total cost of the
elevator project is estimated to be $1,100,000 and is anticipated to be
completed in fiscal 2009.
Cash Flows From Operating Activities:
Payroll and Other Accrued Liabilities: The Company paid $125,999 for
commissions incurred in order to lease space at the Company's properties in
the six months ended January 31, 2009. The original amount of the brokerage
commissions was $2,540,474. As of January 31, 2009, $2,194,681 had been paid.
A tenant at the Company's Jowein building in Brooklyn, New York paid the rent
in advance to the end of the lease term which is April 2010. The amount paid
in advance as of January 31, 2009 was $477,112.
Cash Flows From Investing Activities:
The Company had expenditures of $325,550 in the six months ended January 31,
2009 for the construction of two new elevators. The total cost of the project
is approximately $1,100,000, of which $850,000 will be financed by a bank.
The project will be completed in fiscal 2009.
Cash Flows From Financing Activities:
On September 22, 2008, the Company made a payment in the amount of $300,000,
which was a partial payment towards the principal amount of its loan on the
Jowein Building in Brooklyn, New York. (See Note 6(c) to the Consolidated
Financial Statements.)
Quantitative and Qualitative Disclosures About Market Risks:
The Company uses both fixed-rate and variable-rate debt to finance its capital
requirements. These transactions expose the Company to market risk related to
changes in interest rates. The Company does not use derivative financial
instruments. At January 31, 2009, the Company had fixed-rate debt of
$11,388,510 and variable-rate debt of $380,000. Because of the Jowein
building, Brooklyn, New York loan (presently with a balance of $380,000), if
interest rates were to change 100 basis points, the effect on net income from
operations and future cash flows would be a decrease, should the rates
increase, or an increase, should the rates decline, of $3,800 for this loan.
-14-
Cautionary Statement Regarding Forward-Looking Statements:
This section, Management's Discussion and Analysis of Financial Condition and
Results of Operations, other sections of this Report on Form 10-Q and other
reports and verbal statements made by our representatives from time to time
may contain forward-looking statements that are based on our assumptions,
expectations and projections about us and the securities industry. These
include statements regarding our expectations about revenues, our liquidity,
our expenses and our continued growth, among others. Such forward-looking
statements by their nature involve a degree of risk and uncertainty. We
caution that a variety of factors, including but not limited to the factors
listed below, could cause business conditions and our results to differ
materially from what is contained in forward-looking statements:
changes in the rate of economic growth in the United States;
the ability to obtain credit from financial institutions and at what costs;
changes in the financial condition of our customers;
changes in regulatory environment;
lease cancellations;
changes in our estimates of costs;
war and/or terrorist attacks on facilities where services are or may be
provided;
outcomes of pending and future litigation;
increasing competition by other companies;
compliance with our loan covenants;
recoverability of claims against our customers and others by us and claims
by third parties against us; and
changes in estimates used in our critical accounting policies.
Other factors and assumptions not identified above were also involved in the
formation of these forward-looking statements and the failure of such other
assumptions to be realized, as well as other factors, may also cause actual
results to differ materially from those projected. Most of these factors are
difficult to predict accurately and are generally beyond our control. You
should consider the areas of risk described above in connection with any
forward-looking statements that may be made by us.
We undertake no obligation to publicly update any forward-looking statements,
whether as a result of new information, future events or otherwise. You are
advised, however, to consult any additional disclosures we make in proxy
statements, quarterly reports on Form 10-Q, Annual Reports on Form 10-K and
current reports on Form 8-K filed with the Securities and Exchange Commission.
Controls and Procedures:
The Company's management reviewed the Company's internal controls and
procedures and the effectiveness of these controls. As of January 31, 2009,
the Company carried out an evaluation, under the supervision and with the
participation of the Company's management, including its Chief Executive
Officer and Chief Financial Officer, of the effectiveness of the design and
operation of the Company's disclosure controls and procedures pursuant to
Rules 13a-14(c) and 15d-14(c) of the Securities Exchange Act of 1934. Based
upon that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that the Company's disclosure controls and procedures are effective
in timely alerting them to material information relating to the Company
required to be included in its periodic SEC filings.
There was no change in the Company's internal controls over financial
reporting or in other factors during the Company's last fiscal quarter that
materially affected, or are reasonably likely to materially affect, the
Company's internal controls over financial reporting. There were no
significant deficiencies or material weaknesses, and therefore there were no
corrective actions taken.
Our Accounting Department is comprised of four persons. Due to such a limited
number of persons, a complete segregation of all of the duties as to which the
department is responsible is not possible. In order to make sure that the
inability to segregate all duties does not affect our timely and accurate
financial reporting, we need to remain vigilant in maintaining compensating
controls. These compensating controls will continue to be monitored in order
to assure us that our internal controls over financial reporting remain at a
high level despite the limited number of Accounting Department personnel.
-15-
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
(31) Additional exhibits--Certifications Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
(31.1) Chief Executive Officer 18
(31.2) Chief Financial Officer 19
(32) Certification Pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002,
18 U.S.C. Section. 1350. 20
(b) Reports on Form 8-K - Two reports on Form 8-K were filed by
the registrant during the six months ended January 31, 2009.
Items reported:
The Company reported its financial results for the three months
ended October 31, 2008.
Date of report filed - November 11, 2008.
The Company reported the resignation of Mrs. Sylvia W. Shulman
as a Director of the Company.
Date of report filed - January 6, 2009.
-16-
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 11, 2009 Lloyd J. Shulman
---------------- -------------------------
Lloyd J. Shulman
President
Chief Executive Officer
Date March 11, 2009 Mark S. Greenblatt
---------------- -------------------------
Mark S. Greenblatt
Vice President
Chief Financial Officer
-17-
EXHIBIT 31.1
CERTIFICATION
I, Lloyd J. Shulman, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of J.W. Mays, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
(b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under my
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.
Date: March 11, 2009
/s/ Lloyd J. Shulman
---------------------------
Lloyd J. Shulman
President
Chief Executive Officer
-18-
EXHIBIT 31.2
CERTIFICATION
I, Mark S. Greenblatt, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of J.W. Mays, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
(b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under my
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.
Date: March 11, 2009
/s/ Mark S. Greenblatt
---------------------------
Mark S. Greenblatt
Vice President
Chief Financial Officer
-19-
EXHIBIT 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The following certification is being furnished solely to accompany the Report
pursuant to 18 U.S.C. Section 1350 and in accordance with SEC Release No. 33-
8238. This certification shall not be deemed "filed" for purposes of Section
18 of the Securities Exchange Act of 1934, as amended, nor shall it be
incorporated by reference in any filing of the Company under the Securities
Act of 1933, as amended, whether made before or after the date hereof,
regardless of any general incorporation language in such filing.
In connection with the Quarterly Report of J. W. Mays, Inc. (the "Company") on
Form 10-Q for the period ending January 31, 2009 as filed with the Securities
and Exchange Commission (the "Report"), we, Lloyd J. Shulman and Mark S.
Greenblatt, Chief Executive Officer and Chief Financial Officer, respectively,
of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to our
knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
March 11, 2009
/s/ Lloyd J. Shulman
---------------------------
Lloyd J. Shulman
Chief Executive Officer
/s/ Mark S. Greenblatt
---------------------------
Mark S. Greenblatt
Chief Financial Officer
A signed original of this written statement required by Section 906 has been
provided to J.W. Mays, Inc. and will be retained by J. W. Mays, Inc. and
furnished to the Securities and Exchange Commission or its staff upon request.
-20-