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 October 31, 2004
[ ] 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 .
Indicate by check mark whether the registrant is an accelerated filer (as
defined in rule 12b-2 of the Exchange Act) Yes . No X .
Number of shares outstanding of the issuer's common stock as of the latest
practicable date.
Class Outstanding at December 8, 2004
Common Stock, $1 par value 2,015,780 shares
This report contains 18 pages.
-1-
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 Consolidated Financial Statements 6 - 10
Management's Discussion and Analysis of Results
of Operations and Financial Condition 11 - 13
Controls and Procedures 13
Part II - Other Information 14
Signatures 15
(31) Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
(31.1) - Chief Executive Officer 16
(31.2) - Chief Financial Officer 17
(32) Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002;
18 U.S.C. Section 1350 18
-2-
J. W. MAYS, INC.
CONSOLIDATED BALANCE SHEET
October 31, July 31,
ASSETS 2004 2004
--------------------------------------------------------------- --------------- ---------------
(Unaudited) (Audited)
Property and Equipment - Net (Notes 6 and 7) $40,765,225 $40,153,977
------------- -------------
Current Assets:
Cash and cash equivalents 1,807,310 603,289
Marketable securities (Note 4) 45,463 45,395
Receivables (Note 8) 210,036 181,407
Deferred income taxes 49,000 79,000
Income taxes refundable 32,197 126,911
Prepaid expenses 804,872 1,532,163
Security deposits 81,771 191,118
------------- -------------
Total current assets 3,030,649 2,759,283
------------- -------------
Other Assets:
Deferred charges 2,144,573 2,005,894
Less accumulated amortization 1,027,256 956,805
------------- -------------
Net 1,117,317 1,049,089
Security deposits 1,047,004 946,183
Unbilled receivables (Note 8) 4,300,058 4,316,666
Marketable securities (Note 4) 2,614,027 2,583,812
------------- -------------
Total other assets 9,078,406 8,895,750
------------- -------------
TOTAL ASSETS $52,874,280 $51,809,010
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
---------------------------------------------------------------
Long-Term Debt:
Mortgages payable (Note 6) $10,516,238 $7,830,160
Security deposits payable 741,852 641,209
------------- -------------
Total long-term debt 11,258,090 8,471,369
------------- -------------
Deferred Income Taxes 3,156,000 3,175,000
------------- -------------
Current Liabilities:
Payable to securities broker - 1,434,025
Accounts payable 121,774 87,581
Payroll and other accrued liabilities 640,495 936,048
Other taxes payable 3,579 4,764
Current portion of mortgages payable (Note 6) 556,008 587,634
Current portion of security deposits payable 6,771 116,118
------------- -------------
Total current liabilities 1,328,627 3,166,170
------------- -------------
Total liabilities 15,742,717 14,812,539
------------- -------------
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 1,190,778 1,170,562
Retained earnings 31,704,095 31,589,219
------------- -------------
38,419,415 38,284,323
Less common stock held in treasury, at cost - 162,517
shares at October 31, 2004 and at July 31, 2004 (Note 11) 1,287,852 1,287,852
------------- -------------
Total shareholders' equity 37,131,563 36,996,471
------------- -------------
Contingencies (Note 12)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $52,874,280 $51,809,010
============= =============
See Notes to Consolidated Financial Statements.
-3-
J. W. MAYS, INC.
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
Three Months Ended
October 31,
------------------------------
2004 2003
-------------- --------------
(Unaudited) (Unaudited)
Revenues
Rental income (Notes 5 and 8) $3,156,943 $3,324,294
Loss on sale of fixed assets - (4,353)
-------------- --------------
Total revenues 3,156,943 3,319,941
-------------- --------------
Expenses
Real estate operating expenses 1,781,134 1,867,807
Administrative and general expenses 694,628 594,869
Depreciation and amortization 323,810 311,161
-------------- --------------
Total expenses 2,799,572 2,773,837
-------------- --------------
Income from operations before investment income,
interest expense, other expenses and income taxes 357,371 546,104
-------------- --------------
Investment income, interest expense and other expenses:
Investment income (Note 4) 21,372 66,222
Interest expense (Notes 6 and 10) (156,867) (130,538)
-------------- --------------
(135,495) (64,316)
-------------- --------------
Income before income taxes 221,876 481,788
Income taxes provided 107,000 201,000
-------------- --------------
Net income 114,876 280,788
Retained earnings, beginning of period 31,589,219 30,453,753
-------------- --------------
Retained earnings, end of period $31,704,095 $30,734,541
============== ==============
Income per common share (Note 2) $.06 $.14
============== ==============
Dividends per share $- $-
============== ==============
Average common shares outstanding 2,015,780 2,015,780
-------------- --------------
See Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Three Months Ended
October 31,
------------------------------
2004 2003
-------------- --------------
(Unaudited) (Unaudited)
Net Income $114,876 $280,788
-------------- --------------
Other comprehensive income, net of taxes (Note 3)
Unrealized gain (loss) on available-for-sale securities:
Net of taxes of $10,000 and $79,000 for the three
months ended October 31, 2004 and 2003, respectively, 20,216 210,560
Less reclassification adjustment - (8,750)
-------------- --------------
Net change in comprehensive income 20,216 201,810
-------------- --------------
Comprehensive Income $135,092 $482,598
============== ==============
See Notes to Consolidated Financial Statements.
-4-
J. W. MAYS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Three Months Ended
October 31,
--------------------------------
2004 2003
--------------- ---------------
(Unaudited) (Unaudited)
Cash Flows From Operating Activities:
Net income $114,876 $280,788
Adjustments to reconcile income to
net cash provided by operating activities:
Realized loss (gain) on marketable securities - (8,750)
(Loss) on sale of fixed assets - (4,353)
Depreciation and amortization 323,810 311,161
Amortization of deferred expenses 70,451 64,872
Other assets - deferred expenses (138,679) (5,896)
- unbilled receivables 16,608 7,163
- receivables - -
Deferred income taxes 1,000 2,000
Changes in:
Receivables (28,629) 162,646
Prepaid expenses 727,291 729,566
Income taxes refundable 94,714 198,900
Accounts payable 34,193 65,526
Payroll and other accrued liabilities (295,553) (281,452)
Other taxes payable (1,185) (2,123)
------------- -------------
Cash provided by operating activities 918,897 1,520,048
------------- -------------
Cash Flows From Investing Activities:
Capital expenditures (935,058) (1,434,219)
Security deposits 8,526 (64,603)
Marketable securities:
Receipts from sales or maturities - 100,000
Payments for purchases (67) (82)
------------- -------------
Cash (used) by investing activities (926,599) (1,398,904)
------------- -------------
Cash Flows From Financing Activities:
Payments - security broker (1,434,025) -
Increase - security deposits 100,732 78,387
Borrowings - mortgage 2,820,000 -
Decrease - mortgage and other debt payments (274,984) (178,387)
------------- -------------
Cash provided (used) by financing activities 1,211,723 (100,000)
------------- -------------
Increase in cash 1,204,021 21,144
Cash and cash equivalents at beginning of period 603,289 1,862,444
------------- -------------
Cash and cash equivalents at end of period $1,807,310 $1,883,588
============= =============
See Notes to Consolidated Financial Statements.
-5-
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 October 31, 2004 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, 2004. 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, 2005.
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 each
of the three months ended October 31, 2004 and October 31, 2003.
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 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.
-6-
As of October 31, 2004, the Company's marketable securities were classified as follows:
Gross Gross
Unrealized Unrealized Fair
Cost Gains Losses Value
------------- ------------- ------------- -------------
Current:
Held-to-maturity:
Certificate of deposit $45,463 $- $- $45,463
============= ============= ============= =============
Noncurrent:
Available-for-sale:
Equity securities $810,250 $1,803,777 $- $2,614,027
============= ============= ============= =============
Investment income consists of the following:
Three Months Ended
October 31,
------------- -------------
2004 2003
___________ ___________
Interest income $3,633 $6,190
Dividend income 17,739 51,282
Gain on sale of marketable securities - 8,750
------------- -------------
Total $21,372 $66,222
============= =============
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 and cash and cash
equivalents are placed with high credit quality financial institutions and
instruments to minimize risk.
The Company derives rental income from forty-three tenants, of which one
tenant accounted for 17.18% of rental income during the three months ended
October 31, 2004. No other tenant accounted for more than 10% of rental
income during the same period.
The Company has two irrevocable Letters of Credit totaling $137,500 at
October 31, 2004, provided by two tenants, and had three irrevocable
Letters of Credit totaling $319,000 at July 31, 2004, provided by three
tenants.
-7-
6. Long-Term Debt:
Long Term Debt:
October 31, 2004 July 31, 2004
-------------------------------- ---------------------------------
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) 5% 4/01/07 $266,666 $1,733,334 $266,667 $1,800,000
Jamaica, New York property (b) 6.98% 8/01/06 169,860 2,875,228 166,907 2,918,389
Jowein building, Brooklyn, NY (c) 9 % 3/31/05 73,595 - 109,183 -
Jowein building, Brooklyn, NY (d) 9 % 4/01/09 45,887 1,252,950 44,877 1,264,807
Fishkill, New York property (e) Variable 2/18/08 - 1,834,726 - 1,846,964
Bond St. building, Brooklyn, NY (f) Variable 2/18/08 - 2,820,000 - -
-------------- -------------- -------------- ---------------
Total $556,008 $10,516,238 $587,634 $7,830,160
============== ============== ============== ===============
(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. As of April 1, 2002,
the effective rate was reduced from 8.50% to 5.00% per annum. The
outstanding balance of the loan, totaling $1,355,555 will become due and
payable on April 1, 2007.
(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 loan proceeds were utilized by the Company toward its costs of capital
improvements of the premises in connection with the Company's lease of
42,250 square feet of a floor in the building to the State of New York.
Payments are to be made, in arrears, on the first day of each and every
month calculated during the ten (10) year period of the term loan, at
the sum of the interest rate plus amortization sufficient to fully
liquidate the loan over a fifteen (15) year period. As additional
collateral security, the Company will conditionally assign 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 and the sale or transfer of the Company's ground lease
interest in the premises. Both credit facilities are subject to the
bank's existing first position mortgage loan on the premises.
(c) 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, 2000, the maturity date of
the mortgage, which was scheduled to be on March 31, 2000, was extended to
March 31, 2005. The interest rate remained at 9% per annum. During the
extended period the constant quarterly payments of interest and principal
increased from $37,263 to $38,044. The mortgage loan is self-amortizing.
(d) The Company, on May 7, 2004, closed a loan with an affiliated corporation
(see Note 6(c)) 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 will be $40,316. The funds were used to purchase a one-half
interest in a property that is part of the Company's Brooklyn, New York
building (Fulton Street at Bond Street). The outstanding balance of the
loan, totaling $1,056,007, will become due and payable on April 1, 2009.
-8-
(e) On June 2, 1999, the existing first mortgage loan balance on the
Fishkill, New York property was extended for a period of five years. Under
the terms of the extension agreement the annual interest rate was reduced
from 9% to 8.25% and the interest and principal payments were made in
constant monthly amounts based upon a fifteen (15) year payout period.
On August 19, 2004, the Company extended the loan for an additional
forty-two (42) months, with an option to convert the loan to a seven (7)
year permanent mortgage loan. The payments for the extended period of
forty-two (42) months will be interest only on the amount owing at a
floating rate per annum equal to the one-month LIBOR rate plus 2.25%, but
not less than 3.40%. The payments for the seven-year permanent mortgage
loan would be on a seventeen (17) year level amortization, plus interest.
The interest rate on the permanent loan would be 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. (See Note 6(f)).
(f) The Company, on August 19, 2004, closed a loan with a bank for a
$12,000,000 multiple draw term loan. This loan will finance seventy-five
(75%) percent of the cost of capital improvements for an existing lease to a
tenant and capital improvements to future tenant leases at the Company's
Brooklyn, New York (9 Bond Street) and Fishkill, New York properties. The
loan will also refinance the existing mortgage on the Company's Fishkill,
New York property which matured on July 1, 2004 (see Note 6 (e)). The
Company will have three and one half years to draw down amounts under this
loan. The loan will consist of: a) a permanent, first mortgage loan to
refinance an existing first mortgage loan affecting the Fishkill Property
(the "First Permanent Loan") (see Note 6(e)), 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 Loan"). The loan is structured in two phases:
1) a forty-two 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)
mortgage permanent 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.
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 9 Bond Street property in Brooklyn, New York. The outstanding
balance as of October 31, 2004 was $4,654,726.
7. Property and Equipment - at cost:
October 31, July 31,
2004 2004
--------------- ---------------
Property:
Buildings and improvements $54,061,972 $53,533,121
Improvements to leased property 9,158,009 9,158,009
Land 5,063,555 4,713,503
Construction in progress 51,940 -
------------- -------------
68,335,476 67,404,633
Less accumulated depreciation 27,807,669 27,497,555
------------- -------------
Property - net 40,527,807 39,907,078
------------- -------------
Fixtures and equipment and other:
Fixtures and equipment 715,215 711,001
Other fixed assets 212,747 212,747
------------- -------------
927,962 923,748
Less accumulated depreciation 690,544 676,849
------------- -------------
Fixtures and equipment and other - net 237,418 246,899
------------- -------------
Property and equipment - net $40,765,225 $40,153,977
============= =============
-9-
8. 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.
9. Employees' Retirement Plan:
The Company sponsors a noncontributory Money Purchase Plan covering
substantially all of its employees. Operations were charged $70,003 and
$68,704 as contributions to the Plan for the three months ended October
31, 2004 and October 31, 2003, respectively.
10. 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: Three Months Ended
October 31,
------------------------------
2004 2003
--------------- -------------
Interest paid $155,348 $131,472
Income taxes paid $11,286 $100
11. 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 October 31, 2004 and at July 31,
2004.
12. 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.
-10-
J. W. MAYS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
Results of Operations:
Three Months Ended October 31, 2004 Compared to the Three Months Ended October
31, 2003:
In the three months ended October 31, 2004, the Company reported net income of
$114,876, or $.06 per share. In the comparable three months ended October 31,
2003, the Company reported net income of $280,788, or $.14 per share.
Revenues in the current three months decreased to $3,156,943 from $3,319,941
in the comparable 2003 three months. The decrease in revenues was due to the
New York City Department of Finance vacating the Company's Jowein building in
Brooklyn, New York in June 2004, partially offset by the revenues from the
Company's leasing to two office tenants at its Nine Bond Street building in
Brooklyn, New York, and the leasing to two office tenants at its Jowein
building in Brooklyn, New York.
Real estate operating expenses in the current three months decreased to
$1,781,134 from $1,867,807 in the comparable 2003 three months primarily due
to decreases in rental expense, maintenance costs, and insurance costs
partially offset by increases in payroll costs.
Administrative and general expenses in the current three months increased to
$694,628 from $594,869 in the comparable 2003 three months primarily due to
increases in payroll, insurance costs and legal and professional costs.
Depreciation and amortization expense in the current three months increased to
$323,810 from $311,161 in the comparable 2003 three months primarily due to
depreciation on the additional improvements to the Brooklyn, New York and the
Jamaica, New York properties.
Interest expense and other expenses in the current three months exceeded
investment income by $135,495 and by $64,316 in the comparable 2003 three
months. The increase was due primarily to increased interest expense on the
additional loan with a bank, a decrease in dividend income due to the sale of
the Company's marketable securities, partially offset by scheduled repayments
of debt.
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 $1,807,310 at October 31,
2004.
The Company leased 24,109 square feet for retail use at its Jamaica, New York
property. The space was formerly a retail store which vacated the Jamaica,
New York property in March, 2003. The Company divided the premises into three
retail stores. As of October 31, 2004, the Company has leased the entire
78,398 square feet to three tenants. Rent commenced in September 2003 for two
tenants and rent will commence in March 2005 for the other tenant.
The first mortgage loan balance on the Fishkill, New York property matured on
July 1, 2004, with a balloon
payment due of $1,856,852. The Company on August 19, 2004, extended this
mortgage with the bank. (See Note 6(e) to the Consolidated Financial
Statements).
The Company, on August 19, 2004, closed a loan with a bank for a $12,000,000
multiple draw term loan. This loan will finance seventy-five (75%) percent of
the cost of capital improvements for an existing lease to a tenant and capital
improvements to future tenant leases at the Company's Brooklyn, New York (9
Bond Street) and Fishkill, New York properties. The loan will also refinance
the existing mortgage on the Company's Fishkill, New York property which
matured on July 1, 2004 (see Note 6(e) to the Consolidated Financial
Statements). The Company will have three and one half years to draw down
amounts under this loan. The loan will consist of: a) a permanent, first
-11-
mortgage loan to refinance an existing first mortgage loan affecting the
Fishkill Property (the "First Permanent Loan") (see Note 6(e) to the
Consolidated Financial Statements); b) a permanent subordinate mortgage loan
in the amount of $1,870,000 (the "Second Permanent Loan"); and c) multiple,
successively subordinate building loans in the amount of $8,295,274
("Subordinate Building Loan"). The loan is structured in two phases: 1) a
forty-two 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) mortgage
permanent 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. 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 9 Bond Street
property in Brooklyn, New York. The outstanding balance as of October 31,
2004 was $4,654,726.
The Company on October 1, 2004 purchased a one-quarter interest in a parcel,
which is part of its Brooklyn, New York properties. The parcel was leased to
the Company. The purchase price was $750,000.
The Company on November 4, 2004 purchased a one-third interest in a parcel,
which is part of its Brooklyn, New York properties. The parcel was leased to
the Company. The purchase price was $940,000.
The Company in September 2004 entered into a contract to purchase a one-half
interest in a parcel which is part of its Brooklyn, New York properties. The
parcel was leased to the Company. The purchase price will be $1,500,000.
The Company on August 23, 2004 paid the total amount due on the loan to a
securities broker, which was $1,423,458.
The tenant at the Company's Levittown, New York property, whose lease expired
September 30, 2004, did not renew the lease and vacated the premises. The
annual loss in rental income from this tenant is approximately $350,000. The
Company is actively seeking, through brokers, tenants to occupy the vacated
space.
Cash Flows From Operating Activities:
Prepaid Expenses: Expenditures for the three months ended October 31, 2004
increased by $20,503 compared to the period ended October 31, 2003, due to
increases in real estate taxes paid offset by decreases in insurance premiums
paid.
Deferred Expenses: The Company had expenditures of $138,679 in the three
months ended October 31, 2004, for costs incurred to obtain loan financing for
renovations to be performed at the Brooklyn, New York building (9 Bond Street)
to accommodate new tenants and the refinancing of the existing mortgage on the
Company's Fishkill, New York property.
Payroll and Other Accrued Liabilities: The Company paid $165,654 for
commissions incurred in order to lease space at the Company's properties in
the three months ended October 31, 2004. The original amount of the brokerage
commissions was $481,294. As of October 31, 2004, $466,442 has been paid.
Cash Flows From Investing Activities:
Capital expenditures: The Company had an expenditure of $675,000 for the
three months ended October 31, 2004 for the purchase of a one-quarter interest
in a parcel which is part of its Brooklyn, New York properties. The total
purchase price was $750,000.
Security Deposits: The Company made an expenditure in the three months ended
October 31, 2004 of $75,000 for a deposit on the purchase of a one-half
interest in a parcel which is part of its Brooklyn, New York properties. The
total purchase price will be $1,500,000.
Cash Flows From Financing Activities:
Borrowing: Mortgage - The Company secured financing from a bank in the
principal amount of $2,820,000. (See Note 6(f) to the Consolidated Financial
Statements).
-12-
Borrowing: Payable to securities broker - The Company in the three months
ended October 31, 2004, paid down the balance of $1,434,025, payable to a
securities broker.
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 October 31, 2004, the Company had fixed-rate debt of
$6,417,520 and variable-rate debt of $4,654,726. Because of the extension of
the Fishkill, New York property loan and the 9 Bond Street Brooklyn, New York
loan (presently with balances of $1,834,726 and $2,820,000, respectively), if
interest rates were to increase 100 basis points, the effect to net income
from operations and future cash flows would be a decrease of $46,547 and if it
were to decrease 100 basis points, the effect would be an increase of $46,547
for these loans.
Cautionary Statement Regarding Forward-Looking Statements:
This Quarterly Report on Form 10-Q may contain forward-looking statements
which include assumptions about future market conditions, operations and
financial results. These statements are based on current expectations and are
subject to risks and uncertainties. They are made pursuant to safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. The
Company's actual results, performance or achievements in the future could
differ significantly from the results, performance or achievements discussed
or implied in such forward-looking statements herein and in prior Securities
and Exchange Commission filings by the Company. The Company assumes no
obligation to update these forward-looking statements or to advise of changes
in the assumptions on which they were based.
Factors that could cause or contribute to such differences include, but are
not limited to, changes in the competitive environment of the Company, general
economic and business conditions, industry trends, changes in government rules
and regulations and environmental rules and regulations. Statements concerning
interest rates and other financial instrument fair values and their estimated
contribution to the Company's future results of operations are based upon
market information as of a specific date. This market information is often a
function of significant judgment and estimation. Further, market interest
rates are subject to significant volatility.
Controls and Procedures:
The Company's management reviewed the Company's internal controls and
procedures and the effectiveness of these controls. As of October 31, 2004,
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.
-13-
>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 16
(31.2) Chief Financial Officer 17
(32) Certification Pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002,
18 U.S.C. Section. 1350. 18
(b) Reports on Form 8-K - A report on Form 8-K was filed by the registrant
during the three months ended October 31, 2004.
Item reported - The Company reported its financial results for the
three months ended July 31, 2004.
Date of report filed - October 14, 2004.
-14-
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 December 8, 2004 Lloyd J. Shulman
----------------------- ------------------------
Lloyd J. Shulman
President
Chief Executive Officer
Date December 8, 2004 Mark S. Greenblatt
----------------------- ------------------------
Mark S. Greenblatt
Vice President
Chief Financial Officer
-15-
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)) 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) 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
(c) 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: December 8, 2004
/s/ Lloyd J. Shulman
---------------------------
Lloyd J. Shulman
President
Chief Executive Officer
-16-
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)) 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) 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
(c) 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: December 8, 2004
/s/ Mark S. Greenblatt
---------------------------
Mark S. Greenblatt
Vice President
Chief Financial Officer
-17-
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 October 31, 2004 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.
December 8, 2004
/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.
-18-