EXHIBIT 13
J.W. MAYS, INC.
Annual Report
2011
Year Ended July 31, 2011
J.W. MAYS, INC.
Contents
Executive Offices
9 Bond Street, Brooklyn, N.Y. 11201-5805
Transfer Agent and Registrar
American Stock Transfer & Trust Company
59 Maiden Lane
New York, N.Y. 10038-4502
Special Counsel
Holland & Knight LLP
31 West 52nd Street
New York, N.Y. 10019
Independent Registered Public Accounting Firm
DArcangelo & Co., LLP
800 Westchester Avenue, Suite N-400
Rye Brook, N.Y. 10573-1301
Annual Meeting
The Annual Meeting of Shareholders will be
held on Tuesday, November 22, 2011, at
10:00 A.M., New York time, at J.W. MAYS, INC.,
9 Bond Street, Brooklyn, New York.
J.W. MAYS, INC.
Summary of Selected Financial Data
(dollars in thousands except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
2011 |
|
2010 |
|
2009 |
|
2008 |
|
2007 |
|
Rental Income |
|
|
$ |
|
14,857 |
|
|
|
$ |
|
14,525 |
|
|
|
$ |
|
13,853 |
|
|
|
$ |
|
12,295 |
|
|
|
$ |
|
11,364 |
|
Recovery of Real Estate Taxes |
|
|
|
|
|
243 |
|
|
|
|
547 |
|
|
|
|
91 |
|
|
|
|
39 |
|
Gain (Loss) on Disposition of Property and Equipment |
|
|
|
(8 |
) |
|
|
|
|
|
|
(5 |
) |
|
|
|
|
(17 |
) |
|
|
|
|
4,309 |
|
|
Total Revenues |
|
|
|
14,849 |
|
|
|
|
14,768 |
|
|
|
|
14,395 |
|
|
|
|
12,369 |
|
|
|
|
15,712 |
|
|
Net Income (loss) from Continuing Operations |
|
|
|
758 |
|
|
|
|
661 |
|
|
|
|
665 |
|
|
|
|
(174 |
) |
|
|
|
|
1,780 |
|
Net Income (loss) from Discontinued Operationsnet of taxes |
|
|
|
(228 |
) |
|
|
|
|
(229 |
) |
|
|
|
|
91 |
|
|
|
|
98 |
|
|
|
|
276 |
|
|
Net Income (loss) |
|
|
|
530 |
|
|
|
|
432 |
|
|
|
|
756 |
|
|
|
|
(76 |
) |
|
|
|
|
2,056 |
|
|
Real EstateNet |
|
|
|
44,592 |
|
|
|
|
44,374 |
|
|
|
|
44,831 |
|
|
|
|
45,277 |
|
|
|
|
44,779 |
|
|
Total Assets |
|
|
|
56,341 |
|
|
|
|
55,245 |
|
|
|
|
55,707 |
|
|
|
|
57,283 |
|
|
|
|
60,162 |
|
|
Long-Term Debt: |
|
|
|
|
|
|
|
|
|
|
Mortgages and Term Loan Payable |
|
|
|
5,750 |
|
|
|
|
9,096 |
|
|
|
|
8,564 |
|
|
|
|
9,514 |
|
|
|
|
11,554 |
|
Note Payable |
|
|
|
1,000 |
|
|
|
|
|
|
1,000 |
|
|
|
|
1,000 |
|
|
|
|
1,000 |
|
Other |
|
|
|
922 |
|
|
|
|
557 |
|
|
|
|
805 |
|
|
|
|
1,370 |
|
|
|
|
1,078 |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
7,672 |
|
|
|
|
9,653 |
|
|
|
|
10,369 |
|
|
|
|
11,884 |
|
|
|
|
13,632 |
|
|
Shareholders Equity |
|
|
|
41,433 |
|
|
|
|
40,818 |
|
|
|
|
40,286 |
|
|
|
|
39,454 |
|
|
|
|
39,697 |
|
|
Income (loss) per Common Share from Continuing Operations |
|
|
|
.37 |
|
|
|
|
.33 |
|
|
|
|
.33 |
|
|
|
|
(.09 |
) |
|
|
|
|
.88 |
|
Income (loss) per Common Share from Discontinued Operations |
|
|
|
(.11 |
) |
|
|
|
|
(.12 |
) |
|
|
|
|
.05 |
|
|
|
|
.05 |
|
|
|
|
.14 |
|
|
Income (loss) Per Common Share |
|
|
$ |
|
.26 |
|
|
|
$ |
|
.21 |
|
|
|
$ |
|
.38 |
|
|
|
$ |
|
(.04 |
) |
|
|
|
$ |
|
1.02 |
|
|
Cash Dividends Declared Per Share |
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
Average common shares outstanding for fiscal years 2007 through 2011; 2,015,780.
The Company
J.W. Mays, Inc. was founded in 1924 and incorporated under the laws of the State of New York on July 6, 1927.
The Company operates a number of commercial real estate properties located in Brooklyn and Jamaica in New York City, in Levittown and Massapequa, Long Island, New York, in Fishkill, Dutchess County, New York and in Circleville, Ohio. The major portion of these properties is owned and the balance
is leased. A substantial percentage of these properties are leased to tenants while the remainder is available for lease.
More comprehensive information concerning the Company appears in its Form 10-K Annual Report for the fiscal year ended July 31, 2011.
2
J.W. MAYS, INC.
To Our Shareholders:
The financial condition of our Company continued to be positive during the fiscal year ended July 31, 2011 with profits earned in three of the four quarters, notwithstanding the continued national and international recession during this period.
In fiscal 2011, our revenues from continuing operations were $14,848,512 compared to $14,767,737 in the 2010 fiscal year. Net income for fiscal 2011 was $530,356, or $.26 per share. This compares to net income of $432,208, or $.21 per share for fiscal 2010.
Increased rentals from existing tenants and a new tenant that will commence occupancy and payment of rent in fiscal 2012, should adequately cover the Companys planned operating and capital requirements.
Our emphasis on pursuing and obtaining government agencies, educational institutions and prospective corporate and retail tenants in the last several years has helped us weather the commercial property headwinds which, hopefully, are abating.
I believe our Company is well-positioned to continue its positive operational performance. I specifically want to thank the Mays personnel and our Board colleagues for their ongoing commitment and support, and I want to thank our shareholders for their continuing belief in our Company and its future.
Lloyd J. Shulman
Chairman, President and Chief Executive Officer
October 6, 2011
3
J.W. MAYS, INC.
Consolidated Balance Sheets
July 31, 2011 and 2010
Assets
|
|
|
|
|
|
|
2011 |
|
2010 |
|
Property and Equipmentat cost (Notes 1, 3, 4 and 15): |
|
|
|
|
Buildings and improvements |
|
|
$ |
|
65,575,947 |
|
|
|
$ |
|
65,404,942 |
|
Improvements to leased property |
|
|
|
3,445,698 |
|
|
|
|
3,445,698 |
|
Fixtures and equipment |
|
|
|
533,341 |
|
|
|
|
533,341 |
|
Land |
|
|
|
6,067,805 |
|
|
|
|
6,067,805 |
|
Other |
|
|
|
209,864 |
|
|
|
|
245,387 |
|
Construction in progress |
|
|
|
1,554,457 |
|
|
|
|
|
|
|
|
|
|
|
|
77,387,112 |
|
|
|
|
75,697,173 |
|
Less accumulated depreciation and amortization |
|
|
|
32,696,221 |
|
|
|
|
31,156,602 |
|
|
|
|
|
|
Property and equipmentnet |
|
|
|
44,690,891 |
|
|
|
|
44,540,571 |
|
|
|
|
|
|
Current Assets: |
|
|
|
|
Cash and cash equivalents (Notes 10 and 11) |
|
|
|
2,656,354 |
|
|
|
|
1,551,630 |
|
Marketable securities (Notes 1, 2 and 11) |
|
|
|
619,096 |
|
|
|
|
351,267 |
|
Receivables (Notes 1, 7 and 11) |
|
|
|
264,857 |
|
|
|
|
249,968 |
|
Income taxes refundable |
|
|
|
315,577 |
|
|
|
|
256,198 |
|
Deferred income taxes (Notes 1 and 5) |
|
|
|
331,000 |
|
|
|
|
285,000 |
|
Security deposits |
|
|
|
128,704 |
|
|
|
|
333,590 |
|
Prepaid expenses |
|
|
|
1,197,574 |
|
|
|
|
1,236,551 |
|
|
|
|
|
|
Total current assets |
|
|
|
5,513,162 |
|
|
|
|
4,264,204 |
|
|
|
|
|
|
Other Assets: |
|
|
|
|
Deferred charges (Notes 1 and 12) |
|
|
|
3,468,585 |
|
|
|
|
3,433,658 |
|
Less accumulated amortization (Notes 1 and 12) |
|
|
|
1,565,380 |
|
|
|
|
1,842,480 |
|
|
|
|
|
|
Net |
|
|
|
1,903,205 |
|
|
|
|
1,591,178 |
|
Receivables (Notes 1 and 7) |
|
|
|
150,000 |
|
|
|
|
150,000 |
|
Security deposits |
|
|
|
1,145,434 |
|
|
|
|
862,911 |
|
Unbilled receivables (Notes 1, 7 and 11) |
|
|
|
1,606,099 |
|
|
|
|
1,925,781 |
|
Marketable securities (Notes 1, 2 and 11) |
|
|
|
1,332,460 |
|
|
|
|
1,910,407 |
|
|
|
|
|
|
Total other assets |
|
|
|
6,137,198 |
|
|
|
|
6,440,277 |
|
|
|
|
|
|
TOTAL ASSETS |
|
|
$ |
|
56,341,251 |
|
|
|
$ |
|
55,245,052 |
|
|
|
|
|
|
See Notes to Consolidated Financial Statements.
4
Liabilities and Shareholders Equity
|
|
|
|
|
|
|
2011 |
|
2010 |
|
Long-Term Debt: |
|
|
|
|
Mortgages and term loan payable (Notes 4 and 11) |
|
|
$ |
|
5,750,259 |
|
|
|
$ |
|
9,096,527 |
|
Note payablerelated party (Notes 11 and 14) |
|
|
|
1,000,000 |
|
|
|
Security deposits payable (Note 11) |
|
|
|
836,235 |
|
|
|
|
556,736 |
|
Payroll and other accrued liabilities (Notes 6 and 8) |
|
|
|
85,570 |
|
|
|
|
|
|
|
|
Total long-term debt |
|
|
|
7,672,064 |
|
|
|
|
9,653,263 |
|
|
|
|
|
|
Deferred Income Taxes (Notes 1 and 5): |
|
|
|
2,091,000 |
|
|
|
|
1,804,000 |
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
Accounts payable |
|
|
|
142,593 |
|
|
|
|
95,049 |
|
Payroll and other accrued liabilities (Notes 6 and 8) |
|
|
|
1,511,225 |
|
|
|
|
1,159,881 |
|
Other taxes payable |
|
|
|
3,376 |
|
|
|
|
2,695 |
|
Current portion of long-term debt (Notes 4, 11 and 14) |
|
|
|
3,346,267 |
|
|
|
|
1,365,606 |
|
Current portion of security deposits payable (Note 11) |
|
|
|
141,704 |
|
|
|
|
346,590 |
|
|
|
|
|
|
Total current liabilities |
|
|
|
5,145,165 |
|
|
|
|
2,969,821 |
|
|
|
|
|
|
Total liabilities |
|
|
|
14,908,229 |
|
|
|
|
14,427,084 |
|
|
|
|
|
|
Shareholders Equity: |
|
|
|
|
Common stock, par value $1 each share (shares5,000,000 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 securitiesnet of deferred taxes of $64,000 at July 31, 2011 and $21,000 at July 31, 2010. (Notes 1, 2, 5 and 11) |
|
|
|
126,415 |
|
|
|
|
41,717 |
|
Retained earnings |
|
|
|
37,069,917 |
|
|
|
|
36,539,561 |
|
|
|
|
|
|
|
|
|
|
42,720,874 |
|
|
|
|
42,105,820 |
|
Less common stock held in treasury, at cost162,517 shares at July 31, 2011 and July 31, 2010 (Note 13) |
|
|
|
1,287,852 |
|
|
|
|
1,287,852 |
|
|
|
|
|
|
Total shareholders equity |
|
|
|
41,433,022 |
|
|
|
|
40,817,968 |
|
|
|
|
|
|
Commitments (Notes 6 and 7) and Contingencies (Note 15) |
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY |
|
|
$ |
|
56,341,251 |
|
|
|
$ |
|
55,245,052 |
|
|
|
|
|
|
See Notes to Consolidated Financial Statements.
5
J.W. MAYS, INC.
Consolidated Statements of Income and Retained Earnings
|
|
|
|
|
|
|
|
|
|
|
Years Ended July 31, |
|
2011 |
|
2010 |
|
2009 |
|
|
|
Revenues |
|
|
|
|
|
|
|
|
Rental income (Notes 1, 3 and 7) |
|
|
$ |
|
14,856,365 |
|
|
|
$ |
|
14,524,314 |
|
|
|
$ |
|
13,853,916 |
|
|
|
Recovery of real estate taxes |
|
|
|
|
|
|
|
|
243,423 |
|
|
|
|
546,418 |
|
|
|
(Loss) on disposition of property and equipment |
|
|
|
(7,853 |
) |
|
|
|
|
|
|
|
|
|
(5,184 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
|
14,848,512 |
|
|
|
|
14,767,737 |
|
|
|
|
14,395,150 |
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
Real estate operating expenses (Notes 3 and 6) |
|
|
|
7,837,227 |
|
|
|
|
7,583,514 |
|
|
|
|
7,281,481 |
|
|
|
Administrative and general expenses (Note 3) |
|
|
|
3,574,616 |
|
|
|
|
3,828,033 |
|
|
|
|
3,470,670 |
|
|
|
Depreciation and amortization (Notes 1 and 3) |
|
|
|
1,556,788 |
|
|
|
|
1,563,225 |
|
|
|
|
1,497,675 |
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
|
|
12,968,631 |
|
|
|
|
12,974,772 |
|
|
|
|
12,249,826 |
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before investment income (loss), interest expense and income taxes |
|
|
|
1,879,881 |
|
|
|
|
1,792,965 |
|
|
|
|
2,145,324 |
|
|
|
|
|
|
|
|
|
|
|
|
Investment income (loss) and interest expense: |
|
|
|
|
|
|
|
|
Investment income (loss) (Notes 1 and 2) |
|
|
|
103,084 |
|
|
|
|
71,720 |
|
|
|
|
(77,877 |
) |
|
|
|
Interest expense (Notes 3, 4, 10 and 14) |
|
|
|
(652,830 |
) |
|
|
|
|
(723,747 |
) |
|
|
|
|
(762,766 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(549,746 |
) |
|
|
|
|
(652,027 |
) |
|
|
|
|
(840,643 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes |
|
|
|
1,330,135 |
|
|
|
|
1,140,938 |
|
|
|
|
1,304,681 |
|
|
|
Income taxes provided (Notes 1 and 5) |
|
|
|
572,000 |
|
|
|
|
480,000 |
|
|
|
|
640,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations |
|
|
|
758,135 |
|
|
|
|
660,938 |
|
|
|
|
664,681 |
|
|
|
Discontinued operations (Note 3) |
|
|
|
|
|
|
|
|
Income (loss) from discontinued operationsnet of taxes |
|
|
|
(227,779 |
) |
|
|
|
|
(228,730 |
) |
|
|
|
|
91,405 |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
530,356 |
|
|
|
|
432,208 |
|
|
|
|
756,086 |
|
|
|
Retained earnings, beginning of year |
|
|
|
36,539,561 |
|
|
|
|
36,107,353 |
|
|
|
|
35,351,267 |
|
|
|
|
|
|
|
|
|
|
|
|
Retained earnings, end of year |
|
|
$ |
|
37,069,917 |
|
|
|
$ |
|
36,539,561 |
|
|
|
$ |
|
36,107,353 |
|
|
|
|
|
|
|
|
|
|
|
|
Income per common share from continuing operations |
|
|
$ |
|
.37 |
|
|
|
$ |
|
.33 |
|
|
|
$ |
|
.33 |
|
|
|
Income (loss) per common share from discontinued operations |
|
|
|
(.11 |
) |
|
|
|
|
(.12 |
) |
|
|
|
|
.05 |
|
|
|
|
|
|
|
|
|
|
|
|
Income per common share |
|
|
$ |
|
.26 |
|
|
|
$ |
|
.21 |
|
|
|
$ |
|
.38 |
|
|
|
|
|
|
|
|
|
|
|
|
Dividends per share |
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common shares outstanding |
|
|
|
2,015,780 |
|
|
|
|
2,015,780 |
|
|
|
|
2,015,780 |
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Consolidated Financial Statements.
Consolidated Statements of Comprehensive Income
|
|
|
|
|
|
|
|
|
Years Ended July 31, |
|
2011 |
|
2010 |
|
2009 |
|
Net income |
|
|
$ |
|
530,356 |
|
|
|
$ |
|
432,208 |
|
|
|
$ |
|
756,086 |
|
|
|
|
|
|
|
|
Other comprehensive income, net of tax |
|
|
|
|
|
|
Unrealized gain (loss) on available-for-sale securities, net of taxes of $43,000, $51,000 and $40,000 for the fiscal years 2011, 2010 and 2009, respectively |
|
|
|
70,978 |
|
|
|
|
99,795 |
|
|
|
|
(29,346 |
) |
|
Reclassification adjustment |
|
|
|
13,720 |
|
|
|
|
|
|
|
|
|
105,680 |
|
|
|
|
|
|
|
|
Net change in other comprehensive income |
|
|
|
84,698 |
|
|
|
|
99,795 |
|
|
|
|
76,334 |
|
|
|
|
|
|
|
|
Comprehensive income |
|
|
$ |
|
615,054 |
|
|
|
$ |
|
532,003 |
|
|
|
$ |
|
832,420 |
|
|
|
|
|
|
|
|
See Notes to Consolidated Financial Statements.
6
J.W. MAYS, INC.
Consolidated Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
Years Ended July 31, |
|
2011 |
|
2010 |
|
2009 |
|
|
|
Cash Flows From Operating Activities |
|
|
|
|
|
|
|
|
Income from continuing operations |
|
|
$ |
|
758,135 |
|
|
|
$ |
|
660,938 |
|
|
|
$ |
|
664,681 |
|
|
|
Income (loss) from discontinued operationsnet of taxes |
|
|
|
(227,779 |
) |
|
|
|
|
(228,730 |
) |
|
|
|
|
91,405 |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
530,356 |
|
|
|
|
432,208 |
|
|
|
|
756,086 |
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Gain on nonmonetary exchange of fixed assets |
|
|
|
|
|
(900,000 |
) |
|
|
|
|
|
Deferred income taxes |
|
|
|
198,000 |
|
|
|
|
(101,000 |
) |
|
|
|
|
(86,000 |
) |
|
|
|
Realized (gain) loss on marketable securities |
|
|
|
(10,264 |
) |
|
|
|
|
43,880 |
|
|
|
|
223,881 |
|
|
|
Loss on disposition of property and equipment |
|
|
|
7,853 |
|
|
|
|
|
|
5,184 |
|
|
|
Depreciation and amortization |
|
|
|
1,556,788 |
|
|
|
|
1,660,684 |
|
|
|
|
1,625,016 |
|
|
|
Amortization of deferred charges |
|
|
|
363,148 |
|
|
|
|
383,454 |
|
|
|
|
413,736 |
|
|
|
Other assetsdeferred charges |
|
|
|
(675,175 |
) |
|
|
|
|
(288,464 |
) |
|
|
|
|
|
unbilled receivables |
|
|
|
319,682 |
|
|
|
|
550,807 |
|
|
|
|
382,488 |
|
|
|
receivables |
|
|
|
|
|
31,467 |
|
|
|
|
(178,400 |
) |
|
|
|
Changes in: |
|
|
|
|
|
|
|
|
Receivables |
|
|
|
(14,889 |
) |
|
|
|
|
18,533 |
|
|
|
|
(97,470 |
) |
|
|
|
Prepaid expenses |
|
|
|
38,977 |
|
|
|
|
737,927 |
|
|
|
|
(140,909 |
) |
|
|
|
Income taxes refundable |
|
|
|
(59,379 |
) |
|
|
|
|
(256,198 |
) |
|
|
|
|
|
Accounts payable |
|
|
|
47,544 |
|
|
|
|
3,646 |
|
|
|
|
52,039 |
|
|
|
Payroll and other accrued liabilities |
|
|
|
436,914 |
|
|
|
|
(317,074 |
) |
|
|
|
|
(576,653 |
) |
|
|
|
Income taxes payable |
|
|
|
|
|
(346,355 |
) |
|
|
|
|
243,410 |
|
|
|
Other taxes payable |
|
|
|
681 |
|
|
|
|
395 |
|
|
|
|
409 |
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
|
2,740,236 |
|
|
|
|
1,653,910 |
|
|
|
|
2,622,817 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities |
|
|
|
|
|
|
|
|
Acquisition of property and equipment |
|
|
|
(1,714,961 |
) |
|
|
|
|
(263,758 |
) |
|
|
|
|
(1,243,590 |
) |
|
|
|
Security deposits |
|
|
|
(77,637 |
) |
|
|
|
|
197,011 |
|
|
|
|
48,735 |
|
|
|
Marketable securities: |
|
|
|
|
|
|
|
|
Receipts from sales or maturities |
|
|
|
804,259 |
|
|
|
|
1,006,120 |
|
|
|
|
176,119 |
|
|
|
Payments for purchases |
|
|
|
(356,179 |
) |
|
|
|
|
(1,485,439 |
) |
|
|
|
|
(304,169 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used) by investing activities |
|
|
|
(1,344,518 |
) |
|
|
|
|
(546,066 |
) |
|
|
|
|
(1,322,905 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities |
|
|
|
|
|
|
|
|
Increase (decrease)security deposits payable |
|
|
|
74,613 |
|
|
|
|
(158,538 |
) |
|
|
|
|
(53,944 |
) |
|
|
|
Borrowingsmortgage and other debt |
|
|
|
|
|
850,000 |
|
|
|
|
|
Paymentsmortgage and other debt payments |
|
|
|
(365,607 |
) |
|
|
|
|
(901,395 |
) |
|
|
|
|
(2,067,639 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used) by financing activities |
|
|
|
(290,994 |
) |
|
|
|
|
(209,933 |
) |
|
|
|
|
(2,121,583 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
|
|
|
1,104,724 |
|
|
|
|
897,911 |
|
|
|
|
(821,671 |
) |
|
|
|
Cash and cash equivalents at beginning of year |
|
|
|
1,551,630 |
|
|
|
|
653,719 |
|
|
|
|
1,475,390 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year |
|
|
$ |
|
2,656,354 |
|
|
|
$ |
|
1,551,630 |
|
|
|
$ |
|
653,719 |
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Consolidated Financial Statements.
7
J.W. MAYS, INC.
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies:
CONSOLIDATION: The consolidated financial statements include the accounts of the Company, a New York corporation and its subsidiaries, which are wholly-owned. Material intercompany items have been eliminated in consolidation.
ACCOUNTING RECORDS AND USE OF ESTIMATES: The accounting records are maintained in accordance with accounting principles generally accepted in the United States of America (GAAP). The preparation of the Companys financial statements in accordance with GAAP requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses during the reporting period. The estimates that we make include allowance
for doubtful accounts, depreciation and amortization, income tax assets and liabilities, fair value of marketable securities and revenue recognition. Estimates are based on historical experience where applicable or other assumptions that management believes are reasonable under the circumstances. Due to
the inherent uncertainty involved in making estimates, actual results may differ from those estimates under different assumptions or conditions.
RENTAL INCOME: All of the real estate owned by the Company is held for leasing to tenants except for a small portion used for Company offices. Rent is recognized from tenants under executed leases no later than on an established date or on an earlier date if the tenant should commence conducting
business. Unbilled receivables represent the excess of scheduled rental income recognized on a straight-line basis over rental income as it becomes receivable according to the provisions of the lease. Contingent rental income is recorded when earned and is not based on tenant revenue. Based upon its
periodic assessment of the quality of the receivables, management, using its historical knowledge of the tenants and industry experience, determines whether a reserve or write-off is required. Management has determined that no allowance for uncollectable receivables is considered necessary.
PROPERTY AND EQUIPMENT: Property and equipment are stated at cost. Depreciation is calculated using the straight-line method and the declining-balance method. Amortization of improvements to leased property is calculated over the shorter of the life of the lease or the estimated useful life of the
improvements. Lives used to determine depreciation and amortization are generally as follows:
|
|
|
Buildings and improvements |
|
|
|
18-40 years |
|
Improvements to leased property |
|
|
|
3-40 years |
|
Fixtures and equipment |
|
|
|
7-12 years |
|
Other |
|
|
|
3-5 years |
|
Maintenance, repairs, renewals and improvements of a non-permanent nature are charged to expense when incurred. Expenditures for additions and major renewals or improvements are capitalized along with the associated interest cost during construction. The cost of assets sold or retired and the
accumulated depreciation or amortization thereon are eliminated from the respective accounts in the year of disposal, and the resulting gain or loss is credited or charged to income. Capitalized interest is recorded as part of the asset to which it relates and is amortized over the assets estimated useful life.
The Company reviews long-lived assets for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recovered. At July 31, 2011 and 2010, there were no impairments of its property and equipment.
COMPREHENSIVE INCOME: FASB (Financial Accounting Standards Board) ASC (Accounting Standards Codification) 220-10, 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.
8
DEFERRED CHARGES: Deferred charges consist principally of costs incurred in connection with the leasing of property to tenants. Such costs are amortized over the related lease periods, ranging from 1 to 21 years, using the straight-line method.
INCOME TAXES: Deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of the Companys assets and liabilities. Deferred tax assets result principally from the recording of certain accruals and reserves which currently are not deductible
for tax purposes. Deferred tax liabilities result principally from temporary differences in the recognition of gains and losses from certain investments and from the use, for tax purposes, of accelerated depreciation.
INCOME PER SHARE OF COMMON STOCK: Income per share has been computed by dividing net income for the year by the weighted average number of shares of common stock outstanding during the year, adjusted for the purchase of treasury stock. Shares used in computing income per share
were 2,015,780 in fiscal years 2011, 2010 and 2009.
NONMONETARY ASSET EXCHANGES: In connection with the lease termination and settlement, the Company transferred title to 484 Fulton Street, Brooklyn, New York and in return received title to 14 Hanover Place, Brooklyn, New York. These transactions are recorded at the appraised values of the
buildings transferred and received. The appraised values of the two properties were not derived from a negotiation between parties as to the actual purchase and sale prices for such properties since no such negotiation took place. The exchange was accounted for under ASC Topic 805 Exchanges of
Nonmonetary Assets.
MARKETABLE SECURITIES: The Company categorizes marketable securities as either trading, available-for-sale or held-to-maturity at the time of purchase. 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 (which is considered a Level 1 valuation) 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 three years ended July 31, 2011. The implementation of ASC 810-10, Fair Value Measurements, had no impact on the presentation of marketable securities in the Companys financial statements. The Company does not have any assets valued using Level 2 or
3 valuation methods during the three years ended July 31, 2011.
In accordance with the provisions of Fair Value Measurements, the following are the entitys financial assets presented at fair value at July 31, 2011.
Fair value measurements at reporting date using
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description |
|
July 31 2011 |
|
Quoted prices in active markets for identical assets/ liabilities |
|
Significant other observable inputs |
|
Significant unobservable inputs |
|
July 31 2010 |
|
Quoted prices in active markets for identical assets/ liabilities |
|
Significant other observable inputs |
|
Significant unobservable inputs |
|
(Level 1) |
|
(Level 2) |
|
(Level 3) |
|
(Level 1) |
|
(Level 2) |
|
(Level 3) |
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale |
|
|
$ |
|
1,332,460 |
|
|
|
$ |
|
1,332,460 |
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
1,248,707 |
|
|
|
$ |
|
1,248,707 |
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
Held-to-maturity |
|
|
|
575,937 |
|
|
|
|
575,937 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
979,218 |
|
|
|
|
979,218 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
1,908,397 |
|
|
|
$ |
|
1,908,397 |
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
2,227,925 |
|
|
|
$ |
|
2,227,925 |
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECLASSIFICATIONS: The consolidated financial statements for prior years reflect certain reclassifications to conform with classifications adopted in 2010. These reclassifications have no effect on net income or loss.
9
2. Marketable Securities:
As of July 31, 2011 and 2010, the Companys marketable securities were classified as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July 31, 2011 |
|
July 31, 2010 |
|
Cost |
|
Gross Unrealized Gains |
|
Gross Unrealized Losses |
|
Fair Value |
|
Cost |
|
Gross Unrealized Gains |
|
Gross Unrealized Losses |
|
Fair Value |
Current: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held-to-Maturity: Certificate of deposit |
|
|
$ |
|
50,157 |
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
50,157 |
|
|
|
$ |
|
50,032 |
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
50,032 |
|
Corporate debt securities |
|
|
|
568,939 |
|
|
|
|
7,072 |
|
|
|
|
74 |
|
|
|
|
575,937 |
|
|
|
|
301,235 |
|
|
|
|
3,412 |
|
|
|
|
123 |
|
|
|
|
304,524 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
619,096 |
|
|
|
$ |
|
7,072 |
|
|
|
$ |
|
74 |
|
|
|
$ |
|
626,094 |
|
|
|
$ |
|
351,267 |
|
|
|
$ |
|
3,412 |
|
|
|
$ |
|
123 |
|
|
|
$ |
|
354,556 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale: Mutual funds |
|
|
$ |
|
1,031,793 |
|
|
|
$ |
|
107,627 |
|
|
|
$ |
|
|
|
|
|
$ |
|
1,139,420 |
|
|
|
$ |
|
675,739 |
|
|
|
$ |
|
10,328 |
|
|
|
$ |
|
|
|
|
|
$ |
|
686,067 |
|
Equity securities |
|
|
|
110,252 |
|
|
|
|
82,788 |
|
|
|
|
|
|
|
|
|
|
193,040 |
|
|
|
|
510,252 |
|
|
|
|
60,428 |
|
|
|
|
8,040 |
|
|
|
|
562,640 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
1,142,045 |
|
|
|
$ |
|
190,415 |
|
|
|
$ |
|
|
|
|
|
$ |
|
1,332,460 |
|
|
|
$ |
|
1,185,991 |
|
|
|
$ |
|
70,756 |
|
|
|
$ |
|
8,040 |
|
|
|
$ |
|
1,248,707 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held-to-Maturity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities |
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
661,700 |
|
|
|
$ |
|
13,127 |
|
|
|
$ |
|
133 |
|
|
|
$ |
|
674,694 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Companys debt and equity securities, gross unrealized losses and fair value, aggregated by investment category and length of time that the investment securities have been in a continuous unrealized loss position, at July 31, 2011 are as follows. All of our investments in corporate debt securities
mature in the 1-5 year time frame.
|
|
|
|
|
|
|
Fair Value |
|
Less Than 12 Months |
Corporate debt securities |
|
|
$ |
|
91,024 |
|
|
|
$ |
|
74 |
|
|
|
|
|
|
Investment income (loss) for the years ended July 31, 2011, 2010 and 2009 consists of the following:
|
|
|
|
|
|
|
|
|
2011 |
|
2010 |
|
2009 |
Interest income |
|
|
$ |
|
44,409 |
|
|
|
$ |
|
34,379 |
|
|
|
$ |
|
17,029 |
|
Dividend income |
|
|
|
48,072 |
|
|
|
|
81,221 |
|
|
|
|
128,975 |
|
Gain (loss) on sale of marketable securities |
|
|
|
10,603 |
|
|
|
|
(43,880 |
) |
|
|
|
|
(223,881 |
) |
|
|
|
|
|
|
|
|
Total |
|
|
$ |
|
103,084 |
|
|
|
$ |
|
71,720 |
|
|
|
$ |
|
(77,877 |
) |
|
|
|
|
|
|
|
|
3. Discontinued Operations:
The Companys lease with its landlords at the Jowein building in Brooklyn, New York expired on April 30, 2010. The Company returned the premises in as is condition and the Company has no obligation to correct, cure or take any action relating to repairing such premises other than the cure of certain
existing violations.
As part of the settlement the Company paid to the landlords successor (490 Owner) $1,000,000. The Company also transferred to 490 Owner title to 484 Fulton Street, Brooklyn, New York (with an appraised value of $4,490,000) subject to the existing tenancy and 490 Owner has caused title to 14
Hanover Place, Brooklyn, New York (with an appraised value of $900,000) to be transferred to the Company. The appraised values of the two buildings were merely based upon a review of comparables (other properties which are believed by the appraisers to be similar to the properties subject to the
appraisals). The appraised values of the two properties were not derived from a negotiation between the parties as to the actual purchase and sale prices for such properties since no such negotiation took place. Nor were such appraised values derived using other valuation methods, such as the net present
value from cash flows. Accordingly, these appraised values are merely estimated values of the properties. The exchange was accounted for under ASC Topic 805 Exchanges of Nonmonetary Assets. The tax treatment was reported as a 1031 exchange.
10
The Consolidated Statements of Income and Retained Earnings have been reclassified to show discontinued operations as a single line item. The Components are as follows:
|
|
|
|
|
|
|
|
|
Years Ended July 31, |
|
2011 |
|
2010 |
|
2009 |
Revenues |
|
|
|
|
|
|
Rental income |
|
|
$ |
|
|
|
|
|
$ |
|
1,437,819 |
|
|
|
$ |
|
2,249,566 |
|
Fair value adjustmentnonmonetary exchange |
|
|
|
|
|
4,490,000 |
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
5,927,819 |
|
|
|
|
2,249,566 |
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
Real estate operating expenses |
|
|
|
|
|
1,498,676 |
|
|
|
|
1,942,820 |
|
Lease termination expenses |
|
|
|
327,779 |
|
|
|
|
4,731,414 |
|
|
|
Depreciation and amortization |
|
|
|
|
|
97,459 |
|
|
|
|
127,341 |
|
|
|
|
|
|
|
|
Total |
|
|
|
327,779 |
|
|
|
|
6,327,549 |
|
|
|
|
2,070,161 |
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations |
|
|
|
(327,779 |
) |
|
|
|
|
(399,730 |
) |
|
|
|
|
179,405 |
|
Income tax (benefit) |
|
|
|
(100,000 |
) |
|
|
|
|
(171,000 |
) |
|
|
|
|
88,000 |
|
|
|
|
|
|
|
|
Net income (loss) from discontinued operationsnet of taxes |
|
|
$ |
|
(227,779 |
) |
|
|
|
$ |
|
(228,730 |
) |
|
|
|
$ |
|
91,405 |
|
|
|
|
|
|
|
|
As of July 31, 2010, The Company accrued all reasonably estimable expenses related to the termination of the lease. The termination agreement required the Company to remove a foot bridge over Fulton Street by June 2012. The removal of the foot bridge commenced during the year ended July 31,
2011 and is anticipated to be completed in October 2011, accounting for substantially all the costs incurred in the current year. Approximately $160,000 of the costs incurred are included in accounts payable at July 31, 2011. No substantial costs related to the termination of the lease agreement are expected
to be incurred in the future.
4. Long-Term DebtMortgages and Term Loan:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Annual Interest Rate |
|
Final Payment Date |
|
July 31, 2011 |
|
July 31, 2010 |
|
Due Within One Year |
|
Due After One Year |
|
Due Within One Year |
|
Due After One Year |
Mortgages: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jamaica, New York property |
|
|
|
(a |
) |
|
|
|
|
6 |
% |
|
|
|
|
4/01/12 |
|
|
|
$ |
|
1,085,542 |
|
|
|
$ |
|
|
|
|
|
$ |
|
69,844 |
|
|
|
$ |
|
1,085,542 |
|
Jamaica, New York property |
|
|
|
(b |
) |
|
|
|
|
6.81 |
% |
|
|
|
|
10/01/11 |
|
|
|
|
2,113,948 |
|
|
|
|
|
|
137,910 |
|
|
|
|
2,113,949 |
|
Fishkill, New York property |
|
|
|
(c,d |
) |
|
|
|
|
6.98 |
% |
|
|
|
|
2/18/15 |
|
|
|
|
41,655 |
|
|
|
|
1,631,924 |
|
|
|
|
39,122 |
|
|
|
|
1,673,579 |
|
Bond St. building, Brooklyn, NY |
|
|
|
(d |
) |
|
|
|
|
6.98 |
% |
|
|
|
|
2/18/15 |
|
|
|
|
105,122 |
|
|
|
|
4,118,335 |
|
|
|
|
98,730 |
|
|
|
|
4,223,457 |
|
Jowein building, Brooklyn, NY |
|
|
|
(e |
) |
|
|
Variable |
|
|
|
8/01/10 |
|
|
|
|
|
|
|
|
20,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
$ |
|
3,346,267 |
|
|
|
$ |
|
5,750,259 |
|
|
|
$ |
|
365,606 |
|
|
|
$ |
|
9,096,527 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 extended period is 6.00% per annum. Interest and amortization of principal is being 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. The Company has not determined whether it will extend this loan or pay it in full upon maturity.
(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
11
the loan, totaling $2,739,452 became due and payable on October 1, 2006. The Company exercised its option to extend the loan for an additional five (5) years to October 1, 2011. The interest rate for the extended period is 6.81% per annum. The Company paid the balance due on the loan in the amount of
$2,090,493 in September, 2011.
(c) On August 19, 2004 the Company extended the then existing loan for forty-two (42) months, with an option to convert the loan to a seven (7) year permanent mortgage loan. (See Note 4(d) 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%.
(d) The Company, on August 19, 2004, closed a loan with a bank for a $12,000,000 multiple draw term loan. This loan financed 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 Companys Brooklyn,
New York (Bond Street building) and Fishkill, New York properties through February 2008. The loan also financed $850,000 towards the construction of two new elevators at the Companys Brooklyn, New York property (Bond Street building). The loan consists of: a) a permanent, first mortgage loan to
refinance an existing first mortgage loan affecting the Fishkill, New York property, which matured on July 1, 2004 (the First Permanent Loan)(see Note 4(c)), 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). As of August 19, 2004, the Company refinanced the existing mortgage on the Companys 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
Companys 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
Companys 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
was for the new elevators at the Companys Bond Street building in Brooklyn, New York in the amount of $850,000 referred to above. The $850,000 was drawn down in fiscal 2010.
(e) 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 Companys Jowein building in Brooklyn, New York. The loan
was secured by the assignment of lease of 15,000 square feet. The loan was for a period of five (5) years and was self-amortizing, at a floating interest rate of prime plus 1.00% per annum. The loan was paid in full as of August 1, 2010.
Maturities of long-term debt-mortgages and term loan payable outstanding at July 31, 2011, are as follows: Years ending July 31, 2012 (included in current liabilities); $3,346,267, 2013; $158,662; 2014; $170,262; 2015; $5,421,335.
The carrying value of all properties collateralizing the above debt is $33,236,162 at July 31, 2011.
12
5. Income Taxes:
Significant components of the Companys deferred tax assets and liabilities as of July 31, 2011 and 2010 are a result of temporary differences related to the items described as follows:
|
|
|
|
|
|
|
|
|
|
|
2011 |
|
2010 |
|
Deferred Tax Assets |
|
Deferred Tax Liabilities |
|
Deferred Tax Assets |
|
Deferred Tax Liabilities |
Rental income received in advance |
|
|
$ |
|
75,942 |
|
|
|
$ |
|
|
|
|
|
$ |
|
61,147 |
|
|
|
$ |
|
|
|
Unbilled receivables |
|
|
|
|
|
546,074 |
|
|
|
|
|
|
654,766 |
|
Property and equipment |
|
|
|
|
|
1,480,944 |
|
|
|
|
|
|
1,123,591 |
|
Unrealized gain on marketable securities |
|
|
|
|
|
64,741 |
|
|
|
|
|
|
21,323 |
|
Other |
|
|
|
255,817 |
|
|
|
|
|
|
224,533 |
|
|
|
|
5,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
331,759 |
|
|
|
$ |
|
2,091,759 |
|
|
|
$ |
|
285,680 |
|
|
|
$ |
|
1,804,680 |
|
|
|
|
|
|
|
|
|
|
The Company has determined, based on its history of operating earnings and expectations for the future, that it is more likely than not that future taxable income will be sufficient to fully utilize the deferred tax assets at July 31, 2011 and 2010.
Income taxes provided for the years ended July 31, 2011, 2010 and 2009 consist of the following:
|
|
|
|
|
|
|
|
|
2011 |
|
2010 |
|
2009 |
Current: |
|
|
|
|
|
|
Federal |
|
|
$ |
|
21,519 |
|
|
|
$ |
|
315,000 |
|
|
|
$ |
|
475,000 |
|
State and City |
|
|
|
186,720 |
|
|
|
|
143,932 |
|
|
|
|
277,000 |
|
Prior: |
|
|
|
|
|
|
Federal |
|
|
|
47,326 |
|
|
|
|
|
State and City |
|
|
|
18,435 |
|
|
|
|
(48,932 |
) |
|
|
|
|
62,000 |
|
Deferred taxes (benefit) |
|
|
|
198,000 |
|
|
|
|
(101,000 |
) |
|
|
|
|
(86,000 |
) |
|
|
|
|
|
|
|
|
Total provision |
|
|
$ |
|
472,000 |
|
|
|
$ |
|
309,000 |
|
|
|
$ |
|
728,000 |
|
|
|
|
|
|
|
|
Income taxes provided for the years ended July 31, 2011, 2010 and 2009 consist of the following:
|
|
|
|
|
|
|
|
|
2011 |
|
2010 |
|
2009 |
Continuing operations |
|
|
$ |
|
572,000 |
|
|
|
$ |
|
480,000 |
|
|
|
$ |
|
640,000 |
|
Discontinued operations |
|
|
|
(100,000 |
) |
|
|
|
|
(171,000 |
) |
|
|
|
|
88,000 |
|
|
|
|
|
|
|
|
Total provision |
|
|
$ |
|
472,000 |
|
|
|
$ |
|
309,000 |
|
|
|
$ |
|
728,000 |
|
|
|
|
|
|
|
|
Components of the deferred tax provision (benefit) for the years ended July 31, 2011, 2010 and 2009 consist of the following:
|
|
|
|
|
|
|
|
|
2011 |
|
2010 |
|
2009 |
Book depreciation exceeding tax depreciation |
|
|
$ |
|
357,354 |
|
|
|
$ |
|
10,372 |
|
|
|
$ |
|
87,557 |
|
Reduction (increase) of rental income received in advance |
|
|
|
(14,795 |
) |
|
|
|
|
104,739 |
|
|
|
|
111,833 |
|
(Decrease) in unbilled receivables |
|
|
|
(108,692 |
) |
|
|
|
|
(187,274 |
) |
|
|
|
|
(130,046 |
) |
|
Other |
|
|
|
(35,867 |
) |
|
|
|
|
(28,837 |
) |
|
|
|
|
(155,344 |
) |
|
|
|
|
|
|
|
|
|
|
|
$ |
|
198,000 |
|
|
|
$ |
|
(101,000 |
) |
|
|
|
$ |
|
(86,000 |
) |
|
|
|
|
|
|
|
|
13
Taxes provided for the years ended July 31, 2011, 2010 and 2009 differ from amounts which would result from applying the federal statutory tax rate to pre-tax income, as follows:
|
|
|
|
|
|
|
|
|
2011 |
|
2010 |
|
2009 |
Income before income taxes |
|
|
$ |
|
1,002,302 |
|
|
|
$ |
|
741,207 |
|
|
|
$ |
|
1,541,311 |
|
Dividends received deduction |
|
|
|
(8,412 |
) |
|
|
|
|
(14,214 |
) |
|
|
|
|
(48,983 |
) |
|
Othernet |
|
|
|
9,792 |
|
|
|
|
5,546 |
|
|
|
|
(4,800 |
) |
|
|
|
|
|
|
|
|
Adjusted pre-tax income |
|
|
$ |
|
1,003,682 |
|
|
|
$ |
|
732,539 |
|
|
|
$ |
|
1,487,528 |
|
|
|
|
|
|
|
|
Statutory rate |
|
|
|
34% |
|
|
|
|
34% |
|
|
|
|
34% |
|
Income tax provision at statutory rate |
|
|
$ |
|
336,598 |
|
|
|
$ |
|
246,300 |
|
|
|
$ |
|
506,000 |
|
State and City income taxes, net of federal income tax benefit |
|
|
|
135,402 |
|
|
|
|
62,700 |
|
|
|
|
222,000 |
|
|
|
|
|
|
|
|
Income tax provision |
|
|
$ |
|
472,000 |
|
|
|
$ |
|
309,000 |
|
|
|
$ |
|
728,000 |
|
|
|
|
|
|
|
|
The Company evaluates the effect of uncertain tax positions in accordance with the provisions of GAAP. The Company records interest and penalties relating to its tax returns and provisions as interest expense and administrative and general expenses, respectively.
The Companys tax returns through the year ended July 31, 2006 have been audited by the various taxing authorities. Generally tax returns filed are subject to audit for three years by the appropriate taxing jurisdictions.
6. Leases:
The Companys real estate operations encompass both owned and leased properties. The current leases on leased property, most of which have options to extend the terms, range from 2 year to 20 years. Certain of the leases provide for additional rentals under certain circumstances and obligate the
Company for payments of real estate taxes and other expenses.
Rental expense for leased real property for each of the three fiscal years in the period ended July 31, 2011 was exceeded by sublease rental income, as follows:
|
|
|
|
|
|
|
|
|
2011 |
|
2010 |
|
2009 |
Minimum rental expense |
|
|
$ |
|
1,709,197 |
|
|
|
$ |
|
2,108,028 |
|
|
|
$ |
|
2,000,787 |
|
Contingent rental expense |
|
|
|
726,340 |
|
|
|
|
1,594,141 |
|
|
|
|
1,766,361 |
|
|
|
|
|
|
|
|
|
|
|
|
2,435,537 |
|
|
|
|
3,702,169 |
|
|
|
|
3,767,148 |
|
Sublease rental income |
|
|
|
5,807,901 |
|
|
|
|
7,405,626 |
|
|
|
|
7,807,957 |
|
|
|
|
|
|
|
|
Excess of sublease income over expense |
|
|
$ |
|
3,372,364 |
|
|
|
$ |
|
3,703,457 |
|
|
|
$ |
|
4,040,809 |
|
|
|
|
|
|
|
|
Rent expense related to an affiliate principally owned by certain directors of the Company totaled $825,000 for fiscal years ended July 31, 2011, 2010 and 2009. The rent expense is derived from two leases which expire July 31, 2027 and April 30, 2031, respectively. Rent expense is recognized on a
straight-line basis over the lives of the leases.
Future minimum non-cancelable rental commitments for operating leases with initial or remaining terms of one year or more are payable as follows:
|
|
|
Fiscal Year |
|
Operating Leases |
2012 |
|
|
$ |
|
1,729,116 |
|
2013 |
|
|
|
1,729,116 |
|
2014 |
|
|
|
1,717,755 |
|
2015 |
|
|
|
1,711,504 |
|
2016 |
|
|
|
1,711,504 |
|
After 2016 |
|
|
|
21,006,723 |
|
|
|
|
Total required* |
|
|
$ |
|
29,605,718 |
|
|
|
|
14
|
* |
|
|
|
Minimum payments have not been reduced by minimum sublease rentals of $38,351,149 under operating leases due in the future under non-cancelable leases.
|
7. Rental Income:
Rental income for each of the fiscal years 2011, 2010 and 2009 is as follows:
|
|
|
|
|
|
|
|
|
July 31, |
|
2011 |
|
2010 |
|
2009 |
Minimum rentals |
|
|
|
|
|
|
Company owned property |
|
|
$ |
|
8,564,516 |
|
|
|
$ |
|
8,071,157 |
|
|
|
$ |
|
7,672,673 |
|
Leased property |
|
|
|
5,483,174 |
|
|
|
|
6,769,132 |
|
|
|
|
7,043,384 |
|
|
|
|
|
|
|
|
|
|
|
|
14,047,690 |
|
|
|
|
14,840,289 |
|
|
|
|
14,716,057 |
|
|
|
|
|
|
|
|
Contingent rentals |
|
|
|
|
|
|
Company owned property |
|
|
|
483,948 |
|
|
|
|
485,350 |
|
|
|
|
622,852 |
|
Leased property |
|
|
|
324,727 |
|
|
|
|
636,494 |
|
|
|
|
764,573 |
|
|
|
|
|
|
|
|
|
|
|
|
808,675 |
|
|
|
|
1,121,844 |
|
|
|
|
1,387,425 |
|
|
|
|
|
|
|
|
Total |
|
|
$ |
|
14,856,365 |
|
|
|
$ |
|
15,962,133 |
|
|
|
$ |
|
16,103,482 |
|
|
|
|
|
|
|
|
Rental income for each of the fiscal years 2011, 2010 and 2009 is as follows:
|
|
|
|
|
|
|
|
|
2011 |
|
2010 |
|
2009 |
Continuing operations |
|
|
$ |
|
14,856,365 |
|
|
|
$ |
|
14,524,314 |
|
|
|
$ |
|
13,853,916 |
|
Discontinued operations |
|
|
|
|
|
|
|
|
1,437,819 |
|
|
|
|
2,249,566 |
|
|
|
|
|
|
|
|
Total |
|
|
$ |
|
14,856,365 |
|
|
|
$ |
|
15,962,133 |
|
|
|
$ |
|
16,103,482 |
|
|
|
|
|
|
|
|
Future minimum non-cancelable rental income for leases with initial or remaining terms of one year or more is as follows:
|
|
|
|
|
|
|
Fiscal Year |
|
Company Owned Property |
|
Leased Property |
|
Total |
2012 |
|
|
$ |
|
9,081,824 |
|
|
|
$ |
|
5,671,797 |
|
|
|
$ |
|
14,753,621 |
|
2013 |
|
|
|
8,325,106 |
|
|
|
|
5,260,338 |
|
|
|
|
13,585,444 |
|
2014 |
|
|
|
7,304,053 |
|
|
|
|
4,453,867 |
|
|
|
|
11,757,920 |
|
2015 |
|
|
|
6,500,880 |
|
|
|
|
3,821,701 |
|
|
|
|
10,322,581 |
|
2016 |
|
|
|
6,442,941 |
|
|
|
|
3,583,386 |
|
|
|
|
10,026,327 |
|
After 2016 |
|
|
|
27,431,710 |
|
|
|
|
15,560,060 |
|
|
|
|
42,991,770 |
|
|
|
|
|
|
|
|
Total |
|
|
$ |
|
65,086,514 |
|
|
|
$ |
|
38,351,149 |
|
|
|
$ |
|
103,437,663 |
|
|
|
|
|
|
|
|
Rental income is recognized on a straight-line basis over the lives of the leases.
15
8. Payroll and Other Accrued Liabilities:
Payroll and other accrued liabilities for the fiscal years ended July 31, 2011, and 2010 consist of the following:
|
|
|
|
|
|
|
2011 |
|
2010 |
Payroll |
|
|
$ |
|
133,020 |
|
|
|
$ |
|
126,165 |
|
Interest |
|
|
|
59,349 |
|
|
|
|
64,522 |
|
Professional fees |
|
|
|
147,741 |
|
|
|
|
192,382 |
|
Rents received in advance |
|
|
|
223,360 |
|
|
|
|
179,844 |
|
Utilities |
|
|
|
10,800 |
|
|
|
|
45,500 |
|
Brokers commissions |
|
|
|
313,140 |
|
|
|
|
87,000 |
|
Construction costs |
|
|
|
160,905 |
|
|
|
Other |
|
|
|
548,480 |
|
|
|
|
464,468 |
|
|
|
|
|
|
Total |
|
|
|
1,596,795 |
|
|
|
|
1,159,881 |
|
Less current portion |
|
|
|
1,511,225 |
|
|
|
|
1,159,881 |
|
|
|
|
|
|
Long-term portion |
|
|
$ |
|
85,570 |
|
|
|
$ |
|
|
|
|
|
|
|
|
9. Employees Retirement Plan:
The Company contributes to a union sponsored multi-employer pension plan covering its union employees. The Company contributions to the pension plan for the years ended July 31, 2011, 2010 and 2009 were $27,039, $23,142 and $20,168, respectively. Contributions and costs are determined in
accordance with the provisions of negotiated labor contracts or terms of the plans. The Company also contributes to union sponsored health benefit plans.
Contingent liability for pension plan
Information as to the Companys portion of accumulated pension plan benefits and plan assets is not reported separately by the union sponsored pension plan. A contingent liability may exist because an employer under the Employee Retirement Income Security Act, upon withdrawal from a multi-
employer defined benefit plan, is required to continue to pay its proportionate share of the plans unfunded vested benefits, if any. The liability under this provision has not been determined; however, the Company has no intention of withdrawing from the plan. Union annuity and health and welfare benefits
plans are defined contribution plans and do not have unfunded vested benefits.
The Company sponsors a non-contributory Money Purchase Plan covering substantially all of its non-union employees. Operations were charged $340,751, $330,789 and $311,539 as contributions to the Plan for fiscal years 2011, 2010 and 2009, 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 disclosures:
|
|
|
|
|
|
|
|
|
July 31, |
|
2011 |
|
2010 |
|
2009 |
Interest paid, net of capitalized interest of $44,108 (2011) $569 (2010) and $65,745 (2009) |
|
|
$ |
|
658,004 |
|
|
|
$ |
|
723,623 |
|
|
|
$ |
|
745,668 |
|
Income taxes paid |
|
|
$ |
|
333,380 |
|
|
|
$ |
|
864,174 |
|
|
|
$ |
|
601,587 |
|
16
11. Financial Instruments and Credit Risk Concentrations:
The following disclosure of estimated fair value was determined by the Company using available market information and appropriate valuation methods. Considerable judgment is necessary to develop estimates of fair value. The estimates presented herein are not necessarily indicative of the amounts
that could be realized upon disposition of the financial instruments.
The Company estimates the fair value of its financial instruments using the following methods and assumptions: (i) quoted market prices, when available, are used to estimate the fair value of investments in marketable debt and equity securities; (ii) discounted cash flow analyses are used to estimate the
fair value of long-term debt, using the Companys estimate of current interest rates for similar debt; and (iii) carrying amounts in the balance sheet approximate fair value for cash and cash equivalents and tenant security deposits due to their high liquidity.
|
|
|
|
|
|
|
July 31, 2011 |
|
Carrying Value |
|
Fair Value |
Cash and cash equivalents |
|
|
$ |
|
2,656,354 |
|
|
|
$ |
|
2,656,354 |
|
Marketable securities |
|
|
$ |
|
1,951,556 |
|
|
|
$ |
|
1,958,554 |
|
Security deposits payable |
|
|
$ |
|
977,939 |
|
|
|
$ |
|
977,939 |
|
Mortgages, note and term loan payable |
|
|
$ |
|
10,096,526 |
|
|
|
$ |
|
11,517,059 |
|
Financial instruments that are potentially subject to concentrations of credit risk consist principally of marketable securities and cash and cash equivalents. Marketable securities and cash and cash equivalents are placed with multiple financial institutions and instruments to minimize risk. No assurance
can be made that such financial institutions and instruments will minimize all such risk.
Other assets subject to credit risk include receivables and unbilled receivables. The Company derived rental income from forty-eight tenants, of which one tenant accounted for 18.62% and another tenant accounted for 16.58% of rental income during the year ended July 31, 2011. No other tenant
accounted for more than 10% of rental income during the year ended July 31, 2011. Of the receivables recorded at July 31, 2011, one tenant accounted for 77.53% of the receivables due to a restructuring of the payments due on leases. Of the unbilled receivables, one tenant accounted for 27% of the
balance at July 31, 2011. No other tenants accounted for either 10% of billed receivables, unbilled receivables, or combined billed and unbilled receivables. Write-offs of uncollectible amounts were minimal for the three years ended July 31, 2011.
The Company has one irrevocable letter of credit totaling $230,000 at July 31, 2011 provided by one tenant and two irrevocable letters of credit totaling $297,500 at July 31, 2010 provided by two tenants as security.
12. Deferred Charges:
Deferred charges for the fiscal years ended July 31, 2011 and 2010 consist of the following:
|
|
|
|
|
|
|
|
|
|
|
July 31, 2011 |
|
July 31, 2010 |
|
Gross Carrying Amount |
|
Accumulated Amortization |
|
Gross Carrying Amount |
|
Accumulated Amortization |
Leasing brokerage commissions |
|
|
$ |
|
2,349,667 |
|
|
|
$ |
|
796,518 |
|
|
|
$ |
|
2,306,365 |
|
|
|
$ |
|
1,121,462 |
|
Professional fees for leasing |
|
|
|
324,183 |
|
|
|
|
127,679 |
|
|
|
|
332,558 |
|
|
|
|
129,257 |
|
Financing costs |
|
|
|
760,671 |
|
|
|
|
629,829 |
|
|
|
|
760,671 |
|
|
|
|
591,761 |
|
Other |
|
|
|
34,064 |
|
|
|
|
11,354 |
|
|
|
|
34,064 |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
$ |
|
3,468,585 |
|
|
|
$ |
|
1,565,380 |
|
|
|
$ |
|
3,433,658 |
|
|
|
$ |
|
1,842,480 |
|
|
|
|
|
|
|
|
|
|
The aggregate amortization expense for the three years in the period ended July 31, 2011 was $363,148, $383,454 and $413,736, respectively.
The weighted average life of current year additions to deferred charges was 15.77 years.
17
The estimated aggregate amortization expense for each of the five succeeding fiscal years is as follows:
|
|
|
Fiscal Year |
|
|
2012 |
|
|
$ |
|
338,589 |
|
2013 |
|
|
$ |
|
323,059 |
|
2014 |
|
|
$ |
|
257,298 |
|
2015 |
|
|
$ |
|
211,962 |
|
2016 |
|
|
$ |
|
171,899 |
|
13. 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 July 31, 2011 and at July 31, 2010.
14. 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 and was
extended for an additional three (3) years maturing on December 15, 2010, 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 were $18,750 through December 15, 2010. The
Company, on November 11, 2010, further extended the note for an additional three (3) years maturing on December 15, 2013, at an interest rate of 5.00% per annum. The constant quarterly payment of interest is $12,500. The interest paid for the year ended July 31, 2011 was $59,375 and for the years 2010
and 2009 was $75,000.
15. 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 Companys Consolidated Financial Statements.
The Company is required to remove the foot bridge over Bond Street in Brooklyn, New York by June 2012. The removal of the foot bridge is anticipated to be completed in October 2011 at a cost of $309,423.
If the Company sells, transfers, disposes of or demolishes 25 Elm Place, Brooklyn, New York, then the Company may be liable to create a condominium unit for the loading dock. The necessity of creating the condominium unit and the cost of such condominium unit cannot be determined at this time.
18
J.W. MAYS, INC.
Report of Management
Management is responsible for the preparation and reliability of the financial statements and the other financial information in this Annual Report. Management has established systems of internal control over financial reporting designed to provide reasonable assurance that the financial records used for
preparing financial statements are reliable and reflect the transactions of the Company and that established policies and procedures are carefully followed. The Company reviews, modifies and improves its system of internal controls in response to changes in operations.
The Board of Directors, acting through the Audit Committee, which is comprised solely of independent directors who are not employees of the Company, oversees the financial reporting process. The financial statements have been prepared in accordance with accounting standards generally accepted
in the United States of America and include amounts based on judgments and estimates made by management. Actual results could differ from estimated amounts.
To ensure complete independence, DArcangelo & Co., LLP, the independent registered public accounting firm, has full and free access to meet with the Audit Committee, without management representatives present, to discuss results of the audit, the adequacy of internal controls and the quality of
financial reporting.
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders
J.W. Mays, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of J.W. Mays, Inc. and subsidiaries as of July 31, 2011 and 2010, and the related consolidated statements of income and retained earnings, comprehensive income, and cash flows for each of the years in the three year period ended July
31, 2011. J.W. Mays, Inc. and subsidiaries management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements,
assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of J.W. Mays, Inc. and subsidiaries as of July 31, 2011 and 2010, and the results of its operations and its cash flows for each of the years in the three year period ended July
31, 2011, in conformity with accounting principles generally accepted in the United States of America.
DARCANGELO & CO., LLP
Rye Brook, New York
October 6, 2011
19
J.W. MAYS, INC.
Five Year Summary of Consolidated Operations
(dollars in thousands except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended July 31, |
|
2011 |
|
2010 |
|
2009 |
|
2008 |
|
2007 |
|
Revenues |
|
|
|
|
|
|
|
|
|
|
Rental income |
|
|
$ |
|
14,857 |
|
|
|
$ |
|
14,525 |
|
|
|
$ |
|
13,853 |
|
|
|
$ |
|
12,295 |
|
|
|
$ |
|
11,364 |
|
Recovery of real estate taxes |
|
|
|
|
|
|
|
|
243 |
|
|
|
|
547 |
|
|
|
|
91 |
|
|
|
|
39 |
|
Gain (loss) on disposition of property and equipment |
|
|
|
(8 |
) |
|
|
|
|
|
|
|
|
|
(5 |
) |
|
|
|
|
(17 |
) |
|
|
|
|
4,309 |
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
|
14,849 |
|
|
|
|
14,768 |
|
|
|
|
14,395 |
|
|
|
|
12,369 |
|
|
|
|
15,712 |
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
Real estate operating expenses |
|
|
|
7,837 |
|
|
|
|
7,584 |
|
|
|
|
7,281 |
|
|
|
|
7,088 |
|
|
|
|
6,785 |
|
Administrative and general expenses |
|
|
|
3,575 |
|
|
|
|
3,828 |
|
|
|
|
3,471 |
|
|
|
|
3,252 |
|
|
|
|
3,255 |
|
Depreciation and amortization |
|
|
|
1,557 |
|
|
|
|
1,563 |
|
|
|
|
1,497 |
|
|
|
|
1,477 |
|
|
|
|
1,451 |
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
|
|
12,969 |
|
|
|
|
12,975 |
|
|
|
|
12,249 |
|
|
|
|
11,817 |
|
|
|
|
11,491 |
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before investment income (loss), interest expense, and income taxes |
|
|
|
1,880 |
|
|
|
|
1,793 |
|
|
|
|
2,146 |
|
|
|
|
552 |
|
|
|
|
4,221 |
|
|
|
|
|
|
|
|
|
|
|
|
Investment income (loss) and interest expense: |
|
|
|
|
|
|
|
|
|
|
Investment income (loss) |
|
|
|
103 |
|
|
|
|
72 |
|
|
|
|
(78 |
) |
|
|
|
|
213 |
|
|
|
|
84 |
|
Interest expense |
|
|
|
(653 |
) |
|
|
|
|
(724 |
) |
|
|
|
|
(763 |
) |
|
|
|
|
(884 |
) |
|
|
|
|
(997 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(550 |
) |
|
|
|
|
(652 |
) |
|
|
|
|
(841 |
) |
|
|
|
|
(671 |
) |
|
|
|
|
(913 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes |
|
|
|
1,330 |
|
|
|
|
1,141 |
|
|
|
|
1,305 |
|
|
|
|
(119 |
) |
|
|
|
|
3,308 |
|
Income taxes provided |
|
|
|
572 |
|
|
|
|
480 |
|
|
|
|
640 |
|
|
|
|
55 |
|
|
|
|
1,528 |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) from continuing operations |
|
|
|
758 |
|
|
|
|
661 |
|
|
|
|
665 |
|
|
|
|
(174 |
) |
|
|
|
|
1,780 |
|
Discontinued operations |
|
|
|
|
|
|
|
|
|
|
Net income (loss) from discontinued operationsnet of taxes |
|
|
|
(228 |
) |
|
|
|
|
(229 |
) |
|
|
|
|
91 |
|
|
|
|
98 |
|
|
|
|
276 |
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (loss) |
|
|
$ |
|
530 |
|
|
|
$ |
|
432 |
|
|
|
$ |
|
756 |
|
|
|
$ |
|
(76 |
) |
|
|
|
$ |
|
2,056 |
|
|
|
|
|
|
|
|
|
|
|
|
Income per common share |
|
|
|
|
|
|
|
|
|
|
Income (loss) per common share from continuing operations |
|
|
$ |
|
.37 |
|
|
|
$ |
|
.33 |
|
|
|
$ |
|
.33 |
|
|
|
$ |
|
(.09 |
) |
|
|
|
$ |
|
.88 |
|
Income (loss) per common share from discontinued operations |
|
|
|
(.11 |
) |
|
|
|
|
(.12 |
) |
|
|
|
|
.05 |
|
|
|
|
.05 |
|
|
|
|
.14 |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share |
|
|
$ |
|
.26 |
|
|
|
$ |
|
.21 |
|
|
|
$ |
|
.38 |
|
|
|
$ |
|
(.04 |
) |
|
|
|
$ |
|
1.02 |
|
|
|
|
|
|
|
|
|
|
|
|
Dividends per share |
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common shares outstanding |
|
|
|
2,015,780 |
|
|
|
|
2,015,780 |
|
|
|
|
2,015,780 |
|
|
|
|
2,015,780 |
|
|
|
|
2,015,780 |
|
|
|
|
|
|
|
|
|
|
|
|
20
J.W. MAYS, INC.
Managements Discussion and Analysis of Financial Condition and
Results of Operations
Managements 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.
Forward Looking Statements
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 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 pages 8 through 9 to the Consolidated Financial
Statements).
Fiscal 2011 Compared to Fiscal 2010
Net income for the year ended July 31, 2011 amounted to $530,356, or $.26 per share, compared to net income for the year ended July 31, 2010 of $432,208, or $.21 per share.
Net income from continuing operations for the year ended July 31, 2011 amounted to $758,135, or $.37 per share, compared to net income from continuing operations for the year ended July 31, 2010 of $660,938, or $.33 per share.
Net loss from discontinued operations for the year ended July 31, 2011 amounted to ($227,779), or ($.11) per share, compared to a net loss from discontinued operations for the year ended July 31, 2010 of ($228,730), or ($.12) per share. The loss in the 2011 year was due to the cost of removing the foot
bridge over Bond Street in Brooklyn, New York.
Revenues from continuing operations in the current year increased to $14,848,512 from $14,767,737 in the comparable 2010 year. The increase in revenues was due to increased rental income from existing tenants, offset by the recovery of real estate taxes in fiscal 2010 (see below).
The recovery of real estate taxes in the 2010 year in the amount of $243,423, net of legal expenses, represents prior years real estate taxes from two of the Companys properties. The comparable 2011 year did not have a recovery of real estate taxes.
Real estate operating expenses from continuing operations in the current year increased to $7,837,227 from $7,583,514 in the comparable 2010 year primarily due to increases in real estate taxes and payroll costs, partially offset by decreases in maintenance, insurance, utility costs and rental expense.
Administrative and general expenses from continuing operations in the current year decreased to $3,574,616 from $3,828,033 in the comparable 2010 year primarily due to decreases in legal and professional and insurance costs, partially offset by increases in payroll costs, medical costs and data
processing costs.
Depreciation and amortization expense from continuing operations in the current year decreased to $1,556,788 from $1,563,225 in the comparable 2010 year.
21
Interest expense and other investment expenses in the current year exceeded investment income by $549,746 and by $652,027 in the comparable 2010 year. The decrease in the excess of interest expense over investment income was primarily due to scheduled repayments of debt.
Fiscal 2010 Compared to Fiscal 2009
Net income for the year ended July 31, 2010 amounted to $432,208, or $.21 per share, compared to net income for the year ended July 31, 2009 of $756,086, or $.38 per share.
Net income from continuing operations for the year ended July 31, 2010 amounted to $660,938, or $.33 per share, compared to net income from continuing operations for the year ended July 31, 2009 of $664,681, or $.33 per share.
Net loss from discontinued operations for the year ended July 31, 2010 amounted to ($228,730), or ($.12) per share, compared to net income from discontinued operations for the year ended July 31, 2009 of $91,405, or $.05 per share. The loss in the 2010 year was due to the payment of $1,000,000 for
the settlement of the litigation and $141,414 for the New York State and New York City transfer taxes on the properties transferred.
Revenues from continuing operations in 2010 increased to $14,767,737 from $14,395,150 in the comparable 2009 year. The increase in revenues was due to the Company leasing to one additional tenant at the Companys Brooklyn, New York, Nine Bond Street property and increased rental income from
existing tenants, offset by a larger real estate tax refund in the 2009 year (see below).
The recovery of real estate taxes in 2010 in the amount of $243,423, net of legal expenses, represents prior years real estate taxes from two of the Companys properties. The comparable 2009 year had a recovery of real estate taxes in the amount of $546,418 net of legal expenses.
Real estate operating expenses from continuing operations in 2010 increased to $7,583,514 from $7,281,481 in the comparable 2009 year primarily due to increases in rental expense and real estate taxes, partially offset by decreases in maintenance, insurance and utility costs.
Administrative and general expenses from continuing operations in 2010 increased to $3,828,033 from $3,470,670 in the comparable 2009 year primarily due to increases in legal and professional and payroll costs, partially offset by decreases in insurance costs.
Depreciation and amortization expense from continuing operations in 2010 increased to $1,563,225 from $1,497,675 in the comparable 2009 year primarily due to increased depreciation on the Nine Bond Street, Brooklyn, New York property.
Interest expense and other investment expenses in 2010 exceeded investment income by $652,027 and by $840,643 in the comparable 2009 year. The decrease in the excess of interest expense over investment income was due to the principal write-down of $99,900 due to the impairment of the
Companys investment in Lehman Brothers Holdings Inc. preferred stock and the losses on the sale of marketable securities in the 2009 year and by scheduled repayments of debt, partially offset by additional interest expense on the additional elevator loan.
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 Companys planned operating and capital requirements. The Companys cash and cash equivalents amounted to $2,656,354 at July 31, 2011.
In September 2009, the Company entered into a lease agreement with a drive-in restaurant at the Companys Massapequa premises. The drive-in restaurant intends to construct a new building. The tenants occupancy is subject to it receiving the necessary building permits and licenses to construct the
building and open for business within a reasonable time period. Rent is anticipated to commence in 2012. This will replace
22
the tenant that vacated the premises in April 2009. The rental income from this lease agreement will more than offset the rental income lost from the previous tenant.
In October 2010, the Company entered into a lease agreement with a tenant for 18,218 square feet for office space at the Companys Nine Bond Street, Brooklyn, New York building. The cost of construction and brokerage commissions to the Company will be approximately $2,100,000. The Company has
financed these costs through operating funds. Rent is anticipated to commence in early 2012.
In September, 2011, the Company paid the outstanding balance of a loan on the Jamaica, New York property in the amount of $2,090,493 (see Note 4(b) to the Consolidated Financial Statements)
Contractual Obligations:
At July 31, 2011, the Company had certain contractual cash obligations, as set forth in the following tables:
|
|
|
|
|
|
|
|
|
|
|
Contractual Cash Obligations |
|
Payment Due by Period |
|
Total |
|
Less than 1 Year |
|
1-3 Years |
|
4-5 Years |
|
After 5 Years |
Mortgages and term loan payable |
|
|
$ |
|
9,096,526 |
|
|
|
$ |
|
3,346,267 |
|
|
|
$ |
|
328,924 |
|
|
|
$ |
|
5,421,335 |
|
|
$ |
Note payable |
|
|
|
1,000,000 |
|
|
|
|
|
|
1,000,000 |
|
|
|
|
|
Security deposits payable |
|
|
|
977,939 |
|
|
|
|
141,704 |
|
|
|
|
166,936 |
|
|
|
|
381,276 |
|
|
|
|
288,023 |
|
Operating leases |
|
|
|
29,605,718 |
|
|
|
|
1,729,116 |
|
|
|
|
3,446,871 |
|
|
|
|
3,423,008 |
|
|
|
|
21,006,723 |
|
|
|
|
|
|
|
|
|
|
|
|
Total contractual cash obligations |
|
|
$ |
|
40,680,183 |
|
|
|
$ |
|
5,217,087 |
|
|
|
$ |
|
4,942,731 |
|
|
|
$ |
|
9,225,619 |
|
|
|
$ |
|
21,294,746 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows
The following table summarizes our cash flow activity for the fiscal years ended July 31, 2011, 2010 and 2009:
|
|
|
|
|
|
|
|
|
2011 |
|
2010 |
|
2009 |
Net cash provided by operating activities |
|
|
$ |
|
2,740,236 |
|
|
|
$ |
|
1,653,910 |
|
|
|
$ |
|
2,622,817 |
|
Net cash (used) by investing activities |
|
|
|
(1,344,518 |
) |
|
|
|
|
(546,066 |
) |
|
|
|
|
(1,322,905 |
) |
|
Net cash (used) by financing activities |
|
|
|
(290,994 |
) |
|
|
|
|
(209,933 |
) |
|
|
|
|
(2,121,583 |
) |
|
Cash Flows From Operating Activities:
Deferred Charges: The Company had expenditures for brokerage commissions for the year ended July 31, 2011 in the amount of $488,562, relating to two tenants at its Nine Bond Street, Brooklyn, New York property. The Company also incurred $169,740 for brokerage commissions on renewals of
existing tenant leases.
Payroll and Other Accrued Liabilities: The Company incurred $488,562 for brokerage commissions in order to lease space at the Companys property at Nine Bond Street, Brooklyn, New York for the year ended July 31, 2011. The Company also incurred $169,740 for brokerage commissions on renewals
of existing tenant leases
Cash Flows From Investing Activities:
The Company had expenditures of $1,492,112 for the year ended July 31, 2011, for the renovation of 18,218 square feet for office space for a tenant at the Companys Nine Bond Street, Brooklyn, New York building. The cost of the project is estimated to be $1,600,000 and is anticipated to be completed
in late 2011.
The Company had expenditures of $309,423 for the year ended July 31, 2011 for the removal of the foot bridge over Bond Street in Brooklyn, New York. The removal of the foot bridge is anticipated to be completed in October 2011. (See Note 3 to the Consolidated Financial Statements).
Cautionary Statement Regarding Forward-Looking Statements:
This section, Managements Discussion and Analysis of Financial Condition and Results of Operations, other sections of the Annual Report on Form 10-K and this Annual Report to Shareholders and other reports and
23
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 real estate industry. These include statements regarding our expectations about revenues, our liquidity, or 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 described under Item 1A, Risk Factors in our Form 10-K for the fiscal year ended July 31, 2011 and
the following, 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; |
|
|
|
|
|
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 Companys management reviewed the Companys internal controls and procedures and the effectiveness of these controls. As of July 31, 2011, the Company carried out an evaluation, under the supervision and with the participation of the Companys management, including its Chief Executive
Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Companys 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 Companys 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 Companys internal controls over financial reporting or in other factors during the Companys last fiscal quarter that materially affected, or are reasonably likely to materially affect, the Companys internal controls over financial reporting. There were no significant deficiencies or
material weaknesses, and therefore there were no corrective actions taken.
24
Quarterly Financial Information (Unaudited)
(dollars in thousands except per share data)
|
|
|
|
|
|
|
|
Three Months Ended |
|
Oct. 31, 2010 |
|
Jan. 31, 2011 |
|
Apr. 30, 2011 |
|
July 31, 2011 |
Revenues |
|
|
$ |
|
3,608 |
|
|
|
$ |
|
3,707 |
|
|
|
$ |
|
3,794 |
|
|
|
$ |
|
3,740 |
|
|
|
|
|
|
|
|
|
|
Revenues less expenses |
|
|
$ |
|
324 |
|
|
|
$ |
|
85 |
|
|
|
$ |
|
434 |
|
|
|
$ |
|
487 |
|
|
|
|
|
|
|
|
|
|
Net income (loss) from continuing operations |
|
|
$ |
|
175 |
|
|
|
$ |
|
(6 |
) |
|
|
|
$ |
|
214 |
|
|
|
$ |
|
375 |
|
(Loss) from discontinued operations (net of tax) |
|
|
|
|
|
|
|
|
(177 |
) |
|
|
|
|
(11 |
) |
|
|
|
|
(40 |
) |
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
|
$ |
|
175 |
|
|
|
$ |
|
(183 |
) |
|
|
|
$ |
|
203 |
|
|
|
$ |
|
335 |
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share |
|
|
|
|
|
|
|
|
From continuing operations |
|
|
$ |
|
.09 |
|
|
|
$ |
|
|
|
|
|
$ |
|
.11 |
|
|
|
$ |
|
.17 |
|
From discontined operations |
|
|
|
|
|
|
|
|
(.09 |
) |
|
|
|
|
|
|
|
|
|
(.02 |
) |
|
|
|
|
|
|
|
|
|
|
Total income (loss) per common share |
|
|
$ |
|
.09 |
|
|
|
$ |
|
(.09 |
) |
|
|
|
$ |
|
.11 |
|
|
|
$ |
|
.15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Oct. 31, 2009 |
|
Jan. 31, 2010 |
|
Apr. 30, 2010 |
|
July 31, 2010 |
Revenues |
|
|
$ |
|
3,753 |
|
|
|
$ |
|
3,625 |
|
|
|
|
$ |
|
3,764 |
|
|
|
$ |
|
3,626 |
|
|
|
|
|
|
|
|
|
|
Revenues less expenses |
|
|
$ |
|
505 |
|
|
|
$ |
|
158 |
|
|
|
$ |
|
384 |
|
|
|
$ |
|
94 |
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations |
|
|
$ |
|
329 |
|
|
|
$ |
|
111 |
|
|
|
$ |
|
61 |
|
|
|
$ |
|
160 |
|
Income (loss) from discontinued operations (net of tax) |
|
|
|
(30 |
) |
|
|
|
|
8 |
|
|
|
|
(15 |
) |
|
|
|
|
(192 |
) |
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
|
$ |
|
299 |
|
|
|
$ |
|
119 |
|
|
|
$ |
|
46 |
|
|
|
$ |
|
(32 |
) |
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share |
|
|
|
|
|
|
|
|
From continuing operations |
|
|
$ |
|
.16 |
|
|
|
$ |
|
.06 |
|
|
|
$ |
|
.03 |
|
|
|
$ |
|
.08 |
|
From discontined operations |
|
|
|
(.01 |
) |
|
|
|
|
|
|
|
|
|
(.01 |
) |
|
|
|
|
(.10 |
) |
|
|
|
|
|
|
|
|
|
|
Total income (loss) per common share |
|
|
$ |
|
.15 |
|
|
|
$ |
|
.06 |
|
|
|
$ |
|
.02 |
|
|
|
$ |
|
(.02 |
) |
|
|
|
|
|
|
|
|
|
|
Income per share is computed independently for each of the quarters presented on the basis described in Note 1 to the Consolidated Financial Statements.
25
Common Stock and Dividend Information
Effective November 8, 1999, the Companys common stock commenced trading on The Nasdaq Capital Market tier of The Nasdaq Stock Market under the Symbol: Mays. Such shares were previously traded on The Nasdaq National Market. Effective August 1, 2006, NASDAQ became operational as an
exchange in NASDAQ-Listed Securities. It is now known as The NASDAQ Stock Market LLC.
The following is the sales price range per share of J.W. Mays, Inc. common stock during the fiscal years ended July 31, 2011 and 2010:
|
|
|
|
|
Three Months Ended |
|
Sales Price |
|
High |
|
Low |
October 31, 2010 |
|
|
$ |
|
16.89 |
|
|
|
$ |
|
12.60 |
|
January 31, 2011 |
|
|
|
19.91 |
|
|
|
|
11.73 |
|
April 30, 2011 |
|
|
|
20.00 |
|
|
|
|
17.25 |
|
July 31, 2011 |
|
|
|
20.05 |
|
|
|
|
16.50 |
|
October 31, 2009 |
|
|
$ |
|
15.91 |
|
|
|
$ |
|
12.64 |
|
January 31, 2010 |
|
|
|
21.28 |
|
|
|
|
12.50 |
|
April 30, 2010 |
|
|
|
23.55 |
|
|
|
|
13.12 |
|
July 31, 2010 |
|
|
|
21.92 |
|
|
|
|
13.00 |
|
The quotations were obtained for the respective periods from the National Association of Securities Dealers, Inc. There were no dividends declared in either of the two fiscal years.
On September 9, 2011, the Company had approximately 1,350 shareholders of record.
26
J.W. MAYS, INC.
Officers
|
|
|
Lloyd J. Shulman |
|
Chairman of the Board, Chief Executive Officer and President and Chief Operating Officer |
Mark S. Greenblatt |
|
Vice President and Treasurer |
Ward N. Lyke, Jr. |
|
Vice President and Assistant Treasurer |
George Silva |
|
Vice PresidentOperations |
Salvatore Cappuzzo |
|
Secretary |
|
|
|
Board of Directors |
|
|
Mark S. Greenblatt3,5 |
|
Vice President and Treasurer, J.W. Mays, Inc. |
Dean L. Ryder1,2,3,4,6 |
|
President, Putnam County National Bank |
Jack Schwartz1,2,3,4,6 |
|
Private Consultant |
Lloyd J. Shulman1,3 |
|
Chairman of the Board, Chief Executive Officer and President and Chief Operating Officer, J.W. Mays, Inc. |
Lewis D. Siegel2,3,4,6 |
|
Senior Vice PresidentInvestments, Wells Fargo Advisers, LLC. |
Committee Assignments Key:
1 Member of Executive Committee
2 Member of Audit Committee
3 Member of Investment Advisory Committee
4 Member of Executive Compensation Committee
5
Member of Disclosure Committee (Mr. Lyke is also a member)
6 Member of Nominating Committee
Form 10-K Annual Report
Copies of the Companys Form 10-K Annual Report
to the Securities and Exchange Commission
for the fiscal year ended July 31, 2011
will be furnished without charge to
shareholders upon written request
to: Secretary, J.W. Mays, Inc.
9 Bond Street, Brooklyn, New York 11201-5805.
Copies of the Notice of meeting, Proxy Statement,
Proxy Card and Annual Report to Shareholders are available at:
http://www.amstock.com/proxyservices/viewmaterial.asp?CoNumber=03443
27