FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 2009
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission file number 1-3647
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J.W. Mays, Inc.
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(Exact name of registrant as specified in its charter)
New York 11-1059070
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
9 Bond Street, Brooklyn, New York 11201-5805
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(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) 718-624-7400
Not Applicable
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes __X___ No ____
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes ___ No __X__.
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
See the definitions of "large accelerated filer," "accelerated filer" and
"smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer _____ Accelerated filer ____
Non-accelerated filer ___X__ Smaller reporting company ____
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes ___ No __X__.
Indicate the number of shares outstanding of the issuer's common stock, as of
the latest practicable date.
Class Outstanding at December 9, 2009
----- -------------------------------
Common Stock, $1 par value 2,015,780 shares
This report contains 21 pages.
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J. W. MAYS, INC.
INDEX
Page No.
Part I - Financial Information:
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Income
and Retained Earnings 4
Condensed Consolidated Statements of
Comprehensive Income 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 6 - 13
Management's Discussion and Analysis of Results
of Operations and Financial Condition 13 - 15
Controls and Procedures 16
Part II - Other Information 17
Signatures 18
(31) Certifications Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
(31.1) - Chief Executive Officer 19
(31.2) - Chief Financial Officer 20
(32) Certification Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
18 U.S.C. Section 1350 21
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J. W. MAYS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
October 31 July 31
ASSETS 2009 2009
--------------------------------------------------------------- --------------- ---------------
(Unaudited) (Audited)
Property and Equipment - Net (Notes 7 and 8) $44,851,225 $45,037,497
------------- -------------
Current Assets:
Cash and cash equivalents 2,229,786 653,719
Marketable securities (Note 5) 225,350 49,888
Receivables 222,866 268,501
Real estate taxes refundable 173,904 -
Deferred income taxes 315,000 360,000
Prepaid expenses 927,102 1,974,478
Security deposits 207,676 257,108
------------- -------------
Total current assets 4,301,684 3,563,694
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Other Assets:
Deferred charges 3,399,067 3,348,869
Less accumulated amortization 1,756,227 1,662,701
------------- -------------
Net 1,642,840 1,686,168
Receivables 181,067 181,467
Security deposits 1,105,079 1,136,404
Unbilled receivables (Note 10) 2,332,302 2,476,588
Marketable securities (Note 5) 1,750,111 1,625,552
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Total other assets 7,011,399 7,106,179
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TOTAL ASSETS $56,164,308 $55,707,370
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
---------------------------------------------------------------
Long-Term Debt:
Mortgages and term loan payable (Note 7) $9,358,923 $8,563,925
Note payable - related party (Note 9) 1,000,000 1,000,000
Security deposits payable 782,431 804,756
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Total long-term debt 11,141,354 10,368,681
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Deferred Income Taxes 1,910,000 1,929,000
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Current Liabilities:
Accounts payable 95,481 91,403
Payroll and other accrued liabilities 1,219,708 1,476,955
Income taxes payable 191,734 346,355
Other taxes payable 5,062 2,300
Current portion of mortgages payable (Note 7) 759,435 949,603
Current portion of security deposits payable 207,676 257,108
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Total current liabilities 2,479,096 3,123,724
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Total liabilities 15,530,450 15,421,405
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Shareholders' Equity:
Common stock, par value $1 each share (shares - 5,000,000
authorized; 2,178,297 issued) 2,178,297 2,178,297
Additional paid in capital 3,346,245 3,346,245
Unrealized (loss) on available for sale securities
- net of deferred taxes (benefit) of
$(5,000) at October 31, 2009 and $(30,000) at July 31, 2009 (8,639) (58,078)
Retained earnings 36,405,807 36,107,353
------------- -------------
41,921,710 41,573,817
Less common stock held in treasury, at cost - 162,517
shares at October 31, 2009 and at July 31, 2009 (Note 13) 1,287,852 1,287,852
------------- -------------
Total shareholders' equity 40,633,858 40,285,965
------------- -------------
Contingencies (Note 15)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $56,164,308 $55,707,370
============= =============
See Notes to Condensed Consolidated Financial Statements.
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J. W. MAYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
Three Months Ended
October 31
------------------------------
2009 2008
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(Unaudited) (Unaudited)
Revenues
Rental income (Notes 6 and 10) $4,111,383 $3,922,846
Recovery of real estate taxes 114,251 -
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Total revenues 4,225,634 3,922,846
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Expenses
Real estate operating expenses 2,340,099 2,242,687
Administrative and general expenses 872,018 872,405
Depreciation and amortization 414,529 405,092
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Total expenses 3,626,646 3,520,184
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Income from operations before investment income,
interest expense and income taxes 598,988 402,662
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Investment income and interest expense
Investment income (Note 5) 25,120 (62,899)
Interest expense (Notes 7, 9, and 12) (165,654) (205,425)
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(140,534) (268,324)
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Income before income taxes 458,454 134,338
Income taxes provided 160,000 74,000
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Net income 298,454 60,338
Retained earnings, beginning of period 36,107,353 35,351,267
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Retained earnings, end of period $36,405,807 $35,411,605
============= =============
Income per common share (Note 2) $.15 $.03
============= =============
Dividends per share $- $-
============= =============
Average common shares outstanding 2,015,780 2,015,780
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See Notes to Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three Months Ended
October 31
-------------- ---------------
2009 2008
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(Unaudited) (Unaudited)
Net Income $298,454 $60,338
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Other comprehensive income, net of taxes (Note 3)
Unrealized gain (loss) on available-for-sale securities:
Net of taxes (benefit) of $25,000 and $(117,000) for the
three months ended October 31, 2009 and 2008, respectively 49,439 (126,184)
Reclassification adjustment - 99,976
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Net change in comprehensive income 49,439 (26,208)
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Comprehensive income $347,893 $34,130
============= =============
See Notes to Condensed Consolidated Financial Statements.
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J. W. MAYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
October 31
--------------------------------
2009 2008
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(Unaudited) (Unaudited)
Cash Flows From Operating Activities:
Net income $298,454 $60,338
Adjustments to reconcile net income to
net cash provided by operating activities:
Impairment of marketable securities - 99,976
Depreciation and amortization 414,529 405,092
Amortization of deferred charges 93,526 93,355
Other assets - deferred charges (50,198) -
- unbilled receivables 144,286 123,000
Deferred income taxes 1,000 (36,000)
Changes in:
Receivables 46,035 (54,373)
Real estate taxes refundable (173,904)
Prepaid expenses 1,047,376 924,491
Accounts payable 4,078 87,164
Payroll and other accrued liabilities (257,247) (315,830)
Income taxes payable (154,621) (59,171)
Other taxes payable 2,762 2,335
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Cash provided by operating activities 1,416,076 1,330,377
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Cash Flows From Investing Activities:
Capital expenditures (228,257) (272,734)
Security deposits 80,757 (634)
Marketable Securities:
Payments for purchases (225,582) (246)
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Cash (used) by investing activities (373,082) (273,614)
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Cash Flows From Financing Activities:
Increase (decrease) - security deposits (71,757) 635
Borrowings - mortgage and other debt 850,000 -
Decrease - mortgage and other debt payments (245,170) (551,685)
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Cash provided (used) by financing activities 533,073 (551,050)
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Increase in cash and cash equivalents 1,576,067 505,713
Cash and cash equivalents at beginning of period 653,719 1,475,390
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Cash and cash equivalents at end of period $2,229,786 $1,981,103
============= =============
See Notes to Condensed Consolidated Financial Statements.
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J. W. MAYS, INC.
NOTES TO CONDENSED 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 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.
The interim financial statements are prepared pursuant to the requirements
for reporting on Form 10-Q. The July 31, 2009 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, 2009. 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, 2010.
2. Income Per Share of Common Stock:
Income per share has been computed by dividing the net income for the
periods by the weighted average number of shares of common stock
outstanding during the periods, adjusted for the purchase of treasury
stock. Shares used in computing income per share were 2,015,780 for the
three months ended October 31, 2009 and October 31, 2008.
3. Comprehensive Income:
FASB ASC 220-10 (formerly known as 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. New Accounting Pronouncements:
In July 2009, the Financial Accounting Standards Board, or FASB, issued
FASB Statement No. 168, The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles - a replacement of
FASB Statement No. 162, which was titled The Hierarchy of Generally
Accepted Accounting Principles (the "Codification"). The Codification is
effective for financial statements issued for interim and annual periods
ending after September 15, 2009. The Codification is the single source of
authoritative accounting principles recognized by the FASB to be applied by
non-governmental entities in the preparation of financial statements in
conformity with GAAP. Although the adoption of the statement did not
materially affect our financial statements, the references to accounting
literature within the notes to the condensed consolidated financial
statements and elsewhere in this report conform to the Codification.
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5. Marketable Securities:
The Company categorizes marketable securities as either trading, available-
for-sale or held-to-maturity. Trading securities are carried at fair value
with unrealized gains and losses included in income. Available-for-sale
securities are carried at fair value 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 months ended October 31, 2009
and October 31, 2008. The implementation of ASC 10 (formerly FASB 157),
Fair Value Measurements, had no impact on the presentation of marketable
securities in the Company's financial statements. The Company does not
have any assets valued using Level 2 or 3 valuation methods. During 2009,
the Company adopted ASC 320-10-65, Transition Related to FSB FAS 115-2 and
FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairment
("ASC 320-10-65"). The implementation of this did not have an impact on
the Company's financial statements.
-7-
As of October 31, 2009, the Company's marketable securities were classified as follows:
October 31, 2009 July 31, 2009
---------------------------------------------------- ---------------------------------------------------
Gross Gross Gross Gross
Unrealized Unrealized Fair Unrealized Unrealized Fair
Cost Gains Losses Value Cost Gains Losses Value
------------ ------------- ------------- ----------- ------------- ------------ ------------ -----------
Current:
Held-to-maturity:
Certificate of deposit $49,950 $- $- $49,950 $49,888 $- $- $49,888
Corporate Debt
Securities 175,400 469 1,106 174,763 - - - -
------------ ------------ ------------- ----------- ------------- ------------ ------------ ------------
$225,350 $469 $1,106 $224,713 $49,888 $- $- $49,888
============ ============ ============= =========== ============= ============ ============ ============
Noncurrent:
Available-for-sale:
Equity securities $1,410,252 $95,005 $108,644 $1,396,613 $1,410,252 $52,810 $140,888 $1,322,174
============ ============ ============= =========== ============= ============ ============ ============
Held-to-Maturity:
Corporate Debt
Securities $353,498 $8,421 $599 $361,320 $303,378 $- $4,173 $299,205
============ ============ ============= =========== ============= ============ ============ ============
The Company's 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 October 31, 2009 are as follows. These
investment securities are considered to be temporarily impaired because, if held to maturity, the Company should not incur any
losses All of our investments in corporate debt securities mature in the 1-5 year time frame.
Less Than More Than
Fair Value 12 Months 12 Months
------------- ------------- -------------
Corporate Equity Securities $1,396,613 $- $108,644
Corporate Debt Securities 536,083 1,705 -
------------- ------------- -------------
$1,932,696 $1,705 $108,644
============= ============= =============
Investment income consists of the following:
Three Months Ended
October 31
------------------------------
2009 2008
------------- -------------
Interest income $4,189 $6,327
Dividend income 20,931 30,750
(Loss) on writedown or
impairment of securities - (99,976)
------------- -------------
Total $25,120 $(62,899)
============= =============
-8-
6. Financial Instruments and Credit Risk Concentrations:
Financial instruments that are potentially subject to concentrations of
credit risk consist principally of marketable securities, cash and cash
equivalents and receivables. Marketable securities, cash and cash
equivalents are placed with multiple financial institutions and
instruments to minimize risk. No assurance can be made that such
financial institutions and instruments will minimize all such risk.
The Company derives rental income from fifty-five tenants, of which one
tenant accounted for 15.82% and another tenant accounted for 15.51% of
rental income during the three months ended October 31, 2009. No other
tenant accounted for more than 10% of rental income during the same
period.
The Company has three irrevocable Letters of Credit totaling $367,500 at
October 31, 2009 and July 31, 2009, provided by three tenants.
7. Long-Term Debt - Mortgages and Term Loan:
October 31, 2009 July 31, 2009
-------------------------------- ---------------------------------
Current
Annual Final Due Due Due Due
Interest Payment Within After Within After
Rate Date One Year One Year One Year One Year
------- -------- -------------- -------------- -------------- ---------------
Mortgages:
Jamaica, New York property (a) 6% 4/01/12 $66,778 $1,138,315 $65,786 $1,155,387
Jamaica, New York property (b) 6.81% 10/01/11 131,081 2,218,564 128,856 2,251,859
Fishkill, New York property (c,d) 6.98% 2/18/15 37,258 1,703,380 62,453 1,691,509
Bond St. building, Brooklyn, NY (d) 6.98% 2/18/15 94,026 4,298,664 127,202 3,445,170
Term-loan payable to bank (e) 6.50% 5/01/10 230,292 - 325,306 -
Jowein building, Brooklyn, NY (f) Variable 8/01/10 200,000 - 240,000 20,000
-------------- -------------- -------------- ---------------
Total $759,435 $9,358,923 $949,603 $8,563,925
============== ============== ============== ===============
(a) The Company, on September 11, 1996, closed a loan with a bank in the
amount of $4,000,000. The loan is secured by a first mortgage lien
covering the entire leasehold interest of the Company, as tenant, in a
certain ground lease and building in the Jamaica, New York property. In
March 2007, the Company extended the loan for five years with an option for
an additional five year period. The interest rate for the initial five
years is 6.00% per annum. Interest and amortization of principal will be
made in constant monthly amounts based on a fifteen year (15) payout
period. The outstanding balance of the loan totaling $1,036,602 will
become due and payable on April 1, 2012.
(b) The Company, on December 13, 2000, closed a loan with a bank in the amount
of $3,500,000. The loan is secured by a second position leasehold mortgage
covering the entire leasehold interest of the Company, as tenant, in a
certain ground lease and building in the Jamaica, New York property. The
outstanding balance of the loan, totaling $2,739,452, became due and
payable on October 1, 2006. The Company exercised its option to extend the
loan for a additional five (5) years to October 1, 2011. The interest rate
for the extended period is 6.81% per annum. At the end of the five year
period there will be a balance due on the loan of $2,077,680.
As additional collateral security, the Company conditionally assigned to
the bank all leases and rents on the premises, or portions thereof,
whether now existing or hereafter consummated. The Company has an option
to prepay principal, in whole or in part, plus interest accrued thereon,
at any time during the term, without premium or penalty. Other
provisions of the loan agreement provide certain restrictions on the
incurrence of indebtedness on the Jamaica property and the sale or
transfer of the Company's ground lease interest in the premises.
-9-
(c) On August 19, 2004, the Company extended the then existing loan for an
additional forty-two (42) months, with an option to convert the loan to a
seven (7) year permanent mortgage loan. (See Note 7(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 finances seventy-five (75%)
percent of the cost of capital improvements for an existing lease to a
tenant and capital improvements for future tenant leases at the Company's
Brooklyn, New York (Bond Street building) and Fishkill, New York
properties. The loan will also finance $850,000 towards the construction
of two new elevators at the Company's Brooklyn, New York property (Bond
Street building). The Company had three and one-half years to draw down
amounts under this loan. The loan consists of: a) a permanent, first
mortgage loan to refinance an existing first mortgage loan affecting the
Fishkill Property, which matured on July 1, 2004 (the "First Permanent
Loan")(see Note 6(d)), b) a permanent subordinate mortgage loan in the
amount of $1,870,000 (the "Second Permanent Loan"), and c) multiple,
successively subordinate loans in the amount $8,295,274 ("Subordinate
Building Loans"). The loan is structured in two phases: 1) a forty-two
(42) month loan with payments of interest only at the floating one-month
LIBOR rate plus 2.25% per annum, but not less than 3.40%; and 2) after the
forty-two month period, the loan would convert to a seven-year (7)
permanent mortgage loan on a seventeen (17) year level amortization, plus
interest, at the option of the Company. The interest rate on the permanent
loan would be at a fixed rate equal to the Federal Home Loan Bank of New
York's seven-year (7) fixed interest rate plus 2.25% per annum at the time
of conversion. As of August 19, 2004, the Company refinanced the existing
mortgage on the Company's Fishkill, New York property, which balance was
$1,834,726 and took down an additional $2,820,000 for capital improvements
for two tenants at the Company's Bond Street building in Brooklyn, New
York. In fiscal 2006, 2007 and 2008, the Company drew down additional
amounts totaling $916,670, on its multiple draw term loan to finance tenant
improvements and brokerage commissions for the leasing of 13,026 square
feet for office use at the Company's Bond Street building in Brooklyn, New
York. The Company in February 2008 converted the loan to a seven (7) year
permanent mortgage loan. The interest rate on conversion was 6.98%. Since
the loan has been converted to a permanent mortgage loan, the balance of
the financing on this loan was for the new elevators at the Company's Bond
Street building in Brooklyn, New York in the amount of $850,000 referred to
above. In the three months ended October 31, 2009, the Company has drawn
down the $850,000.
(e) On February 18, 2005, the Company secured financing in the amount of
$1,700,000, from a bank whose president is a director of the Company. The
loan is a multiple draw loan, for a period of five (5) years, and is self-
amortizing, at an interest rate of 6.50% per annum. Interest paid for the
three months ended October 31, 2009 and 2008 was $4,259 and $10,255,
respectively.
(f) The Company, on July 22, 2005, closed a loan with a bank for $1,200,000.
The loan was used to finance the construction costs and brokerage
commissions associated with the leasing of 15,000 square feet for office
use to a tenant at the Company's Jowein building in Brooklyn, New York.
The loan is secured by the assignment of lease of 15,000 square feet. The
loan is for a period of five (5) years and is self-amortizing, at a
floating interest rate of prime plus 1.00% per annum. The interest rate at
October 31, 2009 was 4.25% per annum.
-10-
8. Property and Equipment - at cost:
October 31 July 31
2009 2009
--------------- ---------------
Property:
Buildings and improvements $64,476,942 $63,145,461
Improvements to leased property 9,154,777 9,154,777
Land 6,067,805 6,067,805
Construction in progress - 1,109,538
------------- -------------
79,699,524 79,477,581
Less accumulated depreciation 35,047,286 34,646,428
------------- -------------
Property - net 44,652,238 44,831,153
------------- -------------
Fixtures and equipment and other:
Fixtures and equipment 525,839 519,525
Other fixed assets 245,387 245,387
------------- -------------
771,226 764,912
Less accumulated depreciation 572,239 558,568
------------- -------------
Fixtures and equipment and other - net 198,987 206,344
------------- -------------
Property and equipment - net $44,851,225 $45,037,497
============= =============
9. Note Payable:
On December 15, 2004, the Company borrowed $1,000,000 from a former
director of the Company, who is also a greater than 10% beneficial owner
of the outstanding common stock of the Company. The term of the loan was
for a period of three (3) years maturing on December 15, 2007, at an
interest rate of 7.50% per annum. The loan is unsecured. The note is
prepayable in whole or in part at any time without penalty. The constant
quarterly payments of interest are $18,750. The Company extended the note
for an additional three (3) years maturing on December 15, 2010, at an
interest rate of 7.50% per annum.
10. 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.
11. Employees' Retirement Plan:
The Company contributes to a union sponsored multi-employer pension plan
covering its union employees. The Pension Plan contributions to the Plan
for the three months ended October 31, 2009 and 2008, were $4,649 and
$4,027, respectively. The Company also contributes to union sponsored
health benefit plans.
The Company sponsors a noncontributory Money Purchase Plan covering
substantially all of its non-union employees. Operations were charged
$78,911 and $75,000 as contributions to the Plan for the three months
ended October 31, 2009 and 2008, respectively.
-11-
12. 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
------------------------------
2009 2008
--------------- -------------
Interest paid, net of capitalized interest
of $569 (2009) and $11,677 (2008) $164,696 $209,087
Income taxes paid $295,975 $169,168
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 October 31, 2009 and at July 31,
2009.
14. Related Party Transactions:
In the three months ended October 31, 2009 and 2008, Holland & Knight LLP,
a law firm in which Lance D. Myers, a member of our Board of Directors, is
a partner, performed legal services for us for which it was paid $70,897
and $96,383, respectively.
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 Company's Consolidated Financial
Statements.
In response to a termination notice that the Company received concerning
its tenancy in a portion of the Jowein building, Brooklyn, New York, on
April 25, 2007, the Company filed a lawsuit against its landlords in New
York State Supreme Court, Kings County. In the lawsuit, the Company seeks
a judgment declaring that the landlords' termination notice was improperly
issued and that the Company is not required to correct or cure the
purported defaults cited in the termination notice. In addition, the
Company seeks an order temporarily, preliminarily and permanently
enjoining the landlords from taking any action to terminate the lease or
otherwise interfere with the Company's possession of the premises.
On May 16, 2007, the New York State Supreme Court granted the Company's
motion for preliminary injunctive relief and enjoined the landlords,
during the pendency of this action, from taking any action to evict the
Company, terminate the Company's lease which is scheduled to expire on
April 30, 2010, and/or commencing summary action adverse to the Company's
rights or otherwise disturb the Company's possession of the premises. The
landlords have answered the complaint denying the allegations and
asserting counterclaims against the Company relating to the premises.
Discovery has been completed and the trial date scheduled for November,
2009 has been adjourned without a new trial date being set. Management of
the Company is unable to predict the outcome of this matter or whether the
Company will be required to expend significant amounts of money in order
to correct any of the purported defaults.
If the lease is not renewed prior to expiration, the Company shall
surrender the premises in accordance with the terms of the lease. At this
time the Company is only able to estimate this cost at a range between
$700,000 and $1,200,000.
-12-
16. Subsequent events:
The Company evaluated events occurring between the end of its most recent
quarter and December 9, 2009, the date the financial statements were
issued.
J. W. MAYS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
Management's Discussion and Analysis of Financial Condition and Results of
Operations should be read in conjunction with our financial statements and
related notes thereto contained in this report. In this discussion, the words
"Company", "we", "our" and "us" refer to J.W. Mays, Inc. and subsidiaries.
The following can be interpreted as including forward-looking statements under
the Private Securities Litigation Reform Act of 1995. The words "outlook",
"intend", "plans", "efforts", "anticipates", "believes", "expects" or words of
similar import typically identify such statements. Various important factors
that could cause actual results to differ materially from those expressed in
the forward-looking statements are identified under the heading "Cautionary
Statement Regarding Forward-Looking Statements" below. Our actual results may
vary significantly from the results contemplated by these forward-looking
statements based on a number of factors including, but not limited to,
availability of labor, marketing success, competitive conditions and the
change in economic conditions of the various markets we serve.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires us to make
estimates and judgments that affect the reported amounts of assets,
liabilities, revenues, expenses and related disclosure of contingent assets
and liabilities. We believe the critical accounting policies in Note 1 to the
Condensed Consolidated Financial Statements affect our more significant
judgments and estimates used in the preparation of our financial statements.
Actual results may differ from these estimates under different assumptions and
conditions. (See Note 1 on page 6 to the Condensed Consolidated Financial
Statements herein and Note 1 on pages 8 and 9 to the Condensed Consolidated
Financial Statements in the Annual Report to Shareholders for the fiscal year
ended July 31, 2009).
Results of Operations:
Three Months Ended October 31, 2009 Compared to the Three Months Ended October
31, 2008:
In the three months ended October 31, 2009, the Company reported net income of
$298,454, or $.15 per share. In the comparable three months ended October 31,
2008, the Company reported net income of $60,338, or $.03 per share.
Revenues in the current three months increased to $4,225,634 from $3,922,846
in the comparable 2008 three months. The increase in revenues was due to the
Company's leasing to one additional tenant at the Company's Brooklyn, New York
property.
The recovery of real estate taxes in the current three months in the amount
of $114,251, net of legal expenses, represents prior years' real estate taxes
from one of the Company's properties. The comparable 2008 year did not have a
recovery of real estate taxes.
Real estate operating expenses in the current three months increased to
$2,340,099 from $2,242,687 in the comparable 2008 three months primarily due
to increases in rental expense and real estate taxes, partially offset by
decreases in maintenance and utility costs.
-13-
Administrative and general expenses in the current three months decreased to
$872,018 from $872,405 in the comparable 2008 three months primarily due to
decreases in legal and professional costs, partially offset by increases in
payroll costs.
Depreciation and amortization expense in the current three months increased to
$414,529 from $405,092 in the comparable 2008 three months.
Interest expense and other expenses in the current three months exceeded
investment income by $140,534 and by $268,324 in the comparable 2008 three
months. The decrease in the excess of interest expense over investment income
was due to the principal write-down of $99,976 due to the impairment of the
Company's investment in Lehman Brothers Holdings Inc. preferred stock in the
2008 three month period and 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 $2,229,786 at October 31,
2009.
As part of the $12,000,000 multiple draw term loan, the bank agreed to finance
the cost of two new elevators at the Company's Bond Street building in
Brooklyn, New York. The amount financed was $850,000. In September 2009 and
October 2009, the Company drew down the $850,000. (See Note 7(d) to the
Condensed Consolidated Financial Statements). The total cost of the elevator
project was $1,270,607 and was completed in August 2009.
A tenant who occupies 26,110 square feet of retail space at the Company's
Jowein building in Brooklyn, New York, vacated the premises in October 2009.
The annual loss in rental income will be approximately $400,000. The Company
is actively seeking through brokers tenants to occupy the vacated space.
The leases with the Company's landlords at the Jowein building in Brooklyn,
New York, expire on April 30, 2010. The Company is committed to return the
premises in the condition the Company received it, taking into account normal
wear and tear. At this time we are only able to estimate that the costs
required to separate the building will range between $700,000 and $1,200,000.
The loss in cash flow to the Company will be insignificant when compared to
the fiscal 2009 cash flow.
On August 12, 2009, a tenant in our Bond Street building in Brooklyn, New York
filed for Chapter 11 protection. This tenant is expected to account for 1.66%
of our projected annual income for the year ending July 31, 2010. While we
cannot ascertain what the effect of this filing will be on the Company, cash
flows would be adversely affected by approximately $23,000 per month should
the tenant reject the lease and vacate the premises.
In September 2009, the Company entered into a lease agreement with a drive-in
restaurant at the Company's Massapequa premises. The drive-in restaurant
intends to construct a new building. The tenant's 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 late 2010. This will replace 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.
Cash Flows From Operating Activities:
A tenant at the Company's Jowein building in Brooklyn, New York paid the rent
in advance to the end of the lease term which is April 2010. The amount paid
in advance as of October 31, 2009 was $178,840.
-14-
Cash Flows From Investing Activities:
The Company had expenditures of $161,069 in the three months ended October 31,
2009 for the construction of two new elevators. The total cost of the project
was $1,270,607, of which $850,000 was financed by a bank. The project was
completed in August 2009.
Cash Flows From Financing Activities:
Borrowing: The Company drew down an additional $850,000 on its multiple draw
term loan to finance two new elevators at the Company's Bond Street building
in Brooklyn, New York. (See Note 7(d) to the Condensed Consolidated Financial
Statements.)
Quantitative and Qualitative Disclosures About Market Risks:
The Company uses both fixed-rate and variable-rate debt to finance its capital
requirements. These transactions expose the Company to market risk related to
changes in interest rates. The Company does not use derivative financial
instruments. At October 31, 2009, the Company had fixed-rate debt of
$10,918,358 and variable-rate debt of $200,000. Because of the Jowein
building, Brooklyn, New York loan (presently with a balance of $200,000), if
interest rates were to change 100 basis points, the effect on net income from
operations and future cash flows would be a decrease, should the rates
increase, or an increase, should the rates decline, of $2,000 for this loan.
Cautionary Statement Regarding Forward-Looking Statements:
This section, Management's Discussion and Analysis of Financial Condition and
Results of Operations, other sections of this Report on Form 10-Q and other
reports and verbal statements made by our representatives from time to time
may contain forward-looking statements that are based on our assumptions,
expectations and projections about us and the securities industry. These
include statements regarding our expectations about revenues, our liquidity,
our expenses and our continued growth, among others. Such forward-looking
statements by their nature involve a degree of risk and uncertainty. We
caution that a variety of factors, including but not limited to the factors
listed below, could cause business conditions and our results to differ
materially from what is contained in forward-looking statements:
changes in the rate of economic growth in the United States;
the ability to obtain credit from financial institutions and at what costs;
changes in the financial condition of our customers;
changes in regulatory environment;
lease cancellations;
changes in our estimates of costs;
war and/or terrorist attacks on facilities where services are or may be
provided;
outcomes of pending and future litigation;
increasing competition by other companies;
compliance with our loan covenants;
recoverability of claims against our customers and others by us and claims
by third parties against us; and
changes in estimates used in our critical accounting policies.
Other factors and assumptions not identified above were also involved in the
formation of these forward-looking statements and the failure of such other
assumptions to be realized, as well as other factors, may also cause actual
results to differ materially from those projected. Most of these factors are
difficult to predict accurately and are generally beyond our control. You
should consider the areas of risk described above in connection with any
forward-looking statements that may be made by us.
We undertake no obligation to publicly update any forward-looking statements,
whether as a result of new information, future events or otherwise. You are
advised, however, to consult any additional disclosures we make in proxy
statements, Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K and
Current Reports on Form 8-K filed with the Securities and Exchange Commission.
-15-
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, 2009,
the Company carried out an evaluation, under the supervision and with the
participation of the Company's management, including its Chief Executive
Officer and Chief Financial Officer, of the effectiveness of the design and
operation of the Company's disclosure controls and procedures pursuant to
Rules 13a-14(c) and 15d-14(c) of the Securities Exchange Act of 1934. Based
upon that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that the Company's disclosure controls and procedures are effective
in timely alerting them to material information relating to the Company
required to be included in its periodic SEC filings.
There was no change in the Company's internal controls over financial
reporting or in other factors during the Company's last fiscal quarter that
materially affected, or are reasonably likely to materially affect, the
Company's internal controls over financial reporting. There were no
significant deficiencies or material weaknesses, and therefore there were no
corrective actions taken.
Our Accounting Department is comprised of four persons. Due to such a limited
number of persons, a complete segregation of all of the duties as to which the
department is responsible is not possible. In order to make sure that the
inability to segregate all duties does not affect our timely and accurate
financial reporting, we need to remain vigilant in maintaining compensating
controls. These compensating controls will continue to be monitored in order
to assure us that our internal controls over financial reporting remain at a
high level despite the limited number of Accounting Department personnel.
-16-
Part II - Other Information
Item 6 - Exhibits and Reports on Form 8-K
(a) List of Exhibits:
Sequentially
Exhibit Numbered
Number Exhibit Page
------- ------- ------------
(3) Articles of Incorporation and Bylaws. N/A
(10) Material contracts. N/A
(11) Statement re computation of per share earnings N/A
(12) Statement re computation of ratios N/A
(14) Code of ethics 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
(31) Additional exhibits--Certifications Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
(31.1) Chief Executive Officer 19
(31.2) Chief Financial Officer 20
(32) Certification Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, 18 U.S.C. Section. 1350. 21
(b) Reports on Form 8-K - One report on Form 8-K was filed by the
registrant during the three months ended October 31, 2009.
Items reported:
The Company reported its financial results for the three and twelve
months ended July 31, 2009.
Date of report filed - October 8, 2009.
-17-
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 9, 2009 Lloyd J. Shulman
--------------------------
Lloyd J. Shulman
President
Chief Executive Officer
Date December 9, 2009 Mark S. Greenblatt
--------------------------
Mark S. Greenblatt
Vice President
Chief Financial Officer
-18-
EXHIBIT 31.1
CERTIFICATION
I, Lloyd J. Shulman, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of J.W. Mays, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
(b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under my
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.
Date: December 9, 2009
/s/ Lloyd J. Shulman
---------------------------
Lloyd J. Shulman
President
Chief Executive Officer
-19-
EXHIBIT 31.2
CERTIFICATION
I, Mark S. Greenblatt, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of J.W. Mays, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
(b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under my
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.
Date: December 9, 2009
/s/ Mark S. Greenblatt
---------------------------
Mark S. Greenblatt
Vice President
Chief Financial Officer
-20-
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, 2009 as filed with the Securities
and Exchange Commission (the "Report"), we, Lloyd J. Shulman and Mark S.
Greenblatt, Chief Executive Officer and Chief Financial Officer, respectively,
of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to our
knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
December 9, 2009
/s/ Lloyd J. Shulman
---------------------------
Lloyd J. Shulman
Chief Executive Officer
/s/ Mark S. Greenblatt
---------------------------
Mark S. Greenblatt
Chief Financial Officer
A signed original of this written statement required by Section 906 has been
provided to J.W. Mays, Inc. and will be retained by J. W. Mays, Inc. and
furnished to the Securities and Exchange Commission or its staff upon request.
-21-