-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Wce0fbvzdsE5CrymJ+HHem0XRG9CGSuD8LRnGUIY4DiFLFCWRaSw65IJATblHTF/ +m6bRnrzHXIHq9lAEpmlrw== 0000950110-98-001201.txt : 19981021 0000950110-98-001201.hdr.sgml : 19981021 ACCESSION NUMBER: 0000950110-98-001201 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980731 FILED AS OF DATE: 19981020 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MAYS J W INC CENTRAL INDEX KEY: 0000054187 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 111059070 STATE OF INCORPORATION: NY FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-03647 FILM NUMBER: 98727906 BUSINESS ADDRESS: STREET 1: 9 BOND ST CITY: BROOKLYN STATE: NY ZIP: 11201-5805 BUSINESS PHONE: 7186247400 MAIL ADDRESS: STREET 1: 9 BOND STREET CITY: BROOKLYN STATE: NY ZIP: 11201-5805 10-K 1 FORM 10-K ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-K ------------------------ [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED: JULY 31, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NUMBER: 1-3647 J. W. MAYS, INC. ------------------------------------------------------ (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) NEW YORK 11-1059070 ------------------------------- -------------------- (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 9 BOND STREET, BROOKLYN, NEW YORK 11201-5805 --------------------------------------- ---------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) Registrant's telephone number, including area code: (718) 624-7400 Securities registered pursuant to Section 12(b) of the Act: TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED ------------------- ----------------------------------------- NONE NONE Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, PAR VALUE $1 PER SHARE ------------------------------------ (TITLE OF CLASS) 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 IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS FORM 10-K. [X] NO DELINQUENT FILERS. THE AGGREGATE MARKET VALUE OF VOTING STOCK HELD BY NONAFFILIATES OF THE REGISTRANT WAS APPROXIMATELY $6,670,620 AS OF SEPTEMBER 25, 1998 BASED ON THE AVERAGE OF THE BID AND ASKED PRICE OF THE STOCK REPORTED FOR SUCH DATE. FOR THE PURPOSE OF THE FOREGOING CALCULATION, THE SHARES OF COMMON STOCK HELD BY EACH OFFICER AND DIRECTOR AND BY EACH PERSON WHO OWNS 5% OR MORE OF THE OUTSTANDING COMMON STOCK HAVE BEEN EXCLUDED IN THAT SUCH PERSONS MAY BE DEEMED TO BE AFFILIATES. THIS DETERMINATION OF AFFILIATE STATUS IS NOT NECESSARILY A CONCLUSIVE DETERMINATION FOR OTHER PURPOSES. The number of shares outstanding of the registrant's common stock as of September 25, 1998 was 2,135,780. DOCUMENTS INCORPORATED BY REFERENCE PART OF FORM 10-K IN WHICH THE DOCUMENT DOCUMENT IS INCORPORATED -------- --------------------- Annual Report to Shareholders for Fiscal Year Ended July 31, 1998 Parts I and II Definitive Proxy Statement for the 1998 Annual Meeting of Shareholders Part III ================================================================================
J. W. MAYS, INC. FORM 10-K FOR THE FISCAL YEAR ENDED JULY 31, 1998 TABLE OF CONTENTS PART I PAGE ---- Item 1. Business ............................................................................... 3 Item 2. Properties ............................................................................. 3 Item 3. Legal Proceedings ...................................................................... 7 Item 4. Submission of Matters to a Vote of Security Holders .................................... 7 Executive Officers of the Registrant ............................................................ 8 PART II Item 5. Market for Registrant's Common Stock and Related Shareholder Matters ................... 8 Item 6. Selected Financial Data ................................................................ 8 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations ........................................................................... 8 Item 8. Financial Statements and Supplementary Data ............................................ 8 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ............................................................................ 9 PART III Item 10. Directors and Executive Officers of the Registrant ..................................... 9 Item 11. Executive Compensation ................................................................. 9 Item 12. Security Ownership of Certain Beneficial Owners and Management ......................... 9 Item 13. Certain Relationships and Related Transactions ......................................... 9 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K ....................... 9
2 PART I ITEM 1. BUSINESS. J. W. Mays, Inc. (the "Company" or "Registrant") with executive offices at 9 Bond Street, Brooklyn, New York 11201, operates a number of commercial real estate properties. See below for the description of these properties (Item 2. Properties). The Company's business was founded in 1924 and incorporated under the laws of the State of New York on July 6, 1927. The Company discontinued its department store business which operated under the name of "MAYS," in the year ended July 31, 1989, and has continued the leasing of real estate. The Company has no foreign operations. The Company employs approximately 30 employees and has a contract with a union covering rates of pay, hours of employment and other conditions of employment for 20% of its employees. The Company considers that its labor relations with its employees and union are good. ITEM 2. PROPERTIES. The table below sets forth certain information as to each of the properties currently operated by the Company: APPROXIMATE LOCATION SQUARE FEET -------- ----------- 1. Brooklyn, New York Fulton Street at Bond Street .................. 380,000 2. Brooklyn, New York Jowein Building Fulton Street and Elm Place ................... 430,000 3. Jamaica, New York Jamaica Avenue at 169th Street ................ 297,000 4. Fishkill, New York Route 9 at Interstate Highway 84 .............. 211,000 (located on 14.9 acres) 5. Levittown, New York Hempstead Turnpike ............................ 85,800 6. Massapequa, New York Sunrise Highway ............................... 133,400 7. Circleville, Ohio Tarlton Road .................................. 193,350 (located on 11.6 acres) 8. Brooklyn, New York Truck Bays, passage facilities and tunnel-- Schermehorn Street .......................... 17,000 Building--Livingston Street ................... 10,500 Properties leased are under long-term leases for varying periods, the longest of which extends to 2013, and in most instances renewal options are included. Reference is made to Note 6 to the Consolidated Financial Statements contained in the 1998 Annual Report to Shareholders, incorporated herein by reference. The properties owned which are held subject to mortgage are the Jowein building, Jamaica building, Fishkill property, Ohio property and a small part of the Company's former Brooklyn store. 3 1. Brooklyn, New York--Fulton Street at Bond Street 15% of the premises is leased by the Company under eight separate leases. Expiration dates are as follows: 1/31/2001 (2 leases); 4/30/2011 (4 leases); 6/30/2011 (1 lease); and 12/8/2013 (1 lease). One lease which expires 1/31/2001 has a 10 year option and the lease which expires 12/8/2013 has two thirty year options through 12/8/2073. There are no present plans for additional improvements of this property. The property is currently leased to seven tenants of which five are retail tenants and two occupy office space. One tenant occupies in excess of 10% of the rentable square footage (26.11%). This tenant subleases to a flea market, department store, shoe store and various other retail shops. The lease expires April 30, 2011 with no renewal options. OCCUPANCY LEASE EXPIRATION --------------------- ---------------------------------------- YEAR YEAR NUMBER OF AREA ENDED RATE ENDED LEASES SQ. FT. ------- ------ --------- ------ ------- 7/31/94 28.77% 7/31/1999 1 3,080 7/31/95 28.77% 7/31/2000 1 2,140 7/31/96 28.77% 7/31/2001 2 3,718 7/31/97 28.77% 7/31/2003 1 63 7/31/98 28.77% 7/31/2004 1 1,140 7/31/2011 1 99,190 - ------- 7 109,331 - ------- The federal tax basis is $8,412,611 with accumulated depreciation of $4,608,313 for a net carrying value of $3,804,298 as of July 31, 1998. The life taken for depreciation varies between 18-40 years and the methods used are the straight-line and the declining balance. The real estate taxes for this property are $670,959 and the rate used is averaged at $10.164 per $100 of assessed valuation. 2. Brooklyn, New York--Jowein Building, Fulton St. & Elm Place Approximately 50% of the premises is owned and 50% is leased. The lease is with one landlord and expires April 30, 2010. There are no renewal options. There are no present plans for additional improvement of this property. Approximately 280,000 square feet of the property is currently leased to twelve tenants of which eight are retail stores, one is a restaurant and three leases are for office space. One tenant is a New York City agency which occupies in excess of 10% of the rentable square footage (31.19%). The lease expires April 29, 2010 with no renewal options. Approximately 110,000 square feet of the building is available for lease. OCCUPANCY LEASE EXPIRATION ---------------------- -------------------------------------- YEAR YEAR NUMBER OF AREA ENDED RATE ENDED LEASES SQ. FT. ------- ------ --------- ------ ------- 7/31/94 67.99% 7/31/2001 2 34,110 7/31/95 50.34% 7/31/2004 1 23,603 7/31/96 63.67% 7/31/2007 1 5,500 7/31/97 65.19% 7/31/2008 1 500 7/31/98 65.19% 7/31/2010 7 216,613 -- ------- 12 280,326 -- ------- The federal tax basis is $10,006,821 with accumulated depreciation of $5,300,586 for a net carrying value of $4,706,235 as of July 31, 1998. The life taken for depreciation varies between 18-40 years and the methods used are the straight-line and the declining balance. The real estate taxes for this property are $860,890 and the rate used is averaged at $10.164 per $100 of assessed valuation. 4 3. Jamaica, New York--Jamaica Avenue at 169th Street The building is owned and the fee is leased from an affiliated company. The lease expires July 31, 2027. Approximately 54,000 square feet was renovated for office space for four tenants. Occupancy commenced May 1, 1997 for two tenants, November 1997 for one tenant and January 1998 for the fourth tenant. There are no present plans for additional improvement of the balance of the property. The property is currently leased to nine tenants; five are retail tenants and four leases are for office space. Two tenants occupy in excess of 10% of the rentable square footage. One of the tenants is a department store that occupies 27.50% of the rentable space with a lease that expires August 31, 2005 and has one five year renewal option. The other tenant is a major retail toy store which occupies 15.95% of the rentable space. The lease expires January 31, 2006 with six renewal options of five years each and 2,700 square feet to another tenant for retail space. Approximately 83,000 square feet of the building are available for lease. OCCUPANCY LEASE EXPIRATION --------------------- ----------------------------------------- YEAR YEAR NUMBER OF AREA ENDED RATE ENDED LEASES SQ. FT. ------- ------ --------- ------ ------- 7/31/94 45.55% 7/31/2002 1 2,680 7/31/95 45.55% 7/31/2006 2 128,342 7/31/96 44.72% 7/31/2007 4 46,107 7/31/97 59.59% 7/31/2008 2 8,021 - ------- 7/31/98 62.34% 9 185,150 - ------- The federal tax basis is $11,290,746 with accumulated depreciation of $5,349,700 for a net carrying value of $5,941,046 as of July 31, 1998. The life taken for depreciation varies between 18-40 years and the methods used are the straight-line and the declining balance. The real estate taxes for this property are $265,621 and the rate used is averaged at $10.164 per $100 of assessed valuation. 4. Fishkill, New York--Route 9 at Interstate Highway 84 The Company owns the entire premises. There are no present plans for the additional improvement of this property. Approximately 26,000 square feet are leased to one tenant for office space and 186,000 square feet of the building are available for lease. OCCUPANCY LEASE EXPIRATION --------------------- ------------------------------------------- YEAR YEAR NUMBER OF AREA ENDED RATE ENDED LEASES SQ. FT. ------- ------ --------- --------- -------- 7/31/94 94.45% 7/31/2001 1 25,915 7/31/95 42.75% 7/31/96 55.03% 7/31/97 12.28% 7/31/98 12.28% The federal tax basis is $8,905,467 with accumulated depreciation of $5,126,305 for a net carrying value of $3,779,162 as of July 31, 1998. The life taken for depreciation varies between 18-40 years and the methods used are the straight-line and the declining balance. The real estate taxes for this property are $134,783 and the rate used is averaged at $2.89 per $100 of assessed valuation. 5 5. Levittown, New York--Hempstead Turnpike The Company owns the entire premises. There are no present plans for additional improvement of this property. The property is currently leased to one tenant that operates the premises as a game room and fast food restaurant. The lease expires September 30, 2004 with one five year renewal option. OCCUPANCY LEASE EXPIRATION -------------------- ---------------------------------------- YEAR YEAR NUMBER OF AREA ENDED RATE ENDED LEASES SQ. FT. ------- ---- ------- ------ ------- 7/31/94 100% 7/31/2005 Building 15,243 7/31/95 100% Land 70,557 ------ 7/31/96 100% 1 85,800 ------ 7/31/97 100% 7/31/98 100% The federal tax basis is $273,550 with accumulated depreciation of $261,206 for a net carrying value of $12,344 as of July 31, 1998. The life taken for depreciation varies between 18-40 years and the methods used are the straight-line and the declining balance. The real estate taxes for this property are $99,488 and the rate used is averaged at $95.10 per $100 of assessed valuation. 6. Massapequa, New York--Sunrise Highway The Company leases the entire premises under one lease. The lease expires May 14, 2009. There are no renewal options. There are no present plans for additional improvement of this property. The property is currently sub-leased to two tenants; one, a gasoline service station and the other, a bank. Each of these tenants occupy in excess of 10% of the rentable square footage. The gasoline service station lease expires April 29, 2009 with no renewal options. The sub-lease to the bank expires May 14, 2009 with no renewal options. OCCUPANCY LEASE EXPIRATION ---------------------- ---------------------------------------- YEAR YEAR NUMBER OF AREA ENDED RATE ENDED LEASES SQ. FT. ------- ---- --------- --------- ------ 7/31/94 100% 7/31/2009 2 133,400 7/31/95 100% 7/31/96 100% 7/31/97 100% 7/31/98 100% The real estate taxes for this property are $249,605 and the rate used is averaged at $78.68 per $100 of assessed valuation. The Company does not own this property. Improvements to the property are made by the tenants. 6 7. Circleville, Ohio--Tarlton Road The Company owns the entire premises. There are no present plans for additional improvement of this property. The entire property is currently leased to one tenant. The tenant is a manufacturer and uses these premises as a warehouse and distribution facility. The lease expires September 30, 2002. There are three five year renewal options. OCCUPANCY LEASE EXPIRATION ------------------- ---------------------------------------- YEAR YEAR NUMBER OF AREA ENDED RATE ENDED LEASES SQ. FT. ------- ---- --------- --------- ------- 7/31/94 100% 7/31/2003 1 193,350 7/31/95 100% 7/31/96 100% 7/31/97 100% 7/31/98 100% The federal tax basis is $4,388,456 with accumulated depreciation of $783,653 for a net carrying value of $3,604,803 as of July 31, 1998. The life taken for depreciation varies between 18-40 years and the methods used are the straight-line and the declining balance. The real estate taxes for this property are $42,438 and the rate used is averaged at $37.14 per $1,000 of assessed valuation. 8. The City of New York through its Economic Development Administration ("New York City") constructed a municipal garage at Livingston Street opposite the Company's Brooklyn properties. The Company has a long-term lease with New York City expiring in 2013 with renewal options, the last of which expires in 2073, under which: (1) Such garage, available to the public, provides truck bays and passage facilities through a tunnel for the exclusive use of the Company, to the structure referred to in (2) below; the bays, passage facilities and tunnel, totaling approximately 17,000 square feet, are included in the lease from New York City mentioned in the preceding paragraph and are in full use. (2) The Company constructed a six-story building and basement on a 20 x 75-foot plot (acquired and made available by New York City and leased to the Company for a term expiring in 2013 with renewal options, the last of which expires in 2073) adjacent to and connected with the Company's Brooklyn properties, which provides the other end of the tunnel with the truck bays in the municipal garage. In the opinion of management, all of the Company's properties are adequately covered by insurance. See Note 11 to the Consolidated Financial Statements of the 1998 Annual Report to Shareholders, which information is incorporated herein by reference, for information concerning those tenants the rental income from which equals 10% or more of the Company's rental income. ITEM 3. LEGAL PROCEEDINGS. 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. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. During the fourth quarter of the fiscal year covered by this report, no matter was submitted to a vote of security holders of the Company. 7 EXECUTIVE OFFICERS OF THE REGISTRANT The following information is furnished with respect to each Executive Officer of the Registrant (each of whom is elected annually) whose present term of office will expire upon the election and qualification of his successor: FIRST BECAME BUSINESS EXPERIENCE DURING SUCH OFFICER NAME AGE THE PAST FIVE YEARS OR DIRECTOR ---- --- -------------------------- ------------ Lloyd J. Shulman .... 56 President November, 1978 Co-Chairman of the Board and President June, 1995 Chairman of the Board and President November, 1996 Director November, 1977 Alex Slobodin ....... 83 Executive Vice President November, 1965 Treasurer September, 1955 Director November, 1963 Ward N. Lyke, Jr. ... 47 Vice President February, 1984 George Silva ........ 48 Vice President March, 1995 Salvatore Cappuzzo .. 39 Secretary November, 1981 All of the above mentioned officers have been appointed as such by the directors and, except for Mr. Silva, have been employed as Executive Officers of the Company during the past five years. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS. The information appearing under the heading "Common Stock Prices and Dividends" on page 20 of the Registrant's 1998 Annual Report to Shareholders is incorporated herein by reference. ITEM 6. SELECTED FINANCIAL DATA. The information appearing under the heading "Summary of Selected Financial Data" on page 2 of the Registrant's 1998 Annual Report to Shareholders is incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The information appearing under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 17 through 19 of the Registrant's 1998 Annual Report to Shareholders is incorporated herein by reference. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The Registrant's Consolidated Financial Statements, together with the report of D'Arcangelo & Co., LLP, Independent Accountants, dated October 7, 1998, appearing on pages 4 through 15 of the Registrant's 1998 Annual Report to Shareholders is incorporated herein by reference. With the exception of the aforementioned information and the information incorporated by reference in Items 2, 5, 6, 7 and 8 hereof, the 1998 Annual Report to Shareholders is not to be deemed filed as part of this Form 10-K Annual Report. 8 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. The information required by that part of this item relating to Changes in Registrant's Certifying Accountants appears in the Registrant's Form 8-K dated January 11, 1996, amended February 6, 1996 by Form 8-K/A, and such information is incorporated herein by reference. Response to that part of this item relating to Disagreements with Accountants and Financial Disclosures--None, as it applies to both the former and present accountants. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. The information relating to directors of the Registrant is contained in the Definitive Proxy Statement for the 1998 Annual Meeting of Shareholders and such information is incorporated herein by reference. The information with respect to Executive Officers of the Registrant is set forth in Part I hereof. ITEM 11. EXECUTIVE COMPENSATION. The information required by this item appears under the heading "Executive Compensation and Related Matters" in the Definitive Proxy Statement for the 1998 Annual Meeting of Shareholders and such information is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The information required by this item appears under the headings "Security Ownership of Certain Beneficial Owners and Management" and "Information Concerning Nominees for Election as Directors" in the Definitive Proxy Statement for the 1998 Annual Meeting of Shareholders and such information is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. The information required by this item appears under the heading "Executive Compensation and Related Matters" in the Definitive Proxy Statement for the 1998 Annual Meeting of Shareholders and such information is incorporated herein by reference. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. (a) The following documents are filed as part of this report: 1. The Consolidated Financial Statements and report of D'Arcangelo & Co., LLP, Independent Accountants, dated October 7, 1998, set forth on pages 4 through 15 of the Registrant's 1998 Annual Report to Shareholders. 2. See accompanying Index to Registrant's Financial Statements and Schedules. 9 3. Exhibits: (2) Plan of acquisition, reorganization, arrangement, liquidation or succession--not applicable. (3) Articles of incorporation and by-laws: (i) Certificate of Incorporation, as amended, incorporated by reference to Registrant's Form 8-K dated December 3, 1973. (ii) By-laws, as amended June 1, 1995, incorporated by reference to Registrant's Form 10-K dated October 23, 1995. (4) Instruments defining the rights of security holders, including indentures--see Exhibit (3) above. (9) Voting trust agreement--not applicable. (10) Material contracts: (i) Agreement of Lease dated March 29, 1990 pursuant to which the basement and a portion of the street floor, approximately 32% of the total area of the Registrant's former Jamaica store, has been leased to a tenant for retail space, incorporated by reference to Registrant's Form 10-K dated October 29, 1990. (ii) Agreement of Lease dated July 5, 1990, as amended February 25, 1992, pursuant to which a portion of the street floor and basement, approximately 35% of the total area of the Registrant's former Brooklyn store, has been leased to a tenant for the retail sale of general merchandise and for a restaurant, incorporated by reference to Registrant's Form 10-K dated October 29, 1990. (iii) The J. W. Mays, Inc. Retirement Plan and Trust, Summary Plan Description, effective August 1, 1991, incorporated by reference to Registrant's Form 10-K dated October 23, 1992 and, as amended, effective August 1, 1993, incorporated by reference to Registrant's Form 10-Q for the Quarter ended October 31, 1993 dated December 2, 1993. (11) Statement re computation of per share earnings--not applicable. (12) Statement re computation of ratios--not applicable. (13) Annual report to security holders. (16) Letter re change in certifying accountant--the information required by this item appears in the Registrant's Form 8-K dated January 11, 1996, amended February 6, 1996 by Form 8-K/A, and such information is incorporated herein by reference. (18) Letter re change in accounting principles--not applicable. (21) Subsidiaries of the registrant. (22) Published report regarding matters submitted to vote of security holders--not applicable. (24) Power of attorney--none. (28) Information from reports furnished to state insurance regulatory authorities--not applicable. (99) Additional exhibits--none. (b) Reports on Form 8-K -- No reports on Form 8-K were required to be filed by the Registrant during the three months ended July 31, 1998. 10 SIGNATURES PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) 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) October 19, 1998 By: /s/ LLOYD J. SHULMAN --------------------------------------- Lloyd J. Shulman Chairman of the Board Principal Executive Officer President Principal Operating Officer October 19, 1998 By: /s/ ALEX SLOBODIN --------------------------------------- Alex Slobodin Executive Vice President and Treasurer Principal Financial Officer October 19, 1998 By: /s/ MARK GREENBLATT --------------------------------------- Mark Greenblatt Controller PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT IN THE CAPACITIES AND ON THE DATE INDICATED. SIGNATURE TITLE DATE --------- ----- ---- /s/ LLOYD J. SHULMAN Chairman of the Board, October 19, 1998 - ------------------------------ Chief Executive Officer, Lloyd J. Shulman President, Chief Operating Officer and Director /s/ ALEX SLOBODIN Executive Vice President, October 19, 1998 - ------------------------------ Treasurer and Director Alex Slobodin /s/ FRANK J. ANGELL Director October 19, 1998 - ------------------------------ Frank J. Angell /s/ LANCE D. MYERS Director October 19, 1998 - ------------------------------ Lance D. Myers /s/ JACK SCHWARTZ Director October 19, 1998 - ------------------------------ Jack Schwartz Director October 19, 1998 - ------------------------------ Max L. Shulman /s/ SYLVIA W. SHULMAN Director October 19, 1998 - ------------------------------ Sylvia W. Shulman /s/ LEWIS D. SIEGEL Director October 19, 1998 - ------------------------------ Lewis D. Siegel 11 INDEX TO REGISTRANT'S FINANCIAL STATEMENTS AND SCHEDULES Reference is made to the following sections of the Registrant's Annual Report to Shareholders for the fiscal year ended July 31, 1998, which are incorporated herein by reference: Report of Independent Accountants (page 15) Consolidated Balance Sheets (pages 4 and 5) Consolidated Statements of Operations and Retained Earnings (page 6) Consolidated Statements of Cash Flows (page 7) Notes to Consolidated Financial Statements (pages 8-15) PAGE ---- Financial Statement Schedules: Report of Independent Accountants ........... 12 II Valuation and Qualifying Accounts ........... 13 III Real Estate and Accumulated Depreciation 14 All other schedules for which provision is made in the applicable regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, accordingly, are omitted. The separate financial statements and schedules of J. W. Mays, Inc. (not consolidated) are omitted because the Company is primarily an operating company and its subsidiaries are wholly-owned. ---------- REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES To the Board of Directors and Shareholders J. W. Mays, Inc. and Subsidiaries We have audited the consolidated financial statements of J. W. Mays, Inc. and subsidiaries as of July 31, 1998 and 1997, and for the three years ended July 31, 1998 and have issued our report thereon dated October 7, 1998; such consolidated financial statements and report are incorporated by reference in this Form 10-K Annual Report. Our audits also included the consolidated financial statement schedules of J. W. Mays, Inc. and subsidiaries listed in Item 14(a)2 of this Form 10-K. These consolidated financial statement schedules are the responsibility of the Corporation's management. Our responsibility is to express an opinion based on our audits. In our opinion, such consolidated financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein. D'ARCANGELO & CO., LLP Purchase, N.Y October 7, 1998 12 SCHEDULE II J. W. MAYS, INC. VALUATION AND QUALIFYING ACCOUNTS YEAR ENDED JULY 31, ----------------------------------- 1998 1997 1996 -------- -------- -------- Allowance for net unrealized gains (losses) on marketable securities: Balance, beginning of period .......... $152,151 $ 25,261 $ 42,010 Additions (Reductions) ................ 271,728 126,890 (16,749) -------- -------- -------- Balance, end of period ................ $423,879 $152,151 $ 25,261 ======== ======== ======== Deferred income tax asset valuation allowance: Balance, beginning of period .......... $ 26,952 $ 41,597 $117,098 (Reductions) .......................... (1,961) (14,645) (75,501) -------- -------- -------- Balance, end of period ................ $ 24,991 $ 26,952 $ 41,597 ======== ======== ======== 13
SCHEDULE III J. W. MAYS, INC. REAL ESTATE AND ACCUMULATED DEPRECIATION JULY 31, 1998 ========================================================================================================== COL. A COL. B COL. C COL. D - ---------------------------------------------------------------------------------------------------------- COST CAPITALIZED INITIAL COST TO COMPANY SUBSEQUENT TO ACQUISITION ------------------------------------------------------- ENCUM- BUILDING & CARRYING DESCRIPTION BRANCES LAND IMPROVEMENTS IMPROVEMENTS COST - ---------------------------------------------------------------------------------------------------------- OFFICE AND RENTAL BUILDINGS Brooklyn, New York Fulton Street at Bond Street .... $ 193,274 $1,703,157 $ 3,862,454 $ 6,342,155 $ -- Jamaica, New York Jamaica Avenue at 169th Street ................... 3,666,666 -- 3,215,699 8,075,048 -- Fishkill, New York Route 9 at Interstate Highway 84 ...................... 2,442,584 467,341 7,212,116 1,735,672 -- Brooklyn, New York Jowein Building Fulton Street and Elm Place ..... 758,595 1,622,232 770,561 9,236,260 -- Levittown, New York Hempstead Turnpike .............. -- 95,256 200,560 72,990 -- Circleville, Ohio Tarlton Road .................... 1,580,714 120,849 4,388,456 -- -- ---------- ---------- ----------- ----------- ------- Total (A) ....................... $8,641,833 $4,008,835 $19,649,846 $25,462,125 $ -- ========== ========== =========== =========== ======= ==================================================================================================================================== COL. A COL. E COL. F COL. G COL. H COL. I - ------------------------------------------------------------------------------------------------------------------------------------ GROSS AMOUNT AT WHICH CARRIED LIFE ON WHICH AT CLOSE OF PERIOD DEPRECIATON IN ------------------------- LATEST INCOME BUILDING & ACCUMULATED DATE OF DATE STATEMENT IS DESCRIPTION LAND IMPROVEMENTS TOTAL DEPRECIATION CONSTRUCTION ACQUIRED COMPUTED - ------------------------------------------------------------------------------------------------------------------------------------ OFFICE AND RENTAL BUILDINGS Brooklyn, New York Fulton Street at Bond Street . $1,703,157 $10,204,609 $11,907,766 $ 4,760,866 Various Various (1) (2) Jamaica, New York Jamaica Avenue at 169th Street ................ -- 11,290,747 11,290,747 5,318,818 1959 1959 (1) (2) Fishkill, New York Route 9 at Interstate Highway 84 ................... 467,341 8,947,788 9,415,129 4,650,385 10/74 11/72 (1) Brooklyn, New York Jowein Building Fulton Street and Elm Place .. 1,622,232 10,006,821 11,629,053 5,518,588 1915 1950 (1) (2) Levittown, New York Hempstead Turnpike ........... 95,256 273,550 368,806 245,092 4/69 6/62 (1) Circleville, Ohio Tarlton Road ................. 120,849 4,388,456 4,509,305 603,413 9/92 12/92 (1) ---------- ----------- ----------- ----------- Total (A) .................... $4,008,835 $45,111,971 $49,120,806 $21,097,162 ========== =========== =========== ===========
- ------------------- (1) (Building and improvements 18-40 years (2) (Improvements to leased property 3-40 years (A) Does not include Office Furniture and Equipment and Transportation Equipment in the amount of $748,715 and Accumulated Depreciation thereon of $531,303 at July 31, 1998. YEAR ENDED JULY 31, ---------------------------------------- 1998 1997 1996 ----------- ----------- ----------- INVESTMENT IN REAL ESTATE Balance at Beginning of Year ..... $48,096,243 $45,128,700 $43,475,739 Improvements ..................... 1,024,563 2,967,543 1,652,961 ----------- ----------- ----------- Balance at End of Year ........... $49,120,806 $48,096,243 $45,128,700 =========== =========== =========== ACCUMULATED DEPRECIATION Balance at Beginning of Year ..... $20,143,617 $19,233,598 $18,398,773 Additions Charged to Costs and Expenses ....................... 953,545 910,019 834,825 ----------- ----------- ----------- Balance at End of Year ........... $21,097,162 $20,143,617 $19,233,598 =========== =========== =========== 14 EXHIBIT INDEX TO FORM 10-K (2) Plan of acquisition, reorganization, arrangement, liquidation or succession--not applicable (3) (i) Articles of incorporation--incorporated by reference (ii) By-laws--incorporated by reference (4) Instruments defining the rights of security holders, including indentures--see Exhibit (3) above (9) Voting trust agreement--not applicable (10) Material contracts--(i) through (iii) incorporated by reference (11) Statement re computation of per share earnings--not applicable (12) Statement re computation of ratios--not applicable (13) Annual report to security holders (16) Letter re change in certifying accountant (18) Letter re change in accounting principles--not applicable (21) Subsidiaries of the registrant (22) Published report regarding matters submitted to vote of security holders--not applicable (24) Power of attorney--none (28) Information from reports furnished to state insurance regulatory authorities--not applicable (99) Additional exhibits--none EXHIBIT 13 (COPY OF ANNUAL REPORT TO SHAREHOLDERS ATTACHED HERETO) FISCAL YEAR ENDED JULY 31, 1998 (NEXT PAGE) EXHIBIT 21 SUBSIDIARIES OF THE REGISTRANT The Registrant owns all of the outstanding stock of the following corporations, which are included in the Consolidated Financial Statements filed with this report: DUTCHESS MALL SEWAGE PLANT, INC. (a New York corporation) J. W. M. Realty Corp. (an Ohio corporation) 15 EX-13 2 ANNUAL REPORT J. W. MAYS, INC. Annual Report 1998 Year Ended July 31, 1998 J.W. MAYS, INC. CONTENTS PAGE NO. ================================================================================ Summary of Selected Financial Data 2 The Company 2 Message to Shareholders 3 Consolidated Balance Sheets 4-5 Consolidated Statements of Operations and Retained Earnings 6 Consolidated Statements of Cash Flows 7 Notes to Consolidated Financial Statements 8-15 Report of Independent Auditor 15 Five Year Summary of Consolidated Operations 16 Management's Discussion and Analysis of Financial Condition and Results of Operations 17-19 Quarterly Financial Information (Unaudited) 20 Common Stock Prices and Dividends 20 Officers and Directors 21 EXECUTIVE OFFICES 9 Bond Street, Brooklyn, N.Y. 11201 TRANSFER AGENT AND REGISTRAR American Stock Transfer & Trust Company 40 Wall Street New York, N.Y. 10005 SPECIAL COUNSEL Cullen and Dykman 177 Montague Street Brooklyn, N.Y. 11201 INDEPENDENT ACCOUNTANTS D'Arcangelo & Co., LLP 3010 Westchester Avenue Purchase, N.Y. 10577 COMMON STOCK The Company's common stock trades on the Nasdaq National Market tier of The Nasdaq Stock Market under the Symbol: "Mays". ANNUAL MEETING The Annual Meeting of Shareholders will be held on Tuesday, November 24, 1998, 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) ======================================================================================================== 1998 1997 1996 1995 1994 - ------------------------------------------------------------------------------------------------------- Rental Income ................................ $ 10,249 $ 9,666 $ 8,855 $ 7,944 $ 9,075 Rental Income--Affiliated Company ............ 414 414 414 386 416 Recovery of Real Estate Taxes ................ 1,219 -- -- -- 32 - -------------------------------------------------------------------------------------------------------- Total Revenues ............................... 11,882 10,080 9,269 8,330 9,523 - -------------------------------------------------------------------------------------------------------- Income (Loss) Before Cumulative Effect of Changes in Accounting Principles ............ 1,838 811 (141) (394) (32) Accounting for Certain Investments in Debt and Equity Securities ..................... -- -- -- 22 -- Accounting for Income Taxes ................ -- -- -- -- (275) - -------------------------------------------------------------------------------------------------------- Net Income (Loss) ............................ 1,838 811 (141) (372) (307) - -------------------------------------------------------------------------------------------------------- Real Estate--Net ............................. 28,024 27,953 25,895 25,077 24,912 - -------------------------------------------------------------------------------------------------------- Total Assets ................................. 41,375 40,406 37,771 36,144 37,290 - -------------------------------------------------------------------------------------------------------- Long-Term Debt: Mortgages Payable .......................... 7,814 8,642 6,965 5,954 6,359 Other ...................................... 582 641 734 678 672 -------- -------- -------- -------- -------- Total .................................... 8,396 9,283 7,699 6,632 7,031 - -------------------------------------------------------------------------------------------------------- Shareholders' Equity ......................... 30,059 28,030 27,141 27,293 27,637 - -------------------------------------------------------------------------------------------------------- Income (Loss) Per Common Share: Income (Loss) Before Cumulative Effect of Changes in Accounting Principles .......... .86 .38 (.07) (.18) (.02) Accounting for Certain Investments in Debt and Equity Securities ................... -- -- -- .01 -- Accounting for Income Taxes .............. -- -- -- -- (.13) -------- -------- -------- -------- -------- Net Income (Loss) Per Common Share ....... $ .86 $ .38 $ (.07) $ (.17) $ (.15) - -------------------------------------------------------------------------------------------------------- Cash Dividends Declared Per Share ............ -- -- -- -- -- - --------------------------------------------------------------------------------------------------------
Average common shares outstanding for 1998, 2,135,780; 1997, 2,136,175; 1996, 2,136,397; 1995, 2,136,397; and 1994, 2,137,440. 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, 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 is leased to tenants while the remainder is available for lease. More comprehensive information concerning the Company appears in its Annual Report on Form 10-K for the fiscal year ended July 31, 1998. 2 J.W. MAYS, INC. TO OUR SHAREHOLDERS: - -------------------------------------------------------------------------------- I am pleased to report that the current fiscal year has shown an improvement over the 1997 fiscal year's results. Revenues for the current fiscal year increased to $11,881,859 from $10,080,382 in the 1997 fiscal year. In fiscal 1998, our Company's net income amounted to $1,837,733, or $.86 per share, compared to net income of $810,925, or $.38 per share, in the comparable 1997 fiscal year. The current year's net income is after a pre-tax bad debt recovery of $52,749, compared to $418,789 in the 1997 year, from tenants which had filed for bankruptcy protection under Chapter 11 prior to fiscal 1997. The 1998 year also includes a pre-tax recovery of prior years' real estate taxes of $1,218,600, net of legal expense and credits to tenants in accordance with the terms of their leases, from the City of New York and the Town of Fishkill, New York. Max L. Shulman, a director and former Chairman of the Board, advised that, after more than 50 years of service to the Company, regretfully, he will not stand for re-election to the Board. This annual report would not be complete without acknowledging his contributions and dedicated service to our Company. He leaves the Company with our deep respect and gratitude. The Company appreciates your support and our gratitude extends, as well, to our employees and directors for their dedication and hard work. I look forward to reporting on our continued improvement through fiscal 1999 and beyond. Sincerely, /s/ LLOYD J. SHULMAN - ------------------------------- Lloyd J. Shulman Chairman/President October 7, 1998 3 J.W. MAYS, INC. CONSOLIDATED BALANCE SHEETS July 31, 1998 and 1997 ASSETS
1998 1997 ==================================================================================== Property and Equipment--at cost (Notes 1 and 3): Buildings and improvements ....................... $35,622,806 $34,944,039 Improvements to leased property .................. 9,143,369 9,143,369 Fixtures and equipment ........................... 539,422 510,108 Land ............................................. 4,008,835 4,008,835 Other ............................................ 209,293 180,382 Construction in progress ......................... 345,796 -- ------------ ------------ 49,869,521 48,786,733 Less accumulated depreciation and amortization ... 21,628,465 20,660,899 ------------ ------------ Property and equipment--net .................. 28,241,056 28,125,834 ------------ ------------ Current Assets: Cash and cash equivalents (Notes 10 and 11) ....... 1,047,979 234,288 Marketable securities (Notes 1, 2 and 11) ......... 137,721 28,288 Receivables (Note 7) .............................. 461,770 563,410 Deferred income taxes (Notes 1 and 5) ............. 100,000 67,000 Security deposits ................................. 8,540 -- Prepaid expenses .................................. 953,728 1,150,916 ----------- ----------- Total current assets .......................... 2,709,738 2,043,902 ----------- ----------- Other Assets: Deferred charges (Note 1) .......................... 2,793,022 2,745,524 Less accumulated amortization ...................... 1,186,957 1,030,351 ----------- ----------- Net ............................................ 1,606,065 1,715,173 Security deposits (Note 11) ........................ 615,107 589,492 Unbilled receivables (Notes 1 and 7) ............... 4,017,915 3,651,795 Unbilled receivable--affiliated company (Note 7) ... 727,750 909,688 Receivables ........................................ 180,311 384,088 Receivable--affiliated company (Note 7) ............ 87,943 194,453 Marketable securities (Notes 1, 2 and 11) .......... 3,189,039 2,791,555 ----------- ----------- Total other assets ............................. 10,424,130 10,236,244 ----------- ----------- TOTAL ASSETS $41,374,924 $40,405,980 =========== ===========
See Notes to Consolidated Financial Statements. 4
LIABILITIES AND SHAREHOLDERS' EQUITY 1998 1997 ===================================================================================================== Long-Term Debt: Mortgages payable (Notes 3 and 11) .................................. $ 7,814,161 $ 8,641,833 Other (Note 4) ...................................................... 581,673 640,868 ----------- ----------- Total long-term debt ............................................ 8,395,834 9,282,701 ----------- ----------- Deferred Income Taxes (Notes 1 and 5) ................................. 1,293,000 326,000 ----------- ----------- Current Liabilities: Payable to securities broker ........................................ -- 1,270,053 Accounts payable .................................................... 42,782 46,256 Payroll and other accrued liabilities (Note 8) ...................... 559,344 553,215 Income taxes payable (Notes 1 and 5) ................................ 82,348 11,436 Other taxes payable ................................................. 1,907 1,918 Current portion of long-term debt--other (Note 4) ................... 112,540 104,000 Current portion of long-term debt--mortgages payable (Notes 3 and 11) 827,672 780,365 ----------- ----------- Total current liabilities ....................................... 1,626,593 2,767,243 ----------- ----------- Total liabilities ............................................... 11,315,427 12,375,944 ----------- ----------- Shareholders' Equity: Common stock, par value $1 each share (shares--5,000,000 authorized; 2,178,297 issued) ...................................... 2,178,297 2,178,297 Additional paid in capital .......................................... 3,346,245 3,346,245 Unrealized gain on available for sale securities (Notes 1 and 2) .... 292,879 101,151 Retained earnings ................................................... 24,532,178 22,694,445 ----------- ----------- 30,349,599 28,320,138 Less common stock held in treasury, at cost-- 42,517 shares at 1998 and 1997 ..................................... 290,102 290,102 ----------- ----------- Total shareholders' equity ...................................... 30,059,497 28,030,036 ----------- ----------- Commitments (Notes 6 and 7) and Contingencies (Note 12) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ...................... $41,374,924 $40,405,980 =========== =========== 5
J.W. MAYS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS Years Ended July 31, ------------------------------------------ 1998 1997 1996 ==================================================================================================== Revenues Rental income (Notes 1 and 7) ........................ $10,249,650 $ 9,666,773 $ 8,855,159 Rental income--affiliated company .................... 413,609 413,609 413,609 Recovery of real estate taxes ........................ 1,218,600 -- -- ----------- ----------- ----------- Total revenues ................................. 11,881,859 10,080,382 9,268,768 ----------- ----------- ----------- Expenses Real estate operating expenses (Note 6) .............. 5,416,292 5,873,719 5,678,653 Administrative and general expenses .................. 2,076,614 1,939,303 2,007,987 Bad debts (recovery) (Note 12) ....................... (52,749) (418,789) 424,011 Depreciation and amortization ........................ 1,011,318 966,628 888,932 ----------- ----------- ----------- Total expenses ................................. 8,451,475 8,360,861 8,999,583 ----------- ----------- ----------- Income (loss) from operations before investment income, interest expense and income taxes .................... 3,430,384 1,719,521 269,185 ----------- ----------- ----------- Investment income and interest expense Investment income (Notes 1 and 2) .................... 269,646 267,876 249,479 Interest expense (Notes 3 and 10) .................... 812,297 696,472 681,950 ----------- ----------- ----------- (542,651) (428,596) (432,471) ----------- ----------- ----------- Income (loss) before income taxes ..................... 2,887,733 1,290,925 (163,286) Income taxes provided (benefit) (Notes 1 and 5) ....... 1,050,000 480,000 (22,000) ----------- ----------- ----------- Net income (loss) ..................................... 1,837,733 810,925 (141,286) Retained earnings, beginning of year .................. 22,694,445 21,883,520 22,024,806 ----------- ----------- ----------- Retained earnings, end of year ........................ $24,532,178 $22,694,445 $21,883,520 =========== =========== =========== Income (loss) per common share (Note 1) ............... $ .86 $ .38 $ (.07) =========== =========== =========== Dividends per share .................................. -- -- -- Average common shares outstanding ..................... 2,135,780 2,136,175 2,136,397 =========== =========== ===========
See Notes to Consolidated Financial Statements. 6
J.W. MAYS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended July 31, ----------------------------------------- 1998 1997 1996 ======================================================================================================== Cash Flows From Operating Activities Net income (loss) ........................................ $ 1,837,733 $ 810,925 $ (141,286) Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: Deferred income taxes ................................... 854,000 359,000 (124,000) Amortization of premium on marketable debt securities ............................................. (661) (417) 723 Realized loss on marketable securities .................. 14,997 2,618 6,642 Depreciation and amortization ........................... 1,011,318 966,628 888,932 Amortization of deferred expenses ....................... 248,601 229,344 238,134 Other assets--deferred expenses ......................... (139,493) (413,552) (353,270) --security deposits ..................... (34,155) 297,629 (428,480) --unbilled receivables .................. (366,120) (479,875) (144,829) --unbilled receivable--affiliated company 181,938 44,828 44,828 --receivables ........................... 203,777 (384,088) -- --receivable--affiliated company ........ 106,510 -- (84,766) Changes in: Receivables ............................................. 101,640 (248,231) (70,187) Prepaid expenses ........................................ 197,188 20,980 (50,202) Real estate taxes refundable ............................ -- 13,409 (13,409) Income taxes refundable ................................. -- 4,496 (4,496) Accounts payable ........................................ (3,474) 13,796 (32,284) Payroll and other accrued liabilities ................... 6,129 6,845 58,414 Income taxes payable .................................... 70,912 11,436 (18,588) Other taxes payable ..................................... (11) (3,276) 1,113 ----------- ----------- ----------- Net cash provided (used) by operating activities ..... 4,290,829 1,252,495 (227,011) ----------- ----------- ----------- Cash Flows From Investing Activities Acquisition of property and equipment .................... (1,126,540) (3,011,956) (1,683,503) Marketable securities: Receipts from sales or maturities ....................... 486,524 246,994 476,497 Payments for purchases .................................. (736,049) (51,292) (427,692) ----------- ----------- ----------- Net cash (used) by investing activities ............. (1,376,065) (2,816,254) (1,634,698) ----------- ----------- ----------- Cash Flows From Financing Activities Borrowings--securities broker ............................ 1,708,595 655,020 1,348,262 Payments--securities broker .............................. (2,978,648) (882,287) (1,076,042) Borrowings--mortgages and other notes payable ............ -- 2,500,000 1,500,000 Increase--other debt ..................................... 54,513 340,248 445,041 Payments--mortgage and other debt ........................ (885,533) (1,221,725) (433,214) Purchase of treasury stock ............................... -- (5,862) -- ----------- ----------- ----------- Net cash provided (used) by financing activities ..... (2,101,073) 1,385,394 1,784,047 ----------- ----------- ----------- Net increases (decrease) in cash and cash equivalents .... 813,691 (178,365) (77,662) Cash and cash equivalents at beginning of year ........... 234,288 412,653 490,315 ----------- ----------- ----------- Cash and cash equivalents at end of year ................. $ 1,047,979 $ 234,288 $ 412,653 =========== =========== =========== 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 generally accepted accounting principles (GAAP). The preparation of the Company's financial statements in conformity with GAAP requires management to make estimates that affect the reported consolidated statements of operations and the consolidated balance sheets and related disclosures. Actual results could differ from those estimates. 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. MARKETABLE SECURITIES: The Company categorizes marketable securities as either trading, available for sale or held to maturity. Trading securities are carried at fair value with unrealized gains and losses included in income. Available for sale securities are carried at fair value with unrealized gains and losses recorded as a separate component of shareholders' equity. Held to maturity securities are carried at amortized cost. Dividends and interest income are accrued as earned. 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: Building 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. 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. Interest is capitalized in connection with the construction/renovations of real property. The capitalized interest is recorded as part of the asset to which it relates and will be amortized over the asset's estimated useful life. LONG-LIVED ASSETS: The Financial Accounting Standards Board issued Statement of Financial Standards No. 121 ("SFAS 121"), "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of", effective for fiscal years beginning after December 15, 1995. SFAS 121 requires the recognition of an impairment loss related to long-lived assets and certain identifiable intangibles whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The adoption of the new accounting standard has not had an effect on the consolidated financial statements. RECENT ACCOUNTING PRONOUNCEMENTS: In June 1997, SFAS No. 130, "Reporting Comprehensive Income", ("SFAS 130") was issued. SFAS 130 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. SFAS 130 is effective for financial statements for periods beginning after December 15, 1997. Reclassification of financial statements for earlier periods presented for comparative purposes is required upon adoption. In June 1997, SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information", ("SFAS 131") was issued. SFAS 131 establishes standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in annual financial statements and in interim financial reports issued to shareholders. SFAS 131 is effective for financial statements for periods beginning after December 15, 1997. In February 1998, the Financial Accounting Standards Board issued Statement of Financial Standards No. 132 "Employers' Disclosure about Pensions and Other Post-Retirement Benefits", ("SFAS 132"), effective for fiscal years beginning after December 15, 1997. The Company's Retirement Plan is 100% funded, with Company contributions made quarterly, and there will be no additional liability recognized by the Company. 8 ================================================================================ The Company anticipates that the adoption of SFAS 130, SFAS 131 and SFAS 132 will not have an effect on its 1998 financial statements. 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 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 Company's 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 (LOSS) PER SHARE OF COMMON STOCK: Income (loss) per share has been computed by dividing net income or loss 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 or (loss) per share were 2,135,780 in fiscal 1998, 2,136,175 in fiscal 1997 and 2,136,397 in fiscal 1996. The Company's adoption of FASB 128 "Earnings per Share" has had no effect on the computation of previously reported earnings per share. RECLASSIFICATIONS: Certain accounts for the years ended July 31, 1997 and 1996 have been reclassified to reflect comparability with account classifications adopted for the year ended July 31, 1998 with no effect on previously reported net income. 2. MARKETABLE SECURITIES: As of July 31, 1998 and 1997, the Company's marketable securities were classified as follows:
1998 1997 -------------------------------------------- ------------------------------------------------ GROSS GROSS Gross Gross UNREALIZED UNREALIZED FAIR Unrealized Unrealized Fair COST GAINS LOSSES VALUE Cost Gains Losses Value -------------------------------------------- ------------------------------------------------ Current: Certificate of deposit ..... $ 38,344 $ -- $-- $ 38,344 $ 28,288 $ -- $ -- $ 28,288 Held to maturity: Corporate debt securities due within one year ...... 99,377 1,840 -- 101,217 -- -- -- -- ---------- -------- --- ---------- ---------- -------- ---- ---------- Total current ........... $ 137,721 $ 1,840 $-- $ 139,561 $ 28,288 $ -- $ -- $ 28,288 ========== ======== === ========== ========== ======== ==== ========== Non-current: Available for sale: Equity securities ........ $2,765,160 $423,879 $-- $3,189,039 $2,540,688 $152,151 $ -- $2,692,839 Held to maturity: Corporate debt securities .. -- -- -- -- 98,716 3,971 -- 102,687 ---------- -------- --- ---------- ---------- -------- ---- ---------- Total non-current ....... $2,765,160 $423,879 $-- $3,189,039 $2,639,404 $156,122 $ -- $2,795,526 ========== ======== === ========== ========== ======== ==== ==========
Investment income consists of the following: 1998 1997 1996 ---- ---- ---- Interest income ....................... $ 81,746 $ 48,642 $ 43,294 Dividend income ....................... 202,897 221,852 212,827 (Loss) on sale of securities .......... (14,997) (2,618) (6,642) -------- -------- -------- Total ............................... $269,646 $267,876 $249,479 ======== ======== ======== 9
================================================================================================================ 3. LONG-TERM DEBT: JULY 31, 1998 July 31, 1997 -------------------- --------------------- Current Annual Final DUE DUE Due Due Interest Payment WITHIN AFTER Within After Rate Date ONE YEAR ONE YEAR One Year One Year -------- ------- -------- -------- -------- -------- Mortgages: Jamaica, New York Property .... (a) 8 1/2% 4/01/07 $266,666 $3,400,000 $266,667 $3,666,666 Jowein Building, Brooklyn, N.Y (b) 9 % 3/31/00 83,545 675,050 76,431 758,595 Fishkill, New York Property ... (c) 9 % 11/01/99 129,992 2,312,592 118,844 2,442,584 Circleville, Ohio Property .... (d) 7 % 9/30/02 338,555 1,242,159 310,233 1,580,714 Other ......................... 8 1/2% 5/01/01 8,914 184,360 8,190 193,274 -------- ---------- -------- ---------- Total ...................... $827,672 $7,814,161 $780,365 $8,641,833 ======== ========== ======== ==========
(a) The Company, on September 11, 1996, closed a loan with a bank in the amount of $4,000,000. The loan is secured by a first mortgage lien covering the entire leasehold interest of the Company, as tenant, in a certain ground lease and building in the Jamaica property. The loan proceeds were utilized by the Company toward (i) payment in full of the outstanding term loan by the Company in favor of the same bank in the amount of $1,500,000 plus interest and (ii) its costs for the renovations to the portions of the premises in connection with the Company's sublease of a significant portion of the building. Although the loan was closed on September 11, 1996 the entire $4,000,000 was not drawn down until March 31, 1997. The interest rate on the loan is 81 @2% for a period of five (5) years and six (6) months, with such rate to change on the first day of the sixty-seventh (67th) month of the term to a rate equal to the then prime rate plus 1 @4%, fixed for the balance of the term. The loan is to become due and payable on the first day of the month following the expiration of ten (10) years and six (6) months from the closing date. During the first six (6) months of the term, the Company had the option to secure advances against the loan amount with the loan to convert to a ten (10) year term at the expiration of the initial six (6) month period thereof. (b) Mortgage is held by an affiliated corporation owned by members, including certain directors of the Company, of the family of the late Joe Weinstein, former Chairman of the Board of Directors. Interest and amortization of principal are paid quarterly. Effective April 1, 1997, the maturity date of the mortgage which was scheduled to be on March 31, 1998, was extended to March 31, 2000. The interest rate was increased from 73 @8% to 9% commencing April 1, 1997. During the extended period there will be no change in the constant quarterly payments of interest and principal in the amount of $37,263. (c) The mortgage loan matures November 1, 1999. The annual interest rate is 9% and the principal and interest payments are to be made in constant monthly amounts based upon a fifteen (15) year payout period. (d) The mortgage loan, which is self-amortizing, matures September 30, 2002. The loan is payable at an annual interest rate of 7%. Under the terms of the loan, constant monthly payments, including interest and principal, commenced April 1, 1994 in the amount of $33,767, until October 1, 1997, at which time the monthly payments of interest and principal was increased to $36,540. Maturities of long-term debt--mortgages payable, outstanding at July 31, 1998, are as follows: Years ending July 31, 1999 (included in current liabilities), $827,672; 2000, $3,627,040; 2001, $830,597; 2002, $684,080; 2003, $339,112, and thereafter, $2,333,332. 4. LONG-TERM DEBT--OTHER: Long-Term debt--Other (net of current portion): 1998 1997 ---- ---- Deferred compensation ............. $251,333* $355,333* Lease security deposits ........... 330,340** 285,535** -------- -------- Total ......................... $581,673 $640,868 ======== ======== Maturities of long-term debt--other, outstanding at July 31, 1998, are as follows: Years ending July 31, 1999 (included in current liabilities), $112,540; 2000, $210,339; 2001, $181,121; 2002, $43,333; 2003, $912, and thereafter, $145,968. - ------------------- * The Company entered into a deferred compensation agreement with Max L. Shulman, its then Chairman of the Board. This agreement, as amended, provides for $520,000 to be paid in monthly installments of $8,666.67 for a period of 60 months, payable upon the expiration of his employment, retirement or permanent disability as defined in the agreement, or death. Mr. Shulman retired December 31, 1996 and the monthly payments commenced January, 1997. ** Does not include three irrevocable letters of credit totaling $275,000 at July 31, 1998, and at July 31, 1997, provided by three tenants. 10 ================================================================================ 5. INCOME TAXES: Significant components of the Company's deferred tax assets and liabilities as of July 31, 1998 and 1997, are a result of temporary differences related to the items described as follows:
1998 1997 ------------------------------ ----------------------------- DEFERRED DEFERRED Deferred Deferred TAX ASSETS TAX LIABILITIES Tax Assets Tax Liabilities ---------- --------------- ---------- --------------- Net operating loss carryforward .......................... $1,056,762 $ -- $1,915,163 $ -- Alternative minimum tax credit carryforward .............. 305,814 -- 252,633 -- Investment tax credit carryforward ....................... 24,991 -- 26,952 -- Deferred compensation not currently deductible ........... 120,813 -- 156,173 -- Rental income received in advance ........................ 31,248 -- 7,713 -- Unbilled receivables ..................................... -- 1,613,526 -- 1,550,904 Property and equipment ................................... -- 981,750 -- 1,010,288 Unrealized gain on available for sale securities ......... -- 144,119 -- 51,731 Other 31,758 -- 22,241 -- ---------- ---------- ---------- ---------- 1,571,386 2,739,395 2,380,875 2,612,923 Valuation allowance ...................................... 24,991 -- 26,952 -- ---------- ---------- ---------- ---------- $1,546,395 $2,739,395 $2,353,923 $2,612,923 ========== ========== ========== ==========
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, 1998, except for investment tax credit carryforwards, for which a 100% valuation allowance has been provided. The valuation allowance was reduced by $1,961 in 1998 and $14,645 in 1997, due to the expiration of investment tax credit carryforwards. Income taxes provided (benefit) in fiscal 1998, 1997 and 1996 consisted of: 1998 1997 1996 ---- ---- ---- Current: Federal ....................... $ 54,000 $ 6,000 $ (7,000) State and City ................ 142,000 115,000 109,000 Deferred taxes ................. 854,000 359,000 (124,000) ---------- -------- --------- Total provision (benefit) ... $1,050,000 $480,000 $ (22,000) ========== ======== ========== Components of the deferred tax provision (benefit) for the years ended July 31, 1998, 1997 and 1996 are as follows:
1998 1997 1996 ---- ---- ---- Excess of book depreciation over tax depreciation .......... $ (29,000) $ (58,000) $ (25,000) Reduction (increase) of rental income received in advance ................................................... (24,000) 9,000 2,000 Increase in unbilled receivables ........................... 63,000 148,000 34,000 Deferred compensation ...................................... 35,000 21,000 -- Net operating loss carryforwards ........................... 869,000 193,000 (114,000) Bad debts .................................................. -- 44,000 -- Alternative minimum tax .................................... (53,000) (6,000) -- Other ...................................................... (7,000) 8,000 (21,000) --------- --------- --------- $ 854,000 $ 359,000 $(124,000) ========= ========= =========
11 ================================================================================ Taxes provided (benefit) for the years ended July 31, 1998, 1997 and 1996 differ from amounts which would result from applying the federal statutory tax rate to pre-tax income (loss), as follows:
1998 1997 1996 ---- ---- ---- Income (loss) before income taxes .......................... $2,887,733 $1,290,925 $(163,286) Dividends received deduction ............................... (98,530) (117,959) (110,259) Other-net .................................................. 22,663 13,777 (1,600) ---------- ---------- --------- Adjusted pre-tax income (loss) ............................. 2,811,866 1,186,743 (275,145) Statutory rate ............................................. 34% 34% 34% Income tax provision (benefit) at statutory rate ........... 956,300 403,500 (93,500) State and City income taxes, net of federal income tax benefit ........................................ 93,700 76,500 71,500 ---------- ---------- --------- Income taxes provided (benefit) ............................ $1,050,000 $ 480,000 $ (22,000) ========== ========== ==========
The Company's 1998 and 1997 federal income tax liability of $54,000 and $6,000, respectively, were determined using the Alternative Minimum Tax ("AMT"), a separate parallel tax system. The excess of the AMT over the regular tax is a credit which can be carried forward indefinitely to reduce future regular tax liabilities. The Company has additional AMT credits from prior years totaling $250,000 resulting in total AMT credits of $304,000 at July 31, 1998. At July 31, 1998, the Company had net operating tax loss carryforwards of $2,992,000 available to offset future regular taxable income. Of this amount $58,000 is available until the year 2005, $1,028,000 until 2006, $175,000 until 2009, $1,395,000 until 2010, and $336,000 until 2011. Although the Tax Reform Act of 1986 eliminated investment tax credits for non-transitional property placed in service after December 31, 1985, the Company has investment tax credit carryforwards of $25,000 that expire as follows: $16,000 in 1999 and $9,000 in 2000. 6. LEASES: The Company's real estate operations encompass both owned and leased properties. The current leases on leased property, most of which have options to extend the term, range from 2 years to 29 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 ended July 31, 1998 was exceeded by sublease rental income, as follows:
1998 1997 1996 ---- ---- ---- Minimum rental expense ...................... $1,156,168 $1,155,644 $1,155,120 Contingent rental expense ................... 1,051,884 1,266,880 1,252,684 ---------- ---------- -------- 2,208,052 2,422,524 2,407,804 Sublease rental income ...................... 5,399,129 4,798,895 4,108,307 ---------- ---------- ---------- Excess of rental income over expense ... $3,191,077 $2,376,371 $1,700,503 ========== ========== ==========
Rent expense paid to an affiliated company totaled $160,800 for each of the fiscal years. Future minimum non-cancellable rental commitments for operating leases with initial or remaining terms of one year or more are payable as follows: Fiscal OPERATING Year LEASES ------ ------- 1999 .................................... $ 1,143,340 2000 .................................... 1,143,340 2001 .................................... 1,087,174 2002 .................................... 1,031,007 2003 .................................... 1,031,007 After 2003 .............................. 7,899,159 ----------- Total required* $13,335,027 =========== * Minimum payments have not been reduced by minimum sublease rentals of $36,427,875 under operating leases due in the future under non-cancellable leases. 12 ================================================================================ 7. RENTAL INCOME: Rental income from an affiliated company totaled $413,609 for each of the fiscal years. Amounts due from the affiliated company are as follows: July 31, -------------------------------------------- 1998 1997 1996 ---- ---- ---- Unbilled receivables ............ $727,750 $ 909,688 $ 954,516 Receivables-noncurrent .......... 87,943 194,453 194,453 -------- ---------- ---------- Total ....................... $815,693 $1,104,141 $1,148,969 ======== ========== ========== Rental income for each of the fiscal years 1998, 1997 and 1996 is as follows: July 31, ----------------------------------------------- 1998 1997 1996 ---- ---- ---- Minimum rentals Company owned property ...... $ 4,800,127 $ 4,713,783 $4,584,959 Operating leases ............ 4,686,130 4,036,156 3,443,822 ----------- ----------- ---------- 9,486,257 8,749,939 8,028,781 ----------- ----------- ---------- Contingent rentals Company owned property ....... 464,003 567,704 575,502 Operating leases ............. 712,999 762,739 664,485 ----------- ----------- ---------- 1,177,002 1,330,443 1,239,987 ----------- ----------- ---------- Total ...................... $10,663,259 $10,080,382 $9,268,768 =========== =========== ========== Future minimum non-cancellable rental income for leases with initial or remaining terms of one year or more is as follows: Fiscal COMPANY OPERATING Year OWNED PROPERTY LEASES TOTAL ------ -------------- ------ ----------- 1999 ................... $ 4,780,254 $ 4,724,765 $ 9,505,019 2000 ................... 4,418,032 4,331,870 8,749,902 2001 ................... 3,876,546 3,874,334 7,750,880 2002 ................... 3,722,991 3,696,125 7,419,116 2003 ................... 2,926,880 3,672,267 6,599,147 After 2003 ............. 18,871,436 16,128,514 34,999,950 ----------- ----------- ----------- Total .............. $38,596,139 $36,427,875 $75,024,014 =========== =========== =========== 8. PAYROLL AND OTHER ACCRUED LIABILITIES: Payroll and other accrued liabilities consist of the following: 1998 1997 -------- -------- Payroll ........................ $ 89,428 $ 83,891 Interest ....................... 61,068 69,348 Professional fees .............. 50,659 58,525 Rents received in advance ...... 91,907 22,685 Utilities ...................... 67,907 45,378 Construction costs ............. -- 21,000 Brokers commissions ............ 145,997 208,571 Other .......................... 52,378 43,817 -------- -------- Total ..................... $559,344 $553,215 ======== ======== 13 ================================================================================ 9. EMPLOYEES' RETIREMENT PLAN: The Company sponsors a noncontributory Money Purchase Plan covering substantially all of its employees. Operations were charged $202,432, $132,273 and $132,234 as contributions to the Plan for fiscal years 1998, 1997 and 1996, respectively. 10. CASH FLOW INFORMATION: For purpose 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:
Years Ended July 31, --------------------------------------- 1998 1997 1996 ------- ---- ------- Interest paid, net of capitalized interest of $45,845 in fiscal 1997 ............................. $820,577 $720,461 $686,644 Income taxes paid ...................................... $125,088 $105,068 $125,084
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 Company's 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, 1998 --------------------------- CARRYING FAIR VALUE VALUE ---------- ---------- Cash and cash equivalents ............... $1,047,979 $1,047,979 Marketable securities ................... 3,326,760 3,328,600 Tenant security deposits ................ 338,879 338,879 Long-term debt-mortgages payable ........ (8,641,833) (9,270,709) Financial instruments that are potentially subject to concentrations of credit risk consist principally of marketable securities, cash and cash equivalents and receivables. Marketable securities and cash and cash equivalents are placed with high credit quality financial institutions and instruments to minimize risk. The Company derives rental income from thirty-six tenants, of which two tenants each accounted for more than 10% of rental income during the year ended July 31, 1998; one tenant accounted for 14.55% and the second tenant accounted for 11.60%. 12. CONTINGENCIES: McCrory Stores Corporation ("McCrory"), which occupied space in the Company's Jowein Building in the Fulton Mall in downtown Brooklyn, New York, and whose lease, as amended, extended to April 29, 2010, filed for relief under Chapter 11 of the Bankruptcy Code in February 1992. McCrory rejected its lease, as amended, with the Company with the approval of the Bankruptcy Court, effective January 31, 1994. The Company has filed an unsecured proof of claim with the United States Bankruptcy Court, Southern District of New York for the lease rejection damages in the amount of $7,753,732 ("Lease Rejection Claim"), and an administrative claim in the amount of approximately $296,000, reduced by agreement to $170,000 ("Administrative Claim") for damages resulting from McCrory's failure to repair and maintain the premises as required by the lease. McCrory objected to the Company's Lease Rejection Claim, but has acknowledged the administrative claim in the amount of $170,000. The Company has not included the Lease Rejection Claims against McCrory in its financial statements due to (i) the fact that McCrory has disclosed that it has sold substantially all of its assets and that the proceeds of sale are insufficient to make any distributions to unsecured creditors, and (ii) the uncertainty of the amount that may ultimately be allowed and collected. The Company has leased approximately 69,000 square feet of the approximate 99,000 square feet of space surrendered by McCrory. The remainder of the space of approximately 30,000 square feet is not leaseable due to the renovations required to accommodate six tenants where formerly there was one. The rental income to be derived from the six tenants over the terms of their leases will be approximately $5,040,000 less than the total rental income that would have been due from McCrory for the period February 1, 1994 through April 29, 2010, the termination date of the McCrory lease. 14 ================================================================================ Jamesway Corporation ("Jamesway"), which occupied retail space in the Fishkill, New York property and whose lease extended to January 31, 2005, filed for relief under Chapter 11 of the Bankruptcy Code on October 18, 1995. Jamesway rejected its lease for the Fishkill location with the approval of the Bankruptcy Court, effective February 29, 1996, but continued occupancy until March 22, 1996. The Company filed an amended unsecured claim in the amount of $883,635 for damages resulting from the breach and rejection of the lease and an administrative priority claim in the amount of approximately $189,000 for certain amounts due under the lease after the filing of Jamesway's Chapter 11 petition and for the costs of repairs resulting from Jamesway's failure to fulfill its repair and maintenance obligations under the lease. Pursuant to a settlement that was approved by the Bankruptcy Court, the Company has an allowed unsecured claim in the amount of $950,635 and an allowed administrative claim in the amount of $54,887. The amount of $52,749 recorded in Bad Debt Recovery represents the amount realized from Jamesway of $47,532 less legal expenses of $6,158 and from McCrory of $19,304 less legal expenses of $7,929. The Company has made no provision in its financial statements for the balance of its unsecured claims filed against Jamesway and McCrory due to the uncertainty of the amounts that may ultimately be collected. The Company has realized to date from Jamesway $465,811 or 49% on account of its unsecured claim and 100% of its allowed administrative claim for a total of $520,698. The Company has also realized to date from McCrory $19,304 or 11.36% on account of its Administrative Claim in the amount of $170,000. McCrory has advised creditors that holders of allowed Administrative Claims may receive an additional distribution of approximately 9% of the allowed amount of one Administrative Claim. The Company reports scheduled rental income recognized on a straight-line basis rather than rental income as it becomes a receivable according to the provisions of the lease in compliance with the provisions of Statement of Financial Accounting Standards No. 13, "Accounting for Leases." The excess of the scheduled rental income of McCrory, recognized on a straight-line basis over rental income receivable according to the lease through January 31, 1994, the effective date of McCrory's rejection of its lease, amounts to $708,673 and such amount was written off and classified as a bad debt during the twelve month period ended July 31, 1994. The excess of the scheduled rental income of Jamesway recognized on a straight-line basis over rental income receivable according to the lease through January 31, 1996, amounted to $424,011 and such amount was written off and classified as a bad debt during the twelve month period ended July 31, 1996. There are various lawsuits and claims pending against the Company. It is the opinion of management that the resolution of these matters will not have a material adverse effect on the Company's consolidated Financial Statements. ================================================================================ INDEPENDENT AUDITOR'S REPORT 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 ofJuly 31, 1998 and 1997, and the related consolidated statements of operations and retained earnings and cashflows for the three years ended July 31, 1998. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes 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 its subsidiaries as of July 31, 1998 and 1997, and the results of their operations and their cash flows for the three years ended July 31, 1998 in conformity with generally accepted accounting principles. D'ARCANGELO & CO., LLP Purchase, New York October 7, 1998 15
J.W. MAYS, INC. FIVE YEAR SUMMARY OF CONSOLIDATED OPERATIONS (dollars in thousands except per share data) Years Ended July 31, --------------------------------------------------------------------- 1998 1997 1996 1995 1994 ========================================================================================================================= Revenues Rental income .................................. $ 10,249 $ 9,666 $ 8,855 $ 7,944 $ 9,075 Rental income--affiliated company .............. 414 414 414 386 416 Recovery of real estate taxes .................. 1,219 -- -- -- 32 ---------- ----------- ----------- ---------- ---------- Total revenues ............................... 11,882 10,080 9,269 8,330 9,523 ---------- ----------- ----------- ---------- ---------- Expenses Real estate operating expenses ................. 5,416 5,874 5,679 5,580 5,612 Administrative and general expenses ............ 2,077 1,939 2,008 2,101 2,131 Bad debts (recovery) ........................... (53) (419) 424 57 709 Depreciation and amortization .................. 1,011 967 889 838 823 ---------- ----------- ----------- ---------- ---------- Total expenses ............................... 8,451 8,361 9,000 8,576 9,275 ---------- ----------- ----------- ---------- ---------- Income (loss) from operations before investment income, interest expense and income taxes ................................... 3,431 1,719 269 (246) 248 ---------- ----------- ----------- ---------- ---------- Investment income and interest expense Investment income .............................. 269 268 250 367 385 Interest expense ............................... 812 696 682 641 597 ---------- ----------- ----------- ---------- ---------- (543) (428) (432) (274) (212) ---------- ----------- ----------- ---------- ---------- Income (loss) before income taxes ............... 2,888 1,291 (163) (520) 36 Income taxes provided (benefit) ................. 1,050 480 (22) (126) 68 ---------- ----------- ----------- ---------- ---------- Income (loss) before cumulative effect of changes in accounting principles ....................... 1,838 811 (141) (394) (32) Accounting for certain investments in debt and equity securities ........................ -- -- -- 22 -- Accounting for income taxes ................... -- -- -- -- (275) ---------- ----------- ----------- ---------- ---------- Net Income (loss) ............................... $ 1,838 $ 811 $ (141) $ (372) $ (307) ========== =========== =========== ========== ========== Income (loss) per common share Income (loss) before cumulative effect of changes in accounting principles ............... $ .86 $ .38 $ (.07) $ (.18) $ (.02) Accounting for certain investments in debt and equity securities ......................... -- -- -- .01 -- Accounting for income taxes .................... -- -- -- -- (.13) ---------- ----------- ----------- ---------- ---------- Net income (loss) per common share ........... $ .86 $ .38 $ (.07) $ (.17) $ (.15) ========== =========== =========== ========== ========== Dividends per share ............................. -- -- -- -- -- ========== =========== =========== ========== ========== Average common shares outstanding ............... 2,135,780 2,136,175 2,136,397 2,136,397 2,137,440 ========== =========== =========== ========== ==========
16 J.W. MAYS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ================================================================================ FISCAL 1998 COMPARED TO FISCAL 1997 Net income for the year ended July 31, 1998 amounted to $1,837,733, or $.86 per share. The figures include a pre-tax net recovery of real estate taxes of $1,218,600 (see below). There was no comparable item in the 1997 year. The 1998 year also includes a bad debt recovery amounting to $52,749. In the comparable 1997 year, net income amounted to $810,925, or $.38 per share, after a pre-tax bad debt recovery of $418,789. Revenues in the current year increased to $11,881,859 from $10,080,382 in the comparable 1997 fiscal year, primarily due to the addition of new tenants and the pre-tax net recovery of prior years' real estate taxes in the amount of $1,218,600. The recovery of real estate taxes in the current fiscal year in the amount of $1,218,600, net of legal expenses and credits to tenants in accordance with the terms of their leases, represents prior years' real estate taxes from the City of New York and the Town of Fishkill, New York. (See Liquidity and Capital Resources, Page 18.) Real estate operating expenses in the current year decreased to $5,416,292 from $5,873,719 in the comparable 1997 year principally due to a decrease in real estate taxes and fuel costs, partially offset by an increase in payroll, maintenance costs and leasing commissions. Administrative and general expenses in the current year increased to $2,076,614 from $1,939,303 in the comparable 1997 year principally due to an increase in payroll, legal and professional costs and retirement plan costs; partially offset by a decrease in insurance expense. The bad debt recovery in the amount of $52,749 in the 1998 year and $418,789 in the 1997 year relates to prior years' bad debt write-off from McCrory and Jamesway. See Note 12 to the Consolidated Financial Statements. Depreciation and amortization expense in the current year increased to $1,011,318 from $966,628 in the 1997 year because of additional improvements to property. Interest expense in the current year exceeded investment income by $542,651 and by $428,596 in the comparable 1997 year. The increase of $114,055 was primarily due to the interest on the Jamaica Building loan discussed in Note 3(a) to the Consolidated Financial Statements. FISCAL 1997 COMPARED TO FISCAL 1996 Net income for the year ended July 31, 1997 amounted to $810,925, or $.38 per share, after a pre-tax bad debt recovery of $418,789, compared to a net loss for the year ended July 31, 1996 in the amount of $141,286, or $.07 per share, after a pre-tax bad debt write-off amounting to $424,011 relating to the rejection by a tenant of its lease, discussed below. The above recovery relates to the same rejected lease. Rental income in the 1997 year increased to $10,080,382 from $9,268,768 in the 1996 year principally due to the addition of new tenants. Real estate operating expenses in the 1997 year increased to $5,873,719 from $5,678,653 in the 1996 comparable year principally due to increased real estate taxes, maintenance and fuel costs, an allowed credit for utility costs in the 1996 fiscal year. Administrative and general expenses decreased to $1,939,303 from $2,007,987 in the 1996 year principally due to a decrease in insurance and legal and professional expenses. The bad debt recovery in the amount of $418,789 in fiscal 1997 relates to the bad debt write-off of $424,011 in the 1996 year. See Note 12 to the Consolidated Financial Statements (Jamesway). The Company reports scheduled rental income recognized on a straight-line basis rather than rental income as it becomes receivable according to the provisions of the lease, in compliance with the provisions of Statement of Financial Accounting Standards No. 13, "Accounting for Leases". The excess of the scheduled rental income of Jamesway recognized on a straight-line basis over rental income amounts to $424,011 and such amount has been written off in 1996 and classified as a bad debt. 17 ================================================================================ Depreciation and amortization expense in the 1997 fiscal year increased to $966,628 from $888,932 in the 1996 year because of additional improvements to property. Interest expense exceeded investment income in the amount of $428,596 in the 1997 year and by $432,471 in the 1996 year. 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. As of July 31, 1998, the Company received total real estate tax refunds of $3,324,354. The real estate tax refunds were due to reductions in assessed valuations on (i) the Jowein building in Brooklyn, New York for the years 1991/92 through 1997/98 in the amount of $3,053,220, and (ii) the Fishkill, New York building for the years 1995/96 through 1997/98 in the amount of $271,134. The refund of real estate taxes for the Jowein building produced a reduction in the current year's Real Estate Operating Expenses of $152,906 (net of attorney fees of $95,698), offset by a reduction in tenants' rental income of $112,743. The recovery of real estate taxes increased by $1,117,120 after deductions of attorney and appraisal fees of $582,069 and amounts due tenants for their pro rata share of real estate taxes in prior years of $1,105,427. The refund of real estate taxes for the Fishkill building produced a reduction in the current year's Real Estate Operating Expenses of $55,096 (net of attorney fees of $29,924), offset by a reduction in a tenants rental income of $6,887. The recovery of real estate taxes increased by $101,480 after deductions of attorney fees of $58,282 and amounts due a tenant for its pro rata share of real estate taxes in prior years of $12,146. As of July 31, 1998, the above real estate taxes refunds have been received, and all payments have been made for attorneys fees, appraisal fees and to tenants for their pro rata share of the refunds. The Company had working capital of $1,083,145, with a ratio of current assets to current liabilities of 1.67 to 1 at July 31, 1998. Management considers current working capital and borrowing capabilities adequate to cover the Company's planned operating and capital requirements. CASH FLOWS FROM OPERATING ACTIVITIES Deferred Expenses: The Company had an expenditure of approximately $61,372 for brokerage leasing commissions relating to two new tenants at the Jamaica, New York building and one new tenant which is replacing an existing tenant at the Brooklyn, New York building, during the year ended July 31, 1998. Prepaid Expenses: The decrease was due to a reduction in prepaid real estate taxes on the Jowein building property in Brooklyn, New York in the amount of $201,913. CASH FLOWS FROM INVESTING ACTIVITIES Capital Expenditures: The Company had expenditures of approximately $427,000 for renovations at its Jamaica, New York building to accommodate two new tenants and approximately $339,000 for additional renovations to the Jamaica, New York building, during the year ended July 31, 1998. Marketable Securities: The Company, on March 17, 1998, purchased 54,537 shares of an initial public offering of common stock of a bank in which the Company maintains accounts, at $10 per share, for a total of $545,370. The closing market price of the stock at July 31, 1998 was $14.50 per share, for a total of $790,787. 18 ================================================================================ CASH FLOWS FROM FINANCING ACTIVITIES Lease Security: The Company received approximately $46,000 in additional lease security due to the leasing of space to three new tenants at its Jamaica, New York building, one new tenant which is replacing an existing tenant at its Brooklyn, New York building and from an existing tenant at its Jowein building in Brooklyn, New York, during the year ended July 31, 1998. The leasing of 25,000 square feet to the U.S. Post Office in Fishkill, New York and the leasing to the State of New York of approximately 46,000 square feet of office space for two tenants and 8,000 square feet of office space to two additional tenants in the Company's former store in Jamaica, New York, will provide additional working capital for the Company. The Jamaica leases commenced May 1, 1997. To defray the costs of renovations for the State occupancy, the Company borrowed the principal amount of $2,500,000 from a bank (see Note 5(a) to the Consolidated Financial Statements). YEAR 2000 COMPLIANCE The Company uses a computerized accounting system purchased from a vendor. The vendor has released a Year 2000 compliant version of the accounting system which the Company is in the process of implementing. No material expenditures will be required to resolve the Year 2000 issue. Much of the Company's internal software programs have been purchased from third parties. Failure of the third parties' computer systems would not have a material impact on the Company's ability to conduct business. Furthermore, the Company is not dependant on third party computer systems and applications. The Company has no suppliers or significant customers that "link" up to its computer systems. The Company does not anticipate any problems with its hardware or its software. 19 J.W. MAYS, INC. ================================================================================
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (dollars in thousands except per share data) Three months ended --------------------------------------------------------- Oct. 31, 1997 Jan. 31, 1998 Apr. 30, 1998 July 31, 1998 ------------- ------------- ------------- ------------- Revenues ......................... $2,801 $2,805 $3,589 $2,687 Revenues less expenses ........... 535 523 1,299 531 Net income ...................... 345 327 847 319 Net income per common share ..... $ .16 $ .15 $ .40 $ .15 Three months ended --------------------------------------------------------- Oct. 31, 1996 Jan. 31, 1997 Apr. 30, 1997 July 31, 1997 ------------- ------------- ------------- ------------- Revenues ........................ $2,442 $2,473 $2,429 $2,736 Revenues less expenses .......... 163 123 93 912 Net income ...................... 100 100 18 593 Net income per common share ..... $ .05 $ .05 $ .01 $ .27
Income per share is computed independently for each of the quarters presented, on the basis described inNote 1 to the Consolidated Financial Statements. COMMON STOCK PRICES AND DIVIDENDS The Company's common stock trades on the Nasdaq National Market tier of The Nasdaq Stock Market under the Symbol: "Mays". Following is the sales price range per share of J.W. Mays, Inc. common stock during the fiscal years ended July 31, 1998 and 1997: Sales Price ----------------- Three months ended High Low - ------------------ ------ ----- October 31, 1997 ....................................... 10 1/8 8 January 31, 1998 ....................................... 15 1/2 9 1/2 April 30, 1998 ......................................... 16 12 1/2 July 31, 1998 .......................................... 14 1/4 12 October 31, 1996 ....................................... 12 1/2 7 3/4 January 31, 1997 ....................................... 10 3/4 7 7/8 April 30, 1997 ......................................... 9 1/2 8 1/2 July 31, 1997 .......................................... 10 1/2 8 1/4 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 25, 1998, the Company had approximately 3,700 shareholders of record. 20 J.W. MAYS, INC. ================================================================================
OFFICERS Lloyd J. Shulman Chairman of the Board, Chief Executive Officer and President and Chief Operating Officer Alex Slobodin Executive Vice President and Treasurer Ward N. Lyke, Jr. Vice President--Management Information Services George Silva Vice President--Operations Salvatore Cappuzzo Secretary Mark Greenblatt Controller and Assistant Treasurer BOARD OF DIRECTORS Frank J. Angell 1,2,3,4 President, University Applied Management Consultants Corp. (consultants on portfolio management and estate planning); Professor Emeritus, New York University Leonard N. Stern School of Business Lance D. Myers 2,3,4 Partner in the law firm of Cullen and Dykman Jack Schwartz 1,2,3,4 Private Consultant Lloyd J. Shulman 1,3,4 Chairman of the Board, Chief Executive Officer and President and Chief Operating Officer, J.W. Mays, Inc. Max L. Shulman Retired Chairman of the Board, J.W. Mays, Inc. Sylvia W. Shulman Retired Fashion Director and Merchandiser of Boutique Shops, J.W. Mays, Inc. Lewis D. Siegel 2,3,4 First Vice President--Investments, Salomon Smith Barney Alex Slobodin 1,3 Executive Vice President and Treasurer, J.W. Mays, Inc. 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
FORM 10-K ANNUAL REPORT Copies of the Company's Form 10-K Annual Report to the Securities and Exchange Commission for the fiscal year ended July 31, 1998, will be furnished without charge to shareholders upon written request to: Secretary, J.W. Mays, Inc., 9 Bond Street, Brooklyn, New York 11201. EX-27 3 ARTICLE 5 FIN.
5 This schedule contains summary financial infomation extracted from the contained quarterly 10-Q and is qualified in its entirety by reference to such Form 10-Q. 1 12-MOS JUL-31-1998 AUG-01-1997 JUL-31-1998 1,047,979 137,721 461,770 0 0 2,709,738 49,869,521 21,628,465 41,374,924 1,626,593 0 2,178,297 0 0 27,881,200 41,374,924 0 11,881,859 0 0 8,451,475 0 812,297 0 1,050,000 1,837,733 0 0 0 1,837,733 0.86 0.00
-----END PRIVACY-ENHANCED MESSAGE-----