-----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, ASKtqNQYvvSqjVyIbTX/0g6ILHJGnYyfDnjg5Egqt+uPY+NiL08qf8BisLo92ef6 4O6h8DNSymX8CZ2xZZOgvw== 0000950110-96-001268.txt : 19961027 0000950110-96-001268.hdr.sgml : 19961027 ACCESSION NUMBER: 0000950110-96-001268 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960731 FILED AS OF DATE: 19961024 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: 1934 Act SEC FILE NUMBER: 001-03647 FILM NUMBER: 96647161 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, 1996 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 $11,317,922 AS OF SEPTEMBER 27, 1996 BASED UPON THE CLOSING PRICE ON THE NASDAQ NATIONAL MARKET SYSTEM REPORTED FOR SUCH DATE. 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 27, 1996 WAS 2,136,397. 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, 1996 Parts I and II Definitive Proxy Statement for the 1996 Annual Meeting of Shareholders Part III ================================================================================ J. W. MAYS, INC. FORM 10-K FOR THE FISCAL YEAR ENDED JULY 31, 1996 TABLE OF CONTENTS
PAGE PART I ---- Item 1. Business .................................................................... 3 Item 2. Properties .................................................................. 3 Item 3. Legal Proceedings ........................................................... 4 Item 4. Submission of Matters to a Vote of Security Holders ......................... 5 Executive Officers of the Registrant ................................................. 5 PART II Item 5. Market for Registrant's Common Stock and Related Shareholder Matters ........ 5 Item 6. Selected Financial Data ..................................................... 5 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations ................................................................ 5 Item 8. Financial Statements and Supplementary Data ................................. 5 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ................................................................ 6 PART III Item 10. Directors and Executive Officers of the Registrant ......................... 6 Item 11. Executive Compensation ..................................................... 6 Item 12. Security Ownership of Certain Beneficial Owners and Management ............. 6 Item 13. Certain Relationships and Related Transactions ............................. 6 PART IV Item 14 Exhibits, Financial Statement Schedules, and Reports on Form 8-K .......... 6
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 approximately 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 Owned or leased(1) Square Feet -------- ------------------ ----------- Brooklyn, New York Fulton Street at Bond Street ................. (2) 380,000(5) Jamaica, New York Jamaica Avenue at 169th Street ............... Own Building, Lease Fee 297,000(6) Fishkill, New York Route 9 at Interstate Highway 84 ............. (3) 211,000(7) (located on 14.9 acres) Brooklyn, New York Jowein Building Fulton Street and Elm Place .................. (4) 430,000(8) Levittown, New York Hempstead Turnpike ........................... (3) 85,800(9) Massapequa, New York Sunrise Highway .............................. (10) 133,400(10) Circleville, Ohio Tarlton Road ................................. (3) 193,350(11) (located on 11.6 acres)
- ------------------- (1) 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 1996 Annual Report to Shareholders, incorporated herein by reference. The properties indicated as owned which are held subject to mortgage are the Jowein building, the Fishkill property, the Ohio property and a small part of the Company's former Brooklyn store. (Footnotes continued) 3 (2) A major portion of these premises is owned. (3) The entire premises is owned. (4) Approximately 50% of these premises is owned and the remainder is leased. (5) Approximately 99,000 square feet of the street floor and basement are leased to one tenant for retail and approximately 9,000 square feet, in the aggregate, are leased to four separate tenants for retail and offices. Approximately 232,000 square feet of the building are available for lease. (6) Approximately 75,100 square feet are leased to one tenant, 47,100 square feet to another tenant and 2,700 square feet to a third tenant, all for retail. Approximately 137,000 square feet of the building are available for lease. (7) Approximately 25,000 square feet are leased to one tenant for offices and 186,000 square feet of the building are available for lease. (8) All of the building, except for 149,000 square feet, has been leased for retail and offices. The 149,000 square feet are available for lease. (9) Leased to one tenant for retail. (10) Leased by the Company and sub-leased to two tenants for a bank and a gasoline service station. (11) Leased to one tenant for use as a distribution facility. 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. See Note 11 to the Consolidated Financial Statements of the 1996 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. 4 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. 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 ---- --- -------------------------- ------------ Max L. Shulman ................... 87 Chairman of the Board June, 1963 Co-Chairman of the Board June, 1995 Director January, 1946 Lloyd J. Shulman ................. 54 President November, 1978 Co-Chairman of the Board and President June, 1995 Director November, 1977 Alex Slobodin .................... 81 Executive Vice President November, 1965 Treasurer September, 1955 Director November, 1963 Ward N. Lyke, Jr. ................ 45 Vice President February, 1984 George Silva ..................... 46 Vice President March, 1995 Salvatore Cappuzzo ............... 37 Secretary November, 1981
No family relationship exists among the foregoing persons except that Lloyd J. Shulman is the son of Max L. Shulman. 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 1996 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 1996 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 18 and 19 of the Registrant's 1996 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 reports of D'Arcangelo & Co., LLP and of Lipsky, Goodkin & Co., P.C., Independent Public Accountants, dated October 11, 1996 and October 12, 1995, respectively, appearing on pages 4 through 16 of the Registrant's 1996 Annual Report to Shareholders is incorporated 5 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 1996 Annual Report to Shareholders is not to be deemed filed as part of this Form 10-K Annual Report. 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 1996 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 1996 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 1996 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 1996 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. (i) The Consolidated Financial Statements and report of D'Arcangelo & Co., LLP, Independent Public Accountants, dated October 11, 1996, set forth on pages 4 through 16 of the Registrant's 1996 Annual Report to Shareholders. (ii) The report of Lipsky, Goodkin & Co., P.C. Independent Public Accountants, dated October 12, 1995, (except with respect to the matter discussed in Note 16(b), as to which the date is October 20, 1995), set forth on page 16 of the Registrant's 1995 Annual Report to Shareholders. 2. See accompanying Index to Registrant's Financial Statements and Schedules. 3. Exhibits: (2) Plan of acquisition, reorganization, arrangement, liquidation or succession--not applicable. (3) Articles of incorporation and by-laws: 6 (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, 1996. 7 SIGNATURES PURSUANT TO THE REQUIREMENTS OF SECTIONS 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 21, 1996 By: LLOYD J. SHULMAN -------------------------------- Lloyd J. Shulman Co-Chairman of the Board Principal Executive Officer President Principal Operating Officer October 21, 1996 By: ALEX SLOBODIN -------------------------------- Alex Slobodin Executive Vice President and Treasurer Principal Financial Officer October 21, 1996 By: 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 --------- ----- ---- MAX L. SHULMAN Co-Chairman of the Board October 21, 1996 - ----------------------------- and Director Max L. Shulman LLOYD J. SHULMAN Co-Chairman of the Board, October 21, 1996 - ----------------------------- Chief Executive Officer, Lloyd J. Shulman President, Chief Operating Officer and Director ALEX SLOBODIN Executive Vice President, October 21, 1996 - ----------------------------- Treasurer and Director Alex Slobodin FRANK J. ANGELL Director October 21, 1996 - ----------------------------- Frank J. Angell JACK SCHWARTZ Director October 21, 1996 - ----------------------------- Jack Schwartz SYLVIA W. SHULMAN Director October 21, 1996 - ----------------------------- Sylvia W. Shulman LEWIS D. SIEGEL Director October 21, 1996 - ----------------------------- Lewis D. Siegel
8 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, 1996, which are incorporated herein by reference: Reports of Independent Accountants (page 16) 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: Reports of Independent Accountants ................... 9 II Valuation and Qualifying Accounts .................... 10 III Real Estate and Accumulated Depreciation ............... 11 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. ---------------------- REPORTS 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, 1996 and for the year then ended, and have issued our report thereon dated October 11, 1996; such consolidated financial statements and report are incorporated by reference in this Form 10-K Annual Report. Our audit 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 audit. 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 11, 1996 ---------------------- To the Board of Directors and Shareholders of J. W. Mays, Inc.: Our audits of the Consolidated Financial Statements referred to in our report dated October 12, 1995, appearing on page 16 of the 1995 Annual Report to Shareholders of J.W. Mays, Inc., (which report and Consolidated Financial Statements are incorporated by reference in this Form 10-K Annual Report) also included an audit of the Summarized Financial Information contained in Item 8 and Financial Statement Schedules listed in Item 14(a)(2) of this Form 10-K. Our report on the Consolidated Financial Statements includes explanatory paragraphs with respect to the change in the method of accounting for marketable securities--other investments in 1995 and a change in the method of accounting for income taxes in 1994 as discussed in Note 1 to the Consolidated Financial Statements. In our opinion, this Summarized Financial Information and these Financial Statement Schedules present fairly, in all material respects, the information set forth therein when read in conjunction with the related Consolidated Financial Statements. LIPSKY, GOODKIN & Co., P.C. New York, N.Y October 12, 1995 (except with respect to the matter discussed in Note 16(b) to the 1995 Consolidated Financial Statements, as to which the date is October 20, 1995). See paragraph 6 of Note 11 to the 1996 Consolidated Financial Statements for events subsequent to October 20, 1995. 9 SCHEDULE II J.W. MAYS, INC. VALUATION AND QUALIFYING ACCOUNTS Year ended July 31, -------------------------------- 1996 1995 1994 -------- -------- -------- Allowance for net unrealized gains (losses) on marketable securities-- other investments: Balance, beginning of period ............ $ 42,010 $(31,769) $ -- Additions charged to expense ............ -- -- (31,769) Reductions .............................. 16,749 73,779 -- -------- -------- -------- Balance, end of period .................. $ 25,261 $ 42,010 $(31,769) ======== ======== ======== Deferred income tax asset valuation allowance: Balance, beginning of period ............ $117,098 $169,698 $ -- Additions charged to expense ............ -- -- 169,698 Reductions .............................. 75,501 52,600 -- -------- -------- -------- Balance, end of period .................. $ 41,597 $117,098 $169,698 ======== ======== ======== 10 SCHEDULE III J. W. MAYS, INC. REAL ESTATE AND ACCUMULATED DEPRECIATION July 31, 1996
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 ... $ 208,989 $1,703,157 $ 3,862,454 $ 6,237,539 $ -- Jamaica, New York Jamaica Avenue at 169th Street ................... -- -- 3,215,699 4,321,362 -- Fishkill, New York Route 9 at Interstate Highway 84 ..................... 2,670,079 467,341 7,212,116 1,726,320 -- Brooklyn, New York Jowein Building Fulton Street and Elm Place .... 2,415,385 1,622,232 770,561 9,111,808 -- Levittown, New York Hempstead Turnpike ............. -- 95,256 200,560 72,990 -- Circleville, Ohio Tarlton Road ................... 2,153,714 120,849 4,388,456 -- -- ---------- ---------- ----------- ----------- -------- Total (A) ...................... $7,448,167 $4,008,835 $19,649,846 $21,470,019 $ -- ========== ========== =========== =========== ======== ==================================================================================================================================== Col. A Col. E Col. F Col. G Col. H Col. I - ------------------------------------------------------------------------------------------------------------------------------------ Gross Amount at Which Carried Life on Which at Close of Period Depreciation in ------------------------------------------ Latest Income Buildings & Accumulated Date of Date Statement Is Land Improvements Total Depreciation Construction Acquired Computed - ------------------------------------------------------------------------------------------------------------------------------------ Office and Rental Buildings Brooklyn, New York Fulton Street at Bond Street .. $1,703,157 $10,099,993 $11,803,150 $ 4,399,495 Various Various (1) (2) Jamaica, New York Jamaica Avenue at 169th Street .................. -- 7,537,061 7,537,061 4,922,320 1959 1959 (1) (2) Fishkill, New York Route 9 at Interstate Highway 84 .................... 467,341 8,938,436 9,405,777 4,203,402 10/74 11/72 (1) Brooklyn, New York Jowein Building Fulton Street and Elm Place ... 1,622,232 9,882,369 11,504,601 5,084,510 1915 1950 (1) (2) Levittown, New York Hempstead Turnpike ............ 95,256 273,550 368,806 239,881 4/69 6/62 (1) Circleville, Ohio Tarlton Road .................. 120,849 4,388,456 4,509,305 383,990 9/92 12/92 (1) ---------- ----------- ----------- ----------- Total (A) ..................... $4,008,835 $41,119,865 $45,128,700 $19,233,598 ========== =========== =========== ===========
- ------------- (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 $664,930 and Accumulated Depreciation thereon of $479,526 at July 31, 1996.
Years Ended July 31, ----------------------------------------- 1996 1995 1994 ----------- ----------- ----------- Investment in Real Estate Balance at Beginning of Year .................... $43,475,739 $42,529,020 $40,821,164 Improvements .................................... 1,652,961 946,719 1,707,856 ----------- ----------- ----------- Balance at End of Year .......................... $45,128,700 $43,475,739 $42,529,020 =========== =========== =========== Accumulated Depreciation Balance at Beginning of Year .................... $18,398,773 $17,617,239 $16,857,024 Additions Charged to Costs and Expenses ......... 834,825 781,534 760,215 ----------- ----------- ----------- Balance at End of Year .......................... $19,233,598 $18,398,773 $17,617,239 =========== =========== ===========
11 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, 1996 (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) 12 EX-13 2 ANNUAL REPORT J. W. MAYS, INC. ANNUAL REPORT 1996 Year Ended July 31, 1996 CONTENTS Page No. -------- Summary of Selected Financial Data 2 Company Profile 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 Reports of Independent Accountants 16 Five Year Summary of Consolidated Operations 17 Management's Discussion and Analysis of Financial Condition and Results of Operations 18-19 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 26, 1996, 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)
1996 1995 1994 1993 1992 - ---------------------------------------------------------------------------------------------------------------- Rental Income ........................................ $ 9,269 $ 8,330 $ 9,523 $10,030 $ 9,299 Gain on Sale of Property and Equipment ............... -- -- -- 1 -- Gain on Condemnation Award ........................... -- -- -- 639 -- - ---------------------------------------------------------------------------------------------------------------- Total Revenues ....................................... 9,269 8,330 9,523 10,670 9,299 - ---------------------------------------------------------------------------------------------------------------- Income (Loss) from Continuing Operations Before Cumulative Effect of Changes in Accounting Principles and Extraordinary Item ................... (141) (394) (32) 1,464 856 (Loss) from Discontinued Operations .................. -- -- -- -- (47) Cumulative Effect of Changes in Accounting Principles: Accounting for Certain Investments in Debt and Equity Securities ............................. -- 22 -- -- -- Accounting for Income Taxes ........................ -- -- (275) -- -- Extraordinary Item--Utilization of Net Operating Loss Carryforward ................................... -- -- -- 709 416 - ---------------------------------------------------------------------------------------------------------------- Net Income (Loss) .................................... (141) (372) (307) 2,173 1,225 - ---------------------------------------------------------------------------------------------------------------- Working Capital ...................................... 2,152 2,478 4,629 3,816 7,457 - ---------------------------------------------------------------------------------------------------------------- Total Assets ......................................... 37,771 36,144 37,290 36,384 32,245 - ---------------------------------------------------------------------------------------------------------------- Long-Term Debt: Mortgages Payable .................................. 6,965 5,954 6,359 4,315 4,509 Other .............................................. 1,039 678 672 668 664 - ---------------------------------------------------------------------------------------------------------------- Total ............................................ 8,004 6,632 7,031 4,983 5,173 - ---------------------------------------------------------------------------------------------------------------- Shareholders' Equity ................................. 27,141 27,293 27,637 28,028 26,056 - ---------------------------------------------------------------------------------------------------------------- Income (Loss) Per Common Share: Continuing Operations .............................. (.07) (.18) (.02) .67 .39 Discontinued Operations ............................ -- -- -- -- (.02) Cumulative Effect of Changes in Accounting Principles: Accounting for Certain Investments in Debt and Equity Securities ........................... -- .01 -- -- -- Accounting for Income Taxes ...................... -- -- (.13) -- -- Extraordinary Item--Utilization of Net Operating Loss Carryforward ................... -- -- -- .33 .19 - ---------------------------------------------------------------------------------------------------------------- Net Income (Loss) Per Common Share ............... $ (.07) $ (.17) $ (.15) $ 1.00 $ .56 - ---------------------------------------------------------------------------------------------------------------- Cash Dividends Declared Per Share .................... -- -- -- -- -- - ----------------------------------------------------------------------------------------------------------------
Average common shares outstanding for 1996, 2,136,397; 1995, 2,136,397; 1994, 2,137,440; 1993, 2,171,124; and 1992, 2,178,297. COMPANY PROFILE - ------------------------------------------------------------------------------- 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, 1996. 2 J.W. MAYS, INC. TO OUR SHAREHOLDERS: - ------------------------------------------------------------------------------- The current year has shown an improvement over the 1995 fiscal year. Revenues for the current fiscal year increased to $9,268,768, from $8,330,182 in the 1995 fiscal year, while revenues for the three months ended July 31, 1996 increased to $2,344,431, from $2,053,733 in the 1995 comparable quarter. For the fiscal year ended July 31, 1996, our Company reported a loss of $141,286, or $.07 per share, compared with a loss of $372,039, or $.17 per share, in the year ended July 31, 1995. The current year's loss of $141,286 includes a pre-tax write-off of a bad debt of $424,011, due to a lease rejection by a tenant in bankruptcy under Chapter 11. In the three months ended July 31, 1996, the Company reported net income of $90,701, or $.04 per share, against a quarterly loss in the previous year of $172,500, or $.08 per share. The Company has recently signed two leases with the State of New York for approximately 46,000 square feet of office space in the Company's former store in Jamaica, New York. Occupancy by the two tenants is anticipated to commence in April 1997. To defray the costs of renovations for the State occupancy, the Company borrowed from a bank the principal amount of $2,500,000. As we review the progress made in fiscal 1996, we are confident that the Company is better positioned today then it was one year ago when we were absorbing the loss of two major tenants, and a rent concession to a third tenant, as previously reported. While we cannot control the real estate market, we believe we have made significant progress in the areas we can control. We look forward to being able to report a profitable 1997 fiscal year. We are appreciative of the continued support and confidence of our shareholders, the counsel of our Board of Directors and the loyal service of our employees. Sincerely, /s/ MAX L. SHULMAN Max L. Shulman Co-Chairman /S/ LLOYD J. SHULMAN Lloyd J. Shulman Co-Chairman, Chief Executive Officer and President and Chief Operating Officer 3 J.W. MAYS, INC. CONSOLIDATED BALANCE SHEETS July 31, 1996 and 1995 Assets
1996 1995 ----------- ----------- Property and Equipment--At cost (Notes 1 and 3): Buildings and improvements ........................................................ $31,988,028 $30,867,736 Improvements to leased property ................................................... 9,131,836 8,215,035 Fixtures and equipment ............................................................ 493,748 483,208 Land .............................................................................. 4,008,835 4,008,835 Other ............................................................................. 171,183 167,223 Construction in progress .......................................................... -- 384,133 ----------- ----------- 45,793,630 44,126,170 Less accumulated depreciation and amortization .................................... 19,713,124 18,840,235 ----------- ----------- Property and equipment--net ................................................... 26,080,506 25,285,935 ----------- ----------- Current Assets: Cash and cash equivalents (Notes 11 and 12) ....................................... 412,653 490,315 Marketable securities--other investments (Notes 1, 2, 9 and 11) ................... 2,792,800 2,799,712 Receivables ....................................................................... 315,179 244,992 Deferred income taxes (Note 5) .................................................... 67,000 27,000 Prepaid expenses .................................................................. 1,171,896 1,121,694 Income taxes refundable ........................................................... 4,496 -- Real estate taxes refundable ...................................................... 13,409 -- ----------- ----------- Total current assets .......................................................... 4,777,433 4,683,713 ----------- ----------- Other Assets: Deferred charges (Note 1) ......................................................... 2,414,194 2,329,140 Less accumulated amortization ..................................................... 883,229 913,311 ----------- ----------- Net ........................................................................... 1,530,965 1,415,829 Security deposits (Note 11) ....................................................... 887,121 458,641 Unbilled receivables (Note 1) ..................................................... 4,126,436 4,026,435 Receivables (Note 7) .............................................................. 194,453 109,687 Marketable securities--other investments (Notes 1, 2, 9 and 11) ................... 98,056 164,063 Deferred income taxes (Note 5) .................................................... 76,000 -- ----------- ----------- Total other assets ............................................................ 6,913,031 6,174,655 ----------- ----------- TOTAL ASSETS .................................................................. $37,770,970 $36,144,303 =========== ===========
See Notes to Consolidated Financial Statements. 4 LIABILITIES AND SHAREHOLDERS' EQUITY
1996 1995 ----------- ----------- Long-Term Debt: Mortgages payable (Notes 3 and 11) ............................................... $ 6,964,717 $ 5,954,306 Other (Note 4) ................................................................... 1,039,709 677,597 ----------- ----------- Total long-term debt ......................................................... 8,004,426 6,631,903 ----------- ----------- Deferred Income Taxes (Note 5) ..................................................... -- 14,000 ----------- ----------- Current Liabilities: Payable to securities broker (Notes 9 and 11) .................................... 1,497,320 1,225,100 Accounts payable ................................................................. 32,460 64,744 Payroll and other accrued liabilities (Note 8) ................................... 607,037 487,956 Income taxes payable (Note 5) .................................................... -- 18,588 Other taxes payable .............................................................. 5,194 4,081 Current portion of long-term debt--mortgages payable (Notes 3 and 11) ............ 483,450 404,813 ----------- ----------- Total current liabilities .................................................... 2,625,461 2,205,282 ----------- ----------- Total liabilities ............................................................ 10,629,887 8,851,185 ----------- ----------- 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 (Note 2) ........................ 17,261 28,010 Retained earnings ................................................................ 21,883,520 22,024,806 ----------- ----------- 27,425,323 27,577,358 Less common stock held in treasury, at cost-- 41,900 shares at 1996 and 1995 .................................................. 284,240 284,240 ----------- ----------- Total shareholders' equity ................................................... 27,141,083 27,293,118 ----------- ----------- Commitments and Contingencies (Notes 6 and 14) ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ................................... $37,770,970 $36,144,303 =========== ===========
5 J.W. MAYS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
Years Ended July 31, ----------------------------------------------- 1996 1995 1994 ----------- ----------- ----------- Revenues Rental income (Notes 1 and 7) ..................................... $ 9,268,768 $ 8,330,182 $ 9,522,528 ----------- ----------- ----------- Expenses Real estate operating expenses .................................... 5,678,653 5,580,161 5,611,835 Administrative and general expenses ............................... 2,431,998 2,157,610 2,840,030 Depreciation and amortization ..................................... 888,932 838,063 822,727 ----------- ----------- ----------- Total expenses .............................................. 8,999,583 8,575,834 9,274,592 ----------- ----------- ----------- Income (loss) from operations before investment income, interest expense and income taxes ................................. 269,185 (245,652) 247,936 ----------- ----------- ----------- Investment income and interest expense Investment income (Note 2) ........................................ 249,479 366,911 384,545 Interest expense (Note 3) ......................................... 681,950 641,067 596,947 ----------- ----------- ----------- (432,471) (274,156) (212,402) ----------- ----------- ----------- Income (loss) from operations before income taxes .................. (163,286) (519,808) 35,534 Income taxes provided (benefit) (Note 5) ........................... (22,000) (126,000) 68,000 ----------- ----------- ----------- (Loss) from operations before cumulative effect of changes in accounting principles ............................... (141,286) (393,808) (32,466) Cumulative effect of changes in accounting principles: Accounting for certain investments in debt and equity securities (Note 1) ....................................... -- 21,769 -- Accounting for income taxes (Notes 1 and 5) ....................... -- -- (275,000) ----------- ----------- ----------- Net (loss) ......................................................... (141,286) (372,039) (307,466) Retained earnings, beginning of year ............................... 22,024,806 22,396,845 22,704,311 ----------- ----------- ----------- Retained earnings, end of year ..................................... $21,883,520 $22,024,806 $22,396,845 =========== =========== =========== Income (loss) per common share: (Loss) from operations ............................................ $ (.07) $ (.18) $ (.02) Cumulative effect of change in accounting principles: Accounting for certain investments in debt and equity securities ............................................... -- .01 -- Accounting for income taxes ...................................... -- -- (.13) ----------- ----------- ----------- Net (loss) per common share ................................. $ (.07) $ (.17) $ (.15) =========== =========== =========== Dividends per share ................................................ -- -- -- =========== =========== =========== Average common shares outstanding .................................. 2,136,397 2,136,397 2,137,440 =========== =========== ===========
See Notes to Consolidated Financial Statements. 6 J.W. MAYS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended July 31, ----------------------------------------------- 1996 1995 1994 ---------- ---------- ---------- Cash Flows From Operating Activities (Loss) from operations .............................................. $ (141,286) $ (393,808) $ (32,466) Adjustments to reconcile net income (loss) to net cash provided from (used in) operating activities: Deferred income taxes ............................................. (124,000) (251,000) (61,000) Amortization of premium on marketable debt securities ....................................................... 723 2,171 4,986 Unrealized loss on marketable securities .......................... -- -- 31,769 Realized (gain) loss on marketable securities ..................... 6,642 (13,643) (18,924) Depreciation and amortization ..................................... 888,932 838,063 822,727 Amortization of deferred expenses ................................. 238,134 127,131 230,823 Other assets--deferred expenses ................................... (353,270) (107,469) (231,767) --security deposits ................................... (428,480) (200,505) (57,762) --unbilled receivables ................................ (100,001) (704,496) (7,204) --receivables ......................................... (84,766) 26,211 (135,898) Changes in: Receivables ....................................................... (70,187) 128,011 (10,153) Prepaid expenses .................................................. (50,202) 40,925 21,497 Real estate taxes refundable ...................................... (13,409) -- -- Income taxes refundable ........................................... (4,496) 22,005 (22,005) Accounts payable .................................................. (32,284) (26,786) (36,511) Payroll and other accrued liabilities ............................. 119,081 (77,888) (60,250) Income taxes payable .............................................. (18,588) 18,588 (29,898) Other taxes payable ............................................... 1,113 433 364 ---------- ---------- ---------- Net cash provided (used) by operating activities ............... (166,344) (572,057) 408,328 ---------- ---------- ---------- Cash Flows From Investing Activities Acquisition of property and equipment ............................... (1,683,503) (982,150) (1,719,703) Marketable securities--other investments: Receipts from sales or maturities .................................. 476,497 2,333,962 699,798 Payments for purchases ............................................. (427,692) (415,708) (760,503) ---------- ---------- ---------- Net cash provided (used) by investing activities ............... (1,634,698) 936,104 (1,780,408) ---------- ---------- ---------- Cash Flows From Financing Activities Borrowings--securities broker ....................................... 1,348,262 2,697,663 2,551,633 Payments--securities broker ......................................... (1,076,042) (2,596,076) (3,819,903) Increase (reduction) of mortgage debt--short-term ................... 78,637 (178,354) 389,102 Increase (reduction) of mortgage and other debt--long-term .................................................... 1,372,523 (399,254) 2,048,556 Purchase of treasury stock .......................................... -- -- (83,300) ---------- ---------- ---------- Net cash provided (used) by financing activities ................ 1,723,380 (476,021) 1,086,088 ---------- ---------- ---------- Net (decrease) in cash and cash equivalents ......................... (77,662) (111,974) (285,992) Cash and cash equivalents at beginning of year ...................... 490,315 602,289 888,281 ---------- ---------- ---------- Cash and cash equivalents at end of year ............................ $ 412,653 $ 490,315 $ 602,289 ========== ========== ==========
See Notes to Consolidated Financial Statements. 7 J.W. MAYS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: NATURE OF OPERATIONS: 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. CONSOLIDATION: The consolidated financial statements include the accounts of the Company and its subsidiaries, which are wholly-owned. Material intercompany items have been eliminated in consolidation. USE OF ESTIMATES: The preparation of the Company's financial statements requires management to make estimates and judgements that affect the reported consolidated statements of operations and 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 to be 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--OTHER INVESTMENTS: Effective August 1, 1994, the Company adopted Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" ("FAS 115"). FAS 115 requires certain securities to be categorized 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. 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: Effective August 1, 1993, the Company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("FAS 109"). The adoption of FAS 109 changes the Company's method of accounting for income taxes from the deferred method previously used under APB Opinion No. 11 to an asset and liability approach. This approach requires the recognition of deferred tax assets and liabilities with respect to the expected future tax consequences of events that have been recognized in the Company's financial statements and income tax returns. As permitted by FAS 109, the Company has elected not to restate prior years' consolidated financial statements. 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 2,136,397 in fiscal 1996 and 1995, and 2,137,440 in fiscal 1994. 8 - -------------------------------------------------------------------------------- 2. MARKETABLE SECURITIES -- OTHER INVESTMENTS: As of July 31, 1996 and 1995, the Company's marketable securities were classified as follows:
1996 1995 ---------------------------------------------- ----------------------------------------------- Gross Gross Gross Gross Unrealized Unrealized Fair Unrealized Unrealized Fair Cost Gains Losses Value Cost Gains Losses Value ---------- ---------- ---------- --------- ---------- ---------- ---------- ---------- Current: Available for sale: Equity securities ............. $2,675,300 $25,261 $ -- $2,700,561 $2,531,940 $42,010 $ -- $ 2,573,950 Certificate of deposit ........ 26,996 -- -- 26,996 25,804 -- -- 25,804 ---------- ------- ----- ---------- ---------- ------- ------ ----------- Total ....................... 2,702,296 25,261 -- 2,727,557 2,557,744 42,010 -- 2,599,754 Held to maturity: Corporate debt securities due within one year .......... 65,243 79 -- 65,322 199,958 3,372 -- 203,330 ---------- ------- ----- ---------- ---------- ------- ------ ----------- Total current ............... $2,767,539 $25,340 $ -- $2,792,879 $2,757,702 $45,382 $ -- $ 2,803,084 ========== ======= ====== ========== ========== ======= ====== ========== Noncurrent: Held to maturity: Corporate debt securities .................. $ 98,056 $ 3,644 $ -- $ 101,700 $ 164,063 $ 4,210 $ -- $ 168,273 ========== ======= ====== ========== ========== ======= ====== ==========
At July 31, 1994, marketable securities consisted of $120,010 of certificates of deposit, $2,387,548 of debt securities and $2,289,220 of equity securities, and the aggregate cost of debt and equity securities exceeded the aggregate market value by $31,769. Effective August 1, 1994, the Company adopted Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" ("FAS 115"). The impact of adopting FAS 115 was to increase shareholders' equity, net of taxes, by $28,010 at July 31, 1995 representing unrealized gain on available for sale securities, net of taxes. Investment income consists of the following:
1996 1995 1994 -------- -------- -------- Interest income ........................................ $ 43,294 $157,788 $239,951 Dividend income ........................................ 212,827 195,480 157,439 (Loss) Gain on sale of securities ...................... (6,642) 13,643 18,924 Unrealized loss on marketable securities .............. -- -- (31,769) -------- -------- -------- Total ............................................... $249,479 $366,911 $384,545 ======== ======== ========
9 - -------------------------------------------------------------------------------- 3. LONG-TERM DEBT--MORTGAGES PAYABLE:
July 31, 1996 July 31, 1995 ----------------------- ------------------------ Current Annual Final Due Due Due Due Interest Payment Within After Within After Rate Date One Year One Year One Year One Year -------- -------- -------- ---------- -------- ---------- Term-loan payable to bank .......... (a) 8 1/2% 2/1/07 $ 20,682 $1,479,318 $ -- $ -- Mortgages: Jowein Building, Brooklyn, N.Y. ... (b) 7 3/8% 3/31/98 83,825 831,560 53,513 921,524 Fishkill, New York Property ....... (c) 9 % 11/01/99 108,651 2,561,428 99,333 2,670,079 Circleville, Ohio Property ........ (d) 7 % 9/30/02 262,767 1,890,947 245,053 2,153,714 Other ............................. 8 1/2% 5/01/01 7,525 201,464 6,914 208,989 -------- ---------- -------- ---------- Total .......................... $483,450 $6,964,717 $404,813 $5,954,306 ======== ========== ======== ==========
(a) On August 17, 1995 the Company entered into an agreement with a bank wherein the bank approved a $1,500,000 loan facility for the Company to use to fund building construction/renovation costs to accommodate tenants under lease. There is no prepayment penalty for early payoff of the loan. The Company took down the $1,500,000 and repaid the amount on September 11, 1996 (See Note 15 to Consolidated Financial Statements). (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. On September 6, 1995 the maturity date of the mortgage was extended from March 31, 1996 to March 31, 1998. The interest rate of 10% continued until March 31, 1996 and from April 1, 1996 the interest rate was established at a bank's prevailing rate as at March 31, 1996 at 7 3/8%. During the renewal period there will be no change in the constant quarterly payments of interest and principal in the amount of $37,263. (c) On October 28, 1994, the existing first mortgage loan balance on the Fishkill property was paid down by a $200,000 payment and the due date of the mortgage loan was extended for a period of five years from November 1, 1994. The annual interest rate was reduced from 10% to 9% and the principal and interest payments are to be made in constant monthly amounts of $28,712 based upon a fifteen 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 increase to $36,540. Maturities of long-term debt--mortgages payable, outstanding at July 31, 1996, are as follows: Years ending July 31, 1997 (included in current liabilities), $483,450; 1998, $1,322,436; 1999, $535,808; 2000, $578,422; 2001, $788,572, and thereafter, $3,739,479. 4. LONG-TERM DEBT--OTHER: Long-Term debt--Other consists of the following: 1996 1995 ---------- -------- Deferred compensation ......... $ 459,333* $520,000* Lease security deposits ....... 580,376** 157,597** ---------- -------- Total ..................... $1,039,709 $677,597 ========== ======== Maturities of long-term debt--other, outstanding at July 31, 1996, are as follows: Years ending July 31, 1997, $305,737; 1998, $104,000; 1999, $112,004; 2000, $198,851; 2001, $187,080 and thereafter, $132,037. - ---------- * In fiscal 1964 the Company entered into a deferred compensation agreement with its then Chairman of the Board. This agreement, as amended, provides for the $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. ** Does not include two irrevocable letters of credit totaling $110,000 at July 31, 1996 and three irrevocable letters of credit totaling $410,000 at July 31, 1995, provided by two and three tenants, respectively. 10 ================================================================================ 5. INCOME TAXES: Effective August 1, 1993, the Company adopted Statement of Financial Accounting Standards No. 109--"Accounting for Income Taxes" ("FAS 109"). Significant components of the Company's deferred tax assets and liabilities as of July 31, 1996 and 1995, are a result of temporary differences related to the items described as follows:
1996 1995 -------------------------------- ------------------------------ Deferred Deferred Deferred Deferred Tax Assets Tax Liabilities Tax Assets Tax Liabilities ------------ --------------- ----------- --------------- Net operating loss carryforward .................... $2,108,362 $ -- $1,994,301 $ -- Alternative minimum tax credit carryforward ........ 246,369 -- 246,369 -- Investment tax credit carryforward ................. 41,597 -- 117,098 -- Deferred compensation not currently deductible ..... 176,800 -- 176,800 -- Rental income received in advance .................. 16,601 -- 18,274 -- Bad debts .......................................... 44,138 -- 44,138 -- Unbilled receivables ............................... -- 1,402,988 -- 1,368,988 Property and equipment ............................. -- 1,068,094 -- 1,093,241 Unrealized gain on available for sale securities ... -- 8,589 -- 14,000 Other .............................................. 30,438 37 10,118 771 ---------- ---------- ---------- ---------- 2,664,305 2,479,708 2,607,098 2,477,000 Valuation allowance ................................ 41,597 -- 117,098 -- ---------- ---------- ---------- ---------- $2,622,708 $2,479,708 $2,490,000 $2,477,000 ========== ========== ========== ==========
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, 1996, except for investment tax credit carryforwards, for which a 100% valuation allowance has been provided. The valuation allowance was reduced by $116,156 in 1996 and $52,600 in 1995 due to the expiration of investment tax credit carryforwards. Income taxes provided (benefit) in fiscal 1996, 1995 and 1994 consisted of: 1996 1995 1994 ---- ---- ---- Current: Federal ........................... $ (7,000) $ -- $ -- State and City .................... 109,000 125,000 129,000 Deferred taxes ..................... (124,000) (251,000) (61,000) --------- --------- -------- Total provision or (benefit) .... $ (22,000) $(126,000) $ 68,000 ========= ========= ======== Components of the deferred tax provision (benefit) for the years ended July 31, 1996, 1995 and 1994 are as follows:
1996 1995 1994 --------- --------- -------- Excess of book depreciation over tax depreciation ......... $ (25,000) $ (3,000) $ (4,000) Reduction of rental income received in advance ............ 2,000 5,000 46,000 Increase in unbilled receivables .......................... 34,000 240,000 2,000 Unrealized gain (loss) on marketable securities ........... -- 14,000 (11,000) Net operating loss carryforwards .......................... (114,000) (474,000) (59,000) Bad debts ................................................. -- (15,000) (29,000) Other ..................................................... (21,000) (18,000) (6,000) --------- --------- -------- $(124,000) $(251,000) $(61,000) ========= ========= ========
Taxes provided (benefit) for the years ended July 31, 1996, 1995 and 1994 differ from amounts which would result from applying the federal statutory tax rate to pre-tax income (loss), as follows:
1996 1995 1994 --------- --------- -------- Income (loss) from operations before income taxes ............................. $(163,286) $(519,808) $ 35,534 Dividends received deduction .............. (110,259) (96,442) (79,702) Other-net ................................. (1,600) 3,015 (5,832) --------- --------- -------- Adjusted pre-tax (loss) ................... $(275,145) $(613,235) $(50,000) Statutory rate ............................ 34% 34% 34% --------- --------- -------- Income tax provision (benefit) at statutory rate ........................... $ (93,500) $(208,500) $(17,000) State and City income taxes, net of federal income tax benefit ............... 71,500 82,500 85,000 --------- --------- -------- Income taxes provided (benefit) ........... $ (22,000) $(126,000) $ 68,000 ========= ========= ========
11 ================================================================================ As a result of the Tax Reform Act of 1986, a separate parallel tax system, "Alternative Minimum Tax" ("AMT"), was created. AMT is calculated separately from the regular Federal income tax and is based on a flat rate applied to a base which is broader than the regular tax base. The higher of the two taxes is paid. The excess of the AMT over regular tax is a tax credit, which can be carried forward indefinitely to reduce regular tax liabilities of future years. The Company was subject to AMT in 1993 and 1989 in the amounts of $23,000 and $230,000, respectively. At July 31, 1996, the Company had tax net operating loss carryforwards of $6,201,000 available to offset future regular taxable income. Of this amount $1,210,000 is available until the year 2003, $2,057,000 until 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 $42,000 that expire as follows: $15,000 in 1997, $2,000 in 1998, $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 21 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, 1996 was exceeded by sublease rental income, as follows: 1996 1995 1994 ---------- ---------- ---------- Minimum rental expense ........... $1,155,120 $1,133,896 $1,113,872 Contingent rental expense ........ 1,252,684 1,278,773 1,267,918 ---------- ---------- ---------- 2,407,804 2,412,669 2,381,790 Sublease rental income ........... 4,108,307 3,540,588 3,934,133 ---------- ---------- ---------- Excess ....................... $1,700,503 $1,127,919 $1,552,343 ========== ========== ========== Rent expense for operating leases include $160,800 for fiscal 1996, $141,300 for fiscal 1995 and $121,800 for fiscal 1994, representing rentals with affiliated companies. 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 ------ ----------- 1997 ................................ $ 1,143,340 1998 ................................ 1,143,340 1999 ................................ 1,143,340 2000 ................................ 1,143,340 2001 ................................ 1,087,174 After 2001 .......................... 9,961,173 ----------- Total required* ................. $15,621,707 =========== * Minimum payments have not been reduced by minimum sublease rentals of $38,642,064 under operating leases due in the future under non-cancellable leases. 12 ================================================================================ 7. RENTAL INCOME: Rental income from Company owned property includes $413,609 per annum for the fiscal year 1996, $385,720 for the fiscal year 1995 and $415,934 for the fiscal year 1994 representing rentals from an affiliated company. Amounts due from the affiliated company included in unbilled receivables and noncurrent receivables are as follows: July 31, ---------------------------------------- 1996 1995 1994 ---------- ---------- ---------- Unbilled receivables ............ $ 954,516 $ 999,344 $1,025,578 Receivables-noncurrent .......... 194,453 109,687 109,687 -current ............. -- -- -- ---------- ---------- ---------- Total ....................... $1,148,969 $1,109,031 $1,135,265 ========== ========== ========== Rental income for the years 1996, 1995 and 1994 is as follows: July 31, ---------------------------------------- 1996 1995 1994 ---------- ---------- ---------- Minimum rentals Company owned property ........ $4,584,959 $4,254,489 $4,816,853 Operating leases .............. 3,443,822 2,955,906 3,265,820 ---------- ---------- ---------- 8,028,781 7,210,395 8,082,673 ---------- ---------- ---------- Contingent rentals Company owned property ........ 575,502 535,105 771,542 Operating leases .............. 664,485 584,682 668,313 ---------- ---------- ---------- 1,239,987 1,119,787 1,439,855 ---------- ---------- ---------- Total ....................... $9,268,768 $8,330,182 $9,522,528 ========== ========== ========== 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 ---- -------------- ----------- ----------- 1997 ........................... $ 4,662,742 $ 3,821,118 $ 8,483,860 1998 ........................... 4,327,930 3,486,306 7,814,236 1999 ........................... 3,898,307 3,083,576 6,981,883 2000 ........................... 3,788,257 3,081,836 6,870,093 2001 ........................... 3,612,332 3,015,676 6,628,008 After 2001 ..................... 24,224,529 22,153,552 46,378,081 ----------- ----------- ----------- Total ...................... $44,514,097 $38,642,064 $83,156,161 =========== =========== =========== 8. PAYROLL AND OTHER ACCRUED LIABILITIES: Payroll and other accrued liabilities consist of the following: 1996 1995 -------- -------- Payroll .............................. $183,102 $114,290 Interest ............................. 93,337 98,031 Professional fees .................... 75,317 86,996 Rents received in advance ............ 93,271 53,749 Utilities ............................ 20,570 83,036 Insurance premiums ................... -- 5,304 Construction costs ................... 42,869 2,025 Brokers commissions .................. 63,368 18,143 Other ................................ 35,203 26,382 -------- -------- Total ........................... $607,037 $487,956 ======== ======== 9. PAYABLE TO SECURITIES BROKER: The Company borrowed funds, payable on demand, from a securities broker. The loan balance at July 31, 1996 in the amount of $1,497,320, secured by the Company's marketable securities, accrues interest, which at July 31, 1996, was at the annual rate of 7 1/2%. 10. EMPLOYEES' RETIREMENT PLAN: The Company sponsors a noncontributory Money Purchase Plan covering substantially all of its employees. Operations were charged $132,234, $137,474 and $125,750, as contributions to the Plan for fiscal 1996, 1995 and 1994, respectively. 13 ================================================================================ 11. FINANCIAL INSTRUMENTS AND CREDIT RISK CONCENTRATIONS: Financial instruments that are potentially subject to concentrations of credit risk consist principally of marketable securities-other investments, cash equivalents and receivables. Marketable securities-other investments and cash equivalents are placed with high credit quality financial institutions and instruments to minimize risk. The following disclosure of estimated fair value was determined by the Company, using available market information and appropriate valuation methods. Considerable judgement 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: (1) quoted market prices, when available, are used to estimate the fair value of investments in marketable debt and equity securities; (2) 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 (3) carrying amounts in the balance sheet approximate fair value for cash and cash equivalents due to their high liquidity. July 31, 1996 --------------------------- Carrying Fair Value Value ---------- ---------- Cash and cash equivalents ............... $ 412,653 $ 412,653 Marketable securities ................... 2,890,856 2,894,579 Tenant security deposits ................ 580,376 580,376 Payable to securities broker ............ (1,497,320) (1,497,320) Long-term debt-mortgages payable ........ (7,448,167) (7,558,024) The Company derives rental income from twenty six tenants, of which three tenants each accounted for more than 10% of rental income during the year ended July 31, 1996. The City of New York is one of the three tenants and the other two tenants are 510 Fulton Street Realty Associates and its related 168-21 Jamaica Avenue Store Corporation, the owners of which are long established in business. McCrory Stores Corporation ("McCrory"), which occupied space in the Fulton Mall in downtown Brooklyn, New York, and whose lease extended to April 29, 2010 and accounted for approximately 14% of the 1993 annual rental income of the Company, filed for Chapter 11 bankruptcy protection from creditors on February 26, 1992. McCrory made application to the United States Bankruptcy Court for authorization to reject the lease agreement, as amended, between the Company, as landlord, and McCrory, as tenant, effective as of January 31, 1994. The United States Bankruptcy Court authorized McCrory to reject such lease agreement effective January 31, 1994 by order signed on January 21, 1994. The Company has filed a Proof of Claim with the United States Bankruptcy Court, Southern District of New York in the total amount of $7,753,732 for damages arising from the rejection of the lease ("Lease Rejection Claim") and a proof of claim in the amount of $86,650 for pre-petition rental obligations. The Company has also filed an administrative claim in the amount of approximately $296,000 ("Administrative Claim") for damages resulting from McCrory's failure to repair and maintain the premises as required by the lease. The Company's claim for pre-petition unpaid rent in the amount of approximately $86,650 has been allowed in the reduced amount of $85,354.39 without prejudice to McCrory's right to assert other and further objections. McCrory has filed an objection to the Company's Lease Rejection Claim and Administrative Claim. The Company has not included its claim against McCrory in its financial statements due to the pending litigation over the Lease Rejection Claim and Administrative Claim and the uncertainty of the amount that may ultimately be allowed and collected. McCrory has filed a Plan of Reorganization with the Bankruptcy Court. The Company has leased approximately 64,000 square feet of the approximate 99,000 square feet of space surrendered by McCrory. Jamesway Corporation, which occupied retail space in the Fishkill, New York property, filed for Chapter 11 bankruptcy protection from creditors on July 19, 1993. Jamesway emerged from bankruptcy on January 28, 1995. Jamesway, which was expected to account for approximately 5.2% of the annual rental income of the Company for the fiscal year ended July 31, 1996, and whose lease extended to January 31, 2005, filed for Chapter 11 bankruptcy protection from creditors again on October 18, 1995. Jamesway rejected its lease in the Fishkill location with the approval of the United States Bankruptcy Court, effective February 29, 1996, but continued occupancy until March 22, 1996. The Company has filed an unsecured claim in the amount of approximately $981,255 for damages resulting from the 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. The Company has made no provision in its financial statements for the claims filed against Jamesway due to the uncertainty of the amount that may ultimately be allowed and collected, except for the pre-petition rental obligations claim of $31,971 which amount is included in the unsecured claim of approximately $981,255. 14 ================================================================================ 12. CASH FLOW INFORMATION: For purposes of reporting cash flows, the Company considers cash equivalents to consist of short-term highly liquid investments with maturities of three months or less, which are readily convertible into cash. Supplemental disclosure: Years Ended July 31, ------------------------------------- 1996 1995 1994 -------- -------- -------- Interest paid ................. $686,644 $647,348 $623,222 Income taxes paid ............. $125,084 $ 84,407 $180,903 13. FINANCIAL ACCOUNTING STANDARDS NO. 121: In May 1995, the Financial Accounting Standards Board issued Statement of Financial Standards No. 121 ("FAS 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. FAS 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 Company believes that the adoption of the new accounting standard will not have any effect on the consolidated financial statements. 14. COMMITMENTS AND CONTINGENCIES: There are various lawsuits and claims pending against the Company. It is the opinion of management that the resolution of these matters will not have a material adverse effect on the Company's Consolidated Financial Statements. 15. SUBSEQUENT EVENT: The Company, on September 11, 1996, closed a loan with a bank in the amount of $4,000,000, the loan to be 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 financial statements do not give effect to the loan. The loan proceeds are to be utilized by the Company toward (a) 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 (see Note 3(a) to Consolidated Financial Statements) and (b) 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. The interest rate on the loan is 8 1/2% 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 is to have the option to secure advances against the loan amount with the loan to convert to a ten year term at the expiration of the initial six (6) month period thereof. Payments are to be made, in arrears, on the first day of each and every month during the term, calculated (a) during the initial six (6) month period of the term, interest only, and (b) during the final ten (10) year period of the term, at the sum of the interest plus amortization sufficient to fully liquidate the loan over a fifteen (15) year period. As additional security, the Company conditionally assigned to the bank all leases and rents on the premises, or portions thereof, now existing and will assign all leases on the premises hereafter consummated. The Company has an option to prepay principal, in whole or in part, plus interest accrued thereon, at any time during the term, upon thirty (30) days prior notice to the bank, without premium or penalty. Other provisions of the loan agreement provide certain restrictions on the incurrence of indebtedness and the sale or transfer of the Company's ground lease interest in the premises. 15 ================================================================================ INDEPENDENT AUDITOR'S REPORT To the Board of Directors and Shareholders J.W. Mays, Inc. and Subsidiaries We have audited the accompanying consolidated balance sheet of J.W. Mays, Inc. and subsidiaries as of July 31, 1996, and the related consolidated statements of operations and retained earnings and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the 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 audit provides 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, 1996, and the results of their operations and their cash flows for the year then ended in conformity with generally accepted accounting principles. D'ARCANGELO & CO., LLP Purchase, New York October 11, 1996 ================================================================================ REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders J.W. Mays, Inc. We have audited the accompanying consolidated balance sheet of J.W. Mays, Inc. and its subsidiaries as of July 31, 1995 and the related consolidated statements of operations and retained earnings, and cash flows for each of the years in the two year period ended July 31, 1995. These consolidated financial statements were the responsibility of the Company's management. Our responsibility was to express an opinion on these 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 audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the 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 at July 31, 1995 and the results of their operations and their cash flows for each of the years in the two year period ended July 31, 1995, in conformity with generally accepted accounting principles. As described in Note 1 to the consolidated financial statements, on August 1, 1994, the Company changed its method of accounting for marketable securities--other investments, and on August 1, 1993, the Company changed its method of accounting for income taxes. LIPSKY, GOODKIN & CO., P.C. New York, New York October 12, 1995 (except with respect to the matter discussed in Note 16(b) to the 1995 Consolidated Financial Statements, as to which the date is October 20, 1995). See paragraph 6 of Note 11 to the 1996 Consolidated Financial Statements for events subsequent to October 20, 1995. 16 J.W. MAYS, INC. FIVE YEAR SUMMARY OF CONSOLIDATED OPERATIONS (dollars in thousands except per share data)
Years Ended July 31, ----------------------------------------------------------------- 1996 1995 1994 1993 1992 =========================================================================================================================== Revenues Rental income ........................................ $ 9,269 $ 8,330 $ 9,523 $ 10,030 $ 9,299 Gain on sale of property and equipment ............... -- -- -- 1 -- Gain on condemnation award ........................... -- -- -- 639 -- ------- ------- ------- -------- ------- Total revenues ..................................... 9,269 8,330 9,523 10,670 9,299 ------- ------- ------- -------- ------- Expenses Real estate operating expenses ....................... 5,679 5,580 5,612 5,509 5,311 Administrative and general expenses .................. 2,432 2,158 2,840 2,075 2,105 Depreciation and amortization ........................ 889 838 823 748 669 ------- ------- ------- -------- ------- Total expenses ..................................... 9,000 8,576 9,275 8,332 8,085 ------- ------- ------- -------- ------- Income (loss) from continuing operations before investment income, interest expense and income taxes ......................................... 269 (246) 248 2,338 1,214 ------- ------- ------- -------- ------- Investment income and interest expense Investment income .................................... 250 367 385 562 678 Interest expense ..................................... 682 641 597 564 471 ------- ------- ------- -------- ------- (432) (274) (212) (2) 207 ------- ------- ------- -------- ------- Income (loss) from continuing operations before income taxes ......................................... (163) (520) 36 2,336 1,421 Income taxes provided (benefit) ....................... (22) (126) 68 872 565 ------- ------- ------- -------- ------- Income (loss) from continuing operations .............. (141) (394) (32) 1,464 856 ------- ------- ------- -------- ------- Discontinued Operations (Loss) from disposal of retail segment--net of taxes ............................................ -- -- -- -- (47) ------- ------- ------- -------- ------- Total (loss) from discontinued operations .......... -- -- -- -- (47) ------- ------- ------- -------- ------- Income (loss) from operations before extraordinary item and cumulative effect of changes in accounting principles ................................ (141) (394) (32) 1,464 809 Accounting for certain investments in debt and equity securities .............................. -- 22 -- -- -- Accounting for income taxes ......................... -- -- (275) -- -- Extraordinary Item--utilization of net operating loss carryforward .................................... -- -- -- 709 416 ------- ------- ------- -------- ------- Net Income (loss) ..................................... $ (141) $ (372) $ (307) $ 2,173 $ 1,225 ======= ======= ======= ======== ======= Income (loss) per common share Income (loss) from continuing operations ............. $ (.07) $ (.18) $ (.02) $ .67 $ .39 (Loss) from discontinued operations ................... -- -- -- -- (.02) Cumulative effect of change in accounting principles: Accounting for certain investments in debt and equity securities ............................... -- .01 -- -- -- Accounting for income taxes .......................... -- -- (.13) -- -- Extraordinary item--utilization of net operating loss carryforward ................................... -- -- -- .33 .19 ------- ------- ------- -------- ------- Net income (loss) per common share ................. $ (.07) $ (.17) $ (.15) $ 1.00 $ .56 ======= ======= ======= ======== ======== Dividends per share ................................... -- -- -- -- -- ======= ======= ======= ======== ======== Average common shares outstanding ..................... 2,136,397 2,136,397 2,137,440 2,171,124 2,178,297 ========= ========= ========= ========= =========
17 J.W. MAYS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ================================================================================ FISCAL 1996 COMPARED TO FISCAL 1995 Loss from operations and the overall net loss for the year ended July 31, 1996 amounted to $141,286, or $.07 per share, after a pre-tax write-off of a bad debt amounting to $424,011 relating to the rejection by a tenant of its lease, discussed below. There was no comparable item in the 1995 twelve month period. Operations for the comparable 1995 twelve month period resulted in an after tax net loss of $393,808, or $.18 per share. The overall net loss for the 1995 twelve month period amounted to $372,039, or $.17 per share, after the cumulative effect (an increase in income) of a change in accounting for certain investments in debt and equity securities, in the amount of $21,769, or $.01 per share. There was no comparable item in the 1996 twelve month period. Rental income in the current year increased to $9,268,768 from $8,330,182 in the 1995 twelve month period principally due to the addition of new tenants. Real estate operating expenses in the current year increased to $5,678,653 from $5,580,161 in the 1995 comparable year principally due to increased maintenance and fuel costs, partially offset, by an allowed credit for utility costs and a decrease in real estate taxes in the 1996 fiscal year. Administrative and general expenses increased to $2,431,998 from $2,157,610 principally due to the bad debt write-off of $424,011, discussed below, partially offset by a decrease in insurance expense. 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 and classified as a bad debt. Depreciation and amortization expense in the current year increased to $888,932 from $838,063 in the 1995 year because of additional improvements to property. Interest expense exceeded interest income in the amount of $432,471 in the current year and by $274,156 in the 1995 year principally due to the increased interest on the broker loan discussed in Note 9 and the loan facility discussed in Note 3(a) to Consolidated Financial Statements. FISCAL 1995 COMPARED TO FISCAL 1994 Operations for the fiscal year ended July 31, 1995 resulted in an after tax net loss of $393,808, or $.18 per share, compared to an after tax net loss of $32,466, or $.02 per share, after the write-off of a bad debt amounting to $708,673, discussed below, in the 1994 fiscal year. The excess of the scheduled rental income of McCrory, recognized on a straight-line basis over rental income reported through January 31, 1994, the effective date of McCrory's rejection of its lease, amounted to $622,023 which, together with the pre-petition claim of $86,650, were written off as a bad debt and reported as an administrative expense in fiscal 1994. In the twelve months ended July 31, 1995, the Company reported an overall net loss in the amount of $372,039, or $.17 per share, after the cumulative effect (an increase of income) of a change in accounting for certain investments in debt and equity securities, in the amount of $21,769, or $.01 per share. There was no comparable item in the 1994 fiscal year. The overall net loss for the 1994 twelve month period amounted to $307,466, or $.15 per share, after a charge for the cumulative effect of a change in accounting for income taxes of $275,000, or $.13 per share. There was no comparable item in the 1995 fiscal year. Rental income in the 1995 fiscal year decreased to $8,330,182 from $9,522,528 in the 1994 twelve months, principally due to the loss of two tenants and the concession of rent for another tenant (See Note 11 to Consolidated Financial Statements), partially offset by rental income from a new tenant. 18 ================================================================================ Real estate operating expenses decreased to $5,580,161 in the 1995 fiscal year from $5,611,835 in the 1994 twelve months principally due to decreased real estate taxes, maintenance costs, and fuel, partially offset by an increase in insurance expense and electricity. Administrative and general expenses decreased to $2,157,610 in the 1995 fiscal year from $2,840,030 in the 1994 twelve month period, principally due to the recording of the bad debt in 1994, discussed above, and a reduction of legal and professional expenses. Depreciation and amortization expense in the 1995 fiscal year increased to $838,063 from $822,727 in the 1994 twelve month period because of additional improvements to property. Interest expense exceeded investment income by $274,156 in the 1995 fiscal year and by $212,402 in the twelve months ended July 31, 1994 principally due to the increased interest on the broker loan discussed in Note 9 to Consolidated Financial Statements. 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. The leasing of 58,000 square feet of space in the Jowein Building located in the Fulton Mall in downtown Brooklyn, New York to two chain store tenants for retail space and one tenant for office space, 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 in the Company's former store in Jamaica, New York, will provide additional working capital for the Company. Two of the Brooklyn leases commenced in November 1995 and one in October 1996, the term of the Fishkill lease commenced in December 1995 and the Jamaica leases are anticipated to commence in April 1997. To defray the costs of renovations for the State occupancy, the Company borrowed from a bank the principal amount of $2,500,000. The Company had working capital of $2,151,972 with a ratio of current assets to current liabilities of 1.8 to 1 at July 31, 1996. Management considers current working capital and borrowing capabilities adequate to cover the Company's planned operating and capital requirements. 19 J.W. MAYS, INC. =========================================================================================================================== QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (dollars in thousands except per share data)
Three months ended ------------------------------------------------------------- Oct. 31, 1995 Jan. 31, 1996 Apr. 30, 1996 July 31, 1996 ------------- ------------- ------------- ------------- Revenues ................................................ $2,026 $2,468 $2,430 $2,345 Revenues less expenses .................................. (87) (261) 36 149 Net income (loss) ....................................... (70) (167) 4 91 ------ ------ ------ ------ Net income (loss) per common share ...................... $ (.03) $ (.08) $ -- $ .04 Three months ended ------------------------------------------------------------- Oct. 31, 1994 Jan. 31, 1995 Apr. 30, 1995 July 31, 1995 ------------- ------------- ------------- ------------- Revenues ................................................ $2,071 $2,109 $2,097 $2,053 Revenues less expenses .................................. (78) (60) (151) (231) (Loss) from operations .................................. (57) (53) (111) (173) Cumulative effect of change in accounting for income taxes ........................................... 22 -- -- -- Net (loss) .............................................. (35) (53) (111) (173) (Loss) per common share: From operations ........................................ $ (.03) $ (.02) $ (.05) $ (.08) Cumulative effect of change in accounting for income taxes .......................................... .01 -- -- -- ------ ------ ------ ------ Net (loss) per common share ............................ $ (.02) $ (.02) $ (.05) $ (.08) ====== ====== ====== ======
- ----------- Income (loss) per share is computed independently for each of the quarters presented, on the basis described inNote 1 to Consolidated Financial Statements. COMMON STOCK PRICES AND DIVIDENDS The Company's common stock trades on the Nasdaq Stock 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, 1996 and 1995: Sales Price ----------------- Three months ended High Low ------------------ ----- ----- October 31, 1995 .................. 7 3/4 5 3/4 January 31, 1996 .................. 8 6 3/8 April 30, 1996 .................... 8 1/2 6 15/16 July 31, 1996 ..................... 8 1/2 7 1/2 October 31, 1994 .................. 7 3/8 6 3/4 January 31, 1995 .................. 7 1/2 6 1/2 April 30, 1995 .................... 7 5 1/2 July 31, 1995 ..................... 7 1/2 5 1/2 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 27, 1996, the Company had approximately 3,700 shareholders of record. 20 J.W. MAYS, INC. ==================================================================================================== OFFICERS Lloyd J. Shulman Co-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 1,2,3,5 Professor Emeritus, New York University Leonard N. Stern School of Business Jack Schwartz 2,3,4,5 Private Consultant Lloyd J. Shulman 1,3,4,5 Co-Chairman of the Board, Chief Executive Officer and President and Chief Operating Officer, J.W. Mays, Inc. Max L. Shulman 1,3,4,5 Co-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 2,3,5 First Vice President, Smith Barney, Inc. 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 Advisory Real Estate Committee 5 Member of Executive Compensation Committee ANNUAL REPORT ON FORM 10-K The Company's Annual Report on Form 10-K, filed with the Securities and Exchange Commission for the fiscal year ended July 31, 1996, 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 J.W. MAYS, FDS
5 This schedule contains summary financial information extracted from the Annual Report for the year ended July 31, 1996 and is qualified in its entirety by reference to such Annual Report. 1 12-MOS JUL-31-1996 AUG-01-1995 JUL-31-1996 412,653 2,792,800 315,179 0 0 4,777,433 45,793,630 19,713,124 37,770,970 2,625,461 0 0 0 2,178,297 24,962,786 37,770,970 0 9,268,768 0 0 8,999,583 0 681,950 (163,286) (22,000) (141,286) 0 0 0 (141,286) (0.07) .00
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