Business Context and Reporting Period
Company: J.W. Mays, Inc.
Filing Type: Form 10-K (Annual Report)
Period Ended: July 31, 2006
Business Overview: The Company operates a portfolio of commercial real estate properties in New York and Ohio. It discontinued its department store business in 1989 and currently focuses on leasing real estate. The Company employs approximately 30 people, with a union contract covering 20% of the workforce expiring in November 2007.
Key Financial Metrics
Note: Specific revenue, net income, and cash flow figures for the fiscal year are incorporated by reference from the Annual Report to Shareholders and are not explicitly detailed in the provided text. The following metrics are derived from the filing text:
- Real Estate Assets: Total gross carrying value of real estate and improvements is $75,965,473 as of July 31, 2006.
- Accumulated Depreciation: $30,379,314.
- Debt Structure:
- Fixed-rate debt: $7,841,621
- Variable-rate debt: $6,193,735
- Total encumbrances on real estate: $11,682,272
- Market Capitalization: Aggregate market value of voting stock held by non-affiliates was approximately $7,398,301 as of January 31, 2006.
- Shares Outstanding: 2,015,780 shares as of September 15, 2006.
- Accounting Fees: Total fees paid to auditors (D'Arcangelo & Co., LLP) were $107,129 for fiscal 2006.
Material Changes and Property Status
The filing details significant occupancy and renovation activities across the property portfolio:
- Brooklyn (Bond Street): Renovated 13,026 sq. ft. for office space (completed June 2006). Approximately 88,000 sq. ft. remains available for lease. One major tenant occupies 26.11% of rentable space.
- Brooklyn (Jowein Building): Approximately 166,000 sq. ft. available for lease. The Company owns 50% and leases 50% of the property.
- Jamaica, NY: Approximately 27,000 sq. ft. available for lease. Three tenants occupy over 10% of rentable space each.
- Fishkill, NY: Occupancy rate dropped to 4.09% in 2006. Approximately 203,000 sq. ft. is available for lease.
- Levittown, NY: Occupancy rate fell to 0% in 2006. Approximately 15,000 sq. ft. available for lease.
- Circleville, OH: Occupancy rate declined to 55.77%. Approximately 118,000 sq. ft. available for lease.
- Massapequa, NY: Maintained 100% occupancy (sub-leased to a gas station and a bank).
Outlook, Risks, and Contingencies
Management Commentary and Outlook: The Company plans to renovate vacant spaces upon execution of future leases but provides no assurances regarding timing. Two new elevators are being added to the Bond Street lobby, anticipated for completion in Spring 2007.
Risk Factors:
- Ownership Structure: A controlling shareholder group exists, creating potential conflicts of interest, though the Board is majority independent.
- Real Estate Operations: Risks include rising "fit-up" costs, environmental liabilities in older buildings, and lease non-renewals. The Company mitigates tenant concentration by diversifying where possible.
- Market Risk: The Company holds variable-rate debt. A 100 basis point increase in interest rates would decrease net income by approximately $61,937.
- Legal Proceedings: Various lawsuits are pending, but management believes they will not have a material adverse effect.
Internal Controls: Management concluded disclosure controls are effective. However, due to a small accounting department (four persons), complete segregation of duties is not possible, requiring reliance on compensating controls.
Investor Verification Checklist
- Verify the specific revenue and net income figures in the incorporated Annual Report to Shareholders, as they are not listed in the 10-K text.
- Review the occupancy trends for the Fishkill and Levittown properties, which show significant declines or vacancies.
- Assess the impact of the controlling shareholder group on corporate governance and potential conflicts of interest.
- Confirm the status of the union contract expiring November 30, 2007, and potential labor cost implications.
- Monitor the interest rate exposure on the $6.2 million variable-rate debt.