Business Context and Reporting Period
Company: J.W. Mays, Inc.
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: October 31, 1996
Business Overview: The Company operates as a real estate enterprise following the discontinuance of its retail department store segment in 1989. It manages properties in Brooklyn, Jamaica, Fishkill, and Circleville, deriving revenue primarily from rental income.
Key Financial Metrics
| Metric | Q1 1997 (Oct 31, 1996) | Q1 1996 (Oct 31, 1995) |
|---|---|---|
| Revenues (Rental Income) | $2,442,009 | $2,026,254 |
| Total Expenses | $2,162,820 | $2,005,982 |
| Net Income (Loss) | $100,000 | $(69,522) |
| Earnings Per Share | $0.05 | $(0.03) |
| Cash Flow from Operations | $1,017,751 | $371,877 |
| Cash and Equivalents (Ending) | $463,877 | $587,355 |
| Total Assets | $37,439,587 | $37,770,970 |
| Total Liabilities | $10,168,063 | $10,629,887 |
| Shareholders' Equity | $27,271,524 | $27,141,083 |
| Working Capital | $1,671,198 | N/A |
| Current Ratio | 1.6 to 1 | N/A |
Material Changes vs. Prior Period
- Profitability Turnaround: The Company reported a net income of $100,000 compared to a net loss of $69,522 in the prior year quarter.
- Revenue Growth: Rental income increased by approximately 20.5% ($415,755), driven primarily by the addition of new tenants.
- Expense Increases: Real estate operating expenses rose to $1,424,116 from $1,272,618 due to higher taxes, maintenance, and utility costs. Depreciation increased to $233,468 due to property improvements.
- Interest Expense: Net interest expense (interest expense less investment income) increased to $116,189 from $106,794, attributed to interest on a specific loan facility.
- Cash Flow: Operating cash flow more than doubled to $1,017,751, despite a decrease in cash and equivalents due to investing and financing activities.
Outlook, Risks, and Contingencies
Management Commentary and Outlook
Management considers current working capital and borrowing capabilities adequate for planned requirements. Future working capital is expected to be bolstered by new leases, including:
- 69,000 sq. ft. in the Jowein Building (Brooklyn) to chain stores and office tenants.
- 25,000 sq. ft. to the U.S. Post Office in Fishkill, NY.
- Approximately 46,000 sq. ft. to the State of New York in Jamaica, NY (anticipated commencement April 1997).
To fund renovations for the State of New York occupancy, the Company borrowed $2,500,000. Additionally, a $4,000,000 loan was closed on September 11, 1996, secured by the Jamaica property, to repay a prior term loan and fund renovations; this loan is not yet reflected in the financial statements.
Risks and Contingencies
- McCrory Stores Corporation: McCrory rejected its lease in 1994. The Company has filed claims totaling approximately $7.75 million for lease rejection damages and $296,000 for administrative claims. McCrory contests these claims. The Company has not recorded these amounts due to uncertainty. Approximately 30,000 sq. ft. of the former McCrory space remains unleased pending renovations.
- Jamesway Corporation: Jamesway rejected its Fishkill lease in February 1996. The Company has filed unsecured claims of approximately $981,255 and administrative claims of $189,000. No provision has been made for these claims in the financial statements.
- Tenant Concentration: Two tenants accounted for more than 10% of rental income in the quarter: the City of New York and 510 Fulton Street Realty Associates.
Investor Verification Checklist
- Unrecorded Debt: Verify the status and terms of the $4,000,000 Jamaica property loan closed in September 1996, which is not yet reflected in the balance sheet.
- Lease Rejection Claims: Monitor the litigation status of claims against McCrory Stores ($7.75M+) and Jamesway Corporation ($1.17M+), as recovery is uncertain and not currently booked.
- Renovation Costs: Assess the impact of the $2,500,000 borrowing for Jamaica renovations on future interest expenses and cash flow.
- Occupancy Rates: Confirm the leasing status of the remaining 30,000 sq. ft. of the Fulton Mall space formerly occupied by McCrory.
- Debt Covenants: Review restrictions on indebtedness and asset sales associated with the new Jamaica mortgage and the $1.5M term loan facility.