Business Context and Reporting Period
Company: J.W. Mays, Inc.
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: October 31, 2001
Business Overview: The Company operates as a real estate enterprise following the discontinuance of its retail department store segment in 1989. It owns and manages properties including locations in Jamaica and Fishkill, New York, and Circleville, Ohio.
Key Financial Metrics
| Metric | Q3 2001 (Unaudited) | Q3 2000 (Unaudited) |
|---|---|---|
| Total Revenues | $3,166,187 | $2,736,892 |
| Net Income | $387,572 | $313,475 |
| Earnings Per Share | $0.19 | $0.15 |
| Operating Cash Flow | $1,554,209 | $1,021,580 |
| Cash and Equivalents (End of Period) | $3,206,422 | $1,630,689 |
| Total Assets | $47,021,521 | $45,577,667 |
| Total Liabilities | $13,495,826 | $12,545,067 |
| Long-Term Debt | $8,629,242 | $7,695,639 |
Material Changes vs. Prior Period
- Revenue Growth: Revenues increased by approximately 15.7% ($429,295) primarily due to the leasing of 42,250 square feet at the Jamaica, New York property, which commenced on May 1, 2001.
- Expense Increases: Real estate operating expenses rose to $1,475,091 due to higher taxes, insurance, and maintenance. Administrative expenses increased to $601,924 driven by payroll, medical, and legal costs.
- Interest Expense: Interest expense increased to $182,633 (up from $144,155) due to additional mortgage financing on the Jamaica property, partially offset by scheduled debt repayments.
- Bad Debt Recovery: The prior year period included a $47,532 bad debt recovery from Jamesway Corporation; no comparable item occurred in the current period.
- Liquidity: Cash and cash equivalents more than doubled from $1.0 million to $3.2 million, driven by strong operating cash flows and a $1.2 million mortgage drawdown.
Outlook, Risks, and Contingencies
- Lease Uncertainty (Circleville, Ohio): The tenant occupying the entire Circleville property did not exercise a five-year lease extension option by the September 30, 2001 deadline. Negotiations are ongoing to determine if the tenant will continue using part of the premises. The current lease expires September 30, 2002.
- Legal Contingency (State of New York): The Company obtained a $4,147,500 judgment plus interest against the State of New York regarding a condemnation of the Fishkill property. The State has appealed the judgment and the award of legal fees. This amount is not reflected in financial statements until the appeal is resolved.
- Debt Structure: On August 2, 2001, the Company drew down the remaining $1.2 million of a $3.5 million loan facility, converting it to a 10-year permanent second mortgage at a fixed rate of 6.98% for the first five years.
- Tenant Concentration: Two tenants accounted for 15.09% and 14.96% of rental income in the quarter, respectively.
Investor Verification Checklist
- Verify the status of lease negotiations for the Circleville, Ohio property and the potential impact of vacancy on future revenue.
- Monitor the appeal status of the $4.1 million judgment against the State of New York regarding the Fishkill property condemnation.
- Review the amortization schedule and interest rate reset terms for the new $3.5 million Jamaica property mortgage.
- Confirm the collection status of the $627,687 receivable for tenant renovation reimbursements at the Jamaica property.