Business Context and Reporting Period
Company: J.W. Mays, Inc.
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: January 31, 1999
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 commercial properties, including significant holdings in Jamaica and Brooklyn, New York, and Fishkill, New York.
Key Financial Metrics
| Metric | Three Months Ended Jan 31, 1999 | Six Months Ended Jan 31, 1999 | Balance Sheet (Jan 31, 1999) |
|---|---|---|---|
| Total Revenues | $2,624,516 | $5,304,421 | - |
| Net Income | $177,129 | $498,444 | - |
| Earnings Per Share | $0.08 | $0.23 | - |
| Operating Cash Flow | - | $1,541,199 | - |
| Cash and Equivalents | - | - | $1,277,355 |
| Total Assets | - | - | $41,500,966 |
| Total Liabilities | - | - | $10,930,050 |
| Shareholders' Equity | - | - | $30,570,916 |
| Long-Term Debt | - | - | $5,674,846 |
Material Changes vs. Prior Period
- Revenue Decline: Revenues decreased to $2.62 million for the quarter (from $2.80 million) and $5.30 million for the six months (from $5.61 million). This decline is primarily attributed to the absence of a one-time pre-tax net recovery of real estate taxes ($123,809 for the quarter and $283,085 for the six months) recorded in the prior year.
- Net Income Reduction: Net income fell to $177,129 for the quarter (from $326,750) and $498,444 for the six months (from $671,761), driven by the lack of the aforementioned tax recovery and a bad debt recovery of $41,453 in the prior year.
- Expense Trends: Real estate operating expenses decreased slightly due to lower taxes and fuel costs, partially offset by increased payroll. Administrative and general expenses increased due to higher payroll and pension costs.
- Debt Reduction: Total long-term debt decreased significantly from $8.40 million to $5.67 million, largely due to the elimination of a loan payable to a securities broker and scheduled mortgage repayments.
Outlook, Risks, and Contingencies
- Capital Projects: The Company is undertaking a facade renovation at its Jamaica, NY building, with total costs estimated at $1.1 million ($885,435 expended as of Jan 31, 1999). A new lobby construction at the Brooklyn property is planned, estimated at $500,000, with work expected to commence in March 1999.
- Bankruptcy Contingencies:
- McCrory Stores: The Company holds an unsecured claim of $7.75 million and an administrative claim of $170,000. McCrory has sold assets with insufficient proceeds for unsecured creditors. The Company has received only $19,304 on the administrative claim and has made no provision for the balance due to collection uncertainty.
- Jamesway Corporation: The Company holds an allowed unsecured claim of $950,635 and an administrative claim of $54,887. To date, $520,698 has been realized. No provision has been made for the remaining balance.
- Year 2000 Compliance: Management believes the Company is not materially at risk regarding Year 2000 issues, as its systems are compliant or third-party dependencies are minimal. However, they acknowledge the risk of third-party system failures.
- Tenant Concentration: One tenant accounted for 16.26% of rental income during the six months ended January 31, 1999.
Investor Verification Checklist
- Verify the status and potential recovery value of the unsecured claims against McCrory Stores ($7.75M) and Jamesway Corporation ($950k).
- Monitor the completion and cost overruns of the Jamaica facade renovation and the planned Brooklyn lobby construction.
- Assess the impact of the single tenant representing 16.26% of rental income on future cash flow stability.
- Review the schedule for the Fishkill, NY mortgage maturing November 1, 1999, and the Company's refinancing or repayment strategy.