Business Context and Reporting Period
Company: J.W. Mays, Inc.
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended July 31, 2005
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 now focuses on leasing real estate. The Company employs approximately 31 people, with 16% covered by a union contract expiring in 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 stated in the provided text.
- Real Estate Portfolio: Total gross carrying value of real estate and improvements is $73,265,390 as of July 31, 2005.
- Accumulated Depreciation: $28,895,827.
- Debt Structure:
- Fixed-rate debt: $8,636,794
- Variable-rate debt: $5,854,726
- Market Capitalization: Aggregate market value of voting stock held by non-affiliates was approximately $6,608,469 as of January 31, 2005.
- Shares Outstanding: 2,015,780 shares as of September 16, 2005.
- Accounting Fees: Total fees paid to auditors (D'Arcangelo & Co., LLP) were $104,000 for fiscal 2005 ($65,199 for audit fees).
Material Changes and Property Status
The filing details significant occupancy fluctuations across specific properties compared to prior periods:
- Levittown, NY: Occupancy dropped from 100% in 2004 to 16.67% in 2005 after a tenant vacated in September 2004.
- Fishkill, NY: Occupancy remained at 12.28% for five consecutive years; a tenant vacated in March 2004 but remains obligated to pay rent until November 2005.
- Brooklyn (Bond Street): Occupancy increased to 51.62% in 2005, with approximately 108,000 square feet available for lease.
- Brooklyn (Jowein Building): Occupancy decreased to 40.86% in 2005, with approximately 186,000 square feet available for lease. Renovations for office space were completed in March and September 2005.
- Circleville, OH: Maintained 100% occupancy with a single tenant; a lease extension was executed through September 2005 with plans for a further five-year extension.
Outlook, Risks, and Management Commentary
- Forward-Looking Statements: Management cautions that future results may differ due to competitive environments, economic conditions, and regulatory changes.
- Interest Rate Risk: The Company holds variable-rate debt of $5,854,726. A 100 basis point increase in interest rates would decrease net income and future cash flows by approximately $58,547.
- Legal Proceedings: Various lawsuits are pending, but management believes the resolution will not have a material adverse effect on financial statements.
- 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.
- Renovation Plans: The Company plans to renovate vacant space in Brooklyn, Fishkill, Levittown, and Circleville for future leasing, though no assurances are given regarding timing or execution.
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.
- Confirm the status of the 108,000 sq. ft. vacancy in the Brooklyn Bond Street building and the 186,000 sq. ft. vacancy in the Jowein building.
- Review the lease terms for the Fishkill property tenant who vacated in 2004 but remains liable for rent through late 2005.
- Assess the impact of the 16.67% occupancy rate at the Levittown property on future cash flows.
- Monitor the variable-rate debt exposure ($5.85M) given the stated sensitivity to interest rate changes.