Business Context and Reporting Period
Company: J.W. Mays, Inc.
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended July 31, 2004
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 30 people and has no foreign operations.
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 was $67,404,633 as of July 31, 2004.
- Accumulated Depreciation: $27,497,555 as of July 31, 2004.
- Debt Structure:
- Fixed-rate debt: $6,570,830
- Variable-rate debt: $3,280,989
- Market Capitalization: Aggregate market value of voting stock held by non-affiliates was approximately $5,861,976 as of January 31, 2004.
- Shares Outstanding: 2,015,780 shares as of September 17, 2004.
- Accounting Fees: Total fees paid to auditors (D'Arcangelo & Co., LLP) were $78,603 for fiscal 2004.
Material Changes and Property Status
The Company reported significant activity regarding property occupancy and renovations during the period:
- Brooklyn (Bond Street): Renovated approximately 47,615 square feet for office space, completed in early 2004. One major tenant occupies 26.11% of rentable space.
- Brooklyn (Jowein Building): A major tenant (NYC agency) occupying 33.33% of space vacated in June 2004, leaving approximately 230,000 square feet available for lease. Occupancy rate dropped to 64.08%.
- Jamaica: Divided 80,000 square feet into three retail stores; two have been leased. Occupancy rate was 70.70%.
- Fishkill: A tenant vacated in March 2004 but remains obligated to pay rent until November 2005. Approximately 203,000 square feet are available for lease.
- Levittown: The sole tenant vacated upon lease expiration in September 2004.
- Massapequa: Remained 100% occupied with sub-leases to a gas station and a bank.
- Circleville: Remained 100% occupied by a single manufacturing tenant under a lease extension through September 2005.
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. A 100 basis point increase in interest rates would decrease net income by approximately $32,810 ($18,470 related to the Fishkill loan and $14,340 related to a securities broker loan).
- Legal Proceedings: Various lawsuits are pending, but management believes they 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: Plans exist to renovate vacant space in Brooklyn, Jamaica, Fishkill, and Levittown upon securing future leases, though no assurances are given.
Investor Verification Checklist
- Verify the specific revenue and net income figures in the incorporated Annual Report to Shareholders, as they are not detailed in the 10-K text.
- Monitor the leasing status of the Jowein Building (230,000 sq. ft. vacant) and Fishkill property (203,000 sq. ft. vacant) given recent tenant departures.
- Review the impact of the variable-rate debt exposure on future cash flows if interest rates rise.
- Confirm the status of the pending legal proceedings mentioned in Item 3.
- Assess the effectiveness of compensating controls in the accounting department given the lack of full segregation of duties.