Business Context and Reporting Period
Company: J.W. Mays, Inc.
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: October 31, 1997
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 the Jowein Building in Brooklyn, NY, and properties in Jamaica, NY, Fishkill, NY, and Circleville, OH.
Key Financial Metrics
| Metric | Q3 1997 (Unaudited) | Q3 1996 (Unaudited) |
|---|---|---|
| Total Revenues | $2,800,861 | $2,442,009 |
| Net Income | $345,011 | $100,000 |
| Earnings Per Share | $0.16 | $0.05 |
| Operating Cash Flow | $2,005,532 | $1,017,751 |
| Total Assets | $40,736,730 | $40,405,980 (Prior Year End) |
| Total Liabilities | $12,365,587 | $12,375,944 (Prior Year End) |
| Shareholders' Equity | $28,371,143 | $28,030,036 (Prior Year End) |
| Working Capital | $2,174,695 | N/A |
| Current Ratio | 1.78 to 1 | N/A |
Material Changes vs. Prior Period
- Revenue Growth: Total revenues increased by approximately 14.7% ($358,852) compared to the prior year quarter. This was driven by a $159,276 recovery of real estate taxes and increased rental income from new tenants.
- Profitability Surge: Net income increased 245% to $345,011 from $100,000. The primary driver was the one-time pre-tax recovery of real estate taxes.
- Expense Management: Real estate operating expenses decreased by $77,739 (5.4%) primarily due to lower real estate taxes. Conversely, interest expense increased by $37,986 due to the Jamaica Building loan.
- Liquidity Improvement: Cash and cash equivalents rose significantly from $234,288 to $1,252,666, bolstered by strong operating cash flows.
Outlook, Risks, and Contingencies
Management Commentary and Outlook
Management considers current working capital and borrowing capabilities adequate to cover planned operating and capital requirements. The Company is awaiting court execution of a settlement regarding a real property tax assessment reduction for the Jowein Building, which could result in an additional refund of approximately $919,000 (not yet recorded in financial statements).
Risks and Contingencies
- McCrory Stores Bankruptcy: McCrory rejected its lease in 1994. The Company has filed claims totaling over $7.7 million but has not recorded them due to uncertainty of collection. Approximately 30,000 sq. ft. of the surrendered space remains unleased due to renovation requirements.
- Jamesway Corporation Bankruptcy: Jamesway rejected its lease in 1996. The Company has realized 44% of its unsecured claim ($418,279) but has not provided for the remaining balance due to collection uncertainty.
- 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
- Tax Refund Status: Verify the status of the pending court order for the ~$919,000 real estate tax refund settlement.
- Leasing Progress: Confirm the timeline for leasing the remaining 30,000 sq. ft. of the Jowein Building previously occupied by McCrory.
- Debt Covenants: Review the restrictions on indebtedness and asset sales associated with the $4,000,000 Jamaica property loan.
- Bankruptcy Recoveries: Monitor updates on the collection of remaining unsecured claims against McCrory and Jamesway.