MAYS

Business Context and Reporting Period

Company: J.W. Mays, Inc.
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: April 30, 2001 (Nine months ended April 30, 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 commercial properties, including significant holdings in Jamaica and Brooklyn, New York, and Fishkill, New York.

Key Financial Metrics

Note: Total Debt includes current portion of long-term debt ($951,431) and long-term debt ($7,996,362). Working Capital is Total Current Assets ($2,907,387) minus Total Current Liabilities ($1,981,367).

Material Changes vs. Prior Period

• Revenue Growth: Revenues increased by approximately 3.1% for the nine-month period ($255,780 increase). This was primarily driven by the leasing of 11,200 square feet to a tenant at the Jamaica, New York property, which commenced in September 2000.
• Net Income Decline: Net income decreased by 5.6% ($44,119) for the nine-month period. Despite higher revenues, increased operating expenses and depreciation offset the gains.
• Expense Increases:
  • Real estate operating expenses rose by $281,434 due to higher real estate taxes, payroll, utilities, and maintenance.
  • Administrative and general expenses increased by $75,158, largely due to payroll and medical costs.
  • Depreciation and amortization increased by $59,508 due to capital improvements at the Jamaica property.
• Bad Debt Recovery: The Company recorded a $47,532 bad debt recovery in the nine-month period, representing the final recovery from the Jamesway Corporation bankruptcy claim.
• Debt Structure: Total debt increased significantly due to a new $3,500,000 construction loan (with $2,300,000 drawn as of April 30, 2001) to fund renovations for a State of New York lease. Conversely, a mortgage on the Brooklyn property was paid off in full.

Outlook, Risks, and Management Commentary

• Liquidity: Management considers current working capital and borrowing capabilities adequate. Cash and cash equivalents stood at $1.77 million.
• Capital Projects: The Company is undertaking approximately $4.5 million in renovations at the Jamaica property. Approximately $1.56 million is expected to be reimbursed by tenants. A new 42,250 square foot lease with the State of New York commenced May 1, 2001.
• Cash Flow Outlook: Scheduled rental increases from existing tenants are expected to increase cash flow by approximately $400,000 for the fiscal year ending July 31, 2001.
• Legal Contingency: The Company obtained a judgment of $4,147,500 plus interest from the New York State Court of Claims regarding a condemnation of the Fishkill property. The State has appealed; therefore, the judgment has not been recorded in the financial statements.
• Tenant Concentration: One tenant accounted for 15.63% of rental income in the quarter ended April 30, 2001.

Investor Verification Checklist

• State of New York Lease: Verify the commencement and terms of the 42,250 sq. ft. lease at the Jamaica property, which began May 1, 2001, and its impact on future revenue.
• Condemnation Judgment: Monitor the status of the State of New York's appeal regarding the $4.15 million judgment for the Fishkill property, as this represents a significant potential asset not yet recognized.
• Debt Covenants: Review the terms of the new $3.5 million construction loan, specifically the conversion to a permanent loan and interest rate reset mechanisms.
• Capital Expenditures: Confirm the total cost of renovations at the Jamaica and Fishkill properties and the actual reimbursement amounts received from tenants.
• Tenant Concentration Risk: Assess the financial stability of the single tenant representing 15.63% of quarterly rental income.