MAYS J W INC - Quarter Report: 2013 October (Form 10-Q)

FORM 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

Commission file number 1-3647

J.W. Mays, Inc.
(Exact name of registrant as specified in its charter)

(Registrant's telephone number, including area code) 718-624-7400

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes    X    No ____.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes    X    No ____.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ____ Accelerated filer ____ Non-accelerated filer ____ Smaller reporting company    X   .

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ___ No    X   .

Indicate the number of shares outstanding of the issuer's common stock, as of the latest practicable date.

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J. W. MAYS, INC.

INDEX

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Part 1 - Financial Information

Item 1 - Financial Statements

J. W. MAYS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

See Notes to Condensed Consolidated Financial Statements.

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J. W. MAYS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS

See Notes to Condensed Consolidated Financial Statements.

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J. W. MAYS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

See Notes to Condensed Consolidated Financial Statements.

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J. W. MAYS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

See Notes to Condensed Consolidated Financial Statements.

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J. W. MAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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As of October 31, 2013 and July 31, 2013, the Company's marketable securities were classified as follows:

The Company's debt and equity securities, gross unrealized losses and fair value, aggregated by investment category and length of time that the investment securities have been in a continuous unrealized loss position, at October 31, 2013, are as follows:

Investment income consists of the following:

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Item 2.

J. W. MAYS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION

Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our financial statements and related notes thereto contained in this report. In this discussion, the words “Company”, “we”, “our” and “us” refer to J.W. Mays, Inc. and subsidiaries.

Forward Looking Statements:

The following can be interpreted as including forward looking statements under the Private Securities Litigation Reform Act of 1995. The words “outlook”, “intend”, “plans”, “efforts”, “anticipates”, “believes”, “expects” or words of similar import typically identify such statements. Various important factors that could cause actual results to differ materially from those expressed in the forward-looking statements are identified under the heading “Cautionary Statement Regarding Forward-Looking Statements” below. Our actual results may vary significantly from the results contemplated by these forward-looking statements based on a number of factors including, but not limited to, availability of labor, marketing success, competitive conditions and the change in economic conditions of the various markets we serve.

Critical Accounting Policies and Estimates:

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities. We believe the critical accounting policies in Note 1 to the Condensed Consolidated Financial Statements affect our more significant judgments and estimates used in the preparation of our financial statements. Actual results may differ from these estimates under different assumptions and conditions. (See Note 1 on page 7 to the Condensed Consolidated Financial Statements herein and Note 1 on pages 9 through 11 to the Consolidated Financial Statements in the Annual Report to Shareholders for the fiscal year ended July 31, 2013).

Results of Operations:

Three months Ended October 31, 2013 Compared to the Three months Ended October 31, 2012:

In the three months ended October 31, 2013, the Company reported net income of $436,024, or $.22 per share. In the comparable three months ended October 31, 2012, the Company reported net income of $500,774, or $.25 per share.

Revenues in the current three months increased to $4,218,764 from $4,194,532 in the comparable 2012 three months primarily due to the settlement of litigation with a retail tenant in the amount of $181,257 at the Company's Nine Bond Street, Brooklyn, New York building, partially offset by a retail tenant who vacated the premises at the Jamaica, New York building in September 2013.

Real estate operating expenses in the current three months increased to $2,151,725 from $2,000,894 in the comparable 2012 three months primarily due to increases in real estate taxes, payroll costs, and a bad debt expense from a retail tenant that vacated the premises at the Company's Jamaica, New York building.

Administrative and general expenses in the current three months increased to $918,048 from $844,069 in the comparable 2012 three months primarily due to increases in payroll costs, medical costs and legal and professional costs.

Depreciation and amortization expense in the current three months increased to $418,555 from $401,257 in the comparable 2012 three months primarily due to improvements to the Nine Bond Street, Brooklyn, New York building and the Jowein building in Brooklyn, New York.

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Investment income in the current three months exceeded interest expense by $90,879, whereas in the comparable 2012 three months interest expense exceeded investment income by $103,538. The increase in investment income over interest expense was due to a gain on sale of marketable securities and interest expense reductions effected by scheduled repayments of debt.

Liquidity and Capital Resources:

The Company has been operating as a real estate enterprise since the discontinuance of the retail department store segment of its operations on January 3, 1989.

Management considers current working capital and borrowing capabilities adequate to cover the Company’s planned operating and capital requirements. The Company’s cash and cash equivalents amounted to $1,886,810 at October 31, 2013.

In October 2013, the Company leased 99,992 square feet to a retail tenant at the Company's Fishkill property. Occupancy commenced in November 2013 and rent will commence in January 2014. The Company will incur construction costs, including a new roof, which are expected to cost approximately $1,620,000.

The Company also renewed leases with two office tenants at the Company's Jowein building in Brooklyn, New York who occupy 8,000 and 8,300 square feet, respectively. The existing lease renewal periods were extended to June 30, 2016 and September 30, 2018, respectively.

Two of the Company's retail tenants at its Jamaica, New York building who occupy 28,335 square feet and 25,954 square feet and whose leases expired in August 2013 and September 2013, respectively, did not renew their leases. The loss in annual rental income will be $240,000 and $300,000, respectively. The tenant who occupied 28,335 square feet will stay as a tenant on a month to month rental until January 3, 2014 and the tenant who occupied 25,954 square feet vacated the premises in October 2013. The Company is utilizing brokers to actively seek tenants to occupy the vacated and soon to be vacated space.

In January 2013, a tenant who occupies 7,401 square feet of retail space at the Company's Nine Bond Street, Brooklyn, New York property informed the Company that it will vacate the premises. The Company was in litigation to evict the tenant from the premises. In October 2013, the Company settled the litigation with this tenant. Under the terms of the settlement the tenant will pay all the rent due the Company and in turn the tenant will continue its occupancy under the terms of the lease agreement.

In October 2013, a tenant at the Company's Circleville, Ohio property extended their lease for a period of five years. This tenant also increased the amount of square footage occupied from 30,000 square feet to 48,000 square feet.

Cash Flows From Operating Activities:

Payroll and Other Accrued Liabilities: The Company had a balance due at July 31, 2013 for brokerage commissions of $238,677 of which $47,492 was paid in the three months ended October 31, 2013.

Cash Flows From Investing Activities:

The Company had expenditures of $97,014 for the three months ended October 31, 2013, for work on the elevators in the Brooklyn, New York and Jamaica, New York buildings. The cost of the project is expected to be $315,738 of which $303,108 has been paid.

The Company had expenditures of $522,623 for the three months ended October 31, 2013 for construction costs at its Fishkill, New York building. The cost of the project is approximately $1,620,000 and is anticipated to be completed in 2013.

The Company had expenditures of $673,866 in the three months ended October 31, 2013 for the renovation of 10,000 square feet for office space for a tenant at the Company's Nine Bond Street, Brooklyn, New York building. The cost of the project is approximately $1,200,000 and is anticipated to be completed in December 2013.

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The Company had expenditures of $76,974 for the three months ended October 31, 2013 for renovations to an existing tenant as part of the tenant's lease agreement. The total cost of the renovations will be $190,531 and the renovations are anticipated to be completed in December 2013.

Cautionary Statement Regarding Forward-Looking Statements:

This section, Management’s Discussion and Analysis of Financial Condition and Results of Operations, other sections of this Report on Form 10-Q and other reports and verbal statements made by our representatives from time to time may contain forward-looking statements that are based on our assumptions, expectations and projections about us and the real estate industry. These include statements regarding our expectations about revenues, our liquidity, our expenses and our continued growth, among others. Such forward-looking statements by their nature involve a degree of risk and uncertainty. We caution that a variety of factors, including but not limited to the factors listed below, could cause business conditions and our results to differ materially from what is contained in forward-looking statements:

• changes in the rate of economic growth in the United States;
• the ability to obtain credit from financial institutions and at what costs;
• changes in the financial condition of our customers;
• changes in regulatory environment;
• lease cancellations;
• changes in our estimates of costs;
• war and/or terrorist attacks on facilities where services are or may be provided;
• outcomes of pending and future litigation;
• increasing competition by other companies;
• compliance with our loan covenants;
• recoverability of claims against our customers and others by us and claims by third parties against us; and
• changes in estimates used in our critical accounting policies.

Other factors and assumptions not identified above were also involved in the formation of these forward-looking statements and the failure of such other assumptions to be realized, as well as other factors, may also cause actual results to differ materially from those projected. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described above in connection with any forward-looking statements that may be made by us.

We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to review any additional disclosures we make in proxy statements, quarterly reports on Form 10-Q, annual reports on Form 10-K and any Form 8-K reports filed with the United States Securities and Exchange Commission.

Item 3. Quantitative and Qualitative Disclosures About Market Risk:

The Company uses fixed-rate debt to finance its capital requirements. These transactions do not expose the Company to market risk related to changes in interest rates. The Company does not use derivative financial instruments. At October 31, 2013, the Company had fixed-rate debt of $6,550,957.

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Item 4. Controls and Procedures:

The Company’s management reviewed the Company’s internal controls and procedures and the effectiveness of these controls. As of October 31, 2013, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rules 13a-14(c) and 15d-14(c) of the Securities Exchange Act of 1934. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company required to be included in its periodic SEC filings.

There was no change in the Company’s internal controls over financial reporting or in other factors during the Company’s last fiscal quarter that materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting. There were no significant deficiencies or material weaknesses, and therefore there were no corrective actions taken.

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Part II - Other Information

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 
     None

Item 3. Defaults Upon Senior Securities 
     None

Item 4. Mine Safety Disclosures 
     Not applicable

Item 5. Other Information 
     None

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Item 6. Exhibits and Reports on Form 8-K 
     (a) List of Exhibits:

     (b) Reports on Form 8-K – One report on Form 8-K was filed by the registrant during the three months ended October 31, 2013.

Items reported:

The Company reported its financial results for the three months and year ended July 31, 2013. Date of report filed - October 3, 2013.

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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