**J.W. MAYS, INC.**

**Annual Report2008**Year Ended July 31, 2008

J.W. MAYS, INC.

**Contents**

 

 

 

 

 
  
**Page No.**
 
 

 

Summary of Selected Financial Data
 
 
 
      2
  
 

The Company
 
 
 
      2
  
 

Message to Shareholders
 
 
 
      3
  
 

Consolidated Balance Sheets
 
 
 
      4-5
  
 

Consolidated Statements of Income and Retained      Earnings
 
 
 
      6
  
 

Consolidated Statements of Comprehensive Income
 
 
 
      6
  
 

Consolidated Statements of Cash Flows
 
 
 
      7
  
 

Notes to Consolidated Financial Statements
 
 
 
      8-16
  
 

Report of Management
 
 
 
      17
  
 

Report of Independent Registered Public      Accounting Firm
 
 
 
      17
  
 

Five Year Summary of Consolidated Operations
 
 
 
      18
  
 

Management’s Discussion and Analysis of Financial      Condition and Results of Operations
 
 
 
      19-23
  
 

Controls and Procedures
 
 
 
      23
  
 

Quarterly Financial Information (Unaudited)
 
 
 
      23
  
 

Common Stock and Dividend Information
 
 
 
      23-24
  
 

Officers and Directors
 
 
 
      25
  
 

**Executive Offices**9 Bond Street, Brooklyn, N.Y. 11201-5805

**Transfer Agent and Registrar**American Stock Transfer & Trust Company59 Maiden LaneNew York, New York 10038-4502

**Special Counsel**Holland & Knight LLP195 BroadwayNew York, N.Y. 10007-3189

**Independent Registered Public Accounting Firm**D’Arcangelo & Co., LLP3000 Westchester AvenuePurchase, N.Y. 10577-2538

**Annual Meeting**The Annual Meeting of Shareholders will beheld on Tuesday, November 25, 2008, at10:00 A.M., New York time, at J.W. MAYS, INC.,9 Bond Street, Brooklyn, New York.

J.W. MAYS, INC.

**Summary of Selected Financial Data**(dollars in thousands except per share data)

 

 

 

 

 

 

 

 

 

 

 

 
 
**2008**
 
      2007
 
      2006
 
      2005
 
      2004

 

Rental Income
 
 

**$**

 

**14,572**
  
 

      $

 

       13,810
  
 

      $

 

       13,470
  
 

      $

 

       12,879
  
 

      $

 

       14,025
 
Recovery of Real Estate Taxes
 
 
 
      91
  
 
 
      39
  
 
 
      196
  
      —
 
      —

Gain (Loss) on Disposition of Property and Equipment
 
 
 
**(17**

       )

 
 
 
 
      4,309
  
      —
 
 
 
      4
  
 
 
      (4

       )

 

 

Total Revenues
 
 
 
**14,646**
  
 
 
      18,158
  
 
 
      13,666
  
 
 
      12,883
  
 
 
      14,021
 
 

Net Income (Loss)
 
 
 
**(76**

       )

 
 
 
 
      2,056
  
 
 
      1,433
  
 
 
      348
  
 
 
      1,135
 
 

Real Estate-Net
 
 
 
**45,277**
  
 
 
      44,779
  
 
 
      45,586
  
 
 
      44,370
  
 
 
      39,907
 
 

Total Assets
 
 
 
**57,283**
  
 
 
      60,162
  
 
 
      57,290
  
 
 
      57,177
  
 
 
      51,809
 
 

Long-Term Debt:

 

 

 

 

 

 

 

 

 

 

Mortgages and Term Loan Payable
 
 
 
**9,514**
  
 
 
      11,554
  
 
 
      10,697
  
 
 
      12,476
  
 
 
      7,830
 
Note Payable
 
 
 
**1,000**
  
 
 
      1,000
  
 
 
      1,000
  
 
 
      1,000
  
      —

Other
 
 
 
**1,370**
  
 
 
      1,078
  
 
 
      1,031
  
 
 
      925
  
 
 
      641
 
 

 

 

 

 

 

 

 

 

 

 

Total
 
 
 
**11,884**
  
 
 
      13,632
  
 
 
      12,728
  
 
 
      14,401
  
 
 
      8,471
 
 

Shareholders’ Equity
 
 
 
**39,454**
  
 
 
      39,697
  
 
 
      37,639
  
 
 
      37,339
  
 
 
      36,996
 
 

Net Income (Loss) Per Common Share
 
 

**$**

 

**(.04**

**)**

 
 
 

      $

 

       1.02
  
 

      $

 

       .71
  
 

      $

 

       .17
  
 

      $

 

       .56
 
 

Cash Dividends Declared Per Share
 
**—**
 
      —
 
      —
 
      —
 
      —

 

Average common shares outstanding for fiscal 2008-2004; 2,015,780.

**The Company**

J.W. Mays, Inc. was founded in 1924 and incorporated under the laws of the State of New York on July 6, 1927.

The Company operates a number of commercial real estate properties located in Brooklyn and Jamaica in New York City, in Levittown and Massapequa, Long Island, New York, in Fishkill, Dutchess  County, New York and in Circleville, Ohio. The major portion of these properties is owned and the balance is leased. A substantial percentage of these properties are leased to tenants while the  remainder is available for lease.

More comprehensive information concerning the Company appears in its Form 10-K Annual Report for the fiscal year ended July 31, 2008.

2

J.W. MAYS, INC.

**To Our Shareholders:**

Fiscal 2008 has been an extremely challenging year.

In fiscal 2008, our revenues were $14,646,049 compared to $18,158,702 in the 2007 fiscal year. The 2007 fiscal year included a gain on the sale of a property in the amount of $4,309,340. Net loss  for fiscal 2008 was ($75,641) or ($.04) per share. This compares to net income of $2,055,939 or $1.02 per share for fiscal 2007.

During fiscal 2008, the Company leased an additional 128,337 square feet to three tenants at the Company’s properties. Two of the lease agreements were for office space at the Company’s  Brooklyn, New York (Bond Street building) property. One tenant leased 11,128 square feet and the other tenant leased 57,209 square feet. Part of the space leased replaces the tenant that vacated the  premises in July, 2007. Rent commenced in July, 2008, for one tenant and rent is anticipated to commence in February, 2009, for the other tenant.

The third tenant which entered into a lease agreement was for 60,000 square feet for warehouse space at the Company’s Circleville, Ohio property. Rent commenced in March, 2008.

The increased rentals from the additional tenants should adequately cover the Company’s planned operating and capital requirements.

We are continuing to actively pursue government agencies, educational institutions and prospective corporate tenants which may be seeking office or retail space in our properties.

I believe our Company is well-positioned to continue its growth, and I want to thank the personnel of Mays and our Board colleagues for their continuing commitment and support.

Lloyd J. ShulmanChairman, President and Chief Executive Officer

October 6, 2008

3

J.W. MAYS, INC.

**Consolidated Balance Sheets**

July 31, 2008 and 2007**Assets**

 

 

 

 

 

 
 
**2008**
 
      2007

 

Property and Equipment-at cost (Notes 1 and 3):

 

 

 

 

Buildings and improvements
 
 

**$**

 

**62,488,206**
  
 

      $

 

       60,896,956
 
Improvements to leased property
 
 
 
**9,154,777**
  
 
 
      9,089,969
 
Fixtures and equipment
 
 
 
**544,384**
  
 
 
      726,966
 
Land
 
 
 
**6,067,805**
  
 
 
      6,037,134
 
Other
 
 
 
**227,582**
  
 
 
      227,747
 
Construction in progress
 
 
 
**634,869**
  
 
 
      544,636
 
 

 

 

 

 

 
 
 
 
**79,117,623**
  
 
 
      77,523,408
 
Less accumulated depreciation and amortization
 
 
 
**33,693,516**
  
 
 
      32,553,041
 
 

 

 

 

 

Property and equipment-net
 
 
 
**45,424,107**
  
 
 
      44,970,367
 
 

 

 

 

 

Current Assets:

 

 

 

 

Cash and cash equivalents (Notes 9 and 10)
 
 
 
**1,475,390**
  
 
 
      5,965,350
 
Marketable securities (Notes 1, 2 and 10)
 
 
 
**49,097**
  
 
 
      47,418
 
Receivables (Notes 1 and 6)
 
 
 
**171,031**
  
 
 
      126,253
 
Deferred income taxes (Notes 1 and 4)
 
 
 
**320,000**
  
 
 
      129,000
 
Security deposits
 
 
 
**13,674**
  
 
 
      16,903
 
Prepaid expenses
 
 
 
**1,833,569**
  
 
 
      1,703,539
 
 

 

 

 

 

Total current assets
 
 
 
**3,862,761**
  
 
 
      7,988,463
 
 

 

 

 

 

Other Assets:

 

 

 

 

Deferred charges (Notes 1 and 11)
 
 
 
**3,461,708**
  
 
 
      3,410,592
 
Less accumulated amortization (Notes 1 and 11)
 
 
 
**1,361,804**
  
 
 
      1,219,123
 
 

 

 

 

 

Net
 
 
 
**2,099,904**
  
 
 
      2,191,469
 
Receivables (Notes 1 and 6)
 
 
 
**3,067**
  
 
 
      4,667
 
Security deposits
 
 
 
**1,428,573**
  
 
 
      1,385,606
 
Unbilled receivables (Note 1)
 
 
 
**2,859,076**
  
 
 
      3,461,147
 
Marketable securities (Notes 1, 2, 10 and 15)
 
 
 
**1,605,840**
  
 
 
      160,500
 
 

 

 

 

 

Total other assets
 
 
 
**7,996,460**
  
 
 
      7,203,389
 
 

 

 

 

 

TOTAL ASSETS
 
 

**$**

 

**57,283,328**
  
 

      $

 

       60,162,219
 
 

 

 

 

 

See Notes to Consolidated Financial Statements.

4

**Liabilities and Shareholders’ Equity**

 

 

 

 

 

 
 
**2008**
 
      2007

 

Long-Term Debt:

 

 

 

 

Mortgages and term loan payable (Notes 3 and 10)
 
 

**$**

 

**9,513,528**
  
 

      $

 

       11,553,510
 
Note payable—related party (Notes 10 and 13)
 
 
 
**1,000,000**
  
 
 
      1,000,000
 
Security deposits payable (Note 10)
 
 
 
**1,102,134**
  
 
 
      1,078,006
 
Payroll and other accrued liabilities (Note 7)
 
 
 
**268,272**
  
 
 
      —
 
 

 

 

 

 

Total long-term debt
 
 
 
**11,883,934**
  
 
 
      13,631,516
 
 

 

 

 

 

Deferred Income Taxes (Notes 1 and 4)
 
 
 
**1,935,000**
  
 
 
      2,250,000
 
 

 

 

 

 

Current Liabilities:

 

 

 

 

Accounts payable
 
 
 
**39,364**
  
 
 
      89,621
 
Payroll and other accrued liabilities (Note 7)
 
 
 
**1,785,336**
  
 
 
      2,147,708
 
Income taxes payable
 
 
 
**102,945**
  
 
 
      1,456,558
 
Other taxes payable
 
 
 
**1,891**
  
 
 
      7,909
 
Current portion of mortgages and term loan payable (Notes 3 and 10)
 
 
 
**2,067,639**
  
 
 
      865,158
 
Current portion of security deposits payable (Note 10)
 
 
 
**13,674**
  
 
 
      16,903
 
 

 

 

 

 

Total current liabilities
 
 
 
**4,010,849**
  
 
 
      4,583,857
 
 

 

 

 

 

Total liabilities
 
 
 
**17,829,783**
  
 
 
      20,465,373
 
 

 

 

 

 

Shareholders’ Equity:

 

 

 

 

Common stock, par value $1 each share (shares-5,000,000 authorized; 2,178,297 issued)
 
 
 
**2,178,297**
  
 
 
      2,178,297
 
Additional paid in capital
 
 
 
**3,346,245**
  
 
 
      3,346,245
 
Unrealized gain (loss) on available-for-sale securities—net of deferred taxes (benefit) of ($70,000) at July 31, 2008 and $17,000 at July 31, 2007. (Notes 1, 2 and      4)
 
 
 
**(134,412**

**)**

 
 
 
 
      33,248
 
Retained earnings
 
 
 
**35,351,267**
  
 
 
      35,426,908
 
 

 

 

 

 

 
 
 
 
**40,741,397**
  
 
 
      40,984,698
 
Less common stock held in treasury, at cost-162,517 shares at July 31, 2008 and July 31, 2007 (Note 12)
 
 
 
**1,287,852**
  
 
 
      1,287,852
 
 

 

 

 

 

Total shareholders’ equity
 
 
 
**39,453,545**
  
 
 
      39,696,846
 
 

 

 

 

 

Commitments (Notes 5 and 6) and Contingencies (Note 14)

 

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 

**$**

 

**57,283,328**
  
 

      $

 

       60,162,219
 
 

 

 

 

 

See Notes to Consolidated Financial Statements.

5

J.W. MAYS, INC.**Consolidated Statements of Income and Retained Earnings**

 

 

 

 

 

 

 

 

 

 
 
      Years Ended July 31,
 
**2008**
 
      2007
 
      2006

 

 

 

Revenues

 

 

 

 

 

 
 
 

Rental income (Notes 1 and 6)
 
 

**$**

 

**14,572,005**
  
 

      $

 

       13,809,879
  
 

      $

 

       13,470,572
  
 

Recovery of real estate taxes
 
 
 
**91,043**
  
 
 
      39,483
  
 
 
      195,605
  
 

Gain (loss) on disposition of property and equipment
 
 
 
**(16,999**

**)**

 
 
 
 
      4,309,340
  
      —
 
 

 

 

 

 

 

 

 
 
 

Total revenues
 
 
 
**14,646,049**
  
 
 
      18,158,702
  
 
 
      13,666,177
  
 

 

 

 

 

 

 

 
 
 

Expenses

 

 

 

 

 

 
 
 

Real estate operating expenses (Note 5)
 
 
 
**8,886,483**
  
 
 
      8,587,081
  
 
 
      7,855,318
  
 

Administrative and general expenses
 
 
 
**3,455,068**
  
 
 
      3,255,094
  
 
 
      3,011,080
  
 

Depreciation and amortization (Note 1)
 
 
 
**1,604,321**
  
 
 
      1,582,153
  
 
 
      1,544,419
  
 

 

 

 

 

 

 

 
 
 

Total expenses
 
 
 
**13,945,872**
  
 
 
      13,424,328
  
 
 
      12,410,817
  
 

 

 

 

 

 

 

 
 
 

Income from operations before investment income, interest expense, other expenses and income taxes
 
 
 
**700,177**
  
 
 
      4,734,374
  
 
 
      1,255,360
  
 

 

 

 

 

 

 

 
 
 

Investment income, interest expense and other expenses:

 

 

 

 

 

 
 
 

Investment income (Notes 1 and 2)
 
 
 
**212,705**
  
 
 
      84,094
  
 
 
      2,107,616
  
 

Interest expense (Notes 3, 9 and 13)
 
 
 
**(883,523**

**)**

 
 
 
 
      (997,529

       )

 
 
 
 
      (970,594

       )

 
 
 

 

 

 

 

 

 

 
 
 
 
 
 
**(670,818**

**)**

 
 
 
 
      (913,435

       )

 
 
 
 
      1,137,022
  
 

 

 

 

 

 

 

 
 
 

Income before income taxes
 
 
 
**29,359**
  
 
 
      3,820,939
  
 
 
      2,392,382
  
 

Income taxes provided (Notes 1 and 4)
 
 
 
**105,000**
  
 
 
      1,765,000
  
 
 
      959,000
  
 

 

 

 

 

 

 

 
 
 

Net income (loss)
 
 
 
**(75,641**

**)**

 
 
 
 
      2,055,939
  
 
 
      1,433,382
  
 

Retained earnings, beginning of year
 
 
 
**35,426,908**
  
 
 
      33,370,969
  
 
 
      31,937,587
  
 

 

 

 

 

 

 

 
 
 

Retained earnings, end of year
 
 

**$**

 

**35,351,267**
  
 

      $

 

       35,426,908
  
 

      $

 

       33,370,969
  
 

 

 

 

 

 

 

 
 
 

Net income (loss) per common share (Note 1)
 
 

**$**

 

**(.04**

**)**

 
 
 

      $

 

       1.02
  
 

      $

 

       .71
  
 

 

 

 

 

 

 

 
 
 

Dividends per share
 
**—**
 
      —
 
      —
 
 

 

 

 

 

 

 

 
 
 

Average common shares outstanding
 
 
 
**2,015,780**
  
 
 
      2,015,780
  
 
 
      2,015,780
  
 

 

 

 

 

 

 

 
 
 

See Notes to Consolidated Financial Statements.

**Consolidated Statements of Comprehensive Income**

 

 

 

 

 

 

 

 
 
      Years Ended July 31,
 
**2008**
 
      2007
 
      2006

 

Net income (loss)
 
 

**$**

 

**(75,641**

**)**

 
 
 

      $

 

       2,055,939
  
 

      $

 

       1,433,382
 
 

 

 

 

 

 

 

Other comprehensive income, net of tax

 

 

 

 

 

 

Unrealized gain (loss) on available-for-sale securities, net of taxes (benefit) of ($87,000), $1,000 and ($584,000) for the fiscal years 2008, 2007 and 2006,      respectively
 
 
 
**(167,660**

**)**

 
 
 
 
      1,500
  
 
 
      878,040
 
Reclassification adjustment
 
**—**
 
      —
 
 
 
      (2,010,556

       )

 

 

 

 

 

 

 

 

**Net change in comprehensive income**
 
 
 
**(167,660**

**)**

 
 
 
 
      1,500
  
 
 
      (1,132,516

       )

 

 

 

 

 

 

 

 

Comprehensive income (loss)
 
 

**$**

 

**(243,301**

**)**

 
 
 

      $

 

       2,057,439
  
 

      $

 

       300,866
 
 

 

 

 

 

 

 

See Notes to Consolidated Financial Statements.

6

J.W. MAYS, INC.**Consolidated Statements of Cash Flows**

 

 

 

 

 

 

 

 

 

 
 
      Years Ended July 31,
 
**2008**
 
      2007
 
      2006

 

 

 

Cash Flows From Operating Activities

 

 

 

 

 

 
 
 

Net Income (loss)
 
 

**$**

 

**(75,641**

**)**

 
 
 

      $

 

       2,055,939
  
 

      $

 

       1,433,382
  
 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 
 
 

Deferred income taxes
 
 
 
**(419,000**

**)**

 
 
 
 
      (194,000

       )

 
 
 
 
      (149,000

       )

 
 
 

Realized (gain) on marketable securities
 
**—**
 
      —
 
 
 
      (2,010,556

       )

 
 
 

(Gain) loss on disposition of property and equipment
 
 
 
**16,999**
  
 
 
      (4,309,340

       )

 
 
      —
 
 

Depreciation and amortization
 
 
 
**1,604,321**
  
 
 
      1,582,153
  
 
 
      1,544,419
  
 

Amortization of deferred charges
 
 
 
**379,970**
  
 
 
      449,701
  
 
 
      474,691
  
 

Other assets—deferred charges
 
 
 
**(288,405**

**)**

 
 
 
 
      (1,180,695

       )

 
 
 
 
      (292,887

       )

 
 
 

                         —unbilled receivables
 
 
 
**602,071**
  
 
 
      743,420
  
 
 
      218,417
  
 

                         —receivables
 
 
 
**1,600**
  
 
 
      1,600
  
 
 
      (6,267

       )

 
 
 

Changes in:

 

 

 

 

 

 
 
 

Receivables
 
 
 
**(44,778**

**)**

 
 
 
 
      (40,054

       )

 
 
 
 
      54,993
  
 

Prepaid expenses
 
 
 
**(130,030**

**)**

 
 
 
 
      18,683
  
 
 
      (170,108

       )

 
 
 

Income taxes refundable
 
**—**
 
      —
 
 
 
      234,616
  
 

Accounts payable
 
 
 
**(50,257**

**)**

 
 
 
 
      27,713
  
 
 
      (3,631

       )

 
 
 

Payroll and other accrued liabilities
 
 
 
**(94,100**

**)**

 
 
 
 
      878,130
  
 
 
      135,660
  
 

Income taxes payable
 
 
 
**(1,353,613**

**)**

 
 
 
 
      662,244
  
 
 
      794,314
  
 

Other taxes payable
 
 
 
**(6,018**

**)**

 
 
 
 
      2,264
  
 
 
      457
  
 

 

 

 

 

 

 

 
 
 

Net cash provided by operating activities
 
 
 
**143,119**
  
 
 
      697,758
  
 
 
      2,258,500
  
 

 

 

 

 

 

 

 
 
 

Cash Flows From Investing Activities

 

 

 

 

 

 
 
 

Acquisition of property and equipment
 
 
 
**(2,075,060**

**)**

 
 
 
 
      (901,294

       )

 
 
 
 
      (2,701,860

       )

 
 
 

Proceeds from sale of property and equipment
 
      —
 
 
 
      4,452,222
  
      —
 
 

Security deposits
 
 
 
**(39,738**

**)**

 
 
 
 
      (56,312

       )

 
 
 
 
      (46,083

       )

 
 
 

Marketable securities:

 

 

 

 

 

 
 
 

Receipts from sales or maturities
 
      —
 
      —
 
 
 
      2,710,554
  
 

Payments for purchases
 
 
 
**(1,701,679**

**)**

 
 
 
 
      (1,476

       )

 
 
 
 
      (274

       )

 
 
 

 

 

 

 

 

 

 
 
 

Net cash provided (used) by investing activities
 
 
 
**(3,816,477**

**)**

 
 
 
 
      3,493,140
  
 
 
      (37,663

       )

 
 
 

 

 

 

 

 

 

 
 
 

Cash Flows From Financing Activities

 

 

 

 

 

 
 
 

Borrowings—security broker
 
**—**
 
      —
 
 
 
      567,422
  
 

Payments—security broker
 
**—**
 
      —
 
 
 
      (567,422

       )

 
 
 

Increase—security deposits
 
 
 
**20,899**
  
 
 
      55,812
  
 
 
      47,758
  
 

Borrowings—mortgage and other debt
 
 
 
**41,955**
  
 
 
      315,706
  
 
 
      559,009
  
 

Payments—mortgage and other debt payments
 
 
 
**(879,456**

**)**

 
 
 
 
      (932,394

       )

 
 
 
 
      (1,015,173

       )

 
 
 

 

 

 

 

 

 

 
 
 

Net cash (used) by financing activities
 
 
 
**(816,602**

**)**

 
 
 
 
      (560,876

       )

 
 
 
 
      (408,406

       )

 
 
 

 

 

 

 

 

 

 
 
 

Net increase (decrease) in cash and cash equivalents
 
 
 
**(4,489,960**

**)**

 
 
 
 
      3,630,022
  
 
 
      1,812,431
  
 

Cash and cash equivalents at beginning of year
 
 
 
**5,965,350**
  
 
 
      2,335,328
  
 
 
      522,897
  
 

 

 

 

 

 

 

 
 
 

Cash and cash equivalents at end of year
 
 

**$**

 

**1,475,390**
  
 

      $

 

       5,965,350
  
 

      $

 

       2,335,328
  
 

 

 

 

 

 

 

 
 
 

See Notes to Consolidated Financial Statements.

7

J.W. MAYS, INC.**Notes to Consolidated Financial Statements**

**1. Summary of Significant Accounting Policies:**

CONSOLIDATION: The consolidated financial statements include the accounts of the Company, a New York corporation and its subsidiaries, which are wholly-owned. Material intercompany items  have been eliminated in consolidation.

ACCOUNTING RECORDS AND USE OF ESTIMATES: The accounting records are maintained in accordance with accounting principles generally accepted in the United States of America  (“GAAP”). The preparation of the Company’s financial statements in accordance with GAAP requires management to make estimates that affect the reported consolidated statements of income and  retained earnings, comprehensive income and the consolidated balance sheets and related disclosures. Actual results could differ from those estimates.

RENTAL INCOME: All of the real estate owned by the Company is held for leasing to tenants except for a small portion used for Company offices. Rent is recognized from tenants under executed  leases no later than on an established date or on an earlier date if the tenant should commence conducting business. Unbilled receivables represent the excess of scheduled rental income recognized  on a straight-line basis over rental income as it becomes receivable according to the provisions of the lease. Contingent rental income is recorded when earned and is not based on tenant revenue.  Based upon its periodic assessment of the quality of the receivables, management, using its historical knowledge of the tenants and industry experience, determines whether a reserve or write-off is  required.

MARKETABLE SECURITIES: The Company categorizes marketable securities as either trading, available-for-sale or held-to-maturity. Trading securities are carried at fair value with unrealized gains  and losses included in income. Available-for-sale securities are carried at fair value measurements using quoted prices in active markets for identical assets or liabilities (Level 1) with unrealized gains  and losses recorded as a separate component of shareholders’ equity. Held-to-maturity securities are carried at amortized cost. Dividends and interest income are accrued as earned. Realized gains  and losses are determined on a specific identification basis. The Company reviews marketable securities for impairment whenever circumstances and situations change such that there is an indication  that the carrying amounts may not be recovered. The Company did not classify any securities as trading during the three years ended July 31, 2008. The implementation of Statement of Financial  Accounting Standards No. 157, Fair Value Measurements, had no impact on the presentation of marketable securities in the Company’s financial statements.

PROPERTY AND EQUIPMENT: Property and equipment are stated at cost. Depreciation is calculated using the straight-line method and the declining-balance method. Amortization of  improvements to leased property is calculated over the shorter of the life of the lease or the estimated useful life of the improvements. Lives used to determine depreciation and amortization are  generally as follows:

 

 

 

Buildings and improvements
 
 
 
      18-40 years
 
Improvements to leased property
 
 
 
      3-40 years
 
Fixtures and equipment
 
 
 
      7-12 years
 
Other
 
 
 
      3-5 years
 
Maintenance, repairs, renewals and improvements of a non-permanent nature are charged to expense when incurred. Expenditures for additions and major renewals or improvements are  capitalized. The cost of assets sold or retired and the accumulated depreciation or amortization thereon are eliminated from the respective accounts in the year of disposal, and the resulting gain or loss  is credited or charged to income. Capitalized interest is recorded as part of the asset to which it relates and is amortized over the asset’s estimated useful life.

The Company reviews long-lived assets for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recovered. At July 31,  2008 and 2007, there were no impairments of its property and equipment.

8

 ** **

COMPREHENSIVE INCOME: Statement of Financial Accounting Standards (“SFAS”) No. 130, “Reporting Comprehensive Income”, establishes standards for the reporting of comprehensive income  and its components. It requires all items that are required to be recognized as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as  other income statement information.

Comprehensive income is defined to include all changes in equity except those resulting from investments by and distributions to shareholders.

DEFERRED CHARGES: Deferred charges consist principally of costs incurred in connection with the leasing of property to tenants. Such costs are amortized over the related lease periods, ranging  from 1 to 21 years, using the straight-line method.

INCOME TAXES: Deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities. Deferred tax  assets result principally from the recording of certain accruals and reserves which currently are not deductible for tax purposes. Deferred tax liabilities result principally from temporary differences in the  recognition of gains and losses from certain investments and from the use, for tax purposes, of accelerated depreciation.

INCOME PER SHARE OF COMMON STOCK: Income per share has been computed by dividing net income for the year by the weighted average number of shares of common stock outstanding  during the year, adjusted for the purchase of treasury stock. Shares used in computing income per share were 2,015,780 in fiscal years 2008, 2007 and 2006.

**2. Marketable Securities:**

As of July 31, 2008 and 2007, the Company’s marketable securities were classified as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 
**2008**
 
      2007
 
**Cost**
 
**GrossUnrealizedGains**
 
**GrossUnrealizedLosses**
 
**FairValue**
 
      Cost
 
      GrossUnrealizedGains
 
      GrossUnrealizedLosses
 
      FairValue

Current:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Held-to-Maturity:Certificate of deposit
 
 

      $

 

       49,097
  
 

      $

 

      —
  
 
 
      —
  
 

      $

 

       49,097
  
 

      $

 

       47,418
  
 

      $

 

      —
  
 

      $

 

      —
  
 

      $

 

       47,418
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-current:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale:Equity securities
 
 

      $

 

       1,810,252
  
 

      $

 

      —
  
 
 
      (204,412

       )

 
 
 

      $

 

       1,605,840
  
 

      $

 

       110,252
  
 

      $

 

       50,248
  
 

      $

 

      —
  
 

      $

 

       160,500
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The gross unrealized losses have been in existence for less than twelve months and management does not expect losses upon maturity.

Investment income for the years ended July 31, 2008, 2007 and 2006 consists of the following:

 

 

 

 

 

 

 

 
 
**2008**
 
      2007
 
      2006

Interest income
 
 

**$**

 

**97,301**
  
 

      $

 

       26,294
  
 

      $

 

       28,037
 
Dividend income
 
 
 
**115,404**
  
 
 
      57,800
  
 
 
      69,023
 
Gain on sale of marketable securities
 
**—**
 
      —
 
 
 
      2,010,556
 
 

 

 

 

 

 

 

Total
 
 

**$**

 

**212,705**
  
 

      $

 

       84,094
  
 

      $

 

       2,107,616
 
 

 

 

 

 

 

 

9

 ** **

**3. Long-Term Debt—Mortgages and Term Loan:**

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
   
      CurrentAnnualInterestRate
 
      FinalPaymentDate
 
**July 31, 2008**
 
      July 31, 2007
 
**DueWithinOne Year**
 
**DueAfterOne Year**
 
      DueWithinOne Year
 
      DueAfterOne Year

Mortgages:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jamaica, New York property
 
 
 
      (a

       )

 
 
 
 
      6%
  
 
 
      4/01/12
  
 

**$**

 

**61,964**
  
 

**$**

 

**1,221,173**
  
 

      $

 

       58,365
  
 

      $

 

       1,283,137
 
Jamaica, New York property
 
 
 
      (b

       )

 
 
 
 
      6.81%
  
 
 
      10/01/11
  
 
 
      120,396
  
 
 
**2,380,715**
  
 
 
      112,037
  
 
 
      2,501,111
 
Jowein building, Brooklyn, NY
 
 
 
      (c

       )

 
 
 
 
      9%
  
 
 
      4/01/09
  
 
 
**1,103,520**
  
**—**
 
 
 
      58,612
  
 
 
      1,103,520
 
Fishkill, New York property
 
 
 
      (d,e

       )

 
 
 
 
      6.98%
  
 
 
      2/18/15
  
 
 
**58,199**
  
 
 
**1,753,961**
  
 
 
      17,928
  
 
 
      1,816,798
 
Bond St. building, Brooklyn, NY
 
 
 
      (e

       )

 
 
 
 
      6.98%
  
 
 
      2/18/15
  
 
 
**118,535**
  
 
 
**3,572,373**
  
 
 
      36,102
  
 
 
      3,658,613
 
Term loan payable to bank
 
 
 
      (f

       )

 
 
 
 
      6.50%
  
 
 
      5/01/10
  
 
 
**365,025**
  
 
 
**325,306**
  
 
 
      342,114
  
 
 
      690,331
 
Jowein building, Brooklyn, NY
 
 
 
      (g

       )

 
 
 
 
      Variable
  
 
 
      8/01/10
  
 
 
**240,000**
  
 
 
**260,000**
  
 
 
      240,000
  
 
 
      500,000
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 
 
 

**$**

 

**2,067,639**
  
 

**$**

 

**9,513,528**
  
 

      $

 

       865,158
  
 

      $

 

       11,553,510
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) The Company, on September 11, 1996, closed a loan with a bank in the amount of $4,000,000. The loan is secured by a first mortgage lien covering the entire leasehold interest of the Company,  as tenant, in a certain ground lease and building in the Jamaica, New York property. In March, 2007, the Company extended the loan for five years with an option for an additional five-year period. The  interest rate for the extended period is 6.00% per annum. Interest and amortization of principal will be made in constant monthly amounts based on a fifteen year (15) payout period. The outstanding  balance of the loan totaling $1,036,602 will become due and payable on April 1, 2012.

(b) The Company, on December 13, 2000, closed a loan with a bank in the amount of $3,500,000. The loan is secured by a second position leasehold mortgage covering the entire leasehold  interest of the Company, as tenant, in a certain ground lease and building in the Jamaica, New York property. The outstanding balance of the loan, totaling $2,739,452 became due and payable on  October 1, 2006. The Company exercised its option to extend the loan for an additional five (5) years to October 1, 2011. The interest rate for the extended period is 6.81% per annum. At the end of the  five year period, there will be a balance due on the loan of $2,077,680.

As additional collateral security, the Company will conditionally assign to the bank all leases and rents on the premises, or portions thereof, whether now existing or hereafter consummated. The  Company has an option to prepay principal, in whole or in part, plus interest accrued thereon, at any time during the term, without premium or penalty. Other provisions of the loan agreement provide  certain restrictions on the incurrence of indebtedness on the Jamaica property and the sale or transfer of the Company’s ground lease interest in the premises.

(c) The Company, on May 7, 2004, closed a loan with an affiliated corporation owned by members, including certain directors of the Company, of the family of the late Joe Weinstein, former  Chairman of the Board of Directors, in the amount of $1,350,000. The term of the loan is for a period of five (5) years at an interest rate of 9.00% per annum. Interest and amortization of principal are paid  quarterly based on a fifteen (15) year level amortization period. The constant quarterly payments of interest and principal are $40,316. The outstanding balance of the loan, totaling $1,056,007, will  become due and payable on April 1, 2009.

(d) On August 19, 2004 the Company extended the then existing loan for forty-two (42) months, with an option to convert the loan to a seven (7) year permanent mortgage loan. (See Note 3(e)  below). The Company, in February 2008, converted the loan to a seven (7) year permanent mortgage loan. The interest rate on conversion was 6.98%.

(e) The Company, on August 19, 2004, closed a loan with a bank for a $12,000,000 multiple draw term loan. This loan finances seventy-five (75%) percent of the cost of capital improvements for an  existing lease to a tenant and capital improvements for future tenant leases at the Company’s Brooklyn, New York (Bond Street building) and Fishkill, New York properties. The loan will also finance  $850,000 towards the construction of two new elevators at the Company’s Brooklyn, New York property (Bond Street building). The Company had three

10

 ** **

and one-half years to draw down amounts under this loan. The loan consists of: a) a permanent, first mortgage loan to refinance an existing first mortgage loan affecting the Fishkill Property, which  matured on July 1, 2004 (the “First Permanent Loan”)(see Note 3(d)), b) a permanent subordinate mortgage loan in the amount of $1,870,000 (the “Second Permanent Loan”), and c) multiple,  successively subordinate loans in the amount $8,295,274 (“Subordinate Building Loans”). The loan is structured in two phases: 1) a forty-two (42) month loan with payments of interest only at the floating  one–month LIBOR rate plus 2.25% per annum, but not less than 3.40%; and 2) after the forty-two month period, the loan would convert to a seven-year (7) permanent mortgage loan on a seventeen (17)  year level amortization, plus interest, at the option of the Company. The interest rate on the permanent loan would be at a fixed rate equal to the Federal Home Loan Bank of New York’s seven-year (7)  fixed interest rate plus 2.25% per annum at the time of conversion. As of August 19, 2004, the Company refinanced the existing mortgage on the Company’s Fishkill, New York property, which balance  was $1,834,726 and took down an additional $2,820,000 for capital improvements for two tenants at the Company’s Bond Street building in Brooklyn, New York. In fiscal 2006, 2007 and 2008, the  Company drew down additional amounts totaling $916,670, on its multiple draw term loan to finance tenant improvements and brokerage commissions for the leasing of 13,026 square feet for office use  at the Company’s Bond Street building in Brooklyn, New York. The Company in February 2008 converted the loan to a seven (7) year permanent mortgage loan. The interest rate on conversion was  6.98%. Since the loan has been converted to a permanent mortgage loan, the balance of the financing on this loan is for the new elevators at the Company’s Bond Street building in Brooklyn, New York  in the amount of $850,000 referred to above. As of July 31, 2008, the Company has not drawn down any of the $850,000. The $850,000 is available until the elevator work is completed. The monthly  payments to the bank will increase once the $850,000 is drawn down.

(f) On February 18, 2005, the Company secured financing in the amount of $1,700,000, from a bank whose president is a director of the Company. The loan is a multiple draw loan, for a period of  five (5) years, and is self-amortizing, at an interest rate of 6.50% per annum.

(g) The Company, on July 22, 2005, closed a loan with a bank for $1,200,000. The loan was used to finance the construction costs and brokerage commissions associated with the leasing of 15,000  square feet for office use to a tenant at the Company’s Jowein building in Brooklyn, New York. The loan is secured by the assignment of the lease of 15,000 square feet. The loan is for a period of five (5)  years and is self-amortizing, at a floating interest rate of prime plus 1.00% per annum. The interest rate at July 31, 2008 was 6.00% per annum.

Maturities of long-term debt-mortgages and term loan payable outstanding at July 31, 2008, are as follows: Years ending July 31, 2009 (included in current liabilities); $2,067,639; 2010; $949,604;  2011; $431,275; 2012; $3,417,892; 2013; $234,368; and thereafter, $4,480,389.

Interest paid to related parties for the three years ended July 31, 2008 was $102,211, $107,239, and $111,840, respectively.

**4. Income Taxes:**

Significant components of the Company’s deferred tax assets and liabilities as of July 31, 2008 and 2007 are a result of temporary differences related to the items described as follows:

 

 

 

 

 

 

 

 

 

 
 
**2008**
 
      2007
 
**DeferredTax Assets**
 
**DeferredTax Liabilities**
 
      DeferredTax Assets
 
      DeferredTax Liabilities

Rental income received in advance
 
 

**$**

 

**277,719**
  
 

**$**

 

** —  **
  
 

      $

 

       105,337
  
 

      $

 

 —  
 
Unbilled receivables
 
**—**
 
 
 
**972,086**
  
 
 
 —  
  
 
 
      1,176,790
 
Property and equipment
 
**—**
 
 
 
**1,032,461**
  
 
 
 —  
  
 
 
      1,056,422
 
Unrealized gain on marketable securities
 
 
 
**69,500**
  
**—**
 
      —
 
 
 
      16,234
 
Other
 
 
 
**42,328**
  
**—**
 
 
 
      23,109
  
 
 
 —  
 
 

 

 

 

 

 

 

 

 

 
 
 

**$**

 

**389,547**
  
 

**$**

 

**2,004,547**
  
 

      $

 

       128,446
  
 

      $

 

       2,249,446
 
 

 

 

 

 

 

 

 

 

11

 ** **

The Company has determined, based on its history of operating earnings and expectations for the future, that it is more likely than not that future taxable income will be sufficient to fully utilize the  deferred tax assets at July 31, 2008.

Income taxes provided for the years ended July 31, 2008, 2007 and 2006 consist of the following:

 

 

 

 

 

 

 

 
 
**2008**
 
      2007
 
      2006

Current:

 

 

 

 

 

 

Federal
 
 

      $

 

       342,400
  
 

      $

 

       1,238,771
  
 

      $

 

       786,824
 
State and City
 
 
 
      181,600
  
 
 
      720,229
  
 
 
      289,449
 
Prior:

 

 

 

 

 

 

State and City
 
      —
 
      —
 
 
 
      31,727
 
Deferred taxes (benefit)
 
 
 
      (419,000

       )

 
 
 
 
      (194,000

       )

 
 
 
 
      (149,000

       )

 

 

 

 

 

 

 

 

Total provision
 
 

      $

 

       105,000
  
 

      $

 

       1,765,000
  
 

      $

 

       959,000
 
 

 

 

 

 

 

 

Components of the deferred tax provision (benefit) for the years ended July 31, 2008, 2007 and 2006 consist of the following:

 

 

 

 

 

 

 

 
 
**2008**
 
      2007
 
      2006

Book depreciation over (under) tax depreciation
 
 

      $

 

       (23,961

       )

 
 
 

      $

 

       56,658
  
 

      $

 

       (48,657

       )

 

Reduction (increase) of rental income received in advance
 
 
 
      (172,382

       )

 
 
 
 
      13,496
  
 
 
      (36,229

       )

 

(Decrease) in unbilled receivables
 
 
 
      (204,704

       )

 
 
 
 
      (252,763

       )

 
 
 
 
      (74,262

       )

 

Other
 
 
 
      (17,953

       )

 
 
 
 
      (11,391

       )

 
 
 
 
      10,148
 
 

 

 

 

 

 

 
 
 

      $

 

       (419,000

       )

 
 
 

      $

 

       (194,000

       )

 
 
 

      $

 

       (149,000

       )

 

 

 

 

 

 

 

 

Taxes provided for the years ended July 31, 2008, 2007 and 2006 differ from amounts which would result from applying the federal statutory tax rate to pre-tax income, as follows:

 

 

 

 

 

 

 

 
 
**2008**
 
      2007
 
      2006

Income before income taxes
 
 

**$**

 

**29,358**
  
 

      $

 

       3,820,939
  
 

      $

 

       2,392,382
 
Dividends received deduction
 
 
 
**(80,782**

**)**

 
 
 
 
      (40,460

       )

 
 
 
 
      (48,316

       )

 

Other-net
 
 
 
**(2,700**

**)**

 
 
 
 
      (2,600

       )

 
 
 
 
      (28,923

       )

 

 

 

 

 

 

 

 

Adjusted pre-tax income
 
 

**$**

 

**(54,124**

**)**

 
 
 

      $

 

       3,777,879
  
 

      $

 

       2,315,143
 
 

 

 

 

 

 

 

Statutory rate
 
 
 
**34%**
  
 
 
      34%
  
 
 
      34%
 
Income tax provision at statutory rate
 
 

**$**

 

**(18,072**

**)**

 
 
 

      $

 

       1,282,480
  
 

      $

 

       787,150
 
State and City income taxes, net of federal income tax benefit
 
 
 
**123,072**
  
 
 
      482,520
  
 
 
      171,850
 
 

 

 

 

 

 

 

Income tax provision
 
 

**$**

 

**105,000**
  
 

      $

 

       1,765,000
  
 

      $

 

       959,000
 
 

 

 

 

 

 

 

**5. Leases:**

The Company’s real estate operations encompass both owned and leased properties. The current leases on leased property, most of which have options to extend the terms, range from 1 year to  23 years. Certain of the leases provide for additional rentals under certain circumstances and obligate the Company for payments of real estate taxes and other expenses.

Rental expense for leased real property for each of the three fiscal years in the period ended July 31, 2008 was exceeded by sublease rental income, as follows:

12

 ** **

 

 

 

 

 

 

 

 
 
**2008**
 
      2007
 
      2006

Minimum rental expense
 
 

**$**

 

**1,880,197**
  
 

      $

 

       1,801,414
  
 

      $

 

       1,212,338
 
Contingent rental expense
 
 
 
**1,550,313**
  
 
 
      1,349,508
  
 
 
      1,351,183
 
 

 

 

 

 

 

 
 
 
 
**3,430,510**
  
 
 
      3,150,922
  
 
 
      2,563,521
 
Sublease rental income
 
 
 
**7,660,825**
  
 
 
      6,985,512
  
 
 
      7,248,000
 
 

 

 

 

 

 

 

Excess of sublease income over expense
 
 

**$**

 

**4,230,315**
  
 

      $

 

       3,834,590
  
 

      $

 

       4,684,479
 
 

 

 

 

 

 

 

Rent expense related to an affiliate principally owned by certain directors of the Company totaled $825,000 for fiscal year ended July 31, 2008, $825,000 for fiscal year ended July 31, 2007, and  $273,300 for fiscal year ended July 31, 2006. Rent expense is recognized on a straight-line basis over the lives of the leases.

Future minimum non-cancelable rental commitments for operating leases with initial or remaining terms of one year or more are payable as follows:

 

 

 

      Fiscal Year
 
**OperatingLeases**

2009
 
 

      $

 

       2,031,025
 
2010
 
 
 
      2,097,949
 
2011
 
 
 
      1,742,259
 
2012
 
 
 
      1,729,116
 
2013
 
 
 
      1,729,116
 
After 2013
 
 
 
      25,937,287
 
 

 

 

Total required*
 
 

      $

 

       35,266,752
 
 

 

 

 

      *
 
 
 
      Minimum payments have not been reduced by minimum sublease rentals of $44,441,003 under operating leases due in the future under non-cancelable leases.
**6. Rental Income:**

Rental income for each of the fiscal years 2008, 2007 and 2006 is as follows:
 
 

 

 

 

 

 

 
 
      July 31,
 
**2008**
 
      2007
 
      2006

Minimum rentals

 

 

 

 

 

 

Company owned property
 
 

**$**

 

**6,423,034**
  
 

      $

 

       6,319,755
  
 

      $

 

       5,634,643
 
Leased property
 
 
 
**6,858,020**
  
 
 
      6,103,279
  
 
 
      6,378,907
 
 

 

 

 

 

 

 

 
 
 
 
**13,281,054**
  
 
 
      12,423,034
  
 
 
      12,013,550
 
 

 

 

 

 

 

 

Contingent rentals

 

 

 

 

 

 

Company owned property
 
 
 
**488,146**
  
 
 
      504,612
  
 
 
      587,929
 
Leased property
 
 
 
**802,805**
  
 
 
      882,233
  
 
 
      869,093
 
 

 

 

 

 

 

 

 
 
 
 
**1,290,951**
  
 
 
      1,386,845
  
 
 
      1,457,022
 
 

 

 

 

 

 

 

Total
 
 

**$**

 

**14,572,005**
  
 

      $

 

       13,809,879
  
 

      $

 

       13,470,572
 
 

 

 

 

 

 

 

Future minimum non-cancelable rental income for leases with initial or remaining terms of one year or more is as follows:

13

 ** **

 

 

 

 

 

 

 

      Fiscal Year
 
**CompanyOwned Property**
 
**LeasedProperty**
 
**Total**

2009
 
 

**$**

 

**6,552,835**
  
 

      $

 

       6,874,347
  
 

      $

 

       13,427,182
 
2010
 
 
 
**5,970,789**
  
 
 
      6,676,016
  
 
 
      12,646,805
 
2011
 
 
 
**5,456,661**
  
 
 
      4,795,083
  
 
 
      10,251,744
 
2012
 
 
 
**5,286,620**
  
 
 
      3,765,214
  
 
 
      9,051,834
 
2013
 
 
 
**5,121,360**
  
 
 
      3,392,793
  
 
 
      8,514,153
 
After 2013
 
 
 
**28,842,178**
  
 
 
      18,937,550
  
 
 
      47,779,728
 
 

 

 

 

 

 

 

Total
 
 

**$**

 

**57,230,443**
  
 

      $

 

       44,441,003
  
 

      $

 

       101,671,446
 
 

 

 

 

 

 

 

Rental income is recognized on a straight-line basis over the lives of the leases.

**7. Payroll and Other Accrued Liabilities:**

Payroll and other accrued liabilities for the fiscal years ended July 31, 2008, and 2007 consist of the following:

 

 

 

 

 

 
 
**2008**
 
      2007

Payroll
 
 

**$**

 

**98,024**
  
 

      $

 

       235,964
 
Interest
 
 
 
**77,936**
  
 
 
      87,443
 
Professional fees
 
 
 
**143,526**
  
 
 
      186,152
 
Rents received in advance
 
 
 
**816,821**
  
 
 
      309,816
 
Utilities
 
 
 
**36,100**
  
 
 
      72,341
 
Brokers commissions
 
 
 
**471,792**
  
 
 
      705,366
 
Construction costs
 
 
 
**145,200**
  
      —

Rent expense
 
**—**
 
 
 
      448,200
 
Other
 
 
 
**264,209**
  
 
 
      102,426
 
 

 

 

 

 

Total
 
 

**$**

 

**2,053,608**
  
 

      $

 

       2,147,708
 
 

 

 

 

 

**8. Employees’ Retirement Plan:**

The Company sponsors a non-contributory Money Purchase Plan covering substantially all of its non-union employees. Operations were charged $300,368, $266,506 and $291,306 as contributions  to the Plan for fiscal years 2008, 2007 and 2006, respectively.

**9. Cash Flow Information:**

For purposes of reporting cash flows, the Company considers cash equivalents to consist of short-term highly liquid investments with maturities of three months or less, which are readily convertible  into cash.

Supplemental disclosures:

 

 

 

 

 

 

 

 
 
      Years Ended July 31,
 
**2008**
 
      2007
 
      2006

Interest paid, net of capitalized interest of $55,833 (2008), $19,684 (2007) and $49,279 (2006)
 
 

**$**

 

**893,030**
  
 

      $

 

       1,015,254
  
 

      $

 

       942,537
 
Income taxes paid
 
 

**$**

 

**1,837,616**
  
 

      $

 

       1,296,928
  
 

      $

 

       93,530
 
**10. Financial Instruments and Credit Risk Concentrations:**

The following disclosure of estimated fair value was determined by the Company using available market information and appropriate valuation methods. Considerable judgment is necessary to  develop estimates of fair

14

 ** **

value. The estimates presented herein are not necessarily indicative of the amounts that could be realized upon disposition of the financial instruments.

The Company estimates the fair value of its financial instruments using the following methods and assumptions: (i) quoted market prices, when available, are used to estimate the fair value of  investments in marketable debt and equity securities; (ii) discounted cash flow analyses are used to estimate the fair value of long-term debt, using the Company’s estimate of current interest rates for  similar debt; and (iii) carrying amounts in the balance sheet approximate fair value for cash and cash equivalents and tenant security deposits due to their high liquidity.

 

 

 

 

 

 
 
**July 31, 2008**
 
**CarryingValue**
 
**FairValue**

Cash and cash equivalents
 
 

      $

 

       1,475,390
  
 

      $

 

       1,475,390
 
Marketable securities
 
 

      $

 

       1,654,937
  
 

      $

 

       1,654,937
 
Security deposits payable
 
 

      $

 

       1,115,808
  
 

      $

 

       1,115,808
 
Mortgages, notes and term loan payable
 
 

      $

 

       12,581,167
  
 

      $

 

       13,281,470
 
Financial instruments that are potentially subject to concentrations of credit risk consist principally of marketable securities, cash and cash equivalents and receivables. Marketable securities and  cash and cash equivalents are placed with multiple financial institutions and instruments to minimize risk.

The Company derives rental income from forty-nine tenants, of which one tenant accounted for 13.74% and another tenant accounted for 12.09% of rental income during the year ended July 31,  2008. No other tenant accounted for more than 10% of rental income during the year ended July 31, 2008.

The Company has three irrevocable letters of credit totaling $367,500 at July 31, 2008 provided by three tenants and two irrevocable letters of credit totaling $137,500 at July 31, 2007, provided by  two tenants.

**11. Deferred Charges:**

Deferred charges for the fiscal years ended July 31, 2008 and 2007 consist of the following:

 

 

 

 

 

 

 

 

 

 
 
**July 31, 2008**
 
**July 31, 2007**
 
**Gross CarryingAmount**
 
**AccumulatedAmortization**
 
**Gross CarryingAmount**
 
**AccumulatedAmortization**

Leasing brokerage commissions
 
 

**$**

 

**2,269,914**
  
 

**$**

 

**655,424**
  
 

      $

 

       2,263,370
  
 

      $

 

       547,055
 
Professional fees for leasing
 
 
 
**431,123**
  
 
 
**197,871**
  
 
 
      403,367
  
 
 
      203,327
 
Financing costs
 
 
 
**760,671**
  
 
 
**508,509**
  
 
 
      728,564
  
 
 
      468,741
 
Other
 
**—**
 
**—**
 
 
 
      15,291
  
      —

 

 

 

 

 

 

 

 

 

Total
 
 

**$**

 

**3,461,708**
  
 

**$**

 

**1,361,804**
  
 

      $

 

       3,410,592
  
 

      $

 

       1,219,123
 
 

 

 

 

 

 

 

 

 

The aggregate amortization expense for the three years in the period ended July 31, 2008 was $379,970, $449,701 and $474,691 respectively.

The estimated aggregate amortization expense for each of the five succeeding fiscal years is as follows:

 

 

 

** Fiscal Year**

 

 

2009
 
 

      $

 

       370,455
 
2010
 
 

      $

 

       363,526
 
2011
 
 

      $

 

       295,655
 
2012
 
 

      $

 

       207,060
 
2013
 
 

      $

 

       196,137
 
15

 ** **

**12. Capitalization:**

The Company is capitalized entirely through common stock with identical voting rights and rights to liquidation. Treasury stock is recorded at cost and consists of 162,517 shares at July 31, 2008  and at July 31, 2007.

**13. Note Payable:**

On December 15, 2004, the Company borrowed $1,000,000 from a director of the Company, who is also a greater than 10% beneficial owner of the outstanding common stock of the Company. The  term of the loan was for a period of three (3) years maturing on December 15, 2007, at an interest rate of 7.50% per annum. The loan is unsecured. The note is prepayable in whole or in part at any time  without penalty. The funds were used towards the purchase of a one-half interest in a parcel which is part of the Company’s Brooklyn, New York properties. The total purchase price was $1,500,000. The  constant quarterly payments of interest are $18,750. The Company extended the note for an additional three (3) years maturing on December 15, 2010, at an interest rate of 7.50% per annum. The  interest paid for each of the years ended July 31, 2008, 2007 and 2006 was $75,000.

**14. Contingencies:**

There are various lawsuits and claims pending against the Company. It is the opinion of management that the resolution of these matters will not have a material adverse effect on the Company’s  Consolidated Financial Statements, although the Company is unable to predict the outcome of the matter described below.

In response to a termination notice that the Company received concerning its tenancy in a portion of the Jowein Building, Brooklyn, New York, on April 25, 2007, the Company filed a lawsuit against  its landlords in New York State Supreme Court, Kings County. In the lawsuit, the Company seeks a judgment declaring that the landlord’s termination notice was improperly issued and that the Company  is not required to correct or cure the purported defaults cited in the termination notice. In addition, the Company seeks an order temporarily, preliminarily and permanently enjoining the landlords from  taking any action to terminate the lease or otherwise interfere with the Company’s possession of the premises.

On May 16, 2007, the New York State Supreme Court granted the Company’s motion for preliminary injunctive relief and enjoined the landlords, during the pendency of this action, from taking any  action to evict the Company, terminate the Company’s lease which is scheduled to expire on April 30, 2010, and/or commencing summary action adverse to the Company’s rights or otherwise disturb  the Company’s possession of the premises. The landlords have answered the complaint denying the allegations and asserting counterclaims against the Company relating to the premises. Discovery  has been completed and the case is awaiting the scheduling of a trial date. Management of the Company is unable to predict the outcome of this matter or whether the Company will be required to  expend significant amounts of money in order to correct any of the purported defaults.

**15. Subsequent Event:**

Due to the recent decline in the Stock Market, the Company’s marketable securities have declined by $478,104 since July 31, 2008. The Company has not sold any of its marketable securities,  therefore it has not realized any losses.

16

J.W. MAYS, INC.

**Report of Management**

Management is responsible for the preparation and reliability of the financial statements and the other financial information in this Annual Report. Management has established systems of internal  control over financial reporting designed to provide reasonable assurance that the financial records used for preparing financial statements are reliable and reflect the transactions of the Company and  that established policies and procedures are carefully followed. The Company reviews, modifies and improves its system of internal controls in response to changes in operations.

The Board of Directors, acting through the Audit Committee, which is comprised solely of independent directors who are not employees of the Company, oversees the financial reporting process.  The financial statements have been prepared in accordance with accounting standards generally accepted in the United States of America and include amounts based on judgments and estimates  made by management. Actual results could differ from estimated amounts.

To ensure complete independence, D’Arcangelo & Co., LLP, the independent registered public accounting firm, has full and free access to meet with the Audit Committee, without management  representatives present, to discuss results of the audit, the adequacy of internal controls and the quality of financial reporting.

**Report of Independent Registered Public Accounting Firm**

To the Board of Directors and ShareholdersJ.W. Mays, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of J.W. Mays, Inc. and subsidiaries as of July 31, 2008 and 2007, and the related consolidated statements of income and retained  earnings, comprehensive income, and cash flows for each of the three years in the period ended July 31, 2008. These consolidated financial statements are the responsibility of the Company’s  management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to  obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and  disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall  financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of J.W. Mays, Inc. and subsidiaries as of July 31, 2008 and 2007,  and the results of its operations and its cash flows for each of the three years in the period ended July 31, 2008, in conformity with U.S. generally accepted accounting principles.

D’ARCANGELO & CO., LLPPurchase, New YorkOctober 6, 2008

17

J.W. MAYS, INC.

**Five Year Summary of Consolidated Operations**(dollars in thousands except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 
 
      Years Ended July 31,
 
**2008**
 
      2007
 
      2006
 
      2005
 
      2004

 

**Revenues**

 

 

 

 

 

 

 

 

 

 

Rental income
 
 

**$**

 

**14,572**
  
 

      $

 

       13,810
  
 

      $

 

       13,470
  
 

      $

 

       12,879
  
 

      $

 

       14,025
 
Recovery of real estate taxes
 
 
 
**91**
  
 
 
      39
  
 
 
      196
  
      —
 
      —

Gain (loss) on disposition of property and equipment
 
 
 
**(17**

**)**

 
 
 
 
      4,309
  
      —
 
 
 
      4
  
 
 
      (4

       )

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues
 
 
 
**14,646**
  
 
 
      18,158
  
 
 
      13,666
  
 
 
      12,883
  
 
 
      14,021
 
 

 

 

 

 

 

 

 

 

 

 

**Expenses**

 

 

 

 

 

 

 

 

 

 

Real estate operating expenses
 
 
 
**8,887**
  
 
 
      8,587
  
 
 
      7,855
  
 
 
      7,321
  
 
 
      7,716
 
Administrative and general expenses
 
 
 
**3,455**
  
 
 
      3,255
  
 
 
      3,011
  
 
 
      2,764
  
 
 
      2,771
 
Depreciation and amortization
 
 
 
**1,604**
  
 
 
      1,582
  
 
 
      1,545
  
 
 
      1,465
  
 
 
      1,318
 
 

 

 

 

 

 

 

 

 

 

 

Total expenses
 
 
 
**13,946**
  
 
 
      13,424
  
 
 
      12,411
  
 
 
      11,550
  
 
 
      11,805
 
 

 

 

 

 

 

 

 

 

 

 

**Income from operations before investment income, interest expense, other expenses and income taxes**
 
 
 
**700**
  
 
 
      4,734
  
 
 
      1,255
  
 
 
      1,333
  
 
 
      2,216
 
 

 

 

 

 

 

 

 

 

 

 

**Investment income, interest expense and other expenses:**

 

 

 

 

 

 

 

 

 

 

Investment income
 
 
 
**213**
  
 
 
      84
  
 
 
      2,108
  
 
 
      84
  
 
 
      253
 
Interest expense
 
 
 
**(884**

**)**

 
 
 
 
      (997

       )

 
 
 
 
      (971

       )

 
 
 
 
      (726

       )

 
 
 
 
      (547

       )

 

 

 

 

 

 

 

 

 

 

 

 
 
 
 
**(671**

**)**

 
 
 
 
      (913

       )

 
 
 
 
      1,137
  
 
 
      (642

       )

 
 
 
 
      (294

       )

 

 

 

 

 

 

 

 

 

 

 

 

**Income before income taxes**
 
 
 
**29**
  
 
 
      3,821
  
 
 
      2,392
  
 
 
      691
  
 
 
      1,922
 
**Income taxes provided**
 
 
 
**105**
  
 
 
      1,765
  
 
 
      959
  
 
 
      343
  
 
 
      787
 
 

 

 

 

 

 

 

 

 

 

 

**Net Income (loss)**
 
 

**$**

 

**(76**

**)**

 
 
 

      $

 

       2,056
  
 

      $

 

       1,433
  
 

      $

 

       348
  
 

      $

 

       1,135
 
 

 

 

 

 

 

 

 

 

 

 

**Net income (loss) per common share**
 
 

**$**

 

**(.04**

**)**

 
 
 

      $

 

       1.02
  
 

      $

 

       .71
  
 

      $

 

       .17
  
 

      $

 

       .56
 
 

 

 

 

 

 

 

 

 

 

 

**Dividends per share**
 
**—**
 
      —
 
      —
 
      —
 
      —

 

 

 

 

 

 

 

 

 

 

 

**Average common shares outstanding**
 
 
 
**2,015,780**
  
 
 
      2,015,780
  
 
 
      2,015,780
  
 
 
      2,015,780
  
 
 
      2,015,780
 
 

 

 

 

 

 

 

 

 

 

 

18

J.W. MAYS, INC.**Management’s Discussion and Analysis of Financial Condition andResults of Operations**

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.

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 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 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 pages 8 and 9 to the  Consolidated Financial Statements).

**Fiscal 2008 Compared to Fiscal 2007**

Net loss for the year ended July 31, 2008 amounted to ($75,641) or ($.04) per share, compared to net income for the year ended July 31, 2007 of $2,055,939, or $1.02 per share.

Revenues in the current year decreased to $14,646,049 from $18,158,702 in the comparable 2007 fiscal year. The decrease in revenue was due to the Company’s gain on the sale of a building in  Brooklyn, New York in the amount of $4,309,340 in fiscal 2007 and the vacating of a tenant at the Company’s Brooklyn, New York property in July 2007 and the reduced rent received by the tenant that  replaced Levitz Home Furnishings, Inc., at the Company’s Jowein building in Brooklyn, New York, offset by the Company’s leasing to five additional tenants at the Company’s Brooklyn, Jamaica and  Levittown, New York properties.

The recovery of real estate taxes in the current year in the amount of $91,043, net of legal expenses, represents prior years’ real estate taxes from one of the Company’s properties. The comparable  2007 year had a recovery of real estate taxes in the amount of $39,483, net of legal expenses.

Real estate operating expenses in the current year increased to $8,886,483 from $8,587,081 in the comparable 2007 year primarily due to increases in rental expense in the Company’s Brooklyn,  New York property, utility costs and payroll costs, partially offset by decreases in real estate taxes, insurance costs, licenses and permits and leasing commission costs.

Administrative and general expenses in the current year increased to $3,455,068 from $3,255,094 in the comparable 2007 year primarily due to increases in payroll costs, insurance costs, legal and  professional costs, and pension costs.

Depreciation and amortization expense in the current year increased to $1,604,321 from $1,582,153 in the comparable 2007 year primarily due to depreciation on the additional improvements to the  Jamaica, New York property.

Interest expense in the current year exceeded investment income by $670,818 and $913,435 in the comparable 2007 year. The decrease in the excess of interest expense over investment income  was due primarily to increased investment income and scheduled repayments of debt.

19

**Fiscal 2007 Compared to Fiscal 2006**

Net income for the year ended July 31, 2007 amounted to $2,055,939, or $1.02 per share, compared to net income for the year ended July 31, 2006 of $1,433,382, or $.71 per share.

Revenues in the current year increased to $18,158,702 from $13,666,177 in the comparable 2006 fiscal year. The increase in revenues was due to the Company’s gain on the sale of a building in  Brooklyn, New York in the amount of $4,309,340 and the Company’s leasing to four additional tenants at the Company’s Brooklyn, New York and Jamaica, New York properties.

The recovery of real estate taxes in the current year in the amount of $39,483, net of legal expenses, represents prior years’ real estate taxes from one of the Company’s properties. The comparable  2006 year had a recovery of real estate taxes in the amount of $195,605, net of legal expenses.

Real estate operating expenses in the current year increased to $8,587,081 from $7,855,318 in the comparable 2006 year primarily due to increases in rental expense in the Company’s Brooklyn,  New York and Jamaica, New York properties, maintenance costs and licenses and permits, partially offset by decreases in real estate taxes, payroll costs, utility costs and leasing commission costs.

Administrative and general expenses in the current year increased to $3,255,094 from $3,011,080 in the comparable 2006 year primarily due to increases in payroll costs, bad debt expense due to  a tenant vacating the Company’s Brooklyn, New York building, and legal and professional costs, partially offset by decreases in pension costs.

Depreciation and amortization expense in the current year increased to $1,582,153 from $1,544,419 in the comparable 2006 year primarily due to depreciation on the additional improvements to the  Brooklyn, New York properties.

Interest expense in the current year exceeded investment income by $913,435 and was exceeded by investment income of $1,137,022 in the comparable 2006 year. The higher investment income  amount in the 2006 year was due to the gain on the sale of one of the Company’s marketable securities, which was caused by a merger.

**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 $1,475,390 at July 31, 2008.

In October 2006, the Company entered into a lease agreement with a restaurant at the Company’s Levittown premises. The restaurant constructed a new building. The tenant opened the restaurant  in May 2008. The tenant began paying partial rent in September 2007 and the full rent in May 2008. This will replace the tenant that vacated the premises in September 2004. The annual rental income  from this lease agreement will more than offset the annual rental income lost from the previous tenant.

In July 2007, a tenant who occupied 22,192 square feet of office space at the Company’s Brooklyn, New York property, vacated the premises. The annual loss in rental income to the Company was  approximately $470,000. In March 2008, the Company entered into a lease agreement with a tenant for 11,128 square feet of the vacated space. Rent commenced in July 2008.

In July 2008, the Company entered into a lease agreement with a tenant for 57,209 square feet of office space at the Company’s Brooklyn, New York property. Part of the rented space is for the  balance of 11,064 square feet of vacated space mentioned in the above paragraph. Rent is anticipated to commence in February, 2009. The cost of construction for this tenant will be insignificant.

In May, 2007, the Company entered into a lease agreement with a tenant for 15,900 square feet of office space at its Jowein building in Brooklyn, New York. Rent commenced in March 2008.

20

In March, 2008, the Company entered into a lease agreement with a tenant for 60,000 square feet for warehouse space at its Circleville, Ohio property. Rent commenced in March 2008.

Levitz Home Furnishings, Inc. whose lease was assigned to PLVTZ, LLC, d/b/a Levitz Home Furnishings (“Levitz”) which occupied retail space at the Company’s Jowein building in Brooklyn, New  York and which accounted for 5.60% of the annual rental income of the Company for the fiscal year ended July 31, 2007, filed for Chapter 11 bankruptcy protection from creditors on November 8, 2007.  Levitz vacated the premises on January 31, 2008 and informed the Company in February 2008, of its intentions to reject the lease. The annual rental income from Levitz was approximately $800,000. The  Company, in March 2008, rented the premises to a tenant for the remaining term of the Levitz lease (through April 2010) at slightly less than half the Levitz rental.

The following table represents the increase in square foot occupancy leased at the Company’s properties during fiscal 2008.

 

 

 

Bond Street building, Brooklyn, New York
 
 
 
      68,337
 
Circleville, Ohio
 
 
 
      60,000
 
 

 

 

Total
 
 
 
      128,337
 
 

 

 

As part of the $12,000,000 multiple draw term loan, the bank agreed to finance the cost of two new elevators at the Company’s Bond Street building in Brooklyn, New York. The amount to be  financed will be $850,000. (See Note 3(e) to the Consolidated Financial Statements). The total cost of the elevator project is estimated to be $1,100,000 and is anticipated to be completed in 2008. In  February, 2008, the Company converted the multiple draw term loan to a permanent mortgage. The $850,000 for elevators is the remaining amount of financing due under this loan.

On September 22, 2008, the Company made a payment in the amount of $300,000, which was a partial payment towards the principal amount of its loan on the Jowein building in Brooklyn, New  York. (See Note 3(c) to the Consolidated Financial Statements.)

**Contractual Obligations:**

At July 31, 2008, the Company had certain contractual cash obligations, as set forth in the following tables:

 

 

 

 

 

 

 

 

 

 

 

Contractual CashObligations
 
      Payment Due by Period
 
      Total
 
      Less than 1Year
 
      1-3Years
 
      4-5Years
 
      After 5Years

Mortgages and term loan payable
 
 

      $

 

       11,581,167
  
 

      $

 

       2,067,639
  
 

      $

 

       1,380,879
  
 

      $

 

       3,652,260
  
 

      $

 

       4,480,389
 
Note payable
 
 
 
      1,000,000
  
      —
 
 
 
      1,000,000
  
      —
 
      —

Security deposits payable
 
 
 
      1,115,808
  
 
 
      13,674
  
 
 
      491,607
  
 
 
      218,561
  
 
 
      391,966
 
Operating leases
 
 
 
      35,266,752
  
 
 
      2,031,025
  
 
 
      3,840,208
  
 
 
      3,458,232
  
 
 
      25,937,287
 
 

 

 

 

 

 

 

 

 

 

 

Total contractual cash obligations
 
 

      $

 

       48,963,727
  
 

      $

 

       4,112,338
  
 

      $

 

       6,712,694
  
 

      $

 

       7,329,053
  
 

      $

 

       30,809,642
 
 

 

 

 

 

 

 

 

 

 

 

**Cash Flows From Operating Activities:**

*Deferred Charges:*The Company had expenditures for brokerage commissions in the year ended July 31, 2008, in the amount of $173,731, relating to tenants at its Brooklyn, New York and  Circleville, Ohio properties.

*Payroll and Other Accrued Liabilities:*The Company paid $407,305 for commissions incurred in order to lease space at the Company’s properties in the year ended July 31, 2008. The original  amount of the brokerage commissions was $2,540,474. As of July 31, 2008, $2,068,682 had been paid. The Company also incurred additional brokerage commissions in the amount of $173,731 relating  to two tenants and referred to above.

A tenant at the Company’s Jowein building in Brooklyn, New York paid the rent in advance to the end of the lease term which is April 2010. The amount paid in advance as of July 31, 2008 is  $625,960.

21

The Company has paid $896,400 in rent to its landlord of which $448,200 was accrued at July 31, 2007, which is an affiliated company, on its Jamaica, New York property.

**Cash Flows From Investing Activities:**

The Company had expenditures of $285,242 for the year ended July 31, 2008 for the renovation of 32,890 square feet for office space for a tenant at its Jamaica, New York building. The cost of the  project was $564,937 and was completed in December 2007.

The Company had expenditures of $191,972 for the year ended July 31, 2008, for the construction of two new elevators. The total cost of the project is approximately $1,100,000, of which $850,000  will be financed by a bank. The project is anticipated to be completed in 2008.

The Company had expenditures of $905,912 during the year ended July 31, 2008, for the installation of new heat ventilation and air conditioning equipment along with the corresponding electrical  service required at the Company’s Jamaica, New York building. The project was completed in May 2008.

**Cash Flows From Financing Activities:**

*Borrowing:*The Company drew down an additional $41,955 on its multiple draw term loan, to finance tenant improvements and brokerage commissions for the leasing of 13,026 square feet for  office use at the Company’s Bond Street building in Brooklyn, New York. The total amount financed for tenant improvements and brokerage commissions was $916,670. (See Note 3(e) to the  Consolidated Financial Statements).

**Cautionary Statement Regarding Forward-Looking Statements:**

This section, Management’s Discussion and Analysis of Financial Condition and Results of Operations, other sections of this Annual Report on Form 10-K 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 securities industry. These  include statements regarding our expectations about revenues, our liquidity, or 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 described under Item 1A, “Risk Factors” in our Form 10-K for the fiscal year ended July 31, 2008 and the  following, 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;

 

•
 
 
 
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

22

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 consult any additional  disclosures we make in proxy statements, quarterly reports on Form 10-Q, Annual Reports on Form 10-K and current reports on Form 8-K filed with the Securities and Exchange Commission.

**Controls and Procedures:**

The Company’s management reviewed the Company’s internal controls and procedures and the effectiveness of these controls. As of July 31, 2008, 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.

Our accounting department is comprised of four persons. Due to such a limited number of persons, a complete segregation of all of the duties as to which the department is responsible is not  possible. In order to make sure that the inability to segregate all duties does not affect our timely and accurate financial reporting, we need to remain vigilant in maintaining compensating controls.  These compensating controls will continue to be monitored in order to assure us that our internal controls over financial reporting remain at a high level despite the limited number of accounting  department personnel.

**Quarterly Financial Information (Unaudited)**(dollars in thousands except per share data)

 

 

 

 

 

 

 

 

 

 
 
      Three Months Ended
 
      Oct. 31, 2007
 
      Jan. 31, 2008
 
      Apr. 30, 2008
 
      July 31, 2008

Revenues
 
 

**$**

 

**3,477**
  
 

**$**

 

**3,735**
  
 

**$**

 

**3,489**
  
 

**$**

 

**3,945**
 
Revenues less expenses
 
 
 
**(20**

**)**

 
 
 
 
**(308**

**)**

 
 
 
 
**(129**

**)**

 
 
 
 
**486**
 
Net income (loss)
 
 
 
**(36**

**)**

 
 
 
 
**(245**

**)**

 
 
 
 
**67**
  
 
 
**138**
 
Net income (loss) per common share
 
 

**$**

 

**(.02**

**)**

 
 
 

**$**

 

**(.12**

**)**

 
 
 

**$**

 

**.03**
  
 

**$**

 

**.07**
 
 

 

 

 

 

 

 

 

 

 
 
      Three Months Ended
 
      Oct. 31, 2006
 
      Jan. 31, 2007
 
      Apr. 30, 2007
 
      July 31, 2007

Revenues
 
 

    $

 

    3,317
  
 

    $

 

    3,391
  
 

    $

 

    3,476
  
 

    $

 

    7,975
 
Revenues less expenses
 
 
 
    (169

    )

 
 
 
 
    (32

    )

 
 
 
 
    (104

    )

 
 
 
 
    4,126
 
Net income (loss)
 
 
 
    (178

    )

 
 
 
 
    (9

    )

 
 
 
 
    19
  
 
 
    2,224
 
Net income (loss) per common share
 
 

    $

 

    (.09

    )

 
 
 

    $

 

    ( .00

    )

 
 
 

    $

 

    .01
  
 

    $

 

    1.10
 
Income per share is computed independently for each of the quarters presented on the basis described in Note 1 to the Consolidated Financial Statements.

**Common Stock and Dividend Information**

Effective November 8, 1999, the Company’s common stock commenced trading on The Nasdaq Capital Market tier of The Nasdaq Stock Market under the Symbol: “Mays”. Such shares were  previously traded on The

23

Nasdaq National Market. Effective August 1, 2006, NASDAQ became operational as an exchange in NASDAQ-Listed Securities. It is now known as The NASDAQ Stock Market LLC.

The following is the sales price range per share of J.W. Mays, Inc. common stock during the fiscal years ended July 31, 2008 and 2007:

 

 

 

 

 

Three Months Ended
 
      Sales Price
 
      High
 
      Low

October 31, 2007
 
 

**$**

 

**24.69**
  
 

**$**

 

**21.36**
 
January 31, 2008
 
 
 
**22.15**
  
 
 
**19.00**
 
April 30, 2008
 
 
 
**20.25**
  
 
 
**19.60**
 
July 31, 2008
 
 
 
**21.00**
  
 
 
**18.00**
 
October 31, 2006
 
 

      $

 

       23.80
  
 

      $

 

       17.54
 
January 31, 2007
 
 
 
      22.00
  
 
 
      20.51
 
April 30, 2007
 
 
 
      22.25
  
 
 
      20.86
 
July 31, 2007
 
 
 
      24.53
  
 
 
      21.76
 
The quotations were obtained for the respective periods from the National Association of Securities Dealers, Inc. There were no dividends declared in either of the two fiscal years.

On September 12, 2008, the Company had approximately 1,500 shareholders of record.

24

J.W. MAYS, INC.

**Officers**

 

 

 

      Lloyd J. Shulman
 
Chairman of the Board, Chief Executive Officer and President and Chief Operating Officer

      Mark S. Greenblatt
 
Vice President and Treasurer

      Ward N. Lyke, Jr.
 
Vice President and Assistant Treasurer

      George Silva
 
Vice President-Operations

      Salvatore Cappuzzo
 
Secretary

     
 
 

**Board of Directors**
 
 

      Mark S. Greenblatt3,5
 
Vice President and Treasurer, J.W. Mays, Inc.

      Lance D. Myers1,3,4,5,6
 
Partner, Holland & Knight LLP

      Dean L. Ryder2,3,4,6
 
President, Putnam County National Bank

      Jack Schwartz1,2,3,4,6
 
Private Consultant

      Lloyd J. Shulman1,3
 
Chairman of the Board, Chief Executive Officer and President and Chief Operating Officer, J.W. Mays, Inc.

      Sylvia W. Shulman3
 
Retired

      Lewis D. Siegel2,3,4,6
 
Senior Vice President-Investments, Smith Barney Citigroup

Committee Assignments Key:1 Member of Executive Committee2 Member of Audit Committee3 Member of Investment Advisory Committee4 Member of Executive Compensation Committee5 Member of Disclosure Committee (Mr. Lyke is also a member)6 Member of Nominating Committee
**Form 10-K Annual Report**

Copies of the Company’s Form 10-K Annual Reportto the Securities and Exchange Commissionfor the fiscal year ended July 31, 2008.will be furnished without charge toshareholders upon written requestto: Secretary, J.W. Mays, Inc.,9 Bond Street, Brooklyn, New York 11201-5805.

25