<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15
OF THE SECURITIES EXCHANGE ACT
For Quarter Ended March 31, 1995 Commission File No. 0-6201
BRESLER & REINER, INC.
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(Exact name of Registrant as Specified in its Charter)
DELAWARE 52-0903424
------------------------------- ------------------------------
(State or other jurisdiction of (IRS Employer Identification)
incorporation or organization)
401 M Street, S. W., Washington, D. C. 20024
- - -----------------------------------------------------------------
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number including area code: (202) 488-8800
---------------
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 of the Securities Exchange Act of 1934 during
the preceding twelve months, and (2) has been subject to the filing requirements
for at least the past ninety (90) days.
Yes: X No:
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Number of Shares of Common Stock
Outstanding May 11, 1995: 2,836,403
<PAGE>
BRESLER & REINER, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1995 AND DECEMBER 31, 1994
ASSETS
------
<TABLE>
<CAPTION>
Mar. 31, 1995 Dec 31,1994
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(Unaudited)
<S> <C> <C>
Rental Property and Equipment, Net $ 39,961,000 $ 40,337,000
Construction in Process 15,478,000 15,764,000
Land Held for Development 4,886,000 4,886,000
Receivables:
Mortgages and Notes, Affiliates 6,267,000 6,358,000
Mortgages and Notes, Other 2,305,000 2,417,000
Direct Financing Leases 2,687,000 3,007,000
Other 3,965,000 3,457,000
Operating Equipment, Net 13,000 37,000
Investment In and Advances To
Joint Ventures and Partnerships 5,847,000 5,077,000
Cash and Cash Equivalents 10,209,000 7,200,000
Cash Deposits Held in Escrow 2,595,000 7,165,000
Due From Affiliates 979,000 538,000
Income Taxes Receivable 2,309,000 2,733,000
Deferred Charges and Other Assets 4,986,000 4,425,000
------------ ------------
$102,487,000 $103,401,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Liabilities:
Notes Payable:
Mortgages Payable $ 39,449,000 $ 40,045,000
Land and Development 500,000 1,000,000
Leasing Equipment 1,169,000 1,450,000
Accounts Payable 2,697,000 3,259,000
Accrued Expenses 741,000 970,000
Deposits 250,000 264,000
Deferred Income 976,000 976,000
Income Taxes:
Deferred 2,791,000 2,791,000
------------ ------------
Total Liabilities 48,573,000 50,755,000
Minority Interest 404,000 432,000
Shareholders' Equity 53,510,000 52,214,000
------------ ------------
$102,487,000 $103,401,000
============ ============
</TABLE>
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
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<S> <C> <C>
Revenues:
Sales of Homes & Lots $2,942,000 $1,122,000
Other Construction 290,000 188,000
Rentals-Apartments and Commercial 3,444,000 3,538,000
Hotel Income 1,194,000 1,102,000
Management Fees, Affiliates 202,000 236,000
Leasing Fees, Affiliates 129,000 194,000
Interest:
Affiliates 289,000 276,000
Other 209,000 168,000
Gain on Sale of Realty Interests 82,000 79,000
Equipment Leasing & Vending 90,000 189,000
Income From Equity Investments 221,000 233,000
Other 6,000 25,000
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9,098,000 7,350,000
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Costs and Expenses:
Cost of Sales 2,693,000 906,000
Rentals - Apartments & Commercial 1,607,000 1,878,000
Hotel Expense 1,197,000 1,288,000
Land Development Expense 8,000 69,000
General and Administrative 671,000 637,000
Interest Expense 842,000 936,000
Equipment Leasing & Vending 73,000 99,000
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7,091,000 5,813,000
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Net Income Before Income Taxes,
Minority Interest and Debt Elimination 2,007,000 1,537,000
Income Taxes 702,000 546,000
Minority Interest 9,000 ( 17,000)
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Net Income Before Debt Elimination 1,296,000 1,008,000
Debt Elimination (Net of Income Taxes
of $2,250,000) - 0 - 4,148,000
---------- ----------
Net Income $1,296,000 $5,156,000
========== ==========
Earnings Per Common Share Before
Debt Elimination $0.46 $0.36
Debt Elimination 0.00 1.46
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Earnings Per Common Share $0.46 $1.82
========== ==========
Weighted Average Number of Common
Shares Outstanding 2,836,403 2,836,603
========== ==========
</TABLE>
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
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<S> <C> <C>
Cash Flows from Operating Activities:
Net Income Before Extra-
Ordinary Item $ 1,296,000 $ 1,008,000
Extra-Ordinary Item, Net of Tax -0- 4,148,000
------------ ------------
Net Income $ 1,296,000 $ 5,156,000
Adjustments to Reconcile Net Income To Net Cash
Provided By Operating Activities:
Extra Ordinary Item - Gain on
Debt Forgiveness -0- ( 6,398,000)
Depreciation & Amortization 587,000 620,000
Gain on Sale of Realty Interests ( 82,000) ( 79,000)
Investment in Direct Financing Leases -0- ( 54,000)
Direct Financing Lease Payments 355,000 818,000
Amortization of Investment in Direct
Financing Leases ( 35,000) ( 87,000)
Proceeds From Sale of Equipment Under
Direct Financing Leases -0- 9,000
(Income) From Equity Investments ( 221,000) ( 233,000)
Other -0- ( 9,000)
Changes in Other Assets & Liabilities:
(Increase) Decrease In:
Construction in Process 286,000 90,000
Mortgages & Notes Receivable 285,000 223,000
Income Taxes Receivable 424,000 ( 185,000)
Other Assets 2,964,000 -0-
Increase (Decrease) In Other Liabilities ( 833,000) 2,735,000
------------ ------------
Total Adjustments 3,730,000 (2,550,000)
------------ ------------
Net Cash Provided By Operating Activities: 5,026,000 2,606,000
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Cash Flows From Investing Activities:
Investment in Joint Ventures ( 549,000) 146,000
Other ( 91,000) ( 460,000)
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Net Cash Used in Investing Activities: ( 640,000) ( 314,000)
------------ ------------
Cash Flows From Financing Activities:
Repayment of Notes Payable ( 1,377,000) ( 3,850,000)
------------ ------------
Net Cash Used in Financing Activities ( 1,377,000) ( 3,850,000)
------------ ------------
Net Increase (Decrease) in Cash and Cash Equivalents 3,009,000 ( 1,558,000)
Cash and Cash Equivalents at Beginning of Year 7,200,000 2,662,000
------------ ------------
Cash and Cash Equivalents at End of Period $ 10,209,000 $ 1,104,000
============ ============
Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Period For:
Interest (Net of Amount Capitalized) $ 860,000 $ 943,000
Income Taxes 277,000 307,000
Supplemental Disclosure of Non-Cash Activities:
Escrowed Cash Deposits Received 36,000 70,000
Escrowed Cash Deposits Refunded 50,000 38,000
Real Estate Assets Transferred in Satisfaction
of Liabilities:
Land Held for Development 18,965,000
Mortgage-Land and Development 24,363,000
Accounts Payable 2,500,000
Accrued Expenses 1,000,000
</TABLE>
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995
GENERAL:
The information contained in this report is furnished for the Registrant,
Bresler & Reiner, Inc., and its subsidiaries referred to collectively as the
"Company". In the opinion of Management, the information in this report
reflects all adjustments of a normal recurring nature which are necessary to
present a fair statement of the results for the interim period shown.
The financial information presented herein should be read in conjunction
with the financial statements included in the Registrant's Form 10-K for the
year ended December 31, 1994 as filed with the Securities and Exchange
Commission.
Certain reclassifications have been made in prior years' financial
statements to conform to the classification used in the current year.
COMMITMENTS AND CONTINGENCIES:
The Company is contingently liable for $1,474,000 of outstanding
liabilities of non-consolidated partnerships and ventures in which it has
investments.
During 1990 and 1989, the Company purchased limited partnership interests
in limited partnerships, which are operating low income housing units. The
interests acquired range from 79% to 99%, and the required capital contributions
are payable in annual installments over the ten years such tax credit is
available. The amount of projected contributions are to be adjusted annually to
be a percentage of tax benefits derived. The Company anticipates that the
annual tax benefits will be more than sufficient to fund the annual capital
contributions.
At March 31, 1995, the Company had approximately $3,998,000 of outstanding
letters of credit for land improvements in housing projects that it is
developing.
<PAGE>
EXTRAORDINARY ITEM - DEBT ELIMINATION:
In January 1994 the holder of the note on the Country Club Associates
property foreclosed and obtained possession of the Property. On February 10,
1994, Registrant entered into an agreement with the holder of the first and
second mortgages relating to the property owned by Country Club Associates
Partnership whereby Registrant paid $3,500,000, including a two year secured
note for $1,000,000, for the release of Registrant's guaranty of the first trust
loan, the second trust note, the land exchange liability, any mechanics liens,
real estate taxes and unknown recourse claims. At that time Registrant recorded
the disposition of the property. This transaction resulted in a pre-tax
extraordinary gain of $6,398,000 in the first quarter of 1994.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
Results of Operations
- - ---------------------
Sales of Homes and Lots. Included are sales of 19 homes and no lots in the
------------------------
first three months of 1995 as compared with 7 homes and no lots in 1994.
Registrant's backlog of homes under contract of sale was 21 in 1995 and 28 in
the 1994 period.
Rentals - Apartments and Commercial, Management Fees, Affiliates and Leasing
----------------------------------------------------------------------------
Fees, Affiliates. General Services Administration ("GSA") leases offices from
- - -----------------
Registrant and its affiliates ("GSA Lease"). GSA exercised an option to pay
lower rent by extending the GSA Lease for a further five years. The parties
have agreed that the rent adjustment commences March 1, 1995. The lower
rentals, leasing fees and management fees in 1995 reflect this reduction as of
March 1, 1995. The reduction will be about $998,000 on an annual basis in the
Registrant's revenues from the lease, plus $380,000 per year in leasing and
management fees and income from Town Center office building discussed below.
Hotel Income and Hotel Expense. Included in Hotel Income for the three months
------------ --------------
ended March 31, 1995 is $733,000 of income relating to the Colonnade, a
Baltimore, MD hotel, as compared with $598,000 for the same period in 1994.
Hotel Expense in 1995 reflects $818,000 relating to the Colonnade as compared
with $893,000 for the 1994 period.
Interest, Other. The 1995 results reflect higher interest rates on money
----------------
market accounts as compared with interest rates in the 1994 period. Registrant
has greater cash balances reserved in interest bearing accounts.
Equipment Leasing & Vending. The decline in revenues from 1994 to 1995
----------------------------
reflected a lower level of equipment leasing and vending activities.
Income From Equity Investments. Included herein is income from Registrant's
-------------------------------
46% ownership in a partnership relating to the new GSA Lease of $212,000 in the
1995 period as compared with $242,000 in the 1994 period. (See Rentals -
---------
Apartments and Commercial above).
- - -------------------------
Debt Elimination. In January 1994 the holder of the loan on the Country Club
-----------------
Associates property foreclosed on the mortgage and obtained possession of the
property. Registrant recorded a
<PAGE>
write down at December 31, 1993 based on the intent to dispose of the property.
On February 10, 1994, Registrant entered into an agreement with the holder of
the first and second mortgages relating to the property owned by Country Club
Associates Partnership whereby Registrant paid $3,500,000, including a two year
secured note for $1,000,000, for the release of Registrant's guaranty of the
first trust loan, the second trust note, the land exchange liability, any
mechanics liens, real estate taxes and unknown recourse claims. This transaction
resulted in a pre-tax gain of $6,398,000 in the first quarter of 1994.
Balance Sheet
-------------
Notes Payable-Mortgages. Included in the total for Mortgages is a
------------------------
$4,177,134 Deed of Trust Note on Allentown Apartments. While the Note is non-
recourse, Registrant had issued a $480,000 guarantee agreement covering the
property. The guarantee is disputed by Registrant. Registrant tendered the
note holder a deed to the property in the latter part of 1992. The note holder
has refused the deed offered by Registrant, had a receiver appointed and took
possession of the property on September 22, 1993, and is suing under the
mortgage and guarantee.
Registrant has been notified that the note holder has scheduled
foreclosure of the property for May 4, 1995, subject to court ratification and
possible appeal thereafter. In accordance with generally accepted accounting
principles, when title to the property is transferred in satisfaction of the
debt, Registrant will record a gain on debt defeasance.
Liquidity and Capital Resources
-------------------------------
Registrant continues to fund it obligations out of current cash flow. The
banking and finance communities continue to be adverse to most real estate
lending, requiring increased coverage on debt and significant owner investment
in properties. There is no assurance that Registrant will be able to meet all
of its needs out of cash flow or that additional funding will be available to
Registrant if needed.
During the three month period ended March 31, 1995, Registrant generated cash
flow from operating activities of $5,026,000. Cash flow from operating
activities was used in investing activities of $640,000 which consisted
primarily of funding Registrant's investments in low income housing
partnerships. Cash flow from operating activities was also used in financing
activities for the repayment of mortgages and notes payable in the amount of
$1,337,000. Overall, cash flow from operating, investing and financing
activities resulted in an
<PAGE>
increase of $3,009,000 in cash and cash equivalents during the three months
ended March 31, 1995.
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a) Exhibit 27--Financial Data Statement
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter ended March 31,
1995.
<PAGE>
S I G N A T U R E S
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.
BRESLER & REINER, INC.
(Registrant)
Date: May 11, 1995 /S/ Burton J. Reiner
--------------- --------------------------------
Burton J. Reiner, President
Date: May 11, 1995 /S/ William Oshinsky
--------------- --------------------------------
William Oshinsky, Treasurer
(Principal Financial Officer)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 12,804,000
<SECURITIES> 0
<RECEIVABLES> 16,203,000
<ALLOWANCES> 0
<INVENTORY> 15,478,000
<CURRENT-ASSETS> 0
<PP&E> 62,817,000
<DEPRECIATION> 22,856,000
<TOTAL-ASSETS> 102,487,000
<CURRENT-LIABILITIES> 0
<BONDS> 41,118,000
<COMMON> 28,000
0
0
<OTHER-SE> 53,482,000
<TOTAL-LIABILITY-AND-EQUITY> 102,487,000
<SALES> 2,942,000
<TOTAL-REVENUES> 9,098,000
<CGS> 2,693,000
<TOTAL-COSTS> 2,693,000
<OTHER-EXPENSES> 3,556,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 842,000
<INCOME-PRETAX> 2,007,000
<INCOME-TAX> 702,000
<INCOME-CONTINUING> 1,296,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,296,000
<EPS-PRIMARY> 0.46
<EPS-DILUTED> 0.46
</TABLE>
