<PAGE>
SECUITIES 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 June 30, 1996 Commission File No. 06201
BRESLER & REINER, INC.
- ----------------------------------------------------------------------------
(Exact name of Registrant as Specified in its Charter)
DELAWARE 52-0903024
- -------------------------------- -----------------------------------
(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 ninety (90) days.
Yes: X No:
----- -----
Number of Shares of Common Stock
Outstanding August 13, 1996: 2,792,653
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JUNE 30, 1996 AND DECEMBER 31, 1995
ASSETS
------
<TABLE>
<CAPTION>
JUNE 30, 1996 DEC. 31, 1995
--------------- ---------------
<S> <C> <C>
Rental Property and Equipment, Net $ 37,275,000 $ 38,018,000
Construction in Process 9,108,000 10,198,000
Homes Held for Sale 3,546,000 3,650,000
Land Held for Development 4,903,000 4,903,000
Land Held for Sale 431,000 431,000
Receivables:
Mortgages and Notes, Affiliates 5,742,000 5,971,000
Mortgages and Notes, Other 1,160,000 1,228,000
Direct Financing Leases 247,000 1,022,000
Other 1,737,000 1,838,000
Investment In and Advances To
Joint Ventures and Partnerships 5,005,000 4,233,000
Cash and Cash Equivalents 12,940,000 10,921,000
Cash Deposits Held in Escrow 12,213,000 11,215,000
Income Taxes Receivable -0- 991,000
Deferred Charges and Other Assets 6,394,000 6,776,000
--------------- ---------------
$ 100,701,000 $ 101,395,000
=============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Liabilities:
Notes Payable:
Mortgages Payable $ 32,761,000 $ 33,634,000
Land and Development -0- 500,000
Leasing Equipment 59,000 95,000
Accounts Payable 1,191,000 2,703,000
Accrued Expenses 780,000 859,000
Due to (from) Affiliates (308,000) 1,000,000
Deposits 255,000 275,000
Deferred Income 1,299,000 1,183,000
Income Taxes Payable 167,000 -0-
Deferred Income Taxes Payable 2,871,000 2,871,000
--------------- ---------------
Total Liabilities 39,075,000 43,120,000
Minority Interest 272,000 306,000
Shareholders' Equity 61,354,000 57,969,000
--------------- ---------------
$ 100,701,000 $ 101,395,000
=============== ===============
</TABLE>
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
--------------- ---------------
<S> <C> <C>
Revenues:
Sales of Homes $ 4,046,000 $ 3,768,000
Other Construction (Net) 396,000 667,000
Rentals - Apartments 1,220,000 1,233,000
Rentals - Commercial 5,667,000 5,844,000
Hotel Income 2,991,000 2,923,000
Management Fees, Affiliates 422,000 411,000
Leasing Fee, Affiliates 374,000 351,000
Interest:
Affiliates 482,000 574,000
Other 636,000 408,000
Gain on Sale Of Realty Interests 212,000 166,000
Equipment Leasing & Vending 65,000 148,000
Income From Equity Investments 427,000 447,000
Other 32,000 13,000
--------------- ---------------
16,970,000 16,953,000
--------------- ---------------
Costs And Expenses:
Cost of Home Sales 3,750,000 3,445,000
Rentals - Apartments 883,000 917,000
Rental - Commercial 2,171,000 2,359,000
Hotel Expenses 2,380,000 2,562,000
Land Development Expense 51,000 16,000
General And Administrative 946,000 1,233,000
Interest Expense 1,490,000 1,670,000
Equipment Leasing & Vending 52,000 94,000
--------------- ---------------
11,723,000 12,296,000
--------------- ---------------
Net Income Before Income Taxes
And Minority Interest 5,247,000 4,657,000
Income Taxes 1,836,000 1,643,000
Minority Interest 26,000 25,000
--------------- ---------------
Net Income $ 3,385,000 $ 2,989,000
=============== ===============
Earnings Per Common Share $ 1.21 $ 1.05
=============== ===============
Weighted Average Number of Common
Shares Outstanding 2,792,653 2,836,403
============== ==============
</TABLE>
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
--------------- ---------------
<S> <C> <C>
Revenues:
Sales of Homes $ 2,271,000 $ 826,000
Other Construction (Net) 136,000 377,000
Rentals - Apartments 616,000 615,000
Rentals - Commercial 2,864,000 3,018,000
Hotel Income 1,753,000 1,729,000
Management Fees, Affiliates 208,000 209,000
Leasing Fee, Affiliates 187,000 222,000
Interest:
Affiliates 238,000 285,000
Other 327,000 199,000
Gain on Sale Of Realty Interests 107,000 84,000
Equipment Leasing & Vending 16,000 58,000
Income From Equity Investments 216,000 226,000
Other 23,000 7,000
--------------- ---------------
8,962,000 7,855,000
--------------- ---------------
Costs And Expenses:
Cost of Home Sales 2,058,000 752,000
Rentals - Apartments 404,000 477,000
Rentals - Commercial 1,032,000 1,192,000
Hotel Expenses 1,246,000 1,365,000
Land Development Expense 25,000 8,000
General And Administrative 475,000 562,000
Interest Expense 738,000 828,000
Equipment Leasing & Vending 12,000 21,000
--------------- ---------------
5,990,000 5,205,000
--------------- ---------------
Net Income Before Income Taxes
And Minority Interest 2,972,000 2,650,000
Income Taxes 1,038,000 941,000
Minority Interest 21,000 16,000
--------------- ---------------
Net Income $ 1,913,000 $ 1,693,000
=============== ===============
Earnings Per Common Share $ 0.68 $ 0.59
=============== ===============
Weighted Average Number of Common
Shares Outstanding 2,792,653 2,836,403
============== ==============
</TABLE>
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
--------------- ---------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 3,385,000 $ 2,989,000
Adjustments to Reconcile Net Income To Net Cash
Provided by Operating Activities:
Depreciation & Amortization 1,058,000 1,171,000
Gain on Sale of Realty Interest (212,000) (166,000)
Direct Financing Lease Payments 630,000 700,000
Amortization of Investment in Direct
Financing Leases (4,000) (70,000)
Proceeds From Sale of Equipment Under
Direct Financing Leases 173,000 -0-
(Income) Loss From Equity Investments (427,000) (447,000)
Other (24,000) -0-
Changes in Other Assets & Liabilities:
(Increase) Decrease In:
Construction in Process 1,090,000 (213,000)
Homes Held for Sale 104,000 -0-
Mortgages & Notes Receivable 509,000 488,000
Income Taxes Receivable 991,000 795,000
Other Assets (620,000) (152,000)
Increase (Decrease) In Other Liabilities (2,670,000) (1,793,000)
--------------- ---------------
Total Adjustments 598,000 313,000
--------------- ---------------
Net Cash Provided By Operating Activities 3,983,000 3,302,000
--------------- ---------------
Cash Flows From Investing Activities:
Investment in Joint Ventures (345,000) (1,211,000)
Other (210,000) (222,000)
--------------- ---------------
Net Cash Provided By (Used In) Investing Activities (555,000) (1,433,000)
--------------- ---------------
Cash Flows From Financing Activities:
Repayment of Notes Payable (1,409,000) (2,266,000)
--------------- ---------------
Net Cash Used In Financing Activities (1,409,000) (2,266,000)
--------------- ---------------
Net Increase (Decrease) in Cash and
Cash Equivalents 2,019,000 (397,000)
Cash and Cash Equivalents at Beginning of Year 10,921,000 7,200,000
--------------- ---------------
Cash and Cash Equivalents at End of Period $ 12,940,000 $ 6,803,000
=============== ===============
</TABLE>
<PAGE>
Page Two
Consolidated Statements of Cash Flows
<TABLE>
<S> <C> <C>
Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Period For:
Interest (Net of Amount Capitalized) $ 1,511,000 $ 1,672,000
Income Taxes 679,000 825,000
Supplemental Disclosure of Non-Cash Activities:
Escrowed Cash Deposits Received 60,000 63,000
Escrowed Cash Deposits Refunded 80,000 77,000
Transfer of Construction in Process to
Rental Property and Equipment 178,000
Transfer of Construction in Process to
Advances To/From Affiliates 135,000
</TABLE>
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
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, 1995 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 $1,126,000 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 June 30, 1996, the Company had approximately $2,481,000 of
outstanding letters of credit for land improvements in housing projects that it
is developing.
<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 29 homes in the first six
------------------------
months of 1996 as compared with 25 homes in 1995. In the second quarter, sales
of homes were 16 in 1996 and 6 in 1995. Profit margin per home was lower in the
1996 period, primarily because of greater sales allowances granted to
purchasers.
Registrant's backlog of homes under contract of sale as of June 30 was 16 in
1996 versus 27 in 1995. Registrant generally receives a deposit of $500 to
$2,000 which may be forfeited if the buyer terminates the agreement.
Other Construction(Net): The 1996 decreased revenues result from the
------------------------
Government downsizing of employees at the Environmental Protection Agency (EPA),
the major tenant in Registrant's Waterside Mall and Office Complex. This
resulted in a decrease of construction for the Government in the EPA occupied
facility.
Hotel Income and Hotel Expense. Hotel Income and Hotel Expense includes
------------ --------------
the following related to the Colonnade Doubletree, a Baltimore, MD hotel, for
the six months ended June 30:
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Income 1,978,000 1,815,000
Expense 1,594,000 1,763,000
--------- ---------
Net Before Taxes 384,000 52,000
</TABLE>
Improved results at the Colonnade are attributable to a higher average room rate
and a decrease in expenses.
Interest, Other. The 1996 results reflect higher interest income on invested
----------------
funds as compared with interest income in the 1995 period. Registrant has
greater cash balances reserved in interest bearing accounts and in U.S. Treasury
instruments.
Equipment Leasing & Vending. The decline in revenues from 1995 to 1996
----------------------------
reflected the Registrant's decision to exit the equipment leasing business.
General and Administrative. The 1996 decrease in expenses reflects a
---------------------------
reduction of corporate staff. In addition, the 1995 expenses included pension
contributions which are not required in 1996.
<PAGE>
Liquidity and Capital Resources
- -------------------------------
Registrant continues to fund its 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 six month period ended June 30, 1996, Registrant generated cash
flow from operating activities of $3,983,000. Cash flow from operating
activities was used in investing activities of $555,000 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
$1,409,000. Overall, cash flow from operating, investing and financing
activities resulted in an increase of $2,019,000 in cash and cash equivalents
during the six months ended June 30, 1996.
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a) Exhibit 27 - Financial Data Statement
(b) Form 8-K was filed on May 8, 1996 reporting under Item 1, "Changes
in Control of Registrant," the termination of a Shareholders Agreement among
certain principal shareholders.
<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: August 13, 1996 /S/ Burton J. Reiner
-------------------------------
Burton J. Reiner, President
Date: August 13, 1996 /S/ William Oshinsky
-------------------------------
William Oshinsky, Treasurer
(Principal Financial Officer)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNAUDITED
6/30/96 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 25,513,000
<SECURITIES> 0
<RECEIVABLES> 8,886,000
<ALLOWANCES> 0
<INVENTORY> 13,085,000
<CURRENT-ASSETS> 0
<PP&E> 61,393,000
<DEPRECIATION> 24,118,000
<TOTAL-ASSETS> 100,701,000
<CURRENT-LIABILITIES> 0
<BONDS> 32,820,000
0
0
<COMMON> 28,000
<OTHER-SE> 61,326,000
<TOTAL-LIABILITY-AND-EQUITY> 100,701,000
<SALES> 4,442,000
<TOTAL-REVENUES> 16,970,000
<CGS> 3,750,000
<TOTAL-COSTS> 3,750,000
<OTHER-EXPENSES> 6,483,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,490,000
<INCOME-PRETAX> 5,247,000
<INCOME-TAX> 1,836,000
<INCOME-CONTINUING> 3,385,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,385,000
<EPS-PRIMARY> 1.21
<EPS-DILUTED> 1.21
</TABLE>
