<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 September 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 November 4, 1996: 2,792,653
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
<TABLE>
<CAPTION>
ASSETS
SEPT. 30, 1996 DEC. 31, 1995
--------------- --------------
<S> <C> <C>
Rental Property and Equipment, Net $ 37,142,000 $ 38,018,000
Construction in Process 8,279,000 10,198,000
Homes Held for Sale 3,433,000 3,650,000
Land Held for Development 4,909,000 4,903,000
Land Held for Sale 438,000 431,000
Investments 8,344,000 1,374,000
Receivables:
Mortgages and Notes, Affiliates 5,623,000 5,971,000
Mortgages and Notes, Other 1,141,000 1,228,000
Direct Financing Leases 183,000 1,022,000
Other 1,685,000 1,838,000
Investment In and Advances To
Joint Ventures and Partnerships 4,813,000 4,233,000
Cash and Cash Equivalents 5,480,000 9,547,000
Cash Deposits Held in Escrow 14,679,000 11,215,000
Income Taxes Receivable -0- 991,000
Deferred Charges and Other Assets 6,670,000 6,776,000
------------ ------------
$102,819,000 $101,395,000
============ ============
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Liabilities:
Notes Payable:
Mortgages Payable $ 32,311,000 $ 33,634,000
Land and Development -0- 500,000
Leasing Equipment 47,000 95,000
Accounts Payable 1,689,000 2,703,000
Accrued Expenses 685,000 859,000
Due to (from) Affiliates (442,000) 1,000,000
Deposits 251,000 275,000
Deferred Income 1,303,000 1,183,000
Income Taxes Payable 1,040,000 -0-
Deferred Income Taxes Payable 2,871,000 2,871,000
------------ ------------
Total Liabilities 39,755,000 43,120,000
Minority Interest 230,000 306,000
Shareholders' Equity 62,834,000 57,969,000
------------ ------------
$102,819,000 $101,395,000
============ ============
</TABLE>
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Revenues:
Sales of Homes $ 6,650,000 $ 6,177,000
Other Construction (Net) 678,000 869,000
Rentals - Apartments 1,761,000 1,821,000
Rentals - Commercial 8,464,000 8,618,000
Hotel Income 4,591,000 4,377,000
Management Fees, Affiliates 638,000 629,000
Leasing Fee, Affiliates 561,000 538,000
Interest:
Affiliates 742,000 854,000
Other 932,000 594,000
Gain on Sale Of Realty Interests 323,000 183,000
Equipment Leasing & Vending 91,000 223,000
Income From Equity Investments 636,000 624,000
Other 50,000 31,000
----------- -----------
26,117,000 25,538,000
----------- -----------
Costs And Expenses:
Cost of Home Sales 6,358,000 5,743,000
Rentals - Apartments 1,275,000 1,467,000
Rentals - Commercial 3,238,000 3,328,000
Hotel Expenses 3,630,000 3,805,000
Land Development Expense 80,000 80,000
General And Administrative 1,381,000 1,874,000
Interest Expense 2,221,000 2,473,000
Loss on Write Down of Receivables -0- 673,000
Equipment Leasing & Vending 68,000 130,000
----------- -----------
18,251,000 19,573,000
----------- -----------
Net Income Before Income Taxes,
Minority Interest And Debt
Elimination 7,866,000 5,965,000
Income Taxes 2,957,000 2,107,000
Minority Interest 44,000 14,000
----------- -----------
Net Income Before Debt Elimination 4,865,000 3,844,000
Debt Elimination (Net of Income
Taxes Of $1,010,000 in 1995) -0- 1,863,000
----------- -----------
Net Income $ 4,865,000 $ 5,707,000
=========== ===========
Earnings Per Common Share Before
Debt Elimination $ 1.74 $ 1.35
Debt Elimination 0.00 0.66
----------- -----------
Earnings Per Common Share $ 1.74 $ 2.01
=========== ===========
Weighted Average Number of Common
Shares Outstanding 2,792,653 2,833,587
=========== ===========
</TABLE>
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Revenues:
Sales of Homes $ 2,604,000 $ 2,409,000
Other Construction (Net) 282,000 202,000
Rentals - Apartments 541,000 588,000
Rentals - Commercial 2,797,000 2,774,000
Hotel Income 1,600,000 1,454,000
Management Fees, Affiliates 216,000 218,000
Leasing Fee, Affiliates 187,000 187,000
Interest:
Affiliates 260,000 280,000
Other 296,000 186,000
Gain on Sale Of Realty Interests 111,000 17,000
Equipment Leasing & Vending 26,000 75,000
Income From Equity Investments 209,000 177,000
Other 18,000 18,000
----------- -----------
9,147,000 8,585,000
----------- -----------
Costs And Expenses:
Cost of Home Sales 2,608,000 2,298,000
Rentals - Apartments 392,000 530,000
Rentals - Commercial 1,067,000 989,000
Hotel Expenses 1,250,000 1,243,000
Land Development Expense 29,000 64,000
General And Administrative 435,000 641,000
Interest Expense 731,000 803,000
Loss on Write Down of Receivables -0- 673,000
Equipment Leasing & Vending 16,000 36,000
----------- -----------
6,528,000 7,277,000
----------- -----------
Net Income Before Income Taxes,
Minority Interest And Debt
Elimination 2,619,000 1,308,000
Income Taxes 1,121,000 464,000
Minority Interest 18,000 (11,000)
----------- -----------
Net Income Before Debt Elimination 1,480,000 855,000
Debt Elimination (Net of Income Taxes
Of $1,010,000 in 1995) -0- 1,863,000
----------- -----------
Net Income $ 1,480,000 $ 2,718,000
=========== ===========
Earnings Per Common Share Before
Debt Elimination $ 0.52 $ 0.30
Debt Elimination 0.00 0.66
----------- -----------
Earnings Per Common Share $ 0.52 $ 0.96
=========== ===========
Weighted Average Number of Common
Shares Outstanding 2,792,653 2,828,047
=========== ===========
</TABLE>
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 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 Before Extar-Ordinary Item $ 4,865,000 $ 3,844,000
Extra-Ordinary Item, Net of Tax -0- 1,863,000
----------- -----------
Net Income $ 4,865,000 $ 5,707,000
Adjustments to Reconcile Net Income To
Net Cash Provided by Operating
Activities:
Extra-Ordinary Item - Gain on
Debt Forgiveness -0- (2,873,000)
Depreciation & Amortization 1,637,000 1,742,000
Gain on Sale of Realty Interest (324,000) (183,000)
Direct Financing Lease Payments 646,000 999,000
Amortization of Investment in Direct
Financing Leases (6,000) (103,000)
Proceeds From Sale of Equipment Under
Direct Financing Leases 230,000 150,000
(Income) Loss From Equity Investments (636,000) (624,000)
Other (31,000) (3,000)
Changes in Other Assets & Liabilities:
(Increase) Decrease In:
Construction in Process 1,919,000 795,000
Homes Held for Sale 217,000 -0-
Mortgages & Notes Receivable 759,000 1,168,000
Income Taxes Receivable 991,000 2,331,000
Other Assets (3,370,000) (2,325,000)
Increase (Decrease) In Other
Liabilities (1,570,000) (2,488,000)
----------- -----------
Total Adjustments 462,000 (1,414,000)
----------- -----------
Net Cash Provided By Operating Activities 5,327,000 4,293,000
----------- -----------
Cash Flows From Investing Activities:
Investment in Joint Ventures 56,000 (149,000)
Investment in US Treasury Instruments (6,970,000) (2,293,000)
Purchase of Treasury Stock -0- (165,000)
Other (609,000) (194,000)
----------- -----------
Net Cash Provided By (Used In) Investing
Activities (7,523,000) (2,801,000)
----------- -----------
Cash Flows From Financing Activities:
Repayment of Notes Payable (1,871,000) (3,124,000)
----------- -----------
Net Cash Used In Financing Activities (1,871,000) (3,124,000)
----------- -----------
Net Increase (Decrease) in Cash and
Cash Equivalents (4,067,000) (1,632,000)
Cash and Cash Equivalents at Beginning
of Year 9,547,000 7,200,000
----------- -----------
Cash and Cash Equivalents at End of
Period $ 5,480,000 $ 5,568,000
=========== ===========
</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) $ 2,261,000 $ 2,504,000
Income Taxes 950,000 975,000
Supplemental Disclosure of Non-Cash Activities:
Escrowed Cash Deposits Received 102,000 142,000
Escrowed Cash Deposits Refunded 126,000 116,000
Transfer of Construction in Process to
Advances To/From Affiliates 386,000
Real Estate Assets Transferred in Satisfaction
of Liabilities
Mortgage-Rental Property 4,177,000
Assets Tendered 851,000
Liabilities Extinguished 27,000
</TABLE>
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 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 $502,000 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
interest 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 September 30, 1996, the Company had approximately $2,427,000 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 48 homes in the first nine
------------------------
months of 1996 as compared with 42 homes and 2 lots in 1995. In the third
quarter, sales of homes were 19 in 1996 and 17 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 September 30 was
25 in 1996 versus 25 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 for the nine months
------------------------
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 nine months ended September 30:
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Income 3,159,000 2,726,000
Expense 2,441,000 2,559,000
--------- ---------
Net Before Taxes 718,000 167,000
</TABLE>
Improved results at the Colonnade are attributable to an increased average room
rate together with 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 US Treasury
instruments.
Equipment Leasing & Vending. The decline in revenues from 1995 to 1996
----------------------------
reflected the Registrant's decision to exit the equipment leasing business.
Loss on Write Down of Receivables. The 1995 write down of receivables
----------------------------------
reflects the reduction of funds due from a state Department of Public Welfare
with respect to a nursing home previously owned by Registrant.
<PAGE>
Debt Elimination. The debt elimination reflects the foreclosure sale and
-----------------
subsequent ratification of the loan on the Allentown Apartment project during
the third quarter of 1995. The foreclosure occurred after Registrant tendered a
deed to the note holder, who refused the deed, had a receiver appointed and then
took possession of the property.
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.
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 nine month period ended September 30, 1996, Registrant generated
cash flow of $5,327,000 from operating activities. Cash flow from operating
activities and from cash and cash equivalents were used to fund Registrant's
investments in low income housing partnerships and the purchase of US Treasury
instruments. Cash flow from operating activities was also used for the
repayment of mortgages and notes payable in the amount of $1,871,000. Overall,
cash flow from operating, investing and financing activities resulted in a
decrease of $4,067,000 in cash and cash equivalents during the nine months ended
September 30, 1996.
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 September
30, 1996.
<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: November 13, 1996 /s/ Burton J. Reiner
----------------- ---------------------------------
Burton J. Reiner, President
Date: November 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 BRESLER &
REINER, INC. UNAUDITED 09/30/96 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 20,159,000
<SECURITIES> 8,344,000
<RECEIVABLES> 8,632,000
<ALLOWANCES> 0
<INVENTORY> 12,150,000
<CURRENT-ASSETS> 0
<PP&E> 61,723,000
<DEPRECIATION> 24,581,000
<TOTAL-ASSETS> 102,819,000
<CURRENT-LIABILITIES> 0
<BONDS> 32,358,000
0
0
<COMMON> 28,000
<OTHER-SE> 62,806,000
<TOTAL-LIABILITY-AND-EQUITY> 102,819,000
<SALES> 7,328,000
<TOTAL-REVENUES> 26,117,000
<CGS> 6,358,000
<TOTAL-COSTS> 6,358,000
<OTHER-EXPENSES> 9,672,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,221,000
<INCOME-PRETAX> 7,866,000
<INCOME-TAX> 2,957,000
<INCOME-CONTINUING> 4,865,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,865,000
<EPS-PRIMARY> 1.74
<EPS-DILUTED> 1.74
</TABLE>
