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<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 June 30, 1997 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 12, 1997: 2,792,653
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JUNE 30, 1997 AND DECEMBER 31, 1996
<TABLE>
<CAPTION>
ASSETS
------
June 30, 1997 Dec. 31, 1996
------------- -------------
(Unaudited)
<S> <C> <C>
Rental Property and Equipment, Net $ 36,382,000 $ 36,488,000
Construction in Process 8,331,000 8,035,000
Homes Held for Sale 2,369,000 3,169,000
Land Held for Sale 4,673,000 4,770,000
Investments 13,068,000 13,303,000
Receivables:
Mortgages and Notes, Affiliates 5,250,000 5,501,000
Mortgages and Notes, Other 1,039,000 1,094,000
Direct Financing Leases 89,000 126,000
Other 1,850,000 1,300,000
Investment In and Advances To
Joint Ventures and Partnerships 4,022,000 4,366,000
Cash and Cash Equivalents 5,745,000 6,761,000
Cash Deposits Held in Escrow 9,387,000 3,427,000
Income Taxes Receivable -0- 32,000
Deferred Charges and Other Assets 6,230,000 6,554,000
------------- -------------
$ 98,435,000 $ 94,926,000
============= =============
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
Liabilities:
Notes Payable:
Mortgages Payable $ 21,490,000 $ 22,202,000
Leasing Equipment 12,000 36,000
Accounts Payable 1,882,000 2,662,000
Accrued Expenses 617,000 742,000
Due To Affiliates 518,000 577,000
Deposits 238,000 253,000
Deferred Income 327,000 325,000
Income Taxes Payable 1,394,000 -0-
Deferred Income Taxes Payable 2,694,000 2,694,000
------------- -------------
Total Liabilities 29,172,000 29,491,000
Minority Interest 246,000 193,000
Shareholders' Equity 69,017,000 65,242,000
------------- -------------
$ 98,435,000 $ 94,926,000
============= =============
</TABLE>
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
------------ ------------
(Restated)
<S> <C> <C>
Revenues:
Sales of Homes $ 2,520,000 $ 4,046,000
Other Construction (Net) 378,000 396,000
Rentals - Apartments 1,161,000 1,220,000
Rentals - Commercial 5,825,000 5,667,000
Hotel Income 3,032,000 2,991,000
Management Fees, Affiliates 431,000 422,000
Leasing Fee, Affiliates 374,000 374,000
Interest:
Affiliates 438,000 482,000
Other 690,000 636,000
Gain on Sale Of Realty Interests 428,000 212,000
Equipment Leasing & Vending 64,000 65,000
Income From Equity Investments 425,000 427,000
Other 14,000 32,000
------------ ------------
15,780,000 16,970,000
------------ ------------
Costs And Expenses:
Cost of Home Sales 2,342,000 3,750,000
Rentals - Apartments 742,000 883,000
Rentals - Commercial 2,101,000 2,171,000
Hotel Expenses 2,342,000 2,380,000
Land Development Expense 51,000 51,000
General And Administrative 945,000 946,000
Interest Expense 1,045,000 1,490,000
Equipment Leasing & Vending 26,000 52,000
Reserve for Advances to Partnerships 151,000 -0-
------------ ------------
9,745,000 11,723,000
------------ ------------
Net Income Before Income Taxes And
Minority Interest 6,035,000 5,247,000
Income Taxes 2,207,000 1,836,000
Minority Interest 53,000 26,000
------------ ------------
Net Income $ 3,775,000 $ 3,385,000
============ ============
Earnings Per Common Share $ 1.35 $ 1.21
============ ============
Weighted Average Number of Common
Shares Outstanding 2,792,653 2,792,653
============ ============
</TABLE>
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
------------ ------------
(Restated)
<S> <C> <C>
Revenues:
Sales of Homes $ 1,186,000 $ 2,271,000
Other Construction (Net) 129,000 136,000
Rentals - Apartments 552,000 616,000
Rentals - Commercial 2,959,000 2,864,000
Hotel Income 1,883,000 1,753,000
Management Fees, Affiliates 219,000 208,000
Leasing Fee, Affiliates 187,000 187,000
Interest:
Affiliates 216,000 238,000
Other 356,000 327,000
Gain on Sale Of Realty Interests 119,000 107,000
Equipment Leasing & Vending 24,000 16,000
Income From Equity Investments 202,000 216,000
Other 6,000 23,000
------------ ------------
8,038,000 8,962,000
------------ ------------
Costs And Expenses:
Cost of Home Sales 1,141,000 2,058,000
Rentals - Apartments 372,000 404,000
Rentals - Commercial 1,007,000 1,032,000
Hotel Expenses 1,260,000 1,246,000
Land Development Expense 24,000 25,000
General And Administrative 425,000 475,000
Interest Expense 542,000 738,000
Equipment Leasing & Vending 12,000 12,000
Reserve for Advances to Partnerships 33,000 -0-
------------ ------------
4,816,000 5,990,000
------------ ------------
Net Income Before Income Taxes And
Minority Interest 3,222,000 2,972,000
Income Taxes 1,070,000 1,038,000
Minority Interest 35,000 21,000
------------ ------------
Net Income $ 2,117,000 $ 1,913,000
============ ============
Earnings Per Common Share $ 0.76 $ 0.68
============ ============
Weighted Average Number of Common
Shares Outstanding 2,792,653 2,792,653
============ ============
</TABLE>
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
----------- -----------
(Restated)
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 3,775,000 $ 3,385,000
Adjustments to Reconcile Net Income To Net Cash
Provided by Operating Activities:
Depreciation & Amortization 1,090,000 1,058,000
Gain on Sale of Realty Interest (428,000) (212,000)
Direct Financing Lease Payments 57,000 630,000
Amortization of Investment in Direct
Financing Leases (1,000) (4,000)
Proceeds From Sale of Equipment Under
Direct Financing Leases 10,000 173,000
(Income) Loss From Equity Investments (425,000) (427,000)
Other (29,000) (24,000)
Changes in Other Assets & Liabilities:
(Increase) Decrease In:
Construction in Process (296,000) 1,090,000
Homes Held for Sale 800,000 104,000
Mortgages & Notes Receivable 734,000 509,000
Income Taxes Receivable 32,000 991,000
Other Assets (251,000) (620,000)
Increase (Decrease) In Other Liabilities 470,000 (2,670,000)
----------- -----------
Total Adjustments 1,763,000 598,000
----------- -----------
Net Cash Provided By Operating Activities 5,538,000 3,983,000
----------- -----------
Cash Flows From Investing Activities:
Investment in Joint Ventures 769,000 (345,000)
Investment in US Treasury Instruments 235,000 (4,249,000)
Other (862,000) (210,000)
----------- -----------
Net Cash Provided By (Used In) Investing Activities 142,000 (4,804,000)
----------- -----------
Cash Flows From Financing Activities:
Repayment of Notes Payable (736,000) (1,409,000)
----------- -----------
Net Cash Used In Financing Activities (736,000) (1,409,000)
----------- -----------
Net Increase (Decrease) in Cash and
Cash Equivalents 4,944,000 (2,230,000)
Cash and Cash Equivalents And Cash Deposits Held
in Escrow at Beginning of Year 10,188,000 9,547,000
----------- -----------
Cash and Cash Equivalents And Cash Deposits Held
in Escrow at End of Period $15,132,000 $ 7,317,000
=========== ===========
</TABLE>
<PAGE>
Page Two
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
1997 1996
----------- -----------
(Restated)
<S> <C> <C>
Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Period For:
Interest (Net of Amount Capitalized) $ 1,060,000 $ 1,511,000
Income Taxes 781,000 679,000
Supplemental Disclosure of Non-Cash Activities:
Escrowed Cash Deposits Received 93,000 60,000
Escrowed Cash Deposits Refunded 107,000 80,000
</TABLE>
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
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, 1996 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 $214,000 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 June 30, 1997, the Company had approximately $2,533,000 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 18 homes and one lot in the
------------------------
first six months of 1997 as compared with 29 homes and no lots in 1996. In the
second quarter, sales of homes were 8 and one lot in 1997 and 16 homes and no
lots in 1996. The 1997 decline in home sales is the result of an economic
downturn in the residential sector of the real estate industry in the
Washington, DC metropolitan area.
Registrant's backlog of homes under contract of sale as of June 30 was 25
in 1997 versus 16 in 1996. Registrant generally receives a deposit of $500 to
$2,000 which may be forfeited if the buyer terminates the agreement.
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>
1997 1996
--------- ---------
<S> <C> <C>
Income 2,299,000 1,978,000
Expense 1,562,000 1,594,000
--------- ---------
Net Before Taxes 737,000 384,000
</TABLE>
The 1997 results reflects lower net income from a Holiday Inn because it is in
the process of converting to a Holiday Inn Express. The conversion is estimated
to be completed prior to the end of the year.
Interest Expense. The l997 results reflect a reduction in interest
-----------------
expense due to the December 1996 payoff of the Colonnade mortgage.
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, l997, cash flow from operating,
investing and financing activities resulted in an increase of $4,944,000 in cash
and cash equivalents. Registrant generated cash flow of $5,538,000 from
operating activities.
<PAGE>
Cash flow from operating activities and 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
$736,000.
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a) Exhibit 27 - Financial Data Statement
(b) Reports on Form 8-K
No reports on From 8-K have been filed during the quarter ended June 30,
1997.
<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 12, 1997 /S/ Burton J. Reiner
-----------------------------------
Burton J. Reiner, President
Date: August 12, 1997 /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 6/30/97 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-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 15,132,000
<SECURITIES> 13,068,000
<RECEIVABLES> 8,228,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 62,490,000
<DEPRECIATION> 26,108,000
<TOTAL-ASSETS> 98,435,000
<CURRENT-LIABILITIES> 0
<BONDS> 21,502,000
0
0
<COMMON> 28,000
<OTHER-SE> 68,989,000
<TOTAL-LIABILITY-AND-EQUITY> 98,435,000
<SALES> 2,898,000
<TOTAL-REVENUES> 15,780,000
<CGS> 2,342,000
<TOTAL-COSTS> 2,342,000
<OTHER-EXPENSES> 6,358,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,045,000
<INCOME-PRETAX> 6,035,000
<INCOME-TAX> 2,207,000
<INCOME-CONTINUING> 3,775,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,775,000
<EPS-PRIMARY> 1.35
<EPS-DILUTED> 1.35
</TABLE>
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