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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 March 31, 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
incorporation or organization) Identification)
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 May 1, 1997: 2,792,653
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1997 AND DECEMBER 31, 1996
ASSETS
-------------
<TABLE>
<CAPTION>
Mar. 31, 1997 DEC. 31, 1996
--------------- ---------------
(Unaudited)
<S> <C> <C>
Rental Property and Equipment, Net $ 36,359,000 $ 36,488,000
Construction in Process 8,268,000 8,035,000
Homes Held for Sale 2,656,000 3,169,000
Land Held for Sale 4,704,000 4,770,000
Investments 11,761,000 13,303,000
Receivables:
Mortgages and Notes, Affiliates 5,377,000 5,501,000
Mortgages and Notes, Other 1,058,000 1,094,000
Direct Financing Leases 102,000 126,000
Other 1,912,000 1,300,000
Investment In and Advances To
Joint Ventures and Partnerships 4,096,000 4,366,000
Cash and Cash Equivalents 5,228,000 6,761,000
Cash Deposits Held in Escrow 6,616,000 3,427,000
Income Taxes Receivable -0- 32,000
Due From Affiliates 255,000 -0-
Deferred Charges and Other Assets 6,588,000 6,554,000
-------------- ---------------
$ 94,980,000 $ 94,926,000
============== ===============
</TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
<TABLE>
<S> <C> <C>
Liabilities:
Notes Payable:
Mortgages Payable $ 21,850,000 $ 22,202,000
Leasing Equipment 24,000 36,000
Accounts Payable 1,773,000 2,662,000
Accrued Expenses 593,000 742,000
Due To Affiliates -0- 577,000
Deposits 221,000 253,000
Deferred Income 324,000 325,000
Income Taxes Payable 390,000 -0-
Deferred Income Taxes Payable 2,694,000 2,694,000
------------ --------------
Total Liabilities 27,869,000 29,491,000
Minority Interest 211,000 193,000
Shareholders' Equity 66,900,000 65,242,000
------------ --------------
$ 94,980,000 $ 94,926,000
============ =============
</TABLE>
2
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
------------ ------------
(Restated)
<S> <C> <C>
Revenues:
Sales of Homes $ 1,334,000 $ 1,775,000
Other Construction (Net) 249,000 260,000
Rentals - Apartments 609,000 604,000
Rentals - Commercial 2,866,000 2,803,000
Hotel Income 1,149,000 1,238,000
Management Fees, Affiliates 212,000 214,000
Leasing Fee, Affiliates 187,000 187,000
Interest:
Affiliates 222,000 244,000
Other 334,000 309,000
Gain on Sale Of Realty Interests 309,000 105,000
Equipment Leasing & Vending 40,000 49,000
Income From Equity Investments 223,000 211,000
Other 8,000 9,000
------------ ------------
7,742,000 8,008,000
------------ ------------
Costs And Expenses:
Cost of Home Sales 1,201,000 1,692,000
Rentals - Apartments 370,000 478,000
Rentals - Commercial 1,094,000 1,140,000
Hotel Expenses 1,082,000 1,134,000
Land Development Expense 27,000 26,000
General And Administrative 520,000 471,000
Interest Expense 503,000 752,000
Equipment Leasing & Vending 14,000 40,000
Reserve for Advances to Partnerships 118,000 -0-
------------ ------------
4,929,000 5,733,000
------------ ------------
Net Income Before Income Taxes And
Minority Interest 2,813,000 2,275,000
Income Taxes 1,137,000 798,000
Minority Interest 18,000 5,000
------------ ------------
Net Income $ 1,658,000 $ 1,472,000
============ ============
Earnings Per Common Share $ 0.59 $ 0.53
============ ============
Weighted Average Number of Common
Shares Outstanding 2,792,653 2,792,653
============ ============
</TABLE>
3
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 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 $ 1,658,000 $ 1,472,000
Adjustments to Reconcile Net Income To Net Cash
Provided by Operating Activities:
Depreciation & Amortization 544,000 549,000
Gain on Sale of Realty Interest (309,000) (105,000)
Direct Financing Lease Payments 54,000 242,000
Amortization of Investment in Direct
Financing Leases (1,000) (2,000)
Proceeds From Sale of Equipment Under
Direct Financing Leases -0- 173,000
(Income) Loss From Equity Investments (223,000) (211,000)
Other (29,000) (24,000)
Changes in Other Assets & Liabilities:
(Increase) Decrease In:
Construction in Process (233,000) 311,000
Homes Held for Sale 513,000 (142,000)
Mortgages & Notes Receivable 469,000 239,000
Income Taxes Receivable 32,000 474,000
Other Assets (641,000) 282,000
Increase (Decrease) In Other Liabilities (1,495,000) (1,597,000)
------------ ------------
Total Adjustments (1,319,000) 189,000
------------ ------------
Net Cash Provided By Operating Activities 339,000 1,661,000
------------ ------------
Cash Flows From Investing Activities:
Investment in Joint Ventures 493,000 (575,000)
Investment in US Treasury Instruments 1,542,000 (1,094,000)
Other (354,000) (163,000)
------------ ------------
Net Cash Provided By (Used In) Investing Activities 1,681,000 (1,832,000)
------------ ------------
Cash Flows From Financing Activities:
Repayment of Notes Payable (364,000) (958,000)
------------ ------------
Net Cash Used In Financing Activities (364,000) (958,000)
------------ ------------
Net Increase (Decrease) in Cash and
Cash Equivalents 1,656,000 (1,129,000)
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 $ 11,844,000 $ 8,418,000
============ ============
</TABLE>
4
<PAGE>
Consolidated Statements of Cash Flows (Continued)
<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) $515,000 $783,000
Income Taxes 642,000 324,000
Supplemental Disclosure of Non-Cash Activities:
Escrowed Cash Deposits Received 53,000 30,000
Escrowed Cash Deposits Refunded 85,000 26,000
</TABLE>
5
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 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 $300,000 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 March 31, 1997, the Company had approximately $2,587,000 of outstanding
letters of credit for land improvements in housing projects that it is
developing.
6
<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 10 homes in the first three
-------------------------
months of 1997 as compared with 13 homes in 1996.
Registrant's backlog of homes under contract of sale as of March 31 was 22 in
1997 versus 24 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 three months ended March 31:
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Income 886,000 822,000
Expense 706,000 772,000
------- -------
Net Before Taxes 180,000 50,000
</TABLE>
The 1997 results reflects lower net income from a Holiday Inn as the result of
the conversion to a Holiday Inn Express. The conversion is estimated to be
completed by years end.
Gain on Sale of Realty Interests. The 1997 increase reflects the profit on
---------------------------------
the sale of a parcel of land in Montgomery County, MD in the amount of $187,000.
Interest Expense. The 1997 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 three month period ended March 31, 1997, cash flow from operating,
investing and financing activities resulted in an increase of $1,656,000 in cash
and cash equivalents. Registrant generated cash flow of $339,000 from
operating activities. Cash flow from operating activities and cash and cash
equivalents were used to fund Registrant's investments in low income housing
7
<PAGE>
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 $364,000.
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a) Exhibit 27 - Financial Data Statement
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter ended March 31,
1997.
8
<PAGE>
SIGNATURES
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 1, 1997 /s/ Burton J. Reiner
----------- --------------------------------
Burton J. Reiner, President
Date: May 1, 1997 /s/ William Oshinsky
----------- --------------------------------
William Oshinsky, Treasurer
(Principal Financial Officer)
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNAUDITED
3/31/1997 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 11,844,000
<SECURITIES> 11,761,000
<RECEIVABLES> 8,449,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 61,965,000
<DEPRECIATION> 25,606,000
<TOTAL-ASSETS> 94,980,000
<CURRENT-LIABILITIES> 0
<BONDS> 21,874,000
0
0
<COMMON> 28,000
<OTHER-SE> 66,872,000
<TOTAL-LIABILITY-AND-EQUITY> 94,980,000
<SALES> 1,583,000
<TOTAL-REVENUES> 7,742,000
<CGS> 1,201,000
<TOTAL-COSTS> 1,201,000
<OTHER-EXPENSES> 3,225,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 503,000
<INCOME-PRETAX> 2,813,000
<INCOME-TAX> 1,137,000
<INCOME-CONTINUING> 1,658,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,658,000
<EPS-PRIMARY> 0.59
<EPS-DILUTED> 0.59
</TABLE>
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