<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, 1999 Commission File No. 06201
BRESLER & REINER, INC.
- --------------------------------------------------------------------------------
(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 ninety (90) days.
Yes: X No:
----- -----
Number of Shares of Common Stock
Outstanding November 10, 1999: 2,762,528
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
<TABLE>
<CAPTION>
ASSETS
------
Sept. 30, 1999 Dec. 31, 1998
-------------- -------------
(Unaudited)
<S> <C> <C>
Rental Property and Equipment, Net $ 34,063,000 $ 34,871,000
Construction in Process 6,020,000 7,142,000
Homes Held for Sale 657,000 590,000
Land Held for Sale 4,252,000 4,245,000
Investments 32,670,000 19,626,000
Receivables:
Mortgages and Notes, Affiliates 3,692,000 4,090,000
Mortgages and Notes, Other 735,000 800,000
Other 2,841,000 3,161,000
Investment In and Advances To
Joint Ventures and Partnerships 2,235,000 2,864,000
Cash and Cash Equivalents 7,873,000 5,338,000
Cash Deposits Held in Escrow 5,438,000 9,626,000
Income Taxes Receivable 249,000 12,000
Due From Affiliates 789,000 0
Deferred Charges and Other Assets 5,358,000 5,521,000
-------------- -------------
$ 106,872,000 $ 97,886,000
============== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
-------------------------------------
Liabilities:
Mortgage Loans Payable $ 5,079,000 $ 5,151,000
Accounts Payable 1,127,000 987,000
Accrued Expenses 1,219,000 871,000
Due To Affiliates 0 558,000
Deposits 241,000 220,000
Deferred Income 22,000 544,000
Current Income Taxes Payable 801,000 0
Deferred Income Taxes Payable 6,011,000 6,011,000
-------------- -------------
Total Liabilities 14,500,000 14,342,000
Minority Interest 1,063,000 1,063,000
Shareholders' Equity 91,309,000 82,481,000
-------------- -------------
$ 106,872,000 $ 97,886,000
============== =============
</TABLE>
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
--------------- ----------------
<S> <C> <C>
Revenues:
Sales of Homes $ 4,011,000 $ 3,544,000
Other Construction, Net 671,000 878,000
Rentals - Apartments 1,850,000 1,881,000
Rentals - Commercial 8,774,000 8,532,000
Hotel Income 5,670,000 5,582,000
Management Fees, Affiliates 697,000 660,000
Leasing Fee, Affiliates 561,000 561,000
Interest:
Affiliates 941,000 1,036,000
Other 1,437,000 1,171,000
Gain on Sale of Realty Interests 446,000 457,000
Equipment Leasing and Vending 25,000 200,000
Gain on Sale of Equity Investments 2,756,000 0
Income from Equity Investments 728,000 1,244,000
Other 45,000 26,000
--------------- ----------------
28,612,000 25,772,000
--------------- ----------------
Costs And Expenses:
Cost of Home Sales 3,817,000 3,468,000
Rentals - Apartments 1,131,000 1,113,000
Rentals - Commercial 3,325,000 3,210,000
Hotel Expenses 3,785,000 3,989,000
Land Carrying Cost 77,000 78,000
General and Administrative 1,233,000 1,366,000
Interest Expense 327,000 901,000
Equipment Leasing and Vending 21,000 30,000
Reserve for Advances to Partnerships 6,000 252,000
--------------- ----------------
13,722,000 14,407,000
--------------- ----------------
Net Income Before Income Taxes and
Minority Interest 14,890,000 11,365,000
Income Taxes 5,571,000 4,620,000
Minority Interest 0 (66,000)
--------------- ----------------
Net Income $ 9,319,000 $ 6,811,000
=============== ================
Earnings per Common Share $ 3.36 $ 2.45
=============== ================
Weighted Average Number of Common
Shares Outstanding 2,770,242 2,780,528
=============== ================
</TABLE>
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
------------------- -------------------
<S> <C> <C>
Revenues:
Sales of Homes $ 1,789,000 $ 1,522,000
Other Construction, Net 207,000 296,000
Rentals - Apartments 632,000 627,000
Rentals - Commercial 3,072,000 2,835,000
Hotel Income 1,877,000 1,992,000
Management Fees, Affiliates 243,000 220,000
Leasing Fee, Affiliates 187,000 187,000
Interest:
Affiliates 282,000 532,000
Other 607,000 397,000
Gain on Sale of Realty Interests 154,000 198,000
Equipment Leasing and Vending 10,000 67,000
Gain on Sale of Equity Investments 2,756,000 0
Income from Equity Investments 267,000 644,000
Other 13,000 9,000
------------------- -------------------
12,096,000 9,526,000
------------------- -------------------
Costs And Expenses:
Cost of Home Sales 1,774,000 1,523,000
Rentals - Apartments 412,000 396,000
Rentals - Commercial 1,134,000 1,122,000
Hotel Expenses 1,313,000 1,405,000
Land Carrying Cost 25,000 26,000
General and Administrative 354,000 442,000
Interest Expense 109,000 335,000
Equipment Leasing and Vending 6,000 9,000
Reserve for Advances to Partnerships 0 28,000
------------------- -------------------
5,127,000 5,286,000
------------------- -------------------
Net Income Before Income Taxes and
Minority Interest 6,969,000 4,240,000
Income Taxes 2,466,000 1,862,000
Minority Interest 0 (27,000)
------------------- -------------------
Net Income $ 4,503,000 $ 2,405,000
=================== ===================
Earnings per Common Share $ 1.63 $ 0.86
=================== ===================
Weighted Average Number of Common
Shares Outstanding 2,762,528 2,780,528
=================== ===================
</TABLE>
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
-------------------- -------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 9,319,000 $ 6,811,000
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation and Amortization 1,678,000 1,750,000
Gain on Sale of Realty Interest (446,000) (457,000)
Gain on Sale of Equity Investments (2,756,000) 0
(Income) Loss from Equity Investments (728,000) (1,244,000)
Changes in Other Assets and Liabilities:
(Increase) Decrease In:
Construction in Process 1,122,000 1,323,000
Homes Held for Sale (67,000) (161,000)
Mortgages and Notes Receivable 909,000 1,109,000
Income Taxes Receivable (237,000) 1,156,000
Cash Deposits Held in Escrow 4,188,000 1,969,000
Other Assets 397,000 (809,000)
Increase (Decrease) In Other Liabilities (559,000) 623,000
-------------------- --------------------
Total Adjustments 3,501,000 5,259,000
-------------------- --------------------
Net Cash Provided by Operating Activities 12,820,000 12,070,000
-------------------- --------------------
Cash Flows from Investing Activities:
Investment in Joint Ventures 4,113,000 1,913,000
Investment in US Treasury Instruments (13,044,000) (5,581,000)
Other (791,000) (684,000)
-------------------- --------------------
Net Cash (Used In) Provided by Investing Activities (9,722,000) (4,352,000)
-------------------- --------------------
Cash Flows from Financing Activities:
Repayment of Mortgage Loans Payable (72,000) (8,492,000)
Purchase of Treasury Stock (491,000) 0
-------------------- --------------------
Net Cash Used in Financing Activities (563,000) (8,492,000)
-------------------- --------------------
Net Increase (Decrease) in Cash and
Cash Equivalents 2,535,000 (774,000)
Cash and Cash Equivalents, Beginning of Year 5,338,000 5,762,000
-------------------- --------------------
Cash and Cash Equivalents, at End of Period $ 7,873,000 $ 4,988,000
==================== ====================
</TABLE>
<PAGE>
Page Two
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
1999 1998
------------------------ ---------------------
<S> <C> <C>
Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Period for:
Interest (Net of Amount Capitalized) $ 352,000 $ 910,000
Income Taxes (Current and Estimated) 5,007,000 2,500,000
Supplemental Disclosure of Non-Cash Activities:
Escrowed Cash Deposits Received 117,000 138,000
Escrowed Cash Deposits Refunded 96,000 133,000
</TABLE>
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
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, 1998 as filed with the Securities and Exchange
Commission.
Commitments and Contingencies:
At September 30, 1999, the Company had approximately $1,058,000 of
outstanding letters of credit for land improvements in housing projects that are
under development.
Segment Information:
The company reports segment information for the following categories:
1)Home Sales, 2)Commercial Rental, 3)Residential Rental and 4)Hotel Operations.
Home Sales reflect the sale of homes constructed by the Company and settled
during the current period. Commercial Rental includes income from leases to
tenants ranging from retail businesses to governmental agencies. Residential
Rental income is generated from the leasing of apartments in the Washington
Metropolitan area. Hotel Operations consist of income generated by the
Company's two hotel properties.
The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. The Company evaluates
performance based upon gross operating income from the combined properties in
each segment.
<PAGE>
The Company's reportable segments are a consolidation of related
subsidiaries which offer different products. They are operated separately as
each segment requires different operating, pricing and leasing strategies. All
of the properties have been constructed by the Company and are incorporated into
the applicable segment.
<PAGE>
<TABLE>
<CAPTION>
For the Nine Months Ended
---------------------------------
9/30/99 9/30/98
---------------- ---------------
<S> <C> <C>
Revenues:
Home sales $4,011,000 $3,544,000
Commercial rental 9,647,000 9,406,000
Residential rental 1,850,000 1,881,000
Hotel operations 5,670,000 5,582,000
Other 10,475,000 8,191,000
Consolidation entries (3,041,000) (2,832,000)
---------------- ---------------
Total 28,612,000 25,772,000
---------------- ---------------
Gross operating income:
Home sales 194,000 76,000
Commercial rental 5,045,000 4,801,000
Residential rental 608,000 655,000
Hotel operations 1,885,000 1,593,000
Other 9,078,000 5,625,000
SG&A (1,233,000) (1,366,000)
Income taxes and minority interest (5,571,000) (4,554,000)
Consolidation entries (687,000) (19,000)
---------------- ---------------
Total 9,319,000 6,811,000
---------------- ---------------
Assets:
Home sales 7,572,000 9,214,000
Commercial rental 40,178,000 49,837,000
Residential rental 1,821,000 2,399,000
Hotel management 10,502,000 10,866,000
Other 54,582,000 31,827,000
Income taxes receivable 249,000 0
Consolidation entries (8,032,000) (6,569,000)
---------------- ---------------
Total $106,872,000 $97,574,000
=============== ==============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
For the Three Months Ended
---------------------------------
9/30/99 9/30/98
---------------- ---------------
<S> <C> <C>
Revenues:
Home sales $1,789,000 $1,522,000
Commercial rental 3,368,000 3,112,000
Residential rental 632,000 627,000
Hotel operations 1,877,000 1,992,000
Other 5,907,000 2,761,000
Consolidation entries (1,477,000) (488,000)
---------------- ---------------
Total 12,096,000 9,526,000
---------------- ---------------
Gross operating income:
Home sales 15,000 (1,000)
Commercial rental 1,795,000 1,576,000
Residential rental 182,000 193,000
Hotel operations 564,000 587,000
Other 5,799,000 2,112,000
SG&A (354,000) (442,000)
Income taxes and minority interest (2,466,000) (1,835,000)
Consolidation entries (1,032,000) 215,000
---------------- ---------------
Total 4,503,000 2,405,000
---------------- ---------------
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation
Results of Operations
- ---------------------
Sales of Homes and Lots: 27 homes were settled in the first nine months of
-------------------------
1999 as compared to 26 homes in the same period of 1998. Net income from Home
Sales was $194,000 in the first nine months of 1999 as compared to $76,000 for
the same period of 1998. In the third quarter of 1999, 12 homes were settled
versus 11 homes in the same period of 1998. Net income from Home Sales was
$15,000 in the third quarter of 1999 as compared to a $1,000 loss for the same
period of 1998.
Registrant's backlog of homes under contract of sale as of September 30 was
36 in 1999 as compared to 27 in 1998. Registrant generally receives a deposit of
$500 to $2,000, which may be forfeited if the buyer terminates the agreement.
Rentals - Apartments: Income and Expenses. Rental income from apartments
------------------------------------------
was $1,850,00 in the first nine months of 1999, a decrease of 1.69% as compared
to $1,881,000 for the same period in 1998. Income for the third quarter of 1999
was $632,000, an increase of 0.80% as compared to $627,000 for the same period
in 1998. Expenses for the first nine months of 1999 were $1,131,000 as compared
to $1,113,000 for the same period in 1998. Expenses for the third quarter of
1999 were $412,000 as compared to $396,000 for the same period in 1998, an
increase of 4.04%.
Rentals - Commercial: Income and Expenses. Rental income from commercial
------------------------------------------
operations was $8,774,000 in the first nine months of 1999 as compared to
$8,532,000 for the same period in 1998 or an increase of 2.84%. Income for the
third quarter of 1999 increased by 8.36% as compared to the same period in 1998.
Expenses for the first nine months of 1999 were $3,325,000 as compared to
$3,210,000 in 1998, an increase of 3.95%. Expenses for the third quarter of
1999 were $1,134,000 as compared to $1,122,000 for the same period of 1998, an
increase of 1.07%.
Hotel Income and Hotel Expense: Hotel Income and Hotel Expense reflect
------------ --------------
the operating results for the Company's two hotel properties for the nine months
ended September 30, as follows:
<TABLE>
<CAPTION>
Colonnade Holiday Inn Express
--------- -------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income 3,787,000 3,880,000 1,883,000 1,702,000
Expense 2,310,000 2,561,000 1,475,000 1,428,000
--------- --------- --------- ---------
Net Income
Before Taxes 1,477,000 1,319,000 408,000 274,000
</TABLE>
<PAGE>
The 1999 Colonnade operating results reflect a lower occupancy of 72.80% for
the nine months ended September 30, 1999 as compared to 77.10% occupancy in the
same period of 1998. The average daily room rate in the first nine months of
1999 increased by 4.37% as compared to the same period in 1998. The Colonnade
net income increased by $158,000 as compared to the same period in 1998. While
the nine month gross income decreased by $93,000, expenses decreased by $251,000
as compared to the same period in 1998.
The 1999 Holiday Inn Express results reflect an increase of $181,000 in
revenues due to a 3.56% increase in occupancy for the nine months ended
September 30, 1999 as compared to the same period in 1998. The average daily
room rate increased by 5.29% in the first nine months of 1999 as compared to the
same period of 1998.
Interest - Affiliates: The increase in 1999 reflects the interest
----------------------
received by Registrant from one of its partnership's commercial properties.
Gain on Sale of Equity Investments. The 1999 results reflect the profit
-----------------------------------
from the sale of the apartment properties in Florida owned by two partnerships,
in which the Registrant holds substantial limited partnership interests. See
Form 8-K filed on August 25, 1999.
Income from Equity Investments. The 1998 results reflect the profit from
-------------------------------
the sale of transportation equipment owned by an affiliated partnership, in
which Registrant holds a 50% interest. There was no similar transaction in
1999.
Interest Expense: The 1999 reduction is the result of the elimination of
-----------------
interest expense with respect to Registrant's purchase of the mortgages secured
by two properties owned by two partnerships, in which the Registrant holds
substantial partnership interests.
Assets and Liabilities
- ----------------------
Investments. The increase is the result of investment of cash in short
------------
term Treasury instruments. Funds were provided from Equity Investments as
discussed above. See "Gain on Sale of Equity Investments".
Deferred Income. The decrease reflects the recognition of the discount on
----------------
the purchase of the mortgage loan on one of Registrant's partnership's
commercial properties.
<PAGE>
Liquidity and Capital Resources
- -------------------------------
Registrant continues to fund its obligations out of current cash flow. 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, 1999, cash flow from
operating, investing and financing activities resulted in an increase of
$2,535,000 in cash and cash equivalents. Registrant generated cash flow of
$12,820,000 from operating activities. Cash flow from operating activities and
cash and cash equivalents were used to fund Registrant's investments in low
income housing 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 $72,000 and the purchase of Treasury Stock in the
amount of $491,000.
Registrant anticipates that it will require substantial cash for capital
improvements, tenant fit up, leasing fees and allowances as the result of the
expiration in the year 2002 of the GSA lease in the Waterside Mall property.
Disclaimer
- ----------
Except for historical matters, the matters discussed in this Form 10-Q are
forward looking statements which reflect the Company's current views with
respect to future events and financial performance. These forward-looking
statements are subject to certain risks and uncertainties which could cause
actual results to differ materially from historical results or those
anticipated. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of their dates. The Company
undertakes no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
The following factors could cause actual results to differ materially from
historical results or those anticipated: 1) changes in operations, 2) market
conditions for the Company's products, 3) the Company's ability to lease and re-
lease its properties, 4) development risks, 5) competition, and 6) changes in
the economic climate.
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a) Exhibit 27 - Financial Data Statement
<PAGE>
(b) Reports on Form 8-K
One report on Form 8-K has been filed during the quarter ended September
30, 1999.
<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 10, 1999 /S/ Burton J. Reiner
------------------ ---------------------------------------
Burton J. Reiner, President
Date: November 10, 1999 /S/ William L. Oshinsky
------------------ ---------------------------------------
William L. Oshinsky, Treasurer
(Principal Financial Officer)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED 9/30/99 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-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 13,311,000
<SECURITIES> 32,670,000
<RECEIVABLES> 7,268,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 63,631,000
<DEPRECIATION> 29,568,000
<TOTAL-ASSETS> 106,872,000
<CURRENT-LIABILITIES> 0
<BONDS> 5,079,000
0
0
<COMMON> 28,000
<OTHER-SE> 91,281,000
<TOTAL-LIABILITY-AND-EQUITY> 106,872,000
<SALES> 4,682,000
<TOTAL-REVENUES> 28,612,000
<CGS> 3,817,000
<TOTAL-COSTS> 3,817,000
<OTHER-EXPENSES> 9,578,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 327,000
<INCOME-PRETAX> 14,890,000
<INCOME-TAX> 5,571,000
<INCOME-CONTINUING> 9,319,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,319,000
<EPS-BASIC> 3.36
<EPS-DILUTED> 3.36
</TABLE>
