<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, 1999 Commission File No. 06201
BRESLER & REINER, INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as Specified in its Charter)
<TABLE>
<CAPTION>
<S> <C>
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)
</TABLE>
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, 1999: 2,762,528
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JUNE 30, 1999 AND DECEMBER 31, 1998
<TABLE>
<CAPTION>
ASSETS
June 30, 1999 Dec. 31, 1998
--------------- ---------------
(Unaudited)
<S> <C> <C>
Rental Property and Equipment, Net $ 34,433,000 $ 34,871,000
Construction in Process 7,025,000 7,142,000
Homes Held for Sale 374,000 590,000
Land Held for Sale 4,245,000 4,245,000
Investments 21,864,000 19,626,000
Receivables:
Mortgages and Notes, Affiliates 3,828,000 4,090,000
Mortgages and Notes, Other 750,000 800,000
Other 2,658,000 3,161,000
Investment In and Advances To
Joint Ventures and Partnerships 3,053,000 2,864,000
Cash and Cash Equivalents 6,418,000 5,338,000
Cash Deposits Held in Escrow 11,409,000 9,626,000
Income Taxes Receivable -0- 12,000
Due From Affiliates 423,000 -0-
Deferred Charges and Other Assets 5,163,000 5,521,000
----------------- ------------------
$ 101,643,000 $ 97,886,000
================= ==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage Loans Payable $ 5,103,000 $ 5,151,000
Accounts Payable 1,147,000 987,000
Accrued Expenses 939,000 871,000
Due To Affiliates -0- 558,000
Deposits 231,000 220,000
Deferred Income 196,000 544,000
Current Income Taxes Payable 147,000 -0-
Deferred Income Taxes Payable 6,011,000 6,011,000
----------------- ------------------
Total Liabilities 13,774,000 14,342,000
Minority Interest 1,063,000 1,063,000
Shareholders' Equity 86,806,000 82,481,000
----------------- ------------------
$ 101,643,000 $ 97,886,000
================= ==================
</TABLE>
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
-------------- ---------------
<S> <C> <C>
Revenues:
Sales of Homes $ 2,222,000 $ 2,022,000
Other Construction (Net) 464,000 582,000
Rentals - Apartments 1,218,000 1,254,000
Rentals - Commercial 5,702,000 5,697,000
Hotel Income 3,793,000 3,590,000
Management Fees, Affiliates 454,000 440,000
Leasing Fee, Affiliates 374,000 374,000
Interest:
Affiliates 659,000 504,000
Other 830,000 774,000
Gain on Sale of Realty Interests 292,000 259,000
Equipment Leasing and Vending 15,000 133,000
Income from Equity Investments 461,000 600,000
Other 32,000 17,000
-------------- ---------------
16,516,000 16,246,000
-------------- ---------------
Costs And Expenses:
Cost of Home Sales 2,043,000 1,945,000
Rentals - Apartments 719,000 717,000
Rentals - Commercial 2,191,000 2,088,000
Hotel Expenses 2,472,000 2,584,000
Land Carrying Cost 52,000 52,000
General and Administrative 879,000 924,000
Interest Expense 218,000 566,000
Equipment Leasing and Vending 15,000 21,000
Reserve for Advances to Partnerships 6,000 224,000
-------------- ---------------
8,595,000 9,121,000
-------------- ---------------
Net Income Before Income Taxes and
Minority Interest 7,921,000 7,125,000
Income Taxes 3,105,000 2,758,000
Minority Interest -0- (39,000)
-------------- ---------------
Net Income $ 4,816,000 $ 4,406,000
=============== ===============
Earnings per Common Share $ 1.74 $ 1.58
=============== ===============
Weighted Average Number of Common
Shares Outstanding 2,774,163 2,792,653
=============== ===============
</TABLE>
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
-------------- ---------------
<S> <C> <C>
Revenues:
Sales of Homes $ 895,000 $ 1,068,000
Other Construction (Net) 192,000 313,000
Rentals - Apartments 607,000 633,000
Rentals - Commercial 2,807,000 2,776,000
Hotel Income 2,266,000 2,224,000
Management Fees, Affiliates 229,000 216,000
Leasing Fee, Affiliates 187,000 187,000
Interest:
Affiliates 326,000 299,000
Other 429,000 359,000
Gain on Sale of Realty Interests 148,000 131,000
Equipment Leasing and Vending 9,000 71,000
Income from Equity Investments 220,000 282,000
Other 11,000 7,000
-------------- ---------------
8,326,000 8,566,000
-------------- ---------------
Costs And Expenses:
Cost of Home Sales 796,000 1,047,000
Rentals - Apartments 361,000 373,000
Rentals - Commercial 1,078,000 1,083,000
Hotel Expenses 1,351,000 1,372,000
Land Carrying Cost 26,000 26,000
General and Administrative 382,000 428,000
Interest Expense 108,000 212,000
Equipment Leasing and Vending 9,000 8,000
Reserve for Advances to Partnerships -0- 112,000
-------------- ---------------
4,111,000 4,661,000
-------------- ---------------
Net Income Before Income Taxes and
Minority Interest 4,215,000 3,905,000
Income Taxes 1,637,000 1,527,000
Minority Interest 39,000 (62,000)
--------------- ---------------
Net Income $ 2,539,000 $ 2,440,000
=============== ===============
Earnings per Common Share $ 0.92 $ 0.87
=============== ===============
Weighted Average Number of Common
Shares Outstanding 2,767,869 2,792,653
=============== ===============
</TABLE>
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 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 $ 4,816,000 $ 4,406,000
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation and Amortization 1,096,000 1,151,000
Gain on Sale of Realty Interest (292,000) (259,000)
(Income) Loss from Equity Investments (461,000) (600,000)
Changes in Other Assets and Liabilities:
(Increase) Decrease In:
Construction in Process 117,000 189,000
Homes Held for Sale 216,000 (184,000)
Mortgages and Notes Receivable 604,000 736,000
Income Taxes Receivable 12,000 886,000
Cash Deposits Held in Escrow (1,783,000) 3,195,000
Other Assets 809,000 (598,000)
Increase (Decrease) In Other Liabilities (943,000) 813,000
-------------- ---------------
Total Adjustments (625,000) 5,329,000
-------------- ---------------
Net Cash Provided by Operating Activities 4,191,000 9,735,000
-------------- ---------------
Cash Flows from Investing Activities:
Investment in Joint Ventures 272,000 1,584,000
Investment in US Treasury Instruments (2,238,000) (2,638,000)
Other (606,000) (312,000)
-------------- ---------------
Net Cash (Used In) Provided by Investing Activities (2,572,000) (1,366,000)
-------------- ---------------
Cash Flows from Financing Activities:
Repayment of Mortgage Loans Payable (48,000) (8,462,000)
Purchase of Treasury Stock (491,000) -0-
-------------- ---------------
Net Cash Used in Financing Activities (539,000) (8,462,000)
-------------- ---------------
Net Increase (Decrease) in Cash and
Cash Equivalents 1,080,000 (93,000)
Cash and Cash Equivalents, Beginning of Year 5,338,000 5,762,000
-------------- ---------------
Cash and Cash Equivalents, End of Period $ 6,418,000 $ 5,669,000
=============== ===============
</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) $ 253,000 $ 575,000
Income Taxes (Current and Estimated) 2,946,100 1,871,000
Supplemental Disclosure of Non-Cash Activities:
Escrowed Cash Deposits Received 64,000 106,000
Escrowed Cash Deposits Refunded 53,000 71,000
</TABLE>
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 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.
Certain reclassifications have been made in prior years' financial
statements to conform to the classification used in the current year.
Commitments and Contingencies:
At June 30, 1999, the Company had approximately $975,000.00 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.
<PAGE>
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.
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 Six Months Ended
------------------------
6/30/99 6/30/98
--------- ---------
<S> <C> <C>
Revenues:
Home sales $2,222,000 $2,022,000
Commercial rental 6,279,000 6,294,000
Residential rental 1,218,000 1,254,000
Hotel operations 3,793,000 3,590,000
Other 4,568,000 5,430,000
Consolidation entries (1,564,000) (2,344,000)
------------ ------------
Total 16,516,000 16,246,000
------------ ------------
Gross operating income:
Home sales 179,000 77,000
Commercial rental 3,250,000 3,225,000
Residential rental 426,000 462,000
Hotel operations 1,321,000 1,006,000
Other 3,279,000 3,513,000
SG&A (879,000) (924,000)
Income taxes and minority interest (3,105,000) (2,719,000)
Consolidation entries 345,000 (234,000)
------------ ------------
Total 4,816,000 4,406,000
------------ ------------
Assets:
Home sales 8,452,000 10,494,000
Commercial rental 59,011,000 43,585,000
Residential rental 1,842,000 2,052,000
Hotel management 10,570,000 10,689,000
Other 29,824,000 33,761,000
Income taxes receivable -0- 270,000
Consolidation entries (8,056,000) (6,572,000)
------------ ------------
Total $101,643,000 $94,279,000
============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
For the Three Months Ended
--------------------------
6/30/99 6/30/98
--------- ---------
<S> <C> <C>
Revenues:
Home sales $895,000 $1,068,000
Commercial rental 3,095,000 3,094,000
Residential rental 607,000 633,000
Hotel operations 2,266,000 2,224,000
Other 2,240,000 2,507,000
Consolidation entries (777,000) (960,000)
------------ ------------
Total 8,326,000 8,566,000
------------ ------------
Gross operating income:
Home sales 77,000 21,000
Commercial rental 1,610,000 1,442,000
Residential rental 210,000 222,000
Hotel operations 915,000 852,000
Other 1,592,000 1,879,000
SG&A (382,000) (428,000)
Income taxes and minority interest (1,676,000) (1,511,000)
Consolidation entries 193,000 (37,000)
------------ ------------
Total 2,539,000 2,440,000
============ ============
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operation
Results of Operations
- ---------------------
Sales of Homes and Lots: 15 homes were settled in the first six months of
------------------------
1999 as compared with 15 homes in the same period of 1998. Net income from Home
Sales was $179,000 in the first six months of 1999 as compared to $77,000 for
the same period of 1998. In the second quarter of 1999, 6 homes were settled
versus 8 homes in the same period of 1998. Net income from Homes Sales was
$99,000 in the second quarter of 1999 as compared to $21,000 for the same period
of 1998.
Registrant's backlog of homes under contract of sale as of June 30 was 36
in 1999 as compared to 29 in 1998. Registrant 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 $1,218,000 in the first six months of 1999, a decrease of 2.87% over
$1,254,000 for the same period in 1998. Income for the second quarter of 1999
was $607,000, a decrease of 4.11% over $633,000 for the like period in 1998.
Expenses for the first six months of 1999 was $719,000 as compared to $717,000
in 1998. Expenses for the second quarter of 1998 was $361,000 as compared to
$373,000 for the like period in 1998.
Rentals - Commercial: Income and Expenses. Rental income from commercial
------------------------------------------
operations was $5,702,000 in the first six months of 1999 as compared to
$5,697,000 for the same period in 1998 or an increase of 0.09%. Income for the
second quarter of 1999 increased by 1.12% over the same period in 1998.
Expenses for the first six months of 1999 were $2,191,000 as compared to
$2,088,000 in 1998, an increase of 4.94%. Expenses for the second quarter of
1999 decreased by 0.47% over the same period in 1998.
Hotel Income and Hotel Expense: Hotel Income and Hotel Expense reflect the
------------ --------------
operating results for the Company's two hotel properties for the six months
ended June 30, as follows:
<TABLE>
<CAPTION>
Colonnade Holiday Inn Express
---------------------- ----------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Income 2,508,000 2,492,000 1,285,000 1,098,000
Expense 1,507,000 1,642,000 965,000 942,000
--------- --------- --------- ---------
Net Before Taxes 1,001,000 850,000 320,000 156,000
</TABLE>
The 1999 Colonnade operations reflect a lower occupancy of 72.30% for the
six months ended June 30, 1999 as compared to 75.60% occupancy in the same
period of 1998. The average daily room rate increased by 6.70% in 1999 over the
same period of
<PAGE>
1998. The Colonnade net income increased by $151,000 over the 1998 period due to
an increase in gross revenue of $16,000 and a decrease in expenses of $135,000.
The 1999 Holiday Inn Express results reflect an increase of $187,000 in
revenues due to a 10% increase in occupancy for the six months ended June 30,
1999 as compared to the same period in 1998. The average daily room rate
increased by 6.19% in 1999 over the same period of 1998.
Interest Affiliates: The increase in 1999 reflects the interest received
---------------------
by Registrant on one of its partnership's commercial properties.
Income from Equity Investments: The 1999 reduction in Income from Equity
-------------------------------
Investments as compared to 1998 income is the result of the sale of
transportation equipment in 1998. The equipment was owned by two partnerships
in which Registrant holds an 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 mortgage on one of
its partnership's properties.
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 six month period ended June 30, 1999, cash flow from operating,
investing and financing activities resulted in an increase of $1,080,000 in cash
and cash equivalents. Registrant generated cash flow of $4,191,000 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 $48,000 and the purchase of Treasury Stock in the
amount of $491,000.
Registrant estimates 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.
Without a major tenant for the space that will be vacated, it may not be
possible to finance the project. Consequently, Registrant must be prepared to
finance these anticipated costs from its cash reserves.
<PAGE>
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
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter ended June 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: August 12, 1999 /S/ Burton J. Reiner
----------------- --------------------------------------------
Burton J. Reiner, President
Date: August 12, 1999 /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
6/30/99 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-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 17,827,000
<SECURITIES> 21,864,000
<RECEIVABLES> 7,236,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 63,470,000
<DEPRECIATION> 29,037,000
<TOTAL-ASSETS> 101,643,000
<CURRENT-LIABILITIES> 0
<BONDS> 5,103,000
0
0
<COMMON> 28,000
<OTHER-SE> 86,778,000
<TOTAL-LIABILITY-AND-EQUITY> 101,643,000
<SALES> 2,686,000
<TOTAL-REVENUES> 16,516,000
<CGS> 2,043,000
<TOTAL-COSTS> 2,043,000
<OTHER-EXPENSES> 6,334,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 218,000
<INCOME-PRETAX> 7,921,000
<INCOME-TAX> 3,105,000
<INCOME-CONTINUING> 4,816,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,816,000
<EPS-BASIC> 1.74
<EPS-DILUTED> 1.74
</TABLE>
