<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, 2000 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 August 10, 2000: 2,738,906
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JUNE 30, 2000 AND DECEMBER 31, 1999
<TABLE>
<CAPTION>
ASSETS
------
June 30, 2000 Dec. 31, 1999
-------------------- --------------------
(Unaudited)
<S> <C> <C>
Rental Property and Equipment, Net $ 33,576,000 $ 34,190,000
Construction in Process 3,745,000 4,244,000
Homes Held for Sale 1,089,000 974,000
Land Held for Sale 4,257,000 4,254,000
Receivables:
Mortgages and Notes, Affiliates 3,264,000 3,553,000
Mortgages and Notes, Other 355,000 385,000
Other 3,073,000 3,210,000
Investment In and Advances To
Joint Ventures and Partnerships 6,811,000 1,911,000
Cash and Cash Equivalents 5,541,000 7,606,000
Cash Deposits Held in Escrow 5,388,000 6,035,000
Investments 38,663,000 35,806,000
Income Taxes Receivable 2,627,000 1,190,000
Due From Affiliates 335,000 137,000
Deferred Charges and Other Assets 1,442,000 1,757,000
-------------------- --------------------
$ 110,166,000 $ 105,252,000
==================== ====================
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Liabilities:
Mortgage Loans Payable $ 5,002,000 $ 5,054,000
Accounts Payable 842,000 638,000
Accrued Expenses 1,118,000 1,043,000
Deposits 317,000 259,000
Deferred Income 16,000 19,000
Deferred Income Taxes Payable 3,748,000 3,748,000
-------------------- --------------------
Total Liabilities 11,043,000 10,761,000
Minority Interest 1,063,000 1,063,000
Shareholders' Equity 98,060,000 93,428,000
-------------------- --------------------
$ 110,166,000 $ 105,252,000
==================== ====================
</TABLE>
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
-------------------- --------------------
<S> <C> <C>
Revenues:
Sales of Homes $ 2,071,000 $ 2,222,000
Other Construction (Net) 392,000 464,000
Rentals - Apartments 1,326,000 1,218,000
Rentals - Commercial 6,131,000 5,702,000
Hotel Income 3,957,000 3,793,000
Management Fees, Affiliates 464,000 454,000
Leasing Fee, Affiliates 382,000 374,000
Interest:
Affiliates 257,000 659,000
Other 929,000 830,000
Gain on Sale of Realty Interests 322,000 292,000
Equipment Leasing and Vending 14,000 15,000
Income from Equity Investments 579,000 461,000
Other 34,000 32,000
------------------- -------------------
16,858,000 16,516,000
------------------- -------------------
Costs And Expenses:
Cost of Home Sales 1,876,000 2,043,000
Rentals - Apartments 764,000 719,000
Rentals - Commercial 2,103,000 2,191,000
Hotel Expenses 2,673,000 2,472,000
Land Carrying Cost 52,000 52,000
General and Administrative 1,057,000 879,000
Interest Expense 215,000 218,000
Equipment Leasing and Vending 12,000 15,000
Other 209,000 6,000
------------------- -------------------
8,961,000 8,595,000
------------------- -------------------
Net Income Before Income Taxes 7,897,000 7,921,000
Provision For Income Taxes 3,102,000 3,105,000
------------------- -------------------
Net Income $ 4,795,000 $ 4,816,000
=================== ===================
Earnings Per Common Share $ 1.75 $ 1.74
=================== ===================
Weighted Average Number of Common
Shares Outstanding 2,740,642 2,774,163
================= =================
</TABLE>
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
-------------------- --------------------
<S> <C> <C>
Revenues:
Sales of Homes $ 1,629,000 $ 895,000
Other Construction (Net) 87,000 192,000
Rentals - Apartments 660,000 607,000
Rentals - Commercial 3,056,000 2,807,000
Hotel Income 2,398,000 2,266,000
Management Fees, Affiliates 233,000 229,000
Leasing Fee, Affiliates 191,000 187,000
Interest:
Affiliates 125,000 326,000
Other 581,000 429,000
Gain on Sale of Realty Interests 163,000 148,000
Equipment Leasing and Vending 7,000 9,000
Income from Equity Investments 289,000 220,000
Other 27,000 11,000
------------------- -------------------
9,446,000 8,326,000
------------------- -------------------
Costs And Expenses:
Cost of Home Sales 1,483,000 796,000
Rentals - Apartments 399,000 361,000
Rentals - Commercial 1,050,000 1,078,000
Hotel Expenses 1,447,000 1,351,000
Land Carrying Cost 26,000 26,000
General and Administrative 483,000 382,000
Interest Expense 107,000 108,000
Equipment Leasing and Vending 6,000 9,000
Other 66,000 -0-
------------------- -------------------
5,067,000 4,111,000
------------------- -------------------
Net Income Before Income Taxes and
Minority Interest 4,379,000 4,215,000
Provision For Income Taxes 1,723,000 1,637,000
Minority Interest -0- 39,000
------------------- -------------------
Net Income $ 2,656,000 $ 2,539,000
=================== ===================
Earnings Per Common Share $ 0.97 $ 0.92
=================== ===================
Weighted Average Number of Common
Shares Outstanding 2,739,373 2,767,869
=================== ===================
</TABLE>
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
-------------------- --------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 4,795,000 $ 4,816,000
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation and Amortization 1,200,000 1,096,000
Gain on Sale of Realty Interest (322,000) (292,000)
Income from Equity Investments (579,000) (461,000)
Changes in Other Assets and Liabilities:
(Increase) Decrease In:
Construction in Process 499,000 117,000
Homes Held for Sale (115,000) 216,000
Mortgages and Notes Receivable 641,000 604,000
Income Taxes Receivable (1,437,000) 12,000
Cash Deposits Held in Escrow 647,000 (1,783,000)
Other Assets 382,000 809,000
Increase (Decrease) In Other Liabilities 136,000 (943,000)
-------------------- --------------------
Total Adjustments 1,052,000 (625,000)
-------------------- --------------------
Net Cash Provided by Operating Activities 5,847,000 4,191,000
-------------------- --------------------
Cash Flows from Investing Activities:
Investment in Joint Ventures (4,321,000) 272,000
Investment in US Treasury Instruments (2,857,000) (2,238,000)
Other (519,000) (606,000)
-------------------- --------------------
Net Cash Used In Investing Activities (7,697,000) (2,572,000)
-------------------- --------------------
Cash Flows from Financing Activities:
Repayment of Mortgage Loans Payable (52,000) (48,000)
Purchase of Treasury Stock (163,000) (491,000)
-------------------- --------------------
Net Cash Used in Financing Activities (215,000) (539,000)
-------------------- --------------------
Net Increase (Decrease) in Cash and
Cash Equivalents (2,065,000) 1,080,000
Cash and Cash Equivalents, Beginning of Year 7,606,000 5,338,000
-------------------- --------------------
Cash and Cash Equivalents, End of Period $ 5,541,000 $ 6,418,000
==================== ====================
</TABLE>
<PAGE>
Page Two
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
2000 1999
-------------------- --------------------
<S> <C> <C>
Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Period for:
Interest (Net of Amount Capitalized) $ 215,000 $ 253,000
Income Taxes (Current and Estimated) 3,510,200 2,946,100
Supplemental Disclosure of Non-Cash Activities:
Escrowed Cash Deposits Received 154,000 64,000
Escrowed Cash Deposits Refunded 96,000 53,000
</TABLE>
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
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, 1999 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, 2000, the Company had approximately $1,051,000 of outstanding
letters of credit for land improvements in housing projects that it is
developing.
Subsequent Events:
On July 1, 2000, Bresler & Reiner, Inc. consolidated the five leasehold
interests in the Waterside Mall Complex by an assignment and assumption of the
leases into a newly formed single entity, B&R Waterfront Properties, L.L.C. The
Company now controls a 54% membership interest and the Trilon Plaza partnerships
control a 46% membership interest in the new entity.
Segment Information:
The company reports segment information for the following categories:
1)Home Sales, 2)Commercial Rental,
<PAGE>
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.
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
----------------------------------------------------
6/30/00 6/30/99
----------------------- -----------------------
<S> <C> <C>
Revenues:
Home sales & Other construction $ 2,463,000 $ 2,686,000
Commercial rental 6,131,000 5,702,000
Residential rental 1,326,000 1,218,000
Hotel operations 3,957,000 3,793,000
Other 2,981,000 2,900,000
Consolidation entries -0- 217,000
----------------------- -----------------------
Total 16,858,000 16,516,000
----------------------- -----------------------
Gross operating income:
Home sales & Other construction 587,000 643,000
Commercial rental 4,028,000 3,511,000
Residential rental 562,000 499,000
Hotel operations 1,284,000 1,321,000
Other 1,436,000 1,627,000
SG&A (1,057,000) (879,000)
Income taxes and minority interest (3,102,000) (3,105,000)
Consolidation entries 1,057,000 1,199,000
----------------------- -----------------------
Total 4,795,000 4,816,000
----------------------- -----------------------
Assets:
Home sales 5,939,000 8,452,000
Commercial rental 45,117,000 59,011,000
Residential rental 1,726,000 1,842,000
Hotel management 9,814,000 10,570,000
Other 55,455,000 29,824,000
Consolidation entries (7,885,000) (8,056,000)
----------------------- -----------------------
Total $110,166,000 $101,643,000
======================= =======================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
For the Three Months Ended
----------------------------------------------------
6/30/00 6/30/99
----------------------- -----------------------
<S> <C> <C>
Revenues:
Home sales & Other construction $ 1,716,000 $ 1,087,000
Commercial rental 3,056,000 2,807,000
Residential rental 660,000 607,000
Hotel operations 2,398,000 2,266,000
Other 1,616,000 1,429,000
Consolidation entries -0- 130,000
----------------------- -----------------------
Total 9,446,000 8,326,000
----------------------- -----------------------
Gross operating income:
Home sales & Other construction 233,000 291,000
Commercial rental 2,006,000 1,729,000
Residential rental 261,000 246,000
Hotel operations 951,000 915,000
Other 887,000 758,000
SG&A (483,000) (382,000)
Income taxes and minority interest (1,723,000) (1,676,000)
Consolidation entries 524,000 658,000
----------------------- -----------------------
Total 2,656,000 2,539,000
======================= =======================
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation
Results of Operations
---------------------
Sales of Homes and Lots. 14 homes were settled in the first six months of
------------------------
2000 compared with 15 homes in the same period of 1999. Net income from Home
Sales was $195,000 in the first six months of 2000 as compared to $179,000 for
the same period of 1999. In the second quarter of 2000, 11 homes were settled
versus 6 homes in the same period of 1999. Net income from Home Sales was
$146,000 in the second quarter of 2000 as compared to $99,000 for the same
period of 1999.
Registrant's backlog of homes under contract of sale as of June 30 was 28 in
2000 as compared to 36 in 1999. 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 $1,326,000 in the first six months of 2000, an increase of 8.87% over
$1,218,000 for the same period in 1999. Income for the second quarter of 2000
was $660,000, an increase of 8.74% over $607,000 for the same period in 1999.
Expenses for the first six months of 2000 were $764,000 as compared to $719,000
in 1999, a 6.26% increase. Expenses for the second quarter of 2000 were
$399,000 as compared to $361,000 for the same period in 1999, an increase of
10.53%. Net income was $562,000 for the first six months of 2000 as compared to
$499,000 for the same period in 1999, an increase of 13.61%. For the second
quarter of 2000, net income was $261,000 as compared to $246,000 for the same
period in 1999, an increase of 6.10%.
Rentals - Commercial: Income and Expenses. Rental income from commercial
------------------------------------------
operations was $6,131,000 in the first six months of 2000 as compared to
$5,702,000 for the same period in 1999, an increase of 7.53%. Income for the
second quarter of 2000 was $3,056,000, an increase of 8.87% over $2,807,000 for
the same period of 1999. Expenses for the first six months of 2000 were
$2,103,000 as compared to $2,191,000 in 1999, a decrease of 4.02%. Expenses for
the second quarter of 2000 were $1,050,000 as compared to $1,078,000 for the
same period in 1999, a decrease of 2.60%. Net income was $4,028,000 for the
fist six months of 2000 as compared to $3,511,000 for the same period in 1999,
an increase of 14.73%. For the second quarter of 2000, net income was
$2,006,000 as compared to $1,729,000 for the same period in 1999, an increase of
16.02%.
<PAGE>
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
--------- -------------------
<S> <C> <C> <C> <C>
2000 1999 2000 1999
--------- --------- --------- ---------
Income 2,616,000 2,508,000 1,341,000 1,285,000
Expense 1,616,000 1,507,000 1,057,000 965,000
--------- --------- --------- ---------
Net Before Taxes 1,000,000 1,001,000 284,000 320,000
</TABLE>
The 2000 Colonnade operations reflect a lower occupancy rate of 71.70% for
the six months ended June 30, 2000 as compared to a 72.30% occupancy rate in the
same period of 1999. The average daily room rate of $127.75 increased by 4.14%
in 2000 over the 1999 average daily room rate of $122.68. Income from the
Colonnade operations was $2,616,000 in the first six months of 2000 as compared
to $2,508,000 for the same period in 1999 or an increase of 4.31%. Income for
the second quarter of 2000 was $1,558,000, an increase of 2.64% over $1,518,000
for the same period of 1999. Expenses for the first six months of 2000 were
$1,616,000 as compared to $1,507,000 in 1999, an increase of 7.24%. Expenses
for the second quarter of 2000 were $858,000 as compared to $825,000 for the
same period in 1999, an increase of 4.00%. Net income was $1,000,000 for the
fist six months of 2000 as compared to $1,001,000 for the same period in 1999.
For the second quarter of 2000, net income was $700,000 as compared to $693,000
for the same period in 1999, an increase of 1.01%.
The 2000 Holiday Inn Express operations reflect a higher occupancy rate of
67.34% for the six months ended June 30, 2000 as compared to a 63.35% rate in
the same period of 1999. The average daily room rate increased by 1.63% in 2000
over the same period of 1999. Income from the Holiday Inn Express operations was
$1,341,000 in the first six months of 2000 as compared to $1,285,000 for the
same period in 1999 or an increase of 4.36%. Income for the second quarter of
2000 was $840,000, an increase of 12.30% over $748,000 for the same period of
1999. Expenses for the first six months of 2000 were $1,057,000 as compared to
$965,000 in 1999, an increase of 9.54%. Expenses for the second quarter of 2000
were $589,000 as compared to $526,000 for the same period in 1999, an increase
of 11.98%. Net income was $284,000 for the fist six months of 2000 as compared
to $320,000 for the same period in 1999, a decrease of 11.25%. For the second
quarter of 2000, net income was $251,000 as compared to $222,000 for the same
period in 1999, an increase of 13.07%.
Interest - Affiliates: Interest income for the first six months of 1999
----------------------
includes $345,000 of deferred interest earned as the result of Registrant's
purchase of the mortgage loan on one of its partnership's commercial properties.
There was no such income in the same period of 2000.
<PAGE>
Other Expenses. During the first six months of 2000, Registrant expensed
---------------
cash advances of $209,000 to a partnership operating at a loss. In the first
six months of 1999, Registrant expensed cash advances of $6,000 to the same
partnership.
Assets and Liabilities
----------------------
Investment In and Advances To Joint Ventures and Partnerships. The
--------------------------------------------------------------
increase of $4,900,000 resulted from earnings of joint ventures of $579,000 and
the payment of $4,321,000.
Income Taxes Receivable. Income Taxes Receivable consist of estimated tax
------------------------
payments in excess of the Provision For Income Taxes.
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, 2000, Registrant generated cash
flow from operating activities of $5,847,000. Cash flow from operating
activities was used in investing activities of $7,697,000, which consisted of
investments in U.S. Treasury instruments, municipal bonds and other activities
of $3,376,000, and the payment to related joint ventures in the amount of
$4,321,000. The remaining cash flow from operating activities was used in
financing activities for the repayment of notes payable in the amount of $52,000
and the purchase of Treasury Stock in the amount of $163,000. Overall, cash
flow from operating, investing and financing resulted in a decrease of
$2,065,000 in cash and cash equivalents and cash deposits held in escrow.
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.
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
<PAGE>
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 properties, 3) the Company's
ability to lease and re-lease, 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,
2000.
<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 10, 2000 /s/ Charles S. Bresler
----------------- --------------------------------------
Charles S. Bresler,
Chief Executive Officer
Date: August 10, 2000 /s/ William Oshinsky
----------------- --------------------------------------
William Oshinsky, Treasurer
(Principal Financial Officer)
