<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, 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 May 9, 2000: 2,741,406
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 2000 AND DECEMBER 31, 1999
ASSETS
------
<TABLE>
<CAPTION>
Mar. 31, 2000 Dec. 31, 1999
---------------------- -----------------------
(Unaudited)
<S> <C> <C>
Rental Property and Equipment, Net $ 33,816,000 $ 34,190,000
Construction in Process 4,384,000 4,244,000
Homes Held for Sale 974,000 974,000
Land Held for Sale 4,257,000 4,254,000
Receivables:
Mortgages and Notes, Affiliates 3,410,000 3,553,000
Mortgages and Notes, Other 368,000 385,000
Other 3,095,000 3,210,000
Investment In and Advances To
Joint Ventures and Partnerships 2,022,000 1,911,000
Cash and Cash Equivalents 6,120,000 7,606,000
Cash Deposits Held in Escrow 7,261,000 6,035,000
Investments 37,992,000 35,806,000
Income Taxes Receivable 840,000 1,190,000
Due From Affiliates 959,000 137,000
Deferred Charges and Other Assets 1,666,000 1,757,000
--------------------- -----------------------
$ 107,164,000 $ 105,252,000
====================== =======================
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Liabilities:
Notes Payable:
Mortgages Payable $ 5,028,000 $ 5,054,000
Accounts Payable 489,000 638,000
Accrued Expenses 1,073,000 1,043,000
Deposits 274,000 259,000
Deferred Income 17,000 19,000
Deferred Income Taxes Payable 3,748,000 3,748,000
--------------------- -----------------------
Total Liabilities 10,629,000 10,761,000
Minority Interest 1,063,000 1,063,000
Shareholders' Equity 95,472,000 93,428,000
--------------------- -----------------------
$ 107,164,000 $ 105,252,000
===================== =======================
</TABLE>
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
--------------------- ----------------------
<S> <C> <C>
Revenues:
Sales of Homes $ 442,000 $ 1,327,000
Other Construction (Net) 305,000 272,000
Rentals - Apartments 666,000 611,000
Rentals - Commercial 3,075,000 2,895,000
Hotel Income 1,559,000 1,527,000
Management Fees, Affiliates 231,000 225,000
Leasing Fee, Affiliates 191,000 187,000
Interest:
Affiliates 132,000 333,000
Other 348,000 401,000
Gain on Sale Of Realty Interests 159,000 144,000
Equipment Leasing & Vending 7,000 6,000
Income From Equity Investments 290,000 241,000
Other 7,000 21,000
--------------------- ----------------------
7,412,000 8,190,000
--------------------- ----------------------
Costs And Expenses:
Cost of Home Sales 393,000 1,247,000
Rentals - Apartments 365,000 358,000
Rentals - Commercial 1,053,000 1,113,000
Hotel Expenses 1,226,000 1,121,000
Land Carrying Cost 26,000 26,000
General And Administrative 574,000 497,000
Interest Expense 108,000 110,000
Equipment Leasing & Vending 6,000 6,000
Reserve for Advances to Partnerships 143,000 6,000
--------------------- ----------------------
3,894,000 4,484,000
--------------------- ----------------------
Net Income Before Income Taxes And
Minority Interest 3,518,000 3,706,000
Provision for Income Taxes 1,379,000 1,468,000
Minority Interest (39,000)
--------------------- ----------------------
Net Income $ 2,139,000 $ 2,277,000
===================== ======================
Earnings Per Common Share $ 0.78 $ 0.82
===================== ======================
Weighted Average Number of Common
Shares Outstanding 2,741,910 2,780,528
===================== ======================
</TABLE>
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 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 $ 2,139,000 $ 2,277,000
Adjustments to Reconcile Net Income To Net Cash
Provided by Operating Activities:
Depreciation & Amortization 600,000 512,000
Gain on Sale of Realty Interest (159,000) (144,000)
(Income) Loss From Equity Investments (290,000) (241,000)
Changes in Other Assets & Liabilities:
(Increase) Decrease In:
Construction in Process (140,000) 321,000
Homes Held for Sale -0- 108,000
Mortgages & Notes Receivable 319,000 311,000
Income Taxes Receivable 350,000 12,000
Cash Deposits Held in Escrow (1,226,000) (1,414,000)
Other Assets 170,000 (100,000)
Increase (Decrease) In Other Liabilities (928,000) (1,066,000)
--------------------- ----------------------
Total Adjustments (1,304,000) (1,701,000)
--------------------- ----------------------
Net Cash Provided By Operating Activities 835,000 576,000
--------------------- ----------------------
Cash Flows From Investing Activities:
Investment in Joint Ventures 179,000 (302,000)
Investment in US Treasury Instruments
and Municipal Bonds (2,186,000) 388,000
Other (193,000) (205,000)
--------------------- ----------------------
Net Cash Provided By (Used In) Investing Activities (2,200,000) (119,000)
Cash Flows From Financing Activities:
Repayment of Notes Payable (26,000) (24,000)
Purchase of Treasury Stock (95,000)
--------------------- ----------------------
Net Cash Used In Financing Activities (121,000) (24,000)
--------------------- ----------------------
Net Increase (Decrease) in Cash and
Cash Equivalents (1,486,000) 433,000
Cash and Cash Equivalents, Beginning of Year 7,606,000 5,338,000
--------------------- ----------------------
Cash and Cash Equivalents, End of Period $ 6,120,000 $ 5,771,000
===================== ======================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page Two
Consolidated Statements of Cash Flows
2000 1999
---------------------- -----------------------
<S> <C> <C>
Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Period For:
Interest (Net of Amount Capitalized) $ 108,000 $ 145,000
Income Taxes (Current and Estimated) 1,029,000 796,100
Supplemental Disclosure of Non-Cash Activities:
Escrowed Cash Deposits Received 37,000 28,000
Escrowed Cash Deposits Refunded 22,000 26,000
</TABLE>
<PAGE>
BRESLER & REINER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 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.
Commitments and Contingencies:
At March 31, 2000, the Company had approximately $1,057,000 of outstanding
letters of credit for land improvements in housing projects that it is
developing.
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 Three Months Ended
--------------------------
3/31/00 3/31/99
-------------- --------------
<S> <C> <C>
Revenues:
Home sales & Other construction $ 747,000 $ 1,599,000
Commercial rental 3,075,000 3,769,000
Residential rental 666,000 611,000
Hotel operations 1,559,000 1,527,000
Other 1,365,000 1,471,000
Consolidation entries -0- (787,000)
-------------- --------------
Total 7,412,000 8,190,000
-------------- -------------
Gross operating income:
Home sales & Other construction 354,000 334,000
Commercial rental 2,022,000 2,226,000
Residential rental 260,000 216,000
Hotel operations 333,000 406,000
Other 549,000 869,000
SG&A (574,000) (497,000)
Income taxes and minority interest (1,379,000) (1,429,000)
Consolidation entries 574,000 152,000
-------------- --------------
Total 2,139,000 2,277,000
-------------- --------------
Assets:
Home sales 6,443,000 8,277,000
Commercial rental 58,305,000 54,768,000
Residential rental 1,761,000 1,895,000
Hotel management 9,909,000 10,444,000
Other 38,579,000 33,003,000
Consolidation entries (7,833,000) (8,120,000)
-------------- --------------
Total $107,164,000 $100,267,000
============== ==============
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation
Results of Operations
- ---------------------
Sales of Homes and Lots. 3 homes were settled in the first three months of
------------------------
2000 compared with 9 homes in the same period of 1999. Net income from Home
Sales was $49,000 in the first three months of 2000 as compared to $80,000 for
the same period of 1999.
Registrant's backlog of homes under contract of sale as of March 31 was 29
in 2000 as compared to 21 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 $666,000 in the first three months of 2000 as compared to $611,000 for the
same period in 1999, an increase of 9.01% primarily due to increased occupancy.
Expenses for the first three months of 2000 was $365,000 as compared to $358,000
in 1999, a 1.96% increase. 2000 net income was $301,000 versus $253,000 for
the same period in 1999, an increase of 18.98%.
Rentals - Commercial: Income and Expenses. Rental income from commercial
------------------------------------------
operations was $3,075,000 in the first three months of 2000 as compared to
$2,895,000 for the same period in 1999 due to increased occupancy. Expenses for
the first three months of 2000 were $1,053,000 as compared to $1,113,000 in
1999, a decrease of 5.39%. 2000 net income was $2,022,000 versus $1,782,000 in
1999, an increase of 13.47%.
Hotel Income and Hotel Expense. Hotel Income and Hotel Expense reflect the
------------ --------------
operating results for the Company's two hotel properties for the three months
ended March 31, as follows:
<TABLE>
<CAPTION>
Colonnade Holiday Inn Express
--------- -------------------
<S> <C> <C> <C> <C>
2000 1999 2000 1999
---- ---- ---- ----
Income 1,058,000 990,000 501,000 537,000
Expense 758,000 682,000 468,000 439,000
--------- ------- ------- -------
Net Before Taxes 300,000 308,000 33,000 98,000
</TABLE>
The 2000 Colonnade operations reflect a higher occupancy rate of 63.10% in
the quarter ended March 31, 2000 as compared to a 60.30% occupancy in the same
period of 1999. The average daily room rate increased by 2.79% in 2000 over the
same period of 1999. Income from the Colonnade operations was $1,058,000 in the
first three months of 2000 as compared to $990,000 for the same period of 1999,
an increase of 6.87%. Expenses for the first three months of 2000 were $758,000
as compared to $682,000 in
<PAGE>
1999, an increase of 11.15%. The net income for the first three months of 2000
decreased by 2.60% from the 1999 period.
The 2000 Holiday Inn Express operations reflect a lower occupancy rate of
53.93% in the quarter ended March 31, 2000 as compared to a 63.35% rate in the
same period of 1999 primarily due to adverse winter weather conditions. The
average daily room rate increased by 0.48% in 2000 over the same period of 1999.
Income from the Holiday Inn Express operations was $501,000 in the first three
months of 2000 as compared to $537,000 for the same period of 1999, a decrease
of 6.71%. Expenses for the first three months of 2000 were $468,000 as compared
to $439,000 in 1999, an increase of 6.61%. The net income for the first three
months of 2000 decreased by 66.33% from the 1999 period.
Interest - Affiliates: Interest income for the first three months of 1999
----------------------
includes $173,000 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.
Reserve for Advances to Partnerships. During the first three months of
-------------------------------------
2000, Registrant expensed cash advances of $143,000 to a partnership operating
at a loss. In the first three months of 1999, Registrant expensed cash advances
of $6,000 to the same partnership.
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 three month period ended March 31, 2000, Registrant generated
cash flow from operating activities of $835,000. Cash flow from operating
activities was used in investing activities of $2,200,000, which consisted of
investments in U.S. Treasury instruments, municipal bonds and other activities
of $2,379,000, less proceeds of $179,000 related to investment in joint
ventures. The remaining cash flow from operating activities was used in
financing activities for the repayment of notes payable in the amount of $26,000
and the purchase of Treasury Stock in the amount of $95,000. Overall, cash flow
from operating, investing and financing resulted in a decrease of $1,486,000 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
<PAGE>
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 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 March 31,
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: May 9, 2000 /S/ Charles S. Bresler
----------- --------------------------------------
Charles S. Bresler,
Chief Executive Officer
Date: May 9, 2000 /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
3/31/00 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-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 13,381,000
<SECURITIES> 37,992,000
<RECEIVABLES> 6,873,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 64,555,000
<DEPRECIATION> 30,739,000
<TOTAL-ASSETS> 107,164,000
<CURRENT-LIABILITIES> 0
<BONDS> 5,028,000
0
0
<COMMON> 28,000
<OTHER-SE> 95,444,000
<TOTAL-LIABILITY-AND-EQUITY> 107,164,000
<SALES> 747,000
<TOTAL-REVENUES> 7,412,000
<CGS> 393,000
<TOTAL-COSTS> 393,000
<OTHER-EXPENSES> 3,393,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 108,000
<INCOME-PRETAX> 3,518,000
<INCOME-TAX> 1,379,000
<INCOME-CONTINUING> 2,139,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,139,000
<EPS-BASIC> 0.78
<EPS-DILUTED> 0.78
</TABLE>
