U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
XX ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 0-2864
DIVERSIFIED REALTY, INC.
(Name of small business issuer in its charter)
Montana 81-0268110
(State or other jurisdiction
of incorporation or organization) (I.R.S. Employer Identification Number)
128 Second Street South, Great Falls, Montana 59405
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (406) 727-2600
Securities registered under Section 12(b) of the Exchange Act:
Title of Each Class Name of Each Exchange On Which Registered
NONE N/A
Securities registered under Section 12(g) of the Exchange Act:
Common Stock Without Par Value
(Title of class)
Check whether the issurer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the
past 90 days. YesXX No
Check, if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-KSB or any amendment to this Form 10KSB.
State issuer's revenues for its most recent fiscal year $131,756.
State the aggregate market value of the voting stock held by nonaffiliates
of the registrant. The aggregate market value shall be computed by
reference to the price at which the stock was sold, or the average bid and
asked prices of such stock, as of a specified date within the past 60 days.
(See definition of affiliate in Rule 12b-2 of the Exchange Act).
As of February 28, 1996, 299,710 shares held by nonaffiliates were
outstanding. The registrant's stock is not traded on any securities
exchange. To registrant's knowledge, neither bid nor asked quotations for
registrant's stock have appeared in any established quotation system
during the past sixty business days. To registrant's knowledge, neither bid
nor asked quotations for registrant's stock are reported in any newspapers
nor are records kept of any quotations by the National Quotation Bureau, Inc.
There exists no public market for registrant's stock.
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
1,875,000 shares no par value common stock are outstanding as
of February 28, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
DOCUMENTS FORM 10-KSB REFERENCE
Annual Report to Shareholders for Part I, Items 1 and 2
the year ended December 31, 1995. Part II, Items 5, 6 and 7
Part III, Item 12
Part IV, Item 13
Transitional Small Business Disclosure Format (check one): Yes ; No X .
<PAGE>
DIVERSIFIED REALTY, INC.
PART I
ITEM 1. DESCRIPTION OF BUSINESS AND
ITEM 2. DESCRIPTION OF PROPERTY
A description of the Company's business and property ownership is set forth
on Page 1 of Exhibit 13, the Annual Report to Shareholders for the year ended
December 31, 1995, which description is incorporated herein by reference.
ITEM 3. LEGAL PROCEEDINGS
No legal proceedings presently pending by or against Diversified Realty, Inc.
are described herein as management believes that the outcome of such
litigation should not have a material adverse effect on the financial
position of the Company taken as a whole.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of 1995.
I-1
1.
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DIVERSIFIED REALTY, INC.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
ITEM 7. FINANCIAL STATEMENTS
Items 5, 6 and 7 are set forth on Page 13, Pages 1 and 2 and Pages 3 to 12,
respectively, of Exhibit 13, the Annual Report to Shareholders for the year
ended December 31, 1995, which report is incorporated herein by reference.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been no disagreements concerning accounting principles or
practices or financial statement disclosures between the Company and the
Company's independent auditor during the two most recent years.
II-1
2.
<PAGE>
DIVERSIFIED REALTY, INC.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
The following are the directors and executive officers of the Company.
All directors and officers serve as such until the 1996 annual meeting of
shareholders or until their successors are elected and qualify.
NAME, AGE, AND YEAR ELECTED DIRECTOR POSITION
L. H. LaValley, 31, 1991 President and Director
S. M. McCann, 32, 1990 Director
Charles E. Reed, 78, 1974 Vice President and Director
L.H. LaValley is a director of UAC, Inc., an affiliate of the Company and
a director of M Corp, the Company's parent company. S. M. McCann is the
president and a director of TSI, Inc., an affiliate of the Company,
the president and a director of M Corp and a director of GNI, Inc.
(parent company of M Corp).
Family Relationships
S. M. McCann is the daughter of Anne Marie and Paul J. McCann.
Members of the Anne Marie and Paul J. McCann family control a majority of
the common stock of M Corp. Anne Marie McCann and Paul J. McCann each
disclaim beneficial ownership of any shares of stock not owned of record
directly by them. Anne Marie and Paul J. McCann do not personally own any
stock of the Company.
Following are the executive officers of the Company and a description of
their principal business experience.
Name and Position Business Experience During Past 5 Years
L. H. LaValley Vice President
President TranSecurities International, Inc.
Spokane, Washington
S. M. McCann Attorney at Law, Investor
Vice-President San Luis Obispo, California
and Director
Charles E. Reed President, Continental Realty and Escrow,
Butte, Montana.
Based solely on its review of reports of persons subject to Section 16 of
the Securities and Exchange Act, the Company believes that required reports
were filed in a timely manner disclosing transactions involving the
Company's common stock.
III-1
3.
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DIVERSIFIED REALTY, INC.
ITEM 10. EXECUTIVE COMPENSATION
Summary Compensation Table. The following table shows the cash compensation
paid by the Company to its President and Chief Executive Officer for 1995,
1994 and 1993. No officer or director of the Company received total cash
compensation exceeding $100,000 for 1995, 1994 or 1993.
Summary Compensation Table
Name and Calendar Total Cash
Principal Position Year Compensation
L.H. LaValley 1995 $ 0
President, Director 1994 $ 250
and Chief Executive 1993 $ 100
Officer
The Company has no pension plan, no stock option or stock appreciation right
plans and no long-term incentive plans and there was no other material
compensation paid during the years ended December 31, 1995, 1994 and 1993.
The Company has not adopted a formal plan for the compensation of directors.
During 1995 the Company paid a total of $250 for directors fees.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners
Set forth below is certain information concerning persons who are known by
the Company to own beneficially more than 5% of the Company's voting shares
on February 28, 1996.
Title of Class No Par Value
Common Stock
Name and Address M Corp
of Beneficial Owner 110 Second Street South
Great Falls, Montana
Amount and Nature 1,572,257 (1)
of Beneficial Direct
Ownership
Percent 83.9%
of Class
(1) Members of the Anne Marie and Paul J. McCann family own indirectly a
majority of the outstanding stock of M Corp, which company owns 1,572,257
shares (83.9%) of the outstanding common stock of the Company. Members of
the Anne Marie and Paul J. McCann family own directly 3,033 shares (.2%)
of the Company's stock. Anne Marie and Paul J. McCann, parents of S. M.
McCann, each disclaim beneficial ownership of any shares of stock not owned
of record directly by them. Neither Anne Marie nor Paul J. McCann personally
own any shares of stock in the Company.
III-2
4.
<PAGE>
DIVERSIFIED REALTY, INC.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT -
Continued
(b) Security Ownership of Management
The following table sets forth as of February 28, 1996, information concerning
the beneficial ownership of the Company's common stock by each director, each
executive officer named in the Company's Summary Compensation Table and by
all directors and executive officers of the Company as a group:
Amount and Nature
Name of of Beneficial
Beneficial Owner Ownership Percent
Charles E. Reed 20 Direct -
L. H. LaValley - -
S. M. McCann -(1) -
All Directors and Officers
as a Group 20 (1) -
(1) See Note (1) Item 11(a) on preceding page.
(c) Changes In Control
The Company knows of no contractual arrangements which may at a subsequent
date result in a change in control of the Company.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with the Company's parent company, M Corp and its other
subsidiaries, are disclosed in Note 6 of the notes to financial statements
in the Annual Report to Shareholders for the year ended December 31, 1995,
which note is incorporated herein by reference. M Corp owns approximately
83.9% of the Company's outstanding common stock.
III-3
5.
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DIVERSIFIED REALTY, INC.
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
No. 13 - Diversified Realty, Inc., Annual Report to Shareholders for the
year ended December 31, 1995, incorporated by reference in this Annual Report
on Form 10-KSB.
No. 27 - Financial Data Schedule
(b) Reports on Form 8-K
No Current Reports on Form 8-K were filed by the Company during the three
months ended December 31, 1995.
IV-1
6.
<PAGE>
DIVERSIFIED REALTY, INC.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
DIVERSIFIED REALTY, INC.
Date: February 28, 1996 By:s/L. H. LaValley
L. H. LaValley, President
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities indicated
on February 28, 1996.
Director s/L. H. LaValley
L. H. LaValley
Director s/S. M. McCann
S. M. McCann
Principal Accountant s/Jerry K. Mohland
Jerry K. Mohland
IV-2
7.
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DIVERSIFIED REALTY, INC.
ANNUAL REPORT
1995
<PAGE>
DIVERSIFIED REALTY, INC.
ANNUAL REPORT
DESCRIPTION AND LINES OF BUSINESS
Diversified Realty, Inc. (herein referred to as "DRI" or the "Company") is a
majority-owned subsidiary of M Corp, a financial holding company. As of
December 31, 1995, M Corp owned approximately eighty-four percent of the
outstanding common stock of the Company.
For the past several years, the Company has been primarily engaged in the
ownership and rental of real property. As of December 31, 1995, DRI owned
property in Florida and Montana.
Information as of December 31, 1995, concerning the gross carrying amount of
real property, accumulated depreciation and encumbrances on a property by
property basis is presented in Note 9, Investments in Real Estate, of the
Notes to Financial Statements.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Net income increased $13,392 (54.2%) in 1995 as compared with 1994. The
increase in net income in 1995 as compared with 1994 was due in part to an
increase in revenues and in part to a decrease in expenses.
Rent income increased $2,191 (3.0%) in 1995 as compared with 1994 due primarily
to a decrease in vacancies and an increase in rental rates. Interest income
increased $3,235 (6.1%) in 1995 as compared with 1994. The increase in interest
income in 1995 as compared with 1994 was due in part to an increase in interest-
bearing deposits and in part to an increase in rates earned on interest-bearing
deposits. During 1995 and 1994 the Company charged its parent company interest
1
<PAGE>
DIVERSIFIED REALTY, INC.
ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - CONTINUED
in the amounts of $27,031 and $32,613 respectively. Transactions with the
Company's parent company and its affiliates during 1995 and 1994 are disclosed
in Note 6, Related Party Transactions, of the Notes to Financial Statements.
Operating expenses in total, decreased $15,227 (17.1%) in 1995 as compared with
1994. Maintenance expenses decreased $6,452 (20.0%) in 1995 as compared with
1994 due primarily to decreases in maintenance costs. The provision for
depreciation decreased $6,445 (23.5%) in 1995 as compared with 1994 due to some
of the Company's assets being fully depreciated during 1995 and 1994.
Income tax expense increased $6,948 (53.2%) in 1995 as compared with 1994 due to
the decrease in pre-tax income. The Company files a consolidated income tax
return with the Company's parent company and other affiliated companies.
Although there are no present plans with respect thereto, the Company is
involved in an ongoing basis in examining and investigating investment
opportunities available to the Company which could possibly result in a
change in the liquidity of the Company. However, the Company knows of no
existing trends, demands, commitments, events or uncertainties not otherwise
mentioned herein that could result in a material change in the Company's
liquidity. The Company knows of no material trends, favorable or unfavorable,
in the Company's capital resources.
2
<PAGE>
DIVERSIFIED REALTY, INC.
FINANCIAL REPORT
DECEMBER 31, 1995
CONTENTS
PAGE
AUDITOR'S REPORT 4
FINANCIAL STATEMENTS
Balance Sheets as of December 31, 1995 and 1994 5
Statements of Income and Accumulated Deficit for
the Years Ended December 31, 1995 and 1994 6
Statements of Cash Flows for the Years
Ended December 31, 1995 and 1994 7-8
Notes to Financial Statements 9-12
OTHER INFORMATION 13
3
<PAGE>
Report of Independent Auditors
To The Board of Directors
Diversified Realty, Inc.
Great Falls, MT 59405
We have audited the accompanying balance sheets of Diversified Realty, Inc.,
as of December 31, 1995 and 1994 and the related statements of income and
accumulated deficit and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsiblity is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Diversified Realty, Inc.,
as of December 31, 1995 and 1994 and the results of its operations and its
cash flows for the years then ended, in conformity with generally accepted
accounting principles.
DWYER & KEITH, CPA's, P.C.
March 7, 1996
Great Falls, Montana
4
<PAGE>
DIVERSIFIED REALTY, INC.
BALANCE SHEETS
DECEMBER 31, 1995 and 1994
1995 1994
ASSETS
Current Assets
Cash (Note 2) $ 614,560 $ 558,236
Investment Securities (Note 3) 6 6
Current Portion of Contract Receivable 1,703 1,548
Due from Parent Company 306,225 301,544
Total Current Assets 922,494 861,334
Long-Term Contract Receivable, Less Current
Portion Included Above (Note 4) 13,316 15,011
Investments in Property and Property, Plant
and Equipment (Notes 1 and 9)
Land 14,261 14,261
Buildings 392,975 392,975
Furniture, Fixtures and Equipment 71,124 71,124
478,360 478,360
Less Accumulated Depreciation (183,870) (162,931)
294,490 315,429
Total Assets $ 1,230,300 $ 1,191,774
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities-
Accrued Liabilities $ 7,372 $ 6,968
Stockholders' Equity
Common Stock - No Par Value,
5,000,000 shares authorized,
1,875,000 shares issued and
outstanding 1,416,908 1,416,908
Accumulated Deficit (193,980) (232,102)
Total Stockholder's Equity 1,222,928 1,184,806
Total Liabilities and
Stockholders' Equity $ 1,230,300 $ 1,191,774
See Notes to Financial Statements.
5
<PAGE>
DIVERSIFIED REALTY, INC.
STATEMENTS OF INCOME AND ACCUMULATED DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 1995 and 1994
1995 1994
Income
Rent $ 75,091 $ 72,900
Interest 56,600 53,365
Other 65 378
131,756 126,643
Expenses
Maintenance 25,747 32,199
Depreciation 20,939 27,384
Property Taxes and Licenses 15,254 15,008
Insurance 2,997 2,662
Travel 2,886 3,387
Legal, Accounting and
Advisory Fees 2,164 2,000
Office Supplies and Postage 1,996 3,417
Telephone 652 375
Directors Fees 250 250
Salaries and Payroll Costs 214 294
Interest 2
Other 535 1,883
73,634 88,861
Income Before Income Taxes 58,122 37,782
Income Taxes (Notes 1 and 5) (20,000) (13,052)
NET INCOME 38,122 24,730
Accumulated Deficit, Beginning of Year (232,102) (256,832)
Accumulated Deficit, End of Year $ (193,980) $ (232,102)
NET INCOME PER COMMON SHARE (Note 1)
NET INCOME PER SHARE $ .02 $ .01
See Notes to Financial Statements.
6
<PAGE>
DIVERSIFIED REALTY, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995 and 1994
INCREASE (DECREASE) IN CASH
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash Received From Customers $ 75,606 $ 73,028
Cash Paid to Suppliers and Employees (52,741) (61,216)
Interest Received in Cash 56,600 53,365
Income Tax Payments Made
in Cash (20,000) (13,052)
Interest Paid in Cash - (2)
Net Cash Provided By
Operating Activities 59,465 52,123
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures Paid in Cash - (1,632)
Cash Received on Principal of
Notes Receivable 1,540 47,870
Net Cash Provided By
Investing Activities 1,540 46,238
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Cash Advances to Parent Company (4,681) (24,473)
Net Cash Used By
Financing Activities (4,681) (24,473)
NET INCREASE IN CASH 56,324 73,888
CASH - BEGINNING OF YEAR 558,236 484,348
CASH - END OF YEAR $ 614,560 $ 558,236
(Continued)
7
<PAGE>
DIVERSIFIED REALTY, INC.
STATEMENTS OF CASH FLOWS - Continued
FOR THE YEARS ENDED DECEMBER 31, 1995 and 1994
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED
BY OPERATING ACTIVITIES
1995 1994
Net Income $ 38,122 $ 24,730
Adjustments to Reconcile Net Income to Net
Cash Provided By Operating Activities
Depreciation 20,939 27,384
Changes in Operating Assets and Liabilities
Increase in Accrued Liabilities 404 9
NET CASH PROVIDED BY OPERATING
ACTIVITIES $ 59,465 $ 52,123
See Notes to Financial Statements.
8
<PAGE>
DIVERSIFIED REALTY, INC.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Depreciation
Depreciation for the various classifications of rental property, plant and
equipment is computed using the straight-line and accelerated methods over the
estimated useful lives of the assets as follows:
Buildings 15 - 27 Years
Furniture, Fixtures and Equipment 3 - 10 Years
(b) Earnings Per Share
The computation of earnings per share in the accompanying statements is based
on the weighted average number of shares outstanding during each year
(1,875,000 shares, each year).
(c) Income Taxes
The Company files a consolidated income tax return with its parent company.
Income taxes are allocated to the Company based upon the ratio of the
Company's pre-tax income to total consolidated pre-tax income.
(d) Policy of Cash Equivalents
For the purposes of the statement of cash flows, cash equivalents include time
deposits, certificates of deposit and money market accounts, all with original
maturities of three months or less.
(e) Reclassifications
Certain reclassifications have been made to the prior year amounts to make
them comparable to the 1995 presentation. These changes had no impact on
previously reported results of operations or shareholders' equity.
2. CONCENTRATED CASH BALANCES
The Company maintains accounts with various stock brokerage firms. The
accounts contain cash and securities. Cash balances are insured up to
$100,000 by the Securities Investor Protection Corporation ("SIPC").
At December 31, 1995, a cash balance totalling $494,328 was uninsured by the
SIPC.
3. INVESTMENT SECURITIES
The Company adopted Statement of Financial Accounting Standards No. 115
("SFAS 115"), "Accounting For Investments in Certain Debt and Equity
Securities" effective January 1, 1994. In accordance with SFAS No. 115, the
Company has classified its investment as a trading security.
9
<PAGE>
DIVERSIFIED REALTY, INC.
NOTES TO FINANCIAL STATEMENTS - (Continued)
3. INVESTMENT SECURITIES-Continued
Following is a summary of investment securities classified as trading
securities:
1995 1994
Equity Security, at Cost $ 250 $ 250
Gross Unrealized Holding Loss (244) (244)
Fair Value and Carrying Value $ 6 $ 6
The statements of income for the years ended December 31, 1995 and 1994
contain no net realized gains or losses on the disposition of investment
securities. The statements of income for the years ended December 31, 1995
and 1994 do not include any provision for unrealized gains or losses.
4. CONTRACT RECEIVABLE
Contract receivable at December 31 consists of the following:
1995 1994
9% Contract For Deed, due in monthly
installments of $248 including interest to
September, 2002 $ 15,019 $ 16,559
Less Current Portion 1,703 1,548
Long-Term Contract Receivable $ 13,316 $ 15,011
The above contract receivable is secured by real property, the sale of which
resulted in the receivable. In the event the receivable becomes uncollectible
and the underlying collateral is completely worthless, the Company would
incur a loss in the amount of the receivable.
5. INCOME TAXES
Income tax expense consists of the following, all currently payable:
1995 1994
U.S. Income Taxes $ 19,950 $ 13,000
State Income Taxes 50 52
$ 20,000 $ 13,052
10
<PAGE>
DIVERSIFIED REALTY, INC.
NOTES TO FINANCIAL STATEMENTS - Continued
5. INCOME TAXES-Continued
The income tax expense reflected in the financial statements differs from the
amounts that would normally be expected by applying the U.S. Federal income
tax rates to income before income taxes. The reasons for these differences
are as follows:
1995 1994
Computed "Expected" Tax Expense $ 19,800 $ 12,800
Other 200 252
$ 20,000 $ 13,052
6. RELATED PARTY TRANSACTIONS
During 1995 and 1994 the Company received managerial assistance from its
parent company at no cost to the Company. In addition, the Company has had
transactions with its parent company or subsidiaries of its parent company,
as follows:
1995 1994
Net Cash Transfers To Parent $ - $ 7,260
Income Tax Allocation (19,950) (13,000)
Was Charged For Insurance (2,400) (2,400)
Charged Interest To Parent 27,031 32,613
7. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in estimating
its fair value disclosure for financial instruments. The carrying amounts
reported in the balance sheet for cash and the receivable from the Company's
parent company approximate those assets' fair value. Fair value for investment
securities is based on quoted market prices. The Company believes that the
fair value of its contract receivable, which has a stated interest rate of
9.0 %, approximates carrying value due to the credit risk involved.
8. NATURE OF OPERATIONS, RISKS AND UNCERTAINTIES
The Company is engaged in the ownership and rental of properties located
primarily in Yellowstone County, Montana.
The process of preparing financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
that affect the reported amounts of certain types of assets, liabilities,
revenues and expenses. Such estimates primarily relate to unsettled
transactions and events as of the date of the financial statements. Actual
results could differ from those estimates.
11
<PAGE>
DIVERSIFIED REALTY, INC.
NOTES TO FINANCIAL STATEMENTS - Continued
<TABLE>
<CAPTION>
9. INVESTMENTS IN REAL ESTATE
INITIAL COST TO COMPANY AND GROSS ESTIMATED LIFE
AMOUNT CARRIED ON BALANCE SHEET USED IN
AT DECEMBER 31, 1995 COMPUTING
ENCUM- ACCUMULATED DATE DATE DEPRECIATION
DESCRIPTION BRANCES LAND BUILDING TOTAL DEPRECIATION OF CONSTRUCTION ACQUIRED (YEARS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment
Property $ - $ - $122,000 $122,000 $ 21,996 1988 1991 27
Florida
Rental Units
Florida - 1,500 46,950 48,450 43,668 1975 1982 15-27
Rental Units
Montana - - 224,025 224,025 49,203 Var Var 27
Miscellaneous
Properties - 12,761 - 12,761 -
Totals $ - $14,261 $392,975 $407,236 $114,867
</TABLE>
Reconciliations Of Total Real Estate Carrying Value For The Two Years Ended
December 31, 1995 are as follows:
1995 1994
Balance, Beginning of Year $407,236 $407,236
Add Acquisitions, at Cost -- --
Less Cost of Property Recovered or Sold -- --
Balance, End of Year $407,236 $407,236
Reconciliations Of Accumulated Depreciation For The Two Years Ended
December 31, 1995 are as follows:
1995 1994
Balance, Beginning of Year $ 99,939 $ 85,011
Add Provision for Depreciation 14,928 14,928
Less Properties Sold During Year -- --
Balance, End of Year $114,867 $ 99,939
12
<PAGE>
DIVERSIFIED REALTY, INC.
DIRECTORS AND OFFICERS
NAME OCCUPATION
L. H. LaValley Vice-President, TranSecurities
President and International, Inc.
Director Spokane, Washington
S. M. McCann Attorney at Law, Investor,
Director San Luis Obispo, California
Charles E. Reed Real Estate Broker,
Vice President Butte, Montana
and Director
MARKET INFORMATION
The common stock of Diversified Realty, Inc. is not traded on any securities
exchange, nor are records kept of any quotations by securities dealers or the
National Quotation Bureau, Inc. To the best knowledge of the Company, bid and
asked quotations for Diversified Realty, Inc., common stock are not reported
in any newspapers.
No dividends were paid in 1995 or 1994.
There are approximately 2,270 holders of record of the Company's common stock.
A copy of the Form 10-KSB Annual Report may be obtained upon written request
to the Company.
DIVERSIFIED REALTY, INC.
P.O. Box 2249
110 Second Street South
Great Falls, MT 59403-2249
13
<PAGE>
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<ARTICLE> 5
<C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 614560
<SECURITIES> 6
<RECEIVABLES> 307928
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 922494
<PP&E> 478360
<DEPRECIATION> 183870
<TOTAL-ASSETS> 1230300
<CURRENT-LIABILITIES> 7372
<BONDS> 0
0
0
<COMMON> 1416908
<OTHER-SE> (193980)
<TOTAL-LIABILITY-AND-EQUITY> 1230300
<SALES> 0
<TOTAL-REVENUES> 131756
<CGS> 0
<TOTAL-COSTS> 0
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