U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
Commission file number 0-2864
DIVERSIFIED REALTY, INC.
(Exact name of small business issuer as specified in its charter)
Montana 81-0268110
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
128 Second Street South, Great Falls, Montana 59405
(Address of principal executive offices)
(406) 727-2600
(Issuer's telephone number)
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (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.
Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court. Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Class Outstanding at June 30, 1997
No Par Value Common Stock 1,872,915 Shares
Transitional Small Business Disclosure Format (Check One): Yes ; No X
<PAGE>
DIVERSIFIED REALTY, INC.
INDEX
JUNE 30, 1997
Page Number
PART I
Condensed Financial Statements:
Balance Sheet
June 30, 1997 2
Statements of Income -
Six Months and Three Months Ended June 30, 1997 and 1996 3
Statements of Cash Flows -
Six Months Ended June 30, 1997 and 1996 4
Notes to Financial Statements 5
Management's Discussion and Analysis
of the Statements of Income 6
PART II
Other Information 7
Signatures 8
1
<PAGE>
DIVERSIFIED REALTY, INC.
BALANCE SHEET
AS OF JUNE 30, 1997
ASSETS
Current Assets
Cash $ 991,506
Receivables - Net 1,938
Due From Parent Company 2,000
Total Current Assets 995,444
Noncurrent Receivables 10,473
Property, Plant and Equipment, Net 268,863
TOTAL ASSETS $ 1,274,780
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Expenses $ 30,545
Income Taxes Payable 4,418
Total Current Liabilities 34,963
Stockholders' Equity
Common Stock - No Par Value, 5,000,000 shares
authorized, 1,875,000 shares issued 1,416,908
Accumulated Deficit (176,466)
Cost of Common Stock in Treasury (625)
Total Stockholders' Equity 1,239,817
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,274,780
See Notes to Financial Statements
2
<PAGE>
DIVERSIFIED REALTY, INC.
STATEMENTS OF INCOME
For The Three Months For the Six Months
Ended Ended
June 30, June 30,
1997 1996 1997 1996
Operating Revenues $ 31,045 $ 24,195 $ 64,564 $ 50,498
Operating Expenses 18,877 20,219 33,305 37,507
12,168 3,976 31,259 12,991
Income Tax Expense (2,800) 800 (7,000) (2,900)
Net Income $ 9,368 $ 4,776 $ 24,259 $ 10,091
Earnings Per Weighted
Average Shares Outstanding
(1,872,915 shares in 1997
and 1,874,704 shares
in 1996) $ .01 $ -- $ .01 $ .01
Dividends Per Share $ -- $ -- $ -- $ --
See Notes to Financial Statements
3
<PAGE>
DIVERSIFIED REALTY, INC.
STATEMENTS OF CASH FLOWS
For The Six Months Ended
June 30,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net Cash Provided By Operating
Activities $ 41,487 $ 23,378
CASH FLOWS FROM INVESTING ACTIVITIES
Cash Received on Principal of
Notes Receivable 906 834
Net Cash Provided By
Investing Activities 906 834
CASH FLOWS FROM FINANCING ACTIVITIES
Net Cash Received From (Advanced To)
Parent Company 1,200 (1,200)
Cash Purchases of Treasury Stock - (266)
Net Cash Provided (Used) By Financing
Activities 1,200 (1,466)
NET INCREASE IN CASH 43,593 22,746
CASH - BEGINNING OF PERIOD 947,913 614,560
CASH - END OF PERIOD $ 991,506 $ 637,306
See Notes to Financial Statements
4
<PAGE>
DIVERSIFIED REALTY, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
In the opinion of management, all adjustments necessary (consisting of only
normal recurring accruals) have been made to the unaudited financial
statements to present fairly the financial position as of June 30, 1997 and
the results of the Company's operations for the six months and three months
ended June 30, 1997 and 1996 and cash flows for the six months ended
June 30, 1997 and 1996.
The results of operations for the six months and three months ended
June 30, 1997 and 1996 are not necessarily indicative of the results to be
expected for the full year.
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
period.
Parent -
M Corp, Great Falls, Montana owns approximately 84% of the outstanding shares
of the Company.
5
<PAGE>
DIVERSIFIED REALTY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE INCOME STATEMENT
June 30, 1997
A summary of the period to period changes in items included in the statements
of income is shown below.
COMPARISON OF
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
1997 AND 1996 1997 AND 1996
<TABLE>
<S> <C> <C> <C> <C>
Revenues $ 6,850 28.3% $ 14,066 27.9%
Expenses (1,342) (6.6%) (4,202) (11.2%)
Net Income 4,582 96.1% 14,168 140.4%
</TABLE>
Revenues increased $14,066 (27.9%) in the first six months of 1997 as
compared with the first six months of 1996 due primarily to increases in
interest revenues ($10,335, 73.2%) and other revenues ($4,989). Interest
revenues increased primarily due to an increase in interest-earning deposits
maintained by the Company. Operating expenses decreased $4,202 (11.2%) in
the first six months of 1997 as compared with the first six months of 1996
with decreases in the provision for depreciation ($1,244, 15.1%) and
decreases in other operating expenses ($2,958, 1.0%). The decrease in other
operating expenses during the first six months of 1997 as compared with the
first six months of 1996 was due primarily to decreases in maintenance
expenses. The provision for income tax expense increased $4,100, 141.4%, in
the first six months of 1997 as compared with the first six months of 1996
due to the increase in pretax income.
6
<PAGE>
DIVERSIFIED REALTY, INC.
PART II
OTHER INFORMATION
JUNE 30, 1997
ITEM 1 LEGAL PROCEEDINGS
None
ITEM 2 CHANGES IN SECURITIES
None
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5 OTHER INFORMATION
None
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
None
7
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
DIVERSIFIED REALTY, INC.
Registrant
Date: July 28, 1997 s/K. King
K. King
Assistant
Secretary-Treasurer
Date: July 28, 1997 s/Jerry K. Mohland
Jerry K. Mohland
Accountant
8
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
unaudited financial statements contained in the Company's Form 10-QSB and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 991,506
<SECURITIES> 0
<RECEIVABLES> 1,938
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 995,444
<PP&E> 268,863
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,274,780
<CURRENT-LIABILITIES> 34,963
<BONDS> 0
<COMMON> 1,416,908
0
0
<OTHER-SE> (177,091)
<TOTAL-LIABILITY-AND-EQUITY> 1,274,780
<SALES> 0
<TOTAL-REVENUES> 64,564
<CGS> 0
<TOTAL-COSTS> 33,305
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 31,529
<INCOME-TAX> 7,000
<INCOME-CONTINUING> 24,259
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24,259
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
