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 September 30, 1999
[ ] 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
(State or other jurisdiction of incorporation or organization)
81-0268110
(IRS Employer Identification No.)
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 September 30, 1999
$.10 Par Value Common Stock 5,370,969 Shares
Transitional Small Business Disclosure Format (Check One): Yes No X
<PAGE>
DIVERSIFIED REALTY, INC.
INDEX
SEPTEMBER 30, 1999
Page Number
PART I
Condensed Financial Statements:
Balance Sheet
September 30, 1999 2
Statements of Income -
Three Months and Nine Months Ended
September 30, 1999 and 1998 3
Statements of Cash Flows -
Nine Months Ended September 30, 1999 and 1998 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 SEPTEMBER 30, 1999
ASSETS
Current Assets
Cash $ 2,178,314
Due From Parent Company 34,427
Total Current Assets 2,212,741
Property, Plant and Equipment, Net 232,963
TOTAL ASSETS $ 2,445,704
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Expenses $ 35,520
Income Taxes Payable 11,568
Total Current Liabilities 47,088
Stockholders' Equity
Common Stock, $.10 Par Value,
11,000,000 shares authorized,
5,375,000 shares issued 537,500
Additional Paid-In-Capital 1,929,408
Accumulated Deficit (67,083)
Cost of Common Stock in Treasury (1,209)
Total Stockholders' Equity 2,398,616
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,445,704
See Notes to Financial Statements
2
<PAGE>
<TABLE>
DIVERSIFIED REALTY, INC.
<CAPTION>
STATEMENTS OF INCOME
For The Three For The Nine
Months Months
Ended Ended
September 30, September 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Operating Revenues $ 44,100 $ 42,342 $135,055 $124,547
Operating Expenses 16,352 17,908 50,837 52,331
27,748 24,434 84,218 72,216
Provision for Income Taxes (10,400) (10,000) (34,400) (30,000)
Net Income $ 17,348 $ 14,434 $ 49,818 $ 42,216
</TABLE>
See Notes to Financial Statements
3
<PAGE>
DIVERSIFIED REALTY, INC.
STATEMENTS OF CASH FLOWS
For The Nine
Months Ended
September 30,
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net Cash Provided By Operating
Activities $ 78,191 $ 57,637
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures Paid In Cash (721) -
Cash Received on Redemption
of Property and Equipment 5,210
Cash Received on Principal of
Notes Receivable - 11,466
Net Cash Provided (Used) By Investing Activities (721) 16,676
CASH FLOWS FROM FINANCING ACTIVITIES
Cash Purchases of Treasury Stock (578) -
Net Cash Advances From (To) Parent Company (31,427) (242,200)
Net Cash (Used) By
Financing Activities (32,005) (242,200)
NET INCREASE (DECREASE) IN CASH 45,465 (167,887)
CASH - BEGINNING OF PERIOD 2,132,849 2,065,193
CASH - END OF PERIOD $2,178,314 $1,897,306
See Notes to Financial Statements
4
<PAGE>
DIVERSIFIED REALTY, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
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 September 30, 1999
and the results of the Company's operations for the three months and nine
months ended September 30, 1999 and 1998 and cash flows for the nine months
ended September 30, 1999 and 1998.
The results of operations for the three months and nine months ended
September 30, 1999 and 1998 are not necessarily indicative of the results to
be expected for the full year.
Parent -
M Corp, Great Falls, Montana owns approximately 95% of the outstanding
shares of the Company.
5
<PAGE>
DIVERSIFIED REALTY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE INCOME STATEMENT
SEPTEMBER 30, 1999
A summary of the period to period changes in items included in the
statements of income is shown below.
COMPARISON OF
THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 AND 1998 1999 AND 1998
INCREASES (DECREASES)
Revenues $ 1,758 4.2% $ 10,508 8.4%
Expenses (1,556) (8.7%) (1,494) (2.9%)
Net Income 2,914 20.1% 7,602 18.0%
Revenues increased $10,508 (8.6%) in the first nine months of 1999 as
compared with the first nine months of 1998 due primarily to increases in
rental revenues ($2,597, 4.7%), interest revenues ($3,060, 4.4%) and other
income ($4,851, 257.3%). Interest revenues increased primarily due to an
increase in interest-earning deposits maintained by the Company. Operating
expenses decreased $1,494, (2.9%) in the first nine months of 1999 as
compared with the first nine months of 1998. The provision for income tax
expense increased $4,400, 14.7%, in the first nine months of 1999 as
compared with the first nine months of 1998 due primarily to the increase
in pretax income.
6
<PAGE>
DIVERSIFIED REALTY, INC.
PART II
OTHER INFORMATION
SEPTEMBER 30, 1999
ITEM 1 LEGAL PROCEEDINGS
None
ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDS
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>
DIVERSIFIED REALTY, INC.
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: October 29, 1999 s/S. C. Lee
S. C. Lee, Assistant
Secretary-Treasurer
Date: October 29, 1999 s/Jerry K. Mohland
Jerry K. Mohland,
Accountant
8
<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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 2,178,314
<SECURITIES> 0
<RECEIVABLES> 34,427
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,212,741
<PP&E> 232,963
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,445,704
<CURRENT-LIABILITIES> 47,088
<BONDS> 0
<COMMON> 537,500
0
0
<OTHER-SE> 1,861,116
<TOTAL-LIABILITY-AND-EQUITY> 2,445,704
<SALES> 0
<TOTAL-REVENUES> 135,055
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 50,837
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 49,818
<INCOME-TAX> 34,400
<INCOME-CONTINUING> 49,818
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 49,818
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
