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
For the fiscal year ended December 31, 1999
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
Commission file number 0-2864
DIVERSIFIED REALTY, INC.
(Name of small business issuer in its charter)
Montana
(State or other jurisdiction 81-0268110
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: None
Securities registered under Section 12(g) of the Exchange Act:
$.10 Par Value Common Stock
(Title of class)
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 XX 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 $229,850.
State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was sold, or the average bid and asked price of such common equity, 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 29, 2000, 291,186 shares held by nonaffiliates were
outstanding. The registrant's stock is not traded on any securities
exchange. To registrant's knowledge, bid and asked quotations for
registrant's stock are not reported in any newspapers nor are records kept
of any quotations by securities dealers or the National Quotation Bureau,
Inc. There exists no public market for registrant's common 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.
5,370,947 shares $.10 par value common stock are outstanding as
of February 29, 2000.
DOCUMENTS INCORPORATED BY REFERENCE
If the following documents are incorporated by reference, briefly describe
them and identify the part of the form 10-KSB (e.g., Part I, Part II, etc.)
into which the documents are incorporated: (1) any annual report to security
holders: (2) any proxy or information statement; and (3) any prospectus
filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933
("Securities Act"). The listed documents should be clearly described for
identification.
DOCUMENTS FORM 10-KSB REFERENCE
Annual Report to Shareholders for Part I, Items 1 and 2
the year ended December 31, 1999. 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, 1999, 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 1999.
I-1
1.
<PAGE>
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, 1999, 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 2000 annual meeting of
shareholders or until their successors are elected and qualify.
NAME, AGE, AND YEAR ELECTED DIRECTOR POSITION
S. M. McCann 36, 1990 Director
Lee Arneson 22, 1999 Director
M. A. Arneson 44, 1997 Director
R. Bruce Robson 58, President
S. M. McCann is the president and a director of UAC, Inc., an affiliate of
the Company, and the president and a director of M Corp. M. A. Arneson is a
director of TSI, Inc. and UAC, Inc.
Family Relationships
S. M. McCann and M. A. Arneson are children of Anne Marie and Paul J. McCann
and Lee Arneson is a daughter of M. A. Arneson. 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
R. Bruce Robson Data Processing Manager
President Sletten Construction Co.
Great Falls, Montana
Lee Arneson Investor,
Secretary- Treasurer Billings, Montana
S. M. McCann Attorney at Law, Business Owner, Investor
San Luis Obispo, California
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.
<PAGE>
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 1999,
1998 and 1997. No officer or director of the Company received cash
compensation exceeding $250 during 1999, 1998 or 1997.
Summary Compensation Table
Name of individual Calendar Total Cash
and Position Year Compensation
R. Bruce Robson 1999 $ -
President 1998 $ -
M. A. Arneson 1997 $ -
President, Director
The Company has no pension plan, no stock option or stock appreciation rights
plans and no long-term incentive plans and there was no other material
compensation paid during the years ended December 31, 1999, 1998 and 1997.
The Company has not adopted a formal plan for the compensation of directors.
During 1999 the Company did not pay directors fees to any director.
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 29, 2000.
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 5,076,708 (1)
of Beneficial Direct
Ownership
Percent 94.5%
of Class
(1) S. M. McCann, M. A. Arneson, Lee Arneson and other members of the Anne
Marie and Paul J. McCann family own directly or indirectly a majority of the
outstanding stock of M Corp, which company owns 5,076,708 shares (94.5%) of
the outstanding common stock of the Company. Members of the Anne Marie and
Paul J. McCann family own directly 3,033 shares (.06%) of the Company's stock.
Anne Marie and Paul J. McCann, parents of S. M. McCann and M. A. Arneson and
grandparents of Lee Arneson, 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 29, 2000, 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
Lee Arneson - (1) -
M. A. Arneson - (1) -
R. Bruce Robson - -
S. M. McCann - (1) -
All Directors and Officers
as a Group - (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 4 of the notes to financial statements
in the Annual Report to Shareholders for the year ended December 31, 1999,
which note is incorporated herein by reference. M Corp owns approximately
94.5% of the Company's outstanding common stock.
III-3
5.
<PAGE>
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, 1999, 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, 1999.
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 29, 2000 By:s/R. Bruce Robson
R. Bruce Robson, 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 29, 2000.
Director s/M. A. Arneson
M. A. Arneson
Director s/S. M. McCann
S. M. McCann
Principal Accountant s/Jerry K. Mohland
Jerry K. Mohland
IV-2
7.
<PAGE>
DIVERSIFIED REALTY, INC.
ANNUAL REPORT
1999
<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, 1999, M Corp owned approximately ninety-four percent of the
outstanding common stock of the Company.
The Company is primarily engaged in the ownership and rental of real
property.
Information as of December 31, 1999, concerning the gross carrying amount of
real property, accumulated depreciation and encumbrances on a property by
property basis is presented in Note 5, 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 $41,960, 74.7%, in 1999 as compared with 1998.
The increase in net income in 1999 as compared with 1998 was due primarily
to a gain realized on the sale of property during 1999.
During 1999 the Company sold one rental unit at a gain of $48,250. The
gain is included in other income in the Company's Statements of Income.
No such gains were realized during 1998.
1
<PAGE>
DIVERSIFIED REALTY, INC.
ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - CONTINUED
Rent income increased $3,562, 4.8%, in 1999 as compared with 1998
primarily because of a decrease in vacancies. Interest income increased
$7,379, 8.1%, in 1999 as compared with 1998. The increase in interest
income in 1999 as compared with 1998 was primarily due to an increase
in interest-bearing deposits.
Total operating expenses decreased $2,350, 3.2%, in 1999 as compared
with 1998. Property taxes and licenses increased $560, 3.5%, in 1999
as compared with 1998 due to an increase in the rates of such taxes.
Other expenses decreased $4,143, 9.6%, in 1999 as compared with 1998
primarily due to decreases in travel and professional fees expenses.
Income tax expense increased $24,500, 67.1%, in 1999 as compared with
1998 due to the increase in pre-tax income. The Company files a
consolidated federal income tax return with the Company's parent company
and other affiliates.
Transactions with the Company's parent company and its affiliates during
1999 and 1998 are disclosed in Note 4, Related Party Transactions, of the
Notes to Financial Statements.
The Company is considering acquisitions which would deplete the Company's
available cash and thus affect the liquidity of the Company.
2
<PAGE>
DIVERSIFIED REALTY, INC.
FINANCIAL REPORT
DECEMBER 31, 1999
CONTENTS
PAGE
AUDITOR'S REPORT 4
FINANCIAL STATEMENTS
Balance Sheets as of December 31, 1999 and 1998 5
Statements of Income for the Years Ended
December 31, 1999 and 1998 6
Statements of Stockholders' Equity for the
Years Ended December 31, 1999 and 1998 7
Statements of Cash Flows for the Years
Ended December 31, 1999 and 1998 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, 1999 and 1998 and the related statements of income,
stockholders' equity 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, 1999 and 1998 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 27, 2000
Great Falls, Montana
4
<PAGE>
DIVERSIFIED REALTY, INC.
BALANCE SHEETS
DECEMBER 31, 1999 and 1998
1999 1998
ASSETS
Current Assets
Cash (Note 2) $ 2,220,920 $ 2,132,849
Income Tax Prepayments - 82
Due From Parent Company 27,158 3,000
Total Current Assets 2,248,078 2,135,931
Investments in Property, Plant and
Equipment (Notes 1 and 5)
Land 12,761 14,261
Buildings 340,815 387,765
Furniture, Fixtures and Equipment 71,845 71,124
425,421 473,150
Less Accumulated Depreciation (197,864) (230,458)
Net Property, Plant and Equipment 227,557 242,692
Total Assets $ 2,475,635 $ 2,378,623
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities-
Accrued Expenses $ 28,568 $ 29,247
Income Taxes 168 -
Total Current Liabilities 28,736 29,247
Stockholders' Equity
Common Stock - $.10 Par Value,
11,000,000 shares authorized,
5,375,000 shares issued 537,500 537,500
Capital Surplus 1,929,408 1,929,408
Accumulated Deficit (18,799) (116,901)
Cost of Common Stock in Treasury
(4,032 shares in 1999
and 2,105 shares in 1998) (1,210) (631)
Total Stockholder's Equity 2,446,899 2,349,376
Total Liabilities and
Stockholders' Equity $ 2,475,635 $ 2,378,623
See Notes to Financial Statements.
5
<PAGE>
DIVERSIFIED REALTY, INC.
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1999 and 1998
1999 1998
Income
Rent $ 77,513 $ 73,951
Interest 99,013 91,634
Other 53,324 155
229,850 165,740
Expenses
Salaries and Payroll Costs 1,033 197
Property Taxes and Licenses 16,448 15,888
Depreciation 14,356 13,959
Other Expenses 38,911 43,054
70,748 73,098
Income Before Income Taxes 159,102 92,642
Income Taxes (Notes 1 and 3) (61,000) (36,500)
NET INCOME $ 98,102 $ 56,142
See Notes to Financial Statements.
6
<PAGE>
DIVERSIFIED REALTY, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999 and 1998
<TABLE>
<S> <C> <C> <C> <C> <C>
Common Capital Accumulated Treasury
Stock Surplus Deficit Stock Total
Balances, January 1, 1998 $537,500 $1,929,408 $(173,043) $ (631) $2,293,234
Net Income 56,142 56,142
Balances, December 31, 1998 537,500 1,929,408 (116,901) (631) 2,349,376
Net Income 98,102 98,102
Purchase Treasury Stock (579) (579)
Balances, December 31, 1999 $537,500 $1,929,408 $ (18,799) $(1,210) $2,446,899
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
DIVERSIFIED REALTY, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 and 1998
INCREASE (DECREASE) IN CASH
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash Received From Customers $ 82,142 $ 73,806
Cash Paid to Suppliers and Employees (56,626) (58,860)
Interest Received in Cash 99,013 91,634
Income Taxes Paid in Cash (60,750) (36,400)
Net Cash Provided By
Operating Activities 63,779 70,180
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash Proceeds From Sales and Redemptions
of Property and Equipment 49,750 5,210
Cash Purchase of Equipment (721) -
Cash Received on Principal of
Notes Receivable - 11,466
Net Cash Provided By
Investing Activities 49,029 16,676
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash Purchases of Treasury Stock (579) -
Net Cash Advances From (To) Parent Company (24,158) (19,200)
Net Cash (Used) By
Financing Activities (24,737) (19,200)
NET INCREASE IN CASH 88,071 67,656
CASH - BEGINNING OF YEAR 2,132,849 2,065,193
CASH - END OF YEAR $2,220,920 $2,132,849
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED
BY OPERATING ACTIVITIES
Net Income (Loss) $ 98,102 $ 56,142
Adjustments to Reconcile Net Income to Net
Cash Provided By Operating Activities
Depreciation 14,356 13,959
Gain on Sale of Property,
Plant and Equipment (48,250) -
Changes in Operating Assets and Liabilities
Decrease in Income Tax Prepayments 82 100
(Decrease) in Current Liabilities (511) (21)
NET CASH PROVIDED BY OPERATING
ACTIVITIES $ 63,779 $ 70,180
See Notes to Financial Statements.
8
<PAGE>
DIVERSIFIED REALTY, INC.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Nature of Operations, Risks and Uncertainties
The Company is engaged in the ownership and rental of properties located
almost exclusively within Yellowstone County, Montana. The Company's rental
operations are dependent in large part upon the economy and rental conditions
within Yellowstone County, Montana. The Company leases its properties to
lessees under non-cancelable operating leases with terms of less than one
year.
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.
(b) 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
(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) Comprehensive Income
There were no items of other comprehensive income in 1999 or 1998, and net
income is therefore equal to comprehensive income for each of those years.
9
<PAGE>
DIVERSIFIED REALTY, INC.
NOTES TO FINANCIAL STATEMENTS - (Continued)
1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -(continued)
(f) Retirement Plans
The Company adopted an employees' savings plan under Section 401(k) of the
Internal Revenue Code (the "Code") during 1998. The Company allows eligible
employees to contribute the maximum percentage of their compensation allowed
by the Code. The Company matches employee contributions in an amount equal
to fifty percent of the first six percent of the employee's compensation
up to a maximum of $1,080. Participants are at all times fully vested
in their contributions and are gradually vested in the Company's
contributions. The Company's 401(k) contributions and administrative costs
were $0 for 1999 and 1998.
(g) Reclassifications
Certain reclassifications have been made to the prior year amounts to make
them comparable to the 1999 presentation. These changes had no impact on
previously reported results of operations or shareholders' equity.
2.CASH BALANCES
The Company maintains cash accounts with various financial institutions
and stock brokerage firms. Cash balances are insured up to $100,000 by
either the Securities Investor Protection Corporation ("SIPC") or the
Federal Deposit Insurance Corporation ("FDIC"). At December 31, 1999, cash
balances totaling $2,005,901 were uninsured by either the SIPC or the FDIC.
3. INCOME TAXES
Income tax expense consists of the following, all currently payable:
1999 1998
U.S. Income Taxes $ 51,000 $ 29,700
State Income Taxes 10,000 6,800
$ 61,000 $ 36,500
10
<PAGE>
DIVERSIFIED REALTY, INC.
NOTES TO FINANCIAL STATEMENTS - Continued
3.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:
1999 1998
Computed "Expected" Tax Expense $ 54,100 $ 31,500
State Income Taxes 6,700 4,500
Other 200 500
$ 61,000 $ 36,500
4. RELATED PARTY TRANSACTIONS
During 1999 and 1998 the Company received managerial assistance from M Corp,
its parent company, at no cost to the Company. The Company owns ten of the
thirty-four developed condominium units of the Cedar Grove Condominiums
located in Billings, Montana. The Company paid assessments to the Cedar
Grove Condominium Association, Inc. during 1999 and 1998 in the amounts of
$12,540 and $12,540, respectively. The Company has accrued a payable to the
Cedar Grove Condominium Association, Inc. at December 31, 1999 in the amount
of $20,100. In addition to the foregoing, the Company had transactions with
its parent company or subsidiaries of its parent company, as follows:
1999 1998
Net Cash Transfers To Parent $ 77,558 $ 51,300
Income Tax Allocation (51,000) (29,700)
Was Charged For Insurance (2,400) (2,400)
11
<PAGE>
DIVERSIFIED REALTY, INC.
NOTES TO FINANCIAL STATEMENTS - Continued
<TABLE>
<CAPTION>
5. INVESTMENTS IN REAL ESTATE
GROSS AMOUNT CARRIED
ON BALANCE SHEET
DATE AT DECEMBER 31, 1999 ACCUMULATED AMOUNT OF
DESCRIPTION CONSTRUCTED LAND BUILDINGS TOTAL DEPRECIATION ENCUMBRANCE
<S> <C> <C> <C> <C> <C>
Investment
Property
Florida 1988 $ - $122,000 $122,000 $ 40,540 $ -
Rental Units
Montana Var. - 218,815 218,815 85,779 -
Miscellaneous
Properties 12,761 - 12,761 - -
Totals $12,761 $340,815 $353,576 $ 126,319 $ -
</TABLE>
Reconciliations Of Total Real Estate Carrying Value For The Two Years Ended
December 31, 1999 are as follows:
1999 1998
Balance, Beginning of Year $402,026 $407,236
Less Retirements (48,450) (5,210)
Balance, End of Year $353,576 $402,026
Reconciliations Of Accumulated Depreciation For The Two Years Ended
December 31, 1999 are as follows:
1999 1998
Balance, Beginning of Year $159,489 $145,709
Add Provision for Depreciation 13,780 13,780
Less Retirements and Sales (46,950) -
Balance, End of Year $126,319 $159,489
12
<PAGE>
DIVERSIFIED REALTY, INC.
DIRECTORS AND OFFICERS
NAME OCCUPATION
R. Bruce Robson Data Processing Manager
President Sletten Construction Co.
Great Falls, Montana
M. A. Arneson Investor,
Director Billings, Montana
S. M. McCann Attorney at Law, Investor,
Director San Luis Obispo, California
Lee Arneson Investor,
Director Billings, Montana
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 1999 or 1998.
There are approximately 2,230 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-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 2220920
<SECURITIES> 0
<RECEIVABLES> 27158
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2248078
<PP&E> 425421
<DEPRECIATION> 197864
<TOTAL-ASSETS> 2475635
<CURRENT-LIABILITIES> 28736
<BONDS> 0
0
0
<COMMON> 537500
<OTHER-SE> 1909399
<TOTAL-LIABILITY-AND-EQUITY> 2475635
<SALES> 0
<TOTAL-REVENUES> 229850
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 70748
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 159102
<INCOME-TAX> 61000
<INCOME-CONTINUING> 98102
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 98102
<EPS-BASIC> .00
<EPS-DILUTED> .00
</TABLE>
