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, 2000
[ ] 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, 2000
$.10 Par Value Common Stock 5,370,926 Shares
Transitional Small Business Disclosure Format (Check One): Yes No X
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DIVERSIFIED REALTY, INC.
INDEX
SEPTEMBER 30, 2000
Page Number
PART I
Condensed Financial Statements:
Balance Sheet
September 30, 2000 2
Statements of Income -
Three Months and Nine Months Ended
September 30, 2000 and 1999 3
Statements of Cash Flows -
Nine Months Ended September 30, 2000 and 1999 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
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DIVERSIFIED REALTY, INC.
BALANCE SHEET
AS OF SEPTEMBER 30, 2000
ASSETS
Current Assets
Cash $ 2,280,042
Due From Parent Company 81,467
Total Current Assets 2,361,509
Property, Plant and Equipment, Net 217,073
TOTAL ASSETS $ 2,578,582
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Expenses $ 34,175
Income Taxes Payable 39,868
Total Current Liabilities 74,043
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
Retained Earnings 38,848
Cost of Common Stock in Treasury (1,217)
Total Stockholders' Equity 2,504,539
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,578,582
See Notes to Financial Statements
2
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<TABLE>
DIVERSIFIED REALTY, INC.
<CAPTION>
STATEMENTS OF INCOME
For The Three For The Nine
Months Months
Ended Ended
September 30, September 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Operating Revenues $ 52,773 $ 44,100 $154,415 $135,055
Operating Expenses 19,619 16,352 57,068 50,837
33,154 27,748 97,347 84,218
Provision for Income Taxes (12,700) (10,400) (39,700) (34,400)
Net Income $ 20,454 $ 17,348 $ 57,647 $ 49,818
</TABLE>
See Notes to Financial Statements
3
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DIVERSIFIED REALTY, INC.
STATEMENTS OF CASH FLOWS
For The Nine
Months Ended
September 30,
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net Cash Provided By Operating
Activities $ 113,438 $ 78,191
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures Paid In Cash - (721)
Net Cash (Used) By Investing Activities - (721)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash Purchases of Treasury Stock (7) (578)
Net Cash Advances From (To) Parent Company (54,309) (31,427)
Net Cash (Used) By
Financing Activities (54,316) (32,005)
NET INCREASE IN CASH 59,122 45,465
CASH - BEGINNING OF PERIOD 2,220,920 2,132,849
CASH - END OF PERIOD $2,280,042 $2,178,314
See Notes to Financial Statements
4
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DIVERSIFIED REALTY, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
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, 2000
and the results of the Company's operations for the three months and nine
months ended September 30, 2000 and 1999 and cash flows for the nine months
ended September 30, 2000 and 1999.
The results of operations for the three months and nine months ended
September 30, 2000 and 1999 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
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DIVERSIFIED REALTY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE INCOME STATEMENT
SEPTEMBER 30, 2000
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,
2000 AND 1999 2000 AND 1999
INCREASES (DECREASES)
Revenues $ 8,673 19.7% $ 19,360 14.3%
Expenses 3,267 20.0% 6,231 12.3%
Net Income 3,106 17.9% 7,829 15.7%
Revenues increased $19,360 (14.3%) in the first nine months of 2000 as
compared with the first nine months of 1999 due primarily to an increase in
interest revenues ($23,489, 32.6%) partially offset by a decrease in rental
revenues ($4,165, 7.2%). Interest revenues increased primarily due to an
increase in interest-earning deposits maintained by the Company. Rent
revenues decreased due to the sale of rental property during the fourth
quarter of 1999. Operating expenses increased $6,231, (12.3%) in the first
nine months of 2000 as compared with the first nine months of 1999. The
provision for income tax expense increased $5,300, 15.4%, in the first nine
months of 2000 as compared with the first nine months of 1999 due primarily
to the increase in pretax income.
6
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DIVERSIFIED REALTY, INC.
PART II
OTHER INFORMATION
SEPTEMBER 30, 2000
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
A meeting of shareholders was held on September 28, 2000
at which the Company's board of directors was elected.
ITEM 5 OTHER INFORMATION
None
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
None
7
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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 30, 2000 s/K. M. Cain
K. M. Cain, Assistant
Secretary-Treasurer
Date: October 30, 2000 s/Jerry K. Mohland
Jerry K. Mohland,
Accountant
8
