U.S. Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen,
We are transmitting herewith Form 10-QSB for the quarter ended March 31, 2002
for Diversified Realty, Inc.
Diversified Realty, Inc.
s/D. Mellinger
D. Mellinger
Accountant
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 March 31, 2003
[ ] 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 59401
(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 March 31, 2003
$.10 Par Value Common Stock 5,367,654 Shares
Transitional Small Business Disclosure Format (Check One): Yes ; No X
DIVERSIFIED REALTY, INC.
INDEX
MARCH 31, 2003
Page Number
PART I
Condensed Financial Statements:
Balance Sheet
March 31, 2003 2
Statements of Income -
Three Months Ended March 31, 2003 and 2002 3
Statements of Cash Flows -
Three Months Ended March 31, 2003 and 2002 4
Notes to Financial Statements 5
Management's Discussion and Analysis
of the Statements of Income 6
PART II
Other Information 7
Signatures 8
Certifications 9-11
1
DIVERSIFIED REALTY, INC.
BALANCE SHEET
AS OF MARCH 31, 2003
ASSETS
Current Assets
Cash $ 2,254,481
Deferred Tax Asset 2,892
Prepaid Income Taxes 25,928
Due From Parent Company 113,532
Total Current Assets 2,396,833
Property, Plant and Equipment, Net 184,693
TOTAL ASSETS $ 2,581,526
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Expenses $ 15,272
Total Current Liabilities 15,272
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 100,479
Other Comprehensive Income 1,714
Cost of Common Stock in Treasury (2,847)
Total Stockholders' Equity 2,566,254
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,581,526
See Notes to Financial Statements
2
DIVERSIFIED REALTY, INC.
STATEMENTS OF INCOME
For The Three Months
Ended
March 31,
2003 2002
Operating Revenues $ 21,729 $ 25,486
Operating Expenses 13,297 13,378
8,432 12,108
Income Tax Expense (1,875) (9,750)
Net Income $ 6,557 $ 21,858
Other Comprehensive Income(Loss) Net of Income Taxes
Unrealized Holding Gains 36 --
Comprehensive Income $ 6,593 $ 21,858
See Notes to Financial Statements
3
DIVERSIFIED REALTY, INC.
STATEMENTS OF CASH FLOWS
For The Three Months Ended
March 31,
2003 2002
CASH FLOWS FROM OPERATING ACTIVITIES
Net Cash Provided By Operating
Activities $ 16,701 $ 12,246
CASH FLOWS FROM FINANCING ACTIVITIES
Cash Purchases of Treasury Stock (22) (11)
Net Cash Advances
From (To) Parent Company 600 (600)
Net Cash Provided (Used) By
Financing Activities 578 (611)
NET INCREASE (DECREASE) IN CASH 17,279 11,635
CASH - BEGINNING OF PERIOD 2,237,202 2,225,553
CASH - END OF PERIOD $2,254,481 $2,237,188
See Notes to Financial Statements
4
DIVERSIFIED REALTY, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2003
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 March 31, 2003 and
the results of the Company's operations for the three months ended
and cash flows for the three months ended March 31, 2003 and 2002.
The results of operations for the three months ended
March 31, 2003 and 2002 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
DIVERSIFIED REALTY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE INCOME STATEMENT
MARCH 31, 2003
A summary of the period to period changes in items included in the statements
of income is shown below.
COMPARISON OF
THREE MONTHS
ENDED
MARCH 31,
2003 AND 2002
Revenues $ (3,756) (14.7%)
Expenses (81) (.61%)
Net Income (15,300) (69.9%)
Revenues decreased $3,756 (14.7%) in the first three months of 2003 as
compared with the first three months of 2002 due primarily to decreases in
interest and dividend revenues ($3,107, 41.8%), and a slight decrease in
other income ($649, 3.59%). Interest revenues decreased primarily due to
a decrease in interest rates on investments. Operating expenses decreased
$81(.61%) in the first three months of 2003 as compared with the first
three months of 2002. The provision for income tax expense increased
$11,625, (119.2%) in the first quarter of 2003 as compared with the first
quarter of 2002 due primarily to an adjustment in reporting non-taxable
interest.
6
DIVERSIFIED REALTY, INC.
PART II
OTHER INFORMATION
MARCH 31, 2003
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
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: May 14, 2003 s/Angela D. Semenza
Angela D. Semenza,
Assistant
Secretary-Treasurer
Date: May 14, 2003 s/D. Mellinger
D. Mellinger,
Accountant
8
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED UPRSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Diversified Realty, In. on Form
10-QSB for the period ending March 31, 2003 as filed with the Securites
and Exchange Commission on the date hereof (the "Report"), I, Paul J. McCann,
Representative of Diversified Realty, Inc., certify, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Subanes-
Oxley Act of 2002, that:
1. The report fully compiles with the requiremtns of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations
of Diversified Realty, Inc.
Date: May 14, 2003 s/Paul J. McCann
Paul J. McCann,
Representative
9
CERTIFICATION
I, Paul J. McCann, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of
Diversified Realty Inc.
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circomstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
inforamtion included in quarterly annual report, fairly present in
all material respects the financial condition, results of operations
and cash flows of Diversified Realty, Inc. as of, and for, the
periods presented in this annual report.
4. Diversified Realty, Inc.'s other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Eschange Act Rules 13a-14 and 15d-14) for Diversified Realty,
Inc. We have:
a. designed such disclosure controls and procedures to ensure that material
information relating to Diversified Realty, Inc. is made known to us
by others within those entities, particularly during the period in which
this quarterly report is being prepared.
b. evaluated the effectiveness Diversified Realty, Inc. disclosure controls
and prodecures as of a date with 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. Diversified Realty, Inc.'s other certifying officers and I have disclosed,
based on our most recent evaluation, to Diverdified Realty, Inc. auditors
and the audit committee of Diversified Realty, Inc. board of directors
(or persons performing the equivalent functions):
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect Diversified Realty, Inc.'s
ability to record, process, summarize and report financial data, and
I have identified for Diversified Realty, Inc.'s auditors any
material weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in Diversified Realty,
Inc.'s internal control; and
6. Diversified Realty, Inc.'s other certifying officers and I have indicated
in this annual report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: May 14, 2003 s/Paul J. McCann
Paul J. McCann
11