-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BVU2s4ymYTHmbtZ0mBHMzMHhpG9oWDOsNZm4tJYAwYZdWBdbO2sgXhnCd0Xpkyvs 85SOtn7rm0XK5OmX2xyz6Q== 0000792989-00-000003.txt : 20000331 0000792989-00-000003.hdr.sgml : 20000331 ACCESSION NUMBER: 0000792989-00-000003 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DSI REALTY INCOME FUND VI CENTRAL INDEX KEY: 0000318835 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 953633566 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 002-68926 FILM NUMBER: 587181 BUSINESS ADDRESS: STREET 1: 3701 LONG BEACH BLVD CITY: LONG BEACH STATE: CA ZIP: 90807 BUSINESS PHONE: 3105957711 MAIL ADDRESS: STREET 1: 3701 LONG BEACH BLVD CITY: LONG BEACH STATE: CA ZIP: 90807 FORMER COMPANY: FORMER CONFORMED NAME: DSI REALTY INCOME FUND 81-I DATE OF NAME CHANGE: 19870812 10-K 1 DSI REALTY INCOME FUND VI SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 2O549 FORM 1O-K (Mark One) / x /Annual Report Pursuant to Section 13 or 15 (d) of the Securities and Exchange Act of 1934 [Fee required] for fiscal year ended December 31, 1999. or / / Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 [No fee required] for the transition period from ________________ to _______________ Commission File No. 2-68926. DSI REALTY INCOME FUND VI, a California Limited Partnership (Exact name of registrant as specified in governing instruments) _________California___________________________95-3633566_____ (State of other jurisdiction of (I.R.S. Employer incorporation or organization identification number 6700 E. Pacific Coast Hwy., Long Beach, California 9O8O3 (Address of principal executive offices) (Zip Code) Registrants telephone number, including area code-(562)493-8881 Securities registered pursuant to Section 12(b) of the Act: none. Securities registered pursuant to Section 12(g) of the Act: Units of Limited Partnership Interests (Class of Securities Registered) Indicate by check mark, whether the registrant (l) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 9O days. Yes_X____. No______. Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not 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-K or any amendment to this Form 10-K. /x/ The Registrant is a limited partnership and there is no voting stock. All units of limited partnership sold to date are owned by non-affiliates of the registrant. All such units were sold at $5OO.OO per unit. DOCUMENTS INCORPORATED BY REFERENCE Item 8. Registrant's Financial Statements for its fiscal year ended December 31, 1999, incorporated by reference to Form 10-K, Part II. Item 11. Registrant's Financial Statements for its fiscal year ended December 31, 1999, incorporated by reference to Form 10-K, Part III. Item 12. Registration Statement on Form S-11, previously filed with the Securities and Exchange Commission pursuant to Securities Act of 1933, as amended, incorporated by reference to Form 10-K Part III. Item 13. Registrant's Financial Statements for its fiscal year ended December 31, 1999, incorporated by reference to Form 10-K, Part III. PART I Item l. BUSINESS Registrant, DSI Realty Income Fund VI (the "Partnership") is a publicly-held limited partnership organized under the California Uniform Limited Partnership Act pursuant to a Certificate and Agreement of Limited Partnership (hereinafter referred to as "Agreement") dated August 1, 1983. The General Partners are DSI Properties, Inc., a California corporation, Diversified Investors Agency, a general partnership, whose current partners are Robert J. Conway and Joseph W. Conway, brothers. The General Partners are affiliates of Diversified Securities, Inc., a wholly-owned subsidiary of DSI Financial, Inc. The General Partners provide similar services to other partnerships. Through its public offering of Limited Partnership Units, Registrant sold twenty-three thousand seven hundred fifty-three (23,753) units of limited partnership interests aggregating Eleven Million Eight Hundred Seventy-Six Thousand Five Hundred Dollars ($11,876,500). The General Partners have retained a one percent (l%) interest in all profits, losses and distributions (subject to certain conditions) without making any capital contribution to the Partnership. The General Partners are not required to make any capital contributions to the Partnership in the future. Registrant is engaged in the business of investing in and operating mini-storage facilities with the primary objectives of generating, for its partners, cash flow, capital appreciation of its properties, and obtaining federal income tax deductions so that during the early years of operations, all or a portion of such distributable cash may not represent taxable income to its partners. Funds obtained by Registrant during the public offering period of its units were used to acquire seven mini-storage facilities. Registrant does not intend to sell additional limited partnership units. The term of the Partnership is fifty years but it is anticipated that Registrant will sell and/or refinance its properties prior to the termination of the Partnership. The Partnership is intended to be self-liquidating and it is not intended that proceeds from the sale or refinancing of its operating properties will be reinvested. Registrant has no full time employees but shares one or more employees with other publicly-held limited partnerships sponsored by the General Partners. The General Partners are vested with authority as to the general management and supervision of the business and affairs of Registrant. Limited Partners have no right to participate in the management or conduct of such business and affairs. An independent management company has been retained to provide day-to-day management services with respect to all of the Partnership's investment properties. The average occupancy levels for each of the Partnership's seven properties for the years ended December 31, 1999 and December 31, 1998 were as follows: Location of Property Average Occupancy Average Occupancy Level for the Year Level for the Year Ended Dec. 31, 1999 Ended Dec. 31, 1998 Vallejo, California 91% 92% Santa Rosa, California (both stages) 86% 88% Arvada, Colorado 87% 87% Las Vegas, Nevada 79% 77% Federal Heights, Colorado 85% 86% Colorado Springs, Colorado 82% 84% Please refer to the discussion appearing elsewhere herein under the caption Management's Discussion and Analysis of Financial Condition and Results of Operations for a detailed analysis of the results of operations of the Partnership's properties. The business in which the Partnership is engaged is highly competitive. Each of its mini-storage facilities is located in or near a major urban area, and accordingly, competes with a significant number of individuals and organizations with respect to both the purchase and sale of its properties and for rentals. Generally, Registrant's business is not affected by the change in seasons. Item 2. PROPERTIES Registrant owns a fee interest in seven mini-storage facilities, none of which are subject to long-term indebtedness. Please refer to the discussion under Business for a discussion of the average occupancy rate for each property owned by the Partnership. The following table sets forth information as of December 31, 1999 regarding properties owned by the Partnership. Location Size of Net Rentable No. of Completion Parcel Area Rental Units Date Vallejo, CA 3.10 acres 57,845 512 6/9/81 Arvada, CO 3.75 acres 65,535 662 1/4/83 Federal Heights, CO 2.39 acres 39,892 467 10/15/83 Las Vegas, NV 2.20 acres 39,682 431 12/l/82 Santa Rosa, CA 3.38 acres 72,163 626 9/10/83 Colorado Springs, CO 3.50 acres 60,566 692 11/15/83 Item 3. LEGAL PROCEEDINGS Registrant is not a party to any material pending legal proceedings. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. PART II Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Registrant, a publicly-held limited partnership, sold 23,753 limited partnership units during its offering and as of December 31, 1999 had 830 limited partners of record. There is no intention to sell additional limited partnership units nor is there a market for these units. Average cash distributions of $16.55 per Limited Partnership Unit were declared and paid each quarter for the year ended December 31, 1999 and $16.45 per Limited Partnership Unit for the year ended December 31, 1998 and $15.20 per Limited Partnership Unit for the year ended December 31, 1997. It is Registrant's expectations that distributions will continue to be paid in the future. Item 6. SELECTED FINANCIAL DATA FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, 1997, 1996, and 1995 - -------------------------------------------------------------------------------- 1999 1998 1997 1996 1995 ---- ---- ---- ---- ---- TOTAL REVENUES $2,887,720 $2,778,744 $2,564,306 $2,522,074 $2,513,723 TOTAL EXPENSES 1,619,474 1,551,834 1,530,103 1,476,606 1,406,458 ---------- ---------- ---------- ---------- ---------- NET INCOME $1,268,246 $1,226,910 $1,034,203 $1,045,468 $1,107,265 ========== ========== ========== ========== ========== TOTAL ASSETS $3,796,535 $4,114,006 $4,469,563 $4,903,842 $5,285,147 ========== ========== ========== ========== ========== NET CASH PROVIDED BY OPERATING ACTIVITIES $1,684,625 $1,626,928 $1,443,997 $1,492,765 $1,522,244 ========== ========== ========== ========== ========== NET INCOME PER LIMITED PARTNERSHIP UNIT $ 52.86 $ 51.14 $ 43.10 $ 43.57 $ 46.15 ========== ========== ========== ========== ========== CASH DISTRIBUTIONS PER $500 LIMITED PARTNERSHIP UNIT $ 66.20 $ 65.82 $ 60.83 $ 60.00 $ 57.50 ========== ========== ========== ========== ========== Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS 1999 COMPARED TO 1998 Total revenues increased from $2,887,720 in 1999, while total expenses increased from $1,551,834 to $1,619,474 resulting in an increase in net income from $1,226,910 to $1,268,246. Rental revenues increased as a result of higher unit rental rates. Occupancy levels for the Partnership's seven mini-storage facilities averaged 85.1% for the year 1999 as compared to 86.2% for 1998. The increase in operating expenses of approximately $47,400 (6.9%) was due primarily to increases in yellow pages advertising costs, real estate tax and security alarm services expenses, partially offset by a decrease in repairs and maintenance expense. General and administrative expenses increased approximately $9,100 (7.0%) primarily as a result of an increase in office supplies and printing expense. The General Partners' incentive management fee which is based on cash available for distribution, increased as a result of the increase in rental revenue. 1998 COMPARED TO 1997 Total revenues increased from $2,564,306 in 1997 to $2,778,744 in 1998, while total expenses increased from $1,530,103 to $1,551,834 resulting in an increase in net income from $1,034,203 to $1,226,910. Rental revenues increased as a result of higher occupancy and unit rental rates. Occupancy levels for the Partnership's seven mini-storage facilities averaged 86.2% for the year 1998 as compared to 85.0% for 1997. The decrease in operating expenses of approximately $4,500 (0.7%) was due to a primarily to a decrease in repairs and maintenance expense. General and administrative remained constant. The General Partners' incentive management fee which is based on cash available for distributions, increased as a result of the increase in net income. Property management fees, which are based on revenues, increased as a result of the increase in rental revenue. LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities increased by approximately $57,700 (3.5%) in 1999 compared to 1998 primarily due to the increase in net income. Net cash provided by operating activities increased by approximately $182,900 (12.7%) in 1998 compared to 1997 primarily due to the increase in net income partially offset by an increase in other assets. Cash used in financing activities, as set forth in the statements of cash flows, has consisted solely of cash distributions to partners. Special distributions of 4%, 4% and 3% were declared and paid on December 15, 1999, 1998 and 1997 respectively. Cash used in investing activities, as set forth in the statements of cash flows, has consisted solely of acquisitions of equipment for the Partnership's mini storage properties. The Partnership has no material commitments for capital expenditures. The General Partners plan to continue their policy of funding the continuing improvement and maintenance of Partnership properties with cash generated from operations. The Partnership's resources appear to be adequate to meet its needs for the next twelve months. The General Partners are not aware of any environmental problems which could have a material adverse effect upon the financial position of the Partnership. Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Attached hereto as Exhibit l is the information required to be set forth as Item 8, Part II hereof. Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. PART III Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT'S GENERAL PARTNER The General Partners of Registrant are the same as when the Partnership was formed, i.e., DSI Properties, Inc., a California corporation, and Diversified Investors Agency. As of December 31, 1999, Messrs. Robert J. Conway and Joseph W. Conway, each of whom own approximately 48.4% of the issued and outstanding capital stock of DSI Financial, Inc., a California corporation, are the sole partners of Diversified Investor Agency. Messrs. Robert J. and Joseph W. Conway, together with Mr. Joseph W. Stok, currently comprise the entire Board of Directors of DSI Properties, Inc. Mr. Robert J. Conway is 66 years of age and is a licensed California real estate broker, and since 1965 has been President and a member of the Board of Directors of Diversified Securities, Inc., and since 1973 President, Chief Financial Officer and a member of the Board of Directors of DSI Properties, Inc. Mr. Conway received a Bachelor of Science Degree from Marquette University with majors in Corporate Finance and Real Estate. Mr. Joseph W. Conway is age 70 and has been Executive Vice President, Treasurer and a member of the Board of Directors of Diversified Securities, Inc. since 1965 and since 1973 the Vice President, Treasurer and member of the Board of Directors of DSI Properties, Inc. Mr. Conway received a Bachelor of Arts Degree from Loras College with a major in Accounting. Mr. Joseph W. Stok is age 76 and has been a member of the Board of Directors of DSI Properties, Inc. since 1994, a Vice President of Diversified Securities, Inc. since 1973, and an Account Executive with Diversified Securities, Inc. since 1967. Item 11. EXECUTIVE COMPENSATION (MANAGEMENT REMUNERATION AND TRANSACTIONS) The information required to be furnished in Item 11 of Part III is contained in Registrant's Financial Statements for its fiscal year ended December 31, 1999, which together with the report of its independent auditors, Deloitte & Touche LLP, attached hereto as Exhibit 1 and incorporated herein by this reference. In addition to such information: (a) No annuity, pension or retirement benefits are proposed to be paid by Registrant to any of the General Partners or to any officer or director of the corporate General Partner; (b) No standard or other arrangement exists by which directors of the Registrant are compensated; (c) The Registrant has not granted any option to purchase any of its securities; and (d) The Registrant has no plan, nor does the Registrant presently propose a plan, which will result in any remuneration being paid to any officer or director upon termination of employment. Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT As of December 31, 1999, no person of record owned more than 5% of the limited partnership units of Registrant, nor was any person known by Registrant to own of record and beneficially, or beneficially only, more than 5% thereof. The balance of the information required to be furnished in Item 12 of Part III is contained in Registrant's Registration Statement on Form S-11, previously filed pursuant to the Securities Act of 1933, as amended, and which is incorporated herein by this reference. The only change to the information contained in said Registration Statement on Form S-11 is the fact that Messrs. Benes and Blakley have retired and Messrs. Robert J. Conway and Joseph W. Conway equity interest in DSI Financial, Inc., parent of DSI Properties, Inc., has increased. Please see information contained in Item 10 hereinabove. Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required to be furnished in Item 13 of Part III is contained in Registrant's Financial Statements for its fiscal year ended December 31, 1999 attached hereto as Exhibit l and incorporated herein by this reference. PART IV Item 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a)(l) Attached hereto and incorporated herein by this reference as Exhibit l are Registrant's Financial Statements and Supplemental Schedule for its fiscal year ended December 31, 1999, together with the reports of its independent auditors, Deloitte & Touche. See Index to Financial Statements and Supplemental Schedule. (a)(2) Attached hereto and incorporated herein by this reference as Exhibit 2 is Registrant's letter to its Limited Partners regarding its Annual Report for its fiscal year ended December 31, 1999. (b) There have been no form 8-K's filed during the last quarter of the period covered by this Report. SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DSI REALTY INCOME FUND VI, a California Limited Partnership by: DSI Properties, Inc., a California corporation, as General Partner By_____________________________ Dated: March 31, 2000 ROBERT J. CONWAY, President (Chief Executive Officer, Chief Financial Officer, and Director) By____________________________ Dated: March 31, 2000 JOSEPH W. CONWAY (Executive Vice President and Director) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the date indicated. DSI REALTY INCOME FUND VI, a California Limited Partnership by: DSI Properties, Inc., a California corporation, as General Partner By:__________________________ Dated: March 31, 2000 ROBERT J. CONWAY, President, Chief Executive Officer, Chief Financial Officer, and Director By___________________________ Dated: March 31, 2000 JOSEPH W. CONWAY (Executive Vice President and Director) DSI REALTY INCOME FUND VI CROSS REFERENCE SHEET FORM 1O-K ITEMS TO ANNUAL REPORT PART I, Item 3. There are no legal proceedings pending or threatened. PART I, Item 4. Not applicable. PART II, Item 5. Not applicable. PART II, Item 6. The information required is contained in Registrant's Financial Statements for its fiscal year ended December 31, 1999, attached as Exhibit l to Form 10-K. PART II, Item 8. See Exhibit l to Form 10-K filed herewith. PART II, Item 9. Not applicable. EXHIBIT l DSI REALTY INCOME FUND VI (A California Real Estate Limited Partnership) SELECTED FINANCIAL DATA FIVE YEARS ENDED DECEMBER 31, 1999 - -------------------------------------------------------------------------------- 1999 1998 1997 1996 1995 TOTAL REVENUES $2,887,720 $2,778,744 $2,564,306 $2,522,704 $2,513,723 TOTAL EXPENSES 1,619,474 1,551,834 1,530,103 1,476,606 1,406,458 NET INCOME 1,268,246 1,226,910 1,034,203 1,045,468 1,107,265 TOTAL ASSETS 3,796,535 4,114,006 4,469,563 4,903,842 5,285,147 NET CASH PROVIDED BY OPERATING ACTIVITIES 1,684,625 1,626,928 1,443,997 1,492,765 1,522,244 NET INCOME PER LIMITED PARTNERSHIP UNIT $ 52.86 $ 51.14 $ 43.10 $ 43.57 $ 46.15 CASH DISTRIBUTIONS PER $500 LIMITED PARTNERSHIP UNIT $ 66.20 $ 65.82 $ 60.83 $ 60.00 $ 57.50 The following are reconciliations between the operating results and partners' equity per the financial statements and the Partnership's income tax return for the year ended December 31, 1999. Operating Partners' Results Equity Per financial statements $ 1,268,246 $ 3,429,026 Excess tax depreciation 413,130 (1,368,217) State taxes (28,905) Accrued incentive management fee (16,219) Acquisition costs capitalized for tax purposes 134,382 Deferred rental revenues 71,946 Accrued distributions to partners 269,920 Accrued property taxes (88,000) Other (1,995) ----------- ----------- Per Partnership income tax return $ 1,652,471 $ 2,430,843 =========== =========== Taxable income per $500 limited partnership unit $ 69.57 =========== DSI REALTY INCOME FUND VI (A California Real Estate Limited Partnership) INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE Page FINANCIAL STATEMENTS: Independent Auditors' Report F-1 Balance Sheets at December 31, 1999 and 1998 F-2 Statements of Income for the Three Years Ended December 31, 1999 F-3 Statements of Changes in Partners' Equity for the Three Years Ended December 31, 1999 F-4 Statements of Cash Flows for the Three Years Ended December 31, 1999 F-5 Notes to Financial Statements F-6 SUPPLEMENTAL SCHEDULE: Independent Auditors' Report F-8 Schedule XI - Real Estate and Accumulated Depreciation F-9 SCHEDULES OMITTED: Financial statements and schedules not listed above are omitted because of the absence of conditions under which they are required or because the information is included in the financial statements named above, or in the notes thereto. INDEPENDENT AUDITORS' REPORT To the Partners of DSI Realty Income Fund VI: We have audited the accompanying balance sheets of DSI Realty Income Fund VI, a California Real Estate Limited Partnership(the "Partnership") as of December 31, 1999 and 1998, and the related statements of income, changes in partners' equity (deficit), and cash flows for each of the three years in the period ended December 31, 1999. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits 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 audits provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the financial position of DSI Realty Income Fund VI at December 31, 1999 and 1998, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1999, in conformity with generally accepted accounting principles. Deloitte & Touche Los Angeles, California January 28, 2000 DSI REALTY INCOME FUND VI (A California Real Estate Limited Partnership) BALANCE SHEETS DECEMBER 31, 1999 AND 1998 - -------------------------------------------------------------------------------- ASSETS 1999 1998 CASH AND CASH EQUIVALENTS $ 559,869 $ 546,110 PROPERTY, Net(Notes 1 and 3) 3,176,287 3,513,086 OTHER ASSETS 60,379 54,810 ----------- ----------- TOTAL $ 3,796,535 $ 4,114,006 =========== =========== LIABILITIES AND PARTNERS' EQUITY LIABILITIES: Distribution due partners $ 269,920 $ 269,920 Incentive management fee payable to general partners (Note 4) 9,424 7,947 Property management fees payable (Note 1) 14,371 13,120 Customer deposits and other liabilities 73,794 73,794 ----------- ----------- Total liabilities 367,509 364,781 ----------- ----------- PARTNERS' EQUITY (DEFICIT)(Notes 1 and 4): General partners (58,996) (55,794) Limited partners (23,753 limited partnership units outstanding at December 31, 1999 and 1998) 3,488,022 3,805,019 ------------ ----------- Total partners' equity 3,429,026 3,749,225 ------------ ----------- TOTAL $ 3,796,535 $4,114,006 ============ =========== See accompanying notes to financial statements. DSI REALTY INCOME FUND VI (A California Real Estate Limited Partnership) STATEMENTS OF INCOME THREE YEARS ENDED DECEMBER 31, 1999 - -------------------------------------------------------------------------------- 1999 1998 1997 REVENUES: Rental $2,877,374 $2,760,387 $2,546,164 Interest income 10,346 18,357 18,142 ---------- ---------- --------- Total revenues 2,887,720 2,778,744 2,564,306 ---------- ---------- --------- EXPENSES: Depreciation 419,220 419,220 419,220 Operating 730,031 682,642 687,134 General and administrative 139,652 130,572 128,599 General partners' incentive management fee (Note 4) 158,369 154,541 142,380 Property management fee (Note 1) 172,202 164,859 152,770 ---------- ---------- --------- Total expenses 1,619,474 1,551,834 1,530,103 ---------- ---------- --------- NET INCOME $1,268,246 $1,226,910 $1,034,203 ========== ========== ========== AGGREGATE NET INCOME ALLOCATED TO (Note 4): Limited partners $1,255,564 $1,214,641 $1,023,861 General partners 12,682 12,269 10,342 ---------- ---------- ---------- TOTAL $1,268,246 $1,226,910 $1,034,203 ========== ========== ========== NET INCOME PER LIMITED PARTNERSHIP UNIT (Notes 2 and 4) $ 52.86 $ 51.14 $ 43.10 ========== ========== ========= See accompanying notes to financial statements. DSI REALTY INCOME FUND VI (A California Real Estate Limited Partnership) STATEMENTS OF CHANGES IN PARTNERS' EQUITY THREE YEARS ENDED DECEMBER 31, 1999 - -------------------------------------------------------------------------------- General Limited Partners Partners Total BALANCE AT JANUARY 1, 1997 $(48,017) $ 4,574,918 $ 4,526,901 Net income $ 10,342 1,023,861 1,034,203 Distributions (14,595) (1,444,961) (1,459,556) ------- ----------- ----------- BALANCE AT DECEMBER 31, 1997 $(52,270) $ 4,153,818 $ 4,101,548 Net income 12,269 1,214,641 1,226,910 Distributions (15,793) (1,563,440) (1,579,233) ------- ----------- ----------- BALANCE AT DECEMBER 31, 1998 $(55,794) $ 3,805,019 $ 3,749,225 Net income 12,682 1,255,564 1,268,246 Distributions (15,884) (1,572,561) (1,588,445) ------- ----------- ----------- BALANCE AT DECEMBER 31, 1999 $(58,996) $ 3,488,022 $ 3,429,026 See accompanying notes to financial statements. DSI REALTY INCOME FUND VI (A California Real Estate Limited Partnership) STATEMENTS OF CASH FLOWS THREE YEARS ENDED DECEMBER 31, 1999 - -------------------------------------------------------------------------------- 1999 1998 1997 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,268,246 $ 1,226,910 $ 1,034,203 Adjustments to reconcile net income to net cash provided by operating activities: 419,220 419,220 419,220 Depreciation Changes in assets and liabilities: Other assets (5,569) (15,968) (500) Incentive management fee payable to general partners 1,477 (3,317) 11,264 Property management fees payable 1,251 83 955 Customer deposits and other liabilities (21,145) ---------- ---------- --------- Net cash provided by operating activities 1,684,625 1,626,928 1,443,997 CASH FLOWS FROM INVESTING ACTIVITIES - Additions to property (82,421) (31,393) (14,754) CASH FLOWS FROM FINANCING ACTIVITIES - Distributions to partners (1,588,445) (1,579,233) (1,459,556) ----------- ----------- --------- NET INCREASE(DECREASE)IN CASH AND CASH EQUIVALENTS 13,759 16,302 (30,313) CASH AND CASH EQUIVALENTS, AT BEGINNING OF YEAR 546,110 529,808 560,121 ----------- ----------- ------------ CASH AND CASH EQUIVALENTS, AT END OF YEAR $ 559,869 $ 546,110 $ 529,808 =========== =========== ============ See accompanying notes to financial statements. DSI REALTY INCOME FUND VI (A California Real Estate Limited Partnership) NOTES TO FINANCIAL STATEMENTS THREE YEARS ENDED DECEMBER 31, 1999 1. GENERAL DSI Realty Income Fund VI, a California Real Estate Limited Partnership (the "Partnership"), has two general partners (DSI Properties, Inc. and Diversified Investors Agency) and limited partners owning 23,753 limited partnership units, which were purchased for $500 a unit. The general partners have made no capital contribution to the Partnership and are not required to make any capital contribution in the future. The Partnership has a maximum life of 50 years and was formed on March 27, 1981 under the California Uniform Limited Partnership Act for the primary purpose of acquiring and operating real estate. The Partnership owns seven mini-storage facilities located in Vallejo, California; Arvada, Federal Heights and Colorado Springs, Colorado; Las Vegas, Nevada and two in Santa Rosa, California. All facilities were purchased from Dahn Corporation ("Dahn"). Dahn is not affiliated with the Partnership. Dahn is affiliated with other partnerships in which DSI Properties, Inc. is a general partner. The mini-storage facilities are operated for the Partnership by Dahn under various agreements that are subject to renewal annually. Under the terms of the agreements, the Partnership is required to pay Dahn a property management fee equal to 6% of gross revenue from operations, as defined. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cash and Cash Equivalents - The Partnership classifies its short-term investments purchased with an original maturity of three months or less as cash equivalents. Property and Depreciation - Property is recorded at cost and is composed primarily of mini-storage facilities. Depreciation is provided for using the straight-line method over an estimated useful life of 20 years for the facilities. Building improvements are depreciated over a five year period. Income Taxes - No provision has been made for income taxes in the accompanying financial statements. The taxable income or loss of the Partnership is allocated to each partner in accordance with the terms of the Agreement of Limited Partnership. Each partner's tax status, in turn, determines the appropriate income tax for its allocated share of the Partnership's taxable income or loss. The net difference between the bases of the Partnership's assets and liabilities for federal income tax purposes and as reported for financial statement purposes is $998,183. Revenues - Rental revenue is recognized using the accrual method based on contractual amounts provided for in the lease agreements, which approximates recognition on a straight-line basis. The term of the lease agreements is usually less than one year. Net Income per Limited Partnership Unit - Net income per limited partnership unit is computed by dividing net income allocated to the limited partners by the weighted average number of limited partnership units outstanding during each year (23,753 in 1999, 1998, and 1997). Reclassifications - Certain reclassifications have been made to the 1998 and 1997 amounts to conform to the 1999 presentation. Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires the Partnership to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Impairment of Long-Lived Assets - The Partnership regularly reviews long- lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If the sum of the expected future cash flow is less than the carrying amount of the asset, the Partnership recognizes an impairment. No impairment losses were required in 1999, 1998 or 1997. Fair Value of Financial Instruments - The Company's financial instruments consist primarily of cash, receivables, accounts payable and accrued liabilities. The carrying values of all financial instruments are representative of their fair values due to their short-term maturities. Concentrations of Credit Risk - Financial instruments that potentially subject the Partnership to concentrations of credit risk consist primarily of cash equivalents and rent receivables. The Partnership places its cash equivalents with high credit quality institutions. 3. PROPERTY At December 31, 1999 and 1998, the total cost of property and accumulated depreciation are as follows: 1999 1998 Land $ 1,759,000 $ 1,759,000 Buildings and improvements 8,528,266 8,445,845 ----------- ----------- Total 10,287,266 10,204,845 Less accumulated depreciation (7,110,979) (6,691,759) ----------- ---------- Property, net $ 3,176,287 $ 3,513,086 =========== =========== 4. ALLOCATION OF PROFITS AND LOSSES Under the Agreement of Limited Partnership, the general partners are to be allocated one percent of the net profits or losses from operations, and the limited partners are to be allocated the balance of the net profits or loss es from operations in proportion to their limited partnership interests. The general partners are also entitled to receive a percentage, based on a predetermined formula, of any cash distribution from the sale, other disposition, or refinancing of the project. In addition, the general partners are entitled to receive an incentive management fee for supervising the operations of the Partnership. The fee is to be paid in an amount equal to nine percent per annum of the cash available for distribution on a cumulative basis. 5. BUSINESS SEGMENT INFORMATION The following disclosure about segment reporting of the Partnership is made in accordance with the requirements of SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information. The Partnership operates under a single segment; storage facility operations, under which the Partnership rents its storage facilities to its customers on a need basis and charges rent on a predetermined rate. INDEPENDENT AUDITORS' REPORT To the Partners of DSI Realty Income Fund VI: We have audited the financial statements of DSI Realty Income Fund VI (the "Partnership") as of December 31, 1999 and 1998, and the related statements of income, changes in partners' equity (deficit), and cash flows for each of the three years in the period ended December 31, 1999. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits 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 presnetation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the financial position of DSI Realty Income Fund VI at December 31, 1999 and 1998 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1999, in conformity with generally accepted accounting principles. January 28, 2000 Deloitte & Touche, LLP Los Angeles, California DSI REALTY INCOME FUND VI (A California Real Estate Limited Partnership) REAL ESTATE AND ACCUMULATED DEPRECIATION - --------------------------------------------------------------------------------
Costs Capitalized Initial Cost to Subsequent to Gross Amount at Which Carried Partnership Acquisition at Close of Period ------------------- ----------------- ----------------------------- Buildings Buildings Date and Improve- Carrying and Accum. of Date Description Encumbrances Land Improvements ments Costs Land Improvements Total Deprec. Const. Acq. Life MINI-U-STORAGE Vallejo, CA None $258,000 $1,320,789 $35,144 $258,000 $1,355,933 $1,613,933 $(1,207,153) 11/81 06/81 20 Yrs Santa Rosa, CA II None 190,000 759,346 36,686 190,000 796,032 986,032 (657,007) 08/81 08/81 20 Yrs Arvada, CO None 305,000 1,759,608 37,537 305,000 1,797,145 2,102,145 (1,509,818) 12/83 06/82 20 Yrs Las Vegas, NV None 247,000 1,111,359 33,250 247,000 1,144,609 1,391,609 (972,923) 11/83 07/82 20 Yrs Santa Rosa, CA III None 157,000 802,078 32,236 157,000 834,314 991,314 (693,978) 10/83 12/82 20 Yrs Federal Heights, CO None 260,000 1,013,994 4,926 260,000 1,018,920 1,278,920 (827,321) 10/83 03/83 20 Yrs Colorado Springs, CO None 342,000 1,518,487 62,826 342,000 1,581,313 1,923,313 (1,242,779) 03/84 04/83 20 Yrs -------- ---------- ------- -------- ---------- ---------- ---------- $1,759,000 $8,285,661 $242,605 $1,759,000 $8,528,266 $10,287,266 $(7,110,979) ========== ========== ======== ========== ========== =========== ==========
Real Estate Accumulated at Cost Depreciation Balance at January 1, 1997 10,158,698 5,853,319 Additions 14,754 419,220 ----------- ---------- Balance at December 31, 1997 $10,173,452 $6,272,539 Additions 31,393 419,220 ----------- ---------- Balance at December 31, 1998 $10,204,845 $6,691,759 Additions 82,421 419,220 ----------- ---------- Balance at December 31, 1999 $10,287,266 $7,110,979 =========== ========== EXHIBIT 2 March 31, 1999 ANNUAL REPORT TO LIMITED PARTNERS OF DSI REALTY INCOME FUND VI Dear Limited Partner: This report contains the Partnership's balance sheets as of December 31, 1998 and 1997, and the related statements of income, changes in partners' equity and cash flows for each of the three years in the period ended December 31, 1998 accompanied by an independent auditors' report. The Partnership owns seven mini-storage facilities, including two in Santa Rosa, California. The Partnership's properties were each purchased for all cash and funded solely from subscriptions for limited partnership interests without the use of mortgage financing. Your attention is directed to the section entitled Management's Discussion and Analysis of Financial Condition and Results of Operations for the General Partners' discussion and analysis of the financial statements and operations of the Partnership. Average occupancy levels for each of the Partnership's six properties for the years ended December 31, 1999 and December 31, 1998 were as follows: Location of Property Average Occupancy Average Occupancy Levels for the Levels for the Year Ended Year Ended Dec. 31, 1999 Dec. 31, 1998 Vallejo, California 92% 91% Santa Rosa, California both stages) 86% 88% Arvada, California 87% 88% Las Vegas, Nevada 79% 77% Federal Heights, Colorado 85% 86% Colorado Springs, Colorado 82% 84% We will keep you informed of the activities of DSI Realty Income Fund VI as they develop. If you have any questions, please contact us at your convenience at (562) 493-3022. If you would like a copy of the Partnership's Annual Report on Form 10-K for the year ended December 31, 1999, which was filed with the Securities and Exchange Commission (which report includes the enclosed Financial Statements), we will forward a copy of the report to you upon written request. Very truly yours, DSI REALTY INCOME FUND VI By: DSI Properties, Inc. By_______________________________ ROBERT J. CONWAY, President EX-27 2 DSI REALTY INCOME FUND VI WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 0000318835 1 U.S. Dollars YEAR Dec-31-1999 Dec-31-1999 559869 0 0 0 0 0 10287266 7110979 3796535 0 0 0 0 0 0 3796535 2877374 2887720 0 0 0 0 0 1268246 0 1268246 0 0 0 1268246 0 0
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