10-Q 1 dsiix-305.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q /_x_/ Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended March 31, 2005 /___/ Transition report pursuant to Section 13 or 15(d) of the Securities Act of 1934 for the transition period from ______________ to ________________. Commission File Number 2-96364 DSI REALTY INCOME FUND IX, A California Limited Partnership (Exact name of registrant as specified in its charter) California_______________________________________33-0103989 (State or other jurisdiction of (I.R.S. Employer incorporation) Identification No.) 6700 E. Pacific Coast Hwy., Long Beach, California 90803 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code-(562)493-8881 _________________________________________________________________ Former name, former address and former fiscal year, if changed since last report. Indicate by check mark whether the registrant (1) 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 90 days. Yes _x_. No__. PART I - FINANCIAL INFORMATION Item 1. Financial Statements. DSI REALTY INCOME FUND IX (A California Real Estate Limited Partnership) CONSOLIDATED BALANCE SHEETS(UNAUDITED) MARCH 31, 2005 AND DECEMBER 31, 2004 March 31, December 31, 2005 2004 ASSETS CASH AND CASH EQUIVALENTS $ 394,868 $ 486,736 PROPERTY, NET 3,566,189 3,670,725 OTHER ASSETS 85,360 81,403 ---------- ---------- TOTAL $4,046,417 $4,238,864 ========== ========== LIABILITIES AND PARTNERS' EQUITY LIABILITIES Distribution to Partners $232,523 $310,030 Capital lease obligation 181,638 195,138 Other liabilities 323,668 341,066 -------- -------- Total liabilities 737,829 846,234 -------- -------- MINORITY INTEREST IN REAL ESTATE JOINT VENTURE 182,954 179,703 PARTNERS' EQUITY (DEFICIT): General Partners (106,185) (105,312) Limited Partners 3,231,819 3,318,239 --------- --------- Total partners' equity 3,125,634 3,212,927 TOTAL $4,046,417 $4,238,864 ========== ========== See accompanying notes to consolidated financial statements(unaudited). CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004 March 31, March 31, 2005 2004 REVENUES: Rental $ 663,961 $ 704,032 ---------- ---------- EXPENSES: Operating 412,158 373,165 General and administrative 78,551 70,545 ---------- --------- Total expenses 490,709 443,710 ---------- --------- OPERATING INCOME 173,252 260,322 OTHER INCOME Interest 129 130 ---------- --------- INCOME BEFORE MINORITY INTEREST IN INCOME OF REAL ESTATE JOINT VENTURE 173,381 260,452 MINORITY INTEREST IN INCOME OF REAL ESTATE JOINT VENTURE (28,151) (31,941) NET INCOME $ 145,230 $ 228,511 ========== ========== AGGREGATE NET INCOME ALLOCATED TO: Limited partners $ 143,778 $ 226,226 General partners 1,452 2,285 ---------- ---------- TOTAL $ 145,230 $ 228,511 ========== ========== NET INCOME PER LIMITED PARTNERSHIP UNIT $ 4.68 $ 7.37 ========== ========== LIMITED PARTNERSHIP UNITS USED IN PER UNIT CALCULATION 30,693 30,693 ====== ====== See accompanying notes to consolidated financial statements(unaudited). CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIT)(UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2005 GENERAL LIMITED PARTNERS PARTNERS TOTAL BALANCE AT JANUARY 1, 2005 ($105,312) $3,318,239 $3,212,927 NET INCOME 1,452 143,778 145,230 DISTRIBUTIONS (2,325) (230,198) (232,523) --------- ---------- ---------- BALANCE AT MARCH 31, 2005 ($106,185) $3,231,819 $3,125,634 ========= ========== ========== See accompanying notes to consolidated financial statements(unaudited). CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004 March 31, March 31, 2005 2004 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 145,230 $ 228,511 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 104,536 104,536 Minority interest in income real estate joint venture 28,151 31,941 Changes in assets and liabilities: Decrease in other assets (3,957) (10,610) (Decrease)increase in liabilities (108,405) 43,438 -------- --------- Net cash provided by operating activities 165,555 397,816 -------- --------- CASH FLOWS FROM FINANCING ACTIVITIES - Distributions to partners (232,523) (348,784) Distributions paid to minority interest in real estate joint venture (24,900) (33,000) -------- --------- Net cash used in financing activities (257,423) (381,784) NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (91,868) 16,032 CASH AND CASH EQUIVALENTS: At beginning of period 486,736 732,355 --------- --------- At end of period $ 394,868 $ 748,387 ========= ========= See accompanying notes to consolidated financial statements(unaudited). DSI REALTY INCOME FUND IX (A California Real Estate Limited Partnership) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. GENERAL DSI Realty Income Fund IX (the "Partnership"), a limited partnership, has three general partners (DSI Properties, Inc., Robert J. Conway and Joseph W. Conway) and limited partners owning 30,693 limited partnership units. The Partnership has acquired five mini-storage facilities located in Monterey Park and Azusa, California; Everett, Washington;and Romeoville and Elgin, Illinois. The Partnership has also entered into a joint venture with DSI Realty Income Fund VIII through which the Partnership has a 70% interest in a mini-storage facility in Aurora, Colorado. The Partnership is a general partner in the joint venture. The facilities were acquired from Dahn Corporation ("Dahn"). Dahn is not affiliated with the Partner- ship. Dahn is affiliated with other partnerships in which DSI Properties, Inc., Robert J. Conway and Joseph W. Conway are the general partners. The mini-storage facilities are operated for the Partnership by Dahn under various agreements which are subject to renewal annually. Under the terms of the agreements, the Partnership is required to pay Dahn a property management fee equal to 5% of gross revenue from operations, defined as the entire amount of all receipts from the renting or leasing of storage compartments and sale of locks. The accompanying consolidated financial information as of March 31, 2005 and for the periods ended March 31, 2005, and 2004 is unaudited. Such financial information includes all adjustments which are considered necessary by the Partnership's management for a fair presentation of the results for the periods indicated. 2. PROPERTY The Partnership owns five mini-storage facilities located in Monterey Park and Azusa, California; Everett, Washington; and Romeoville and Elgin, Illinois. The Partnership also owns a 70% interest in a mini-storage facility in Aurora, Colorado. As of March 31, 2005, the total cost and accumulated depreciation of the mini-storage facilities are as follows: March 31, 2005 December 31, 2004 Land $ 2,729,790 $ 2,729,790 Buildings and equipment 11,032,676 11,032,676 Equipment 275,042 275,042 ------------ ------------ Total 14,037,508 14,037,508 Less: Accumulated Depreciation (10,471,319) (10,366,783) ------------ ------------ Property - Net $ 3,566,189 $ 3,670,725
============ ============ 3. NET INCOME PER LIMITED PARTNERSHIP UNIT Net income per limited partnership unit is calculated by dividing the net income allocated to the limited partners by the number of limited partnership units outstanding during the period. 4. ALLOCATION OF PROFITS AND LOSSES AND GENERAL PARTNERS' INCENTIVE MANAGEMENT FEE Under the Agreement of limited Partnership, the general partners are to be allocated 1% of the net profits or losses from operations, and the limited partners are to be allocated the balance of the net profits or losses 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 9% per annum of the cash available for distribution on a cumulative basis, calculated as cash generated from operations less capital expenditures. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. We are pleased to enclose the Partnership's unaudited consolidated financial statements for the period ended March 31, 2005. The following is Management's discussion and analysis of the Partnership's financial condition and results of its operations. For the three month periods ended March 31, 2005 and 2004, total revenues decreased 5.7% from $704,032 to $663,961, total expenses increased 10.6% from $443,710 to $490,709, other income decreased from $130 to $129 and minority interest in income of real estate joint venture decreased 11.9% from $31,941 to $28,151. As a result, net income decreased 36.4% from $228,511 to $145,230 for the three-month period ended March 31, 2005, as compared to the same period in 2004. The decrease in revenue can be attributed to a decrease in rental in income due to lower occupancy and unit rental rates. Occupancy levels for the Partnership's six mini-storage facilities averaged 71.9% for the three month period ended March 31, 2005 as compared to 74.7% for the same period in 2004. The Partnership is continuing its marketing efforts to attract and keep new tenants in its various mini-storage facilities. Operating expenses increased approximately $39,000 (10.5%) primarily as a result of increases in advertising, maintenance and repair, real estate tax and truck insurance expenses. General and administrative expenses increased approxi- mately $8,000 (11.3%) primarily as a result of an increase in legal and professional and equipment and computer lease expenses partially offset by a decrease in incentive management fees. 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. The General Partners anticipate distributions to the Limited Partners to remain at the current level for the foreseeable future. Item 3. Quantative and Qualitative Disclosures About Market Risk NONE Item 4. CONTROLS AND PROCEDURES Within 90 days prior to the date of this report, the Partnership evaluated the effectiveness of its disclosure controls and procedures. This evaluation was performed by the Partnership's Controller with assistance of the Partner- ship's President and Chief Executive Officer. These disclosure controls and procedures are designed that the information required to be disclosed by the Partnership in its periodic reports filed with Securities and Exchange Commission (the Commission) is recorded, processed, summarized and reported, within the time periods specified by the Commission's rules and forms, and that the information is communicated to the certifying officers on a timely basis. Based on this evaluation, the Partnership concluded that its dis- closure controls and procedures were effective. There have been no signif- icant changes in the Partnership's internal controls or in other factors that could significantly affect the internal contorls subsequent to the date of their evaluation. PART II - OTHER INFORMATION Item 1. Legal Proceedings Registrant is not a party to any material pending legal proceedings. Item 2. Unregistered Sales of Equity 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 8K. (a) Attached hereto as Exhibit "20" is Registrant's Quarterly Report to Limited Partners for the period ended March 31, 2005. (B) Registrant did not file any reports on Form 8-K for the period reported upon. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: May 13, 2005 DSI REALTY INCOME FUND IX A California Limited Partnership (Registrant) By____\s\ Robert J. Conway_____ DSI Properties, Inc., as General Partner by ROBERT J. CONWAY, President and Chief Financial Officer SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: May 13, 2005 DSI REALTY INCOME FUND IX A California Limited Partnership (Registrant) By__\s\ Robert J. Conway________ DSI Properties, Inc., as General Partner by ROBERT J. CONWAY, President and Chief Financial Officer CERTIFICATIONS I, Robert J. Conway, certify that: 1. I have reviewed this quarterly report on Form 10-Q of DSI Realty Income Fund IX; 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 circumstances under which such statements were made, not misleading with respect to the period cover- ed by this quarterly report. 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15e and 15d-15e) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our super- vision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of our annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors: a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to affect the registrant's ability to record, pro- cess, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's in- ternal controls over financial reporting. Date: May 13, 2005 Robert J. Conway Chief Executive Officer CERTIFICATIONS I, Richard P. Conway, certify that: 1. I have reviewed this quarterly report on Form 10-Q of DSI Realty Income Fund IX; 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 circumstances under which such statements were made, not misleading with respect to the period cover- ed by this quarterly report. 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15e and 15d-15e) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our super- vision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of our annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors: a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to affect the registrant's ability to record, pro- cess, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's in- ternal controls over financial reporting. Date: May 13, 2005 Richard P. Conway Vice President CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of DSI Realty Income Fund IX (the "Partnership") on Form 10-Q for the period ending March 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Robert J. Conway, Chief Executive Officer of the Partnership, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements 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 the Partnership. Robert J. Conway Chief Executive Officer May 13, 2005 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of DSI Realty Income Fund IX (the "Partnership") on Form 10-Q for the period ending March 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Richard P. Conway, Vice President of the Corporate General Partner, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements 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 the Partnership. Richard P. Conway Vice President May 13, 2005