-----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, De+FAGUMhByrrSYdXifJfxGYLCWJicGNMGH75EVPQZnfJ64wesgHsoLAIZ1Q9voT nuCivkFIJtZt/c+apzJRPw== 0000318835-99-000004.txt : 19990403 0000318835-99-000004.hdr.sgml : 19990403 ACCESSION NUMBER: 0000318835-99-000004 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990401 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DSI REALTY INCOME FUND X CENTRAL INDEX KEY: 0000792989 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 330195079 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-15346 FILM NUMBER: 99585213 BUSINESS ADDRESS: STREET 1: 3701 LONG BEACH BLVD CITY: LONG BEACH STATE: CA ZIP: 90801 BUSINESS PHONE: 310-595-7711 MAIL ADDRESS: STREET 1: P O BOX 357 CITY: LONG BEACH STATE: CA ZIP: 90801 10-K 1 DSI REALTY INCOME FUND X 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 the fiscal year ended December 31, 1998. 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. 33-5327. DSI REALTY INCOME FUND X, a California Limited Partnership (Exact name of registrant as specified in governing instruments) _________California___________________________33-0195079_____ (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)493-3022 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, 1998, incorporated by reference to Form 10-K, Part II. Item 11. Registrant's Financial Statements for its fiscal year ended December 31, 1998, 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, 1998, incorporated by reference to Form 10-K, Part III. PART I Item l. BUSINESS Registrant, DSI Realty Income Fund X (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 April 15, 1986. The General Partners are DSI Properties, Inc., a California corporation, 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 thirty-one thousand seven hundred eighty-three (31,783) units of limited partnership interests aggregating Fifteen Million Eight Hundred Ninety-One Thousand Five Hundred Dollars ($15,891,500). 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 five 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 five properties for the years ended December 31, 1998 and December 31, 1997 were as follows: Location of Property Average Occupancy Average Occupancy Level for the Level for the Year Ended Year Ended Dec. 31, 1998 Dec. 31, 1997 Ryan Road Warren, MI 80% 84% Crestwood, IL 82% 82% Groesbeck Hwy Warren, MI 85% 86% Forrestville, MD 84% 86% Troy, MI 83% 85% 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 five mini-storage facilities, none of which are subject to long-term indebtedness. The following table sets forth information as of December 31, 1998 regarding properties owned by the Partnership. Location Size of Net Rentable No. of Completion Parcel Area Rental Units Date Ryan Road, Warren, MI 4.286 acres 53,779 494 9/30/87 Crestwood, IL 2.96 acres 51,055 463 11/25/87 Groesbeck Hwy, Warren, MI 4.76 acres 59,281 493 l/23/88 Forrestville, MD 4.18 acres 56,461 527 8/6/88 Troy, MI 4.98 acres 79,201 498 6/17/88 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 31,783 limited partnership units during its offering and currently has 997 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 $12.62 per Limited Partnership Unit were declared and paid each quarter for the year ended December 31, 1998 and $12.59 per Limited Partnership Unit were declared and paid each quarter for the year ended December 31, 1997 and $11.25 per Limited Partnership Unit were declared and paid each quarter for the year ended December 31, 1996. Due to adverse conditions in the local economies where certain of the properties are located, it is Registrant's expectations that distributions will continue to be paid in the future, however, at a reduced annualized return of the Limited Partners' capital contributions. Item 6. SELECTED FINANCIAL DATA FIVE YEARS ENDED DECEMBER 31, 1998 ------------------------------------------------------------------- 1998 1997 1996 1995 1994 ---- ---- ---- ---- ---- TOTAL REVENUES $2,707,174 $2,659,936 $2,667,128 $2,529,555 $ 2,292,130 TOTAL EXPENSES 1,626,960 1,628,097 1,574,943 1,561,433 1,428,672 ---------- ----------- ----------- ----------- ----------- NET INCOME $1,080,214 $1,031,839 $1,092,185 $ 968,122 $ 863,458 ========== =========== =========== =========== =========== TOTAL ASSETS $9,050,011 $9,300,328 $9,811,469 $9,890,145 $10,039,357 ========== =========== =========== =========== =========== NET CASH PROVIDED BY OPERATING ACTIVITIES $1,918,525 $1,644,418 $1,906,898 $1,919,722 $ 1,319,398 ========== =========== =========== =========== =========== NET INCOME PER LIMITED PARTNERSHIP UNIT $ 33.65 $ 32.14 $ 34.02 $ 30.16 $ 26.90 ========== =========== =========== =========== =========== CASH DISTRIBUTIONS PER $500 LIMITED PARTNERSHIP UNIT $ 50.51 $ 50.37 $ 45.00 $ 40.00 $ 36.25 ========== =========== =========== =========== =========== Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS 1998 COMPARED TO 1997 Total revenues increased from $2,659,936 in 1997 to $2,707,174 in 1998, while total expenses decreased from $1,628,097 to $1,626,960 resulting in an increase in net income from $1,031,839 to $1,080,214. The approximate $39,400 (1.5%) increase in rental revenues can be attributed to higher unit rental rates. Occupancy levels for the Partnership's five mini-storage facilities averaged 82.7% for the year ended December 31, 1998, compared to 84.5% for the year ended December 31, 1997. The Partnership continued to increase rental rates where market conditions made such increases feasible. Operating expenses decreased by approximately $11,200 (1.8%) primarily due to decreases in repairs and maintenance, legal and professional and worker's conpensation insurance expenses partially offset by increases in real estate tax and salary and wage expenses. General and administrative expenses increased by approximately $5,800 (3.3%) primarily due to an increase in Michigan State Taxes. The General Partners' incentive management fee remained constant. Property management fees increased by approximately $2,700 (2.1%). Property management fees, which are computed as a percentage of rental revenue, increased as a result of the increase in rental revenue. 1997 COMPARED TO 1996 Total revenues decreased from $2,667,128 in 1996 to $2,659,659 in 1997, while total expenses increased from $1,574,943 to $1,628,097 resulting in a decrease in net income from $1,092,185 to $1,031,839. The approximate $14,800 (0.6%) decrease in rental revenues can be attributed to lower occupancy levels partially offset by higher unit rental rates. Occupancy levels for the Partnership's five mini-storage facilities averaged 84.5% for the year ended December 31, 1997, compared to 86.4% for the year ended December 31, 1996. The Partnership continued to increase rental rates where market conditions made such increases feasible. Operating expenses increased by approximately $33,000 (5.4%) primarily due to increases in repairs and maintenance, real estate taxes and salaries and wages partially offset by a decrease in yellow pages advertising costs. General and administrative expenses increased by approximately $8,800 (5.3%) primarily due to increases in miscellaneous advertising costs, insurance and office expenses partially offset by a decrease in other taxes. The General Partners' incentive management fee increased by approximately $14,400 (11.1%). As this fee is computed as a percentage of distributions made to the Limited Partners, the 1997 increase in distributions resulted in an increased general partners' incentive management fee. Property management fees remained constant. LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities increased by approximately $274,100 (16.7%) primarily as a result of an increase net income, deferral of property management and incentive management fees and a decrease in other assets. Net cash provided by operating activities increased by approximately $262,500 (13.8%) in 1997 compared to 1996 primarily as a result of the decrease in net income and partial payment of accrued property management fees. Cash used in financing activities, as set forth in the statements of cash flows, consists solely of cash distributions to partners. Special distributions of 2%, 2% and 1% were declared and paid on December 15, 1998, 1997 and 1996, respectively. Cash used in investing activities, as set forth in the statement of cash flows, consists of acquisitions of equipment for the Partnership's mini-storage facilities in 1996 and 1997. 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 financial resources appear to be adequate to meet its needs for the next twelve months. The Year 2000 issue refers to the inability of certain computer systems to recognize a date using "00" as the Year 2000. The Partnership has implemented a Year 2000 program, which ahs three phases: (1) identification; (2) remediation; and (3) testing and verification. The Partnership, as well as the property management company and the Partnership's warehouse facilities have completed those phases. Computer programs have been upgraded and tested to function properly with respect to the dates in the Year 2000 and thereafter. Year 2000 compliance costs are nominal and have been expensed in the regular course of business. The Partnership provides no assurance that third-party suppliers and customers will be compliant. Nevertheless, the Partnership does not believe that the Year 2000 issue will have a material adverse effect on its financial condition or results of operations. The General Partners are not aware of any environmental problems which might have a material adverse impact on 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, Robert J. Conway and Joseph W. Conway, brothers. As of December 31, 1998, 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, together with Mr. Joseph W. Stok, currently comprise the entire Board of Directors of DSI Properties, Inc. Mr. Robert J. Conway is 65 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 69 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 75 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 RENUMERATION 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, 1998, which together with the report of its independent auditors, Deloitte & Touche LLP, is 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, 1998, 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. 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, 1998, 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 year ended December 31, 1998, 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, 1998. (b) No reports on Form 8K were filed during the fiscal year ended December 31, 1998. 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 X by: DSI Properties, Inc., a California corporation, as General Partner By_____________________________ Dated: March 31, 1999 ROBERT J. CONWAY, President (Chief Executive Officer, Chief Financial Officer, and Director) By____________________________ Dated: March 31, 1999 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 X by: DSI Properties, Inc., a California corporation, as General Partner By:__________________________ Dated: March 31, 1999 ROBERT J. CONWAY, President, Chief Executive Officer, Chief Financial Officer, and Director By___________________________ Dated: March 31, 1999 JOSEPH W. CONWAY (Executive Vice President and Director) DSI REALTY INCOME FUND X 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, 1995, 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 X (A California Real Estate Limited Partnership) SELECTED FINANCIAL DATA FIVE YEARS ENDED DECEMBER 31, 1998 - -------------------------------------------------------------------------------- 1998 1997 1996 1995 1994 ---- ---- ---- ---- ---- TOTAL REVENUES $2,707,174 $2,659,936 $2,667,128 $2,529,555 $ 2,292,130 TOTAL EXPENSES 1,626,960 1,628,097 1,574,943 1,561,433 1,428,672 ---------- ----------- ----------- ----------- ----------- NET INCOME $1,080,214 $1,031,839 $1,092,185 $ 968,122 $ 863,458 ========== =========== =========== =========== =========== TOTAL ASSETS $9,050,011 $9,300,328 $9,811,469 $9,890,145 $10,039,357 ========== =========== =========== =========== =========== NET CASH PROVIDED BY OPERATING ACTIVITIES $1,918,525 $1,644,418 $1,906,898 $1,919,722 $ 1,319,398 ========== =========== =========== =========== =========== NET INCOME PER LIMITED PARTNERSHIP UNIT $ 33.65 $ 32.14 $ 34.02 $ 30.16 $ 26.90 ========== =========== =========== =========== =========== CASH DISTRIBUTIONS PER $500 LIMITED PARTNERSHIP UNIT $ 50.51 $ 50.37 $ 45.00 $ 40.00 $ 36.25 ========== =========== =========== =========== =========== 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, 1998. Operating Partners' Results Equity Per financial statements $ 1,080,214 $ 6,676,395 Excess financial statement depreciation 181,316 1,955,960 Capitalization of syndication costs 1,694,248 Accrued incentive management fee 145,930 1,302,163 Accrued partner distributions 321,042 Deferred rental revenues 74,734 Acquisition costs capitalized for tax purposes 1,146,936 State taxes (16,240) Other (6) ----------- ----------- Per Partnership income tax return $ 1,391,220 $13,171,478 =========== =========== Net taxable income per $500 limited partnership unit $ 43.77 =========== DSI REALTY INCOME FUND X (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, 1998 and 1997 F-2 Statements of Income for the Three Years Ended December 31, 1998 F-3 Statements of Changes in Partners' Equity for the Three Years Ended December 31, 1998 F-4 Statements of Cash Flows for the Three Years Ended December 31, 1998 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 X: We have audited the accompanying balance sheets of DSI Realty Income Fund X, a California Real Estate Limited Partnership (the "Partnership") as of December 31, 1998 and 1997, 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, 1998. 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 X at December 31, 1998 and 1997, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1998 in conformity with generally accepted accounting principles. Also in our opinion, such financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects, the information set forth therein. February 5, 1999 DELOITTE & TOUCHE LONG BEACH, CALIFORNIA DSI REALTY INCOME FUND X (A California Real Estate Limited Partnership) BALANCE SHEETS DECEMBER 31, 1998 AND 1997 - -------------------------------------------------------------------------------- ASSETS 1998 1997 CASH AND CASH EQUIVALENTS $ 1,772,250 $ 1,475,167 PROPERTY, net (Notes 1, 2 and 3) 7,213,688 7,752,217 OTHER ASSETS 64,073 72,944 ----------- ----------- TOTAL $ 9,050,011 $ 9,300,328 =========== =========== LIABILITIES AND PARTNERS' EQUITY LIABILITIES: Distribution due partners (Note 4) $ 321,040 $ 321,040 Incentive management fee payable to general partners (Note 4) 1,302,163 1,156,233 Property management fees payable (Note 1) 616,627 483,594 Customer deposits and other liabilities 133,786 121,838 ----------- ----------- Total liabilities 2,373,616 2,082,705 ----------- ----------- PARTNERS' EQUITY (DEFICIT)(Notes 1 and 4): General partners (75,264) (69,852) Limited partners (31,783 limited partnership units outstanding at December 31, 1998 and 1997) 6,751,659 7,287,475 ------------ ----------- Total partners' equity 6,676,395 7,217,623 ------------ ----------- TOTAL $ 9,050,011 $ 9,300,328 ============ =========== See accompanying notes to financial statements. DSI REALTY INCOME FUND X (A California Real Estate Limited Partnership) STATEMENTS OF INCOME THREE YEARS ENDED DECEMBER 31, 1998 - -------------------------------------------------------------------------------- 1998 1997 1996 REVENUES: Rental revenues $2,645,296 $2,605,899 $2,620,682 Interest and other income 61,878 54,037 46,446 ---------- ---------- ---------- Total revenues 2,707,174 2,659,936 2,667,128 ---------- ---------- ---------- EXPENSES: Depreciation (Note 2) 538,529 538,529 540,890 Operating 628,231 639,403 606,374 General and administrative 181,236 175,402 166,622 General partners' incentive management fee (Note 4) 145,930 144,469 130,022 Property management (Note 1) 133,034 130,294 131,035 ---------- ---------- ---------- Total expenses 1,626,960 1,628,097 1,574,943 ---------- ---------- ---------- NET INCOME $1,080,214 $1,031,839 $1,092,185 ========== ========== ========== AGGREGATE NET INCOME ALLOCATED TO (Note 4): Limited partners $1,069,412 $1,021,521 $1,081,263 General partners 10,802 10,318 10,922 ---------- ---------- ---------- TOTAL $1,080,214 $1,031,839 $1,092,185 ========== ========== ========== NET INCOME PER LIMITED PARTNERSHIP UNIT (Notes 2 and 4) $ 33.65 $ 32.14 $ 34.02 ========== ========== ========== See accompanying notes to financial statements. DSI REALTY INCOME FUND X (A California Real Estate Limited Partnership) STATEMENTS OF CHANGES IN PARTNERS' EQUITY THREE YEARS ENDED DECEMBER 31, 1998 - -------------------------------------------------------------------------------- General Limited Partners Partners Total BALANCE AT JANUARY 1, 1996 (60,475) 8,215,788 8,155,313 Net income 10,922 1,081,263 1,092,185 Distributions (14,447) (1,430,237) (1,444,684) ------- ---------- ---------- BALANCE AT DECEMBER 31, 1996 $(64,000) $7,866,814 $7,802,814 Net income 10,318 1,021,521 1,031,839 Distributions (16,170) (1,600,860) (1,617,030) ------- ---------- ---------- BALANCE AT DECEMBER 31, 1997 $(69,852) $7,287,475 $7,217,623 Net income 10,802 1,069,412 1,080,214 Distributions (16,214) (1,605,228) (1,621,442) ------- ---------- ---------- $(75,264) $6,751,659 $6,676,395 ======= ========== ========== See accompanying notes to financial statements. DSI REALTY INCOME FUND X (A California Real Estate Limited Partnership) STATEMENTS OF CASH FLOWS THREE YEARS ENDED DECEMBER 31, 1998 - -------------------------------------------------------------------------------- 1998 1997 1996 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $1,080,214 $1,031,839 $1,092,185 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 538,529 538,529 540,890 Changes in assets and liabilities: Receivable from general partners Other assets 8,871 Incentive management fee payable to general partners 145,930 144,469 130,022 Property management fee payable 133,033 (69,705) 131,034 Customer deposits and other liabilities 11,948 (714) 12,767 ----------- ----------- ----------- Net cash provided by operating activities 1,918,525 1,644,418 1,906,898 CASH FLOWS FROM FINANCING ACTIVITIES - Distributions to partners (1,621,442) (1,617,030) (1,444,684) CASH FLOWS FROM INVESTING ACTIVITIES - Additions to property (7,628) (139,590) ----------- ----------- ----------- NET INCREASE IN CASH AND CASH EQUIVALENTS 297,083 19,760 322,624 CASH AND CASH EQUIVALENTS, AT BEGINNING OF YEAR 1,475,167 1,455,407 1,132,783 ----------- ----------- ------------ CASH AND CASH EQUIVALENTS, AT END OF YEAR $ 1,772,250 $ 1,475,167 $ 1,455,407 =========== =========== ============ See accompanying notes to financial statements. DSI REALTY INCOME FUND X (A California Real Estate Limited Partnership) NOTES TO FINANCIAL STATEMENTS THREE YEARS ENDED DECEMBER 31, 1998 1. GENERAL DSI Realty Income Fund X, a California Real Estate Limited Partnership (the "Partnership"), has three general partners (DSI Properties, Inc. Robert J. Conway and Joseph W. Conway) and limited partners owning 31,783 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 May 1, 1986 under the California Uniform Limited Partnership Act for the primary purpose of acquiring and operating real estate. The Partnership has acquired five mini-storage properties, two of which are located in Warren, Michigan; one in Crestwood, Illinois; one in Troy, Michigan; and one in Forestville, Maryland. The facilities were acquired from Dahn Corporation ("Dahn"). Dahn is not affiliated with the Partnership. 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, 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 mini-storage facilities. Depreciation is provided 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 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 $6,495,083. 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 (31,783 in 1998, 1997 and 1996). Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires the Partnership's management to make estimates and assumptions that affect the reported amount of 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 recognized in 1998, 1997 or 1996. 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. Concentration 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 As of December 31, 1998 and 1997, the total cost of property and accumulated depreciation are as follows: 1998 1997 Land $ 2,089,882 $ 2,089,882 Buildings and improvements 10,833,336 10,833,336 ----------- ------------ Total $12,923,218 $12,923,218 Accumulated depreciation (5,709,530) (5,171,001) ----------- ----------- Property, net $ 7,213,688 $ 7,752,217 =========== =========== 4. ALLOCATION OF PROFITS AND LOSSES Under the Agreement of Limited Partnership, the general partners are to be allocated 1% of the net profits or net losses from operations, and the limited partners are to be allocated the balance of the net profit or loss 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 a real estate project. In addition, the general partners are entitled to 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 Partnership distributions made from cash available for distribution from operations, as defined, and the payment of such fee is subordinated to a cumulative return to the limited partners of 8.1% of the offering proceeds as defined. 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. DSI REALTY INCOME FUND X (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 Ryan Road, Warren Michigan None $277,799 $1,715,183 $ 5,319 $277,799 $1,720,502 $1,998,301 $950,932 12/87 02/87 20 Yrs Crestwood,Illinois None 205,960 1,631,179 3,211 205,960 1,634,390 1,840,350 904,407 12/87 04/87 20 Yrs Grosebeck Highway Warren, Michigan None 314,517 1,760,657 67,206 314,517 1,827,863 2,142,380 980,734 01/88 04/87 20 Yrs Forestville, Maryland None 755,000 2,278,110 9,145 755,000 2,287,255 3,042,255 1,196,925 07/88 08/87 20 Yrs Troy, Michigan None 536,606 3,148,119 215,207 536,606 3,363,326 3,899,932 1,676,532 06/88 06/88 20 Yrs -------- ---------- ------- -------- ---------- ---------- ---------- $2,089,882 $10,533,248 $300,088 $2,089,882 $10,833,336 $12,923,218*$5,709,530 ========== ========== ======== ========== ========== =========== ==========
Real Estate Accumulated at Cost Depreciation Balance at January 1, 1996 12,776,000 4,091,582 Additions 139,590 540,890 ----------- ---------- Balance at December 31, 1996 $12,915,590 $4,632,472 Additions 7,628 538,529 ----------- ---------- Balance at December 31, 1997 $12,923,218 $5,171,001 Additions 538,529 ----------- ---------- Balance at December 31, 1998 $12,923,218 $5,709,530 =========== ========== EXHIBIT 2 March 31, 1999 ANNUAL REPORT TO LIMITED PARTNERS OF DSI REALTY INCOME FUND X 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 five mini-storage facilities and a 70% interest in a sixth mini-storage facility on a joint venture basis with an affiliated Partnership, DSI Realty Income Fund VIII. 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, 1998 and December 31, 1997 were as follows: Location of Property Average Occupancy Average Occupancy Levels for the Levels for the Year Ended Year Ended Dec. 31, 1998 Dec. 31, 1997 Ryan Rd Warren, MI 80% 84% Crestwood,IL 82% 82% Groesbeck Hwy Warren, MI 85% 86% Forestville, MD 84% 86% Troy, MI 83% 85% We will keep you informed of the activities of DSI Realty Income Fund X 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, 1998 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 X By: DSI Properties, Inc. By___________________________ ROBERT J. CONWAY, President EX-27 2 DSI REALTY INCOME FUND X WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 0000792989 1 U.S. Dollars YEAR DEC-31-1998 DEC-31-1998 1772250 0 0 0 0 0 12923218 5709530 9050011 0 0 0 0 0 0 9050011 2645296 2707174 0 0 0 0 0 1080214 0 1080214 0 0 0 1080214 0 0
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