-----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, DaLmL2bLdSwe44KzX/KzMhBZTRV5/OGfHxIJdK409rT0C4ChV9wgDljelor/aL9p RwPvy1eq4/lvnot6nTokdQ== 0000318835-07-000029.txt : 20071114 0000318835-07-000029.hdr.sgml : 20071114 20071114164426 ACCESSION NUMBER: 0000318835-07-000029 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20070930 FILED AS OF DATE: 20071114 DATE AS OF CHANGE: 20071114 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-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15346 FILM NUMBER: 071245697 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-Q 1 dsix907.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 September 30, 2007. /___/ Transition report pursuant to Section 13 or 15(d) of the Securities Act of 1934 for the transition period from ______________ to ________________. Commission File Number 33-5327 DSI REALTY INCOME FUND X, A California Limited Partnership (Exact name of registrant as specified in its charter) California_______________________________________33-0195079 (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 X (A Limited Partnership) BALANCE SHEETS(UNAUDITED), SEPTEMBER 30, 2007 AND DECEMBER 31, 2006 September 30, December 31, 2007 2006 ASSETS CASH AND CASH EQUIVALENTS $ 493,747 $ 601,812 PROPERTY, NET 2,500,938 2,934,830 OTHER ASSETS 226,762 226,656 ---------- ---------- TOTAL $3,221,447 $3,763,298 ========== ========== LIABILITIES AND PARTNERS' EQUITY LIABILITIES Distribution to Partners $240,780 $321,041 Incentive management fee payable to general partners 257,167 178,208 Property management fees payable 409,939 409,337 Customer deposits and other liabilities 183,494 286,645 Capital lease obligation 50,575 79,133 -------- -------- Total liabilities 1,141,955 1,274,364 ---------- ---------- PARTNERS' EQUITY (DEFICIT): General Partners (121,232) (117,138) Limited Partners (31,783 limited partnership units outstanding at September 30, 2007 and December 31, 2006) 2,200,724 2,606,072 ---------- ---------- Total partners' equity 2,079,492 2,488,934 ---------- ---------- TOTAL $3,221,447 $3,763,298 ========== ========== See accompanying notes to financial statements (unaudited). STATEMENTS OF INCOME (UNAUDITED) FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 September 30, September 30, 2007 2006 REVENUES: Rental $694,306 $708,222 -------- -------- EXPENSES: Operating 455,075 503,637 General and administrative 49,302 52,152 -------- -------- Total expenses 504,377 555,789 -------- -------- OPERATING INCOME 189,929 152,433 OTHER INCOME Interest 158 186 -------- -------- NET INCOME $190,087 $152,619 ======== ======== AGGREGATE NET INCOME ALLOCATED TO : Limited partners $188,186 $151,093 General partners 1,901 1,526 -------- -------- TOTAL $190,087 $152,619 ======== ======== NET INCOME PER LIMITED PARTNERSHIP UNIT $ 5.92 $ 4.75 ====== ====== LIMITED PARTNERSHIP UNITS USED IN PER UNIT CALCULATION 31,783 31,783 ====== ====== See accompanying notes to financial statements (unaudited). STATEMENTS OF INCOME (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 September 30, September 30, 2007 2006 REVENUES: Rental $2,037,469 $2,020,812 ---------- ---------- EXPENSES: Operating 1,357,242 1,465,909 General and administrative 207,281 198,625 ---------- ---------- Total expenses 1,564,523 1,664,534 ---------- ---------- OPERATING INCOME 472,946 356,278 OTHER INCOME Interest 472 698 ---------- ---------- NET INCOME $ 473,418 $ 356,976 ========== ========== AGGREGATE NET INCOME ALLOCATED TO : Limited partners $ 468,683 $ 353,406 General partners 4,735 3,570 ---------- ---------- TOTAL $ 473,418 $ 356,976 ========== ========== NET INCOME PER LIMITED PARTNERSHIP UNIT $14.75 $11.12 ====== ====== LIMITED PARTNERSHIP UNITS USED IN PER UNIT CALCULATION 31,783 31,783 ====== ====== See accompanying notes to financial statements (unaudited). STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIT)(UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 GENERAL LIMITED PARTNERS PARTNERS TOTAL BALANCE AT JANUARY 1, 2007 ($117,138) $2,606,072 $2,488,934 NET INCOME 4,735 468,683 473,418 DISTRIBUTIONS (8,829) (874,031) (882,860) --------- ---------- ---------- BALANCE AT SEPTEMBER 30, 2007 ($121,232) $2,200,724 $2,079,492 ========= ========== ========== See accompanying notes to financial statements (unaudited). STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 September 30, September 30, 2007 2006 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 473,418 $ 356,976 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 433,892 437,428 Changes in assets and liabilities: Decrease in distributions to partners (80,261) - Increase in incentive management fee payable to general partners 78,959 57,788 Increase in property management fee payable 603 1,577 Increase(Decrease) in customer deposits and other liabilities (103,260) 15,450 --------- --------- Net cash provided by operating activities 803,351 869,219 CASH FLOWS FROM FINANCING ACTIVITIES - Distributions to partners (882,860) (963,120) Payments on capital lease obligations (28,556) (25,331) --------- --------- Net cash used in financing activities (911,416) (988,451) NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS (108,065) (119,232) --------- --------- CASH AND CASH EQUIVALENTS: At beginning of period 601,812 657,642 --------- --------- At end of period $ 493,747 $ 538,410 ========= ========= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION - Cash paid for interest $ 3,131 $ 3,200 ========= ========= NONCASH FINANCING ACTIVITIES - Distributions due partners included in partners' equity $ 240,780 $ 321,040 ========= ========= See accompanying notes to financial statements (unaudited). DSI REALTY INCOME FUND X (A Limited Partnership) NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 1. GENERAL DSI Realty Income Fund X (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. The Partnership was formed 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 accompanying interim financial statements have been prepared by the Company's management in accordance with accounting principles generally accepted in the United States of America ("GAAP") and in conjunction with the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to SEC rules and regu- lations. Accordingly, the interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying interim financial statements reflect all adjustments of a normal and recurring nature which are considered necessary for a fair presentation of the results for the interim periods presented. However, the results of operations for the interim periods are not necessarily indicative of the results that may be expected for the year ending December 31, 2007. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2006. 2. PROPERTY The Partnership owns five mini-storage facilities. Two facilities are located in Warren, Michigan; one facility is located in Troy, Michigan; one facility is located in Crestwood, Illinois; and one facility is located in Forestville, Maryland. The total cost and accumulated depreciation of the mini-storage facilities is as follows: September 30, December 31, 2007 2006 Land $ 2,076,627 $ 2,076,627 Buildings and Improvements 10,891,728 10,891,728 Rental trucks under capital leases 157,604 157,604 ----------- ----------- Total 13,125,959 13,125,959 Less: Accumulated Depreciation (10,625,021) (10,191,129) ----------- ----------- Property - Net $ 2,500,938 $ 2,934,830
=========== =========== 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 Partnership distributions made from cash available for distribution, calculated as cash generated from operations less capital expenditures, and the payment of such fee is subordinated to a cumulative return to the limited partners of 8.1% of the offering proceeds. 5. RELATED-PARTY TRANSACTIONS The Partnership has entered into a management agreement with Dahn to operate its mini-storage facilities. The management agreement provides for a management fee equal to 6% of gross revenue from operations, which is defined as the entire amount of all receipts from the renting or leasing of storage compartments and sale of locks. The management agreement is renewable annually. Dahn earned management fees equal to $34,715 and $35,411, for the three month periods ended September 30, 2007 and 2006, respectively, and $101,873 and $101,041 for the nine month period ended September 30, 2007 and 2006, respectively. Amounts payable to Dahn at September 30, 2007 and December 31, 2006, were $409,939 and $409,337, respectively. In 2004, the Partnership entered into truck lease agreements with KMD Trucks, LLC ("KMD"). The president of Dahn, Brian Dahn, is also a member of KMD. Trucks are leased under 48-month leases with total monthly payments in the amount of $3,750. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. We are pleased to enclose the Partnership's unaudited financial statements for the period ended September 30, 2007. 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 September 30, 2007 and 2006, total revenues decreased 2.0% from $708,222 to $694,306 and total expenses decreased 9.3% from $555,789 to $504,377 and other income decreased from $186 to $158. As a result, net income increased 24.6% from $152,619 to $190,087 for the three- month period ended September 30, 2007, as compared to the same period in 2006. The decrease in revenues can be attributed to a decrease in rental income and sale of locks and packing materials, partially offset by an increase in truck rentals. Occupancy levels for the Partnerships, five mini-storage facilities averaged 85.0% for the three-month period ended September 30, 2007, as com- pared to 81.9% for the same period in 2006. The Partnership is continuing its marketing efforts to attract and keep new tenants in its various mini-storage facilities. Operating expenses decreased approximately $48,600 (9.6%) pri- marily as a result of a decrease in advertising, legal and real estate tax expenses. General and administrative expenses remained relatively constant as an increase in administrative expenses was partially offset by a decrease in incentive management fee and legal and professional expense. For the nine-month periods ended September 30, 2007, and 2006, total revenues increased 0.8% from $2,020,812 to $2,037,469 and total expenses decreased 6.0% from $1,664,534 to $1,564,523 and other income decreased from $698 to $472. As a result, net income increased 32.6% from $356,976 for the nine-month period ended September 30, 2006, to $473,418 for the same period in 2007. The increase in revenues can be attributed to increases in rental income, late fees and truck rental revenues, partially offset by a decrease in revenue from the sale of locks and packing materials. Occupancy levels for the Part- nership five mini-storage facilities averaged 80.5% for the nine-month period ended September 30, 2007, as compared to 78.6% for the same period in 2006. Operating expenses decreased approximately $108,700 (7.4%) primarily due to lower advertising, legal, purchase of locks and packing materials, repairs and maintenance, real estate tax expenses. General and administrative expenses increased approximately $8,700 (4.4%) as a result of an increase in admini- strative expense, partially offset by a decrease in incentive management fee expense. After a thorough review of operating results, the General Partners have deter- mined that cash flow from operations of the Partnership's properties will not be sufficient to fund distributions at the previous annual rate of 8%. There- fore, distributions will be reduced to an annual rate of 6% beginning with the October 15, 2007 distribution. This is a decrease of 1/2 of 1% from the previous quarterly rate. The General Partners will 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. Item 3. Quantitative and Qualitative Disclosures About Market Risk NONE Item 4. CONTROLS AND PROCEDURES The Partnership evaluated the effectiveness of its disclosure controls and procedures. This evaluation was performed by the Partnership's Controller with the assistance of the Partnership's President and the Chief Executive Officer. These disclosure controls and procedures are designed to ensure that the information required to be disclosed by the Partnership in its periodic reports filed with the 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 inform- ation is communicated to the certifying officers on a timely basis. Based on this evaluation, the Partnership concluded that its disclosure controls and procedures were effective. There have been no significant changes in the Partnership's internal controls or in other factors that could significantly affect the internal controls 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 1A. Risk Factors Please refer to the risk factors disclosed by the partnership in response to Item 1A, part I of the Form 10-K filed on March 30, 2007. There has been no material change to the risk factors disclosed therein. 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 NONE 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: November 14, 2007 DSI REALTY INCOME FUND X 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: November 14, 2007 DSI REALTY INCOME FUND X 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 report on Form 10-Q for the quarter ended September 30, 2007 of DSI Realty Income Fund X; 2. Based on my knowledge, this 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 report. 3. Based on my knowledge, the financial statements and other financial information included in this 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 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 and general partners (or persons performing the equivalent functions): 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: November 14, 2007 Robert J. Conway Chief Executive Officer CERTIFICATIONS I, Richard P. Conway, certify that: 1. I have reviewed this report on Form 10-Q for the quarter ended September 30, 2007 of DSI Realty Income Fund X; 2. Based on my knowledge, this 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 report. 3. Based on my knowledge, the financial statements and other financial information included in this 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 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 and general partners (or persons performing the equivalent functions): 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: November 14, 2007 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 X (the "Partnership") on Form 10-Q for the period ending September 30, 2007 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 November 14, 2007 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 X (the "Partnership") on Form 10-Q for the period ending September 30, 2007 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 November 14, 2007 -----END PRIVACY-ENHANCED MESSAGE-----