-----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, PIWtdLzQfcowtLwQiB1SEJV6a9ywAWpiXzBOjSiaiNEWlhoyfZhbCyWT70Xz3r3N xM6m/FICqsPhjRnp1RvhsQ== 0000318835-08-000023.txt : 20080227 0000318835-08-000023.hdr.sgml : 20080227 20080226191255 ACCESSION NUMBER: 0000318835-08-000023 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20061231 FILED AS OF DATE: 20080227 DATE AS OF CHANGE: 20080226 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/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-15346 FILM NUMBER: 08644252 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/A 1 x-exa.txt DSI REALTY INCOME FUND X SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 2O549 FORM 10-K (Mark One) [X] Annual Report Pursuant to Section 13 or 15 (d) of the Securities and Exchange Act of 1934 For the fiscal year ended December 31, 2006, or [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 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 (Title of Class) Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X] Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes [ ] No [X] 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] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Large Accelerated Filer [ ] Accelerated Filer [ ] Non-accelerated Filer [X] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [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, 2006, incorporated by reference to Form 10-K, Part II. Item 11. Registrant's Financial Statements for its fiscal year ended December 31, 2006, 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, 2006, 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, 2006 and 2005 were as follows: Location of Property Average Occupancy Average Occupancy Level for the Level for the Year Ended Year Ended Dec. 31, 2006 Dec. 31, 2005 Ryan Road Warren, MI 77% 79% Crestwood, IL 83% 82% Groesbeck Hwy Warren, MI 78% 75% Forestville, MD 74% 70% Troy, MI 79% 72% 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 1a. RISK FACTORS Some Potential Losses Are Not Covered By Insurance. We carry comprehensive liability, fire, extended coverage and rental loss insurance on all of our Properties. We believe the policy specifications and insured limits of these policies are adequate and appropriate. There are, however, types of losses, such as lease and other contract claims and acts of war that generally are not insured. We cannot be assured that we will be able to renew insurance coverage upon expiration of our policies in an adequate amount or at reasonable prices. In addition, insurance companies may no longer offer coverage against certain types of losses, such as losses due to terrorist acts and mold or, if offered, these types of insurance may be prohibitively expensive. Should uninsured loss or a loss in excess from insured limits occur, we could lose all or a portion of the capital we have invested in a Property, as well as the anticipated future revenue from the Property. In such an event, we might nevertheless remain obligated for any mortgage debt or other financial obligations related to the Property. We cannot be assured that material losses in excess of insurance proceeds will not occur in the future. If any of our Properties were to experience catastrophic loss, it could seriously disrupt our operations, delay revenue and result in large expenses to repair or rebuild the Property. Such events could adversely affect our cash flow and ability to make distributions to shareholders. Because real estate is illiquid, we may not be able to sell Properties when appropriate. Real estate investments generally, mini-storage facilities like those that we own, in particular, often cannot be sold quickly. Consequently, we may not be able to sell Properties when appropriate. This could adversely affect our cash flow and ability to make distributions. Our operating costs might rise, which might reduce our profitability and have an adverse affect on our cash flow and our ability to make distributions to shareholders. We might face higher operating expenses as a result of rising costs generally, and in particular as a result of increased costs following a terrorist attack or other catastrophic event. For example, it might cost more in the future for security, property/casualty and liability insurance, and property mainten- ance. As noted above, when our insurance policies expire, the cost of premiums for comparable coverage might be significantly higher after such an event when it is time to renew our coverage, which could then increase our operating expenses and reduce or profitability and our cash flow. Because of rising costs in general, we might experience increases in our property maintenance costs, such as for cleaning and electricity. If operating expenses increase dramatically, the availability of other comparable mini-storage facilities in our specific geographic markets might limit our ability to increase rents, which could reduce our profitability (if operating expenses increase without a corresponding increase in revenues) and limit our ability to make distributions. We face significant competition. We compete with numerous other owners of mini-storage facilities for tenants. Some of these competitors have significantly greater financial resources than we do. Such competition may reduce our ability to attract and keep and retain tenants, and may increase vacancies, which increases may lower rental rates. In addition, some of our competitors may be willing, because their properties may have vacancy rates higher than those for our properties, to make space available at lower prices than the space in our properties. We cannot be assured that this competition will not adversely affect our cash flow and ability to make distributions. Our ability to make distributions is subject to various risks. We have been paying quarterly distributions since inception. Our ability to make distributions in the future will depend upon: - Financial performance of our Property; - The absence of significant expenditures relating to environmental and regulator matters; and - Our ability to attract and maintain tenants. Certain of these matters are beyond our control and any significant difference between our expectations and actual results could have a material adverse affect on our cash flow and our ability to make distributions. Changes in the law may adversely affect our cash flow. The Properties are subject to various regulatory requirements, such as those relating to the environment, fire and safety. Our failure to comply with these requirements could result in the imposition of fines and damage awards. Additionally, the cost to comply with any new or different regulation could adversely affect our cash flow and our ability to make distributions. While we believe that the Properties are currently in material compliance with all such requirements, we cannot be assured that these requirements will not change our that newly imposed requirements will not require significant unanticipated expenditures. Should we incur long-term indebtedness, it will subject us to additional risks. Like other real estate companies, should we incur indebtedness on our proper- ties, we will be subject to risks normally associated with debt financing, such as the insufficiency of cash flow to meet required debt service payment obligations and the inability to refinance existing indebtedness. If such debt cannot be paid, refinanced or extended at maturity, in addition to our failure to repay our debt, we may not be able to make distributions at expected levels or at all. Furthermore, an increase in interest expense could adversely affect our cash flow and ability to make distributions to Limited Partners. If we should not meet our debt service obligations, any Properties securing such indebtedness could be foreclosed on, which would have a material adverse affect on our cash flow and ability to make distributions and, depending on the number of Properties foreclosed on, could threaten our continued viability. Our organizational documents do not contain any limitation on our ability to incur debt secured by our Properties. Accordingly, we could place financing on our Properties almost without restriction. If we were to take such action, the debt service could adversely affect our cash flow and ability to make dis- tributions and would include the risk of default on such indebtedness. There are no plans to incur any long-term indebtedness on any of the Partnership's Properties. Environmental problems at the Properties are possible and may be costly. Federal, state and local laws, ordinances and regulations may require a current or previous owner or operator of real estate to investigate and clean up hazard- ous or toxic substances or releases at such property. The owner or operator may be forced to pay for property damage and for investigation and clean up costs incurred by others in connection with environmental contamination. Such laws typically impose clean-up responsibility and liability without regard to whether the owner or operator knew of or caused the presence of contaminates. Even if more than one person may have been responsible for the contamination, each person covered by the environmental laws may be held responsible for all the clean-up costs incurred. In addition, third parties may sue the owner or operator of a site for damages and costs resulting from environmental contamin- ation emanating from that site. These costs may be substantial and the presence of such substances may adversely affect the owner's ability to sell or rent such property or to borrow using such property as collateral. Environmental laws that govern the presence, maintenance and removal of asbestos require that owners or operators of buildings containing asbestos properly manage and maintain the asbestos, notifying and train those who may come into contact with asbestos and undertake special precautions, including removal or other abatement, if asbestos would be disturbed during renovation or demolition of a building. Such laws may impose fines and penalties on building owners or operators who fail to comply with these requirements and may allow third parties to seek recovery from owners or operators for personal injury associated with exposure to asbestos fibers. To the best of our knowledge, asbestos was not used in the construction of any of the Properties. Tenants of the Partnership's mini-storage facilities are prohibited from storing hazardous or toxic substances or from even bringing hazardous or toxic substances onto the property. To the best knowledge of the General Partners, there are no instances of storage or release of hazardous or toxic substances at any of the Partnership's Properties. However, there can be no guaranty that one or more tenants did not actually store such materials or cause releases at any of the Partnership's Properties. If these conditions should occur, we may need to undertake a target remediation program which could become costly and could necessitate the temporary location of some or all of the Properties' tenants or require rehabilitation of the affected property. Americans With Disabilities Act compliance can be costly. Under the Americans With Disabilities Act of 1990 ("ADA"), all public accom- modations and commercial facilities, must meet certain Federal requirements related to access and use by disabled persons. Compliance with the ADA re- quirements could involve removal of structural barriers from certain disabled persons' entrances, which could adversely affect our financial condition, and results of operations. Other Federal, state or local laws may require modifi- cations to or restrict further renovations of our Properties with respect to such accesses. Although we believe that our Properties are currently in material compliance with present requirements, non-compliance with the ADA or similar or related laws or regulations could result in the United States govern- ment imposing fines or private litigants being awarded damages against us. In addition, we do not know whether existing requirements will change or whether compliance with future requirements will require significant unanticipated expenditures. Such costs may adversely affect our cash flow and ability to make distributions. Partnership's status as a limited partnership is dependent on compliance with Federal income tax requirements. Failure of the Partnership to be treated as a limited partnership would have serious adverse consequences to holders of our Units. If the IRS were to successfully challenge the tax status of the Partnership for Federal income tax purposes, the Partnership would be treatable as a corporation. In such event, the imposition of a corporate tax on the Partnership would reduce the amount of cash available for distribution from such Partnership to the Limited Partners. We do not anticipate such a challenge. We are dependent upon our key personnel whose continued service is not guar- anteed. We are dependent upon our independent property manager for experience in managing mini-storage facilities. While we believe we could find replace- ments for these key personnel, loss of their services could adversely affect our operations. Item 1b. UNRESOLVED STAFF COMMENTS None. 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 regarding properties owned by the Partnership. 2006 2005 Location Size of Net Rentable No. of Completion Avg. Rent Parcel Area Rental Units Date Per. Sq. Ft. Ryan Road, Warren, MI 4.286 acres 53,779 494 9/30/87 8.86 8.75 Crestwood, IL 2.96 acres 51,055 463 11/25/87 10.11 8.88 Groesbeck Hwy, Warren, MI 4.76 acres 59,281 493 l/23/88 8.27 7.66 Forestville, MD 4.18 acres 56,461 527 8/06/88 11.53 10.86 Troy, MI 4.98 acres 79,201 498 6/17/88 8.28 7.52 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 943 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 $10.11 per Limited Partnership Unit were declared and paid each quarter for the year ended December 31, 2006 and $10.30 per Limited Partnership Unit were declared and paid each quarter for the year ended December 31, 2005 and $10.94 per Limited Partnership Unit were declared and paid each quarter for the year ended December 31, 2004 and $10.96. Item 6. SELECTED FINANCIAL DATA FIVE YEARS ENDED DECEMBER 31, ------------------------------------------------------------------- 2006 2005 2004 2003 2002 ---- ---- ---- ---- ---- TOTAL REVENUES AND OTHER INCOME $2,760,191 $2,588,756 $2,678,680 $2,837,397 $3,076,030 TOTAL EXPENSES 2,125,889 2,109,687 1,890,156 1,960,287 1,931,715 ---------- ----------- ----------- ----------- ----------- NET INCOME $ 634,302 $ 479,069 $ 788,524 $ 877,110 $1,144,315 ========== =========== =========== =========== =========== TOTAL ASSETS $3,763,298 $4,288,375 $5,091,426 $5,557,881 $6,074,744 ========== =========== =========== =========== =========== CASH FLOW FROM (USED IN): OPERATING $1,283,835 $1,160,892 $1,374,708 $1,448,782 $1,050,669 INVESTING (6,793) (14,061) (10,032) (7,302) - FINANCING (1,332,872) (1,359,511) (1,415,919) (1,407,500)(1,610,044) NET INCOME PER LIMITED PARTNERSHIP UNIT $ 19.76 $ 14.92 $ 24.56 $ 27.32 $ 35.64 ========== =========== =========== =========== =========== CASH DISTRIBUTIONS PER LIMITED PARTNERSHIP UNIT $ 40.44 $ 41.33 $ 43.75 $ 43.84 $ 50.15 ========== =========== =========== =========== =========== Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Critical Accounting Policies Revenue recognition - 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. RESULTS OF OPERATIONS 2006 COMPARED TO 2005 Total revenues increased from $2,586,824 in 2005 to $2,759,332 in 2006, total expenses increased from $2,109,687 to $2,125,889 and other income decreased from $1,932 to $859, resulting in an increase in net income from $479,069 to $634,302. The increase in rental revenues can be attributed to higher occupancy and unit rental rates. Occupancy levels for the Partnership's five mini-storage facilities averaged 78.3% for the year ended December 31, 2006, compared to 75.6% for the year ended December 31, 2005. The Partnership continued its advertising campaign to attract and keep new tenants in its various mini-storage facilities. Operating expenses increased approximately $10,600 (1.1%) primarily as a result of increases in repairs and maintenance and salaries and wages expenses, partially offset by decreases in advertising, real estate tax and power and sweeping expenses. General and administrative expenses increased approximately $29,200 (11.2%) as a result of increases in legal and professional and a bank and credit card fee expenses, partially off- set by a decrease in office supplies and printing expenses. The General Partners incentive management fee, which is based on cash distributions to Limited Partners, decreased as a result of a decrease in these distributions. Property management fees, which are computed as a percentage of rental revenue, increased as a result of the increase in rental revenue. 2005 COMPARED TO 2004 Total revenues decreased from $2,676,266 in 2004 to $2,586,824 in 2005, total expenses increased from $1,890,156 to $2,109,687 and other income de- creased from $2,414 to $1,932, resulting in a decrease in net income from $788,524 to $479,069. The approximate $89,400 (3.3%) decrease in rental revenues can be attributed to lower occupancy and unit rental rates. Occupancy levels for the Partnership's five mini-storage facilities averaged 75.6% for the year ended December 31, 2005, compared to 77.6% for the year ended December 31, 2004. The Partnership continued its advertising campaign to attract and keep new tenants in its various mini-storage facilities. Operating expenses increased approximately $120,100 (13.8%) primarily as result of increases in advertising, purchase of locks and packing material, real estate taxes, salaries and wages, truck insurance and maintenance and power and sweeping expenses. General and administrative expenses increased approximately $60,200 (30.1%) as a result of increases in legal and professional fees, equipment and computer lease expenses and office supplies and printing expenses. The General Partners' incentive management fee, which is based on cash distri- butions to Limited Partners, decreased as a result of a decrease in these distributions. Property management fees, which are computed as a percentage of rental revenue, decreased as a result of the decrease in rental revenue. decreased as a result of the decrease in rental revenue. Operating expenses consists mainly of expenses such as yellow pages and other advertising, utilities, repairs and maintenance, real estate taxes, salaries and wages and their related expenses. General and administrative expenses consist mainly of expenses such as legal and professional, office supplies, postage, accounting services and computer expenses. LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities increased approximately $122,900 (10.6%) in 2006 compared to 2005 primarily as a result of the increase in net income before depreciation, increases in incentive management fee payable to general partners and customer deposits and other liabilities, partially offset by an increase in other assets. Net cash provided by operating activities decreased approximately $213,800 (15.6%) in 2005 compared to 2004 primarily as a result of the decrease in net income before depreciation, partially offset by increases in incentive management fee payable to general partners and customer deposits and other liabilities. Cash used in investing activities, as set forth in the statements of cash flows, consists of acquisitions of property for the Partnership's mini-storage facilities in 2006, 2005 and 2004. The Partnership has no material commitments for capital expenditures. Cash used in financing activities, as set forth in the statements of cash flows, consists solely of cash distributions to partners in 2006, 2005 and 2004 and payments on capital lease obligations starting in 2004. A special distributions of 0.5% of capital contributed by Limited Partners were declared and paid on December 15, 2004. 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 anticipates that cash flows generated from operations of the Partnership's rental real estate operations will be sufficient to cover operating expenses and distributions for the next twelve months and beyond. The General Partners are not aware of any environmental problems which might have a material adverse impact on the financial position of the Partnership. LONG-TERM LIABILITIES, CONTRACTUAL OBLIGATIONS, AND OFF-BALANCE SHEET ARRANGEMENTS Long-Term Liabilities and Contractual Obligations. The following table summar- izes our long-term liabilities, material obligations and commitments to make future payments under certain contracts, including long-term debt obligations, purchase commitments and operating leases. Payments due by period Less More than 1 1-3 3-5 than 5 Contractual Obligations Total year years years years Long-Term Debt - - - - - Capital (Finance) Lease 84,375 43,875 40,500 - - Purchase Obligations - - - - - Other Long-Term Liablities - - - - - Reflected on the Registrant's Balance Sheet under the GAAP of the primary financial Statements QUARTERLY FINANCIAL INFORMATION (UNAUDITED) Summarized quarterly financial data for the years ended December 31, 2006 and 2005 was as follows: 2006 Quarter Ended ------------------ March 31 June 30 September 30 December 31 Total revenues $639,310 $673,280 $708,222 $738,520 Net income 75,496 128,861 152,619 277,326 Net income per limited partnership unit $ 2.35 $ 4.01 $ 4.75 $ 8.65 Weighted average number of limited partnership units outstanding 31,783 31,783 31,783 31,783 2005 Quarter Ended ------------------ March 31 June 30 September 30 December 31 Total revenues $650,132 $640,897 $645,997 $649,798 Net income 144,707 107,419 149,058 77,885 Net income per limited partnership unit $ 4.51 $ 3.35 $ 4.64 $ 2.42 Weighted average number of limited partnership units outstanding 31,783 31,783 31,783 31,783 Item 7a. QUANTITATIVE & QUALITATIVE DISCLOSURES ABOUT MARKET RISK None. 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. See the financial statements. Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. Item 9a. 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 Parnership 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 information 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. Item 9b. Other Information 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, 2005, 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 73 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 78 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 84 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, 2006, 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 The following table sets forth certain information regarding the beneficial ownership of the Fund's limited partnership units as of December 31, 2006 of (i) each person known to beneficially own more than 5% of the Fund's limited partnership units(2), (ii) each director or director nominee of the Fund, (iii) each executive officer of the Fund for whom information is given in the Summary Compensation Table in this proxy statement, and (iv) all directors and executive officers of the Fund. TITLE OF NAME OF NUMBER OF LP UNITS PERCENT CLASS BENEFICIAL OWNER BENEFICIALLY HELD(1) OF CLASS - -------- ----------------- -------------------- -------- Limited Partnership Interest Robert J. Conway 1,280 - Direct 4.02 Limited Partnership Interest Joseph W. Conway 30 - Direct * * Less than one percent of the Fund's limited partnership's units. (1) Unless otherwise indicated, the address for each listed director or officer is c/o 6700 E. Pacific Coast Hwy. #150. As used in this table, "beneficial ownership" means the sole or shared power to vote or direct the voting or to dispose or direct the disposition of any security. For purposes of this table, a person is deemed to be the beneficial owner of units acquired before the date of this filing. (2) As of December 31, 2006, 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 beneficiary, 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, 2006, attached hereto as Exhibit l and incorporated herein by this reference. Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES Audit Fees The aggregate fees for professional services rendered by Deloitte & Touche LLP for the audit of the Partnership's annual financial statements and for re- view of the financial statements included in the Partnership's Quarterly Reports on Form 10-Q for 2005 were $31,240 and for $29,640. Tax Fees The aggregate fees for professional services rendered by Deloitte Tax LLP for tax compliance, tax advice and tax planning for 2006 were $20,713 and 2005 were $17,600. Most of the fees related to preparation of the Part- nership's tax returns. PART IV Item 15. 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, 2006, 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, 2006. (b) No reports on Form 8K were filed during the fiscal year ended December 31, 2006. 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 /s/ ROBERT J. CONWAY By_____________________________ Dated: March 30, 2007 ROBERT J. CONWAY, President (Chief Executive Officer, Chief Financial Officer, and Director) /s/ Joseph W. Conway By____________________________ Dated: March 30, 2007 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 /s/ Robert J. Conway By:__________________________ Dated: March 30, 2007 ROBERT J. CONWAY, President, Chief Executive Officer, Chief Financial Officer, and Director /s/ Joseph W. Conway By___________________________ Dated: March 30, 2007 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, 2006, 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, ------------------------------------------------------------------- 2006 2005 2004 2003 2002 ---- ---- ---- ---- ---- TOTAL REVENUES AND OTHER INCOME $2,760,191 $2,588,756 $2,678,680 $2,837,397 $3,076,030 TOTAL EXPENSES 2,125,889 2,109,687 1,890,156 1,960,287 1,931,715 ---------- ----------- ----------- ----------- ----------- NET INCOME $ 634,302 $ 479,069 $ 788,524 $ 877,110 $1,144,315 ========== =========== =========== =========== =========== TOTAL ASSETS $3,763,298 $4,288,375 $5,091,426 $5,557,881 $6,074,744 ========== =========== =========== =========== =========== CASH FLOW FROM (USED IN): OPERATING $1,283,835 $1,160,892 $1,374,708 $1,448,782 $1,050,669 INVESTING (6,793) (14,061) (10,032) (7,302) - FINANCING (1,332,872) (1,359,511) (1,415,919) (1,407,500)(1,610,044) NET INCOME PER LIMITED PARTNERSHIP UNIT $ 19.76 $ 14.92 $ 24.56 $ 27.32 $ 35.64 ========== =========== =========== =========== =========== CASH DISTRIBUTIONS PER LIMITED PARTNERSHIP UNIT $ 40.44 $ 41.33 $ 43.75 $ 43.84 $ 50.15 ========== =========== =========== =========== =========== 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, 2006: Net Partners' Income Equity Per financial statements $ 634,302 $ 2,488,934 Excess book depreciation 218,857 3,564,751 Capitalization of syndication costs 1,694,248 Property acquisition costs 1,146,935 Deferred rental revenues (11,062) 44,138 Accrued expenses (13,400) 13,600 Fixed asset adjustments (34,614) (78,471) Excess book distributions 321,041 Tax expense adjustment (14,089) Gain on sale of land 2,272 Bad debt allowance 29,935 ----------- ----------- Per Partnership income tax return $ 809,929 $ 9,227,388 =========== =========== Net taxable income per limited partnership unit $ 25.23 =========== DSI REALTY INCOME FUND X (A California Real Estate Limited Partnership) INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE Page FINANCIAL STATEMENTS: Report of Independent Registered Public Accounting Firm F-1 Balance Sheets as of December 31, 2006 and 2005 F-2 Statements of Income for Each of the Three Years Ended December 31, 2006 F-3 Statements of Changes in Partners' Equity (Deficit) for Each of the Three Years Ended December 31, 2006 F-4 Statements of Cash Flows for Each of the Three Years Ended December 31, 2006 F-5 Notes to Financial Statements as of December 31, 2006 and 2005, and for Each of the Three Years Ended December 31, 2006 F-6 SUPPLEMENTAL SCHEDULE: Schedule III - Real Estate and Accumulated Depreciation F-10 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. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Partners of DSI Realty Income Fund X: We have audited the accompanying balance sheets of DSI Realty Income Fund X, a California Limited Partnership (the "Partnership") as of December 31, 2006 and 2005, 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, 2006. Our audits also included the supplemental schedule listed in the Index at Item 15. These financial statements and the supplemental schedule are the responsibility of the Partnership's management. Our responsibility is to express an opinion on the financial statements and supplemental schedule based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership's internal control over financial reporting. Accordingly we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the account- ing 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, 2006 and 2005, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2006, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such supplemental 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. /s/ Deloitte & Touche LLP _______________________________________ Deloitte & Touche LLP Los Angeles, California March 30, 2007 DSI REALTY INCOME FUND X (A California Real Estate Limited Partnership) BALANCE SHEETS DECEMBER 31, 2006 AND 2005 - -------------------------------------------------------------------------------- ASSETS 2006 2005 CASH AND CASH EQUIVALENTS $ 601,812 $ 657,642 PROPERTY, net (Note 3) 2,934,830 3,508,877 OTHER ASSETS 226,656 121,856 ----------- ----------- TOTAL $ 3,763,298 $ 4,288,375 =========== =========== LIABILITIES AND PARTNERS' EQUITY LIABILITIES: Distribution due partners (Note 4) $ 321,041 $ 321,041 Incentive management fee payable to general partners (Note 4) 178,208 62,632 Property management fees payable (Note 6) 409,337 408,719 Customer deposits and other liabilities 286,645 229,346 Capital lease obligations (Note 3) 79,133 113,747 ----------- ----------- Total liabilities 1,274,364 1,135,485 ----------- ----------- PARTNERS' EQUITY (DEFICIT)(Note 4): General partners (117,138) (110,498) Limited partners (31,783 limited partnership units outstanding at December 31, 2006 and 2005) 2,606,072 3,263,388 ------------ ----------- Total partners' equity 2,488,934 3,152,890 ------------ ----------- TOTAL $ 3,763,298 $ 4,288,375 ============ =========== See notes to financial statements. DSI REALTY INCOME FUND X (A California Real Estate Limited Partnership) STATEMENTS OF INCOME THREE YEARS ENDED DECEMBER 31, 2006 - -------------------------------------------------------------------------------- 2006 2005 2004 REVENUES: Rental $2,759,332 $2,586,824 $2,676,266 ---------- ---------- ---------- EXPENSES: Depreciation 580,840 605,188 561,252 Interest 5,886 7,893 - Operating 998,531 987,910 867,829 General and administrative 289,479 260,304 200,076 General partners' incentive management fee (Note 4) 115,576 119,048 126,421 Property management 135,577 129,344 134,578 ---------- ---------- ---------- Total expenses 2,125,889 2,109,687 1,890,156 ---------- ---------- ---------- OPERATING INCOME 633,443 477,137 786,110 OTHER INCOME - Interest income 859 1,932 2,414 ---------- ---------- ---------- NET INCOME $ 634,302 $ 479,069 $ 788,524 ========== ========== ========== AGGREGATE NET INCOME ALLOCATED TO (Note 4): Limited partners $ 627,959 $ 474,278 $ 780,639 General partners 6,343 4,791 7,885 ---------- ---------- ---------- TOTAL $ 634,302 $ 479,069 $ 788,524 ========== ========== ========== NET INCOME PER LIMITED PARTNERSHIP UNIT (Notes 2 and 4) $ 19.76 $ 14.92 $ 24.56 ========== ========== ========== See notes to financial statements. DSI REALTY INCOME FUND X (A California Real Estate Limited Partnership) STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIT) THREE YEARS ENDED DECEMBER 31, 2006 - -------------------------------------------------------------------------------- General Limited Partners Partners Total BALANCE, JANUARY 1, 2004 $ (95,901) $4,708,598 $4,612,697 Net income 7,885 780,639 788,524 Distributions (14,046) (1,390,623) (1,404,669) ------- ---------- ---------- BALANCE, DECEMBER 31, 2004 (102,062) 4,098,614 3,996,552 Net income 4,791 474,278 479,069 Distributions (13,227) (1,309,504) (1,322,731) ------- ---------- ---------- BALANCE, DECEMBER 31, 2005 (110,498) 3,263,388 3,152,890 Net income 6,343 627,959 634,302 Distributions (12,983) (1,285,275) (1,298,258) ------- ---------- ---------- BALANCE, DECEMBER 31, 2006 $(117,138) $2,606,072 $2,488,934 ======= ========== ========== See notes to financial statements. DSI REALTY INCOME FUND X (A California Real Estate Limited Partnership) STATEMENTS OF CASH FLOWS THREE YEARS ENDED DECEMBER 31, 2006 - -------------------------------------------------------------------------------- 2006 2005 2004 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 634,302 $ 479,069 $ 788,524 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 580,840 605,188 561,252 Changes in assets and liabilities: Other assets (104,800) (756) 21,596 Incentive management fee payable to general partners 115,576 60,510 (254) Property management fee payable 618 (160) (331) Customer deposits and other liabilities 57,299 17,041 3,921 ----------- ----------- ----------- Net cash provided by operating activities 1,283,835 1,160,892 1,374,708 ----------- ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES - Additions to property (6,793) (14,061) (10,032) ----------- ----------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Distributions to partners (1,298,258) (1,326,904) (1,404,669) Payments on capital lease obligations (34,614) (32,607) (11,250) ----------- ----------- ---------- Net cash used in financing activities (1,332,872) (1,359,511) (1,415,919) ----------- ----------- ----------- NET DECREASE IN CASH AND CASH EQUIVALENTS (55,830) (212,680) (51,243) CASH AND CASH EQUIVALENTS, AT BEGINNING OF YEAR 657,642 870,322 921,565 ----------- ----------- ------------ CASH AND CASH EQUIVALENTS, AT END OF YEAR $ 601,812 $ 657,642 $ 870,322 =========== =========== ============ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION - Cash paid for interest $ 5,886 $ 7,893 $ - =========== =========== ============ NON CASH INVESTING ACTIVITIES: Acquisition of trucks utilizing capital leases $ - $ - $ 157,604 =========== =========== ============ Distribution due partners included in partners' equity $ 321,041 $ 321,041 $ 325,214 =========== =========== ============ See notes to financial statements. DSI REALTY INCOME FUND X (A California Real Estate Limited Partnership) NOTES TO FINANCIAL STATEMENTS AS OF DECEMBER 31, 2006 AND 2005, AND FOR EACH OF THE THREE YEARS ENDED DECEMBER 31, 2006 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 contributions 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 (Note 6). 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 of mini-storage facilities. Depreciation is provided using the straight-line method over an estimated useful life of twenty years for the facilities. Building improvements are depreciated over a five-year period. Property under capital leases is amortized over the lives of the respective leases or the estimated useful lives of the assets. 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 basis of the Partnership's assets and liabilities for federal income tax purposes and as reported for financial statement purposes for the year ended December 31, 2006 is $175,627. 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. Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Partnership's management to make estimates and assumptions that affect the reported amounts 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 undiscounted future cash flows is less than the carrying amount of the asset, the Partnership would recognize an impairment to the extent the carrying value exceeded the fair market value of the property. No impairment losses were recog- nized in 2006, 2005 or 2004. Fair Value of Financial Instruments - For all Financial instruments, inclueing cash and cash equivalents, other assets, distributions due partners, incentive management fee payable to general partners, property management fee payable, customer deposits and other liabilities, carry- ing values approximate fair values because of the short maturity of those instruments. The carrying value of the capital lease obligations approximates fair value because the terms of the instrument are similar to terms available to the Partnership for similar types of leasing agreements. 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. Recent Accounting Pronouncement - In September 2006, the Financial Account- ing Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 157, "Fair Value Measurements." SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. The Partnership is required to adopt SFAS No. 157 for fiscal year 2008 and does not expect its adop- tion to have a material effect on the Partnership's results of operations or financial condition. 3. PROPERTY The total cost of property and accumulated depreciation at December 31, 2006 and 2005, is as follows: 2006 2005 Land $ 2,076,627 $ 2,076,627 Buildings and improvements 10,891,728 10,884,935 Rental trucks under capital leases 157,604 157,604 ----------- ------------ Total 13,125,959 13,119,166 Accumulated depreciation (10,191,129) (9,610,289) ----------- ----------- Property - net $ 2,934,830 $ 3,508,877 =========== =========== Depreciation expense of $40,244 and $40,244 was recorded on the rental trucks under capital leases in 2006 and 2005, respectively. The Partnership leases certain vehicles under agreements that meet the criteria for classification as capital leases which expire in 2008. Future minimum lease payments under these capital leases at December 31, 2006 are summarized as follows: 2007 $ 43,875 2008 40,500 -------- Total future minimum payment obligations 84,375 Less interest portion 5,242 -------- Present value of net minimum lease payments $ 79,133 ======== 4. ALLOCATION OF PROFITS AND LOSSES AND GENERAL PARTNERS' INCENTIVE MANAGEMENT FEES 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, 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. 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 Partner- ship 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 on a predetermined rate. 6. RELATED-PARTY TRANSACTIONS The Partnership has entered into management agreements with Dahn to operate their mini-storage facilities. The management agreeemtn provides for a management fee equal to 5% of gross revenue from operations, which is defined as the entire amount of all receipts from the renting or leas- ing of storage compartments and sale of locks. The management agreement is renewable annually. Dahn earned management fees equal to $135,577, $129,344, and $134,578 for the years ended December 31, 2006, 2005, and 2004, respectively. Amounts payable to Dahn at December 31, 2006 and 2005, were $409,337 and $408,719, 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. The truck lease is a 48-month lease with monthly payments in the amount of $750 (see Note 3). DSI REALTY INCOME FUND X (A California Real Estate Limited Partnership) SCHEDULE III 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 $264,544 $1,715,183 $ 11,230 $264,544 $1,726,413 $1,990,957 $1,642,620 12/87 02/87 20 Yrs Crestwood,Illinois None 205,960 1,631,179 13,656 205,960 1,644,835 1,850,795 1,562,002 12/87 04/87 20 Yrs Grosebeck Highway Warren, Michigan None 314,517 1,760,657 88,102 314,517 1,848,759 2,163,276 1,747,685 01/88 04/87 20 Yrs Forestville, Maryland None 755,000 2,278,110 20,082 755,000 2,298,192 3,053,192 2,138,255 07/88 08/87 20 Yrs Troy, Michigan None 536,606 3,152,736 220,793 536,606 3,373,529 3,910,135 3,020,085 06/88 06/88 20 Yrs -------- ---------- ------- -------- ---------- ---------- ---------- $2,076,627 $10,537,865 $353,863 $2,076,627 $10,891,728 $12,968,355 $10,110,647 ========== ========== ======== ========== ========== =========== ==========
Real Estate Accumulated at Cost Depreciation Balance, December 31, 2004 $12,947,501 $9,005,101 Additions 14,061 564,950 ----------- ---------- Balance, December 31, 2005 12,961,562 9,570,051 Additions 6,793 540,596 ----------- ---------- Balance, December 31, 2006 $12,968,355 $10,110,647 =========== =========== EXHIBIT 2 March 30, 2007 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, 2006 and 2005, and the related statements of income, changes in partners' equity (deficit) and cash flows for each of the three years ended December 31, 2006 accompanied by a report of independent registered public accounting firm. The Partnership owns five mini-storage facilities including two in Warren, MI. 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 five properties for the years ended December 31, 2006 and 2005 were as follows: Location of Property Average Occupancy Average Occupancy Levels for the Levels for the Year Ended Year Ended Dec. 31, 2006 Dec. 31, 2005 Ryan Road Warren, MI 77% 79% Crestwood, IL 83% 82% Groesbeck Hwy Warren, MI 78% 75% Forestville, MD 74% 70% Troy, MI 79% 72% 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, 2006 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. /s/ ROBERT J. CONWAY By___________________________ ROBERT J. CONWAY, President CERTIFICATIONS I, Robert J. Conway, certify that: 1. I have reviewed this annual report on Form 10-K 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 officer 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 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 an 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 officer and I have disclosed based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (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 adversely affect the registrant's ability to re- cord, process, 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 control over financial reporting. Date: March 30, 2007 /s/ ROBERT J. CONWAY ___________________________ Robert J. Conway Chief Executive Officer CERTIFICATIONS I, Richard P. Conway, certify that: 1. I have reviewed this annual report on Form 10-K of DSI Realty Income Fund X; 2. Based on my knowledge, this annual 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 annual report. 3. Based on my knowledge, the financial statements, and other financial information included in this annual 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 annual report; 4. The registrant's other certifying officer 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 officer and I have disclosed based on our most recent evaluation of internal controls over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (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 adversely affect the registrant's ability to re- cord, process, 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: March 30, 2007 /s/ RICHARD P. CONWAY ______________________________ Richard P. Conway Vice President EXHIBIT 3 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 Annual Report of DSI Realty Income Fund X (the "Partnership") on Form 10-K for the period ending December 31, 2006 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. /s/ ROBERT J. CONWAY ______________________________ Robert J. Conway Chief Executive Officer March 30, 2007 EXHIBIT 4 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 Annual Report of DSI Realty Income Fund X (the "Partnership") on Form 10-K for the period ending December 31, 2006 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. /s/ RICHARD P. CONWAY _______________________________ Richard P. Conway Vice President March 30, 2007 -----END PRIVACY-ENHANCED MESSAGE-----