-----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, CX80w5kC9SAMGBDd2PZ9+TxH9QkcgD0KFKSjvYLjIaKyDIQpQIrBpsIWuQyAFfzS lUf0M5bOO05Y8aiw/YFbBw== 0000764586-02-000002.txt : 20020415 0000764586-02-000002.hdr.sgml : 20020415 ACCESSION NUMBER: 0000764586-02-000002 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20011231 FILED AS OF DATE: 20020327 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DSI REALTY INCOME FUND X CENTRAL INDEX KEY: 0000792989 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 330195079 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-15346 FILM NUMBER: 02588633 BUSINESS ADDRESS: STREET 1: 3701 LONG BEACH BLVD CITY: LONG BEACH STATE: CA ZIP: 90801 BUSINESS PHONE: 310-595-7711 MAIL ADDRESS: STREET 1: P O BOX 357 CITY: LONG BEACH STATE: CA ZIP: 90801 10-K 1 dsi10k01.txt DSI REALTY INCOME FUND X SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 2O549 AMENDMENT #1 TO FORM 1O-K (Mark One) / x /Annual Report Pursuant to Section 13 or 15 (d) of the Securities and Exchange Act of 1934 [Fee Required] for the fiscal year ended December 31, 2001. or / /Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 [No Fee Required] for the transition period from ______________ to ________________. Commission File No. 33-5327. DSI REALTY INCOME FUND X, a California Limited Partnership (Exact name of registrant as specified in governing instruments) _________California___________________________33-0195079_____ (State of other jurisdiction of (I.R.S. Employer incorporation or organization identification number 6700 E. Pacific Coast Hwy., Long Beach, California 9O8O3 (Address of principal executive offices) (Zip Code) Registrants telephone number, including area code-(562)493-3022 Securities registered pursuant to Section 12(b) of the Act: none. Securities registered pursuant to Section 12(g) of the Act: Units of Limited Partnership Interests (Class of Securities Registered) Indicate by check mark, whether the registrant (l) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 9O days. Yes_X____. No______. Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. /x/ The Registrant is a limited partnership and there is no voting stock. All units of limited partnership sold to date are owned by non-affiliates of the registrant. All such units were sold at $5OO.OO per unit. DOCUMENTS INCORPORATED BY REFERENCE Item 8. Registrant's Financial Statements for its fiscal year ended December 31, 2001, incorporated by reference to Form 10-K, Part II. Item 11. Registrant's Financial Statements for its fiscal year ended December 31, 2001, 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, 2001, 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, 2001 and December 31, 2000 were as follows: Location of Property Average Occupancy Average Occupancy Level for the Level for the Year Ended Year Ended Dec. 31, 2001 Dec. 31, 2000 Ryan Road Warren, MI 88% 86% Crestwood, IL 86% 85% Groesbeck Hwy Warren, MI 85% 87% Forrestville, MD 92% 88% Troy, MI 87% 89% The business in which the Partnership is engaged is highly competitive. Each of its mini-storage facilities is located in or near a major urban area, and accordingly, competes with a significant number of individuals and organizations with respect to both the purchase and sale of its properties and for rentals. Generally, Registrant's business is not affected by the change in seasons. Item 2. PROPERTIES Registrant owns a fee interest in five mini-storage facilities, none of which are subject to long-term indebtedness. The following table sets forth information as of December 31, 2001 regarding properties owned by the Partnership. Location Size of Net Rentable No. of Completion Parcel Area Rental Units Date Ryan Road, Warren, MI 4.286 acres 53,779 494 9/30/87 Crestwood, IL 2.96 acres 51,055 463 11/25/87 Groesbeck Hwy, Warren, MI 4.76 acres 59,281 493 l/23/88 Forrestville, MD 4.18 acres 56,461 527 8/6/88 Troy, MI 4.98 acres 79,201 498 6/17/88 Item 3. LEGAL PROCEEDINGS Registrant is not a party to any material pending legal proceedings. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. PART II Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Registrant, a publicly-held limited partnership, sold 31,783 limited partnership units during its offering and currently has 969 limited partners of record. There is no intention to sell additional limited partnership units nor is there a market for these units. Average cash distributions of $12.62 per Limited Partnership Unit were declared and paid each quarter for the year ended December 31, 2001 and $12.80 per Limited Partnership Unit were declared and paid each quarter for the year ended December 31, 2000 and $13.84 per Limited Partnership Unit were declared and paid each quarter for the year ended December 31, 1999. Item 6. SELECTED FINANCIAL DATA FIVE YEARS ENDED DECEMBER 31, 2001 ------------------------------------------------------------------- 2001 2000 1999 1998 1997 ---- ---- ---- ---- ---- TOTAL REVENUES AND OTHER INCOME $3,351,149 $3,201,912 $2,928,689 $2,707,174 $2,659,936 TOTAL EXPENSES 1,913,535 1,857,563 1,737,036 1,626,960 1,628,097 ---------- ----------- ----------- ----------- ----------- NET INCOME $1,437,614 $1,344,349 $1,191,653 $1,080,214 $1,031,839 ========== =========== =========== =========== =========== TOTAL ASSETS $7,194,045 $8,846,914 $8,779,268 $9,050,011 $9,300,328 ========== =========== =========== =========== =========== CASH FLOW FROM: OPERATING $ 461,933 $2,040,154 $1,918,525 $1,644,418 $1,906,898 INVESTING - - (6,949) - (7,628) FINANCING (1,620,635) (1,638,784) (1,777,602) (1,621,442)(1,617,030) NET INCOME PER LIMITED PARTNERSHIP UNIT $ 44.78 $ 41.87 $ 37.12 $ 33.65 $ 32.14 ========== =========== =========== =========== =========== CASH DISTRIBUTIONS PER LIMITED PARTNERSHIP UNIT $ 50.48 $ 51.18 $ 55.37 $ 50.51 $ 50.37 ========== =========== =========== =========== =========== Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS 2001 COMPARED TO 2000 Total revenues increased from $3,121,539 in 2000 to $3,300,988 in 2001, total expenses increased from $1,857,563 to $1,913,535 and other income decreased from $80,373 to $50,161, resulting in an increase in net income from $1,344,349 to $1,437,614. The approximate $179,400 (5.7%) 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 87.9% for the year ended December 31, 2001, compared to 86.9% for the year ended December 31, 2000. The Partnership continued to increase rental rates where market conditions made such increases feasible. Operating expenses increased by approximately $47,100 (5.6%) primarily due to increases in repairs and maintenance, real estate taxes, salaries and wages and power and sweeping expenses, partially offset by de- creases in yellow page advertising and workers compensation insurance expenses. Power and sweeping expenses increased as a result of above normal snow removal costs associated with heavy snowfalls in the Detroit, Michigan area during the first quarter of 2001. General and administrative expenses increased approxi- mately $5,000 (2.9%) as a result of increases in legal and professional and travel expenses. The General Partners' incentive management fee decreased approximately $1,700 (1.2%). As this fee is computed as a percentage of distri- butions made to the Limited Partners, the 2001 decrease in distributions result- ed in a decrease in the General Partners' incentive management fee. Property management fees increased approximately $5,600 (3.6%). Property management fees, which are computed as a percentage of rental revenue, increased as a result of the increase in rental revenue. 2000 COMPARED TO 1999 Total revenues increased from $2,867,387 in 1999 to $3,121,539 in 2000, total expenses increased from $1,737,036 to $1,857,563 and other income increased from $61,302 to $80,373, resulting in an increase in net income from $1,191,653 to $1,344,349. The approximate $254,200 (8.9%) 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 86.9% for the year ended December 31, 2000, compared to 85.0% for the year ended December 31, 1999. The Partnership continued to increase rental rates where market conditions made such increases feasible. Operating expenses increased approximately $103,500 (14.0%) primarily due to increases in yellow pages advertising costs, repairs and maintenance, real estate tax, salaries and wages, partially off- set by a decrease in power and sweeping expenses. Power and sweeping expenses decreased as the substantial snow removal costs in the prior year associated with the blizzard, which hit the Detroit, Mighigan area, were not incurred in the year 2000. General and administrative expenses increased approximately $16,400 (10.6%) as a result of increases in legal and professional and travel expenses. The General Partners' incentive management fee decreased approx- imately 12,400 (7.8%). As this fee is computed as a percentage of distributions made to the Limited Partners, the 2000 decrease in distributions resulted in a decrease in General Partners' incentive management fee. Property management fees increased approximately $13,000 (9.1%). Property management fees, which are computed as a percentage of rental revenue, increased as a result of the increase 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 decreased approximately $1,754,700 (79.2%) in 2001 compared to 2000 primarily as a result of the decreases in other liabilities and incentive management fees (see Note 4 to Financial State- ments) partially offset by the increase in other assets, net income and the deferral of property management fees. Net cash provided by operating activities increased by approximately $176,400 (8.6%) in 2000 compared to 1999 primarily as a result of an increase in net income and the deferral of property management and incentive management fees. Cash used in financing activities, as set forth in the statements of cash flows, consists solely of cash distributions to partners. Special distributions of 1.9%, 2%, and 3% of capital contributed by limited partners were declared and paid on December 15, 2001, 2000 and 1999, respectively. Cash used in investing activities, as set forth in the statement of cash flows, consists of acquisitions of equipment for the Partnership's mini-storage facilities in 1999. The Partnership has no material commitments for capital expenditures. The General Partners plan to continue their policy of funding the continuing improvement and maintenance of Partnership properties with cash generated from operations. The Partnership 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. QUARTERLY FINANCIAL INFORMATION (UNAUDITED) Summarized quarterly financial data for the years ended December 31, 2001 and 2000 was as follows: 2001 Quarter Ended ------------------ March 31 June 30 September 30 December 31 Total revenues $837,717 $802,686 $823,597 $836,988 Net income 408,480 352,280 347,335 329,519 Net income per limited partnership unit $ 12.72 $ 10.97 $ 10.82 $ 10.26 Weighted average number of limited partnership units outstanding 31,783 31,783 31,783 31,783 2000 Quarter Ended ------------------ March 31 June 30 September 30 December 31 Total revenues $732,552 $740,437 $835,981 $812,569 Net income 317,661 329,597 384,751 312,340 Net income per limited partnership unit $ 9.89 $ 10.27 $ 11.98 $ 9.73 Weighted average number of limited partnership units outstanding 31,783 31,783 31,783 31,783 Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Attached hereto as Exhibit l is the information required to be set forth as Item 8, Part II hereof. Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. PART III Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT'S GENERAL PARTNER The General Partners of Registrant are the same as when the Partnership was formed, i.e., DSI Properties, Inc., a California corporation, Robert J. Conway and Joseph W. Conway, brothers. As of December 31, 2001, 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 68 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 72 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 78 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, 2001, which together with the report of its independent auditors, Deloitte & Touche LLP, is attached hereto as Exhibit 1 and incorporated herein by this reference. In addition to such information: (a) No annuity, pension or retirement benefits are proposed to be paid by Registrant to any of the General Partners or to any officer or director of the corporate General Partner; (b) No standard or other arrangement exists by which directors of the Registrant are compensated; (c) The Registrant has not granted any option to purchase any of its securities; and (d) The Registrant has no plan, nor does the Registrant presently propose a plan, which will result in any remuneration being paid to any officer or director upon termination of employment. Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT As of December 31, 2001, no person of record owned more than 5% of the limited partnership units of Registrant, nor was any person known by Registrant to own of record and beneficially, or beneficially only, more than 5% thereof. The balance of the information required to be furnished in Item 12 of Part III is contained in Registrant's Registration Statement on Form S-11, previously filed pursuant to the Securities Act of 1933, as amended, and which is incorporated herein by this reference. Please see information contained in Item 10 hereinabove. Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required to be furnished in Item 13 of Part III is contained in Registrant's Financial Statements for its fiscal year ended December 31, 2001, attached hereto as Exhibit l and incorporated herein by this reference. PART IV Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a)(l) Attached hereto and incorporated herein by this reference as Exhibit l are Registrant's Financial Statements and Supplemental Schedule for its year ended December 31, 2001, 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, 2001. (b) No reports on Form 8K were filed during the fiscal year ended December 31, 2001. 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 Robert J. Conway By_____________________________ Dated: March 28, 2002 ROBERT J. CONWAY, President (Chief Executive Officer, Chief Financial Officer, and Director) Joseph W. Conway By____________________________ Dated: March 28, 2002 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 Robert J. Conway By:__________________________ Dated: March 28, 2002 ROBERT J. CONWAY, President, Chief Executive Officer, Chief Financial Officer, and Director Joseph W. Conway By___________________________ Dated: March 28, 2002 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, 2001, 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, 2001 - -------------------------------------------------------------------------------- 2001 2000 1999 1998 1997 ---- ---- ---- ---- ---- TOTAL REVENUES AND OTHER INCOME $3,351,149 $3,201,912 $2,928,689 $2,707,174 $2,659,936 TOTAL EXPENSES 1,913,535 1,857,563 1,737,036 1,626,960 1,628,097 ---------- ----------- ----------- ----------- ----------- NET INCOME $1,437,614 $1,344,349 $1,191,653 $1,080,214 $1,031,839 ========== =========== =========== =========== =========== TOTAL ASSETS $7,194,045 $8,846,914 $8,779,268 $9,050,011 $9,300,328 ========== =========== =========== =========== =========== CASH FLOW FROM: OPERATING $ 461,933 $2,216,593 $2,040,154 $1,918,525 $1,644,418 INVESTING - - (6,949) - (7,628) FINANCING (1,620,635)(1,638,784) (1,777,602) (1,621,442) (1,617,030) NET INCOME PER LIMITED PARTNERSHIP UNIT $ 44.78 $ 41.87 $ 37.12 $ 33.65 $ 32.14 ========== =========== =========== =========== =========== CASH DISTRIBUTIONS PER LIMITED PARTNERSHIP UNIT $ 50.48 $ 51.18 $ 55.37 $ 50.51 $ 50.37 ========== =========== =========== =========== =========== 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, 2001. Net Partners' Income Equity Per financial statements $ 1,437,614 $ 5,608,816 Excess financial statement depreciation 182,502 2,502,499 Capitalization of syndication costs 1,694,248 Accrued incentive management fee (1,608,358) 1,332 Accrued partner distributions 325,217 Deferred rental revenues 74,734 Acquisition costs depreciated for tax purposes 1,146,937 State taxes (14,787) ----------- ----------- Per Partnership income tax return $ (3,029) $ 11,353,781 =========== =========== Net taxable income per limited partnership unit $ (0.09) =========== DSI REALTY INCOME FUND X (A California Real Estate Limited Partnership) INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE Page FINANCIAL STATEMENTS: Independent Auditors' Report F-1 Balance Sheets at December 31, 2001 and 2000 F-2 Statements of Income for the Three Years Ended December 31, 2001 F-3 Statements of Changes in Partners' Equity (Deficit) for the Three Years Ended December 31, 2001 F-4 Statements of Cash Flows for the Three Years Ended December 31, 2001 F-5 Notes to Financial Statements F-6 SUPPLEMENTAL SCHEDULE: Schedule III - Real Estate and Accumulated Depreciation F-9 SCHEDULES OMITTED: Financial statements and schedules not listed above are omitted because of the absence of conditions under which they are required or because the information is included in the financial statements named above, or in the notes thereto. INDEPENDENT AUDITORS' REPORT To the Partners of DSI Realty Income Fund X: We have audited the accompanying balance sheets of DSI Realty Income Fund X, a California Real Estate Limited Partnership (the "Partnership") as of December 31, 2001 and 2000, 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, 2001. Our audits also included the financial statement schedule listed in the Index at Item 14. These financial statements are the responsi- bility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the over- all 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, 2001 and 2000, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2001, in conformity with generally accepted accounting in the United States of America. Also in our opinion, such financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. Deloitte & Touche LLP February 1, 2002 DSI REALTY INCOME FUND X (A California Real Estate Limited Partnership) BALANCE SHEETS DECEMBER 31, 2001 AND 2000 - -------------------------------------------------------------------------------- ASSETS 2001 2000 CASH AND CASH EQUIVALENTS $ 1,446,960 $ 2,605,662 PROPERTY, net (Note 3) 5,605,054 6,143,582 OTHER ASSETS 142,031 97,670 ----------- ----------- TOTAL $ 7,194,045 $ 8,846,914 =========== =========== LIABILITIES AND PARTNERS' EQUITY (DEFICIT) LIABILITIES: Distribution due partners (Note 4) $ 325,214 $ 325,214 Incentive management fee payable to general partners (Note 4) 1,332 1,609,690 Property management fees payable 1,078,394 916,401 Customer deposits and other liabilities 180,289 203,772 ----------- ----------- Total liabilities 1,585,229 3,055,077 ----------- ----------- PARTNERS' EQUITY (DEFICIT)(Note 4): General partners (85,940) (84,110) Limited partners (31,783 limited partnership units outstanding at December 31, 2001 and 2000) 5,694,756 5,875,947 ------------ ----------- Total partners' equity 5,608,816 5,791,837 ------------ ----------- TOTAL $ 7,194,045 $ 8,846,914 ============ =========== See accompanying notes to financial statements. DSI REALTY INCOME FUND X (A California Real Estate Limited Partnership) STATEMENTS OF INCOME THREE YEARS ENDED DECEMBER 31, 2001 - -------------------------------------------------------------------------------- 2001 2000 1999 REVENUES: Rental $3,300,988 $3,121,539 $2,867,387 ---------- ---------- ---------- EXPENSES: Depreciation 538,528 538,528 538,527 Operating 890,989 843,873 740,387 General and administrative 176,169 171,215 154,769 General partners' incentive management fee (Note 4) 145,857 147,542 159,984 Property management 161,992 156,405 143,369 ---------- ---------- ---------- Total expenses 1,913,535 1,857,563 1,737,036 ---------- ---------- ---------- OPERATING INCOME 1,387,453 1,263,976 1,130,351 OTHER INCOME - Interest income 50,161 80,373 61,302 ---------- ---------- ---------- NET INCOME $1,437,614 $1,344,349 $1,191,653 ========== ========== ========== AGGREGATE NET INCOME ALLOCATED TO (Note 4): Limited partners $1,423,238 $1,330,906 $1,179,736 General partners 14,376 13,443 11,917 ---------- ---------- ---------- TOTAL $1,437,614 $1,344,349 $1,191,653 ========== ========== ========== NET INCOME PER LIMITED PARTNERSHIP UNIT (Notes 2 and 4) $ 44.78 $ 41.87 $ 37.12 ========== ========== ========== See accompanying notes to financial statements. DSI REALTY INCOME FUND X (A California Real Estate Limited Partnership) STATEMENTS OF CHANGES IN PARTNERS' EQUITY THREE YEARS ENDED DECEMBER 31, 2001 - -------------------------------------------------------------------------------- General Limited Partners Partners Total BALANCE, JANUARY 1, 1999 $(75,264) $6,751,659 $6,676,395 Net income 11,917 1,179,736 1,191,653 Distributions (17,776) (1,759,826) (1,777,602) ------- ---------- ---------- BALANCE, DECEMBER 31, 1999 $(81,123) $6,171,569 $6,090,446 Net income 13,443 1,330,906 1,344,349 Distributions (16,430) (1,626,528) (1,642,958) ------- ---------- ---------- BALANCE, DECEMBER 31, 2000 $(84,110) $5,875,947 $5,791,837 Net income 14,376 1,423,238 1,437,614 Distributions (16,206) (1,604,429) (1,620,635) ------- ---------- ---------- BALANCE, DECEMBER 31, 2001 $(85,940) $5,694,756 $5,608,816 ======= ========== ========== See accompanying notes to financial statements. DSI REALTY INCOME FUND X (A California Real Estate Limited Partnership) STATEMENTS OF CASH FLOWS THREE YEARS ENDED DECEMBER 31, 2001 - -------------------------------------------------------------------------------- 2001 2000 1999 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $1,437,614 $1,344,349 $1,191,653 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 538,528 538,528 538,527 Changes in assets and liabilities: Receivable from general partners Other assets (44,361) (28,365) (5,232) Incentive management fee payable to general partners (1,608,358) 147,542 159,985 Property management fee payable 161,993 156,405 143,369 Customer deposits and other liabilities (23,483) 58,134 11,852 ----------- ----------- ----------- Net cash provided by operating activities 461,933 2,216,593 2,040,154 CASH FLOWS FROM INVESTING ACTIVITIES - Additions to property (6,949) CASH FLOWS FROM FINANCING ACTIVITIES - Distributions to partners (1,620,635) (1,638,784) (1,777,602) ----------- ----------- ---------- NET INCREASE IN CASH AND CASH EQUIVALENTS (1,158,702) 577,809 255,603 CASH AND CASH EQUIVALENTS, AT BEGINNING OF YEAR 2,605,662 2,027,853 1,772,250 ----------- ----------- ------------ CASH AND CASH EQUIVALENTS, AT END OF YEAR $ 1,446,960 $ 2,605,662 $ 2,027,853 =========== =========== ============ See accompanying notes to financial statements. DSI REALTY INCOME FUND X (A California Real Estate Limited Partnership) NOTES TO FINANCIAL STATEMENTS THREE YEARS ENDED DECEMBER 31, 2001 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. The mini-storage facilities are operated for the Partnership by Dahn under various agreements which are subject to renewal annually. Under the terms of the agreements, the Partnership is required to pay Dahn a property management fee equal to five percent of gross revenue from operations, defined as the entire amount of all receipts for the renting or leasing of storage compartments and sale of locks. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cash and Cash Equivalents - The Partnership classifies its short-term investments purchased with an original maturity of three months or less as cash equivalents. Property and Depreciation - Property is recorded at cost and is composed mini-storage facilities. Depreciation is provided using the straight-line method over an estimated useful life of twenty years for the facilities. Building improvements are depreciated over a five year period. Income Taxes - No provision has been made for income taxes in the accompanying financial statements. The taxable income or loss of the Partnership is allocated to each partner in accordance with the terms of the Agreement of Limited Partnership. Each partner's tax status, in turn, determines the appropriate income tax for its allocated share of the Partnership taxable income or loss. The net difference between the basis of the Partnership's assets and liabilities for federal income tax purposes and as reported for financial statement purposes is $5,744,965. Revenues - Rental revenue is recognized using the accrual method based on contractual amounts provided for in the lease agreements, which approximates recognition on a straight line basis. The term of the lease agreements is usually less than one year. Net Income per Limited Partnership Unit - Net income per limited partnership unit is computed by dividing net income allocated to the limited partners by the weighted average number of limited partnership units outstanding during each year (31,783 in 2001, 2000 and 1999). 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 future cash flow is less than the carrying amount of the asset, the Partnership would recognize an impairment. No impairment losses were recognized in 2001, 2000 or 1999. Fair Value of Financial Instruments - The Partnership's financial instruments consist primarily of cash, receivables, accounts payable and accrued liabilities. The carrying values of all financial instruments are representative of their fair values due to their short-term maturities. Concentrations of Credit Risk - Financial instruments that potentially subject the Partnership to concentrations of credit risk consist primarily of cash equivalents and rent receivables. The Partnership places its cash equivalents with high credit quality institutions. 3. PROPERTY As of December 31, 2001 and 2000, the total cost of property and accumulated depreciation are as follows: 2001 2000 Land $ 2,089,882 $ 2,089,882 Buildings and improvements 10,840,285 10,840,285 ----------- ------------ Total $12,930,167 $12,930,167 Accumulated depreciation (7,325,113) (6,786,585) ----------- ----------- Property, net $ 5,605,054 $ 6,143,582 =========== =========== 4. ALLOCATION OF PROFITS AND LOSSES Under the Agreement of Limited Partnership, the general partners are to be allocated one percent of the net profits or 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 nine percent 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 percent of the offering proceeds. As a result of the Special Distribution paid on December 15, 2001 to the limited partners, they now have reached a cumulative return of 8.1 percent of the offering proceeds. Consequently, in December 2001, the general partners were paid accrued incentive management fees in the amount of $1,754,214. This sum represents accumulated incentive management fees due the general partners from inception of the Partnership through December 31 2001, which had not been paid previously. 5. BUSINESS SEGMENT INFORMATION The following disclosure about segment reporting of the Partnership is made in accordance with the requirements of Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information." The Partnership operates under a single segment; storage facility operations, under which the Partnership rents its storage facilities to its customers on a need basis and charges rent on a predetermined rate on a predetermined rate. DSI REALTY INCOME FUND X (A California Real Estate Limited Partnership) REAL ESTATE AND ACCUMULATED DEPRECIATION - --------------------------------------------------------------------------------
Costs Capitalized Initial Cost to Subsequent to Gross Amount at Which Carried Partnership Acquisition at Close of Period ------------------- ----------------- ----------------------------- Buildings Buildings Date and Improve- Carrying and Accum. of Date Description Encumbrances Land Improvements ments Costs Land Improvements Total Deprec. Const. Acq. Life MINI-U-STORAGE Ryan Road, Warren Michigan None $277,799 $1,715,183 $ 5,319 $277,799 $1,720,502 $1,998,301*$1,208,160 12/87 02/87 20 Yrs Crestwood,Illinois None 205,960 1,631,179 3,211 205,960 1,634,390 1,840,350 1,148,991 12/87 04/87 20 Yrs Grosebeck Highway Warren, Michigan None 314,517 1,760,657 74,155 314,517 1,834,812 2,149,329 1,244,831 01/88 04/87 20 Yrs Forestville, Maryland None 755,000 2,278,110 9,145 755,000 2,287,255 3,042,255 1,549,953 07/88 08/87 20 Yrs Troy, Michigan None 536,606 3,148,119 215,207 536,606 3,363,326 3,899,932 2,173,178 06/88 06/88 20 Yrs -------- ---------- ------- -------- ---------- ---------- ---------- $2,089,882 $10,533,248 $307,037 $2,089,882 $10,840,285 $12,930,167*$7,325,113 ========== ========== ======== ========== ========== =========== ==========
Real Estate Accumulated at Cost Depreciation Balance, January 1, 1999 $12,923,218 $5,709,530 Additions 6,949 538,527 ----------- ---------- Balance, December 31, 1999 $12,930,167 $6,248,057 Additions 538,528 ----------- ---------- Balance, December 31, 2000 $12,930,167 $6,786,585 Additions 538,528 ----------- ---------- Balance, December 31, 2001 $12,930,167 $7,325,113 =========== ========== EXHIBIT 2 March 28, 2002 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, 2001 and 2000, and the related statements of income, changes in partners' equity and cash flows for each of the three years in the period ended December 31, 2001 accompanied by an independent auditors' report. The Partnership owns five mini-storage facilities and a 70% interest in a sixth mini-storage facility on a joint venture basis with an affiliated Partnership, DSI Realty Income Fund VIII. The Partnership's properties were each purchased for all cash and funded solely from subscriptions for limited partnership interests without the use of mortgage financing. Your attention is directed to the section entitled Management's Discussion and Analysis of Financial Condition and Results of Operations for the General Partners' discussion and analysis of the financial statements and operations of the Partnership. Average occupancy levels for each of the Partnership's six properties for the years ended December 31, 2001 and December 31, 2000 were as follows: Location of Property Average Occupancy Average Occupancy Levels for the Levels for the Year Ended Year Ended Dec. 31, 2001 Dec. 31, 2000 Ryan Rd Warren, MI 88% 86% Crestwood,IL 86% 85% Groesbeck Hwy Warren, MI 86% 86% Forestville, MD 92% 88% Troy, MI 87% 89% 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, 2001 which was filed with the Securities and Exchange Commission (which report includes the enclosed Financial Statements), we will forward a copy of the report to you upon written request. Very truly yours, DSI REALTY INCOME FUND X By: DSI Properties, Inc. By___________________________ ROBERT J. CONWAY, President -----END PRIVACY-ENHANCED MESSAGE-----