10-Q 1 dsi11904.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q /_x_/ Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended September 30, 2004 /___/ Transition report pursuant to Section 13 or 15(d) of the Securities Act of 1934 for the transition period from ______________ to ________________. Commission File Number 33-26038 DSI REALTY INCOME FUND XI, A California Limited Partnership (Exact name of registrant as specified in its charter) California_______________________________________33-0324161 (State or other jurisdiction of (I.R.S. Employer incorporation) Identification No.) 6700 E. Pacific Coast Hwy., Long Beach, California 90803 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code-(562)493-8881 _________________________________________________________________ Former name, former address and former fiscal year, if changed since last report. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes _x_. No__. PART I - FINANCIAL INFORMATION Item 1. Financial Statements. The information required by Rule 10-01 of Regulation S-X is included in the Quarterly Report to the Limited Partners of Registrant for the period ended September 30, 2004, which is attached hereto as Exhibit "20" and incorporated herein by this reference. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Registrant incorporates by this reference its Quarterly Report to Limited Partners for the period ended September 30, 2004. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8K. (a) Attached hereto as Exhibit "20" is Registrant's Quarterly Report to Limited Partners for the period ended September 30, 2004. (B) Registrant did not file any reports on Form 8-K for the period reported upon. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: October 29, 2004 DSI REALTY INCOME FUND XI A California Limited Partnership (Registrant) By____\s\ Robert J. Conway_____ DSI Properties, Inc., as General Partner by ROBERT J. CONWAY, President and Chief Financial Officer SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: October 29, 2004 DSI REALTY INCOME FUND XI A California Limited Partnership (Registrant) By__\s\ Robert J. Conway________ DSI Properties, Inc., as General Partner by ROBERT J. CONWAY, President and Chief Financial Officer October 29, 2004 QUARTERLY REPORT TO THE LIMITED PARTNERS OF DSI REALTY INCOME FUND XI DEAR LIMITED PARTNERS: We are pleased to enclose the Partnership's unaudited financial statements for the period ended September 30, 2004. The following is Management's discussion and analysis of the Partnership's financial condition and results of its operations. For the three-month periods ended September 30, 2004 and 2003, total revenues decreased 2.6% from $587,206 to $572,026 and total expenses increased 3.3% from $360,853 to $348,938 and other income remained constant. Minority interest in income of real estate joint ventures decreased 6.8% from $154,854 to $144,354. As a result, net income increased 10.1% from $71,582 for the three-month period ended September 30, 2003, to $78,817 for the same period in 2004. Rental revenue decreased as a result of lower occupancy rates. Occupancy levels for the Partnership's four mini-storage facilities averaged 84.3% for the three-month period ended September 30, 2004 as compared to 86.7% for the same period in 2003. The Partnership is continuing its marketing efforts to attract and keep new tenants in its various mini-storage facilities. Oper- ating expenses increased approximately $23,000 (7.7%) primarily as a result of higher advertising, maintenance and repair, office supplies and salaries and wages expenses partially offset by a decrease in real estate tax expense. General and administrative expenses decreased approximately $34,900 (55.6%) primarily due to a decrease in legal and professional expense. The decrease in legal and professional expense is related to unsuccessful legal challenges by two dissident Limited Partners to an amendment to the Partnership Agreement in the prior period. For the nine-month periods ended September 30, 2004, and 2003, total revenues decreased 2.3% from $1,752,121 to $1,711,352 and total expenses increased 1.7% from $1,049,514 to $1,067,717 and other income decreased from $284 to $247. Minority interest in income of real estate joint ventures decreased 6.8% from $154,854 to $144,354. As a result, net income decreased 8.9% from $548,037 for the nine-month period ended September 30, 2003, to $499,528 for the same period in 2004. Rental revenue decreased as a result of lower occupancy rates. Operating expenses increased approximately $32,300 (3.7%) primarily as a re- sult of higher maintenance and repair and office supplies expenses, partially offset by a decrease in real estate tax expense. General and administrative expenses decreased approximately $14,100 (8.4%) primarily due to a decrease in legal and professional expense, partially offset by an increase in state tax payments. The decrease in legal and professional expense was discussed above. The General Partners plan to continue their policy of funding improvements and maintenance of Partnership properties with cash generated from operations. The Partnership's financial resources appear to be adequate to meet its needs. We are not enclosing a copy of the Partnership Form 10-Q as filed with the Securities and Exchange Commission since all the information set forth therein is contained either in this letter or in the attached financial statements. However, if you wish to receive a copy of said report, please send a written request to DSI Realty Income Fund XI, P.O. Box 357, Long Beach, California 90801. Very truly yours, DSI REALTY INCOME FUND XI By: DSI Properties, Inc., as General Partner By /s/ Robert J. Conway ____________________________ ROBERT J. CONWAY, President DSI REALTY INCOME FUND XI (A California Real Estate Limited Partnership) BALANCE SHEETS(UNAUDITED) SEPTEMBER 30, 2004 AND DECEMBER 31, 2003 September 30, December 31, 2004 2003 ASSETS CASH AND CASH EQUIVALENTS $ 659,563 $ 527,509 PROPERTY, Net 3,861,584 4,100,678 OTHER ASSETS 47,989 47,989 TOTAL $4,569,136 $4,676,176 LIABILITIES AND PARTNERS' EQUITY (DEFICIT) LIABILITIES $ 367,811 $ 368,319 PARTNERS' EQUITY (DEFICIT): General Partners (47,654) (46,589) Limited Partners 4,248,979 4,354,446 Total partners' equity 4,201,325 4,307,857 TOTAL $4,569,136 $4,676,176 See accompanying notes to financial statements(unaudited). STATEMENTS OF INCOME (UNAUDITED) FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003 September 30, September 30, 2004 2003 REVENUES: Rental Income $ 572,026 $ 587,206 EXPENSES: Operating 321,120 298,122 General and administrative 27,818 62,731 Total expenses 348,938 360,853 OPERATING INCOME 223,088 226,353 OTHER INCOME Interest 83 83 INCOME BEFORE MINORITY INTEREST IN INCOME OR REAL ESTATE JOINT VENTURES 223,171 226,436 MINORITY INTEREST IN INCOME OF REAL ESTATE JOINT VENTURES (144,354) (154,854) NET INCOME $ 78,817 $ 71,582 AGGREGATE NET INCOME ALLOCATED TO: Limited partners $ 78,029 $ 70,866 General partners 788 716 TOTAL $ 78,817 $ 71,582 NET INCOME PER LIMITED PARTNERSHIP UNIT $ 3.90 $ 3.54 LIMITED PARTNERSHIP UNITS USED IN PER UNIT CALCULATION 20,000 20,000 See accompanying notes to financial statements(unaudited). STATEMENTS OF INCOME (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003 September 30, September 30, 2004 2003 REVENUES: Rental $1,711,352 $1,752,121 EXPENSES: Operating 912,994 880,670 General and administrative 154,723 168,844 Total expenses 1,067,717 1,049,514 OPERATING INCOME 643,635 702,607 OTHER INCOME Interest 247 284 INCOME BEFORE MINORITY INTEREST IN INCOME OF REAL ESTATE JOINT VENTURES 643,882 702,891 MINORITY INTEREST IN INCOME OF REAL ESTATE JOINT VENTURES (144,354) (154,854) NET INCOME 499,528 548,037 AGGREGATE NET INCOME ALLOCATED TO: Limited partners 494,533 542,557 General partners 4,995 5,480 TOTAL 499,528 548,037 NET INCOME PER LIMITED PARTNERSHIP UNIT $24.73 $27.13 LIMITED PARTNERSHIP UNITS USED IN PER UNIT CALCULATION 20,000 20,000 See accompanying notes to financial statements(unaudited). STATEMENTS OF CHANGES IN PARTNERS' EQUITY (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 GENERAL LIMITED PARTNERS PARTNERS TOTAL BALANCE AT JANUARY 1, 2004 ($46,589) $4,354,446 $4,307,857 NET INCOME 4.995 494,533 499,528 DISTRIBUTIONS (6,060) (600,000) (606,060) BALANCE AT SEPTEMBER 30, 2004 ($47,654) $4,248,979 $4,201,325 See accompanying notes to financial statements(unaudited). STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003 September 30, September 30, 2004 2003 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 499,528 $ 548,037 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 239,094 239,094 Changes in assets and liabilities: (Decrease)increase in liabilities (508) 31,020 Net cash provided by operating activities 738,114 818,151 CASH FLOWS FROM FINANCING ACTIVITIES - Distributions to partners (606,060) (606,060) NET INCREASE CASH AND CASH EQUIVALENTS 132,054 212,091 CASH AND CASH EQUIVALENTS: At beginning of period 527,509 597,284 At end of period $ 659,563 $ 809,375 See accompanying notes to financial statements(unaudited). DSI REALTY INCOME FUND XI (A California Real Estate Limited Partnership) NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 1. GENERAL DSI Realty Income Fund XI (the "Partnership"), a limited partnership, has three general partners (DSI Properties, Inc., Robert J. Conway and Joseph W. Conway) and limited partners owning 20,000 limited partnership units. The Partnership was formed under the California Uniform Limited Partnership Act for the primary purpose of acquiring and operating real estate. The accompanying financial information as of September 30, 2004, and for the periods ended September 30, 2004, and 2003 is unaudited. Such financial information includes all adjustments which are considered necessary by the Partnership's management for a fair presentation of the results for the periods indicated. 2. PROPERTY The Partnership holds a 90% interest in a joint venture that owns a mini- storage facility in Whittier, California; an 85% interest in an existing mini-storage in Edgewater Park, New Jersey; a 90% interest in an operating mini-storage facility in Bloomingdale, Illinois; and a 75% interest in an operating mini-storage in Sterling Heights, Michigan. As of September 30, 2004, the total property cost and accumulated depreciation are as follows: Land $ 1,894,250 Buildings 6,541,922 Furniture and equipment 8,802 Total 8,444,974 Less: Accumulated Depreciation ( 4,583,390) Property - Net $ 3,861,584 3. NET INCOME PER LIMITED PARTNERSHIP UNIT Net income per limited partnership unit is calculated by dividing the net income allocated to the limited partners by the number of limited partnership units outstanding during the period. 4. CONTROLS AND PROCEDURES Within 90 days prior to the date of this report, the Partnership evaluated the effectiveness of its disclosure controls and procedures. This evaluation was performed by the Partnership's Controller with the assistance of the Partnership's President and the Chief Executive Officer. These disclosure controls and procedures are designated to ensure that the information required to be disclosed by the Partnership in its periodic reports filed with the Securities and Exchange Commission (the "Commission") is recorded, processed, summarized and reported, within the time periods specified by the Commission's rules and forms, and that the information is communicated to the certifying officers on a timely basis. Based on this evaluation, the Partnership con- cluded 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. DSI REALTY INCOME FUND XI Form 10-Q CERTIFICATION Each of the undersigned hereby certifies in his capacity as an officer of DSI Properties, Inc. (corporate General Partner) of DSI REALTY INCOME FUND XI (the "Partnership") that the Quarterly Report of the Partnership on Form 10-Q for the periods ended September 30, 2004 fully complies with the requirements of Section 13(a) of the Securities and Exchange Act of 1934 and that inform- ation contained in such report fairly presents, in all material respects, the financial condition of the Partnership at the end of such periods and the results of operations of the Partnership for such periods. ROBERT J. CONWAY, CEO RICHARD P. CONWAY, VP CERTIFICATIONS I, Robert Conway, certify that: 1. I have reviewed this quarterly report on Form 10-Q of DSI Realty Income Fund XI; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consoli- dated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effec- tiveness of the disclosure controls and procedures based on our evalu- ation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit com- mitee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls sub- sequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November, 2004 Robert Conway President CERTIFICATIONS I, Richard Conway, certify that: 1. I have reviewed this quarterly report on Form 10-Q of DSI Realty Income Fund XI; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consoli- dated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effec- tiveness of the disclosure controls and procedures based on our evalu- ation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit com- mitee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls sub- sequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November, 2004 Richard Conway Vice President