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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 2O549
FORM 1O-K
(Mark One)
/ x /Annual Report Pursuant to Section 13 or 15 (d) of the Securities and
Exchange Act of 1934 [Fee required] for fiscal year ended December 31, 2002, 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. 2-68926.
DSI REALTY INCOME FUND VI, a California Limited Partnership (Exact name of
registrant as specified in governing instruments)
_________California___________________________95-3633566_____
(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)493-8881
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,
2002, incorporated by reference to Form 10-K, Part II.
Item 11. Registrant's Financial Statements for its fiscal year ended December
31, 2002, 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, 2002, incorporated by reference to Form 10-K, Part III.
PART I
Item l. BUSINESS
Registrant, DSI Realty Income Fund VI (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 August 1, 1983. The General
Partners are DSI Properties, Inc., a California corporation, Diversified
Investors Agency, a general partnership, whose current partners are 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 twenty-three
thousand seven hundred fifty-three (23,753) units of limited partnership
interests aggregating Eleven Million Eight Hundred Seventy-Six Thousand Five
Hundred Dollars ($11,876,500). 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 seven 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 seven properties
for the years ended December 31, 2002 and December 31, 2001 were as follows:
Location of Property Average Occupancy Average Occupancy
Level for the Year Level for the Year
Ended Dec. 31, 2002 Ended Dec. 31, 2001
Vallejo, California 85% 84%
Santa Rosa, California
(both stages) 83% 85%
Arvada, Colorado 85% 89%
Las Vegas, Nevada 81% 87%
Federal Heights, Colorado 85% 88%
Colorado Springs, Colorado 85% 90%
Please refer to the discussion appearing elsewhere herein under the caption
Management's Discussion and Analysis of Financial Condition and Results of
Operations for a detailed analysis of the results of operations of the
Partnership's properties.
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 seven mini-storage facilities, none of
which are subject to long-term indebtedness. Please refer to the discussion
under Business for a discussion of the average occupancy rate for each property
owned by the Partnership. The following table sets forth information as of
December 31, 2002 regarding properties owned by the Partnership.
Location Size of Net Rentable No. of Completion
Parcel Area Rental Units Date
Vallejo, CA 3.10 acres 57,845 512 6/9/81
Arvada, CO 3.75 acres 65,535 662 1/4/83
Federal
Heights, CO 2.39 acres 39,892 467 10/15/83
Las Vegas, NV 2.20 acres 39,682 431 12/l/82
Santa Rosa, CA 3.38 acres 72,163 626 9/10/83
Colorado
Springs, CO 3.50 acres 60,566 692 11/15/83
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 23,753 limited
partnership units during its offering and as of December 31, 2002 had 811
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 $15.97 per Limited Partnership Unit were
declared and paid each quarter for the year ended December 31, 2002 and $17.86
per Limited Partnership Unit were declared and paid each quarter for the year
ended December 31, 2001 and $19.12 per Limited Partnership Unit were declared
and paid each quarter for the year ended December 31, 2000. It is
Registrant's expectations that distributions will continue to be paid in
the future.
Item 6. SELECTED FINANCIAL DATA
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001, 2000, 1999, and 1998
- --------------------------------------------------------------------------------
2002 2001 2000 1999 1998
---- ---- ---- ---- ----
TOTAL REVENUES AND
OTHER
INCOME $2,843,760 $3,115,301 $3,121,611 $2,887,720 $2,778,744
TOTAL
EXPENSES 1,777,129 1,825,103 1,742,859 1,619,474 1,551,834
---------- ---------- ---------- ---------- ----------
NET
INCOME $1,066,631 $1,290,198 $1,378,752 $1,268,246 $1,226,910
========== ========== ========== ========== ==========
TOTAL
ASSETS $2,527,467 $2,971,125 $3,372,953 $3,796,535 $4,114,006
========== ========== ========== ========== ==========
CASH FLOWS FROM:
OPERATING $1,522,050 $1,755,331 $1,860,986 $1,684,625 $1,626,928
INVESTING - (41,401) (48,969) (82,421) (31,393)
FINANCING (1,533,059) (1,713,926) (1,834,963) (1,588,445) (1,579,233)
NET INCOME
PER LIMITED
PARTNERSHIP
UNIT $ 44.46 $ 53.77 $ 57.46 $ 52.86 $ 51.14
---------- ---------- ---------- ---------- ----------
CASH
DISTRIBUTIONS
PER LIMITED
PARTNERSHIP
UNIT $ 63.90 $ 71.43 $ 76.48 $ 66.20 $ 65.82
========== ========== ========== ========== ==========
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
2002 COMPARED TO 2001
Total revenues decreased from $3,109,553 in 2001 to $2,842,325 in 2002,
while total expenses decreased from $1,825,103 to $1,777,129 and other
income decreased from $5,748 to $1,435, resulting in a decrease in net income
from $1,290,198 to $1,066,631. Rental revenues decreased as a result of lower
occupancy and unit rental rates. Occupancy levels for the Partnership's
seven mini-storage facilities averaged 84.2% for the year 2002 as compared
to 87.0% for 2001. The increase in operating expenses of approximately $46,900
(5.8%) was due primarily to increases in real estate tax, workers compensation
insurance and security alarm services expenses, partially offset by a
decrease in maintenance and repair expense. General and administrative
expenses increased approximately $33,200 (19.6%) primarily as a result of
higher legal and professional and equipment and computer lease expenses,
partially offset by a decrease in office supplies and printing expense. The
General Partners' incentive management fee which is based on cash available
for distribution, decreased as a result of the decrease in net income.
Property management fees, which are based on revenues, decreased as a result
of the decrease in rental revenue.
2001 COMPARED TO 2000
Total revenues increased from $3,109,493 in 2000 to $3,109,553 in 2001,
while total expenses increased from $1,742,859 to $1,825,103 and other income
decreased from $12,118 to $5,748, resulting in a decrease in net income from
$1,378,752 to $1,290,198. Rental revenues remained stable as lower occupancy
levels were offset by higher unit rental rates. Occupancy levels for the Part-
nership's seven mini-storage facilities averaged 87.0% for the year 2001 as
compared to 88.0% for 2000. The increase in operating expenses of approximately
$35,700 (4.7%) was due primarily to an increase in salaries and wages expense.
General and administrative expenses increased approximately $27,900 (19.7%)
primarily as a result of higher office supplies and expense. The General
Partners' incentive management fee which is based on cash available for dis-
tribution, increased as a result of the increase in net income. Property
management fees, which are based on revenues, remained stable, as there was
a small difference in rental revenue between the years 2000 and 2001.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities decreased approximately
$233,300 (13.3%) in 2002 compared to 2001 primarily due to the decreases in
net income and other assets, partially offset by a decrease in depreciation.
Net cash provided by operating activities decreased approximately $105,700
(5.7%) in 2001 compared to 2000 primarily due to the decrease in net income
and an increase in other assets.
Cash used in financing activities, as set forth in the statements of cash
flows, has consisted solely of cash distributions to partners. Special
distributions of 3.5%, 5%, and 6% of capital contributed by limited partners
were declared and paid on December 15, 2002, 2001, and 2000, respectively.
Cash used in investing activities, as set forth in the statements of cash
flows, has consisted solely of acquisitions of equipment for the Partnership's
mini storage properties. The Partnership has no material commitments for capital
expenditures.
On April 5, 2002, the General Partners received a copy of a hostile tender
offer from MacKenzie Patterson, Inc. and associated corporations and limited
partnerships to purchase all of the Units in the Partnership, This offer was
also filed with the Securities and Exchange Commission on the same date. The
General Partners determined that the hostile tender offer was not in the best
interests of the Limited Partners, that the tender offer was grossly inadequate
given the performance history of the Limited Partnership and the inherent value
of the Units, and recommended that the Limited Partners reject the hostile
tender offer and not tender their Units pursuant thereto. The offer was sub-
sequently increased and extended to June 30, 2002 and again to July 22, 2002.
The General Partners' initial determination regarding the offer has not
changed. Prior to the expiration date of the offer, Limited Partners tendered
30 Units representing 0.15% of the outstanding Units of the Partnership.
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 distribtuions for the next twelve
months and beyond.
The General Partners are not aware of any environmental problems which
could have a material adverse effect upon the financial position of the
Partnership.
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Summarized quarterly financial data for the years ended December 31, 2002 and
2001 was a follows:
2002 Quarter Ended
------------------
March 31 June 30 September 30 December 30
Total revenues $735,362 $693,646 $732,861 $680,456
Net income 294,524 217,539 264,273 290,295
Net income per limited
partnership unit $ 12.28 $ 9.07 $ 11.01 $ 12.10
Weighted average number
of limited partnership
units outstanding 23,753 23,753 23,753 23,753
2001 Quarter Ended
------------------
March 31 June 30 September 30 December 30
Total revenues $791,400 $789,397 $782,190 $746,566
Net income 374,495 354,262 351,932 209,509
Net income per limited
partnership unit $ 15.61 $ 14.77 $ 14.67 $ 8.73
Weighted average
number of limited
partnership units 23,753 23,753 23,753 23,753
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, and Diversified
Investors Agency. As of December 31, 2002, 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, are the sole
partners of Diversified Investor Agency. Messrs. Robert J. and Joseph W. Conway,
together with Mr. Joseph W. Stok, currently comprise the entire Board of
Directors of DSI Properties, Inc.
Mr. Robert J. Conway is 69 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 73 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 79 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 REMUNERATION 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, 2002, which together with the report of its independent auditors,
Deloitte & Touche LLP, 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, 2002, 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. 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, 2002 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 fiscal year ended December 31, 2002, 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, 2002.
(b) There have been no form 8-K's filed during the last quarter of the
period covered by this Report.
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 VI,
a California Limited Partnership
by: DSI Properties, Inc., a
California corporation, as
General Partner
By_____________________________ Dated: March 31, 2003
ROBERT J. CONWAY, President
(Chief Executive Officer, Chief
Financial Officer, and Director)
By____________________________ Dated: March 31, 2003
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 VI,
a California Limited Partnership
by: DSI Properties, Inc., a
California corporation, as
General Partner
By:__________________________ Dated: March 31, 2003
ROBERT J. CONWAY, President,
Chief Executive Officer, Chief
Financial Officer, and Director
By___________________________ Dated: March 31, 2003
JOSEPH W. CONWAY
(Executive Vice President
and Director)
DSI REALTY INCOME FUND VI
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, 2002, 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 VI
(A California Real Estate Limited Partnership)
SELECTED FINANCIAL DATA
FIVE YEARS ENDED DECEMBER 31, 2002
- --------------------------------------------------------------------------------
2002 2001 2000 1999 1998
---- ---- ---- ---- ----
TOTAL REVENUES AND
OTHER
INCOME $2,843,760 $3,115,301 $3,121,611 $2,887,720 $2,778,744
TOTAL
EXPENSES 1,777,129 1,825,103 1,742,859 1,619,474 1,551,834
---------- ---------- ---------- ---------- ----------
NET
INCOME $1,066,631 $1,290,198 $1,378,752 $1,268,246 $1,226,910
========== ========== ========== ========== ==========
TOTAL
ASSETS $2,527,467 $2,971,125 $3,372,953 $3,796,535 $4,114,006
========== ========== ========== ========== ==========
CASH FLOWS FROM:
OPERATING $1,522,050 $1,755,331 $1,860,986 $1,684,625 $1,626,928
INVESTING - (41,401) (48,969) (82,421) (31,393)
FINANCING (1,533,059) (1,713,926) (1,834,963) (1,588,445) (1,579,233)
NET INCOME
PER LIMITED
PARTNERSHIP
UNIT $ 44.46 $ 53.77 $ 57.46 $ 52.86 $ 51.14
---------- ---------- ---------- ---------- ----------
CASH
DISTRIBUTIONS
PER LIMITED
PARTNERSHIP
UNIT $ 63.90 $ 71.43 $ 76.48 $ 66.20 $ 65.82
========== ========== ========== ========== ==========
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, 2002.
Net Partners'
Income Equity
Per financial statements $ 1,066,631 $ 2,082,659
Excess tax depreciation 385,300 (51,728)
Accrued revenue 10,164
Accrued incentive management fee (16,219)
Acquisition costs capitalized
for tax purposes 134,382
Deferred rental revenues 79,486
Accrued distributions to partners 269,920
Accrued property taxes (88,000)
Other (33,501) (2,000)
----------- -----------
Per Partnership tax return $ 1,418,430 $ 2,418,664
=========== ===========
Taxable income per $500 limited
partnership unit $ 59.12
===========
DSI REALTY INCOME FUND VI
(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, 2002 and 2001 F-2
Statements of Income for the Three
Years Ended December 31, 2002 F-3
Statements of Changes in Partners' Equity (Deficit) for
the Three Years Ended December 31, 2002 F-4
Statements of Cash Flows for the Three Years
Ended December 31, 2002 F-5
Notes to Financial Statements F-6
SUPPLEMENTAL SCHEDULE:
ScheduleIII - 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.
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 evalu-
ation 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 inform-
ation required to be disclosed by the Parnership it 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.
INDEPENDENT AUDITORS' REPORT
Partners of
DSI Realty Income Fund VI:
We have audited the accompanying balance sheets of DSI Realty Income Fund VI,
a California Limited Partnership (the "Partnership") as of December 31, 2002
and 2001, 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, 2002. Our audits also included the financial statement
schedule listed in the Index at Item 14. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with 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 estimates, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reason-
able basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of DSI Realty Income Fund VI at December 31,
2002 and 2001, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2002, in conformity with
accounting principles generally accepted 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 3, 2003
DSI REALTY INCOME FUND VI
(A California Real Estate Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 2002 AND 2001
- --------------------------------------------------------------------------------
ASSETS 2002 2001
CASH AND CASH EQUIVALENTS $ 526,418 $ 537,427
PROPERTY, Net (Note 3) 1,926,139 2,319,749
OTHER ASSETS 74,910 113,949
----------- -----------
TOTAL $ 2,527,467 $ 2,971,125
=========== ===========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
LIABILITIES:
Distribution due partners $ 269,920 $ 269,920
Incentive management fee payable to
general partners (Note 4) 50,522 12,671
Property management fees payable 12,864 13,460
Customer deposits and other liabilities 111,502 125,987
----------- -----------
Total liabilities 444,808 422,038
----------- -----------
PARTNERS' EQUITY (DEFICIT)(Note 4):
General partners (72,459) (67,794)
Limited partners (23,753 limited
partnership units outstanding
at December 31, 2002 and 2001) 2,155,118 2,616,881
------------ -----------
Total partners' equity 2,082,659 2,549,087
------------ -----------
TOTAL $ 2,527,467 $2,971,125
============ ===========
See accompanying notes to financial statements.
DSI REALTY INCOME FUND VI
(A California Real Estate Limited Partnership)
STATEMENTS OF INCOME
THREE YEARS ENDED DECEMBER 31, 2002
- --------------------------------------------------------------------------------
2002 2001 2000
REVENUES:
Rental $2,842,325 $3,109,553 $3,109,493
---------- ---------- ---------
EXPENSES:
Depreciation 393,610 476,803 469,605
Operating 848,878 801,943 766,261
General and administrative 202,876 169,671 141,759
General partners' incentive
management fee (Note 4) 160,168 190,675 178,665
Property management
fee 171,597 186,011 186,569
---------- ---------- ---------
Total expenses 1,777,129 1,825,103 1,742,859
---------- ---------- ---------
OPERATING INCOME $1,284,450 $1,366,634
OTHER INCOME -
Interest income 1,435 5,748 12,118
---------- ---------- ----------
NET INCOME $1,066,631 $1,290,198 $1,378,752
========== ========== ==========
AGGREGATE NET INCOME ALLOCATED
TO (Note 4):
Limited partners $1,055,965 $1,277,296 $1,364,964
General partners 10,666 12,902 13,788
---------- ---------- ----------
TOTAL $1,066,631 $1,290,198 $1,378,752
========== ========== ==========
NET INCOME PER LIMITED PARTNERSHIP
UNIT (Notes 2 and 4) $ 44.46 $ 53.77 $ 57.46
========== ========== =========
See accompanying notes to financial statements.
DSI REALTY INCOME FUND VI
(A California Real Estate Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIT)
THREE YEARS ENDED DECEMBER 31, 2002
- --------------------------------------------------------------------------------
General Limited
Partners Partners Total
BALANCE AT JANUARY 1, 2000 $(58,996) $ 3,488,022 $ 3,429,026
Net income 13,788 1,364,964 1,378,752
Distributions (18,349) (1,816,614) (1,834,963)
------- ----------- -----------
BALANCE DECEMBER 31, 2000 $(63,557) $ 3,036,372 $ 2,972,815
Net income 12,902 1,277,296 1,290,198
Distributions (17,139) (1,696,787) (1,713,926)
------- ----------- -----------
BALANCE DECEMBER 31, 2001 $(67,794) $ 2,616,881 $ 2,549,087
Net income 10,666 1,055,965 1,066,631
Distributions (15,331) (1,517,728) (1,533,059)
------- ----------- -----------
BALANCE DECEMBER 31, 2002 $(72,459) $ 2,155,118 $ 2,082,659
See accompanying notes to financial statements.
DSI REALTY INCOME FUND VI
(A California Real Estate Limited Partnership)
STATEMENTS OF CASH FLOWS
THREE YEARS ENDED DECEMBER 31, 2002
- --------------------------------------------------------------------------------
2002 2001 2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,066,631 $ 1,290,198 $ 1,378,752
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 393,610 476,803 469,605
Changes in assets and liabilities:
Other assets 39,039 (33,570) (20,000)
Incentive management fee payable
to general partners 37,851 (5,121) 8,368
Property management fees payable (596) (1,973) 1,062
Customer deposits and other liabilities (14,485) 28,994 23,199
---------- ---------- ---------
Net cash provided by
operating activities 1,522,050 1,755,331 1,860,986
CASH FLOWS FROM INVESTING ACTIVITIES -
Additions to property (41,401) (48,469)
CASH FLOWS FROM FINANCING ACTIVITIES -
Distributions to partners (1,533,059) (1,713,926) (1,834,963)
----------- ----------- ---------
NET(DECREASE)INCREASE IN CASH AND
CASH EQUIVALENTS (11,009) 4 (22,446)
CASH AND CASH EQUIVALENTS,
AT BEGINNING OF YEAR 537,427 537,423 559,869
----------- ----------- ------------
CASH AND CASH EQUIVALENTS,
AT END OF YEAR $ 526,418 $ 537,427 $ 537,423
=========== =========== ============
See accompanying notes to financial statements.
DSI REALTY INCOME FUND VI
(A California Real Estate Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
THREE YEARS ENDED DECEMBER 31, 2002
1. GENERAL
DSI Realty Income Fund VI, a California Limited Partnership (the
"Partnership"), has two general partners (DSI Properties, Inc. and
Diversified Investors Agency) and limited partners owning 23,753 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 contributions in the future. The Partnership
has a maximum life of 50 years and was formed on March 27, 1981 under the
California Uniform Limited Partnership Act for the primary purpose of
acquiring and operating real estate.
The Partnership owns seven mini-storage facilities located in Vallejo,
California; Arvada, Federal Heights and Colorado Springs, Colorado; Las
Vegas, Nevada and two in Santa Rosa, California. All facilities were
purchased from Dahn Corporation ("Dahn"). Dahn is not affiliated with the
Partnership. Dahn is affiliated with other partnerships in which DSI
Properties, Inc. is a general partner. The mini-storage facilities are
operated for the Partnership by Dahn under various agreements that are
subject to renewal annually. Under the terms of the agreements, the
Partnership is required to pay Dahn a property management fee equal to 6%
of gross revenue from operations, defined as the entire amount of
all receipts from 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
primarily of mini-storage facilities. Depreciation is provided for using
the straight-line method over an estimated useful life of 20 years for the
facilities. Building improvements are depreciated over a five year period.
Income Taxes - No provision has been made for income taxes in the
accompanying financial statements. The taxable income or loss of the
Partnership is allocated to each partner in accordance with the terms of
the Agreement of Limited Partnership. Each partner's tax status, in turn,
determines the appropriate income tax for its allocated share of the
Partnership's 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 $336,005.
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 to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contin-
gent 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 flow is less than the
carrying amount of the asset, the Partnership recognizes an impairment
loss to the extent the carrying value exceeded the fair value of the
property. No impairment losses were required in 2002, 2001, or 2000.
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 and cash equivalents and rent receivables. The Partnership places
its cash equivalents with high credit quality institutions.
Impact of Recent Accounting Pronouncements - In 2002, the Partnership
adopted the following prouncements: Statement of Financial Accounting
Standards ("SFAS") No. 144, Accounting for Impairment or Disposal of Long-
Lived Assets; SFAS No 145, Rescission of FASB Statements No 4, 44, 64 and
Amendment of FASB Statement No. 13, and Technical Corrections. The
adoption of these pronouncements did not have a material impact on the
Partnership's financial position or results of operations. The Partnership
believes the adoption of Financial Accounting Standards Board Interpret-
ation No. 46, Consolidation of Variable Interest Entities, will not have
a material impact on financial statements.
3. PROPERTY
The total cost of property and accumulated depreciation isas follows
as of December 31:
2002 2001
Land $ 1,759,000 $ 1,759,000
Buildings and improvements 8,618,136 8,618,136
----------- -----------
Total 10,377,136 10,377,136
Less accumulated depreciation (8,450,997) (8,057,387)
----------- ----------
Property, net $ 1,926,139 $ 2,319,749
=========== ===========
4. ALLOCATION OF PROFITS AND LOSSES
Under the Agreement of Limited Partnership, the general partners are to be
allocated 1% of the net profits or losses from operations, and the
limited partners are to be allocated the balance of the net profits or loss
es from operations in proportion to their limited partnership interests.
The general partners are also entitled to receive a percentage, based
on a predetermined formula, of any cash distribution from the sale,
other disposition, or refinancing of the project.
In addition, the general partners are entitled to receive an incentive
management fee for supervising the operations of the Partnership. The
fee is to be paid in an amount equal to 9% per annum of the cash available
for distribution on a cumulative basis, calculated as cash generated from
operations less capital expenditures.
5. BUSINESS SEGMENT INFORMATION
The following disclosure about segment reporting of the Partnership is
made in accordance with the requirements of SFAS No. 131, Disclosures
about Segments of an Enterprise and Related Information. The Partnership
operates in a single segment; storage facility operations, under which
the Partnership rents its storage facilities to its customers on a need
basis and charges rent on a predetermined rate.
DSI REALTY INCOME FUND VI
(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
Vallejo, CA None $258,000 $1,320,789 $37,939 $258,000 $1,358,728 $1,616,728 $(1,358,728) 11/81 06/81 20 Yrs
Santa Rosa, CA II None 190,000 865,608 27,170 190,000 892,778 1,082,778 (885,943) 08/81 08/81 20 Yrs
Arvada, CO None 305,000 1,759,608 58,166 305,000 1,817,774 2,122,774 (1,802,898) 12/83 06/82 20 Yrs
Las Vegas, NV None 247,000 1,111,359 33,250 247,000 1,144,609 1,391,609 (1,144,609) 11/83 07/82 20 Yrs
Santa Rosa, CA III None 157,000 715,122 22,446 157,000 737,568 894,568 (731,922) 10/83 12/82 20 Yrs
Federal Heights, CO None 260,000 1,013,972 26,451 260,000 1,040,423 1,300,423 (991,688) 10/83 03/83 20 Yrs
Colorado Springs, CO None 342,000 1,518,487 107,769 342,000 1,626,256 1,968,256 (1,535,209) 03/84 04/83 20 Yrs
-------- ---------- ------- -------- ---------- ---------- ----------
$1,759,000 $8,304,945 $313,191 $1,759,000 $8,618,136 $10,377,136 $(8,450,997)
========== ========== ======== ========== ========== =========== ==========
Real Estate Accumulated
at Cost Depreciation
Balance at January 1, 2000 $10,287,266 $7,110,979
Additions 48,469 469,605
----------- ----------
Balance at December 31, 2000 $10,335,735 $7,580,584
Additions 41,401 476,803
----------- ----------
Balance at December 31, 2001 $10,377,136 $8,057,387
Additions 393,609
----------- ----------
Balance at December 31, 2002 $10,377,136 $8,450,997
=========== ==========
EXHIBIT 2
March 28, 2002
ANNUAL REPORT TO LIMITED PARTNERS OF
DSI REALTY INCOME FUND VI
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 seven
mini-storage facilities, including two in Santa Rosa, California. 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
Vallejo, California 84% 93%
Santa Rosa, California
both stages) 84% 87%
Arvada, California 89% 86%
Las Vegas, Nevada 86% 86%
Federal Heights, Colorado 88% 87%
Colorado Springs, Colorado 90% 87%
We will keep you informed of the activities of DSI Realty Income Fund VI 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 VI
By: DSI Properties, Inc.
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 VI;
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 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 con-
solidated 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 as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and
c) presented in this annual 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:
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to re-
cord, 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 in-
ternal controls; and
6. The registrnat's other certifying officers and I have indicated in this
annual 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: February 3, 2003
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 VI;
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 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 con-
solidated 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 as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and
c) presented in this annual 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:
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to re-
cord, 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 in-
ternal controls; and
6. The registrnat's other certifying officers and I have indicated in this
annual 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: February 3, 2003
Richard P. Conway
Vice President
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of DSI Realty Income Fund VI (the
"Partnership") on Form 10-K for the period ending December 31, 2002 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Robert J. Conway, Chief Executive Officer of the Partnership, certify,
pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Partnership.
Robert J. Conway
Chief Executive Officer
February 3, 2003
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 VI (the
"Partnership") on Form 10-K for the period ending December 31, 2002 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Richard P. 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.
Richard P. Conway
Vice President
February 3, 2003