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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 the fiscal year ended December 31, 1998.
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,
1998, incorporated by reference to Form 10-K, Part II.
Item 11. Registrant's Financial Statements for its fiscal year ended December
31, 1998, 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, 1998, 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, 1998 and December 31, 1997 were as follows:
Location of Property Average Occupancy Average Occupancy
Level for the Level for the
Year Ended Year Ended
Dec. 31, 1998 Dec. 31, 1997
Ryan Road
Warren, MI 80% 84%
Crestwood, IL 82% 82%
Groesbeck Hwy
Warren, MI 85% 86%
Forrestville, MD 84% 86%
Troy, MI 83% 85%
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, 1998 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 997 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, 1998 and $12.59
per Limited Partnership Unit were declared and paid each quarter for the year
ended December 31, 1997 and $11.25 per Limited Partnership Unit were declared
and paid each quarter for the year ended December 31, 1996. Due to adverse
conditions in the local economies where certain of the properties are located,
it is Registrant's expectations that distributions will continue to be paid in
the future, however, at a reduced annualized return of the Limited Partners'
capital contributions.
Item 6. SELECTED FINANCIAL DATA
FIVE YEARS ENDED DECEMBER 31, 1998
-------------------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
TOTAL
REVENUES $2,707,174 $2,659,936 $2,667,128 $2,529,555 $ 2,292,130
TOTAL
EXPENSES 1,626,960 1,628,097 1,574,943 1,561,433 1,428,672
---------- ----------- ----------- ----------- -----------
NET
INCOME $1,080,214 $1,031,839 $1,092,185 $ 968,122 $ 863,458
========== =========== =========== =========== ===========
TOTAL
ASSETS $9,050,011 $9,300,328 $9,811,469 $9,890,145 $10,039,357
========== =========== =========== =========== ===========
NET CASH
PROVIDED BY
OPERATING
ACTIVITIES $1,918,525 $1,644,418 $1,906,898 $1,919,722 $ 1,319,398
========== =========== =========== =========== ===========
NET INCOME
PER LIMITED
PARTNERSHIP
UNIT $ 33.65 $ 32.14 $ 34.02 $ 30.16 $ 26.90
========== =========== =========== =========== ===========
CASH
DISTRIBUTIONS
PER $500
LIMITED
PARTNERSHIP
UNIT $ 50.51 $ 50.37 $ 45.00 $ 40.00 $ 36.25
========== =========== =========== =========== ===========
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
1998 COMPARED TO 1997
Total revenues increased from $2,659,936 in 1997 to $2,707,174 in 1998,
while total expenses decreased from $1,628,097 to $1,626,960 resulting in an
increase in net income from $1,031,839 to $1,080,214. The approximate $39,400
(1.5%) increase in rental revenues can be attributed to higher unit rental
rates. Occupancy levels for the Partnership's five mini-storage facilities
averaged 82.7% for the year ended December 31, 1998, compared to 84.5% for the
year ended December 31, 1997. The Partnership continued to increase rental
rates where market conditions made such increases feasible. Operating expenses
decreased by approximately $11,200 (1.8%) primarily due to decreases in repairs
and maintenance, legal and professional and worker's conpensation insurance
expenses partially offset by increases in real estate tax and salary and wage
expenses. General and administrative expenses increased by approximately $5,800
(3.3%) primarily due to an increase in Michigan State Taxes. The General
Partners' incentive management fee remained constant. Property management fees
increased by approximately $2,700 (2.1%). Property management fees, which are
computed as a percentage of rental revenue, increased as a result of the
increase in rental revenue.
1997 COMPARED TO 1996
Total revenues decreased from $2,667,128 in 1996 to $2,659,659 in 1997,
while total expenses increased from $1,574,943 to $1,628,097 resulting in a
decrease in net income from $1,092,185 to $1,031,839. The approximate $14,800
(0.6%) decrease in rental revenues can be attributed to lower occupancy levels
partially offset by higher unit rental rates. Occupancy levels for the
Partnership's five mini-storage facilities averaged 84.5% for the year ended
December 31, 1997, compared to 86.4% for the year ended December 31, 1996. The
Partnership continued to increase rental rates where market conditions made
such increases feasible. Operating expenses increased by approximately $33,000
(5.4%) primarily due to increases in repairs and maintenance, real estate
taxes and salaries and wages partially offset by a decrease in yellow pages
advertising costs. General and administrative expenses increased by
approximately $8,800 (5.3%) primarily due to increases in miscellaneous
advertising costs, insurance and office expenses partially offset by a decrease
in other taxes. The General Partners' incentive management fee increased by
approximately $14,400 (11.1%). As this fee is computed as a percentage of
distributions made to the Limited Partners, the 1997 increase in distributions
resulted in an increased general partners' incentive management fee. Property
management fees remained constant.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities increased by approximately
$274,100 (16.7%) primarily as a result of an increase net income, deferral of
property management and incentive management fees and a decrease in other
assets. Net cash provided by operating activities increased by approximately
$262,500 (13.8%) in 1997 compared to 1996 primarily as a result of the decrease
in net income and partial payment of accrued property 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 2%, 2% and 1% were declared and paid on December 15, 1998, 1997 and 1996,
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 1996 and 1997. 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's financial resources appear to be
adequate to meet its needs for the next twelve months.
The Year 2000 issue refers to the inability of certain computer systems to
recognize a date using "00" as the Year 2000. The Partnership has implemented
a Year 2000 program, which ahs three phases: (1) identification;
(2) remediation; and (3) testing and verification. The Partnership, as well
as the property management company and the Partnership's warehouse facilities
have completed those phases. Computer programs have been upgraded and tested
to function properly with respect to the dates in the Year 2000 and thereafter.
Year 2000 compliance costs are nominal and have been expensed in the regular
course of business. The Partnership provides no assurance that third-party
suppliers and customers will be compliant. Nevertheless, the Partnership does
not believe that the Year 2000 issue will have a material adverse effect on
its financial condition or results of operations.
The General Partners are not aware of any environmental problems which
might have a material adverse impact on the financial position of the
Partnership.
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, 1998, 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 65 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 69 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 75 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, 1998, 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, 1998, 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, 1998, 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, 1998, 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, 1998. (b) No reports on
Form 8K were filed during the fiscal year ended December 31, 1998.
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
By_____________________________ Dated: March 31, 1999
ROBERT J. CONWAY, President
(Chief Executive Officer, Chief
Financial Officer, and Director)
By____________________________ Dated: March 31, 1999
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
By:__________________________ Dated: March 31, 1999
ROBERT J. CONWAY, President,
Chief Executive Officer, Chief
Financial Officer, and Director
By___________________________ Dated: March 31, 1999
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, 1995, 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, 1998
- --------------------------------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
TOTAL
REVENUES $2,707,174 $2,659,936 $2,667,128 $2,529,555 $ 2,292,130
TOTAL
EXPENSES 1,626,960 1,628,097 1,574,943 1,561,433 1,428,672
---------- ----------- ----------- ----------- -----------
NET
INCOME $1,080,214 $1,031,839 $1,092,185 $ 968,122 $ 863,458
========== =========== =========== =========== ===========
TOTAL
ASSETS $9,050,011 $9,300,328 $9,811,469 $9,890,145 $10,039,357
========== =========== =========== =========== ===========
NET CASH
PROVIDED BY
OPERATING
ACTIVITIES $1,918,525 $1,644,418 $1,906,898 $1,919,722 $ 1,319,398
========== =========== =========== =========== ===========
NET INCOME
PER LIMITED
PARTNERSHIP
UNIT $ 33.65 $ 32.14 $ 34.02 $ 30.16 $ 26.90
========== =========== =========== =========== ===========
CASH
DISTRIBUTIONS
PER $500
LIMITED
PARTNERSHIP
UNIT $ 50.51 $ 50.37 $ 45.00 $ 40.00 $ 36.25
========== =========== =========== =========== ===========
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, 1998.
Operating Partners'
Results Equity
Per financial statements $ 1,080,214 $ 6,676,395
Excess financial statement depreciation 181,316 1,955,960
Capitalization of syndication costs 1,694,248
Accrued incentive management fee 145,930 1,302,163
Accrued partner distributions 321,042
Deferred rental revenues 74,734
Acquisition costs capitalized for
tax purposes 1,146,936
State taxes (16,240)
Other (6)
----------- -----------
Per Partnership income tax return $ 1,391,220 $13,171,478
=========== ===========
Net taxable income per $500 limited
partnership unit $ 43.77
===========
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, 1998 and 1997 F-2
Statements of Income for the Three
Years Ended December 31, 1998 F-3
Statements of Changes in Partners' Equity for
the Three Years Ended December 31, 1998 F-4
Statements of Cash Flows for the Three Years
Ended December 31, 1998 F-5
Notes to Financial Statements F-6
SUPPLEMENTAL SCHEDULE:
Independent Auditors' Report F-8
Schedule XI - 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, 1998 and 1997, 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, 1998. 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 generally accepted auditing
standards. 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 overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of DSI Realty Income Fund X at December 31,
1998 and 1997, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1998 in conformity with
generally accepted accounting principles. 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.
February 5, 1999
DELOITTE & TOUCHE
LONG BEACH, CALIFORNIA
DSI REALTY INCOME FUND X
(A California Real Estate Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
- --------------------------------------------------------------------------------
ASSETS 1998 1997
CASH AND CASH EQUIVALENTS $ 1,772,250 $ 1,475,167
PROPERTY, net (Notes 1, 2 and 3) 7,213,688 7,752,217
OTHER ASSETS 64,073 72,944
----------- -----------
TOTAL $ 9,050,011 $ 9,300,328
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES:
Distribution due partners (Note 4) $ 321,040 $ 321,040
Incentive management fee payable to
general partners (Note 4) 1,302,163 1,156,233
Property management fees payable (Note 1) 616,627 483,594
Customer deposits and other liabilities 133,786 121,838
----------- -----------
Total liabilities 2,373,616 2,082,705
----------- -----------
PARTNERS' EQUITY (DEFICIT)(Notes 1 and 4):
General partners (75,264) (69,852)
Limited partners (31,783 limited
partnership units outstanding
at December 31, 1998 and 1997) 6,751,659 7,287,475
------------ -----------
Total partners' equity 6,676,395 7,217,623
------------ -----------
TOTAL $ 9,050,011 $ 9,300,328
============ ===========
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, 1998
- --------------------------------------------------------------------------------
1998 1997 1996
REVENUES:
Rental revenues $2,645,296 $2,605,899 $2,620,682
Interest and other income 61,878 54,037 46,446
---------- ---------- ----------
Total revenues 2,707,174 2,659,936 2,667,128
---------- ---------- ----------
EXPENSES:
Depreciation (Note 2) 538,529 538,529 540,890
Operating 628,231 639,403 606,374
General and administrative 181,236 175,402 166,622
General partners' incentive
management fee (Note 4) 145,930 144,469 130,022
Property management (Note 1) 133,034 130,294 131,035
---------- ---------- ----------
Total expenses 1,626,960 1,628,097 1,574,943
---------- ---------- ----------
NET INCOME $1,080,214 $1,031,839 $1,092,185
========== ========== ==========
AGGREGATE NET INCOME ALLOCATED
TO (Note 4):
Limited partners $1,069,412 $1,021,521 $1,081,263
General partners 10,802 10,318 10,922
---------- ---------- ----------
TOTAL $1,080,214 $1,031,839 $1,092,185
========== ========== ==========
NET INCOME PER LIMITED PARTNERSHIP
UNIT (Notes 2 and 4) $ 33.65 $ 32.14 $ 34.02
========== ========== ==========
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, 1998
- --------------------------------------------------------------------------------
General Limited
Partners Partners Total
BALANCE AT JANUARY 1, 1996 (60,475) 8,215,788 8,155,313
Net income 10,922 1,081,263 1,092,185
Distributions (14,447) (1,430,237) (1,444,684)
------- ---------- ----------
BALANCE AT DECEMBER 31, 1996 $(64,000) $7,866,814 $7,802,814
Net income 10,318 1,021,521 1,031,839
Distributions (16,170) (1,600,860) (1,617,030)
------- ---------- ----------
BALANCE AT DECEMBER 31, 1997 $(69,852) $7,287,475 $7,217,623
Net income 10,802 1,069,412 1,080,214
Distributions (16,214) (1,605,228) (1,621,442)
------- ---------- ----------
$(75,264) $6,751,659 $6,676,395
======= ========== ==========
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, 1998
- --------------------------------------------------------------------------------
1998 1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,080,214 $1,031,839 $1,092,185
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 538,529 538,529 540,890
Changes in assets and liabilities:
Receivable from general partners
Other assets 8,871
Incentive management fee
payable to general partners 145,930 144,469 130,022
Property management fee payable 133,033 (69,705) 131,034
Customer deposits and other
liabilities 11,948 (714) 12,767
----------- ----------- -----------
Net cash provided by operating
activities 1,918,525 1,644,418 1,906,898
CASH FLOWS FROM FINANCING ACTIVITIES -
Distributions to partners (1,621,442) (1,617,030) (1,444,684)
CASH FLOWS FROM INVESTING ACTIVITIES -
Additions to property (7,628) (139,590)
----------- ----------- -----------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 297,083 19,760 322,624
CASH AND CASH EQUIVALENTS,
AT BEGINNING OF YEAR 1,475,167 1,455,407 1,132,783
----------- ----------- ------------
CASH AND CASH EQUIVALENTS,
AT END OF YEAR $ 1,772,250 $ 1,475,167 $ 1,455,407
=========== =========== ============
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, 1998
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 contribution 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 5% of gross revenue, as defined.
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 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 taxable income or loss. The net difference between the
bases of the Partnership's assets and liabilities for federal income tax
purposes and as reported for financial statement purposes is $6,495,083.
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 1998,
1997 and 1996).
Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires the Partnership's
management to make estimates and assumptions that affect the reported
amount 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 recognizes an
impairment. No impairment losses were recognized in 1998, 1997 or 1996.
Fair Value of Financial Instruments - The Company'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.
Concentration 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, 1998 and 1997, the total cost of property and
accumulated depreciation are as follows:
1998 1997
Land $ 2,089,882 $ 2,089,882
Buildings and improvements 10,833,336 10,833,336
----------- ------------
Total $12,923,218 $12,923,218
Accumulated depreciation (5,709,530) (5,171,001)
----------- -----------
Property, net $ 7,213,688 $ 7,752,217
=========== ===========
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 net losses from operations,
and the limited partners are to be allocated the balance of the net
profit or loss from operations in proportion to their limited partnership
interests. The general partners are also entitled to receive a percentage
based on a predetermined formula, of any cash distribution from the sale,
other disposition or refinancing of a real estate project.
In addition, the general partners are entitled to an incentive management
fee for supervising the operations of the Partnership. The fee is to be
paid in an amount equal to 9% per annum of the Partnership distributions
made from cash available for distribution from operations, as defined, and
the payment of such fee is subordinated to a cumulative return to the
limited partners of 8.1% of the offering proceeds as defined.
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 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.
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 $950,932 12/87 02/87 20 Yrs
Crestwood,Illinois None 205,960 1,631,179 3,211 205,960 1,634,390 1,840,350 904,407 12/87 04/87 20 Yrs
Grosebeck Highway
Warren, Michigan None 314,517 1,760,657 67,206 314,517 1,827,863 2,142,380 980,734 01/88 04/87 20 Yrs
Forestville, Maryland None 755,000 2,278,110 9,145 755,000 2,287,255 3,042,255 1,196,925 07/88 08/87 20 Yrs
Troy, Michigan None 536,606 3,148,119 215,207 536,606 3,363,326 3,899,932 1,676,532 06/88 06/88 20 Yrs
-------- ---------- ------- -------- ---------- ---------- ----------
$2,089,882 $10,533,248 $300,088 $2,089,882 $10,833,336 $12,923,218*$5,709,530
========== ========== ======== ========== ========== =========== ==========
Real Estate Accumulated
at Cost Depreciation
Balance at January 1, 1996 12,776,000 4,091,582
Additions 139,590 540,890
----------- ----------
Balance at December 31, 1996 $12,915,590 $4,632,472
Additions 7,628 538,529
----------- ----------
Balance at December 31, 1997 $12,923,218 $5,171,001
Additions 538,529
----------- ----------
Balance at December 31, 1998 $12,923,218 $5,709,530
=========== ==========
EXHIBIT 2
March 31, 1999
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,
1998 and 1997, 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, 1998
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, 1998 and December 31, 1997 were as follows:
Location of Property Average Occupancy Average Occupancy
Levels for the Levels for the
Year Ended Year Ended
Dec. 31, 1998 Dec. 31, 1997
Ryan Rd
Warren, MI 80% 84%
Crestwood,IL 82% 82%
Groesbeck Hwy
Warren, MI 85% 86%
Forestville, MD 84% 86%
Troy, MI 83% 85%
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, 1998 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