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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, 2000.
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. 2-96364.
DSI REALTY INCOME FUND IX, a California Limited Partnership
(Exact name of registrant as specified in governing instruments)
_________California___________________________33-0103189_____
(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,
2000, incorporated by reference to Form 10-K, Part II.
Item 11. Registrant's Financial Statements for its fiscal year ended December
31, 2000, 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, 2000, incorporated by reference to Form 10-K, Part III.
PART I
Item l. BUSINESS
Registrant, DSI Realty Income Fund IX (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 March 6, 1985, as amended and
restated to November 1, 1985. 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 thousand six hundred ninety-three (30,693) units of
limited partnership interests aggregating Fifteen Million Three Hundred
Forty-Six Thousand Five Hundred Dollars ($15,346,500) 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, as well as a joint venture interest with an affiliated Partnership
(DSI Realty Income Fund VIII, a California Limited Partnership) in which the
Partnership has a 70% interest in a mini-storage facility located in Aurora,
Colorado. 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.
Average occupancy levels for each of the Partnership's properties for the
years ended December 31, 2000 and December 31, 1999 are as follows:
Location of Property Average Occupancy Average Occupancy
Level for the Level for the
Year Ended Year Ended
Dec. 31, 2000 Dec. 31, 1999
Azusa, CA 85% 81%
Elgin, IL 81% 81%
Everett, WA 82% 82%
Monterey Park, CA 89% 88%
Romeoville, IL 78% 75%
Aurora, CO* 86% 88%
*The Partnership owns a 70% interest in this facility.
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, as well as
a 70% interest in a joint venture with an affiliated partnership (DSI Realty
Income Fund VIII, a California Limited Partnership) which joint venture owns a
mini-storage facility, none of which are subject to long-term indebtedness. The
following table sets forth information as of December 31, 2000 regarding
properties owned by the Partnership.
Location Size of Net Rentable No. of Completion
Parcel Area Rental Units Date
Azusa, CA 2.94 acres 71,059 664 6/11/86
Elgin, IL 4.99 acres 48,363 441 9/29/86
Everett, WA 2.71 acres 50,572 488 12/01/85
Monterey Park,
CA .95 acres 31,654 392 8/23/86
Romeoville, IL 3.956 acres 65,941 690 11/24/86
Aurora, CO(1) 4.6 acres 86,676 887 9/05/85
(1) The Partnership has a 70% fee interest in this facility. DSI Realty Income
Fund VIII, a California Limited Partnership (an affiliated partnership)
owns a 30% fee interest in this facility.
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 30,693 limited
partnership units during its offering and currently has 1,228 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 $13.75 per Limited Partnership Unit were
declared and paid each quarter for the year ended December 31, 2000 and $12.00
per Limited Partnership Unit were declared and paid each quarter for the year
ended December 31, 1999 and $12.61 per Limited Partnership Unit were declared
and paid each quarter for the year ended 1998. It is the Registrant's
expectations that distributions will continue to be paid in the future.
Item 6. SELECTED FINANCIAL DATA
FIVE YEARS ENDED DECEMBER 31, 2000
--------------------------------------------------------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
TOTAL REVENUES
AND OTHER
INCOME $ 2,960,225 $ 2,878,176 $ 2,779,151 $ 2,624,488 $ 2,468,108
TOTAL
EXPENSES 1,863,988 1,833,773 1,684,393 1,674,192 1,620,477
MINORITY
INTEREST
IN INCOME OF
REAL ESTATE
JOINT
VENTURE (121,220) (122,453) (109,741) (93,305) (82,729)
----------- ----------- ----------- ------------ ------------
NET
INCOME $ 975,017 $ 921,950 $ 985,017 $ 856,991 $ 764,902
=========== =========== =========== ============ ============
TOTAL
ASSETS $ 5,709,174 $ 6,265,344 $ 6,924,389 $ 7,396,927 $ 8,011,698
=========== =========== =========== ============ ============
CASH FLOW FROM:
OPERATING $ 1,666,833 $ 1,639,711 $ 1,702,518 $ 1,494,901 $ 1,468,741
INVESTING (5,940) (42,758) - - -
FINANCING (1,654,732) (1,727,394) (1,565,393) (1,547,914) (1,530,884)
NET INCOME
PER LIMITED
PARTNERSHIP
UNIT $ 31.45 $ 29.64 $ 31.77 $ 27.64 $ 24.67
=========== =========== =========== ============ ============
CASH
DISTRIBUTIONS
PER LIMITED
PARTNERSHIP
UNIT $ 47.99 $ 50.47 $ 45.30 $ 45.27 $ 45.00
=========== =========== =========== ============ ============
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
2000 COMPARED TO 1999
Total revenues increased from $2,867,285 in 1999 to $2,952,549 in 2000, total
expenses increased from $1,833,773 to $1,863,988, other income decreased from
$10,891 to $7,676 and minority interest in income of the real estate joint
venture decreased from $122,453 to $121,220. As a result of these fluctuations,
net income attributed to higher occupacy and unit rental rates. Occupancy
levels for the Partnership's six mini-storage facilities averaged 83.8% for
the year ended December 31, 2000 and 82.4% for the year ended December 31,
1999. The Partnership is continuing its advertising campaign to attract and
keep new tenants in its various mini-storage facilities. The approximate
$32,800 (4.1%) increase in operating expenses was due primarily to increases
in real estate tax, salaries and wages, workers compensation insurance and
security alarm service expenses partially offset by decreases yellow pages
advertising costs, maintenance and repair and power and sweeping expenses.
General and administrative expenses increased approximately $19,700 (12.4%)
primarily as a result of increases in legal and professional and office supplies
and printing expenses. General Partners' incentive management fees decreased
approximately $6,900 (5.0%). These fees, which are based on cash distributions
to Limited Partners, decreased as a result of a decrease in these distributions.
Property management fees, which are based on rental revenue, increased as a
result of the increase in rental revenue.
1999 COMPARED TO 1998
Total revenues increased from $2,765,747 in 1998 to $2,867,285 in 1999, total
expenses increased from $1,684,393 to $1,833,773, other income decreased from
$13,404 to $10,891 and minority interest in income of the real estate joint
venture increased from $109,741 to $122,453. As a result, of these fluctuations
net income decreased from $985,017 to $921,950. The approximate $101,500 (3.7%)
increase in rental revenues can be attributed to higher unit rental rates.
Occupancy levels for the Partnership's six mini-storage facilities averaged
82.4% for the year ended December 31, 1999 and 83.8% for the year ended
December 31, 1998. The Partnership is continuing its advertising campaign to
attract and keep new tenants in its various mini-storage facilities. The
approximate $83,800 (11.6%) increase in operating expenses was due primarily
to increases in yellow pages and other advertising costs, maintenance and
repair, salaries and wages, workers compensation and power and sweeping expenses
partially offset by real estate tax and security alarm service expenses.
General and administrative expenses increased approximately $9,600 (6.4%) as
a result of relatively insignificant fluctuations in various expense accounts.
General Partners' incentive management fees increased approximately $15,300
(12,2%). These fees, which are based on cash distributions to Limited Partners,
increased as a result of an increase in these distributions. Property manage-
ment fees, which are based on rental revenue, increased as a result of the
increase in rental revenue.
Operating expenses consists mainly of expenses such as yellow pages and other
advertising, utilities, repairs and maintenance, real estate taxes, salaries
and wages and their related expenses. General and administrative expenses
consist mainly of expenses such as legal and professional, office supplies,
postage accounting services and computer expenses.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities increased by approximately
$27,100 (1.7%) in 2000 compared to 1999 primarily as a result of the increase
in net income. Net cash provided by operating activities decreased by approx-
imately $62,800 (3.7%) in 1999 compared to 1998 primarily as a result of the
decrease in net income. Cash used in financing activities, as set forth in
the statements of cash flows, has been used for distributions to partners and
the minority interest in the Partnership's real estate joint venture. Special
distributions of 1.5%, 2% and 1% was declared and paid on December 15, 2000,
1999 and 1998.
Cash used in investing activities, as set forth in the statements of cash
flows, consists of acquisitions of equipment for the Partnership's mini-storage
facilities. 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 anticipates that cash flows
generated from operations will be sufficient to cover operating expenses and
distributions for the next twelve months and beyond.
The General Partners are not aware of any environmental problems which
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, 2000 and
1999 was as follows:
2000 Quarter Ended
------------------
March 31, June 30, September 30, December 31,
Total revenues $700,729 $701,010 $782,414 $768,396
Income before minority
interest in joint
venture 229,692 239,584 289,568 337,393
Net income 197,503 213,395 260,081 304,038
Net income per
limited partnerhip
unit $ 6.37 $ 6.88 $ 8.39 $ 9.81
Weighted average
limited partnership
units 30,693 30,693 30,693 30,693
1999 Quarter Ended
------------------
March 31, June 30, September 30, December 31,
Total revenues $705,837 $732,740 $725,364 $703,344
Income before minority
interest in joint
venture 217,539 278,526 300,131 248,207
Net income 191,890 248,950 267,754 213,356
Net income per
limited partnership
unit $ 6.19 $ 8.03 $ 8.64 $ 6.88
Weighted average
limited partnership
uits 30,693 30,693 30,693 30,693
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, 2000, 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 67 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 71 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 77 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, 2000, 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, 2000 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, 2000, 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, 2000, 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, 2000.
(b) No reports on Form 8K were filed during the fiscal year ended December
31, 2000.
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 IX
by: DSI Properties, Inc., a
California corporation, as
General Partner
By_____________________________ Dated: March 30, 2001
ROBERT J. CONWAY, President
(Chief Executive Officer, Chief
Financial Officer, and Director)
By____________________________ Dated: March 30, 2001
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 IX
by: DSI Properties, Inc., a
California corporation, as
General Partner
By:__________________________ Dated: March 30, 2001
ROBERT J. CONWAY, President,
Chief Executive Officer, Chief
Financial Officer, and Director
By___________________________ Dated: March 30, 2001
JOSEPH W. CONWAY
(Executive Vice President
and Director)
DSI REALTY INCOME FUND IX
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, 2000, 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 IX
(A California Real Estate Limited Partnership)
SELECTED FINANCIAL DATA
FIVE YEARS ENDED DECEMBER 31, 2000
- --------------------------------------------------------------------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
TOTAL REVENUES
AND OTHER
INCOME $ 2,960,225 $ 2,878,176 $ 2,779,151 $ 2,624,488 $ 2,468,108
TOTAL
EXPENSES 1,863,988 1,833,773 1,684,393 1,674,192 1,620,477
MINORITY
INTEREST
IN INCOME OF
REAL ESTATE
JOINT
VENTURE (121,220) (122,453) (109,741) (93,305) (82,729)
----------- ----------- ----------- ------------ ------------
NET
INCOME $ 975,017 $ 921,950 $ 985,017 $ 856,991 $ 764,902
=========== =========== =========== ============ ============
TOTAL
ASSETS $ 5,709,174 $ 6,265,344 $ 6,924,389 $ 7,396,927 $ 8,011,698
=========== =========== =========== ============ ============
CASH FLOW FROM:
OPERATING $ 1,666,833 $ 1,639,711 $ 1,702,518 $ 1,494,901 $ 1,468,741
INVESTING (5,940) (42,758) - - -
FINANCING (1,654,732) (1,727,394) (1,565,393) (1,547,914) (1,530,884)
NET INCOME
PER LIMITED
PARTNERSHIP
UNIT $ 31.45 $ 29.64 $ 31.77 $ 27.64 $ 24.67
=========== =========== =========== ============ ============
CASH
DISTRIBUTIONS
PER LIMITED
PARTNERSHIP
UNIT $ 47.99 $ 50.47 $ 45.30 $ 45.27 $ 45.00
=========== =========== =========== ============ ============
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, 2000.
Net Partners'
Income Equity
Per financial statements $ 975,017 $ 4,778,339
Excess book depreciation 13,823 172,371
Accrued incentive management fee 314,602
Taxable income from joint venture
in excess of book value 22,421 541,244
Acquisition costs capitalized
for tax purposes 466,135
Recognition of deferred rental revenues 56,021
Accrued distributions to partners 310,030
Accrued property taxes (15,197) (75,000)
----------- -----------
Per Partnership income tax return $ 996,064 $ 6,563,742
=========== ===========
Net taxable income per limited
partnership unit $ 32.13
===========
DSI REALTY INCOME FUND IX
(A California Real Estate Limited Partnership)
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
Page
FINANCIAL STATEMENTS:
Independent Auditors' Report F-1
Consolidated Balance Sheets at December 31, 2000 and 1999 F-2
Consolidated Statements of Income for the Three
Years Ended December 31, 2000 F-3
Consolidated Statements of Changes in Partners' Equity for
the Three Years Ended December 31, 2000 F-4
Consolidated Statements of Cash Flows for the Three Years
Ended December 31, 2000 F-5
Notes to Consolidated 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 IX:
We have audited the accompanying balance sheets of DSI Realty Income Fund IX, a
California Real Estate Limited Partnership (the "Partnership") as of December
31, 2000 and 1999, and the related consolidated statements of income, changes
in partners' equity (deficit), and cash flows for each of the three years in the
period ended December 31, 2000. Our audits also included the financial state-
ment 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 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 signif-
icant estimates made by management, 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 consolidated financial statements present fairly, in
all material respects, the financial position of DSI Realty Income Fund IX
at December 31, 2000 and 1999, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2000
in conformity with accounting principlesgenerally 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.
February 2, 2001
DELOITTE & TOUCHE LLP
LONG BEACH, CALIFORNIA
DSI REALTY INCOME FUND IX
(A California Real Estate Limited Partnership)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
- --------------------------------------------------------------------------------
ASSETS 2000 1999
CASH AND CASH EQUIVALENTS $ 509,410 $ 503,249
PROPERTY, net (Note 3) 5,137,840 5,699,515
OTHER ASSETS 61,924 62,580
----------- -----------
TOTAL $ 5,709,174 $ 6,265,344
=========== ===========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
LIABILITIES:
Distribution due partners(Note 4) $ 310,030 $ 310,030
Incentive management fee payable to
general partners (Note 4) 317,287 315,920
Property management fees payable 9,849 8,573
Customer deposits and other liabilities 116,895 117,213
----------- -----------
Total liabilities 754,061 751,736
----------- -----------
MINORITY INTEREST IN REAL ESTATE
JOINT VENTURE (Note 2) 176,774 222,444
PARTNERS' EQUITY (DEFICIT)(Note 4):
General partners (89,657) (84,529)
Limited partners (30,693 limited
partnership units outstanding
at December 31, 2000 and 1999) 4,867,339 5,375,693
------------ -----------
Total partners' equity 4,778,339 5,291,164
------------ -----------
TOTAL $ 5,709,174 $ 6,265,344
============ ===========
See accompanying notes to financial statements.
DSI REALTY INCOME FUND IX
(A California Real Estate Limited Partnership)
CONSOLIDATED STATEMENTS OF INCOME
THREE YEARS ENDED DECEMBER 31, 2000
- --------------------------------------------------------------------------------
2000 1999 1998
REVENUES:
Rental $2,952,549 $2,867,285 $2,765,747
---------- ---------- ----------
EXPENSES:
Depreciation 567,615 587,750 587,750
Operating 835,709 802,957 719,175
General and administrative 179,105 159,370 149,781
General partners' incentive
management fee (Note 4) 133,906 140,831 125,563
Property management fee 147,653 142,865 102,124
---------- ---------- ----------
Total expenses 1,863,988 1,833,773 1,684,393
---------- ---------- ----------
OPERATING INCOME 1,088,561 1,033,512 1,081,354
OTHER INCOME-
Interest income 7,656 10,891 13,404
---------- ---------- ----------
INCOME BEFORE MINORITY INTEREST IN
INCOME OF REAL ESTATE JOINT VENTURE 1,096,237 1,044,403 1,094,758
MINORITY INTEREST IN INCOME OF REAL
ESTATE JOINT VENTURE (NOTES 2) (121,220) (122,453) (109,741)
---------- ---------- ----------
NET INCOME $ 975,017 $ 921,950 $ 985,017
========== ========== ==========
AGGREGATE NET INCOME ALLOCATED
TO (Note 4):
General partners 9,750 9,220 9,850
Limited partners $ 965,267 $ 912,730 $ 975,167
---------- ---------- ----------
TOTAL $ 975,107 $ 921,950 $ 985,017
========== ========== ==========
NET INCOME PER LIMITED PARTNERSHIP
UNIT (Notes 2 and 4) $ 31.45 $ 29.74 $ 31.77
========== ========== ==========
See accompanying notes to financial statements.
DSI REALTY INCOME FUND IX
(A California Real Estate Limited Partnership)
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' EQUITY
THREE YEARS ENDED DECEMBER 31, 2000
- --------------------------------------------------------------------------------
General Limited
Partners Partners Total
------- ----------- -----------
BALANCE AT JANUARY 1, 1998 $(73,905) $ 6,427,489 $ 6,353,584
Net income 9,850 975,167 985,017
Distributions (14,046) (1,390,547) (1,404,593)
------- ----------- -----------
BALANCE AT DECEMBER 31, 1998 $(78,101) $ 6,012,109 $ 5,934,008
Net income 9,220 912,730 921,950
Distributions (15,648) (1,549,146) (1,564,794)
------- ----------- -----------
BALANCE AT DECEMBER 31,1999 (84,529) 5,375,693 5,291,164
Net income 9,750 965,267 975,017
Distributions (14,878) (1,472,964) (1,487,842)
------- ----------- -----------
BALANCE AT DECEMBER 31, 2000 $(89,657) $ 4,867,996 $ 4,778,339
======= =========== ===========
See accompanying notes to financial statements.
DSI REALTY INCOME FUND IX
(A California Real Estate Limited Partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE YEARS ENDED DECEMBER 31, 2000
- --------------------------------------------------------------------------------
2000 1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 975,017 $ 921,950 $ 985,017
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 567,615 587,750 587,750
Minority interest in income
of real estate joint venture 121,220 122,453 109,741
Changes in assets and liabilities:
Other assets 656 (16,388) 19,717
Property management fees payable 1,276 308 59
Incentive management fees payable 1,367 1,316
Customer deposits and
other liabilities (318) 22,322 234
----------- ----------- ------------
Net cash provided by operating
activities 1,666,833 1,639,711 1,702,518
----------- ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES -
Additions to property (5,940) (42,758)
----------- ----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES -
Distributions paid to minority interest
in real estate joint venture (166,890) (162,600) (160,800)
Distributions to partners (1,487,842) (1,564,794) (1,404,593)
____________ ___________ __________
Net cash used in financing
activities (1,654,732) (1,727,394) (1,565,393)
------------ ----------- ----------
NET INCREASE(DECREASE) IN CASH AND
CASH EQUIVALENTS 6,161 (130,441) 137,125
CASH AND CASH EQUIVALENTS,
AT BEGINNING OF YEAR 503,249 633,690 137,125
----------- ----------- ------------
CASH AND CASH EQUIVALENTS,
AT END OF YEAR $ 509,410 $ 503,249 $ 633,690
=========== =========== ============
See accompanying notes to consolidated financial statements.
DSI REALTY INCOME FUND IX
(A California Real Estate Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE YEARS ENDED DECEMBER 31, 2000
1. GENERAL
DSI Realty Income Fund IX, 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 30,693
limited partnership units which were purchased for $500 a unit. The
general partners have made no 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 April 12, 1985 under the
California Uniform Limited Partnership Act for the primary purpose of
acquiring and operating real estate.
The Partnership has acquired five mini-storage facilities located in
Monterey Park and Azusa, California; Everett, Washington;and Romeoville and
Elgin, Illinois. The Partnership also entered into a joint venture with
DSI Realty Income Fund VIII through which the Partnership has a 70%
interest in a mini-storage facility in Aurora, Colorado. 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 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
Principles of Consolidation - The consolidated financial statements
include the accounts of DSI Realty Income Fund IX and its 70 percent-owned
real estate joint venture. All significant intercompany accounts and trans-
actions have been eliminated in consolidation.
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 ranging from 15 to
20 years for the facilities. Improvements are depreciated over a five-year
period.
Reclassifications - Certain reclassifications have been made to the 1999
amounts to conform to the 2000 presentation.
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 $1,785,403.
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 the net income allocated to the
limited partners by the weighted average number of limited partnership
units outstanding during each year (30,693 in 2000, 1999 and 1998).
Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires the Partnership's management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ
from those estimates.
Impairment of Long-Lived Assets - The Partnership regularly reviews long-
lived assets for impairment whenever events or changes in circumstances
indicate that the carrying amount of the asset may not be recoverable.
If the sum of the expected undiscounted future cash flow is less than the
carrying amount of the asset, the Partnership would recognize an impairment
to the extent the carrying value exceeded the fair value of the property.
No impairment losses were required in 2000, 1999 or 1998.
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.
Recent Accounting Pronouncements - In December 1999, the Securities and
Exchange Commission issued Staff Accounting Bulletin No. 101 ("SAB 101"),
"Revenue Recognition in Financial Statements." The adoption of SAB 101
did not impact the financial statements .
3. PROPERTY
As of December 31, 2000 and 1999, the total cost of property and the
accumulated depreciation are as follows:
2000 1999
Land $ 2,729,790 $ 2,729,790
Buildings and improvements 11,023,939 11,017,999
----------- -----------
Total 13,753,729 13,747,789
Accumulated depreciation (8,615,889) (8,048,274)
----------- ----------
Property, net $ 5,137,840 $ 5,699,515
=========== ===========
4. ALLOCATION OF PROFITS AND LOSSES
Under the Agreement of Limited Partnership, the general partners are to be
allocated one percent of the net profits or losses from operations, and
the limited partners are to be allocated the balance of the net profits or
losses from operations in proportion to their limited partnership
interests. The general partners are also entitled to receive a percent-
age, based on a predetermined formula, of any cash distribution from
the sale, other disposition, or refinancing of the real estate project.
In addition, the general partners are entitled to an incentive management
fee for supervising the operations of the Partnership. The fee is to be
paid in an amount equal to nine percent per annum of Partnership distri-
butions made from cash available for distribution, 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 Statement of Financial
Accounting Standards No. 131, "Disclosures about Segments of an Enter-
prise 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 IX
(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
Monterey Park, CA None $420,200 $1,409,050 $ 6,123 $420,200 $1,415,173 $1,835,373 $1,835,373 08/86 12/85 20 Yrs
Azusa, CA None 696,000 2,095,965 9,188 696,000 2,105,153 2,801,153 1,524,644 06/86 01/86 20 Yrs
Everett, WA None 352,350 1,252,536 6,431 352,350 1,258,967 1,611,317 946,369 11/85 06/85 20 Yrs
Romeoville, IL None 298,740 2,180,802 40,597 298,740 2,221,399 2,520,139 1,542,991 01/87 05/86 20 Yrs
Elgin, IL None 376,000 1,424,577 12,462 376,000 1,437,039 1,813,039 1,007,184 09/86 03/86 20 Yrs
Aurora, CO None 586,500 2,544,046 42,162 586,500 2,586,208 3,172,708 2,586,208 02/85 09/85 15 Yrs
-------- ---------- ------- -------- ---------- ---------- ----------
$2,729,790 $10,906,976 $116,963 $2,729,790 $11,023,939 $13,753,729*$8,615,889
========== ========== ======== ========== ========== =========== ==========
Real Estate Accumulated
at Cost Depreciation
Balance at January 1, 1998 $13,705,687 $6,272,774
Additions 587,750
----------- ----------
Balance at December 31, 1998 $13,705,031 $7,460,524
Additions 42,758 587,750
----------- ----------
Balance at December 31, 1999 $13,747,789 $8,048,274
Additions 5,940 567,615
----------- ----------
Balance at December 31, 2000 $13,753,729 $8,615,889
=========== ==========
EXHIBIT 2
March 30, 2001
ANNUAL REPORT TO LIMITED PARTNERS OF
DSI REALTY INCOME FUND IX
Dear Limited Partner:
This report contains the Partnership's balance sheets as of December 31,
2000 and 1999, 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, 2000
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, 2000 and December 31, 1999 were as follows:
Location of Property Average Occupancy Average Occupancy
Levels for the Levels for the
Year Ended Year Ended
Dec. 31, 2000 Dec. 31, 1999
Azusa, CA 85% 81%
Elgin, IL 81% 81%
Everett, WA 82% 82%
Monterey Park, CA 89% 88%
Romeoville, IL 78% 75%
Aurora, CO* 86% 88%
- ----------
*The Partnership owns a 70% interest in this facility.
We will keep you informed of the activities of DSI Realty Income Fund IX 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, 2000 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 IX
By: DSI Properties, Inc.
By___________________________
ROBERT J. CONWAY, President