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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, 1999. 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,
1999, incorporated by reference to Form 10-K, Part II.
Item 11. Registrant's Financial Statements for its fiscal year ended December
31, 1999, 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, 1999, 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, 1999 and December 31, 1998 were as follows:
Location of Property Average Occupancy Average Occupancy
Level for the Year Level for the Year
Ended Dec. 31, 1999 Ended Dec. 31, 1998
Vallejo, California 91% 92%
Santa Rosa, California
(both stages) 86% 88%
Arvada, Colorado 87% 87%
Las Vegas, Nevada 79% 77%
Federal Heights, Colorado 85% 86%
Colorado Springs, Colorado 82% 84%
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, 1999 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, 1999 had 830
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 $16.55 per Limited Partnership Unit were
declared and paid each quarter for the year ended December 31, 1999 and
$16.45 per Limited Partnership Unit for the year ended December 31, 1998 and
$15.20 per Limited Partnership Unit for the year ended December 31, 1997. 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, 1999, 1998, 1997, 1996, and 1995
- --------------------------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
TOTAL
REVENUES $2,887,720 $2,778,744 $2,564,306 $2,522,074 $2,513,723
TOTAL
EXPENSES 1,619,474 1,551,834 1,530,103 1,476,606 1,406,458
---------- ---------- ---------- ---------- ----------
NET
INCOME $1,268,246 $1,226,910 $1,034,203 $1,045,468 $1,107,265
========== ========== ========== ========== ==========
TOTAL
ASSETS $3,796,535 $4,114,006 $4,469,563 $4,903,842 $5,285,147
========== ========== ========== ========== ==========
NET CASH
PROVIDED BY
OPERATING
ACTIVITIES
$1,684,625 $1,626,928 $1,443,997 $1,492,765 $1,522,244
========== ========== ========== ========== ==========
NET INCOME
PER LIMITED
PARTNERSHIP
UNIT $ 52.86 $ 51.14 $ 43.10 $ 43.57 $ 46.15
========== ========== ========== ========== ==========
CASH
DISTRIBUTIONS
PER $500
LIMITED
PARTNERSHIP
UNIT $ 66.20 $ 65.82 $ 60.83 $ 60.00 $ 57.50
========== ========== ========== ========== ==========
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
1999 COMPARED TO 1998
Total revenues increased from $2,887,720 in 1999, while total expenses
increased from $1,551,834 to $1,619,474 resulting in an increase in net income
from $1,226,910 to $1,268,246. Rental revenues increased as a result of higher
unit rental rates. Occupancy levels for the Partnership's seven mini-storage
facilities averaged 85.1% for the year 1999 as compared to 86.2% for 1998.
The increase in operating expenses of approximately $47,400 (6.9%) was due
primarily to increases in yellow pages advertising costs, real estate tax and
security alarm services expenses, partially offset by a decrease in repairs
and maintenance expense. General and administrative expenses increased
approximately $9,100 (7.0%) primarily as a result of an increase in office
supplies and printing expense. The General Partners' incentive management fee
which is based on cash available for distribution, increased as a result of
the increase in rental revenue.
1998 COMPARED TO 1997
Total revenues increased from $2,564,306 in 1997 to $2,778,744 in 1998,
while total expenses increased from $1,530,103 to $1,551,834 resulting in an
increase in net income from $1,034,203 to $1,226,910. Rental revenues
increased as a result of higher occupancy and unit rental rates. Occupancy
levels for the Partnership's seven mini-storage facilities averaged 86.2% for
the year 1998 as compared to 85.0% for 1997. The decrease in operating
expenses of approximately $4,500 (0.7%) was due to a primarily to a decrease
in repairs and maintenance expense. General and administrative remained
constant. The General Partners' incentive management fee which is based on
cash available for distributions, increased as a result of the increase in net
income. Property management fees, which are based on revenues, increased as a
result of the increase in rental revenue.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities increased by approximately
$57,700 (3.5%) in 1999 compared to 1998 primarily due to the increase in net
income. Net cash provided by operating activities increased by approximately
$182,900 (12.7%) in 1998 compared to 1997 primarily due to the increase in net
income partially offset by 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 4%, 4% and 3% were declared and paid on December 15, 1999,
1998 and 1997 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.
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 resources appear to be adequate to
meet its needs for the next twelve months.
The General Partners are not aware of any environmental problems which
could have a material adverse effect upon 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, and Diversified
Investors Agency. As of December 31, 1999, 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 66 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 70 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 76 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, 1999, 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, 1999, 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, 1999 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, 1999, 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, 1999.
(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, 2000
ROBERT J. CONWAY, President
(Chief Executive Officer, Chief
Financial Officer, and Director)
By____________________________ Dated: March 31, 2000
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, 2000
ROBERT J. CONWAY, President,
Chief Executive Officer, Chief
Financial Officer, and Director
By___________________________ Dated: March 31, 2000
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, 1999, 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, 1999
- --------------------------------------------------------------------------------
1999 1998 1997 1996 1995
TOTAL
REVENUES $2,887,720 $2,778,744 $2,564,306 $2,522,704 $2,513,723
TOTAL
EXPENSES 1,619,474 1,551,834 1,530,103 1,476,606 1,406,458
NET INCOME 1,268,246 1,226,910 1,034,203 1,045,468 1,107,265
TOTAL ASSETS 3,796,535 4,114,006 4,469,563 4,903,842 5,285,147
NET CASH PROVIDED
BY OPERATING
ACTIVITIES 1,684,625 1,626,928 1,443,997 1,492,765 1,522,244
NET INCOME
PER LIMITED
PARTNERSHIP UNIT $ 52.86 $ 51.14 $ 43.10 $ 43.57 $ 46.15
CASH DISTRIBUTIONS
PER $500 LIMITED
PARTNERSHIP UNIT $ 66.20 $ 65.82 $ 60.83 $ 60.00 $ 57.50
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, 1999.
Operating Partners'
Results Equity
Per financial statements $ 1,268,246 $ 3,429,026
Excess tax depreciation 413,130 (1,368,217)
State taxes (28,905)
Accrued incentive management fee (16,219)
Acquisition costs capitalized
for tax purposes 134,382
Deferred rental revenues 71,946
Accrued distributions to partners 269,920
Accrued property taxes (88,000)
Other (1,995)
----------- -----------
Per Partnership income tax return $ 1,652,471 $ 2,430,843
=========== ===========
Taxable income per $500 limited
partnership unit $ 69.57
===========
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, 1999 and 1998 F-2
Statements of Income for the Three
Years Ended December 31, 1999 F-3
Statements of Changes in Partners' Equity for
the Three Years Ended December 31, 1999 F-4
Statements of Cash Flows for the Three Years
Ended December 31, 1999 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 VI:
We have audited the accompanying balance sheets of DSI Realty Income Fund VI, a
California Real Estate Limited Partnership(the "Partnership") as of December 31,
1999 and 1998, 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, 1999. 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 VI at December 31,
1999 and 1998, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1999, in conformity with
generally accepted accounting principles.
Deloitte & Touche
Los Angeles, California
January 28, 2000
DSI REALTY INCOME FUND VI
(A California Real Estate Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
ASSETS 1999 1998
CASH AND CASH EQUIVALENTS $ 559,869 $ 546,110
PROPERTY, Net(Notes 1 and 3) 3,176,287 3,513,086
OTHER ASSETS 60,379 54,810
----------- -----------
TOTAL $ 3,796,535 $ 4,114,006
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES:
Distribution due partners $ 269,920 $ 269,920
Incentive management fee payable to
general partners (Note 4) 9,424 7,947
Property management fees payable (Note 1) 14,371 13,120
Customer deposits and other liabilities 73,794 73,794
----------- -----------
Total liabilities 367,509 364,781
----------- -----------
PARTNERS' EQUITY (DEFICIT)(Notes 1 and 4):
General partners (58,996) (55,794)
Limited partners (23,753 limited
partnership units outstanding
at December 31, 1999 and 1998) 3,488,022 3,805,019
------------ -----------
Total partners' equity 3,429,026 3,749,225
------------ -----------
TOTAL $ 3,796,535 $4,114,006
============ ===========
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, 1999
- --------------------------------------------------------------------------------
1999 1998 1997
REVENUES:
Rental $2,877,374 $2,760,387 $2,546,164
Interest income 10,346 18,357 18,142
---------- ---------- ---------
Total revenues 2,887,720 2,778,744 2,564,306
---------- ---------- ---------
EXPENSES:
Depreciation 419,220 419,220 419,220
Operating 730,031 682,642 687,134
General and administrative 139,652 130,572 128,599
General partners' incentive
management fee (Note 4) 158,369 154,541 142,380
Property management
fee (Note 1) 172,202 164,859 152,770
---------- ---------- ---------
Total expenses 1,619,474 1,551,834 1,530,103
---------- ---------- ---------
NET INCOME $1,268,246 $1,226,910 $1,034,203
========== ========== ==========
AGGREGATE NET INCOME ALLOCATED
TO (Note 4):
Limited partners $1,255,564 $1,214,641 $1,023,861
General partners 12,682 12,269 10,342
---------- ---------- ----------
TOTAL $1,268,246 $1,226,910 $1,034,203
========== ========== ==========
NET INCOME PER LIMITED PARTNERSHIP
UNIT (Notes 2 and 4) $ 52.86 $ 51.14 $ 43.10
========== ========== =========
See accompanying notes to financial statements.
DSI REALTY INCOME FUND VI
(A California Real Estate Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' EQUITY
THREE YEARS ENDED DECEMBER 31, 1999
- --------------------------------------------------------------------------------
General Limited
Partners Partners Total
BALANCE AT JANUARY 1, 1997 $(48,017) $ 4,574,918 $ 4,526,901
Net income $ 10,342 1,023,861 1,034,203
Distributions (14,595) (1,444,961) (1,459,556)
------- ----------- -----------
BALANCE AT DECEMBER 31, 1997 $(52,270) $ 4,153,818 $ 4,101,548
Net income 12,269 1,214,641 1,226,910
Distributions (15,793) (1,563,440) (1,579,233)
------- ----------- -----------
BALANCE AT DECEMBER 31, 1998 $(55,794) $ 3,805,019 $ 3,749,225
Net income 12,682 1,255,564 1,268,246
Distributions (15,884) (1,572,561) (1,588,445)
------- ----------- -----------
BALANCE AT DECEMBER 31, 1999 $(58,996) $ 3,488,022 $ 3,429,026
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, 1999
- --------------------------------------------------------------------------------
1999 1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,268,246 $ 1,226,910 $ 1,034,203
Adjustments to reconcile net
income to net cash provided
by operating activities: 419,220 419,220 419,220
Depreciation
Changes in assets and liabilities:
Other assets (5,569) (15,968) (500)
Incentive management fee payable
to general partners 1,477 (3,317) 11,264
Property management fees payable 1,251 83 955
Customer deposits and other liabilities (21,145)
---------- ---------- ---------
Net cash provided by
operating activities 1,684,625 1,626,928 1,443,997
CASH FLOWS FROM INVESTING ACTIVITIES -
Additions to property (82,421) (31,393) (14,754)
CASH FLOWS FROM FINANCING ACTIVITIES -
Distributions to partners (1,588,445) (1,579,233) (1,459,556)
----------- ----------- ---------
NET INCREASE(DECREASE)IN CASH AND
CASH EQUIVALENTS 13,759 16,302 (30,313)
CASH AND CASH EQUIVALENTS,
AT BEGINNING OF YEAR 546,110 529,808 560,121
----------- ----------- ------------
CASH AND CASH EQUIVALENTS,
AT END OF YEAR $ 559,869 $ 546,110 $ 529,808
=========== =========== ============
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, 1999
1. GENERAL
DSI Realty Income Fund VI, a California Real Estate 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 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 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, 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
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 bases
of the Partnership's assets and liabilities for federal income tax purposes
and as reported for financial statement purposes is $998,183.
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 (23,753 in 1999, 1998, and 1997).
Reclassifications - Certain reclassifications have been made to the 1998
and 1997 amounts to conform to the 1999 presentation.
Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires the Partnership to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent 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 required in 1999, 1998 or 1997.
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.
Concentrations of Credit Risk - Financial instruments that potentially
subject the Partnership to concentrations of credit risk consist primarily
of cash equivalents and rent receivables. The Partnership places its cash
equivalents with high credit quality institutions.
3. PROPERTY
At December 31, 1999 and 1998, the total cost of property and accumulated
depreciation are as follows:
1999 1998
Land $ 1,759,000 $ 1,759,000
Buildings and improvements 8,528,266 8,445,845
----------- -----------
Total 10,287,266 10,204,845
Less accumulated depreciation (7,110,979) (6,691,759)
----------- ----------
Property, net $ 3,176,287 $ 3,513,086
=========== ===========
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 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 nine percent per annum of the cash
available for distribution on a cumulative basis.
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.
INDEPENDENT AUDITORS' REPORT
To the Partners of
DSI Realty Income Fund VI:
We have audited the financial statements of DSI Realty Income Fund VI (the
"Partnership") as of December 31, 1999 and 1998, 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, 1999. 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 audits 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 presnetation. 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 VI at December 31,
1999 and 1998 and the results of its operations and its cash flows for each
of the three years in the period ended December 31, 1999, in conformity with
generally accepted accounting principles.
January 28, 2000
Deloitte & Touche, LLP
Los Angeles, California
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 $35,144 $258,000 $1,355,933 $1,613,933 $(1,207,153) 11/81 06/81 20 Yrs
Santa Rosa, CA II None 190,000 759,346 36,686 190,000 796,032 986,032 (657,007) 08/81 08/81 20 Yrs
Arvada, CO None 305,000 1,759,608 37,537 305,000 1,797,145 2,102,145 (1,509,818) 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 (972,923) 11/83 07/82 20 Yrs
Santa Rosa, CA III None 157,000 802,078 32,236 157,000 834,314 991,314 (693,978) 10/83 12/82 20 Yrs
Federal Heights, CO None 260,000 1,013,994 4,926 260,000 1,018,920 1,278,920 (827,321) 10/83 03/83 20 Yrs
Colorado Springs, CO None 342,000 1,518,487 62,826 342,000 1,581,313 1,923,313 (1,242,779) 03/84 04/83 20 Yrs
-------- ---------- ------- -------- ---------- ---------- ----------
$1,759,000 $8,285,661 $242,605 $1,759,000 $8,528,266 $10,287,266 $(7,110,979)
========== ========== ======== ========== ========== =========== ==========
Real Estate Accumulated
at Cost Depreciation
Balance at January 1, 1997 10,158,698 5,853,319
Additions 14,754 419,220
----------- ----------
Balance at December 31, 1997 $10,173,452 $6,272,539
Additions 31,393 419,220
----------- ----------
Balance at December 31, 1998 $10,204,845 $6,691,759
Additions 82,421 419,220
----------- ----------
Balance at December 31, 1999 $10,287,266 $7,110,979
=========== ==========
EXHIBIT 2
March 31, 1999
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,
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 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, 1999 and December 31, 1998 were as follows:
Location of Property Average Occupancy Average Occupancy
Levels for the Levels for the
Year Ended Year Ended
Dec. 31, 1999 Dec. 31, 1998
Vallejo, California 92% 91%
Santa Rosa, California
both stages) 86% 88%
Arvada, California 87% 88%
Las Vegas, Nevada 79% 77%
Federal Heights, Colorado 85% 86%
Colorado Springs, Colorado 82% 84%
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, 1999, 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