DSI REALTY INCOME FUND X
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 2O549
FORM 10-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, 2002.
or / /Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required] for the transition period from
______________ to ________________.
Commission File No. 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,
2002, incorporated by reference to Form 10-K, Part II.
Item 11. Registrant's Financial Statements for its fiscal year ended December
31, 2002, incorporated by reference to Form 10-K, Part III.
Item 12. Registration Statement on Form S-11, previously filed with the
Securities and Exchange Commission pursuant to Securities Act of 1933, as
amended, incorporated by reference to Form 10-K Part III.
Item 13. Registrant's Financial Statements for its fiscal year ended December
31, 2002, incorporated by reference to Form 10-K, Part III.
PART I
Item l. BUSINESS
Registrant, DSI Realty Income Fund 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, 2002 and December 31, 2001 were as follows:
Location of Property Average Occupancy Average Occupancy
Level for the Level for the
Year Ended Year Ended
Dec. 31, 2002 Dec. 31, 2001
Ryan Road
Warren, MI 85% 88%
Crestwood, IL 83% 86%
Groesbeck Hwy
Warren, MI 82% 86%
Forestville, MD 88% 92%
Troy, MI 83% 87%
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, 2002 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
Forestville,
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 962 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 $12.54 per Limited Partnership Units were
declared and paid each quarter for the year ended December 31, 2002 and $12.62
per Limited Partnership Unit were declared and paid each quarter for the year
ended December 31, 2001 and $12.80 per Limited Partnership Unit were declared
and paid each quarter for the year ended December 31, 2000.
Item 6. SELECTED FINANCIAL DATA
FIVE YEARS ENDED DECEMBER 31, 2002
-------------------------------------------------------------------
2002 2001 2000 1999 1998
---- ---- ---- ---- ----
TOTAL REVENUES
AND OTHER
INCOME $3,076,030 $3,351,149 $3,201,912 $2,928,689 $2,707,174
TOTAL
EXPENSES 1,931,715 1,913,535 1,857,563 1,737,036 1,626,960
---------- ----------- ----------- ----------- -----------
NET
INCOME $1,144,315 $1,437,614 $1,344,349 $1,191,653 $1,080,214
========== =========== =========== =========== ===========
TOTAL
ASSETS $6,074,744 $7,194,045 $8,846,914 $8,779,268 $9,050,011
========== =========== =========== =========== ===========
CASH FLOW FROM:
OPERATING $1,050,669 $ 461,933 $2,040,154 $1,918,525 $1,644,418
INVESTING - - - (6,949) -
FINANCING (1,610,044) (1,620,635) (1,638,784) (1,777,602)(1,621,442)
NET INCOME
PER LIMITED
PARTNERSHIP
UNIT $ 35.64 $ 44.78 $ 41.87 $ 37.12 $ 33.65
========== =========== =========== =========== ===========
CASH
DISTRIBUTIONS
PER LIMITED
PARTNERSHIP
UNIT $ 50.15 $ 50.48 $ 51.18 $ 55.37 $ 50.51
========== =========== =========== =========== ===========
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
2002 COMPARED TO 2001
Total revenues decreased from $3,300,988 in 2001 to $3,070,312 in 2002,
total expenses increased from $1,913,535 to $1,931,715 and other income
decreased from $50,161 to $5,718, resulting in a decrease in net income from
$1,437,614 to $1,144,315. The approximate $230,700 (7.0%) decrease in rental
revenues can be attributed to lower occupancy and unit rental rates. Occupancy
levels for the Partnership's five mini-storage facilities averaged 84.3%
for the year ended December 31, 2002, compared to 87.9% for the year ended
December 31, 2001. The Partnership continued to increase rental rates where
market conditions made such increases feasible. Operating expenses decreased
by $38,100 (4.3%) primarily due to decreases in repairs and maintenance,
salaries and wages and power and sweeping expenses, partially offset by
increases in real estate tax and workers compensation insurance expenses.
Power and sweeping expenses decreased as the substantial snow removal costs
associated with heavy snowfalls in the Detroit, Michigan area during the first
quarter of 2001, were not incurred in the current period. General and admin-
istration expenses increased approximately $46,800 (26.6%) as a result of
increases in office supplies, legal and professional and equipment and computer
lease expenses, partially offset by a decrease in travel expense. The General
Partners' incentive management fee remained relatively constant. Property
management fees decreased approximately $8,500 (5.2%). Property management
fees, which are computed as a percentage of rental revenue, decreased as a
result of the decrease in rental revenue.
2001 COMPARED TO 2000
Total revenues increased from $3,121,539 in 2000 to $3,300,988 in 2001,
total expenses increased from $1,857,563 to $1,913,535 and other income
decreased from $80,373 to $50,161, resulting in an increase in net income
from $1,344,349 to $1,437,614. The approximate $179,400 (5.7%) increase in
rental revenues can be attributed to higher occupancy and unit rental rates.
Occupancy levels for the Partnership's five mini-storage facilities averaged
87.9% for the year ended December 31, 2001, compared to 86.9% for the year
ended December 31, 2000. The Partnership continued to increase rental rates
where market conditions made such increases feasible. Operating expenses
increased by approximately $47,100 (5.6%) primarily due to increases in
repairs and maintenance, real estate taxes, salaries and wages and power and
sweeping expenses, partially offset by decreases in yellow page advertising
and workers compensation insurance expenses. Power and sweeping expenses
increased as a result of above normal snow removal costs associated with
heavy snowfalls in the Detroit, Michigan area during the first quarter of
2001. General and administrative expenses increased approximately $5,000
(2.9%) as a result of increases in legal and professional and travel expenses.
The General Partners' incentive management fee decreased approximately $1,700
(1.2%). As this fee is computed as a percentage of distributions made to the
Limited Partners, the 2001 decrease in distributions resulted in a decrease
in the General Partners' incentive management fee. Property management fees
increased approximately $5,600 (3.6%). Property management fees, which are
computed as a percentage of 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 decreased approximately $588,700
(127.4%) in 2002 compared to 2001 primarily as a result of not having to pay
accrued incentive management fees (see Note 4 to Financial Statements),
partially offset by the decrease in net income and the partial payment of
deferred property management fees. Net cash provided by operating activities
decreased approximately $1,754,700 (79.2%) in 2001 compared to 2000 primarily
as a result of the decreases in other liabilities and incentive management
fees (see Note 4 to Financial Statements), partially offset by the increase
in other assets, net income and the defferal of 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 1.9%, 1.9%, and 2% of capital contributed by limited partners were declared
and paid on December 15, 2002, 2001 and 2000, respectively.
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 anticipates that cash flows generated
from operations of the Partnership's rental real estate 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
might have a material adverse impact on the financial position of the
Partnership.
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Summarized quarterly financial data for the years ended December 31, 2002 and
2001 was as follows:
2002 Quarter Ended
------------------
March 31 June 30 September 30 December 31
Total revenues $828,313 $750,761 $765,152 $726,086
Net income 358,857 319,209 318,503 147,746
Net income per limited
partnership unit $ 11.18 $ 9.94 $ 9.92 $ 4.60
Weighted average number
of limited partnership
units outstanding 31,783 31,783 31,783 31,783
2001 Quarter Ended
------------------
March 31 June 30 September 30 December 31
Total revenues $837,717 $802,686 $823,597 $836,988
Net income 408,480 352,280 347,335 329,519
Net income per limited
partnership unit $ 12.72 $ 10.97 $ 10.82 $ 10.26
Weighted average
number of limited
partnership units
outstanding 31,783 31,783 31,783 31,783
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, 2002, Messrs. Robert J.
Conway and Joseph W. Conway, each of whom own approximately 48.4% of the issued
and outstanding capital stock of DSI Financial, Inc., a California corporation,
together with Mr. Joseph W. Stok, currently comprise the entire Board of
Directors of DSI Properties, Inc.
Mr. Robert J. Conway is 69 years of age and is a licensed California real
estate broker, and since 1965 has been President and a member of the Board of
Directors of Diversified Securities, Inc., and since 1973 President, Chief
Financial Officer and a member of the Board of Directors of DSI Properties, Inc.
Mr. Conway received a Bachelor of Science Degree from Marquette University with
majors in Corporate Finance and Real Estate.
Mr. Joseph W. Conway is age 73 and has been Executive Vice President,
Treasurer and a member of the Board of Directors of Diversified Securities, Inc.
since 1965 and since 1973 the Vice President, Treasurer and member of the Board
of Directors of DSI Properties, Inc. Mr. Conway received a Bachelor of Arts
Degree from Loras College with a major in Accounting.
Mr. Joseph W. Stok is age 79 and has been a member of the Board of
Directors of DSI Properties, Inc. since 1994, a Vice President of Diversified
Securities, Inc. since 1973, and an Account Executive with Diversified
Securities, Inc. since 1967.
Item 11. EXECUTIVE COMPENSATION (MANAGEMENT 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, 2002, 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, 2002, no person of record owned more than 5% of the
limited partnership units of Registrant, nor was any person known by Registrant
to own of record and beneficially, or beneficially only, more than 5% thereof.
The balance of the information required to be furnished in Item 12 of Part III
is contained in Registrant's Registration Statement on Form S-11, previously
filed pursuant to the Securities Act of 1933, as amended, and which is
incorporated herein by this reference. Please see information contained in Item
10 hereinabove.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required to be furnished in Item 13 of Part III is
contained in Registrant's Financial Statements for its fiscal year ended
December 31, 2002, attached hereto as Exhibit l and incorporated herein by this
reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a)(l) Attached hereto and incorporated herein by this reference as Exhibit
l are Registrant's Financial Statements and Supplemental Schedule for
its year ended December 31, 2002, together with the reports of its
independent auditors, Deloitte & Touche. See Index to Financial
Statements and Supplemental Schedule.
(a)(2) Attached hereto and incorporated herein by this reference as Exhibit
2 is Registrant's letter to its Limited Partners regarding its Annual
Report for its fiscal year ended December 31, 2002. (b) No reports on
Form 8K were filed during the fiscal year ended December 31, 2002.
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
Robert J. Conway
By_____________________________ Dated: March 31, 2003
ROBERT J. CONWAY, President
(Chief Executive Officer, Chief
Financial Officer, and Director)
Joseph W. Conway
By____________________________ Dated: March 31, 2003
JOSEPH W. CONWAY (Executive
Vice President and Director)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant and
in the capacities and on the date indicated.
DSI REALTY INCOME FUND X
by: DSI Properties, Inc., a
California corporation, as
General Partner
Robert J. Conway
By:__________________________ Dated: March 31, 2003
ROBERT J. CONWAY, President,
Chief Executive Officer, Chief
Financial Officer, and Director
Joseph W. Conway
By___________________________ Dated: March 31, 2003
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, 2002, attached as Exhibit l to
Form 10-K.
PART II, Item 8. See Exhibit l to Form 10-K filed herewith.
PART II, Item 9. Not applicable.
EXHIBIT l
DSI REALTY INCOME FUND X
(A California Real Estate Limited Partnership)
SELECTED FINANCIAL DATA
FIVE YEARS ENDED DECEMBER 31, 2002
-------------------------------------------------------------------
2002 2001 2000 1999 1998
---- ---- ---- ---- ----
TOTAL REVENUES
AND OTHER
INCOME $3,076,030 $3,351,149 $3,201,912 $2,928,689 $2,707,174
TOTAL
EXPENSES 1,931,715 1,913,535 1,857,563 1,737,036 1,626,960
---------- ----------- ----------- ----------- -----------
NET
INCOME $1,144,315 $1,437,614 $1,344,349 $1,191,653 $1,080,214
========== =========== =========== =========== ===========
TOTAL
ASSETS $6,074,744 $7,194,045 $8,846,914 $8,779,268 $9,050,011
========== =========== =========== =========== ===========
CASH FLOW FROM:
OPERATING $1,050,669 $ 461,933 $2,040,154 $1,918,525 $1,644,418
INVESTING - - - (6,949) -
FINANCING (1,610,044) (1,620,635) (1,638,784) (1,777,602)(1,621,442)
NET INCOME
PER LIMITED
PARTNERSHIP
UNIT $ 35.64 $ 44.78 $ 41.87 $ 37.12 $ 33.65
========== =========== =========== =========== ===========
CASH
DISTRIBUTIONS
PER LIMITED
PARTNERSHIP
UNIT $ 50.15 $ 50.48 $ 51.18 $ 55.37 $ 50.51
========== =========== =========== =========== ===========
The following are reconciliations between the operating results and partners'
equity per the financial statements and the Partnership's income tax return for
the year ended December 31, 2002.
Net Partners'
Income Equity
Per financial statements $ 1,144,315 $ 5,143,087
Excess financial statement depreciation 201,403 2,703,902
Capitalization of syndication costs 1,694,248
Payment of accrued incentive management fee (953) 379
Accrued partner distributions 325,215
Deferred rental revenues 74,734
Acquisition costs depreciated
for tax purposes 1,146,935
State taxes (4,200)
----------- -----------
Per Partnership income tax return $ 1,340,565 $ 11,088,500
=========== ===========
Net taxable income per limited
partnership unit $ 41.76
===========
DSI REALTY INCOME FUND X
(A California Real Estate Limited Partnership)
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
Page
Independent Auditors' Report F-1
FINANCIAL STATEMENTS:
Balance Sheets at December 31, 2002 and 2001 F-2
Statements of Income for the Three
Years Ended December 31, 2002 F-3
Statements of Changes in Partners' Equity (Deficit) for
the Three Years Ended December 31, 2002 F-4
Statements of Cash Flows for the Three Years
Ended December 31, 2002 F-5
Notes to Financial Statements F-6
SUPPLEMENTAL SCHEDULE:
Schedule III - Real Estate and Accumulated Depreciation F-9
SCHEDULES OMITTED:
Financial statements and schedules not listed above are omitted because of the
absence of conditions under which they are required or because the
information is included in the financial statements named above, or in the
notes thereto.
CONTROLS AND PROCEDURES
Within 90 days prior to the date of this report, the Partnership evaluated
the effectiveness of its disclosure controls and procedures. This evalu-
ation was performed by the Partnership's Controller with the assistance
of the Partnership's President and the Chief Executive Officer. These
disclosure controls and procedures are designed to ensure that the inform-
ation required to be disclosed by the Parnership it its periodic reports
filed with the Securities and Exchange Commission (the "Commission") is
recorded, processed summarized and reported, within the time periods
specified by the Commission's rules and forms, and that the information
is communicated to the certifying officers on a timely basis. Based on
this evaluation, the Partnership concluded that its disclosure controls
and procedures were effective. There have been no significant changes
in the Partnership's internal controls or in other factors that could
significantly affect the internal controls subsequent to the date of
their evaluation.
INDEPENDENT AUDITORS' REPORT
To the Partners of
DSI Realty Income Fund X:
We have audited the accompanying balance sheets of DSI Realty Income Fund X, a
California Limited Partnership (the "Partnership") as of December 31, 2002
and 2001, and the related statements of income, changes in partners' equity
(deficit), and cash flows for each of the three years in the period ended
December 31, 2002. Our audits also included the financial statement schedule
listed in the Index at Item 14. These financial statements and the financial
schedule are the responsibility of the Partnership's management. Our respons-
ibility is to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the over-
all 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,
2002 and 2001, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2002, in conformity with
generally accepted accounting in the United States of America.
Deloitte & Touche LLP
February 3, 2003
DSI REALTY INCOME FUND X
(A California Real Estate Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 2002 AND 2001
- --------------------------------------------------------------------------------
ASSETS 2002 2001
CASH AND CASH EQUIVALENTS $ 887,585 $ 1,446,960
PROPERTY, net (Note 3) 5,047,627 5,605,054
OTHER ASSETS 139,532 142,031
----------- -----------
TOTAL $ 6,074,744 $ 7,194,045
=========== ===========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
LIABILITIES:
Distribution due partners (Note 4) $ 325,214 $ 325,214
Incentive management fee payable to
general partners (Note 4) 379 1,332
Property management fees payable 409,681 1,078,394
Customer deposits and other liabilities 196,383 180,289
----------- -----------
Total liabilities 931,657 1,585,229
----------- -----------
PARTNERS' EQUITY (DEFICIT)(Note 4):
General partners (90,597) (85,940)
Limited partners (31,783 limited
partnership units outstanding
at December 31, 2002 and 2001) 5,233,684 5,694,756
------------ -----------
Total partners' equity 5,143,087 5,608,816
------------ -----------
TOTAL $ 6,074,744 $ 7,194,045
============ ===========
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, 2002
- --------------------------------------------------------------------------------
2002 2001 2000
REVENUES:
Rental $3,070,312 $3,300,988 $3,121,539
---------- ---------- ----------
EXPENSES:
Depreciation 557,427 538,528 538,528
Operating 852,859 890,989 843,873
General and administrative 223,009 176,169 171,215
General partners' incentive
management fee (Note 4) 144,904 145,857 147,542
Property management 153,516 161,992 156,405
---------- ---------- ----------
Total expenses 1,931,715 1,913,535 1,857,563
---------- ---------- ----------
OPERATING INCOME 1,138,597 1,387,453 1,263,976
OTHER INCOME -
Interest income 5,718 50,161 80,373
---------- ---------- ----------
NET INCOME $1,144,315 $1,437,614 $1,344,349
========== ========== ==========
AGGREGATE NET INCOME ALLOCATED
TO (Note 4):
Limited partners $1,132,872 $1,423,238 $1,330,906
General partners 11,443 14,376 13,443
---------- ---------- ----------
TOTAL $1,144,315 $1,437,614 $1,344,349
========== ========== ==========
NET INCOME PER LIMITED PARTNERSHIP
UNIT (Notes 2 and 4) $ 35.64 $ 44.78 $ 41.87
========== ========== ==========
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, 2002
- --------------------------------------------------------------------------------
General Limited
Partners Partners Total
BALANCE, JANUARY 1, 2000 $(81,123) $6,171,569 $6,090,446
Net income 13,443 1,330,906 1,344,349
Distributions (16,430) (1,626,528) (1,642,958)
------- ---------- ----------
BALANCE, DECEMBER 31, 2000 $(84,110) $5,875,947 $5,791,837
Net income 14,376 1,423,238 1,437,614
Distributions (16,206) (1,604,429) (1,620,635)
------- ---------- ----------
BALANCE, DECEMBER 31, 2001 $(85,940) $5,694,756 $5,608,816
Net income 11,443 1,132,872 1,144,315
Distributions (16,100) (1,593,944) (1,610,044)
------- ---------- ----------
BALANCE, DECEMBER 31, 2002 $(90,597) $5,233,684 $5,143,087
======= ========== ==========
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, 2002
- --------------------------------------------------------------------------------
2002 2001 2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,144,315 $1,437,614 $1,344,349
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 557,427 538,528 538,528
Changes in assets and liabilities:
Receivable from general partners
Other assets 2,499 (44,361) (28,365)
Incentive management fee
payable to general partners (953) (1,608,358) 147,542
Property management fee payable (668,713) 161,993 156,405
Customer deposits and other
liabilities 16,094 (23,483) 58,134
----------- ----------- -----------
Net cash provided by operating
activities 1,050,699 461,933 2,216,593
CASH FLOWS FROM FINANCING ACTIVITIES -
Distributions to partners (1,610,044) (1,620,635) (1,638,784)
----------- ----------- ----------
NET (DECREASE)INCREASE IN CASH AND
CASH EQUIVALENTS (559,375) (1,158,702) 577,809
CASH AND CASH EQUIVALENTS,
AT BEGINNING OF YEAR 1,446,960 2,605,662 2,027,853
----------- ----------- ------------
CASH AND CASH EQUIVALENTS,
AT END OF YEAR $ 887,585 $ 1,446,960 $ 2,605,662
=========== =========== ============
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, 2002
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 contributions 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 from oper-
ations, defined as the entire amount of all receipts for the renting or
leasing of storage compartments and sale of locks.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents - The Partnership classifies its short-term
investments purchased with an original maturity of three months or less
as cash equivalents.
Property and Depreciation - Property is recorded at cost and is composed
mini-storage facilities. Depreciation is provided using the straight-line
method over an estimated useful life of twenty 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
basis of the Partnership's assets and liabilities for federal income tax
purposes and as reported for financial statement purposes is $5,945,413.
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 2002,
2001 and 2000).
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 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 market
value of the property. No impairment losses were recognized in 2002,
2001 or 2000.
Fair Value of Financial Instruments - The Partnership's financial
instruments consist primarily of cash, receivables, accounts payable and
accrued liabilities. The carrying values of all financial instruments
are representative of their fair values due to their short-term maturities.
Concentrations of Credit Risk - Financial instruments that potentially
subject the Partnership to concentrations of credit risk consist primarily
of cash equivalents and rent receivables. The Partnership places its cash
equivalents with high credit quality institutions.
Impact of Recent Accounting Pronouncements - In 2002, the Partnership
adopted the following pronouncements: Statement of Financial Accounting
Standards ("SFAS") No. 144, Accounting for Impairment or Disposal of Long-
Lived Assets, and SFAS No. 145, Rescission of FASB Statements No. 4, 44,
64, Amendment of FASB Statement No. 13, and Technical Corrections. The
adoption of these pronouncements did not have a material impact on the
Partnership's financial position or results of operations. The Partner-
ship believes the adoption of Financial Accounting Standards Board
Interpretation No. 46, Consolidation of Variable Interest Entities,
will have not have a material impact on the financial statements.
3. PROPERTY
The total cost of property and accumulated depreciation is as follows
as of December 31:
2002 2001
Land $ 2,089,882 $ 2,089,882
Buildings and improvements 10,840,285 10,840,285
----------- ------------
Total $12,930,167 $12,930,167
Accumulated depreciation (7,882,540) (7,325,113)
----------- -----------
Property, net $ 5,047,627 $ 5,605,054
=========== ===========
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 nine percent per annum of the Partnership
distributions made from cash available for distribution, calculated as
cash generated from operations less capital expenditures,and the payment
of such fee is subordinated to a cumulative return to the limited partners
of 8.1% of the offering proceeds.
As a result of the Special Distribution paid on December 15, 2001 to the
limited partners, they now have reached a cumulative return of 8.1% of
the offering proceeds. Consequently, in December 2001, the general
partners were paid accrued incentive management fees in the amount of
$1,754,214. This sum represents accumulated incentive management fees due
the general partners from inception of the Partnership through December 31
2001, which had not been paid previously.
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 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 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*$1,294,983 12/87 02/87 20 Yrs
Crestwood,Illinois None 205,960 1,631,179 3,211 205,960 1,634,390 1,840,350 1,231,192 12/87 04/87 20 Yrs
Grosebeck Highway
Warren, Michigan None 314,517 1,760,657 74,155 314,517 1,834,812 2,149,329 1,347,695 01/88 04/87 20 Yrs
Forestville, Maryland None 755,000 2,278,110 9,145 755,000 2,287,255 3,042,255 1,665,687 07/88 08/87 20 Yrs
Troy, Michigan None 536,606 3,152,736 210,590 536,606 3,363,326 3,899,932 2,342,983 06/88 06/88 20 Yrs
-------- ---------- ------- -------- ---------- ---------- ----------
$2,089,882 $10,537,865 $302,420 $2,089,882 $10,840,285 $12,930,167*$7,882,540
========== ========== ======== ========== ========== =========== ==========
Real Estate Accumulated
at Cost Depreciation
Balance, January 1, 2000 $12,930,167 $6,248,057
Additions 538,528
----------- ----------
Balance, December 31, 2000 $12,930,167 $6,786,585
Additions 538,528
----------- ----------
Balance, December 31, 2001 $12,930,167 $7,325,113
Additions 557,427
----------- ----------
Balance, December 31, 2002 $12,930,167 $7,882,540
=========== ==========
EXHIBIT 2
March 28, 2003
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,
2002 and 2001, 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, 2002
accompanied by an independent auditors' report. The Partnership owns five
mini-storage facilities including two in Warren, MI. The Partnership's proper-
ties 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, 2002 and December 31, 2001 were as follows:
Location of Property Average Occupancy Average Occupancy
Levels for the Levels for the
Year Ended Year Ended
Dec. 31, 2002 Dec. 31, 2001
Ryan Rd
Warren, MI 85% 88%
Crestwood,IL 83% 86%
Groesbeck Hwy
Warren, MI 82% 86%
Forestville, MD 88% 92%
Troy, MI 83% 87%
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, 2002 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
CERTIFICATIONS
I, Robert J. Conway, certify that:
1. I have reviewed this annual report on Form 10-K of DSI Realty Income
Fund X;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period cover-
ed by this annual report.
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its con-
solidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effec-
tiveness of the disclosure controls and procedures based on our evalu-
ation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors:
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to re-
cord, process, summarize and report financial data and have identified
for the registrant's auditors any material weaknesses in internal
controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's in-
ternal controls; and
6. The registrnat's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls sub-
sequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: February 3, 2003
Robert J. Conway
Chief Executive Officer
CERTIFICATIONS
I, Richard P. Conway, certify that:
1. I have reviewed this annual report on Form 10-K of DSI Realty Income
Fund X;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period cover-
ed by this annual report.
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its con-
solidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effec-
tiveness of the disclosure controls and procedures based on our evalu-
ation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors:
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to re-
cord, process, summarize and report financial data and have identified
for the registrant's auditors any material weaknesses in internal
controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's in-
ternal controls; and
6. The registrnat's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls sub-
sequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: February 3, 2003
Richard P. Conway
Vice President
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of DSI Realty Income Fund X (the
"Partnership") on Form 10-K for the period ending December 31, 2002 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Robert J. Conway, Chief Executive Officer of the Partnership, certify,
pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Partnership.
Robert J. Conway
Chief Executive Officer
February 3, 2003
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of DSI Realty Income Fund X (the
"Partnership") on Form 10-K for the period ending December 31, 2002 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Richard P. Conway, Chief Executive Officer of the Partnership, certify,
pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Partnership.
Richard P. Conway
Vice President
February 3, 2003