SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
/_x_/ Quarterly report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934.
For the quarterly period ended September 30, 2006
/___/ Transition report pursuant to Section 13 or 15(d) of the
Securities Act of 1934
for the transition period from ______________ to ________________.
Commission File Number 2-96364
DSI REALTY INCOME FUND IX, A California Limited Partnership
(Exact name of registrant as specified in its charter)
California_______________________________________33-0103989
(State or other jurisdiction of (I.R.S. Employer
incorporation) Identification No.)
6700 E. Pacific Coast Hwy., Long Beach, California 90803
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code-(562)493-8881
_________________________________________________________________
Former name, former address and former fiscal year, if changed
since last report.
Indicate by check mark whether the registrant (1) 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 90 days. Yes _x_. No__.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
DSI REALTY INCOME FUND IX
(A California Real Estate Limited Partnership)
CONSOLIDATED BALANCE SHEETS(UNAUDITED)
SEPTEMBER 30, 2006 AND DECEMBER 31, 2005
September 30, December 31,
2006 2005
ASSETS
CASH AND CASH EQUIVALENTS $ 688,245 $ 520,071
PROPERTY, NET 2,836,939 3,190,797
OTHER ASSETS 96,166 92,355
---------- ----------
TOTAL $3,621,350 $3,803,223
========== ==========
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Distribution to Partners $232,523 $232,468
Capital lease obligation 117,300 151,662
Other liabilities 317,619 345,200
-------- --------
Total liabilities 667,442 729,330
-------- --------
MINORITY INTEREST IN
REAL ESTATE JOINT VENTURE 183,530 182,223
-------- --------
PARTNERS' EQUITY (DEFICIT):
General Partners (109,737) (108,524)
Limited Partners 2,880,115 3,000,194
--------- ---------
Total partners' equity 2,770,378 2,891,670
--------- ---------
TOTAL $3,621,350 $3,803,223
========== ==========
See accompanying notes to consolidated financial statements(unaudited).
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
September 30, September 30,
2006 2005
REVENUES:
Rental $ 773,618 $ 736,887
---------- ----------
EXPENSES:
Operating 470,712 450,351
General and administrative 38,755 41,103
---------- ---------
Total expenses 509,467 491,454
---------- ---------
OPERATING INCOME 264,151 245,433
OTHER INCOME
Interest 49 48
---------- ---------
INCOME BEFORE MINORITY INTEREST
IN INCOME OF REAL ESTATE
JOINT VENTURE 264,200 245,481
MINORITY INTEREST IN INCOME
OF REAL ESTATE JOINT VENTURE (29,577) (30,634)
---------- ----------
NET INCOME $ 234,623 $ 214,847
========== ==========
AGGREGATE NET INCOME ALLOCATED TO:
Limited partners $ 232,277 $ 212,699
General partners 2,346 2,148
---------- ----------
TOTAL $ 234,623 $ 214,847
========== ==========
NET INCOME PER LIMITED
PARTNERSHIP UNIT $ 7.57 $ 6.93
========== ==========
LIMITED PARTNERSHIP UNITS
USED IN PER UNIT CALCULATION 30,693 30,693
====== ======
See accompanying notes to consolidated financial statements(unaudited).
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
September 30, September 30,
2006 2005
REVENUES
Rental $2,243,635 $2,059,112
---------- ----------
EXPENSES:
Operating 1,403,336 1,368,313
General and administrative 180,361 175,499
---------- ----------
Total expenses 1,583,697 1,543,812
---------- ----------
OPERATING INCOME 659,938 515,300
OTHER INCOME
Interest 145 241
---------- ----------
INTEREST BEFORE MINORITY
INTEREST IN INCOME OF REAL
ESTATE JOINT VENTURE 660,083 515,541
MINORITY INTEREST IN INCOME
OF REAL ESTATE JOINT VENTURE (83,807) (82,758)
--------- ---------
NET INCOME $ 576,276 $ 432,783
========= =========
AGGREGATE NET INCOME ALLOCATED TO:
Limited Partners $ 570,513 $ 428,455
General Partners 5,763 4,328
--------- ---------
TOTAL $ 576,276 $ 432,783
========= =========
NET INCOME PER LIMITED
PARTNERSHIP UNIT $ 18.59 $ 13.96
========= =========
LIMITED PARTNERSHIP UNITS
USED IN PER UNIT CALCULATION 30,693 30,693
====== ======
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIT)(UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006
GENERAL LIMITED
PARTNERS PARTNERS TOTAL
BALANCE AT JANUARY 1, 2006 ($108,524) $3,000,194 $2,891,670
NET INCOME 5,763 570,513 576,276
DISTRIBUTIONS (6,976) (690,592) (697,568)
--------- ---------- ----------
BALANCE AT SEPTEMBER 30, 2006 ($109,737) $2,880,115 $2,770,378
========= ========== ==========
See accompanying notes to consolidated financial statements(unaudited).
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
September 30, September 30,
2006 2005
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 576,276 $ 432,783
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 353,858 345,130
Minority interest in income
real estate joint venture 83,807 82,758
Changes in assets and
liabilities:
Increase in other assets (3,811) (11,878)
Decrease in other liabilities (27,581) (75,320)
-------- ---------
Net cash provided by
operating activities 982,549 773,473
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners (697,513) (697,568)
Distributions paid to minority
interest in real estate
joint venture (82,500) (80,400)
Payments on capital
lease obligations (34,362)
-------- ---------
Net cash used in
financing activities (814,375) (777,968)
-------- ---------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 168,174 (4,495)
CASH AND CASH EQUIVALENTS:
At beginning of period 520,071 486,736
--------- ---------
At end of period $ 688,245 $ 482,241
========= =========
See accompanying notes to consolidated financial statements(unaudited).
DSI REALTY INCOME FUND IX
(A California Real Estate Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. GENERAL
DSI Realty Income Fund IX (the "Partnership"), a limited partnership, has
three general partners (DSI Properties, Inc., Robert J. Conway and
Joseph W. Conway) and limited partners owning 30,693 limited partnership
units.
The Partnership has acquired five mini-storage facilities located in
Monterey Park and Azusa, California; Everett, Washington; and Romeoville
and Elgin, Illinois. The Partnership has 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 Partnership
is a general partner in the joint venture. The facilities were acquired
from Dahn Corporation ("Dahn"). Dahn is not affiliated with the Partner-
ship. 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.
The accompanying consolidated financial information is unaudited. Such
financial information includes all adjustments which are considered
necessary by the Partnership's management for a fair presentation of the
results for the periods indicated.
2. PROPERTY
Properties owned by the Partnership are all mini-storage facilities.
Depreciation is calculated using the straight line method over the estimated
useful life of 20 years. The total cost of property and accumulated
depreciation is as follows:
September 30, December 31,
2006 2005
Land $ 2,729,790 $ 2,729,790
Buildings and equipment 11,110,430 11,110,430
Rental trucks
under capital lease 210,138 210,138
------------ ------------
Total 14,050,358 14,050,358
Less: Accumulated Depreciation (11,213,419) (10,859,561)
------------ ------------
Property - Net $ 2,836,939 $ 3,190,797
============ ============
3. NET INCOME PER LIMITED PARTNERSHIP UNIT
Net income per limited partnership unit is calculated by dividing the
net income allocated to the limited partners by the number of limited
partnership units outstanding during the period.
4. ALLOCATION OF PROFITS AND LOSSES AND GENERAL PARTNERS' INCENTIVE
MANAGEMENT FEE
Under the Agreement of limited Partnership, the general partners are to
be allocated 1% of the net profits or losses from operations, and the
limited partners are to be allocated the balance of the net profits or
losses from operations in proportion to their limited partnership
interests.
The General Partners are also entitled to receive a percentage, based on
a predetermined formula, of any cash distribution from the sale, other
disposition or refinancing of the project.
In addition, the General Partners are entitled to receive an incentive
management fee for supervising the operations of the Partnership. The
fee is to be paid in an amount equal to 9% per annum of the cash available
for distribution on a cumulative basis, calculated as cash generated from
operations less capital expenditures.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
We are pleased to enclose the Partnership's unaudited consolidated financial
statements for the period ended September 30, 2006. The following is
Management's discussion and analysis of the Partnership's financial
condition and results of its operations.
For the three-month periods ended September 30, 2006 and 2005, total revenues
increased 5.0% from $736,887 to $773,618 and total expenses increased 3.7%
from $491,454 to $509,467 and other income increased from $48 to $49. Minor-
ity interest in income of real estate joint venture decreased 3.5% from
$30,634 to $29,577. As a result, net income increased 9.2% from $214,847
to $234,623 for the three-month period period ended September 30, 2006, as
compared to the same period in 2005. Rental revenue increased as a result
of higher unit rental rates. Occupancy levels for the Partnership's six
mini-storage facilities averaged 80.7% for the three-month period ended
September 30, 2006 as compared to 79.3% for the same period in 2005. The
Partnership is continuing its marketing efforts to attract and keep new
tenants in its various mini-storage facilities. Operating expenses increased
approximately $20,400 (4.5%) due primarily to an increase in maintenance and
repair, legal, salaries and wages, workers compensation insurance and bank
and credit card fee expenses, partially offset by decreases in advertising,
office supplies, travel and truck maintenance expenses. Property management
fees, which are based on rental revenue, increased as a result of the increase
in rental revenue. General and administrative decreased approximately $2,300
(5.6%) as a result of relatively insignificant fluctuations in various expense
accounts. Minority interest in income of real estate joint venture remained
constant.
For the nine-month periods ended September 30, 2006 and 2005, total revenues
increased 9.0% from $2,059,112 to $2,243,635 and total expenses increased
2.6% from $1,543,812 to $1,583,697 and other income decreased from $241 to
$145. Minority interest in income of real estate joint venture increased
1.3% from $82,758 to $83,807. As a result, net income increased 33.2% from
$432,783 to $576,276 for the nine-month period ended September 30, 2006, as
compared to the same period in 2005. Rental revenue increased as a result
of higher occupancy and unit rental rates. Operating expenses increased
approximately $35,000 (2.6%) due primarily to increases in maintenance and
repair, legal, property management fees, real estate tax, salaries and wages,
depreciation and bank and credit card fee expenses, partially offset by a
decrease in advertising, purchase of locks and packing materials and office
supplies, travel and truck maintenance expenses. General and administrative
expenses increased approximately $4,900 (2.8%) primarily as a result of an
increase in legal and professional and office expenses, partially offset by
a decrease in equipment and computer lease expense. Minority interest in
income of real estate joint venture remained constant.
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. The General Partners anticipate distributions to the Limited
Partners to remain at the current level for the foreseeable future.
Item 3. Quantative and Qualitative Disclosures About Market Risk
NONE
Item 4. CONTROLS AND PROCEDURES
The Partnership evaluated the effectiveness of its disclosure controls and
procedures. This evaluation 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 information required to be disclosed by the Partnership in 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 inform-
ation 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.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Registrant is not a party to any material pending legal proceedings.
Item 1A. Risk Factors
Please refer to the risk factors disclosed by the partnership in
response to Item 1A, part I of the Form 10-K filed on March 27,
2006. There has been no material change to the risk factors
disclosed therein.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
NONE
Item 3. Defaults Upon Senior Securities
NONE
Item 4. Submission of Matters to a Vote of Security Holders
NONE
Item 5. Other Information
NONE
Item 6. Exhibits and Reports on Form 8K.
(a) Attached hereto as Exhibit "20" is Registrant's Quarterly
Report to Limited Partners for the period ended September 30, 2006.
(b) Registrant did not file any reports on Form 8-K for the
period reported upon.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Dated: October 31, 2006 DSI REALTY INCOME FUND IX
A California Limited Partnership
(Registrant)
By____\s\ Robert J. Conway_____
DSI Properties, Inc., as General
Partner by ROBERT J. CONWAY,
President and Chief Financial Officer
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Dated: October 31, 2006 DSI REALTY INCOME FUND IX
A California Limited Partnership
(Registrant)
By__\s\ Robert J. Conway________
DSI Properties, Inc., as General
Partner by ROBERT J. CONWAY,
President and Chief Financial Officer
CERTIFICATIONS
I, Robert J. Conway, certify that:
1. I have reviewed this quarterly report on Form 10-Q of DSI Realty Income
Fund IX;
2. Based on my knowledge, this quarterly 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 quarterly report.
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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
quarterly 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-15e and 15d-15e) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our super-
vision, to ensure that material information relating to the registrant,
including its consolidated 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 and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures as of the end
of the period covered by this report based on such evaluation; and
c) disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of our annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation of internal control over financial reporting,
to the registrant's auditors and general partners (or persons performing
the equivalent functions):
a) all significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to affect the registrant's ability to record, pro-
cess, summarize and report financial information; 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 over financial reporting.
Date: October 31, 2006
Robert J. Conway
Chief Executive Officer
CERTIFICATIONS
I, Richard P. Conway, certify that:
1. I have reviewed this quarterly report on Form 10-Q of DSI Realty Income
Fund IX;
2. Based on my knowledge, this quarterly 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 quarterly report.
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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
quarterly 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-15e and 15d-15e) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our super-
vision, to ensure that material information relating to the registrant,
including its consolidated 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 and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures as of the end
of the period covered by this report based on such evaluation; and
c) disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of our annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation of internal control over financial reporting,
to the registrant's auditors and general partners (or persons performing
the equivalent functions):
a) all significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to affect the registrant's ability to record, pro-
cess, summarize and report financial information; 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 over financial reporting.
Date: October 31, 2006
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 Quarterly Report of DSI Realty Income Fund IX (the
"Partnership") on Form 10-Q for the period ending September 30, 2006 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
October 31, 2006
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 Quarterly Report of DSI Realty Income Fund IX (the
"Partnership") on Form 10-Q for the period ending September 30, 2006 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Richard P. Conway, Vice President of the Corporate General Partner, 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
October 31, 2006