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, 2006.
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,
2006, incorporated by reference to Form 10-K, Part II.
Item 11. Registrant's Financial Statements for its fiscal year ended December
31, 2006, 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, 2006, 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, 2006 and 2005 were as follows:
Location of Property Average Occupancy Average Occupancy
Level for the Level for the
Year Ended Year Ended
Dec. 31, 2006 Dec. 31, 2005
Ryan Road
Warren, MI 77% 79%
Crestwood, IL 83% 82%
Groesbeck Hwy
Warren, MI 78% 75%
Forestville, MD 74% 70%
Troy, MI 79% 72%
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 1a. RISK FACTORS
Some Potential Losses Are Not Covered By Insurance.
We carry comprehensive liability, fire, extended coverage and rental loss
insurance on all of our Properties. We believe the policy specifications and
insured limits of these policies are adequate and appropriate. There are,
however, types of losses, such as lease and other contract claims and acts of
war that generally are not insured. We cannot be assured that we will be able
to renew insurance coverage upon expiration of our policies in an adequate
amount or at reasonable prices. In addition, insurance companies may no longer
offer coverage against certain types of losses, such as losses due to terrorist
acts and mold or, if offered, these types of insurance may be prohibitively
expensive. Should uninsured loss or a loss in excess from insured limits
occur, we could lose all or a portion of the capital we have invested in a
Property, as well as the anticipated future revenue from the Property. In
such an event, we might nevertheless remain obligated for any mortgage debt
or other financial obligations related to the Property. We cannot be assured
that material losses in excess of insurance proceeds will not occur in the
future. If any of our Properties were to experience catastrophic loss, it
could seriously disrupt our operations, delay revenue and result in large
expenses to repair or rebuild the Property. Such events could adversely
affect our cash flow and ability to make distributions to shareholders.
Because real estate is illiquid, we may not be able to sell Properties when
appropriate.
Real estate investments generally, mini-storage facilities like those that we
own, in particular, often cannot be sold quickly. Consequently, we may not be
able to sell Properties when appropriate. This could adversely affect our cash
flow and ability to make distributions.
Our operating costs might rise, which might reduce our profitability and have
an adverse affect on our cash flow and our ability to make distributions to
shareholders.
We might face higher operating expenses as a result of rising costs generally,
and in particular as a result of increased costs following a terrorist attack
or other catastrophic event. For example, it might cost more in the future
for security, property/casualty and liability insurance, and property mainten-
ance. As noted above, when our insurance policies expire, the cost of premiums
for comparable coverage might be significantly higher after such an event when
it is time to renew our coverage, which could then increase our operating
expenses and reduce or profitability and our cash flow. Because of rising
costs in general, we might experience increases in our property maintenance
costs, such as for cleaning and electricity. If operating expenses increase
dramatically, the availability of other comparable mini-storage facilities in
our specific geographic markets might limit our ability to increase rents,
which could reduce our profitability (if operating expenses increase without a
corresponding increase in revenues) and limit our ability to make distributions.
We face significant competition.
We compete with numerous other owners of mini-storage facilities for tenants.
Some of these competitors have significantly greater financial resources than
we do. Such competition may reduce our ability to attract and keep and retain
tenants, and may increase vacancies, which increases may lower rental rates.
In addition, some of our competitors may be willing, because their properties
may have vacancy rates higher than those for our properties, to make space
available at lower prices than the space in our properties. We cannot be
assured that this competition will not adversely affect our cash flow and
ability to make distributions.
Our ability to make distributions is subject to various risks.
We have been paying quarterly distributions since inception. Our ability to
make distributions in the future will depend upon:
- Financial performance of our Property;
- The absence of significant expenditures relating to environmental
and regulator matters; and
- Our ability to attract and maintain tenants.
Certain of these matters are beyond our control and any significant difference
between our expectations and actual results could have a material adverse
affect on our cash flow and our ability to make distributions.
Changes in the law may adversely affect our cash flow.
The Properties are subject to various regulatory requirements, such as those
relating to the environment, fire and safety. Our failure to comply with
these requirements could result in the imposition of fines and damage awards.
Additionally, the cost to comply with any new or different regulation could
adversely affect our cash flow and our ability to make distributions. While
we believe that the Properties are currently in material compliance with all
such requirements, we cannot be assured that these requirements will not change
our that newly imposed requirements will not require significant unanticipated
expenditures.
Should we incur long-term indebtedness, it will subject us to additional risks.
Like other real estate companies, should we incur indebtedness on our proper-
ties, we will be subject to risks normally associated with debt financing,
such as the insufficiency of cash flow to meet required debt service payment
obligations and the inability to refinance existing indebtedness. If such
debt cannot be paid, refinanced or extended at maturity, in addition to our
failure to repay our debt, we may not be able to make distributions at expected
levels or at all. Furthermore, an increase in interest expense could adversely
affect our cash flow and ability to make distributions to Limited Partners.
If we should not meet our debt service obligations, any Properties securing
such indebtedness could be foreclosed on, which would have a material adverse
affect on our cash flow and ability to make distributions and, depending on
the number of Properties foreclosed on, could threaten our continued viability.
Our organizational documents do not contain any limitation on our ability to
incur debt secured by our Properties. Accordingly, we could place financing
on our Properties almost without restriction. If we were to take such action,
the debt service could adversely affect our cash flow and ability to make dis-
tributions and would include the risk of default on such indebtedness. There
are no plans to incur any long-term indebtedness on any of the Partnership's
Properties.
Environmental problems at the Properties are possible and may be costly.
Federal, state and local laws, ordinances and regulations may require a current
or previous owner or operator of real estate to investigate and clean up hazard-
ous or toxic substances or releases at such property. The owner or operator
may be forced to pay for property damage and for investigation and clean up
costs incurred by others in connection with environmental contamination. Such
laws typically impose clean-up responsibility and liability without regard to
whether the owner or operator knew of or caused the presence of contaminates.
Even if more than one person may have been responsible for the contamination,
each person covered by the environmental laws may be held responsible for all
the clean-up costs incurred. In addition, third parties may sue the owner or
operator of a site for damages and costs resulting from environmental contamin-
ation emanating from that site. These costs may be substantial and the presence
of such substances may adversely affect the owner's ability to sell or rent
such property or to borrow using such property as collateral.
Environmental laws that govern the presence, maintenance and removal of asbestos
require that owners or operators of buildings containing asbestos properly
manage and maintain the asbestos, notifying and train those who may come into
contact with asbestos and undertake special precautions, including removal or
other abatement, if asbestos would be disturbed during renovation or demolition
of a building. Such laws may impose fines and penalties on building owners or
operators who fail to comply with these requirements and may allow third parties
to seek recovery from owners or operators for personal injury associated with
exposure to asbestos fibers.
To the best of our knowledge, asbestos was not used in the construction of any
of the Properties. Tenants of the Partnership's mini-storage facilities are
prohibited from storing hazardous or toxic substances or from even bringing
hazardous or toxic substances onto the property. To the best knowledge of the
General Partners, there are no instances of storage or release of hazardous or
toxic substances at any of the Partnership's Properties. However, there can
be no guaranty that one or more tenants did not actually store such materials
or cause releases at any of the Partnership's Properties. If these conditions
should occur, we may need to undertake a target remediation program which could
become costly and could necessitate the temporary location of some or all of
the Properties' tenants or require rehabilitation of the affected property.
Americans With Disabilities Act compliance can be costly.
Under the Americans With Disabilities Act of 1990 ("ADA"), all public accom-
modations and commercial facilities, must meet certain Federal requirements
related to access and use by disabled persons. Compliance with the ADA re-
quirements could involve removal of structural barriers from certain disabled
persons' entrances, which could adversely affect our financial condition, and
results of operations. Other Federal, state or local laws may require modifi-
cations to or restrict further renovations of our Properties with respect to
such accesses. Although we believe that our Properties are currently in
material compliance with present requirements, non-compliance with the ADA or
similar or related laws or regulations could result in the United States govern-
ment imposing fines or private litigants being awarded damages against us. In
addition, we do not know whether existing requirements will change or whether
compliance with future requirements will require significant unanticipated
expenditures. Such costs may adversely affect our cash flow and ability to
make distributions.
Partnership's status as a limited partnership is dependent on compliance with
Federal income tax requirements.
Failure of the Partnership to be treated as a limited partnership would have
serious adverse consequences to holders of our Units. If the IRS were to
successfully challenge the tax status of the Partnership for Federal income
tax purposes, the Partnership would be treatable as a corporation. In such
event, the imposition of a corporate tax on the Partnership would reduce the
amount of cash available for distribution from such Partnership to the Limited
Partners. We do not anticipate such a challenge.
We are dependent upon our key personnel whose continued service is not guar-
anteed. We are dependent upon our independent property manager for experience
in managing mini-storage facilities. While we believe we could find replace-
ments for these key personnel, loss of their services could adversely affect
our operations.
Item 1b. UNRESOLVED STAFF COMMENTS
None.
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, 2006 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 943 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 $10.11 per Limited Partnership Unit were
declared and paid each quarter for the year ended December 31, 2006 and $10.30
per Limited Partnership Unit were declared and paid each quarter for the year
ended December 31, 2005 and $10.94 per Limited Partnership Unit were declared
and paid each quarter for the year ended December 31, 2004 and $10.96.
Item 6. SELECTED FINANCIAL DATA
FIVE YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------
2006 2005 2004 2003 2002
---- ---- ---- ---- ----
TOTAL REVENUES
AND OTHER
INCOME $2,760,191 $2,588,756 $2,678,680 $2,837,397 $3,076,030
TOTAL
EXPENSES 2,125,889 2,109,687 1,890,156 1,960,287 1,931,715
---------- ----------- ----------- ----------- -----------
NET
INCOME $ 634,302 $ 479,069 $ 788,524 $ 877,110 $1,144,315
========== =========== =========== =========== ===========
TOTAL
ASSETS $3,763,298 $4,288,375 $5,091,426 $5,557,881 $6,074,744
========== =========== =========== =========== ===========
CASH FLOW FROM (USED IN):
OPERATING $1,283,835 $1,160,892 $1,374,708 $1,448,782 $1,050,669
INVESTING (6,793) (14,061) (10,032) (7,302) -
FINANCING (1,332,872) (1,359,511) (1,415,919) (1,407,500)(1,610,044)
NET INCOME
PER LIMITED
PARTNERSHIP
UNIT $ 19.76 $ 14.92 $ 24.56 $ 27.32 $ 35.64
========== =========== =========== =========== ===========
CASH
DISTRIBUTIONS
PER LIMITED
PARTNERSHIP
UNIT $ 40.44 $ 41.33 $ 43.75 $ 43.84 $ 50.15
========== =========== =========== =========== ===========
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Critical Accounting Policies
Revenue recognition - 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.
RESULTS OF OPERATIONS
2006 COMPARED TO 2005
Total revenues increased from $2,586,824 in 2005 to $2,759,332 in 2006, total
expenses increased from $2,109,687 to $2,125,889 and other income decreased
from $1,932 to $859, resulting in an increase in net income from $479,069
to $634,302. The 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 78.3% for the year ended December 31, 2006,
compared to 75.6% for the year ended December 31, 2005. The Partnership
continued its advertising campaign to attract and keep new tenants in its
various mini-storage facilities. Operating expenses increased approximately
$10,600 (1.1%) primarily as a result of increases in repairs and maintenance
and salaries and wages expenses, partially offset by decreases in advertising,
real estate tax and power and sweeping expenses. General and administrative
expenses increased approximately $29,200 (11.2%) as a result of increases in
legal and professional and a bank and credit card fee expenses, partially off-
set by a decrease in office supplies and printing expenses. The General
Partners incentive management fee, which is based on cash distributions to
Limited Partners, decreased as a result of a decrease in these distributions.
Property management fees, which are computed as a percentage of rental revenue,
increased as a result of the increase in rental revenue.
2005 COMPARED TO 2004
Total revenues decreased from $2,676,266 in 2004 to $2,586,824 in 2005,
total expenses increased from $1,890,156 to $2,109,687 and other income de-
creased from $2,414 to $1,932, resulting in a decrease in net income from
$788,524 to $479,069. The approximate $89,400 (3.3%) 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 75.6%
for the year ended December 31, 2005, compared to 77.6% for the year ended
December 31, 2004. The Partnership continued its advertising campaign to
attract and keep new tenants in its various mini-storage facilities. Operating
expenses increased approximately $120,100 (13.8%) primarily as result of
increases in advertising, purchase of locks and packing material, real estate
taxes, salaries and wages, truck insurance and maintenance and power and
sweeping expenses. General and administrative expenses increased approximately
$60,200 (30.1%) as a result of increases in legal and professional fees,
equipment and computer lease expenses and office supplies and printing expenses.
The General Partners' incentive management fee, which is based on cash distri-
butions to Limited Partners, decreased as a result of a decrease in these
distributions. Property management fees, which are computed as a percentage
of rental revenue, decreased as a result of the decrease in rental revenue.
decreased as a result of the decrease in rental revenue.
Operating expenses consists mainly of expenses such as yellow pages and other
advertising, utilities, repairs and maintenance, real estate taxes, salaries
and wages and their related expenses. General and administrative expenses
consist mainly of expenses such as legal and professional, office supplies,
postage, accounting services and computer expenses.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities increased approximately $122,900
(10.6%) in 2006 compared to 2005 primarily as a result of the increase in
net income before depreciation, increases in incentive management fee payable
to general partners and customer deposits and other liabilities, partially
offset by an increase in other assets. Net cash provided by operating
activities decreased approximately $213,800 (15.6%) in 2005 compared to 2004
primarily as a result of the decrease in net income before depreciation,
partially offset by increases in incentive management fee payable to general
partners and customer deposits and other liabilities.
Cash used in investing activities, as set forth in the statements of cash
flows, consists of acquisitions of property for the Partnership's mini-storage
facilities in 2006, 2005 and 2004. The Partnership has no material commitments
for capital expenditures.
Cash used in financing activities, as set forth in the statements of cash
flows, consists solely of cash distributions to partners in 2006, 2005 and
2004 and payments on capital lease obligations starting in 2004. A special
distributions of 0.5% of capital contributed by Limited Partners were declared
and paid on December 15, 2004.
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, 2006 and
2005 was as follows:
2006 Quarter Ended
------------------
March 31 June 30 September 30 December 31
Total revenues $639,310 $673,280 $708,222 $738,520
Net income 75,496 128,861 152,619 277,326
Net income per limited
partnership unit $ 2.35 $ 4.01 $ 4.75 $ 8.65
Weighted average
number of limited
partnership units
outstanding 31,783 31,783 31,783 31,783
2005 Quarter Ended
------------------
March 31 June 30 September 30 December 31
Total revenues $650,132 $640,897 $645,997 $649,798
Net income 144,707 107,419 149,058 77,885
Net income per limited
partnership unit $ 4.51 $ 3.35 $ 4.64 $ 2.42
Weighted average
number of limited
partnership units
outstanding 31,783 31,783 31,783 31,783
Item 7a. QUANTITATIVE & QUALITATIVE DISCLOSURES ABOUT MARKET RISK
None.
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. See the financial statements.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
Item 9a. 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
Parnership 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 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.
Item 9b. Other Information
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, 2005, 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 73 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 78 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 84 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, 2006, 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, 2006, 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, 2006, attached hereto as Exhibit l and incorporated herein by this
reference.
Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees
The aggregate fees for professional services rendered by Deloitte & Touche
LLP for the audit of the Partnership's annual financial statements and for re-
view of the financial statements included in the Partnership's Quarterly Reports
on Form 10-Q for 2005 were $31,240 and for $29,640.
Tax Fees
The aggregate fees for professional services rendered by Deloitte Tax
LLP for tax compliance, tax advice and tax planning for 2006 were $20,713
and 2005 were $17,600. Most of the fees related to preparation of the Part-
nership's tax returns.
PART IV
Item 15. 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, 2006, 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, 2006. (b) No reports on
Form 8K were filed during the fiscal year ended December 31, 2006.
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 30, 2007
ROBERT J. CONWAY, President
(Chief Executive Officer, Chief
Financial Officer, and Director)
Joseph W. Conway
By____________________________ Dated: March 30, 2007
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 30, 2007
ROBERT J. CONWAY, President,
Chief Executive Officer, Chief
Financial Officer, and Director
Joseph W. Conway
By___________________________ Dated: March 30, 2007
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, 2006, 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,
-------------------------------------------------------------------
2006 2005 2004 2003 2002
---- ---- ---- ---- ----
TOTAL REVENUES
AND OTHER
INCOME $2,760,191 $2,588,756 $2,678,680 $2,837,397 $3,076,030
TOTAL
EXPENSES 2,125,889 2,109,687 1,890,156 1,960,287 1,931,715
---------- ----------- ----------- ----------- -----------
NET
INCOME $ 634,302 $ 479,069 $ 788,524 $ 877,110 $1,144,315
========== =========== =========== =========== ===========
TOTAL
ASSETS $3,763,298 $4,288,375 $5,091,426 $5,557,881 $6,074,744
========== =========== =========== =========== ===========
CASH FLOW FROM (USED IN):
OPERATING $1,283,835 $1,160,892 $1,374,708 $1,448,782 $1,050,669
INVESTING (6,793) (14,061) (10,032) (7,302) -
FINANCING (1,332,872) (1,359,511) (1,415,919) (1,407,500)(1,610,044)
NET INCOME
PER LIMITED
PARTNERSHIP
UNIT $ 19.76 $ 14.92 $ 24.56 $ 27.32 $ 35.64
========== =========== =========== =========== ===========
CASH
DISTRIBUTIONS
PER LIMITED
PARTNERSHIP
UNIT $ 40.44 $ 41.33 $ 43.75 $ 43.84 $ 50.15
========== =========== =========== =========== ===========
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, 2006:
Net Partners'
Income Equity
Per financial statements $ 634,302 $ 2,488,934
Excess book depreciation 218,857 3,564,751
Capitalization of syndication costs 1,694,248
Property acquisition costs 1,146,935
Deferred rental revenues (11,062) 44,138
Accrued expenses (13,400) 13,600
Fixed asset adjustments (34,614) (78,471)
Excess book distributions 321,041
Tax expense adjustment (14,089)
Gain on sale of land 2,272
Bad debt allowance 29,935
----------- -----------
Per Partnership income tax return $ 809,929 $ 9,227,388
=========== ===========
Net taxable income per limited
partnership unit $ 25.23
===========
DSI REALTY INCOME FUND X
(A California Real Estate Limited Partnership)
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
Page
FINANCIAL STATEMENTS:
Report of Independent Registered Public Accounting Firm F-1
Balance Sheets as of December 31, 2006 and 2005 F-2
Statements of Income for Each of the Three
Years Ended December 31, 2006 F-3
Statements of Changes in Partners' Equity (Deficit) for
Each of the Three Years Ended December 31, 2006 F-4
Statements of Cash Flows for Each of the Three Years
Ended December 31, 2006 F-5
Notes to Financial Statements as of December 31, 2006
and 2005, and for Each of the Three Years Ended
December 31, 2006 F-6
SUPPLEMENTAL SCHEDULE:
Schedule III - Real Estate and Accumulated Depreciation F-10
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.
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
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, 2006
and 2005, 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, 2006. Our audits also included the supplemental schedule listed
in the Index at Item 15. These financial statements and the supplemental
schedule are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on the financial statements and
supplemental schedule based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. The Partnership
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration
of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Partnership's
internal control over financial reporting. Accordingly we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the account-
ing principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of DSI Realty Income Fund X at December 31,
2006 and 2005, and the results of its operations and its cash flows for each
of the three years in the period ended December 31, 2006, in conformity
with accounting principles generally accepted in the United States of America.
Also, in our opinion, such supplemental schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
Deloitte & Touche LLP
Los Angeles, California
March 30, 2007
DSI REALTY INCOME FUND X
(A California Real Estate Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 2006 AND 2005
- --------------------------------------------------------------------------------
ASSETS 2006 2005
CASH AND CASH EQUIVALENTS $ 601,812 $ 657,642
PROPERTY, net (Note 3) 2,934,830 3,508,877
OTHER ASSETS 226,656 121,856
----------- -----------
TOTAL $ 3,763,298 $ 4,288,375
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES:
Distribution due partners (Note 4) $ 321,041 $ 321,041
Incentive management fee payable to
general partners (Note 4) 178,208 62,632
Property management fees payable (Note 6) 409,337 408,719
Customer deposits and other liabilities 286,645 229,346
Capital lease obligations (Note 3) 79,133 113,747
----------- -----------
Total liabilities 1,274,364 1,135,485
----------- -----------
PARTNERS' EQUITY (DEFICIT)(Note 4):
General partners (117,138) (110,498)
Limited partners (31,783 limited
partnership units outstanding
at December 31, 2006 and 2005) 2,606,072 3,263,388
------------ -----------
Total partners' equity 2,488,934 3,152,890
------------ -----------
TOTAL $ 3,763,298 $ 4,288,375
============ ===========
See notes to financial statements.
DSI REALTY INCOME FUND X
(A California Real Estate Limited Partnership)
STATEMENTS OF INCOME
THREE YEARS ENDED DECEMBER 31, 2006
- --------------------------------------------------------------------------------
2006 2005 2004
REVENUES:
Rental $2,759,332 $2,586,824 $2,676,266
---------- ---------- ----------
EXPENSES:
Depreciation 580,840 605,188 561,252
Interest 5,886 7,893 -
Operating 998,531 987,910 867,829
General and administrative 289,479 260,304 200,076
General partners' incentive
management fee (Note 4) 115,576 119,048 126,421
Property management 135,577 129,344 134,578
---------- ---------- ----------
Total expenses 2,125,889 2,109,687 1,890,156
---------- ---------- ----------
OPERATING INCOME 633,443 477,137 786,110
OTHER INCOME -
Interest income 859 1,932 2,414
---------- ---------- ----------
NET INCOME $ 634,302 $ 479,069 $ 788,524
========== ========== ==========
AGGREGATE NET INCOME ALLOCATED
TO (Note 4):
Limited partners $ 627,959 $ 474,278 $ 780,639
General partners 6,343 4,791 7,885
---------- ---------- ----------
TOTAL $ 634,302 $ 479,069 $ 788,524
========== ========== ==========
NET INCOME PER LIMITED PARTNERSHIP
UNIT (Notes 2 and 4) $ 19.76 $ 14.92 $ 24.56
========== ========== ==========
See notes to financial statements.
DSI REALTY INCOME FUND X
(A California Real Estate Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIT)
THREE YEARS ENDED DECEMBER 31, 2006
- --------------------------------------------------------------------------------
General Limited
Partners Partners Total
BALANCE, JANUARY 1, 2004 $ (95,901) $4,708,598 $4,612,697
Net income 7,885 780,639 788,524
Distributions (14,046) (1,390,623) (1,404,669)
------- ---------- ----------
BALANCE, DECEMBER 31, 2004 (102,062) 4,098,614 3,996,552
Net income 4,791 474,278 479,069
Distributions (13,227) (1,309,504) (1,322,731)
------- ---------- ----------
BALANCE, DECEMBER 31, 2005 (110,498) 3,263,388 3,152,890
Net income 6,343 627,959 634,302
Distributions (12,983) (1,285,275) (1,298,258)
------- ---------- ----------
BALANCE, DECEMBER 31, 2006 $(117,138) $2,606,072 $2,488,934
======= ========== ==========
See notes to financial statements.
DSI REALTY INCOME FUND X
(A California Real Estate Limited Partnership)
STATEMENTS OF CASH FLOWS
THREE YEARS ENDED DECEMBER 31, 2006
- --------------------------------------------------------------------------------
2006 2005 2004
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 634,302 $ 479,069 $ 788,524
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 580,840 605,188 561,252
Changes in assets and liabilities:
Other assets (104,800) (756) 21,596
Incentive management fee
payable to general partners 115,576 60,510 (254)
Property management fee payable 618 (160) (331)
Customer deposits and other
liabilities 57,299 17,041 3,921
----------- ----------- -----------
Net cash provided by operating
activities 1,283,835 1,160,892 1,374,708
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES -
Additions to property (6,793) (14,061) (10,032)
----------- ----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners (1,298,258) (1,326,904) (1,404,669)
Payments on capital lease obligations (34,614) (32,607) (11,250)
----------- ----------- ----------
Net cash used in
financing activities (1,332,872) (1,359,511) (1,415,919)
----------- ----------- -----------
NET DECREASE IN CASH AND
CASH EQUIVALENTS (55,830) (212,680) (51,243)
CASH AND CASH EQUIVALENTS,
AT BEGINNING OF YEAR 657,642 870,322 921,565
----------- ----------- ------------
CASH AND CASH EQUIVALENTS,
AT END OF YEAR $ 601,812 $ 657,642 $ 870,322
=========== =========== ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION - Cash paid for interest $ 5,886 $ 7,893 $ -
=========== =========== ============
NON CASH INVESTING ACTIVITIES:
Acquisition of trucks utilizing
capital leases $ - $ - $ 157,604
=========== =========== ============
Distribution due partners
included in partners' equity $ 321,041 $ 321,041 $ 325,214
=========== =========== ============
See notes to financial statements.
DSI REALTY INCOME FUND X
(A California Real Estate Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2006 AND 2005,
AND FOR EACH OF THE THREE YEARS
ENDED DECEMBER 31, 2006
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 (Note 6).
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 of
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. Property
under capital leases is amortized over the lives of the respective leases
or the estimated useful lives of the assets.
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 for the year
ended December 31, 2006 is $175,627.
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.
Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires the Partnership's management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
Impairment of Long-Lived Assets - The Partnership regularly reviews
long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of the asset may not
be recoverable. If the sum of the expected undiscounted future cash
flows 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 recog-
nized in 2006, 2005 or 2004.
Fair Value of Financial Instruments - For all Financial instruments,
inclueing cash and cash equivalents, other assets, distributions due
partners, incentive management fee payable to general partners, property
management fee payable, customer deposits and other liabilities, carry-
ing values approximate fair values because of the short maturity of
those instruments. The carrying value of the capital lease obligations
approximates fair value because the terms of the instrument are similar
to terms available to the Partnership for similar types of leasing
agreements.
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.
Recent Accounting Pronouncement - In September 2006, the Financial Account-
ing Standards Board issued Statement of Financial Accounting Standards
("SFAS") No. 157, "Fair Value Measurements." SFAS No. 157 defines fair
value, establishes a framework for measuring fair value and expands
disclosures about fair value measurements. The Partnership is required
to adopt SFAS No. 157 for fiscal year 2008 and does not expect its adop-
tion to have a material effect on the Partnership's results of operations
or financial condition.
3. PROPERTY
The total cost of property and accumulated depreciation at December 31,
2006 and 2005, is as follows:
2006 2005
Land $ 2,076,627 $ 2,076,627
Buildings and improvements 10,891,728 10,884,935
Rental trucks under capital leases 157,604 157,604
----------- ------------
Total 13,125,959 13,119,166
Accumulated depreciation (10,191,129) (9,610,289)
----------- -----------
Property - net $ 2,934,830 $ 3,508,877
=========== ===========
Depreciation expense of $40,244 and $40,244 was recorded on the rental
trucks under capital leases in 2006 and 2005, respectively.
The Partnership leases certain vehicles under agreements that meet the
criteria for classification as capital leases which expire in 2008.
Future minimum lease payments under these capital leases at December 31,
2006 are summarized as follows:
2007 $ 43,875
2008 40,500
--------
Total future minimum payment obligations 84,375
Less interest portion 5,242
--------
Present value of net minimum lease payments $ 79,133
========
4. ALLOCATION OF PROFITS AND LOSSES AND GENERAL PARTNERS' INCENTIVE
MANAGEMENT FEES
Under the Agreement of Limited Partnership, the general partners are to
be allocated 1% of the net profits or net losses from operations, and
the limited partners are to be allocated the balance of the net profit
or loss from operations in proportion to their limited partnership
interests.The general partners are also entitled to receive a percentage,
based on a predetermined formula, of any cash distribution from the sale,
other disposition, or refinancing of a real estate project.
In addition, the general partners are entitled to an incentive management
fee for supervising the operations of the Partnership. The fee is to be
paid in an amount equal to 9% per annum of the Partnership distributions
made from cash available for distribution, 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.
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 Partner-
ship 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.
6. RELATED-PARTY TRANSACTIONS
The Partnership has entered into management agreements with Dahn to
operate their mini-storage facilities. The management agreeemtn provides
for a management fee equal to 5% of gross revenue from operations, which
is defined as the entire amount of all receipts from the renting or leas-
ing of storage compartments and sale of locks. The management agreement
is renewable annually. Dahn earned management fees equal to $135,577,
$129,344, and $134,578 for the years ended December 31, 2006, 2005, and
2004, respectively. Amounts payable to Dahn at December 31, 2006 and
2005, were $409,337 and $408,719, respectively.
In 2004, the Partnership entered into truck lease agreements with KMD
Trucks, LLC ("KMD"). The president of Dahn, Brian Dahn, is also a
member of KMD. The truck lease is a 48-month lease with monthly payments
in the amount of $750 (see Note 3).
DSI REALTY INCOME FUND X
(A California Real Estate Limited Partnership)
SCHEDULE III
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 $264,544 $1,715,183 $ 11,230 $264,544 $1,726,413 $1,990,957 $1,642,620 12/87 02/87 20 Yrs
Crestwood,Illinois None 205,960 1,631,179 13,656 205,960 1,644,835 1,850,795 1,562,002 12/87 04/87 20 Yrs
Grosebeck Highway
Warren, Michigan None 314,517 1,760,657 88,102 314,517 1,848,759 2,163,276 1,747,685 01/88 04/87 20 Yrs
Forestville, Maryland None 755,000 2,278,110 20,082 755,000 2,298,192 3,053,192 2,138,255 07/88 08/87 20 Yrs
Troy, Michigan None 536,606 3,152,736 220,793 536,606 3,373,529 3,910,135 3,020,085 06/88 06/88 20 Yrs
-------- ---------- ------- -------- ---------- ---------- ----------
$2,076,627 $10,537,865 $353,863 $2,076,627 $10,891,728 $12,968,355 $10,110,647
========== ========== ======== ========== ========== =========== ==========
Real Estate Accumulated
at Cost Depreciation
Balance, December 31, 2004 $12,947,501 $9,005,101
Additions 14,061 564,950
----------- ----------
Balance, December 31, 2005 12,961,562 9,570,051
Additions 6,793 540,596
----------- ----------
Balance, December 31, 2006 $12,968,355 $10,110,647
=========== ===========
EXHIBIT 2
March 30, 2007
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,
2006 and 2005, and the related statements of income, changes in partners' equity
(deficit) and cash flows for each of the three years ended December 31, 2006
accompanied by a report of independent registered public accounting firm. The
Partnership owns five mini-storage facilities including two in Warren, MI. 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 five properties
for the years ended December 31, 2006 and 2005 were as follows:
Location of Property Average Occupancy Average Occupancy
Levels for the Levels for the
Year Ended Year Ended
Dec. 31, 2006 Dec. 31, 2005
Ryan Road
Warren, MI 77% 79%
Crestwood, IL 83% 82%
Groesbeck Hwy
Warren, MI 78% 75%
Forestville, MD 74% 70%
Troy, MI 79% 72%
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, 2006 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 officer 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 officer and I have disclosed based
on our most recent evaluation of internal controls 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 adversely affect the registrant's ability to re-
cord, process, 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: March 30, 2007
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 officer 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 officer and I have disclosed based
on our most recent evaluation of internal controls 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 adversely affect the registrant's ability to re-
cord, process, 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: March 30, 2007
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, 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
March 30, 2007
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, 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
March 30, 2007