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, 2007
/___/ 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 Limited Partnership)
CONSOLIDATED BALANCE SHEETS(UNAUDITED)
SEPTEMBER 30, 2007 AND DECEMBER 31, 2006
September 30, December 31,
2007 2006
ASSETS
CASH AND CASH EQUIVALENTS $ 800,246 $ 635,667
PROPERTY, NET 2,565,868 2,918,479
OTHER ASSETS 215,725 174,959
---------- ----------
TOTAL $3,581,839 $3,729,105
========== ==========
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Distribution to Partners $232,523 $232,468
Property management
fees payable 9,818 12,424
Customer deposits and
other liabilities 42,433 134,123
Capital lease obligation 57,528 105,510
-------- --------
Total liabilities 342,302 484,525
-------- --------
MINORITY INTEREST IN
REAL ESTATE JOINT VENTURE 197,938 191,503
-------- --------
PARTNERS' EQUITY (DEFICIT):
General Partners (107,025) (106,910)
Limited Partners (30,693
limited partnership
units outstanding at
September 30, 2007 and
December 31, 2006) 3,148,624 3,159,987
--------- ---------
Total partners' equity 3,041,599 3,053,077
--------- ---------
TOTAL $3,581,839 $3,729,105
========== ==========
See accompanying notes to consolidated financial statements (unaudited).
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006
September 30, September 30,
2007 2006
REVENUES:
Rental $ 798,522 $ 773,618
---------- ----------
EXPENSES:
Operating 444,873 470,712
General and administrative 47,645 38,755
---------- ---------
Total expenses 492,518 509,467
---------- ---------
OPERATING INCOME 306,004 264,151
OTHER INCOME
Interest 48 49
---------- ---------
INCOME BEFORE MINORITY INTEREST
IN INCOME OF REAL ESTATE
JOINT VENTURE 306,052 264,200
MINORITY INTEREST IN INCOME
OF REAL ESTATE JOINT VENTURE (36,163) (29,577)
---------- ----------
NET INCOME $ 269,889 $ 234,623
========== ==========
AGGREGATE NET INCOME ALLOCATED TO:
Limited partners $ 267,190 $ 232,277
General partners 2,699 2,346
---------- ----------
TOTAL $ 269,889 $ 234,623
========== ==========
NET INCOME PER LIMITED
PARTNERSHIP UNIT $ 8.71 $ 7.57
========== ==========
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, 2007 AND 2006
September 30, September 30,
2007 2006
REVENUES:
Rental $2,354,065 $2,243,635
---------- ----------
EXPENSES:
Operating 1,356,191 1,403,336
General and administrative 213,094 180,361
---------- ---------
Total expenses 1,569,285 1,583,697
---------- ---------
OPERATING INCOME 784,780 659,938
OTHER INCOME
Interest 145 145
---------- ---------
INCOME BEFORE MINORITY INTEREST
IN INCOME OF REAL ESTATE
JOINT VENTURE 784,925 660,083
MINORITY INTEREST IN INCOME
OF REAL ESTATE JOINT VENTURE (98,835) (83,807)
---------- ----------
NET INCOME $ 686,090 $ 576,276
========== ==========
AGGREGATE NET INCOME ALLOCATED TO:
Limited partners $ 679,229 $ 570,513
General partners 6,861 5,763
---------- ----------
TOTAL $ 686,090 $ 576,276
========== ==========
NET INCOME PER LIMITED
PARTNERSHIP UNIT $ 22.13 $ 18.59
========== ==========
LIMITED PARTNERSHIP UNITS
USED IN PER UNIT CALCULATION 30,693 30,693
====== ======
See accompanying notes to consolidated financial statements (unaudited).
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIT)(UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007
GENERAL LIMITED
PARTNERS PARTNERS TOTAL
BALANCE AT JANUARY 1, 2007 ($106,910) $3,159,987 $3,053,077
NET INCOME 6,861 679,229 686,090
DISTRIBUTIONS (6,976) (690,593) (697,568)
--------- ---------- ----------
BALANCE AT SEPTEMBER 30, 2007 ($107,025) $3,148,624 $3,041,599
========= ========== ==========
See accompanying notes to consolidated financial statements (unaudited).
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006
September 30, September 30,
2007 2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 686,090 $ 576,276
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 352,611 353,858
Minority interest in income
real estate joint venture 98,835 83,807
Changes in assets and
liabilities:
Increase in other assets (40,766) (3,811)
Increase in incentive
management fee payable
to general partners - 20,927
(Decrease)Increase in property
management fee payable (242) 292
Decrease in customer deposits
and other liabilities (111,586) (48,800)
-------- ---------
Net cash provided by
operating activities 984,942 982,549
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES -
Distributions to partners (697,568) (697,513)
Distributions paid to minority
interest in real estate
joint venture (92,400) (82,500)
Payments on capital
lease obligations (30,395) (34,362)
-------- ---------
Net cash used in
financing activities (820,363) (814,375)
-------- ---------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 164,579 168,174
CASH AND CASH EQUIVALENTS:
At beginning of period 635,667 520,071
--------- ---------
At end of period $ 800,246 $ 688,245
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION -
Cash paid for interest $ 2,442 $ 4,266
========= =========
NONCASH FINANCING ACTIVITIES -
Distributions due partners
included in partners' equity $ 232,523 $ 232,523
========= =========
See accompanying notes to consolidated financial statements (unaudited).
DSI REALTY INCOME FUND IX
(A 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.
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 (see Note 4).
The accompanying interim financial statements have been prepared by the
Company's management in accordance with accounting principles generally
accepted in the United States of America ("GAAP") and in conjunction with
the rules and regulations of the Securities and Exchange Commission ("SEC").
Certain information and footnote disclosures required for annual financial
statements have been condensed or excluded pursuant to SEC rules and regu-
lations. Accordingly, the interim financial statements do not include all
of the information and footnotes required by GAAP for complete financial
statements. In the opinion of management, the accompanying interim financial
statements reflect all adjustments of a normal and recurring nature which are
considered necessary for a fair presentation of the results for the interim
periods presented. However, the results of operations for the interim periods
are not necessarily indicative of the results that may be expected for the
year ending December 31, 2007. These financial statements should be read in
conjunction with the audited consolidated financial statements and notes
thereto included in the Company's annual report on Form 10-K for the year
ended December 31, 2006.
2. PROPERTY
The Partnership owns five mini-storage facilities located in Monterey Park
and Azusa, California; Everett, Washington; and Romeoville and Elgin,
Illinois. The Partnership also owns a 70% interest in a mini-storage
facility in Aurora, Colorado. The total cost and accumulated depreciation
of the mini-storage facilities are as follows:
September 30, December 31,
2007 2006
Land $ 2,729,790 $ 2,729,790
Buildings and equipment 11,129,105 11,129,105
Rental trucks
under capital lease 210,138 210,138
------------ ------------
Total 14,069,033 14,069,033
Less: Accumulated Depreciation (11,503,165) (11,150,554)
------------ ------------
Property - Net $ 2,565,868 $ 2,918,479
============ ============
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.
5. RELATED-PARTY TRANSACTIONS
The Partnership has entered into a management agreement with Dahn to
operate its mini-storage facilities. The management agreement 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
leasing of storage compartments and sale of locks. The management
agreement is renewable annually. Dahn earned management fees equal to
$33,192 and $30,510, for the three month periods ended September 30, 2007
and 2006, respectively, and $94,072 and $87,634 for the nine month
period ended September 30, 2007 and 2006, respectively. Amounts payable
to Dahn at September 30, 2007 and December 31, 2006, were $9,818 and
$12,424, 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. Trucks are leased under 48-month leases with total
monthly payments in the amount of $4,500.
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, 2007. 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, 2007 and 2006, total revenues
increased 3.2% from $773,618 to $798,522 and total expenses decreased 3.3%
from $509,467 to $492,518 and other income decreased from $49 to $48. Minor-
ity in income of real estate joint venture increased 22.3% from $29,577 to
$36,163. As a result, net income increased 15.0% from $234,623 to $269,889
for the three-month period ended September 30, 2007, as compared to the same
period in 2006. Rental revenue increased as a result of higher unit rental
rates. Occupancy levels for the Partnership's six mini-storage facilities
averaged 81.4% for the three-month period ended September 30, 2007 as compared
to 80.7% for the same period in 2006. The Partnership is continuing its
marketing efforts to attract and keep new tenants in its various mini-storage
facilities. Operating expenses decreased approximately $25,800 (5.5%) due
primarily to a decrease in advertising and maintenance and repair expenses,
partially offset by an increase in property management fees. Property manage-
ment fees, which are based on rental revenue, increased as a result of the
increase in rental revenue. General and administrative expenses increased
approximately $8,900 (23.0%) primarily as a result of increases in legal and
professional, administrative and equipment and computer lease expenses, partial-
ly offset by a decrease in legal and professional expense. Minority interest
in income of real estate joint venture increased as a result of the higher net
income at that facility.
For the nine-month periods ended September 30, 2007 and 2006, total revenues
increased 4.9% from $2,243,635 to $2,354,065 and total expenses decreased
0.9% from $1,583,697 to $1,569,285 and other income remained constant at $145.
Minority interest in income of real estate joint venture increased 17.9% from
$83,807 to $98,835. As a result, net income increased 19.1% from $576,276
to $686,090 for the nine-month period ended September 30, 2007, as compared
to the same period in 2006. Rental revenue increased as a result of higher
unit rental rates. Occupancy levels for the Partnership's six mini-storage
facilities averaged 78.9% for the nine-month periods ended September 30, 2007
and 2006. Operating expenses decreased approximately $47,100 (3.4%) due
primarily to decreases in advertising and maintenance, repair expenses and
property management fee expenses, partially offset by increases in legal,
salaries and wages and power and sweeping expenses. Property management fees,
which are based on rental revenue, increased as a result of the increase in
rental revenue. General and administrative expenses increased approximately
$32,700 (18.1%) primarily as a result of an increase in legal and professional,
administrative and equipment and computer lease expenses. Minority interest
in income of real estate joint venture increased as discussed above.
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. Quantitative 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 30,
2007. 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
NONE
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: November 14, 2007 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: November 14, 2007 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 report on Form 10-Q for the quarter ended
September 30, 2007 of DSI Realty Income Fund IX;
2. Based on my knowledge, this 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 report.
3. Based on my knowledge, the financial statements and other financial
information included in this 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 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: November 14, 2007
Robert J. Conway
Chief Executive Officer
CERTIFICATIONS
I, Richard P. Conway, certify that:
1. I have reviewed this report on Form 10-Q for the quarter ended
September 30, 2007 of DSI Realty Income Fund IX;
2. Based on my knowledge, this 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 report.
3. Based on my knowledge, the financial statements and other financial
information included in this 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 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: November 14, 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 Quarterly Report of DSI Realty Income Fund IX (the
"Partnership") on Form 10-Q for the period ending September 30, 2007 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
November 14, 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 Quarterly Report of DSI Realty Income Fund IX (the
"Partnership") on Form 10-Q for the period ending September 30, 2007 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
November 14, 2007