Item 2. PROPERTIES
Registrant owns a fee interest in seven mini-storage facilities, none of which are subject to long-term indebtedness. Please refer to the discussion under Business for a discussion of the average occupancy rate for each property owned by the Partnership. The following table sets forth information as of December 31, 1996 regarding properties owned by the Partnership.
Location Size of Net Rentable No. of Completion Parcel Area Rental Units Date
Vallejo, CA 3.10 acres 57,845 512 6/9/81
Arvada, CO 3.75 acres 65,535 662 1/4/83
Federal Heights, CO 2.39 acres 39,892 467 10/15/83
Las Vegas, NV 2.20 acres 39,682 431 12/l/82
Santa Rosa, CA 3.38 acres 72,163 626 9/10/83 Colorado Springs, CO 3.50 acres 60,566 692 11/15/83
Item 3.
Item 3. LEGAL PROCEEDINGS
Registrant is not a party to any material pending legal proceedings.
Item 4.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
Item 5.
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Registrant, a publicly-held limited partnership, sold 23,753 limited partnership units during its offering and as of December 31, 1996 had 831 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 $15.00 per Limited Partnership Unit were declared and paid each quarter for the year ended December 31, 1996 and $14.37 per Limited Partnership Unit for the year ended December 31, 1995. It is Registrant's expectations that distributions will continue to be paid in the future.
Item 6.
Item 6. SELECTED FINANCIAL DATA FOR THE YEARS ENDED DECEMBER 31, 1996, 1995, 1994, 1993, and 1992 - -------------------------------------------------------------------------------- 1996 1995 1994 1993 1992 ---- ---- ---- ---- ----
REVENUES $2,522,074 $2,513,723 $2,410,812 $2,218,414 $1,965,275
COSTS AND EXPENSES 1,476,606 1,406,458 1,329,740 1,256,159 1,212,087 ---------- ---------- ---------- ---------- ----------
NET INCOME $1,045,468 $1,107,265 $1,081,072 $ 962,255 $ 753,188 ========== ========== ========== ========== ==========
TOTAL ASSETS $4,903,842 $5,285,147 $5,565,612 $5,842,854 $6,261,578 ========== ========== ========== ========== ==========
NET CASH PROVIDED BY OPERATING ACTIVITIES $1,492,765 $1,522,244 $1,487,138 $ 955,785 $ 971,655 ========== ========== ========== ========== ==========
CASH DISTRIBUTIONS PER $500 LIMITED PARTNERSHIP UNIT $ 60.00 $ 57.50 $ 57.50 $ 40.00 $ 40.00 ========== ========== ========== ========== ==========
NET INCOME PER LIMITED PARTNERSHIP UNIT $ 43.57 $ 46.15 $ 45.06 $ 40.11 $ 31.39 ========== ========== ========== ========== ==========
Item 7.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
1996 COMPARED TO 1995
Total revenues increased from $2,513,723 in 1995 to $2,522,074 in 1996, while total expenses increased from $1,406,458 to $1,476,606 resulting in a decrease in net income from $1,107,265 to $1,045,468. Rental revenues remained relatively constant as average occupancy remained at 85% for the Partnership's seven mini-storage facilities in 1996 as compared to 1995. The Partnership is continuing its marketing efforts to attract and keep new tenants in its various mini-storage facilities. The increase in operating expenses of approximately $69,600 (11.6%) was due primarily to increases in yellow pages advertising costs, real estate tax expense and salaries and wages partially offset by a decrease in office expenses. General and administrative expenses increased slightly as a result of some relatively insignificant fluctuations in various expense accounts. The General Partners' incentive management fee available for distribution on which this fee is based.
1995 COMPARED TO 1994
Total revenues increased from $2,410,812 in 1994 to $2,513,723 in 1995, while total expenses increased from $1,329,740 to $1,406,458 resulting in an increase in net income from $1,081,072 to $1,107,265. The approximate $97,000 (4%) increase in rental revenues can be attributed to higher unit rental rates as average occupancy decreased from 88% to 85% for the Partnership's seven mini-storage facilities in both 1995 and 1994. The increase in operating expenses of approximately $29,000 (5.1%) was due primarily to increases in salaries and wages, maintenance and repair costs and workers' office expenses partially offset by a decrease in yellow page advertising costs. General and administrative expenses increased by approximately $27,000 (13.5%) primarily due to higher property management fees partially offset by lower professional fees. Property management fees, which are based on revenue, increased due to the increase in rental income and an increase in these fees from 5% to 6% of rental income. The General Partners' incentive management fee remained constant.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities decreased by approximately $29,000 (1.9%) in 1996 compared to 1995 primarily due to the decrease in net income partially offset by any increase in customer deposits and other liabilities. Net cash provided by operating activities increased by approximately $35,000 (2.4%) in 1995 compared to 1994 primarily due to the increase in net income.
Cash used in financing activities, as set forth in the statements of cash flows, has consisted solely of cash distributions to partners. Effective with the third quarter 1994 distribution, the General Partners decided to increase distributions to an amount which yields an annualized return of 9% of limited partners' capital contributions from the previous 8% level. In addition, special distributions of 3%, 2.5% and 3% were declared and paid on December 15, 1996, 1995 and 1994 respectively. These actions were the result of the Partnership's increased cash flow from the operations of its properties.
Cash used in investing activities, as set forth in the statements of cash flows, has consisted solely of acquisitions of equipment for the Partnership's mini storage properties. The Partnership has no material commitments for capital expenditures.
The General Partners plan to continue their policy of funding the continuing improvement and maintenance of Partnership properties with cash generated from operations. The Partnership's resources appear to be adequate to meet its needs for the next twelve months.
The General Partners are not aware of any environmental problems which could have a material adverse effect upon the financial position of the Partnership.
Item 8.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Attached hereto as Exhibit l is the information required to be set forth as Item 8, Part II hereof.
Item 9.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
Item 10.
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT'S GENERAL PARTNER
The General Partners of Registrant are the same as when the Partnership was formed, i.e., DSI Properties, Inc., a California corporation, and Diversified Investors Agency. As of December 31, 1996, Messrs. Robert J. Conway and Joseph W. Conway, each of whom own approximately 45.43% of the issued and outstanding capital stock of DSI Financial, Inc., a California corporation, are the sole partners of Diversified Investor Agency. Messrs. Robert J. and Joseph W. Conway, together with Mr. Joseph W. Stok, currently comprise the entire Board of Directors of DSI Properties, Inc.
Mr. Robert J. Conway is 63 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 67 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 73 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.
Item 11. EXECUTIVE COMPENSATION (MANAGEMENT REMUNERATION AND TRANSACTIONS)
The information required to be furnished in Item 11 of Part III is contained in Registrant's Financial Statements for its fiscal year ended December 31, 1996, which together with the report of its independent auditors, Deloitte & Touche LLP, attached hereto as Exhibit 1 and incorporated herein by this reference. In addition to such information:
(a) No annuity, pension or retirement benefits are proposed to be paid by Registrant to any of the General Partners or to any officer or director of the corporate General Partner;
(b) No standard or other arrangement exists by which directors of the Registrant are compensated;
(c) The Registrant has not granted any option to purchase any of its securities; and
(d) The Registrant has no plan, nor does the Registrant presently propose a plan, which will result in any remuneration being paid to any officer or director upon termination of employment.
Item 12.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of December 31, 1996, no person of record owned more than 5% of the limited partnership units of Registrant, nor was any person known by Registrant to own of record and beneficially, or beneficially only, more than 5% thereof. The balance of the information required to be furnished in Item 12 of Part III is contained in Registrant's Registration Statement on Form S-11, previously filed pursuant to the Securities Act of 1933, as amended, and which is incorporated herein by this reference. The only change to the information contained in said Registration Statement on Form S-11 is the fact that Messrs. Benes and Blakley have retired and Messrs. Robert J. Conway and Joseph W. Conway equity interest in DSI Financial, Inc., parent of DSI Properties, Inc., has increased. Please see information contained in Item 10 hereinabove.
Item 13.
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, 1996 attached hereto as Exhibit l and incorporated herein by this reference.
PART IV
Item 14
Item 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(l) Attached hereto and incorporated herein by this reference as Exhibit l are Registrant's Financial Statements and Supplemental Schedule for its fiscal year ended December 31, 1996, 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, 1996.
(b) There have been no form 8-K's filed during the last quarter of the period covered by this Report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
DSI REALTY INCOME FUND VI, a California Limited Partnership by: DSI Properties, Inc., a California corporation, as General Partner
By_____________________________ Dated: March 28, 1997 ROBERT J. CONWAY, President (Chief Executive Officer, Chief Financial Officer, and Director)
By____________________________ Dated: March 28, 1997 JOSEPH W. CONWAY (Executive Vice President and Director)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the date indicated.
DSI REALTY INCOME FUND VI, a California Limited Partnership by: DSI Properties, Inc., a California corporation, as General Partner
By:__________________________ Dated: March 28, 1997 ROBERT J. CONWAY, President, Chief Executive Officer, Chief Financial Officer, and Director
By___________________________ Dated: March 28, 1997 JOSEPH W. CONWAY (Executive Vice President and Director)
DSI REALTY INCOME FUND VI
CROSS REFERENCE SHEET
FORM 1O-K ITEMS TO ANNUAL REPORT
PART I, Item 3. There are no legal proceedings pending or threatened.
PART I, Item 4. Not applicable.
PART II, Item 5. Not applicable.
PART II, Item 6. The information required is contained in Registrant's Financial Statements for its fiscal year ended December 31, 1996, attached as Exhibit l to Form 10-K.
PART II, Item 8. See Exhibit l to Form 10-K filed herewith.
PART II, Item 9. Not applicable.
EXHIBIT l
DSI REALTY INCOME FUND VI (A California Real Estate Limited Partnership)
SELECTED FINANCIAL DATA FIVE YEARS ENDED DECEMBER 31, 1996 - --------------------------------------------------------------------------------
1996 1995 1994 1993 1992
REVENUES $2,522,074 $2,513,723 $2,410,812 $2,218,414 $1,965,275
COSTS AND EXPENSES 1,476,606 1,406,458 1,329,740 1,256,159 1,212,087 ---------- ---------- ---------- ---------- ---------- NET INCOME $1,045,468 $1,107,265 $1,081,072 $ 962,255 $ 753,188 ========== ========== ========== ========== ========== TOTAL ASSETS $4,903,842 $5,285,147 $5,565,612 $5,842,854 $6,261,578 ========== ========== ========== ========== ========== NET CASH PROVIDED BY OPERATING ACTIVITIES $1,492,765 $1,522,244 1,487,138 $ 955,785 $ 971,655 ========== ========== ========== ========== ========== CASH DISTRIBUTIONS PER $500 LIMITED PARTNERSHIP UNIT $ 60.00 $ 57.50 $ 57.50 $ 40.00 $ 40.00 ========== ========== ========== ========== ========== NET INCOME PER LIMITED PARTNERSHIP UNIT $ 43.57 $ 46.15 $ 45.06 $ 40.11 $ 31.39 ========== ========== ========== ========== ==========
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, 1996.
Operating Partners' Results Equity
Per financial statements $ 1,045,468 $ 4,526,901 Excess tax depreciation (89,780) (2,005,706) Accrued property taxes (88,000) Deferred rental revenues 10,164 71,946 Accrued incentive management fees (16,219) Acquisition costs capitalized for tax purposes 134,382 Accrued distributions to partners 269,920 Other (1,994) ----------- ----------- Per Partnership income tax return $ 965,852 $ 2,891,230 =========== =========== Taxable income per $500 limited partnership unit $ 40.66 ===========
DSI REALTY INCOME FUND VI (A California Real Estate Limited Partnership)
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
Page
FINANCIAL STATEMENTS:
Independent Auditors' Report
Balance Sheets at December 31, 1996 and 1995
Statements of Income for the Three Years Ended December 31, 1996
Statements of Changes in Partners' Equity for the Three Years Ended December 31, 1996
Statements of Cash Flows for the Three Years Ended December 31, 1996
Notes to Financial Statements
SUPPLEMENTAL SCHEDULE:
Independent Auditors' Report
Schedule XI - Real Estate and Accumulated Depreciation
SCHEDULES OMITTED:
Financial statements and schedules not listed above are omitted because of the absence of conditions under which they are required or because the information is included in the financial statements named above, or in the notes thereto.
INDEPENDENT AUDITORS' REPORT To the Partners of DSI Realty Income Fund VI:
We have audited the accompanying balance sheets of DSI Realty Income Fund VI, a California Real Estate Limited Partnership (the "Partnership") as of December 31, 1996 and 1995, and the related statements of income, changes in partners' equity, and cash flows for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material respects, the financial position of DSI Realty Income Fund VI at December 31, 1996 and 1995, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles.
January 31, 1997
DSI REALTY INCOME FUND VI (A California Real Estate Limited Partnership)
BALANCE SHEETS DECEMBER 31, 1996 AND 1995 - --------------------------------------------------------------------------------
ASSETS 1996 1995
CASH AND CASH EQUIVALENTS $ 560,121 $ 506,933
PROPERTY, At cost (net of accumulated depreciation of $5,853,319 in 1996 and $5,418,826 in 1995) (Notes 1, 2 and 3) 4,305,379 4,739,872
OTHER ASSETS 38,342 38,342 ----------- ----------- TOTAL $ 4,903,842 $ 5,285,147 =========== ===========
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES: Distribution due partners $ 269,920 $ 269,920 Incentive management fee payable to general partners (Note 4) 3,775 Property management fees payable (Note 1) 12,082 12,413 Customer deposits and other liabilities 94,939 78,029 ----------- ----------- Total liabilities 376,941 364,137 ----------- ----------- PARTNERS' EQUITY (Notes 1 and 4): General partners (48,017) (44,075) Limited partners (23,753 limited partnership units outstanding at December 31, 1996 and 1995) 4,574,918 4,965,085 ------------ ----------- Total partners' equity 4,526,901 4,921,010 ------------ ----------- TOTAL $ 4,903,842 $ 5,285,147 ============ ===========
See accompanying notes to financial statements.
DSI REALTY INCOME FUND VI (A California Real Estate Limited Partnership)
STATEMENTS OF INCOME THREE YEARS ENDED DECEMBER 31, 1996 - --------------------------------------------------------------------------------
1996 1995 1994
REVENUES: Rental revenues $2,502,484 $2,496,840 $2,399,645 Interest income 19,590 16,883 11,167 ---------- ---------- --------- Total revenues 2,522,074 2,513,723 2,410,812 ---------- ---------- ---------- EXPENSES: Depreciation (Note 2) 434,493 434,494 414,792 Operating expenses (Note 1) 668,541 598,905 569,588 General and administrative 230,369 226,667 199,351 General partners' incentive management fee (Note 4) 143,203 146,392 146,009 ---------- ---------- ---------- Total expenses 1,476,606 1,406,458 1,329,740 ---------- ---------- ---------- NET INCOME $1,045,468 $1,107,265 $1,081,072 ========== ========== ========== AGGREGATE NET INCOME ALLOCATED TO (Note 4): Limited partners $1,035,013 $1,096,192 $1,070,261 General partners 10,455 11,073 10,811 ---------- ---------- ---------- TOTAL $1,045,468 $1,107,265 $1,081,072 ========== ========== ========== NET INCOME PER LIMITED PARTNERSHIP UNIT (Notes 2 and 4) $ 43.57 $ 46.15 $ 45.06 ========== ========== ==========
See accompanying notes to financial statements.
DSI REALTY INCOME FUND VI (A California Real Estate Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' EQUITY THREE YEARS ENDED DECEMBER 31, 1996 - --------------------------------------------------------------------------------
General Limited Partners Partners Total
BALANCE AT JANUARY 1, 1994 ($38,367) 5,530,231 5,491,864
Net income 10,811 1,070,261 1,081,072
Distributions (13,796) (1,365,798) (1,379,594) ------- ---------- ----------- BALANCE AT DECEMBER 31, 1994 (41,352) 5,234,694 5,193,342
Net income 11,073 1,096,192 1,107,265
Distributions (13,796) (1,365,801) (1,379,597) ------- ----------- ----------- BALANCE AT DECEMBER 31, 1995 ($44,075) $ 4,965,085 $ 4,921,010
Net income 10,455 1,035,013 1,045,468
Distributions (14,397) (1,425,180) (1,439,577) ------- ----------- ----------- BALANCE AT DECEMBER 31,1996 $(48,017) $ 4,574,918 $ 4,526,901
See accompanying notes to financial statements.
DSI REALTY INCOME FUND VI (A California Real Estate Limited Partnership)
STATEMENTS OF CASH FLOWS THREE YEARS ENDED DECEMBER 31, 1996 - --------------------------------------------------------------------------------
1996 1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers $ 2,502,484 $ 2,485,458 $ 2,399,645 Cash paid to suppliers and employees (1,029,309) (980,097) (923,674) Interest received 19,590 16,883 11,167 ----------- ----------- ---------- Net cash provided by operating activities 1,492,765 1,522,244 1,487,138
CASH FLOWS FROM FINANCING ACTIVITIES - Distributions to partners (1,439,577) (1,379,597) (1,349,603)
CASH FLOWS FROM INVESTING ACTIVITIES - Additions to property (42,964) (27,159) ----------- ----------- ------------ NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 53,188 99,683 110,376
CASH AND CASH EQUIVALENTS, AT BEGINNING OF YEAR 506,933 407,250 296,874 ----------- ----------- ------------ CASH AND CASH EQUIVALENTS, AT END OF YEAR $ 560,121 $ 506,933 $ 407,250 =========== =========== ============ RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Net income $ 1,045,468 $ 1,107,265 $ 1,081,072 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 434,493 434,494 414,792 Changes in assets and liabilities: Other assets (11,382) (15) Incentive management fee payable to general partners (3,775) (1,486) (15,760) Property management fees payable (331) 3,777 626 Customer deposits and other liabilities 16,910 (10,424) 6,423 ----------- ----------- ------------ NET CASH PROVIDED BY OPERATING ACTIVITIES $ 1,492,765 $ 1,522,244 $ 1,487,138 =========== =========== ============
See accompanying notes to financial statements.
DSI REALTY INCOME FUND VI (A California Real Estate Limited Partnership)
NOTES TO FINANCIAL STATEMENTS THREE YEARS ENDED DECEMBER 31, 1996
1. GENERAL
DSI Realty Income Fund VI, a California Real Estate Limited Partnership (the "Partnership"), has two general partners (DSI Properties, Inc. and Diversified Investors Agency) and limited partners owning 23,753 limited partnership units, which were purchased for $500 a unit. The general partners have made no capital contribution to the Partnership and are not required to make any capital contribution in the future. The Partnership has a maximum life of 50 years and was formed on March 27, 1981 under the California Uniform Limited Partnership Act for the primary purpose of acquiring and operating real estate.
The Partnership owns seven mini-storage facilities located in Vallejo, California; Arvada, Federal Heights and Colorado Springs, Colorado; Las Vegas, Nevada and two in Santa Rosa, California. All facilities were purchased from Dahn Corporation ("Dahn"). Dahn is not affiliated with the Partnership. Dahn is affiliated with other partnerships in which DSI Properties, Inc. is a general partner. The mini-storage facilities are operated for the Partnership by Dahn under various agreements 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 6% of gross revenue from operations, as defined.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents - The Partnership classifies its short-term investments purchased with an original maturity of three months or less as cash equivalents.
Property and Depreciation - Property is recorded at cost and is comprised primarily of mini-storage facilities. Depreciation is provided for using the straight-line method over an estimated useful life of 20 years for the facilities. Building improvements are depreciated over a five year period.
Income Taxes - No provision has been made for income taxes in the accompanying financial statements. The taxable income or loss of the Partnership is allocated to each partner in accordance with the terms of the Agreement of Limited Partnership. Each partner's tax status, in turn, determines the appropriate income tax for its allocated share of the Partnership taxable income or loss. The net difference between the bases of the Partnership's assets and liabilities for federal income tax purposes and as reported for financial statement purposes is $1,635,671.
Revenues - Rental revenue is recognized using the accrual method based on contractual amounts provided for in the lease agreements, which approximates recognition on a straight-line basis. The term of the lease agreements is usually less than one year.
Net Income per Limited Partnership Unit - Net income per limited partnership unit is computed by dividing net income allocated to the limited partners by the weighted average number of limited partnership units outstanding during each year (23,753 in 1996, 1995 and 1994).
Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires the Partnership to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Impairment of Long-Lived Assets - The Partnership regularly reviews long- lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If the sum of the expected future cash flow is less than the carrying amount of the asset, the Partnership recognizes an impairment. As of December 31, 1996, no impairment losses were recognized.
3. PROPERTY
At December 31, 1996 and 1995, the total cost of property and accumulated depreciation are as follows:
1996 1995 Land $ 1,759,000 $ 1,759,000 Buildings and improvements 8,399,698 8,399,698 ----------- -----------
Total 10,158,698 10,158,698 Less accumulated depreciation (5,853,319) (5,418,826) ----------- ----------
Property, net $ 4,305,379 $ 4,739,872 =========== ===========
4. ALLOCATION OF PROFITS AND LOSSES
Under the Agreement of Limited Partnership, the general partners are to be allocated 1% of the net profits or 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, 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.
INDEPENDENT AUDITORS' REPORT To the Partners of DSI Realty Income Fund VI:
We have audited the financial statements of DSI Realty Income Fund VI (the "Partnership") as of December 31, 1996 and 1995, and for each of the three years in the period ended December 31, 1996, and have issued our report thereon dated January 31, 1997; such report is included elsewhere in this Form 10-K. Our audits also included the financial statements schedule of DSI Realty Income Fund VI, listed in Item 14. This financial statement schedule is the responsibility of the Partnership's management. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statements 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.
January 31, 1997
DSI REALTY INCOME FUND VI (A California Real Estate Limited Partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION - --------------------------------------------------------------------------------
Real Estate Accumulated at Cost Depreciation
Balance at January 1, 1994 $10,088,575 $4,569,540 Additions 27,159 414,792 ----------- ---------- Balance at December 31, 1994 10,115,734 4,984,332 Additions 42,964 434,494 ----------- ---------- Balance at December 31, 1995 10,158,698 5,418,826 Additions 434,493 ----------- ---------- Balance at December 31, 1996 $10,158,698 $5,853,319 =========== ==========
The total cost at the end of the period for Federal income tax purposes was approximately $10,250,000.
EXHIBIT 2
March 28, 1997
ANNUAL REPORT TO LIMITED PARTNERS OF
DSI REALTY INCOME FUND VI
Dear Limited Partner:
This report contains the Partnership's balance sheets as of December 31, 1996 and 1995, and the related statements of income, changes in partners' equity and cash flows for each of the three years in the period ended December 31, 1996 accompanied by an independent auditors' report. The Partnership owns seven mini-storage facilities, including two in Santa Rosa, California. The Partnership's properties were each purchased for all cash and funded solely from subscriptions for limited partnership interests without the use of mortgage financing.
Your attention is directed to the section entitled Management's Discussion and Analysis of Financial Condition and Results of Operations for the General Partners' discussion and analysis of the financial statements and operations of the Partnership.
Average occupancy levels for each of the Partnership's six properties for the years ended December 31, 1996 and December 31, 1995 were as follows:
Location of Property Average Occupancy Average Occupancy Levels for the Levels for the Year Ended Year Ended Dec. 31, 1996 Dec. 31, 1995
Vallejo, California 85% 80%
Santa Rosa, California both stages) 85% 91%
Arvada, California 80% 83%
Las Vegas, Nevada 84% 89%
Federal Heights, Colorado 87% 86%
Colorado Springs, Colorado 88% 82%
We will keep you informed of the activities of DSI Realty Income Fund VI as they develop. If you have any questions, please contact us at your convenience at (562) 424-2655. If you would like a copy of the Partnership's Annual Report on Form 10-K for the year ended December 31, 1996, which was filed with the Securities and Exchange Commission (which report includes the enclosed Financial Statements), we will forward a copy of the report to you upon written request.
Very truly yours,
DSI REALTY INCOME FUND VI By: DSI Properties, Inc.
By_______________________________ ROBERT J. CONWAY, President