10-Q 1 dsi06903.txt 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, 2003 /___/ Transition report pursuant to Section 13 or 15(d) of the Securities Act of 1934 for the transition period from ______________ to ________________. Commission File Number 2-68926 DSI REALTY INCOME FUND VI, A California Limited Partnership (Exact name of registrant as specified in its charter) California_______________________________________95-3633566 (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. The information required by Rule 10-01 of Regulation S-X is included in the Quarterly Report to the Limited Partners of Registrant for the period ended September 30, 2003, which is attached hereto as Exhibit"20" and incorporated herein by this reference. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Registrant incorporates by this reference its Quarterly Report to Limited Partners for the period ended September 30, 2003. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8K. (a) Attached hereto as Exhibit "20" is Registrant's Quarterly Report to Limited Partners for the period ended September 30, 2003. (B) Registrant did not file any reports on Form 8-K for the period reported upon. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: October 31, 2003 DSI REALTY INCOME FUND VI A California Limited Partnership (Registrant) By__/s/ Robert J. Conway______ DSI Properties, Inc., as General Partner by ROBERT J. CONWAY, President and Chief Financial Officer SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: October 31, 2003 DSI REALTY INCOME FUND VI 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 October 31, 2003 QUARTERLY REPORT TO THE LIMITED PARTNERS OF DSI REALTY INCOME FUND VI DEAR LIMITED PARTNERS: We are pleased to enclose the Partnership's unaudited financial statements for the period ended September 30, 2003. 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, 2003, and 2002, total revenues decreased 7.3% from $732,861 to $679,280 and total expenses decreased 22.8% from $468,967 to $361,966 and other income decreased from $379 to $211. As a result, net income increased 20.2% from $264,273 for the three-month period ended September 30, 2002, to $317,525 for the same period in 2003. The revenue decrease can be attributed to a decrease in rental in- come as a result of lower unit rental rates. Occupancy levels for the Partner- ship's six mini-storage facilities averaged 85.8% for the three-month period ended September 30, 2003, compared to 84.5% for the same period in 2002. The Partnership is continuing its marketing efforts to attract and keep new tenants in its various mini-storage facilities. Operating expenses decreased approx- imately $148,600 (35.7%) primarily due to decreases in depreciation, mainten- ance and repair, property management fees and workers compensation insurance expenses, partially offset by increases in real estate tax expense. Depreci- ation decreased as the Partnership properties became fully depreciated during the current period. Property management fees, which are based on rental revenue, decreased as a result of the decrease in rental revenue. General and administrative expenses increased approximately $41,600 (78.7%) as a result of an increase in legal and professional expense, partially offset by a de- crease in equipment and computer lease expense. Legal expenses increased as a result of legal challenges by dissident Limited Partners to a proposed amendment to the Partnership Agreement (see paragraph below). For the nine-month periods ended September 30, 2003, and 2002, total revenues increased 2.1% from $2,161,869 to $2,117,088, total expenses decreased 12.2% from $1,386,608 to $1,217,003 and other income decreased from $1,075 to $609. As a result, net income increased 16.0% from $776,336 for the nine months ended September 30, 2002, to $900,694 for the same period in 2003. The revenue decrease can be attributed to a decrease in rental revenue as a result of lower occupancy and unit rental rates. Operating expenses decreased approxi- mately $199,300 (17.2%) primarily due to decreases in depreciation, mainten- ance and repair and workers compensation insurance expenses, partially offset by increases in advertising, telephone, real estate tax, salaries and wages and power and sweeping expenses. General and administrative expenses increased approximately $29,700 (13.1%) primarily as a result of increases in legal and professional expense, partially offset by decreases in incentive management fees, equipment and computer lease expenses and state tax payments. On April 5, 2002, the General Partners received a copy of a hostile tender offer from MacKenzie Patterson, Inc. and associated corporations and limited partnerships to purchase all of the Units in the Partnership. This offer was also filed with the Securities and Exchange Commission on the same date. The General Partners have determined that the hostile tender offer was not in the best interests of the Limited Partners, that the tender offer was grossly inadequate given the performance history of the Limited Partnership and the inherent value of the Units, and recommended that the Limited Partners reject the hostile tender offer and not tender their units pursuant thereto. The offer was subsequently increased and extended to June 30, 2002 and again to July 22, 2002. The General Partners' initial determination regarding the offer did not change. Prior to the expiration date of the offer, Limited Partners tendered 85 Units representing 0.358% of the outstanding Units of the Partner- ship. The Limited Partners have approved an amendment to the Partnership Agreement granting the General Partners ten days to review certain types of transfers during which the General Partners may match, exceed or approve the proposed transfers. The Court has rejected all preliminary attempts to halt implement- ation of the amendment. Subsequently, the dissident Limited Partners who initiated the legal proceedings decided not to pursue the matter any further. The General Partners plan to continue their policy of funding improvements 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. We are not enclosing a copy of the Partnership Form 10-Q as filed with the Securities and Exchange Commission since all the information set forth therein is contained either in this letter or in the attached financial statements. However, if you wish to receive a copy of said report, please send a written request to DSI Realty Income Fund VI, P.O. Box 357, Long Beach, California 90801. Very truly yours, DSI Realty Income Fund VI By: DSI Properties, Inc., as General Partner By___\s\ Robert J. Conway_______ ROBERT J. CONWAY, President DSI REALTY INCOME FUND VI (A California Real Estate Limited Partnership) BALANCE SHEETS(UNAUDITED), SEPTEMBER 30, 2003 AND DECEMBER 31, 2002 September 30, December 31, 2003 2002 ASSETS CASH AND CASH EQUIVALENTS $ 780,096 $ 526,418 PROPERTY, Net 1,759,000 1,926,139 OTHER ASSETS 95,265 74,910 TOTAL $2,634,361 $2,527,467 LIABILITIES AND PARTNERS' EQUITY (DEFICIT) LIABILITIES $460,768 $444,808 PARTNERS' EQUITY (DEFICIT): General Partners (71,549) (72,459) Limited Partners 2,245,142 2,155,118 Total partners' equity 2,173,593 2,082,659 TOTAL $2,634,361 $2,527,467 See accompanying notes to financial statements (unaudited). STATEMENTS OF INCOME (UNAUDITED) FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 September 30, September 30, 2003 2002 REVENUES: Rental $679,280 $732,861 EXPENSES: Operating 267,529 416,112 General and administrative 94,437 52,855 Total expenses 361,966 468,967 OPERATING INCOME 317,314 263,894 OTHER INCOME Interest 211 379 NET INCOME 317,525 264,273 AGGREGATE NET INCOME ALLOCATED TO: Limited partners $314,350 $261,630 General partners 3,175 2,643 TOTAL $317,525 $264,273 NET INCOME PER LIMITED PARTNERSHIP UNIT $13.23 $11.01 LIMITED PARTNERSHIP UNITS USED IN PER UNIT CALCULATION 23,753 23,753 See accompanying notes to financial statements(unaudited). STATEMENTS OF INCOME (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 September 30, September 30, 2003 2002 REVENUES: Rental $2,117,088 $2,161,869 EXPENSES: Operating 961,114 1,160,404 General and administrative 255,889 226,204 Total expenses 1,217,003 1,386,608 OPERATING INCOME 900,085 775,261 OTHER INCOME Interest 609 1,075 NET INCOME 900,694 776,336 AGGREGATE NET INCOME ALLOCATED TO: Limited Partners 891,687 768,573 General Partners 9,007 7,763 TOTAL 900,694 776,336 NET INCOME PER LIMITED PARTNERSHIP UNIT $ 37.54 $ 32.36 LIMITED PARTNERSHIP UNITS USED IN PER UNIT CALCULATION 23,753 23,753 See accompanying notes to financial statements (unaudited). STATEMENTS OF CHANGES IN PARTNERS' EQUITY (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 GENERAL LIMITED PARTNERS PARTNERS TOTAL BALANCE AT JANUARY 1, 2003 ($72,459) $2,155,118 $2,082,659 NET INCOME 9,007 891,687 900,694 DISTRIBUTIONS (8,097) (801,663) (809,760) BALANCE AT SEPTEMBER 30, 2003 ($71,549) $2,245,142 $2,173,593 See accompanying notes to financial statements (unaudited). STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 September 30, September 30, 2003 2002 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 900,694 $ 776,336 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 167,139 330,579 Changes in assets and liabilities: Increase (decrease)in other assets (20,355) 1,411 Increase in liabilities 15,960 18,781 Net cash provided by operating activities 1,063,438 1,127,107 CASH FLOWS FROM FINANCING ACTIVITIES - Distributions to partners (809,760) (809,760) NET INCREASE IN CASH AND CASH EQUIVALENTS 253,678 317,347 CASH AND CASH EQUIVALENTS: At beginning of period 526,418 537,427 At end of period $ 780,096 $ 854,774 See accompanying notes to financial statements (unaudited). DSI REALTY INCOME FUND VI (A California Real Estate Limited Partnership) NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 1. GENERAL DSI Realty Income Fund VI (the "Partnership"), a limited partnership, has two general partners (DSI Properties, Inc., and Diversified Investors Agency) and limited partners owning 23,753 limited partnership units. The Partnership was formed under the California Uniform Limited Partnership Act for the primary purpose of acquiring and operating real estate. The accompanying financial information as of September 30, 2003, and for the periods ended September 30, 2003 and 2002, is unaudited. Such financial information includes all adjustments which are considered necessary by the Partnership's management for a fair presentation of the results for the periods indicated. 2. PROPERTY Properties owned by the Partnership are all mini-storage facilities. Depreciation is calculated using the straight line method over the estimated useful life of 20 years. The total cost of property and accumulated depreciation at September 30, 2003, is as follows: Land $ 1,759,000 Buildings and improvements 8,579,426 Equipment 38,710 Total 10,377,136 Less: Accumulated Depreciation ( 8,618,136) Property - Net $ 1,759,000 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. CONTROLS AND PROCEDURES Within 90 days prior to the date of this report, the Partnership evaluated the effectiveness of its disclosure controls and procedures. This 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 information is communicated to the certifying officers on a timely basis. Based on this evaluation, the Partnership con- cluded 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. DSI REALTY INCOME FUND VI Form 10-Q CERTIFICATION Each of the undersigned hereby certifies in his capacity as an officer of DSI Properties, Inc. (corporate General Partner) of DSI REALTY INCOME FUND VI (the "Partnership") that the Quarterly Report of the Partnership on Form 10-Q for the periods ended September 30, 2003 fully complies with the requirements of Section 13(a) of the Securities and Exchange Act of 1934 and that inform- ation contained in such report fairly presents, in all material respects, the financial condition of the Partnership at the end of such periods and the results of operations of the Partnership for such periods. ROBERT J. CONWAY, CEO RICHARD P. CONWAY, VP CERTIFICATIONS I, Robert Conway, certify that: 1. I have reviewed this quarterly report on Form 10-Q of DSI Realty Income Fund VI; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consoli- dated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effec- tiveness of the disclosure controls and procedures based on our evalu- ation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit com- mitee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls sub- sequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November, 2003 Robert Conway President CERTIFICATIONS I, Richard Conway, certify that: 1. I have reviewed this quarterly report on Form 10-Q of DSI Realty Income Fund VI; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consoli- dated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effec- tiveness of the disclosure controls and procedures based on our evalu- ation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit com- mitee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls sub- sequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November, 2003 Richard Conway Vice President