10-Q 1 dsi07901.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, 2001 /___/ Transition report pursuant to Section 13 or 15(d) of the Securities Act of 1934 for the transition period from ______________ to ________________. Commission File Number 2-83291 DSI REALTY INCOME FUND VII, A California Limited Partnership (Exact name of registrant as specified in its charter) California_______________________________________95-3871044 (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, 2001 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, 2001. 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, 2001. (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, 2001 DSI REALTY INCOME FUND VII 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, 2001 DSI REALTY INCOME FUND VII 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, 2001 QUARTERLY REPORT TO THE LIMITED PARTNERS OF DSI REALTY INCOME FUND VII DEAR LIMITED PARTNERS: We are pleased to enclose the Partnership's unaudited financial statements for the period ended September 30, 2001. 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, 2001 and 2000, total revenues increased 7.1% from $613,355 to $657,158 and total expenses decreased 35.8% from $457,784 to $293,879 and other income decreased from $2,198 to $959. As a result, net income increased 130.9% from $157,769 for the three-month period ended September 30, 2000, to $364,238 for the same period in 2001. Rental revenue increased primarily as a result of hiher unit rental rates. Occupancy levels for the Partnership's six mini-storage facilities averaged 89.6% for the three-month period ended September 30, 2001 and 90.8% for the same period in 2000. The Partnership is continuing its its marketing efforts to attract and keep new tenants in its various mini-storage facilities. Operating expenses decreased approximately $179,800 (42.9%) primarily as a result of decreases in depreciation, maintenance and repair, salaries and wages and security alarm service expenses, partially off-set by an increase in property management fees. Property management fees, which are based on rental income, increased as a result of the increase in rental revenue. There was a substantial decrease in depreciation expense, as the Partnership's properties are fully depreciated. General and administrative expenses in- creased approximately $15,900 (41.3%) primarily as a result of an increase in incentive management fees. Incentive management fees, which are based on cash available for distributions, increased as a result of the increase in net income. For the nine-month periods ended September 30, 2001, and 2000, total revenues increased 10.2% from $1,739,219 to $1,915,834 and total expenses decreased 29.4% from $1,248,259 to $881,345 and other income decreased from $5,971 to $3,603. As a result, net income increased 108.9% from $496,931 for the nine months ended September 30, 2000, to $1,038,092 for the same period in 2001. Rental revenue increased primarily as a result of high unit rental rates. Operating expenses decreased approximately $380,800 (35.0%) primarily due to decreases in yellow pages advertising costs, maintenance and repair, office supplies, workers compensation insurance expenses and depreciation, partially offset by increases in property management fees, salaries and wages and security alarm service expenses. The increase in property management fees and decrease in depreciation was discussed above. General and administrative expenses increased approximately $13,900 (8.7%) for the reason discussed above. The General Partners will continue their policy of funding improvements and maintenance of Partnership properties with cash generated from operations. The Partnership's financial 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 VII, P.O. Box 357, Long Beach, California 90801. Very truly yours, DSI REALTY INCOME FUND VII By: DSI Properties, Inc., as General Partner By /s/ Robert J. Conway ____________________________ ROBERT J. CONWAY, President DSI REALTY INCOME FUND VII (A California Real Estate Limited Partnership) BALANCE SHEETS(UNAUDITED) SEPTEMBER 30, 2001 AND DECEMBER 31, 2000
September 30, December 31, 2001 2000 ASSETS CASH AND CASH EQUIVALENTS $ 791,143 $ 468,842 PROPERTY, Net 2,089,800 2,089,800 OTHER ASSETS 52,588 44,588 TOTAL $2,933,531 $2,603,230 LIABILITIES AND PARTNERS' EQUITY(DEFICIT) LIABILITIES $ 640,869 $ 621,388 PARTNERS' EQUITY (DEFICIT): General Partners (84,841) (87,950) Limited Partners 2,377,503 2,069,792 Total partners' equity 2,292,662 1,981,842 TOTAL $2,933,531 $2,603,230 See accompanying notes to financial statements (unaudited). STATEMENTS OF INCOME (UNAUDITED) FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 September 30, September 30, 2001 2000 REVENUES: Rental $ 657,158 $ 613,355 EXPENSES: Operating 239,437 419,268 General and administrative 54,442 38,516 Total expenses 293,879 457,784 OPERATING INCOME $ 363,279 $ 155,571 OTHER INCOME Interest 959 2,198 NET INCOME 364,238 157,769 AGGREGATE NET INCOME ALLOCATED TO: Limited partners $ 360,596 $ 156,191 General partners 3,642 1,578 TOTAL $ 364,238 $ 157,769 NET INCOME PER LIMITED PARTNERSHIP UNIT $ 15.02 $ 6.51 LIMITED PARTNERSHIP UNITS USED IN PER UNIT CALCULATION 24,000 24,000 See accompanying notes to financial statements (unaudited). STATEMENTS OF INCOME (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 September 30, September 30, 2001 2000 REVENUES: Rental $1,915,834 $1,739,219 EXPENSES: Operating 707,847 1,088,622 General and administrative 173,498 159,637 Total expenses 881,345 1,248,259 OPERATING INCOME $1,034,489 $490,960 OTHER INCOME Interest 3,603 5,971 NET INCOME 1,038,092 496,931 AGGREGATE NET INCOME ALLOCATED TO: Limited partners 1,027,711 491,962 General partners 10,381 4,969 TOTAL 1,038,092 496,931 NET INCOME PER LIMITED PARTNERSHIP UNIT $42.82 $20.50 LIMITED PARTNERSHIP UNITS USED IN PER UNIT CALCULATION 24,000 24,000 See accompanying notes to financial statements (unaudited).
STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIT)(UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
GENERAL LIMITED PARTNERS PARTNERS TOTAL BALANCE AT JANUARY 1, 2000 ($86,270) $2,236,131 $2,149,861 NET INCOME 4,969 491,962 496,931 DISTRIBUTIONS (7,272) (720,000) (727,272) BALANCE AT SEPTEMBER 30, 2000 ($88,573) $2,008,093 $1,919,520 BALANCE AT JANUARY 1, 2001 ($87,950) $2,069,792 $1,981,842 NET INCOME 10,381 1,027,711 1,038,092 DISTRIBUTIONS (7,272) (720,000) (727,272) BALANCE AT SEPTEMBER 30, 2001 ($84,841) $2,377,503 $2,292,662 See accompanying notes to financial statements(unaudited).
STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
September 30, September 30, 2001 2000 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $1,038,092 $ 496,931 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 0 381,980 Changes in assets and liabilities: Increase in other assets (8,000) 0 Increase in liabilities: 19,481 42,237 Net cash provided by operating activities 1,049,573 921,148 CASH FLOWS FROM FINANCING ACTIVITIES - Distributions to partners (727,272) (727,272) NET INCREASE IN CASH AND CASH EQUIVALENTS 322,301 193,876 CASH AND CASH EQUIVALENTS: At beginning of period 468,842 525,003 At end of period $ 791,143 $ 718,879 See accompanying notes to financial statements(unaudited).
DSI REALTY INCOME FUND VII (A California Real Estate Limited Partnership) NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 1. GENERAL DSI Realty Income Fund VII (the "Partnership"), has two general partners (DSI Properties, Inc., and Diversified Investors Agency) and limited partners owning 24,000 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, 2001, and for the periods ended September 30, 2001, and 2000 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 15 years. The total cost of property and accumulated depreciation at September 30, 2001, is as follows: Land $ 2,089,800 Buildings and equipment 7,685,522 Equipment 60,760 Total 9,836,082 Less: Accumulated Depreciation ( 7,746,282) Property - Net $ 2,089,800
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.