10-Q 1 dsiviii-602.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 June 30, 2002 /___/ Transition report pursuant to Section 13 or 15(d) of the Securities Act of 1934 for the transition period from ______________ to ________________. Commission File Number 2-90168 DSI REALTY INCOME FUND VIII, A California Limited Partnership (Exact name of registrant as specified in its charter) California_______________________________________95-0050204 (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 June 30, 2002 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 June 30, 2002. 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 June 30, 2002. (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: July 31, 2002 DSI REALTY INCOME FUND VIII 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: July 31, 2002 DSI REALTY INCOME FUND VIII 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 July 31, 2002 QUARTERLY REPORT TO THE LIMITED PARTNERS OF DSI REALTY INCOME FUND VIII DEAR LIMITED PARTNERS: We are pleased to enclose the Partnership's unaudited financial statements for the period ended June 30, 2002. 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 June 30, 2002 and 2001, total revenues decreased 4.2% from $632,472 to $605,710 and total expenses increased 12.1% from $242,426 to $271,652 and other income decreased from $1,377 to $299. Equity in income of the real estate joint venture decreased 24.0% from $43,090 to $32,739. As a result, net income decreased 15.5% from $434,513 to $367,096 for the three-month period ended June 30, 2002, as compared to the same period in 2001. Rental revenue decreased as a result of lower occupancy and unit rental rates. Occupancy levels for the Partnership's five mini-storage facilities averaged 85.2% for the three-month period ended June 30, 2002 as compared to 92.5% for the same period in 2001. The Partnership is continuing its marketing efforts to attract and keep new tenants in its various mini-storage facilities. Operating expenses increased approximately $15,400 (8.3%) primarily as a result of higher repairs and maintenance, office supplies and workers compensation insurance expenses, partially offset by a decrease in advertising expense. General and admini- strative expenses increased approximately $13,900 (24.2%) primarily as a result of increases in legal and professional and equipment and computer lease expenses, partially offset by a decrease in incentive management fees. Incentive management fees, which are based on cash available for distribution, decreased as a result of the decrease in net income. Equity in income from the real estate joint venture decreased as a result of lower rental revenue and higher operating expenses at that facility. For the six month periods ended June 30, 2002, and 2001, total revenues increased 0.5% from $1,250,278 to $1,244,652 and total expenses increased 10.8% from $482,021 to $533,965 and other income decreased from $2,938 to $581. Equity in income of the real estate joint venture decreased 19.1% from $86,484 to $69,927. As a result, net income decreased 8.9% from $857,679 to $781,195 for the six-month period ended June 30, 2002, as compared to the same period in 2001. Rental revenue decreased as a result of lower occupancy and unit rental rates. Operating expenses increased approximately $35,900 (10.3%) primarily as a result of increases in repairs and maintenance, office supplies and workers compensation insurance expenses, partially offset by a decrease in advertising expense. General and administrative expenses in- creased approximately $16,100 (12.0%) primarily as a result of higher legal and professional and equipment and computer lease expenses, partially offset by lower incentive management fees. The decrease in incentive management fees was discussed above. The decrease in equity in income from the real estate joint venture was also discussed above. On April 5, 2002, the General Partners received a copy of a hostile tender offer from MacKenzie Patterson, Inc. and associated corporation 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 recommendedthat 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 has not changed. Prior to the expiration date of the offer, Limited Partners tendered 36 Units representing 0.150% of the outstanding Units of the Partnership. 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 VIII, P.O. Box 357, Long Beach, California 90801. Very truly yours, DSI REALTY INCOME FUND VIII By: DSI Properties, Inc., as General Partner By /s/ Robert J. Conway ____________________________ ROBERT J. CONWAY, President DSI REALTY INCOME FUND VIII (A California Real Estate Limited Partnership) BALANCE SHEETS(UNAUDITED) JUNE 30, 2002 AND DECEMBER 31, 2001 June 30, December 31, 2002 2001 ASSETS CASH AND CASH EQUIVALENTS $ 881,351 $ 619,194 PROPERTY, Net 2,287,427 2,287,427 INVESTMENT IN REAL ESTATE JOINT VENTURE 184,087 181,660 OTHER ASSETS 69,425 71,264 TOTAL $3,422,290 $3,159,545 LIABILITIES AND PARTNERS' EQUITY (DEFICIT) LIABILITIES $ 662,627 $ 635,623 PARTNERS' EQUITY (DEFICIT): General Partners (80,185) (82,543) Limited Partners 2,839,848 2,606,465 Total partners' equity 2,759,663 2,523,922 TOTAL $3,422,290 $3,159,545 See accompanying notes to financial statements(unaudited). STATEMENTS OF INCOME (UNAUDITED) FOR THE THREE MONTHS ENDED JUNE 30, 2002 AND 2001 June 30, June 30, 2002 2001 REVENUES: Rental $ 605,710 $ 632,472 EXPENSES: Operating 200,283 184,909 General and administrative 71,369 57,517 Total expenses 271,652 242,426 OPERATING INCOME 334,058 390,046 OTHER INCOME Interest 299 1,377 INCOME BEFORE EQUITY IN INCOME OF REAL ESTATE JOINT VENTURE 334,357 391,423 EQUITY IN INCOME OF REAL ESTATE JOINT VENTURE 32,739 43,090 NET INCOME $ 367,096 $ 434,513 AGGREGATE NET INCOME ALLOCATED TO: Limited Partners $ 363,425 $ 430,168 General Partners 3,671 4,345 TOTAL $ 367,096 $ 434,513 NET INCOME PER LIMITED PARTNERSHIP UNIT $ 15.14 $ 17.92 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 SIX MONTHS ENDED JUNE 30, 2002 AND 2001 June 30, June 30, 2002 2001 REVENUES: Rental $1,244,652 $1,250,278 EXPENSES: Operating 384,268 348,411 General and Administrative 149,697 133,610 Total Expenses 533,965 482,021 OPERATING INCOME 710,687 768,257 OTHER INCOME 581 2,938 INCOME BEFORE EQUITY IN INCOME OF REAL ESTATE JOINT VENTURE 711,268 771,195 EQUITY IN INCOME OF REAL ESTATE JOINT VENTURE 69,927 86,484 NET INCOME $ 781,195 $ 857,679 AGGREGATE NET INCOME ALLOCATED TO: Limited Partners $ 773,383 $ 849,102 General Partners 7,812 8,577 TOTAL $ 781,195 $ 857,679 NET INCOME PER LIMITED PARTNERSHIP UNIT $32.22 $35.38 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 (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2002 GENERAL LIMITED PARTNERS PARTNERS TOTAL BALANCE AT JANUARY 1, 2002 ($82,543) $2,606,465 $2,523,922 NET INCOME 7,812 773,383 781,195 DISTRIBUTIONS (5,454) (540,000) (545,454) BALANCE AT JUNE 30, 2002 ($80,185) $2,839,848 $2,759,663 See accompanying notes to consolidated financial statements(unaudited). STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001 June 30, June 30, 2002 2001 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 781,195 $ 857,679 Adjustments to reconcile net income to net cash provided by operating activities: Equity in earnings of real estate joint venture (69,927) (86,484) Distributions from real estate joint venture 67,500 80,400 Changes in assets and liabilities: Decrease(increase)in other assets 1,839 (6,000) Increase(decrease)in liabilities 27,004 (3,397) Net cash provided by operating activities 807,611 842,198 CASH FLOWS FROM FINANCING ACTIVITIES - Distributions to partners (545,454) (545,454) NET INCREASE IN CASH AND CASH EQUIVALENTS 262,157 296,744 CASH AND CASH EQUIVALENTS: At beginning of period 619,194 514,497 At end of period $ 881,351 $811,241 See accompanying notes to financial statements(unaudited). DSI REALTY INCOME FUND VIII (A California Real Estate Limited Partnership) NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 1. GENERAL DSI Realty Income Fund VIII (the "Partnership"), a limited 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 June 30, 2002, and for the periods ended June 30, 2002, and 2001 is unaudited. Such financial information includes all adjustments considered necessary by the Partnership's management for a fair presentation of the results for the periods indicated. 2. PROPERTY The Partnership owns five mini-storage facilities located in Stockton, Pittsburg, El Centro, Lompoc and Huntington Beach, California. The total cost of property and accumulated depreciation at June 30, 2002, is as follows: Land $ 2,287,427 Buildings and improvements 7,126,997 Equipment 22,831 Total 9,437,255 Less: Accumulated Depreciation ( 7,149,828) Property - Net $ 2,287,427 3. INVESTMENT IN REAL ESTATE JOINT VENTURE The Partnership is involved in a joint venture with DSI Realty Income Fund IX through which the Partnership has a 30% interest in a mini-storage facility in Aurora, Colorado. Under the terms of the joint venture agreement, the Partnership is entitled to 30% of the profits and losses of the venture and owns 30% of the mini-storage facility as a tenant in common with DSI Realty Income Fund IX, which has the remaining 70% interest in the venture. Summarized income statement information for the six months ended June 30, 2002, and 2001 is as follows: 2002 2001 Revenue $345,223 $389,206 Operating Expenses 112,134 100,926 Net Income $233,089 $288,280 The Partnership accounts for its investment in the real estate joint venture under the equity method of accounting. 4. 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. DSI REALTY INCOME FUND VIII 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 VIII (the "Partnership") that the Quarterly Report of the Partnership on Form 10-Q for the periods ended June 30, 2002 fully complies with the requirements of Section 13(a) of the Securities and Exchange Act of 1934 and that information 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