10-Q 1 dsiviii-604.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, 2004 /___/ 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, 2004 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, 2004. 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, 2004. (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, 2004 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, 2004 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, 2004 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, 2004. 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, 2004 and 2003, total revenues decreased 0.1% from $589,816 to $589,499 and total expenses increased 8.5% from $265,108 to $287,666 and other income increased from $159 to $184. Equity in income of the real estate joint venture decreased 13.4% from 31,505 to $27,284. As a result, net income decreased 7.6% from $356,372 to $329,301 for the three-month period ended June 30, 2004, as compared to the same period in 2003. Rental revenue remained constant as higher unit rental rates was off- set by lower occupancy rates. Occupancy levels for the Partnership's five mini-storage facilities averaged 85.7% for the three-month period ended June 30, 2004 as compared to 88.7% for the same period in 2003. The Partner- ship is continuing its marketing efforts to attract and keep new tenants in its various mini-storage facilities. Operating expenses increased approxi- mately $18,400 (9.1%) primarily as a result of increases in advertising, repairs and maintenance and office supplies expenses, partially offset by a decrease in salaries and wages expense. General and administrative expenses increased approximately $4,200 (6.8%) primarily as a result of an increase in legal and professional and equipment and computer lease expenses partially offset by a decrease in incentive management fees expense. Equity in income from the real estate joint venture decreased as a result of lower rental revenue at that facility. For the six-month periods ended June 30, 2004, and 2003, total revenues decreased 3.7% from $1,228,019 to $1,182,159 and total expenses increased 2.6% from $554,683 to $569,049 and other income increased from $350 to $368. Equity in income of the real estate joint venture decreased 15.0% from $69,689 to $59,225. As a result, net income decreased 9.5% from $743,375 to $672,703 for the six-month period ended June 30, 2004, as compared to the same period in 2003. Rental revenue decreased as a result of lower occupancy rates. Operating expenses increased approximately $20,600 (5.0%) primarily as a result of increases in advertising, office supplies and salaries and wages expenses. General and administrative expense decreased approximately $6,200 (4.4%) primarily as a result of a decrease in incentive management fees expense, partially offset by an increase in legal and professional expense. Equity in income from the real estate joint venture decreased as a result of lower rental revenue at that facility. 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, 2004 AND DECEMBER 31, 2003 June 30, December 31, 2004 2003 ASSETS CASH AND CASH EQUIVALENTS $ 857,528 $ 713,429 PROPERTY, Net 2,288,638 2,288,638 INVESTMENT IN REAL ESTATE JOINT VENTURE 181,093 180,968 OTHER ASSETS 97,709 97,680 TOTAL $3,424,968 $3,280,715 LIABILITIES AND PARTNERS' EQUITY (DEFICIT) LIABILITIES $ 699,333 $ 682,329 PARTNERS' EQUITY (DEFICIT): General Partners (80,525) (81,798) Limited Partners 2,806,160 2,680,184 Total partners' equity 2,725,635 2,598,386 TOTAL $3,424,968 $3,280,715 See accompanying notes to financial statements(unaudited). STATEMENTS OF INCOME (UNAUDITED) FOR THE THREE MONTHS ENDED JUNE 30, 2004 AND 2003 June 30, June 30, 2004 2003 REVENUES: Rental $ 589,499 $ 589,816 EXPENSES: Operating 221,689 203,314 General and administrative 65,977 61,794 Total expenses 287,666 265,108 OPERATING INCOME 301,833 324,708 OTHER INCOME Interest 184 159 INCOME BEFORE EQUITY IN INCOME OF REAL ESTATE JOINT VENTURE 302,017 324,867 EQUITY IN INCOME OF REAL ESTATE JOINT VENTURE 27,284 31,505 NET INCOME $ 329,301 $ 356,372 AGGREGATE NET INCOME ALLOCATED TO: Limited Partners $ 326,008 $ 352,808 General Partners 3,293 3,564 TOTAL $ 329,301 $ 356,372 NET INCOME PER LIMITED PARTNERSHIP UNIT $ 13.58 $ 14.70 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, 2004 AND 2003 June 30, June 30, 2004 2003 REVENUES: Rental $1,182,159 $1,228,019 EXPENSES: Operating 434,556 413,980 General and Administrative 134,493 140,703 Total Expenses 569,049 554,683 OPERATING INCOME 613,110 673,336 OTHER INCOME 368 350 INCOME BEFORE EQUITY IN INCOME OF REAL ESTATE JOINT VENTURE 613,478 673,686 EQUITY IN INCOME OF REAL ESTATE JOINT VENTURE 59,225 69,689 NET INCOME $ 672,703 $ 743,375 AGGREGATE NET INCOME ALLOCATED TO: Limited Partners $ 665,976 $ 735,941 General Partners 6,727 7,434 TOTAL $ 672,703 $ 743,375 NET INCOME PER LIMITED PARTNERSHIP UNIT $27.75 $30.66 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, 2004 GENERAL LIMITED PARTNERS PARTNERS TOTAL BALANCE AT JANUARY 1, 2004 ($81,798) $2,680,184 $2,598,386 NET INCOME 6,727 665,976 672,703 DISTRIBUTIONS (5,454) (540,000) (545,454) BALANCE AT JUNE 30, 2004 ($80,525) $2,806,160 $2,725,635 See accompanying notes to consolidated financial statements(unaudited). STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003 June 30, June 30, 2004 2003 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 672,703 $ 743,375 Adjustments to reconcile net income to net cash provided by operating activities: Equity in earnings of real estate joint venture (59,225) (69,689) Distributions from real estate joint venture 59,100 64,200 Changes in assets and liabilities: Increase in other assets (29) 0 Increase in liabilities 17,004 30,624 Net cash provided by operating activities 689,553 768,510 CASH FLOWS FROM FINANCING ACTIVITIES - Distributions to partners (545,454) (545,454) NET INCREASE IN CASH AND CASH EQUIVALENTS 144,099 223,056 CASH AND CASH EQUIVALENTS: At beginning of period 713,429 502,070 At end of period $ 857,528 $725,126 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, 2004, and for the periods ended June 30, 2004, and 2003 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, 2004, is as follows: Land $ 2,287,427 Buildings and improvements 7,126,999 Equipment 24,040 Total 9,438,466 Less: Accumulated Depreciation ( 7,149,828) Property - Net $ 2,288,638 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, 2004, and 2003 is as follows: 2004 2003 Revenue $308,594 $335,827 Operating Expenses 111,177 103,531 Net Income $197,417 $232,296 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. 5. 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 President and Chief Executive Officer. These disclosure controls and pro- cedures are designed to ensure that the information required to be disclosed by the Partnership in its periodic reports filed with the Securities and Ex- change Commission (the Commission) is recorded, processed, summarized and reported, within the time periods specified by the Commissions rules and forms and that the information 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 signifi- cantly affect the internal controls subsequent to the date of their evaluation. CERTIFICATIONS I, Robert J. Conway, certify that: 1. I have reviewed this quarterly report on Form 10-Q of DSI Realty Income Fund VIII; 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 cover- ed 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 con- solidated 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: a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to re- cord, 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 in- ternal 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: July 31, 2004 Robert J. Conway Chief Executive Officer CERTIFICATIONS I, Richard P. Conway, certify that: 1. I have reviewed this quarterly report on Form 10-Q of DSI Realty Income Fund VIII; 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 cover- ed 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 con- solidated 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: a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to re- cord, 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 in- ternal 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: July 31, 2004 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 VIII (the "Partnership") on Form 10-Q for the period ending June 30, 2004 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 July 31, 2004 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 VIII (the "Partnership") on Form 10-Q for the period ending June 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Richard P. 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. Richard P. Conway Vice President July 31, 2004