10-Q 1 dsi09902.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, 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 IX, A California Limited Partnership (Exact name of registrant as specified in its charter) California_______________________________________33-0103989 (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, 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 September 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 September 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: October 31, 2002 DSI REALTY INCOME FUND IX 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, 2002 DSI REALTY INCOME FUND IX 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, 2002 QUARTERLY REPORT TO THE LIMITED PARTNERS OF DSI REALTY INCOME FUND IX DEAR LIMITED PARTNERS: We are pleased to enclose the Partnership's unaudited financial statements for the period ended September 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 September 30, 2002 and 2001, total revenues decreased 2.1% from $805,170 to $787,933 and total expenses decreased 3.6% from $450,307 to $434,102 and other income decreased from $783 to $224. Minority interest in income of real estate joint venture decreased 8.6% from $39,652 to $36,115. As a result, net income increased 0.6% from $315,994 to $317,940 for the three-month period ended September 30, 2002, as compared to the same period in 2001. Rental revenue decreased as a result of lower occupancy rates. Occupancy levels for the Partnership's six mini-storage facilities averaged 83.3% for the three-month period ended September 30, 2002 as compared to 87.8% for the same period in 2001. The Partnership is con- tinuing its marketing efforts to attract and keep new tenants in its various mini-storage facilities. Operating expenses decreased approximately $20,000 (5.0%) due primarily to a decrease in maintenance and expense, partially off- set by increases in workers compensation insurance and postage expenses. General and administrative expenses increased approximately $3,800 (8.2%) primarily as a result of an increase in equipment and computer lease expense. Minority interest in income of real estate joint venture decreased as a result of lower rental revenue at that facility. For the nine-month periods ended September 30, 2002, and 2001, total revenues decreased 1.3% from $2,391,231 to $2,359,578 and total expenses increased 4.8% from $1,324,117 to $1,387,028 and other income decreased from $2,965 to $635. Minority interest in income of real estate joint venture decreased 15.9% from $126,136 to $106,042. As a result, net income decreased 8.1% from $943,943 to $867,143 for the nine-month period ended September 30, 2002, as compared to the same period in 2001. Rental revenue decreased as a result of lower occupancy rates. Operating expenses increased approximately $35,400 (3.1%) due primarily to increases in advertising, telephone, legal and professional, office supplies, salaries and wages, workers compensation insurance, security alarm services, travel and postage expenses, partially offset by decreases in repair and maintenance and power and sweeping expenses. Power and sweeping expenses decreased as the substantial snow removal costs, associated with heavy snowfalls in area of Illinois and Michigan where Partnership facilities are located, were not incurred in the current period. General and administra- tive expenses increased approximately $27,600 (15.4%) as a result of increases in legal and professional and equipment and computer lease expenses. The decrease in minority interest in income of real estate joint venture was discussed above. 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 in- adequate 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 has not changed. Prior to the expiration date of the offer, Limited Partners tendered 22 Units representing 0.072% of the outstanding Units of the Partnership. 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 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 IX, P.O. Box 357, Long Beach, California 90801. Very truly yours, DSI REALTY INCOME FUND IX By: DSI Properties, Inc., as General Partner By /s/ Robert J. Conway ____________________________ ROBERT J. CONWAY, President DSI REALTY INCOME FUND IX (A California Real Estate Limited Partnership) CONSILIDATED BALANCE SHEETS(UNAUDITED) SEPTEMBER 30, 2002 AND DECEMBER 31, 2001 September 30, December 31, 2002 2001 ASSETS CASH AND CASH EQUIVALENTS $ 895,231 $ 633,503 PROPERTY, Net 4,423,652 4,745,825 OTHER ASSETS 90,597 93,384 TOTAL $5,409,480 $5,472,712 LIABILITIES AND PARTNERS' EQUITY (DEFICIT) LIABILITIES $ 725,157 $ 724,084 MINORITY INTEREST IN REAL ESTATE JOINT VENTURE 180,302 181,660 PARTNERS' EQUITY(DEFICIT): General Partners (92,401) (91,771) Limited Partners 4,596,422 4,658,739 Total partners' equity 4,504,021 4,566,968 TOTAL $5,409,480 $5,472,712 See accompanying notes to financial statements(unaudited). CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 September 30, September 30, 2002 2001 REVENUES: Rental $ 787,933 $ 805,170 EXPENSES: Operating 383,859 403,852 General and administrative 50,243 46,455 Total expenses 434,102 450,307 OPERATING INCOME 353,831 354,863 OTHER INCOME Interest 224 783 INCOME BEFORE EQUITY IN INCOME OF REAL ESTATE JOINT VENTURE 354,055 355,646 MINORITY INTEREST IN INCOME OF REAL ESTATE JOINT VENTURE (36,115) (39,652) NET INCOME $ 317,940 $ 315,994 AGGREGATE NET INCOME ALLOCATED TO: Limited partners $ 314,761 $ 312,834 General partners 3,179 3,160 TOTAL $ 317,940 $ 315,994 NET INCOME PER LIMITED PARTNERSHIP UNIT $ 10.26 $ 10.19 LIMITED PARTNERSHIP UNITS USED IN PER UNIT CALCULATION 30,693 30,693 See accompanying notes to financial statements(unaudited). CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 September 30, September 30, 2002 2001 REVENUES: Rental $2,359,578 $2,391,231 EXPENSES: Operating 1,180,256 1,144,899 General and Administrative 206,772 179,218 Total Expenses 1,387,028 1,324,117 OPERATING INCOME 972,550 1,067,114 OTHER INCOME Interest 635 2,965 INCOME BEFORE MINORITY INTEREST IN INCOME OF REAL ESTATE JOINT VENTURE 973,185 1,070,079 MINORITY INTEREST IN INCOME OF REAL ESTATE JOINT VENTURE (106,042) (126,136) NET INCOME $867,143 $943,943 AGGREGATE NET INCOME ALLOCATED TO: Limited Partners 858,472 934,504 General Partners 8,671 9,439 TOTAL 867,143 943,943 NET INCOME PER LIMITED PARTNERSHIP UNIT $27.97 $30.45 LIMITED PARTNERSHIP UNITS USED IN PER UNIT CALCULATION 30,693 30,693 See accompanying notes to financial statements(unaudited). CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIT)(UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 GENERAL LIMITED PARTNERS PARTNERS TOTAL BALANCE AT JANUARY 1, 2002 ($91,771) $4,658,739 $4,566,968 NET INCOME 8,671 858,472 867,143 DISTRIBUTIONS (9,301) (920,789) (930,090) BALANCE AT SEPTEMBER 30, 2002 ($92,401) $4,596,422 $4,504,021 See accompanying notes to consolidated financial statements(unaudited). CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 September 30, September 30, 2002 2001 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 867,143 $ 943,943 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 322,173 313,610 Minority interest in income of real estate joint venture 106,042 126,136 Changes in assets and liabilities: Decrease(increase)in other assets 2,787 (9,000) Increase(decrease)in liabilities 1,073 (5,874) Net cash provided by operating activities 1,299,218 1,368,815 CASH FLOWS FROM FINANCING ACTIVITIES - Distributions to partners (930,090) (930,090) Distributions paid to minority interest in real estate joint venture (107,400) (121,200) Net cash used in financing activities (1,037,490) (1,051,290) NET INCREASE IN CASH AND CASH EQUIVALENTS 261,728 317,525 CASH AND CASH EQUIVALENTS: At beginning of period 633,503 509,410 At end of period $ 895,231 $826,935 See accompanying notes to financial statements(unaudited). DSI REALTY INCOME FUND IX (A California Real Estate Limited Partnership) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. GENERAL DSI Realty Income Fund IX (the "Partnership"), a limited partnership, has three general partners (DSI Properties, Inc., Robert J. Conway and Joseph W. Conway) and limited partners owning 30,693 limited partnership units. The accompanying consolidated financial information as of September 30, 2002, and for the periods ended September 30, 2002, and 2001 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 The Partnership owns five mini-storage facilities located in Monterey Park and Azusa, California; Everett, Washington; and Romeoville and Elgin, Illinois. The Partnership also owns a 70% interest in a mini-storage facility in Aurora, Colorado. As of September 30, 2002, the total cost and accumulated depreciation of the mini-storage facilities are as follows: Land $ 2,729,790 Buildings and equipment 11,052,387 Total 13,782,177 Less: Accumulated Depreciation ( 9,358,526) Property - Net $ 4,423,651 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 IX 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 IX (the "Partnership") that the Quarterly Report of the Partnership on Form 10-Q for the periods ended September 30, 2002 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 IX; 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 materinal weaknesses. Date: November, 2002 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 IX; 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 materinal weaknesses. Date: November, 2002 Richard Conway Vice President