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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, 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 2-83291
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 June 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 June 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 June 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: July 31, 2003 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: July 31, 2003 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
July 31, 2003
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 June 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 period ended June 30, 2003, and 2002, total revenues
increased 1.8% from $637,269 to $648,778 and total expenses decreased 1.6%
from $330,618 to $325,298 and other income decreased from $259 to $137. As
a result, net income increased 5.4% from $306,910 for the three-month period
ended June 30, 2002, to $323,617 for the same period in 2003. Rental revenue
remained relatively constant. Occupancy levels for the Partnership's six mini-
storage facilities averaged 89.1% for the three-month period ended June 30,
2003 and 88.8% 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 remained constant as increases in
advertising, real estate tax and salaries and wages expenses was offset by
decreases in maintenance and repair, office supplies and workers compensation
insurance expenses. General and administrative expenses decreased approx-
imately $8,100 (11.0%) primarily as a result of a decrease in equipment and
computer lease expense.
For the six-month periods ended June 30, 2003, and 2002, total revenues
decreased 0.7% from $1,309,012 to $1,299,482 and total expenses decreased 1.7%
from $648,101 to $637,309 and other income decreased from $503 to $303. As
a result, net income increased 0.2% from $661,414 for the six months ended
June 30, 2002, to $662,476 for the same period in 2003. Rental revenue re-
mained relatively constant. Operating expenses remained constant as increases
in advertising, telephone and real estate tax expenses was offset by decreases
in maintenance and repair, office supplies and workers compensation insurance.
General and administrative expenses decreased approximately $6,300 (4.4%) as
a result of relatively insignificant fluctuations in various accounts.
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 74 Units representing 0.308% of the outstanding Units of
the Partnership.
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 implemen-
tation of the amendment.
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)
JUNE 30, 2003 AND DECEMBER 31, 2002
June 30, December 31,
2003 2002
ASSETS
CASH AND CASH EQUIVALENTS $ 641,529 $ 497,970
PROPERTY, Net 2,089,800 2,089,800
OTHER ASSETS 62,338 62,338
TOTAL $2,793,667 $2,650,108
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
LIABILITIES $ 578,662 $ 612,731
PARTNERS' EQUITY (DEFICIT):
General Partners (85,618) (87,395)
Limited Partners 2,300,623 2,124,772
Total partners' equity 2,215,005 2,037,377
TOTAL $2,793,667 $2,650,108
See accompanying notes to financial statements(unaudited).
STATEMENTS OF INCOME (UNAUDITED)
FOR THE THREE MONTHS ENDED JUNE 30, 2003 AND 2002
June 30, June 30,
2003 2002
REVENUES:
Rental $ 648,778 $ 637,269
EXPENSES:
Operating 259,982 257,178
General and administrative 65,316 73,440
Total expenses 325,298 330,618
OPERATING INCOME $ 323,480 $ 306,651
OTHER INCOME
Interest 137 259
NET INCOME $ 323,617 $ 306,910
AGGREGATE NET INCOME ALLOCATED TO:
Limited Partners $ 320,381 $ 303,841
General Partners 3,236 3,069
TOTAL $ 323,617 $ 306,910
NET INCOME PER LIMITED
PARTNERSHIP UNIT $ 13.35 $ 12.66
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, 2003 AND 2002
June 30, June 30,
2003 2002
REVENUES:
Rental $1,299,482 $1,309,012
EXPENSES:
Operating 499,756 504,231
General and administrative 137,553 143,870
Total expenses 637,309 648,101
OPERATING INCOME $ 662,173 $ 660,911
OTHER INCOME
Interest 303 503
NET INCOME $ 662,476 $ 661,414
AGGREGATE NET INCOME ALLOCATED TO:
Limited Partners $ 655,851 $ 654,800
General Partners 6,625 6,614
TOTAL $ 662,476 $ 661,414
NET INCOME PER LIMITED
PARTNERSHIP UNIT $27.33 $27.28
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 SIX MONTHS ENDED JUNE 30, 2003
GENERAL LIMITED
PARTNERS PARTNERS TOTAL
BALANCE AT JANUARY 1, 2003 ($87,395) $2,124,772 $2,037,377
NET INCOME 6,625 655,851 662,476
DISTRIBUTIONS (4,848) (480,000) (484,848)
BALANCE AT JUNE 30, 2003 ($85,618) $2,300,623 $2,215,005
See accompanying notes to financial statements(unaudited).
STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002
June 30, June 30,
2003 2002
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 662,476 $ 661,414
Adjustments to reconcile net
income to net cash provided
by operating activities:
Changes in assets and
liabilities:
Decrease in assets 0 2,670
Decrease in liabilities (34,069) (23,778)
Net cash provided by
operating activities 628,407 640,306
CASH FLOWS FROM FINANCING ACTIVITIES -
Distributions to partners (484,848) (484,848)
NET INCREASE IN CASH AND
CASH EQUIVALENTS 143,559 155,458
CASH AND CASH EQUIVALENTS:
At beginning of period 497,970 530,721
At end of period $ 641,529 $ 686,179
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 June 30, 2003, and for
the periods ended June 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 15 years. The total cost of property and
accumulated depreciation at June 30, 2003, is as follows:
Land $ 2,089,800
Buildings and improvements 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.
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.
CERTIFICATIONS
I, Robert J. Conway, certify that:
1. I have reviewed this quarterly report on Form 10-Q of DSI Realty Income
Fund VII;
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, 2003
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 VII;
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, 2003
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 VII (the
"Partnership") on Form 10-Q for the period ending June 30, 2003 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, 2003
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 VII (the
"Partnership") on Form 10-Q for the period ending June 30, 2003 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, 2003