UNITED STATES
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 fiscal quarter ended
September 30, 1995.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 For the transition period
from to
Commission file number 2-64413
-----------------------
RMI COVERED HOPPER RAILCAR MANAGEMENT PROGRAM 79-1
(Exact name of registrant as specified in its charter)
California 94-2645847
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Market, Steuart Street Tower
Suite 900, San Francisco, CA 94105-1301
(Address of principal (Zip code)
executive offices)
Registrant's telephone number, including area code (415) 974-1399
-----------------------
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 ______
RMI COVERED HOPPER RAILCAR MANAGEMENT PROGRAM 79-1
STATEMENTS OF REVENUES COLLECTED AND EXPENSES PAID
AND OTHER CHANGES IN CASH
For the three months For the nine months
ended September 30, ended September 30,
--------------------------------------------------------------------------------
1995 1994 1995 1994
--------------------------------------------------------------------------------
Revenues Collected:
Lease revenue received $ 620,590 $ 433,324 $ 1,870,231 $ 1,740,277
Interest and other income 18,343 5,422 61,280 44,304
--------------------------------------------------------------------------------
Total revenues collected 638,933 438,746 1,931,511 1,784,581
Expenses:
Repairs and maintenance 97,293 64,439 240,397 241,112
Insurance -- 6,710 (254) 29,593
Property taxes 4,909 12,737 21,362 42,728
Accounting and legal fees 1,824 297 6,334 9,076
Storage, repositioning and other 2,014 1,635 6,049 13,637
--------------------------------------------------------------------------------
Total expenses paid 106,040 85,818 273,888 336,146
--------------------------------------------------------------------------------
Excess of revenues collected
over expenses paid 532,893 352,928 1,657,623 1,448,435
--------------------------------------------------------------------------------
Other increases (decreases) in cash:
Prepaid mileage, reimbursable repairs
and other 48,992 82,037 49,037 88,598
Management fees paid (67,431) (64,149) (195,103) (184,676)
Receipt of proceeds from sold or destroyed
cars -- -- 22,461 554,134
Receipt of proceeds for transfer of car
ownership 75,000 -- 250,000 --
Payments to investors for sold or
destroyed cars -- (47,127) (47,968) (589,635)
Payments to investors for transfer of car
ownership (72,000) -- (240,000) (20,160)
Commission paid (2,000) -- (9,000) --
Distributions to investors (444,597) (403,223) (1,286,868) (1,233,875)
--------------------------------------------------------------------------------
Net other decreases in cash (462,036) (432,462) (1,457,441) (1,385,614)
--------------------------------------------------------------------------------
Net increase (decrease) in cash 70,857 (79,534) 200,182 62,821
Cash at beginning of period 1,506,650 1,315,208 1,377,325 1,172,853
--------------------------------------------------------------------------------
Cash at end of period $ 1,577,507 $ 1,235,674 $ 1,577,507 $ 1,235,674
================================================================================
See accompanying notes to financial
statements.
RMI COVERED HOPPER RAILCAR MANAGEMENT PROGRAM 79-1
NOTES TO THE STATEMENTS OF REVENUES COLLECTED AND EXPENSES PAID
AND OTHER CHANGES IN CASH
September 30, 1995
1. Basis of Presentation
RMI Covered Hopper Railcar Management Program 79-1 (the "Program") is not a
legal entity. The statements of revenues collected and expenses paid and other
changes in cash (the "Statements") of the Program are presented on the cash
basis of accounting, used for reporting to investors in the Program in
accordance with the Management Agreement with PLM Investment Management, Inc.
("IMI"). Under the cash basis, revenues are recognized when received, rather
than when earned, and expenses are recognized when paid, rather than when the
obligation is incurred. Accordingly, the Statements are not intended to present
financial position, or results of operations or cash flows in accordance with
generally accepted accounting principles.
2. Operations
At September 30, 1995, 494 cars, which are owned by the investors, were being
managed by IMI under the Program, all of which were covered by lease agreements.
During the nine months ending September 30,1995, one car was destroyed and ten
railcars transferred from several investors to other investors and IMI received
a commission fee of $9,000 to handle the transfer.
3. Equalization reserve
Under the terms of the management agreement, IMI may, at its discretion, cause
the Program to retain a certain amount of cash (the working capital reserve) to
cover future disbursements and provide for a balanced distribution of funds to
the investors each quarter. IMI has determined the working capital reserve at
September 30, 1995, to be $954,768 ($956,308 at December 31, 1994).
4. Reclassification
Certain amounts in the 1994 Statements have been reclassified to conform to 1995
presentation.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CASH BALANCES AND RESULTS OF
OPERATIONS
Liquidity and Capital Resources
The Program's capital commitments consist of paying operating expenses, and to
the extent funds are available, making cash distributions to the investors. Cash
reserves are considered sufficient to cover all known liabilities of the
equipment pool.
Comparison of the Program's Revenues Collected, Expenses Paid and Other Changes
in Cash for the Three Months Ended September 30, 1995 and 1994
Revenues collected:
(1) Lease receipts increased to $620,590 in the third quarter of 1995, from
$433,324 in the third quarter of 1994. The increase is primarily due to the
timing of receipt of revenues during the comparable periods and higher average
lease rates.
(2) Interest and other income increased to $18,343 in the third quarter of 1995,
from $5,422 in the third quarter of 1994, due to higher interest income
resulting from higher cash balances and a higher rate of interest paid, offset
in part by a lower exchange rate gain.
Expenses paid:
(1) Repairs and maintenance expense increased to $97,293 in the third quarter of
1995, from $64,439 in the third quarter of 1994. The increase is due to the
timing of payments of expenses during comparable periods.
(2) Insurance decreased to zero in the third quarter of 1995, from $6,710 in the
third quarter of 1994 due to timing of payments of expenses during comparable
periods. Insurance policies remain in force for all equipment.
(3) Property taxes decreased to $4,909 in the third quarter of 1995, from
$12,737 in the third quarter of 1994. The decrease is due to the timing of
payments for these expenses during the comparable periods, as the tax rates
remained constant.
(4) Accounting and legal fees increased to $1,824 in the third quarter of 1995,
from $297 in the third quarter of 1994 due to the timing of payments for these
expenses during the comparable periods, as the service level remain the same.
(5) Storage, repositioning and other expenses increased to $2,014 in the third
quarter of 1995, from $1,635 in the third quarter of 1994. The increase is
primarily due to the timing of payments of expenses during comparable periods.
Other changes in cash:
(1) Prepaid mileage, reimbursable repairs and other are composed primarily of
receipts of mileage credits from railroads which are due to lessees, net of
reimbursable repairs due from lessees. The funds increased by $48,992 in the
third quarter of 1995, as compared to an increase of $82,037 in the third
quarter of 1994. The difference between comparable periods is due primarily to
the timing of net receipts and repayments of these funds by the Program.
Other changes in cash: (continued)
(2) Management fees paid increased to $67,431 in the third quarter 1995, from
$64,149 in the third quarter of 1994. The increase is due to $11,115 of
incentive fees for net income over $750 per car that was paid in the third
quarter of 1995, as compared to $7,605 that was paid in the third quarter of
1994.
The Program distributed $444,597 to investors in the third quarter 1995, a 10%
increase from the comparable period in 1994.
The Program's performance in the second quarter 1995 is not necessarily
indicative of future periods.
Comparison of the Program's Revenues Collected, Expenses Paid and Other Changes
in Cash for the Nine Months Ended September 30, 1995 and 1994
Revenues collected:
(1) Lease receipts increased to $1,870,231 for the nine-month period ended
September 30, 1995, from $1,740,277 for the comparable period in 1994. The
increase is primarily due to timing of rental receipts between the comparable
periods and higher average lease rates. In addition, during 1994, 24 railcars
were sold or destroyed.
(2) Interest and other income increased to $61,280 for the nine-month period
ended September 30, 1995, from $44,304 for the comparable period in 1994. The
increase is primarily due to an increase in interest income resulting from
higher cash balances and a higher rate of interest paid, $21,500 for business
interruption insurance claims was received, a similiar claim was not received
during 1995.
Expenses paid:
(1) Repairs and maintenance expense decreased to $240,397 in the nine-month
period ended September 30, 1995, from $241,112 for the comparable period in
1994. The decrease is primarily due to the timing of payments of expenses during
comparable periods.
(2) Insurance decreased to a credit amount of $254 for the nine-month period
ended September 30, 1995, from expense of $29,593 for the comparable period in
1994. The decrease is due to an additional 1991 annual premium for business
interruption insurance paid in the first quarter of 1994, partially offset by a
refund of 1993 annual premium for contingent liability insurance received in the
first quarter of 1995.
(3) Property taxes decreased to $21,362 for the nine-month ended September 30,
1995, from $42,728 for the comparable period in 1994. The decrease is due to the
timing receipt of invoices from various states, and to the timing of payments
for these expenses during the comparable periods, as the tax rates remained
constant.
(4) Accounting and legal fees decreased to $6,334 for the nine-month period
ended September 30, 1995, from $9,076 for the comparable period in 1994 as the
result of a reduction in the cost for these professional services.
(5) Storage, repositioning and other expenses decreased to $6,049 for the
nine-month period ended September 30, 1995, from $13,637 for the comparable
period in 1994. The decrease is due to timing of payments for these expenses
during comparable periods.
Other changes in cash:
(1) Prepaid mileage, reimbursable repairs and other are composed primarily of
receipts of mileage credits from railroads which are due to lessees, net of
reimbursable repairs due from lessees. The funds increased by $49,037 during the
nine-month period ended September 30, 1995, as compared to an increase of
$88,598 for the comparable period in 1994. The difference between comparable
periods is due primarily to the timing of net receipts and repayments of these
funds by the Program.
(2) Management fees paid increased to $195,103 in the nine-month period ended
September 30, 1995, from $184,676 for the comparable period in 1994. The
increase is due to $25,965 of incentive fees for net income over $750 per car
that was paid during 1995, as compared to $11,505 in incentive fees which was
paid during 1994.
The Program distributed $1,286,868 to investors for the nine-month period ended
September 30, 1995, a 4% increase from the comparable period in 1994.
Inflation and changing prices did not materially impact the Program's revenues
collected, expenses, and other changes in cash during the reported periods.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RMI COVERED HOPPER RAILCAR
MANAGEMENT PROGRAM 79-1
By: PLM Investment Management, Inc.
Manager
By: /s/ Stephen M. Bess
--------------------
Stephen M. Bess
President
Date: November 13, 1995 By: /s/ David J. Davis
-----------------------
David J. Davis
Vice President and
Corporate Controller