UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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, 1996.
[ ] 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
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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 800, San Francisco, CA 94105-1301
(Address of principal (Zip code)
executive offices)
Registrant's telephone number, including area code (415) 974-1399
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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,
1996 1995 1996 1995
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Revenues Collected:
Lease revenue received $ 618,363 $ 620,590 $ 1,875,508 1,870,231
Interest and other income 17,187 19,330 55,247 65,268
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Total revenues collected 635,550 639,920 1,930,755 1,935,499
Expenses:
Repairs and maintenance 92,950 97,293 230,945 240,397
Insurance -- -- 3,195 (254 )
Property taxes 2,815 4,909 15,555 21,362
Accounting and legal fees 911 1,824 8,576 6,334
Storage, repositioning and other 3,401 3,001 8,072 10,037
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Total expenses paid 100,077 107,027 266,343 277,876
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Excess of revenues collected
over expenses paid 535,473 532,893 1,664,412 1,657,623
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Other increases (decreases) in cash:
Prepaid mileage, reimbursable repairs
and other (207,216 ) 48,992 (249,488 ) 49,037
Management fees paid (67,536 ) (67,431 ) (204,051 ) (195,103 )
Receipt of proceeds from sold or
destroyed cars -- -- 960,000 22,461
Receipt of proceeds for transfer of car
ownership 305,000 75,000 384,000 250,000
Payments to investors for sold or
destroyed cars -- -- (923,561 ) (47,968 )
Payments to investors for transfer of car
ownership (319,680 ) (72,000 ) (368,640 ) (240,000 )
Commission paid (10,000 ) (2,000 ) (51,960 ) (9,000 )
Distributions to investors (449,964 ) (444,597 ) (1,407,065 ) (1,286,868 )
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Net other decreases in cash (749,396 ) (462,036 ) (1,860,765 ) (1,457,441 )
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Net (decrease) increase in cash (213,923 ) 70,857 (196,353 ) 200,182
Cash at beginning of period 1,598,682 1,506,650 1,581,112 1,377,325
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Cash at end of period $ 1,384,759 $ 1,577,507 $ 1,384,759 1,577,507
==========================================================================
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, 1996
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, 1996, 469 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 30,1996, five cars were added, 31 cars
were sold and 14 railcars transferred from several investors to other investors.
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, 1996, to be $942,136 ($873,359 at December 31, 1995).
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, 1996 and 1995
Revenues collected:
(1) Lease receipts decreased to $618,363 in the third quarter of 1996, from
$620,590 in the third quarter of 1995. The decrease is primarily due to the
disposition of 31 cars in the first two quarters of 1996, and the timing of
receipt of revenues during the comparable periods, offset by five cars that were
added during the first two quarters of 1996.
(2) Interest and other income decreased to $17,187 in the third quarter of 1996,
from $19,330 in the third quarter of 1995, due to lower interest income
resulting from lower cash balances and a lower rate of interest paid.
Expenses paid:
(1) Repairs and maintenance expense decreased to $92,950 in the third quarter of
1996, from $97,293 in the third quarter of 1995. The decrease is due to the
disposition of 31 railcars during the first two quarters of 1996 and the timing
of payments of expenses during comparable periods.
(2) Property taxes decreased to $2,815 in the third quarter of 1996, from
$4,909 in the third quarter of 1995. The decrease is due to the disposition of
31 railcars during the first two quarters of 1996 and the timing of payments for
these expenses during the comparable periods, as the tax rates remained
constant.
(3) Accounting and legal fees decreased to $911 in the third quarter of 1996,
from $1,824 in the third quarter of 1995 due to the timing of payments for these
expenses during the comparable periods, as the service level remain the same.
(4) Storage, repositioning and other expenses increased to $3,401 in the third
quarter of 1996, from $3,001 in the third quarter of 1995. 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 decreased by $207,216 in the
third quarter of 1996, as compared to an increase of $48,992 in the third
quarter of 1995. 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 $67,536 in the third quarter 1996, from
$67,431 in the third quarter of 1995. The increase is primarily due to $14,070
of incentive fees for net income over $750 per car that was paid in the third
quarter of 1996, as compared to $11,115 that was paid in the third quarter of
1995, offset by the decrease in the number of cars.
The Program distributed $449,964 to investors in the third quarter 1996, a 1%
increase from the comparable period in 1995.
The Program's performance in the second quarter 1996 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, 1996 and 1995
Revenues collected:
(1) Lease receipts increased to $1,875,508 for the nine-month period ended
September 30, 1996, from $1,870,231 for the comparable period in 1995. The
increase is primarily due to higher average lease rates and five cars being
added during the nine months ended September 30, 1996, offset by 31 railcars
that were sold or destroyed in the first two quarters of 1996.
(2) Interest and other income decreased to $55,247 for the nine-month period
ended September 30, 1996, from $65,268 for the comparable period in 1995. The
decrease is primarily due to a decrease in interest income resulting from lower
cash balances and a lower rate of interest paid.
Expenses paid:
(1) Repairs and maintenance expense decreased to $230,945 in the nine-month
period ended September 30, 1996, from $240,397 for the comparable period in
1995. The decrease is primarily due to the disposition of 31 railcars during the
first two quarters of 1996 and the timing of payments of expenses during
comparable periods.
(2) Insurance increased to $3,195 for the nine-month period ended September 30,
1996, from expense of a credit amount of $254 for the comparable period in 1995.
The increase is due to a refund of 1993 annual premium for contingent liability
insurance received in the first quarter of 1995, no refund was received in 1996.
(3) Property taxes decreased to $15,555 for the nine-month ended September 30,
1996, from $21,362 for the comparable period in 1995. The decrease is due to the
disposition of 31 cars during the first two quarters of 1996 and 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 increased to $8,576 for the nine-month period
ended September 30, 1996, from $6,334 for the comparable period in 1995 is due
to timing of payments for these expenses during the comparable periods, as the
service level remains the same.
(5) Storage, repositioning and other expenses decreased to $8,072 for the
nine-month period ended September 30, 1996, from $10,037 for the comparable
period in 1995. 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 decreased by $249,488 during
the nine-month period ended September 30, 1996, as compared to an increase of
$49,037 for the comparable period in 1995. 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 $204,051 in the nine-month period ended
September 30, 1996, from $195,103 for the comparable period in 1995. The
increase is primarily due to $40,310 of incentive fees for net income over $750
per car that was paid during 1996, as compared to $25,965 in incentive fees
which was paid during 1995, offset by the decrease in the number of cars.
The Program distributed $1,407,065 to investors for the nine-month period ended
September 30, 1996, a 9% increase from the comparable period in 1995.
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
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Stephen M. Bess
President
Date: November 7, 1996 By: /s/ David J. Davis
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David J. Davis
Vice President and
Corporate Controller