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 June 30, 2000.
[ ] 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 800, 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 Six Months
Ended June 30, Ended June 30,
2000 1999 2000 1999
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Revenues collected:
Lease receipts $ 435,280 $ 632,130 $ 856,623 $ 1,169,454
Interest and other income 10,939 16,544 22,677 39,274
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Total revenues collected 446,219 648,674 879,300 1,208,728
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Expenses paid:
Management fees 55,860 73,076 115,155 147,154
Repairs and maintenance 99,717 59,131 259,460 132,966
Property taxes 2,249 3,916 3,613 5,280
Accounting and legal fees 772 2,911 6,943 4,899
Storage, repositioning and other 8,109 3,826 14,927 5,983
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Total expenses paid 166,707 142,860 400,098 296,282
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Excess of revenues collected
over expenses paid 279,512 505,814 479,202 912,446
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Other increases (decreases) in cash:
Prepaid mileage, reimbursable repairs
and other expenses (445) 13,380 30,369 45,469
Receipt of proceeds from sold or destroyed cars 1,994 33,066 1,994 62,829
Receipt of proceeds for transfer of car ownership -- 73,000 -- 99,000
Payments to investors for sold or destroyed cars -- (62,829) -- (62,829)
Payments to investors for transfer of car
ownership -- (71,540) -- (96,500)
Commission paid for sale or transfer of car
ownership -- (2,500) -- (2,500)
Distributions to investors (392,000) (485,659) (780,911) (970,984)
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Net other decreases in cash (390,451) (503,082) (748,548) (925,515)
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Net (decrease) increase in cash (110,939) 2,732 (269,346) (13,069)
Cash at beginning of period 798,209 1,303,194 956,616 1,318,995
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Cash at end of period $ 687,270 $ 1,305,926 $ 687,270 $ 1,305,926
==================================================================
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
June 30, 2000
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 of accounting, 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
the financial position or results of operations or cash flows of the Program in
accordance with generally accepted accounting principles.
2. OPERATIONS
As of June 30, 2000, 490 cars, which are owned by the investors, were being
managed by IMI under the Program. All of the cars were covered by lease
agreements as of June 30, 2000. As of June 30, 1999, 485 cars, which are owned
by the investors, were being managed by IMI under the Program. All of the cars
were covered by lease agreements as of June 30, 1999. During the six months
ending June 30, 2000, no cars were added to the Program and no cars were sold or
destroyed. During the six months ending June 30, 1999, two cars were added to
the Program and two cars were destroyed.
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
June 30, 2000, to be $354,546 ($603,179 at December 31, 1999).
(this space intentionally left blank)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(I) RESULTS OF OPERATIONS
Comparison of RMI Covered Hopper Railcar Management Program 79-1 (the Program)
Revenues Collected, Expenses Paid and Other Changes in Cash for the Three Months
Ended June 30, 2000 and 1999
REVENUES COLLECTED:
(1) Lease receipts decreased to $435,280 in the second quarter of 2000, from
$632,130 in the second quarter of 1999. A decrease in lease receipts of $186,156
was due to lower average lease rates for the majority of railcars during the
comparable periods and a decrease in lease receipts of $13,904 was due to the
timing of receipt of revenue. The decrease in lease receipts was partially
offset by a $3,210 increase in lease receipts due to the net addition of five
cars to the Program during the last two quarters of 1999.
(2) Interest and other income decreased to $10,939 in the second quarter of
2000, from $16,544 in the second quarter of 1999. The decrease was primarily due
to a decrease in interest income earned as a result of lower average cash
balances during the second quarter of 2000 when compared to the same period of
1999.
EXPENSES PAID:
(1) Management fees decreased to $55,860 in the second quarter of 2000, from
$73,076 in the second quarter of 1999. The decrease was primarily due to lower
incentive fees paid to PLM Investment Management, Inc. (IMI) resulting from
reduced cash flows in the second quarter of 2000 compared to same quarter of
1999. In the second quarter of 2000, $3,675 of incentive fees were paid to IMI,
compared to $17,840 in the second quarter of 1999.
(2) Repairs and maintenance payments increased to $99,717 in the second quarter
of 2000, from $59,131 in the second quarter of 1999. An increase of $54,302 in
repairs and maintenance resulted from major repairs required on certain railcars
in the fleet during the second quarter of 2000, which were not needed during the
same period of 1999. The increase was partially offset by a decrease in repairs
and maintenance payments of $13,716 due to the timing of payments during the
comparable periods.
(3) Property taxes decreased to $2,249 in the second quarter of 2000, from
$3,916 in the second quarter of 1999. The decrease is primarily due to the
timing of payments for these expenses during the comparable periods, and the
timing of receiving of invoices from various states, as the tax rates remained
relatively constant.
(4) Accounting and legal fees decreased to $772 in the second quarter of 2000,
from $2,911 in the second quarter of 1999. The decrease was primarily due to the
timing of payments of these expenses during the comparable periods.
(5) Storage, repositioning and other expenses increased to $8,109 in the second
quarter of 2000, from $3,826 for the comparable periods in 1999. The increase
was primarily due to higher repositioning expenses resulting from more cars
being transferred to new lessees during 2000 when compared to 1999.
OTHER CHANGES IN CASH:
(1) Prepaid mileage, reimbursable repairs and other expenses are composed
primarily of receipts of mileage credits from railroads which are due to
lessees, net of reimbursable repairs due from lessees. Net payments were $445 in
the second quarter of 2000, as compared to net receipts of $13,380 in the second
quarter of 1999. The difference between the comparable periods was due primarily
to the timing of receipts and repayments of these funds by the Program.
2) During the second quarter of 2000, no cars were destroyed or sold. During the
second quarter of 2000, proceeds of $1,994 were received for a car that was
destroyed in 1999; these proceeds will be paid to an investor during the third
quarter of 2000. During the second quarter of 1999, one car was destroyed for
which the Program received and paid to the investor insurance proceeds of
$33,066. In addition, $29,763 of insurance proceeds were paid to the investor
for the car that was destroyed during the first quarter of 1999.
(3) During the second quarter of 2000, no railcars were transferred between
investors in the Program. During the second quarter of 1999, the Program
received proceeds of $73,000 for three railcars that were transferred between
investors in the Program. The Program paid $71,540 to the investors that sold
the cars.
(4) No commissions were paid for the three months ended June 30, 2000.
Commissions of $1,460 were paid to the Manager during the second quarter of 1999
for cars that were transferred between investors during the second quarter of
1999. In addition, commission of $1,040 was paid to the Manager during the
second quarter of 1999 for the one car that was transferred between investors
during the first quarter of 1999.
The Program distributed $392,000 to investors in the three months ended June 30,
2000 compared to $485,659 in the three months ended June 30, 1999.
The Program's performance in the three months ended June 30, 2000 is not
necessarily indicative of future periods.
COMPARISON OF RMI COVERED HOPPER RAILCAR MANAGEMENT PROGRAM 79-1 (THE PROGRAM)
REVENUES COLLECTED, EXPENSES PAID AND OTHER CHANGES IN CASH FOR THE SIX MONTHS
ENDED JUNE 30, 2000 AND 1999
REVENUES COLLECTED:
(1) Lease receipts decreased to $856,623 for the six months ended June 30, 2000,
from $1,169,454 for the comparable period in 1999. A decrease in lease receipts
of $346,820 was due to lower average lease rates for the majority of railcars
during the comparable periods. The decrease in lease receipts was partially
offset by an increase in lease receipts of $27,569 due to the timing of lease
receipts, and a $6,420 increase in lease receipts due to the net addition of
five cars to the Program during the last two quarters of 1999.
(2) Interest and other income decreased to $22,677 for the six months ended June
30, 2000, from $39,274 for the comparable period of 1999. The decrease was
primarily due to a decrease in interest income earned as a result of lower
average cash balances during the six months ended June 30, 2000 when compared to
the same period of 1999.
EXPENSES PAID:
(1) Management fees decreased to $115,155 for the six months ended June 30,
2000, from $147,154 in the six months ended June 30, 1999. The decrease was
primarily due to lower incentive fees paid to IMI resulting from reduced cash
flows for the six months ended June 30, 2000 compared to same period of 1999. In
the six months ended June 30, 2000, $7,110 in incentive fees were paid to IMI,
compared to $36,628 in the six months ended June 30, 1999.
(2) Repairs and maintenance payments increased to $259,460 for the six months
ended June 30, 2000, from $132,966 in the six months ended June 30, 1999. An
increase of $96,847 in repairs and maintenance resulted from major repairs
required on certain railcars in the fleet during the six months ended June 30,
2000, which were not needed during the same period of 1999. An increase in
repairs and maintenance payments of $29,647 was due to the timing of payments
during the comparable periods.
(3) Property taxes decreased to $3,613 for the six months ended June 30, 2000,
from $5,280 for the comparable period in 1999. The decrease is primarily due to
the timing of payments for these expenses during the comparable periods, and the
timing of receiving of invoices from various states, as the tax rates remained
relatively constant.
(4) Accounting and legal fees increased to $6,943 for the six months ended June
30, 2000, from $4,899 for the six months ended June 30, 1999. The increase was
primarily due to higher professional service costs in the six months ended June
30, 2000 when compared to the same period of 1999.
(5) Storage, repositioning and other expenses increased to $14,927 for the six
months ended June 30, 2000, from $5,983 for the comparable period in 1999. The
increase was primarily due to higher repositioning expenses resulting from more
cars being transferred to new lessees during 2000 when compared to 1999.
OTHER CHANGES IN CASH:
(1) Prepaid mileage, reimbursable repairs and other expenses are composed
primarily of receipts of mileage credits from railroads which are due to
lessees, net of reimbursable repairs due from lessees. Net receipts were $30,369
for the six months ended June 30, 2000, as compared to net receipts of $45,469
for the six months ended June 30, 1999. The difference between the comparable
periods was due primarily to the timing of receipts and repayments of these
funds by the Program.
(2) During the six months ended June 30, 2000, no cars were destroyed or sold.
During the six months ended June 30, 2000, proceeds of $1,994 were received for
a car that was destroyed in 1999; these proceeds will be paid to an investor
during the third quarter of 2000. During the six months ended June 30, 1999, two
cars were destroyed for which the Program received and paid to investors
insurance proceeds of $62,829.
(3) During the six months ended June 30, 2000, no railcars were transferred
between investors in the Program. During the six months ended June 30, 1999, the
Program received proceeds of $99,000 for four railcars that were transferred
between investors in the Program. The Program paid $96,500 to investors that
sold the cars.
(4) No commissions were paid for the six months ended June 30, 2000. Commissions
of $2,500 were paid to the Manager during the six months ended June 30, 1999 for
cars that were transferred between investors during the first six months of
1999.
The Program distributed $780,911 to investors in the six months ended June 30,
2000 compared to $970,984 in the six months ended June 30, 1999.
The Program's performance in the six months ended June 30, 2000 is not
necessarily indicative of future periods.
(II) LIQUIDITY AND CAPITAL RESOURCES
The Program's operating funds are committed to payment of operating expenses,
management fees, and making cash distributions to the investors when available.
The Program intends to finance these activities with funds generated from
operations. The Manager knows of no demands or commitments that might adversely
affect the liquidity of the Program.
(III) FORWARD-LOOKING INFORMATION
Except for the historical information contained herein, the discussion in this
Form 10-Q contains forward-looking statements that involve risks and
uncertainties, such as statements of the Program's plans, objectives,
expectations, and intentions. The cautionary statements made in this Form 10-Q
should be read as being applicable to all related forward-looking statements
wherever they appear in this Form 10-Q. The Program's actual results could
differ materially from those discussed here.
(IV) OUTLOOK FOR THE FUTURE
Demand for covered hopper cars softened in 1999 and is continuing in 2000. This
has put downward pressure on lease rates.
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: August 4, 2000 By: /s/ Richard K Brock
Richard K Brock
Vice President and
Chief Financial Officer