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 March 31, 2002.
[x] 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.)
120 Montgomery Street,
Suite 1350, San Francisco, CA 94104
(Address of principal (Zip code)
executive offices)
Registrant's telephone number, including area code (415) 445-3201
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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 ______
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RMI COVERED HOPPER RAILCAR MANAGEMENT PROGRAM 79-1
CONDENSED STATEMENTS OF REVENUES COLLECTED AND EXPENSES PAID
AND OTHER CHANGES IN CASH
(Unaudited)
For the Three Months
Ended March 31,
2002 2001
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Revenues collected:
Lease receipts $ 190,504 $ 305,672
Interest and other income 2,454 6,999
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Total revenues collected 192,958 312,671
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Expenses paid:
Management fees 55,632 55,632
Repairs and maintenance 34,156 77,848
Property taxes 2,297 2,772
Accounting and legal fees 2,364 5,405
Storage, repositioning and other 35,627 12,570
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Total expenses paid 130,076 154,227
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Excess of revenues collected
over expenses paid 62,882 158,444
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Other increases (decreases) in cash:
Prepaid mileage, reimbursable repairs and other expenses 306 18,537
Distributions to investors (48,703) (192,888)
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Net other decreases in cash (48,397) (174,351)
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Net increase (decrease) in cash 14,485 (15,907)
Cash at beginning of period 559,424 541,913
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Cash at end of period $ 573,909 $ 526,006
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See accompanying notes to financial statements.
RMI COVERED HOPPER RAILCAR MANAGEMENT PROGRAM 79-1
NOTES TO THE CONDENSED STATEMENTS OF REVENUES COLLECTED AND EXPENSES
PAID AND OTHER CHANGES IN CASH
(Unaudited)
1. BASIS OF PRESENTATION
RMI Covered Hopper Railcar Management Program 79-1 (the Program) is not a legal
entity. The condensed 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 accounting principles generally accepted
in the United States of America. For further information, reference should be
made to the financial statements and notes thereto included in the Partnership's
Annual Report on Form 10-K for the year ended December 31, 2001 on file at the
Securities and Exchange Commission.
2. OPERATIONS
As of March 31, 2002, 487 cars, which are owned by the investors, were being
managed by IMI under the Program. There were 195 cars off lease as of March 31,
2002. As of March 31, 2001, 488 cars, which were owned by the investors, were
being managed by IMI under the Program. There were 141 cars off lease as of
March 31, 2001. During the three months ending March 31, 2002 and 2001, no cars
were added to the Program and no cars were sold or 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
March 31, 2002, to be $519,507 ($481,905 at December 31, 2001).
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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 March 31, 2002 and 2001
REVENUES COLLECTED:
(1) Lease receipts decreased to $190,504 in the first quarter of 2002 from
$305,672 in the first quarter of 2001. A $79,286 decrease in lease receipts was
due to lower average lease rates during the comparable periods and a $35,882
decrease in lease receipts was due to the increase in the number of cars off
lease during the comparable periods.
(2) Interest and other income decreased to $2,454 in the first quarter of 2002
from $6,999 in the first quarter of 2001. The decrease was primarily due to
lower interest income earned as a result of lower average cash balances during
the first quarter of 2002 compared to the same quarter of 2001.
EXPENSES PAID:
(1) Repairs and maintenance expense decreased to $34,156 in the first quarter of
2002 from $77,848 in the first quarter of 2001. A decrease in repairs and
maintenance expense of $51,265 was due to the timing of payments of expenses
during comparable periods. This decrease was partially offset by an increase in
the cost of repairs and maintenance of $7,573.
(2) Property taxes decreased to $2,297 in the first quarter of 2002 from $2,772
for the comparable period in 2001. The decrease was primarily due to the timing
of payments for these expenses during the comparable periods, as the tax rates
and number of cars owned by the Program remained relatively constant.
(3) Accounting and legal fees decreased to $2,364 in the first quarter of 2002
from $5,405 in the first quarter of 2001. A decrease in accounting and legal
fees of $3,819 was due to the lower cost of these professional services during
the comparable periods. This decrease was partially offset by an increase of
$778 due to the timing of payments.
(4) Storage, repositioning and other expenses increased to $35,627 in the first
quarter of 2002 from $12,570 for the comparable period in 2001. The increase was
due to $26,954 of higher storage expense and an increase of $3,468 in
repositioning expense due to the increase in the number of off lease railcars
during comparable periods. These increases were partially offset by a decrease
of $7,365 in other expenses.
OTHER CHANGES IN CASH:
Reimbursable repairs, prepaid mileage and other expenses are composed primarily
of receipts of mileage credits from railroads that are due to lessees, net of
reimbursable repairs due from lessees. Net receipts were $306 in the first
quarter of 2002 compared to net receipts of $18,537 in the first quarter of
2001. The difference between comparable periods was due primarily to the timing
of receipts and repayments of these funds by the Program.
The Program distributed $48,703 to investors in the three months ended March 31,
2002 compared to $192,888 in the three months ended March 31, 2001.
The Program's performance in the three months ended March 31, 2002 is not
necessarily indicative of future periods.
(II) LIQUIDITY AND CAPITAL RESOURCES
The Program's operating funds are committed to the payment of operating
expenses, management fees, and making cash distributions to the investors. 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) OUTLOOK FOR THE FUTURE
The cars in the Program are lower capacity than those built in the last six to
seven years. Better equipment utilization by the railroads, combined with little
or no growth in the number of grain car loadings in recent years, has led to an
imbalance in the supply/demand equation (i.e., supply of cars exceeding relative
demand). Consequently, many of the lower capacity cars, as well as the newer
higher capacity cars, are now in storage. The Program has avoided placing
additional cars into storage by reducing the rental rates on the cars
significantly. Lease rates are expected to continue to decrease in the remainder
of 2002, and additional cars may be placed into storage before the supply/demand
imbalance is corrected.
(IV) 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.
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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
Date: May 13, 2002 By: /s/ Stephen M. Bess
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Stephen M. Bess
President and
Current Chief Accounting Officer