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, 2002.
[ ] 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.)
450 CARILLON PARKWAY SUITE 200
ST. PETERSBURG, FL 33716
(Address of principal (Zip code)
executive offices)
Registrant's telephone number, including area code (727) 803-8200
_______________________
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
CONDENSED STATEMENTS OF REVENUES COLLECTED AND EXPENSES PAID
AND OTHER CHANGES IN CASH
(UNAUDITED)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2002 2001 2002 2001
-------- -------- -------- ------
Revenues collected:
Lease receipts $ 123,705 $ 219,190 $ 314,209 $ 524,862
Interest and other income 2,305 5,181 4,759 12,180
------------- ------------ ---------- ----------
Total revenues collected 126,010 224,371 318,968 537,042
Expenses paid:
Management fees 55,556 55,632 111,188 111,264
Repairs and maintenance 24,764 60,066 58,920 137,914
Property taxes 226 146 2,523 2,918
Accounting and legal fees 2,631 2,637 4,995 8,042
Storage, repositioning and other 9,874 3,868 45,501 16,438
------------- ------------ ---------- ----------
Total expenses paid 93,051 122,349 223,127 276,576
Excess of revenues collected
over expenses paid 32,959 102,022 95,841 260,466
Other increases (decreases) in cash:
Prepaid mileage, reimbursable repairs
and other expenses (16,838) 11,074 (16,532) 29,611
Receipts of proceeds from sold cars 192,000 -- 192,000 --
Payments to investors for sold cars (127,880) -- (127,880) --
Commission paid (7,680) -- (7,680) --
Distributions to investors (24,351) (99,900) (73,054) (292,788)
------------- ------------ ---------- ----------
Net other increase (decrease) in cash 15,251 (88,826) (33,146) (263,177)
Net increase (decrease) in cash 48,210 13,196 62,695 (2,711)
Cash at beginning of period 573,909 526,006 559,424 541,913
------------- ------------ ---------- ----------
Cash at end of period $ 622,119 $ 539,202 $ 622,119 $ 539,202
============= ============ ========== ==========
See accompanying notes to unaudited condensed 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 June 30, 2002, 455 cars, which are owned by the investors, were being
managed by IMI under the Program. There were 189 cars off lease as of June 30,
2002. As of June 30, 2001, 488 cars, which are owned by the investors, were
being managed by IMI under the Program. There were 141 cars off lease as of
June 30, 2001. During the six months ended June 30, 2002, no cars were added to
the Program and 32 cars were sold or destroyed. During the six months ended
June 30, 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
June 30, 2002, to be $484,631 ($481,905 at December 31, 2001).
(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, 2002 and 2001
- ---------------------------------
REVENUES COLLECTED:
(1) Lease receipts decreased to $123,705 in the second quarter of 2002
from $219,190 in the second quarter of 2001. A decrease in lease receipts of
$57,815 was due to lower average lease rates during the comparable periods and a
decrease in lease receipts of $37,670 was due to the increase in the number of
cars off lease in the second quarter of 2002 compared to the same period of
2001.
(2) Interest and other income decreased to $2,305 in the second quarter
of 2002 from $5,181 in the second quarter of 2002. 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 2002 compared to the same period of 2001.
EXPENSES PAID:
(1) Repairs and maintenance payments decreased to $24,764 in the second
quarter of 2002 from $60,066 in the second quarter of 2001. A decrease of
$55,458 in repairs and maintenance resulted from major repairs required on
certain railcars in the fleet during the second quarter of 2001, which were not
needed during the same period of 2002. This decrease was partially offset by an
increase in repairs and maintenance payments of $20,156 due to the timing of
payments during the comparable periods.
(2) Property taxes increased to $226 in the second quarter of 2002 from $146
in the second quarter of 2001. The increase is primarily due to the timing of
payments for these expenses during the comparable periods, as the tax rates
remained relatively constant.
(3) Storage, repositioning and other expenses increased to $9,874 in
the second quarter of 2002 from $3,868 for the comparable period in 2001. An
increase of $4,721 of storage expense was due to the increase in the number of
off lease railcars. Also, an increase of $2,099 in repositioning expense was
also due to the increase in the number of off lease railcars during comparable
periods. These increases were partially offset by a decrease of $814 in other
expenses.
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
$16,838 in the second quarter of 2002 compared to net receipts of $11,074 in the
second quarter of 2001. 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 2002, thirty-two cars were sold. The
Program received proceeds of $192,000 for the sold cars and $127,880 were paid
to the investors. No cars were destroyed or sold during the second quarter of
2001.
(3) Commission of $7,680 was paid to IMI in the second quarter of 2002
related to the disposition of railcars.
The Program distributed $24,351 to investors in the three months ended June 30,
2002 compared to $99,900 in the three months ended June 30, 2001.
The Program's performance in the three months ended June 30, 2002 is not
necessarily indicative of future periods.
Comparison of RMI Covered Hopper Railcar Management Program 79-1 Revenues
- --------------------------------------------------------------------------------
Collected, Expenses Paid and Other Changes in Cash for the Six Months Ended June
- --------------------------------------------------------------------------------
30, 2002 and 2001
- --------------------
REVENUES COLLECTED:
(1) Lease receipts decreased to $314,209 for the six months ended June
30, 2002, from $524,862 for the comparable period in 2001. A decrease in lease
receipts of $114,973 was due to lower average lease rates for the majority of
railcars during the comparable periods and a $95,680 decrease in lease receipts
was due to the increase in the number of cars off lease in the six months ended
June 30, 2002 compared to the same period of 2001.
(2) Interest and other income decreased to $4,759 for the six months ended June
30, 2002, from $12,180 for the comparable period of 2001. 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, 2002 compared to the
same period of 2001.
EXPENSES PAID:
(1) Repairs and maintenance payments decreased to $58,920 for the six months
ended June 30, 2002, from $137,914 in the six months ended June 30, 2001. A
decrease of $47,885 in repairs and maintenance resulted from major repairs
required on certain railcars in the fleet during the six months ended June 30,
2001, which were not needed during the same period of 2002. A decrease in
repairs and maintenance payments of $31,109 was due to the timing of payments
during the comparable periods.
(2) Property taxes decreased to $2,523 for the six months ended June 30,
2002, from $2,918 for the comparable period in 2001. The decrease is primarily
due to the timing of payments for these expenses during the comparable period,
as tax rates remained relatively constant.
(3) Accounting and legal fees decreased to $4,995 for the six months
ended June 30, 2002, from $8,042 for the six months ended June 30, 2001. The
decrease was primarily due to lower auditing fee in the six months ended June
30, 2002 compared to the same period of 2001.
(4) Storage, repositioning and other expenses increased to $45,501 for
the six months ended June 30, 2002, from $16,438 for the comparable period in
2001. The increase was due to the following:
a) An increase of $13,868 was due to the timing of payments for these
expenses during the six months ended June 30, 2002 compared to the same period
of 2001.
b) An increase of $9,708 in storage expense was due to the increase in the
number of off lease railcars.
c) An increase of $5,487 in repositioning expense was due to the increase in
the number of off lease railcars.
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
$16,532 for the six months ended June 30, 2002, compared to net receipts of
$29,611 for the six months ended June 30, 2001. 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, 2002, thirty-two cars were sold.
The Program received proceeds of $192,000 for the sold cars and $127,880 were
paid to the investors. No cars were destroyed or sold during the six months
ended June 30, 2001.
(3) Commission of $7,680 was paid to IMI during the six months ended June
30, 2002 related to the disposition of railcars.
The Program distributed $73,054 to investors in the six months ended June 30,
2002 compared to $292,788 in the six months ended June 30, 2001.
The Program's performance in the six months ended June 30, 2002 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.
Currently, the covered hopper railcar market is severely depressed. The net
cash generated by the Program has been decreasing over the past several quarters
and it is possible that the Program will exhaust its working capital. The
owners of the railcars in the Program are personally responsible for funding
operating expenses. Thus, the owners maybe required to make additional capital
contributions to the Program in the future.
(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
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.
(This space intentionally left blank)
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: August 12, 2002 By: /s/ Stephen M. Bess
-------------------
Stephen M. Bess
President and
Current Chief Accounting
Officer
CERTIFICATION
The undersigned hereby certifies, in their capacity as an officer of the Manager
of RMI Covered Hopper Railcar Management Program 79-1 (The Program), that the
Quarterly Report of the Program on Form 10-Q for the period ended June 30, 2002,
fully complies with the requirements of Section 13(a) of the Securities Exchange
Act of 1934 and that the information contained in such report fairly presents,
in all material respects, the financial condition of the Program at the end of
such period and the results of operations of the Program for such period.
RMI COVERED HOPPER RAILCAR
MANAGEMENT PROGRAM 79-1
By:PLM Investment Management,
Inc.
Manager
Date: August 12, 2002 By: /s/ Stephen M. Bess
-------------------
Stephen M. Bess
President and
Current Chief Accounting
Officer
Date: August 12, 2002 By: /s/ James A. Coyne
------------------
James A. Coyne
Chief Financial Officer