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 June 30, 2001.
[-] 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 --
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,
2001 2000 2001 2000
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Revenues collected:
Lease receipts $ 219,190 $ 435,280 $ 524,862 $ 856,623
Interest and other income 5,181 10,939 12,180 22,677
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Total revenues collected 224,371 446,219 537,042 879,300
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Expenses paid:
Management fees 55,632 55,860 111,264 115,155
Repairs and maintenance 60,066 99,717 137,914 259,460
Property taxes 146 2,249 2,918 3,613
Accounting and legal fees 2,637 772 8,042 6,943
Storage, repositioning and other 3,868 8,109 16,438 14,927
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Total expenses paid 122,349 166,707 276,576 400,098
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Excess of revenues collected
over expenses paid 102,022 279,512 260,466 479,202
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Other increases (decreases) in cash:
Prepaid mileage, reimbursable repairs
and other expenses 11,074 (445) 29,611 30,369
Receipt of proceeds from sold or destroyed cars -- 1,994 -- 1,994
Distributions to investors (99,900) (392,000) (292,788) (780,911)
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Net other decreases in cash (88,826) (390,451) (263,177) (748,548)
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Net increase (decrease) in cash 13,196 (110,939) (2,711) (269,346)
Cash at beginning of period 526,006 798,209 541,913 956,616
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Cash at end of period $ 539,202 $ 687,270 $ 539,202 $ 687,270
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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, 2001
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, 2001, 488 cars, which are owned by the investors, were being
managed by IMI under the Program. All of the cars, except 141 cars were on lease
as of June 30, 2001. 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 on
lease as of June 30, 2000. During the six months ended June 30, 2001, no cars
were added to the Program and no cars were sold or destroyed. During the six
months ended June 30, 2000, 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, 2001, to be $485,188 ($419,882 at December 31, 2000).
(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, 2001 and 2000
REVENUES COLLECTED:
(1) Lease receipts decreased to $219,190 in the second quarter of 2001, from
$435,280 in the second quarter of 2000. A decrease in lease receipts of $108,135
was due to 141 cars being off lease during the second quarter of 2001, and a
decrease in lease receipts of $44,089 was due to the timing of receipt of
revenue. A $63,866 decrease in lease receipts was due to lower average lease
rates during the comparable periods. ` (2) Interest and other income decreased
to $5,181 in the second quarter of 2001, from $10,939 in the second quarter of
2000. 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 2001
compared to the same period of 2000.
EXPENSES PAID:
(1) Management fees decreased to $55,632 in the second quarter of 2001 from
$55,860 in the second quarter of 2000.
(2) Repairs and maintenance payments decreased to $60,066 in the second quarter
of 2001, from $99,717 in the second quarter of 2000. A decrease of $49,036 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 2001. This decrease was partially offset by an increase in
repairs and maintenance payments of $9,385 due to the timing of payments during
the comparable periods.
(3) Property taxes decreased to $146 in the second quarter of 2001, from $2,249
in the second quarter of 2000. The decrease is primarily due to the timing of
payments for these expenses during the comparable periods, as the tax rates
remained relatively constant.
(4) Accounting and legal fees increased to $2,637 in the second quarter of 2001,
from $772 in the second quarter of 2000. An increase in accounting and legal
fees of $7,171 was due to the higher cost of professional services. The increase
was partially offset by a decrease in accounting and legal fees of $5,306 due to
the timing of payments during the comparable periods.
(5) Storage, repositioning and other expenses decreased to $3,868 in the second
quarter of 2001, from $8,109 for the comparable period in 2000. The decrease was
primarily due to lower repositioning expenses resulting from less cars being
transferred to new lessees during 2001 when compared to 2000.
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 $11,074
in the second quarter of 2001, as compared to net payments of $445 in the second
quarter of 2000. The difference between the comparable periods was due primarily
to the timing of receipts and repayments of these funds by the Program.
(2) No cars were destroyed or sold during the second quarter of 2001 or 2000.
During the second quarter of 2000, however, proceeds of $1,994 were received for
a car that was destroyed in 1999; these proceeds were paid to an investor during
the third quarter of 2000.
The Program distributed $99,900 to investors in the three months ended June 30,
2001 compared to $392,000 in the three months ended June 30, 2000.
The Program's performance in the three months ended June 30, 2001 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, 2001 AND 2000
REVENUES COLLECTED:
(1) Lease receipts decreased to $524,862 for the six months ended June 30, 2001,
from $856,623 for the comparable period in 2000. A decrease in lease receipts of
$216,270 was due to 141 cars being offlease and $157,043 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 $41,552 due to the timing of lease receipts.
(2) Interest and other income decreased to $12,180 for the six months ended June
30, 2001, from $22,677 for the comparable period of 2000. 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, 2001 compared to the
same period of 2000.
EXPENSES PAID:
(1) Management fees decreased to $111,264 for the six months ended June 30,
2001, from $115,155 in the six months ended June 30, 2000. The decrease was
primarily due to lower incentive fees paid to IMI resulting from reduced cash
flows for the six months ended June 30, 2001 compared to same period of 2000. In
the six months ended June 30, 2001, no incentive fees were paid to IMI, compared
to $7,110 in the six months ended June 30, 2000.
(2) Repairs and maintenance payments decreased to $137,914 for the six months
ended June 30, 2001, from $259,460 in the six months ended June 30, 2000. A
decrease of $106,494 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 2001. A decrease in
repairs and maintenance payments of $15,052 was due to the timing of payments
during the comparable periods.
(3) Property taxes decreased to $2,918 for the six months ended June 30, 2001,
from $3,613 for the comparable period in 2000. The decrease is primarily due to
the timing of payments for these expenses during the comparable period, as the
tax rates remained relatively constant.
(4) Accounting and legal fees increased to $8,042 for the six months ended June
30, 2001, from $6,943 for the six months ended June 30, 2000. The increase was
primarily due to higher professional service costs in the six months ended June
30, 2001 compared to the same period of 2000.
(5) Storage, repositioning and other expenses increased to $16,438 for the six
months ended June 30, 2001, from $14,927 for the comparable period in 2000. The
increase was primarily due to the timing of payments for these expenses during
the six months ended June 30, 2001 compared to the same period of 2000.
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 $29,611
for the six months ended June 30, 2001, compared to net receipts of $30,369 for
the six months ended June 30, 2000. 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, 2001 and 2000, no cars were destroyed
or sold. During the six months ended June 30, 2000, however, proceeds of $1,994
were received for a car that was destroyed in 1999; these proceeds were paid to
an investor during the third quarter of 2000.
The Program distributed $292,788 to investors in the six months ended June 30,
2001 compared to $780,911 in the six months ended June 30, 2000.
The Program's performance in the six months ended June 30, 2001 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
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 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 for the remainder of 2001.
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
Current Chief Accounting Officer
Date: August 10, 2001