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, 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 ______
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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 For the Nine Months
Ended September 30, Ended September 30,
2001 2000 2001 2000
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Revenues collected:
Lease receipts $ 178,609 $ 375,266 $ 703,471 $ 1,231,889
Interest and other income 4,847 9,238 17,027 31,915
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Total revenues collected 183,456 384,504 720,498 1,263,804
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Expenses paid:
Management fees 55,746 59,459 167,010 174,614
Repairs and maintenance 55,237 66,227 193,151 325,687
Property taxes 1,174 1,345 4,092 4,958
Accounting and legal fees 1,185 706 9,227 7,649
Storage, repositioning and other 1,256 7,260 17,694 22,187
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Total expenses paid 114,598 134,997 391,174 535,095
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Excess of revenues collected
over expenses paid 68,858 249,507 329,324 728,709
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Other increases (decreases) in cash:
Prepaid mileage, reimbursable repairs
and other expenses (23,477) (50,478) 6,134 (20,109)
Receipt of proceeds from destroyed cars 27,203 54,748 27,203 56,742
Payments to investors for destroyed cars (27,203) (56,742) (27,203) (56,742)
Distributions to investors (95,801) (293,998) (388,589) (1,074,909)
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Net other decreases in cash (119,278) (346,470) (382,455) (1,095,018)
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Net decrease in cash (50,420) (96,963) (53,131) (366,309)
Cash at beginning of period 539,202 687,270 541,913 956,616
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Cash at end of period $ 488,782 $ 590,307 $ 488,782 $ 590,307
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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 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.
2. OPERATIONS
As of September 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 September
30, 2001. As of September 30, 2000, 488 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 September 30, 2000. During the nine months ended
September 30, 2001, one car was added to the Program and one car was destroyed.
During the nine months ended September 30, 2000, no 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
September 30, 2001, to be $422,176 ($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 September 30, 2001 and 2000
REVENUES COLLECTED:
(1) Lease receipts decreased to $178,609 in the third quarter of 2001, from
$375,266 in the third quarter of 2000. The decrease was due to the following:
a) A decrease in lease receipts of $108,135 was due to 141 cars being off
lease during the third quarter of 2001.
b) A decrease in lease receipts of $57,783 was due to lower average lease
rates for railcars during the comparable periods.
c) A decrease in lease receipts of $30,739 was due to the timing of receipt
of revenue.
(2) Interest and other income decreased to $4,847 in the third quarter of 2001,
from $9,238 in the third 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 third quarter of 2001 compared to the same period of 2000.
EXPENSES PAID:
(1) Management fees decreased to $55,746 in the third quarter of 2001 from
$59,459 in the third quarter of 2000. The decrease was primarily due to no
incentive fees paid to PLM Investment Management, Inc. (IMI) during the third
quarter of 2001.
(2) Repairs and maintenance expense decreased to $55,237 in the third quarter of
2001, from $66,227 in the third quarter of 2000. A decrease of $10,990 in
repairs and maintenance resulted from major repairs required on certain railcars
in the fleet during the third quarter of 2000, which were not needed during the
same period of 2001.
(3) Property taxes and other decreased to $1,174 in the third quarter of 2001
from $1,345 in the third quarter of 2000. The decrease is 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.
(4) Accounting and legal fees increased to $1,185 in the third quarter of 2001
from $706 in the third quarter of 2000. The increase was primarily due to the
timing of payments of these expenses during the comparable periods.
(5) Storage, repositioning and other expenses decreased to $1,256 in the third
quarter of 2001, from $7,260 in the third quarter of 2000. The decrease was
primarily due to lower repositioning expenses resulting from fewer cars being
transferred to new lessees during 2001 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 payments were $23,477
in the third quarter of 2001 compared to net payments of $50,478 in the third
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) One car was destroyed during the third quarter of 2001. The Program received
proceeds of $27,203 for the destroyed car and these proceeds were paid to the
investor. During the third quarter of 2000, two cars were destroyed for which
the Program received and paid to investors proceeds of $54,748. In addition,
during the third quarter of 2000, proceeds of $1,994 were paid to the investor
for a car that was destroyed in 1999.
The Program distributed $95,801 to investors in the three months ended September
30, 2001 compared to $293,998 in the three months ended September 30, 2000.
The Program's performance in the three months ended September 30, 2001 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 NINE MONTHS
ENDED SEPTEMBER 30, 2001 AND 2000
REVENUES COLLECTED:
(1) Lease receipts decreased to $703,471 for the nine months ended September 30,
2001, from $1,231,889 for the comparable period in 2000. The decrease was due to
the following: a) A decrease in lease receipts of $216,270 was due to 141 cars
being off lease in 2001. b) A decrease of $322,961 was due to lower average
lease rates for railcars during the comparable periods. c) These decreases in
lease receipts were partially offset by an increase in lease receipts of $10,813
due to the timing of lease receipts.
(2) Interest and other income decreased to $17,027 for the nine months ended
September 30, 2001, from $31,915 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 nine months ended September 30, 2001 compared
to the same period of 2000.
EXPENSES PAID:
(1) Management fees decreased to $167,010 for the nine months ended September
30, 2001, from $174,614 in the nine months ended September 30, 2000. The
decrease was primarily due to lower incentive fees paid to IMI resulting from
reduced cash flows to the Program for the nine months ended September 30, 2001
compared to same period of 2000. In the nine months ended September 30, 2001, no
incentive fees were paid to IMI, compared to $7,110 in the nine months ended
September 30, 2000.
(2) Repairs and maintenance expense decreased to $193,151 for the nine months
ended September 30, 2001, from $325,687 in the nine months ended September 30,
2000. A decrease in repairs and maintenance expense of $37,368 was due to the
timing of payments during the comparable periods. A decrease of $95,168 in
repairs and maintenance resulted from major repairs required on certain railcars
in the fleet during the nine months ended September 30, 2000, which were not
needed during the same period of 2001.
(3) Property taxes and other decreased to $4,092 for the nine months ended
September 30, 2001, from $4,958 for the comparable period in 2000. The decrease
is 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.
(4) Accounting and legal fees increased to $9,227 for the nine months ended
September 30, 2001, from $7,649 for the nine months ended September 30, 2000.
The increase was primarily due to higher professional service costs in the nine
months ended September 30, 2001 compared to the same period of 2000.
(5) Storage, repositioning and other expenses decreased to $17,694 for the nine
months ended September 30, 2001, from $22,187 for the comparable period in 2000.
The decrease was due to lower repositioning expenses resulting from fewer cars
being transferred to new lessees during 2001 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 $6,134
for the nine months ended September 30, 2001, compared to net payments $20,109
for the nine months ended September 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 nine months ended September 30, 2001, one car was destroyed. The
proceeds of $27,203 were paid to an investor. During the nine months ended
September 30, 2000, two cars were destroyed for which the Program received and
paid to the investors insurance proceeds of $54,748. In addition, during the
nine months ended September 30, 2000, proceeds of $1,994 were received and paid
to an investor for a car that was destroyed in 1999.
The Program distributed $388,589 to investors in the nine months ended September
30, 2001 compared to $1,074,909 in the nine months ended September 30, 2000.
The Program's performance in the nine months ended September 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. 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 loading 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 2001, and additional cars may be placed into storage before the supply/demand
imbalance is corrected.
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 and
Current Chief Accounting Officer
Date: November 13, 2001