UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM 10-K
[x] Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 For the fiscal year ended
December 31, 1995.
[ ] 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 900, 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 ______
Aggregate Market Value of Voting Stock: N/A
An index of exhibits filed with this Form 10-K is located at page 21.
Total number of pages in this report: 22
<PAGE>
PART I
ITEM 1. BUSINESS
(A) Background
In 1979, PLM Investment Management, Inc. (IMI or Manager) (formerly PLM Railcar
Management, Inc.), a wholly owned subsidiary of PLM Financial Services, Inc.
(FSI), sponsored the public offering of a management program entitled RMI
Covered Hopper Railcar Management Program 79-1 (variously, the Registrant or the
Program). The Program was registered with the Securities and Exchange Commission
under the Securities Act of 1933. The Program offered to investors, meeting
certain suitability standards, the opportunity to purchase from PLM
Transportation Equipment Corporation (TEC) (formerly National Equipco, Inc.), an
affiliate of FSI, one or more 100-ton triple covered hopper, 4,700/4,750 cubic
foot, railroad cars with center pockets, gravity discharge, and trough hatches
(car or cars).
The purchase price for one unit, consisting of one car plus a Management
Agreement (Unit), was the sum of (i) the manufacturer's invoice price of a car,
(ii) a commencement fee, equal to 10% prior to August 15, 1980, and 13%
thereafter, of the manufacturer's invoice price and (iii) initial storage and
transit costs.
The Program is organized to provide investors with an efficient and
convenient method of acquiring, leasing, maintaining and managing individually
owned railroad cars. With certain exceptions, operating revenues and expenses
from all cars managed under the Program are pooled. Net income, or net loss, is
allocated to each participant and excess cash flow is distributed to each
participant on a pro-rata basis.
IMI manages 11 private railcar management programs and two public railcar
programs. Each of the programs involves a distinct group of railcars available
for a specified time and managed separately, with all funds from each management
program administered separately. The railcars owned by investors in each pool
are subject to separate leases.
(B) Sale and Availability of Cars
Program investors purchased 777 cars for a price per car ranging from $48,000 to
$50,000, which included commencement fees. The Program closed April 30, 1981 and
two cars were added to the Program in October and November 1995.
(C) Management
The investors were offered the option of entering into a 10-year management
agreement (Management Agreement) with IMI, pursuant to which IMI has acted as
the investors' agent for the purpose of managing and leasing the investors' car
or cars. Pursuant to the original Management Agreement and extensions thereof,
IMI receives a management fee on a per car basis at a fixed rate each month,
plus an incentive management fee equal to 15% of "Net Earnings" (as defined in
the Management Agreement) over $750 per car per quarter. At December 31, 1995,
495 cars continued to be managed in the Program, all of which were on lease. The
weighted average monthly rental rate per car in 1995 was $411.
All 495 cars in the Program are operating under fixed payment, full
service lease agreements. Additional mileage revenue above the fixed lease
payments may also be earned for certain cars.
<PAGE>
In most circumstances, the Manager endeavors to obtain the longest lease
term practicable. At December 31, 1995, the Program had leases with the
following lessees which accounted for greater than 10% of the total number of
cars in the Program:
<TABLE>
<CAPTION>
Lessee Number of cars % Remaining Lease Term
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Louis Dreyfus Corp. 69 14 20-60 months
San Luis Central Railroad 66 13 60 months
Canadian Pacific Railroad 82 17 8-48 months
Union Pacific 121 24 5 months
General Chemical Corp. 58 12 20 months
</TABLE>
Under most of the Program's leases, the lessor is obligated to pay
property taxes and to maintain the cars in good running condition. When cars
need repair, rent will generally abate during the period they are out of
service. Lessees are usually obligated to pay all other operating expenses of
the cars. Lessees are normally responsible for the loss, damage or destruction
of the cars, except in the case of negligence, recklessness or willful
misconduct on the part of the Manager. Regulatory changes may occasionally
require cars to be altered or retrofitted. Typically, such alterations or
retrofits are the responsibility of the investor. The leases usually provide for
an increase in the monthly rental rate calculated as a percentage of the cost of
any such alterations. In such cases, rent will abate for the period of time
while the alterations are being made.
Monthly management fees of $38 per car and quarterly incentive management
fees are charged directly to the individual investors pursuant to five-year
extensions made to the original Management Agreements which had original terms
of ten years. Prior to the five-year extensions, management fees were being
charged at the rate of $55 per car.
(D) Competition
Full service lease rental rates are highly competitive and are not subject to
regulation by the Interstate Commerce Commission. Lease rental rates are
principally affected by the demand for and the supply of cars between different
owner-lessors. Secondarily, lease rental rates are influenced by a number of
factors, including the cost of new and used cars, interest rates, maintenance
and operating costs, property taxes, other direct operating costs and the level
of railroad mileage allowances.
The major leasing competitors of the Program who are also involved in
leasing privately-owned covered hopper cars are: ACF Industries, Inc. (Shippers
Car Line Division), U.S. Rail Services, Inc., General American Transportation
Corp., General Electric Railcar Services Corporation, and Union Tank Car Co.
(E) Demand
Nearly all the major railroads reported substantial revenue increases during
1995. As additional industry consolidation is expected in 1996, these mergers
should produce further operating efficiencies leading to continued increases in
revenues and profits. Car loadings rose approximately 3% during 1995 with
chemicals, metals, and grain experiencing the largest gains.
The Program's cars experienced 100% utilization during 1995. Rates are at
the top of the cycle for all types of cars. With demand continuing high, rental
rates for most types of cars are expected to remain relatively strong during
1996.
On the supply side, industry experts predict approximately 55,000 new car
builds and 40,000 retirements for a net gain of about 1.2% in the total U.S.
fleet during 1996. While car builders are still busy, orders are not coming in
as rapidly as in the last two years, so it is likely additions will not
significantly outpace retirements this year.
ITEM 2. PROPERTIES
At December 31, 1995, the Program had no properties except for the 495 cars
being managed under the Program, as described in Item 1(c). The Program
maintains its principal office at One Market, Steuart Street Tower, Suite 900,
San Francisco, California 94105-1301. All office facilities are provided by FSI
without reimbursement by the Program.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Program's owners during the last
quarter of its fiscal year ended December 31, 1995.
(This space intentionally left blank)
<PAGE>
PART II
ITEM 5. MARKET FOR THE PROGRAM'S EQUITY AND RELATED EQUITY MATTERS
None.
(This space intentionally left blank)
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
Table 1, below, lists selected financial data for the five years ended December
31, 1995, prepared on a cash basis, for the Program, as a whole and on a per car
basis, computed on a weighted average available car per day basis:
<TABLE>
TABLE 1
For the years ended December 31,
<CAPTION>
1995 1994 1993 1992 1991
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per car available (computed
on a weighted average car
per day basis
Total revenues collected $ 5,177 $ 4,849 $ 4,826 $ 4,702 $ 4,337
Expenses paid (922) (976) (1,108) (1,417) (742)
Excess of revenue collected
over expenses paid 4,255 3,873 3,718 3,285 3,595
Management fees paid (531) (486) (476) (456) (488)
Total revenues collected less
total expenses and
management fees paid $ 3,724 $ 3,387 $ 3,242 $ 2,829 $ 3,107
Total Program
Total revenues collected $ 2,559,935 $ 2,441,627 $ 2,509,506 $ 2,445,292 $ 2,266,939
Expenses paid (455,927) (491,486) (576,012) (736,622) (387,934)
Excess of revenues collected
over expenses paid 2,104,008 1,950,141 1,933,494 1,708,670 1,879,005
Management fees paid (262,458) (244,940) (247,539) (237,120) (254,817)
Total revenues collected less
total expenses and
management fees paid $ 1,841,550 $ 1,705,201 $ 1,685,955 $ 1,471,550 $ 1,624,188
Distributions to or on
behalf of investors
after management fees $ 1,731,469 $ 1,630,624 $ 1,540,593 $ 1,404,000 $ 1,561,008
</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Program's operating funds are committed to payment of operating expenses,
management fees, and making cash distributions to the car owners when available.
The Program intends to finance these activities with funds generated from
operations. The Program has experienced no known demands or commitments that
might adversely affect the liquidity of the Program.
Funds from operations are generated by lease payments and interest income
on invested cash.
Results of Operations
The statements of revenues collected and expenses paid and other changes in cash
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
IMI. Under the cash basis, revenues are recognized when received, rather than
when earned, and expenses are recognized when paid, rather than when the
obligation is incurred.
Comparison of the Program's Revenues Collected, Expenses Paid and Other Changes
in Cash for the Years Ended December 31, 1995 and 1994
Revenues collected:
1. Lease receipts increased to $2,475,106 for the year ended December 31,
1995, from $2,378,466 for the comparable period in 1994. The increase is
primarily due to the timing of rental receipts between the comparable
periods and higher average lease rates in 1995.
2. Interest and other income increased to $84,829 for the year ended December
31, 1995, from $63,161 for the comparable period in 1994. The increase is
primarily due to an increase in interest income resulting from higher cash
balances and a higher rate of interest paid. In addition, $28,000 for
business interruption insurance claims was received in 1994. A similar
claim was not received during 1995.
Expenses paid:
1. Repairs and maintenance expense increased to $363,776 for the year ended
December 31, 1995, from $339,962 for the comparable period in 1994. The
increase is primarily due to timing of payments for these expenses during
the comparable periods.
2. Insurance expense decreased to $23,890 for the year ended December 31,
1995, from $49,969 for the comparable period in 1994. The decrease is
primarily due to the timing of payments for the annual premium for
liability and physical damage insurance and the non-renewal of business
interruption insurance.
3. Property taxes decreased to $53,685 for the year ended December 31, 1995,
from $75,606 for the comparable period in 1994. The decrease is due to
timing of receipt of invoices from various states, and to the timing of
payments for these expenses during the comparable periods, as the tax
rates remained constant.
4. Accounting and legal fees decreased to $6,597 for the year ended December
31, 1995, from $12,741 for the comparable period in 1994. The decrease is
due to reduction in the cost of these professional services.
5. Storage, repositioning and other expenses decreased to $7,979 for the year
ended 1995, from $13,208 for the comparable period in 1994. The decrease
is primarily due to the timing of payments of these expenses during
comparable periods.
Other changes in cash:
1. Prepaid mileage, reimbursable repairs and other are composed primarily of
receipts of mileage credits from railroads which are due to lessees, net
of reimbursable repairs from lessees. The funds increased by $119,933
during the year ended December 31, 1995, as compared to an increase of
$130,846 for the comparable period in 1994. The decrease between
comparable periods is primarily due to the timing of net receipts and
repayments of these funds by the Program.
2. Management fees increased to $262,458 for the year ended December 31,
1995, from $244,940 for the comparable period in 1994. The primary reason
for the increase is due to an incentive management fee of $37,080 for net
income over $750 per car to IMI was paid in 1995 compared to an incentive
management fee of $15,225 in 1994.
As a result of the foregoing and other factors, the Program distributed
$1,731,469 to investors for the year ended December 31, 1995, a 6% increase from
the $1,630,674 paid in 1994.
Comparison of the Program's Revenues Collected, Expenses Paid and Other Changes
in Cash for the Years Ended December 31, 1994 and 1993
Revenues collected:
1. Lease receipts decreased to $2,378,466 for the year ended December 31,
1994, from $2,459,768 for the comparable period in 1993. The decrease is
primarily due to the collection of past due rents of $180,000 from lessees
during 1993 which should have been collected in 1992, the disposition of
24 railcars during 1994, and the timing of rental receipts between the
comparable periods, as the lease rates remained relatively stable.
2. Interest and other income increased to $63,161 for the year ended December
31, 1994, from $49,738 for the comparable period in 1993. The increase is
primarily due to an increase in interest income resulting from higher cash
balances, the timing of receipts of business interruption insurance claims
and litigation settlement proceeds during comparable periods, with $28,000
collected in 1994, and $24,000 in 1993.
Expenses paid:
1. Repairs and maintenance expense decreased to $339,962 for the year ended
December 31, 1994, from $430,603 for the comparable period in 1993. The
decrease is primarily due to timing of payments for these expenses during
the comparable periods.
2. Insurance expense decreased to $49,969 for the year ended December 31,
1994, from $45,685 for the comparable period in 1993. The decrease is
primarily due to the timing of payments for these expenses during the
comparable periods.
3. Property taxes increased to $75,606 for the year ended December 31, 1994,
from $46,461 for the comparable period in 1993. The increase is due to
timing of receipt of invoices from various states, and to the timing of
payments for these expenses during the comparable periods, as the tax
rates remained constant.
4. Accounting and legal fees increased to $12,741 for the year ended December
31, 1994, from $8,112 for the comparable period in 1993. The increase is
due to payments of some 1993 invoices in the first quarter of 1994.
5. Storage, repositioning and other expenses decreased to $13,208 for the
year ended 1994, from $45,151 for the comparable period in 1993. The
decrease is primarily due to payments of $22,000 for repositioning of cars
which were re-leased in 1993.
Other changes in cash:
1. Prepaid mileage, reimbursable repairs and other are composed primarily of
receipts of mileage credits from railroads which are due to lessees, net
of reimbursable repairs from lessees. The funds increased by $130,846
during the year ended December 31, 1994, as compared to an increase of
$54,384 for the comparable period in 1993. The increase between comparable
periods is primarily due to the timing of net receipts and repayments of
these funds by the Program.
2. Management fees decreased to $244,940 for the year ended December 31,
1994, from $247,539 for the comparable period in 1993. The primary reason
for the decrease is due to fewer railcars in the program, one car which
was destroyed in the fourth quarter of 1993, and 24 cars which were sold
or destroyed in 1994, offset by an incentive management fee of $15,225 for
net income over $750 per car to IMI compared to an incentive management
fee of $10,419 in 1993.
As a result of the foregoing and other factors, the Program distributed
$1,630,674 to investors for the year ended December 31, 1994, a 6% increase from
the $1,540,593 paid in 1993.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Statements of Revenues Collected and Expenses Paid and Other Changes in Cash for
the three years ended December 31, 1995, are included on the Index to Financial
Statements as part of Item 14(a) of this Annual Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
(This space intentionally left blank.)
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PROGRAM
As of the date of this Annual Report, the directors and executive officers
of PLM International (and key executive officers of its subsidiaries) are as
follows:
<TABLE>
<CAPTION>
Name Age Position
- -------------------------------------- ------------------- -------------------------------------------------------
<S> <C> <C>
J. Alec Merriam 60 Director, Chairman of the Board, PLM International,
Inc.; Director, PLM Financial Services, Inc.
Allen V. Hirsch 42 Director, Vice Chairman of the Board, Executive Vice
President of PLM International, Inc.; Director and
President, PLM Financial Services, Inc.; President,
PLM Securities Corp., and PLM Transportation
Equipment Corporation.
Walter E. Hoadley 79 Director, PLM International, Inc.
Robert L. Pagel 59 Director, Chairman of the Executive Committee, PLM
International, Inc.; Director, PLM Financial
Services, Inc.
Harold R. Somerset 61 Director, PLM International, Inc.
Robert N. Tidball 57 Director, President and Chief Executive Officer, PLM
International, Inc.
J. Michael Allgood 47 Vice President and Chief Financial Officer, PLM
International, Inc. and PLM Financial Services, Inc.
Stephen M. Bess 49 President, PLM Investment Management, Inc.; Vice
President, PLM Financial Services, Inc.
David J. Davis 39 Vice President and Corporate Controller, PLM
International and PLM Financial Services, Inc.
Frank Diodati 41 President, PLM Railcar Management Services Canada
Limited.
Douglas P. Goodrich 49 Senior Vice President, PLM International; Senior Vice
President PLM Transportation Equipment Corporation;
President PLM Railcar Management Services, Inc.
Steven O. Layne 41 Vice President, PLM Transportation Equipment
Corporation.
Stephen Peary 47 Senior Vice President, General Counsel and Secretary,
PLM International, Inc.; Vice President, General
Counsel and Secretary, PLM Financial Services, Inc.,
PLM Investment Management, Inc., PLM Transportation
Equipment Corporation; Vice President, PLM
Securities, Corp.
Thomas L. Wilmore 53 Vice President, PLM Transportation Equipment
Corporation; Vice President, PLM Railcar Management
Services, Inc.
</TABLE>
J. Alec Merriam was appointed Chairman of the Board of Directors of PLM
International in September 1990, having served as a director since February
1988. In October 1988 he became a member of the Executive Committee of the Board
of Directors of PLM International. From 1972 to 1988 Mr. Merriam was Executive
Vice President and Chief Financial Officer of Crowley Maritime Corporation, a
San Francisco area-based company engaged in maritime shipping and transportation
services. Previously, he was Chairman of the Board and Treasurer of LOA
Corporation of Omaha, Nebraska and served in various financial positions with
Northern Natural Gas Company, also of Omaha.
Allen V. Hirsch became Vice Chairman of the Board and a Director of PLM
International in April 1989. He is an Executive Vice President of PLM
International and President of PLM Securities Corp. Mr. Hirsch became the
President of PLM Financial Services, Inc. in January 1986 and President of PLM
Investment Management, Inc. and PLM Transportation Equipment Corporation in
August 1985, having served as a Vice President of PLM Financial Services, Inc.
and Senior Vice President of PLM Transportation Equipment Corporation beginning
in August 1984, and as a Vice President of PLM Transportation Equipment
Corporation beginning in July 1982 and of PLM Securities Corp. from July 1982 to
October 1, 1987. He joined PLM, Inc. in July 1981, as Assistant to the Chairman.
Prior to joining PLM, Inc., Mr. Hirsch was a Research Associate at the Harvard
Business School. From January 1977 through September 1978, Mr. Hirsch was a
consultant with the Booz, Allen and Hamilton Transportation Consulting Division,
leaving that employment to obtain his master's degree in business
administration.
Dr. Hoadley joined PLM International's Board of Directors and its Executive
Committee in September, 1989. He served as a Director of PLM, Inc. from November
1982 to June 1984 and PLM Companies, Inc. from October 1985 to February 1988.
Dr. Hoadley has been a Senior Research Fellow at the Hoover Institute since
1981. He was Executive Vice President and Chief Economist for the Bank of
America from 1968 to 1981 and Chairman of the Federal Reserve Bank of
Philadelphia from 1962 to 1966. Dr. Hoadley has served as a Director of
Transcisco Industries, Inc. from February 1988 through August 1995.
Robert L. Pagel was appointed Chairman of the Executive Committee of the
Board of Directors of PLM International in September 1990, having served as a
director since February 1988. In October 1988 he became a member of the
Executive Committee of the Board of Directors of PLM International. From June
1990 to April 1991 Mr. Pagel was President and Co-Chief Executive Officer of The
Diana Corporation, a holding company traded on the New York Stock Exchange. He
is the former President and Chief Executive Officer of FanFair Corporation which
specializes in sports fans' gift shops. He previously served as President and
Chief Executive Officer of Super Sky International, Inc., a publicly traded
company, located in Mequon, Wisconsin, engaged in the manufacture of skylight
systems. He was formerly Chairman and Chief Executive Officer of Blunt, Ellis &
Loewi, Inc., a Milwaukee-based investment firm. Mr. Pagel retired from Blunt,
Ellis & Loewi in 1985 after a career spanning 20 years in all phases of the
brokerage and financial industries. Mr. Pagel has also served on the Board of
Governors of the Midwest Stock Exchange.
Harold R. Somerset was elected to the Board of Directors of PLM
International in July 1994. From February 1988 to December 1993, Mr. Somerset
was President and Chief Executive Officer of California & Hawaiian Sugar
Corporation, (C&H) a recently acquired subsidiary of Alexander & Baldwin, Inc.
Mr. Somerset joined C&H in 1984 as Executive Vice President and Chief Operating
Officer, having served on its Board of Directors since 1978, a position in which
he continues to serve. Between 1972 and 1984, Mr. Somerset served in various
capacities with Alexander & Baldwin, Inc., a publicly-held land and agriculture
company headquartered in Honolulu, Hawaii, including Executive Vice President -
Agricultures, Vice President, General Counsel and Secretary. In addition to a
law degree from Harvard Law School, Mr. Somerset also holds degrees in civil
engineering from the Rensselaer Polytechnic Institute and in marine engineering
from the U.S. Naval Academy. Mr. Somerset also serves on the Boards of Directors
for various other companies and organizations, including Longs Drug Stores,
Inc., a publicly-held company headquartered in Maryland.
Robert N. Tidball was appointed President and Chief Executive Officer of
PLM International in March 1989. At the time of his appointment, he was
Executive Vice President of PLM International. Mr. Tidball became a director of
PLM International in April, 1989 and a member of the Executive Committee of the
Board of Directors of PLM International in September 1990. Mr. Tidball was
elected President of PLM Railcar Management Services, Inc. in January 1986. Mr.
Tidball was Executive Vice President of Hunter Keith, Inc., a Minneapolis-based
investment banking firm, from March 1984 to January 1986. Prior to Hunter Keith,
Inc., he was Vice President, a General Manager and a Director of North American
Car Corporation, and a Director of the American Railcar Institute and the
Railway Supply Association.
J. Michael Allgood was appointed Vice President and Chief Financial Officer
of PLM International in October 1992. Between July 1991 and October 1992, Mr.
Allgood was a consultant to various private and public sector companies and
institutions specializing in financial operational systems development. In
October 1987, Mr. Allgood co-founded Electra Aviation Limited and its holding
company, Aviation Holdings Plc of London where he served as Chief Financial
Officer until July 1991. Between June 1981 and October 1987, Mr. Allgood served
as a First Vice President with American Express Bank, Ltd. In February 1978, Mr.
Allgood founded and until June 1981, served as a director of Trade Projects
International/Philadelphia Overseas Finance Company, a joint venture with
Philadelphia National Bank. From March 1975 to February 1978, Mr. Allgood served
in various capacities with Citibank, N.A.
Stephen M. Bess was appointed President of PLM Investment Management, Inc.
in August 1989, having served as Senior Vice President of PLM Investment
Management, Inc. beginning in February 1984 and as Corporate Controller of PLM
Financial Services, Inc. beginning in October 1983. Mr. Bess served as Corporate
Controller of PLM, Inc., beginning in December 1982. Mr. Bess was Vice
President-Controller of Trans Ocean Leasing Corporation, a container leasing
company, from November 1978 to November 1982, and Group Finance Manager with the
Field Operations Group of Memorex Corp., a manufacturer of computer peripheral
equipment, from October 1975 to November 1978.
David J. Davis was appointed Vice President and Controller of PLM
International in January 1994. From March 1993 through January 1994, Mr. Davis
was engaged as a consultant for various firms, including PLM. Prior to that Mr.
Davis was Chief Financial Officer of LB Credit Corporation in San Francisco from
July 1991 to March 1993. From April 1989 to May 1991, Mr. Davis was Vice
President and Controller for ITEL Containers International Corporation which was
located in San Francisco. Between May 1978 and April 1989, Mr. Davis held
various positions with Transamerica Leasing Inc., in New York, including that of
Assistant Controller for their rail leasing division.
Frank Diodati was appointed President of PLM Railcar Management Services
Canada Limited in 1986. Previously, Mr. Diodati was Manager of Marketing and
Sales for G.E. Railcar Services Canada Limited.
Douglas P. Goodrich was appointed Senior Vice President of PLM
International in March 1994. Mr. Goodrich has also served as Senior Vice
President of PLM Transportation Equipment Corporation since July 1989, and as
President of PLM Railcar Management Services, Inc. since September 1992 having
been a Senior Vice President since June 1987. Mr. Goodrich was an Executive Vice
President of G.I.C. Financial Services Corporation, a subsidiary of Guardian
Industries Corp. of Chicago, Illinois from December 1980 to September 1985.
Steven O. Layne was appointed Vice President, PLM Transportation Equipment
Corporation's Air Group in November 1992. Mr. Layne was its Vice President,
Commuter and Corporate Aircraft beginning in July 1990. Prior to joining PLM,
Mr. Layne was the Director, Commercial Marketing for Bromon Aircraft
Corporation, a joint venture of General Electric Corporation and the Government
Development Bank of Puerto Rico. Mr. Layne is a major in the United States Air
Force Reserves and senior pilot with 13 years of accumulated service.
Stephen Peary became Vice President, Secretary, and General Counsel of PLM
International in February 1988 and Senior Vice President in March 1994. Mr.
Peary was Assistant General Counsel of PLM Financial Services, Inc. from August
1987 through January 1988. Previously, Mr. Peary was engaged in the private
practice of law in San Francisco. Mr. Peary is a graduate of the University of
Illinois, Georgetown University Law Center, and Boston University (Masters of
Taxation Program).
Thomas L. Wilmore was appointed Vice President - Rail, PLM Transportation
Equipment Corporation, in March 1994 and has served as Vice President, Marketing
for PLM Railcar Management Services, Inc. since May 1988. Prior to joining PLM,
Mr. Wilmore was Assistant Vice President Regional Manager for MNC Leasing Corp.
in Towson, Maryland from February 1987 to April 1988. From July 1985 to February
1987, he was President and Co-Owner of Guardian Industries Corp., Chicago,
Illinois and between December 1980 and July 1985, Mr. Wilmore was an Executive
Vice President for its subsidiary, G.I.C. Financial Services Corporation. Mr.
Wilmore also served as Vice President of Sales for Gould Financial Services
located in Rolling Meadows, Illinois from June 1978 to December 1980.
The directors of the General Partner are elected for a one-year term or
until their successors are elected and qualified. There are no family
relationships between any director or any executive officer of the General
Partner.
ITEM 11. EXECUTIVE COMPENSATION
The Program has no directors, officers, or employees. The Program has no
pension, profit-sharing, retirement, or similar benefit plan in effect as of
December 31, 1995.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Program is not a legal entity. The Program itself does not have any
securities. The Program has neither directors nor executive officers. However,
the Cars sold to investors who have entered into Management Agreements are
managed by IMI. Neither the Manager, its affiliates nor any officer or director
of the Manager or its affiliates own any Cars.
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Transactions with Management and Others
During 1995, $262,458 in management fees was paid to the
Manager by participants in the Program.
(b) Certain Business Relationships
None.
(c) Indebtedness of Management
None.
(d) Transactions with Promoters
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial statements
The statements listed in the accompanying Index to Financial
Statements are filed as part of this Annual Report.
2. Financial Statement Schedules
None.
(b) Reports on Form 8-K
None.
(c) Exhibits
10.1 Form of Management Agreement, incorporated by reference to
the Program's Annual Report on Form 10-K filed with the
Securities and Exchange Commission on April 2, 1990.
25. Power of Attorney
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
The Registrant is not a legal entity. PLM Investment Management, Inc., the
Manager, has signed on behalf of the Registrant by its duly authorized officers.
RMI COVERED HOPPER RAILCAR
MANAGEMENT PROGRAM 79-1
Date: March 27, 1996 Registrant
By: PLM Investment Management, Inc.
Manager
By: /s/ Stephen M. Bess
--------------------------
Stephen M. Bess
President
By: /s/ David J. Davis
-------------------------
David J. Davis
Vice President and
Corporate Controller
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following directors of IMI on the dates indicated.
Name Capacity Date
*
Stephen M. Bess Director March 27, 1996
*
Allen V. Hirsch Director March 27, 1996
*
Stephen Peary Director March 27, 1996
* Stephen Peary, by signing his name hereto, does sign this document on behalf
of the persons indicated above pursuant to powers of attorney duly executed
by such persons and filed with the Securities and Exchange Commission.
/s/ Stephen Peary
--------------------
Stephen Peary
Attorney-in-Fact
<PAGE>
RMI COVERED HOPPER RAILCAR MANAGEMENT PROGRAM 79-1
INDEX TO FINANCIAL STATEMENTS
(Item 14(a))
Page
Report of Independent Auditors 17
Statements of revenues collected and expenses paid and
other changes in cash for
the years ended December 31,
1995, 1994 and 1993 18
Notes to the statements of revenues collected and expenses
paid and other changes in cash 19-20
All financial statement schedules have been omitted as the required information
is not pertinent to the Registrant or is not material, or because the
information required is included in the statements and notes thereto.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Equipment Owners in
RMI Covered Hopper Railcar Management Program 79-1
We have audited the accompanying financial statements of RMI Covered Hopper
Railcar Management Program 79-1 (the Program) as listed in the accompanying
index. These financial statements are the responsibility of the Program's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether these financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
The accompanying financial statements were prepared to present the revenues
collected and expenses paid and other changes in cash of RMI Covered Hopper
Railcar Management Program 79-1 pursuant to the management agreement described
in Note 1 and are not intended to be a complete presentation of the Program's
financial position, results of operations and cash flows in conformity with
generally accepted accounting principles.
In our opinion, the accompanying financial statements present fairly, in all
material respects, the revenues collected and expenses paid and other changes in
cash of RMI Covered Hopper Railcar Management Program 79-1 for each of the years
in the three-year period ended December 31, 1995, on the cash basis of
accounting described in Note 1.
/S/ KPMG PEAT MARWICK LLP
San Francisco, California
March 27, 1996
<PAGE>
RMI COVERED HOPPER RAILCAR MANAGEMENT PROGRAM 79-1
STATEMENTS OF REVENUES COLLECTED AND EXPENSES PAID
AND OTHER CHANGES IN CASH
For the Years Ended December 31,
<TABLE>
<CAPTION>
1995 1994 1993
------------------------------------------------------
<S> <C> <C> <C>
Revenues collected:
Lease revenue received $ 2,475,106 $ 2,378,466 $ 2,459,768
Interest and other income 84,829 63,161 49,738
------------------------------------------------------
Total revenues collected 2,559,935 2,441,627 2,509,506
Expenses paid:
Repairs and maintenance 363,776 339,962 430,603
Insurance 23,890 49,969 45,685
Property taxes 53,685 75,606 46,461
Accounting and legal fees 6,597 12,741 8,112
Storage, repositioning and other 7,979 13,208 45,151
------------------------------------------------------
Total expenses paid 455,927 491,486 576,012
------------------------------------------------------
Excess of revenues collected over
expenses paid 2,104,008 1,950,141 1,933,494
----------------------------------------------------
Other increases (decreases) in cash:
Prepaid mileage, reimbursable repairs
and other 119,213 130,846 54,384
Management fees paid (262,458) (244,940) (247,539)
Receipt of proceeds from sold or destroyed
cars 46,742 578,134 294,481
Receipt of proceeds for transfer of
car ownership 250,000 -- --
Payments to investors for sold or destroyed
cars (72,250) (579,035) (300,294)
Payments to investors for transfer of
car ownership (240,000) -- --
Distributions to investors (1,731,469) (1,630,674) (1,540,593)
Commission paid (10,000) -- --
------------------------------------------------------
Net other decreases in cash (1,900,222) (1,745,669) (1,739,561)
------------------------------------------------------
Net increase in cash 203,786 204,472 193,933
Cash at beginning of year 1,377,326 1,172,854 978,921
------------------------------------------------------
Cash at end of year $ 1,581,112 $ 1,377,326 $ 1,172,854
======================================================
</TABLE>
See accompanying notes to the financial
statements.
<PAGE>
RMI COVERED HOPPER RAILCAR MANAGEMENT PROGRAM 79-1
NOTES TO THE STATEMENTS OF REVENUES COLLECTED AND EXPENSES PAID
AND OTHER CHANGES IN CASH
December 31, 1995
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, results of operations or cash flows in accordance with generally
accepted accounting principles.
2. Operations
The Program is managed by IMI, a wholly owned subsidiary of PLM Financial
Services, Inc. (FSI). FSI, in conjunction with its subsidiaries,
syndicates investor programs, sells transportation equipment to investor
programs and third parties, manages pools of transportation equipment
under management agreements with the investor programs, and is also a
general partner of several limited partnerships. The investors are liable
for the obligations and liabilities of the Program.
As of December 31, 1995, monthly management fees of $38 per car are
charged directly to the individual investors with respect to cars being
managed pursuant to five-year extensions made to the original management
agreements which had original terms of ten years. In addition, IMI earns
an incentive management fee equal to 15% of Net Earnings (as defined in
the original Management Agreement) over $750 per car per quarter. Prior to
the five-year extensions, management fees were being charged at the rate
of $55 per car.
At December 31, 1995, 495 cars (495 cars at December 31, 1994 and 519 cars
at December 31, 1993) which are owned by the investors, were being managed
by IMI under the Program, all of which were covered by lease arrangements
at December 31, 1995. During 1995, two cars were destroyed and ten cars
were transferred from several investors to other investors and IMI
received a commission fee of $10,000 to handle the transfer.
3. Revenues and Expenses
Operating revenues and expenses of the Program are pooled and allocated to
participants based on available car-days as defined in the Management
Agreement. Revenues are earned by placing the railcars under leases, and
are billed monthly. As of December 31, 1995, all 495 cars were leased on a
fixed rate basis.
<PAGE>
RMI COVERED HOPPER RAILCAR MANAGEMENT PROGRAM 79-1
NOTES TO THE STATEMENT OF REVENUES COLLECTED AND EXPENSES PAID
AND OTHER CHANGES IN CASH
December 31, 1995
3. Revenues and Expenses (continued)
The lessees accounting for 10% or more of lease revenues collected during
1995, 1994 and 1993 were Louis Dreyfus Corp. (14% in 1995, 13% in 1994,
and 11% in 1993), Con Agra, Inc. (10% in 1993), Canadian Pacific Railroad
(16% in 1995, 19% in 1994, and 16% in 1993), San Luis Central Railroad Co.
(13% in 1995, 14% in 1994, and 13% in 1993), TG Soda Ash (11% in 1993),
Union Pacific Railroad (24% in 1995, 26% in 1994, and 26% in 1993), and
General Chemical Co. (14% in 1995 and 10% in 1994).
4. 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 December 31, 1995 to be $873,359 ($956,308
and $756,854 at December 31, 1994 and 1993, respectively). Any retained
cash has been invested in an interest bearing account at a rate of 5.38%
at December 31, 1995 (2.47% and 2.27% at December 31, 1994 and 1993,
respectively).
<PAGE>
RMI COVERED HOPPER RAILCAR MANAGEMENT PROGRAM 79-1
INDEX OF EXHIBITS
Exhibit Page
10.1 Form of Management Agreement *
25. Power of Attorney 22
* Incorporated by reference. See page 13 of this report.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned does hereby constitute and appoint Robert N.
Tidball, Stephen Peary, J. Michael Allgood and David J. Davis, jointly and
severally, his true and lawful attorneys-in-fact, each with power of
substitution, for him in any and all capacities, to do any and all acts and
things and to execute any and all instruments which said attorneys, or any of
them, may deem necessary or advisable to enable PLM Investment Management, Inc.,
as Manager of RMI Covered Hopper Railcar Management Program 79-1, to comply with
the Securities Exchange Act of 1934, as amended (the "Act"), and any rules and
regulations thereunder, in connection with the preparation and filing with the
Securities and Exchange Commission of annual reports on Form 10-K on behalf of
PLM Investment Management, Inc., as Manager of RMI Covered Hopper Railcar
Management Program 79-1, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign the name of the
undersigned, in any and all capacities, to such annual reports, to any and all
amendments thereto, and to any and all documents or instruments filed as a part
of or in connection therewith; and the undersigned hereby ratifies and confirms
all that each of the said attorneys, or his substitute or substitutes, shall do
or cause to be done by virtue hereof. This Power of Attorney is limited in
duration until May 1, 19965 and shall apply only to the annual reports and any
amendments thereto filed with respect to the fiscal year ended December 31,
1995.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
18th day of February, 1996.
/s/ Allen V. Hirsch
---------------------------------
Allen V. Hirsch
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 1,581,112
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 2,559,935
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
