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, 1997.
[ ] 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 800, 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 ______
<PAGE>
RMI COVERED HOPPER RAILCAR MANAGEMENT PROGRAM 79-1
STATEMENTS OF REVENUES COLLECTED AND EXPENSES PAID
AND OTHER CHANGES IN CASH
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
1997 1996 1997 1996
---------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues collected:
Lease revenue received $ 519,290 $ 623,070 $ 1,210,440 $ 1,257,117
Interest income 16,292 17,891 32,314 38,088
---------------------------------------------------------------
Total revenues collected 535,582 640,961 1,242,754 1,295,205
---------------------------------------------------------------
Expenses paid:
Repairs and maintenance 62,476 65,952 108,697 138,340
Insurance (11,077 ) -- (10,181 ) --
Property taxes 826 6,648 (3,168 ) 12,740
Accounting and legal fees 1,223 3,988 7,436 7,311
Storage, repositioning and other 1,867 2,079 5,550 7,875
---------------------------------------------------------------
Total expenses paid 55,315 78,667 108,334 166,266
----------------------------------------------------------------
Excess of revenues collected
over expenses paid 480,267 562,294 1,134,420 1,128,939
----------------------------------------------------------------
Other increases (decreases) in cash:
Prepaid mileage, reimbursable repairs
and other expense (4,089 ) 23,508 5,276 (43,513)
Management fees paid (71,276 ) (68,512 ) (138,829 ) (136,515)
Receipt of proceeds from sold or destroyed cars 31,713 61,000 31,713 960,000
Receipt of proceeds for transfer of car ownership 27,500 54,000 27,500 79,000
Payments to investors for sold or destroyed cars (31,713 ) (921,600 ) (31,713 ) (921,600)
Payments to investors for transfer of car
ownership (26,400 ) (24,960 ) (26,400 ) (48,960)
Commission paid (1,100 ) (5,720 ) (2,180 ) (42,680)
Distributions to investors (469,216 ) (512,324 ) (914,813 ) (957,101)
---------------------------------------------------------------
Net other decreases in cash (544,581 ) (1,394,608 ) (1,049,446 ) (1,111,369)
----------------------------------------------------------------
Net (decrease) increase in cash (64,314 ) (832,314 ) 84,974 17,570
Cash at beginning of period 1,494,268 2,430,996 1,344,980 1,581,112
----------------------------------------------------------------
Cash at end of period $ 1,429,954 $ 1,598,682 $ 1,429,954 $ 1,598,682
================================================================
</TABLE>
See accompanying notes to 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
June 30, 1997
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
financial position, or results of operations or cash flows in accordance with
generally accepted accounting principles.
2. Operations
At June 30, 1997, 474 cars, which are owned by the investors, were being managed
by IMI under the Program. At June 30, 1997, all but fourteen of the cars were
covered by lease agreements. During the six months ending June 30, 1997, six
cars were added to the Program, one car was destroyed, and one car was
transferred from one investor to another investor.
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, 1997, to be $940,501 ($910,989 at December 31, 1996).
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Program's capital commitments consist of paying operating expenses, and to
the extent funds are available, making cash distributions to the investors. Cash
reserves are considered sufficient to cover all known liabilities of the
equipment pool.
Comparison of the Program's Revenues Collected, Expenses Paid and Other Changes
in Cash for the Three Months Ended June 30, 1997 and 1996
Revenues collected:
(1) Lease receipts decreased to $519,290 in the second quarter of 1997, from
$623,070 in the second quarter of 1996. The decrease is primarily due to the
timing of receipt of revenues during the comparable periods.
(2) Interest income decreased to $16,292 in the second quarter of 1997, from
$17,891 in the second quarter of 1996, due to lower interest income resulting
from lower interest income due to lower average cash balances maintained by the
Program.
Expenses paid:
(1) Repairs and maintenance expense decreased to $62,476 in the second quarter
of 1997, from $65,952 in the second quarter of 1996. The decrease is due to the
timing of payments of expenses during comparable periods.
(2) Insurance decreased to a credit of $11,077 in the second quarter of 1997,
from zero in the second quarter of 1996. The decrease is due to a refund of 1994
annual premium for business interruption insurance received in the second
quarter of 1997.
(3) Property taxes decreased to $826 in the second quarter of 1997, from $6,648
in the second quarter of 1996. The decrease is due to a $4,200 credit for
overpaid taxes from prior years, and the timing of payments for these taxes
during the comparable periods, as the tax rates remained constant.
(4) Accounting and legal fees decreased to $1,223 in the second quarter of 1997,
from $3,988 in the second quarter of 1996 due to the timing of payments for
these expenses during the comparable periods.
(5) Storage, repositioning and other expenses decreased to $1,867 in the second
quarter of 1997, from $2,079 in the second quarter of 1996. The decrease is
primarily due to the timing of payments of 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 due from lessees. The funds decreased by $4,089 in the
second quarter of 1997, as compared to an increase by $23,508 in the second
quarter of 1996. The difference between comparable periods is due primarily to
the timing of net receipts and repayments of these funds by the Program.
(2) Management fees paid increased to $71,276 in the second quarter of 1997,
from $68,512 in the second quarter of 1996. The increase is due to five cars
which were added during the second quarter of 1997, partially offset by lower
incentive fee in the second quarter of 1997 compared to same period of 1996. In
the second quarter of 1997, $17,588 in incentive fees were paid to IMI, compared
to $26,240 in the second quarter of 1996.
(3) During the second quarter of 1997, one car was destroyed for which the
Program received proceeds of $31,713. During the second quarter of 1996, two
cars were sold for $61,000. The net proceeds of $921,600 that was paid to the
investors in the second quarter of 1996 included the net proceeds of $863,040
for 29 cars sold in the first quarter of 1996.
<PAGE>
(4) Comission paid decreased to $1,100 in the second quarter of 1997, from
$5,720 in the second quarter of 1996. The decrease was due to fewer cars being
destroyed or transferred in the second quarter of 1997 as compared to the second
quarter of 1996.
Comparison of the Program's Revenues Collected, Expenses Paid and Other Changes
in Cash for the Six Months Ended June 30, 1997 and 1996
Revenues collected:
(1) Lease receipts decreased to $1,210,440 for the six months ended June 30,
1997, from $1,257,117 for the comparable period in 1996. The decrease is
primarily due to the timing of receipt of revenues during the comparable
periods.
(2) Interest income decreased to $32,314 for the six months ended June 30, 1997,
from $38,088 for the comparable period in 1996, due to lower interest income
resulting from a lower interest income due to lower cash balances maintained by
the Program.
Expenses paid:
(1) Repairs and maintenance expense decreased to $108,697 for the six months
ended June 30, 1997, from $138,340 for the comparable period in 1996. The
decrease is due to the timing of payments of expenses during comparable periods.
(2) Insurance decreased to a credit of $10,181 for the six months ended June 30,
1997, from zero for the comparable period of 1996. The decrease is due to a
refund of 1994 annual premium for business interruption insurance received in
the second quarter of 1997.
(3) Property taxes decreased to a credit of $3,168 for the six months ended June
30, 1997, from $12,740 for the comparable period in 1996. The decrease is due to
a $8,400 credit for overpaid taxes from prior years, and the timing of payments
for these expenses during the comparable periods, as the tax rates remained
constant.
(4) Accounting and legal fees increased to $7,436 for the six months ended June
30, 1997, from $7,311 for the comparable period in 1996 due to the timing of
payments for these expenses during the comparable periods.
(5) Storage, repositioning and other expenses decreased to $5,550 for the six
months ended June 30, 1997, from $7,875 for the comparable period in 1996. The
decrease is primarily due to the timing of payments of expenses during
comparable periods and decrease in postage and filing fee.
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 due from lessees. The funds increased by $5,276 for the six
months ended June 30, 1997, as compared to a decrease of $43,513 for the
comparable period in 1996. The difference between comparable periods is due
primarily to the timing of net receipts and repayments of these funds by the
Program.
(2) Management fees paid increased to $138,829 for the six months period ended
June 30, 1997, from $136,515 for the comparable period in 1996. The increase is
due to $31,658 of incentive fees that was paid for the comparable period in
1997, as compared to comparable incentive fees of $26,240 that was paid for the
six months ended June 30, 1996. The increase is also due to six cars being added
during 1997 to the Program.
(3) During the six months ended June 30, 1997, one car was destroyed for which
the Program received proceeds of $31,713. During the six months ended June 30,
1996, 31 cars were sold for $960,000. The net proceeds of $921,600 was paid to
the investors for the six months ended June 30, 1996.
<PAGE>
(4) Comission paid decreased to $2,180 for the six months ended June 30, 1997,
from $42,680 in the second quarter of 1996. The decrease was due to fewer cars
being destroyed or sold, or transferred for the six months ended June 30, 1997,
as compared to same period of 1996.
The Program distributed $914,813 to investors in the six months ended June 30,
1997, and $957,101 in the six months ended June 30, 1996.
The Program's performance in the six months ended June 30, 1997 is not
necessarily indicative of future periods.
<PAGE>
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
--------------------
Stephen M. Bess
President
Date: August 7, 1997 By: /s/ Richard Brock
--------------------
Richard Brock
Vice President and
Corporate Controller
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,429,954
<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> 1,242,754
<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>
