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 March 31, 1998.
[ ] 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
Ended March 31,
1998 1997
----------------------------------------
<S> <C> <C>
Revenues collected:
Lease revenue received $ 612,392 $ 691,150
Interest and other income 19,690 16,022
----------------------------------------
Total revenues collected 632,082 707,172
Expenses paid (reimbursed):
Repairs and maintenance 67,270 46,221
Property taxes 1,654 (3,994 )
Accounting and legal fees 3,791 6,213
Storage, repositioning, and other 2,671 4,580
----------------------------------------
Total expenses paid 75,386 53,020
----------------------------------------
Excess of revenues collected
over expenses paid 556,696 654,152
----------------------------------------
Other increases (decreases) in cash:
Prepaid mileage, reimbursable repairs,
and other expenses 40,953 9,365
Management fees paid (71,494 ) (67,553 )
Receipt of proceeds from sold or destroyed cars 62,820 --
Receipt of proceeds for transfer of car ownership 79,000 --
Payments to investors for sold or destroyed cars (32,772 ) --
Payments to investors for transfer of car ownership (75,840 ) --
Commission paid for sale or transfer of car ownership (3,160 ) (1,080 )
Distributions to investors (476,086 ) (445,597 )
----------------------------------------
Net other decreases in cash (476,579 ) (504,865 )
----------------------------------------
Net increase in cash 80,117 149,287
Cash at beginning of period 1,314,628 1,344,981
----------------------------------------
Cash at end of period $ 1,394,745 $ 1,494,268
========================================
</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
March 31, 1998
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 March 31, 1998, 478 cars, which are owned by the investors, were being
managed by IMI under the Program. With the exception of four cars, all of the
cars were covered by lease agreements. During the three months ending March 31,
1998, two cars were added to the Program and one car was 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
March 31, 1998, to be $789,502 ($781,906 at December 31, 1997).
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CASH BALANCES AND RESULTS OF
OPERATIONS
Comparison of the Program's Revenues Collected, Expenses Paid, and Other Changes
in Cash for the Three Months Ended March 31, 1998 and 1997
Revenues collected:
(1) Lease receipts decreased to $612,392 in the first quarter of 1998 from
$691,150 in the first quarter of 1997. The decrease is primarily due to the
timing of receipt of revenues and to lower average lease rates for certain
lessees during the comparable periods.
(2) Interest and other income increased to $19,690 in the first quarter of 1998,
from $16,022 in the first quarter of 1997, due to higher interest income
resulting from higher interest rates earned on cash investments during the first
quarter of 1998 when compared to the same period of 1997.
Expenses paid:
(1) Repairs and maintenance expense increased to $67,270 in the first quarter of
1998, from $46,221 in the first quarter of 1997. The increase is due to the
timing of payments of expenses during comparable periods.
(2) Property taxes increased to $1,654 in the first quarter of 1998, from a
credit balance of $(3,994) in the first quarter of 1997. The increase is due to
a $4,000 credit for the overpayment of taxes from prior years received during
the first quarter of 1997. A similar credit was not received during the first
quarter of 1998.
(3) Accounting and legal fees decreased to $3,791 in the first quarter of 1998,
from $6,213 in the first quarter of 1997 due to the decrease in cost of these
professional services and the timing of payments for these expenses during the
comparable periods.
(4) Storage, repositioning, and other expenses decreased to $2,671 in the first
quarter of 1998, from $4,580 in the first quarter of 1997. 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 expenses are composed
primarily of receipts of mileage credits from railroads which are due to
lessees, net of reimbursable repairs due from lessees. Cash increased by $40,953
in the first quarter of 1998, as compared to an increase of $9,365 in the first
quarter of 1997 as a result of these items. 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 $71,494 in the first quarter 1998, from
$67,553 in the first quarter of 1997. The increase is due primarily to higher
incentive fees of $17,850 in the first quarter of 1998 compared to $14,070 paid
in the same period of 1997.
(3) During the three months ended March 31, 1998, the Program received
settlement proceeds of $62,820 from two cars that were destroyed. The Program
paid one investor $32,772 for one of the destroyed cars and expects to pay the
remaining $30,048 to the other investor of the destroyed car during the second
quarter of 1998.
(4) During the three months ended March 31, 1998, the Program received proceeds
of $79,000 from an investor in the Program that purchased three railcars from
another investor in the Program. The Program paid PLM Investment Management,
Inc. (IMI) a commission of $3,160 from this sale and paid the remaining $75,840
to the investor that sold the railcars.
(5) The Program distributed $476,086 to investors in the first quarter 1998
compared to $445,597 in the first quarter of 1997.
The Program's performance in the first quarter 1998 is not necessarily
indicative of future periods.
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 Program has experienced no known demands or commitments that
might adversely affect the liquidity of the Program.
Year 2000 Compliance
IMI is currently addressing the year 2000 computer software issue and is
creating a timetable for carrying out any program modifications that may be
required. IMI does not anticipate that the cost of these modifications allocable
to the Program will be material.
Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board issued two new
statements: SFAS No. 130, "Reporting Comprehensive Income," which requires
enterprises to report, by major component and in total, all changes in equity
from nonowner sources; and SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," which establishes annual and interim
reporting standards for a public Program's operating segments and related
disclosures about its products, services, geographic areas, and major customers.
Both statements are effective for the Program's fiscal year ended December 31,
1998. The effect of adoption of these statements will be limited to the form and
content of the Program's disclosures and will not impact the Program's results
of operations, cash flow, or financial position.
Forward-Looking Information
Except for 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.
(this space intentionally left blank)
<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: May 14, 1998 By: /s/ Richard K Brock
-------------------
Richard K Brock
Vice President and
Corporate Controller
-5-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,395
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,395
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,395
<TOTAL-LIABILITY-AND-EQUITY> 1,395
<SALES> 0
<TOTAL-REVENUES> 632
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 75
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 557
<INCOME-TAX> 0
<INCOME-CONTINUING> 557
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 557
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
