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 September 30, 2000.
[ ] 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 ______
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 Nine Months
Ended September 30, Ended September 30,
2000 1999 2000 1999
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<S> <C> <C> <C> <C>
Revenues collected:
Lease receipts $ 375,266 $ 612,001 $ 1,231,889 $ 1,781,455
Interest and other income 9,238 13,316 31,915 52,590
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Total revenues collected 384,504 625,317 1,263,804 1,834,045
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Expenses paid:
Management fees 59,459 72,776 174,614 219,930
Repairs and maintenance 66,227 111,089 325,687 244,055
Property taxes 1,345 2,264 4,958 7,544
Accounting and legal fees 706 733 7,649 5,632
Storage, repositioning and other 7,260 4,139 22,187 10,122
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Total expenses paid 134,997 191,001 535,095 487,283
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Excess of revenues collected
over expenses paid 249,507 434,316 728,709 1,346,762
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Other increases (decreases) in cash:
Prepaid mileage, reimbursable repairs
and other expenses (50,478) (103,256) (20,109) (57,787)
Receipt of proceeds from destroyed cars 54,748 34,673 56,742 97,502
Receipt of proceeds for transfer of car ownership -- -- -- 99,000
Payments to investors for destroyed cars (56,742) (35,136) (56,742) (97,965)
Payments to investors for transfer of car
ownership -- -- -- (96,500)
Commission paid for sale or transfer of car
ownership -- -- -- (2,500)
Distributions to investors (293,998) (485,185) (1,074,909) (1,456,169)
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Net other decreases in cash (346,470) (588,904) (1,095,018) (1,514,419)
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Net decrease in cash (96,963) (154,588) (366,309) (167,657)
Cash at beginning of period 687,270 1,305,926 956,616 1,318,995
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Cash at end of period $ 590,307 $ 1,151,338 $ 590,307 $ 1,151,338
====================================================================
</TABLE>
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
September 30, 2000
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 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. As of September 30, 1999, 485 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, 1999. During the
nine months ending September 30, 2000, no cars were added to the Program and two
cars were destroyed. During the nine months ending September 30, 1999, three
cars were added to the Program and three 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, 2000, to be $359,352 ($603,179 at December 31, 1999).
(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, 2000 AND 1999
REVENUES COLLECTED:
(1) Lease receipts decreased to $375,266 in the third quarter of 2000, from
$612,001 in the third quarter of 1999. A decrease in lease receipts of $152,320
was due to lower average lease rates for railcars during the comparable periods
and a decrease in lease receipts of $84,415 was due to the timing of receipt of
revenue.
(2) Interest and other income decreased to $9,238 in the third quarter of 2000,
from $13,316 in the third quarter of 1999. 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 2000 when compared to the same period of 1999.
EXPENSES PAID:
(1) Management fees decreased to $59,459 in the third quarter of 2000, from
$72,776 in the third quarter of 1999. The decrease was primarily due to no
incentive fees paid to PLM Investment Management, Inc. (IMI) during the third
quarter of 2000, compared to $18,188 incentive fees being paid to IMI in the
third quarter of 1999. The decrease in management fees resulted from reduced
cash flows to the Program.
(2) Repairs and maintenance payments decreased to $66,227 in the third quarter
of 2000, from $111,089 in the third quarter of 1999. A decrease of $66,294 in
repairs and maintenance resulted from major repairs required on certain railcars
in the fleet during the third quarter of 1999, which were not needed during the
same period of 2000. This decrease was partially offset by an increase in
repairs and maintenance payments of $21,432 due to the timing of payments during
the comparable periods.
(3) Property taxes decreased to $1,345 in the third quarter of 2000, from $2,264
in the third quarter of 1999. 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 decreased to $706 in the third quarter of 2000,
from $733 in the third quarter of 1999. The decrease was primarily due to the
timing of payments of these expenses during the comparable periods.
(5) Storage, repositioning and other expenses increased to $7,260 in the third
quarter of 2000, from $4,139 in the third quarter of 1999. The increase was
primarily due to increased cost of data processing.
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 $50,478
in the third quarter of 2000, as compared to $103,256 in the third quarter of
1999. 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 third quarter of 2000, two cars were destroyed for which the
Program received and paid to investors insurance 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; these proceeds were received
during the second quarter of 2000. During the third quarter of 1999, one car was
destroyed for which the Program received $34,673 and paid to the investor
insurance proceeds of $35,136.
The Program distributed $293,998 to investors in the three months ended
September 30, 2000 compared to $485,185 in the three months ended September 30,
1999.
The Program's performance in the three months ended September 30, 2000 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, 2000 AND 1999
REVENUES COLLECTED:
(1) Lease receipts decreased to $1,231,889 for the nine months ended September
30, 2000, from $1,781,455 for the comparable period in 1999. A decrease in lease
receipts of $492,720 was due to lower average lease rates for railcars during
the comparable periods. A decrease in lease receipts of $56,846 was due to the
timing of lease receipts.
(2) Interest and other income decreased to $31,915 for the nine months ended
September 30, 2000, from $52,590 for the comparable period of 1999. 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, 2000 when
compared to the same period of 1999.
EXPENSES PAID:
(1) Management fees decreased to $174,614 for the nine months ended September
30, 2000, from $219,930 in the nine months ended September 30, 1999. 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, 2000
compared to same period of 1999. In the nine months ended September 30, 2000,
$7,110 in incentive fees were paid to IMI, compared to $54,816 in the nine
months ended September 30, 1999.
(2) Repairs and maintenance payments increased to $325,687 for the nine months
ended September 30, 2000, from $244,055 in the nine months ended September 30,
1999. An increase in repairs and maintenance payments of $51,079 was due to the
timing of payments during the comparable periods. An increase of $30,553 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 1999.
(3) Property taxes decreased to $4,958 for the nine months ended September 30,
2000, from $7,544 for the comparable period in 1999. 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 $7,649 for the nine months ended
September 30, 2000, from $5,632 for the nine months ended September 30, 1999.
The increase was primarily due to higher professional service costs in the nine
months ended September 30, 2000 when compared to the same period of 1999.
(5) Storage, repositioning and other expenses increased to $22,187 for the nine
months ended September 30, 2000, from $10,122 for the comparable period in 1999.
An increase of $4,664 was due to higher repositioning expenses resulting from
more cars being transferred to new lessees during 2000 when compared to 1999. An
increase of $4,366 was due to increased cost of data processing and a $3,035
increase was due to higher bank service charge.
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 $20,109
for the nine months ended September 30, 2000, compared to $57,787 for the nine
months ended September 30, 1999. 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, 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. During the nine months ended September 30, 1999, three cars were destroyed
for which the Program received $97,502 and paid to investors insurance proceeds
of $97,965.
(3) During the nine months ended September 30, 2000, no railcars were
transferred between investors in the Program. During the nine months ended
September 30, 1999, the Program received proceeds of $99,000 for four railcars
that were transferred between investors in the Program. The Program paid $96,500
to investors that sold the cars.
(4) No commissions were paid for the nine months ended September 30, 2000.
Commissions of $2,500 were paid to the Manager during the nine months ended
September 30, 1999 for cars that were transferred between investors during the
first nine months of 1999.
The Program distributed $1,074,909 to investors in the nine months ended
September 30, 2000 compared to $1,456,169 in the nine months ended September 30,
1999.
The Program's performance in the nine months ended September 30, 2000 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. Consequently, many of the lower
capacity cars are now in storage. The Program has avoided placing cars into
storage; however, the rental rates on the cars have decreased significantly
during the last three years. Lease rates are expected to continue to decrease in
the remainder of 2000.
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: November 6, 2000 By: /s/ Richard K Brock
Richard K Brock
Vice President and
Chief Financial Officer
