-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JnAXe+P4nvCMerzNwlDeMyPSvbKTm0HHJPoLO1Yi7SxRN0vWDw6wYywBAVt7l1Me SPlYdgtfH20QibA2s4UzNw== 0000311250-99-000007.txt : 19991110 0000311250-99-000007.hdr.sgml : 19991110 ACCESSION NUMBER: 0000311250-99-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991109 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RMI COVERED HOPPER RAILCAR MANAGEMENT PROGRAM 79-1 CENTRAL INDEX KEY: 0000311250 STANDARD INDUSTRIAL CLASSIFICATION: ARRANGEMENT OF TRANSPORTATION OF FREIGHT & CARGO [4731] IRS NUMBER: 942645847 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 002-64413 FILM NUMBER: 99744381 BUSINESS ADDRESS: STREET 1: ONE MARKET PLZ STREET 2: STEUART STREET TOWER STE 900 CITY: SAN FRANCISCO STATE: CA ZIP: 94105-1301 BUSINESS PHONE: 4159741399 10-Q 1 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, 1999. [ ] 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
For the Three Months For the Nine Months Ended September 30, Ended September 30, 1999 1998 1999 1998 -------------------------------------------------------------------- Revenues collected: Lease revenue received $ 612,001 $ 557,141 $ 1,781,455 $ 1,869,108 Interest and other income 13,316 15,782 52,590 53,075 -------------------------------------------------------------------- Total revenues collected 625,317 572,923 1,834,045 1,922,183 -------------------------------------------------------------------- Expenses paid: Management fees paid 72,776 72,266 219,930 216,113 Repairs and maintenance 111,089 108,465 244,055 230,956 Property taxes 2,264 1,885 7,544 9,157 Accounting and legal fees 733 327 5,632 6,007 Storage, repositioning and other 4,139 1,961 10,122 6,114 -------------------------------------------------------------------- Total expenses paid 191,001 184,904 487,283 468,347 -------------------------------------------------------------------- Excess of revenues collected over expenses paid 434,316 388,019 1,346,762 1,453,836 -------------------------------------------------------------------- Other increases (decreases) in cash: Reimbursable prepaid mileage, repairs and other expenses (103,256) 8,609 (57,787) (49,844) Receipt of proceeds from sold or destroyed cars 34,673 32,042 97,502 94,862 Receipt of proceeds for transfer of car ownership -- 26,000 99,000 133,000 Payments to investors for sold or destroyed cars (35,136) (32,042) (97,965) (94,862) Payments to investors for transfer of car ownership -- (24,960) (96,500) (128,800) Commission paid for sale or transfer of car ownership -- (1,040) (2,500) (4,200) Distributions to investors (485,185) (477,339) (1,456,169) (1,431,479) --------------------------------- --------------------------------- -- Net other decreases in cash (588,904) (468,730) (1,514,419) (1,481,323) -------------------------------------------------------------------- Net decrease in cash (154,588) (80,711) (167,657) (27,487) Cash at beginning of period 1,305,926 1,367,852 1,318,995 1,314,628 -------------------------------------------------------------------- Cash at end of period $ 1,151,338 $ 1,287,141 $ 1,151,338 $ 1,287,141 ====================================================================
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, 1999 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 or Manager). 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, 1999, 485 cars, which are owned by the investors, were being managed by IMI under the Program. As of September 30, 1998, 484 cars, which are owned by the investors, were being managed by IMI under the Program. All of the cars were covered by lease agreements. During the nine months ending September 30, 1999, three cars were added to the Program and three cars were destroyed. During the nine months ending September 30, 1998, 10 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, 1999, to be $722,836 ($836,155 at December 31, 1998). (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 the Program's Revenues Collected, Expenses Paid and Other Changes in Cash for the Three Months Ended September 30, 1999 and 1998 Revenues collected: (1) Lease receipts increased to $612,001 in the third quarter of 1999, from $557,141 in the third quarter of 1998. $144,426 increase in lease receipts is due to the timing of receipt of revenues, $9,349 increase in lease receipts is due to twelve cars added in the Program during the last quarter of 1998 and the first three quarters in 1999. The increase in lease receipts is partially offset by decrease in lease receipts of $98,915 due to lower average leases rates for certain lessees during the comparable periods. (2) Interest and other income decreased to $13,316 in the third quarter of 1999, from $15,782 in the third quarter of 1998 due to a decrease in interest income of $5,135 resulting from lower interest income earned on lower average cash balances during the third quarter of 1999 when compared to the same period of 1998 and a decrease in miscellaneous income of $214. The decrease in interest and other income is partially offset by the exchange rate fluctuation, $353 exchange rate gain in the third quarter of 1999 as compared to $2,530 exchange rate loss in the third quarter of 1998. Expenses paid: (1) Management fees paid increased to $72,776 in the third quarter of 1999, from $72,266 in the third quarter of 1998. The increase is primarily due to higher incentive fees paid to PLM Investment Management, Inc. (IMI) in the third quarter of 1999 compared to same quarter of 1998. In the third quarter of 1999, $18,188 in incentive fees were paid to IMI, compared to $17,888 in the third quarter of 1998. The increase is also due to more cars in the Program during the third quarter of 1999 as compared to the same period of 1998. IMI receives a monthly management fee on a per car basis at $38 per car. (2) Repairs and maintenance expense increased to $111,089 in the third quarter of 1999, from $108,465 in the third quarter of 1998. An increase of $23,105 in repairs and maintenance resulted from running repairs required on certain railcars in the fleet during the third quarter of 1999, which were not needed during the same period of 1998. A $6,919 increase in repairs and maintenance is due to twelve cars added in the Program during the last quarter of 1998 and the first three quarters in 1999. The increase in repairs and maintenance expense is partially offset by the decrease in repairs and maintenance expense of $27,400 due to the timing of payments of expenses during comparable period. (3) Property taxes increased to $2,264 in the third quarter of 1999, from $1,885 in the third quarter of 1998. The increase is primarily due to the timing of payments for these expenses during the comparable periods, and the timing of receiving of invoices from various states, as the tax rates remained relatively constant. (4) Accounting and legal fees increased to $733 in the third quarter of 1999, from $327 in the third quarter of 1998, due to the timing of payments for these expenses during the comparable periods. (5) Storage, repositioning and other expenses increased to $4,139 in the third quarter of 1999, from $1,961 for the comparable period in 1998. The increase is primarily due to higher repositioning expenses during 1999 when compared to 1998. Other changes in cash: (1) Reimbursable prepaid mileage, 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 $103,256 in the third quarter of 1999, as compared to net receipts of $8,609 in the third quarter of 1998. The difference between comparable periods is due primarily to the timing of receipts and repayments of these funds by the Program. (2) 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. During the third quarter of 1998, one car was destroyed for which the Program received and paid to the investor insurance proceeds of $32,042. (3) During the third quarter of 1999, no railcars were transferred from one investor to another investor in the Program. During the third quarter of 1998, the Program received proceeds of $26,000 for a railcar that was transferred from one investor to another investor in the Program. The Program paid $24,960 net of commission to the investor that sold the car. (4) No commission was paid for the three months ended September 30, 1999, compared to $1,040 in the third quarter of 1998. The decrease was due to no cars being transferred during the third quarter of 1999, when compared to one car being transferred during the same quarter of 1998. The Program distributed $485,185 to investors in the three months ended September 30, 1999 compared to $477,339 in the three months ended September 30, 1998. Comparison of the Program's Revenues Collected, Expenses Paid and Other Changes in Cash for the Nine Months Ended September 30, 1999 and 1998 Revenues collected: (1) Lease receipts decreased to $1,781,455 for the nine months ended September 30, 1999, from $1,869,108 for the comparable period in 1998. $131,805 decrease in lease receipts is due to lower average leases rates for certain lessees during the comparable periods. The decrease in lease receipts is partially offset by increase in lease receipts of $30,895 due to the timing of receipt of revenues and $13,257 increase in lease receipts due to twelve cars added in the Program during the last quarter of 1998 and the first three quarters in 1999. (2) Interest and other income decreased to $52,590 for the nine months ended September 30, 1999, from $53,075 for the comparable period in 1998, due to a decrease in interest income of $12,711 resulting from lower interest income earned on lower average cash balances during the nine months ended September 30, 1999 when compared to the same period of 1998 and a decrease in miscellaneous income of $30. The decrease in interest and other income is partially offset by the exchange rate fluctuation, $8,017 exchange rate gain in the nine months ended September 30, 1999 as compared to $4,239 exchange rate loss in the nine months ended September 30, 1998. Expenses paid: (1) Management fees paid increased to $219,930 for the nine months period ended September 30, 1999, from $216,113 for the comparable period in 1998. The increase is due to more cars in the Program during the first three quarters of 1999 as compared to the same period of 1998. IMI receives a monthly management fee on a per car basis at $38 per car. The increase is also due to higher incentive fees in the first nine months of 1999 compared to same period of 1998. For the nine months ended September 30, 1999, $54,816 in incentive fees were paid to IMI, compared to $53,663 paid for the nine months ended September 30, 1998. (2) Repairs and maintenance expense increased to $244,055 for the nine months ended September 30, 1999, from $230,956 for the comparable period in 1998. An increase of $9,473 in repairs and maintenance expense is due to twelve cars added in the Program during the last quarter of 1998 and the first three-quarters in 1999. An increase of $9,030 in repairs and maintenance expense resulted from running repairs required on certain railcars in the fleet during the nine months ended September 30, 1998, which were not needed during the same period of 1999. The increase is partially offset by the decrease in repairs and maintenance expense of $5,404 due to the timing of payments of expenses during comparable periods (3) Property taxes decreased to $7,544 for the nine months ended September 30, 1999, from $9,157 for the comparable period in 1998. The decrease is primarily due to the timing of payments for these expenses during the comparable periods, and the timing of receiving of invoices from various states, as the tax rates remained relatively constant. (4) Accounting and legal fees decreased to $5,632 for the nine months ended September 30, 1999, from $6,007 for the comparable period in 1998, due to the timing of payments for these expenses during the comparable periods. (5) Storage, repositioning and other expenses increased to $10,122 for the nine months ended September 30, 1999, from $6,114 for the comparable period in 1998. The increase is primarily due to higher repositioning expenses in 1999 when compared to 1998. Other changes in cash: (1) Reimbursable prepaid mileage, 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 $57,787 for the nine months ended September 30, 1999, as compared to net payments of $49,844 for the comparable period in 1998. The difference between comparable periods is due primarily to the timing of receipts and repayments of these funds by the Program. (2) During the nine months ended September 30, 1999, three cars were destroyed for which the Program received insurance proceeds of $97,502 and paid to investors insurance proceeds of $97,965. During the nine months ended September 30, 1998, three cars were destroyed for which the Program received and paid to investors insurance proceeds of $94,862. (3) 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 net of commission to investors that sold the cars. During the nine months ended September 30, 1998, the Program received proceeds of $133,000 for five railcars that were transferred between investors in the Program. The Program paid $128,800 net of commission to investors that sold the cars. (4) Commission paid decreased to $2,500 for the nine months ended September 30, 1999, from $4,200 in the same period of 1998. The decrease was due to fewer cars being transferred in the nine months ended September 30, 1999, as compared to the same period of 1998. The Program distributed $1,456,169 to investors in the nine months ended September 30, 1999 compared to $1,431,479 in the nine months ended September 30, 1998. The Program's performance in the nine months ended September 30, 1999 is not necessarily indicative of future periods. (II) EFFECTS OF YEAR 2000 It is possible that the Manager's currently installed computer systems, software products, and other business systems, or those of the Program's vendors, service providers, and customers, working either alone or in conjunction with other software or systems, may not accept input of, store, manipulate, and output dates on or after January 1, 2000 without error or interruption, a possibility commonly known as the "Year 2000" or "Y2K" problem. As the Program relies substantially on the Manager's software systems, applications and control devices in operating and monitoring significant aspects of its business, any Year 2000 problem suffered by the Manager could have a material adverse effect on the Program's business, financial condition and results of operations. The Manager has established a special Year 2000 oversight committee to review the impact of Year 2000 issues on its business systems in order to determine whether such systems will retain functionality after December 31, 1999. As of September 30, 1999, the Manager has completed inventory, assessment, remediation and testing stages of its Year 2000 review of its core business information systems. Specifically, the Manager (a) has integrated Year 2000-compliant programming code into its existing internally customized and internally developed transaction processing software systems and (b) the Manager's accounting and asset management software systems have been made Year 2000 compliant. In addition, numerous other software systems provided by vendors and service providers have been replaced with systems represented by the vendor or service provider to be Year 2000 functional. These systems will be fully tested and appear to be compliant. As of September 30, 1999, the costs incurred and allocated to the Fund to become Year 2000 compliant have not been material and does not anticipate any additional Year 2000-compliant expenditures. Some risks associated with the Year 2000 problem are beyond the ability of the Program or Manager to control, including the extent to which third parties can address the Year 2000 problem. The Manager is communicating with vendors, services providers, and customers in order to assess the Year 2000 readiness of such parties and the extent to which the Program is vulnerable to any third-party Year 2000 issues. As part of this process, vendors and service providers were ranked in terms of the relative importance of the service or product provided. All service providers and vendors who were identified as medium to high relative importance were surveyed to determine Year 2000 status. The Manager has received satisfactory responses to Year 2000 readiness inquiries from surveyed service providers and vendors. It is possible that certain of the Program's equipment lease portfolio may not be Year 2000 compliant. The Manager has contacted equipment manufacturers of the portion of the Program's leased equipment portfolio identified as date sensitive to assure Year 2000 compliance or to develop remediation strategies. The Program does not expect that non-Year 2000 compliance of its leased equipment portfolio will have an adverse material impact on its financial statements. The Manager has surveyed the majority of its lessees and the majority of those surveyed have responded satisfactorily to Year 2000 readiness inquiries. There can be no assurance that the software systems of such parties will be converted or made Year 2000 compliant in a timely manner. Failure by the Manager or such other parties to make their respective systems Year 2000 compliant could have a material adverse effect on the business, financial position, and results of operations of the Program. The Manager has made and will continue an ongoing effort to recognize and evaluate potential exposure relating to third party Year 2000 noncompliance. The Manager will implement a contingency plan if the Manager determines that third-party noncompliance would have a material adverse effect on the Program's business, financial position, or results of operation. The Manager is currently developing a contingency plan to address the possible failure of any systems or vendors or service providers due to Year 2000 problems. For the purpose of such contingency planning, a reasonably likely worst case scenarios primarily anticipate a) an inability to access systems and data on a temporary basis resulting in possible delay in reconciliation of funds received or payment of monies owed, or b) an inability to continuously employ equipment assets due to temporary Year 2000 related failure of external infrastructure necessary to the ongoing operation of the equipment. The Manager is evaluating whether there are additional scenarios, which have not been identified. Contingency planning will encompass strategies up to and including manual processes. The Manager anticipates that these plans will be completed by the fourth quarter of 1999. (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. 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 9, 1999 By: /s/ Richard K Brock -------------------------------- Richard K Brock Vice President and Corporate Controller EX-27 2
5 1 9-MOS DEC-31-1999 SEP-30-1999 1,151,338 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1,834,045 0 0 487,283 0 0 0 0 0 0 0 0 0 0 0
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