10-Q 1 doc1.txt 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, 2002. [ ] 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)

~~For~~CALIFORNIA ~~the Three Months For the Nine Months Ended September 30, Ended September 30, 2001 2000 2001 2000~~ 94-~~------------------------------------------------------------------~~2645847 Revenues collected: Lease receipts $ 178,609 $ 375,266 $ 703,471 $ 1,231,889 Interest and other income 4,847 9,238 17,027 31,915 ------------------------------------------------------------------- Total revenues collected 183,456 384,504 720,498 1,263,804 ------------------------------------------------------------------- Expenses paid: Management fees 55,746 59,459 167,010 174,614 Repairs and maintenance 55,237 66,227 193,151 325,687 Property taxes 1,174 1,345 4,092 4,958 Accounting and legal fees 1,185 706 9,227 7,649 Storage, repositioning and other 1,256 7,260 17,694 22,187 ------------------------------------------------------------------- Total expenses paid 114,598 134,997 391,174 535,095 ------------------------------------------------------------------- Excess of revenues collected over expenses paid 68,858 249,507 329,324 728,709 ------------------------------------------------------------------- Other increases (~~decreases)~~State inor ~~cash: Prepaid mileage, reimbursable repairs and~~ other ~~expenses~~jurisdiction ~~(23,477) (50,478) 6,134 (20,109) Receipt~~ of ~~proceeds from destroyed cars 27,203 54,748 27,203 56,742 Payments to investors for destroyed cars~~ (~~27,203)~~I.R.S. ~~(56,742)~~Employer ~~(27,203)~~incorporation ~~(56,742)~~or ~~Distributions to investors (95,801~~organization) ~~(293,998)~~Identification ~~(388,589~~No.) ~~(1,074,909)~~450 ~~-------------------------------------------------------------------~~CARILLON ~~Net~~PARKWAY ~~other~~SUITE ~~decreases~~200 inST. ~~cash (119~~PETERSBURG,~~278)~~ ~~(346,470)~~FL ~~(382,455)~~33716 (~~1,095,018)~~Address ~~-------------------------------------------------------------------~~of ~~Net~~principal ~~decrease in cash~~ (~~50,420)~~Zip ~~(96,963~~code) ~~(53,131)~~executive ~~(366,309~~offices) Cash at beginning of period 539,202 687,270 541,913 956,616 ------------------------------------------------------------------- Cash at end of period $ 488,782 $ 590,307 $ 488,782 $ 590,307 ===================================================================

Registrant's telephone number, including area code (727) 803-8200 _______________________ 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 CONDENSED STATEMENTS OF REVENUES COLLECTED AND EXPENSES PAID AND OTHER CHANGES IN CASH (UNAUDITED)

See accompanying notes to unaudited condensed financial statements. RMI COVERED HOPPER RAILCAR MANAGEMENT PROGRAM 79-1 NOTES TO THE CONDENSED STATEMENTS OF REVENUES COLLECTED AND EXPENSES PAID AND OTHER CHANGES IN CASH (UNAUDITED) 1. Basis of Presentation ----------------------- RMI Covered Hopper Railcar Management Program 79-1 (the Program) is not a legal entity. The condensed 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 accounting principles generally accepted in the United States of America. For further information, reference should be made to the financial statements and notes thereto included in the Partnership's Annual Report on Form 10-K for the year ended December 31, 2001 on file at the Securities and Exchange Commission. 2. Operations ---------- As of June 30, 2002, 455 cars, which are owned by the investors, were being managed by IMI under the Program. There were 189 cars off lease as of June 30, 2002. As of June 30, 2001, 488 cars, which are owned by the investors, were being managed by IMI under the Program. There were 141 cars off lease as of June 30, 2001. During the six months ended June 30, 2002, no cars were added to the Program and 32 cars were sold or destroyed. During the six months ended June 30, 2001, no cars were added to the Program and no cars were sold or 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 June 30, 2002, to be $484,631 ($481,905 at December 31, 2001). (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 June 30, 2002 and 2001 --------------------------------- REVENUES COLLECTED: (1) Lease receipts decreased to $123,705 in the second quarter of 2002 from $219,190 in the second quarter of 2001. A decrease in lease receipts of $57,815 was due to lower average lease rates during the comparable periods and a decrease in lease receipts of $37,670 was due to the increase in the number of cars off lease in the second quarter of 2002 compared to the same period of 2001. (2) Interest and other income decreased to $2,305 in the second quarter of 2002 from $5,181 in the second quarter of 2002. The decrease was primarily due to a decrease in interest income earned as a result of lower average cash balances during the second quarter of 2002 compared to the same period of 2001. EXPENSES PAID: (1) Repairs and maintenance payments decreased to $24,764 in the second quarter of 2002 from $60,066 in the second quarter of 2001. A decrease of $55,458 in repairs and maintenance resulted from major repairs required on certain railcars in the fleet during the second quarter of 2001, which were not needed during the same period of 2002. This decrease was partially offset by an increase in repairs and maintenance payments of $20,156 due to the timing of payments during the comparable periods. (2) Property taxes increased to $226 in the second quarter of 2002 from $146 in the second quarter of 2001. The increase is primarily due to the timing of payments for these expenses during the comparable periods, as the tax rates remained relatively constant. (3) Storage, repositioning and other expenses increased to $9,874 in the second quarter of 2002 from $3,868 for the comparable period in 2001. An increase of $4,721 of storage expense was due to the increase in the number of off lease railcars. Also, an increase of $2,099 in repositioning expense was also due to the increase in the number of off lease railcars during comparable periods. These increases were partially offset by a decrease of $814 in other expenses. 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 $16,838 in the second quarter of 2002 compared to net receipts of $11,074 in the second quarter of 2001. 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 second quarter of 2002, thirty-two cars were sold. The Program received proceeds of $192,000 for the sold cars and $127,880 were paid to the investors. No cars were destroyed or sold during the second quarter of 2001. (3) Commission of $7,680 was paid to IMI in the second quarter of 2002 related to the disposition of railcars. The Program distributed $24,351 to investors in the three months ended June 30, 2002 compared to $99,900 in the three months ended June 30, 2001. The Program's performance in the three months ended June 30, 2002 is not necessarily indicative of future periods. Comparison of RMI Covered Hopper Railcar Management Program 79-1 Revenues -------------------------------------------------------------------------------- Collected, Expenses Paid and Other Changes in Cash for the Six Months Ended June -------------------------------------------------------------------------------- 30, 2002 and 2001 -------------------- REVENUES COLLECTED: (1) Lease receipts decreased to $314,209 for the six months ended June 30, 2002, from $524,862 for the comparable period in 2001. A decrease in lease receipts of $114,973 was due to lower average lease rates for the majority of railcars during the comparable periods and a $95,680 decrease in lease receipts was due to the increase in the number of cars off lease in the six months ended June 30, 2002 compared to the same period of 2001. (2) Interest and other income decreased to $4,759 for the six months ended June 30, 2002, from $12,180 for the comparable period of 2001. The decrease was primarily due to a decrease in interest income earned as a result of lower average cash balances during the six months ended June 30, 2002 compared to the same period of 2001. EXPENSES PAID: (1) Repairs and maintenance payments decreased to $58,920 for the six months ended June 30, 2002, from $137,914 in the six months ended June 30, 2001. A decrease of $47,885 in repairs and maintenance resulted from major repairs required on certain railcars in the fleet during the six months ended June 30, 2001, which were not needed during the same period of 2002. A decrease in repairs and maintenance payments of $31,109 was due to the timing of payments during the comparable periods. (2) Property taxes decreased to $2,523 for the six months ended June 30, 2002, from $2,918 for the comparable period in 2001. The decrease is primarily due to the timing of payments for these expenses during the comparable period, as tax rates remained relatively constant. (3) Accounting and legal fees decreased to $4,995 for the six months ended June 30, 2002, from $8,042 for the six months ended June 30, 2001. The decrease was primarily due to lower auditing fee in the six months ended June 30, 2002 compared to the same period of 2001. (4) Storage, repositioning and other expenses increased to $45,501 for the six months ended June 30, 2002, from $16,438 for the comparable period in 2001. The increase was due to the following: a) An increase of $13,868 was due to the timing of payments for these expenses during the six months ended June 30, 2002 compared to the same period of 2001. b) An increase of $9,708 in storage expense was due to the increase in the number of off lease railcars. c) An increase of $5,487 in repositioning expense was due to the increase in the number of off lease railcars. 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 $16,532 for the six months ended June 30, 2002, compared to net receipts of $29,611 for the six months ended June 30, 2001. 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 six months ended June 30, 2002, thirty-two cars were sold. The Program received proceeds of $192,000 for the sold cars and $127,880 were paid to the investors. No cars were destroyed or sold during the six months ended June 30, 2001. (3) Commission of $7,680 was paid to IMI during the six months ended June 30, 2002 related to the disposition of railcars. The Program distributed $73,054 to investors in the six months ended June 30, 2002 compared to $292,788 in the six months ended June 30, 2001. The Program's performance in the six months ended June 30, 2002 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. Currently, the covered hopper railcar market is severely depressed. The net cash generated by the Program has been decreasing over the past several quarters and it is possible that the Program will exhaust its working capital. The owners of the railcars in the Program are personally responsible for funding operating expenses. Thus, the owners maybe required to make additional capital contributions to the Program in the future. (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 (i.e., supply of cars exceeding relative demand). Consequently, many of the lower capacity cars, as well as the newer higher capacity cars, are now in storage. The Program has avoided placing additional cars into storage by reducing the rental rates on the cars significantly. Lease rates are expected to continue to decrease in the remainder of 2002, and additional cars may be placed into storage before the supply/demand imbalance is corrected. (This space intentionally left blank) 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 Date: August 12, 2002 By: /s/ Stephen M. Bess ------------------- Stephen M. Bess President and Current Chief Accounting Officer CERTIFICATION The undersigned hereby certifies, in their capacity as an officer of the Manager of RMI Covered Hopper Railcar Management Program 79-1 (The Program), that the Quarterly Report of the Program on Form 10-Q for the period ended June 30, 2002, fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition of the Program at the end of such period and the results of operations of the Program for such period. RMI COVERED HOPPER RAILCAR MANAGEMENT PROGRAM 79-1 By:PLM Investment Management, Inc. Manager Date: August 12, 2002 By: /s/ Stephen M. Bess ------------------- Stephen M. Bess President and Current Chief Accounting Officer Date: August 12, 2002 By: /s/ James A. Coyne ------------------ James A. Coyne Chief Financial Officer

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