About Locomotive Residual Management

What is Locomotive Residual Management?

Locomotive Residual Management LLC is a 50/50 joint venture of Scott Consulting LLC and Railroad Financial Corporation. LRM’s professionals provide their customers with more than 50 years of experience in locomotive design, manufacture, repair, reconfiguration and leasing.

Why was Locomotive Residual Management organized?

LRM’s principals, David Scott and Tony Kruglinski, were engaged separately on a locomotive project for a major locomotive lessor and came to understand that the knowledge and disciplines represented by their individual firms could, when combined, provide a level of locomotive service and finance experience not otherwise available in the marketplace.

What Goals have LRM’s Principals set for their company?

LRM is dedicated to enhancing existing resources and opportunities available to both locomotive lessors and locomotive end-users. These activities focus on four areas:

• Programs to increase the fuel efficiency of existing locomotive fleets.
• Increasing the efficiency of the North American locomotive fleet.
• Developing financial and technical products to aid the locomotive lessors and lessees.
• Maximizing the value received for each dollar invested in acquisition, renewal or remanufacture of locomotives.

In addition to these broad areas of focus, LRM provides complete “cradle-to-grave” locomotive service for investors and end-users, including:

• Guidance on the specifications and acquisition of new, used or rebuilt locomotive power;
• Project management for new locomotive construction and for the repair, refurbishment or remanufacture of existing locomotives;
• Locomotive sales, leasing and lease management.

Simply put, LRM “raises the bar” on locomotive acquisition, repair and deployment.

What makes LRM different from other locomotive mechanical resources?

Traditional mechanical resources available to locomotive end-users and investors are generally tied to locomotive rebuilders or to component manufacturers or suppliers. These market participants have a material interest in selling parts or service to the locomotive user or investor. While these individuals and company may be meritorious, they represent an inherent conflict of interest for the investor or end-user without an independent advisor.

Railroad trained mechanical professionals while often able and talented do not have a background in locomotive design and manufacture. In addition, railroad CMO’s and their mechanical teams often have 110% of their time committed to railroad operations.

David I. Scott has, over a 35+ year career at the ElectroMotive Division of General Motors Corporation, designed and built significantly more than half of all locomotives in service in North America today. Dave began his locomotive career when he attended General Motors Institute (now Kettering University) sponsored by EMD. He earned a Bachelors of Mechanical Engineering degree from GMI and a Masters of Science in Mechanical Engineering degree from University of Illinois at Urbana. When he retired from EMD in April of 2005 as Executive Director of EMD Locomotives he had performed and/or managed the following EMD activities:

• Chief Marketing and Sales Officer
• Chief Technical Officer (Product Engineering)
• Chief Customer Care Officer (Parts and services)
• Director of Program Management (large order execution)
• Chief Engine Design Engineer
• Director of Strategic Initiatives (the sale of EMD)

LRM believes that no other independent industry resource can provide the level of locomotive understanding and experience available from LRM.

What is Railroad Financial Corporation’s role?

During the past 15+ years, Railroad Financial Corporation has financed and leased more than US$15 Billion in rail equipment. To our knowledge no participant in any of RFC’s transactions has experienced a loss of principal, interest, rent or residual value. RFC is the champion of “Win/Win” transactions in our industry.

As a result of RFC’s involvement, LRM can offer state-of-the-art assistance in funding the acquisition of new or used locomotive power or the resources needed to invest in, improve or reconfigure locomotives. LRM is also using RFC’s market presence and resources to lease and manage lease locomotives.

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