UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB
Annual Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended March 31, 1996
Commission File Number 0-18727
CARC, Inc.
(Name of small business issuer in its charter)
South Carolina 57-0641693
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation of organization)
500 Downs Loop, Clemson, South Carolina 29631
(Address of principal executive offices) (Zip Code)
Issuers's telephone number, including
area code: (864) 654-1155
Securities registered pursuant to Section 12(b) of the Exchange Act:
Name of each exchange
Title of each class on which registered
None None
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock
(Title of class)
Check whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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>
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB [x]
State issuer's revenues for its most recent fiscal year: $2,984,686
The aggregate market value of the voting stock held by non-affiliates of the
registrant is unknown and the stock is not currently being traded.
The number of shares outstanding at March 31, 1996 is :
Common stock, $1 par value 536,000
Documents Incorporated by Reference
Portions of registrant's definitive proxy statement (to be filed pursuant to
Regulation 14A) or definitive information statement (to be filed pursuant to
Regulation 14C) for registrant's 1996 annual meeting are incorporated by
reference in Part III.
<PAGE>
PART 1
Item 1. Business.
CARC, Inc., the registrant, was organized under the laws of the State of
South Carolina on December 20, 1976 to plan, develop, construct and operate
a retirement community ("Clemson Downs") in the Clemson, South Carolina area
to include residential apartments, an accredited health care center and
related recreational and social facilities. The company's present office
is located at 500 Downs Loop, Clemson, South Carolina 29631, and its
telephone number is (864) 654-1155.
The principal services rendered by the registrant are retirement community
services. They include the operation of a health care center, apartment
rentals and providing recreational and other associated services. For the
last three fiscal years, the percentage of total revenue contributed by each
of these services which provided 15% or more of consolidated revenue are
as follows:
1996 1995 1994
1. Health care center - 47.9% 46.8% 46.7%
2. Apartment rentals - 49.3% 49.7% 50.7%
The apartment buildings at Clemson Downs provide a choice of seven floor
plans. The apartments rent for between $794 and $1,585 per month, depending
on which floor plan is chosen and whether the apartment is rented by one
person or a couple. One meal per day for each resident is included in the
rental fee. In addition, residents may select a catered living program.
Apartment rates for the catered living program range between $1,470 and
$2,900 per month, depending on the floor plan chosen and number of occupants
per apartment. The catered living program provides special services and
three meals per day to residents in the program. Each apartment has a patio
deck, and each floor of each building has its own washer and dryer room.
All buildings have entrances at ground level. Some buildings are also served
by elevators. Doors are electric with wheelchair level door openers. There
are thermal-pane windows in patio doors. All halls have assist rails and
wide doorways. Each apartment unit has individual heating and air-
conditioning systems and an individual hot water heater. All the
apartments and public areas in the apartment wings are carpeted, with the
exception of the kitchen and bathroom areas. The kitchens are fully equipped
with a range and oven, refrigerator, dishwasher and disposal. There is an
emergency response call system to the health care center in each apartment
and smoke and heat detectors are located throughout the property.
Item 1. Business. (continued)
The health care center provides convalescent and rehabilitative treatment to
inpatient adults, including those who are admitted after hospitalization and
before returning to their homes, and is designed to supplement general
hospital care, rather than compete directly with general hospitals. The
services furnished by the health care center include room, board, nursing
care, drugs, supplies, medical equipment, other medical services, social
activities and physical, speech and recreational therapy. The health care
center contains private and semi-private rooms. It also has laundry
facilities and a reception area. The admission, treatment and discharge of
each health care center resident are under the direction of the resident's
attending physician. Although no full-time staff physicians are retained, the
health care center has a part time-medical director as well as consulting and
on-call physicians as required.
The health care center receives payments for resident care directly on a
private pay basis, including payments from private health insurance, and from
governmental reimbursement programs such as the federal Medicare program.
Within the statutory framework of the Medicare program, there are substantial
areas subject to administrative rulings, interpretations and discretion which
affect payments made under those programs.
Health care facility operations are subject to federal, state and local
government regulations. Health care facilities are subject to periodic
inspection by state licensing agencies to determine whether the standards
necessary for continued licensure are maintained. In granting and renewing
licenses, the state agencies consider, among other things, the buildings,
furniture and equipment; the qualifications of the administrative personnel
and staff; the quality of care; and the compliance with the laws and
regulations relating to operation of the facilities. State licensure of a
health care facility is a prerequisite to certification for participation in
the Medicare program. Management believes that the health care center at
Clemson Downs is presently in substantial compliance with all applicable
federal, state and local regulations with respect to licensure requirements.
However, because those standards are subject to change, there can be no
assurance that the health care center will be able to maintain its licenses
upon a change in standards, and future changes in those standards could
necessitate substantial expenditures by the registrant to comply with them.
Clemson Downs competes with other local and regional retirement communities
on the basis of reputation and physical appearance and in the case of its
health care center on the basis of the quality of care provided. The
primary, secondary and tertiary service areas for Clemson Downs are as
follows:
Primary Service Area - the City of Clemson;
Secondary Service Area - an 18 mile radius extending from the City of
Clemson; and
Tertiary Service Area - All other areas.
Item 1. Business. (continued)
Approximately 60% of the current patients in the health care center resided
in the Primary Service Area immediately before being admitted to the health
care center. The Secondary Service Area accounted for almost 30% of the
current patients last residence and the remaining 10% of the patients at the
health care center were from areas outside of the 18 mile radius, or
the Tertiary Service Area.
There are many health care institutions and corporations that furnish
services similar to those offered by the registrant. Some competitors
operate nationally and have substantially greater resources than the
registrant.
The registrant also experiences competition in the search for nurses,
technicians, aides and other high-quality professional and non-professional
employees.
The registrant maintains professional liability, comprehensive general
liability and other typical insurance coverage on all its facilities. The
registrant believes that its insurance is adequate in amount and coverage.
The registrant employees approximately 75 persons in its business and
believes its relations with its employees are good.
Item 2. Properties.
The only property owned by the registrant is Clemson Downs, a retirement
community located in Clemson, South Carolina, which consists of 96
apartments, 52 nursing home beds and a community center which includes a
dining room, library, recreation areas and administrative offices. The
buildings are suitable and adequate for which they were designed and are in
good state of repair.
There is a mortgage balance of $2,982,973 at March 31, 1996 that is
collateralized by land and buildings.
Item 3. Legal Proceedings.
Registrant is not currently engaged in legal proceedings of material
consequence other than ordinary routine litigation incidental to its business.
Item 4. Submission of Matters to a Vote of Shareholders.
No matters were submitted to a vote of shareholders during the fourth quarter
of 1996.<PAGE>
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters.
There is no established public trading market for the registrant's common
stock. The Center has served as agent in transferring shares from
stockholders to new residents interested in obtaining shares and has received
fees for these services. There are approximately 536 holders of the
registrant's common stock. There have been no cash dividends declared or
paid during the past three fiscal years to the holders of the registrant's
common stock.
Item 6. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The discussion and analysis that follow discusses the financial condition,
results of operations, liquidity and capital resources of the registrant.
Financial Condition
During the second quarter of the current year, the Center exercised an option
stated in its mortgage with a bank to make a $150 thousand payment against
the outstanding principal without penalty.
Results of Operations
Net income for the year ended March 31, 1996 and 1995 was $250 thousand and
$223 thousand, respectively.
Operating revenues for the year ended March 31, 1996 and 1995 were $2,985
thousand and $3,002 thousand, respectively. The overall decrease in
operating revenues of $17 thousand is due primarily to a decrease in both
apartment and miscellaneous revenues and an increase in health care revenue.
Health care center revenues increased $23 thousand as a result of an
increase in the number of beds at the end of fiscal year 1995. Miscellaneous
revenue decreased approximately $23 thousand due primarily to the Center
receiving a refund in the prior year for workers' compensation insurance
premiums. The decrease of $19 thousand in apartment revenues occurred from a
combination of two factors. First, there was an increase in apartment
residents staying in the health care center. When this occurs, the resident
only pays a reduced fee for the apartment to exclude meal charges. Secondly,
there was an increase in single apartment residents, which reduces total
apartment revenues.
<PAGE>
Item 6. Management's Discussion and Analysis of Financial Condition
and Results of Operations. (continued)
Operating expenses for the years ended March 31, 1996 and 1995 were $2,757
thousand and $2,797 thousand, respectively. The net decrease of $40 thousand
was primarily attributable to decreases in interest, general and
administrative, and property tax costs which were offset by an increase in
health care center expenses. Interest expense decreased $33 thousand as a
result of the reduction in principal during the current year. General and
administrative expenses decreased $11 thousand as a result of a decrease in
worker's compensation insurance costs. Property taxes decreased $18 thousand
as a result of a lower property tax rate for the current year. Health care
center costs increased $25 thousand as a result of an increase in hiring more
temporary employees.
<PAGE>
PART II (continued)
Item 7. Financial Statements.
Table of Contents
Page
Independent Auditors' Report . . . . . . . . . . . . . . . . .7
Balance Sheets . . . . . . . . . . . . . . . . . . . . . .8 - 9
Statements of Operations . . . . . . . . . . . . . . . . . . 10
Statements of Stockholders' Equity . . . . . . . . . . . . . 11
Statements of Cash Flows . . . . . . . . . . . . . . . .12 - 13
Notes to Financial Statements. . . . . . . . . . . . . .14 - 20
<PAGE>
Independent Auditors' Report
The Board of Directors
CARC, Inc.
Clemson, South Carolina
We have audited the accompanying balance sheets of CARC, Inc. (the Center) as
of March 31, 1996 and 1995, and the related statements of operations,
stockholders' equity and cash flows for the years ended March 31, 1996, 1995
and 1994. These financial statements are the responsibility of the Center's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of CARC, Inc. as of
March 31, 1996 and 1995 and the results of its operations and its cash flows
for the years ended March 31, 1996, 1995 and 1994, in conformity with
generally accepted accounting principles.
<TABLE>
<CAPTION>
May 17, 1996<PAGE>
CARC, INC.
Balance Sheets
March 31, 1996 and 1995
Assets
1996 1995
<S> <C>
Current assets
Cash $ 225,709 $221,627
Investments 112,926 131,830
Accounts receivable, net of allowance for
doubtful accounts of $5,000 in 1996
and 1995 117,133 128,468
Accrued interest receivable 7,230 7,500
Prepaid insurance 20,613 16,323
Inventory 14,924 14,924
Total current assets 498,535 520,672
Assets whose use is limited:
By stockholders for expansion of facilities 109,336 109,336
Property, buildings, and equipment, net 3,943,841 4,099,609
Entrance fees in escrow 99,063 89,710
Other assets - principally loan refinancing costs 114,998 126,997
$ 4,765,773 $4,946,324
(continued)<PAGE>
CARC, INC.
Balance Sheets (continued)
March 31, 1996 and 1995
Liabilities and Stockholders' Equity
1996 1995
Current liabilities
Current installments of long-term debt $ 252,021 $ 230,793
Accounts payable 5,881 10,204
Accrued payroll 42,022 36,882
Accrued payroll and property taxes 27,752 28,972
Accrued interest 19,265 24,486
Other accrued liabilities 9,067 7,000
Unearned revenue 21,084 63,866
Total current liabilities 377,092 402,203
Refundable entrance fees 99,063 89,710
Long-term debt, excluding current installments 2,730,952 3,145,539
Total liabilities 3,207,107 3,637,452
Stockholders' equity:
Common stock, $1 par value. Authorized
600,000 shares; issued and outstanding
536,000 shares 536,000 536,000
Additional paid-in capital 2,111,886 2,111,886
Accumulated deficit (1,089,220) (1,339,014)
Total stockholders' equity 1,558,666 1,308,872
$4,765,773 $4,946,324
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
CARC, INC.
Statements of Operations
Years Ended March 31, 1996, 1995 and 1994
<S> <C>
1996 1995 1994
Operating revenues:
Apartments $ 1,472,650 $ 1,491,622 $ 1,502,990
Health care center 1,430,410 1,406,976 1,383,775
Dietary 46,815 41,922 41,771
Residential services 30,956 34,077 29,025
Miscellaneous 3,855 27,284 6,117
Net operating revenues 2,984,686 3,001,881 2,963,678
Operating expenses:
Apartments 201,049 207,245 176,609
Health care center 722,674 697,390 643,316
Dietary 560,532 562,559 535,859
Residential services 29,888 31,050 27,792
Maintenance and repair 104,978 103,150 97,558
Housekeeping 100,955 104,162 93,358
Administrative and general 268,037 278,799 315,768
Depreciation and amortization 278,903 272,802 259,588
Utilities 172,443 171,393 165,904
Interest 238,935 272,379 352,776
Property taxes 78,201 96,462 92,316
Total operating expenses 2,756,595 2,797,391 2,760,844
Income from operations 228,091 204,490 202,834
Nonoperating revenues (expenses):
Interest and investment income 28,808 24,469 22,765
Loss on disposal of assets (7,105) (5,973) (6,447)
Nonoperating revenues 21,703 18,496 16,318
Net income $ 249,794 $222,986 $ 219,152
Per share information:
Net income $ .47 $ .42 $ .41
Weighted average number of shares
outstanding during the year 536,000 536,000 536,000
</TABLE>
<TABLE>
<CAPTION>
CARC, INC.
Statements of Stockholders' Equity
Years Ended March 31, 1996, 1995 and 1994
Additional Total
Common Paid-In Accumulated Stockholders'
Stock Capital Deficit Equity
<S> <C>
Balances at
March 31, 1993 $ 536,000 $2,111,886 $(1,781,152) $ 866,734
Net income - - 219,152 219,152
Balances at
March 31, 1994 536,000 2,111,886 (1,562,000) 1,085,886
Net income - - 222,986 222,986
Balances at
March 31, 1995 536,000 2,111,886 (1,339,014) 1,308,872
Net income - - 249,794 249,794
Balances at
March 31, 1996 $ 536,000 $2,111,886 $(1,089,220) $ 1,558,666
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
CARC, INC.
Statements of Cash Flows
Years Ended March 31, 1996, 1995 and 1994
1996 1995 1994
<S> <C>
Cash flows from operating activities:
Net income $249,794 $ 222,986 $ 219,152
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 266,903 272,801 259,588
Loss on sale of equipment 7,105 5,973 6,447
Decrease (increase) in:
Accounts receivable, net 11,335 (10,088) (17,661)
Accrued interest receivable 270 (2,981) (4,519)
Prepaid insurance (4,290) 2,722 22,018
Inventory - 80 (79)
Entrance fees in escrow (9,353) 14,897 (6,711)
Other assets 11,999 - (141,831)
Increase (decrease) in:
Accounts payable (4,323) 766 (215)
Accrued payroll 5,140 6,291 4,821
Accrued payroll and property
taxes (1,220) 1,371 1,653
Accrued interest payable (5,221) 24,486 -
Other accrued liabilities 2,067 683 (100)
Unearned revenue (42,782) 5,443 23,870
Entrance fee proceeds 9,353 6,389 20,352
Entrance fee refunds - (21,286) (13,641)
Net cash provided by
operating activities 496,777 530,533 373,144
(continued)<PAGE>
CARC, INC.
Statements of Cash Flows (continued)
Years Ended March 31, 1996, 1995 and 1994
1996 1995 1994
Cash flows from investing activities:
Purchase of investments, net $ 18,904 $(13,628) $ (118,202)
Capital expenditures (118,240) (133,589) (101,447)
Net cash used in
investing activities (99,336) (147,217) (219,649)
Cash flows from financing activities:
Proceeds from borrowing - - 3,850,000
Principal payments of
long-term debt (393,359) (348,669) (4,274,632)
Principal payments under capital
lease obligations - - (896)
Net cash used in
financing activities (393,359) (348,669) (425,528)
Net increase (decrease) in cash 4,082 34,647 (272,033)
Cash at beginning of year 221,627 186,980 459,013
Cash at end of year $225,709 $ 221,627 $186,980
</TABLE>
<PAGE>
CARC, INC.
Notes to Financial Statements
March 31, 1996, 1995 and 1994
1. Summary of Significant Accounting Policies
CARC, Inc. (the "Center") is a corporation existing for the purpose
of operating a retirement community in the Clemson, South Carolina
area with an accredited health care facility, residential apartments
and other facilities. The following are the significant accounting
policies used in preparation of the accompanying financial
statements.
Operating Revenues - Apartment revenues consist of rental, meals and
miscellaneous other income. Rentals amounted to $1,065,842 in 1996,
$1,074,629 in 1995, and $1,083,124 in 1994. Health Care Center
revenues consist primarily of room and board fees amounting to
$1,349,193 in 1996, $1,330,367 in 1995, and $1,335,883 in 1994, and
also include fees for medical supplies and physical therapy.
Dietary revenues consist of fees charged for meals and catered
functions.
Resident Revenue - Resident revenue is reported at the estimated net
realizable amounts from residents, third-party payors, and others
for service rendered.
Revenue received under the South Carolina Medicare program is
subject to audit and retroactive adjustment. Settlements, if any,
are included as contractual revenue adjustments in the year of
determination.
Refundable Fees and Deposits - Refundable entrance deposits are
refunded without interest to the former tenant or estate thereof.
Refundable application fees are refunded upon demand by the original
applicant. Refundable security deposits are refunded upon
termination of the rental agreement less the cost of repairs. See
Note 4.
Investment Securities - The Center accounts for investments
according to Statement of Financial Accounting Standards No. 115
"Accounting for Certain Investment in Debt and Equity Securities
(SFAS 115). Under SFAS 115, investment securities held for
investment are stated at amortized cost since the Center has both
the ability and intent to hold such securities to maturity.
Premiums and discounts on the investments are amortized into income
over the contractual terms of the security using a level yield
interest method. Gains and losses on the sale of these securities
would be calculated on the specific identification method.
Assets Whose Use Is Limited - Assets whose use is limited consist of
funds that have been set aside by the Center's stockholders for the
expansion of facilities. See Note 3. The body which placed the
limitations retains control over the funds and may, at its
discretion, subsequently use such funds for other purposes. Since
the amount is designated for noncurrent assets, it has been excluded
from current assets in the accompanying balance sheets.
Property, Buildings, and Equipment - Property, buildings, and
equipment are stated at cost or, if donated, at fair market value at
date of receipt. Depreciation on buildings and equipment is
calculated on the straight-line method over the estimated useful
lives of the assets. Equipment held under capital leases is
amortized using the straight-line method over the shorter of the
lease term or estimated useful life of the asset.
Inventory - Inventory consists of food and medical supplies and is
carried at cost (first-in, first-out).
Fair Value of Financial Instruments - Generally accepted accounting
principles require disclosure of fair value information about
financial instruments. Cash, accounts receivable, accounts payable
and current notes payable will typically be received or paid
within a short period after the balance sheet date. The Center
estimates the fair value of these items to be the same as their
carrying value.
The estimated fair value of long-term notes is based on the fact
that contractual rates approximate market rates for similar
instruments. The Center estimates the fair value of these items
to be the same as their carrying value.
Accounts Receivable - Accounts receivable consist of unsecured
balances from residents and patients for monthly apartment and
health care center charges. The Center uses the allowance method
to account for uncollectible accounts receivable. The allowance for
bad debt accounts is based upon prior years' experience and
management's analysis of possible bad debts.
Income Taxes - The Center accounts for income taxes according to
Statement of Financial Accounting Standards No. 109 "Accounting for
Income Taxes" (SFAS 109). Under SFAS 109, deferred income taxes
are recognized for the tax consequences of "temporary differences"
by applying enacted statutory rates applicable for future years
to differences between the financial statement carrying amounts and
the tax basis of existing assets and liabilities. See Note 7.
Statements of Cash Flows - For purposes of the statements of cash
flows, the Center considers unrestricted highly liquid investments
with an original maturity of three months or less when purchased to
be cash or cash equivalents.
As supplemental disclosure to the statements of cash flows, the
Center paid interest amounting to $215,348 in 1996, $247,893 in
1995, and $352,776 in 1994. The Center paid no income taxes in
1996, 1995 or 1994.
Unearned Revenue - Unearned revenue represents advance payment of
gross room rates.
Estimates - The presentation of financial statements in conformity
with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Reclassifications - Certain prior year amounts have been
reclassified to conform to current year presentation.
2. Health Care Center Revenues
A portion of Health Care Center revenue is generated by patients who
qualify for the Medicare program. The approximate percentage of such
revenue was 1% in 1996, 1995, and 1994. Patient service revenue is
recorded at established rates with provisions made for differences
between patient service revenue at the Center's established rates and
the related Medicare reimbursement. Such adjustments are accrued on an
estimated basis in the period the related services are rendered.
3. Cash, Cash Equivalents and Investments
A summary of the Center's cash, cash equivalents and investments at
March 31 follows:
1996 1995
Cash $ 225,709 $221,627
Investments:
U.S. Treasury obligations 321,325 330,876
$547,034 $552,503
The carrying amounts and approximate market value of investment securities
are:
Amortized Unrealized Market
Cost Gain Value
March 31, 1996 $ 321,325 $ 7,229 $ 328,554
March 31, 1995 $ 330,876 $ 7,604 $ 338,480
There were no unrealized losses on securities or realized gains or losses
on securities in 1994, 1995 or 1996.
The aggregate of these funds is classified as assets in the accompanying
balance sheets as follows:
1996 1995
Cash and cash equivalents $ 225,709 $ 221,627
Investments 112,926 131,830
Assets whose use is limited 109,336 109,336
Entrance fees in escrow 99,063 89,710
$ 547,034 $ 552,503
The Company has on deposit with a financial institution a cash balance of
$ 256,776 and $221,301 at March 31, 1996 and 1995, respectively. Amounts
exceeding $100,000 are not guaranteed by the Federal Deposit Insurance
Corporation.
4. Refundable Entrance Fees and Deposits
During 1995, all entrance fees and deposits were refunded and only
security deposits will be accepted in future periods. Refundable
security deposits consist of the following at March 31:
1996 1995
Refundable security deposits $ 99,063 $ 89,710
5. Property, Building, and Equipment
A summary of property, buildings, and equipment at March 31 follows:
1996 1995
Land and land improvements $ 539,119 $ 539,119
Buildings 6,233,075 6,151,233
Equipment 533,545 515,036
Vehicles 53,079 53,079
Construction in progress 16,000 21,827
7,374,818 7,280,294
Less accumulated depreciation 3,430,977 3,180,685
Property, buildings and equipment,
net $3,943,841 $ 4,099,609
The Center is in the process of building renovations at March 31, 1996.
The contract sum is $23,690; $16,000 has been incurred at March 31, 1996.
The construction will be completed within the year ended March 31, 1997.
6. Long-Term Debt
Long-term debt consists of a mortgage note due in October 2005.
Monthly payments of $40,626, including interest at 7.5% are to be
made during the first six years of the loan period. During the
second six years, the interest rate will equal the yield of the
banks cost of issuing a large certificate of deposit in the
secondary market and having a maturity most proximate to six years
plus 2.5% per annum. The note had an outstanding balance of
$2,982,973 at March 31, 1996 and $3,376,332 at March 31,1995.
The note is collateralized by land and buildings with a depreciated
cost of approximately $3,790,000 at March 31, 1996.
The aggregate annual maturities of long-term debt for each of the five
years subsequent to March 31, 1996 are as follows:
1997 $ 253,021
1998 268,018
1999 288,825
2000 290,053
2001 270,362
Thereafter 1,612,694
$2,982,973
7. Income Taxes
The Center accounts for income taxes according to SFAS No. 109,
"Accounting for Income Taxes" (SFAS 109). The Statement requires
the use of the asset and liability approach for financial accounting
and reporting for income taxes. Under SFAS No. 109, deferred income
taxes are recognized for the tax consequences of "temporary
differences" by applying enacted statutory rates applicable for
future years to differences between the financial statement carrying
amounts and the tax basis of existing assets and liabilities.
SFAS No. 109 requires the recording of a deferred tax asset for the
tax benefit of a loss carryforward only if it is more likely than
not that there will be sufficient taxable income in future years to
offset the loss carryforward and if the benefit is offset by a
deferred tax liability. Since the Center's deferred tax liabilities
are not sufficient to offset a tax asset resulting from the benefit
of the following loss carryforwards and it cannot reasonably predict
that there will be adequate taxable income in future periods to
offset the loss carryforwards, no deferred tax assets and liabilities
have been recorded on its balance sheet for the years ending 1996
and 1995.
For financial statement and income tax reporting purposes at
March 31, 1996, the Center has net operating loss carryforwards and
investment tax credit carryforwards which, if not used to offset
future taxable income or taxes, will expire as follows:
Year ending March 31 Loss Carryforwards Credit Carryforwards
1997 $ - $ 515
1998 - 76
1999 - 385
2000 65,574 712
2001 174,699 156
2002 56,080 -
2004 146,181 -
2005 370,611 -
2006 269,514 -
2007 126,952 -
$ 1,209,611 $ 1,844
8. Contingencies
The Center is involved in a lawsuit arising in the ordinary course
of business. In the opinion of the Center's legal counsel and
management, any liability resulting from such litigation would not
be material in relation to the Center's financial position.
9. Retirement Plan
The Center has a 401(k) Retirement Plan for all employees who have
completed one year of service. Active participants may elect to
have the Center make salary reduction contributions on their behalf
based on a percentage of their earnings, not to exceed 15%.
The Center has the option of making an annual discretionary
contribution and can also match each employees' contribution to the
plan up to a predetermined limit. The Center's combined contribution
totaled $23,182, $11,270, and $-0- for the years ended March 31,
1996, 1995, and 1994, respectively.
<PAGE>
PART II (continued)
Item 8. Changes in and Disagreement with Accountants on Accounting and
Financial Disclosure.
None.
PART III
Item 9. Directors and Executive Officers of the Registrant.
Item 10. Executive Compensation.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
Item 12. Certain Relationships and Related Transactions.
The information called for by Items 9, 10, 11, and 12 has been omitted
because the registrant will file with the SEC no later than 120 days after
the close of its fiscal year a definitive proxy pursuant to Regulation 14A.
Such information is hereby incorporated by reference from registrants
definitive proxy statement.
Item 13. Exhibits and Reports on Form 8-K.
A. Financial statements included in Part II of this annual report are as
follows:
Independent Auditors' Report
Balance Sheets
Statements of Operations
Statements of Stockholders' Equity
Statements of Cash Flows
Notes to Financial Statements
B. Exhibits
None.
C. Reports on Form 8-K
None filed.<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Registrant CARC, INC.
By
/S/Anita M. Davis
Anita M. Davis
Administrator
Date
