SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY
PERIOD ENDED SEPTEMBER 30, 1997
[] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR TRANSITION
PERIOD FROM TO .
Commission file number 0-18727
CARC, Inc
(Exact name of registrant as specified in its charter)
South Carolina 57-0641693
(State or other jurisdiction (I.R.S. Employer
of incorporation of organization) Identification No.)
500 Downs Loop
Clemson, SC 29631
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number,including area code: (864) 654-1155
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) or the
Securities Exchange Act of 1934 during the preceding 1-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 [ ]
The number of shares outstanding of the Issuer's Shares of Common
Stock as of September 30, 1997 was 536,000.
Transitional Small Business Disclosure Format:
Yes [ ] No [ X ]
CARC, INC
Report on Form 10-QSB
For the Quarterly Period Ended September 30, 1997
Form 10-QSB Index
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Balance Sheet at September 30, 1997......1
Unaudited Statements of Operations
for the Three Months and Six Months
Ended September 30, 1997 and 1996...............2
Unaudited Statement of Stockholders'
Equity for the Six Months
Ended September 30, 1997.........................3
Unaudited Statements of Cash Flows for
the Six Months Ended September 30, 1997 and 1996.4
Notes to Unaudited Financial Statements............5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations.....................................6 - 7
Part II OTHER INFORMATION
Item 1. Legal Proceedings....................................7
Item 2. Changes in Securities................................7
Item 3. Defaults Upon Senior Securities......................7
Item 4. Submission of Matters to a Vote of Security Holders..8
Item 5. Other Information....................................8
Item 6. Exhibits and Reports on Form 8-K.....................8
Signatures...........................................9
<TABLE>
<CAPTION>
CARC, INC.
Balance Sheet
September 30, 1997
(unaudited)
<S> <C>
Assets
Current assets:
Cash $ 277,783
Investments 207,344
Accounts receivable, net of allowance for
contractual adjustments of $5,000 122,892
Accrued interest receivable 7,740
Prepaid expenses 40,596
Inventory 10,799
Total current assets 667,154
Property, buildings, and equipment, net 4,717,208
Entrance fees in escrow 106,775
Other assets - principally loan refinancing costs 130,332
$ 5,621,469
Liabilities and Stockholders' Equity
Current liabilities:
Current installments of long-term debt $ 270,564
Accounts payable 306,728
Accrued payroll 53,548
Accrued payroll and property taxes 63,109
Accrued interest 16,503
Other accrued liabilities 35,968
Unearned revenue 58,538
Total current liabilities 804,958
Refundable entrance fees 106,775
Long-term debt, excluding current installments 2,671,711
Total liabilities 3,583,444
Stockholders' equity:
Common stock $1 par value. Authorized 600,000
shares; issued and outstanding 536,000 shares 536,000
Additional paid-in capital 2,111,886
Accumulated deficit (609,861)
Total stockholders' equity 2,038,025
$ 5,621,469
</TABLE>
See accompanying notes to interim financial statements.
<TABLE>
<CAPTION>
CARC, INC.
Statements of Operations
For the Three and Six Months Ended September 30, 1997 and 1996
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
September 30, September 30,
1997 1996 1997 1996
(unaudited) (unaudited)
Operating revenues:
Apartments $ 383,157 $ 368,994 $ 769,725 $ 737,222
Health Care Center 434,833 394,251 862,527 759,132
Dietary 9,024 10,423 19,341 23,429
Residential services 1,140 885 2,055 4,756
Miscellaneous 317 7,872 317 6,903
Total operating revenues 828,471 782,425 1,653,965 1,531,442
Operating expenses:
Apartments 57,562 57,453 111,736 109,239
Health Care Center 207,782 194,443 399,230 389,212
Dietary 144,711 156,001 293,705 300,239
Residential services 343 1,075 996 4,906
Maintenance and repair 27,263 25,963 52,339 53,772
Housekeeping 32,752 33,183 66,861 59,600
Administrative & general 71,823 65,435 145,255 144,607
Depreciation & amort. 69,083 71,680 138,049 143,125
Utilities 43,057 45,941 81,011 88,278
Interest 47,120 55,486 95,627 112,236
Property taxes 20,558 20,404 41,117 40,932
Total operating expenses 722,054 727,064 1,425,926 1,446,146
Income from operations 106,417 55,361 228,039 85,296
Nonoperating revenue (expense):
Interest & investment inc. 8,544 7,408 15,950 14,238
(Gain) loss on disposal of
equipment - (527) (5,703) (527)
Nonoperating revenue (exp) 8,544 6,881 10,247 13,711
Net income $ 114,961 $ 62,242 $ 238,286 $ 99,007
Per share information:
Net income $ .21 $ .12 $ .44 $ .18
Weighted average number of shares
outstanding during
the period 536,000 536,000 536,000 536,000
</TABLE>
<TABLE>
<CAPTION>
CARC, INC.
Statement of Stockholders' Equity
For the Six Months Ended September 30, 1997
(Unaudited)
<S> <C> <C> <C> <C>
Additional Total
Common Paid-In Accumulated Stockholders
Stock Capital Deficit Equity
Balances at
March 31, 199 $ 536,000 $ 2,111,886 $ (848,147) $ 1,799,739
Net income - - 238,286 238,286
Balances at
September 30, 1997 $ 536,000 $ 2,111,886 $ (609,861) $ 2,038,025
</TABLE>
<TABLE>
<CAPTION>
CARC, INC.
Statements of Cash Flows
For the Six Months Ended September 30, 1997 and 1996
(Unaudited)
<S> <C> <C>
1997 1996
Cash flows from operating activities:
Net income $ 238,286 $ 99,007
Adjustment to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 138,049 143,125
Loss on disposal of equipment 5,703 527
Decrease (increase) in:
Cash - funds held for others (857) (4,224)
Accounts receivable (4,543) 256
Accrued interest receivable 7,603 (1,717)
Prepaid expenses (28,804) (14,691)
Other assets (50,912) -
Increase (decrease) in:
Accounts payable 252,763 20,303
Accrued expenses 44,271 39,539
Unearned revenue 32,018 63,100
Deposits held for others 857 4,224
Net cash provided by operating activities 634,434 349,449
Cash flows from investing activities:
Capital expenditures (977,131) (61,479)
Proceeds from sale of equipment - 50
Release by Board of assets
whose use is limited - 109,336
Net cash provided by (used in)
investing activities (977,131) 47,907
Cash flows from financing activities:
Principal payments of long-term debt (298,131) (281,521)
Proceeds from bank loan 682,375 -
Net cash provided by (used
in) financing activities 384,244 (281,521)
Net increase in cash 41,547 115,835
Cash at beginning of period 236,236 225,709
Cash at end of period $ 277,783 $ 341,544
</TABLE>
CARC, INC.
Notes to Interim Financial Statements
September 30, 1997
(1) Basis of Presentation
The accompanying unaudited financial statements, which are for
interim periods, do not include all disclosures provided in the
annual financial statements. These unaudited financial statements
should be read in conjunction with the financial statements
and the footnotes thereto contained in the Annual Report on Form
10-KSB for the year ended March 31, 1997 of CARC, Inc., (the
"Center") as filed with the Securities and Exchange Commission.
(2) Interim Periods
In the opinion of the Center, the accompanying unaudited
financial statements contain all adjustments (which are of a
normal recurring nature) necessary for a fair presentation of the
financial statements. The results of operations for the six months
ended September 30, 1997 are not necessarily indicative of the
results to be expected for the full year.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Financial Condition
During the first quarter of 1997, the Center began
construction of a twenty unit two-bedroom apartment
building and an activity center.
There have been no other significant changes in the
Center's financial condition since March 31, 1997.
Results of Operations - For the six months ended September 30,
1997 compared to six months ended September 30, 1996.
Net income for the six months ended September 30, 1997
increased $139,000 or 141% compared to 1996.
Operating Revenues
Operating revenues for the six months ended September 30,
1997 and 1996 were $1,655,000 and $1,531,000, respectively.
The overall increase in operating revenues of $124,000 is
due primarily to a five percent increase of rates occurring
during the first quarter of 1997 in health care center and
apartment revenues, and a Medicare rate adjustment totaling
$17,000.
Operating Expenses
Operating expenses for the six month ended September 30,
1997 and 1996 were $1,431,000 and $1,446,000, respectively.
The net decrease was primarily attributable to a decrease
in interest expense which was offset by an increase in
housekeeping expenses. Interest expense decreased $16,000
due to a reduction of the principal balance of the mortgage.
Housekeeping expenses increased approximately $7,000 due to
an increase in temporary employees. Other operating
expenses remained relatively stable.
Nonoperating revenue
Nonoperating revenues, which consist of interest and
investment income, for the six months ended September 30,
1997 remained relatively stable.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (continued)
Liquidity
The Center generated $630,228 in cash flows from
operating activities and $384,244 from additional financing
for the six months ended September 30, 1997. The cash
flows were used primarily to fund $972,925 of capital
acquisitions.
Future Commitments for Capital Expenditures
During the six months ended September 30, 1997, the
Center entered into a contract with a construction company
for the construction of a twenty unit two-bedroom
apartment building and an activity center at an estimated
cost of $2,598,694. Approximately $968,000 has been spent on
the construction as of September 30, 1997.
The Center received a maximum construction loan of
$2,800,000 from Wachovia Bank. This loan is secured by the
real estate and apartment rents. Interest is at prime less
.25% and payments of interest only are due through October
1998. Beginning in November 1998, monthly principal and
interest payments will be made through April 2007. The
monthly payment and applicable interest rate will be
determined at a later date.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There are no material pending legal proceedings, other
than ordinary routine litigation incidental to its business,
to which the CARC, Inc. is a party or to which any of
its property is the subject.
Item 2. Changes in Securities
There have been no changes in securities during the reporting
period.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits None.
B. There were no reports on Form 8-K filed for the quarter ended
September 30, 1997.
Signatures
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.
CARC, Inc.
Clemson, South Carolina
Date: October 27, 1997 By: /s/ Anita M. Davis
Anita M. Davis
Administrator
(Principal executive officer)
Date: October 27, 1997 By: /s/ Debra Turner
Debra Turner
Accountant
(Principal Financial and
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-1-1997
<PERIOD-END> SEP-30-1997
<CASH> 277,783
<SECURITIES> 207,344
<RECEIVABLES> 127,892
<ALLOWANCES> 5,000
<INVENTORY> 10,799
<CURRENT-ASSETS> 667,154
<PP&E> 8,520,761
<DEPRECIATION> 3,803,553
<TOTAL-ASSETS> 5,621,469
<CURRENT-LIABILITIES> 804,958
<BONDS> 2,671,711
0
0
<COMMON> 536,000
<OTHER-SE> 609,861
<TOTAL-LIABILITY-AND-EQUITY> 5,621,469
<SALES> 0
<TOTAL-REVENUES> 1,653,965
<CGS> 0
<TOTAL-COSTS> 1,425,926
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 95,627
<INCOME-PRETAX> 238,286
<INCOME-TAX> 0
<INCOME-CONTINUING> 238,286
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 238,286
<EPS-PRIMARY> 0.44
<EPS-DILUTED> 0
</TABLE>
