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 JUNE 30, 1999
[ ] 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 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 [ ]
The number of shares outstanding of the Issuer's Shares of Common Stock as of
June 30, 1999 was 536,000.
Transitional Small Business Disclosure Format:
Yes [ ] No [ X ]
CARC, INC.
Form 10-QSB Index
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Balance Sheet at June 30, 1999......................... 1
Unaudited Statements of Operations for the Three Months Ended
June 30, 1999 and 1998........................................... 2
Unaudited Statement of Stockholders' Equity for the Three Months
Ended June 30, 1999.............................................. 3
Unaudited Statements of Cash Flows for the Three Months Ended
June 30, 1999 and 1998 ...........................................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 ................................................8
Item 2. Changes in Securities ............................................ 8
Item 3. Defaults Upon Senior Securities ...................................8
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 ..................................9
Signatures ..............................................................10
[CAPTION]
<TABLE>
CARC, INC.
Balance Sheet
June 30, 1999
(unaudited)
Assets
<S> <C>
Current assets:
Cash and cash equivalents $ 550,573
Investments 107,568
Accounts receivable, net of allowance for
contractual adjustments of $5,000 149,730
Inventory 9,756
Deferred tax asset 121,100
Total current assets 938,727
Property, buildings, and equipment, net 6,053,140
Entrance fees in escrow 121,145
Other assets 106,739
$ 7,219,751
Liabilities and Stockholders' Equity
Current liabilities:
Current installments of long-term debt $ 385,331
Accounts payable 50,258
Accrued liabilities 146,060
Unearned revenue 99,652
Total current liabilities 681,301
Deferred tax liability 23,600
Refundable entrance fees 121,145
Long-term debt, excluding current installments 3,827,951
Total liabilities 4,653,997
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 (82,132)
Total stockholders' equity 2,565,754
$ 7,219,751
</TABLE>
CARC, INC.
Statements of Operations
For the Three Months Ended June 30, 1999 and 1998
(Unaudited)
[CAPTION]
<TABLE>
<S> <C> <C>
1999 1998
Operating revenues:
Apartments $ 425,738 $ 436,829
Health Care Center, net 424,555 427,288
Dietary 10,895 12,187
Residential services - 1,039
Miscellaneous 603 3,265
Total operating revenues 861,791 880,608
Operating expenses:
Apartments 77,627 56,048
Health Care Center 212,951 219,114
Dietary 153,874 153,894
Residential services - 5,204
Maintenance and repair 36,153 27,097
Housekeeping 34,151 34,174
Administrative and general 94,088 80,164
Depreciation and amortization 93,041 85,259
Utilities 40,005 39,395
Interest 80,905 91,579
Property taxes 21,098 23,319
Total operating expenses 843,893 815,247
Income from operations 17,898 65,361
Nonoperating revenue (expense):
Interest and investment income 6,354 7,915
Nonoperating revenue (expense) 6,354 7,915
Income before income taxes 24,252 73,276
Income tax expense (6,500) -
Net income $ 17,752 $ 73,276
Basic earnings per share $ .03 $ .14
Weighted average number of shares
outstanding during the period 536,000 536,000
</TABLE>
[CAPTION]
<TABLE>
CARC, INC.
Statement of Stockholders' Equity
For the Three Months Ended June 30, 1999
(Unaudited)
<S> <C> <C> <C> <C>
Additional Total
Common Paid-In Accumulated Stockholders'
Stock Capital Deficit Equity
Balances at
March 31, 1999 $ 536,000 $ 2,111,886 $ (99,884) $ 2,548,002
Net income - - 17,752 17,752
Balances at
June 30, 1999 $ 536,000 $ 2,111</TABLE>
[CAPTION]
<TABLE>
CARC, INC.
Statements of Cash Flows
For the Three Months Ended June 30, 1999 and 1998
(Unaudited)
<S> <C> <C>
1999 1998
Cash flows from operating activities:
Net income $ 17,752 $ 73,276
Adjustment to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 93,041 85,259
Deferred income tax expense 6,500 -
Decrease (increase) in:
Cash - funds held for others (296) (20,105)
Accounts receivable (16,902) (30,270)
Accrued interest receivable 654 8,888
Prepaid expenses 10,815 (50,034)
Increase (decrease) in:
Accounts payable (19,528) (106,525)
Accrued liabilities (8,847) (12,546)
Unearned revenue 59,135 124,731
Deposits held for others 296 20,105
Net cash provided by operating activities 142,620 92,779
Cash flows from investing activities:
Capital expenditures - (169,531)
Cash flows from financing activities:
Principal payments of long-term debt (113,519) (105,917)
Proceeds from bank loan - 268,739
Net cash provided by financing activities (113,519) 162,822
Net increase in cash 29,101 86,070
Cash at beginning of period 521,472 292,918
Cash at end of period $ 550,573 $ 378,988
</TABLE>
CARC, INC.
Notes to Interim Financial Statements
June 30, 1999
(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, 1999 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 three months ended June 30, 1999 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
The balance sheet of the Center has not materially changed from
March 31, 1999 to June 30, 1999. The Center is in the process of
upgrading one of its buildings to provide assisted living to
residents. Costs incurred through June 30, 1999 are primarily
architect fees of $9,700. The most significant upgrade known at this
time will be the installation of a sprinkler system for
approximately $80,000. Total assets decreased by approximately
$69,000 related primarily to depreciation expense and stockholders'
equity increased by net income.
Results of Operations - For the three months ended June 30, 1999
compared to the three months ended June 30, 1998.
Operating Revenues
Operating Revenues for the three months ended June 30, 1999 and 1998
were $862,000 and $881,000, respectively. The overall decrease in
operating revenues of approximately $19,000 is due primarily to a
decrease in apartment occupancy of 3%
Operating Expenses
Operating expenses for the three months ended June 30, 1999 and 1998
were approximately $844,000 and $815,000, respectively. The net
increase of $29,000 in expenses was primarily demonstrated in the
following areas of operations. Apartment expenses increased $22,000
due primarily to repairs of the HVAC systems. Maintenance expenses
increased $9,000 due to repairs of a chiller and increased wages.
Administrative expenses increased $17,000 due to hiring an
additional staff member in the fourth quarter of 1998 center
expenses decreased $7,000 due to a decrease in number of patients.
Residential services decreased $5,000 due to discontinuing the
residential services program in the third quarter of 1998. Interest
expense decreased $11,000 in relation to a reduction in principal.
Other operating expenses remained relatively stable.
Nonoperating revenue
Nonoperating revenues, which consist primarily of interest and
investment income, for the three months ended June 30, 1999 remained
relatively stable.
Liquidity
The Center generated $143,000 in cash flows from operating activities
for the three months ended June 30, 1999. The cash flows were used
primarily to repay $114,000 of long-term debt.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations - Continued
Year 2000
The Company has addressed its Year 2000 compliance issues internally
through a plan that included upgrading computer terminals at a
minimal cost. The network operating system was upgraded to Windows
98 in December 1998. Costs of this upgrade were approximately
$11,500. Externally, the Company has received notification from its
most significant vendors and its primary financial institution
confirming their Year 2000 compliance.
The Company will continue to monitor the Year 2000 issue and, if
necessary, develop a contingency plan to enable operations to
continue and its financial position and operating results not to be
materially impacted should their current plans not provide the
desired results.
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
The Annual Meeting of Stockholders of the Trust ("Meeting") was held
on June 17, 1999. The results of the vote on the matters presented at
the meeting were as follows:
1. The following individuals were elected as trustees, each for a
one-year term:
Vote For Withheld Abstain
Thomas Lynch 273 5 2
Anna Forbis 273 5 2
Broy Moyer 273 5 2
Fred Martin 273 5 2
Dorothy D. Dent 273 5 2
Robert Downing 273 5 2
James Fanning, Jr. 273 5 2
D. Greg Hughes 273 5 2
Bill Senn 273 5 2
2. Ratification of the appointment of Crisp Hughes Evans LLP as the Trust's
independent audit firm was approved by stockholders by the following vote:
Vote for: 275 Withheld: 5
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits 27 Financial Data Schedule
B. There were no reports on Form 8-K filed for the quarter ended
June 30, 1999.
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: August 9, 1999 By: /s/ Susan Davis
Susan Davis
Administrator
(Principal executive officer)
Date: August 9, 1999 By: /s/ Debra Turner
Debra Turner
Accountant
(Principal Financial and Accounting
Officer)
Exhibit 27.1
CARC, INC.
EDGAR - FINANCIAL DATA SCHEDULES
Article 5 of Regulation S-X
Commercial and Industrial Companies
Item
Financial Data as of
Number
Item Description
June 30, 1999
5-02(1)
Cash and cash items
$ 550,573
5-02(2)
Marketable securities
107,568
5-02(3)(a)(1)
Notes and accounts receivable - trade
154,730
5-02(4)
Allowances for doubtful accounts
5,000
5-02(6)
Inventory
9,756
5-02(9)
Total current assets
938,727
5-02(13)
Property, plant and equipment
10,416,864
5-02(14)
Accumulated depreciation
4,363,724
5-02(18)
Total assets
7,219,751
5-02(21)
Total current liabilities
681,301
5-02(22)
Bonds, mortgages and similar debt
3,827,951
5-02(28)
Preferred stock-mandatory redemption
-
5-02(29)
Preferred stock-no mandatory redemption
-
5-02(30)
Common stock
536,000
5-02(31)
Other stockholders' equity
2,029,754
5-02(32)
Total liabilities and stockholders' equity
7,219,751
5-03(b)(1)(a)
Net sales of tangible products
-
5-03(b)(1)
Total revenues
861,791
5-03(b)2(a)
Cost of tangible goods sold
-
5-03(b)2
Total costs and expenses applicable to sales and revenues
843,893
Exhibit 27.1 (continued)
CARC, INC.
EDGAR - FINANCIAL DATA SCHEDULES
Article 5 of Regulation S-X (continued)
Commercial and Industrial Companies
Item
Financial Data as of
Number
Item Description
June 30, 1999
5-03(b)3
Other costs and expenses
$ -
5-03(b)5
Provision for doubtful accounts and notes
-
5-03(b)(8)
Interest and amortization of debt discount
80,905
5-03(b)(10)
Income before taxes and other items
24,252
5-03(b)(11)
Income tax expense
6,500
5-03(b)(14)
Income/loss continuing operations
17,752
5-03(b)(15)
Discontinued operations
-
5-03(b)(17)
Extraordinary items
-
5-03(b)(18)
Cumulative effect-changes in accounting principles
-
5-03(b)(19)
Net income or loss
17,752
5-03(b)(20)
Earnings per share-primary
.03
5-03(b)(20)
Earnings per share-fully diluted
.03
2
4
The accompanying notes are an integral part of these financial statements.
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> JUN-30-1999
<CASH> 550,573
<SECURITIES> 107,568
<RECEIVABLES> 154,730
<ALLOWANCES> 5,000
<INVENTORY> 9,756
<CURRENT-ASSETS> 938,727
<PP&E> 10,416,864
<DEPRECIATION> 4,363,724
<TOTAL-ASSETS> 7,219,751
<CURRENT-LIABILITIES> 681,301
<BONDS> 3,827,951
0
0
<COMMON> 536,000
<OTHER-SE> 2,029,754
<TOTAL-LIABILITY-AND-EQUITY> 7,219,751
<SALES> 0
<TOTAL-REVENUES> 861,791
<CGS> 0
<TOTAL-COSTS> 843,893
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 80,905
<INCOME-PRETAX> 24,252
<INCOME-TAX> 6,500
<INCOME-CONTINUING> 17,752
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,752
<EPS-BASIC> 0.03
<EPS-DILUTED> 0.03
