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 DECEMBER 31, 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 December 31, 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 December 31, 1999 1
Unaudited Statements of Operations for the
Three Months and Nine Months Ended
December 31, 1999 and 1998 2
Unaudited Statement of Stockholders'
Equity for the Nine Months
Ended December 31, 1999 3
Unaudited Statements of Cash Flows
for the Nine Months Ended
December 31, 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 8
Signatures 9
[CAPTION]
<TABLE>
CARC, INC.
Balance Sheet
December 31, 1999
(unaudited)
Assets
<S> <C>
Current assets:
Cash $ 555,697
Investments 107,568
Accounts receivable, net of allowance for
contractual adjustments of $5,000 148,156
Prepaid expenses 1,288
Inventory 9,756
Deferred tax asset 114,100
Total current assets 935,565
Property, plant, and equipment, net 5,882,801
Entrance fees in escrow 122,965
Other assets - principally loan refinancing costs 113,628
$ 7,055,959
Liabilities and Stockholders' Equity
Current liabilities:
Current installments of long-term debt $ 319,522
Accounts payable 56,267
Accrued liabilities 213,124
Unearned revenue 37,659
Total current liabilities 626,572
Deferred tax liability 23,600
Refundable entrance fees 122,965
Long-term debt, excluding current installments 3,690,746
Total liabilities $ 4,463,883
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 (55,810)
Total stockholders' equity 2,592,076
$ 7,055,959
The accompanying notes are an integral part of these financial statements.
</TABLE>
[CAPTION]
<TABLE>
CARC, INC.
Statements of Operations
For the Three and Nine Months Ended December 31, 1999 and 1998
(Unaudited)
<S> <C> <C> <C> <C>
Three Months Ended, Nine Months Ended,
December 31 December 31
1999 1998 1999 1998
Operating revenues:
Apartments $ 405,528 $ 434,074 $ 1,241,270 $ 1,321,525
Health Care Center, net 418,137 435,437 1,250,689 1,279,538
Dietary 10,142 12,775 30,645 35,597
Residential services - 847 - 2,310
Miscellaneous 760 270 1,859 4,136
Total operating revenues 834,567 883,403 2,524,463 2,643,106
Operating expenses:
Apartments 57,917 61,675 187,208 176,331
Health Care Center 218,984 234,836 665,364 683,778
Dietary 159,696 148,362 465,464 460,778
Residential services - 5,354 - 15,198
Maintenance and repair 31,230 24,007 91,771 76,096
Housekeeping 37,141 33,735 107,938 100,826
Administrative and general 82,119 92,326 251,810 254,231
Depreciation and amortizatio 92,686 92,954 278,529 271,916
Utilities 39,148 41,248 125,081 125,899
Interest 83,195 88,401 246,417 270,841
Property taxes 21,099 24,497 63,296 72,312
Miscellaneous 203 683 4,388 2,869
Total operating expenses 823,418 848,078 2,487,266 2,511,075
Income from operations 11,149 35,325 37,197 132,031
Nonoperating revenue (expense):
Interest and
investment income 6,279 8,005 20,377 24,058
Nonoperating revenue 6,279 8,005 20,377 24,058
Income before income taxes 17,428 43,330 57,574 156,089
Income tax expense 3,950 12,600 13,500 50,100
Net income $ 13,478 $ 30,730 $ 44,074 $ 105,989
Basic earnings per share $ .03 $ .22 $ .08 $ .66
Weighted average number of shares
outstanding during the period 536,000 536,000 536,000 536,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
[CAPTION]
<TABLE>
CARC, INC.
Statement of Stockholders' Equity
For the Nine Months Ended December 31, 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 - - 44,074 44,074
Balances at
December 31, 1999 $ 536,000 2,111,886 $ (55,810) $ 2,592,076
The accompanying notes are an integral part of these financial statements.
</TABLE>
[CAPTION]
<TABLE>
CARC, INC.
Statements of Cash Flows
For the Nine Months Ended December 31, 1999 and 1998
(Unaudited)
<S> <C> <C>
1999 1998
Cash flows from operating activities:
Net income $ 44,074 $ 105,989
Adjustment to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 278,529 271,916
Provision for deferred income taxes 13,500 50,100
Decrease (increase) in:
Cash - funds held for others (1,524) (14,231)
Accounts receivable (15,328) (25,013)
Accrued interest receivable 653 5,361
Prepaid expenses 9,527 (17,589)
Increase (decrease) in:
Accounts payable (13,519) (20,744)
Accrued liabilities 58,217 (32,149)
Unearned revenue (2,858) 75,962
Deposits held for others 1,524 14,231
Net cash provided by
operating activities 372,795 413,833
Cash flows from investing activities:
Capital expenditures (8,038) (203,708)
Cash flows from financing activities:
Principal payments of long-term debt (316,532) (321,647)
Proceeds from bank loan - 268,739
Increase in other assets
- refinancing costs (14,000) -
Net cash used in financing activities (330,532) (52,908)
Net increase in cash 34,225 157,217
Cash at beginning of period 521,472 292,918
Cash at end of period $ 555,697 $ 450,135
The accompanying notes are an integral part of these financial statements.
</TABLE>
CARC, INC.
Notes to Interim Financial Statements
December 31, 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 interim financial statements should be read in
conjunction with the audited 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 interim 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 and nine months ended December 31, 1999 are not
necessarily indicative of the results to be expected for the entire 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 December 31, 1999. The Center is in the process of upgrading one of
its buildings to provide assisted living to residents. Costs incurred through
December 31, 1999 are primarily architect fees of $17,700. The most
significant upgrade known at this time will be the installation of a
sprinkler system for approximately $80,000 which began in January 2000.
Total assets decreased by approximately $228,000 related primarily to
depreciation expense and stockholders' equity increased by net income. The
Center refinanced its long term debt of $3,850,000 in October 1999. Scheduled
repayments will be due in monthly installments of $27,392 including principal
and interest at a rate of 8.75% through October 2005.
Results of Operations - For the nine months ended December 31, 1999 compared
to the nine months ended December 31, 1998.
Operating Revenues
Operating revenues for the nine months ended December 31, 1999 and 1998 were
approximately $2,524,000 and $2,643,000, respectively. The overall decrease
in operating revenues of approximately $119,000 was due primarily to an
average decrease in apartment occupancy of 3% and healthcare center occupancy
of 5%. The decrease in apartment occupancy is a result of discontinuing the
residential services. The decrease in healthcare occupancy is a result of
increased competition from other healthcare providers in the area.
Operating Expenses
Operating expenses for the nine months ended December 31, 1999 and 1998
remained relatively stable overall. However, fluctuations were noted within
the following areas of operations. Health care expenses decreased $18,000
due to the decrease in occupancy. Maintenance expenses increased $15,000 due
to repairs of vehicle and lawn equipment, the use of temporary employees and
fall grounds maintenance. Administrative expenses decreased $3,000 due
primarily to the replacement of a staff member at a lower salary in the third q
quarter of 1999. Residential services decreased $15,000 due to discontinuing
the residential services program in the third quarter of 1998. Interest
expense decreased $24,000 as the debt continues to be paid down.
Nonoperating revenue
Nonoperating revenues, which consist primarily of interest and investment
income, for the nine months ended December 31, 1999 remained relatively
stable.
Liquidity
The Center generated $373,000 in cash flows from operating activities for
the nine months ended December 31, 1999. The cash flows were used primarily
to repay $316,000 of long-term debt.
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)
Year 2000
The Center 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. The Center has not experienced
any problems related to year 2000 issues at the date of filing this report,
but will continue to monitor the issue for signs of potential problems.
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. Exhibit 27.1 Financial Data Schedule
B. There were no reports on Form 8-K filed for the quarter ended
December 31, 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: February 11, 2000 By: /s/ Susan Davis
Susan Davis
Administrator
(Principal executive officer)
Date: February 11, 2000 By: /s/ Lynn Shook
Lynn Shook
Accountant
(Principal Financial and Accounting Officer)
Exhibit 27.1
[CAPTION]
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CARC, INC.
EDGAR - FINANCIAL DATA SCHEDULES
Article 5 of Regulation S-X
Commercial and Industrial Companies
<S> <S> <C>
Item Financial Data as of
Number Item Description December 31, 1999
5-02(1) Cash and cash items $ 555,697
5-02(2) Marketable securities 107,568
5-02(3)(a)(1)Notes and accounts receivable - trade 153,156
5-02(4) Allowances for doubtful accounts 5,000
5-02(6) Inventory 9,756
5-02(9) Total current assets 935,565
5-02(13) Property, plant and equipment 10,424,902
5-02(14) Accumulated depreciation 4,542,101
5-02(18) Total assets 7,055,959
5-02(21) Total current liabilities 626,572
5-02(22) Bonds, mortgages and similar debt 3,690,746
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 2,056,076
5-02(32) Total liabilities and
stockholders' equity 7,055,959
5-03(b)(1)(a)Net sales of tangible products -
5-03(b)(1) Total revenues 2,524,463
5-03(b)2(a) Cost of tangible goods sold -
5-03(b)2 Total costs and expenses
applicable to sales and revenues 2,487,266
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 December 31, 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 246,417
5-03(b)(10) Income before taxes and other items 57,574
5-03(b)(11) Income tax expense 13,500
5-03(b)(14) Income/loss continuing operations 44,074
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 44,074
5-03(b)(20) Earnings per share-primary .08
5-03(b)(20) Earnings per share-fully diluted .08
</TABLE>
The accompanying notes are an integral part of these financial statements.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> DEC-31-1999
<CASH> 555,697
<SECURITIES> 107,568
<RECEIVABLES> 153,156
<ALLOWANCES> 5,000
<INVENTORY> 9,756
<CURRENT-ASSETS> 935,565
<PP&E> 10,424,902
<DEPRECIATON> 4,542,101
<TOTAL-ASSETS> 7,055,959
<CURRENT-LIABILITIES> 626,572
<BONDS> 3,690,746
0
0
<COMMON> 536,000
<OTHER-SE> 2,056,076
<TOTAL-LIABILITY-AND-EQUITY> 7,055,959
<SALES> 0
<TOTAL-REVENUE> 2,524,463
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,487,266
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 246,417
<INCOME-PRETAX> 57,574
<INCOME-TAX> 13,500
<INCOME-CONTINUING> 44,074
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 44,074
<EPS-BASIC> .08
<EPS-DILUTED> .08
</TABLE>
