SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended June 30, 1995
Commission File No. 0-3417
CENCOR, INC
(Exact Name of Registrant as Specified in its Charter)
Delaware 43-0914033 (State of
other jurisdiction of (I.R.S. Employer IdentifiIncorporation or
Organization) cation Number
1100 Main Street, Suite 416A
Post Office Box 26098
Kansas City, Missouri
64196 (Address of Principal
Executive Office) (Zip Code)
Registrant's telephone number, including area code:
(816) 221-5833
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of 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
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court.
Yes X No
As of October 30, 1995, CenCor, Inc. had 1,240,498 shares of Common Stock,
$1.00 par value outstanding with a market value of $4,800,727.
CENCOR, INC.
FORM 10-Q
QUARTER ENDED JUNE 30, 1995
INDEX
Item Page
PART I
1. Financial Statements and Supplementary Data 1
2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 12
PART II
1. Legal Proceedings 16
2. Change in Securities 16
3. Defaults Upon Senior Securities 16
4. Submission of Matters to a Vote of
Security Holders 17
5. Other Information 17
6. Exhibits and Reports on Form 8-K 17
7. Signatures 18
As used herein, the term "CenCor" refers to CenCor, Inc. and the term
"Century" refers to CenCor's sole operating subsidiary Century Acceptance
Corporation. The term "the Company" as used herein refers to CenCor
collectively with Century.
Part I
Item I Financial Statements
The Company's Financial Statements are set forth herein, beginning on the
following page.
(The remainder of this page is intentionally blank.)
CenCor, Inc.
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30, December 31,
1995 1994
(Unaudited)
Cash and cash equivalents $ 2,005,000 $ 809,000
Cash and cash equivalents of
discontinued operations 23,086,000 224,000
Net finance receivables of
discontinued operations -- 104,125,000
Property and equipment, net of
accumulated depreciation 19,000 --
Property and equipment of
discontinued operations,
net of accumulated depreciation -- 2,154,000
Unamortized debt issuance costs
of discontinued operations -- 667,000
Other assets -- 750,000
Other assets of discontinued
operations 6,189,000 3,215,000
Total assets $ 31,299,000 $111,944,000
CenCor, Inc.
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
June 30, December 31,
1995 1994
(Unaudited)
Liabilities and stockholders'
equity (deficit):
Accounts payable and accrued
liabilities $ 1,307,000 $ 205,000
Accounts payable and accrued
liabilities of discontinued
operations 2,137,000 2,060,000
Income taxes payable of
discontinued operations 1,100,000 --
Accrued interest 1,175,000 --
Accrued interest - warrants of
discontinued operations -- 1,152,000
Unearned insurance commissions of
discontinued operations -- 2,654,000
Long-term debt (Note 3) 14,687,000 14,687,000
Long-term debt of discontinued
operations -- 84,720,000
Borrowings under line of credit
of discontinued operations -- 13,693,000
Total liabilities $20,406,000 $119,171,000
Stockholders' equity (deficit):
Common stock, $1 par value,
2,000,000 shares authorized,
1,240,498 shares issued
and outstanding 1,241,000 1,241,000
Paid-in capital 2,805,000 2,805,000
Accumulated earnings (deficit) 6,847,000 (11,273,000)
Total stockholders' equity
(deficit) 10,893,000 (7,227,000)
Total liabilities and stock-
holders' equity (deficit) $31,299,000 $111,944,000
CenCor, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 1995 and 1994
(Unaudited)
1995 1994
Income $ 782,000 $ 230,000
Expenses:
Salaries and other expenses 1,472,000 294,000
Interest expense, net 1,122,000 950,000
2,594,000 1,244,000
Loss from continuing operations (1,812,000) (1,014,000)
Discontinued operations:
Income (loss) from operations,
net of taxes of $0 in 1995 and 1994 (4,115,000) 217,000
Gain on disposal, net of taxes of
$1,100,000 24,047,000 --
Income from discontinued operations 19,932,000 217,000
Net income (loss) $18,120,000 $ (797,000)
Weighted average common and common
equivalent shares outstanding 1,815,080 1,815,080
Income (loss) per share of
common stock and
common equivalent shares of
stock: (Note 5)
Loss per share from continuing
operations $ (1.00) $ (0.56)
Income per share from
discontinued operations 10.98 0.12
Net income (loss) per share $ 9.98 $ (0.44)
CenCor, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended June 30, 1995 and 1994
(Unaudited)
1995 1994
Income $ 171,000 $ 229,000
Expenses:
Salaries and other expenses 1,406,000 176,000
Interest expense, net 556,000 477,000
1,962,000 653,000
Loss from continuing operations (1,791,000) (424,000)
Discontinued operations:
Loss from operations, net of
taxes of $0 in 1995 and 1994 (3,323,000) (73,000)
Gain on disposal, net of taxes of
$1,100,000 24,047,000 --
Income (loss) from discontinued
operations 20,724,000 (73,000)
Net income (loss) $18,933,000 $(497,000)
Weighted average common and common
equivalent shares outstanding 1,815,080 1,815,080
Income (loss) per share of
common stock and
common equivalent shares of
stock: (Note 5)
Loss per share from continuing
operations $ (0.99) $ (0.23)
Income (loss) per share from
discontinued operations 11.42 (0.04)
Net income (loss) per share $ 10.43 $ (0.27)
CenCor, Inc.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Six Months Ended June 30, 1995 and 1994
(Unaudited)
1995 1994
OPERATING ACTIVITIES:
Net income (loss) $18,120,000 $ (797,000)
Adjustments to reconcile net
income (loss) to net
cash provided by (used in)
operating activities:
Income from discontinued
operations (19,932,000) (217,000)
Increase in accrued
interest 1,175,000 1,013,000
Other changes in assets
and liabilities, net 2,651,000 (368,000)
Total adjustments (16,106,000) 428,000
Net cash provided by (used in)
operating activities 2,014,000 (369,000)
INVESTING AND OTHER ACTIVITIES:
Proceeds from sale of discontinued
operations $128,586,000 $ --
Cash provided by (used in)
discontinued operations 572,000 (2,139,000)
Capital expenditures, net (19,000) --
Net cash provided by (used in)
investing and other activities 129,139,000 (2,139,000)
CenCor, Inc.
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
For the Six Months Ended June 30, 1995 and 1994
(Unaudited)
1995 1994
FINANCING ACTIVITIES:
Payment of long-term debt $(102,095,000) $ --
Escrow fund from sale of
discontinued operations (5,000,000) --
Net cash used in financing
activities (107,095,000) --
Net increase (decrease) in
cash and cash equivalents 24,058,000 (2,508,000)
Cash and cash equivalents at
beginning of year 1,033,000 3,277,000
Cash and cash equivalents at end
of period $25,091,000 $ 769,000
Supplemental disclosures of
cash flow information:
Cash paid during the period for:
Interest $5,698,000 $ 3,716,000
CenCor, Inc.
NOTES TO FINANCIAL STATEMENTS
For the Six Months Ended June 30, 1995
(Unaudited)
Note 1 Basis of Presentation
The interim condensed financial statements included herein are unaudited
but, in the opinion of management, present fairly in all material respects,
the consolidated position of CenCor, Inc. at June 30, 1995 and December 31,
1994 and the results of operations and cash flows for all periods
presented. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles ("GAAP") have been condensed or omitted, although the
Company believes that the disclosures are adequate to make the information
presented not misleading. Annualization of the amounts in these condensed
financial statements may not necessarily be indicative of the actual
operating results for the full year.
In preparing the financial statements in accordance with GAAP, management is
required to make certain estimates and assumptions that affect both the
reported amounts of assets and liabilities as of the date of the statement
of financial condition and revenues and expenses for the period. Actual
results could differ significantly from those estimates.
It is suggested that these condensed financial statements be read in
conjunction with the financial statements and the notes thereto included in
the Company's latest Annual Report on Form 10-K for the year 1994.
Note 2 Discontinued Operations
Effective June 30, 1995 the Company sold substantially all of the assets of
its sole operating subsidiary, Century Acceptance Corporation. The gross
cash proceeds to Century as a result of the sale was approximately
$128,500,000. As part of the transaction, $5,000,000 of the purchase price
was placed in escrow to secure certain indemnification obligations of
Century and CenCor to the buyer that run through July 1, 1998. The escrow
account is included with "other assets" in the accompanying consolidated
balance sheet as of June 30, 1995.
Century was able to redeem all of its outstanding secured notes held by the
lenders for a purchase price equal to the principal amount of the secured
notes (approximately $100 million) together with interest, but without the
payment of substantial prepayment premiums payable under the secured notes.
The lenders also surrendered for cancellation outstanding warrants which
would have allowed them to acquire up to 30% of Century.
The income (loss) from operations, net of applicable income taxes, for
Century is segregated as discontinued operations in the accompanying
consolidated statement of operations. The net income (loss) from
discontinued operations is as follows:
For the Six Months Ended June 30,
1995 1994
Revenues $14,857,000 $13,567,000
Expenses 18,916,000 13,898,000
Other income (loss) (56,000) 548,000
Income (loss) from discontinued
operations before income taxes (4,115,000) 217,000
Income taxes applicable to
discontinued operations -- --
Net income (loss) from discontinued
operations $(4,115,000) 217,000
Note 2 Discontinued Operations (continued)
For the Three Months Ended June 30,
1995 1994
Revenues $ 7,390,000 $7,074,000
Expenses 10,660,000 7,145,000
Other loss (53,000) (2,000)
Loss from discontinued
operations before income taxes (3,323,000) (73,000)
Income taxes applicable to
discontinued operations -- --
Net loss from discontinued
operations $(3,323,000) $ (73,000)
Note 3 Long-Term Debt
On July 19, 1993, CenCor filed a Voluntary Petition with the United States
Bankruptcy Court. At the same time, CenCor filed an Application with the
Bankruptcy Court seeking expeditious confirmation of its previously
creditor approved prepackaged plan of reorganization. The plan was
confirmed by the Bankruptcy Court on August 30, 1993.
Pursuant to the plan, CenCor's noteholders received the following
securities for each $1,000 aggregate amount of principal and accrued but
unpaid interest at December 31, 1992:
$600 principal amount of non-interest bearing New Notes
$400 principal amount of non-interest bearing Convertible Notes
5.2817 shares of CenCor common stock, par value of $1 per share
The New Notes and Convertible Notes are non-interest bearing and will
mature on July 1, 1999. The Convertible Notes may be converted at the
option of the holder, at any time, into shares of common stock at a ratio
of one share of common stock for each $20 principal amount of Convertible
Notes. The reorganization resulted in the issuance of $17,230,589 of
Note 3 Long-Term Debt (continued)
New Notes, $11,487,060 of Convertible Notes, and 151,450 shares of $1 par
value common stock on November 1, 1993. Simultaneously the Company
canceled 271,410 shares of treasury stock. The New Notes and Convertible
Notes are recorded in the accompanying consolidated balance sheet at their
net present value using an estimated market discount rate of 16%.
Note 4 Other Income
In March of 1995, the Company received $600,000 from the Estate of Robert
F. Brozman (the "Brozman Estate") which represented the cash portion of the
Company's settlement of all of its claims against the Brozman Estate,
including claims arising from the Company's loss of goodwill due to the
CenCor, Inc. of Kansas City ("CIKC") loans. For additional information
concerning the balance of the settlement, including the Brozman Estate's
agreement to transfer to CenCor all or a portion of the 597,064 shares of
CenCor common stock held by the Robert F. Brozman Trust, see Item 13,
Certain Relationships, and Related Transactions in CenCor's Annual Report
for the year ended December 31, 1994 on Form 10-K. Because the amount of
the balance of the settlement is not currently determinable, it has not
been recorded in the accompanying financial statements. At the time the
amount of the transaction becomes determinable (anticipated to be December
31, 1995), it will be appropriately recorded in the Company's financial
statements.
Note 5 Earnings Per Share
As of June 30, 1995 and 1994, earnings per common share and common
equivalent shares were computed by dividing net loss by the weighted
average number of shares of common stock and common stock equivalents
outstanding during the period. The number of weighted
Note 5 Earnings Per Share (continued)
average common share equivalents was increased under the assumption that
the Company's Convertible Notes were converted to common stock. The
Convertible Notes may be
converted, at the option of the holder at any time, into shares of common
stock at a ratio of one share of common stock for each $20 principal amount
of Convertible Notes. Earnings per share assuming full dilution was
determined in the same manner as earnings per common share and common
equivalent share.
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations
Effective June 30, 1995, Century, the sole operating subsidiary of CenCor,
consummated the sale of its consumer finance business to Fidelity
Acceptance Corporation, a subsidiary of the Bank of Boston Corporation.
Under the terms of the sale, which was effective as of July 1, 1995,
Century received $128.5 million for substantially all of its assets. As
part of the transaction, $5 million of the sale proceeds were placed in
escrow to secure certain indemnification obligations of Century and CenCor
to the buyer that run through July 1, 1998.
Century was able to redeem all of its outstanding secured notes held by the
lenders for a purchase price equal to the principal amount of the secured
notes (approximately $100 million) together with interest. The lenders
also surrendered for cancellation outstanding warrants which would have
allowed them to acquire up to 30% of Century.
Century's remaining liabilities at June 30, 1995 consist mostly of accounts
payable and other accrued liabilities, including accrued income taxes
payable.
Item 2 Management's Discussion and Analysis of Financial condition and
Results of Operations (continued)
As a result of its 1993 debt restructuring, CenCor currently has outstand-
ing non-interest bearing debt consisting of approximately $17.2 million in
notes and $11.5 million in convertible notes due July 1, 1999. The
convertible notes are convertible at CenCor's option at the rate of one
share of common stock for each $20 principal amount of convertible notes
after $17.5
million of the net proceeds from the sale of Century are distributed by
dividend to CenCor. Management anticipates converting the convertible
notes into shares of common stock in 1996.
It is unlikely that CenCor will liquidate prior to July 1998. In the event
of liquidation, CenCor's liquidation value may be adversely effected by
claims arising from indemnification obligations to the buyer of Century
resulting from the sale of Century's assets, income tax liabilities, or
other factors. Conversely, CenCor's liquidation value may be enhanced by
CenCor's ability to realize the value of securities issued by and
receivables transferred from ConCorde Career College in settlement of
certain amounts owed and CenCor's ability to collect the balances owed on
these securities and receivables.
Results of Operations
As a result of the sale of Century's assets, the Company's continuing
operations consist of collecting amounts due to the Company on various
receivables and securities, primarily amounts received from previously
charged-off Concorde receivables received in payment of accrued interest.
In addition, as previously mentioned in Note 4 to the consolidated
financial statements, in March of 1995 the Company received $600,000 from
the Brozman Estate in partial payment of the Company's settlement of all
its claims against the Brozman Estate.
Results of Operations (continued)
The Company's continuing expenses consist mostly of interest expense on its
long-term debt. In addition the Company incurs expenses related to
salaries, legal fees, and other recurring operating expenses. During the
six months ended June 30, 1995 the Company also recognized additional
expense for consulting fees in connection with the sale of Century's
assets. Also, during the six months ended June 30, 1995, the Company
became liable for payment of its Stock Appreciation Rights (SARs) as a
result of the sale of Century. See Note 10 to the consolidated financial
statements in CenCor's Annual Report for the year ended December 31, 1994
on Form 10-K for additional information on the SARs.
Continuing Operations
Subsequent to the sale of Century's assets, CenCor's operations will
continue to focus on the collection of various amounts owed to it,
including the collection of the Concorde Junior Secured Debenture,
preferred stock, and the previously charged-off Concorde receivables
received in payment of accrued interest. CenCor will also closely monitor
claims arising from indemnification obligations to the buyer of Century in
order to maximize the value of the escrow fund established as a result of
the sale.
(The remainder of this page is intentionally blank.)
Liquidity and Capital Resources
Capital Obligations
The Company has no significant obligations for capital purchases.
Defaults on Long-Term Debt
Prior to the restructuring of its debt, CenCor was in default on both its
public and private debt. As part of the restructuring, which was
consummated on August 30, 1993, the old debt was exchanged for New Notes,
Convertible Notes, and stock. The Company is in compliance with all
covenants and terms under the new indenture.
Internal Revenue Service Examination
The Company's income tax returns for 1988 and 1989 were examined by the
Internal Revenue Service (IRS) which has proposed certain adjustments, a
portion of which have been protested by the Company. The Company has also
claimed additional deductions in these years. Management believes that the
ultimate disposition of this IRS examination will not have a material
effect on the financial position of the Company. In addition, the
Company's 1991 income tax return is currently under examination by the IRS.
As a result of the unresolved IRS examinations, management cannot precisely
estimate the amount of the Company's net operating loss (NOL) carryforward
for federal income tax purposes. For purposes of estimating the Company's
current income tax liability, management has assumed the Company's NOL
carryforward will be approximately $9,000,000 which represents the current
status of the carryforward amount. Because the proposed adjustments for
1988 and 1989 have not been resolved and the 1991 IRS examination is still
ongoing, no assurance can be made regarding this amount.
Item 1 Legal Proceedings
As previously reported, a Century subsidiary was named as a defendant in a
lawsuit in the Circuit Court of Jefferson County styled Dorothy McCurdy, et
al v. American General Finance, Inc., et al. On August 8, 1995 an
agreement was entered whereby the case was dismissed from the Circuit
Court. However, it is likely that the plaintiffs will attempt to re-file
certain claims in the case as part of the Princess Nobels, et al v.
Associates, et al suit in which the same Century subsidiary is also a
defendant.
On October 18, 1995 the Dorothy McCurdy et al v. American General Finance
Inc. et al suit was refiled in the United States District Court for the
Middle District of Alabama, Northern Division.
In addition, as previously reported, a Century subsidiary was named as a
defendant in a lawsuit styled Princess Nobels, et al v. Associates, et al.
On July 31, 1995, a class certification hearing was held to request
certification of a nationwide class action. At this time, the Plaintiffs'
Motion for Certification is still under submission by the Court.
The amount of exposure, if any, in connection with these claims is not
determinable at this time. Both cases are being vigorously defended.
Item 2 Change in Securities - None
Item 3 Defaults Upon Senior Securities - For a discussion of defaults in
prior periods, see Part I, Item 2, Liquidity and Capital Resources -
Defaults on Long-Term Debt.
Item 4 Submission of Matters to a Vote of Security Holders - None
Item 5 Other Information
On June 30, 1995 the Company sold substantially all of the assets of its
sole operating subsidiary, Century Acceptance Corporation to Fidelity
Acceptance Corporation, a subsidiary of the Bank of Boston Corporation.
See the Company's Form 8-K dated July 17, 1995.
Item 6 Exhibits and Reports on Form 8-K
EXHIBIT NUMBER DESCRIPTION
27 Financial Data Schedule
No reports on Form 8-K were filed during the quarter ending June 30, 1995.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed by the undersigned,
thereunto duly authorized.
CENCOR, INC.
Dated November 17, 1995 /s/ Jack L. Brozman
Jack L. Brozman, President
/s/ Terri L. Rinne
Terri L. Rinne, Vice President