UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934 (fee required)
For the Year Ended December 31, 1995
Commission file number 0-3417
CENCOR, INC.
(Exact name of registrant as specified in its charter)
1100 Main Street, City Center Square, Suite 416A
P.O. Box 26098
Kansas City, MO 64196-6098
Telephone (816) 221-5833
Incorporated in the State of Delaware
43-0914033
(I.R.S. Employer
Identification No.)
Securities registered pursuant to Section 12(g) of the Act:
TITLE OF CLASS
Regular Common Stock, $1.00 par value
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.
YesX No__
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 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.
YesX No__
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by
references in Part III of this Form 10-K or any amendment to this
Form 10-K.
Indicate the number of shares outstanding of each of the
issuer's classes of Common Stock, as of May 16, 1996.
1,366,321 Shares of Regular Common Stock, $1.00 par value
Market value at May 16, 1996 was $5,123,704
Documents incorporated by reference--None
CENCOR, INC.
FORM 10-K
YEAR ENDED DECEMBER 31, 1995
INDEX
Item Page
PART I 1
Item 1. Business 1
Item 2. Properties 1
Item 3. Legal Proceedings 1
Item 4. Submission of Matters to a Vote of Security Holders 2
PART II 3
Item 5. Market for Registrant's Common Stock and
Related Stockholder Matters 3
Item 6. Selected Financial Data 4
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 5
Item 8. Financial Statements and Supplementary Data 9
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 24
PART III 25
Item 10. Directors and Executive Officers of the Registrant 25
Item 11. Executive Compensation 26
Item 12. Security Ownership of Certain Beneficial Owners and
Management 30
Item 13. Certain Relationships and Related Transactions 31
PART IV 33
Item 14. Exhibits, Financial Statements, Schedules, and Reports on
Form 8-K 33
PART I
Item 1. Business
CenCor, Inc. ("CenCor") was incorporated under the laws of
Delaware on May 27, 1968. Prior to June 30, 1995, CenCor, was
engaged in the consumer finance business through its wholly-owned
subsidiary Century Acceptance Corporation ("Century"). As used
herein, the term "the Company" refers to CenCor and Century
collectively. Effective June 30, 1995, substantially all of the
assets of Century were sold. For additional information regarding
the sale of Century, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Financial Condi-
tions--Sale of Century".
The Company has not conducted on-going operations since the
sale of its consumer finance business and is in the process of
liquidation. CenCor's Board of Directors has adopted a resolution
calling for the dissolution of CenCor and has adopted a Plan of
Dissolution and Liquidation (the "Plan of Liquidation") which will
be submitted for stockholder approval at CenCor's next annual
meeting. If the Plan of Liquidation is approved, CenCor is
expected to be fully liquidated by 1999. See "Management's Discus-
sion and Analysis of Financial Condition and Results of Operation--
Financial Condition--Plan of Liquidation".
Subsequent to December 31, 1995, CenCor caused its Convertible
Notes (as later defined) to be converted into CenCor common stock
(see "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Financial Condition--Conversion of
Convertible Notes"). As a result of the conversion, 572,554
shares of CenCor common stock are issuable to the holders of the
Convertible Notes. As of May 16, 1996, 450,464 shares of common
stock have been issued upon the surrender of Convertible Notes.
Subsequent to December 31, 1995, CenCor received into its treasury
324,641 shares of CenCor common stock in settlement of a claim
against the Estate of Robert F. Brozman and the related Robert F.
Brozman Trust (see "Certain Relationships and Related Transac-
tions"). The issued and outstanding share amounts reflected in
this report (except the cover page) and in the December 31, 1995
financial statements included herein reflect the receipt and retirement of
the 324,641 shares received from the Robert F. Brozman Trust and treats all
572,554 shares issuable as a result of the conversion of
the Convertible Notes as issued and outstanding at December 31, 1995.
Item 2. Properties
Since the sale of its consumer finance business, the Company's
need for office space has decreased sufficiently. The Company
currently subleases approximately 800 sq. feet of office space on
a month to month basis (see "Certain Relationships and Related
Transactions"). The Company believes that its office space is
adequate for its needs.
Item 3. Legal Proceedings
During 1991, a Century subsidiary was the victim of a
fraudulent scheme involving the purchase of automobile financing
contracts which Century later determined were fictitious. Century
recorded a multi-million dollar loss in 1991 as a result of the
fraudulent automobile contracts. At the time of the fraudulent
scheme, the Century subsidiary was insured by Lloyds of London for
a maximum of $1,000,000 under a fidelity policy. Lloyds of London
initially denied the claim filed by Century as a result of the
fraudulent scheme. On April 22, 1994, the Century subsidiary filed
suit in the Circuit Court of the Thirteenth Judicial Circuit of the
State of Florida, Hillsborough County, against Lloyds of London
seeking recovery of $1,000,000 for breach of contract. In March
1996, the Century subsidiary and the insurance company reached an
agreement to settle the claim for $750,000.
On July 21, 1994, Century, along with a number of
other consumer finance companies, was named as a defendant in a
lawsuit styled Princess Nobels v. Associates Corporation of North
America, et al. The case is currently pending in the U.S. District
Court for the Middle District of Alabama. The plaintiffs, who
allegedly were charged for non-filing insurance, make claims for
antitrust violations, fraud, violations of RICO, breach of
contract, conversion, and Truth-in-Lending Act violations and seek
statutory and actual damages, attorney fees and litigation costs.
On April 22, 1996, a statewide class of borrowers was certified by
the court. Century has denied the allegations
presented in the suit and is actively defending the charges.
On April 13, 1995, Century, along with a number of
other consumer finance companies, was named as a defendant in a
lawsuit filed by certain alleged borrowers of the defendant
creditor/lenders. In the action, which is pending before the
United States District Court for the Middle District of Alabama,
Northern Division and styled Dorothy McCurdy, et al. v. American
General Finance, Inc., et al, the plaintiffs allege that the
defendants engaged in violations of the Alabama Mini-Code, fraud,
and conspiracy with respect to the sale of credit property
insurance. The plaintiffs seek statutory damages, compensatory and
punitive damages, and attorneys' fees. Preliminary motions are
currently pending in the case. Century has denied
the allegations presented in the suit and is actively defending the
charges.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of security holders during
the fourth quarter of the registrant's fiscal year ended Decem-
ber 31, 1995.
PART II
Item 5. Market for Registrant's Common Stock and Related Stockholder Matters
CenCor's common stock is quoted on the OTC Bulletin Board
under the symbol CNCR. The range of high and low sales price as
quoted on the OTC Bulletin Board for each quarter of 1994 and 1995
is as follows:
1994 1995
Quarter Ended High Low High Low
March 31 3/4 1/2 5/8 5/8
June 30 13/16 1/2 3 3
September 30 3/4 1/2 4-3/8 4-3/8
December 31 3/4 9/16 3-1/2 3-1/2
The quotations from the OTC Bulletin Board reflect inter-
dealer prices without retail mark-up, mark-down, or commission and
may not represent actual transactions.
On May 16, 1996, the quoted bid price of the Common Stock on
the OTC Bulletin Board was $3.75.
At May 16, 1996, CenCor had approximately 1,166 stockholders
of record. No dividends have been paid on the common stock.
(The remainder of this page is intentionally blank.)
Item 6. Selected Financial Data
December 31
1995
Net Assets in Liquidation
Cash and cash equivalents $22,439,000
Property and equipment, net 30,000
Other assets 11,903,000
Total assets 34,372,000
Accounts payable and
accrued liabilities 3,200,000
Income taxes payable 759,000
Long-term debt 12,303,000
Total liabilities 16,262,000
Net assets in liquidation $18,110,000
Number of common shares outstanding 1,488,411
Net assets in liquidation per share $ 12.17
Operating results for the year ended
December 31, 1995*:
Income $ 1,220,000
Expenses 5,082,000
Operating loss (3,862,000)
Non-operating income 3,087,000
Loss before discontinued operations (775,000)
Income from discontinued operations 18,717,000
Net income $17,942,000
Weighted average shares outstanding 1,813,052
Earnings per share from net income $ 9.90
________________
*As discussed in "Description of Business," the Company is in the
process of liquidation and therefore prior year financial data is
not comparable or meaningful.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Financial Condition
Sale of Century
Effective June 30, 1995, Century 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, Century received $128.7 million
for substantially all of its assets. In accordance with the
provisions of the sales agreement, $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.
While the escrow may be reduced by claims of the buyer, no such
claims have been made as of May 16, 1996.
As a result of the sale, Century was able to redeem all of its
outstanding secured notes held by its lenders for a purchase price
equal to the principal amount of the secured notes (approximately
$102 million) together with interest. The lenders also surrendered
for cancellation outstanding warrants which would have allowed them
to acquire up to 30% of Century. The remaining net proceeds from
the sale have been invested in short-term government and government
agency instruments.
Conversion of Convertible Notes
On December 31, 1995, CenCor had outstanding non-interest
bearing convertible notes due July 1, 1999 (the "Convertible
Notes") in the principal amount of $11,449,771. Effective April 1,
1996, CenCor converted these Convertible Notes into shares of
CenCor's common stock at a ratio of one share of common stock for
each $20 principal amount of Convertible Notes. As a result of
this conversion, the holders of the Convertible Notes are entitled
to be issued 572,554 shares of CenCor common stock upon surrender
of their Convertible Notes. As of May 16, 1996, 450,464 shares
have been issued and are outstanding as a result of the surrender
of Convertible Notes.
Plan of Liquidation
With the sale of its consumer finance business, CenCor's
business purpose no longer exists. For that reason, Cencor's Board
of Directors adopted a resolution on January 22, 1996 that CenCor
be liquidated and that the Plan of Liquidation be submitted to the
stockholders for approval at the next annual meeting.
Under Delaware law, the Plan of Liquidation requires the
affirmative approval of a majority of the issued and outstanding
shares of common stock entitled to vote. If the Plan of Liquida-
tion is adopted by the stockholders, a Certificate of Dissolution
will be filed with the State of Delaware and CenCor shall be
dissolved. Under Delaware law, CenCor will continue as a corporate
entity for three years after the dissolution becomes effective, or
for such longer period as the Delaware Court of Chancery directs in
its own discretion, for the purpose of prosecuting and defending
suits by or against CenCor and winding up the business and affairs
of CenCor, but not for the purpose of continuing the business of
CenCor.
The Plan of Liquidation provides that the implementation of
the plan is intended to be completed within three years of the
effective date of the Certificate of Dissolution. During this
three year period, CenCor would not engage in any business
activities, except for preserving the value of its assets,
adjusting and winding up its business and affairs, and distributing
its assets in accordance with the Plan of Liquidation. CenCor's
debts and liabilities, whether fixed, conditioned or contingent,
would either be paid as they become due or provided for.
At such time as the Board has determined that all claims and
liabilities have been identified and paid or provided for, which
CenCor does not expect to occur prior 1999, CenCor will distribute
in one or a series of distributions, at any time, or from time to
time as the Board, in its discretion may determine, all funds
resulting from CenCor's liquidation to the stockholders in accor-
dance with the respective rights of each. The proportionate
interests of the respective stockholders in the assets of CenCor
would be fixed on the basis of their ownership of the outstanding
shares of CenCor on a record date to be determined by the Board of
Directors. The Plan of Liquidation provides that CenCor will be
fully liquidated no later than three years from the effective date
of the Certificate of Dissolution.
During the period of liquidation, CenCor's directors and
officers would implement and carry out the provisions of the Plan
of Liquidation and would receive compensation for their services.
Under Delaware law, stockholders of CenCor do not have the
right to dissent and demand appraisal of their shares if the Plan
of Liquidation is adopted. Accordingly, if the Plan of Liquidation
is adopted, all stockholders would be bound by its terms whether or
not they voted for the plan.
The Board of Directors has been informed that Jack Brozman,
who has the authority to vote 21% of the common stock, intends to
vote all of these shares in favor of the Plan of Liquidation.
Assuming CenCor had fully liquidated and distributed its
assets by December 31, 1995 and assuming further that the Company's
actual realizable value of its assets and liabilities is identical
to the Company's estimated realized value of these items, CenCor's
stockholders would have received $18,110,000 in distributions or
approximately $12.17 per share, less expenses. The actual amount
to be received upon complete liquidation may be adversely affected
by claims arising from the indemnification obligations resulting
from the sale of Century's assets, unanticipated tax liabilities,
the ultimate amount collected on the Debenture and Preferred Stock
of Concorde Career Colleges, Inc., (as discussed below), or other
unforeseen factors. The actual liquidation amount also may be
reduced by legal matters, including the class action lawsuits
pending in Alabama against Century (see "Legal Proceedings").
If the stockholders do not approve the proposed Plan of
Liquidation, management will in all likelihood seek liquidation of
CenCor under the supervision of the U.S. Bankruptcy Court that has
retained jurisdiction of CenCor's 1993 plan of reorganization, on
the basis that the sale of Century accomplished CenCor's plan of
reorganization. A court-supervised liquidation would result in
additional legal and administrative fees being incurred by CenCor,
which would reduce the amount payable to stockholders upon
liquidation.
Assets and Liabilities Following Sale of Century Using Liquidation
Accounting
Following the sale of its consumer finance business, the
Company's assets consist primarily of cash and cash equivalents, a
junior secured debenture (the "Debenture") in the principal amount
of $2,422,000 of Concorde Career Colleges, Inc. ("Concorde"),
300,000 shares of Concorde's cumulative preferred stock (the
"Preferred Stock"), certain previously charged-off receivables
received in payment of accrued interest on the Debenture, and the
escrow account established to secure the indemnification obliga-
tions of the Company to the buyer of the consumer finance business.
At December 31, 1995, the Company also held a receivable in the
amount of $750,000 relating to a fidelity bond claim arising from
a loss on fraudulent automobile contracts in 1991 (see "Legal
Proceedings") and a $875,000 receivable for a claim against a third
party relating to the Company's loss of goodwill due to the so-
called CenCor, Inc. of Kansas City loans (the "CIKC Loans"). The
Company received payment for these receivables in March 1996. The
Company's remaining liabilities consist primarily of the amounts
due to the holders of its Non-Convertible Notes (as later defined),
accounts payable, and other accrued liabilities, including accrued
income taxes. As a result of being in the process of liquidation,
the Company is required to adopt the liquidation basis of account-
ing. Generally accepted accounting principles require the
adjustment of assets and liabilities to estimated fair value under
the liquidation basis of accounting. For information concerning
the estimated fair values given these items by the Company and the
methods and assumptions used to arrive at such values, see the
Company's Financial Statements and the notes thereto.
Results of Operations
During the year ended December 31, 1995, the Company's sources
of income, apart from the income received from the discontinued
operations of Century, consisted mostly of collections from the
Concorde charged-off receivables that the Company accepted in
exchange for accrued interest on the Debenture. The Company also
recognized an additional $875,000 of income from the settlement
claim against a third party as described above. In addition, the
Company recognized a gain of $3,087,000 as a result of its
settlement with the Estate of Robert F. Brozman and related Robert
F. Brozman Trust (collectively the "Brozman Estate"). CenCor
released the Brozman Estate of all liability upon receipt of
$600,000 in cash plus the transfer of shares of CenCor common stock
held by the Brozman Estate in the amount of $2,487,000 (see
"Certain Relationships and Related Transactions").
The Company's expenses during the year ended December 31, 1995
consisted mainly of salaries, professional fees, consulting fees in
connection with the sale of Century's assets and accrued expenses
related to the Company's stock appreciation rights ("SARs") and
phantom stock options. See Note 9 to the consolidated financial
statements for further information regarding the SARs and phantom
stock options. In addition, interest expense on the Non-Convert-
ible Notes and Convertible Notes accrued monthly during the period
at the estimated discount rate of 16%. Consequently, interest
expense exceeded interest income due to the higher discount of the
Company's long-term debt as compared to the yield on the Company's
investments. During the period of liquidation, the change in the
discounted value of the long-term debt will be recognized currently
as an adjustment to estimated liquidation value.
Century's loss from operations was $5,330,000. The loss was
comprised of revenue of $15,714,000 which was offset by expenses of
$21,044,000, including interest expense of $5,981,000, provision for
credit losses of $4,462,000 and salaries and other expenses of $10,601,000.
From the date of sale of Century's assets to December 31,
1995, the Company earned $707,000 in interest income from its
short-term investments. The Company's expenses during the same
time period consisted mostly of professional fees, severance and
bonus payments to former employees and officers, a charge-off in
the amount of $250,000 related to the reduction in the receivable
from its fidelity bond claim arising from a loss on fraudulent
automobile contracts in 1991, and a contingency reserve related to
various legal matters.
Activities During Liquidation Period
The Company's activities during the period of liquidation will
focus on the collection of various amounts owed to it, including
the collection of the Debenture, Preferred Stock, and the previous-
ly charged-off Concorde receivables received in payment of accrued
interest. The Company 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. Until the Company's long-term debt becomes payable and
distributions are made to stockholders, management expects to
invest the available proceeds from the sale of Century and the
Company's other cash in short-term government or government agency
instruments.
The Company's expenses during the period of liquidation are
expected to consist mostly of salaries, professional fees,
stockholder communication expenses and other liquidating expenses.
The Company will be required to satisfy the balance of the
Non-Convertible Notes together with all other liabilities prior to
any distribution on its outstanding common stock.
Regulation During the Liquidation
Because of the sale of Century's consumer finance business,
CenCor may be an "investment company" as defined in the Investment
Company Act of 1940 (the "1940 Act"). The 1940 Act generally
requires investment companies to register with the Securities and
Exchange Commission after which their capital structure, securities
issuances, investments and transactions with affiliates, along with
numerous other activities would become subject to extensive
regulation. The 1940 Act does not, however, require an investment
company to register if its only activities are those "merely
incidental to its dissolution". CenCor believes that in light of
the dissolution exception from registration under the 1940 Act,
CenCor will not have to register under such act, assuming that the
plan of liquidation is approved by the stockholders.
Surrender of Certificates for Common Stock
At such time as the respective interest of the stockholders
are fixed on the basis of the ownership of their outstanding shares
of common stock of the Corporation on a record date determined by
the Board (the "Record Date"), it is anticipated that the stock
transfer books of CenCor will be closed, no further transfers will
be recorded on CenCor's books and no further stock certificates
will be issued, other than replacement certificates. All distribu-
tions from CenCor on or after the Record Date will be made to
stockholders according to their stockholdings as of the Record
Date. As soon as practicable after the determination of the Record
Date, stockholders will be advised of the procedures for surrender-
ing certificates representing their shares of common stock.
Stockholders should not forward their stock certificates before
receiving those instructions. All distributions otherwise payable
by CenCor to stockholders who have not surrendered their stock
certificate and executed and returned such documents may be held
for such stockholders, without interest, until the surrender of
their certificates (subject to the laws relating to unclaimed
property).
Liquidity and Capital Resources
Capital Obligations
The Company has no significant obligations for capital
purchases.
Defaults on Long-Term Debt
The Company is in compliance with all covenants and terms
under the indenture for the Non-Convertible Notes.
Internal Revenue Service Examination and Potential California Sales
Tax Assessment
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. In addition, the Company's 1990, 1991, and 1992
income tax returns are currently under examination by the IRS.
Management believes that the ultimate disposition of these IRS
examinations will not have a material effect on the financial
position of the Company.
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 made certain assumptions regarding the Company's NOL
carryforwards, which were utilized in full during 1995. Because
the proposed adjustments for 1988 and 1989 have not been resolved
and the 1990-1992 IRS examination is still ongoing, no assurance
can be made regarding this amount.
The California Board of Equalization (the "Board of Equaliza-
tion") issued a Notice of Determination on January 30, 1996 to
Charter Equipment Leasing Corp. ("Charter"), a former subsidiary of
CenCor, in the approximate amount of $723,300 for sales taxes,
interest and penalties for the period October 1 through 31, 1992.
On April 29, 1996, the Board of Equalization issued a revised
Report of Field Audit reducing the sales tax assessment against
Charter to $5,362.
Charter sold substantially all of its assets in November 1992
and dissolved in October 1994. The bulk of the January 1996 tax
assessment was based upon Charter's sale of assets. The April 1996
Report of Field Audit reduced the sales tax assessment, because the
asset sale occurred in November 1992 and the assessment period
ended October 31, 1992. The Board of Equalization may still
attempt to assert a claim against the buyer of Charter's assets
based upon successor liability for the sales taxes allegedly due
from the November 1992 sale transaction. If the buyer is assessed
sales taxes, the buyer may attempt to assert an indemnification
claim against CenCor.
Item 8. Financial Statements and Supplementary Data
INDEX TO FINANCIAL STATEMENTS
Page
CenCor, Inc.
Report of Independent Auditors 11
Audited Consolidated Financial Statements
Consolidated Statement of Net Assets in Liquidation 12
Consolidated Statement of Operations 13
Consolidated Statement of Stockholders' Equity 14
Consolidated Statement of Cash Flows 15
Notes to Consolidated Financial Statements 17
Report of Independent Auditors
The Board of Directors and Stockholders
CenCor, Inc.
We have audited the accompanying consolidated statement of net
assets in liquidation of CenCor, Inc. (the Company) as of December
31, 1995, and the related consolidated statements of operations,
stockholders' equity, and cash flows for the year then ended.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit 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 audit
provides a reasonable basis for our opinion.
As described in Note 1 to the financial statements, as a result of
the Board of Directors' intent at December 31, 1995, the Company changed
its basis of accounting from the going-concern basis to the
liquidation basis.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the net assets in
liquidation of CenCor, Inc. as of December 31, 1995, and the
consolidated results of its operations and its cash flows for the
year ended December 31, 1995, in conformity with generally accepted
accounting principles applied on the basis described in the
preceding paragraph.
Ernst & Young LLP
May 22, 1996
Kansas City, Missouri
CenCor, Inc.
(In Process of Liquidation)
Consolidated Statement of Net Assets in Liquidation
December 31, 1995
Assets:
Cash and cash equivalents $22,439,000
Property and equipment, net of accumulated
depreciation 30,000
Other assets 11,903,000
Total assets $34,372,000
Liabilities:
Accounts payable and accrued liabilities $3,200,000
Income taxes payable 759,000
Long-term debt 12,303,000
Total liabilities 16,262,000
Net assets in liquidation $18,110,000
Number of common shares outstanding 1,488,411
Net assets in liquidation per share $ 12.17
See accompanying notes.
CenCor, Inc.
(In Process of Liquidation)
Consolidated Statement of Operations
For the Year Ended December 31, 1995
Income $1,220,000
Expenses:
Salaries and other expenses 2,822,000
Interest expense, net 2,260,000
Operating loss (3,862,000)
Non-operating income 3,087,000
Loss before discontinued operations (775,000)
Discontinued operations:
Loss from operations, net of $0 taxes (5,330,000)
Gain on disposal, net of $1,100,000 taxes 24,047,000
Income from discontinued operations 18,717,000
Net income $17,942,000
Weighted average common and common
equivalent shares outstanding 1,813,052
Earnings per share of common stock and
common equivalent shares of stock:
Loss per share before discontinued operations $ (0.43)
Earnings per share from discontinued operations 10.33
Earnings per share from net income $ 9.90
See accompanying notes.
CenCor, Inc.
(In Process of Liquidation)
Consolidated Statement of Stockholders' Equity
Retained
Shares Amount Paid-in Earnings Net Assets
Capital (Deficit) In Liquidation Total
Balance at December 31, 1994 1,240,498 $1,241,000 $2,805,000 $(11,273,000) $ -- $(7,277,000)
Net income -- -- -- 17,942,000 -- 17,942,000
Shares received in settlement (324,641) (325,000) (734,000) (1,428,000) -- (2,487,000)
Balance at December 31, 1995
prior to adoption of
liquidation basis of
accounting 915,857 916,000 2,071,000 5,241,000 -- 8,228,000
Adoption of liquidation
basis of accounting 572,554 (916,000) (2,071,000) (5,241,000) 18,110,000 9,882,000
Net assets in liquidation at
December 31, 1995 1,488,411 $ -- -- $ -- $18,110,000 $18,110,000
See accompanying notes.
CenCor, Inc.
(In Process of Liquidation)
Consolidated Statement of Cash Flows
For the Year Ended December 31, 1995
Operating activities:
Net income $17,942,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Gain on disposal (24,047,000)
Other changes in assets and liabilities, net 1,370,000
Total adjustments (22,677,000)
Net cash provided by operating activities (4,735,000)
Investing and other activities:
Proceeds from sale of discontinued operations 123,710,000
Loss from discontinued operations 4,561,000
Capital expenditures, net (35,000)
Net cash provided by investing and other
activities 128,236,000
CenCor, Inc.
(In Process of Liquidation)
Consolidated Statement of Cash Flows (continued)
For the Year Ended December 31, 1995
Financing activities:
Payments of long-term debt $(102,095,000)
Net cash used in financing activities (102,095,000)
Net increase in cash and cash equivalents 21,406,000
Cash and cash equivalents at beginning of year 1,033,000
Cash and cash equivalents at end of year $22,439,000
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $5,698,000
Income taxes $356,000
See accompanying notes.
CenCor, Inc.
Notes to Consolidated Financial Statements
December 31, 1995
1. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements include the
accounts of CenCor, Inc. and its wholly-owned subsidiary, Century
Acceptance Corporation ("Century") (collectively, "the Company").
Effective June 30, 1995, the Company sold substantially all of the
assets of Century, its only operating subsidiary. Since the date
of the sale of Century, the Company has had no ongoing operations.
As the Company has changed its basis of accounting from going
concern basis to liquidation basis, comparative financial state-
ments are not meaningful and thus have not been presented.
The operations of Century, which accounted for substantially all of
the Company's operations, have been reflected as discontinued
operations.
As a result of Board of Directors' intent of Liquidation, as of
December 31, 1995, the Company adopted a Plan of Dissolution and
Liquidation (the Plan of Liquidation). In connection with the Plan of
Liquidation, the officers and directors of CenCor are authorized to (i)
dissolve CenCor, including the execution and filing of a Certifi-
cate of Dissolution with the Secretary of State of the State of
Delaware, (ii) wind up CenCor's affairs, including satisfaction of
all liabilities and long-term debt of CenCor and (iii) liquidate
CenCor's assets on a pro rata basis in accordance with the
respective interests of its common stockholders. CenCor is
expected to be dissolved in October 1999. The Plan of
Liquidation will be submitted to the shareholders for approval at
the next stockholder meeting. If the stockholders do not approve
the Plan of Liquidation, management will in all likelihood seek
liquidation of CenCor under the supervision of the U.S. Bankruptcy
Court.
Generally accepted accounting principles require the adjustment of
assets and liabilities to estimated fair value under the liquida-
tion basis of accounting. Accordingly, the statement of net assets
in liquidation at December 31, 1995 reflects assets and liabilities
on this basis. Adjustments for changes in estimated liquidation
value in subsequent periods will be recognized currently.
Estimated costs of liquidation have not been provided since such
costs are not reasonably estimatable.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles under the liquidation
basis of accounting requires management to make estimates and
assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ
from such estimates.
Cash and Cash Equivalents
Cash and cash equivalents include cash, money market accounts, and
short-term government or government agency instruments.
Fair Values of Assets and Liabilities
The following methods and assumptions were used by the Company in
estimating the liquidation value of its assets and liabilities:
Cash and cash equivalents: The carrying amount reported in the
statement of net assets in liquidation for cash and cash equiva-
lents approximates their fair value.
Other Assets: The fair value of the Company's other assets (see
Note 4) is estimated using discounted cash flow analysis, based on
an estimated discount rate commensurate with the associated risks.
Accounts Payable and Accrued Liabilities: The carrying amount
reported in the statement of net assets in liquidation for accounts
payable and accrued liabilities approximates their fair value.
Income Tax Payable: The carrying amount reported in the statement
of net assets in liquidation approximates the fair value of taxes
currently payable.
Long-Term Debt: The fair value of the Company's long-term debt is
estimated using discounted cash flow analyses, based on the
Company's current incremental borrowing rates for similar types of
borrowing arrangements (10% at December 31, 1995). The fair value
reflects a conversion of the convertible notes in accordance with
the bankruptcy plan (see Note 5).
The $9,882,000 effect of adoption of liquidation basis of account-
ing is comprised primarily of the increased value in the Concorde
related assets, as described in Note 4, and the revaluation and
conversion of long-term debt as described in Note 5.
2. Discontinued Operations
Effective June 30, 1995, the Company sold substantially all of the
assets of Century. The gross cash proceeds from the sale of
Century were approximately $128,710,000. In accordance with the
provisions of the sales agreement, $5,000,000 of the purchase price
was placed in escrow to secure certain indemnification obligations
of the Company to the buyer that run through July 1, 1998.
Century was able to redeem all of its outstanding secured notes
held by its lenders for a purchase price equal to the principal
amount of the secured notes (approximately $102 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 loss from operations, net of applicable income taxes, for
Century is segregated as discontinued operations in the accompany-
ing consolidated statement of operations. The net loss from
discontinued operations is as follows:
December 31,
1995
Revenues $15,714,000
Expenses (20,988,000)
Other loss (56,000)
Loss from discontinued
operations before income taxes (5,330,000)
Income taxes applicable to
discontinued operations --
Net loss from discontinued
operations $(5,330,000)
3. Litigation and Contingencies
Century is a defendant, along with a number of other consumer
finance companies, in two class action lawsuits currently pending
in the State of Alabama. The suits were filed by certain alleged
borrowers of the defendant creditor/lenders and assert various
violations. Century has denied the allegations presented in the
suit and is actively defending the charges. Management believes
that any potential liability pertaining to these lawsuits would be
immaterial to the accompanying financial statements.
4. Other Assets
Concorde Career Colleges, Inc. ("Concorde"), a former subsidiary of
CenCor that was spun off in 1988, agreed as part of the spin-off
arrangement to assume certain obligations of CenCor relating to
CenCor's then outstanding Series H 10% notes. As a result of
Concorde's subsequent inability to make payments on the assumed
debt, CenCor terminated Concorde's obligation regarding these notes
in consideration of Concorde issuing to CenCor a junior secured
debenture (the "Debenture") in the amount of $5,422,000. The
Debenture, which is due July 31, 1997, is secured by a lien on
substantially all of Concorde's assets, which lien is junior to the
lien of Concorde's secured bank lender. Interest on the Debenture
compounds and accrues quarterly at a variable rate not to exceed 12
percent. The interest rate (11.0 percent at December 31, 1995) is
variable based upon both Concorde's cost of funds and the amount of
debt outstanding under the agreement.
The Debenture also entitles CenCor to an amount equal to 25% of the
amount by which the "market capitalization" of Concorde exceeds
$3,500,000. Market capitalization is the total common shares of
Concorde multiplied by the highest average share price (high-bid)
for any 30 consecutive trading days between January 1, 1997 and
June 30, 1997.
In 1993, Concorde and CenCor amended their Agreement to provide
that CenCor would receive Concorde's previously charged-off
receivables in full payment of the accrued interest on the Junior
Secured Debenture through December 31, 1993. The receivables,
which consist of account and notes receivable from students who
attended schools operated by Concorde or its subsidiaries, were
assigned to CenCor without recourse with CenCor assuming all risk
of non-payment of the receivables. The amendment grants CenCor
limited rights of substitution until such time as it collects full
payment of the accrued interest, exclusive of out-of-pocket
collection fees and expenses paid to third parties.
In 1994, Concorde and CenCor further amended their Agreement to
provide that CenCor would receive an additional $15,000,000 of
Concorde's previously charged-off receivables in full payment of
the accrued interest on the Debenture through December 31, 1994 in
the amount of $500,231. The amendment grants CenCor the same
rights of assignment and substitution for these receivables as
provided for in the first amendment. CenCor has engaged a
collection agent to pursue recovery of such receivables assigned to
the Company as a result of the 1993 and 1994 amendments.
As part of the 1994 amendment, CenCor also agreed to accept 300,000
shares of Concorde's cumulative preferred stock (the "Preferred
Stock") in exchange for the cancellation of $3,000,000 of the total
$5,422,000 of original principal amount of the Debenture. The
Preferred Stock, $.10 par value, has a per share liquidation
preference of $10.00. Cumulative quarterly dividends accrue at a
rate equal to 73% of the then current interest rate on the
Debenture. The dividends accumulate until such time as the
Debenture has been repaid in full which is currently scheduled for
July 31, 1997. At such time, the accumulated quarterly dividends
will be paid ratably over the ensuing 12 fiscal quarters. The
Preferred Stock has no mandatory redemption date but Concorde may
redeem the Preferred Stock, in whole or in part, at any time, at
liquidation value plus accrued cumulative dividends.
Management of Concorde recently reported improvements in its
financial condition resulting in a substantial reduction in its
outstanding bank debt. Consequently management, in conjunction
with its independent financial advisor, has estimated the liquidation value in
the Debenture, including accrued interest, to be $2,802,804 as of
December 31, 1995. In addition, management and its independent financial
advisor have determined that Concorde will most likely elect to
redeem the preferred stock on December 31, 2003. The estimated
liquidation value of the Preferred Stock and accrued dividends is
$2,074,925 at December 31, 1995.
Also included in other assets are receivables relating to a
fidelity bond claim arising from a loss on fraudulent automobile
contracts in 1991 and a claim against a third party relating to the
CenCor, Inc. of Kansas City. In March of
1996, the Company reached agreements to settle these claims.
As mentioned in Note 2, an escrow account was established in
accordance with the provisions of the agreement pertaining to the
sale of Century's assets. Such amount, including accrued interest
($5,028,000), is included in other assets. The escrow was
established in order to secure certain indemnification obligations
of Century and CenCor to the buyer that run through July 1, 1998.
Management believes that any potential liability pertaining to
these obligations would be immaterial to the accompanying financial
statements.
5. Long-Term Debt
Pursuant to a 1993 plan of reorganization, CenCor's noteholders
received the following securities for each $1,000 aggregate amount
of principal and accrued but unpaid interest at December 31, 1992:
i. $600 principal amount of non-interest bearing Non-Convertible Notes
ii. $400 principal amount of non-interest bearing Convertible Notes
iii. 5.2817 shares of CenCor common stock, par value of $1 per share
The principal balances of the Non-Convertible Notes at December 31,
1995 is $17,174,656. The Non-Convertible Notes are non-interest
bearing and will mature on July 1, 1999. Such notes have been
assigned a fair value of $12,303,000 at December 31, 1995.
In accordance with the provisions of the bankruptcy plan, the
Convertible Notes are convertible at CenCor's option due to the
receipt of at least $17,500,000 in net proceeds from the sale of
Century's assets. The Convertible Notes were converted at a ratio
of one share of common stock for each $20 principal amount of
Convertible Notes. In connection with the conversion of these
notes, 572,554 shares of CenCor common stock are issuable to the
convertible noteholders. The conversion of these notes in
satisfaction of $11,449,771 principal amount of the obligations is
reflected in the financial statements and the number of outstanding shares
at December 31, 1995.
6. Other Income
The Company and the Estate of Robert F. Brozman and the related
Trust of Robert F. Brozman (collectively the "Brozman Estate")
entered into a settlement agreement pursuant to which the claims of
the Company against the Brozman Estate, including claims arising
from CenCor's loss of goodwill, would be
settled. Under the settlement agreement, CenCor released the
Brozman Estate of all liability upon receipt of $600,000 in cash
plus the transfer of shares of common stock held by the Brozman
Estate in the amount of $2,487,000. In March of 1995, CenCor
received the $600,000 in cash from the Brozman Estate. The
Company, with the assistance of its independent financial advisor,
and the Brozman Estate agreed to a value of the stock of
$7.66 per share which resulted in 324,641 shares of stock being
transferred to the Company. The transfer in satisfaction of the
settlement agreement and the
subsequent retirement of the stock is reflected in the December 31, 1995
financial statements.
7. Per Share Information
Earnings per common share and common equivalent shares were
computed by dividing net income by the average outstanding shares
of stock during the year ended December 31, 1995. The number of
weighted average common share equivalents was increased under the
assumption that the common stock shares issued as a result of the
conversion of the Convertible Notes were outstanding during the
year ended December 31, 1995.
Net assets in liquidation per common share was computed by dividing
net assets in liquidation by the outstanding shares of common stock
at December 31, 1995.
8. Income Taxes
The Company and its subsidiaries file a consolidated federal income
tax return. There is no provision or benefit for income taxes
allocated to operations as of December 31, 1995. A reconciliation
of income tax provision (benefit) allocated to operations to the
amount computed using the statutory federal income tax rate is as
follows:
1995
Provision (benefit) at statutory rate (34%) $(264,000)
Estimated limitation of recognition of operating
loss under applicable accounting principles 264,000
Income tax provision (benefit) allocated
to operations $ 0
The provision for income taxes allocated to discontinued operations
consisted of the following:
December 31,
1995
Federal $765,000
State 335,000
$1,100,000
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
as a result of the prior period adjustments. In addition, the
Company's 1990, 1991, and 1992 income tax returns are currently
under examination by the IRS. Management believes that the
ultimate disposition of the IRS examination will not have a
material effect on the financial position of the Company and no
liability has been accrued at December 31, 1995.
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, manage-
ment has made certain assumptions regarding the Company's NOL
carryforwards, which were utilized in full during 1995. Because
the proposed adjustments for 1988 and 1989 have not been resolved
and the 1990-1992 IRS examination is still ongoing, no assurance
can be made regarding this amount.
The Company has alternative minimum tax (AMT) credit carryforwards
of approximately $190,000 which have an unlimited carryforward
period.
9. Stock Option Plan
In 1993, CenCor granted 90,000 phantom share options to certain
officers and directors of CenCor. For each option exercised, the
holders will receive a cash payment equal to the excess, if any,
over $1.00 per share of the greater of (i) the closing price of the
Common Stock on the NASDAQ National Market (as determined on the
date the option is exercised), (ii) the stockholders' equity of
CenCor at the end of its most recent fiscal quarter, or (iii) the
aggregate distributions per share received by CenCor's stockholders
in the event CenCor is liquidated. The options automatically
terminate (a) five years after such officer or director resigns, or
is removed, or (b) on the date that said officer or director
engages in certain misconduct under his employment agreement. The
Company recorded a liability in the amount of $1,010,000 at
December 31, 1995 for this obligation.
The Company has 50,000 Stock Appreciation Rights (SARs) to certain
directors and officers of the Company outstanding at December 31,
1995. The liability related to the SARs was $701,505 at December
31, 1995. The SARs permit the holders to receive a cash payment of
the excess of the fair value of Century's stock at the date of
exercise over the fair value of Century's stock as of the date of
grant. As a result of the sale of Century during 1995, the holders
of the SARs became entitled to payment. The fair market value of
Century's stock has been determined as the net proceeds from the
sale less liabilities retained by Century. $505,500 of the payment
due on the SARs was disbursed in January of 1996 and the remaining
liability is scheduled to be paid in installments through July of
1998.
10. Employee Benefit Plan
The Company has a Profit-Sharing and 401(K) Retirement Savings Plan
(the Plan) which covers all employees, age 21 or older, with one
year of service. Participants may contribute from 1% to 20% of
their annual compensation, with certain exclusions. The Company
may make discretionary contributions. No contributions were made
by the Company to the Plan in 1995.
The Company terminated its Plan on September 30, 1995. At
termination the account of each participant of the Plan became
fully vested and nonforfeitable. The Plan will continue to be
administered in accordance with its terms until the receipt of a
favorable determination letter from the IRS. At that time, the
Plan assets will be distributed to the participants as indicated by
the terms of the Plan.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None.
(The remainder of this page is intentionally blank.)
PART III
Item 10. Directors and Executive Officers of the Registrant
The following tables sets for the names of the directors of the
registrant and certain related information as of December 31, 1995.
Each of the directors has been elected to serve until the next
annual meeting of stockholders or until his successor is duly
elected and qualified.
Name of Served Principal Occupation for
Director Since Age Last Five Years and Directorships<F1>
Jack L. Brozman<F1> 1979 46 Chairman of the Board, President and Chief
Executive Officer of CenCor and ConCorde
since June 1991. Chief Executive Officer of
Century from July 1991 to August 1992.
Chairman of the Board and Treasurer, from
June 1991 until July 23, 1993, and President
and Director, for more than five years prior
to July 23, 1993, of La Petite Academy, Inc.
Director of Century and ConCorde.
Edward G. Bauer, Jr.<F2><F3> 1991 68 Vice President and General Counsel of
Philadelphia Electric Company for more than
the five-year period prior to August 1988.
Retired from this position at the end of
August 1988.
George L. Bernstein<F2><F3> 1991 64 Chief Financial and Administrative Officer of
Howard Fischer Associates, Inc. (executive
search firm) since October 1994. Chief Operating
Officer of Dilworth, Paxson, Kalish & Kauffman,
Philadelphia, Pennsylvania (law firm) from
November 1991 to September 1994. Director of
R & B, Inc. (distributor of automotive parts).
Director of Century effective April 8, 1993.
Marvin S. Riesenbach<F2><F3> 1991 66 Executive Vice President and Chief Financial
Officer of Subaru of America, Inc. for more than
the five years prior to October 1990.
Retired from this position at the end
of October 1990.
<FN>
<F1> Jack L. Brozman is the sole trustee of the Estate of Robert F. Brozman.
<F2> Director effective July 1, 1991.
<F3> Member of Special and Audit Committees beginning July 1, 1991. Elected to
Executive Compensation Committee on August 21, 1991.
</FN>
The Board of Directors of CenCor held 12 meetings and acted by
unanimous written consent on one occasion during the last fiscal
year. Standing committees, consisting of the Special Committee and
the Audit Committee, held five meetings during the last fiscal
year. The Executive Compensation Committee makes salary and bonus
recommendations for certain executive officers. The Audit
Committee oversees the work of CenCor's independent auditors.
CenCor's Board of Directors does not have a nominating committee.
The Special Committee has the final authority to thoroughly
investigate and report to the Board of Directors on certain matters
concerning the misappropriation of CenCor's assets by CenCor's
previous chairman of the board, Robert F. Brozman, or certain of
his affiliated privately held companies. The Special Committee
also has the power and authority to consider the adequacy of
CenCor's internal controls and procedures and to investigate and
report upon such other matters as the Special Committee considers
appropriate. The Special Committee, the Executive Compensation
Committee, and the Audit Committee are composed of Messrs. Bauer,
Bernstein and Riesenbach.
In addition to Jack L. Brozman, the following person also serves as
an executive officer of the Company as of December 31, 1995.
Name Age Principal Occupation for Last Five Years
Terri Rinne 28 Vice President CenCor since July 1, 1995.
Controller of CenCor from April 1994 through
June 1995. Tax manager of CenCor and Century
from August 1993 through March 1994. Accountant
with Arthur Andersen, LLP from October 1989
through August 1993.
Disclosure of Delinquent Files
Except as described below, the Company believes, based on informa-
tion filed with the Company, that all reports required to be filed
for the past two years with the Securities and Exchange Commission
under Section 16 by the Company's executive officers, directors,
and ten percent stockholders have been filed in compliance with
applicable rules:
Terri Rinne failed to file a report on Form 3 with respect to her
appointment as an executive officer of the Company in July 1995.
A report on Form 5 disclosing the information required by Form 3
(and reporting no common stock ownership or transactions) was
subsequently filed, on an untimely basis, with the Securities and
Exchange Commission.
Edward Bauer reported, on an untimely basis, a transaction in CenCor
common stock in May 1995.
Item 11. Executive Compensation.
Summary Compensation Table
The following table sets forth information as to the compensation
of the Chief Executive Officer and each of the other executive
officers of CenCor and Century whose total annual salary and bonus
exceeded $100,000, during the year ended December 31, 1995 for
services in all capacities to CenCor and its subsidiaries in 1993,
1994, and 1995.
Long-Term
Compensation
Annual
Compensation Awards Payout
Other Annual
Name and Principal Salary Bonus Compensation Option/SARs
Position Year ($) ($) ($) (#) SARs
Jack L. Brozman, Chairman
of the Board and Chief
Executive Officer of CenCor 1995 $178,300<F1> 15,000<F2> <F3>
1994 $134,800<F1> $25,000<F4> 15,000
1993 $129,800<F1> $25,000<F4> 60,000
Patrick F. Healy, former
Vice President-Finance,
Treasurer and Chief
Financial Officer of
CenCor and Century and
former Chief Accounting
Officer of CenCor<F5> 1995 $ 56,400 $15,000<F6> 10,000<F2> <F7>
1994 $152,800 10,000
1993 $161,000 $5,000<F6> 30,000
Dennis Berglund, former
Chief Executive Officer and
President of Century<F8> 1995 $94,000 $571,600<F9> $265,000<F10> 30,000<F2>
1994 $150,000 $700<F11> 30,000
1993 $100,100 $800<F12>
<FN>
<F1> Mr. Brozman also received compensation as an executive officer
of ConCorde.
<F2> "See "Executive Compensation--Option/SAR Grants in Last Fiscal
Year."
<F3> Mr. Brozman will receive a payout on 30,000 units of stock
appreciation rights (SARs) deemed exercised in 1995 in the amount
of $427,000 but payable in installments beginning in 1996 and
ending in 1998. See "Executive Compensation -- Option/SAR Exercise
and Fiscal Year End Option Value Table."
<F4> Mr. Brozman was awarded and paid a $25,000 cash bonus in 1993 in
recognition of his excellent performance during 1992. Mr. Brozman
was also awarded and paid a cash bonus in 1994 of $25,000 in
recognition of his excellent performance in 1993.
<F5> Mr. Healy's employment with the Company terminated on January
18, 1995.
<F6> Mr. Healy was awarded and paid a $5,000 cash bonus in 1993 in
recognition of his excellent performance to the Company during
1992. Mr. Healy was also awarded a cash bonus in 1994 of $15,000
in recognition of his excellent performance to the Company during
1993. The $15,000 bonus was not paid until 1995.
<F7> Mr. Healy will receive a payout on 20,000 SAR units deemed
exercised in 1996 in the amount of approximately $286,700 but
payable in installments beginning in 1996 and ending in 1998. See
"Executive Compensation -- Optional/SAR Exercises and Fiscal Year-
End Option/SAR Value Table."
<F8> Mr. Berglund's employment with the Company terminated on July 1,
1995.
F9> Consists of a bonus attributable to incentives contained in
employment agreement. As a result of this incentive arrangement,
Mr. Berglund will receive an estimated additional bonus of $803,000
during 1996.
<F10> Consists of $85,000 paid in satisfaction and termination of in-
the-money SARs and a $180,000 severance payment pursuant to Mr.
Berglund's employment agreement.
<F11> Consists of the value of a leased automobile.
<F12> Consists of the value of a leased automobile and vacation
earned as the result of a promotional program.
</FN>
Option/SAR Grants in Last Fiscal Year
The following table sets forth information as to SARs granted by
CenCor during 1995 to executive officers named in the Summary
Compensation Table.
Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation For
Individual Grants Option Term
Percent of Total Options/
SARs Granted to Em- Exercise or
Options/SARs ployees in Fiscal Year Base Price Expiration
Name Granted (#) ($/Sh) Date 5%($) 10%($)
Jack L. Brozman 15,000<F1> 27% $13.72 12/31/98 NA<F2> NA<F2>
Patrick F. Healy<F3> 10,000 18% $13.72 12/31/95 NA<F2> NA<F2>
Dennis Berglund 30,000<F1> 55% $13.72 12/31/98 NA<F2> NA<F2>
<FN>
<F1> In 1995, CenCor approved SARs for Messrs. Berglund and Brozman
relating to appreciation in value of Century's common stock.
Messrs. Berglund and Brozman were granted 30,000 and 15,000 SAR
units, respectively, effective March 1, 1995. The SARs provide
that the executive will receive cash compensation for his units at
the earlier of his death, permanent disability, involuntary
termination of employment without cause or December 31, 1998, equal
to the amount by which the per share value of Century stock at such
time (determined by formula) exceeds a base amount of $13.72. If
substantially all of the assets or stock of Century are sold prior
to December 31, 1998, the amount to be paid to the executive would
be equal to the amount by which the net liquidation recovery per
share of Century exceeds the base amount. The base amount of
$13.72 was selected by CenCor's Executive Compensation Committee as
the estimated value per share of Century stock as of December 31,
1993. The SARs terminate if (a) the executive terminates employ-
ment with Century prior to January 1, 1999, for reasons other than
death or disability; (b) the executive is terminated for cause; or
(c) the executive violates certain noncompetition obligations.
<F2> As a result of the consideration received from the sale of
Century on June 30, 1995, the payout receivable for the SARs
granted during 1995 has been determined. See "Executive Compensa-
tion -- Option/SAR Exercise and Fiscal Year-End Option/SAR Value
Table."
<F3> Mr. Healy was awarded 10,000 SAR units relating to Century's
common stock on March 1, 1995 having the same terms and conditions
as the stock appreciation rights granted to Messrs. Berglund and
Brozman. In recognition of Mr. Healy's continuing consulting
services to CenCor and Century and his service as CenCor's
representative on the Board of Directors of Century, CenCor
determined, subsequent to the termination of Mr. Healy's employment
on January 18, 1995, that Mr. Healy's benefits under his SARs
continue only with respect to a sale Century at any time on or
before December 31, 1995.
</FN>
Option/SAR Exercise and Fiscal Year-End Option/SAR Value Table
The following table provides information with respect to the named
executive officers concerning SARs exercised during 1995 and
unexercised options held as of December 31, 1995.
SAR's Value # of Securities Underlying Value of Unxercised In-The-
Exercised Realized Unexercised Options/SARs Money Options/SARs
Name ($) at FY-End at FY-End ($)
Exercisable Unexercisable Exercisable Unexercisable
Jack L. Brozman,
CEO 30,000 $427,000<F1> 60,000<F2> N/A Between N/A
$150,000
and
$670,000<F3>
Patrick F. Healy 20,000 $286,700<F1> 30,000<F4> N/A Between N/A
$75,000 and
$335,100<F3>
Dennis Berglund <F5> <F5> N/A N/A N/A N/A
<FN>
<F1> Amount relates to value of SAR units deemed exercised during
1995 but payable in subsequent years.
<F2> Consists of phantom share options relating to 60,000 shares of
CenCor common stock.
<F3> Represents range of estimated value of phantom stock options.
The actual value at exercise will depend on which of three
approaches to value are then applicable. The actual value realized
may fall outside the range indicated.
<F4> Consists of phantom share options relating to 30,000 shares of
CenCor common stock.
<F5> Mr. Berglund received $85,000 in satisfaction and termination of
60,000 in-the-money SAR units. See "Executive Compensation --
Summary Compensation Table."
</FN>
Compensation of Directors
Each non-officer/director of CenCor is paid an annual retainer of
$25,000 plus a fee (based on time spent on corporate matters,
including attendance at board and committee meetings) and expenses.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth, with respect to CenCor common stock
(the only class of voting securities), the only person known to be
a beneficial owner of more than five percent (5%) of any class of
CenCor voting securities as of May 16, 1996.
Number of Shares and
Name and Address Nature of Beneficial
of Beneficial Owner Ownership<F1> Percent of Class
Jack L. Brozman, Trustee 272,423<F2> 18%
Robert F. Brozman Trust
1100 Main St.
Kansas City, Missouri 64105
<FN>
<F1> Nature of ownership of securities is direct. Beneficial
ownership as shown in the table arises from sole voting power and
sole investment power.
<F2> Does not include 34,344 shares held by Jack L. Brozman or 20,025
shares held by or for the benefit of Robert F. Brozman's other
children, in which the Robert F. Brozman Trust disclaims any
beneficial interest.
</FN>
The following table sets forth, with respect to CenCor common stock
(the only class of voting securities), (i) shares beneficially
owned by all directors of the Company and nominees for director,
and (ii) total shares beneficially owned by directors and officers
as a group, as of May 16, 1996.
Number of Shares and
Name and Address Nature of Beneficial
of Beneficial Owner Ownership<F1> Percent of Class
Jack L. Brozman 306,767<F2> 21%
Edward G. Bauer, Jr. --- ---
George L. Bernstein --- ---
Marvin S. Riesenbach -- ---
Directors and Officers as a Group 306,767<F2> 21%
<FN>
<F1> Nature of ownership of securities is indirect. Beneficial
ownership as shown in the table arises from sole voting power and
sole investment power.
<F2> Includes 34,344 shares held by Jack L. Brozman and 272,423
shares held by the Robert F. Brozman Trust. Does not include
20,025 shares held by or for the benefit of Robert F. Brozman's
other children, in which the Robert F. Brozman Trust disclaims any
beneficial interest. Jack L. Brozman is the sole trustee and is
also one of the beneficiaries of the Robert F. Brozman Trust.
</FN>
Item 13. Certain Relationships and Related Transactions
Concorde, a business in which Jack L. Brozman has an interest,
continues to be indebted to CenCor. CenCor holds the Debenture in
the principal amount of $2,422,000 of Concorde. In addition,
CenCor owns 300,000 shares of Concorde's Preferred Stock. Further,
CenCor has been assigned approximately $23.4 million in previously
charged-off Concorde receivable in payment of accrued interest on
the Debenture.
The Debenture, which matures July 31, 1997, provides for principal
and interest payments commencing June 30, 1996 based on a ten year
amortization schedule. A balloon payment for the remaining balance is called
for on July 31, 1997.
Under the Debenture, Concorde will make an additional contingent
payment to CenCor at maturity in an amount equal to 25% of the
market value of Concorde's outstanding common stock in excess of
$3,500,000 on July 31, 1997.
The Preferred Stock provides for cumulative quarterly dividends
from the date of issuance at an annual dividend rate equal to 73%
of the then current interest rate on the Debenture. Dividends
cumulate until such time as the Debenture has been repaid in full.
At such time, the accumulated dividends are then paid ratably over the next 12
consecutive quarters. After the
retirement of the Debenture, the current dividends on the Preferred
Stock will become payable and the dividend rate changes to 2% above the prime
rate charged by Concorde's bank lender up to a maximum rate of 12%. In the
event of Concorde's voluntary or involuntary liquidation, the Preferred
Stock has a liquidation preference of $10 per share ($3,000,000),
plus cumulative dividends. While Concorde may redeem the Preferred
Stock in whole or in part at liquidation value plus accrued
cumulative dividends, the Preferred Stock does not provide for
mandatory redemption.
Concorde assigned to CenCor the previously charged off receivables
(primarily student loan promissory notes) in payment of accrued
interest on the Debenture through December 31, 1994 of approximate-
ly $1 million. Provided that CenCor undertakes reasonable steps
to collect the charged off receivables, CenCor has a right to
substitute receivables as to which collection efforts have been
made for new Concorde receivables until such time as CenCor
receives cash equal to the accrued interest. Any amounts collected
in excess of the accrued interest amount, apply first to reimburs-
ing Concorde for its professional fees and then to interest and
principal on the Debenture.
The Company currently subleases its approximately 800 sq. feet
office space from Concorde on a month to month basis. The Company
pays rent of $927 per month for the space.
Jack L. Brozman, who is Chairman of the Board of CenCor and Centu-
ry, is Chairman of the Board of Concorde. Mr. Brozman owns 171,724
shares of Concorde (2.5% of the outstanding). As sole fiduciary
for the Estate of Robert F. Brozman (the "Brozman Estate") and the
Robert F. Brozman Trust (he is one of the beneficiaries of the
estate and the trust), he owns 2,985,324 shares of Concorde (42.9%
of the outstanding).
The Company and the Brozman Estate have settled the claims of the
Company against the Brozman Estate arising from the CIKC Loans.
The Company released the Brozman Estate from all liability in
exchange for $600,000 in cash plus the transfer to the Company on
May 16, 1996 of 324,641 shares of CenCor common stock previously
held by the Brozman Estate. Pursuant to the terms of the settle-
ment agreement between the Company and the Brozman Estate, the
shares transferred represent the number of shares of common stock
which equal the aggregate of $400,000 plus one-half the amount by
which the December 31, 1995 fair market value of the stock held by
the Brozman Estate exceeds $400,000. The Special Committee, with
the assistance of its independent financial advisor, determined
that the fair market value of the CenCor common stock on Decem-
ber 31, 1995, for the purposes of the settlement, was $7.66 per
share.
PART IV
Item 14. Exhibits, Financial Statements, Schedules, and Reports on Form 8-K.
(a) The following documents are filed as part of this Annual Report on
Form 10-K.
The following Consolidated Financial Statements of CenCor, Inc. and
Subsidiaries are included in Item 8:
Consolidated Statement of Net Assets in Liquidation.
Consolidated Statement of Operations.
Consolidated Statement of Stockholders' Equity.
Consolidated Statement of Cash Flows.
Notes to Consolidated Financial Statements.
(i) Consolidated Financial Statement Schedules of CenCor, Inc. and
Subsidiaries have been omitted as not applicable or not required
under the instructions contained in Regulations S-X, or the information
is included elsewhere in the financial statements or notes thereto.
(ii) Exhibits.
Exhibit
Number Description
2.1 Plan of Reorganization. (Incorporated by reference--Exhibit
2(b) to the Company's Annual Report on Form 10-K for the year ended
December 31, 1992.)
3.1 Certificate of Incorporation and all Amendments thereto through
August 31, 1990. (Incorporated by reference--Exhibit 3(a) to the
Company's Annual Report on Form 10-K for the year ended December
31, 1990.)
3.2 Bylaws amended through July 29, 1991. (Incorporated by refer-
ence--Exhibit 3(a) to the Company's Annual Report on Form 10-K for
the year ended December 31, 1991.)
4.1 Specimen common stock certificate. (Incorporated by reference--
Exhibit 4(a) to the Company's Annual Report on Form 10-K for the
year ended December 31, 1990.)
4.2 Certificate of Incorporation and all Amendments and Amended and
Restated Bylaws. (Incorporated by reference--Exhibit 3(a) to the
Company's Annual Report on Form 10-K for the year ended December
31, 1990 and included as Exhibit 3(b) hereto.)
4.3 Composite Conform Copy Relating To: Century Acceptance Corpo-
ration Amendment and Exchange Agreement dated as of January 29,
1993 and Composite Conformed Copy of Amendment and Exchange
Agreement Regarding Century Acceptance Corporation Amendment and
Exchange Agreement dated as of January 29, 1993 relating to the
restructuring of Century Acceptance Corporation's outstanding
indebtedness to All State Life Insurance Company, Inc., American
Banker's Life Insurance Company of Florida, American Mutual Life
Insurance Company, Continental American Life Insurance Company, The
Lincoln National Life Insurance Company, Mutual Services Casualty
Insurance Company, New England Mutual Life Insurance Company,
Principal Mutual Life Insurance Company, Provident Mutual Life
Annuity Company of America, Provident Mutual Life Insurance Company
of Philadelphia, and Standard Insurance Company. (Incorporated by
reference -Exhibit 4(d) to Company's Annual Report on Form 10-K for
the year ended December 31, 1992.)
4.4 Indentures between CenCor, Inc. and Commercial National Bank of
Kansas City, N.A. dated April 27, 1993 with respect to notes due
1999. (Incorporated by reference--Exhibit T3C to Company's
Application on Form T-3; SEC file #22-24246.)
4.5 Indenture between CenCor, Inc. and Commercial National Bank of
Kansas City, N.A. dated April 27, 1993, with respect to convertible
notes due 1.999. (Incorporated by reference--Exhibit T3C to
Company's Application on Form T-3; SEC file #22-24248.)
4.6 Third Amendment to Amendment and Exchange Agreement dated March
31, 1995.
10.1 Restructuring, Security and Guaranty Agreement dated October
30, 1992 between and Dental Assistants, Inc., United Health Careers
Institute, Inc., Southern California College of Medical and Dental
Assistants, Inc., Concorde Careers--Florida, Inc., Colleges of
Dental and Medical Assistants, Inc. and Computer Career Institute,
Inc. (Incorporated by reference -- Exhibit 100) to Company's Annual
Report on Form 10-K for the year ended December 31, 1992.)
10.2 Amendment to Agreement for Transfer of Assets and Assumption
of Liabilities dated October 30, 1992 between CenCor, Inc. and
Concorde Career Colleges, Inc. (Incorporated by, reference--
Exhibit 10(k) to Company's Annual Report on Form 10-K for the year
ended December 31, 1992.)
10.3 Employment Agreement with Dennis C. Berglund dated June 28,
1993. (Incorporated by reference--Exhibit 10(g) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1993.)
10.4 First Amendment to Restructuring, Security and Guarantee
Agreement between CenCor, Concorde, Minnesota Institute of Medical
and Dental Assistance, Texas College of Medical and Dental Assis-
tants, Texas College of Medical and Dental Assistants, Inc., United
Health Careers Institute, Inc., Southern California College of
Medical and Dental Assistants, Inc., Concorde Careers--Florida,
Inc., College of Dental and Medical Assistants, Inc. and Computer
Career Institute, Inc. dated December 30, 1993. (Incorporated by
reference--Exhibit 10(i) to the Company's Annual Report on Form 10-
K for the year ended December 31, 1993.)
10.5 Stock Appreciation Agreement with Dennis Berglund dated August
29, 1994. (Incorporated by reference--Exhibit 10(h) to the
Company's Annual Report on Form 10-K for the year ended December
31, 1994.)
10.6 Stock Appreciation Agreement with Pat Healy dated October 4,
1994. (Incorporated by reference--Exhibit 10(i) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1994.)
10.7 Stock Appreciation Agreement with Jack Brozman dated October
4, 1994. (Incorporated by reference--Exhibit 10(j) to the
Company's Annual Report on Form 10-K for the year ended December
31, 1994.)
10.8 Minutes of Compensation Committee dated February 7, 1995
relating to amendments to Stock Appreciation Agreements. (Incorpo-
rated by reference--Exhibit 10(k) to the Company's Annual Report on
Form 10-K for the year ended December 31, 1994.)
10.9 Mutual Release between First Portland Corporation, FP
Holdings, Inc., and Leonard and Sharlene Ludwig, Arthur and Phyllis
Levinson, CEL-CEN Corp. and CenCor, Inc. dated February 14, 1995.
(Incorporated by reference--Exhibit 10(l) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1994.)
10.10 Second Amendment to the Restructuring, Security and Guaranty
Agreement between CenCor, Concorde, Minnesota Institute of Medical
and Dental Assistance, Texas College of Medical and Dental Assis-
tants, Texas College of Medical and Dental Assistants, Inc., United
Health Careers Institute, Inc., Southern California College of
Medical and Dental Assistants, Inc., Concorde Careers--Florida,
Inc., College of Dental and Medical Assistants, Inc. and Computer
Career Institute, Inc. dated November 15, 1994. (Incorporated by
reference--Exhibit 10(m) to the Company's Annual Report on Form 10-
K for the year ended December 31, 1994.)
10.11 Subordination Agreement dated November 15, 1994 among Concorde
Career Colleges, Inc., CenCor, Inc. and Mark Twain Kansas City
Bank. (Incorporated by reference--Exhibit 10(n) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1994.)
10.12 Settlement Agreement dated March 27, 1995 among CenCor, Inc.,
Century Acceptance Corporation, Jack L. Brozman, Executor, and Jack
L. Brozman, Trustee. (Incorporated by reference--Exhibit 10(o) to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1994.)
10.13 Purchase Agreement dated May 19, 1995 by and among CenCor,
Century and Fidelity Acceptance Corporation.
10.14 Employment Agreement dated July 3, 1995 between CenCor and
Jack Brozman.
10.15 Letter Agreement dated July 15, 1995 between Century and
Dennis Berglund.
10.16 General Release and Settlement Agreement dated July 13, 1995
between CenCor and Dennis Berglund.
21 Subsidiaries of the Registrant.
27 Financial Data Schedule.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter ending
December 31, 1995.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
CENCOR, INC.
By:/s/ Jack L. Brozman
Jack L. Brozman
Chairman of the Board
Date: May 28, 1996
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of Registrant and in the capacities and on the dates
indicated.
Signature Date
By: /s/ Jack L. Brozman May 28, 1996
Jack L. Brozman
(Chairman of the Board,
Chief Executive Officer and Director)
By: /s/ Terri L. Rinne May 28, 1996
Terri L. Rinne
(Vice President and Chief Financial Officer)
By:/s/ Edward G. Bauer, Jr. May 28, 1996
Edward G. Bauer, Jr.
(Director)
By:/s/ George L. Bernstein May 28, 1996
George L. Bernstein
(Director)
By:/s/ Marvin S. Riesenbach May 28, 1996
Marvin S. Riesenbach
(Director)