SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended June 30, 1996 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 Identifi-
Incorporation 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 July 31, 1996, CenCor, Inc. had 1,395,405 shares of Common
Stock, $1.00 par value outstanding with a market value of
$7,151,451.
CENCOR, INC.
FORM 10-Q
QUARTER ENDED JUNE 30, 1996
INDEX
Item Page
Part I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1 Financial Statements . . . . . . . . . . . . . . . . . . . 1
2 Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . 10
Part II. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . 13
2 Change in Securities . . . . . . . . . . . . . . . . . . . 13
3 Defaults Upon Senior Securities. . . . . . . . . . . . . . 13
4 Submission of Matters to a Vote of Security Holders. . . . 13
5 Other Information. . . . . . . . . . . . . . . . . . . . . 14
6 Exhibits and Reports on Form 8-K . . . . . . . . . . . . . 14
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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 1 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.
(In Process of Liquidation)
Consolidated Statement of Net Assets in Liquidation
June 30, December 31,
1996 1995
Assets: (Unaudited)
Cash and cash equivalents. . . . $ 22,305,000 $ 22,439,000
Property and equipment, net of
accumulated depreciation. . . 20,000 30,000
Other assets . . . . . . . . . . 10,591,000 11,903,000
Total assets. . . . . . . . . 32,916,000 34,372,000
Liabilities:
Accounts payable and accrued
liabilities . . . . . . . . . 1,993,000 3,200,000
Income taxes payable . . . . . . 37,000 759,000
Long-term debt . . . . . . . . . 12,904,000 12,303,000
Total liabilities . . . . . . 14,934,000 16,262,000
Net assets in liquidation. . . . $17,982,000 $ 18,110,000
Number of common shares
outstanding 1,488,411 1,488,411
Net assets in liquidation per share $ 12.08 $ 12.17
See accompanying notes.
CenCor, Inc.
(In Process of Liquidation)
Consolidated Statement of Changes in Net Assets in Liquidation
For the Six Months Ended June 30, 1996
(Unaudited)
Net assets in liquidation, December 31, 1995 $18,110,000
Income from liquidating activities
Investment income. . . . . . . . . . . . . 683,000
Other. . . . . . . . . . . . . . . . . . . 426,000
1,109,000
Expenses from liquidating activities
Salaries and related benefits. . . . . . . 273,000
Interest expense . . . . . . . . . . . . . 600,000
Professional fees. . . . . . . . . . . . . 181,000
Other expenses . . . . . . . . . . . . . . 303,000
1,357,000
Expenses in excess of income from
liquidating activities . . . . . . . . . . <248,000>
Adjustment of net assets in liquidation
to liquidation value . . . . . . . . . . . 120,000
Decrease in net assets in liquidation. . . . <128,000>
Net assets in liquidation, June 30, 1996 . . $17,982,000
See accompanying notes.
Cencor, Inc.
(In Process of Liquidation)
Consolidated Statement of Changes in Net Assets in Liquidation
For the Three Months Ended June 30, 1996
(Unaudited)
Net assets in liquidation, March 31,1996 . . $ 17,879,000
Income from liquidating activities
Investment income. . . . . . . . . . . . . 321,000
Other. . . . . . . . . . . . . . . . . . . 281,000
602,000
Expenses from liquidating activities
Salaries and related benefits. . . . . . . 149,000
Interest expense . . . . . . . . . . . . . 303,000
Professional fees. . . . . . . . . . . . . 36,000
Other expenses . . . . . . . . . . . . . . 131,000
619,000
Expenses in excess of income from
liquidating activities . . . . . . . . . . <17,000>
Adjustment of net assets in liquidation
to liquidation value . . . . . . . . . . . 120,000
Increase in net assets in liquidation. . . . 103,000
Net assets in liquidation, June 30, 1996 . . $17,982,000
See accompanying notes.
CenCor, Inc.
(In Process of Liquidation)
Notes to Consolidated Financial Statements
June 30, 1996
1. Summary of Significant Accounting Policies
Basis of Presentation
The unaudited interim condensed financial statements included
herein have been prepared by the Company pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted account-
ing principles ("GAAP") have been condensed or omitted, although
the Company believes that the disclosures are adequate to make the
information presented not misleading.
Effective June 30, 1995, the Company sold substantially all of the
assets of Century Acceptance Corporation ("Century"), its only
operating subsidiary. Since the date of the sale of Century, the
Company has had no ongoing operations. As a result, the Company
has changed its basis of accounting from going concern basis to
liquidation basis.
As a result of Board of Directors' intent, as of December 31, 1995,
the Company adopted a Plan of Dissolution and Liquidation (the
"Plan of Liquidation"). In connection with the Plan of Liquida-
tion, 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 stockholders for approval at the next
stockholder meeting. If the stockholders do not approve the Plan
of Liquidation, management will 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 June 30, 1996 and December 31, 1995 reflects
assets and liabilities on this basis. Adjustments for changes in
estimated liquidation value are recognized currently. Estimated
costs of liquidation have not been provided since such costs are
not reasonably estimatable.
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
significantly from those estimates.
These condensed financial statements should be read in conjunction
with the financial statements and the notes thereto included in the
Company's Annual Report on Form 10-K for the year 1995.
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
equivalents approximates their fair value.
Other Assets: The fair value of the Company's other assets
(see Note 3) is estimated using discounted cash flow analysis,
based on an estimated discount rate commensurate with the associat-
ed 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 June 30, 1996 and December 31,
1995). The fair value reflects a conversion of the convertible
notes in accordance with the bankruptcy plan (see Note 4).
2. 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.
3. 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 matures July 31, 1997, is secured by a lien on
substantially all of Concorde's assets. The Debenture provides for
principal and interest payments commencing June 30, 1996. A
balloon payment for the remaining balance is called for on July 31,
1997. On June 30, 1996 CenCor received $142,238 from Concorde in
payment of the first installment of the Debenture. Interest on the
Debenture compounds and accrues quarterly at a variable rate not to
exceed 12 percent. The interest rate (10.75 percent at June 30,
1996 and 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 capitaliza-
tion" 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 of
June 30, 1996 the Company has collected approximately $514,000 of
the $1,060,000 accrued interest due from the Concorde charged-off
receivables.
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.
During 1995 management of Concorde reported improvements in its
financial condition resulting in a substantial reduction in its
outstanding bank debt. In June 1996 Concorde reported that its
outstanding bank debt had been paid in full. Consequently,
management, in conjunction with its independent financial advisor,
estimated the liquidation value in the Debenture, including accrued
interest, to be $2,802,804 at December 31, 1995. Management,
utilizing equivalent terms as used at December 31, 1995, valued the
Debenture at $2,788,195 at June 30, 1996.
The estimated liquidation value of the Preferred Stock and accrued
dividends was $2,074,925 at December 31, 1995, based on
management's and its independent financial advisor's determination
that Concorde would most likely elect to redeem the Preferred Stock
by December 31, 2003. On August 2, 1996, the Company received
$352,495 from Concorde in exchange for the redemption of 30,975
shares of Preferred Stock. The Preferred Stock and accrued
dividends are valued at $2,324,660 at June 30, 1996 after taking
into consideration the August 2, 1996 transaction. The resulting
adjustment in valuation is recorded as an adjustment to net assets
in liquidation in the accompanying financial statements.
Also included in other assets at December 31, 1995 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 CenCor Inc. of Kansas City. In March of 1996, the
Company received $875,000 from the third party in payment of the
claim. In April of 1996 the Company received $750,000 in payment
of the fidelity bond claim.
In addition, 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 ($5,127,000 and
$5,028,000 at June 30, 1996 and December 31, 1995, respectively),
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.
4. 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 balance of the Non-Convertible Notes 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
$12,904,000 and $12,303,000 at June 30, 1996 and December 31, 1995,
respectively.
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 June 30, 1996 and December 31, 1995.
5. Per Share Information
Net assets in liquidation per common share was computed by dividing
net assets in liquidation by the outstanding shares of common stock
at June 30, 1996 and December 31, 1995, respectively.
6. Subsequent Events
On July 30, 1996 CenCor agreed to release its claim on certain
assets to be sold by Concorde in consideration of Concorde's
agreement to use a portion of the proceeds received by it to redeem
the Preferred Stock and thereafter, to retire the Debenture. See
"Part II-Item 5-Other Information."
Item 2 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.
The buyer has notified the Company of several claims for which they
may assert against the escrow. Although the amount of the claims
is currently undeterminable, management estimates the amount to be
immaterial to the escrow.
Conversion of Convertible Notes and Retired Stock
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 July 31, 1996, 479,548 shares
have been issued and are outstanding as a result of the surrender
of Convertible Notes.
In May of 1996 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. The issued and outstanding share amounts reflected in the
accompanying financial statements reflect the receipt and retire-
ment of the 324,641 shares received from the Robert F. Brozman
Trust.
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
accordance 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 share 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 June 30, 1996 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 $17,982,000 in distributions or
approximately $12.08 per share, less costs to liquidate. 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, unantici-
pated 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.
If the stockholders do not approve the proposed Plan of
Liquidation, management will 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 reorganiza-
tion. 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.
The Company's remaining liabilities consist primarily of the
amounts due to the holders of its Non-Convertible Notes, 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 accounting.
Generally accepted accounting principles require the adjustment of
assets and liabilities to estimated fair value under the liquida-
tion basis of accounting.
Results of Operations
During the six months ended June 30, 1996, the Company's
sources of income consisted mostly of investment income and
collections from the Concorde charged-off receivables that the
Company accepted in exchange for accrued interest on the Debenture.
The Company's expenses during the six months ended June 30,
1996 consisted mainly of salaries, accretion of interest on the
Company's long-term debt, professional and consulting fees, and
other liquidating expenses.
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, income taxes 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.
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 sale 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.
Part II
Item 1 Legal Proceedings - None
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
As previously discussed in Note 6 to the Financial Statements,
CenCor agreed on July 30, 1996, to release its lien on certain
assets to be sold by Concorde in consideration of Concorde's
agreement to use a portion of the proceeds received by it to redeem
the Preferred Stock and, thereafter, to retire the Debenture.
Concorde will apply one-half of certain asset sale proceeds,
certain future non-compete payments and 50% of certain future net
profit participation payments toward redemption of the Preferred
Stock at a rate of $10 per share plus accrued but unpaid dividends
thereon. Thereafter, such proceeds and payments will be applied to
the full or partial retirement of the Debenture. Concorde's
obligation to apply such funds is subject to actual receipt of such
proceeds and payments. Upon redemption of all outstanding shares
of Preferred Stock owned by CenCor and the retirement of the entire
Debenture (including accrued interest thereon), Concorde will have
no obligation to apply any additional proceeds or payments
received. The non-compete payments and net profit participation
payments to be received by Concorde are scheduled to be paid from
time to time beginning August 1996 and ending March 2007.
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 ended June 30,
1996.
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 August 15, 1996 /s/ Jack L. Brozman
Jack L. Brozman, President
/s/ Terri L. Rinne
Terri L. Rinne, Vice President