________________________________________________________________
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, 1998
Commission file number 0-3417
CENCOR, INC.
(Exact name of registrant as specified in its charter)
5800 Foxridge Drive
Suite 500
Mission, Kansas 66202
Telephone (913) 831-6334
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.
Yes X 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.{}
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
distribution of securities under a plan confirmed by a court:
Yes X No ___
Indicate the number of shares outstanding of each of the
issuer's classes of Common Stock, as of March 9, 1999.
1,343,202 Shares of Common Stock, $1.00 par value
Market value at March 9, 1999 was $9,234,514.
Documents incorporated by reference--None
_________________________________________________________________
CENCOR, INC.
FORM 10-K
YEAR ENDED DECEMBER 31, 1998
INDEX
Item Page
PART I
Item 1. Business 3
Item 2. Properties 3
Item 3. Legal Proceedings 3
Item 4. Submission of Matters to a Vote of
Security Holders 3
PART II
Item 5. Market for Registrant's Common Stock and
Related Stockholder Matters 4
Item 6. Selected Financial Data 5
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk 11
Item 8. Financial Statements and Supplementary Data 12
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 19
PART III
Item 10. Directors and Executive Officers
of the Registrant 20
Item 11. Executive Compensation 21
Item 12. Security Ownership of Certain
Beneficial Owners and Management 23
Item 13. Certain Relationships and Related Transactions 24
PART IV
Item 14. Exhibits, Financial Statements
Schedules, and Reports on Form 8-K 26
PART 1
Item 1. Business
CenCor, Inc. 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
Conditions--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. As a result of the Board of Director's intent, as of
December 31, 1995, the Company adopted a Plan of Dissolution and
Liquidation (the "Plan of Liquidation"). The Company's stockholders
approved the Plan of Liquidation on September 12, 1996 at the Company's
annual meeting of stockholders. CenCor is expected to be fully liquidated
by October 1999. See "Management's Discussion and Analysis of
Financial Condition and Results of Operation--Financial Condition--
Plan of Liquidation".
Item 2. Properties
Since the sale of its consumer finance business, the Company's
need for office space has decreased significantly. 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
There are no pending legal actions against the Company.
Item 4. Submission of Matters to a Vote of Security Holders
As a result of the stockholders approval of the Company's Plan
of Liquidation on September 12, 1996, the Company is not required
to submit any further matters to a vote of security holders.
(the remainder of this page is intentionally blank)
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 1997 and 1998 is as
follows:
1997 1998
Quarter Ended High Low High Low
March 31 7.625 7.625 4.67 4.11
June 30 9.125 9.125 5.45 5.45
September 30 9.125 9.125 6.75 6.61
December 31 9.250 9.250 6.86 6.86
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 March 9, 1999, the quoted bid price of the common stock on
the OTC Bulletin Board was $6.875.
At March 9, 1999, CenCor had approximately 645 shareholders of
record.
(The remainder of this page is intentionally blank.)
Item 6. Selected Financial Data
December 31, December 31,
1998 1997
Net Assets in Liquidation:
Assets:
Cash and cash equivalents $ 9,833,000 $ 11,248,000
Other assets 860,000 6,182,000
Total Assets 10,693,000 17,430,000
Liabilities:
Accounts payable and
accrued liabilities 445,000 432,000
Partial liquidating distribution payable 57,000 7,225,000
Total Liabilities 502,000 7,657,000
Net assets in liquidation $ 10,191,000 $ 9,773,000
Number of common shares
outstanding 1,350,384 1,350,384
Net assets in liquidation per $ 7.55 $ 7.24
share
Change in Net Assets in
Liquidation for the year
ended:
Income from liquidating
activities:
Investment income $ 613,000 $1,101,000
Income Tax Benefit 366,000 1,232,000
979,000 2,333,000
Expenses from liquidating
activities:
Salaries and related benefits 237,000 256,000
Interest expense --- 709,000
Professional fees 153,000 76,000
Other expenses 171,000 531,000
561,000 1,572,000
Retirement of common stock --- 1,157,000
Partial liquidation distribution --- 7,225,000
--- 8,382,000
Increase (Decrease)in net assets $ 418,000 $<7,621,000>
in liquidation
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, ("Fidelity").
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 the Company that expired on July 1, 1998. During the
quarter ended September 30, 1998, Fidelity withdrew all of its previously
filed claims against the escrow account and Century received approximately
$5.6 million from the escrow account. The funds received from the escrow
account were distributed to CenCor through an intercompany dividend and were
then invested in short-term government and government agency instruments.
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. The
Company's stockholders approved the Plan of Liquidation at the Company's
annual meeting of stockholders held on September 12, 1996 and a Certificate
of Dissolution was subsequently filed with the State of Delaware.
Under Delaware Law, CenCor will continue as a corporate entity for three
years after the effective date of the dissolution (October 1, 1996) 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 by October 1, 1999. During this three year period,
CenCor will 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,
will either be paid as they become due or provided for.
The Board determined that a partial liquidating distribution of $5.35
per share would be issued to stockholders of record on February 16, 1998.
At such time as the Board has determined that all claims and liabilities
have been indentified and paid or provided for, the Board will determine a
record date and issue a final liquidating distribution.
During the period of liquidation, CenCor's directors and officers are
authorized to implement and carry out the provisions of the Plan of
Liquidation and will receive compensation for their services. The Board
determined that, in addition to the regular directors fees paid to each
member of the Board of Directors, each Director shall receive a payment
equal to $75,000 immediately prior to the final distribution of the
liquidation proceeds to the shareholders as additional consideration for
the performance of services to CenCor. In addition, the Vice President
of Cencor will receive a bonus of $100,000 if the officer is still
employed by CenCor on the date CenCor makes its final liquidation
distribution to its shareholders. The purpose of the additional payments is
to encourage these individuals to continue their service to CenCor
through the CenCor's final liquidation and to recognize the directors for
their past performance. The present value of these payments is recorded as
a liability in December 31, 1998 and December 31, 1997 financial statements.
As discussed below, on February 2, 1998, CenCor announced a
partial liquidating distribution in the amount of $5.35 per share which was
paid on March 9, 1998. After the partial liquidating distribution and assuming
CenCor had fully liquidated and distributed its assets by December 31, 1998,
and 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 an additional $10,191,000 in
distributions or approximately $7.55 per share, less costs to liquidate.
The actual amount to be received upon complete liquidation my be adversely
affected by unanticipated tax liabilities, other liquidating costs, or other
unforseen factors. The actual amount to be received upon liquidation will
also be affected if, and to the extent, holders of CenCor's Old Notes, who
failed to surrender their Old Notes for Non-Convertible Nobes, Convertible
Notes or common stock pursuant to CenCor's 1993 Plan of Liquidation, are
permitted by the Bankruptcy Court to surrender their Old Notes beyond the
time allowed in the plan but prior to the liquidating distribution. Up to
11,633 additional shares of common stock could be outstanding as a result
of such event.
In accordance with Section 280 of Delaware General Corporation Law ("DGCL"),
on February 26, 1999 CenCor mailed a 60-day bar date notice to all known or
possible creditors of CenCor. The same bar date notice was also published
on March 11, 1999 and March 18, 1999 in The Kansas City Star, Wall Street
Journal, and Wilmington News Journal. The bar date notice requires all
persons who believe they have a claim or potential claim against CenCor to
present such claim to CenCor or its outside legal counsel no later than 4:00
p.m. Central Standard Time on April 27, 1999. Individiuals or entities holding
stock of record of CenCor or the CenCor Non-Convertible Notes due July 1, 1999
do not need to file a claim unless they believe they have claims against
CenCor unrelated to their ownership of common stock or Non-Convertible Notes.
CenCor must respond to or reject any filed claims by May 4, 1999.
As of March 29, 1999, only holders of CenCor's common stock or Non-Convertible
Notes had filed claims against CenCor. These individuals were subsequently
notified that it was not necessary for them to file a claim.
CenCor expects to make a second or final distribution by October 1999. If
CenCor determines that it is necessary to establish a reserve for
potential claims that are not resolved prior to October 1999, the CenCor
would then make (subject to cost and expense considerations) a third and
final distribution if the potential claims are ultimately settled for
less than the amount of the reserve. Due to the current uncertainty of this
issue, CenCor is not able to estimate a reserve amount, if any.
Partial Liquidating Distribution
CenCor's 1993 plan of reorganization entitled holders of Old Notes to
receive Non-Convertible Notes, Convertible Notes, and common stock in
exchange for their Old Notes. The Convertible Notes were converted into
shares of common stock at a ratio of one share of common stock for each $20
principal amount of Convertible Notes on April 1, 1996.
On February 2, 1998, CenCor announced payment of a partial liquidating
distribution on March 9, 1998 in the amount of $5.35 per share to common
stockholders of record as of February 16, 1998. The Company distributed
$7,159,049 on 1,338,140 outstanding shares of common stock on March 9, 1998.
The outstanding shares of stock at February 16, 1998 that received the
partial liquidating distribution on March 9, 1998 did not include 11,713 of
common shares issuable to holders of Convertible Notes who had failed to
surrender their Convertible Notes in exchange for common stock. Subsequently,
2,120 shares of common stock and the underlying partial liquidating
distribution of $5.35 per share have been issued as a result of the surrender
of Convertible Notes. The Company is attempting to contact the remaining
unsurrendered Convertible Noteholders and advise them of the partial
liquidating distribution that they would be entitled to receive upon surrender
of their Convertible Notes. If the shares of common stock and partial
liquidating distribution underlying the unsurrendered Convertible Notes are
not claimed, the Company expects to release the unclaimed funds based upon
the applicable escheat laws. The partial liquidation distribution payable
recorded in the financial statements at December 31, 1998 and December 31, 1997
includes the partial liquidating distribution due to holders of unsurrendered
Convertible Notes.
Conversion of Convertible Notes
On December 31, 1995, ConCor had outstanding non-interest bearing
Convertible Notes due July 1, 1999 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 February 18, 1999, 9,594 shares issuable remain unclaimed by
holders of the Convertible Notes.
Long-Term Debt
On August 19, 1996 CenCor offered to redeem all of its outstanding
Non-Convertible Notes due July 1, 1999 at a cash equal to 74% of their
principal amount. Prior to the offer, the principal balance of the
Non-Convertible Notes was $17,174,656. CenCor redeemed outstanding
Non-Convertible Notes in the principal amount of $9,970,930 as of the
November 18, 1996 offer expiration date at a cost of $7,374,415. On May 30,
1997, pursuant to the indenture governing the Non-Convertible Notes, CenCor
defeased its outstanding Non-Convertible Notes in the principal amount of
$7,203,726 by delivering approximately $6.4 million in U.S. Government
Securities to the indenture trustee. The Non-Convertible Notes will be paid
in full on July 1, 1999 by the indenture trustee.
Concorde Career Colleges, Inc. Agreements
In February 1997, the Company retired in full its holding in a junior
secured debenture (the "Debenture") of Concorde Career Colleges, Inc.
("Concorde") in the principal amount of approximately $2.4 million plus
interest and redeemed all of its shares of Concorde's cumulative
preferred stock.
In 1993 and 1994, Concorde agreed to assign certain charged-off
receivables to the Company in full payment of the accrued interest due on
the Debenture through December 31, 1993 and 1994, respectively.
The receivables, which consisted of account and notes receivable from
students who attended schools operated by Concorde or its subsidiaries,
were assigned to the Company without recourse with the Company assuming all
risk of non-payment of the receivables. As of December 31, 1997, the Company
had collected approximately $1,046,000 of the total $1,057,000 discharged
interest due from the charged-off receivables. The balance of the discharged
interest was collected in January 1998 and the Company has subsequently
reassigned the charged-off receivables to Concorde.
Assets and Liabilities Using Liquidation Accounting
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 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.
The Company's assets at December 31, 1998 and December 31, 1997, consisted
primarily of cash and cash equivalents and an income tax receivable refund.
At December 31, 1997 the Company's assets also included the escrow account
established to secure the indemnification obligations of the Company to the
buyer of Century.
The Company's liabilities at December 31, 1998 and December 31, 1997
consisted primarily of accounts payable and other accrued liabilities,
including the accrued additional payments due to the Company's officers and
directors prior to liquidation. At December 31, 1997 the Company had also
recorded a liability for the partial liquidating distribution payable to its
shareholders on March 9, 1998. The Company distributed $7,159,040 on March
9, 1998 to the stockholders of record as of February 16, 1998. The partial
liquidating distribution payable at December 31, 1998 represents the balance
due to the holders of unsurrendered Convertible Notes.
Results of Operations
During the year ended December 31, 1998, the Company's primary source of
income was interest from short-term government and government-agency
investments.
The Company's expenses for the year ended December 31, 1998 consisted mainly
of salaries, professional fees, and other recurring business expenses. The
Company also recorded a reduction to income tax expense as a result of
expected refunds from the settlement of the IRS examination.
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 revund of prior
years' taxes from the IRS. Until a distribution is made to stockholders,
management has invested the Company's 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 all timely asserted liabilities,
and any estimated post-liquidation costs, prior to any final distribution on
its outstanding common stock, Although, the Company believes that it has
adequate reserves for all of its material known contingent tax and other
liabilities it is currently attempting to identify any other potential
liabilities by the issuance of the bar date claim notice on February 26,
1999 to known or possible creditors.
Internal Revenue Service Examination
As a result of a preliminary settlement with the IRS related to the
examination of the Company's 1990, 1991 and 1992 federal income tax returns,
the Company recorded in other assets a net recoverable for income taxes of
$850,000 and $595,000 at December 31, 1998 and December 31, 1997, respectively.
The receivable also includes refunds to be received as a result of net
operating loss ("NOL") carryovers to the Company's 1995 and 1996 federal income
tax returns. In February 1999, the Company received from the IRS a refund
of income taxes, including interest, of approximately $836,000 and an
additional refund of $48,00 in March 1999. As a result of the receipt of
IRS refunds, the Company believes it has resolved any known issues with the IRS
with respect to the Company's 1990, 1991, and 1992 federal income tax returns.
The Company's NOL carryforward, for federal income purposes, at December
31, 1998 is approximately $295,000. The NOL carry forward expires on December
31, 2008. However, the liquidation of the Company is expected to occur
prior to the expiration of the NOL carryforward. The Company's alternative
minimum tax ("AMT") credit carryforward is approximately $579,000 and can be
carried forward indefinately. Because of the uncertainty of the amount and
timing of the possible realization of the Company's income tax carryforward
at December 31, 1998, no amount has been recorded as a receivable regarding
these carryforwards.
Capital Obligations
The Company has no obligations for capital purchases.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
(The remainder of this page is intentionally blank.)
Item 8. Financial Statements and Supplementary Data
INDEX TO FINANCIAL STATEMENTS
Page CenCor, Inc.
Report of Independent Auditors 13
Audited Consolidated Financial Statements:
Consolidated Statement of Net Assets in Liquidation 14
Consolidated Statement of Changes in Net
Assets in Liquidation 15
Notes to Consolidated Financial Statements 16
Report of Independent Auditors
The Board of Directors and Stockholders
CenCor, Inc.
We have audited the accompanying consolidated statements of net assets in
liquidation of CenCor, Inc. (the Company) as of December 31, 1998 and 1997,
and the related statement of changes in net assets in liquidation for the
years 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 audits.
We conducted our audits 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 audits
provide 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 financial statements referred to above present fairly,
in all material respects, the consolidated net assets in liquidation of
CenCor, Inc. as of December 31, 1998 and 1997, the changes in net assets in
liquidation for the years then ended, in conformity with generally accepted
accounting principles applied on the basis described in the preceding
paragraph.
Ernst & Young LLP
March 12, 1999
Kansas City, Missouri
CenCor, Inc.
(In Process of Liquidation)
Consolidated Statement of Net Assets in Liquidation
December 31, 1998 and 1997
December 31, December 31,
1998 1997
Assets:
Cash and cash equivalents $ 9,833,000 $11,248,000
Other assets 860,000 6,182,000
Total assets 10,693,000 17,430,000
Liabilities:
Accounts payable and accrued
liabilities 445,000 432,000
Partial liquidating
distribution payable 57,000 7,225,000
Total liabilities 502,000 7,657,000
Net assets in liquidation $10,191,000 $ 9,773,000
Number of common shares
outstanding 1,350,384 1,350,384
Net assets in liquidation per share $ 7.55 $ 7.24
See accompanying notes.
CenCor, Inc.
(In Process of Liquidation)
Consolidated Statement of Changes in Net Assets in Liquidation
For the Years Ended December 31, 1998 and 1997
December 31, December 31,
1998 1997
Net assets in liquidation,
Beginning of Year $ 9,773,000 $17,394,000
Income from liquidating activities:
Investment income 613,000 1,101,000
Income Tax Benefit 366,000 1,232,000
979,000 2,333,000
Expenses from liquidating activities:
Salaries and related benefits 237,000 256,000
Interest expense --- 709,000
Professional fees 153,000 76,000
Other expenses 171,000 531,000
561,000 1,572,000
Retirement of common stock --- 1,157,000
Partial liquidation
distribution --- 7,225,000
--- 8,382,000
Increase (Decrease) in net assets 418,000 (7,621,000)
Net assets in liquidation,
December 31, 1998 and 1997 $10,191,000 $9,773,000
See accompanying notes.
Notes to Consolidated Financial Statements
(In Process of Liquidation)
December 31, 1998 and 1997
1. Summary of Significant Accounting Policies
Basis of Presentation and Plan of Liquidation
The accompanying consolidated financial statements include 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 then 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 Liquidation, the officers
and directors of CenCor are authorized to (i) dissolve CenCor, including
the execution and filing of a Certificate 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. The Company's stockholders
approved the Plan of Liquidation on September 12, 1996 at the Company's
annual meeting of stockholders. At such time as the Board will determine a
record date and issue a final liquidating distribution. CenCor is expected
to be fully liquidated by October 1999.
Generally accepted accounting principles require the adjustment of
assets and liabilities to estimated fair value under the liquidation basis
of accounting. Accordingly, the statements of net assets in liquidation at
December 31, 1998 and 1997, reflect 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 able to be estimated.
Principles of Consolidation
The consolidated financial statements include CenCor, Inc. and its wholly
owned subsidiary, Century Acceptance Corporation. All material intercompany
transactions have been eliminated.
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 significantly from those 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 fair value reported in the statements
of net assets in liquidation for cash and cash equivalents approximate their
carrying amounts.
Other Assets: The Company's other assets are reported in the statement
of net assets in liquidation at their fair value.
Accounts Payable and Accrued Liabilities: The fair value reported in
the statements of net assets in liquidation for accounts payable and accrued
liabilities approximates their carrying amounts.
Partial Liquidating Distribution Payable: The fair value reported
in the statements of net assets in liquidation approximates the carrying
amounts of the partial liquidating distribution payable.
2. Other Assets
An escrow account was established in accordance with the provisions of the
agreement pertaining to the sale of Century's assets in order to secure
certain indemnification obligations of Century and CenCor to the buyer,
Fidelity Acceptance Corporation ("Fidelity"), that ran through July 1, 1998.
The escrow account, including accrued interest, is included in other assets at
December 31, 1997 at a value of $5,549,000.
During the quarter ended September 30, 1998, Fidelity withdrew all of its
claims against the escrow account and Century received approximately $5.6
million of the escrow funds. The funds received from the escrow account were
distributed to CenCor through an intercompany dividend and were then invested
in short-term government and government agency instruments.
As discussed in Note 3, other assets at December 31, 1998 and December 31,
1997, also include a net income tax refund receivable of $850,000 and $595,000,
respectively, from the Company's prior years' federal income tax returns.
At December 31, 1997, a portion of the Company's other assets consisted of
certain charged-off receivables obtained in full payment of the accrued
interest due on a subordinated debt of Concorde Career College, Inc.
("Concorde"). The receivables, consisted of account and notes receivable from
students who attended schools operated by Concorde or its subsidiaries. As of
December 31, 1997, the Company had collected approximately $1,046,000 of the
total $1,057,000 discharge interest due from the charged-off receivables. The
balance of the discharged interest was collected in January 1998 and the
Company has subsequently reassigned the charged-off receivables to Concorde.
3. Income Taxes
As a result of a preliminary settlement with the IRS related to the examination
of the Company's 1990, 1991 and 1992 federal income tax returns, the Company
recorded in other assets a net recoverable for income taxes of $850,000 and
$595,000 at December 31, 1998 and December 31, 1997 respectively. The
receivable also includes refunds to be received as a result of net operating
loss ("NOL") carryovers to the Company's 1995 and 1996 federal income tax
returns. In February 1999, the Company received from the IRS a refund of
income taxes, including interest, of approximately $836,000 and an additional
refund of $48,000 in March 1999. As a result of the receipt of the IRS
refunds, the Company believes it has resolved any known issues with the IRS
with respect to the Company's 1990, 1991 and 1992 federal income tax returns.
The Company's NOL carryforward, for federal income purposes, at December 31,
1998 is approximately $295,000. The NOL carry forward expires on December 31,
2008. However, the liquidation of the Company is expected to occur prior to
the expiration of the NOL carryforward. The Company's alternative minimum tax
("AMT") credit carryforward is approximately $579,000 and can be carried
forward indefinately. Because of the uncertainty of the amount and timing
of the possible realization of the Company's income tax carryforward at
December 31, 1998, no amount has been recorded as a receivable regarding
these carryforwards.
4. 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 December
31, 1998 and December 31, 1997.
Effective April 1, 1996, CenCor converted its outstanding non-interest bearing
Convertible Notes due July 1, 1999 (the "Convertible Notes") in the principal
amount of $11,449,771 into shares of CenCor's common stock at a ratio of one
of common stock for each $20 principal amount of Convertible Notes. As a
result of the conversion, the holders of the Convertible Notes were entitled
to 572,554 shares of CenCor common stock upon surrender of their Convertible
Notes. The outstanding share amount reflected in the financial statements
assumes all 572,554 shares issued as a result of the conversion of the
Convertible Notes are outstanding. However, as of February 18, 1999, 9,594
shares issuable remain unclaimed by the holders of the Convertible Notes.
On February 2, 1998 CenCor announced payment of a partial liquidating
distribution of $5.35 per share to shareholders of record as of February 16,
1998. On March 9, 1998, CenCor distributed $7,159,049 to its 1,338,140
outstanding shares of record as of February 16, 1998.
The outstanding shares of stock at February 16, 1998 that received
the partial liquidating distribution on March 9, 1998 does not include
11,713 of common shares issuable to holders of Convertible Notes who had
failed to surrender their Convertible Notes in exchange for common stock.
Subsequently, 2,120 shares of common stock and the underlying partial
liquidating distribution of $5.35 per share have been issued as a result of
the surrender of Convertible Notes. The Company is attempting to contact
the unsurrendered Convertible Noteholders and advise them of the partial
liquidating distribution that they would be entitled to receive upon surrender
of their Convertible Notes. If the shares of common stock and partial
liquidating distribution underlying the unsurrendered Convertible Notes are not
claimed, the Company expects to release the unclaimed funds based
upon the applicable escheat laws. The partial liquidation distribution
payable recorded in the financial statements at December 31, 1998 and
December 31, 1997 includes the partial liquidating distribution due to the
holders of unsurrendered Convertible Notes.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None.
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PART III
Item 10. Directors and Executive Officers of the Registrant
The following tables set forth the names of the directors of the
registrant and certain related information as of December 31, 1998.
Pursuant to the Plan of Liquidation, each of the directors is entitled to
serve until the Plan of Liquidation is fully implemented.
Name of Served Principal Occupation for
Director Since Age Last Five Years and Directorships
Jack L. Brozman<F1> 1979 48 Chairman of the Board, President and
Chief Executive Officer of
CenCor since June 1991.
Chief Executive Officer
of Century from July 1991 to
August 1992. President and Chief
Executive Officer of Concorde from
June 1991 to April 1997 and from
November 1998 to the present. Chairman
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.
Edward G. Bauer, Jr.<F2> 1991 70 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> 1991 66 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> 1991 69 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 executor of the Estate of Robert F. Brozman.
<F2> 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 three meetings and acted by
unanimous written consent on no occasions during the last fiscal year.
Standing committees, consisting of the Executive Compensation Committee,
the Audit Committee and the Special Committee held one meeting 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
considers the adequacy of CenCor's internal controls and procedures and may
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, 1998.
Name Age Principal Occupation for Last Five Years
Terri Rinne 31 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
information 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.
Edward Bauer and Marvin Riesenbach, failed to timely file
Form 4's with respect to transactions in shares of CenCor common stock
during 1997. Form 5's reflecting these transactions were
subsequently filed, on an untimely basis, with the Securities and
Exchange Commission.
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 $100,000,
during the year ended December 31, 1998 for services in all capacities to
CenCor and its subsidiaries in 1996, 1997, and 1998.
Long-Term All Other
Annual Compensation Compensation
Compensation Awards
Other Annual
Name and Principal Salary Bonus Compensation Options/SARs
Position Year ($) ($) ($) #
Jack L. Brozman, 1998 $125,000<F1> $21,350<F2>
Chairman of the
Board and
Chief Executive
Officer 1997 $151,000<F1> $ 42,700<F2> $279,250<F3>
1996 $201,900<F1> $753,900<F4>
<FN>
<F1> Mr. Brozman also received compensation as an executive
officer of Concorde.
<F2> Consists of installment payments received during
1997 and 1998 with respect to payout received on 30,000 units of stock
appreciation rights (SARs) exercised during 1997 and 1998.
<F3> Represents payout received on the exercise of phantom stock options
representing 25,000 shares of CenCor common stock.
<F4> Consists of (i) installment payments received during 1996 with
respect to payout received on 30,000 units of stock appreciation
rights (SARs) deemed exercised during 1996 in the amount of $427,000
but payable beginning in 1996 and ending in 1998 and (ii) payout
received on the excercise of phantom share options with respect to
35,000 shares of CenCor common stock.
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.
(The remainder of this page is intentionally blank).
</FN>
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 persons known to be a
beneficial owner of more than five percent (5%) of any class of CenCor
voting securities as of March 9, 1999.
Names and Addresses Number of Shares and
of Beneficial Owners Nature of Beneficial Ownership<F1> Percent of Class
Jack L. Brozman, Trustee 272,423<F2> 20%
Robert F. Brozman Trust
5800 Foxridge Drive, Ste. 500
Mission, Kansas
66202
A. Baron Cass III 134,392 10%
5005 LBJ Freeway
Suite 1130, LB 119
Dallas, Texas
75244
<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.
(The remainder of this page is intentionally blank.)
</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 March 9, 1999.
Number of Shares and
Name and Address Nature of Beneficial
of Beneficial Owner Ownership<F1> Percent of Class
Jack L. Brozman 306,767<F2> 23%
Edward G. Bauer, Jr. --- ---
George L. Bernstein --- ---
Marvin S. Riesenbach 9,250 *
Directors and Officers as a Group 316,017<F2> 23%
*Less than 1%
<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
5,625 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
The Company currently subleases its approximately 800 sq. feet
office space from Concorde on a month to month basis. The Company pays
rentof $917 per month for the space.
Jack L. Brozman, who is Chairman of the Board of CenCor and Century, is
Chairman of the Board of Concorde. Mr. Brozman owns 771,124 shares of
Concorde (9% of the outstanding class). As sole fiduciary for the
the Robert F. Brozman Trust (he is one of the beneficiaries of the
trust), he owns 2,485,324 shares of Concorde common stock (32% of the
outstanding class). Mr. Brozman also owns 240,000 shares of exercisable
Concorde options.
During 1997, the Board determined that, in addition to the regular
directors' fees paid to each member of the Board of Directors, each Director
shall receive a payment equal to $75,000 immediately prior to the final
distribution of the liquidation proceeds to the shareholders of the Company
as additional consideration for the performance of services to the Company
between 1993 and the final distribution of the liquidation proceeds to the
Company's shareholders. In addition, Terri Rinne, Vice President of the
Company, will receive a bonus of $100,000 if she is still employed by the
Company on the date of Company makes its final liquidation distribution to
its shareholders. The purpose of the additional payments and the bonus is
to encourage these individuals to continue in their service to the Company
through the Company's final liquidation.
(The remainder of this page is intentionally blank.)
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 Changes in Net Assets in
Liquidation.
Note to Consolidated Financial Statements
(ii) Exhibits.
Exhibit Number Description
2.1 Plan of Dissolution and Liquidation (Incorporated by
reference--Exhibit 2 to the Company's Schedule 14-A
dated August 15, 1996)
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 reference--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.)
10.3 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.)
10.4 Minutes of Compensation Committee dated February 7,
1995 relating to amendments to Stock Appreciation
Agreements. (Incorporated by reference--exhibit 10(k)
to the Company's Annual Report on Form 10-K for the
year ended December 31, 1994.
10.5 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.)
10.8 Purchase Agreement dated May 19, 1995 by and among
CenCor, Century and Fidelity Acceptance Corporation.
(Incorporated by reference--Exhibit 10.13 to the Company's
Annual report on Form 10-K for the year ended December 31,
1995.)
10.9 Employment Agreement dated July 3, 1995 between
CenCor and Jack Brozman. (Incorporated by reference--
Exhibit 10.14 to the Company's Annual report on Form
10-K for the year ended December 31, 1995.)
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, 1998.
SIGNATURES
Pursuant to the requirements of Section 13 or 159(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this reportto 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: March 31, 1999
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.
By: /s/ Jack L. Brozman March 31, 1999
Jack L. Brozman
(Chairman of the Board,
Chief Executive Officer
and Director)
By: /s/ Terri L. Rinne March 31, 1999
Terri L. Rinne
(Vice President and
Chief Financial Officer)
By: /s/ Edward G. Bauer, Jr. March 31, 1999
Edward G. Bauer, Jr.
(Director)
By: /s/ George L. Bernstein March 31, 1999
George L. Bernstein
(Director)
By: /s/ Marvin S. Riesenbach March 31, 1999
Marvin S. Riesenbach
(Director)