-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BQsu88Bk13T07L1Jqo3cfbbgVFIQIJdRJ1/joE+O7tI4ZY/iyLwiUow3+Qe1qAeO Hkmpu5CabeeL5If5m83VLw== 0000018497-99-000001.txt : 19990403 0000018497-99-000001.hdr.sgml : 19990403 ACCESSION NUMBER: 0000018497-99-000001 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990401 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENCOR INC CENTRAL INDEX KEY: 0000018497 STANDARD INDUSTRIAL CLASSIFICATION: PERSONAL CREDIT INSTITUTIONS [6141] IRS NUMBER: 430914033 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-03417 FILM NUMBER: 99584846 BUSINESS ADDRESS: STREET 1: 1100 MAIN STREET SUITE 416A STREET 2: P O BOX 26098 CITY: KANSAS CITY STATE: MO ZIP: 64196-6098 BUSINESS PHONE: 8162219744 MAIL ADDRESS: STREET 1: P O BOX 26098 STREET 2: 1100 MAIN STREET, SUITE 416A CITY: KANSAS CITY STATE: MO ZIP: 64196 FORMER COMPANY: FORMER CONFORMED NAME: ALLIED SERVICE INC DATE OF NAME CHANGE: 19680709 10-K 1 ________________________________________________________________ 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. (The remainder of this page is intentionally blank.) 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 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. 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 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 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. Jack L. Brozman is the sole executor of the Estate of Robert F. Brozman. Member of Special and Audit Committees beginning July 1, 1991. Elected to Executive Compensation Committee on August 21, 1991.
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 $21,350 Chairman of the Board and Chief Executive Officer 1997 $151,000 $ 42,700 $279,250 1996 $201,900 $753,900 Mr. Brozman also received compensation as an executive officer of Concorde. 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. Represents payout received on the exercise of phantom stock options representing 25,000 shares of CenCor common stock. 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).
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 Percent of Class Jack L. Brozman, Trustee 272,423 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 Nature of ownership of securities is direct. Beneficial ownership as shown in the table arises from sole voting power and sole investment power. 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.)
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 Percent of Class Jack L. Brozman 306,767 23% Edward G. Bauer, Jr. --- --- George L. Bernstein --- --- Marvin S. Riesenbach 9,250 * Directors and Officers as a Group 316,017 23% *Less than 1% Nature of ownership of securities is indirect. Beneficial ownership as shown in the table arises from sole voting power and sole investment power. 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.
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) EX-21 2 EX-21 CENCOR, INC. AND SUBSIDIARIES SUBSIDIARIES OF THE REGISTRANT Century Acceptance Corporation, 100% owned The Company is in the process of dissolving Century's subsidiaries. Although the following subsidiaries were inactive during 1998, they remain incorporated at December 31, 1998: Name State of Incorporation Century Finance Company of Colorado Colorado Century Finance Company of Missouri Missouri Century Finance Company of Omaha, Inc Nebraska Century Acceptance Corporation of Texas Texas Century Finance Company of Utah Utah EX-27 3
5 DEC-31-1998 DEC-31-1998 YEAR $ 9,833,000 0 860,000 0 0 10,693,000 0 0 10,693,000 502,000 0 1,350,384 0 0 8,840,616 10,693,000 0 613,000 0 0 195,000 0 0 418,000 0 418,000 0 0 0 418,000 $0.31 $0.31
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