ITEM 1. BUSINESS
GENERAL
CenCor, Inc. was incorporated under the laws of Delaware on May 27, 1968. As used herein, the term "CenCor" refers to CenCor, Inc. and the term "Century" refers to CenCor's sole operating subsidiary, Century Acceptance Corporation. The term "the Company" as used herein refers to CenCor collectively with Century and, as indicated by the context, its prior subsidiaries. CenCor, through its wholly-owned subsidiary, Century, is primarily engaged in the consumer finance business. Century makes consumer and home equity loans to individuals, generally secured by personal property and real estate. Century also sells various insurance products, including credit life, accident and health, and property insurance in conjunction with its consumer loan business. In addition, Century purchases consumer retail installment sales obligations. On July 19, 1993, CenCor filed a Voluntary Petition with the United States Bankruptcy Court for the Western District of Missouri, seeking protection under Chapter 11 of the United States Bankruptcy Code. At the same time, CenCor filed an Application with the Bankruptcy Court seeking expeditious confirmation of its previously creditor approved prepackaged plan of reorganization. The plan was confirmed by the bankruptcy court on August 30, 1993. On November 1, 1993, CenCor issued new notes and stock to its subordinated noteholders pursuant to the provisions of the plan. The filing did not involve Century.
CONSUMER FINANCE OPERATIONS
The percentages of gross revenue from consumer financing and insurance commissions during each of the last five years were as follows:
Since the consumer finance business involves the carrying of receivables, a relatively high ratio of borrowings to invested capital is customary. Net income of the Company and Century is materially dependent on the cost of borrowed funds, and because the maximum rates charged for Century's lending operations are limited by statute, any increase or decrease in interest costs tend to have an adverse or favorable effect on the Company's and Century's net income.
The following tables set forth certain information concerning Century's consumer finance business:
CONSUMER LOANS AND REAL ESTATE LOANS Consumer loan operations are generally confined to two types of loans, as authorized by the laws of the respective states in which business is conducted: (a) loans on which the interest is reflected in the face amount of the note (precompute loans) and (b) loans on which the interest is computed on monthly unpaid balances (interest bearing loans). As of December 31, 1993, 85% of Century's consumer loans receivable were precompute loans. Permitted relevant effective rates for loans vary from 18% per annum to approximately 36% per annum with maximum allowable loans ranging from $2,500 to an unspecified amount. In general, Century charges the maximum rate permitted. During 1993, home equity loan receivables increased by 112% from $6,382,000 to $13,560,000. The average per loan net balance outstanding at December 31, 1993 was $15,327. Home equity loans consist primarily of loans made to individuals which are secured by first or second mortgages on single family homes. If a borrower needs additional money before repaying his loan in full, Century's policy is to extend additional monies if the borrower's credit circumstances warrant. This is done by making a new loan in an amount sufficient to pay off the balance of the old loan and to supply the needed new money. The following table sets forth certain information regarding new and present borrowers:
INSURANCE OPERATIONS
In conjunction with its consumer lending operations and where applicable laws permit, Century also makes credit life, accident and health, property, and specialty insurance products available to its customers. The insurance is carried through American Bankers Life Assurance Co. of Florida and American Bankers Life Insurance Co. of Florida. The following table sets forth the percentage of revenues from insurance operations attributable to accident and health, property, and credit life policies for the periods indicated.
LENDING POLICIES
In conducting lending activities, it is the policy of Century to require a satisfactory credit history. Loans are made to individuals primarily on the basis of the borrower's income and are limited to amounts which the customer appears able to repay without hardship. Investigation of the credit worthiness of obligors is made by Century's personnel. When security is taken in connection with a loan, the net realizable value of the property on which liens are taken as security (except for real estate in which case the loan amount is limited to a maximum of 75% of the appraised market value) is in many cases less than the amount of the related receivable. Subject to governmental restrictions, Century makes loans secured by consumer goods for varying periods, with original contractual terms up to 36 months and not exceeding 48 months. Home equity loans secured by real estate generally do not exceed 180 months. Century purchases retail installment contracts with original contractual terms generally not exceeding 36 months.
CREDIT LOSS EXPERIENCE
Past due finance receivables are charged off in accordance with the policies set forth below and when management deems them to be uncollectible, although in most instances collection efforts do not cease. Provisions for credit losses are charged to income in amounts sufficient to maintain the allowance for credit losses at a level considered adequate to cover losses in the existing portfolio (see Note 1 "Credit Losses" to the financial statements). Prior to December 31, 1991, unpaid balances were charged off if no installments had been received for 180 days. At December 31, 1991 Century charged off all non-asset receivables such as bankruptcies, deficiency balances, settlements and the unsecured portions of Chapter XIII bankruptcy accounts. The year end effect of this policy change was to increase 1991 charge offs by $3,000,000. In August 1992, Century implemented a policy of charging off accounts when six (6) or more monthly contractual installments are past due and aggregate collections of principal and interest for a six (6) month period are less than a contractual payment. However, when an account is considered uncollectible, it is charged off immediately. Uncollectible accounts are handled as follows:
BANKRUPTCY - CHAPTER 7 - The balance of the account will be charged off in the month following the date of discharge. BANKRUPTCY - CHAPTER 13 - The unsecured portion of the balance will be charged off in the month following the confirmation hearing. SETTLEMENT - The remaining balance will be charged off in the month following the final payment. REPOSSESSION DEFICIENCY - The deficiency balance will be charged off after the appropriate proceeds of the sale of security have been posted. The appropriate supervisor must warrant that there is limited potential for additional collection.
The allowance for credit losses in the opinion of management is adequate to cover losses and expenses known through the end of the year. The credit loss experience of Century for each of the five years ended December 31, is set forth below:
The following is a table of net receivables outstanding (gross receivables less unearned finance charges), percent of allowance for credit losses to net receivables at year-end and net charge offs at the dates indicated:
A summary of delinquent consumer loan receivables (excluding sales contracts) as of December 31, 1989 through 1993 is set forth on the following page. The table includes accounts which have had no collections of principal,
interest or charges for 60 days or more, classified as to the period during which the last collection was received. Thus, if any payment has been made on an account within 60 days, even though such payment was more than 60 days delinquent, the account is not included in the amounts shown in the table.
REGULATION Century operates under various state laws which regulate the direct consumer loan business, although the degree and nature of such regulation varies from state to state and depends on the laws involved. In general, the laws under which a substantial amount of Century's business is conducted provide for state licensing of lenders (which licenses may be revoked for cause), impose limitations on the maximum duration and amount of individual loans and the maximum rate of interest and charges and prohibit the taking of assignments of wages. In addition, certain of these laws prohibit the taking of liens on real estate except liens resulting from judgments. In accordance with the Federal Consumer Credit Protection Act, Century discloses to its customers various charges and expenses, including the total finance charge and the annual percentage rate of charges applicable to each transaction. Century also discloses either monthly interest rates or total dollar credit charges as required by the states in which it operates. Century also is subject to the provisions of the Fair Credit Reporting Act ("FCRA") and makes the disclosures to consumers required by the FCRA. Consumers are advised when adverse action, such as the denial of credit or insurance or an increase in charges for credit or insurance, is taken based in whole or in part on information contained in consumer reports received from consumer reporting agencies, such as credit bureaus, or other sources. A rule of the Federal Trade Commission permits a debtor to assert against a purchaser of a consumer credit contract, such as the installment contracts purchased by Century, all claims and defenses which the debtor could assert against the seller of the goods or services obtained by the debtor pursuant to the contract. Although Century has no direct recourse against the seller of such installment contracts, if problems with purchased contracts arise, it is common business practice and Century's history has demonstrated that the seller will exchange a more satisfactory installment contract for the problem one. Therefore, there has been no material impact on operations as a result of the rule. At December 31, 1993, approximately 22% of Century's receivables are from the purchase of installment contracts.
Century is subject to the Equal Credit Opportunity Act, Title VII, prohibiting discrimination on the basis of sex or marital status, race, color, religion, national origin, age, receipt of income under public aid or good faith exercise of rights under the Consumer Credit Protection Act.
The federal bankruptcy law affects the business of Century in the following principal respects:
(A) Rights of the creditor and debtor to reaffirm obligations are limited by necessity of court approval, and then the debtor has 30 days to change his mind;
(B) Contact between creditor and debtor must be limited once a bankruptcy case is filed;
(C) Debtor next has choice of federal exemptions or state exemptions and in many instances federal exemptions are more liberal so that creditor's rights are limited;
(D) Payments made by a debtor to a creditor 90 days before bankruptcy may have to be returned because of presumption of insolvency;
(E) The value of secured property can be determined by the court rather than by the balance of the loan, thus making it possible for the debtor to retain property free and clear through payoff of the debt, at an amount which is less than the outstanding balance of the loan.
Century continuously modifies its finance forms in order to conform with new interpretations of the various laws and regulations to which it is subject. However, it is virtually impossible, because of numerous new court decisions with retroactive application, to avoid technical violations, especially with respect to the truth-in-lending laws, which may subject Century to substantial liabilities including penalties and attorney's fees payable to its customers. To date, there has not been a significant number of such claims asserted against Century. The sale of insurance is subject to various insurance regulations in each state where Century sells such insurance.
EMPLOYEES
As of March 7, 1994, the Company had 257 employees. The Company has no contract with any labor union representing its employees and there have been no organizing efforts of employees.
ITEM 2.
ITEM 2. PROPERTIES
LOCATION OF OFFICES
Century's business requires a relatively small investment in fixed assets. All offices occupied by Century are leased with terms of five years or less.
The geographic distribution of Century's business on December 31, 1993 was as follows:
Item 3.
Item 3. Legal Proceedings
Because the business of Century involves the collection of numerous accounts, the validity of liens, accident and other damage or loss claims under many types of insurance, and compliance with state and federal consumer laws, Century and its subsidiaries are from time to time plaintiffs and defendants in numerous legal proceedings. Other than the cases listed below, CenCor, nor any of its subsidiaries is a party to, nor is the property thereof the subject of, any pending legal proceedings which depart from the ordinary routine litigation incident to the kinds of business conducted by Century and its subsidiaries or, if such proceedings constitute other than routine litigation, in which there is a reasonable possibility of an adverse decision which could have any material adverse effect upon the financial condition of CenCor. There are no proceedings pending or, to the Company's knowledge, threatened by or on behalf of any administrative board or regulatory body which would materially affect or impair the right of Century to carry on any of its respective business. For information on legal proceedings involving the Estate of Robert F. Brozman and the CIKC Lenders (as later defined) see Note 4 to the financial statements. A subsidiary of Century commenced litigation on February 19, 1992 in the Circuit Court of the Thirteenth Judicial Circuit of Hillsborough County, Florida, against JoAnn's Instant Finance Cars, Inc. (JoAnn's) and certain of its affiliates from whom Century had purchased automobile financing contracts. The Company alleged a variety of fraudulent and criminal activities by the defendants and was seeking substantial monetary damages as well as various forms of equitable relief. Century was successful in having a receiver appointed to oversee the assets of JoAnn's and the contracts created by JoAnn's that were held by Century. The receiver was subsequently discharged upon a determination that the cost of continuing the receivership would exceed the amount of recovery to Century. On May 7, 1992, the suit filed by JoAnn's against CenCor, Century and two of their officers was dismissed with prejudice.
On January 6, 1993, Century's subsidiary was awarded a summary judgment of $6,000,000 against JoAnn's; however, this amount is not necessarily indicative of the actual damages incurred by Century in the fraudulent scheme. Because JoAnn's does not own significant assets, the ability of Century to recover substantial monetary amounts from JoAnn's and/or its affiliates is doubtful, despite the summary judgment granted in Century's favor. On May 13, 1993, George C. Evans, Century's former President and CEO, filed suit against Century in the Circuit Court of Jackson County, Missouri at Kansas City, Sixteenth Judicial Circuit, State of Missouri, Case No. CV93-10201, alleging that he was terminated without cause and should be entitled to compensation for wages and bonuses. On May 13, 1993, Century filed suit against Evans, in the Circuit Court of Jackson County, Missouri at Kansas City, Case No. CV 93-10198, seeking Declaratory and Injunctive Relief. Both actions were dismissed pursuant to a Release and Settlement Agreement between Evans, Century and CenCor dated June 4, 1993. The Agreement requires that the parties keep the terms confidential with certain limited exceptions. Under the Agreement, Evans will receive periodic cash payments and may receive other contingent payments discussed in Note 13 to the financial statements.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the fourth quarter of the registrant's fiscal year ended December 31, 1993.
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PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Until December 7, 1992, the Company's Common Stock was quoted on the NASDAQ National Market System (Symbol-CNCRE). Effective that date, the Common Stock was delisted from the NASDAQ National Market System because of CenCor's failure to meet the NASDAQ capital and surplus requirements. On December 4, 1992, the last date the Common Stock was quoted, the closing price was $ .50 per share. Since that time, CenCor's stock has been quoted on an inter-dealer basis in the over-the-counter market on the so-called "broker's pink sheets." The range of high and low sales price as quoted on broker's pink sheets for each quarter of 1993 and the range of high and low sales price as reported on the National Market system for each quarter of 1992 are as follows:
The quotations from the broker's pink sheets reflect inter-dealer prices without retail mark-up, mark-down, or commission and may not represent actual transactions. On March 10, 1994, the quoted bid price of the Common Stock on broker's pink sheets was $0.50. At March 10, 1994, CenCor had approximately 1,197 shareholders of record. No dividends have been paid on the common stock and the Company does not presently intend to pay dividends. Due to the current financial status of the Company it is unlikely that dividends will be declared or paid. In addition, the terms of Century's restructuring agreements eliminate Century's ability to pay dividends on its common stock other than in shares of Century. Accordingly, CenCor will not be entitled to receive cash dividends from Century until Century's restructured debt obligations have been paid in full.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
ITEM 6. SELECTED FINANCIAL DATA (CONTINUED)
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Item 7.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company was significantly and adversely affected by certain events in 1991 and 1992. Among other consequences, these events have affected the Company's results of operations, its financial position, its liquidity, and resulted in certain defaults under the loan agreements. As a result of these adverse developments, the Company has, since mid-1991, experienced severe liquidity problems. In July 1992, the Board of Directors began reviewing various financial alternatives that the Company might pursue, including restructuring its outstanding debt by means of an exchange offer or by means of a Chapter 11 bankruptcy filing, with the goal of maximizing its investment in Century and implementing a long-term solution to the Company's financial situation. The review process resulted in the development of a proposed restructuring plan and a prepackaged bankruptcy plan of reorganization, which was circulated to noteholders and other creditors on May 13, 1993. Following creditor approval, CenCor filed for Chapter 11 bankruptcy reorganization on July 19, 1993. The prepackaged bankruptcy plan was confirmed by the bankruptcy court on August 30, 1993. On January 28, 1993, Century completed a restructuring of its debt obligations with its principal creditors (NOTE 5). Subsequent to the restructuring, Century sold or closed twelve non-strategic branches to obtain operating efficiencies. Century has also modernized many of its offices and has converted to an on-line computer system. According to its business plan, Century intends to achieve financial stability and profitability through internal growth with a program to grow its current branches and expand the branch network in states with strong operations. In addition, the business plan calls for the acquisition of compatible receivables and/or companies to achieve growth of receivables of $100 million in the next four years. The plan assumes that Century will be able to retain a substantial portion of acquired accounts as active customers and that acquisitions can be negotiated with acceptable yields and levels of credit risk. Century's acquisition program is also dependent on its ability to obtain additional financing. On August 22, 1992, the Century Board hired George C. Evans as President and CEO to direct the operations of Century. Mr. Evans' employment was terminated effective April 12, 1993 (see Note 13 to the financial statements). Dennis C. Berglund, who had 24 years of experience with Avco Financial Services, was then appointed to fulfill these duties. Effective June 15, 1993, Mr. Berglund was appointed to the positions of President and CEO. During 1993, Century also completed the installation of a modern management information and data processing system which is operated under contract with Norwest Financial Information Services Group ("Norwest"). Norwest provides similar services for the consumer loan operations of its own affiliate and for a large section of the consumer finance industry, which includes approximately 4,000 branch offices throughout the country. The system provides Century headquarter personnel on-line access to branch data and enables Century to provide more timely and informative reports to improve management decision making, supervision and control.
CURRENT OVERALL TRENDS
During the year ended December 31, 1993, the Company incurred a net loss from continuing operations of $7,256,000 as compared to a net loss of $12,352,000 for 1992. As discussed in further detail below, the loss resulted primarily from a decrease in total revenue of $2,768,000 (11%) and an increase in operating expenses of $4,687,000 (32%). Offsetting these was a decrease in provision for credit losses of $11,052,000 (84%). Century has shifted its emphasis away from sales finance contracts acquired from automobile dealers, and is focusing on more desirable and profitable direct loans, including home equity loans, which typically have lower yields but generally have lower charge-off and servicing costs. In addition, during 1993 Century sold four of its branches and sold an additional six branch offices during January and February of 1994. Management determined that these locations were outside of its focused market area and the cost of operating the offices was not providing adequate benefits. The sale of these branches will enable Century to focus on its more profitable and geographically desirable offices. Century also merged two of its branch offices into other nearby branches during 1993 in order to consolidate resources, improve efficiency, and eliminate overhead costs. Management feels that the above mentioned changes and the completion of the installation of the new data processing system will serve to reduce the amount of operating expenses in 1994. Management intends to closely evaluate and monitor operating expenses throughout the year.
1993 COMPARED TO 1992
Interest on finance receivables decreased by $2,131,000 (9%) in the year ended December 31, 1993. The decrease resulted primarily from the change in the concentration of high yielding assets, such as automobile sales finance contracts, to an increase in the level of lower yielding home equity loans. The provision for credit losses decreased by $11,052,000 to $2,104,000 for the year ended December 31, 1993. The decrease in the provision for credit losses is primarily attributable to the significant decrease in the auto paper portfolio, the increased recoveries of previously charged off receivables and the strengthening of management and controls. Operating expenses increased by $4,687,000 (31%) to $19,339,000 for the year ended December 31, 1993. The increase was mostly due to additional costs incurred to improve the quality and effectiveness of Century's operations. Most of the increase in operating expenses occurred in the following categories: salary and employment expenses (44%), rent expense (30%), computer system conversion (100%), incentives toward the growth of Century's portfolio (68%), settlement with a former employee (100%), and relocation expenses (78%). Interest expense decreased slightly in the year ended December 31, 1993 from $10,685,000 at December 31, 1992 to $9,263,000 at December 31, 1993. The decrease in the interest expense resulted from the restructuring of the outstanding long term debt (see Notes 2 and 5 to the financial statements).
In addition, Century, in connection with its debt restructure on January 28, 1993, issued warrants to its noteholders in order to acquire 300,000 shares of Century common stock (see Note 5 to the financial statements). The value of the warrants in excess of the exercise price is being accrued as interest expense. As previously mentioned, Century sold four of its branch offices during 1993. The resulting gain from the sale of the branch receivables ($944,000) and the loss from the sale of the branch fixed assets ($18,000) was recorded as other income (loss) in the accompanying consolidated statement of operations. As a result of CenCor's reorganization plan (see Note 2 to the financial statements), CenCor issued New Notes, Convertible Notes, and stock to its noteholders. The New Notes and Convertible Notes were recorded at their net present value using an estimated market discount rate of 16%. As a result of these transactions, an extraordinary gain of $18,033,000 was recorded. No provision for income tax was recorded in 1993. See Note 10 to the financial statements.
1992 COMPARED TO 1991
Interest on finance receivables decreased in the year ended December 31, 1992 compared to 1991. Although yields were comparable between the two years, average earning balances for the period were lower in 1992 as compared to 1991. This resulted from Century's decision to significantly curtail the purchase of bulk automobile sales contracts subsequent to the discovery of the JoAnn's fraud in late 1991. As a result, net finance receivables were $74,777,000 at December 31, 1992 as compared to $100,905,000 at December 31, 1991. Because principal pay downs were not reinvested in bulk sales contracts, cash and cash equivalents increased $19,976,000 during 1992 to $23,401,000. Insurance commissions were down $306,000 or 15% from 1991. The decrease also reflected the lower consumer loan origination activity in 1992 compared to 1991. The provision for credit losses increased $1,023,000 to $13,156,000 for the year ended December 31, 1992. Net charge offs for 1992 included approximately $2,700,000 of JoAnn's notes of which $2,100,000 had been previously reserved. As a result of significant credit losses in Century's automobile sales contract portfolio, management has increased the related allowance for credit losses to approximately 22% of net outstanding balances. The allowance for credit losses on all other finance receivables is approximately 5% of net outstanding balances. Operating expenses for 1992 decreased to $14,652,000 from $18,169,000 in 1991. The 1991 results included $3,120,000 of service fees paid to JoAnn's and a $3,707,00 loss on fraudulent contracts which did not reoccur in 1992. The 1992 results reflect higher professional expenses incurred in connection with the JoAnn's fraud and dealing with defaults on CenCor's and Century's debt. The loss from discontinued operations for 1992 was $9,623,000 as compared to a loss from discontinued operations of $229,000 for the same period in 1991. The increase is primarily due to the $5,422,000 provision for credit losses related to the Junior Secured Debenture issued by Concorde Career Colleges ("Concorde") and the net loss on disposal of discontinued operations' assets of $3,699,000 (see Note 3 to the financial statements). An income tax benefit of $336,000 was recorded for the 1992 loss. A reconciliation of income tax benefit to the amount computed using the statutory federal income tax rate is included in Note 10 to the financial statements.
LIQUIDITY AND CAPITAL RESOURCES
DEBT AVAILABILITY
On January 29, 1993, after extensive negotiations with its major creditors, Century successfully completed its debt restructuring. Prior to that date, Century had been in default on all its debt due to various covenant violations (see Note 5 to the financial statements for details of Century's debt restructure). The terms of Century's restructuring agreements limit Century's ability to incur additional indebtedness, within certain limits. On October 15, 1993 Century entered into a letter of intent with Congress Financial Corporation ("Congress") that provided for a revolving line of credit up to $25,000,000. The loan will be used to provide future working capital for Century in order to achieve its plan of portfolio growth. The facility is fully secured by a first lien on all of Century's assets. The interest rate on the proposed Congress loan is two percent (2%) above the prime commercial interest rate, adjusted monthly. The revolving credit line is provided for a minimum of two years with automatic year to year renewals unless terminated by either party. Management expects to complete the Congress agreement and have funds available by April 1, 1994. As previously mentioned, CenCor successfully restructured its debt on August 30, 1993. For a further discussion of CenCor's debt restructure, refer to Note 2 of the financial statements.
CAPITAL OBLIGATIONS
The Company has no significant obligations for capital purchases.
DEFAULTS ON LONG-TERM DEBT
At December 31, 1992, Century was in default of certain covenants in its long-term debt agreements. On January 29, 1993, Century entered into amendment and exchange agreements with the holders of its long-term debt (the Agreements), whereby the holders agreed to defer all principal payments until April 30, 1997. Additionally, many covenants of the debt agreements were amended. The covenants include, in part, maintaining net worth at certain minimum levels and limitations on indebtedness and payment of dividends. Century is in compliance with the amended covenants of the long-term debt agreements. Pursuant to the Agreements, all of Century's long-term debt will mature on April 30, 1997. However, certain scheduled principal installments as provided for in the original debt agreements are due prior to this date. In lieu of cash payment of the scheduled principal installments, Century will deliver Secured Deferred Payment Notes for the related senior debt and a combination of Secured Deferred Payment Notes and Secured Compound PIK Notes for the related subordinated and junior subordinated debt. These notes will bear interest at a fixed rate equal to the rate on 4.5 year Treasury notes as of the installment due date, plus 2.25% (senior notes), 3.75% (subordinated notes) and 5% (junior subordinated notes).
Interest is payable monthly under all of the notes, except for the Secured Compound PIK Notes, for which interest compounds monthly and is payable on April
30, 1997. Prior to the restructuring of its debt, CenCor was in default on both its public and private debt. As part of the Restructuring, which was consummated on August 30, 1993, the old debt was exchanged for New Notes, Convertible Notes, and stock (see Note 2 to the financial statements). The Company is in compliance with all covenants and terms under the new indenture.
INTERNAL REVENUE SERVICE EXAMINATION
The Company's income tax returns for 1988 and 1989 were examined by the Internal Revenue Service (IRS), which has proposed certain adjustments, a portion of which have been protested by the Company. The Company has also claimed additional deductions in these years. Management believes that the ultimate disposition of the IRS examination will not have a material effect on the financial position of the Company. As a result of the unresolved IRS examination, management cannot precisely estimate the amount of the Company's net operating loss carryforward for financial statement or federal income tax purposes.
CONTINUING OPERATIONS
As noted earlier, CenCor successfully restructured its long-term debt pursuant to a plan confirmed by the U.S. Bankruptcy Court and approved by the majority of its creditors. Management believes that CenCor's financial condition will not have a material adverse impact on Century's financial condition, operations, or its ability to fund its operations. Funds that are available to CenCor, including cash on hand, investment income and the collection of certain receivables, are expected to be sufficient to support CenCor's limited activities through at least 1996. In addition, with the potential availability of the line of credit provided by Congress, Century intends to pursue its business plans of expansion through acquisitions of consumer finance businesses and portfolios of consumer loans and also through expansion of business with its existing and former customers.
INFLATION AND GENERAL ECONOMIC CONDITIONS
The cost of Century's operating expenses has increased due to normal inflationary increases. Century foresees no detrimental effects from inflation as long as inflation remains at or near current levels. Changes in interest rates can affect Century. Its liabilities are more sensitive to interest rate changes than its assets. While economic conditions affecting the country have an impact on Century's business, primarily with its cost of funds, the business is such, that specific local economies have a much greater financial impact. For example, a major employer either adding or reducing employees will have a ripple effect in a community which will impact Century's ability to make and collect loans. Century, as it is now structured, does not anticipate any major economic effect on its business.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders CenCor, Inc.
We have audited the accompanying consolidated balance sheets of CenCor. Inc. (the Company) as of December 31, 1993 and 1992, and the related consolidated statements of operations, stockholders' equity (deficit) and cash flows for each of the three years in the period ended December 31, 1993. Our audits also included the financial statement schedules listed in the Index at Item 14(a). These financial statements and schedules are the responsibility of the Company's management. Our responsibility is to express an opinion of these financial statements and schedules 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.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of CenCor, Inc. at December 31, 1993 and 1992, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 1993, in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.
ERNST & YOUNG
Kansas City, Missouri March 4, 1994
CenCor, Inc. Consolidated Balance Sheets
SEE ACCOMPANYING NOTES.
CenCor Inc.
Consolidated Statements of Operations
SEE ACCOMPANYING NOTES.
CenCor Inc.
Consolidated Statements of Operations (continued)
SEE ACCOMPANYING NOTES.
CenCor, Inc.
Consolidated Statements of Stockholders' Equity (Deficit)
SEE ACCOMPANYING NOTES.
CenCor, Inc.
Consolidated Statements of Cash Flows
See Accompanying Notes.
CenCor, Inc.
Consolidated Statements of Cash Flows (continued)
SEE ACCOMPANYING NOTES
CenCor, Inc. Notes to Consolidated Financial Statements December 31, 1993, 1992, and 1991
1. SUMMARY OF SIGNIGICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
CenCor, Inc. is essentially a holding company for its wholly-owned subsidiary, Century Acceptance Corporation ("Century"). On January 29, 1993, Century completed a restructuring of its debt obligations with its principal creditors (NOTE 5). On July 19, 1993, CenCor filed a Voluntary Petition with the United States Bankruptcy Court for the Western District of Missouri seeking protection under Chapter 11 of the United States Bankruptcy Court. At the same time, CenCor filed an Application with the Bankruptcy Court seeking expeditious confirmation of its previously creditor approved prepackaged plan of reorganization. The plan was confirmed by the bankruptcy court on August 30, 1993. As discussed further in Note 2, on November 1, 1993, CenCor issued new notes and stock to its subordinated noteholders pursuant to the provisions of the plan. The filing did not involve Century.
ACCOUNTING PRINCIPLES
The consolidated financial statements have been prepared in accordance with generally accepted accounting principles. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the year. Because of changing economic conditions and the economic prospects of borrowers, it is often necessary to make frequent changes in estimates and assumptions. Accordingly, actual results could differ from such estimates. Material estimates that are particularly susceptible to significant change in the near-term relate to the determination of the allowance for credit losses. Management believes that the allowance for credit losses is adequate. While management uses currently available information to recognize losses on finance receivables, future additions to the allowances may be necessary based on changes in economic conditions in the Company's market areas.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of CenCor, Inc., and its subsidiaries, (together, the "Company") all of which are wholly owned. At December 31, 1993, Century was the Company's only subsidiary.
The Company, through its subsidiary Century, is engaged in the consumer finance industry. Century provides consumer loans and real estate loans to individuals and purchases installment sales contracts. The Company also sells various insurance products including property, credit life, accident and health insurance in conjunction with its consumer loan business. All significant intercompany accounts and transactions have been eliminated in consolidation.
REVENUE RECOGNITION
Finance charges on receivables are recognized as revenue using the interest (actuarial) method. Finance charge accruals are suspended on accounts more than two months contractually past due. Once an account is suspended, finance charges are recognized on a collection basis.
Insurance commissions are generally recognized as revenue over the term of the loan.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CREDIT LOSSES
Provisions for credit losses are charged to income in amounts sufficient to maintain the allowance for credit losses at a level considered adequate to cover the losses in the existing portfolio. The allowance is determined using estimated loss percentages established by management for each major category of receivables. Additions to the allowance are charged to the provision for credit losses.
Management evaluates allowance requirements by examining current delinquencies, the characteristics of the accounts, the value of the underlying collateral and general economic conditions and trends. Management also evaluates the availability of dealer reserves to absorb finance receivables losses.
Finance receivables are charged to the allowance for credit losses when they are deemed to be uncollectible but, in any event, all accounts (except for real estate secured loans) for which an amount aggregating a full contractual payment has not been received for six consecutive months are written off. Real estate secured loans are charged to the allowance for credit losses when a full contractual payment has not been received for twelve months unless the property has been foreclosed.
DEALER RESERVES
At the time of the acquisition of certain automobile and sales finance contracts, arrangements are entered into with dealers whereby reserves are established and are available to the Company to charge credit losses associated with such contracts. The balance of the reserve may be refunded to the dealer should the actual loss experience of the contracts be less than the negotiated amount.
DEPRECIATION AND AMORTIZATION
Furniture and equipment are depreciated over the estimated useful lives of the assets using the straight-line method. Leasehold improvements are amortized ratably over the terms of the related leases.
OTHER ASSETS
Included in other assets at December 31, 1993 and 1992, is a $1,000,000 receivable from an insurance company in connection with a fidelity bond claim arising from the loss on fraudulent automobile contracts (NOTE 6).
Other assets at December 31, 1993 and 1992, also include a $750,000 note receivable related to the sale of Charter Equipment Leasing (Charter) (NOTE 3).
GOODWILL AND OTHER INTANGIBLE ASSETS
In connection with the sale of The Christine England Corporation (dba Writer's) in 1991, $1,936,000 of goodwill and non-compete agreements were netted against the sale proceeds.
In connection with sale of the Company's Temporary Services division and Charter in 1992, all remaining unamortized goodwill and other intangibles of $3,097,000 were netted against the sale proceeds. Amortization expense was $145,000 in 1992, and $427,000 in 1991.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
TRANSACTIONS WITH AFFILIATES
Prior to 1993, certain corporate, general and administrative expenses had been allocated from the Company to two former subsidiaries, Concorde Career Colleges, Inc. (Concorde) and LaPetite Academy, Inc. (LaPetite), which were spun off in 1988 and 1983, respectively. These allocations were made in accordance with agreements between the Company, Concorde, and LaPetite based on the estimated amounts attributable to each.
The expense allocations from the Company to Concorde were $328,000 in 1992 and $611,000 in 1991. The expense allocations from the Company to LaPetite were $689,000 in 1992 and $1,193,000 in 1991.
Management believes the allocations were reasonable and approximate the costs of services had they been obtained from unaffiliated parties. Included in accounts receivable are amounts due from LaPetite which total $36,000 at December 31, 1992. This amount was paid in full in 1993.
CASH EQUIVALENTS
Cash equivalents consisted of money market funds and are stated at cost, which approximates market.
RECLASSIFICATIONS
Certain 1991 and 1992 amounts have been reclassified to conform to the 1993 presentation.
DIVIDEND RESTRICTION
CenCor has limited sources of funds from continuing operations, except from Century. The terms of Century's debt restructuring (NOTE 5) eliminate Century's ability to pay dividends on its common stock other than in the stock of Century. Accordingly, CenCor will not be entitled to receive cash dividends from Century until Century's restructured debt obligations have been paid in full.
2. REORGANIZATION AND EXTRAORDINARY ITEM
On July 19, 1993, CenCor filed a Voluntary Petition with the United States Bankruptcy Court. At the same time, CenCor filed an Application with the Bankruptcy Court seeking expeditious confirmation of its previously creditor approved prepackaged plan of reorganization. The plan was confirmed by the Bankruptcy Court on August 30, 1993.
Pursuant to the plan, the noteholders received the following securities for each $1,000 aggregate amount of principal and accrued but unpaid interest at December 31, 1992:
(i) $600 principal amount of non-interest bearing New Notes (ii) $400 principal amount of non-interest bearing Convertible Notes (iii) 5.2817 shares of CenCor common stock, par value $1 per share
The New Notes and Convertible Notes are non-interest bearing and will mature on July 1, 1999. The Convertible Notes may be converted at the option of the holder, at any time, into shares of common stock at
2. REORGANIZATION AND EXTRAORDINARY ITEM (CONTINUED)
a ratio of one share of common stock for each $20 principal amount of Convertible Notes. The reorganization resulted in the issuance of $17,230,589 of New Notes, $11,487,060 of Convertible Notes, and 151,679 shares of $1 par value common stock on November 1, 1993. Simultaneously the Company cancelled 271,410 shares of treasury stock. The New Notes and Convertible Notes were recorded at their net present value using an estimated market discount rate of 16%. A market value of $0.125 was assigned to the issuance of the common stock. As a result of these transactions, an extraordinary gain of $18,033,000 was recorded.
3. DISCONTINUED OPERATIONS
Effective November 6, 1992, the Company sold substantially all the net assets of Charter in exchange for cash of $2,396,000, net of selling expenses of approximately $144,000, a promissory note in the amount of $750,000 and the buyer's assumption of certain liabilities. The promissory note is payable in full on November 5, 1995, including all accrued interest compounded monthly at a rate of 12% per annum. Net assets sold were approximately $6,969,000. The Company recorded a loss on disposal (net of income taxes) of $4,090,000.
Effective February 29, 1992, the Company sold seven Temporary Services offices located in Ohio. The gross cash proceeds of the sale was $2,842,000 which was received May 1, 1992. In July 1992, the remainder of the Temporary Services offices were sold. The gross cash proceeds to the Company of the sale was approximately $1,660,000 which was received July 29, 1992. Total net assets of all the offices sold was approximately $4,111,000. The Company recorded a gain of $391,000 (net of income taxes) from the sale of these Temporary Services offices which is classified as discontinued operations in the accompanying consolidated statements of operations.
Effective December 11, 1991, the Company sold Writers to Christine England from whom the Company had acquired the business in 1989. The sales price for Writers was $2,560,000, of which $1,110,000 was paid to the Company in cash and the balance eliminated indebtedness, including accrued interest, due from CenCor to Ms. England for the deferred portion of the purchase price payable to her when CenCor acquired Writer's, or amounts due to her as consideration for her agreement not to compete with CenCor. The Company recorded a loss of $369,000 (net of income taxes) related to this sale.
Concorde, which was spun off to the stockholders of the Company in 1988, had previously agreed to assume certain obligations of the Company relating to the Company's Series H 10% notes. Concorde notified the Company on October 1, 1992, that it was unable to continue making payments on the assumed debt. On October 30, 1992, Concorde executed a restructuring agreement with the Company, which terminated Concorde's obligations regarding these notes. In consideration, the Company accepted Concorde's Junior Secured Debenture ("Junior Secured Debenture") for $5,422,000. As a result of Concorde's precarious financial condition, the Company established a reserve for the full amount due from Concorde. The loss provision related to the allowance is classified in the accompanying 1992 consolidated statement of operations as discontinued operations.
On December 30, 1993, Concorde and Century amended the Restructuring Agreement (as later defined) to provide that CenCor would receive $8,390,000 of Concorde's previously charged-off receivables in full payment of the accrued interest on the Junior Secured Debenture through December 31, 1993 in the amount of $559,353. The receivables, which consist of accounts and notes receivable from students who attended schools operated by Concorde or its subsidiaries, were assigned to CenCor without recourse with CenCor assuming all risk of non-payment of the receivables. The amendment grants CenCor limited rights of substitution until such time as it collects $559,353 from the receivables, exclusive of out-of-pocket collection
3. DISCONTINUED OPERATIONS (CONTINUED)
fees and expenses paid to third-parties. The Company has engaged a collection agent to pursue recovery of such receivables. The $559,353 accrued but unpaid interest is fully reserved in the accompanying consolidated balance sheet.
The income (loss) from operations, net of applicable income taxes, for the Temporary Services division, Writer's and Charter is classified as discontinued operations in the accompanying consolidated statements of operations. The net income (loss) from discontinued operations is as follows:
4. CIKC LOANS
Robert F. Brozman, who had been the President and Chairman of the Board of CenCor since its incorporation in 1968, died on June 10, 1991. Shortly thereafter, the directors who were serving on CenCor's Board of Directors at the time of Robert F. Brozman's death, including his son, Jack L. Brozman, learned for the first time of the "CIKC Loans" described below.
Prior to Robert F. Brozman's death, various banks and other lenders had made loans, purportedly to CenCor, the proceeds of which were never received by, or used for the benefit of, CenCor, but rather were credited to the account of and used by CenCor, Inc. of Kansas City ("CIKC"). CIKC is a wholly-owned subsidiary of Cor, Inc. ("Cor") which was wholly-owned and controlled by Robert F. Brozman. CIKC recorded these loans on its financial statements as its obligations.
The lenders whose loan proceeds were received by and used for the benefit of CIKC ("CIKC Lenders") apparently believed, based upon actions taken by or at the direction of Robert F. Brozman, that the loans were being made to CenCor. The principal amount due to the CIKC Lenders was $23,117,820 at the time of Robert F. Brozman's death. The CIKC Lenders have asserted that CenCor (among other parties) is obligated to repay the CIKC Loans.
The Estate of Robert F. Brozman (the "Estate"), CIKC and Cor (collectively, the "Indemnitors") entered into an indemnity agreement dated July 26, 1991, with the Company (the "Indemnity Agreement") in which the Estate, CIKC and Cor acknowledged that they are jointly and severally liable to repay the amounts due to the CIKC Lenders. The Indemnitors also agreed to indemnify the Company against certain other injury or loss that the Company might incur as a result of certain unauthorized actions or omissions of the late president. Although CenCor has not admitted liability with respect to these claims, it has executed a Continuing Guarantee of Collection with respect to liabilities flowing from the CIKC Loans as well as a Continuing Guarantee of Collection for Certain Creditors Previously Unsecured of up to $3 million for the benefit of certain unsecured creditors of the Estate of Robert F. Brozman.
4. CIKC LOANS (continued)
The Company's potential exposure to the CIKC Lenders and to the unsecured creditors of the Estate has been significantly reduced as a result of the sale of the Estate's assets, including the common stock of LaPetite Academy, Inc. owned by the Estate. CenCor has been informed by the Estate that the outstanding balance of the CIKC Loans was $2,142,000 as of March 1, 1994 and that the current balance of the unsecured obligations of the Brozman Estate is approximately $860,000. The Estate has also informed CenCor that it has contracted to sell its last remaining significant asset, which sale may generate sales proceeds, after provision for administrative expenses and taxes, sufficient to satisfy all of its outstanding liabilities. Because the closing contingencies of the sales contract have yet to be satisfied and because the amount of taxes and administrative expenses to be paid by the Estate have not been determined, there can be no assurance that the claims of the CIKC Lenders and the others against CenCor pursuant to the guarantees will not exceed the Estate's ability to satisfy such claims and to indemnify CenCor. CenCor has recorded no provision for loss relating to the contingencies associated with the CIKC loans.
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5. LONG-TERM DEBT
Long-term debt at December 31, 1993 and 1992, consisted of:
5. LONG-TERM DEBT (continued)
On January 29, 1993, Century entered into amendment and exchange agreements with the holders of its long-term debt (the Agreements), whereby the holders exchanged their prior notes for new notes and the terms and covenants of the debt agreements were amended. The covenants include in part, maintaining net worth at certain minimum levels and limitations on indebtedness and payment of dividends. Century is in compliance with the amended covenants of the long-term debt agreements at December 31, 1993.
Pursuant to the Agreements, all of Century's long-term debt will mature on April 30, 1997. However, scheduled principal installments as provided for in the original debt agreements are due prior to this date (except for past-due installments as of January 28, 1993, aggregating approximately $18.7 million, for which a combination of Secured Deferred Payment Notes and Secured Compound PIK Notes were issued but are not due prior to April 30, 1997). In lieu of cash payment of the scheduled principal installments, Century has delivered Secured Deferred Payment Notes for the related senior debt and a combination of Secured Deferred Payment Notes and Secured Compound PIK Notes for the related subordinated and junior subordinated debt. These notes will bear interest at the rate of 4.5 year Treasury Notes as of the installment due date, plus 2.25% (senior notes), 3.75% (subordinated notes) and 5% (junior subordinated notes).
Interest is payable monthly under all of the notes, except for the Secured Compound PIK Notes, for which interest compounds monthly and is payable on April 30, 1997.
All of the notes issued are secured by a security interest in the assets of Century. The noteholders have agreed to subordinate their lien to providers of new secured lending, provided that Century is in compliance with the conditions specified in the Agreements.
Century is required under the debt agreements to pay a prepayment penalty if Century pays off the notes in full prior to the April 30, 1997 maturity date. The amount of the prepayment penalty is dependent upon the rates at which the noteholders can reinvest the principal. Century is prohibited from making partial principal payments and from redeeming less than all of the notes.
5. LONG-TERM DEBT (continued)
Prior to the execution of the Agreements, Century had scheduled principal installment payments due subsequent to April 30, 1997 of approximately $16,547,000. Pursuant to the Agreements, the notes issued in exchange for these scheduled payments mature on April 30, 1997, at which time Century may be required to pay a premium based upon the rates at which the noteholders are able to reinvest the principal.
In consideration for the noteholders entering into the Agreements, Century issued warrants to the noteholders to acquire 300,000 shares of Century's common stock which constitutes 25% of Century's common stock on a fully diluted basis. The warrants vested on April 30, 1993 and expire on January 1, 2003. The exercise price of the warrants is $.01 per share. Century has the right to call the warrants in May 1997 if the notes have been paid in full. The noteholders can require Century to purchase (at a per share price based upon the greater of the fair value of the shares or equity value, equal to the book value of Century plus a 5% premium on net finance receivables) their warrants and the shares obtained from the exercise of the warrants [at the greater of their then current market value if an offer exists, or equity value (as defined)] after the notes are paid in full or upon the occurrence of certain events including the sale of substantially all of the assets of Century.
The value of the warrants in excess of the exercise price (the put adjustment) is accrued as interest expense over the period from the date of issuance to the earliest date the creditors may force Century to buy the warrants (the put date). Changes in the highest redemption price after the date of issuance and before the earliest put date, including changes in interim periods, will be considered changes in accounting estimates and will affect the put adjustment on a prospective basis. Changes in the highest redemption price after the earliest put date will be recognized as interest expense in the current year.
The term and provisions of the long-term debt of CenCor, Inc. are described in Note 2 to the financial statements.
6. LOSS ON PURCHASE OF FRAUDULENT AUTOMOBILE CONTRACTS
During 1991, Century was the victim of a fraudulent scheme involving the purchase of automobile financing contracts which the Company determined were fictitious or missing vehicle titles. The receivables were acquired in 1991 from JoAnn's Instant Finance Cars, Inc. (JoAnn's), a used car dealer. Century had an agreement with JoAnn's for JoAnn's to sell vehicles repossessed by certain of Century's subsidiaries. When the vehicles were purportedly sold by JoAnn's, Century acquired the purchasers' installment contracts. A service fee (representing repossession and automobile restoration costs) was paid to JoAnn's at the time the new contract was acquired. When those receivables became delinquent, JoAnn's exchanged other installment contracts for the delinquent accounts. Century had approximately $11,200,000 of finance receivables purchased from JoAnn's, of which $8,500,000 were charged off in 1991. During 1992, all remaining JoAnn's finance receivables were charged off, with a resulting charge to the provision for credit losses of $600,000. Century does not have any other such agreements for the sale of repossessed vehicles.
These transactions were classified in the 1991 consolidated statement of operations as follows:
6. LOSS ON PURCHASE OF FRAUDULENT AUTOMOBILE CONTRACTS (continued)
A subsidiary of Century commenced litigation February 19, 1992, against JoAnn's Instant Finance Cars, Inc. (JoAnn's) in the Circuit Court of the Thirteenth Judicial Circuit of Hillsborough County, Florida. The Company alleged a variety of fraudulent and criminal activities by the defendants and was seeking monetary damages, as well as various forms of equitable relief. On January 19, 1993, the Court of Florida issued a final judgement for $6,000,000 in favor of Century. Management believes it is unlikely any portion of the judgement will be recovered, and accordingly, the Company has not recorded any related amounts in the consolidated financial statements.
7. CREDIT LOSS EXPERIENCE
An analysis of the allowance for credit losses on finance receivables is as follows:
8. FINANCE RECEIVABLES
Finance receivables at December 31, 1993 and 1992, consisted of:
Finance receivables may be originated at any one of Century's 53 branch offices or may be purchased. Century's branches are located in 16 states, primarily in the Midwest and the South. As of December 31, 1993, the five states with the largest concentration of net finance receivables are as follows:
The maximum term of finance receivables, other than real estate secured accounts, is 48 months, although Century generally restricts maturities to 36 months. The maximum term over which real estate loans are written is 180 months. Contractual maturities at December 31, 1993, were estimated to be as follows:
8. FINANCE RECEIVABLES (continued)
Experience of the finance industry indicates a substantial portion of finance receivables will be paid off or renewed prior to contractual maturity dates. Accordingly, the preceding table cannot be regarded as a forecast of future cash collections.
Although Century may require borrowers to pledge collateral on precompute and interest-bearing loans, such collateral is generally not pursued in the event of default. Sales finance and automobile contracts are generally collateralized, although the fair value of the collateral in the event of repossession has historically been significantly less than the book value of the contract.
9. EARNINGS PER SHARE
As of December 31, 1993, 1992 and 1991, earnings per common share and common equivalent shares were computed by dividing net income by the weighted average number of shares of common stock and common stock equivalents outstanding during the period.
For the period ended December 31, 1993, the number of weighted average common share equivalents was increased under the assumption that all of the Convertible Notes were converted to common stock. As indicated in Note 2, the Convertible Notes may be converted, at the option of the holder at any time, into shares of common stock at a ratio of one share of common stock for each $20 principal amount of Convertible Notes.
10. INCOME TAXES
On January 1, 1993, the Company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS109). The adoption of SFAS 109 had no impact on the Company's consolidated financial statements.
The Company and its subsidiaries file a consolidated federal income tax return. The benefit for income taxes allocated to continuing operations for each of the three years in the periods ended December 31, consisted of the following:
10. INCOME TAXES (CONTINUED)
A reconciliation of income tax benefit allocated to continuing operations to the amount computed using the statutory federal income tax rate is as follows:
The Company's income tax returns for 1988 and 1989 were examined by the Internal Revenue Service (IRS), which has proposed certain adjustments, a portion of which have been protested by the Company. The Company has also claimed additional deductions in these years as a result of the prior period adjustments. Management believes that the ultimate disposition of the IRS examination will not have a material effect on the financial position of the Company.
As a result of the matters described above, management cannot precisely estimate the amount of the Company's net operating loss carryforward for financial reporting and income tax purposes and thus, the deferred tax assets which may exist. However, a valuation allowance would be required during 1993 to fully offset the amount of any such assets. Accordingly, the present inability to estimate the net operating loss carryforward for income tax purposes has no impact on the consolidated financial statements.
11. STOCK OPTION PLAN
In March 1993, the Company's stock option plan was terminated and participants were paid $0.50 for each of the 5,380 options previously outstanding in exchange for a waiver of rights with respect to acquiring shares of CenCor common stock under the plan.
12. EMPLOYEE BENEFIT PLAN
The Company has a Profit-Sharing and 401(k) Retirement Savings Plan (the Plan) which covers all employees, age 21 or older, with one year of service. Participants may contribute from 1% to 20% of their annual compensation, with certain exclusions. The Company may make discretionary contributions. No contributions were made by the Company to the Plan in 1993, 1992, or 1991.
13. COMMITMENTS AND CONTINGENCIES
The Company has agreed not to compete with Charter in the equipment leasing business through November 1995. Additionally, the Company has agreed not to engage in the business of temporary services for various terms, the longest of which extends through July, 1997.
The Company rents substantially all office space under leases expiring at various dates through 1998. Certain of the leases contain renewal options and/or obligations or occupancy expenses allocated to tenants. Total rent expense was $946,000, $980,000 and $1,158,000 in 1993, 1992 and 1991, respectively. Aggregate minimum future rentals under these noncancelable operating leases at December 31, 1993, were as follows:
On April 12, 1993, Century terminated the employment of its President and Chief Executive Officer (CEO). Century and the CEO entered into a settlement agreement which details the economic terms of severance benefits to the CEO. The amounts related to these benefits have been recorded in the accompanying consolidated financial statements. The agreement also provides for a bonus that may be payable in the event a majority of Century's assets or stock is sold prior to April 13, 1996.
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Item 9.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
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PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following tables sets for the names of the directors of the registrant and certain related information as of December 31, 1993. Each of the directors has been elected to serve until the next annual meeting of stockholders or until his successor is duly elected and qualified.
The Board of Directors of the Company held thirteen meetings and acted by unanimous written consent on seven occasions during the last fiscal year. Standing committees, consisting of the Special Committee and the Audit Committee, held five meetings during the last fiscal year. The Executive Compensation Committee, which did not become active until early 1993, makes salary and bonus recommendations for certain executive officers. The Audit Committee oversees the work of CenCor's independent auditors. The Company's Board of Directors does not have a nominating committee. The Special Committee has the final authority to thoroughly investigate and report to the Board of Directors on certain matters concerning the misappropriation of CenCor's assets by CenCor's previous chairman of the board, Robert F. Brozman, or certain of his affiliated privately held companies. The Special Committee also has the power and authority to consider the adequacy of CenCor's internal controls and procedures and to explore strategic steps to maximize value for all relevant constituencies of CenCor and to investigate and report upon such other matters as the Special Committee considers appropriate. The Special Committee, the Executive Compensation Committee, and the Audit Committee are composed of Messrs. Bauer, Bernstein and Riesenbach.
In addition to Jack L. Brozman, the following persons also serve as executive officers of CenCor or Century.
NAME AGE PRINCIPAL OCCUPATION FOR LAST FIVE YEARS - ---- --- ----------------------------------------
Dennis C. Berglund 56 Chief Executive Officer and President of Century since June 1993. Acting Chief Executive Officer and President of Century from April 1993 until June 1993. Chief Financial Officer, Executive Vice President and Chief Administrative Officer of Imperial Thrift and Loan Association, Burbank, California, from March 1988 through November 1992. Experience includes 24 years with Avco Financial Services, an international consumer finance company.
Patrick F. Healy 41 Vice President-Finance, Treasurer and Chief Financial Officer of CenCor and Century since July 1991. General partner in Equity Analysts, a Kansas City, Missouri based real estate investment group, for more than the prior five years. Vice President, Treasurer and Director of TSI Holdings, Inc., a parent company of a manufacturing enterprise, from November 1989 through June 1991.
Randall J. Opliger 36 Controller of CenCor and Vice President and Controller of Century since July 1992. Controller and member of Executive Committee of Garsite/TSR, Inc., a Kansas City, Kansas manufacturing enterprise, from April 1990 to December 1991. Director of Finance of R.F.D. Travel Corp., Overland Park, Kansas from July 1984 to March 1990.
William J. Turner 58 Executive Vice President-Acquisitions and Administration of Century since January 1993. Employed by Century in various management positions for approximately 29 years.
DISCLOSURE OF DELINQUENT FILERS
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:
Randall J. Opliger failed to file an initial report on Form 3 with respect to his appointment as an executive officer of the Company in July 1992. A report on Form 5 disclosing the information required by Form 3 (and reporting no common stock ownership or transactions) was subsequently filed, on an untimely basis, with the Securities and Exchange Commission. Dennis C. Berglund failed to file an initial report on Form 3 with respect to his appointment as an executive officer of the Company in June 1993. A report on Form 5 disclosing the information required by Form 3 (and reporting no common stock ownership or transactions) was subsequently filed, on an untimely basis, with the Securities and Exchange Commission.
ITEM 11.
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, 1993 for services in all capacities to CenCor and its subsidiaries in 1991, 1992, and 1993.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth information as to stock appreciation rights granted by CenCor during 1993 to executive officers named in the Summary Compensation Table.
OPTION/SAR EXERCISE AND FISCAL YEAR-END OPTION/SAR VALUE TABLE
No option on stock appreciation rights were exercised by any of the named executive officers during 1993. The following table provides information with respect to the named executive officers concerning unexercised options held as of December 31, 1993.
COMPENSATION OF DIRECTORS
Each non-officer/director of CenCor is paid an annual retainer of $5,000 plus a fee (based on time spent on corporate matters, including attendance at board and committee meetings) and expenses.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGE- MENTS
On February 10, 1993, CenCor entered into a two-year employment agreement with Mr. Healy. Under the terms of the agreement, Mr. Healy will continue to serve as CenCor's Chief Financial Officer at an annual salary of $155,000. Mr. Healy has also agreed that he will not, during the term of the employment agreement and without the express written consent of CenCor's Board of Directors, directly or indirectly have any interest in any business which is a supplier to CenCor.
On June 28, 1993, Century entered into a three-year employment agreement with Mr. Berglund. Under the terms of the agreement, Mr. Berglund will serve as Century's President and Chief Executive Officer at annual salaries of $140,000, $160,000 and $180,000 for the first, second and third years respectively of the agreement. Mr. Berglund may also receive an annual bonus based on annual pre- tax profits. Mr. Berglund has also agreed that he will not, during the term of the employment agreement and without the expressed written consent of Century's Board of Directors, directly or indirectly have any interest in any business which is a supplier to Century.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, with respect to the Company's common stock (the only class of voting securities), the only person known to be a beneficial owner of more than five percent (5%) of any class of the Company's voting securities as of March 1, 1994.
The following table sets forth, with respect to the Company's 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 1, 1994.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH CONCORDE AND LAPETITE
Concorde, a former CenCor subsidiary, continues to be indebted to CenCor as a result of a 1992 restructuring agreement between Concorde and CenCor (the "Restructuring Agreement"). Under the Restructuring Agreement, Concorde, which is in the business of operating proprietary vocational training schools, was released from an earlier agreement by which it assumed the obligations of CenCor to make principal and interest payments on CenCor's outstanding Series H 10% Notes. In consideration for releasing Concorde from this obligation, CenCor received from Concorde a Junior Secured Debenture in the principal amount of $5,422,000 (the amount of the principal and accrued interest on the Series H 10% Notes immediately prior to the execution of the Restructuring Agreement) and received Concorde's promise to pay an additional contingent payment to CenCor on July 31, 1997 in an amount equal to 25% of the market value of Concorde's outstanding common stock in excess of $3,500,000.
The Junior Secured Debenture is secured by a lien on substantially all of Concorde's assets, which lien is junior to the lien of Concorde's secured bank lender. The Junior Secured Debenture bears interest ranging from prime plus 1% to prime plus 1-1/2% per annum, and provides for principal and interest payments commencing September 30, 1995 based on a ten-year amortization schedule. The Junior Secured Debenture initially provided that interest would accrue and compound quarterly through September 30, 1995, when the first interest payment would be due. Interest will be payable quarterly thereafter. In addition, the Junior Secured Debenture provides that Concorde shall make annual prepayments equal to 50% of Concorde's Excess Cash Flow, as defined in the debt restructuring agreement between CenCor and Concorde.
On February 9, 1993, Concorde's secured bank lender and CenCor executed an intercreditor agreement. Under the terms of the intercreditor agreement, CenCor has agreed not to assert its rights against collateral pledged to it by Concorde until the earlier to occur of (i) payment in full of Concorde's secured bank debt or (ii) July 31, 1997. In addition, CenCor agreed that any amount due to CenCor under the terms of the Restructuring Agreement or the Junior Secured Debenture would be subordinate to the indebtedness evidenced by Concorde's secured bank debt.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS (CONTINUED)
On December 30, 1993, Concorde and Century amended the Restructuring Agreement to provide that CenCor would receive $8,390,000 of Concorde's previously charged-off receivables in full payment of the accrued interest on the Junior Secured Debenture through December 31, 1993 in the amount of $559,353. The receivables, which consist of accounts and notes receivable from students who attended schools operated by Concorde or its subsidiaries, were assigned to CenCor without recourse with CenCor assuming all risk of non-payment of the receivables. The amendment grants CenCor limited rights of substitution until such time as it collects $559,353 from the receivables, exclusive of out- of-pocket collection fees and expenses paid to third-parties.
Concorde has reported that it has an ongoing dispute with the United States Department of Education ("DOE") concerning Concorde's compliance with DOE factors of financial responsibility and, therefore, its eligibility to participate in various student financial assistance programs. Concorde has also reported that it is contesting DOE findings that certain of its proprietary schools have violated DOE regulations concerning administration of Title IV federal student financial assistance programs. CenCor has acknowledged that if its schools are not allowed to participate in these student financial assistance programs, the viability of Concorde's continuing operations would be in doubt.
Because the outcome of Concorde's regulatory disputes cannot be predicted, there can be no assurance that Concorde will be able to perform its obligations under the Junior Secured Debenture or that CenCor will receive any additional payment based on the market value of Concorde's stock. Accordingly, CenCor has established a reserve in its consolidated financial statements in the full amount of the Junior Secured Debenture plus the receivables received in payment of the accrued but unpaid interest of $559,353.
Jack L. Brozman, who is Chairman of the Board of CenCor and Century, is Chairman of the Board of Concorde. Mr. Brozman owns 171,724 shares of Concorde (2.5% of the outstanding). As sole fiduciary for the Estate of Robert F. Brozman (the "Brozman Estate") and the Robert F. Brozman Trust (he is one of the beneficiaries of the estate and the trust), he owns 2,985,324 shares of Concorde (42.9% of the outstanding).
Prior to April 1993, CenCor shared leased office space with LaPetite, another former CenCor subsidiary, and Concorde in Kansas City, Missouri in space leased by LaPetite. Until October 1993, CenCor also shared certain office services with both LaPetite and Concorde, and there were several common officers and employees who divided their time between the three companies. Effective January 11, 1993, CenCor entered into an agreement with LaPetite and Concorde that provided for the allocation of certain costs as long as the corporations continue to share employees/officers. Under the January 11, 1993 agreement and a replacement transition agreement dated July 23, 1993, CenCor, LaPetite and Concorde each paid their own direct expenses plus an allocated portion of certain common expenses and each paid an allocated portion of salary and payroll costs of the common employees. This sharing agreement between the three companies terminated September 30, 1993. The three companies now maintain separate office leases and office services and all intercompany accounts have been settled.
Prior to July 23, 1993, Jack L. Brozman was the Chairman of the Board of LaPetite and owned directly 2.1% of LaPetite's outstanding common stock. In addition, the Brozman Estate and Robert E. Brozman Trust owned 11.8% of the outstanding common stock of LaPetite prior to July 23, 1993.
Management believes that these transactions with LaPetite and Concorde have been made on no less favorable terms than could be obtained from unaffiliated third parties.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS (CONTINUED)
OTHER TRANSACTIONS
Prior to Robert F. Brozman's death on June 10, 1991, loans were made by outside institutions, purportedly to CenCor, whose proceeds were never received by or used for the benefit of CenCor, but rather were credited to the account of and used by CenCor, Inc. of Kansas City ("CIKC"). CIKC is a wholly-owned subsidiary of Cor, Inc., which was, at the time of the loans, wholly-owned and controlled by Robert F. Brozman. CIKC recorded such loans (the "CIKC Loans") on its financial statements as its obligations. Shortly following the death of Robert F. Brozman, the Board of Directors of CenCor learned for the first time of the CIKC Loans, which had at that time a principal balance of $23,117,820.
Certain creditors, including the institutions referred to above (the "CIKC Lenders"), have asserted claims against CenCor, among others, for actions taken by the late Robert F. Brozman, CenCor's former chairman, including the CIKC Loans. Although CenCor has not admitted liability with respect to these claims, it has executed a Continuing Guarantee of Collection with respect to liabilities flowing from the CIKC Loans as well as a Continuing Guarantee of Collection for Certain Creditors Previously Unsecured of up to $3 million for the benefit of certain unsecured creditors of the Estate of Robert F. Brozman.
The Estate of Robert F. Brozman and the related Trust of Robert F. Brozman (collectively the "Brozman Estate"), Cor, and CIKC (collectively the "Indemnitors") have executed an Indemnity Agreement (the "Indemnity Agreement") with CenCor in which the Indemnitors acknowledge that they are jointly and severally liable to repay the amounts due to the CIKC Lenders. The Indemnitors also agree that they are jointly and severally liable to CenCor to the extent CenCor is obligated to pay any of the CIKC Loans or Cor any loss, damages or expense in connection with the CIKC Loans.
The Brozman Estate has been liquidating its assets in order to satisfy the claims against it, including the claims to which the CenCor guarantees apply. CenCor has been informed by the Brozman Estate that the outstanding balance of the CIKC Loans was $2,142,000 as of March 1, 1994 and that the current balance of the unsecured obligations of the Brozman Estate is approximately $860,000. The Brozman Estate has also informed CenCor that it has contracted to sell its last remaining significant asset, which sale may generate sales proceeds, after provision for administrative expenses and taxes, sufficient to satisfy all of its outstanding liabilities. Because the closing contingencies of the sales contract have yet to be satisfied and because the amount of taxes and administrative expenses to be paid by the Brozman Estate have not been determined, there can be no assurance that the claims of the CIKC Lenders and the others against CenCor pursuant to the guarantees will not exceed the Brozman Estate's ability to satisfy such claims and to indemnify CenCor.
PART IV
ITEM 14.
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.
1. The following Consolidated Financial Statements of CenCor, Inc. and Subsidiaries are included in Item 8:
Consolidated Balance Sheets--At December 31, 1993 and 1992.
Consolidated Statements of Operations--For the years ended December 31, 1993, 1992, and 1991.
Consolidated Statements of Stockholders' Equity (Deficit)--For the years ended December 31, 1993, 1992, and 1991.
Consolidated Statements of Cash Flows--For the years ended December 31, 1993, 1992, and 1991.
Notes to Consolidated Financial Statements.
2. The following Consolidated Financial Statement Schedules of CenCor, Inc. and Subsidiaries are included in Item 14(d):
Schedule II--Amounts Receivable From Related Parties, Underwrit- ers, Promoters and Employees Other Than Related Parties.
Schedule III--Condensed Financial Information of Registrant (Parent Company Only).
Schedule VIII--Valuation and Qualifying Accounts and Allowances.
Schedules other than those referred to above have been omitted as not applicable or not required under the instructions contained in Regulations S-X, or the information is included elsewhere in the financial statements or notes thereto.
3. Exhibits.
Exhibit Number Description ------ -----------
2(a) Plan of Reorganization (Incorporated by reference--Exhibit 2(b) to the Company's Annual Report on Form 10-K for the year ended December 31, 1992).
3(a) 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(b) 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(a) 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(b) Certificate of Incorporation and all Amendments and Amended and Restated Bylaws. (Incorporated by reference--Exhibit 3(a) to the Company's Annual Report on Form 10-K for the year ended December 31, 1990 and included as Exhibit 3(b) hereto.)
4(c) Composite Conform Copy Relating To: Century Acceptance Corpora- tion Amendment and Exchange Agreement dated as of January 28, 1993 and Composite Conformed Copy of Amendment and Exchange Agreement Regarding Century Acceptance Corporation Amendment and Exchange Agreement dated as of January 28, 1993 relating to the restructuring of Century Acceptance Corporation's outstanding indebtedness to All State Life Insurance Company, Inc., American Banker's Life Insurance Company of Florida, American Mutual Life Insurance Company, Continental American Life Insurance Company, The Lincoln National Life Insurance Company, Mutual Services Casualty Insurance Company, New England Mutual Life Insurance Company, Principal Mutual Life Insurance Company, Provident Mutual Life Annuity Company of America, Provident Mutual Life Insurance Company of Philadelphia, and Standard Insurance Company. (Incorporated by reference -- Exhibit 4(d) to Company's Annual Report on Form 10-K for the year ended December 31, 1992.)
4(d) Indentures between CenCor, Inc. and Commercial National Bank of Kansas City, N.A. dated April 27, 1993 with respect to notes due 1999. (Incorporated by reference--Exhibit T3C to Company's Application of Form T-3; SEC file #22-24246.
4(e) Indenture between CenCor, Inc. and Commercial National Bank of Kansas City, N.A. dated April 27, 1993, with respect to convertible notes due 1999; SEC file #22-24248.
10(a) Indemnity Agreement dated July 26, 1991 between the Company and the Indemnitors. (Incorporated by reference--Exhibit 2 to Report on Form 8-K dated July 29, 1991.)
10(b) First Amendment to Indemnity Agreement dated August 20, 1991 between the Company and the Indemnitors. (Incorporated by reference--Exhibit 1 to Report on Form 8-K dated September 3, 1991.)
10(c) Modification and Exchange Agreement and Lender Consent Stipulation dated August 1, 1991 between the Company, the Indemnitors, and certain CIKC Lenders. (Incorporated by reference--Exhibit 2 to Report on the Company's Form 8-K dated September 3, 1991.)
10(d) Standstill Agreement dated August 14, 1991 between the Company and College Boulevard National Bank. (Incorporated by reference- -Exhibit 4 to Report on the Company's Form 8-K dated September 3, 1991.)
10(e) Expense Sharing Agreement dated January 1, 1993 between CenCor, Inc., Century Acceptance Corporation, LaPetite Academy, Inc., and Concorde Career Colleges, Inc. (Incorporated by reference -- Exhibit 10(h) to Company's Annual Report on Form 10-K for the year ended December 31, 1992.)
10(f) Restructuring, Security and Guaranty Agreement dated October 30, 1992 between CenCor, Inc. and Concorde Career Colleges, Inc., Minnesota Institute of Medical
and Dental Assistants, Inc., United Health Careers Institute, Inc., Southern California College of Medical and Dental Assistants, Inc., Concorde Careers--Florida, Inc., Colleges of Dental and Medical Assistants, Inc. and Computer Career Institute, Inc. (Incorporated by reference -- Exhibit 10(j) to Company's Annual Report on Form 10-K for the year ended December 31, 1992.)
10(g) Amendment to Agreement for Transfer of Assets and Assumption of Liabilities dated October 30, 1992 between CenCor, Inc. and Concorde Career Colleges, Inc. (Incorporated by reference -- Exhibit 10(k) to Company's Annual Report on Form 10-K for the year ended December 31, 1992.)
10(h) Employement Agreement with Dennis C. Berglund dated June 28, 1993.
10(i) First Amendment to Restructuring, Security and Guarantee Agreement between CenCor, Concorde, Minnesota Institute of Medical and Dental Assistance, Texas College of Medical and Dental Assistants, Texas College of Medical and Dental Assistants, Inc., United Health Careers Institute, Inc., Southern California College of Medical and Dental Assistants, Inc., Concorde Careers--Florida, Inc., College of Dental and Medical Assistants, Inc. and Computer Career Institute, Inc. dated December 30, 1993.
10(j) Transition Service Agreement between CenCor, Century, LaPetite, and Concorde dated July 23, 1993.
10(k) Termination of Transition Services Agreement dated August 30, 1993 between LaPetite, CenCor, and Concorde.
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, 1993.
CENCOR, INC. AND SUBSIDIARIES ---------- SCHEDULE II--AMOUNTS RECEIVABLE FROM RELATED PARTIES, UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
CENCOR, INC. (PARENT COMPANY ONLY) ---------- SCHEDULE III--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED BALANCE SHEETS
DECEMBER 31, 1993 and 1992
ASSETS
See Notes to Consolidated Financial Statements of CenCor, Inc. included elsewhere in this report.
CENCOR, INC. (PARENT COMPANY ONLY) ---------- SCHEDULE III--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31
See Notes to Consolidated Financial Statements of CenCor, Inc. included elsewhere in this report.
CENCOR, INC. (PARENT COMPANY ONLY) ---------- SCHEDULE III--CONDENSED FINANCIAL INFORMATION OF REGISTRANT STATEMENTS OF CASH FLOWS FOR THE THREE YEARS ENDED DECEMBER 31
See Notes to Consolidated Financial Statements of CenCor, Inc. included elsewhere in this report.
CENCOR, INC.
SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS AND ALLOWANCES
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
CENCOR, INC.
By /s/ JACK L. BROZMAN ----------------------- Jack L. Brozman Chairman of the Board
Date: March 31, 1994
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE DATE
By:/s/ JACK L. BROZMAN March 31, 1994 ---------------------------------------------------------------------- Jack L. Brozman (Chairman of the Board, Chief Executive Officer and Director)
By:/s/ PATRICK F. HEALY March 31, 1994 ---------------------------------------------------------------------- Patrick F. Healy (Vice President-Finance and Treasurer, Principal Financial Officer)
By:/s/ EDWARD G. BAUER, JR. March 31, 1994 ---------------------------------------------------------------------- Edward G. Bauer, Jr. (Director)
By:/s/ GEORGE L. BERNSTEIN March 31, 1994 ---------------------------------------------------------------------- George L. Bernstein (Director)
By:/s/ MARVIN S. RIESENBACH March 31, 1994 ---------------------------------------------------------------------- Marvin S. Riesenbach (Director)
EXHIBIT INDEX
Exhibit Number Description ------------------
2(a) Plan or Reorganization (Incorporated by reference--Exhibit 2(b) to the Company's Annual Report on Form 10-K for the year ended December 31, 1992.)
3(a) 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(b) 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(a) Specimen common stock certificate. (Incorporated by reference--Exhibit 4(a) to the Company's Annual Report on Form 10-K for the year ended De- cember 31, 1990.)
4(b) Certificate of Incorporation and all Amendments and Amended and Restated Bylaws. (Incorporated by reference--Exhibit 3(a) to the Company's Annual Report on Form 10-K for the year ended December 31, 1990 and included as Exhibit 3(b) hereto.)
4(c) Composite Conform Copy Relating To: Century Acceptance Corporation Amendment and Exchange Agreement dated as of January 28, 1993 and Composite Conformed Copy of Amendment and Exchange Agreement Regarding Century Acceptance Corporation Amendment and Exchange Agreement dated as of January 28, 1993 relating to the restructuring of Century Acceptance Corporation's outstanding indebtedness to All State Life Insurance Company, Inc., American Banker's Life Insurance Company of Florida, American Mutual Life Insurance Company, Continental American Life Insurance Company, The Lincoln National Life Insurance Company, Mutual Services Casualty Insurance Company, New England Mutual Life Insurance Company, Principal Mutual Life Insurance Company, Provident Mutual Life Annuity Company of America, Provident Mutual Life Insurance Company of Philadelphia, and Standard Insurance Company. (Incorporated by reference -- Exhibit 4(d) to Company's Annual Report on Form 10-K for the year ended December 31, 1992.)
4(d) Indentures between CenCor, Inc. and Commercial National Bank of Kansas City, N.A. dated April 27, 1993 with respect to notes due 1999. (Incorporated by reference--Exhibit T3C to Company's application on Form T-3; SEC file #22-24246
4(e) Indenture between CenCor, Inc. and Commercial National Bank of Kansas City, N.A. dated April 27, 1993 with respect to convertible notes due 1999; (Incorporated by reference--Exhibit T3C to Company's application on Form T-3; SEC file #22-24248
10(a) Indemnity Agreement dated July 26, 1991 between the Company and the Indemnitors. (Incorporated by reference--Exhibit 2 to Report on Form 8-K dated July 29, 1991.)
10(b) First Amendment to Indemnity Agreement dated August 20, 1991 between the Company and the Indemnitors. (Incorporated by reference--Exhibit 1 to Report on Form 8-K dated September 3, 1991.)
10(c) Modification and Exchange Agreement and Lender Consent Stipulation dated August 1, 1991 between the Company, the Indemnitors, and certain CIKC Lenders. (Incorporated by reference--Exhibit 2 to Report on the Company's Form 8-K dated September 3, 1991.)
10(d) Standstill Agreement dated August 14, 1991 between the Company and College Boulevard National Bank. (Incorporated by reference--Exhibit 4 to Report on the Company's Form 8-K dated September 3, 1991.)
10(e) Expense Sharing Agreement dated January 1, 1993 between CenCor, Inc., Century Acceptance Corporation, La Petite Academy, Inc., and ConCorde Career Colleges, Inc. (Incorporated by reference -- Exhibit 10(h) to Company's Annual Report on Form 10-K for the year ended December 31, 1992.)
10(f) Restructuring, Security and Guaranty Agreement dated October 30, 1992 between CenCor, Inc. and Concorde Career Colleges, Inc., Minnesota Institute of Medical and Dental Assistants, Inc., United Health Careers Institute, Inc., Southern California College of Medical and Dental Assis- tants, Inc., Concorde Careers--Florida, Inc., Colleges of Dental and Medical Assistants, Inc. and Computer Career Institute, Inc. (Incor- porated by reference -- Exhibit 10(j) to Company's Annual Report on Form 10-K for the year ended December 31, 1992.)
10(g) Amendment to Agreement for Transfer of Assets and Assumption of Liabili- ties dated October 30, 1992 between CenCor, Inc. and Concorde Career Colleges, Inc. (Incorporated by reference -- Exhibit 10(k) to Company's Annual Report on Form 10-K for the year ended December 31, 1992.)
10(h) Employment Agreement with Dennis C. Berglund dated June 28, 1993.
10(i) First Amendment to Restructuring, Security and Guarantee Agreement between CenCor, ConCorde, Minnesota Institute of Medical and Dental As- sistance, Texas College of Medical and Dental Assistants, Texas College of Medical and Dental Assistants, Inc., United Health Careers Institute, Inc., Southern California College of Medical and Dental Assistants, Inc., ConCorde Careers--Florida, Inc., College of Dental and Medical Assistants, Inc. and Computer Career Institute, Inc. dated December 30, 1993.
10(j) Transition Service Agreement between CenCor, Century, LaPetite, and Concorde dated July 23, 1993.
10(k) Termination of Transition Services Agreement dated August 30, 1993 be- tween LaPetite, CenCor, and ConCorde.
21 Subsidiaries of the Registrant.
27 Financial Data Schedule.