SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended March 31, 1994
Commission File No. 0-3417
CENCOR, INC.
(exact name of registrant as specified in its charter)
Delaware 43-0914033
(State of other jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
1100 Main Street, Suite 2350
Post Office Box 26098
Kansas City, Missouri 64196
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code: (816) 221-9744
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes [X] No [ ]
As of May 4, 1994, CenCor, Inc. had 1,240,727 shares of Common Stock, $1.00 par
value outstanding with a market value of $620,364.
<PAGE>
CENCOR, INC.
FORM 10-Q
QUARTER ENDED MARCH 31, 1994
INDEX
Item Page
PART I
1. Financial Statements and Supplementary Data. . . . . . . . . . . . 1
2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . 11
PART II
1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . 16
2. Change in Securities . . . . . . . . . . . . . . . . . . . . . . . 16
3. Defaults Upon Senior Securities . . . . . . . . . . . . . . . . . 16
4. Submission of Matters to a Vote of Security Holders. . . . . . . . 16
5. Other Materially Important Events. . . . . . . . . . . . . . . . . 17
6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . 17
7. Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
<PAGE>
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.
Part I
Item I Financial Statements
The Company's Financial Statements are set forth herein, beginning on the
following page.
(The remainder of this page is intentionally blank.)
<PAGE>
<TABLE>
CenCor, Inc.
CONSOLIDATED BALANCE SHEETS
March 31, 1994 and December 31, 1993
ASSETS
<CAPTION>
March 31, December 31,
1994 1993
_________ _____________
(Unaudited)
<S> <C> <C>
Cash and cash equivalents. . . . $ 3,023,000 $ 3,277,000
Net finance receivables, less allowance
for credit losses of $4,847,000
($5,026,000 in 1993) . . . . . . . . 87,989,000 88,972,000
Property and equipment . . . . . . . . 1,741,000 1,742,000
Other assets . . . . . . . . . . . . . 4,170,000 3,465,000
__________ ___________
$ 96,923,000 $ 97,456,000
============= =============
</TABLE>
<PAGE>
<TABLE>
CenCor, Inc.
CONSOLIDATED BALANCE SHEETS
March 31, 1994 and December 31, 1993
LIABILITIES AND STOCKHOLDERS' DEFICIT
<CAPTION>
March 31, December 31,
1994 1993
_________ ____________
(Unaudited)
<S> <C> <C>
Liabilities and stockholders' deficit:
Long-term debt . . . . . . . . $95,950,000 $95,950,000
Accrued interest . . . . . . . 1,589,000 975,000
Accrued interest - warrants. . 681,000 513,000
Accounts payable and accrued liabilities 4,718,000 5,733,000
___________ ____________
Total liabilities. . . . . 102,938,000 103,171,000
Stockholders' deficit:
Common stock, $1 par value, 2,000,000 shares
authorized, 1,240,727 shares issued
and outstanding. . . . . . . 1,241,000 1,241,000
Paid-in capital. . . . . . . . 2,805,000 2,805,000
Accumulated deficit. . . . . . (10,061,000) (9,761,000)
___________ __________
Total stockholders' deficit. . (6,015,000) (5,715,000)
___________ ___________
$ 96,923,000 $ 97,456,000
============= ==============
</TABLE:
<PAGE>
</TABLE>
<TABLE>
CenCor, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 1994 and 1993
(Unaudited)
<CAPTION>
1994 1993
____ ____
<S> <C> <C>
Revenue:
Finance charges. . . . . . . . $ 5,730,000 $ 5,469,000
Insurance commissions. . . . . 763,000 431,000
___________ ___________
Total revenue. . . . 6,493,000 5,900,000
Expenses:
Salaries and other operating expenses 3,579,000 4,010,000
Interest expense, net. . . . . 2,417,000 2,453,000
Interest expense, warrants . . 168,000 --
Provision for credit losses. . 1,179,000 49,000
___________ __________
Total expenses . . . 7,343,000 6,512,000
Operating loss . . . . . . . . (850,000) (612,000)
Other income (loss):
Gain on sale of finance receivables 556,000 --
Loss on sale of property and equipment (6,000) --
__________ __________
550,000 --
Loss before taxes. . . . . . . (300,000) (612,000)
Income tax expense . . . . . . -- --
___________ __________
Net loss . . . . . . . . . . . $ (300,000) $ (612,000)
=========== ===========
Weighted average common and common
equivalent shares outstanding 1,815,080 1,089,048
=========== ===========
Earnings (loss) per share of common stock and
common equivalent shares of stock: (Note 6)
Earnings (loss) per share. . . $ (0.17) $ (0.56)
</TABLE>
<PAGE>
<TABLE>
CenCor, Inc.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Three Months Ended March 31, 1994 and 1993
(Unaudited)
<CAPTION>
1994 1993
____ ____
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss. . . . . . . . . . . . . . . . . . . $ (300,000) $ (612,000)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization . . . . . . . . 79,000 53,000
Provision for credit losses . . . . . . . . . 1,179,000 49,000
Gain on sale of finance receivables . . . . . (556,000) --
Increase (decrease) in accrued interest . . . 614,000 (701,000)
Increase in accrued interest - warrants . . . 168,000 --
Other changes in assets and liabilities, net . (1,713,000) (714,000)
__________ ________
Total adjustments. . . . . . . . . . . . . . . . . . (229,000) (1,313,000)
________ __________
Net cash used in operating activities. . . . . . . . (529,000) (1,925,000)
</TABLE>
<PAGE>
<TABLE>
CenCor, Inc.
CONSOLIDATED STATEMENT OF CASH FLOWS (continued)
For the Three Months Ended March 31, 1994 and 1993
(Unaudited)
<CAPTION>
1994 1993
____ ____
<S> <C> <C>
INVESTING ACTIVITIES:
Decrease (increase) in finance receivables . . . . . . 360,000 (1,502,000)
Proceeds from sale of other assets . . . . . . . . . . -- 32,000
Proceeds from sale of property and equipment . . . . . -- 29,000
Capital expenditures, net. . . . . . . . . . . . . . . (85,000) (454,000)
_________ __________
Net cash provided by (used in) investing activities. . 275,000 (1,895,000)
_________ ___________
Net decrease in cash and cash equivalents. . . . . . . (254,000) (3,820,000)
Cash and cash equivalents at beginning of year . . . . 3,277,000 23,401,000
___________ ___________
Cash and cash equivalents at end of period . . . . . .$3,023,000 $19,581,000
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
Supplemental disclosures of cash flow information:
<S> <C> <C>
Cash paid during the period for:
Interest . . . . . . . . . . . . . . . . . . . . $ 1,844,000 $ 3,344,000
Income taxes . . . . . . . . . . . . . . . . . . -- --
</TABLE>
<PAGE>
CenCor, Inc.
NOTES TO FINANCIAL STATEMENTS
For the Three Months Ended March 31, 1994
(Unaudited)
Note 1 Basis of Presentation
The interim condensed financial statements included herein are unaudited
but, in the opinion of management, present fairly in all material respects,
the consolidated position of CenCor, Inc. and subsidiaries at March 31, 1994
and December 31, 1993 and the results of operations and cash flows for all
periods presented. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles ("GAAP") have been condensed or omitted, although the
Company believes that the disclosures are adequate to make the information
presented not misleading. Due to the inherent seasonal nature of certain
business segments, annualization of the amounts in these condensed financial
statements may not necessarily be indicative of the actual operating results
for the full year.
In preparing the financial statements in accordance with GAAP, management
is required to make certain estimates and assumptions that affect both the
reported amounts of assets and liabilities as of the date of the statement of
financial condition and revenues and expenses for the period. Actual results
could differ significantly from those estimates.
It is suggested that these condensed financial statements be read in
conjunction with the financial statements and the notes thereto included in
the Company's latest Annual Report on Form 10-K for the year 1993.
<PAGE>
Note 2 Reorganization
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 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 each share of common stock.
Note 3 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.
<PAGE>
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 liability flowing from the
CIKC Loans as well as a Continuing Guarantee of Collection for Certain Creditor
s Previously Unsecured of up to $3 million for the benefit of certain unsecured
creditors of the Estate of Robert F. Brozman.
On March 31, 1994 all of the remaining outstanding debt related to the CIKC
Loans was paid in full by the Estate of Robert F. Brozman.
<PAGE>
Note 4 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 receivable
losses.
Finance receivables are charged to 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. 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.
<PAGE>
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.
Note 5 Sale of Branch Offices
During January and February of 1994, Century sold three of its branch
offices and closed an additional three offices. 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 elimination of
these branches will enable Century to focus on its more profitable and
geographically desirable locations. The gain on the sale of the three branches
is classified as other income (loss) in the accompanying financial statements.
Note 6 Earnings Per Share
As of March 31, 1994 and December 31, 1993, 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 year. 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.
Earnings per share assuming full dilution was determined in the same manner
as earnings per common share and common equivalent share.
Note 7 Subsequent Events
On April 12, 1993, Century terminated the employment of its President and
Chief Executive Officer (CEO). Century and the CEO entered into a settlement
which detailed the economic terms of severance benefits to the CEO. The
agreement also provided for a bonus that may be payable in the event that a
majority of Century's assets or stock is sold prior to April 13, 1996. On
April 26, 1994, Century paid to the CEO a final payment in settlement of such
agreement and was released from any future obligations to the former CEO.
<PAGE>
On April 1, 1994, Century completed an agreement with Congress Financial
Corporation establishing a revolving line of credit in the amount of
$25,000,000 to be used for future working capital. The facility is fully
secured by a first lien on all of Century's assets. The revolving line is
provided for a minimum of two years with automatic year-to-year renewals unless
terminated by either party.
As previously reported, during 1991 a Century subsidiary was the victim of a
fraudulent scheme involving the purchase of automobile financing contracts
which Century determined were fictitious. Century recorded a multi-million
dollar loss in 1991 as a result of the fraudulent automobile contracts. At
the time of the fraudulent scheme the Century subsidiary was insured by Lloyds
of London for a maximum of $1,000,000 under a fidelity policy. Lloyds of
London has denied the claim filed by Century as a result of the fraudulent
scheme. On April 22, 1994, the Century subsidiary filed suit against Lloyds of
London for $1,000,000 seeking restitution for breach of contract arising out of
the breach of the insuring agreement.
Item 2Management's Discussion and Analysis of Financial Condition and Results
of Operations
On January 29, 1993, Century completed a restructuring of its debt
obligations with its principal creditors. 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.
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 decisions
making, supervision and control.
<PAGE>
Current Overall Trends
During the quarter ended March 31, 1994, the Company incurred a net loss of
$300,000 as compared to a net loss of $612,000 for the same period in 1993.
As discussed in further detail below, the loss primarily resulted from an
increase in the provision for credit losses from $49,000 to $1,179,000.
Offsetting this was a decrease in salaries and other operating expenses of
$431,000 (11%) and an increase in total revenue of $593,000 (10%). Due to the
elimination and consolidation of non-strategic offices and the elimination of
many non-recurring expenses incurred in 1993, management expects the level of
operating expenses to continue to decrease from the levels incurred in 1993.
In addition, 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. As a result, the level
of outstanding finance receivables has increased from the first quarter of
1993, consequently producing a slight increase in revenue for the first quarter
of 1994.
Results of Operations
Three Months Ended March 31, 1994,
Compared to Three Months Ended March 31, 1993
Interest on finance receivables increased $261,000 (5%) in the first quarter
of 1994 from the same period in 1993. As previously mentioned, this resulted
primarily from an increase in the level of earning assets.
Insurance commissions, which are earned on the sale of insurance upon
origination of consumer and home equity loans, increased by $332,000 (77%) from
the first quarter of 1993. The increase is also a result of the increase in
the outstanding finance receivables and the mix of the receivables.
<PAGE>
The provision for credit losses increased from $49,000 to $1,179,000 for the
three months ended March 31, 1994 from the same period in 1993. During the
fourth quarter of 1992, Century established a centralized location for the
purposes of collecting charged off receivables. Subsequently, a large amount
of delinquent receivables were charged off in the fourth quarter of 1992 and
delivered to the centralized collection location to pursue further collection
efforts. As a result of the collection efforts and the low charge-off's for
the first quarter of 1993, the amount of provision necessary to set the
allowance at an adequate level for the first quarter of 1993 was minimal. The
increase in the provision for credit losses in the first quarter of 1994 is a
result of setting the allowance for credit losses at an adequate level to
cover expected losses for the existing portfolio and is consistent with
historical trends.
An analysis of allowance for credit losses on finance receivables is as
follows:
<TABLE>
<CAPTION>
Quarter Ended Quarter Ended
March 31, 1994 March 31, 1993
______________ ______________
<S> <C> <C>
Balance at December 31, 1993 and 1992 $5,026,000 $5,990,000
Charge-off's, net of recoveries (1,134,000) (215,000)
Provision charged to operations 1,179,000 49,000
Sale of receivables (224,000) --
_______________________________
Balance at March 31, 1994 and 1993 $4,847,000 $5,824,000
===============================
</TABLE>
The allowance is maintained at a level which management feels is adequate
to provide for loan losses currently existing in the portfolio.
<PAGE>
See Note 4 for additional information regarding the allowance for credit
losses.
Salaries and other operating expenses for the three month period ended
March 31, 1994, decreased to $3,579,000 from $4,010,000 in 1993, a decrease
of 11%. As previously mentioned, the decrease is primarily the result of
the elimination and consolidation of several of Century's offices and the
elimination of many one-time expenses incurred in 1993.
As discussed earlier, a financial reorganization plan was confirmed by the
U.S. Bankruptcy Court and approved by the majority of CenCor's noteholders and
other creditors. The Company accounted for the reorganization as a troubled
debt restructuring, whereby the New Notes were reocrded at their net present
value on August 30, 1993, using an estimated market discount rate of 16%. As
a result of these transactions, an extraordinary gain of $18,366,000 was
recorded as the difference between the book value of the Old Notes (plus
accrued interest through August 30, 1993) and the book value of the New Notes.
In accordance with generally accepted accounting principles, the interest on
the New Notes is accruing monthly until the date of maturity of the New Notes,
July 1, 1999. The interest expense on the New Notes for the quarter ended
March 31, 1994 was $506,000. Century's net interest expense on long-term debt
for the quarter ended March 31, 1994, was $1,911,000.
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.
The terms of Century's restructuring agreements limit Century's ability to
incur additional indebtedness, within certain limits.
<PAGE>
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. On April 1, 1994, Century completed the agreement
with Congress. 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 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.
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, scheduled principal installments as provided for in
<PAGE>
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 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.
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 IRS examination, management cannot precisely estimate the
amount of the Company's net operating loss carryforward for financial
statement or federal income tax purposes.
<PAGE>
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 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 rates
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.
<PAGE>
Part II - Other Information
Item 1 Legal Proceedings
See Note 7 to the Financial Statements regarding the settlement with the
former CEO and the lawsuit versus Lloyds of London.
Item 2 Change in Securities - None
Item 3 Defaults Upon Senior Securities - For a discussion of defaults in prior
periods, see Part I, Item 2, Liquidity and Capital Resources - Defaults on
Long-Term Debt.
Item 4 Submission of Matters to a Vote of Security Holders - At the Annual
Meeting of the Stockholders on January 21, 1994, the entire incumbent Board of
Directors was re-elected for another one-year term. The result of the vote for
the Board of Directors was as follows:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAINED
___ _______ _________
<S> <C> <C> <C>
Jack L. Brozman, Chairman 1,031,245 0 8,988
Edward G. Bauer, Jr. 1,033,270 0 6,963
George L. Bernstein 1,029,633 0 10,600
Marvin S. Riesenbach 1,033,270 0 6,963
</TABLE>
<PAGE>
Additionally, the retention of Ernst & Young as independent auditors for 1993
was approved. The result of the vote for retention of Ernst & Young was as
follows:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAINED
<S> <C> <C> <C>
1,032,706 941 6,586
</TABLE>
Item 5 Other Materially Important Events - None
Item 6 Exhibits and Reports on Form 8-K
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
<C> <C>
27 Financial Data Schedule
</TABLE>
No reports on Form 8-K were filed during the quarter ending March 31, 1994.
(The remainder of this page is intentionally blank.)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed by the undersigned,
thereunto duly authorized.
CENCOR, INC.
Dated May 13, 1994 /s/ Jack L. Brozman
____________________________________________________
Jack L. Brozman, President
/s/ Patrick F. Healy
____________________________________________________
Patrick F. Healy, Vice President-Finance
and Treasurer
EXHIBIT 99
<TABLE>
CENCOR, INC.
FINANCIAL DATA SCHEDULE
FOR THE QUARTER ENDED MARCH 31, 1994
<CAPTION>
<S> <C>
Cash and cash items $3,023,000
Marketable securities -0-
Notes and accounts receivable-trade 92,836,000
Allowances for doubtful accounts 4,847,000
Inventory -0-
Total current assets 95,182,000
Property, plant and equipment 2,424,000
Accumulated depreciation 683,000
Total assets 96,923,000
Total current liabilities 6,988,000
Bonds, mortgages, and similar debt 95,950,000
Preferred stock--no mandatory redemption -0-
Preferred stock--no mandatory redemption -0-
Common stock 1,241,000
Other stockholders' equity (7,256,000)
Total liabilities and stockholders' equity 96,923,000
Net sales of tangible products -0-
Total revenues 6,493,000
Cost of tangible goods sold -0-
Total costs and expenses applicable to sales and revenue 3,579,000
Other costs and expenses 550,000
Provision for doubtful accounts and notes 1,179,000
Interest and amortization of debt discount 2,585,000
Income before taxes and other items (300,000)
Income tax expense -0-
Income/loss continuing operations (300,000)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL DATA SCHEDULE (CONT.) EXHIBIT 27
<S> <C>
Discontinued operations -0-
Extraordinary items -0-
Cumulative effect-changes in accounting principles -0-
Net income or loss (300,000)
Earnings per share--primary ($0.17)
Earnings per share-fully diluted ($0.17)
</TABLE>
