Some more CHLR info:
From their web-site:
With several billion in completed transactions, Chancellor
Corporation has been providing fleet management and
transportation equipment finance solutions to Fortune 500
and middle market businesses. Through unique and
innovative programs, the Company seeks to provide its
customers with a Total Holding Cost Solution for their
transportation equipment needs.
From Revolution to Evolution
1997 to Present
Maintaining previous successes is never as easy as achieving the initial goal. For this reason,
Chancellor Corporation underwent a revolution in its organization and emerged ready to
spearhead an evolution in its industry. Foreseeing a need for dramatic change, Chancellor
underwent a restructuring in 1997. Business units that were not operating up to expectations
were fixed, closed or sold. The Company divested itself of marginal businesses and
commenced an acquisition strategy designed to strengthen the business, capture market
share and develop a significant competitive advantage that would lead Chancellor into the
new millennium.
Chancellor would introduce the Total Holding Cost Solution concept to provide
unique, innovative and comprehensive solutions to the transportation equipment needs of
its customers. The Company's leadership was bold enough to think "outside the box" of
conventional thought in its industry, acquiring its own distribution network for off-lease
transportation equipment. These moves, including the introduction of its "Wholesale-Plus"
approach to lease pricing and its innovative Trade-In program, have created a competitive
advantage for Chancellor that is unrivaled in the industry.
Chancellor's ongoing business strategy revolves around several key initiatives, including
the development of a nationwide retail sales center network to protect and advance the
competitive advantage it has developed, as well as, the addition of value-added services to its
product offerings to further enhance the savings of its unique programs to the Company's
customers.
Birth to Revolution
1977 to 1997
The Year 1977 marked the beginning for Chancellor Corporation. The Company,
founded by a group of entrepreneurs with banking and finance backgrounds, quickly found a
niche in solving the transportation equipment needs of Fortune 500 companies. By
developing this niche in the transportation equipment, the Company's early successes
allowed it to build a portfolio of assets under management that reached nearly $2 billion,
based on original equipment cost.
I n t r o d u c t i o n
Historically, the Company serviced the fleet equipment needs of the Fortune 500 market
doing business with some of the countries largest companies including Alliant Foodservice,
Coca-Cola, Goodyear, Mobil, Texaco, Wal-Mart and Whirlpool.
Today, Chancellor has implemented a new strategy designed with the needs of its
customers in mind. The Company has designed an innovative approach to leasing that
provides its customers with a "Total Holding Cost Solution".
T o t a l H o l d i n g C o s t C o n c e p t
One of the primary concerns of a fleet manager is the total holding cost of their equipment,
which includes all expenses related to the purchase of the equipment, insurance, fuel
management, maintenance and service, asset tracking and disposition and data
management. Chancellor has introduced a program to reduce its customer's total holding
cost by incorporating a number of value-added services into its transportation equipment
leasing program, including:
Equipment Acquisition Management
Fuel Management Systems
Maintenance Programs
Data and Administration Management Strategies
Disposition Management Capabilities
Financial Management
R e t a i l S a l e s C e n t e r s
By owning its own distribution channel, Chancellor is able to change the dynamics of
structuring a lease transaction. The retail centers provide a unique platform for the sale of
off-lease equipment, providing Chancellor with a significant competitive advantage. This
competitive advantage translates into substantial savings for its customers.
Currently, the Company retail sales center network consists of seven locations. Chancellor
is committed to developing its network into a nationwide franchise in order to better serve the
needs of its customers.
" W h o l e s a l e - P l u s "
As a result of its retail strategy, Chancellor is able to be more aggressive in its pricing of new
lease contracts. With the application of its "Wholesale-Plus" approach to lease pricing,
Chancellor is able to provide lease customers with a more attractive residual value on new
transportation equipment.
With an increased residual value position, Chancellor is able to reduce the monthly
payments on a lease, potentially saving the customer millions over the term of the lease on a
fleet of equipment. By owning these retail sales centers, Chancellor eliminates the
middleman and passes on the savings to its customers.
See How "Wholesale-Plus" Can Work For You
I n n o v a t i v e T r a d e - I n P r o g r a m s
A fleet manager or owner operator is often confronted with the task of disposing of their older
equipment when they are purchasing new equipment. By introducing its innovative trade-in
program, Chancellor is using its retail sales center presence to again drive innovation and
gain a competitive advantage by a program designed to save the customer money.
In a manner similar to consumer auto dealerships, Chancellor will provide for trade-in
allowances to its customers, which have the effect of reducing the total purchase price of the
new equipment. This reduction in purchase price results in sales and use tax savings to the
customer on the purchase of this new equipment.
Chancellor makes finding the equipment you need easy. Visit the site of Tomahawk
Truck & Trailer Sales to learn more about our quality inventory of used equipment
available through our retail sales center network.
Looking to replace units or add to your fleet? Considering purchasing quality pre-owned
trucks from Chancellor. Fill out an fill out an Equipment Spec Request today.
Owner-Operators, Chancellor can help you finance your pre-owned truck acquisition
through its Point of Sale financing program. Get the credit you deserve, Apply Online
today.
R e t a i l S a l e s C e n t e r N e t w o r k
Currently, the Company retail sales center network consists of seven locations. Chancellor
is committed to developing its network into a nationwide franchise in order to better serve the
needs of its customers.
Chancellor can help you find the best deal on the price of the equipment you want to
purchase. By utilizing our contacts and buying power, Chancellor will work to save you
money on the purchase of replacement units.
Chancellor can help you save time and money on your fuel needs when leasing new
equipment. Ask us today about how we can set up a customized fuel management program
for you.
Avoid costly repairs through Chancellor's convenient maintenance programs. Whether its
routine maintenance or on the road service that you need, Chancellor's programs can help
you.
How efficient is the equipment you are using? Are your fuel and maintenance costs rising?
Does it make sense to acquire new equipment? With Chancellor's data and administration
management strategies, you can have the information you need at your fingertips.
Have excess or underutilized equipment? Want to trade in you older equipment?
Chancellor can help. Through its retail sales center network, Chancellor can take your
equipment in trade or purchase you excess or underutilized equipment.
Through it's Total Holding Cost Solutions program, Chancellor can provide you with a
customized financing solution that will enable you to meet all of your financial management
objectives.
Since its inception in 1977, Chancellor Corporation has provided solutions to the
transportation equipment financing needs of the Fortune 500. Throughout its history the
Company has leased and remarketed over $2 billion of equipment, based on its original cost.
Past news releases:
chancellorcorp.com
1/19/2000 news
Wednesday January 19, 10:51 am Eastern Time
Company Press Release
Chancellor to Report Another Profitable
Year
BOSTON--(BUSINESS WIRE)--Jan. 19, 2000--Chancellor Corporation (OTC:CHLR - news) announced today that it
will close out 1999 with another profitable year. The Company anticipates 1999 revenues to be approximately
$60,000,000. Since the change in management and new ownership the Company has had nine consecutive profitable
quarters and has grown top line revenues from just under $5,000,000 in 1997 to approximately $60,000,000 in 1999.
Chancellor Chairman and CEO, Brian M. Adley commented on the Company's year end results ``We anticipate our year
end numbers to be released in March and have started 2000 with continued growth. E-commerce will continue to
strengthen our industry. The platform and unique competitive advantage that we have developed will continue to
improve our results. Although 1999 results are positive; we are not yet satisfied. We plan on continuing to build our
management team around our President and COO, Frank E. Churchill, and look forward to 2000.'
Chancellor Corporation is spearheading an evolution in transportation equipment finance through innovative financing
and fleet management programs. The Company seeks to reduce a customer's total holding cost through its
``Wholesale-Plus' lease pricing strategy and through other value-added services, including asset management,
equipment maintenance, fuel management and data management strategies. Since its founding in 1977, Chancellor has
completed a total of approximately $1.5 billion in equipment lease transactions for its Fortune 500 and middle market
customers in the U.S. and select international markets. Chancellor is a transportation equipment finance and fleet
management solutions provider headquartered in Boston. The Company's Internet address is
chancellorcorp.com. The Company is publicly traded under the symbol ``CHLR'.
``Safe Harbor' Statement under the Private Securities Litigation Reform Act of 1995:
The statements contained in this release which are not historical facts may be deemed to contain forward-looking
statements with respect to events, the occurrence of which involve risks and uncertainties, including, without limitation,
demand and competition for the Company's lease financing services and the products to be leased by the Company, the
continued availability to the Company of adequate financing the ability of the Company to recover its investment in
equipment through remarketing, and other risks and uncertainties detailed in the Company's Securities and Exchange
Commission filings.
Contact:
Chancellor Corporation
(617) 368-2700
information@chancellorcorp.com
chancellorcorp.com
11/15/1999 filing
November 15, 1999
CHANCELLOR CORP (CHLR)
Quarterly Report (SEC form 10QSB)
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three-Month Period Ended September 30, 1999 vs. September 30, 1998
Revenues. Total revenues for the three-month period ended September 30, 1999 was $17,856,000 as compared to
$12,569,000 for the corresponding prior period, an increase of $5,287,000 or 42.1%. For the three-month period
ended September 30, 1999, transportation equipment sales were $16,152,000 as compared to $11,886,000 for the
corresponding prior period, an increase of $4,266,000 or 35.9%. This revenue stream from transportation equipment
sales is primarily attributable to sales of used transportation equipment through the operating activities of the Company's
wholly owned subsidiary, Chancellor Asset Management Inc. ("CAM"). CAM's revenues from the sales of used
transportation equipment for the three-month period ended September 30, 1999 increased by $6,492,000 or 72.0% as
compared to the corresponding period for 1998. The increase in revenues provided by CAM is primarily a result of its
seven retail sales centers located in Atlanta, Georgia; Dallas, Texas; Elizabeth, New Jersey; Kansas City, Missouri;
Orlando, Florida; Pompano Beach, Florida; and Richmond, Virginia. For the three-month period ended September 30,
1999, rental income increased by $179,000 or 62.6% to $465,000 as compared to $286,000 for the corresponding
prior period. The increase in rental income is attributable primarily to the addition to the Company's portfolio of
transportation equipment and recent acquisition of investment grade portfolios. For the three month period ended
September 30, 1999, lease underwriting income decreased by $18,000 or 100% to $0 as compared to $18,000 for the
corresponding prior period and direct finance lease income decreased by $5,000 or 22.7% to $17,000 as compared to
$22,000 for the corresponding prior period. The Company is in the beginning of its rebuilding process of the lease
origination business in order to stimulate future growth in this area. For the three-month period ended September 30,
1999, interest income increased by $164,000 or 3,280.0% to $169,000 as compared to $5,000 for the corresponding
prior period. The increase is primarily attributable to interest earned in connection with the Company's investments. For
the three-month period ended September 30, 1999, gains from portfolio remarketing increased by $239,000 or 508.5%
to $286,000 as compared to $47,000 for the corresponding prior period. The increase in gains from portfolio
remarketing is attributable to the increase in portfolio assets acquired in connection with the purchase of portfolios by
the Company. For the three-month period ended September 30, 1999, fees from remarketing activities increased by
$464,000 or 153.1% to $767,000 as compared to $303,000 for the corresponding prior period. This increase is
attributable, in part, to the Company's efforts to promote its remarketing services to financial institutions and other third
parties.
Costs and Expenses. Total costs and expenses for the three-month period ended September 30, 1999 was $17,207,000
as compared to $12,304,000 for the corresponding prior period, an increase of 4,903,000 or 39.8%. The significant
increase is primarily a result of the costs associated with sales and remarketing expenses of transportation equipment.
The cost of transportation equipment sales for the three-month period ended September 30, 1999 was $12,837,000 as
compared to $10,337,000 for the corresponding prior period, an increase of $2,500,000 or 24.2%, and resulted in an
overall gross margin of 20.5%. Selling, general and administrative expenses for the three-month period ended
September 30, 1999 was $3,657,000 as compared to $1,707,000 for the corresponding prior period, an increase of
$1,950,000 or 114.2%. Approximately $2,157,000 of selling, general and administrative expenses for the three-month
period ended September 30, 1999 is a result of normal operating expenses incurred by CAM and CAM's newly
acquired retail and wholesale business unit, Tomahawk, whose operations were consolidated with the Company's as of
the August 1, 1998 acquisition date. Net of the effect of the CAM expenses, selling, general and administrative
expenses increased to $1,500,000 for the three-month period ended September 30, 1999 as compared to $571,000 for
the corresponding prior period, an increase of $929,000 or 162.7%. The increase in selling, general and administrative
expenses reflects the effect of the Company's growth strategy implementation that included, in part, including costs
associated with the addition of senior management, sales and staff personnel.
Interest expense for the three-month period ended September 30, 1999 was $322,000 as compared to $152,000 for the
corresponding prior period, an increase of $170,000 or 111.8%. This increase is primarily a result of increased interest
expense associated with CAM's revolving credit line with a financial institution utilized for inventory floor planning and
interest accrued on the Company's recourse debt.
Depreciation and amortization expense for the three-month period ended September 30, 1999 was $391,000 as
compared to $108,000 for the corresponding prior period, an increase of $283,000 or 262.0%. The increase is
primarily due to the amortization of intangible assets associated with the acquisition of Tomahawk by CAM, as well as
the depreciation of additions to the Company's portfolio of leased transportation equipment.
Net Income. Net income for the three-month period ended September 30, 1999 was $518,000 as compared to $265,000
for the corresponding prior period, an increase of $253,000 or 95.5%. The increase in net income is attributable to
increase in revenues, primarily from the retail and wholesale of used transportation equipment, the sale of equipment
under lease, and continued improvements in the containment of costs. Net income per share was $0.01 per share (both
basic and diluted) for the three-month period ended September 30, 1999 as compared to $0.01 per share basic and
$0.00 diluted for the corresponding prior period.
Nine-Month Period Ended September 30, 1999 vs. September 30, 1998
Revenues. Total revenues for the nine-month period ended September 30, 1999 was $47,081,000 as compared to
$14,981,000 for the corresponding prior period, an increase of $32,100,000 or 214.3%. For the nine-month period
ended September 30, 1999, transportation equipment sales were $42,642,000 as compared to $12,858,000 for the
corresponding prior period, an increase of $29,784,000 or 231.6%. This significant revenue stream from transportation
equipment sales is primarily attributable to sales of used transportation equipment through the operating activities of the
Company's wholly owned subsidiary, CAM. CAM's used transportation equipment retail and wholesale business unit
accounted for approximately $39,615,000 of used transportation equipment sales. CAM's revenues from the sales of
used transportation equipment for the nine-month period ended September 30, 1999 increased by $11,799,000 or
42.4% as compared to the corresponding period for 1998. The increase in revenues provided by CAM is primarily a
result of its seven different retail sales centers located in Atlanta, Georgia; Dallas, Texas; Elizabeth, New Jersey; Kansas
City, Missouri; Orlando, Florida; Pompano Beach, Florida; and Richmond, Virginia. For the nine-month period ended
September 30, 1999, rental income increased by $543,000 or 77.9% to $1,240,000 as compared to $697,000 for the
corresponding prior period. The increase in rental income is attributable primarily to the addition to the Company's
portfolio of transportation equipment. For the nine-month period ended September 30, 1999, lease underwriting income
decreased by $25,000 or 48.1% to $27,000 as compared to $52,000 for the corresponding prior period and direct
finance lease income decreased by $29,000 or 32.6% to $60,000 as compared to $89,000 for the corresponding prior
period. The Company is in the development stage of rebuilding its lease origination business to stimulate future growth
in this area. For the nine-month period ended September 30, 1999, interest income increased by $693,000 or 2,566.7%
to $720,000 as compared to $27,000 for the corresponding prior period. The increase is primarily attributable to interest
earned in connection with the Company's investments. For the nine-month period ended September 30, 1999, gains
from portfolio remarketing increased by $505,000 or 142.3% to $860,000 as compared to $355,000 for the
corresponding prior period. The increase in gains from portfolio remarketing is attributable to the increase in portfolio
assets acquired in connection with the purchase of several lease portfolios. For the nine-month period ended September
30, 1999, fees from remarketing activities increased by $593,000 or 69.2% to $1,450,000 as compared to $857,000
for the corresponding prior period. This increase is attributable, in part, to the Company's efforts to promote its
remarketing services to financial institutions and others on a third party basis.
Costs and Expenses. Total costs and expenses for the nine-month period ended September 30, 1999 was $45,701,000
as compared to $14,656,000 for the corresponding prior period, an increase of $31,045,000 or 211.8%. The
significant increase is primarily a result of the costs associated with sales of transportation equipment. The cost of
transportation equipment sales for the nine-month period ended September 30, 1999 was $34,232,000 as compared to
$11,009,000 for the corresponding prior period, an increase of $23,223,000 or 210.9%, and resulted in an overall
gross margin of 19.7%. Selling, general and administrative expenses for the nine-month period ended September 30,
1999 was $9,575,000 as compared to $3,122,000 for the corresponding prior period, an increase of $6,453,000 or
206.7%. Approximately $5,711,000 of selling, general and administrative expenses for the nine-month period ended
September 30, 1999 is a result of normal operating expenses incurred by CAM and CAM's newly acquired retail and
wholesale business unit, Tomahawk, whose operations were consolidated with the Company's as of the August 1,
1998 acquisition date. Net of the effect of the CAM expenses, selling, general and administrative expenses increased to
$3,864,000 for the nine-month period ended September 30, 1999 as compared to $1,986,000 for the corresponding
prior period, an increase of $1,878,000 or 94.6%. This increase in selling, general and administrative expenses reflects
the effect of the Company's growth strategy implementation that included, in part, significant costs associated with the
addition of senior management and staff personnel while continuing to improve the containment of other costs.
Interest expense for the nine-month period ended September 30, 1999 was $767,000 as compared to $182,000 for the
corresponding prior period, an increase of $585,000 or 321.4%. This increase is primarily a result of increased interest
expense associated with CAM's revolving credit line with a financial institution utilized for inventory floor planning and
interest accrued on the Company's recourse debt.
Depreciation and amortization expense for the nine-month period ended September 30, 1999 was $1,126,000 as
compared to $343,000 for the corresponding prior period, an increase of $783,000 or 228.3%. The increase is
primarily due to the amortization of intangible assets associated with the acquisition of Tomahawk by CAM.
Net Income. Net income for the nine-month period ended September
30, 1999 was $1,194,000 as compared to $325,000 for the corresponding prior
period, an increase of $869,000 or 267.4%. The increase in net income is
attributable to the significant increase in revenues, primarily from the retail
and wholesale of used transportation equipment, the purchase portfolios, and
continued improvements in the containment of costs. Net income per share was
$0.02 per share (both basic and diluted) for the nine-month period ended
September 30, 1999 as compared to $0.01 per share (both basic and diluted) for
corresponding prior period.
LIQUIDITY AND CAPITAL RESOURCES
The Company recognized a net increase in cash and cash equivalents for the nine-month period ended September 30,
1999 of $1,013,000 totaling $1,657,000. Operating activities provided cash of $4,905,000 during the nine-month
period ended September 30, 1999 and is primarily a result of increased sales of used transportation equipment
inventory, an increase in deferred revenue associated with the addition to the Company's portfolio of certain equipment
acquired in connection with the purchase of several equipment lease portfolios, and offset by increases in accounts
receivables. Investing activities used cash of $13,877,000 during the nine-month period ended September 30, 1999 and
is primarily a result of the acquisitions of portfolios of operating leases valued at approximately $4,773,000. The
Company also increased its investments and acquired distribution rights of approximately $7,000,000 via the
acquisition of said activities with Afinta Motor Corporation (Pty) Ltd. ("AMC"). Financing activities provided cash of
$9,985,000 during the nine-month period ended September 30, 1999 and is primarily the result of the exercise of a
Stock Purchase Warrant for an aggregate of Ten Million (10,000,000) shares of the Common Stock, $.01 par value, of
the Company at the exercise price of $.20 per share by Vestex Capital Corporation, the Company's majority
shareholder. In addition the Company issued Preferred Stock in conjunction with the acquisition of a 15.1% interest in
AMC and the world wide distribution rights (within the defined territory) to the current and future product lines of
AMC. Additionally, the Company incurred a net increase in recourse debt of approximately $5,148,000 primarily as a
result of loans from financing institutions and other creditors, including, but not limited to, additional infusions by
Vestex Capital Corporation. Cash and cash equivalents were $1,657,000 at September 30, 1999 as compared to
$644,000 at December 31, 1998, an increase of $1,013,000 or 157.3%.
In connection with the purchase of certain transportation equipment (the "Equipment") on lease to certain lessees, the
Company entered into a $2,500,000 loan agreement (the "Loan") with a financial institution (the "Lender") in March
1999. The Loan provides for the payment of twenty-four equal monthly installments, beginning May 1, 1999, of
principal in the approximate amount of $104,000 and interest at 3.75% plus the average of the one (1) and two (2)
month London Interbank Offered Rates. In addition, proceeds from the sale of the Equipment will be paid to the Lender
as additional principal reduction up to $1,034,000. In connection with the Loan, the lender retained $300,000 to secure
repayment of the Loan. The Loan is secured by all of the Equipment and the lease contracts specifically associated with
this transaction. Balance for this loan as of 11/15/99 is $1,340,000.
In connection with the purchase of certain transportation equipment (the "Equipment") on lease to certain lessees, the
Company entered into a $2,876,000 loan agreement (the "Loan") with a financial institution (the "Lender") in
September 1999. The Loan provides for principal and interest payments (at 10%) of $583,400 September 30, 1999,
$72,300 per month from October 1999 through December 1999, $64,400 per month from January 2000 through April
2000, $55,500 per month from May 2000 through July 2000, and $1,842,000 August 2000. The Loan is secured by all
of the Equipment and the lease contracts specifically associated with this transaction. The balance outstanding as of
11/15/99 is $2,230,000.
The Company also maintains a revolving line of credit agreement with a financial institution whereby CAM can borrow
up to $7,500,000 to floor plan used transportation equipment inventory. The balance outstanding under this revolving
line of credit agreement is approximately $6,385,000 as of September 30, 1999. During 1998, CAM entered into a
special purpose financing agreement with the same institution to floor plan additional used transportation equipment
inventory in the approximate amount of $4,500,000. The balance outstanding under this special purpose financing
agreement is approximately $1,254,000 as of September 30, 1999. In addition, during 1999, CAM entered into an
additional special purpose financing agreement with the same institution to finance used transportation equipment
inventory in the approximate amount of $626,000. The balance outstanding under this agreement is approximately
$626,000 as of September 30, 1999. The interest rate charges on the above three lines of credit is Prime plus 1.75%.
The Company, in 1999, has also entered into a special line of credit to finance used transportation equipment for
approximately $500,000 at the rate of Prime plus 1%. The balance on this line of credit as of September 30, 1999 is
approximately $383,000.
The Company's ability to underwrite equipment lease transactions is largely dependent upon the availability of
short-term warehouse lines of credit. Management is engaged in continuing dialogue with several inventory lenders to
providing the Company with warehouse financing. If the Company experiences delays in putting warehouse facilities in
place, the Company transacts deals by coterminous negotiation of lease transactions with customers and financing with
institutions upon which it obtains a fee as the intermediary of up to 3% of the amount of financing.
The remarketing, retailing and wholesaling of equipment has played and will continue to play a vital |
