-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, I8AzyHO4BU7tbdQISXBv3E7m9rVNWoQ7ZXASMVb4G58JkHSurhK+1PjxbMOUzqbn /hQ0EfLbo2Xm84fn6Todow== 0000724051-99-000025.txt : 19990712 0000724051-99-000025.hdr.sgml : 19990712 ACCESSION NUMBER: 0000724051-99-000025 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990709 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990709 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHANCELLOR CORP CENTRAL INDEX KEY: 0000724051 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 042626079 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-11663 FILM NUMBER: 99662177 BUSINESS ADDRESS: STREET 1: 210 SOUTH STREET CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 6177288500 MAIL ADDRESS: STREET 1: 210 SOUTH STREET CITY: BOSTON STATE: MA ZIP: 02111 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K/A AMENDMENT NO. 2 TO CURRENT REPORT ON FORM 8-K PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report: Date of Earliest Event Reported: July 9, 1999 February 10, 1999 COMMISSION FILE NUMBER 0-11663 CHANCELLOR CORPORATION (Exact name of registrant as specified in its charter) MASSACHUSETTS 04-2626079 (State of other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 210 SOUTH STREET BOSTON, MASSACHUSETTS 02111 (Address of principal executive offices and zip code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (617) 368-2700 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS The registrant filed on February 12, 1999 a current report on Form 8-K relating to its acquisition of MRB, Inc., a Georgia corporation d/b/a Tomahawk Truck and Trailer Sales; Tomahawk Truck & Trailer Sales, Inc., a Florida corporation; Tomahawk Truck and Trailer Sales of Virginia, Inc., a Virginia corporation; and Tomahawk Truck and Trailer Sales of Missouri, Inc., a Missouri corporation (collectively "Tomahawk") and an amendment on Form 8-K/A dated April 13, 1999 for the purpose of providing the financial statement and information required by Item 7 of the Form 8-K. The purpose of this Form 8-K/A Amendment No. 2 is to provide revised pro forma financial statements and a description of the total purchase price relating to the subject transaction pursuant to the requirements of Item 301(d) of Regulation S-B. Chancellor Asset Management Inc. ("CAM"), a wholly owned subsidiary of the Company, entered into a Management Agreement, dated August 1, 1998, as amended August 17, 1998, with Tomahawk. The Management Agreement provided CAM with effective control of Tomahawk's operations as of August 1, 1998. Subsequently, CAM acquired all of the outstanding capital stock of Tomahawk from the two (2) sole shareholders (the "Selling Shareholders") pursuant to a Stock Purchase Agreement (the "Agreement") dated January 29, 1999. Tomahawk is engaged in a similar line of business as CAM. Tomahawk retails and wholesales used transportation equipment, primarily tractors and trailers. Tomahawk operates five (5) retail centers in Conley, Georgia; Richmond, Virginia; Pompano Beach, Florida; Orlando, Florida; and Kansas City, Missouri. Tomahawk also operates its wholesale division from the Conley, Georgia facility. Tomahawk will operate as a wholly owned subsidiary of the Company, coordinating many operations with the Company to achieve operating efficiencies and synergies. The purchase price paid by CAM consisted of 4,500,000 shares of Common Stock of Chancellor (valued at $.96 per share) and future cash consideration pursuant to an earn-out (the "Earn-Out") as provided for in the Agreement. The Earn-Out provides that each of the Selling Shareholders will be paid an amount equal to seven and one-half percent (7.5%) of the Adjusted Pre-Tax Earnings of Tomahawk. The Earn-Out, which is paid on a quarterly basis, begins in the fiscal year ended December 31, 1999 and ends in the fiscal year ended December 31, 2004. In connection with this Agreement, CAM loaned the Selling Shareholders a total of $500,000 pursuant to certain promissory notes payable that are payable in full on January 29, 2004. The Agreement also: i) nominates one of the Selling Shareholders as a director of Chancellor's Board of Directors; ii) elects both of the Selling Shareholders as directors of CAM's Board of Directors; iii) provides for Employment Agreements for the Selling Shareholders over a period of five years with base salaries of $200,000 per annum; iv) prohibits the Selling Shareholders from competing against CAM or Tomahawk, or soliciting former employees and customers of Tomahawk; v) provides for Tomahawk to lease from the Selling Shareholders the Conley, Georgia facility at fair market value rents of approximately $8,500 per month; and vi) provides CAM an option to purchase from the Selling Shareholders the Conley, Georgia facility for an amount not to exceed $950,000. This transaction has been recorded in accordance with the purchase method of accounting. As a result of the effect on the transaction of the Management Agreement, as amended, the designated date of this transaction for accounting purposes is August 1, 1998. In connection with this transaction, CAM assumed liabilities of approximately $6,414,000 and incurred acquisition costs of approximately $3,405,000. The excess of the purchase price over net assets of approximately $7,695,000 has been recorded in intangibles. Approximately $154,000 of intangibles has been amortized as of December 31, 1998. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Pro Forma Financial Information (unaudited): Exhibit 99.1 filed herewith contains the following pro forma condensed financial statements as required by Article 11 of Regulation S-X and Item 301(d) of Regulation S-B: Pro Forma Balance Sheet as of December 31, 1998 Pro Forma Statements of Operations for the years ended December 31, 1998 and 1997 (b) Exhibits: Exhibit 99.1 The unaudited pro forma condensed balance sheet as of December 31, 1998, and statements of operations for the years ended December 31, 1998 and 1997. SIGNATURES Pursuant to the requirements 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. CHANCELLOR CORPORATION By: /s/ Franklyn E. Churchill______ ---------------------------------------- Franklyn E. Churchill, President Date: July 9, 1999 EXHIBIT INDEX Exhibit No. Description 99.1 The unaudited pro forma condensed balance sheet as of December 31, 1998, and statements of operations for the years ended December 31, 1998 and 1997. EX-99.1 2 EXHIBIT 99.1
CHANCELLOR CORPORATION PRO FORMA COMBINED BALANCE SHEETS AS OF DECEMBER 31, 1998 (IN THOUSANDS) PRO FORMA PRO FORMA CHANCELLOR MRB ADJUSTMENTS COMBINED ASSETS Cash and cash equivalents $ 612 $ 32 $ 644 Receivables, net 2,880 375 3,255 Inventory 37 10,721 10,758 Net investment in direct finance lease 359 359 Equipment on operating lease, net 702 702 Residual values, net 219 219 Furniture and equipment, net 808 191 999 Other investments 3,681 3,681 Intangibles, net 3,251 4,290 (1) 7,541 Other assets, net 1,262 149 1,411 13,811 11,468 4,290 29,569 ------------ ---------- ------------- ---------- LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable & accrued expenses 5,062 1,303 6,365 Deferred reimbursable expenses 1,068 - 1,068 Indebtedness: Revolving credit line - 9,063 9,063 Notes payable 115 828 943 Non recourse debt 889 - 889 Recourse debt 4,234 - 4,234 11,368 11,194 - 22,562 ------------ ---------- ------------- ---------- Commitments and contingencies Stockholders' Equity: Preferred stock, Series AA 50 50 APIC, Series AA 964 964 Common stock 385 80 (35) (2) 430 APIC 28,978 - 4,275 (3) 33,253 Retained earnings/accumulated deficit (27,934) 194 50 (4) (27,690) 2,443 274 4,290 7,007 ------------ ---------- ------------- ---------- $ 13,811 $ 11,468 $ 4,290 $ 29,569 ============ ========== ============= ========== SUMMARY NOTES TO PRO FORMA ADJUSTMENTS: (1) Adjustment to reflect i) acquisition costs of $3,405,000, ii) issuance of 4,500,000 shares of Chancellor's Common Stock valued at $0.96 per share or $4,320,000, and iii) elimination of $80,000 of MRB common stock and $50,000 of accumulated deficit. Intangibles include the allocated purchase price in the amounts of $995,000, $750,000, and $5,950,000 for non-compete agreements, customer lists, and goodwill, respectively, net of accumulated amortization of $154,000. Intangibles have been amortized using the straight-line method over their useful economic lives ranging from 5 to 40 years. (2) Adjustment to reflect i) elimination of MRB common stock of $80,000 and ii) record issuance of 4,500,000 shares of Chancellor Common Stock, $.01 par value. (3) Adjustment to reflect additional paid-in capital associated with the issuance of 4,500,000 shares of Chancellor Common Stock, $.01 par value, valued at $0.96 per share. Adjustment to eliminate accumulated deficit of MRB as of July 31, 1998.
CHANCELLOR CORPORATION PRO FORMA COMBINED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1998 (IN THOUSANDS, EXCEPT PER SHARE DATA) PRO FORMA PRO FORMA CHANCELLOR MRB ADJUSTMENTS COMBINED Revenues: Transportation equipment sales $ 6,165 $ 39,074 $ 45,239 Rental income 942 942 Lease underwriting income 74 74 Direct finance lease income 110 110 Interest income 194 194 Gains from portfolio remarketing 1,374 1,374 Fees from remarketing income 1,407 1,407 Other 442 442 10,708 39,074 - 49,782 ----------- ---------- ------------ --------- Cost of Sales: Cost of transportation equipment sales 5,646 32,753 38,399 Selling, general & administrative 3,613 5,491 9,104 Interest 201 445 646 Depreciation & amortization 642 40 682 10,102 38,729 - 48,831 ----------- ---------- ------------ --------- Net income $ 606 $ 345 $ - $ 951 =========== ========== ============ ========= Basic net income per share $ 0.03 =========== Diluted net income per share $ 0.02 =========== Shares used in computing basic net Net income per share 36,695,162 =========== Shares used in computing diluted net Income per share 52,941,579 ===========
CHANCELLOR CORPORATION PRO FORMA COMBINED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1997 (IN THOUSANDS, EXCEPT PER SHARE DATA) PRO FORMA PRO FORMA CHANCELLOR MRB ADJUSTMENTS COMBINED Revenues: Transportation equipment sales $ - $ 27,332 $ 27,332 Rental income 870 870 Lease underwriting income 293 293 Direct finance lease income 272 272 Interest income 44 44 Gains from portfolio remarketing 801 801 Fees from remarketing income 1,488 1,488 Other 665 665 4,433 27,332 - 31,765 ------------ ---------- ------------ ---------- Cost of Sales: Cost of transportation equipment sales - 22,604 22,604 Selling, general & administrative 6,412 4,207 10,619 Interest 281 406 687 Depreciation & amortization 459 47 506 7,152 27,264 - 34,416 ------------ ---------- ------------ ---------- Income (loss) before extraordinary item and income tax provision (2,719) 68 - (2,651) Income tax provision 13 - - 13 ------------ ---------- ------------ ---------- Income (loss) before extraordinary item (2,732) 68 - (2,664) Extraordinary item-gain on debt forgiveness 930 - - 930 ------------ ---------- ------------ ---------- Net income (loss) $ (1,802) $ 68 $ - $ (1,734) ============ ========== ============ ========== Basic net loss per share: Loss before extraordinary item $ (0.17) Extraordinary item 0 Net loss $ (0.11) ============ Shares used in computing basic net loss per share 15,224,432 ============
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