UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-11663
CHANCELLOR CORPORATION
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2626079
(State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
745 Atlantic Avenue, Boston, Massachusetts 02111
(Address of principal executive offices) (Zip Code)
(617) 728 - 8500
(Registrant's telephone number, including area code)
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 [ ]
As of June 30, 1997, 20,186,391 shares of Common Stock, $.01 par value per
share, and 8,000,000 shares of Series AA Convertible Preferred Stock, $.01 par
value per share (with a liquidation preference of $.50 per share or $4,000,000)
were outstanding.
<PAGE>
Chancellor Corporation and Subsidiaries
Page
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as
of March 31, 1997 and December 31, 1996 2
Condensed Consolidated Statements of Operations for
the Three Months Ended March 31, 1997 and 1996 3
Condensed Consolidated Statements of Cash Flows for
the Three Months Ended March 31, 1997 and 1996 4
Notes to Condensed Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Part II. Other Information 11
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures 12
1
<PAGE>
<TABLE>
<CAPTION>
Chancellor Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(In Thousands)
March 31, December 31,
1997 1996
------------- -----------
(unaudited)
<S> <C> <C>
Assets
Cash and cash equivalents $ 65 $ 21
Cash - restricted and escrowed 3,007 3,553
Receivables, net 202 2,563
Leased equipment held for underwriting 383 1,231
Net investment in direct finance leases 277 748
Equipment on operating lease, net of accumulated depreciation 295 497
of $7,825 and $7,191
Residual values, net 173 748
Furniture and equipment, net of accumulated depreciation 102 121
of $2,667 and $2,655
Other assets, net 1,288 980
-------- --------
$ 5,792 $ 10,462
======== ========
Liabilities and Stockholders' Deficit
Accounts payable and accrued expenses $ 7,493 $ 10,260
Indebtedness:
Nonrecourse 810 1,188
Recourse 2,877 3,432
-------- --------
Total liabilities 11,180 14,880
-------- --------
Stockholders' deficit:
Convertible preferred stock, Series AA, $.01 par value, 10,000,000 shares 80 50
authorized, 8,000,000 and 5,000,000 shares issued and outstanding
Common stock, $.01 par value; 30,000,000 shares authorized, 65 65
6,567,302 shares issued and outstanding
Additional paid-in capital 25,479 24,609
Accumulated deficit (30,476) (28,606)
-------- --------
(4,852) (3,882)
Less: Treasury stock, 1,430,911 shares at cost (536) (536)
-------- --------
Total stockholders' deficit (5,388) (4,418)
-------- --------
$ 5,792 $ 10,462
======== ========
</TABLE>
The accompanying notes are an integral part
of these condensed consolidated financial statements.
2
<PAGE>
Chancellor Corporation and Subsidiaries
Condensed Consolidated Statements of Operations
(In Thousands, Except Per Share Data)
Three Months Ended March 31,
1997 1996
------------------ ----------------
(unaudited) (unaudited)
Revenues:
Rental income $ 278 $ 581
Lease underwriting income 15 133
Direct finance lease income 40 38
Interest income 12 14
Gains from portfolio remarketing 172 248
Fees from remarketing activities 349 207
Other income -- 119
------- -------
866 1,340
------- -------
Costs and expenses:
Selling, general and administrative 1,835 1,275
Interest expense 101 129
Depreciation and amortization 90 339
Residual value estimate reduction 709 --
------- -------
2,735 1,743
------- -------
Net loss ($1,869) ($ 403)
======= =======
Net loss per share ($ .36) ($. 08)
Weighted average common and common
equivalent shares 5,136,391 5,136,391
========= =========
The accompanying notes are an integral part of
these condensed consolidated financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
Chancellor Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In Thousands)
Three Months Ended March 31,
1997 1996
-------------- -------------
(unaudited) (unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net loss ($1,869) ($ 403)
------- -------
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation and amortization 90 339
Residual value estimate realizations and
reductions, net of additions 575 19
Changes in assets and liabilities:
Decrease in receivables 2,361 1,459
Increase in other assets (308) (14)
Decrease in accounts payable and accrued expenses (2,767) (1,957)
------- -------
49 (154)
------- -------
Net cash used by operating activities (1,918) (557)
------- -------
Cash flows from investing activities:
Leased equipment held for underwriting 848 (4,079)
Net investments in direct finance leases 471 175
Equipment on operating lease 127 44
Net change in cash restricted and escrowed 546 2,113
Additions to furniture and equipment, net 3 (5)
------- -------
Net cash provided (used) by investing activities 1,995 (1,762)
------- -------
Cash flows from financing activities:
Increase in indebtedness - nonrecourse -- 3,163
Increase in indebtedness - recourse 175 --
Repayments of indebtedness - nonrecourse (378) (677)
Repayments of indebtedness - recourse (730) (327)
Issuance of preferred stock, net 900 --
------- -------
Net cash provided (used) by financing activities (33) 2,159
------- -------
Net increase (decrease) in cash and cash equivalents 44 (160)
Cash and cash equivalents at beginning of period 21 185
------- -------
Cash and cash equivalents at end of period $ 65 $ 25
======= =======
Cash paid for interest $ 74 $ 124
======= =======
</TABLE>
The accompanying notes are an integral part of
these condensed consolidated financial statements.
4
<PAGE>
CHANCELLOR CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles and the
rules and regulations of the Securities and Exchange Commission for interim
financial statements. Accordingly, the interim statements do not include all of
the information and disclosure required for annual financial statements. In the
opinion of the Company's management, all adjustments (consisting solely of
adjustments of a normal recurring nature) necessary for a fair presentation of
these interim results have been included. Intercompany accounts and transactions
have been eliminated. These financial statements and related notes should be
read in conjunction with the audited consolidated financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996. The balance sheet at December 31, 1996 has been derived from
the audited consolidated financial statements included in the Annual Report on
Form 10-K. The results for the interim period ended March 31, 1997 are not
necessarily indicative of the results to be expected for the entire year.
RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share" (SFAS 128). SFAS
128 specifies required disclosures relating to earnings per share data. SFAS 128
is effective for fiscal years ending after December 15, 1997 and earlier
application is not permitted. The implementation of these standards is not
expected to materially affect the Company's consolidated financial statements.
PREFERRED STOCK
In February 1997, the Board of Directors approved the issuance of 3,000,000
shares of the Company's Series AA Convertible Preferred Stock ("Preferred
Stock") at $.30 per share to Vestex, the Company's majority stockholder, in
consideration of $900,000 of consulting fees due to Vestex. Each share of
Preferred Stock is entitled to the number of votes equal to the number of whole
shares of Common Stock into which the shares of Preferred Stock held by Vestex
are then convertible. The holders of shares of Preferred Stock shall be entitled
to receive cash dividends only to the same extent and in the same amounts as
dividends are declared and paid with respect to Common Stock as if the Preferred
Stock had been converted to Common Stock in accordance with the provision
related to conversion.
5
<PAGE>
CHANCELLOR CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
SUBSEQUENT EVENTS
In April 1997, the Company repaid in advance of their respective terms an
intercreditor loan and secured inventory loan. The aggregate amount of this debt
on the repayment date was $1,906,000, of which approximately $976,000 was paid
in cash and the balance of $930,000 was forgiven. In addition, the Company paid
approximately $22,000 in legal and bank fees to complete this transaction.
In April 1997, the Board of Directors approved the issuance of 2,000,000 shares
of Common Stock to new management and employees. Vestex will contribute 500,000
shares of Common Stock that it currently owns into this incentive program for a
total of 2,500,000 new shares available under this program.
On May 1, 1997, the Company sold its 50% investment in Truckscan LLC to Telescan
Technologies LLC ("Telescan"), a party unrelated to the Company. In
consideration for its 50% ownership interest, the Company received certain
assets from Telescan with an estimated value of $35,000 and a one year
promissory note in the amount of $50,000 secured by certain assets of Telescan.
In addition, Telescan released the Company from its obligations to make a
capital investment in Truckscan LLC of approximately $300,000.
On May 19, 1997, the Company borrowed $1.5 million from the Vice Chairman of the
Board of the Company. The loan is evidenced by a promissory note that bears
interest at the prime rate plus 2-1/8% (10-3/8% at May 19, 1997) and is
guaranteed by the Chairman of the Board of the Company. The Company is also
negotiating an additional $2.5 million loan with a bank and a $2.5 million
warehouse line of credit facility with a financing institution owned by the Vice
Chairman of the Board of the Company. Although there can be no assurance that
such financing will occur, management is confident that these additional
financing transactions can be closed during the third quarter of fiscal 1997.
On June 6, 1997, the Company issued 8,333,333 shares of Common Stock to Vestex
in consideration of the guarantee by Vestex of certain bank lines of credit in
the aggregate of $4,000,000. The Company will record compensation expense of
$1,000,000 in connection with this guarantee. On June 6, 1997, the Company also
issued 6,716,667 shares of Common Stock to Vestex in consideration of
approximately $806,000 of fees due Vestex which were previously accrued. Of the
total 15,050,000 shares issued, 1,430,911 shares were issued from treasury
stock.
6
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
RESULTS OF OPERATIONS
Revenues. Total revenues for the three month period ended March 31, 1997
were $866,000 as compared to $1,340,000 for the corresponding period of 1996, a
decrease of $474,000 or 35.4%. For the three month period ended March 31, 1997,
rental income decreased by $303,000 or 52.2% as compared to the corresponding
prior year period. The decrease in rental income is attributable primarily to
the expiration of several leases, including the subsequent disposition of $10.5
million of equipment (based on its original cost). Rental income will continue
to decrease until the Company is able to begin adding new equipment to its
portfolio. For the three month period ended March 31, 1997, lease underwriting
income decreased by $118,000 or 88.7% as compared to the corresponding prior
year period. Lease underwriting income decreased due to origination of $848,000
of equipment leases, at cost, as compared to origination of $4.2 million of
equipment leases, at cost, during the same period last year. For the three month
period ended March 31, 1997, gains from portfolio remarketing decreased by
$76,000 or 30.7% as compared to the corresponding prior year period. The
decrease in gains from portfolio remarketing is attributable to the sale of
portfolio assets of $736,000, at original cost, during the three month period
ended March 31, 1997 as compared to sales of portfolio assets with an original
cost of $1.7 million for the corresponding prior year period. In contrast, for
the three month period ended March 31, 1997, fees from remarketing activities
increased by $142,000 or 68.6% as compared to the corresponding prior year
period. This increase is attributable to a renewed focus by management on the
remarketing of trust assets as they become available for sale. Although no fees
were attributable to remarketing performed for third parties other than trust
investors, management plans to utilize the Company's remarketing expertise to
provide such services to third parties. For the three month period ended March
31, 1997, other income decreased by $119,000 or 100.0% as compared to the
corresponding prior year period. The decrease is due primarily to a $101,000
bankruptcy claim settlement recognized in the three month period ended March 31,
1996.
Costs and Expenses. Selling, general and administrative expenses for the
three month period ended March 31, 1997 were $1,835,000 as compared to
$1,275,000 for the corresponding period of 1996, an increase of $560,000 or
43.9%. Although the Company successfully reduced headcount and general operating
costs by approximately $341,000 or 26.8% as compared to the corresponding period
of 1996, the Company, as expected, incurred additional legal, accounting and
consulting fees of approximately $964,000 in connection with the continuing
restructuring activities and litigation against certain members of the Company's
former management team and directors.
Depreciation expense for the three month period ended March 31, 1997 was
$90,000 as compared to $339,000 for the corresponding period of 1996, a decrease
of $249,000 or 73.5%. The decrease is primarily due to the decrease in the
operating lease base, resulting from decreases in operating leases originated by
the Company over the past year and the sale of equipment coming off lease.
Prior to 1996, the Company utilized a combination of benchmark/matrices for
establishing performance of the residual portfolio. During 1996, due to changes
in market conditions, the Company evaluated residual values based upon
independent assessments by industry professionals, in addition to the already
established criteria used in the benchmark/matrices methodology previously used.
As a result of such procedures, the Company has recorded an additional residual
value estimate reduction of $709,000 for the three month period ended March 31,
1997.
7
<PAGE>
Net Loss. Net loss for the three month period ended March 31, 1997 was
$1,869,000 as compared to $403,000 for the corresponding period of 1996, an
increase of $1,466,000 or 363.8%. The increase in the net loss is attributable
to the decreases in revenue components, and the net increases in total costs,
specifically described above. Net loss per share for the three month period
ended March 31, 1997 was $.36 per share as compared to $.08 per share for the
corresponding prior year period, an increase of $.28 per share or 350.0%.
LIQUIDITY AND CAPITAL RESOURCES
The Company used cash flow from operations of $1,918,000 during the three
month period ended March 31, 1997, in part, due to the net loss of $1,869,000
for the same period. Investing activities, which are primarily related to
investments in equipment for lease, provided $1,995,000 during the three month
period, in part, due to the sale of equipment coming off lease. Financing
activities in the three month period used $33,000, in, part due to repayments of
aggregate nonrecourse and recourse debt of $1,108,000. The repayment of debt was
offset by the issuance of 3,000,000 shares of the Company's Series AA
Convertible Preferred Stock at $.30 per share to Vestex in consideration of
$900,000 of consulting fees due Vestex. The net result of the above activity for
the three month period was an increase in cash and cash equivalents of $44,000.
Cash and cash equivalents amounted to $65,000 at March 31, 1997 as compared to
$25,000 at March 31, 1996. Cash restricted and escrowed amounted to $3.0 million
at March 31, 1997 as compared to $2.4 million at March 31, 1996. Withdrawals of
restricted cash balances are limited to debt service and working capital
allotments, whereas the use of escrowed balances is limited to debt service
payments.
In February 1997, the Board of Directors approved the issuance of 3,000,000
shares of the Company's Series AA Convertible Preferred Stock at $.30 per share
to Vestex in consideration of $900,000 of consulting fees due Vestex. In
addition during the first quarter of 1997, the Company received loans from
Vestex of approximately $250,000 which are due on demand.
In April 1997, the Company executed and delivered (1) the Loan Reduction
and Purchase and Assignment Agreement dated as of April 1997 among the Company,
its corporate affiliates and/or subsidiaries, Fleet National Bank- Corporate
Trust Division, as agent (the "Agent") for the Company's principal recourse
lenders, and Vestex, the Company's majority stockholder; (2) release in favor of
the principal recourse lenders to be given by Vestex and Brian Adley, Chairman
of the Board of Directors of the Company and president of Vestex, individually;
(3) release in favor of the principal recourse lenders to be given by the
Company, its corporate affiliates and/or subsidiaries; and (4) $1,500,000
Secured Promissory Note given by the Company, its corporate affiliates and/or
subsidiaries in favor of Vestex.
In April 1997, both an intercreditor loan and secured inventory loan were
repaid in advance of their respective terms. The aggregate amount of this debt
on the repayment date was approximately $1,906,000 of which approximately
$976,000 was paid in cash and the balance of $930,000 was forgiven. In addition,
the Company paid approximately $22,000 in legal and bank fees to complete this
transaction.
8
<PAGE>
The Company's ability to underwrite equipment lease transactions is largely
dependent upon the continuing availability of short-term warehouse lines of
credit. Management is engaged in a continuing dialogue with several possible
alternative inventory lenders which appear to be interested in providing the
Company with warehouse financing. If the Company were to lose either of its
existing credit lines, or if their availability were reduced, the Company would
take immediate steps to replace either or both of them with one or more
alternative warehouse facilities. If the Company experienced unexpected delays
in putting a new warehouse facility in place, it would temporarily disrupt the
Company's ability to underwrite new equipment leases until the new warehouse
financing was secured.
On May 19, 1997, the Company borrowed $1.5 million from the Vice Chairman
of the Board of the Company. The loan is evidenced by a promissory note that
bears interest at the prime rate plus 2-1/8% (10-3/8% at May 19, 1997) and is
guaranteed by the Chairman of the Board of the Company. The Company is also
negotiating an additional $2.5 million loan with a bank and a $2.5 million
warehouse line of credit facility with a financing institution owned by the Vice
Chairman of the Board of the Company. Although there can be no assurance that
such financing will occur, management is confident that these additional
financing transactions can be closed during the third quarter of fiscal 1997.
On June 6, 1997, the Company issued 8,333,333 shares of Common Stock to
Vestex in consideration of the guarantee by Vestex of certain bank lines of
credit in the aggregate of $4,000,000. The Company will record compensation
expense of $1,000,000 in connection with this guarantee. On June 6, 1997, the
Company also issued 6,716,667 shares of Common Stock to Vestex in consideration
of approximately $806,000 of fees due Vestex which were previously accrued. Of
the total 15,050,000 shares issued, 1,430,911 shares were issued from treasury
stock.
The remarketing of equipment has played and will continue to play a vital
role in the Company's operating activities. In connection with the sale of lease
transactions to investors, the Company typically is entitled to share in a
portion of the residual value realized upon remarketing. Successful remarketing
of the equipment is essential to the realization of the Company's interest in
the residual value of its managed portfolio. It is also essential to the
Company's ability to recover its original investment in the equipment in its own
portfolios and to recognize a return on that investment. The Company has found
that its ability to remarket equipment is affected by a number of factors. The
original equipment specifications, current market conditions, technological
changes, and condition of the equipment upon its return all influence the price
for which the equipment can be sold or re-leased. Delays in remarketing caused
by various market conditions reduce the profitability of the remarketing.
The Company anticipates it will continue to dedicate substantial resources
toward the further development and improvement of its remarketing capabilities
and believes that remarketing will continue to be a profit center for the
Company. The Company's strategy is to further exploit its remarketing expertise
by continuing to develop its ability to sell remarketing services to other
lessors, fleet owners, and lessees and also to create a dealer capability under
which the Company would buy and resell fleet equipment. The Company is also
implementing a plan to expand its brokerage activities through the Internet and
the use of other information technologies.
9
<PAGE>
The Company's current lines of credit, if renewed or replaced, the renewal
of recently expired lines, its expected access to the public and private
securities markets, both debt and equity, anticipated new lines of credit (both
short-term and long-term and recourse and nonrecourse), anticipated long-term
financing of individual significant lease transactions, and its estimated cash
flows from operations are anticipated to provide adequate capital to fund the
Company's operations for the next twelve months. Although no assurances can be
given, the Company expects to be able to renew or timely replace its existing
and recently expired lines of credit, to continue to have access to the public
and private securities markets, both debt and equity, and to be able to enter
into new lines of credit and individual financing transactions.
POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS
The Company's future quarterly operating results and the market price of
its stock may fluctuate. In the event the Company's revenues or earnings for any
quarter are less than the level expected by securities analysts or the market in
general, such shortfall could have an immediate and significant adverse impact
on the market price of the Company's stock. Any such adverse impact could be
greater if any such shortfall occurs near the same time of any material decrease
in any widely followed stock index or in the market price of the stock of one or
more public equipment leasing companies or major customers or vendors of the
Company.
The Company's quarterly results of operations are susceptible to
fluctuations for a number of reasons, including, without limitation, as a result
of sales by the Company of equipment it leases to its customers. Such sales of
equipment, which are an ordinary but not predictable part of the Company's
business, will have the effect of increasing revenues, and, net income to the
extent sales proceeds exceeds net book value, during the quarter in which the
sale occurs. Furthermore, any such sale may result in the reduction of revenue,
and net income, otherwise expected in subsequent quarters, as the Company will
not receive lease revenue from the sold equipment in those quarters.
Given the possibility of such fluctuations, the Company believes that
comparisons of the results of its operations to immediately succeeding quarters
are not necessarily meaningful and that such results for one quarter should not
be relied upon as an indication of future performance.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995
This Quarterly Report on Form 10-Q contains certain "Forward-Looking"
statements as such term is defined in the Private Securities Litigation Reform
Act of 1995 and information relating to the Company and its subsidiaries that
are based on the beliefs of the Company's management as well as assumptions used
in this report, the words "anticipate," "believe," "estimate," "expect," and
"intend" and words or phrases of similar import, as they relate to the Company
or its subsidiaries or the Company management, are intended to identify
forward-looking statements. Such statements reflect the current risks,
uncertainties and assumptions related to certain factors including, without
limitation, competitive factors, general economic conditions, customer
relations, relationships with vendors, the interest rate environment,
governmental regulation and supervision, seasonality, distribution networks,
product introduction and acceptance, technology changes and changes in industry
conditions. Should any one or more of these risks or uncertainties materialize,
or should any underlying assumptions prove incorrect, actual results may vary
materially from those described herein as anticipated, believed, estimated,
expected or intended. The Company does not intend to update these
forward-looking statements.
10
<PAGE>
Part II. Other Information
Item 1. Legal Proceedings
The Company is involved in the following legal proceedings:
On January 15, 1997, Chancellor filed a complaint in Superior Court,
Suffolk County, Massachusetts, alleging that certain of its former officers and
directors are liable to the corporation for losses incurred as a result of their
negligence, breach of fiduciary duties, unjust enrichment, conversion, and
unfair and deceptive trade practices. In addition, Chancellor's complaint seeks
the imposition of a constructive trust for the corporation's benefit on various
assets that Chancellor claims were wrongfully taken from the corporation by its
former officers and directors, as well as recovery of damages arising from legal
malpractice allegedly committed by the corporation's former general counsel, and
defamatory statements made by one former officer and director to certain of the
corporation's customers.
Four of the defendants, Stephen G. Morison, David W. Parr, Gregory S.
Harper and Thomas W. Killilea, have answered the complaint (denying its
allegations), and have filed a counterclaim against Chancellor, and have
commenced a third-party action against Brian M. Adley, Vestex Corporation and
Vestex Capital Corporation. The counterclaim alleges that Chancellor is liable
for breach of certain employment and severance agreements allegedly entered into
with the defendants Morison and Harper, and for the abuse of process in
connection with the corporation's initiation of this lawsuit. The third-party
complaint seeks indemnification and contribution from Adley, Vestex Corporation
and Vestex Capital Corporation in connection with the claims raised by
Chancellor in the primary action. In addition, the third party complaint seeks
recovery of damages from Adley, Vestex Corporation and Vestex Capital
Corporation for alleged abuse of process, interference with the contractual
relations and deceit. In their answer to the counterclaim the third-party
complaint, Chancellor and the third-party defendant have denied the defendants'
allegations.
The Company is also involved in routine legal proceedings incidental to the
conduct of its business. Management believes that none of these legal
proceedings will have a material adverse effect on the financial condition or
operations of the Company.
Item 2. Changes in Securities
None
Item 3. Defaults Under Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - None
(b) Reports on Form 8-K - During the first quarter of 1997, the
Company filed a Form 8-K report (Item 5) dated March 26, 1997 and a Form
8-K report (Item 4) dated March 5, 1997.
11
<PAGE>
Chancellor Corporation
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
/s/ John J. Powell
John J. Powell
President and Chief Executive Officer
DATE: July 28, 1997
12
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 65
<SECURITIES> 0
<RECEIVABLES> 202
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 2,769
<DEPRECIATION> (2,667)
<TOTAL-ASSETS> 5,792
<CURRENT-LIABILITIES> 0
<BONDS> 3,687
0
80
<COMMON> 65
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<SALES> 0
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