Lancer (AMEX:LAN)
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Lancer Reports Second & Third Quarter Results
SAN ANTONIO, Dec. 8 /PRNewswire-FirstCall/ -- Lancer Corporation announced
results of operations for the quarters ended June 30, 2003 and September 30,
2003. KPMG LLP, the Company's independent accountants, has advised Lancer that
it will be unable to complete its review of the Company's consolidated financial
statements for the second and third quarters of 2003 until the previously
announced ongoing Audit Committee investigation is complete. Securities
regulations require that interim financial statements contained in a Form 10-Q
be reviewed by an independent auditor. The Company has filed the unreviewed
results of operations as Exhibits to a Form 8-K, and intends to file Form 10-Qs
when the reviews have been completed.
The filing of the Form 8-K does not make the Company current in its filing
requirements with the Securities and Exchange Commission. Due to the ongoing
investigation, the Company has not included any disclosure in the Form 8-K
relating to its controls and procedures, nor any of the certifications which
would be required in a filing of a Form 10-Q. Finally, the Company notes that
findings from the investigation and the subsequent reviews could result in
changes to the information contained in this news release and the Form 8-K.
Operating Results and Other Information
By managing costs, Lancer maintained profitability during the second and third
quarters despite sales declines from a strong 2002. The lower sales in the 2003
periods reflected a generally weak capital spending environment for the
foodservice and beverage industries, a trend the Company expects to continue in
the fourth quarter of 2003. The Company absorbed costs associated with the
Audit Committee investigation, which were negligible in the second quarter of
2003, and approximately $1.3 million in the third quarter. Lancer expects to
incur significant additional investigation expense in the fourth quarter of
2003.
Sales for the three months ended June 30, 2003 were $29.4 million, down 21.3%
from sales in the second quarter of 2002. Income from continuing operations
declined to $0.3 million in the 2003 quarter from $1.9 million in the 2002
period. Net earnings were $0.2 million, or $0.02 per diluted share, in the
second quarter of 2003, and $0.6 million, or $0.06 per diluted share, in the
second quarter of 2002.
Third quarter sales were $30.2 million in 2003, down 19% from sales in the 2002
period. Income from continuing operations was $0.6 million, compared to $1.9
million in the third quarter of 2002. Net earnings were $0.6 million, or $0.06
per diluted share, in the third quarter of 2003, down from $1.9 million, or
$0.20 per diluted share, in the same period of 2002.
Sales for the nine months ended September 30, 2003 were $86.5 million, down 18%
from sales in the same period of 2002. Loss from continuing operations was $0.1
million in the 2003 period, compared to income of $4.4 million in 2002. Net
income was $0.5 million, or $0.05 per diluted share, in the nine months ended
September 30, 2003, down from $3.0 million, or $0.31 per diluted share, in the
same period of 2002.
During the first quarter of 2003, the Company resolved the Internal Revenue
Services' challenge of the Company's deduction of its investment in Brazil, and
other matters. As a result, the Company reversed certain tax accruals in the
three months ended March 31, 2003, resulting in an income tax benefit included
in continuing operations of $1.1 million. The Company has since determined that
the reversal of $0.7 million of the accruals related to the Brazilian operations
should be reclassified as a tax benefit from discontinued operations. The
reclassification has no effect on the net loss of $0.3 million, or $0.03 per
share, as previously reported in the first quarter of 2003. The
reclassification does, however, change the loss from continuing operations to
$1.0 million, or $0.11 per share, and earnings from discontinued operations to
$0.7 million, or $0.08 per diluted share. The Company intends to amend its
first quarter report on Form 10-Q to reflect these changes.
This press release contains various forward-looking statements and information
that are based on management's belief as well as assumptions made by and
information currently available to management. Although the Company believes
that the expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to have
been correct. Such statements contain certain risks, uncertainty and
assumptions. Should one or more of these risks materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those expected.
LANCER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Amounts in thousands, except share data)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
Net sales $29,370 $37,306 $56,244 $67,556
Cost of sales 21,680 27,574 42,760 50,616
Gross profit 7,690 9,732 13,484 16,940
Selling, general and
administrative expenses 6,692 6,585 13,274 12,454
Operating income 998 3,147 210 4,486
Other (income) expense:
Interest expense 156 382 324 842
Loss from joint ventures 261 46 487 138
Minority interest --- (11) --- (55)
Other income, net (25) (224) (226) (307)
392 193 585 618
Income (loss) from
continuing operations
before income taxes 606 2,954 (375) 3,868
Income tax expense (benefit)
Current 1,020 938 881 1,269
Deferred (694) 101 (526) 105
326 1,039 355 1,374
Income (loss) from
continuing operations 280 1,915 (730) 2,494
Discontinued operations
Loss from operations of
discontinued Brazilian
subsidiary 76 2,020 120 2,138
Income tax benefit (26) (687) (763) (727)
(Income) loss from
discontinued operations 50 1,333 (643) 1,411
Net earnings (loss) $230 $582 $(87) $1,083
Common Shares Outstanding:
Basic 9,353,706 9,332,135 9,349,542 9,318,031
Diluted 9,449,974 9,408,263 9,349,542 9,398,304
Earnings Per Share:
Basic
Earnings (loss) from
continuing operations $0.03 $0.20 $(0.08) $0.27
Earnings (loss) from
discontinued operations $(0.01) $(0.14) $0.07 $(0.15)
Net earnings (loss) $0.02 $0.06 $(0.01) $0.12
Diluted
Earnings (loss) from
continuing operations $0.03 $0.20 $(0.08) $0.27
Earnings (loss) from
discontinued operations $(0.01) $(0.14) $0.07 $(0.15)
Net earnings (loss) $0.02 $0.06 $(0.01) $0.12
LANCER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Amounts in thousands, except share data)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2003 2002 2003 2002
Net sales $30,237 $37,298 $86,481 $104,854
Cost of sales 21,855 26,267 64,615 76,883
Gross profit 8,382 11,031 21,866 27,971
Selling, general and
administrative expenses 7,722 7,563 20,996 20,017
Operating income 660 3,468 870 7,954
Other (income) expense:
Interest expense 103 299 427 1,112
(Income) loss from joint
ventures (427) 232 60 370
Minority interest --- --- --- (55)
Other income, net 20 (1) (206) (279)
(304) 530 281 1,148
Income from continuing
operations before
income taxes 964 2,938 589 6,806
Income tax expense (benefit)
Current 447 972 1,328 2,241
Deferred (90) 28 (616) 133
357 1,000 712 2,374
Income (loss) from
continuing operations 607 1,938 (123) 4,432
Discontinued operations
Loss from operations of
discontinued Brazilian
subsidiary 40 85 160 2,223
Income tax benefit (7) (23) (770) (750)
(Income) loss from
discontinued operations 33 62 (610) 1,473
Net earnings $574 $1,876 $487 $2,959
Common Shares Outstanding:
Basic 9,360,893 9,333,115 9,353,912 9,323,114
Diluted 9,431,772 9,416,381 9,460,611 9,412,172
Earnings Per Share:
Basic
Earnings (loss) from
continuing operations $0.07 $0.21 $(0.01) $0.48
Earnings (loss) from
discontinued operations $(0.01) $(0.01) $0.06 $(0.16)
Net earnings $0.06 $0.20 $0.05 $0.32
Diluted
Earnings (loss) from
continuing operations $0.07 $0.21 $(0.01) $0.47
Earnings (loss) from
discontinued operations $(0.01) $(0.01) $0.06 $(0.16)
Net earnings $0.06 $0.20 $0.05 $0.31
LANCER CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in thousands)
ASSETS
September 30, December 31,
2003 2002
(Unaudited)
Assets:
Cash $1,975 $3,241
Net receivables 15,527 17,325
Total inventories 27,039 29,094
Other assets 45,648 43,311
Total assets $90,189 $92,971
LIABILITIES AND SHAREHOLDERS' EQUITY
September 30, December 31,
2003 2002
(Unaudited)
Liabilities:
Accounts payable $8,106 $10,141
Debt 16,087 17,534
Other liabilities 13,736 15,145
Total liabilities $37,929 $42,820
Minority interest --- ---
Shareholders' equity 52,260 50,151
Total liabilities and shareholders' equity $90,189 $92,971
Contact: Scott Adams of Lancer Corporation, +1-210-310-7065.
DATASOURCE: Lancer Corporation
CONTACT: Scott Adams of Lancer Corporation, +1-210-310-7065
Web site: http://www.lancercorp.com/