LAN Lancer Cp

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/

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