UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K AMENDMENTS
Annual Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1996 Commission file number 0-13875
Lancer Corporation
(Exact name of registrant as specified in its charter)
Texas 74-1591073
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
235 W. Turbo, San Antonio, Texas 78216
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (210) 344-3071
Securities registered pursuant to Section 12 (b) of the Act:
NONE
<PAGE>
Index of Amended Items
# Description
1 Correction of misspelled word line 12 - advantageous found in Accounting
Matters on Page 9 of Form 10-K
2 Formatting Correction of Subtotal for Net cash provided in investing
activities found in Consolidated Statements of Cash Flows on Page F-7
of Form 10-K
3 Investments pretaining to lines 12 and 14 should have been plural in
paragraph 3 of Long-term Debt and Line of Credit with Bank on Page F-12
of Form 10-K
4 Signatures
<PAGE>
1. Correction of misspelled word line 12 - advantageous found in Accounting
Matters on Page 9 of Form 10-K
Accounting Matters
The Company established a DISC in 1979 in order to defer federal income taxes on
its foreign sales. In late 1984, the Internal Revenue Code (the Code) was
amended to limit the benefits of a DISC, primarily by imposing an interest
charge on the accumulated deferred federal income taxes of a DISC. At the same
time, the Code was amended to permit the creation of a Foreign Sales Corporation
(FSC). Under the Code, as amended, a portion of a FSC's income is subject to
federal income taxes, while a portion is permanently exempt from federal income
taxes. As a result, at some point, the interest charge the Company incurs on the
deferred federal income taxes of its DISC will equal or exceed the taxes it
would have incurred had it operated a FSC. Since the Company cannot maintain the
DISC and FSC at the same time under current tax regulations, the Company has
determined it will be advantageous to convert the DISC to a FSC and plans to
convert in 1997. At the time of such a conversion, the Company will be required
to provide for federal income taxes on the $2.4 million of undistributed
earnings of the DISC, for which federal income taxes had not previously been
provided. If the DISC had been converted on December 31, 1996, it would have
resulted in a reduction of approximately $801,000 in the Company's net earnings.
The Company will be able to pay such federal income taxes over a ten-year
period; thus the Company does not anticipate that payments of such federal
income taxes will significantly affect the Company's cash from operations.
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2. Formatting Correction of Subtotal for Net cash provided in investing
activities found in Consolidated Statements of Cash Flows on Page F-7 of
Form 10-K
<TABLE>
<CAPTION>
LANCER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 1996, 1995 and 1994
1996 1995 1994
----------------- ----------------- -----------------
Cash flow from operating activities:
<S> <C> <C> <C>
Net earnings $ 5,732,500 $ 4,091,117 $ 2,950,554
Adjustments to reconcile net earnings to net
cash (used) provided by operating activities:
Depreciation and amortization 2,445,288 2,152,169 1,843,177
(Gain) loss on sale and disposal of assets (15,485) 13,985 28,679
Effect of foreign currency translation 183,803 - -
Change in assets and liabilities, net of effects
from purchase of subsidiary:
Receivables (5,464,226) (3,872,837) 218,488
Prepaid expenses (97,161) (23,969) (4,522)
Inventories (8,207,165) 2,283,927 (5,783,544)
Other assets (390,495) 425,019 (143,666)
Accounts payable 1,589,097 (1,094,867) (356,526)
Accrued expenses 473,429 601,787 (32,771)
Deferred licensing and maintenance fees 1,190,504 1,710,576 610,925
Income taxes payable (883,890) 760,293 (359,449)
Deferred tax liability (22,267) (100,552) (36,034)
Other long-term liabilities 120,000 180,000 160,000
----------------- ----------------- -----------------
Net cash (used) provided by operating activities (3,346,068) 7,126,648 (904,689)
----------------- ----------------- -----------------
Cash flow from investing activities:
Proceeds from sale of assets 43,625 20,166 31,595
Acquisition of property, plant and equipment (9,056,710) (7,861,164) (2,942,641)
Acquisition of subsidiary company - (3,503,600) -
Purchase of long-term investments (2,600,000) (225,000) (150,000)
----------------- ----------------- -----------------
Net cash used in investing activities (11,613,085) (11,569,598) (3,061,046)
----------------- ----------------- -----------------
Cash flow from financing activities:
Net borrowings under line of credit agreements 4,700,000 1,000,000 700,000
Proceeds from issuance of long-term debt 17,950,000 6,929,000 5,035,072
Retirement of long-term debt (7,483,792) (4,889,170) (4,663,338)
Proceeds from issuance of common stock - - 3,533,083
Proceeds from exercise of stock options 55,018 55,082 110,141
----------------- ----------------- -----------------
Net cash provided by financing activities 15,221,226 3,094,912 4,714,958
----------------- ----------------- -----------------
Net increase (decrease) in cash 262,073 (1,348,038) 749,223
Cash at beginning of year 754,352 2,102,390 1,353,167
----------------- ----------------- -----------------
Cash at end of year $ 1,016,425 $ 754,352 $ 2,102,390
================= ================= =================
<CAPTION>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
3. Investments pretaining to lines 12 and 14 should have been plural in
paragraph 3 of Long-term Debt and Line of Credit with Bank on Page F-12
of Form 10-K
To manage its exposure to fluctuations in interest rates, the Company has
entered into two interest rate swap agreements (the Swap Agreements) for a
combined notional principal amount of $8.0 million. The Swap Agreements
terminate in August, 1999 and November, 2001. Interest rate swap agreements
involve the exchange of interest obligations on fixed and floating rate debt
without the exchange of the underlying principal amounts. The difference paid or
received on the swap agreement is recognized as an adjustment to interest
expense. The Companys Swap Agreements provide that the Company pay fixed
interest rates of 6.255% and 6.345%, while receiving a floating rate payment
equal to the three month LIBOR rate determined on a quarterly basis with
settlement occurring on specific dates. While the Company has credit risk
associated with these financial instruments, no loss is anticipated due to
nonperformance by the counterparties to these agreements because of the credit
worthiness of the financial institutions.
<PAGE>
4. Signuatures
Pursuant to the requirements of Section 13 or 15 (d) 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.
LANCER CORPORATION
by: /s/ George F. Schroeder
George F. Schroeder March 28, 1997
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Signature Title Date
- ----------------------- ------------------- --------------
/s/ ALFRED A. SCHROEDER Chairman of the Board March 28, 1997
Alfred A. Schroeder
/s/ GEORGE F. SCHROEDER President and Director March 28, 1997
George F. Schroeder (principal executive officer)
/s/ JOHN P. HERBOTS Vice President Finance & Director March 28, 1997
John P. Herbots (principal financial and accounting officer)
/s/ WALTER J. BIEGLER Director March 28, 1997
Walter J. Biegler
/s/ JEAN M. BRALEY Director March 28, 1997
Jean M. Braley
/s/ CHARLES K. CLYMER Director March 28, 1997
Charles K. Clymer
/s/ MICHAEL E. SMITH Director March 28, 1997
Michael E. Smith
