LANCER CORPORATION
6655 Lancer Blvd.
San Antonio, Texas 78219
April 28, 1998
Dear Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders (the
"Meeting") of Lancer Corporation (the "Company") to be held at the Company's
Corporate Headquarters at 6655 Lancer Blvd., San Antonio, Texas on Thursday, May
28, 1998 at 9:30 a.m., local time.
The attached Notice of Annual Meeting and Proxy Statement fully describes the
formal business to be transacted at the Meeting, which includes: electing six
directors of the Company, approving the appointment of KPMG Peat Marwick LLP as
independent auditors for the Company for the ensuing year, and transacting such
other matters as may properly come before the Meeting or any adjournments
thereof.
Directors and officers of the Company, as well as a representative of the
Company's independent auditors, will be present at the annual meeting to respond
to any questions that you may have.
The Company's Board of Directors believes that a favorable vote on each of the
matters to be considered at the Meeting is in the best interest of the Company
and its shareholders and unanimously recommends a vote "FOR" each such matter.
Accordingly, we urge you to review the accompanying material carefully, and to
sign, date and return the enclosed Proxy promptly. If you attend the Meeting,
you may vote in person even if you have previously mailed a Proxy.
Sincerely,
/s/ George F. Schroeder
George F. Schroeder
President and Chief Executive Officer
<PAGE>
LANCER CORPORATION
6655 Lancer Blvd.
San Antonio, Texas 78219
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on May 28, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the "Meeting")
of Lancer Corporation (the "Company" or "Lancer") will be held at the Company's
Corporate Headquarters at 6655 Lancer Blvd., San Antonio, Texas on Thursday, May
28, 1998 at 9:30 a.m., local time. A form of Proxy and a Proxy Statement for the
Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of a Board of Directors consisting of six directors for the
ensuing year;
2. The approval of the appointment of KPMG Peat Marwick LLP as independent
auditors for the Company for the ensuing year; and
3. Such other matters as may properly come before the Meeting or any
adjournments thereof.
The close of business on April 13, 1998 has been fixed by the Board of Directors
as the record date for determining shareholders entitled to notice of and to
vote at the Meeting or any adjournments thereof. For a period of at least 10
days prior to the Meeting, a complete list of shareholders entitled to vote at
the Meeting shall be open to the examination of any shareholder during ordinary
business hours at the Company's Corporate Headquarters, 6655 Lancer Blvd., San
Antonio, Texas 78219.
Information concerning the matters to be acted upon at the Meeting is set forth
in the accompanying Proxy Statement.
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING IN PERSON ARE URGED
TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD, WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE MEETING, YOU MAY VOTE
IN PERSON EVEN IF YOU HAVE PREVIOUSLY MAILED A PROXY.
By Order of the Board of Directors
/s/ George F. Schroeder
George F. Schroeder
President and Chief Executive Officer
San Antonio, Texas
April 28, 1998
<PAGE>
LANCER CORPORATION
6655 Lancer Blvd.
San Antonio, Texas 78219
PROXY STATEMENT
For
ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 28, 1998
THE PROXY
This Proxy Statement is being furnished to shareholders of Lancer Corporation
(the "Company" or "Lancer") in connection with the solicitation of Proxies (the
"Proxies") for use at the Annual Meeting of Shareholders (the "Meeting") to be
held at the Company's Corporate Headquarters at 6655 Lancer Blvd., San Antonio,
Texas on Thursday, May 28, 1998, at 9:30 a.m., local time, or at such other time
and place to which the Meeting may be adjourned. The enclosed Proxy is solicited
by the Board of Directors of the Company. Where a shareholder has appropriately
specified how a Proxy is to be voted, it will be voted accordingly.
The Proxy may be revoked at any time by providing written notice of such
revocation to The Bank of New York, Securities Transfer Services, 1301 Fannin,
Suite 2215, Houston, Texas 77002, Attention: Proxy Department. This notice must
be received prior to 5:00 p.m., local time on May 14, 1998. If notice of
revocation is not actually received by the Proxy Department by such date, a
shareholder may nevertheless revoke a Proxy by attending the Meeting and voting
in person.
The address of the principal executive offices of the Company is 6655 Lancer
Blvd., San Antonio, Texas 78219. This Proxy Statement and enclosed Proxy are
first being mailed to shareholders on or about April 23, 1998.
RECORD DATE AND VOTING SECURITIES
The record date for determining the shareholders entitled to vote at the Meeting
is the close of business on April 13, 1998 (the "Record Date"), at which time
the Company had issued and outstanding 9,098,470 shares of Common Stock, par
value $.01 per share (the "Common Stock"), which class of stock constitutes the
only outstanding securities of the Company entitled to vote at the Meeting.
QUORUM AND VOTING
The presence at the Meeting, in person or by Proxy, of the holders of a majority
of the outstanding shares of Common Stock is necessary to constitute a quorum.
Each share of Common Stock is entitled to one vote with respect to each matter
to be voted on at the Meeting. The approval of all proposals requires the
affirmative vote of a majority of the outstanding shares of Common Stock present
in person or by Proxy at the Meeting. Neither the Company's Articles of
Incorporation nor Bylaws provide for cumulative voting.
Abstentions and broker non-votes will be included in determining the presence of
a quorum at the meeting. Because matters to be voted upon at the meeting must be
approved by a vote of the holders of a majority of the shares of the Company
present at the meeting in person or by proxy, any abstention (including broker
non-votes) on any matter will have the effect of and be counted as a "no" vote.
1
<PAGE>
ACTIONS TO BE TAKEN AT THE MEETING
All shares represented by valid Proxies, unless the shareholder otherwise
specifies, will be voted FOR (i) the election of the six persons named under
"Election of Directors" of the Company; (ii) the proposal to approve KPMG Peat
Marwick LLP as independent auditors for the Company for the ensuing year; and
(iii) at the discretion of the proxy holders, any other matter that may properly
come before the Meeting or any adjournment thereof. The Board of Directors of
the Company unanimously recommends a vote "FOR" each proposal described in this
Proxy.
PROPOSAL I - ELECTION OF DIRECTORS
There are six directors to be elected. It is intended that the names of the
persons indicated in the following table will be placed in nomination and that
the persons named in the Proxy will vote for their election unless otherwise
instructed. Each of the nominees has indicated his or her willingness to serve
as a member of the Board of Directors, if elected. In case any nominee shall
become unavailable for election to the Board of Directors for any reason not
presently known or contemplated, the proxy holders will have discretionary
authority in that instance to vote the Proxy for a substitute. To be elected, a
nominee must receive the affirmative vote of the holders of a majority of the
shares of Common Stock present, in person or by Proxy, at the Meeting. Each
nominee elected will serve as director for the ensuing year and until his or her
successor shall have been duly qualified and elected.
The nominees are as follows:
<TABLE>
<CAPTION>
Name Age Position
- --------------------------------- --------------- -------------------------------------
<S> <C> <C>
Alfred A. Schroeder (1) 61 Chairman of the Board
George F. Schroeder (1) 58 President, Chief Executive Officer
and Director
Walter J. Biegler (2) 56 Director
Jean M. Braley (3) 68 Director
Charles K. Clymer (2) 62 Director
Michael E. Smith (2) 57 Director
<FN>
(1) Alfred A. Schroeder and George F. Schroeder are brothers. No other nominee
is related by blood, marriage or adoption to another nominee or to any executive
officer of the Company or its subsidiaries.
(2) Member of the Compensation, Audit, and Stock Option Committees.
(3) Member of the Audit Committee.
</FN>
</TABLE>
Mr. Alfred A. Schroeder is a co-founder of the Company and has served as
Chairman of the Board of Directors of the Company since its inception in 1967.
His primary responsibilities include conceptual engineering design, new product
development and corporate planning. He is the brother of George F. Schroeder,
and is also a partner in Lancer Properties. See "Compensation and Certain
Transactions."
Mr. George F. Schroeder is a co-founder of the Company and has served as its
President, Chief Executive Officer and director since 1967. His primary
responsibilities include strategic planning, marketing, overall production
management and corporate administration. He is the brother of Alfred A.
Schroeder, and is also a partner in Lancer Properties. See "Compensation and
Certain Transactions."
Mr. Walter J. Biegler has served as a director of the Company since 1985. He has
held the position of Chief Financial Officer of Periodical Management Group,
Inc., a San Antonio, Texas concern which distributes periodicals, books and
specialty items in the United States, Mexico and the Virgin Islands, since
November 1991. Prior to November 1991, he served as the Chief Financial Officer
and Senior Vice President-Finance of La Quinta Motor Inns, Inc. of San Antonio,
Texas, a national hotel chain.
2
<PAGE>
Ms. Jean M. Braley has served as a director of the Company since 1976. She
served as Secretary of the Company from 1982 to 1985. Ms. Braley has been a
private investor since 1985. She is also a partner in Lancer Properties. See
"Compensation and Certain Transactions."
Mr. Charles K. Clymer has served as a director of the Company since December
1996. Mr. Clymer retired from The Coca-Cola Company in 1993 after 31 years of
service. Managerial positions held with Coca-Cola International included Manager
of Chile, Director and Senior Vice President of Coca-Cola (Japan) Company
Limited, and Vice President of On Premise Market Development and Customer
Service for the Latin America Group.
Mr. Michael E. Smith has served as a director of the Company since 1985. Mr.
Smith is presently a principal shareholder and Vice President of Bailey-Gosling
Associates, Inc., an insurance brokerage firm. He has been employed by the same
firm since 1968. Mr. Smith has been the Company's insurance broker since 1981.
See "Compensation and Certain Transactions."
Board of Directors and Committees
The business of the Company is managed under the direction of the Board of
Directors. The Board meets on a periodic basis to review significant
developments affecting the Company and to act on matters requiring Board
approval. The Board of Directors met four times and acted by unanimous written
consent four times during the 1997 fiscal year. During such period, each member
of the Board participated in at least 75% of all Board and applicable Committee
meetings.
The Board of Directors has established audit, compensation and stock option
committees to devote attention to specific subjects and to assist it in the
discharge of its responsibilities. Mr. Walter J. Biegler, Ms. Jean M. Braley,
Mr. Charles K. Clymer and Mr. Michael E. Smith are the members of the audit
committee. Mr. Biegler, Mr. Clymer and Mr. Smith are the members of the
compensation and stock option committees. The Audit Committee is responsible for
the review of the audited financial results and coordination of the annual
audit. The Compensation Committee is responsible for officer compensation. The
Stock Option Committee is responsible for administering the Company's stock
option plans. The Compensation Committee met once, and the Stock Option
Committee acted by unanimous consent seven times during the 1997 fiscal year.
The Audit committee met once during the 1997 fiscal year.
PROPOSAL II - APPROVAL OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed the firm of KPMG Peat Marwick LLP as
independent auditors to make an examination of the accounts of the Company for
the fiscal year 1998, and has directed that the appointment be submitted to the
shareholders for their approval at the Meeting. KPMG Peat Marwick LLP has
audited the Company's financial statements for a period exceeding 18 years. It
is expected that a representative of the firm will be present at the Meeting
with an opportunity to make a statement if such representative so desires and
will be available to respond to appropriate questions by shareholders. If the
shareholders do not approve this appointment, the Board of Directors will
consider the selection of other auditors.
During the fiscal year ended December 31, 1997, KPMG Peat Marwick LLP provided
audit services to the Company consisting of the audit of the consolidated
financial statements of the Company, services related to filings with the
Securities and Exchange Commission, and tax preparation and consultation
services.
3
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of March 23, 1998, regarding the
beneficial ownership of common stock of Lancer by each person known by Lancer to
own 5% or more of the outstanding shares of each class of Lancer's Common Stock,
each director of Lancer, each executive officer of the Company named in the
Summary Compensation Table set forth in this proxy, and the directors and
executive officers of Lancer as a group. The persons named in the table have
sole voting and investment power with respect to all shares of Common Stock
owned by them, unless otherwise noted. The number of shares beneficially owned
reflects a three-for-two stock dividend effective July 8, 1997.
<TABLE>
<CAPTION>
Number of Shares
Name of Beneficial Owner and Number of Common Stock Percent of
of Persons in Group Beneficially Owned Class
<S> <C> <C>
Alfred A. Schroeder (1)(2) 1,228,957 12.9
George F. Schroeder (1)(3) 1,431,546 15.0
John P. Herbots (4) 28,797 *
Walter J. Biegler 6,750 *
Jean M. Braley (1)(5) 485,877 5.1
Charles K. Clymer 6,521 *
Michael E. Smith 7,650 *
Samuel Durham (6) 53,237 *
Michael U. Raymondi (7) 17,896 *
Robert W. Abbott (8) 24,975 *
Greenbriar Partners, Ltd. (9) 549,225 5.8
All directors and executive officers
as a group (fifteen persons) (10) 3,338,952 35.0
<CAPTION>
*Less than 1%
(1) The mailing address for Mr. Alfred A. Schroeder, Mr. George F. Schroeder and
Mrs. Jean M. Braley is 6655 Lancer Blvd., San Antonio, Texas 78219.
(2) Includes 187,987 shares purchasable pursuant to options which are
exercisable within the next 60 days, but excludes 206,969 shares held of record
by Mr. Alfred A. Schroeder's two adult children.
(3) Includes 447,525 shares held by trusts for the children of Mr. George F.
Schroeder, of which Mr. George F. Schroeder is the trustee, and includes 187,987
shares purchasable pursuant to options which are exercisable within the next 60
days. Excludes 15,187 shares held by Mr. George F. Schroeder's three adult
children.
(4) Includes 17,766 shares purchasable pursuant to options which are exercisable
within the next 60 days. Mr. Herbots resigned as an officer and director of the
Company effective April 17, 1998.
(5) Includes 265,318 shares held by the Estate of William V. Braley for which
Mrs. Braley serves as sole independent executrix.
(6) Includes 49,897 shares purchasable pursuant to options which are exercisable
within the next 60 days.
(7) Shares purchasable pursuant to options which are exercisable within the next
60 days.
(8) Includes 21,375 shares purchasable pursuant to options which are exercisable
within the next 60 days.
(9) Greenbriar Partners, Ltd. is an investment firm whose mailing address is
1901 N. Akard, Dallas, Texas 75201. Includes 13,500 shares held by Rowe Family
Partnership, Ltd.
(10) Includes 514,483 shares purchasable pursuant to options which are
exercisable within the next 60 days.
</TABLE>
4
<PAGE>
EXECUTIVE OFFICERS
The following table sets forth certain information concerning the executive
officers of the Company:
<TABLE>
<CAPTION>
Name Age Position with the Company
- -------------------------- ------ ---------------------------------------
<S> <C>
Alfred A. Schroeder 61 Chairman of the Board
George F. Schroeder 58 President and CEO
Charles W. Thomas 44 Vice President of Marketing
Robert W. Abbott 59 Vice President - Asia
Richard M. Abraham 47 Vice President - Pacific
Jose A. Canales, Jr. 52 Vice President - Latin America
Robert E. Gehl 36 Vice President - Europe
James R. Sprinkle 50 Vice President - North America
Samuel Durham 49 Vice President of Engineering
Michael U. Raymondi 50 Vice President of Operations
</TABLE>
Mr. Alfred A. Schroeder is a co-founder of the Company and has served as
Chairman of the Board of Directors of the Company since its inception in 1967.
His primary responsibilities include conceptual engineering design, new product
development and corporate planning. He is the brother of George F. Schroeder,
and is also a partner in Lancer Properties. See "Compensation and Certain
Transactions."
Mr. George F. Schroeder is a co-founder of the Company and has served as
President, Chief Executive Officer and director since 1967. His primary
responsibilities include strategic planning, marketing, overall production
management and corporate administration. He is the brother of Alfred A.
Schroeder, and is also a partner in Lancer Properties. See "Compensation and
Certain Transactions."
Mr. Charles W. Thomas joined the Company as Vice President of Marketing in
February 1996. Prior to joining Lancer, Mr. Thomas was employed for 15 years by
what is now The Minute Maid Company, a division of The Coca-Cola Company. While
at The Minute Maid Company, Mr. Thomas held positions including Director of
Marketing, Director of Field Sales and Director of Technical Development.
Mr. Robert W. Abbott has been employed by the Company since 1974. Mr. Abbott
became Vice President - Asia in 1997. From 1976 until January 1997, he has held
various senior sales positions, including Vice President - International Sales.
Prior to his employment with Lancer, Mr. Abbott was employed by The Coca-Cola
Company.
Mr. Richard M. Abraham has been employed by the Company as Vice President -
Pacific since April, 1997. He was previously a principal owner of Applied
Beverage Systems (1990), Ltd. ("ABS") in Auckland, New Zealand, since 1986. The
Company acquired substantially all of the assets of ABS in April, 1997.
Mr. Jose A. Canales, Jr., joined the Company as Vice President - Latin America
in August 1995. Prior to joining Lancer, Mr. Canales was the International Sales
Manager for Pioneer Flour Mills in San Antonio, Texas. From 1982 to 1993 he held
various management positions within the Latin American steel industry with Trade
Arbed of Luxembourg, Fundidora in Mexico and Huntco Steel in the United States.
From 1972 to 1982, he represented W.W. Grainger in Mexico and Latin America.
Mr. Robert E. Gehl joined the Company in February 1997 as Vice President -
Europe. Before coming to Lancer, Mr. Gehl was Managing Director of Europe for
Multiplex GmbH for five years, and was Director of Sales and Marketing of
Jetspray London, Ltd. for two years.
Mr. James R. Sprinkle joined the Company in April 1984 as Director of National
Accounts. Mr. Sprinkle assumed the responsibilities of Vice President - Domestic
Sales in May 1993. Prior to his employment with Lancer, Mr. Sprinkle was
employed by The Coca-Cola Company.
5
<PAGE>
Mr. Samuel Durham joined the Company in June 1979 and has held the position of
Vice President of Engineering since May 1993. He is primarily responsible for
coordinating new product design through its introduction into the market and
works directly with the engineering department of the Company's largest
customer. Before joining the Company, Mr. Durham was employed by Polyvend, a
manufacturer of vending equipment.
Mr. Michael U. Raymondi joined the Company as Vice President of Operations in
August 1994. Prior to joining Lancer, Mr. Raymondi was employed by Minnesota
Rubber, a rubber and plastics products company, as General Manager for three
years. Prior to that, Mr. Raymondi was employed by National O-Ring as Plant
Manager for five years.
COMPENSATION AND CERTAIN TRANSACTIONS
Report of the Compensation Committee and the Stock Option Committee on Executive
Compensation
The Compensation Committee of the Board of Directors consists of three
non-employee directors of the Company. It is authorized to review and consider
the Company's compensation standards and practices. The Compensation Committee
considers suggestions from management and makes recommendations to the Board of
Directors concerning the cash compensation to be paid to executive officers of
the Company and its subsidiaries. The Stock Option Committee of the Board of
Directors was formed in 1985 at the time of the adoption of the Company's first
Incentive Stock Option plan. It consists of three non-employee directors. The
Committee administers such plans and awards long-term compensation in the form
of stock options to executive officers and other eligible employees under such
plans.
The Company's executive compensation program is designed to attract and retain
talented managers and to motivate such managers to increase profitability and
shareholder value over time. Executive officers' compensation consists of base
salary and benefits and may include incentives in the form of annual cash
bonuses and stock options.
In determining base salaries, the Compensation Committee considers
recommendations from the President and CEO of the Company. Base salaries in 1997
for the Named Officers generally reflect the Company's performance in 1996. The
Compensation Committee has taken special notice that management is currently
leading the Company through a transition phase in which new markets are being
explored and developed, expansion programs at the Company's facilities have
added to the financial burden of the Company, and the installation of a new
fully integrated MRP II computer system has temporarily consumed managerial
resources. If such efforts result in earnings growth for the Company in future
years, the Compensation Committee intends to reward management with appropriate
increases in salaries.
Annual cash bonuses are typically tied to a performance target. Bonuses may also
be awarded at the Compensation Committee's discretion for special individual
contributions to the success of the Company. Since the Company did not achieve
desired results for the year, executive officers were generally not awarded cash
bonuses. The Chairman did receive a $38,214 bonus in 1997 that was not directly
related to an overall performance target.
Based upon available data, the Compensation Committee believes the base salaries
and cash bonuses of its executive officers were set below the levels of
comparable companies as measured by market capitalization.
All employees, including executive officers and non-employee directors are
eligible to receive grants of stock options from the Company. Options granted
generally have an exercise price equal to the market value of the Common Stock
on the date of grant, generally become exercisable in equal annual installments
over four years after the date of grant, and are contingent upon the optionee's
continued employment with the Company. The number of options granted to an
individual varies according to his or her individual contribution to the success
of the Company. The Stock Option Committee intends to make future grants as
necessary to focus managers on increasing profitability and shareholder value.
6
<PAGE>
Recent amendments to the federal income tax laws impose limitations on the
deductibility of compensation in excess of $1 million paid to executive officers
in certain circumstances. Certain performance-based compensation, however, is
specifically exempt from such limitations. Since the vesting of options under
the 1992 Plan is not subject to the attainment of performance objectives, it is
possible that awards to Named Officers under this plan, when taken in
conjunction with their annual compensation, could become subject to the
limitations of Section 162(m) of the Internal Revenue Code. Awards made under
the 1992 Plan to two of the Named Officers will expire if not exercised by
January 12, 2002. Therefore, it is likely that these options will be exercised
by January 12, 2002. When added to other compensation likely to be paid to such
officers in 2002, compensation related to these awards is likely to be partially
non-deductible to the Company under Section 162(m). The committee believes the
compensation of its executive officers cannot always be based upon fixed
formulas, and that the prudent use of discretion in determining compensation is
in the best interest of the Company and its shareholders. In some cases, the
Committee, in the exercise of such discretion, may approve executive
compensation that is not fully deductible. However, the Company does not expect
the limitations on deductibility to have a material impact on its financial
condition.
Compensation and Stock Option Committees
Walter J. Biegler, Chairman
Charles K. Clymer
Michael E. Smith
Compensation of Directors
Directors who are also employees of the Company receive no compensation for
serving as a director. Directors who are not employees of the Company receive a
fee of $2,000 per quarter.
Compensation Committee Interlocks and Insider Participation
Mr. Michael E. Smith is a member of the Company's Compensation and Stock Option
Committees. Mr. Smith is a principal shareholder and Vice President of the
insurance brokerage firm of Bailey-Gosling Associates, Inc. The CFompany paid
approximately $279,000, $305,000, and $313,000 in premiums in 1997, 1996 and
1995, respectively, for various insurance policies placed by or through
Bailey-Gosling Associates, Inc.
7
<PAGE>
Summary Compensation Table
The following table sets forth the compensation paid or to be paid by the
Company to the Chairman of the Board, the Chief Executive Officer, and the Named
Executive Officers for services rendered in all capacities for the years ended
December 31, 1997, 1996 and 1995.
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
-------------------- ------
Other Securities
Annual Underlying All Other
Year Salary Bonus Compensation(1) Options (2) Compensation (3)
Name/Title ($) ($) ($) (#) ($)
- ----------------------------- -------- --- ---------- -- ---------- ---------------- ------------ -----------------
<S> <C> <C> <C> <C> <C> <C>
Alfred A. Schroeder 1997 199,992 38,214 4,945 - 52,432
Chairman of the 1996 199,992 47,693 4,441 - 60,385
Board 1995 199,992 21,462 4,500 - 60,311
George F. Schroeder 1997 199,992 - 4,945 - 28,080
President & CEO 1996 199,992 28,782 4,441 - 31,314
1995 199,992 - 4,500 - 32,436
John P. Herbots 1997 142,318 - 4,153 - -
Vice President Finance 1996 110,345 38,700 2,792 25,470 377
& CFO (4) 1995 80,395 13,654 - 16,371 8,934
Samuel Durham 1997 141,355 - 4,945 - 941
Vice President of 1996 118,922 29,800 3,484 33,750 1,013
Engineering 1995 111,821 4,795 3,500 - 1,267
Michael U. Raymondi 1997 116,553 - 4,943 - -
Vice President of 1996 105,490 26,400 - 22,500 377
Operations 1995 95,014 15,630 - 3,954 249
Robert W. Abbott 1997 106,548 - 4,180 - 505
Vice President - Asia 1996 100,020 25,100 3,208 28,125 1,518
1995 99,278 8,332 3,000 - 2,260
<CAPTION>
(1) These amounts reflect Company contributions to its profit sharing plan for
the benefit of the Named Officers for the years indicated.
(2) Adjusted for three-for-two stock dividends in July 1997, July 1996 and July
1995.
(3) These amounts include insurance premiums paid for the benefit of the Named
Officers and certain other taxable fringe benefits.
(4) John P. Herbots joined the Company in February, 1995. Mr. Herbots resigned
as an officer and director of the Company effective April 17, 1998.
</TABLE>
8
<PAGE>
Options Exercised During the 1997 Fiscal Year and Fiscal Year End Option Values
The following table discloses, for the Chairman of the Board, the Chief
Executive Officer, and the Named Executive Officers, information concerning
options exercised during the fiscal year ended December 31, 1997, and the number
and value of the options held at the end of fiscal year 1997 based upon the
closing price of $11.50 per share of Common Stock on December 31, 1997. Amounts
are adjusted for the three-for-two stock dividends paid in July 1997, July 1996
and July 1995.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised In-the Money
Shares Options at FY-End Options at FY-End
Acquired Value Exercisable/ Exercisable/
Name/Title on Exercise Realized Unexercisable Unexercisable
- ------------------------- -- ----------- -- ------------- --------------------------------- -------------------------------
<S> <C> <C> <C> <C>
Alfred A. Schroeder 0 0 187,987/ $1,817,781/
Chairman of the 0 $ 0
Board
George F. Schroeder 0 0 187,987/ $1,817,781/
President & CEO 0 $ 0
John P. Herbots 0 0 10,782/ $ 45,824/
Vice President Finance 21,238 $103,547
and CFO
Samuel Durham 0 0 43,147/ $352,353/
Vice President of 20,250 $ 86,630
Engineering
Michael U. Raymondi 6,075 $52,367 13,396/ $64,116/
Vice President of 17,107 $79,248
Operations
Robert W. Abbott 2,250 $20,147 15,750/ $70,462/
Vice President - Asia 18,900 $82,241
</TABLE>
9
<PAGE>
Company Performance
The following graph shows a comparison of cumulative total returns for the
Company, the Standard & Poors SmallCap 600 Index, and the Standard & Poors
Specialized Manufacturing ("SPSM") Index for the five-year period ended December
31, 1997.
The total cumulative return on investment (change in the year end stock price
plus reinvested dividends) for each year for the Company, the Standard & Poors
SmallCap 600 Index, and the SPSM Index is based on the stock price or composite
index on December 31 of each year presented. The comparison assumes that $100
was invested in the Company's Common Stock and in each of the other two indices.
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Lancer Corporation $ 100.00 $ 191.53 $ 249.15 $ 284.76 $ 621.65 $ 526.32
Standard & Poors SmallCap 600 $ 100.00 $ 113.41 $ 111.74 $ 162.91 $ 167.70 $ 216.14
S & P Specialized Manufacturing $ 100.00 $ 118.79 $ 113.12 $ 147.01 $ 178.35 $ 223.98
</TABLE>
Profit Sharing Plan
In 1991 the Company amended the non-contributory profit sharing plan it
originally adopted in 1985 to comply with changes in the law. The amount of
annual contributions made by the Company is at the discretion of the Board of
Directors but may not exceed an amount equal to fifteen percent of the
compensation paid or accrued during the year to all participating employees.
Substantially all United States employees are eligible to participate. The
Company's consolidated statements of income for the years ended December 31,
1997, 1996, and 1995 include provisions of $576,000, $520,000, and $359,000,
respectively, attributable to the plan.
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Certain Transactions
Michael E. Smith, a principal shareholder and Vice President of the insurance
brokerage firm Bailey-Gosling Associates, Inc., has been the Company's insurance
broker since 1981. The Company paid approximately $279,000, $305,000 and
$313,000 in premiums for various insurance policies placed by or through
Bailey-Gosling Associates, Inc. in 1997, 1996 and 1995, respectively, for which
Mr. Smith's services were used in connection therewith.
Lancer Properties is a Texas general partnership that owns the land and building
at 235 West Turbo in San Antonio, Texas where a portion of the Company's
production operations are located. Lancer Properties leased the premises to the
Company for a term of 21 years beginning June 1, 1977 at a rental of $6,600 per
month. The Company also leases adjoining operating facilities at 257R West
Turbo, from Lancer Properties on a month-to-month basis for $800 per month. The
Company pays all maintenance expenses, property taxes, assessments and insurance
premiums on these facilities. In conjunction with a debt refinancing in 1992,
the Company advanced $220,000 to this partnership. Repayment of this advance was
made through a reduction of lease payments otherwise due between the Company and
the partnership and includes an interest charge at a rate of 9.25% per annum.
The advance was retired during 1997. Improvements to these properties paid by
the Company are recorded as an offset against the lease payments. Alfred A.
Schroeder, George F. Schroeder and Jean M. Braley, all of whom were directors of
the Company during 1997, own 13.33%, 13.33% and 15%, respectively, of Lancer
Properties. The Estate of William V. Braley, for which Mrs. Braley serves as
sole independent executrix, also holds a 15% interest in the partnership.
As of December 31, 1997, Alfred A. Schroeder and George F. Schroeder were
indebted to the Company for approximately $351,000 for cash advances received
from the company prior to and during 1997. The obligation to repay this
indebtedness is evidenced by promissory notes due on or before December 31,
1999, and payable to the company in four equal annual installments, beginning on
or before January 10, 1997, together with interest at the AFR rate, as published
by the Internal Revenue Service.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than ten percent of
the Company's Common Stock, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and the American Stock
Exchange. Based solely on reports and other information submitted by executive
officers and directors, the Company believes that during the year ended December
31, 1997 each of its executive officers, directors and persons who own more than
ten percent of the Company's Common Stock filed all reports required by Section
16(a), except for one late filing by Mrs. Jean M. Braley pursuant to stock
transactions involving a total of 900 shares, one late filing by Mr. George F.
Schroeder pursuant to stock transactions involving a total of 5,000 shares, and
two late filings for Mr. Michael U. Raymondi pursuant to stock transactions
involving a total of 2,000 shares.
SHAREHOLDER PROPOSALS
Shareholders may submit proposals on matters appropriate for shareholder action
at subsequent annual meetings of the Company consistent with Rule 14a-8
promulgated under the Securities Exchange Act of 1934, as amended. For such
proposals to be considered for inclusion in the Proxy Statement and Proxy
relating to the 1999 Annual Meeting of Shareholders, such proposals must be
received by the Company no later than December 24, 1998. Such proposals should
be directed to Lancer Corporation, 6655 Lancer Blvd., San Antonio, Texas 78219,
Attn: Chief Financial Officer.
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OTHER BUSINESS
The Board of Directors knows of no matter other than those described herein that
will be presented for consideration at the Meeting. However, should any other
matters properly come before the Meeting or any adjournment thereof, it is the
intention of the persons named in the accompanying Proxy to vote in accordance
with their best judgment in the interest of the Company.
MISCELLANEOUS
The expenses of preparing, printing and mailing this notice of meeting and proxy
material and all other expenses of soliciting proxies will be borne by the
Company. Georgeson & Company Inc., New York, New York, will distribute proxy
soliciting material to brokers, banks, and institutional holders and will
request such parties to forward soliciting material to the beneficial owners of
the Common Stock held of record by such persons. The Company will pay Georgeson
& Company Inc. an estimated fee of $2,000 for its services and will reimburse
Georgeson & Company Inc. for payments made to brokers and other nominees for
their expenses in forwarding soliciting material.
The Company's Annual Report to Shareholders for the fiscal year ended December
31, 1997 accompanies this Proxy statement. The Annual Report is not deemed to be
part of this Proxy Statement.
By order of the Board of Directors
/s/ George F. Schroeder
George F. Schroeder
President and Chief Executive Officer
San Antonio, Texas
April 28, 1998
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LANCER CORPORATION
1998 ANNUAL MEETING OF SHAREHOLDERS - MAY 28, 1998
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned shareholder of LANCER CORPORATION, a Texas corporation,
hereby acknowledges receipt of the Notice of Annual Meeting of Shareholders and
Proxy Statement, each dated April 28, 1998 and hereby appoints George F.
Schroeder and Alfred A. Schroeder or either of them, proxies and
attorneys-in-fact, with full power to each of substitution, on behalf and in the
name of the undersigned, to represent the undersigned at the 1998 Annual Meeting
of Shareholders of Lancer Corporation to be held May 28, 1998 at 9:30 a.m.,
local time, at the Companys facility at 6655 Lancer Blvd., San Antonio, Texas,
and at any adjournment or adjournments thereof, and to vote all shares of Common
Stock which the undersigned would be entitled to vote if then and there
personally present, on the matters set forth on the reverse side hereof and in
their discretion, upon such other matter or matters which may properly come
before the meeting or any adjournment or adjournments thereof.
This Proxy will be voted as directed or, if no contrary direction is
indicated, will be voted FOR the election of all listed directors, FOR the
ratification of the appointment of KPMG Peat Marwick as independent auditors,
and as said proxies deem advisable on such other matters as may come before the
meeting.
(Continued, and to be signed and dated, on the reverse side.)
LANCER CORPORATION
PO BOX 11214
NEW YORK, NY 10203-0214
<PAGE>
1. ELECTION OF DIRECTORS FOR all nominees / /
listed below
WITHHOLD AUTHORITY to vote / /
for all nominees listed below
EXCEPTIONS / /
Nominees: Alfred A. Schroeder; George F. Schroeder; Walter J. Biegler;
Jean M. Braley; Charles K. Clymer; Michael E. Smith
(INSTRUCTIONS: To withhold authority to vote for any individual nominee,
mark the Exceptions box and strike a line through that nominees name.)
2. PROPOSAL TO APPROVE THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE
INDEPENDENT AUDITORS OF THE COMPANY FOR THE YEAR ENDING DECEMBER 31, 1998
FOR / / AGAINST / / ABSTAIN / /
Address Change and/or
Comments Mark Here / /
(This Proxy should be marked, dated and signed by the shareholder(s)
exactly as his or her name appears hereon, and returned promptly in the
enclosed envelope. Persons signing in a fiduciary capacity should so
indicate, if shares are held by joint tenants both should sign.)
Dated , 1998
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Signature
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Signature
Votes MUST be indicated (x)
in Black or Blue ink. / /
Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope
<PAGE>
