UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 8, 1999
LANCER CORPORATION
(Exact name of registrant as specified in its charter)
Texas 0-13875 74-1591073
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)
6655 Lancer Blvd., San Antonio, Texas 78219
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (210) 310-7000
<PAGE>
Item 5. Other Events.
The registrant's press release dated November 8, 1999, regarding its financial
results for the period ended September 30, 1999, including unaudited
consolidated financial statements for the period ended September 30, 1999, are
attached as Exhibit 99.
Item 7. Financial Statements and Exhibits.
Exhibit 99 News Release dated November 8, 1999.
LANCER REPORTS THIRD QUARTER 1999 RESULTS
AND WRITEDOWN RELATED TO BRAZILIAN SUBSIDIARY
San Antonio, Texas, November 8, 1999 - Lancer Corporation (AMEX: LAN) reported a
net loss of $7,081,953 ($0.78 per share) for the quarter ended September 30,
1999, compared to net income of $1,839,684 ($0.20 per diluted share) in the
third quarter of 1998. Sales were $29,182,638 in the third quarter of 1999,
compared to $36,469,050 in last year's quarter.
For the nine months ended September 30, 1999, the Company's net loss was
$4,180,123 ($0.46 per share) versus net income of $6,114,815 ($0.66 per diluted
share) in the same period of 1998. Net sales for the first three quarters of
1999 were $103,482,838, down from $109,789,502 last year.
A decline in gross margin contributed to the reduction in third quarter
earnings. Reduced sales and lower production levels negatively affected overhead
absorption rates, which increased cost of sales and decreased profitability.
Because of the continuing poor business conditions in much of Latin America, the
Company has further reduced the size of its Brazilian operation, and has
written-off substantially all of its investment in Brazil. The resulting pre-tax
charge to third quarter earnings is $5,955,904.
The Company has recorded tax benefits of $3,279,735 relating to the third
quarter loss.
George F. Schroeder, Lancer's President and CEO, commented: "Low demand for
fountain products from several of our key customers in the United States in
particular, and from Latin America and most other international markets in
general, caused a significant decline in our sales. This drop in demand and our
successful efforts to reduce physical inventories combined to cause a
significant drop in our unit production. The lower production levels helped
erode our gross margin from historical levels, further contributing to the
earnings pressures we felt in the third quarter."
"This has been a tough year for our industry, and for Lancer and its
shareholders. Though we expect the fourth quarter to be seasonally slow as
usual, we believe industry conditions have bottomed-out. We enter the new
millennium with strengthened operations and strong momentum in our new product
development efforts. Our new Model 600 dispenser with modular volumetric
technology, our Ice Link ice transport system, dispensers targeting the growing
dual cola market, and new applications for our frozen beverage dispensers give
us the potential to advance our business significantly over the coming years."
Lancer is a leading manufacturer and distributor of beverage dispensing
equipment and related parts and components serving customers worldwide. The
Company, headquartered in San Antonio, Texas, has manufacturing facilities in
San Antonio, Texas; Adelaide, Australia; Sao Paulo, Brazil; and Piedras Negras,
Mexico. Lancer operates distribution centers in Sydney, Australia; Brussels,
Belgium; Quito, Ecuador; Monterrey, Mexico; Auckland, New Zealand; and Moscow,
Russia.
Under the safe harbor provisions of the Private Securities Litigation Reform Act
of 1995, Lancer cautions investors that any forward-looking statements or
projections made by the Company, including those made in this document, are
subject to risks and uncertainties that may cause actual results to differ
materially from those projected. These risks and uncertainties include future
market demand for the Company's existing products, the Company's ability to
commercialize and successfully manufacture new products, and market acceptance
of those new products.
<PAGE>
LANCER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September, 30 December 31,
1999 1998
----------------------- ------------------------
(Unaudited)
Assets:
<S> <C> <C>
Cash $ 602,770 $ 1,118,848
Net receivables 19,558,421 21,106,182
Total inventories 36,563,327 46,128,697
Other assets 47,635,425 44,486,240
----------------------- ------------------------
Total assets $ 104,359,943 $ 112,839,967
======================= ========================
</TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
----------------------- ----------------------
(Unaudited)
<S> <C> <C>
Liabilities:
Accounts payable $ 6,885,911 $ 8,854,438
Debt 40,761,523 44,662,550
Other Liabilities 10,951,474 11,065,004
----------------------- ----------------------
Total liabilities $ 58,598,908 $ 64,581,992
Minority interest
599,696 -
Shareholders' equity 45,161,339 48,257,975
----------------------- ----------------------
$ 104,359,943 $ 112,839,967
======================= ======================
</TABLE>
<PAGE>
LANCER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
1999 1998 1999 1998
------------------- ------------------- ------------------- ------------------
<S> <C> <C> <C> <C>
Net sales $ 29,182,638 $ 36,469,050 $ 103,482,838 $ 109,789,502
Cost of sales 28,328,664 27,148,651 86,986,644 81,529,792
------------------- ------------------- ------------------- ------------------
Gross profit 853,974 9,320,399 16,496,194 28,259,710
Selling, general and
Administrative expenses 5,673,057 5,175,032 16,221,695 15,393,926
Writedown of Brazilian assets 5,955,904 - 5,955,904 -
------------------- ------------------- ------------------- ------------------
Operating (loss) income (10,774,987) 4,145,367 (5,681,405) 12,865,784
------------------- ------------------- ------------------- ------------------
Other (income) expense:
Interest expense 857,615 1,105,812 2,661,868 3,042,420
Income from joint venture (323,938) - (1,851,841) (16,125)
Gain on sale of investment (895,424) - (895,424) -
Minority interest (66,970) - (66,970) -
Other (income) expense, net 15,418 62,668 6,770 133,437
------------------- ------------------- ------------------- ------------------
(413,299) 1,168,480 (145,597) 3,159,732
------------------- ------------------- ------------------- ------------------
(Loss) income before income (10,361,688) 2,976,887 (5,535,808) 9,706,052
taxes
------------------- ------------------- ------------------- ------------------
Income tax (benefit) expense:
Current (3,075,309) 1,276,550 (1,368,826) 3,224,738
Deferred (204,426) (139,347) 13,141 366,499
------------------- ------------------- ------------------- ------------------
(3,279,735) 1,137,203 (1,355,685) 3,591,237
------------------- ------------------- ------------------- ------------------
Net (loss) earnings $(7,081,953) $1,839,684 $(4,180,123) $ 6,114,815
=================== =================== =================== ==================
Common Shares and
Equivalents Outstanding:
Basic 9,124,509 9,112,304 9,123,252 9,063,394
Diluted 9,124,509 9,368,008 9,123,252 9,318,998
(Loss) Earnings Per Share:
Basic $ (0.78) $ 0.20 $ (0.46) $ 0.67
Diluted $ (0.78) $ 0.20 $ (0.46) $ 0.66
</TABLE>
<PAGE>
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 hereunto duly authorized.
LANCER CORPORATION
(Registrant)
November 9, 1999 By: /s/ George F. Schroeder
George F. Schroeder
President
November 9, 1999 By: /s/ Mark L. Freitas
Mark L. Freitas
Vice President - Controller
