USA: Lancer Reports Second Quarter Results

Lancer Corporation (Amex: LAN) announced results of operations for the second quarter and six months ended June 30, 2000.

The Company reported second quarter earnings of $806,000, or $0.09 per diluted share, compared to $1,450,000, or $0.16 in the second quarter of 1999. Net sales were $31,551,000 in the second quarter of 2000, down from $38,072,000 in the second quarter last year.

Net earnings for the first six months of 2000 were $1,121,000, or $0.12 per diluted share, compared to net earnings of $2,901,000, or $0.31 per diluted share, in the same period last year. Net sales for the first half of 2000 were $59,280,000, versus $74,300,000 in the first half of 1999.

Sales were strong in Europe and the Pacific region. North American revenue declined principally because of lower sales of frozen beverage equipment, which faced a difficult comparison with the second quarter of 1999. The Company's business in Asia and Latin America continued to suffer from weak market conditions.

George F. Schroeder, Lancer's President and CEO, commented: "Our sales decline relative to last year's second quarter was driven by a decline in sales of frozen beverage dispensers. Excluding the frozen business, our sales were roughly flat. Improved performance by our manufacturing group and a favorable sales mix helped raise our gross margin. Selling, general and administrative expenses rose from the second quarter last year primarily because of new product development and expenses associated with our new ABS distribution subsidiary in Chicago.

"The second quarter is generally our strongest quarter of the year. While there are signs that our business has bottomed out in certain segments and regions, we expect industry conditions to remain difficult for the remainder of 2000."

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 Chicago, Illinois; 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, the Company 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, but are not limited to, uncertainties related to economic conditions and market demand for the Company's products.

                      LANCER CORPORATION AND SUBSIDIARIES
 
                          CONSOLIDATED BALANCE SHEETS
 
                             (Amounts in thousands)
 
                                     ASSETS
 
                                            June 30,         December 31,
                                              2000               1999
                                           (Unaudited)
     Assets:
       Cash                              $       830         $     1,227
       Net receivables                        20,562              17,606
       Total inventories                      38,887              36,166
       Other assets                           45,140              48,055
         Total assets                    $   105,419         $   103,054
 
                      LIABILITIES AND SHAREHOLDERS' EQUITY
 
                                            June 30,         December 31,
                                              2000               1999
                                           (Unaudited)
     Liabilities:
       Accounts payable                  $     9,592         $     9,119
       Debt                                   36,718              36,605
       Other liabilities                      13,814              12,312
         Total  liabilities              $    60,124         $    58,036
 
      Minority interest                          406                 542
 
      Shareholders' equity                    44,889              44,476
 
      Total liabilities and
       shareholders' equity              $   105,419         $   103,054
 
                      LANCER CORPORATION AND SUBSIDIARIES
 
                       CONSOLIDATED STATEMENTS OF INCOME
 
                                  (Unaudited)
 
                   (Amounts in thousands, except share data)
 
                               Three Months Ended          Six Months Ended
                              June 30,     June 30,      June 30,     June 30,
                                2000         1999          2000         1999
 
     Net sales             $    31,551  $    38,072   $    59,280  $    74,300
     Cost of sales              23,395       30,498        44,887       58,658
       Gross profit              8,156        7,574        14,393       15,642
 
     Selling, general and
      administrative expenses    6,093        5,355        11,085       10,548
 
     Operating income            2,063        2,219         3,308        5,094
 
     Other expense (income):
       Interest expense            802          896         1,468        1,804
       Other income, net          (171)        (995)         (153)      (1,535)
                                   631          (99)        1,315          269
 
       Income before
        income taxes             1,432        2,318         1,993        4,825
 
     Income tax expense            626          868           872        1,924
 
     Net earnings          $       806  $     1,450   $     1,121  $     2,901
 
     Common Shares and
      Equivalents Outstanding:
       Basic                 9,124,857    9,121,482     9,124,857    9,121,482
       Diluted               9,263,726    9,283,841     9,283,900    9,313,484
 
     Earnings Per Share:
       Basic               $      0.09  $      0.16   $      0.12  $      0.32
       Diluted             $      0.09  $      0.16   $      0.12  $      0.31
 
      Contact:   Scott Adams
                 Lancer Corporation
                 210-310-7065