Lante Reports Continued Losses, Shakes Up Organization

"We've taken a set of bold moves and actions to strengthen our company," Rudy Puryear, Lante CEO, told analysts during an earnings call Wednesday afternoon. "We are committed to achieving profitability and revenue growth."

The new organizational structure finds Mark Tebbe, Lante founder, stepping down from his position as chairman of the board. Lante appointed John C. Kraft, a member of the board since its creation, as its new chairman.

Tebbe was not available for immediate comment. In a released statement, however, Tebbe said he has "intended to focus more of my attention and energy on my own family for a while."

Puryear said would remain actively involved in Lante as a board member and its largest shareholder. Puryear also applauded Tebbe's contributions to the company he founded.

"Mark has provided enormous leadership over the last 17 years," Puryear told analysts.

For its fourth quarter ended Dec. 31, 2001, Lante reported a loss, including charges, of $2.2 million, or 6 cents per share. The loss includes a restructuring charge of $2.6 million. The results compare with loss, including charges, of $13.9 million, or 37 cents per share, for the same period last year.

First Call analysts called for a loss of 4 cents.

For its fiscal year 2001 ended Dec. 31, Lante reported a net loss, including charges, of $19.2 million, or 49 cents per share, compared to a loss of $21.4 million, or 60 cents per share for fiscal 2000. The company's cash and short-term investment balance at the end of the year was $64.5 million.

Lante bet big on B2B, but found itself in a sea of integrators struggling to deal with sharp declines in market demand and revenues amid increasingly uncertain economic conditions during the 18 months. In June 2001, Lante shifted its focus from B2B to business-partner integration services.

The company continues its fight to turn things around in 2002. Among the changes are a new organizational structure and retirement of 11 percent of Lante outstanding common stock through revamped deals with Dell Computer, a Lante investor, and Puryear.

Bill Davis, Lante's chief financial officer, said Lante amended its master services agreement with Dell Computer in December. Under the terms of the new agreement, Dell paid Lante $1.6 million by tendering two million shares of Lante stock in the fourth quarter to fulfill its 2001 commitment with Lante. The stock was promptly retired, said Davis.

In addition, the revised agreement calls for Lante to provide Dell with $1 million per quarter in services over the next five years, for a total of $5 million.

Meanwhile, earlier this month, said Davis, Lante restructured Puryear's stock compensation package. As part of the agreement, Lante has agreed to repurchase and retire Puryear's 2.4 million shares to substantially satisfy an outstanding shareholder note to the company. Lante has replaced the shares with a significant option grant to create "appropriate performance incentives."

Meanwhile, Puryear highlighted other organizational changes, including the establishment of an energy industry group based on clients such as British Petroleum acquired with the $5.2 million cash purchase of Luminant. The move represents the first time Lante has created a vertical business unit. The company has also established a national sales organization and eliminated the position of chief operating officer, held for the last year by John Corsiglia.

While Puryear told analysts Corsiglia will remain on board until the integration of Luminant is complete, he did not specify what other role, if any, Corsiglia will play in the future for Lante.

Davis said the company remains guarded in its expectations for first quarter results in light of "continued marketplace uncertainty and integration costs from the acquisition."

He said Lante expects revenue of at least $11.5 million and a cash earnings net loss of less than $1 million, with a restructuring charge of about $1 million.