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NEWS BULLETIN RE: LJ International, Inc.
Focal Industrial Center
FROM: 21 Man Lok Street
Hung Hom, Kowloon
The Financial Relations Board Hong Kong
----------------------------- Nasdaq/NMS: JADE
BSMG WORLDWIDE
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FOR FURTHER INFORMATION:
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At LJ International, Inc.: At The Financial Relations Board:
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Ringo Ng Michael Gilburd Haris Tajyar Lisa Mueller
Chief Financial Officer VP, Corporate Development General Info. Investor Contact
011-852-2764-3622 (480) 551-0988 (310) 442-0599 (310) 442-0599
[email protected] [email protected] [email protected] [email protected]
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FOR IMMEDIATE RELEASE
Tuesday, August 29, 2000
LJ INTERNATIONAL REPORTS RECORD gains in fourth quarter AND
YEAR END results; revenues up 167%, operating income up 111%
Company Sees Continued Strong Growth in First Quarter and Fiscal Year 2001
Fourth Quarter Highlights:
. Growth across all existing product lines and new product introductions fuels
a 167% surge in revenues to a record $11.9 million from $4.5 million last
year
. Operating income increases 111% to $1.5 million despite start-up costs
relating to new product lines
. Net income, before one time $585,000 charge for conversion of debenture,
increases over 70% to $1.7 million, or $0.22 per diluted share, from earnings
of $980,000, or $0.15 per diluted share in 4Q99
. SG&A, as a percentage of sales, improves to 29% from 31%
. 100 additional Authorized Dealers signed for Lorenzo-branded jewelry
HONG KONG and SCOTTSDALE, Arizona - August 29, 2000 - LJ International Inc.
(Nasdaq/NMS: JADE), the largest publicly-owned manufacturer of semi-precious
jewelry, today reported record sales and earnings gains for its fourth quarter
and year-ended April 30, 2000.
"LJ International's proven 'mine-to-market' strategy has enabled us to not only
break our own sales records but once again achieve industry leading financial
results in nearly all major areas, including revenue and earnings growth and
margins. Our meticulous and consistent attention to quality and detail, ability
to meet large orders in a timely manner, and competitive pricing are
increasingly becoming more prevalent to our customers and the industry in
general. This focus on quality and service, which has been embedded in our
corporate culture over the past 10 years, will continue to drive our ability to
serve and grow within large high-volume customers such as QVC, Wal-Mart and
Zales," said Yu Chuan Yih, Chairman and CEO of LJ International.
-more-
Financial Relations Board, Inc. serves as financial relations counsel to this
company, is acting on the company's behalf in issuing this bulletin and
receiving compensation therefor. The information contained herein is furnished
for information purposes only and is not to be construed as an offer to buy or
sell securities.
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LJ International Inc.
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Company Achieves Highest Sales Quarter in History
Revenues for the fourth quarter ended April 30, 2000 increased 167% to a record
$11.9 million from $4.5 million for the fourth quarter of fiscal 1999. The
increase in revenues is primarily attributable to increased orders from the
Company's current customers as well as new contributions from the Company's
Diamond Division, launched in July 1999. [Revenues from newer product launches,
including the Lorenzo-branded line, will initially be realized beginning in the
first fiscal quarter of 2001.]
With substantial start-up costs relating to the launch of LJ Intl.'s new product
lines, the Company still achieved operating income of $1.5 million, an increase
of over 111% over operating income of $708,000 in the year-ago quarter.
[Excluding a one-time charge of $585,000 relating to the December 1999 issuance
of a convertible debenture, which has already been converted, the Company
reported net income of $1.7 million, or $0.22 per diluted share on for the
fourth quarter. This was an increase of over 70% from net income of $980,000,
or $0.15 per diluted share on shares less than the outstanding in the
year-ago quarter.] Including the $585,000 charge, the Company reported net
income of $1,084,000, or $0.14 per diluted share for the fourth quarter.
As expected, net income is beginning to be impacted because of lower gross
margins resulting from the Company's shift in its product mix from primarily
semi-precious jewelry to more expensive precious stones such as diamonds,
rubies, sapphires and emeralds
"The increasing demand we are experiencing, primarily from our current customer
base, resulted in substantial growth across all of our business segments," said
Michael Gilburd, Vice President of Corporate Development. "We are particularly
encouraged at the speed by which our new product lines, primarily our diamond
jewelry and Lorenzo-branded jewelry, are having an impact on the industry as
well as on our financial performance.
"Since the launch of the Lorenzo brand in June 2000, over 160 independent
retailers have signed on to become a Lorenzo Authorized Dealership. With over
200 unique styles and increasing distribution, we look forward to further
expanding our Lorenzo-branded jewelry and continuing to build its brand equity
in the U.S. We expect sales from our Lorenzo-branded jewelry in addition to our
new product lines to accelerate its ramp-up as we continue to leverage our blue-
chip client base. This leverage facilitated our ability to rapidly cross-sell
these new product lines," concluded Mr. Gilburd.
Record Fiscal 2000 Financial Results
Revenues for the twelve months ended April 30, 2000 increased 54% to a record
$38.9 million from $25.3 million in fiscal 1999. The increase in revenues is
primarily attributable to increased orders from existing customers as well as
new contributions from new product lines. Excluding the one-time charge
relating to the convertible debenture, the Company reported net income of $5.1
million, or $0.74 per diluted, or an increase of over 19% from net income of
$4.3 million, or $0.68 per diluted share on 6.3 million weighted average shares.
Including the one-time charge, the Company achieved record net income of $4.5
million, or $0.66 per diluted share for fiscal 2000, compared with net income of
$4.5 million, or $0.68 per diluted share, for fiscal 1999.
Chairman Comments on Status of Jewelry Industry
"The U.S. jewelry industry is continuing its robust growth at a rate of more
than 6%, or $5 billion a year, compared to LJ Intl.'s projected 30% growth rate.
Our much higher growth outlook is being supported by trends in the manufacturing
sector, which are clearly resulting in a growing percentage of jewelry
manufacturing being conducted abroad in favor of lower cost while maintaining
high quality jewelry. According to a recent
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LJ International Inc.
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U.S. Department of Commerce report, Hong Kong and China were the two fastest
growing sources of jewelry imports to the U.S., with percentage changes of 27%
and 82%, respectively, over 1999. This places the two regions as the number 4
and 7, respectively, top jewelry importers to the U.S. We believe as this trend
accelerates, as it has in many other manufacturing industries, it will heighten
the industry's awareness of LJ Intl. As a result, this will further bolster our
customer expansion plans and overall growth and profitability," said Mr. Yih.
Bright First Quarter and Fiscal Year 2001 Outlook
"Our strong balance sheet and rapidly expanding financial and operational
performance places us in a solid position to expand on our growth record. In
fact, based on currently available information, we experienced similar growth
for our first quarter of fiscal 2001, again driven by increased customer demand
for our core and new product lines. We expect this trend to continue in fiscal
2001 and look forward to reporting first quarter results in the coming weeks,"
concluded Mr. Ringo,CFO.
Investor Conference Call
LJ International will be holding an investor conference call to discuss the
Company's financial and operational results at 11:00 am EDT today, August 29,
2000. Investors will have the opportunity to listen to the conference call over
the Internet through Vcall at http://www.vcall.com. To listen to the live call,
please go to the web site at least fifteen minutes early to register, download,
and install any necessary audio software. For those who cannot listen to the
live broadcast, a replay will be available shortly after the call.
About LJ International Inc.
With manufacturing operations in the People's Republic of China for more than 10
years, LJ International Inc. has grown to become the world's largest publicly-
owned manufacturer and marketer of semi-precious jewelry. The Company's
operations are totally vertically integrated from mine-to-market. LJ
International operates four manufacturing facilities in China that employ
approximately 2,500 skilled craftsmen. The Company produces more than 2 million
pieces of fine finished jewelry, and annually cuts more than 4 million carats of
high quality gemstones, which are sold primarily to the largest jewelry
retailers in the United States, including Wal-Mart, Zales and QVC. LJ
International. invites the public to visit the Company's website at
http://www.ljinc.com/ for additional information.
Except for the historical information herein the matters discussed in this press
release contain forward-looking statements, including but not limited to future
sales, geographic expansion, customer diversification, the launch of Lorenzo-
branded jewelry, and the implementation of the Company's expansion strategy.
These forward-looking statements may involve a number of risks and
uncertainties. Actual results may vary significantly based on a number of
factors, including, but not limited to, uncertainties in product demand, the
impact of competitive products and pricing, changing economic conditions around
the world, release and sales of new products, and other risk factors detailed in
the Company's most recent annual report, and other filings with the Securities
and Exchange Commission.
[Financial Tables to Follow]
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LJ International, Inc.
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LJ INTERNATIONAL INC.
STATEMENT OF OPERATIONS
IN ACCORDANCE WITH US GAAP
(United States dollars in thousands, except per share amounts)
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Three Months Ended Twelve Months Ended
April 30, April 30, April 30, April 30,
2000 1999 2000 1999
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(Unaudited) (Unaudited) (Audited) (Audited)
Sales $ 11,941 $ 4,473 $ 38,926 $ 25,255
Cost of goods sold 6,996 2,360 22,938 12,854
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Gross profit 4,945 2,113 15,988 12,401
Selling, general and administrative expenses 3,448 1,405 10,497 7,836
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Operating income 1,497 708 5,491 4,565
Financial expenses 1,124 226 1,877 890
Other income, net 447 452 860 654
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Income before income taxes 820 934 4,474 4,329
Income taxes (refund) (229) (47) 3 49
Minority Interests 35 (1) 52 35
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Net income under US GAAP $ 1,084 $ 980 $ 4,523 $ 4,315
Earnings per share - basic (US GAAP) $0.16 $0.15 $0.69 $0.68
Earnings per share - diluted (US GAAP) $0.14 $0.15 $0.66 $0.68
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Weighted Avg. Shares Outstanding - basis 6,883,990 6,347,046 6,589,415 6,347,046
Weighted Avg. Shares Outstanding - diluted 7,964,500 6,349,097 6,944,640 6,347,560
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SELECT BALANCE SHEET DATA
IN ACCORDANCE WITH US GAAP
(United States dollars in thousands, except per share amounts)
As of As of
April 30, 2000 April 30, 1999
(Audited) (Audited)
Cash $ 5,031 $ 2,175
Accounts receivable, net 5,522 6,421
Inventories 19,203 12,113
Prepayments and others 2,803 120
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Total current assets 32,559 20,829
Property, plant and equipment, net 6,374 6,622
Tangibles 1 1
Intangibles 325 105
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Total assets 39,259 27,557
Total current liabilities 12,017 11,029
Total liabilities 15,830 12,197
Minority interests - 20
Related companies' advances (65) 20
Common stock 74 64
Additional paid-in capital 11,444 7,932
Warrant reserve 339 210
Retained earnings 11,637 7,114
Total shareholders' equity $ 23,429 $ 15,340
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