<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------------------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
February 29, 2000.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
TO
Commission File No. 1-7848
LAZARE KAPLAN INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
Delaware 13-2728690
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
529 Fifth Avenue, New York, NY 10017
(Address of principal executive offices) (Zip Code)
(212) 972-9700
(Registrant's telephone number, including area code)
--------------------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
-------- --------
As of March 31, 2000, 8,089,473 shares of the registrant's common stock
were outstanding.
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. Financial Statements
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except share and per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
FEB. 29, Feb. 28, FEB. 29, Feb. 28,
(Unaudited) (Unaudited)
------------------------ -----------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 106,238 $ 47,045 $ 287,886 $ 190,595
Cost of sales 97,363 43,182 264,324 179,796
----------- ----------- ----------- -----------
8,875 3,863 23,562 10,799
----------- ----------- ----------- -----------
Selling, general and administrative
expenses (net of life insurance proceeds
of $1.6 million in 2000) 4,074 3,751 12,770 11,034
Interest expense - net 1,027 524 2,553 1,933
Legal settlement and related costs -- -- 5,048 --
----------- ----------- ----------- -----------
5,101 4,275 20,371 12,967
----------- ----------- ----------- -----------
Income/(loss) before taxes 3,774 (412) 3,191 (2,168)
Income tax provision/(benefit) (Note 2) 940 (675) 202 (1,257)
----------- ----------- ----------- -----------
Income/(loss) before cumulative effect
of change in accounting principle 2,834 263 2,989 (911)
Cumulative effect of change in method
of accounting for reporting the costs of
start-up activities in accordance with
Statement of Position 98-5 (Note 5) -- -- (1,522) --
----------- ----------- ----------- -----------
Net income/(loss) $ 2,834 $ 263 $ 1,467 $ (911)
=========== =========== =========== ===========
Income/(loss) per share (Note 3)
Basic earnings/(loss) per share before
cumulative effect of change in
accounting principle $ 0.35 $ 0.03 $ 0.36 $ (0.11)
=========== =========== =========== ===========
Basic earnings/(loss) per share $ 0.35 $ 0.03 $ 0.18 $ (0.11)
=========== =========== =========== ===========
Average number of shares
outstanding during the period 8,137,448 8,486,593 8,256,030 8,509,679
=========== =========== =========== ===========
Diluted earnings/(loss) per share
before cumulative effect of change
in accounting principle $ 0.35 $ 0.03 $ 0.36 $ (0.11)
=========== =========== =========== ===========
Diluted earnings/(loss) per share $ 0.35 $ 0.03 $ 0.18 $ (0.11)
=========== =========== =========== ===========
Average number of shares
outstanding during the period 8,189,021 8,523,646 8,317,269 8,509,679
=========== =========== =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
2
<PAGE>
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
<TABLE>
<CAPTION>
FEBRUARY 29, 2000 May 31, 1999
(Unaudited)
----------------- -------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 5,828 $ 5,181
Accounts receivable - net 63,469 32,902
Inventories - rough diamonds 27,371 30,363
- polished diamonds 53,939 50,991
Prepaid expenses and other current assets 12,761 13,038
Deferred tax assets - current 1,701 1,450
--------- ---------
TOTAL CURRENT ASSETS 165,069 133,925
DEFERRED TAX ASSETS, net 7,965 7,665
NON-CURRENT ASSETS, net 18,024 10,323
--------- ---------
$ 191,058 $ 151,913
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable & other current liabilities $ 54,849 $ 25,186
Notes payable - banks 4,159 2,158
--------- ---------
TOTAL CURRENT LIABILITIES 59,008 27,344
SENIOR NOTES AND OTHER LONG-TERM DEBT 46,713 38,575
--------- ---------
TOTAL LIABILITIES 105,721 65,919
--------- ---------
STOCKHOLDERS' EQUITY
Preferred stock, par value $.01 per share
Authorized 5,000,000 shares;
no shares outstanding -- --
Common stock, par value $1 per share
Authorized 20,000,000 shares;
issued 8,538,223 and 8,535,493 shares 8,538 8,535
Additional paid-in capital 58,161 58,149
Foreign currency translation adjustment (10) 44
Retained earnings 21,946 20,479
--------- ---------
88,635 87,207
Less treasury stock, 429,750 and 167,150 shares at cost (3,298) (1,213)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 85,337 85,994
--------- ---------
$ 191,058 $ 151,913
========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
Feb. 29, Feb. 28,
2000 1999
------------ ------------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss) $ 1,467 $ (911)
Adjustments to reconcile net income/(loss)
to net cash provided by/(used in)operating activities:
Depreciation and amortization 1,132 687
Provision for uncollectible accounts 45 45
Deferred income taxes 120 (1,260)
Cumulative effect of change in method of accounting 1,522 --
(Increase)/decrease in assets and increase/ (decrease) in liabilities:
Notes and accounts receivable (30,612) 1,203
Inventories 44 6,088
Prepaid expenses and other current assets (1,916) (2,231)
Non-current assets (6,919) (4,387)
Accounts payable and other current liabilities 29,663 (10,762)
-------- --------
Net cash (used in)/provided by operating activities (5,454) (11,528)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,914) (2,107)
-------- --------
Net cash used in investing activities (1,914) (2,107)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock (2,085) (356)
Increase in short-term borrowings 2,001 --
Increase in long-term borrowings 8,138 18,908
Proceeds from exercise of stock options 15 4
-------- --------
Net cash provided by financing activities 8,069 18,556
-------- --------
Effect of foreign currency translation adjustment (54) 63
-------- --------
Net increase/(decrease) in cash 647 4,984
Cash at beginning of year 5,181 1,222
-------- --------
Cash at end of period $ 5,828 $ 6,206
======== ========
See Notes to Consolidated Financial Statements.
4
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. INTERIM FINANCIAL REPORTING
This financial information has been prepared in conformity with the accounting
principles and practices reflected in the financial statements included in the
annual report filed with the Commission for the preceding fiscal year. In the
opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments necessary to present fairly Lazare Kaplan
International Inc.'s operating results for the nine and three months ended
February 29, 2000 and February 28, 1999 and its financial position as of
February 29, 2000.
The balance sheet at May 31, 1999 has been derived from the audited financial
statements at that date but does not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's annual
report on Form 10-K for the year ended May 31, 1999. The operating results for
the interim periods presented are not necessarily indicative of the operating
results for a full year.
2. TAXES
The Company's foreign subsidiaries are not subject to Federal income taxes and
their provisions have been determined based upon the effective tax rates, if
any, in the foreign countries in which they conduct business.
Deferred income taxes reflect the net tax effects of (a) temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes, and (b) operating loss
carryforwards. The Company's net deferred tax asset as of February 29, 2000,
which is comprised primarily of operating loss carryforwards, is approximately
$10,251,000 less a valuation allowance of approximately $585,000 resulting in a
net deferred tax asset of $9,666,000. For the nine months ended February 29,
2000, the Company generated approximately $600,000 of net operating losses which
can be used to offset future Federal, state and local income taxes. At February
29, 2000, the Company has available U.S. net operating losses of $20,700,000
which expire as follows:
</TABLE>
<TABLE>
<CAPTION>
Year Amount
---- -------------
<S> <C>
2000 $ 2,000,000
2001 3,500,000
2002 500,000
2007 500,000
2008 900,000
2010 400,000
2013 1,200,000
2019 11,100,000
2020 600,000
--------------
$20,700,000
==============
</TABLE>
5
<PAGE>
3. EARNINGS/(LOSS) PER SHARE
Basic and diluted earnings per share are computed in accordance with Financial
Accounting Standards Board Statement No. 128 "Earnings per Share." Basic
earnings per share is computed based upon the weighted average number of common
shares outstanding. Diluted earnings per share includes the impact of dilutive
stock options.
4. COMPREHENSIVE INCOME/(LOSS)
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" (SFAS 130) established rules for the reporting and display of
comprehensive income and its components. SFAS 130 requires foreign currency
translation adjustments to be included in other comprehensive income. For the
nine months ended February 29, 2000 and February 28, 1999, total comprehensive
income/(loss) was $1,521,000 and ($848,000), respectively.
5. CUMULATIVE EFFECT OF CHANGE IN METHOD OF ACCOUNTING FOR START-UP COSTS
In April 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position (SOP)
98-5, "Reporting on the Costs of Start-Up Activities", which was required for
financial statements for fiscal years beginning after December 15, 1998. The SOP
broadly defines start-up costs as those one-time activities related to opening a
new facility, introducing a new product or service, conducting business in a new
territory, conducting business with a new class of customer, initiating a new
process in an existing facility or commencing some new operation. The SOP
requires that start-up costs capitalized prior to adoption be written off as a
cumulative effect of a change in accounting principle and any future start-up
costs be expensed as incurred. The Company was required to adopt this standard
on June 1, 1999 and recorded a non-cash charge of $1,522,000 (net of tax benefit
of $671,000). This amount is primarily comprised of a) the start-up expenses
related to the operations of the Company's newly formed, wholly owned
subsidiary, Pegasus Overseas Ltd. and the signing and implementation of its ten
year agreement with a wholly owned subsidiary of General Electric Company, and
b) the start-up expenses related to the signing and implementation of the March
1999 Cooperation Agreement with AK Almazi Rossii Sakha of Russia. The adoption
of SOP 98-5 did not have a material effect on income from continuing operations
for the nine months ended February 29, 2000.
6. LEGAL SETTLEMENT AND RELATED COSTS
A settlement agreement, dated October 18, 1999, was signed which settled all of
the various disputes among the Company and other related parties and
International Diamond Traders CY B.V.B.A. ("IDT") and Avi Neumark, the President
and controlling stockholder of IDT. The Company agreed to pay the parties the
sum of $3,275,000 over a period of 40 months. The total cost of the settlement
to the Company during the nine months ended February 29, 2000 was $5,048,000,
including related legal and other expenses.
6
<PAGE>
7. NEW CREDIT FACILITIES
In September 1999, the Company entered into a $20 million unsecured line of
credit with a bank at an interest rate of 150 basis points above the bank's base
rate. In April 2000, this line of credit was increased to $30 million. This line
of credit has been utilized during the nine months ended February 29, 2000 and
will be available for the Company's working capital requirements.
In December 1999, a subsidiary of the Company borrowed, at a fixed exchange
rate, 1.1 billion Japanese Yen (approximately $10,000,000) under a loan facility
with one of its primary commercial bank lenders, payable in six quarterly
installments of 96,250,000 Yen each, commencing on March 7, 2000 until
December 7, 2001, at which time the entire principal is payable in full, plus
interest. The loan bears interest at a rate equal to the Japanese prime rate
plus 1% or the 90-day LIBOR rate for Yen borrowings plus 1% (which rate is
currently 1.13%), at the option of the borrower. The Company has guaranteed
the payment of the loan and has secured its guarantee by pledging interest
bearing deposits of approximately $10,000,000 to the bank, of which $6.5 million
is included in non-current assets.
8. LIFE INSURANCE PROCEEDS
In connection with the Company's relationship with its former Japanese
distributor, it had been named as beneficiary of certain life insurance policies
of a senior executive officer of such distributor. As a result of a previously
determined permanent disability of this individual - under which life insurance
proceeds are paid in Japan - a portion of the policies were acknowledged by the
insurance companies as of February 29, 2000. As a result of the subsequent death
of this individual, the Company anticipates receiving approximately $1.3 million
under these policies during the fourth quarter ending May 31, 2000.
7
<PAGE>
8. Geographic Segment Information
Revenue, gross profit and income/(loss) before income tax provision for the nine
months ended February 29, 2000 and Februart 28, 1999 and identifiable assets at
the end of each of those periods, classified by geographic area, which was
determined by where sales originated from and where identifiable assets are
held, were as follows (in thousands):
<TABLE>
<CAPTION>
North Far Elimi- Consoli-
America Europe Africa East nations dated
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Nine months ended February 29, 2000
- -----------------------------------
Net sales to unaffiliated customers $70,475 $204,036 $208 $13,167 $ - $287,886
Transfers between geographic areas 16,426 3,449 130,817 - (150,692) -
-----------------------------------------------------------------------
Total revenue $86,901 $207,485 $131,025 $13,167 ($150,692) $287,886
-----------------------------------------------------------------------
Gross profit $17,642 $2,579 $701 $2,640 $ - $23,562
-----------------------------------------------------------------------
Income/(loss) before income tax provision and
cumulative effect of change in accounting
principle $2,299 $1,336 $18 ($462) $ - $3,191
-----------------------------------------------------------------------
Identifiable assets at February 29, 2000 $154,695 $33,090 $31,116 $12,870 ($40,713) $191,058
-----------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Nine months ended February 28, 1999
- -----------------------------------
Net sales to unaffiliated customers $87,853 $71,770 $20,893 $10,079 $ - $190,595
Transfers between geographic areas 17,217 8,295 57,130 - (82,642) -
-----------------------------------------------------------------------
Total revenue $105,070 $80,065 $78,023 $10,079 ($82,642) $190,595
-----------------------------------------------------------------------
Gross profit $7,929 $306 $900 $1,981 ($317) $10,799
-----------------------------------------------------------------------
Income/(loss) before income tax provision ($2,440) ($298) $525 $362 ($317) ($2,168)
-----------------------------------------------------------------------
Identifiable assets at February 28, 1999 $139,005 $19,179 $11,169 $7,330 ($27,407) $149,276
-----------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
The identifiable assets which are included in the eliminations primarily
represent advances to affiliates. These advances are included therein since the
Company, which is the parent company, finances the operations of these
affiliates.
8
<PAGE>
8. Geographic Segment Information (continued)
Revenue and gross profit for the nine months ended February 29, 2000 and
February 28, 1999 classified by product were as follows (in thousands):
<TABLE>
<CAPTION>
Polished Rough
diamonds diamonds Total
-----------------------------------
<S> <C> <C> <C>
Nine months ended February 29, 2000
- -----------------------------------
Net sales $91,032 $196,854 $287,886
-----------------------------------
Gross profit $18,585 $4,977 $23,562
-----------------------------------
Nine months ended February 28, 1999
- -----------------------------------
Net sales $82,821 $107,774 $190,595
-----------------------------------
Gross profit $9,537 $1,262 $10,799
-----------------------------------
</TABLE>
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
This quarterly report contains, in addition to historical information, certain
forward-looking statements that involve significant risks and uncertainties.
Such forward-looking statements are based on management's belief as well as
assumptions made by, and information currently available to, management pursuant
to the "safe harbor" provisions of the Private Securities Litigation Reform Act
of 1995. The Company's actual results could differ materially from those
expressed in or implied by the forward-looking statements contained herein.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed in "Liquidity - Capital Resources" and in Item 1--
"Description of Business" and elsewhere in the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1999. The Company undertakes no
obligation to release publicly the result of any revisions to these
forward-looking statements that may be made to reflect events or circumstances
after the date of this quarterly report or to reflect the occurrence of other
unanticipated events.
RESULTS OF OPERATIONS
NET SALES
Net sales during the nine months ended February 29, 2000 were $287.9 million
compared to $190.6 million in sales during the comparable period last year, an
increase of 51%. For the three month period ended February 29, 2000 net sales
were $106.2 million compared to $47.0 million in the third quarter last year.
Revenue from the sale of polished diamonds was $91.0 million for the nine months
ended February 29, 2000 compared to $82.8 million in the comparable period last
year. For the three month period ended February 29, 2000, polished diamond sales
were $31.3 million compared to $28.6 million in the third quarter last year.
Polished diamond revenue was positively impacted during the nine months and
three months ended February 29, 2000 by continued strong sales in Japan and
Southeast Asia.
Rough diamond sales were $196.9 million for the nine months ended February 29,
2000 compared to $107.8 million in the comparable period last year. For the
three months ended February 29, 2000, rough diamond sales were $74.9 million
compared to $18.5 million in the third quarter last year. The increases from the
prior year were primarily attributable to significantly increased purchases of
better quality rough diamonds from one of the Company's primary rough diamond
suppliers, as well as purchases made in its rough diamond buying operation in
Africa. The Company's buying operations in Angola have continued throughout
most of the quarter, however, its agreement with Empresa Nacional de Diamantes
de Angola, Angola's national diamond mining company (pursuant to which the
Company was granted a license to purchase rough diamonds from local Angolan
miners and export such rough diamonds for resale) expired on December 31, 1999.
Pending the outcome of further negotiations with the government of Angola,
the Company has suspended its operations. The Company believes it has developed
alternative sources of rough diamonds in Africa. However, if these sources do
not materialize and the current suspension of operations in Angola becomes
permanent, the rough diamond revenue component of its business could be
materially adversely affected.
10
<PAGE>
GROSS PROFIT
During the nine months ended February 29, 2000, gross margin on net polished
sales was 20%, compared to 12% in the comparable period last year. For the three
months ended February 29, 2000, gross margin on net polished sales was 21%
compared to 13% in the third quarter last year. Polished diamond margins were
favorably affected by increased sales of better quality goods as a result of
favorable economic conditions, particularly in Southeast Asia and the United
States, during the nine months and three months ended February 29, 2000. During
the nine months ended February 29, 2000, the blended (both polished and rough
diamonds) gross margin on net sales was 8.2% compared to 5.7% for the same
period last year. For the three months ended February 29, 2000, blended gross
margin on net sales was 8.4% compared to 8.2% in the third quarter last year.
The increases from the prior year were primarily due to the improved margins
realized on both polished and rough diamond sales during the current year.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the nine months ended February
29, 2000 were $12.8 million, compared to $11.0 million for this period last
year. For the three months ended February 29, 2000, selling, general and
administrative expenses were $4.1 million compared to $3.8 million in the third
quarter last year. These increases were primarily attributable to higher
compensation and benefit costs (including selling commissions) including the
building of the Company's salesforce in Japan, and increased marketing and
advertising expense, partially offset in Japan by the effect of the
strengthening yen when compared to the U.S. dollar during the nine months
ended February 29, 2000 and the receipt of life insurance proceeds of
$1.6 million in the current year (as discussed in Note 8.)
CUMULATIVE EFFECT OF CHANGE IN METHOD OF ACCOUNTING FOR START-UP COSTS
In April 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position (SOP)
98-5, "Reporting on the Costs of Start-Up Activities", which was required for
financial statements for fiscal years beginning after December 15, 1998. The SOP
broadly defines start-up costs as those one-time activities related to opening a
new facility, introducing a new product or service, conducting business in a new
territory, conducting business with a new class of customer, initiating a new
process in an existing facility or commencing some new operation. The SOP
requires that start-up costs capitalized prior to adoption be written off as a
cumulative effect of a change in accounting principle and any future start-up
costs be expensed as incurred. The Company was required to adopt this standard
on June 1, 1999 and recorded a non-cash charge of $1,522,000 (net of tax benefit
of $671,000), or $0.18 per share. This amount is primarily comprised of a) the
start-up expenses related to the operations of the Company's newly formed,
wholly owned subsidiary, Pegasus Overseas Ltd. and the signing and
implementation of its ten year agreement with a wholly owned subsidiary of
General Electric Company, and b) the start-up expenses related to the signing
and implementation of the March 1999 Cooperation Agreement with AK Almazi Rossii
Sakha of Russia. The adoption of SOP 98-5 did not have a material effect on
income from continuing operations for the nine months ended February 29, 2000.
11
<PAGE>
INTEREST EXPENSE
Net interest expense for the nine month period ended February 29, 2000 was $2.6
million compared to $1.9 million last year. For the three months ended February
29, 2000 net interest expense was $1.0 million compared to $524,000 in the third
quarter last year. The increases during the nine months and three months ended
February 29, 2000 were due to an increase in the average balance outstanding on
the Company's revolving loan and other debt in the current year.
LEGAL SETTLEMENT AND RELATED COSTS
As described in Note 6 to the consolidated financial statements, in October
1999 the litigation which was commenced against the Company and other related
parties in March 1999 by International Diamond Traders CY B.V.B.A. ("IDT") and
Avi Neumark, the President and controlling stockholder of IDT, was settled. The
total cost of the settlement to the Company was $5,048,000, including related
legal and other expenses.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital at February 29, 2000 was $106.1 million, which was
$500,000 lower than its working capital at May 31, 1999. The decrease was
primarily due to higher accounts payable and other current liabilities partially
offset by higher accounts receivable in the current period.
In September 1999, the Company entered into a $20 million unsecured line of
credit with a bank at an interest rate of 150 basis points above the bank's base
rate. In April 2000, this line of credit was increased to $30 million. This line
of credit has been utilized during the nine months ended February 29, 2000 and
will be available for the Company's working capital requirements. This facility
is in addition to the Company's existing $40 million long-term unsecured,
revolving loan agreement. The Company believes that it has the ability to meet
its current and anticipated financing needs for the next twelve months.
In December 1999, a subsidiary of the Company borrowed, at a fixed exchange
rate, 1.1 billion Japanese Yen (approximately $10,000,000) under a loan facility
with one of its primary commercial bank lenders, payable in six quarterly
installments of 96,250,000 Yen each, commencing on March 7, 2000 until
December 7, 2001, at which time the entire principal is payable in full, plus
interest. The loan bears interest at a rate equal to the Japanese prime rate
plus 1% or the 90-day LIBOR rate for Yen borrowings plus 1% (which rate is
currently 1.13%), at the option of the borrower. The Company has guaranteed
the payment of the loan and has secured its guarantee by pledging interest
bearing deposits of approximately $10,000,000 to the bank, of which $6.5 million
is included in non-current assets.
Stockholders' equity was $85.3 million at February 29, 2000 as compared to $86.0
million at May 31, 1999. No dividends were paid to stockholders during the nine
months ended February 29, 2000. During the nine months ended February 29, 2000,
the Company purchased 262,600 shares of its common stock (at a cost of $2.1
million) which are shown as a reduction of stockholders' equity on the
accompanying consolidated balance sheet.
12
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT
MARKET RISK
Not applicable
PART 2
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits
(27) Financial Data Schedule
(B) Reports on Form 8-K
None
13
<PAGE>
SIGNATURE
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 thereunto duly authorized.
LAZARE KAPLAN INTERNATIONAL INC.
By /s/ Sheldon L. Ginsberg
--------------------------------
Sheldon L. Ginsberg
Executive Vice President and
Chief Financial Officer
Dated: April 14, 2000
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial information extracted
from the balance sheet and income statement and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-2000
<PERIOD-END> FEB-29-2000
<CASH> 5,828
<SECURITIES> 0
<RECEIVABLES> 63,711
<ALLOWANCES> 242
<INVENTORY> 81,310
<CURRENT-ASSETS> 165,069
<PP&E> 17,820
<DEPRECIATION> 8,631
<TOTAL-ASSETS> 191,058
<CURRENT-LIABILITIES> 59,008
<BONDS> 45,082
<COMMON> 8,538
0
0
<OTHER-SE> 76,799
<TOTAL-LIABILITY-AND-EQUITY> 191,058
<SALES> 287,886
<TOTAL-REVENUES> 287,886
<CGS> 264,324
<TOTAL-COSTS> 264,324
<OTHER-EXPENSES> 12,770
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,553
<INCOME-PRETAX> 3,191
<INCOME-TAX> 202
<INCOME-CONTINUING> 2,989
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (1,522)
<NET-INCOME> 1,467
<EPS-BASIC> 0.18
<EPS-DILUTED> 0.18
</TABLE>
