<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended DECEMBER 31, 1999
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the transition period from _______________ to ______________
Commission File Number 1-7848 (Lazare Kaplan International Inc.)
A. Full title of the plan and the address of the plan, if
different from that of the issuer named below:
LAZARE KAPLAN INTERNATIONAL INC.
401(k) PLAN FOR SAVINGS AND INVESTMENTS
B. Name of issuer of the securities held pursuant to the plan
and the address of its principal executive office:
LAZARE KAPLAN INTERNATIONAL INC.
529 FIFTH AVENUE
NEW YORK, NY 10017
<PAGE>
LAZARE KAPLAN INTERNATIONAL INC.
401(k) PLAN FOR SAVINGS
AND INVESTMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
TABLE OF CONTENTS
Page
Report of Independent Auditors 2
Statements of Net Assets
Available for Benefits, with
Fund Information 3
Statements of Changes in Net
Assets Available for
Benefits, with Fund Information 4-5
Notes to Financial Statements 6-9
Supplemental Schedules:
Assets Held for Investment Purposes
(Item 27a) for the year ended
December 31, 1999 10
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Trustees and Participants of
Lazare Kaplan International Inc.
401(k) Plan for Savings and Investments
We have audited the accompanying statements of net assets available for benefits
of Lazare Kaplan International Inc. 401(k) Plan for Savings and Investments
(the "Plan") as of December 31, 1999 and 1998, and the related statements of
changes in net assets available for benefits for the years then ended. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 1999 and 1998, and the changes in its net assets available for
benefits for the years then ended, in conformity with accounting principles
generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of
assets held for investment purposes at December 31, 1999 and 1998, is presented
for purposes of additional analysis and is not a required part of the financial
statements but is supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule has been
subjected to the auditing procedures applied in our audits of the financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
The schedule of assets held for investment purposes that accompanies the Plan's
financial statements does not disclose the historical cost of investments.
Disclosure of this information is required by the Department of Labor's Rules
and Regulations for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974.
Ernst & Young LLP
May 16, 2000
New York, New York
<PAGE>
LAZARE KAPLAN INTERNATIONAL INC.
401(K) PLAN FOR SAVINGS AND INVESTMENTS
<TABLE>
<CAPTION>
STATEMENTS OF NET ASSETS
AVAILABLE FOR BENEFITS, WITH FUND INFORMATION FUND INFORMATION
---------- ---------- ---------- ---------- ----------
DECEMBER 31, 1999 U.S. GOVT GINNIE EQUITY CAPITAL
RESERVES MAE INCOME MAGELLAN APPRECIATION
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Investments $ 241,889 $ 206,400 $ 903,802 $1,451,135 $ 956,436
---------- ---------- ---------- ---------- ----------
TOTAL ASSETS 241,889 206,400 903,802 1,451,135 956,436
LIABILITIES 0 0 0 0 0
---------- ---------- ---------- ---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $ 241,889 $ 206,400 $ 903,802 $1,451,135 $ 956,436
========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF NET ASSETS
AVAILABLE FOR BENEFITS, WITH FUND INFORMATION FUND INFORMATION
DECEMBER 31, 1999 GROWTH & GROWTH EMPLOYEE LKI
INCOME CO. LOANS STOCK TOTAL
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Investments $ 558,237 $ 797,433 $ 218,269 $ 5,265 $5,338,866
---------- ---------- ---------- ---------- ----------
TOTAL ASSETS 558,237 797,433 218,269 5,265 5,338,866
LIABILITIES 0 0 0 0 0
---------- ---------- ---------- ---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $ 558,237 $ 797,433 $ 218,269 $ 5,265 $5,338,866
========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF NET ASSETS
AVAILABLE FOR BENEFITS, WITH FUND INFORMATION FUND INFORMATION
---------- ---------- ---------- ---------- ----------
DECEMBER 31, 1998 U.S. GOVT GINNIE EQUITY CAPITAL
RESERVES MAE INCOME MAGELLAN APPRECIATION
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
---------- ---------- ---------- ---------- ----------
Investments $ 216,336 $ 188,249 $ 781,205 $1,162,646 $ 592,638
---------- ---------- ---------- ---------- ----------
TOTAL ASSETS 216,336 188,249 781,205 1,162,646 592,638
LIABILITIES 0 0 0 0 0
---------- ---------- ---------- ---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $ 216,336 $ 188,249 $ 781,205 $1,162,646 $ 592,638
========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF NET ASSETS
AVAILABLE FOR BENEFITS, WITH FUND INFORMATION FUND INFORMATION
---------- ---------- ---------- ---------- ----------
DECEMBER 31, 1998 GROWTH & GROWTH EMPLOYEE LKI
INCOME CO. LOANS STOCK TOTAL
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
---------- ---------- ---------- ---------- ----------
Investments $ 468,188 $ 408,548 $ 216,745 $ 4,620 $4,039,175
---------- ---------- ---------- ---------- ----------
TOTAL ASSETS 468,188 408,548 216,745 4,620 4,039,175
LIABILITIES 0 0 0 0 0
---------- ---------- ---------- ---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $ 468,188 $ 408,548 $ 216,745 $ 4,620 $4,039,175
========== ========== ========== ========== ==========
SEE NOTES TO FINANCIAL STATEMENTS.
-3-
<PAGE>
LAZARE KAPLAN INTERNATIONAL INC.
401(K) PLAN FOR SAVINGS AND INVESTMENTS
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1999
</TABLE>
<TABLE>
<CAPTION>
FUND INFORMATION
--------- ---------- ----------- ----------- ------------
U.S. GOVT GINNIE EQUITY CAPITAL
RESERVES MAE INCOME MAGELLAN APPRECIATION
--------- ---------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Additions:
Contributions from participants $ 20,500 $ 19,307 $ 75,097 $ 90,575 $ 52,237
Interest and dividend income 11,261 12,431 90,349 122,495 61,013
Loan interest income 1,671 2,072 3,964 2,401 1,685
Loan repayments 8,909 9,623 14,062 10,312 3,883
----------- ----------- ----------- ----------- -----------
Total additions/(deductions) 42,341 43,433 183,472 225,783 118,818
----------- ----------- ----------- ----------- -----------
Deductions:
Payments to participants (4,606) (8,812) (47,469) (26,510) (8,349)
Loans to participants (15,259) (12,127) (25,289) (25,351) (5,887)
----------- ----------- ----------- ----------- -----------
Total (deductions)/additions (19,865) (20,939) (72,758) (51,861) (14,236)
----------- ----------- ----------- ----------- -----------
Net increase/(decrease) prior to transfers and net
realized and unrealized appreciation/(depreciation)
in fair value of investments 22,476 22,494 110,714 173,922 104,582
Net realized and unrealized appreciation/(depreciation)
in fair value of investments 0 (9,874) (30,826) 162,826 228,124
Net inter fund transfers 3,077 5,531 42,709 (48,259) 31,092
----------- ----------- ----------- ----------- -----------
Net increase/(decrease) 25,553 18,151 122,597 288,489 363,798
Net assets available for benefits:
January 1, 1999 216,336 188,249 781,205 1,162,646 592,638
----------- ----------- ----------- ----------- -----------
Net assets available for benefits
December 31, 1999 $ 241,889 $ 206,400 $ 903,802 $ 1,451,135 $ 956,436
=========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
FUND INFORMATION
----------- ----------- ----------- ----------- -----------
GROWTH & GROWTH EMPLOYEE LKI
INCOME COMPANY LOANS STOCK TOTAL
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Additions:
Contributions from participants $ 57,068 $ 55,672 $ 0 $ 0 $ 370,456
Interest and dividend income 37,818 54,748 0 700 390,815
Loan interest income 1,713 2,317 0 0 15,823
Loan repayments 4,201 6,192 (57,182) 0 0
----------- ----------- ----------- ----------- -----------
Total additions/(deductions) 100,800 118,929 (57,182) 700 777,094
----------- ----------- ----------- ----------- -----------
Deductions:
Payments to participants (2,780) (8,549) (26,514) (55) (133,644)
Loans to participants (505) (802) 85,220 0 0
----------- ----------- ----------- -----------
Total (deductions)/additions (3,285) (9,351) 58,706 (55) (133,644)
----------- ----------- ----------- ----------- -----------
Net increase/(decrease) prior to transfers and net
realized and unrealized appreciation/(depreciation)
in fair value of investments 97,515 109,578 1,524 645 643,450
Net realized and unrealized appreciation/(depreciation)
in fair value of investments 14,845 291,146 0 0 656,241
Net inter fund transfers (22,311) (11,839) 0 0 0
----------- ----------- ----------- ----------- -----------
Net increase/(decrease) 90,049 388,885 1,524 645 1,299,691
Net assets available for benefits:
January 1, 1999 468,188 408,548 216,745 4,620 4,039,175
----------- ----------- ----------- ----------- -----------
Net assets available for benefits
December 31, 1999 $ 558,237 $ 797,433 $ 218,269 $ 5,265 $ 5,338,866
=========== =========== =========== =========== ===========
</TABLE>
-4-
<PAGE>
LAZARE KAPLAN INTERNATIONAL INC.
401(K) PLAN FOR SAVINGS AND INVESTMENTS
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
FUND INFORMATION
U/S.GOVT GINNIE EQUITY CAPITAL
RESERVES MAE INCOME MAGELLAN RECIATION
-------- -------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
Additions:
Contributions from participants $19,879 $20,814 $97,810 $94,115 $76,600
Interest and dividend income 10,789 11,575 42,566 51,948 14,051
Loan interest income 1,545 2,113 4,215 2,062 1,450
Loan repayments 7,424 7,614 19,779 9,591 6,201
-------- -------- -------- ---------- --------
Total additions/(deductions) 39,637 42,116 164,370 157,716 98,302
-------- -------- -------- ---------- --------
Deductions:
Payments to participants (7,022) (11,102) (12,714) (41,030) (18,455)
Loans to participants (14,881) (5,610) (41,081) (19,446) (20,597)
-------- -------- -------- ---------- --------
Total (deductions)/additions (21,903) (16,712) (53,795) (60,476) (39,052)
-------- -------- -------- ---------- --------
Net increase/(decrease) prior to
transfers and net realized and
unrealized appreciation/(depreciation)
in fair value of investments 17,734 25,404 110,575 97,240 59,250
Net realized and unrealized
appreciation/(depreciation) in
fair value of investments 0 (42) 42,133 232,314 73,252
Net inter fund transfers 709 (23,241) 494 26,793 (41,088)
-------- -------- -------- ---------- --------
Net increase/(decrease) 18,443 2,121 153,202 356,347 91,414
Net assets available for benefits:
January 1, 1998 197,893 186,128 628,003 806,299 501,224
-------- -------- -------- ---------- --------
Net assets available for benefits
December 31, 1998 $216,336 $188,249 $781,205 $1,162,646 $592,638
======== ======== ======== ========== ========
<CAPTION>
GROWTH & GROWTH EMPLOYEE LKI
INCOME COMPANY LOANS STOCK TOTAL
-------- -------- -------- ------ ----------
<S> <C> <C> <C> <C> <C>
Additions:
Contributions from participants $65,373 $69,622 $0 $0 $444,213
Interest and dividend income 23,279 27,974 0 0 182,182
Loan interest income 1,121 1,764 0 0 14,270
Loan repayments 3,428 4,516 (58,553) 0 0
-------- -------- -------- ------ ----------
Total additions/(deductions) 93,201 103,876 (58,553) 0 640,665
-------- -------- -------- ------ ----------
Deductions:
Payments to participants (661) (2,119) (2,202) (524) (95,829)
Loans to participants (20,735) (29,401) 151,751 0 0
-------- -------- -------- ------ ----------
Total (deductions)/additions (21,396) (31,520) 149,549 (524) (95,829)
-------- -------- -------- ------ ----------
Net increase/(decrease) prior to
transfers and net realized and
unrealized appreciation/(depreciation)
in fair value of investments 71,805 72,356 90,996 (524) 544,836
Net realized and unrealized
appreciation/(depreciation) in
fair value of investments 72,388 56,942 0 (2,877) 474,110
Net inter fund transfers 35,138 1,195 0 0 0
-------- -------- -------- ------ ----------
Net increase/(decrease) 179,331 130,493 90,996 (3,401) 1,018,946
Net assets available for benefits:
January 1, 1998 288,857 278,055 125,749 8,021 3,020,229
-------- -------- -------- ------ ----------
Net assets available for benefits
December 31, 1998 $468,188 $408,548 $216,745 $4,620 $4,039,175
======== ======== ======== ====== ==========
</TABLE>
-5-
<PAGE>
LAZARE KAPLAN INTERNATIONAL INC.
401(k) PLAN FOR SAVINGS
AND INVESTMENTS
Notes to Financial Statements
December 31, 1999
1. DESCRIPTION OF THE PLAN
The Lazare Kaplan International Inc. 401(k) Plan for Savings
and Investments (the "Plan") became effective January 1, 1990. The Plan is a
defined contribution profit-sharing plan applicable to full-time employees who
complete at least one year of service or were a full-time employee as of January
1, 1990. The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA").
The following description of the Plan provides only general
information. Participants should refer to the Plan Document for a more complete
description of the Plan's provisions.
Employees may elect to contribute, subject to defined
limitations, a portion of their salary to the Plan, to be deducted from each
paycheck under a deferred arrangement pursuant to Section 401(k) of the Internal
Revenue Code. Lazare Kaplan International Inc. (the "Company") intends to match
contributions in an amount equal to 50[c] for every pretax dollar contributed
up to the first six percent on the first $20,000 of compensation, as defined,
providing the Company's pretax earnings for that fiscal year exceed $3,500,000.
Matching contributions will be made at the end of each calendar year.
The Plan is funded from each payroll directly to Fidelity
Investments (the "Custodian"). Each Plan participant's contribution with any
employer's contribution, is invested in or among seven funds or the Company's
stock at the sole discretion of the participant.
All employee contributions are fully vested when made.
Employer contributions are earned at a rate of 33-1/3 percent after two years of
service, 66-2/3 percent after three years and full vesting after four years of
service. Service is based on date of hire. Forfeited balances of terminated
participants' non-vested accounts are used to reduce Company contributions.
-6-
<PAGE>
1. DESCRIPTION OF THE PLAN (continued)
Employees may borrow up to fifty percent of their vested
account balance with a minimum loan of $1,000 and a maximum loan of $50,000.
Repayment of the loan, made through payroll deductions, must be made over a
period not to exceed five years except for the purchase of a primary residence
which can be for a period not to exceed twenty years. Interest is charged at 1/4
percent over the prime rate at the time the loan is requested.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting - The Plan's financial statements have
been preprared on the accrual basis of accounting.
Valuation of Investments - The Plan's investments are stated
at fair value. Unrealized appreciation or depreciation of the securities is
reflected in the asset balances. Fair values are determined by the Custodian of
the Fidelity Equity Income Fund, Fidelity Magellan Fund, Fidelity Capital
Appreciation Fund, Fidelity Growth & Income Portfolio and Fidelity Growth
Company Fund based upon closing prices of securities traded on national stock
exchanges and at closing bid-and-asked quotations for those securities traded by
over-the-counter markets. The Fidelity Ginnie Mae Portfolio is valued primarily
on the basis of valuations furnished by a pricing service, which utilizes both
dealer-supplied valuations and EDP techniques. The U.S. Government Reserves
Fund is valued utilizing an amortized cost valuation technique. The Company's
common stock is valued at the closing price of the common stock on the last
day of the Plan year. The participant loans are valued at their outstanding
balances, which approximate fair value.
Except for the Company's common stock, the Plan's investments
are pooled with other investments administered by the Custodian. The combined
net investment income from other investments is allocated to each fund
participant based upon his or her share of the total shares of the fund.
Earnings are accrued daily and posted monthly by the Custodian.
Fees and Expenses - The administration fees and expenses of
the Plan are paid by the Company and not charged to the Plan.
Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make certain estimates and assumptions that could affect the amounts reported in
the financial statements and accompanying notes. Actual results could differ
from these estimates.
-7-
<PAGE>
3. INTERNAL REVENUE STATUS
The Plan is intended to be qualified under Section 401(a) of
the Internal Revenue Code of 1986 (the "Code") and its related trust is intended
to be exempt from taxation under Section 501(a) of the Code. The Plan received a
favorable IRS determination letter dated July 12, 1994. Subsequent to that date,
the Plan has been amended. The Plan administrator intends to restate the Plan
and to apply for a new determination letter in accordance with the requirements
of the IRS. The Plan's administrator believes the Plan continues to qualify
under the Code.
4. PLAN TERMINATION
It is the intention of the Company to continue the Plan
indefinitely. However, the Company has the right to terminate the Plan at any
time subject to the provisions of ERISA. In the event of Plan termination, all
participants' accounts will be fully vested.
5. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for
benefits per the financial statements to the Form 5500 as of December 31, 1999
and 1998.
<TABLE>
<CAPTION>
December 31,
1999 1998
---- ----
<S> <C> <C>
Net assets available for
benefits per the financial
statements $ 5,338,866 $ 4,039,175
Contributions refundable (8,410) (9,364)
Withdrawals payable (4,605) (1,667)
----------- -----------
Net assets available for
benefits per Form 5500 $ 5,325,851 $ 4,028,144
=========== ===========
</TABLE>
-8-
<PAGE>
5. RECONCILIATION OF FINANCIAL STATMENTS TO FORM 5500
(continued)
The following is a reconciliation of benefits paid to
participants per the financial statements to the Form 5500 for the years ended
December 31, 1999 and 1998:
<TABLE>
<CAPTION>
Year Ended
December 31,
1999 1998
---- ----
<S> <C> <C>
Benefits paid to participants
per the financial statements $ 133,644 $ 95,829
Add: amounts allocated to
withdrawn participants at
December 31 4,605 1,667
Add: amounts allocated to
be distributed to participants
at December 31 8,410 9,364
Less: amounts allocated to
withdrawn participants in
prior year (1,667) (2,234)
Less: amounts allocated to be
distributed to participants
in prior year (9,364) (5,905)
--------- ---------
Benefits paid to participants
per Form 5500 $ 135,628 $ 98,721
========= =========
</TABLE>
-9-
<PAGE>
EN # 13-6966063
Plan #001
Lazare Kaplan International Inc.
401(k) Plan for Savings
and Investments
Supplemental Schedule of Assets Held for Investment Purposes
(Item 27a)
December 31, 1999
<TABLE>
<CAPTION>
Description Fair Value
----------- ----------
<S> <C>
Fidelity U.S. Government Reserves $ 241,889
Fidelity Ginnie Mae Portfolio 206,400
Fidelity Equity Income Fund 903,802
Fidelity Magellan Fund 1,451,135
Fidelity Capital Appreciation Fund 956,436
Fidelity Growth & Income Portfolio 558,237
Fidelity Growth Company Fund 797,433
LKI Stock 5,265
Loans to participants (interest rates
from 6.25% to 9.25%) 218,269
----------
$5,338,866
==========
</TABLE>
Historical cost information is not available and has not been provided for
purposes of this schedule.
-10-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the trustees have duly caused this annual report to be signed on
its behalf by the undersigned thereunto duly authorized.
LAZARE KAPLAN INTERNATIONAL INC.
401(k) PLAN FOR SAVINGS
AND INVESTMENT
By: /s/ Leon Tempelsman
------------------------
Leon Tempelsman
Trustee
Dated: June 15, 2000
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
----------
<S> <C>
23.1 Consent of Ernst & Young LLP
STATEMENT OF DIFFERENCES
The cent sign shall be expressed as .........................[c]
</TABLE>
