Lazare Kaplan International Inc. Reports Second Quarter Fiscal 2007 Results


NEW YORK, Jan. 12, 2007 (PRIME NEWSWIRE) -- Lazare Kaplan International Inc. (AMEX:LKI) today announced financial results for the second quarter of fiscal 2007 ended November 30, 2006.

Net sales for the three and six month periods ended November 30, 2006 were $94.4 million and $233.3 million, a decrease of approximately 2% and 1% compared to the respective prior year periods. Gross margin for the three and six months ended November 30, 2006 was 5.2% and 4.4%, respectively compared to 6.3% and 6.4% in the comparable prior year periods.

The decrease in sales and gross margin for the three and six month periods reflects a shift in sales mix with a higher percentage of overall sales derived from lower margin rough diamond trading and the sale of fine cut commercial polished diamonds. In addition, during the three months ended November 30, 2006 the Company sought to close out certain slower moving commercial polished diamonds at reduced prices to maximize cash flow and reduce inventory-carrying costs.

Net income / (loss) for the three and six month periods ended November 30, 2006 was $(1.4) million, or $(0.17) per share, and $(3.2) million, or $(0.39) per share, compared to $(0.4) million, or $(0.05) per share, and $0.5 million, or $0.06 per share, in the respective prior year periods. Fully diluted earnings per share for the three and six month period ended November 30, 2006 are based on the weighted average number of shares outstanding of 8,197,634 and 8,197,420, as compared to 8,327,060 and 8,782,278 in the comparable prior year periods.

Lazare Kaplan International Inc. sells its diamonds and jewelry products through a worldwide distribution network. The Company is noted for its ideal cut diamonds, which it markets internationally under the brand name, Lazare Diamonds(r).

Except for historical information contained herein, the statements in this release are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties which may cause the Company's actual results in future periods to differ materially from forecasted results. Those risks include a softening of retailer or consumer acceptance of or demand for the Company's products, pricing pressures, adequate supply of rough diamonds and other competitive factors. These and other risks are more fully described in the Company's filings with the Securities and Exchange Commission. The information contained in this press release is accurate only as of the date issued. Investors should not assume that the statements made in these documents remain operative at a later time. Lazare Kaplan International Inc. undertakes no obligation to update any information contained in this news release.


 CONSOLIDATED STATEMENTS OF OPERATIONS
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 (In thousands, except per share and per share data)

                          
 November 30,             Three Months Ended        Six Months Ended
 (unaudited)              2006         2005        2006         2005
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 Net sales           $   94,411   $   96,275   $  233,295   $  235,131
 Cost of Sales           89,482       90,221      223,121      220,095
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                          4,929        6,054       10,174       15,036
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 Selling, general and
  administrative
  expenses                6,831        6,429       13,070       13,116
 Equity in income
  of joint ventures        (907)         --        (1,200)         --
 Interest expense,
  net of interest
  income                  1,548          341        3,270        1,244
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                          7,472        6,770       15,140       14,360
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 Income / (loss)
  before income
  taxes                  (2,543)        (716)      (4,966)         676
 Income tax
  provision /
  (benefit)              (1,180)        (309)      (1,778)         175
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 NET INCOME /
 (LOSS)              $   (1,363)  $     (407)  $   (3,188)  $      501
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 EARNINGS / (LOSS)
  PER SHARE
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 Basic earnings /
  (loss) per share   $    (0.17)  $    (0.05)  $    (0.39)  $     0.06
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 Average number
  of shares
  outstanding
  during the
  period              8,197,634    8,327,060    8,197,420    8,348,798
 ---------------------------------------------------------------------


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 Diluted earnings
  / (loss) per
  share              $    (0.17)  $    (0.05)  $    (0.39)  $     0.06
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 Average number
  of shares
  outstanding
  during the period
  assuming dilution   8,197,634    8,327,060    8,197,420    8,782,278
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