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UNITED STATES
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 NOVEMBER 30, 2002.
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 January 2, 2003, 8,575,645 shares of the registrant's common
stock were outstanding.
Part I. Financial Information
Item I. Financial Statements
Lazare Kaplan International Inc.
Financial Highlights
($ in thousands, except share and per share data)
Three Months Ended Six Months Ended
November 30, November 30,
(Unaudited) (Unaudited)
2002 2001 2002 2001
---------- ---------- ---------- ----------
Net sales $ 51,747 $ 46,454 $ 105,635 $ 97,510
Cost of Sales 45,449 41,446 94,214 88,902
---------- ---------- ---------- ----------
Gross profit 6,298 5,008 11,421 8,608
Selling, general and administrative expenses 4,701 4,517 9,326 10,000
Interest expense (net) 123 762 281 1,537
---------- ---------- ---------- ----------
4,824 5,279 9,607 11,537
---------- ---------- ---------- ----------
Income before income taxes and cumulative effect
of change in accounting principle 1,474 (271) 1,814 (2,929)
---------- ---------- ---------- ----------
Income tax provision / (benefit) 544 (16) 680 (1,011)
---------- ---------- ---------- ----------
Income / (Loss) before cumulative effect of
change in accounting principle 930 (255) 1,134 (1,918)
Cumulative effect of change in accounting principle,
net of taxes of $501 - - (972) -
---------- ---------- ---------- ----------
Net Income / (Loss) $ 930 $ (255) $ 162 $ (1,918)
========== ========== ========== ==========
Earnings / (Loss) per share:
Basic earnings / (loss) per share before cumulative
effect of change in accounting principle $ 0.11 $ (0.03) $ 0.13 $ (0.26)
========== ========== ========== ==========
Basic earnings / (loss) per share $ 0.11 $ (0.03) $ 0.02 $ (0.26)
========== ========== ========== ==========
Average number of shares outstanding during the period 8,705,745 7,367,691 8,705,492 7,367,691
========== ========== ========== ==========
Diluted earnings / (loss) per share before cumulative
effect of change in accounting principle $ 0.11 $ (0.03) $ 0.13 $ (0.26)
========== ========== ========== ==========
Diluted earnings / (loss) per share $ 0.11 $ (0.03) $ 0.02 $ (0.26)
========== ========== ========== ==========
Average number of shares outstanding during the period
assuming dilution 8,711,042 7,367,691 8,733,867 7,367,691
========== ========== ========== ==========
See notes to consolidated financial statements.
2
Consolidated Balance Sheets
(in thousands, except share data)
November 30, May 31,
(Unaudited) (Audited)
2002 2002
-------- --------
ASSETS:
Cash and cash equivalents $ 834 $ 1,102
Accounts receivable-net 49,003 45,469
Inventories - rough diamonds 5,048 9,468
- polished diamonds 65,871 64,833
Prepaid expenses and other current assets 6,587 6,058
Deferred taxes 2,267 2,319
-------- --------
Total Current Assets 129,610 129,249
-------- --------
Non-current assets - net 7,652 9,783
Deferred taxes 8,835 8,955
-------- --------
Total Assets $146,097 $147,987
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Liabilities:
Accounts payable and other current liabilities $ 43,200 $ 45,792
-------- --------
Total Current Liabilities 43,200 45,792
-------- --------
Long-term debt 12,643 12,089
-------- --------
Total Liabilities 55,843 57,881
-------- --------
Stockholders' Equity:
Preferred stock, par value $.01 per share
Authorized 1,500,000 shares;
no shares outstanding - -
Common stock, par value $1 per share
Authorized 12,500,000; issued 8,705,745 and 8,704,860
in November and May 2002, respectively 8,706 8,705
Additional paid-in capital 61,572 61,567
Cumulative translation adjustment (235) (215)
Retained earnings 20,211 20,049
-------- --------
Total Stockholders' equity 90,254 90,106
-------- --------
Total Liabilities and Stockholders' Equity $146,097 $147,987
======== ========
See notes to consolidated financial statements.
3
Consolidated Statements of Cash Flows
(Amounts in thousands)
Six Months Ended
November 30,
(Unaudited)
2002 2001
------- -------
Cash Flows From Operating Activities:
Net income / (loss) $ 162 $(1,918)
Adjustments to reconcile net income / (loss) to
net cash used in operating activities:
Cumulative effect of change in accounting principle 972
Depreciation and amortization 838 781
Provision for uncollectible accounts 60 (280)
Deferred income taxes 172 (924)
Changes in operating assets and liabilities:
Accounts receivable (3,594) (1,297)
Rough and Polished inventories 3,382 (4,417)
Prepaid expenses and other current assets (529) 2,515
Other 362 628
Accounts payable and other current liabilities (2,592) (819)
------- -------
Net cash used in operating activities (767) (5,731)
------- -------
Cash Flows From Investing Activities:
Capital expenditures (41) (110)
------- -------
Net cash used in investing activities (41) (110)
------- -------
Cash Flows From Financing Activities:
Increase in short-term borrowings - 6,102
Increase / (decrease) in long-term borrowings 554 (239)
Proceeds from exercise of stock options 6 -
------- -------
Net cash provided by financing activities 560 5,863
------- -------
Effect of foreign currency translation adjustment (20) (76)
------- -------
Net decrease in cash (268) (54)
Cash and cash equivalents at beginning of year 1,102 1,128
------- -------
Cash and cash equivalents at end of period $ 834 $ 1,074
======= =======
See notes to consolidated financial statements.
4
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 (consisting of normal recurring accruals)
necessary to present fairly Lazare Kaplan International Inc.'s operating results
for the three and six months ended November 30, 2002 and 2001 and its financial
position as of November 30, 2002.
The balance sheet at May 31, 2002 has been derived from the audited financial
statements at that date but does not include all of the information and
footnotes required by accounting principles generally accepted in the United
States 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, 2002. 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 subsidiaries conduct business in foreign countries. The
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.
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 November 30, 2002 is
approximately $11,235,000 less a valuation allowance of approximately $133,000
resulting in a net deferred tax asset of $11,102,000.
At November 30, 2002 the Company has available U.S. net operating losses of
$26.1 million, which expire as follows (in thousands):
Year Net Operating Losses
---- --------------------
2007 $ 41
2008 926
2010 371
2012 406
2013 2,097
2019 12,268
2020 298
2021 120
2022 9,560
-------
$26,087
=======
5
3. Earnings 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.
Three Months Ended Six Months Ended
November 30, November 30,
2002 2001 2002 2001
--------- --------- --------- ---------
Average number of shares outstanding
during the period 8,705,745 7,367,691 8,705,492 7,367,691
Effect of dilutive stock options 5,297 - 28,375 -
--------- --------- --------- ---------
Average number of shares outstanding
during the period assuming dilution 8,711,042 7,367,691 8,733,867 7,367,691
========= ========= ========= =========
4. Comprehensive Income
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" (Statement 130) established rules for the reporting and display of
comprehensive income and its components. Statement 130 requires foreign currency
translation adjustments to be included in other comprehensive income. For the
three months ended November 30, 2002 and 2001, total comprehensive income/(loss)
was $976,000 and $(260,000), respectively. For the six months ended November 30,
2002 and 2001, total comprehensive income/(loss) was $142,000 and $(1,994,000),
respectively.
5. Lines of Credit
The Company entered into a new long-term unsecured, revolving loan
agreement in August 2002. The new agreement provides that the Company may borrow
up to $30 million in the aggregate through December 1, 2004. The loan term may
be extended in one year increments commencing November 30, 2003, subject to the
consent of the lending banks. Borrowings under this agreement bear interest at
(a) the higher of the banks base rate or one half of one percent above the
Federal Funds Effective Rate, or (b) 160 basis points above LIBOR. The
applicable interest rate is contingent upon the method of borrowing selected by
the Company. The proceeds of this facility are available for working capital
purposes. The loan agreement contains certain provisions that require, among
other things, (a) maintenance of defined levels of working capital, net worth
and profitability, (b) limitations on borrowing levels, investments and capital
expenditures and (c) limitations on dividends and the repurchase of treasury
shares. The proceeds of this facility are available for the Company's working
capital needs. There were no outstanding borrowings under this loan agreement at
November 30, 2002.
The Company also has a $25 million and a $15 million unsecured,
uncommitted line of credit with a bank. Borrowings under the $25 million line
bear interest at a rate 160 basis points above the 90 day LIBOR. Borrowings
under the $15 million line bear interest at a rate 150 basis points above the
bank's base rate. Borrowings under these lines are available for the Company's
6
working capital requirements and are payable on demand. Outstanding borrowings
under these lines amounted to approximately $4.3 million at November 30, 2002.
A subsidiary of the Company maintains a loan facility that enables it
to borrow up to 1.1 billion Japanese yen at an interest rate 1% above Japanese
LIBOR. In November 2002, the loan was amended extending its term through
November 2004. The loan contains provisions that, among other things, require
the Company to maintain a minimum debt to equity ratio. Borrowings under the
facility are available for general working capital purposes and are guaranteed
by the Company. Outstanding borrowings under this line amounted to approximately
$8.3 million at November 30, 2002.
6. Sales to Related Parties
During the period ended November 30, 2002 the Company sold
approximately $0.8 million of jewelry items to a non-employee member of the
Company's board of directors.
7. Cumulative Effect of Change in Accounting Principle
On June 1, 2002 the Company adopted Financial Accounting Standards
Board Standard No. 142, Goodwill and Other Intangible Assets ("Statement 142").
As a result, the Company ceased amortization of goodwill and other indefinite
lived intangible assets. Had the Company been accounting for its goodwill and
other indefinite lived assets under Statement 142 for the prior year, the
Company's net loss for each of the first and second fiscal quarters of the prior
year would have been reduced by approximately $32,000, respectively, which
represents amortization expense net of tax. Loss per share for the six months
ended November 30, 2001 would have been reduced to $0.25.
Under the transition provision of Statement 142 the Company completed
its evaluation of goodwill and indefinite lived assets during the quarter ended
November 30, 2002, using a discounted cash flow methodology. As a result of
testing goodwill impairment in accordance with Statement 142, as of June 1,
2002, the Company recorded a non-cash charge of approximately $1.5 million
($972,000 after tax, or $0.11 per share), which has been reported under the
caption "Cumulative Effect of a Change in Accounting Principle". The effect of
this charge was to reduce fiscal first quarter 2003 net income to a loss of
$768,000, or $0.09 per share. The charge relates to the Company's operations in
Japan (Far East Segment).
7
8. Geographic Segment Information
Revenue, gross profit and income/(loss) before income taxes and cumulative
effect of change in accounting principle for the three months ended November 30,
2002 and 2001 classified by geographic area, which was determined by where
sales originated from, were as follows (in thousands):
North Far Elimi- Consoli-
America Europe Africa East nations dated
------- ------ ------ ---- ------- -----
Three months ended November 30, 2002
Net sales to unaffiliated customers $ 31,405 $17,583 $ - $ 2,759 $ - $ 51,747
Transfers between geographic areas 6,943 177 - - (7,120) -
--------- ------- ----- ------- -------- ---------
Total revenue $ 38,348 $17,760 $ - $ 2,759 $ (7,120) $ 51,747
========= ======= ===== ======= ======== =========
Gross Profit $ 5,655 $ 303 $(304) $ 644 $ - $ 6,298
========= ======= ===== ======= ======== =========
Income/(loss) before income taxes
and cumulative effect of change in
accounting principle $ 1,806 $ 11 $(314) $ (29) $ - $ 1,474
========= ======= ===== ======= ======== =========
North Far Elimi- Consoli-
America Europe Africa East nations dated
------- ------ ------ ---- ------- -----
Three months ended November 30, 2001
Net sales to unaffiliated customers $ 27,352 $15,639 $ - $ 3,463 $ - $ 46,454
Transfers between geographic areas 13,357 74 - - (13,431) -
--------- ------- ----- ------- -------- ---------
Total revenue $ 40,709 $15,713 $ - $ 3,463 $(13,431) $ 46,454
========= ======= ===== ======= ======== =========
Gross Profit $ 3,974 $ 301 $ (2) $ 735 $ - $ 5,008
========= ======= ===== ======= ======== =========
Income/(loss) before income taxes
and cumulative effect of change in
accounting principle $ (198) $ 163 $(140) $ (96) $ - $ (271)
========= ======= ===== ======= ======== =========
8
8. Geographic Segment Information (continued)
Revenue, gross profit and income/(loss) before income taxes and cumulative
effect of change in accounting principle for the six months ended November 30,
2002 and 2001 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):
North Far Elimi- Consoli-
America Europe Africa East nations dated
------- ------ ------ ---- ------- -----
Six months ended November 30, 2002
Net sales to unaffiliated customers $ 59,100 $40,923 $ - $ 5,612 $ - $ 105,635
Transfers between geographic areas 9,535 177 - - (9,712) -
--------- ------- ------- ------- -------- ---------
Total revenue $ 68,635 $41,100 $ - $ 5,612 $ (9,712) $ 105,635
========= ======= ======= ======= ======== =========
Gross Profit $ 9,854 $ 595 $ (304) $ 1,276 $ - $ 11,421
========= ======= ======= ======= ======== =========
Income/(loss) before income taxes
and cumulative effect of change in
accounting principle $ 2,248 $ 18 $ (320) $ (132) $ - $ 1,814
========= ======= ======= ======= ======== =========
Identifiable assets at November 30, 2002 $ 128,456 $ 4,033 $ 6,726 $ 6,939 $ (57) $ 146,097
========= ======= ======= ======= ======== =========
North Far Elimi- Consoli-
America Europe Africa East nations dated
------- ------ ------ ---- ------- -----
Six months ended November 30, 2001
Net sales to unaffiliated customers $ 55,733 $35,270 $ - $ 6,507 $ - $ 97,510
Transfers between geographic areas 22,194 74 - - (22,268) -
--------- ------- ------- ------- -------- ---------
Total revenue $ 77,927 $35,344 $ - $ 6,507 $(22,268) $ 97,510
========= ======= ======= ======= ======== =========
Gross Profit $ 6,620 $ 711 $ (2) $ 1,279 $ - $ 8,608
========= ======= ======= ======= ======== =========
Income/(loss) before income taxes
and cumulative effect of change in
accounting principle $ (2,469) $ 285 $ (423) $ (322) $ - $ (2,929)
========= ======= ======= ======= ======== =========
Identifiable assets at November 30, 2001 $ 144,772 $12,027 $13,103 $ 9,194 $ (128) $ 178,968
========= ======= ======= ======= ======== =========
9
8. Geographic Segment Information (continued)
Revenue and gross profit for the three months ended November 30, 2002 and 2001
classified by product were as follows (in thousands):
Polished Rough
diamonds diamonds Total
-------- -------- -----
Three months ended November 30, 2002
Net Sales $39,175 $ 12,572 $51,747
------- -------- -------
Gross Profit $ 6,071 $ 227 $ 6,298
------- -------- -------
Three months ended November 30, 2001
Net Sales $40,161 $ 6,293 $46,454
------- -------- -------
Gross Profit $ 5,043 $ (35) $ 5,008
------- -------- -------
Revenue and gross profit for the six months ended November 30, 2002 and 2001
classified by product were as follows (in thousands):
Polished Rough
diamonds diamonds Total
-------- -------- -----
Six months ended November 30, 2002
Net Sales $70,572 $ 35,063 $105,635
------- -------- --------
Gross Profit $10,369 $ 1,052 $ 11,421
------- -------- --------
Six months ended November 30, 2001
Net Sales $77,384 $ 20,126 $ 97,510
------- -------- --------
Gross Profit $ 8,491 $ 117 $ 8,608
------- -------- --------
10
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, 2002. 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 for the three and six months ended November 30, 2002 were
$51.7 and $105.6 million, respectively, an increase of $5.3 and $8.1 million, as
compared to the prior year.
Polished diamond revenue for the three and six months ended November
30, 2002 was $39.2 and $70.6 million, respectively, as compared to $40.2 and
$77.4 million in the prior year. The decrease in polished sales primarily
reflects softness in consumer demand attributable to difficult financial
conditions in the United States and Southeast Asia.
Rough diamond sales were $12.6 and $35.1 million, an increase of $6.3
and $14.9 million for the three and six months ended November 30, 2002,
respectively, as compared to the prior year. The increase from the prior year is
attributable to increased sourcing of rough diamonds.
Gross Profit
During the three months ended November 30, 2002 gross margin on net
polished sales was 15.5% compared to 12.6% in the second quarter of last year.
For the six months ended November 30, 2002 gross margin on net polished sales
was 14.7% compared to 11.0% in the same period last year. The increase in
polished gross margin reflects higher gross margin on the sale of certain larger
stones and a reduction in sales incentives offered to liquidate slower moving
inventory compared to the same period last year.
Rough gross margin during the six month period ended November 30, 2002
was 3.0% compared to 0.6% in the prior year period. The increase in rough gross
margin percentage primarily reflects a recovery of trading margins to levels in
line with the Company's historical experience.
11
As a result of the foregoing, overall gross margin percentage during
the three month period ended November 30, 2002 was 12.2% compared to 10.8% in
the second quarter last year. For the six months ended November 30, 2002 overall
gross margin on net sales was 10.8% compared to 8.8% for the same period last
year.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the three and six
months ended November 30, 2002 were $4.7 and $9.3 million, respectively, as
compared to $4.5 and $10.0 million for the same periods in the prior year. The
increase for the current quarter and decrease for the six months ended November
30, 2002 reflects increased insurance costs offset by the effect of cost
reduction programs.
Interest Expense
Net interest expense for the three and six months ended November 30,
2002 was $123,000 and $281,000, respectively, as compared to $762,000 and
$1,537,000 for the same periods in the prior year. The decrease was due to
reduced levels of borrowing and lower interest rates during the current period
compared to the same period last year.
Income Tax
The Company's effective tax rate for six months ended November 30, 2002
was 37.5% as compared to 34.5% for the prior year. This increase is primarily
attributable to increased income in higher tax rate jurisdictions.
Liquidity and Capital Resources
The Company's working capital at November 30, 2002 was $86.4 million,
which was $3.0 million greater than its working capital at May 31, 2002. This
increase primarily reflects a reduction in accounts payable and other current
liabilities funded by non current borrowings and earnings before non-cash
charges.
The Company maintains a $30 million long-term unsecured, revolving
credit facility that it utilizes for general working capital purposes. It also
maintains $40 million of uncommitted lines of credit (approximately $4.3 million
outstanding at November 30, 2002) that are used to finance rough inventory
transactions and other working capital needs. In addition, the Company has a 1.1
billion Yen denominated facility (approximately $8.3 million outstanding at
November 30, 2002) that is used in support of its operations in Japan.
Stockholders' equity was $90.3 million at November 30, 2002 as compared
to $90.1 million at May 31, 2002. No dividends were paid to stockholders during
the six months ended November 30, 2002.
The Company believes that it has the ability to meet its current and
anticipated financing needs for the next twelve months.
12
Cumulative Effect of Change in Accounting Principle
On June 1, 2002 the Company adopted Financial Accounting Standards
Board Standard No. 142, Goodwill and Other Intangible Assets ("Statement 142").
As a result, the Company ceased amortization of goodwill and other indefinite
lived intangible assets. Had the Company been accounting for its goodwill and
other indefinite lived assets under Statement 142 for the prior year, the
Company's net loss for each of the first and second fiscal quarters of the prior
year would have been reduced by approximately $32,000, respectively, which
represents amortization expense net of tax. Loss per share for the six months
ended November 30, 2001 would have been reduced to $0.25.
Under the transition provision of Statement 142 the Company completed
its evaluation of goodwill and indefinite lived assets during the quarter ended
November 30, 2002, using a discounted cash flow methodology. As a result of
testing goodwill impairment in accordance with Statement 142, as of June 1,
2002, the Company recorded a non-cash charge of approximately $1.5 million
($972,000 after tax, or $0.11 per share), which has been reported under the
caption "Cumulative Effect of a Change in Accounting Principle". The effect of
this charge was to reduce fiscal first quarter 2003 net income to a loss of
$768,000, or $0.09 per share. The charge relates to the Company's operations in
Japan (Far East Segment).
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT
MARKET RISK
At November 30, 2002, the Company had borrowings totaling approximately $12.6
million outstanding under various credit agreements. The interest rates on these
borrowings are variable and therefore the general level of U.S. and foreign
interest rates affects interest expense. Increases in interest expense resulting
from an increase in interest rates could impact the Company's results of
operations. The Company's policy is to take actions that would mitigate such
risk when appropriate. These actions include staggering the term and rate of its
borrowings to match anticipated cash flows and movements in interest rates. For
further discussion of market risk, 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, 2002.
ITEM 4. CONTROLS AND PROCEDURES
As of November 30, 2002, an evaluation was performed under the supervision and
with the participation of the Company's management, including the Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures. Based
on that evaluation, the Company's management, including the Chief Executive
Officer and Chief Financial Officer, concluded that the Company's disclosure
controls and procedures were effective as of November 30, 2002. There have been
no significant changes in the Company's internal controls or in other factors
that could significantly affect internal controls subsequent to November 30,
2002.
13
PART 2
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits
(99.1) Certification of Leon Tempelsman, Vice Chairman of the Board and
President, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
(99.2) Certification of William H. Moryto, Vice President and Chief Financial
Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
(B) Reports on Form 8-K
None
14
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/ William H. Moryto
---------------------
William H. Moryto
Vice President and
Chief Financial Officer
Dated: January 13, 2003
15
I, Leon Tempelsman, Certify that:
1. I have reviewed this quarterly report on Form 10-Q of Lazare Kaplan
International Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function);
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: January 13, 2003 By: /s/ Leon Tempelsman
-------------------
Leon Tempelsman
(Chief Executive Officer)
16
I, Wiliam H. Moryto, Certify that:
1. I have reviewed this quarterly report on Form 10-Q of Lazare Kaplan
International Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function);
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: January 13, 2003 By: /s/ William H. Moryto
---------------------
William H. Moryto
(Chief Financial Officer)
17