UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 15, 2013
LAZARE KAPLAN INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
| Delaware | 1-7848 | 13-2728690 |
| (State or other jurisdiction of incorporation or organization) |
(Commission File Number) | (IRS Employer Identification No.) |
| 19 West 44th Street, New York, New York | 10036 | |
| (Address of principal executive offices) | (Zip Code) | |
Registrant's telephone number, including area code (212) 972-9700
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Check the appropriate box below if the Form 8−K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
| Item 2.02 | Results of Operations and Financial Condition. |
The information set forth under “Results of Operations” in Item 8.01 in this Form 8-K is incorporated herein by reference.
| Item 8.01 | Other Events. |
Notification of Late Filing
On April 15, 2013, Lazare Kaplan International Inc. (the “Company”) filed with the Securities and Exchange Commission a Notification of Late Filing on Form 12b-25 pertaining to its Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 2013 (“Q3 2013”).
As stated in the Form 12b-25, the Company has been unable to resolve the material uncertainties concerning (a) the collectability and recovery of certain assets, and (b) the Company’s potential obligations under certain lines of credit (all of which, the “Material Uncertainties”).
Accordingly, the Company is currently unable to finalize its financial statements for Q3 2013 or file its Q3 2013 Form 10-Q. Additionally, the Company remains unable to finalize its financial statements or file the corresponding (i) Form 10-K for each of its fiscal years ended May 31, 2009, 2010, 2011 or 2012, and (ii) Forms 10-Q for its quarterly fiscal periods ended after May 31, 2009.
The Company intends to as promptly as practicable finalize and file all requisite financial and other information for the periods referenced above with the Securities and Exchange Commission, upon the earlier to occur of (a) the successful resolution of the Material Uncertainties or (b) the Company concluding (together with its Independent Public Accountants) that the Material Uncertainties have been resolved to such an extent that it can finalize its financial statements.
Please refer to the Forms 8-K filed by the Company on September 1, 2009, September 16, 2009, October 21, 2009, January 15, 2010, April 14, 2010, August 31, 2010, October 15, 2010, January 14, 2011, April 14, 2011, and July 6, 2011, August 30, 2011, October 18, 2011, December 29, 2011, January 18, 2012, April 16, 2012, August 30, 2012, October 16, 2012, and January 15, 2013.
Other Matters
Litigation with KBC Bank N.V. and Antwerp Diamond Bank N.V.
On February 19, 2008, Lazare Kaplan Belgium N.V., a subsidiary of the Company (the “Subsidiary”), and Antwerp Diamond Bank N.V. (“ADB”) entered into a Credit Confirmation Letter (the “Credit Letter”), pursuant to which ADB granted to the Subsidiary an uncommitted US$25 million credit facility (the “$25M Facility”).
On February 20, 2008, the Company and ADB entered into a Credit Confirmation Agreement (the “Credit Agreement”), pursuant to which ADB granted to the Company an unsecured, uncommitted US$45 million New York credit facility (the “$45M Facility”).
Commencing in early 2009, the Company entered into discussions with the Executive Committee and senior management of ADB concerning, among other matters, its knowledge with respect to the loss or theft of the Company’s assets and the possible obligations of ADB to the Company and the Subsidiary resulting from its actions and the actions of certain of its senior personnel.
On December 29, 2009, ADB delivered a notice to the Subsidiary, stating that under the terms of the Credit Letter, it was terminating the $25M Facility as of January 28, 2010. There were no amounts outstanding under the $25M Facility at the time of termination.
On December 30, 2009, ADB delivered a notice to the Company, stating that under the terms of the Credit Agreement, it was terminating the $45M Facility on March 1, 2010. Pursuant to such notice, ADB claimed that the balance allegedly outstanding under the $45M Facility plus accrued and unpaid interest, costs, charges and fees (including attorneys’ fees) would be due and payable on such termination date. At the time of termination approximately $43 million was alleged by ADB to be outstanding under the $45M Facility.
In early 2010 the Company contacted executive management of KBC Bank N.V. (“KBC”), the parent company of ADB, concerning the loss or theft of the assets of the Company and the Subsidiary and the Company’s understanding of the potential involvement of ADB and senior members of ADB’s management with respect thereto.
In March 2010, ADB commenced civil litigation against the Company in the Antwerp Court of Commerce seeking payment of amounts alleged to be due and owing under the $45M Facility.
The Company denies that any amounts are currently due or owing to ADB under the $45M Facility and further denies that any action under the $45M Facility may be brought by ADB in the courts of Belgium.
On December 23, 2011 the Company filed suit against ADB and KBC – under the Racketeer Influenced and Corrupt Organizations Act (“RICO”) and state law. The Company is seeking, among other things, in excess of $500 million in damages that could be trebled under RICO. The lawsuit alleges that the banks engaged in money laundering and other illegal activity that includes the theft of over $135 million from the sales of diamonds belonging to the Company and its affiliates. Both banks have offices in New York and conduct licensed banking operations in the United States. The Company filed the RICO lawsuit against ADB and KBC in an effort to resolve the remaining Material Uncertainties.
On April 6, 2012, KBC and ADB filed motions to dismiss the Company’s complaint. On September 5, 2012, the District Court granted motions made by the banks dismissing the Company’s complaint pursuant to the doctrine of forum non conveniens. The District Court did not address the Company’s claims against the banks, but rather ruled as a procedural matter that the lawsuit should be brought and tried in a Belgian forum.
On September 6, 2012, the Company filed a notice of appeal to the United States Court of Appeals for the Second Circuit from the final judgment and Opinion and Order entered by the District Court.
Consistent with the opinion of outside counsel, the Company believes that the District Court erred in its ruling and believes that the ruling should be reversed on appeal.
On March 21, 2013, the Company filed criminal proceedings in Antwerp Belgium against ADB alleging, among other things, fraud, embezzlement and money-laundering.
On March 22, 2013, a judge in the Antwerp Belgium civil proceedings ordered the Company and ADB to brief their positions on the potential need to suspend the civil proceedings pending the resolution of criminal allegations filed by the Company.
Proceedings in the criminal case are currently scheduled to commence on May 3, 2013. Further proceedings in the civil case are currently scheduled for May 31, 2013.
The Company believes that the continued existence of this litigation and the remaining Material Uncertainties have a significant detrimental effect on the Company’s ability to transact business in the ordinary course.
Results of Operations
As described above, at this time, the Company is unable to resolve the Material Uncertainties. As such, the Company cannot report its results of operations for Q3 2013, except as set forth below.
The Company anticipates that its reported results of operations for Q3 2013 will reflect significant changes from the corresponding period of the last fiscal year. However, the Company, at this time, can only give a reasonable estimate of its anticipated net sales for Q3 2013, which is subject to the completion of the Company’s audits for its fiscal years ended May 31, 2009, May 31, 2010, May 31, 2011, and May 31, 2012.
The Company anticipates net sales for the three and nine months ended February 28, 2013 of approximately $15.3 million and $50.2 million, as compared to net sales of $22.3 million and $81.3 million for the comparable prior year periods. The decrease in net sales for the three and nine months ended February 28, 2013 reflects a decrease in sales of both polished and rough diamonds.
Current uncertain economic conditions continue to impact the sectors of the diamond and jewelry industry in which the Company operates. In addition, the continued existence of its litigation with Antwerp Diamond Bank N.V. and KBC Bank N.V. and the inability of the Company to timely resolve the Material Uncertainties has adversely impacted the Company's ability to transact business in the ordinary course to the same extent and in the same manner as it did previously. This includes, without limitation, the ability of the Company to maintain and/or expand its operations.
Forward-Looking Statements
The information provided in this Form 8-K includes forward-looking statements, including, without limitation, statements regarding financial information, the estimated timing for the completion of the Company’s financial statements, the filing of the Company’s Form 10-Q for Q3 2013 and other annual and quarterly reports, and expectations regarding the Company’s RICO lawsuit and other legal proceedings.
Statements that are not historical facts, including statements about the Company’s beliefs and expectations, are forward-looking statements. These statements are based on beliefs and assumptions by the Company’s management, and on information currently available to management. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update any of them publicly in light of new information or future events. A number of important factors could cause actual result to differ materially from those contained in any forward-looking statements.
SIGNATURES
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 hereunto duly authorized.
| LAZARE KAPLAN INTERNATIONAL INC. | ||
| Date: April 15, 2013 | By: | /s/ William H. Moryto |
| William H. Moryto, Vice President and Chief Financial Officer | ||