Lazare Kaplan International anticipates that its third-quarter sales for the period that ended on February 29, 2012 fell 43 percent year on year to $22.4 million. Net sales for the first nine months of the company’s fiscal year 2012 dropped 20 percent to $81.5 million, according to the estimates filed with the Securities & Exchange Commission (SEC). Even though the company has been unable to file its official quarterly and fiscal year results dating back to the first-quarter of fiscal 2010, it has continually filed sales estimates with the SEC.
The decrease in net sales for the most recent quarter and year-to-date reflected lower levels of rough diamond trading and a decrease in sales of non-branded polished diamonds. Lazare Kaplan noted that uncertain economic conditions continue to impact the diamond and jewelry industry. In addition, the inability of Lazare Kaplan to timely resolve the remainder of its ongoing material uncertainties with lenders 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 the firm’s ability to maintain and/or expand its operations.
Lazare Kaplan first entered into a settlement agreement with lenders to resolve certain aspects of the material uncertainties in October 2010. In July 2011, the company entered into a release and settlement agreement with certain insurance companies, which further resolved certain aspects of these uncertainties. In addition, the company filed suit on December 23, 2011 against KBC Bank N.V. and its wholly owned subsidiary, Antwerp Diamond Bank N.V. under the racketeer influenced corrupt organizations act (RICO) and state law and seeks, among other things, in excess of $500 million in damages. This case could resolve the remaining material uncertainties, at which time Lazare Kaplan intends to finalize and file its forms 10-K and 10-Q for the past reporting periods.