Lazare Kaplan International Inc. Reports Third Quarter Fiscal 2001 Results

Business Wire, April 12, 2001

    Business Editors

      NEW YORK--(BUSINESS WIRE)--April 12, 2001--

               -- Polished diamond sales increase 31% --

      Lazare Kaplan International Inc. (AMEX:LKI) today announced
financial results for the third quarter of fiscal 2001, ended February
28, 2001.
      For the third quarter, net sales were $55.1 million compared to
$106.2 million in the third quarter of last year. Net income for the
period was $250,000, or $0.03 per share compared to a net income of
$2,834,000 or $0.35 per share during the third quarter last year.
Earnings per share are based on the weighted average number of shares
of 7,511,080 for the third quarter of fiscal 2001 compared to
8,189,021 for the third quarter last year.
      During the current quarter, polished diamond sales increased 31%
to $41.1 million compared with $31.3 million in the same period last
year. Polished diamond sales accounted for 75% of sales for the
quarter compared to 29% for last year's third quarter. The increase in
polished sales was primarily due to higher sales of Lazare Diamonds(R)
and Bellataire Diamonds(TM).
      Rough diamond sales for the third quarter were $14.0 million
compared to $74.9 million in the third quarter last year. The decrease
in volume is primarily attributable to the termination of the
Company's rough buying operation in Angola during the fourth quarter
of fiscal 2000.
      For the nine months, net sales were $211.0 million compared to
$287.9 million in the same period last year. Net income for the nine
month period was $2,008,000, or $0.26 per share compared to a net
income of $1,467,000, or $0.18 per share for the same period last
year. Excluding the cumulative effect of a change in accounting
principle, net income for the prior year period was $2,989,000 or
$0.36 per share. Earnings per share are based on the weighted average
number of shares of 7,765,973 and 8,317,269 for the periods ended
February 28, 2001 and February 29, 2000.
      For the nine months, polished diamond sales were $150.7 million,
an increase of $59.7 million, or 66% over the same period last year.
The increase in polished sales reflects growth in sales of stones
produced in Russia, Lazare Diamonds and Bellataire Diamonds.
      Rough diamond sales for nine months were $60.2 million, a decrease
of $136.6 million or 69% compared to the same period last year. The
decrease in volume is primarily attributable to the termination of the
Company's rough buying operation in Angola.
      Overall gross margin for nine months was 11.7% compared to 8.2% in
the same period last year. This improvement results primarily from a
shift in sales mix toward polished sales, which provide higher
margins.
      "We are pleased to be able to report continued growth in our
polished diamond revenue despite the somewhat difficult and uncertain
condition of important global economies.", stated Leon Tempelsman,
President of Lazare Kaplan International Inc.
      Lazare Kaplan will be hosting a conference call at 10AM EDT this
morning to further discuss the quarterly results. The call will
simultaneously be hosted on http:/www.vcall.com and can be accessed by
entering the ticker symbol "LKI" on the vcall.com homepage.
      Lazare Kaplan International Inc. sells its diamond 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.
-0-
*T

                   LAZARE KAPLAN INTERNATIONAL INC.
                         FINANCIAL HIGHLIGHTS
           ($ in thousands, except share and per share data)


                    Three Months Ended           Nine Months Ended
                February 28,  February 29,  February 28,  February 29,
                    (Unaudited)                    (Unaudited)
                  2001           2000         2001             2000

Net sales       $ 55,064       $ 106,238    $ 210,956        $ 287,886
Cost of Sales     48,129          97,363      186,301          264,324
Gross profit       6,935           8,875       24,655           23,562

Selling, general
 and administrative
 expenses
 (net of life insurance
 proceeds of $1.6 million
 in 2000)          5,481           4,074       17,832           12,770
Legal settlement
 and related costs     -               -            -            5,048
Interest expense
 (net)               980           1,027        3,555            2,553

Income before taxes
 and cummulative
 effect of change in
 accounting
 principle           474           3,774        3,268            3,191

Income tax           224             940        1,260              202
Income before
 cummulative effect of
  change in accounting
  principle          250           2,834        2,008            2,989
Cummulative effect of
 change in
 accounting method for
 start up activities   -               -            -          (1,522)

Net Income         $ 250         $ 2,834      $ 2,008         $  1,467

Earnings per share:
Basic earnings per
 share before
 cummulative effect
 of change in
 accounting
 principle        $ 0.03          $ 0.35       $ 0.26          $  0.36
Basic earnings
 per share        $ 0.03          $ 0.35       $ 0.26          $  0.18

Average number of
 shares outstanding
 during the
 period        7,497,616       8,137,448    7,744,163        8,256,030

Diluted earnings per
 share before
 cummulative effect of
 change in accounting
 principle      $   0.03         $  0.35       $ 0.26           $ 0.36
Diluted earnings
 per share      $   0.03         $  0.35       $ 0.26           $ 0.18

Average number of
 shares outstanding
 during the
 period        7,511,080       8,189,021    7,765,973        8,317,269

    --30--mem/ny*

    CONTACT: Investor Relations:
             PR21, Inc., New York
             Glenn Wiener/Christopher Fullam
             212/299-8888

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