HONG KONG, June 30 /Xinhua-PRNewswire-FirstCall/ -- LJ International Inc. (LJI) (Nasdaq: JADE), a leading jewelry manufacturer and retailer, today announced financial results for the fiscal year ended December 31, 2007.
Revenues for 2007 totaled $152.0 million, up 23% from $123.8 million in 2006. Most of the increase was due to a 127% increase in sales for the Company's retail operations, to $34.3 million from $15.1 million. Wholesale revenues also increased, by 8%, to $117.7 million in 2007 from $108.7 million in 2006.
Net income for fiscal 2007 was $1.5 million, or $0.07 per diluted share, compared to $5.3 million, or $0.29 per diluted share, in 2006. The decrease was primarily due to costs associated with the opening of an additional 50 new ENZO retail stores during the year. These start-up and ongoing operating costs consisted primarily of rental expenses, advertising spending and increased staffing. The Company's ENZO Division expanded its number of retail stores in China from 41 in 2006 to 91 in 2007.
CEO Notes Sustained Growth
"Today's results are encouraging to us because they show that LJI was able to maintain its strong top-line growth and still remain profitable in a challenging global market for luxury consumer products," said Yu Chuan Yih, Chairman and CEO of LJ International. "The past year also saw us maintain steady progress toward our goal of becoming a leading retailer as well as wholesale distributor of fine jewelry. With 100 ENZO retail stores open in China, Hong Kong and Macau, we will now be able to take advantage of China's continued economic boom. Our retail operation also gives us welcome diversification at a time when our older, primarily North American-based wholesale business must contend with the effects of an economic slowdown."
Sales Trend Leads to China
On a geographic basis, the Company's revenues in 2007 continued the previous year's trend of growing modestly in North America, falling in Japan and increasing sharply in China. Sales in Europe also grew strongly. China sales rose 83%, to $36.7 million in 2007 from $20.0 million in 2006. North American sales rose 5%, to $80.6 million from $76.9 million. Sales in Japan fell 10%, to $2.2 million from $2.5 million, while sales to Europe and other countries rose 33%, to $32.6 million from $24.5 million. Sales to North America, Japan, Europe and other countries outside China were predominantly wholesale.
To be added to LJI's investor lists, please contact Haris Tajyar at htajyar@irintl.com or at 818-382-9702.
About LJ International
LJ International Inc. (LJI) (Nasdaq: JADE), based in Hong Kong, is engaged in the designing, branding, marketing and distribution of a full range of jewelry. It has built its global business on a vertical integration strategy and an unwavering commitment to quality and service. LJI distributes to fine jewelers, department stores, national jewelry chains and electronic and specialty retailers throughout North America and Western Europe, with a growing retail presence in China through its ENZO stores. Its product lines incorporate all major categories sought by major retailers, including earrings, necklaces, pendants, rings and bracelets.
Forward looking statement: Except for the historical information, the matters discussed in this news release may contain forward-looking statements, including, but not limited to, factors relating to future revenues and earnings. These forward-looking statements may involve a number of risks and uncertainties. Actual results may vary significantly based on a number of factors including, but not limited to, uncertainties in product demand, the impact of competitive products and pricing, changing economic conditions around the world and in China, introduction of new products and other risk factors detailed in the Company's most recent annual report and other filings with the Securities and Exchange Commission.
LJ INTERNATIONAL INC
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
Year ended Year ended
December 31, December 31,
2007 2006
US$ US$
Operating revenue 152,037 123,791
Costs of goods sold (112,508) (88,867)
Gross profit 39,529 34,924
Operating expenses
Selling, general and
administrative expenses (30,399) (23,114)
Net (loss) gain on derivatives (4) (29)
Depreciation (3,095) (2,039)
Operating income 6,031 9,742
Other income and expense
Interest income 273 282
Interest expenses (3,103) (3,258)
Income before income taxes, minority
interests and extraordinary item 3,201 6,766
Income taxes expense (1,711) (1,403)
Income before minority interests and
extraordinary item 1,490 5,363
Minority interests in consolidated
subsidiaries (1) (38)
Income before extraordinary item 1,489 5,325
Extraordinary gain on negative
goodwill -- --
Net income 1,489 5,325
Weighted average number of
shares used in calculating
diluted earnings per share 22,289,102 18,303,277
Earnings per share:
Basic 0.07 0.31
Diluted 0.07 0.29
LJ INTERNATIONAL INC
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
As of December 31,
2007 2006
US$ US$
ASSETS
Current asset
Cash and cash equivalents 4,951 5,863
Restricted cash 4,161 5,489
Trade receivables, net of allowance
for doubtful accounts 23,194 23,894
Derivatives 2,947 3,400
Available-for-sale securities 2,973 2,596
Inventories 82,012 68,751
Prepayments and other current assets 2,522 3,118
Total current assets 122,760 113,111
Properties held for lease, net 1,292 1,346
Property, plant and equipment, net 8,460 8,412
Due from related parties -- 21
Deferred tax assets 111 111
Goodwill, net 1,521 1,521
Total assets 134,144 124,522
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Bank overdrafts 2,977 1,591
Notes payable 4,047 3,987
Capitalized lease obligation, current
portion 92 94
Letters of credit, gold loan and others 21,536 33,423
Derivatives 4,444 6,034
Trade payables 18,700 9,213
Accrued payroll and staff benefits 2,686 2,043
Accrued expenses and other payables 3,434 5,509
Income taxes payable 1,719 735
Deferred taxation 339 348
Total current liabilities 59,974 62,977
Notes payable, non-current portion 1,154 1,378
Capitalized lease obligation, non-current
portion 181 262
Total liabilities 61,309 64,617
Minority interest 167 166
Shareholders' equity
Common stocks, par value US$0.01 each,
Authorized -- 100 million shares,
Issued 21,437,172 shares as of December
31, 2007 and 18,977,371 shares as of
December 31, 2006 214 190
Additional paid-in capital 51,495 40,456
Accumulated other
comprehensive income (loss) 321 (56)
Retained earnings 20,638 19,149
Total shareholders' equity 72,668 59,739
Total liabilities and shareholders' equity 134,144 124,522
FOR MORE INFORMATION:
Haris Tajyar
Investor and Media Contact
Tel: +1-818-382-9702
Email: htajyar@irintl.com
SOURCE LJ International Inc.
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