LJ International Revenue Rises 30% In First Quarter 2004 Operating
Income Up 32% as Jewelry Firm Begins Expansion Into China's Retail
Market First Quarter Highlights: -- Revenue of $14.5 million, up
30% from $11.1 million in the first quarter of 2003. -- Net income
of $421,000, or $0.04 per fully diluted share, compared to
$358,000, also $0.04 per share, a year earlier. This is the
Company's seventh straight profitable quarter. -- Operating income
of $572,000, up 32% from $434,000 in the first quarter of 2003. --
Balance sheet remains strong with over $5.3 million in cash and
zero long-term debt. -- Company makes significant move into China
during first quarter, with new Hong Kong showroom and Mainland
Chinese Government approval for accelerated expansion. HONG KONG
and LOS ANGELES, May 13 /Xinhua-PRNewswire-FirstCall/ -- LJ
International, Inc. (LJI) (NASDAQ:JADE), one of the fastest-growing
fine jewelry companies in the world, today announced financial
results for the first quarter of 2004, ending March 31. The
year-over-year revenue increase continued the trend of the past
year, when sales rose 26% from 2002 to 2003. The Company attributed
the first- quarter rise in sales to acceptance of new products, new
customers as well as an increase in orders from existing customers.
During the first quarter, LJI made its first significant entry into
the mainland Chinese retail jewelry market, opening up its first
Hong Kong showroom and gaining government approval to expand its
product lines into China. Since the end of the first quarter it has
announced two other major Chinese marketing initiatives. One is a
memorandum of understanding to market and sell LJI jewelry through
a joint venture with China Commerce Group a leading China-based
operator of several retail outlets including the upscale 'China
Friendship Shops,' Hualian Department Stores and Juntai Department
stores, among others. The other is a new strategic vendor
partnership under which LJI is now selling jewelry featuring
colored stones through the global retailer Carrefour. Carrefour is
the second largest retailer in the world and the operator of 35
giant 'hypermarkets' in China. The Company also announced in the
first quarter that it had received initial orders from Australia's
largest TV home shopping network, and it announced that it had
received a $1.3 million order for colored-stone jewelry from the
largest warehouse club chain in the U.S. 'Our first-quarter
financial results, which were at the higher end of our earlier
guidance, clearly indicate that LJI is successfully executing its
expansion strategy,' said Yu Chuan Yih, LJI's chairman and CEO.
'The combination of new product introductions and new customers are
the primary reasons behind our sales growth. Our plans to rapidly
expand into the fast- growing Chinese consumer market are expected
to generate a new and growing revenue channel for LJI in the
current and coming years. Excluding potential contributions from
China, we continue to remain comfortable with double digit revenue
growth in the coming quarters. Earnings should also be favorably
impacted by our progress in growing sales while decreasing our
overall expenses as a percentage of overall sales.' Balance Sheet
Continues to Strengthen As of March 31, 2004, LJI reported cash and
cash equivalents of $5.34 million with zero long-term debt. The
strength in the Company's balance sheet should provide LJI with the
necessary financial flexibility to execute on its growth
initiatives, particularly as it begins its penetration of the
Chinese market. Company Sees Continued Sales Growth For the second
quarter of 2004, the Company said it expected sales to total
between $13.5million and $14.0 million, or 12% to 21% above the
$11.6 million reported in the second quarter of 2003. It indicated
that revenues appear to be on track to reach its 2004 full-year
target of approximately $68 million, representing an approximate
17% gain over the $58.2 million reported for all of 2003. The
Company is projecting EPS between $0.01 to $0.02 for the second
quarter of 2004. If you would like to be added to LJI's investor
email lists, please contact Haris Tajyar with Investor Relations
International at . Conference Call Information LJI will be
conducting a conference call today at 11:00 a.m. EDT to discuss
first quarter results. If you would like to participate live via
phone, please dial 877-407-8031 and ask for LJ International, Inc.
call. International callers can dial 201-689-8031. About LJ
International LJ International Inc. is a publicly-owned company,
based in Hong Kong and the U.S., engaged in designing, branding,
marketing and distributing a full range of fine jewelry. It has
built its global business, currently one of the fastest-growing in
the jewelry industry, 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
stores and e-shopping sites. Its product lines incorporate all
major categories sought by major retailers, including earrings,
necklaces, pendants, rings and bracelets. It trades on the Nasdaq
National Market under the symbol JADE. For more information on LJI,
please visit the Company's Web site at http://www.ljintl.com/.
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 sales. 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, release and sales 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. CONDENSED CONSOLIDATED BALANCE SHEETS (IN
THOUSANDS, EXCEPT SHARE DATA) As of As of December March 31 31 2004
2003 (Unaudited) ASSETS US$ US$ Current assets: Cash and cash
equivalents 5,340 2,722 Restricted cash 5,913 5,931 Trade
receivables, net of allowance for doubtful accounts (US$159 as of
March 31,2004 and December 31, 2003) 10,804 15,243 Derivative
contracts 721 651 Inventories 23,526 21,487 Prepayments and other
current assets 4,562 3,726 Total current assets 50,866 49,760
Properties held for lease, net 1,493 1,506 Property, plant and
equipment, net 4,728 4,931 Due from related parties 508 508
Goodwill, net 1,521 1,521 Investment securities, net 2,460 2,460
Total assets 61,576 60,686 LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Bank overdrafts 3,294 1,312 Notes payable,
current portion 1,550 1,516 Capitalized lease obligation, current
portion 18 18 Letters of credit, gold and other loans 14,719 16,737
Embedded derivative 1,501 1,430 Trade payables 5,764 8,417 Accrued
expenses and other payables 5,195 2,864 Income taxes payable 322
326 Deferred taxation 87 87 Total current liabilities 32,450 32,707
Other payables, non-current 73 77 Total liabilities 32,523 32,784
Minority interest - - Stockholders' equity Common stocks, par value
US$0.01 each, Authorized - 100 million shares, Issued - 10,650,576
shares as of March 31, 2004; 9,890,006 shares as of December 31,
2003 107 99 Additional paid-in capital 20,524 19,802 Accumulated
other comprehensive loss (151) (151) Retained earnings 8,573 8,152
Total stockholders' equity 29,053 27,902 Total liabilities and
stockholders' equity 61,576 60,686 LJ INTERNATIONAL INC CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (IN THOUSANDS,
EXCEPT SHARE AND PER SHARE DATA) Three months ended March 31 2004
2003 US$ US$ Operating revenue 14,497 11,139 Costs of goods sold
(11,061) (8,286) Gross profit 3,436 2,853 Selling, general and
administrative expenses (2,864) (2,419) Operating income 572 434
Other revenue and expense Other revenues 32 60 Interest expenses
(182) (144) Income before income taxes and minority interest 422
350 Income taxes (1) - Income before minority interest 421 350
Minority interest - 8 Net income 421 358 Numerator: Net income used
in computing basic and diluted earnings per share 421 358
Denominator: Weighted average number of shares used in calculating
basic earnings per share 10,381,000 8,353,415 Effect of dilutive
potential ordinary shares: Warrants & stock options 1,523,788 -
Weighted average number of shares used in calculating diluted
earnings per share 11,904,788 8,353,415 Earnings per share: Basic
0.04 0.04 Diluted 0.04 0.04 CONTACT: Betty Ho, Vice President,
Corporate Development, LJ International Inc. Tel: +852-2170-0001
Email: Haris Tajyar, Managing Partner, INVESTOR RELATIONS INTL Tel:
+1-818-382-9702 Email: CONTACT: Betty Ho, Vice President, Corporate
Development at LJI, +852- 2170-0001, or betty@ljintl.com; or Haris
Tajyar, Managing Partner of INVESTOR RELATIONS INTL,
+1-818-382-9702, or htajyar@irintl.com DATASOURCE: LJ International
Inc. Web Site: http://www.ljintl.com/
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