11-K 1 a32947.txt LAZARE KAPLAN INTL. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended DECEMBER 31, 2001 or [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from _______________ to ______________ Commission File Number 1-7848 (Lazare Kaplan International Inc.) A. Full title of the plan and the address of the plan, if different from that of the issuer named below: LAZARE KAPLAN INTERNATIONAL INC. 401(k) PLAN FOR SAVINGS AND INVESTMENTS B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: LAZARE KAPLAN INTERNATIONAL INC. 529 FIFTH AVENUE NEW YORK, NY 10017 LAZARE KAPLAN INTERNATIONAL INC. 401(k) PLAN FOR SAVINGS AND INVESTMENTS YEARS ENDED DECEMBER 31, 2001 AND 2000 TABLE OF CONTENTS
Page Report of Independent Auditors 3 Statements of Net Assets Available for Benefits 4 Statements of Changes in Net Assets Available for Benefits 5 Notes to Financial Statements 6-9 Supplemental Schedule: Schedule H, Line 4 (i) Assets Held for Investment Purposes at end of Year December 31, 2001 10 Signature 11
2 REPORT OF INDEPENDENT AUDITORS To the Trustees and Participants of Lazare Kaplan International Inc. 401(k) Plan for Savings and Investments We have audited the accompanying statements of net assets available for benefits of the Lazare Kaplan International Inc. 401(k) Plan for Savings and Investments (the "Plan") as of December 31, 2001 and 2000, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our Responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 2001 and 2000, and the changes in its net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States. Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedule of assets held for investment purposes at end of year December 31, 2001 is presented for purposes of additional analysis and is not a required part of the financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. Ernst & Young LLP June 25, 2002 New York, New York 3 LAZARE KAPLAN INTERNATIONAL INC. 401(k) PLAN FOR SAVINGS AND INVESTMENTS STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 2001 2000 ---------- ---------- Assets Investments, at fair value: Mutual funds Fidelity U.S. Government Reserves * $ 348,502 $ 236,864 Fidelity Ginnie Mae Portfolio * 358,474 230,900 Fidelity Equity Income Fund * 831,003 884,690 Fidelity Magellan Fund * 1,037,440 1,259,348 Fidelity Capital Appreciation Fund * 761,324 926,247 Fidelity Growth & Income Portfolio * 486,903 456,246 Fidelity Growth Company Fund * 759,568 1,076,405 Lazare Kaplan International Inc. Common Stock 4,380 3,282 Participant Loans (interest rates from 6.25% to 9.25%) 200,523 218,249 ------------------------------------------------------ ---------- ---------- Total Investments 4,788,117 5,292,231 Receivables: Participant contributions 1,085 -- ------------------------------------------------------ ---------- ---------- Total Assets 4,789,202 5,292,231 Liabilities: Amounts due to participants 27,734 -- ------------------------------------------------------ ---------- ---------- Net assets available for benefits $4,761,468 $5,292,231 ====================================================== ========== ==========
* represents 5% or more of the net assets available for benefits. See accompanying notes 4 LAZARE KAPLAN INTERNATIONAL INC. 401(k) PLAN FOR SAVINGS AND INVESTMENTS STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year Ended December 31, 2001 2000 ----------- ----------- Additions: Interest and dividend income $87,403 $373,152 Participant Contributions 431,026 412,353 Loan interest payments 15,976 17,808 ------------------------------------------------------- ----------- ----------- Total additions 534,405 803,313 Deductions: Net (depreciation) in fair value of investments (599,798) (698,126) Benefits paid to participants (465,370) (151,822) ------------------------------------------------------- ----------- ----------- Total deductions (1,065,168) (849,948) ------------------------------------------------------- ----------- ----------- Net (decrease) (530,763) (46,635) Net assets available for benefits at beginning of year 5,292,231 5,338,866 ------------------------------------------------------- ----------- ----------- Net assets available for benefits at end of year $4,761,468 $5,292,231 ======================================================= =========== ===========
See accompanying notes 5 LAZARE KAPLAN INTERNATIONAL INC. 401(k) PLAN FOR SAVINGS AND INVESTMENTS Notes to Financial Statements December 31, 2001 1. DESCRIPTION OF THE PLAN The Lazare Kaplan International Inc. 401(k) Plan for Savings and Investments (the "Plan") became effective January 1, 1990. The Plan is a defined contribution profit-sharing plan applicable to full-time employees who complete at least one year of service or were a full-time employee as of January 1, 1990. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). The following description of the Plan provides only general information. Participants should refer to the Plan Document for a more complete description of the Plan's provisions. Employees may elect to contribute, subject to defined limitations, a portion of their salary to the Plan, to be deducted from each paycheck under a deferred arrangement pursuant to Section 401(k) of the Internal Revenue Code. Lazare Kaplan International Inc. (the "Company") intends to match contributions in an amount equal to 50% of every pretax dollar contributed up to the first six percent on the first $20,000 of compensation, as defined, providing the Company's pretax earnings for that fiscal year exceed $3,500,000. Matching contributions will be made at the end of each calendar year. The Company made no matching contributions for the plan years 2001 and 2000. The Plan is funded from each payroll directly to Fidelity Investments (the "Custodian"). Each Plan participant's contribution with any employer's contribution, is invested in or among seven funds or the Company's stock at the sole discretion of the participant. All employee contributions are fully vested when made. Employer contributions are earned at a rate of 33-1/3 percent after two years of service, 66-2/3 percent after three years and full vesting after four years of service. Service is based on date of hire. Forfeited balances of terminated participants' non-vested accounts are used to reduce Company contributions. Employees may borrow up to fifty percent of their vested account balance with a minimum loan of $1,000 and a maximum loan of $50,000. Repayment of the loan, made through payroll deductions, must be made over a period not to exceed five years except for the purchase of a primary residence which can be for a period not to exceed twenty years. Interest is charged at 1 percent over the prime rate at the time the loan is requested. 6 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting - The financial statements of the Plan have been prepared on the accrual basis of accounting. Valuation of Investments - Investments are stated at fair value, which is determined by reference to quoted market prices, except for participant loans which are stated at their outstanding balances, which approximate fair value. Except for the Company's common stock, the Plan's investments are pooled with other investments administered by the Custodian. The combined net investment income from other investments is allocated to each fund participant based upon his or her share of the total shares of the fund. Earnings are accrued daily and posted monthly by the Custodian. Fees and Expenses - The administration fees and expenses of the Plan are paid by the Company and not charged to the Plan. Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that could affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. Reclassification - Prior year amounts have been reclassified to conform with the current years presentation. 3. INTERNAL REVENUE STATUS The Plan has received a determination letter from the Internal Revenue Service dated July 12, 1994 stating that the plan is qualified under Section 401(a) of the Internal Revenue Code (the "Code") and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The Plan administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan is qualified and the related trust exempt. 4. PLAN TERMINATION It is the intention of the Company to continue the Plan indefinitely. However, the Company has the right to terminate the Plan at any time subject to the provisions of ERISA. In the event of Plan termination, all participants' accounts will be fully vested. 7 5. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500 The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500 as of December 31, 2001 and 2000.
December 31, 2001 2000 ----------- ----------- Net assets available for benefits per the financial statements $4,761,468 $5,292,231 Contributions refundable -- (2,492) Withdrawals payable -- (10,331) -------------------------------------------------------------- ----------- ----------- Net assets available for benefits per Form 5500 $4,761,468 $5,279,408 ============================================================== =========== ===========
The following is a reconciliation of benefits paid to participants per the financial statements to the Form 5500 for the years ended December 31, 2001 and 2000:
December 31, 2001 2000 --------- --------- Benefits paid to participants per the financial statements $465,370 $151,822 Amounts allocated to withdrawn participants -- 10,331 Amounts allocated to be distributed to participants -- 2,492 Amounts allocated to withdrawn participants in prior year (10,331) (4,605) Amounts allocated to be distributed to participants in prior year (2,492) (8,410) ----------------------------------------------------------------- --------- --------- Benefits paid to participants per Form 5500 $452,547 $151,630 ================================================================= ========= =========
8 6. INVESTMENTS During the years ended December 31, 2001 and 2000, the Plan's investments (including investments purchased, sold, and held during the year) appreciated/(depreciated) in fair value as follows:
Year Ended December 31, 2001 2000 ---------------------------------------------------------- --------- --------- Mutual funds Fidelity U.S. Government Reserves $ (29) $ -- Fidelity Ginnie Mae Portfolio 3,040 7,650 Fidelity Equity Income Fund (73,578) 1,496 Fidelity Magellan Fund (147,573) (179,980) Fidelity Capital Appreciation Fund (56,153) (283,922) Fidelity Growth & Income Portfolio (54,065) (51,384) Fidelity Growth Company Fund (272,538) (190,002) Lazare Kaplan International Inc. Common Stock 1,098 (1,984) Participant Loans -- -- ---------------------------------------------------------- --------- --------- $(599,798) $(698,126) ========= =========
7. SUBSEQUENT EVENTS Effective January 2002, the Plan changed the family of funds to T.Rowe Price and increased the number of funds being offered from seven funds to eleven funds. In conjuction with this change the Plan changed the custodial relationship from Fidelity Investments to Circle Trust Company. The Plan is funded from each payroll directly to Circle Trust Company (the "Custodian"). Each Plan participant's contribution along with any employer's contribution, is invested in or among the eleven funds at the sole discretion of the participant. In addition, the Plan will no longer offer LKI stock as an option for employer matching contributions. 9 EN # 13-6966063 Plan #001 LAZARE KAPLAN INTERNATIONAL INC. 401(k) PLAN FOR SAVINGS AND INVESTMENTS Schedule H, Line (i) Assets Held for Investment Purposes at end of year December 31, 2001
Description Fair Value ----------------------------------------------------------------- ---------- Fidelity U.S. Government Reserves $ 348,502 Fidelity Ginnie Mae Portfolio 358,474 Fidelity Equity Income Fund 831,003 Fidelity Magellan Fund 1,037,440 Fidelity Capital Appreciation Fund 761,324 Fidelity Growth & Income Portfolio 486,903 Fidelity Growth Company Fund 759,568 Lazare Kaplan International Inc. Common Stock * 4,380 Participant Loans (interest rates from 6.25% to 9.25%) 200,523 ----------------------------------------------------------------- ---------- $4,788,117 ==========
* Indicates Party-in-Interest to the Plan. 10 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees have duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized. LAZARE KAPLAN INTERNATIONAL INC. 401(k) PLAN FOR SAVINGS AND INVESTMENT By: /s/ Leon Tempelsman ---------------------------- Leon Tempelsman Trustee Dated: June 25, 2002 EXHIBIT INDEX
Exhibit --------------- 23.1 Consent of Ernst & Young LLP
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