LJ International, Inc. News

LJ International Reports Financial Results for Fiscal 2007

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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