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RAPAPORT... Charles & Colvard Ltd. reported that its sales rose 40 percent year on year to $22 million for the year that ended on December 31. Profit rose to $4.4 million, or 22 cents per diluted share, from $1.6 million, or 8 cents per share, in 2011. Loose moissanite gemstone sales increased 24 percent to approximately $15 million, while finished jewelry sales surged 87 percent to approximately $7.4 million. The fourth quarter of 2012 included a net income tax benefit of $3.8 million resulting from the company’s reduction of a valuation allowance on certain deferred tax assets. In addition, income also included an income tax benefit of approximately $320,000 generated by the reversal of a liability for an uncertain tax position resulting from a voluntary disclosure agreement the company entered into with a taxing authority. Charles & Colvard's cash and liquid long-term investments totaled $12.4 million on December 31, up from $10.5 million one year earlier. The company held no long-term debt outstanding. Randy N. McCullough, the CEO of Charles & Colvard, said, “Our wholesale business executed exceptionally throughout the year, providing significant increases in sales of loose jewels and finished jewelry with both providing the necessary cash flow to grow our consumer-direct businesses as we invest in our future. In addition to this, finishing the year with a $2.8 million positive cash flow after approximate $2.7 million incremental year-over-year investment in our consumer-direct business models highlights our strong financial performance, making our results even more gratifying to us. “In addition, investments in improving our information technology infrastructure paid off as the volume of transactions increased with sales, thereby validating our ability to operationally execute during the ramp up. Continuous process improvement is top of mind throughout our company as we focus on 2013. “Moissanite.com launched a new software platform in the fourth quarter, providing many site functionality improvements that resulted in considerable revenue growth that we expect, with annual traffic of over one million visitors, will continue to increase. Also during the fourth quarter, our Lulu Avenue direct sales initiative underwent a significant remake with the addition of the JudeFrances team developing an exclusive product line and creating catalogs and marketing collateral targeting second quarter of 2013. Several improvements in both the front-end and back-office system are designed to better support our Lulu Avenue field personnel in their businesses, while providing operational support to drive the business forward. We believe our investment in Lulu Avenue will begin to yield higher revenue in 2013, while significantly increasing our market exposure and our revenue streams for years to come,” he said.
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