-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NKzG++OZRF8JvS0kDDeBYBy87Ma9kpQImy+SN4RnN4MZHC5kcBn0JgY2VauPxJCK nDFX3q66u4s6hs6TCDNTWQ== /in/edgar/work/20000912/0000950152-00-006621/0000950152-00-006621.txt : 20000922 0000950152-00-006621.hdr.sgml : 20000922 ACCESSION NUMBER: 0000950152-00-006621 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000729 FILED AS OF DATE: 20000912 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MICHAEL ANTHONY JEWELERS INC CENTRAL INDEX KEY: 0000799515 STANDARD INDUSTRIAL CLASSIFICATION: [3911 ] IRS NUMBER: 132910285 STATE OF INCORPORATION: DE FISCAL YEAR END: 0130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-10645 FILM NUMBER: 720947 BUSINESS ADDRESS: STREET 1: 115 SO MACQUESTEN PKWY CITY: MOUNT VERNON STATE: NY ZIP: 10550 BUSINESS PHONE: 9146990000 MAIL ADDRESS: STREET 1: 115 SOUTH MACQUESTEN PKWY STREET 2: 115 SOUTH MACQUESTEN PKWY CITY: MOUNT VERNON STATE: NY ZIP: 10550 10-Q 1 l83845ae10-q.txt MICHAEL ANTHONY JEWELERS, INC. 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter ended July 29, 2000 Commission file number: 015230 MICHAEL ANTHONY JEWELERS, INC. (Exact name of registrant as specified in its charter) Delaware No. 13-2910285 (State of Incorporation) (I.R.S. Employer Identification No.) 115 South MacQuesten Parkway Mount Vernon, New York 10550-1724 (Address of principal executive offices) Registrant's telephone number, including area code: (914) 699-0000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No . CLASS ----- Number of Shares Common Stock, Par Value $.001 Outstanding as of September 7, 2000 ----------------- 6,341,733 -1- 2 MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES INDEX -----
PAGE ---- PART I FINANCIAL INFORMATION: ITEM 1. FINANCIAL STATEMENTS Consolidated Condensed Balance Sheets, July 29, 2000 (Unaudited) and January 29, 2000................................................................................ 3 Consolidated Condensed Statements of Operations Six-Month Period Ended July 29, 2000 and July 31, 1999 (Unaudited) ................................................... 4 Consolidated Condensed Statement of Changes in Stockholders' Equity, Six-Month Period Ended July 29, 2000 (Unaudited)....................................................................... 5 Consolidated Condensed Statements of Cash Flows, Six-Month Period Ended July 29, 2000 and July 31, 1999 (Unaudited)..................................................... 6 Notes to Consolidated Condensed Financial Statements........................................................................................ 7-8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS....................................................................................... 9-14 PART II OTHER INFORMATION: Item 1 Through Item 6 .............................................................................. 15 Signature Page..................................................................................... 16
-2- 3 MICHAEL ANTHONY JEWELERS, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA)
July 29, January 29, 2000 2000 ------------ ------------ (Unaudited) ASSETS CURRENT ASSETS: Cash and equivalents $690 $2,580 Accounts receivable: Trade (less allowances of $1,384 and $1,007, respectively) 18,167 25,521 Other 210 287 Inventories 22,634 16,270 Prepaid expenses and other current assets 1,709 1,389 Deferred taxes 682 682 ------- --------- Total current assets 44,092 46,729 PROPERTY, PLANT AND EQUIPMENT - net 20,719 20,614 INTANGIBLES - net 116 169 OTHER ASSETS 293 402 ------- ------- $65,220 $67,914 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable - trade $5,189 $2,198 Current portion of long-term debt and lease liability 1,695 1,656 Taxes payable - 1,974 Accrued expenses 3,567 4,941 ------- -------- Total current liabilities 10,451 10,769 ------- ------- LONG-TERM DEBT 11,803 12,684 ------- ------- DEFERRED TAXES 417 417 ------- ------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred stock - par value $1.00 per share; 1,000,000 shares authorized; none issued - - Common stock - par value $.001 per share; 20,000,000 shares authorized; 8,317,000 and 8,308,000 shares issued and outstanding as of July 29, 2000 and January 29, 2000 8 8 Additional paid-in capital 31,851 31,826 Retained earnings 16,795 18,242 Treasury stock, 1,976,000 and 1,951,000 shares as of July 29, 2000 and January 29, 2000, respectively (6,105) (6,032) ------- ------- Total stockholders' equity 42,549 44,044 -------- ------ $65,220 $67,914 ======= =======
See accompanying notes to the consolidated condensed financial statements. -3- 4 MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) (IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
THREE MONTHS ENDED SIX MONTHS ENDED -------------------------- ---------------------- July 29, July 31, July 29, July 31, 2000 1999 2000 1999 --------- ------- --------- ------ NET SALES $24,821 $25,331 $50,521 $54,313 COST OF GOODS SOLD 20,147 19,187 40,258 41,358 ------- ------- ------ ------ GROSS PROFIT ON SALES 4,674 6,144 10,263 12,955 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 5,821 6,420 11,776 12,583 ------ ------ ------ ------ OPERATING (LOSS)/INCOME (1,147) (276) (1,513) 372 OTHER INCOME/(EXPENSE): Gold consignment fee (246) (277) (468) (501) Interest expense (244) (239) (493) (472) Interest income 20 63 110 139 Other income 16 28 30 55 ------- ------- ------ ------ Total Other Expense (454) (425) (821) (779) ------- ------- ----- ------ LOSS BEFORE INCOME TAXES (1,601) (701) (2,334) (407) INCOME TAX BENEFIT (608) (265) (887) (154) ------- ------ -------- ------- NET LOSS $(993) $(436) $(1,447) $(253) ====== ===== ======= ====== LOSS PER SHARE - BASIC AND DILUTED $(.16) $(.06) $(.23) $(.04) ====== ======= ====== ====== WEIGHTED AVERAGE NUMBER OF SHARES 6,336 6,739 6,338 6,784 ===== ===== ===== =====
See accompanying notes to the consolidated condensed financial statements. -4- 5 MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) (IN THOUSANDS)
Common Stock Additional TREASURY STOCK ------------ Paid-In Retained -------------- Shares Dollars Capital Earnings Shares Dollars Total ------- ------- ------- -------- ------ ------- ----- Balance - January 29, 2000 8,308 $ 8 $31,826 $18,242 (1,951) $(6,032) $44,044 Purchase of treasury stock - - - - (25) (73) (73) Issuance of stock 9 - 25 - - - 25 Net loss - - - (1,447) - - (1,447) -------- ------ ----------- ------- ---------- ---------- ------- Balance - July 29, 2000 8,317 $ 8 $31,851 16,795 (1,976) (6,105) $42,549 ===== ===== ======= ====== ======= ======= =======
See accompanying notes to the consolidated condensed financial statements. -5- 6 MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS)
SIX MONTHS ENDED ----------------------------- July 29, July 31, 2000 1999 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(1,447) $(253) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 1,676 1,978 Provision for accounts receivable 29 132 Provision for sales returns 348 (398) Issuance of stock 25 20 (Increase)/decrease in operating assets: Accounts receivable 7,054 7,720 Inventories (6,364) (3,159) Prepaid expenses and other current assets (320) (154) Other assets 109 71 Increase/(decrease) in operating liabilities: Accounts payable 2,991 249 Accrued expenses (1,374) (1,341) Taxes payable (1,974) 464 ------- ----- Net cash provided by operating activities 753 5,330 ------- ----- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment - net (1,728) (4,041) ------- ------- Net cash used in investing activities (1,728) (4,041) ------- ------ CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments of long-term debt and capital lease liabilities (842) (134) Proceeds from long term debt - 901 Proceeds from exercise of stock options - 44 Purchase of treasury stock (73) (863) -------- -------- Net cash used in financing activities (915) (52) -------- -------- DECREASE IN CASH AND EQUIVALENTS (1,890) - INCREASE IN CASH AND EQUIVALENTS - 1,237 CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 2,580 961 -------- -------- CASH AND EQUIVALENTS AT END OF PERIOD $690 $2,198 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest and gold consignment fees $ 1,224 $ 812 Taxes $ 1,441 $ 265
See accompanying notes to the consolidated condensed financial statements. -6- 7 MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES FORM 10-Q FOR QUARTER ENDED JULY 29, 2000 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (INFORMATION SUBSEQUENT TO JANUARY 29, 2000 IS UNAUDITED) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The unaudited condensed consolidated financial statements as of July 29, 2000 and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. The accompanying unaudited interim consolidated condensed financial statements and related notes should be read in conjunction with the financial statements and related notes included in the 2000 Annual Report to Stockholders of Michael Anthony Jewelers, Inc. (the "Company"). The information furnished reflects, in the opinion of the management of the Company, all adjustments, consisting of normal recurring accruals, which are necessary to present a fair statement of the results for the interim periods presented. The interim figures are not necessarily indicative of the results to be expected for the fiscal year due to the seasonal nature of the business. NEW ACCOUNTING PRONOUNCEMENT NOT YET ADOPTED In June 1998, SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended by SFAS No. 137, is effective for fiscal years beginning after June 15, 2000. SFAS No. 133 requires that all derivative instruments be measured at fair value and recognized in the balance sheet as either assets or liabilities. The Company is currently evaluating the impact of adopting SFAS No. 133. 2. PRODUCT PRICING The Company's products, the principal component of which is gold, are generally sold at prices which are based on the market price of gold on the date merchandise is ordered or shipped to the customer, therefore, the Company's sales volume is significantly influenced by the market price of gold. The selling prices for certain customers may be fixed for a specific period of time. In such cases, the Company is able to shift a substantial portion of the risks of gold price fluctuation by hedging against changes in the price of gold by entering into forward contracts or purchasing futures or options on futures. The Company's consigned gold inventory is hedged against the effects of price fluctuations. The Company has entered into arrangements with certain gold lenders (the "Gold Lenders") pursuant to which the Company does not purchase gold from the Gold Lenders until receipt of a purchase order from, or shipment of jewelry to, its customers. These arrangements permit the Company to match the sales price of the product with the price the Company pays for the gold. -7- 8 MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES FORM 10-Q FOR QUARTER ENDED JULY 29, 2000 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (INFORMATION SUBSEQUENT TO JANUARY 29, 2000 IS UNAUDITED) 2. PRODUCT PRICING (Continued) The average selling price of gold in the current quarter was $287 per ounce compared to $278 per ounce for the quarter ended July 31, 1999. 3. INVENTORIES
Inventories consist of: July 29, January 29, 2000 2000 ---------- ------ (Unaudited) (In thousands) Finished goods $45,746 $34,908 Work in process 19,519 14,012 Raw materials 6,582 5,426 ------- -------- 71,847 54,346 Less: Consigned gold 49,213 38,076 -------- ------- $22,634 $16,270 ======= =======
Inventories as of July 29, 2000 and January 29, 2000 excluded approximately 177,000 and 133,000 ounces of gold on consignment, respectively. 4. STOCK REPURCHASE PROGRAM In December 1995, the Company announced a Common Stock repurchase program pursuant to which the Company may repurchase up to 750,000 shares of Common Stock. On April 4, 1997, the Board of Directors authorized an increase of an additional 500,000 shares of Common Stock that the Company may repurchase under the Stock Repurchase Plan. On May 26, 1998, the Board of Directors authorized an increase of up to an additional 1,000,000 shares of common stock that the Company may repurchase under the Stock Repurchase Plan. As of September 7, 2000, the Company had purchased a total of 1,976,000 shares on the open market for an aggregate cost of approximately $6,105,000, of which 60,000 shares have been retired. -8- 9 ITEM 2 MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (INFORMATION SUBSEQUENT TO JANUARY 29, 2000 IS UNAUDITED) RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED - ------------------------------------------------ JULY 29, 2000 AND JULY 31, 1999 - ------------------------------- Net sales for the three months ended July 29, 2000 were approximately $24,821,000, a decrease of 2% from net sales of approximately $25,331,000 for the comparable period last year. Gross profit margin decreased to approximately 18.8% of net sales for the three months ended July 29, 2000 compared to approximately 24.3% for the comparable period last year, primarily due to a change in the customer and product mix. Selling, general and administrative expenses for the three months ended July 29, 2000 were approximately $5,821,000 a decrease of $599,000 or 9.3% from approximately $6,420,000 for the comparable period last year. As a percentage of net sales, selling , general and administrative expenses decreased to 23.5% for the three months ended July 29, 2000 from 25.3% for the comparable period of the prior year. The decrease is primarily attributable to decreases in (i) advertising related expenses, and (ii) product and packaging supplies. Other expenses for the three months ended July 29, 2000 were approximately $454,000, an increase of $29,000 or 6.8% compared to approximately $425,000 for the comparable period last year. The increase was primarily due to a decrease in interest income due to the Company's lower cash position. This increase was partly offset by a decrease in gold consignment fees of $31,000 primarily due to the Company's lower gold rates. As a result of the above factors the Company had a net loss for the three months ended July 29, 2000 of approximately $993,000 or $.16 per share on 6,336,000 weighted average shares outstanding, compared to a net loss of $436,000 or $.06 per share on 6,739,000 weighted average shares outstanding for the comparable period last year. -9- 10 ITEM 2 MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (INFORMATION SUBSEQUENT TO JANUARY 29, 2000 IS UNAUDITED) RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED - ---------------------------------------------- JULY 29, 2000 AND JULY 31, 1999 - ------------------------------- Net sales for the six months ended July 29, 2000 were approximately $50,521,000, a decrease of 7.0% from net sales of approximately $54,313,000 for the comparable period last year. Gross profit margin decreased to approximately 20.3% of net sales for the six months ended July 29, 2000 compared to approximately 23.9% for the comparable period last year, primarily due to a change in the customer and product mix. Selling, general and administrative expenses for the six months ended July 29, 2000 were approximately $11,776,000, a decrease of $807,000 or 6.4% from approximately $12,583,000 for the comparable period last year. The decrease is primarily attributable to decreases in (i) advertising related expenses and (ii) product and packaging supplies. Interest expense and gold consignment fees for the six months ended July 29, 2000 were approximately $821,000, an increase of $42,000 or 5.4% compared to approximately $779,000 for the comparable period last year. The increase was primarily due to a decrease in interest income due to the Company's lower cash position. As a result of the above factors the Company had a net loss for the six months ended July 29, 2000 of approximately $1,447,000 or $.23 per share on 6,338,000 weighted average shares outstanding, compared to a net loss of $253,000 or $.04 per share on 6,784,000 weighted average shares outstanding for the comparable period last year. -10- 11 MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES FORM 10-Q FOR QUARTER ENDED JULY 29, 2000 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (INFORMATION SUBSEQUENT TO JANUARY 29, 2000 IS UNAUDITED) LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- The Company relies on a gold consignment program, short-term and long-term borrowings and internally generated funds to finance its operations. The Company fills most of its gold supply needs through gold consignment arrangements with the Gold Lenders. Under the terms of those arrangements, the Company is entitled to lease the lesser of (i) an aggregate of 270,000 ounces of fine gold or (ii) consigned gold with an aggregate value equal to $92,250,000. The consigned gold is secured by certain property of the Company including inventory and machinery and equipment. The Company pays the Gold Lenders a consignment fee based on the dollar value of ounces of gold outstanding under their respective agreements, which value is based on the daily Second London Gold Fix. The Company believes that its financing rate under the consignment arrangements is substantially similar to the financing rates charged to gold consignees similarly situated to the Company. As of July 29, 2000, the Company held 176,900 ounces of gold on consignment with a market value of $49,213,000. The consignment agreements contain certain restrictive covenants relating to maximum usage, net worth, working capital and other financial ratios and each of the agreements requires the Company to own a specific amount of gold at all times. At July 29, 2000, the Company was in compliance with the covenants in its consignment agreements and the Company's owned gold inventory was valued at approximately $3,740,000. Management believes that the supply of gold available through the Company's gold consignment arrangements, in conjunction with the Company's owned gold, is sufficient to meet the Company's requirements. The consignment agreements are terminable by the Company or the respective Gold Lenders upon 30 days notice. If any Gold Lender were to terminate its existing gold consignment arrangement, the Company does not believe it would experience an interruption of its gold supply that would materially adversely affect its business. The Company believes that other consignors would be willing to enter into similar arrangements if any Gold Lender terminates its relationship with the Company. Consigned gold is not included in the Company's inventory, and there is no related liability recorded. As a result of these consignment arrangements, the Company is able to shift a substantial portion of the risk of market fluctuations in the price of gold to the Gold Lenders, since the Company does not purchase gold from the Gold Lenders until receipt of a purchase order from, or shipment of jewelry to, its customers. The Company then either locks in the selling price of the jewelry to its customers concurrently with the required purchase of gold from the Gold Lenders or hedges against changes in the price of gold by entering into forward contracts or purchasing futures or options on futures that are listed on the COMEX. -11- 12 ITEM 2 MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (INFORMATION SUBSEQUENT TO JANUARY 29, 2000 IS UNAUDITED) LIQUIDITY AND CAPITAL RESOURCES (Continued) While the Company believes its supply of gold is relatively secure, significant increases or rapid fluctuations in the cost of gold may result in reduced demand for the Company's products. From January 29, 2000 until July 29, 2000, the closing price of gold according to the Second London Gold Fix ranged from a low of $272 per ounce to a high of nearly $313 per ounce. There can be no assurances that fluctuations in the precious metals and credit markets would not result in an interruption of the Company's gold supply or the credit arrangements necessary to allow the Company to support its accounts receivable and continue the use of consigned gold. On January 27, 1999, the Company repaid its long-term debt with the insurance companies by obtaining a loan from a new lender in the amount of $10,444,000. As collateral for the loan, the Company granted the lender a lien on the Company's machinery and equipment. The loan has an eight-year term and will accrue interest at 6.85%. The loan does not contain any restrictive financial covenants. At July 29, 2000, $9,853,000 of principal remained outstanding under the loan. On February 10, 1999, Michael Anthony obtained a loan in the amount of $937,500. As collateral for the loan, the Company granted the lender a first mortgage on one of its manufacturing facilities. The mortgage has a fifteen-year term and accrues interest at an annual rate of 7.05%. At July 29, 2000, $885,000 of principal remained outstanding under the loan. In October 1995, the Company obtained a loan from a bank in the amount of $2,500,000. As collateral for the loan, the Company granted the bank a first mortgage on the Company's corporate headquarters. The mortgage has a ten-year term and interest on the mortgage accrues at 8% per annum. In addition, the mortgage contains certain restrictive financial covenants. At July 29, 2000, the Company was in compliance with the covenants and $1,990,000 of principal remained outstanding under the mortgage. On September 16, 1999, the Company acquired two buildings which house two manufacturing facilities, located at 70 and 60 South MacQuesten Parkway, Mount Vernon, NY from MacQuesten Realty Company for a price of $2,450,000. The Company incurred $929,000 of long term debt, which has a four-year term and accrues interest at an annual rate of 7.50%, and paid the balance with cash from its operations. At July 29, 2000, $763,000 of principal remained outstanding under the loan. The Company has a line of credit arrangement with a commercial bank which varies seasonally from $10,000,000 to $18,350,000 (the "Line of Credit"). The Line of Credit is secured by certain assets of the Company, including accounts receivable and inventory. As of July 29, 2000 no amount was outstanding under the Line of Credit. -12- 13 ITEM 2 MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (INFORMATION SUBSEQUENT TO JANUARY 29, 2000 IS UNAUDITED) LIQUIDITY AND CAPITAL RESOURCES (Continued) During the six months ended July 29, 2000, cash provided from operating activities was $753,000. The decrease compared to last year is primarily due to an increase in inventory offset by an increase in accounts payable and decreases in taxes payable. During the comparable period of the prior year, the Company provided $5,330,000 of cash in operating activities, primarily due to the decreased accounts receivable. Cash of $1,728,000 was used in investing activities as compared to $4,041,000 used during the comparable six-month period last year. The decrease is primarily due to the Company's purchases of certain assets, primarily molds, machinery and equipment, from Town & Country Fine Jewelry Group for the comparable period last year. Cash of $915,000 was used in financing activities during the six-month period, compared to $52,000 used in the comparable period of the prior year. The decrease was primarily due to the Company's issuance of long term debt last year. For the balance of fiscal 2001, the Company projects capital expenditures of approximately $1,300,000. The Company believes that its long-term debt and existing lines of credit provide sufficient funding for the Company's operations. In the event that the Company requires additional financing during fiscal 2001, it will be necessary to fund this requirement through expanded credit facilities with its existing or other lenders. The Company believes that such additional financing can be arranged. FORWARD LOOKING STATEMENTS This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. These forward-looking statements include the words "believe," "expect," "plans" or similar words and are based in part on the Company's reasonable expectations and are subject to a number of factors and risks, many of which are beyond the Company's control. Actual results could differ materially from those discussed under "Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Year 2000 Compliance" as a result of any of the following factors: a) general economic conditions and their impact on the retail environment; b) fluctuations in the price of gold and other metals used to manufacture the Company's jewelry; c) risks related to the concentration of the Company's customers, particularly the operations of any of its top customers; -13- 14 ITEM 2 MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (INFORMATION SUBSEQUENT TO JANUARY 29, 2000 IS UNAUDITED) FORWARD LOOKING STATEMENTS (Cont'd) d) increased competition from outside the United States where labor costs are substantially lower; e) variability of customer requirements and the nature of customers' commitments on projections and orders; and f) the extent to which the Company is able to attract and retain key personnel. In light of these uncertainties and risks, there can be no assurance that the forward-looking statements in this Quarterly Report on Form 10-Q will occur or continue in the future. Except for its required, periodic filings under the Securities Exchange Act of 1934, the Company undertakes no obligations to release publicly any revisions to these forward looking statements that may reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. NEW ACCOUNTING STANDARDS - ------------------------ In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended by SFAS No. 137, which is effective for the fiscal years beginning after June 15, 2000. SFAS No. 133 establishes accounting and reporting standards for derivative instruments and for hedging periods. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. The Company is currently evaluating the impact of adopting SFAS No. 133. -14- 15 MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES PART II - OTHER INFORMATION Item 1 and 2 Not applicable. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK --------------------------------------------------------- The carrying amounts of financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, approximate fair value because of the current nature of these instruments. The carrying amount reported for revolving credit and long-term debt approximate fair value because of the interest rates on these instruments approximate current market rates. Because the interest rates on our long term debt is fixed and our revolving debt is utilized seasonally we do not hedge against interest rate increases. Consigned gold is not included in the Company's inventory, and there is no related liability recorded. As a result of these consignment arrangements, the Company is able to shift a substantial portion of the risk of market fluctuations in the price of gold to the Gold Lenders, since the Company does not purchase gold from the Gold Lenders until receipt of a purchase order form, or shipment of jewelry to, its customers. The Company then either locks in the selling price of the jewelry to its customers concurrently with the required purchase of gold from the Gold Lenders or hedges against changes in the price of gold by entering into forward contracts or purchasing futures or options on futures that are listed on the COMEX. While the Company believes its supply of gold is relatively secure, significant increases or rapid fluctuations in the cost of gold may result in reduced demand for the Company's products. All of our revenues are realized in U.S. dollars and all of our revenues are from customers in the United States. Therefore, we do not believe we face significant direct foreign currency exchange rate risk. We do not hedge against foreign currency exchange rate changes. Item 4 and 5 Not applicable Item 6. (a) EXHIBITS 27 Financial Data Schedule (b) REPORTS ON FORM 8-K Not applicable. -15- 16 MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MICHAEL ANTHONY JEWELERS, INC. Dated: September 7, 2000 BY: /s/ Allan Corn ------------------ Allan Corn Senior Vice President and Chief Financial Officer -16- 17 EXHIBIT INDEX TO FORM 10-Q FOR QUARTER ENDED JULY 29, 2000 EXHIBIT NO. PAGE NO. ----------- -------- 27 Financial Data Schedule 18 -17- EX-27 2 l83845aex27.txt EXHIBIT 27
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS FOR MICHAEL ANTHONY JEWELERS, INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS JAN-29-2000 JAN-29-2000 JUL-29-2000 690 0 19,551 (1,384) 22,634 44,092 53,787 33,068 65,220 10,451 0 0 0 8 42,541 65,220 50,521 50,521 40,258 40,258 821 29 961 (2,334) (887) (1,447) 0 0 0 (1,447) (.23) 0
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