-----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, VaELrz9iOFTu+tm6/pXmGSjNCAPgScLfuQI0EFucDeEiFFaluSWjIGUrvAJdm0un lMd0jk/l77TzUZaZ3gPqyw== 0001019056-98-000337.txt : 19980615 0001019056-98-000337.hdr.sgml : 19980615 ACCESSION NUMBER: 0001019056-98-000337 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980502 FILED AS OF DATE: 19980612 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: MICHAEL ANTHONY JEWELERS INC CENTRAL INDEX KEY: 0000799515 STANDARD INDUSTRIAL CLASSIFICATION: JEWELRY, PRECIOUS METAL [3911] IRS NUMBER: 132910285 STATE OF INCORPORATION: DE FISCAL YEAR END: 0128 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-10645 FILM NUMBER: 98646873 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 FORM 10Q 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 May 2, 1998 Commission file number: 015230 MICHAEL ANTHONY JEWELERS, INC. (Exact name of registrant as specified in its charter) Delaware No. 132910285 (State of Incorporation) (I.R.S. Employer Identification No.) 115 South MacQuesten Parkway Mount Vernon, New York 105501724 (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 May 27, 1998 ------------ 7,285,000 MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES INDEX PAGE ---- PART I FINANCIAL INFORMATION: ITEM 1. FINANCIAL STATEMENTS Consolidated Condensed Balance Sheets, May 2, 1998 (Unaudited) and January 31, 1998......................................... 3 Consolidated Condensed Statements of Operations Three-Month Period Ended May 2, 1998 and May 3, 1997 (Unaudited) ................. 4 Consolidated Condensed Statement of Changes in Stockholders' Equity, Three-Month Period Ended May 2, 1998 (Unaudited).................................. 5 Consolidated Condensed Statements of Cash Flows, Three-Month Period Ended May 2, 1998 and May 3, 1997 (Unaudited).................. 6 Notes to Consolidated Condensed Financial Statements................................................. 7-9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.............................................. 10-15 PART II OTHER INFORMATION: Item 1 Through Item 6 ....................................... 16 Signature Page.............................................. 17 MICHAEL ANTHONY JEWELERS, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA)
(Unaudited) May 2, January 31, 1998 1998 -------- -------- ASSETS CURRENT ASSETS: Cash and equivalents $ 3,091 $ 6,747 Accounts receivable: Trade (less allowances of $1,756 and $1,196, respectively) 24,586 22,234 Other 62 40 Inventories 12,044 12,913 Income tax refundable 1,667 1,667 Prepaid expenses and other current assets 1,680 1,640 Deferred taxes 720 720 -------- -------- Total current assets 43,850 45,961 PROPERTY, PLANT AND EQUIPMENT - net 17,613 18,045 INTANGIBLES - net 532 584 OTHER ASSETS 918 1,054 -------- -------- $ 62,913 $ 65,644 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable - trade $ 1,483 $ 2,870 Current portion of long-term debt and lease liability 1,438 1,446 Accrued expenses 3,869 4,385 -------- -------- Total current liabilities 6,790 8,701 -------- -------- LONG-TERM DEBT 12,588 12,617 -------- -------- CAPITAL LEASE LIABILITY 71 119 -------- -------- DEFERRED TAXES 818 818 -------- -------- 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; 8,282,000 shares issued and outstanding 8 8 Additional paid-in capital 31,747 31,747 Retained earnings 13,718 13,484 Treasury stock, 998,000 and 578,000 shares as of May 2, 1998 and January 31, 1998, respectively (2,827) (1,850) -------- -------- Total stockholders' equity 42,646 43,389 -------- -------- $ 62,913 $ 65,644 ======== ========
The accompanying notes are an integral part of these consolidated condensed financial statements. -3- MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) (IN THOUSANDS, EXCEPT EARNINGS PER SHARE) Three Months Ended -------------------- May 2, May 3, 1998 1997 -------- -------- NET SALES $ 30,432 $ 27,606 COST OF GOODS SOLD 23,925 22,544 -------- -------- GROSS PROFIT ON SALES 6,507 5,062 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 5,688 5,252 -------- -------- OPERATING INCOME/(LOSS) 819 (190) OTHER INCOME/(EXPENSES): Gold consignment fee (260) (260) Interest expense (277) (381) Interest income 81 125 Other income 15 24 -------- -------- Total Other Income/(Expense) (441) (492) -------- -------- INCOME/(LOSS) BEFORE INCOME TAXES 378 (682) INCOME TAX PROVISION/(BENEFIT) 144 (259) -------- -------- NET INCOME/(LOSS) $ 234 $ (423) ======== ======== EARNINGS/(LOSS) PER SHARE - BASIC AND DILUTED $ 0.03 $ (0.05) ======== ======== WEIGHTED AVERAGE NUMBER OF SHARES 7,436 7,869 ======== ======== The accompanying notes are an integral part of these consolidated condensed financial statements. -4-
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 ------ -------- -------- -------- -------- ------- ------- DOLLARS Balance - January 31, 1998 8,282 $ 8 $ 31,747 $ 13,484 (578) $(1,850) $43,389 Purchase of treasury stock -- -- -- -- (420) (977) (977) Net income -- -- -- 234 -- -- 234 ------ -------- -------- -------- -------- ------- ------- Balance - May 2, 1998 8,282 $ 8 $ 31,747 $ 13,718 (998) $(2,827) $42,646 ====== ======== ======== ======== ======== ======= =======
The accompanying notes are an integral part of these consolidated condensed financial statements. -5- MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS)
Three Months Ended ---------------------- May 2, May 3, 1998 1997 CASH FLOWS FROM OPERATING ACTIVITIES: -------- ---------- Net income/(loss) $ 234 $ (423) Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 907 1,016 Provision for accounts receivable 86 60 Provision for sales returns 680 (145) Asset write-off -- 259 (Increase)/decrease in operating assets: Accounts receivable (3,140) (363) Inventories 869 (1,068) Prepaid expenses and other current assets (40) (587) Other assets 136 (185) Increase/(decrease) in operating liabilities: Accounts payable (1,387) 452 Accrued expenses (516) (365) -------- -------- Net cash used in operating activities (2,171) (1,349) -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment - net (423) (723) -------- -------- Net cash used in investing activities (423) (723) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments of long-term debt and capital lease liabilities (85) (248) Purchase of treasury stock (977) (921) -------- -------- Net cash used in financing activities (1,062) (1,169) -------- -------- DECREASE IN CASH AND EQUIVALENTS (3,656) (3,241) CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 6,747 10,430 -------- -------- CASH AND EQUIVALENTS AT END OF PERIOD $ 3,091 $ 7,189 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest and gold consignment fees $ 608 $ 693 Taxes $ 0 $ 0
The accompanying notes are an integral part of these consolidated condensed financial statements. -18- MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES FORM 10-Q FOR QUARTER ENDED MAY 2, 1998 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (INFORMATION SUBSEQUENT TO JANUARY 31, 1998 IS UNAUDITED) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The unaudited interim consolidated condensed balance sheet as of May 2, 1998 and the unaudited consolidated condensed statements of operations for the three months ended May 2, 1998 and May 3, 1997, the unaudited consolidated statement of changes in stockholders' equity for the three months ended May 2, 1998, and the unaudited consolidated condensed statements of cash flows for the three months ended May 2, 1998 and May 3, 1997, 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 1998 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. EARNINGS PER SHARE During fiscal 1998, the Company adopted Statement of Financial Accounting Standards No. 128, "Earnings Per Share", ("SFAS 128"), which requires presentation of basic and diluted earnings per share ("EPS") on the face of the consolidated statements of operations and requires a reconciliation of the numerators and denominators of the basic and diluted EPS calculations. Basic EPS is computed by dividing net income by the weighted average shares outstanding for the period. Earnings per share for all periods presented were computed on a basic basis using the weighted average number of common shares outstanding. Diluted EPS reflects the potential dilution that could occur if options to issue common stock were exercised and converted to common stock. Options and warrants outstanding were not materially dilutive. Earnings per share for prior periods have been computed in accordance with SFAS 128. -7- MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES FORM 10-Q FOR QUARTER ENDED MAY 2, 1998 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (INFORMATION SUBSEQUENT TO JANUARY 31, 1998 IS UNAUDITED) 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 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. The average price of gold in the current quarter was $301 per ounce as compared to $349 per ounce for the quarter ended May 3, 1997. 3. INVENTORIES Inventories consist of: May 2, January 31, 1998 1998 ------- ------- (Unaudited) (In thousands) Finished goods $32,117 $27,691 Work in process 16,828 13,335 Raw materials 10,876 5,095 ------- ------- 59,821 46,121 Less: Consigned gold 47,777 33,208 ------- ------- $12,044 $12,913 ======= ======= Inventories as of May 2, 1998 and January 31, 1998 excluded 155,700 and 108,900 ounces of gold on consignment, respectively. -8- MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES FORM 10-Q FOR QUARTER ENDED MAY 2, 1998 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (INFORMATION SUBSEQUENT TO JANUARY 31, 1998 IS UNAUDITED) 5. 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. During fiscal 1999, the Company had purchased an additional 527,000 shares on the open market for an aggregate of approximately $1,223,000. 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 May 27, 1998, the Company had repurchased a total of 1,164,000 shares on the open market for an aggregate price of approximately $3,221,000. -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 31, 1998 IS UNAUDITED) RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED - ------------------------------------------------ MAY 2, 1998 AND MAY 3, 1997 - ---------------------------- Net sales for the three months ended May 2, 1998 were approximately $30,432,000, an increase of 10% from net sales of approximately $27,606,000 for the comparable period last year. Had it not been for the decrease in the average gold price, $301 versus last year's $349 an ounce, net sales would have increased $6,231,000 or 23%. Gross profit margin increased to approximately 21.4% of net sales for the three months ended May 2, 1998 compared to approximately 18.3% for the comparable period last year, primarily due to the lower average gold price and to a lesser extent, a change in product mix. Selling, general and administrative expenses for the three months ended May 2, 1998 were approximately $5,688,000, an increase of $436,000 or 8% from approximately $5,252,000 for the comparable period last year. The increase is primarily attributable to increases in (i) advertising related expenses, (ii) product and packaging supplies, and (iii) payroll and payroll related expenses. These increases were primarily due to the Company's increased sales volume. As a percentage of net sales, adjusted for the gold price difference, selling, general and administrative expenses decreased to 16.8% for the three months ended May 2, 1998 from 19.0% for the comparable period of the prior year. Interest expense and gold consignment fees for the three months ended May 2, 1998 were approximately $537,000, a decrease of $104,000 or 16% compared to approximately $641,000 for the comparable period last year. Interest expense decreased due to the Company's principal payments on its long term debt. Interest income decreased $44,000 due to the Company's lower cash position compared to last year. As a result of the above factors the Company had net income for the three months ended May 2, 1998 of approximately $234,000 or $.03 per share on 7,436,000 weighted average shares outstanding, compared to a net loss of $423,000 or $.05 per share on 7,869,000 weighted average shares outstanding for the comparable period last year. -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 31, 1998 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 250,000 ounces of fine gold or (ii) consigned gold with an aggregate value equal to $106,695,000. However, on May 15, 1998, at the Company's request, the aggregate amount of fine gold available for consignment was reduced to the lessor of (i) an aggregate of 218,000 ounces or (ii) consigned gold with an aggregate value equal to $90,350,000. 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 May 2, 1998, the Company held 155,700 ounces of gold on consignment with a market value of $47,777,000. 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 May 2, 1998, the Company was in compliance with the covenants in its consignment agreements and the Company's owned gold inventory was valued at approximately $3,170,000. 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. On June 3, 1998, the Company received notice from an existing Gold Lender that it plans to terminate its consignment agreement with the Company on June 30, 1998. This will reduce the aggregate ounces the Company is entitled to lease to 188,000, with an aggregate value equal to $80,300,000. Based upon current and anticipated needs, Management believes this change will not have any impact on the Company. However, it is the Company's present intention to explore relationships with other consignors or expand its relationships with its existing Gold Lenders. -11- ITEM 2 MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (INFORMATION SUBSEQUENT TO JANUARY 31, 1998 IS UNAUDITED) Liquidity and Capital Resources (Continued) - ------------------------------- 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. 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 31, 1998 until May 2, 1998, the closing price of gold according to the Second London Gold Fix ranged from a low of $290 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. In 1992, the Company issued $10,000,000 principal amount of senior secured notes with various insurance companies, which accrue interest at 8.61% per annum. In February 1995, the Company issued an additional $6,000,000 principal amount of senior secured notes with various insurance companies, which currently accrue interest at 7.13% per annum. The various insurance company lenders are collectively referred to as the "Senior Note Holders". These notes are secured by the Company's accounts receivable, machinery and equipment, inventory (secondary lien to the Gold Lenders) and proceeds. In addition, the note purchase agreements contain certain restrictive financial covenants and restrict the payment of dividends. At May 2, 1998, the Company was in compliance with the covenants and $11,556,000 of principal remained outstanding under the notes issued in 1992 and 1995. 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 May 2, 1998, the Company was in compliance with the covenants and $2,255,000 of principal remained outstanding under the mortgage. -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 31, 1998 IS UNAUDITED) Liquidity and Capital Resources (Continued) - ------------------------------- The Company has a line of credit arrangement with a commercial bank (the "Line of Credit"), under which the Company may borrow up to $15,000,000. The Line of Credit is secured by certain assets of the Company, including accounts receivable and inventory. As of May 2, 1998, there was no amount outstanding under the Line of Credit, due to seasonal borrowings. The Line of Credit currently expires on July 31, 1998, subject to annual renewal. Management believes that the line of credit will be renewed. However, if the current lender decides not to renew the line, the Company believes that other lenders would be willing to enter into a similar arrangement. Cash and cash equivalents decreased $3,656,000 during the three months ended May 2, 1998. This decrease was primarily due to the Company's seasonal increase in accounts receivable, purchases of machinery and equipment, and repurchase of treasury stock. During the three months ended May 2, 1998, the Company used $2,171,000 of cash from operations. The increase is primarily due to the increased accounts receivable levels which was partially offset by depreciation. The increase in accounts receivable is primarily related to the increased sales compared to last year. During the comparable period of the prior year, the Company used $1,349,000 of cash from operations, primarily due to higher inventory levels and increased prepaid expenses. Cash of $423,000 was used for investing activities as compared to $723,000 used during the comparable three-month period last year. The decrease is primarily due to the Company's decreased purchases of machinery and equipment. Cash of $1,062,000 was used in financing activities during the three-month period, compared to $1,169,000 used for the comparable period of the prior year. For the balance of fiscal 1999, the Company projects capital expenditures of approximately $1,100,000. 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 1999, 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. -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 31, 1998 IS UNAUDITED) 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", as a result of any of the following factors: i) general economic conditions and their impact on the retail sales environment; ii) fluctuations in the price of gold and other metals used to manufacture the Company's jewelry; iii) risks related to the concentration of the Company's customers, particularly the operations of any of its top customers; iv) increased competition from outside the United States where labor costs are substantially lower; v) variability of customer requirements and the nature of customers' commitments on projections and orders; and vi) the extent to which the Company is able to retain and attract 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 Standard - ----------------------- In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 131, Disclosures about Segments of an Enterprise and Related Information, which will be effective for fiscal years beginning after December 15, 1997. SFAS No. 131 redefines how operating segments are determined and requires expanded quantitative and qualitative disclosures relating to a company's operating segments. The Company anticipates that the adoption of SFAS No. 131 will not have a material impact on current disclosures. -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 31, 1998 IS UNAUDITED) New Accounting Standard (Continued) - ----------------------- The Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 132, "Employer's Disclosure about Pensions and Other Post Retirement Benefits" which will be effective for the 1999 financial statements. SFAS No. 132 will require new disclosures related to any changes in the defined contribution plan, including a description of the nature and effect of any significant changes during the year affecting comparability, such as a change in the rate of employer contributions, a business combination, or divestiture. -15- MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES PART II - OTHER INFORMATION Item 1 through Item 4 Not applicable. Item 6. (a) EXHIBITS 27 Financial Data Schedule (b) REPORTS ON FORM 8-K Not applicable. -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: June 11, 1998 BY: /s/ ALLAN CORN ---------------------------------- Allan Corn Senior Vice President and Chief Financial Officer -17- EXHIBIT INDEX TO FORM 10-Q FOR QUARTER ENDED MAY 2, 1998 Exhibit No. Page No. ----------- -------- 27 Financial Data Schedule 19 -18- EX-27 2 FDS
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. 0000799515 Michael Anthony Jewelers, Inc. 1,000 USD 3-MOS JAN-30-1999 FEB-01-1998 MAY-02-1998 1 0 0 26,342 (1,756) 12,044 43,850 42,792 25,179 62,913 6,790 12,659 0 0 8 42,638 62,913 30,432 30,432 23,925 23,925 5,602 86 537 378 144 0 0 0 0 234 .03 0
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