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 August 1, 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 [ ].
Number of Shares
Outstanding as of
Class September 1, 1998
----- -----------------
Common Stock, Par Value $.001 6,940,893
<PAGE>
MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
INDEX
-----
PAGE
----
PART I FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Condensed Balance Sheets,
August 1, 1998 (Unaudited) and
January 31, 1998..................................... 3
Consolidated Condensed Statements of Operations
Six-Month Period Ended
August 1, 1998 and August 2, 1997 (Unaudited) ....... 4
Consolidated Condensed Statement of Changes in
Stockholders' Equity, Six-Month Period Ended
August 1, 1998 (Unaudited)........................... 5
Consolidated Condensed Statements of Cash Flows,
Six-Month Period Ended
August 1, 1998 and August 2, 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............................................... 10-16
PART II OTHER INFORMATION:
Item 1 Through Item 6 ................................... 17
Signature Page........................................... 18
<PAGE>
MICHAEL ANTHONY JEWELERS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
August 1, January 31,
1998 1998
-------- --------
(Unaudited)
<S> <C> <C>
ASSETS
- ------
CURRENT ASSETS:
Cash and equivalents $ 6,377 $ 6,747
Accounts receivable:
Trade (less allowances of $753 and $1,196, respectively) 17,931 22,234
Other 258 40
Inventories 14,233 12,913
Income tax refundable 985 1,667
Prepaid expenses and other current assets 1,396 1,640
Deferred taxes 1,402 720
-------- --------
Total current assets 42,582 45,961
PROPERTY, PLANT AND EQUIPMENT - net 17,435 18,045
INTANGIBLES - net 485 584
OTHER ASSETS 785 1,054
-------- --------
$ 61,287 $ 65,644
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Accounts payable - trade $ 1,857 $ 2,870
Current portion of long-term debt
and lease liability 2,431 1,446
Accrued expenses 3,794 4,385
-------- --------
Total current liabilities 8,082 8,701
-------- --------
LONG-TERM DEBT 10,447 12,617
-------- --------
CAPITAL LEASE LIABILITY 25 119
-------- --------
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 13,502 13,484
Treasury stock, 1,192,000 and 578,000 shares as of
August 1, 1998 and January 31, 1998, respectively (3,342) (1,850)
-------- --------
Total stockholders' equity 41,915 43,389
-------- --------
$ 61,287 $ 65,644
======== ========
</TABLE>
The accompanying notes are an integral part of these
consolidated condensed financial statements.
-3-
<PAGE>
MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except earnings per share)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------- --------------------
August 1, August 2, August 1, August 2,
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET SALES $ 26,912 $ 22,618 $ 57,344 $ 50,224
COST OF GOODS SOLD 21,163 18,967 45,088 41,511
-------- -------- -------- --------
GROSS PROFIT ON SALES 5,749 3,651 12,256 8,713
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 5,686 5,845 11,374 11,097
-------- -------- -------- --------
OPERATING INCOME(LOSS) 63 (2,194) 882 (2,384)
OTHER INCOME/EXPENSES):
Gold consignment fee (242) (347) (502) (607)
Interest expense (266) (304) (543) (685)
Interest income 78 113 159 238
Other income 18 643 33 667
-------- -------- -------- --------
Total Other (Expense)/Income (412) 105 (853) (387)
-------- -------- -------- --------
(LOSS)/INCOME BEFORE INCOME
TAXES (349) (2,089) 29 (2,771)
INCOME TAX (BENEFIT)/PROVISION (133) (822) 11 (1,081)
-------- -------- -------- --------
NET (LOSS)/INCOME $ (216) $ (1,267) $ 18 $ (1,690)
======== ======== ======== ========
(LOSS)/EARNINGS PER SHARE
- BASIC AND DILUTED $ (.03) $ (0.16) $ .00 $ (.22)
======== ======== ======== ========
WEIGHTED AVERAGE NUMBER
OF SHARES 7,148 7,706 7,292 7,787
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these
consolidated condensed financial statements.
-4-
<PAGE>
MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Common Stock Additional Common Stock
--------------- Paid-in Retained -----------------
Shares Dollars Capital Earnings Shares Dollars Total
------ ------- ------- -------- ------ ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance -
January 31, 1998 8,282 $ 8 $31,747 $13,484 (578) $(1,850) $43,389
Purchase of treasury stock -- -- -- -- (614) (1,492) (1,492)
Net income -- -- -- 18 -- -- 18
----- ---- ------- ------- ------ ------- -------
Balance -
August 1, 1998 8,282 $ 8 $31,747 $13,502 (1,192) $(3,342) $41,915
===== ==== ======= ======= ====== ======= =======
</TABLE>
The accompanying notes are an integral part of these
consolidated condensed financial statements.
-5-
<PAGE>
MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
--------------------
August 1, August 2,
1998 1997
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss) $ 18 $ (1,690)
Adjustments to reconcile net income
to net cash used in operating activities:
Depreciation and amortization 1,812 2,013
Provision for accounts receivable -- 343
Provision for sales returns -- (147)
Asset write-off -- 259
(Increase)/decrease in operating assets:
Accounts receivable 4,085 2,711
Inventories (1,320) (1,368)
Prepaid expenses and other current assets 244 (1,211)
Other assets 269 (36)
Increase/(decrease) in operating liabilities:
Accounts payable (1,013) (104)
Accrued expenses (591) (922)
-------- --------
Net cash provided by/(used) in operating activities 3,504 (152)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment - net (1,103) (2,772)
-------- --------
Net cash used in investing activities (1,103) (2,772)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments of long-term debt
and capital lease liabilities (1,279) (1,506)
Purchase of treasury stock (1,492) (1,056)
-------- --------
Net cash used in financing activities (2,771) (2,562)
-------- --------
DECREASE IN CASH AND EQUIVALENTS (370) (5,486)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 6,747 10,430
-------- --------
CASH AND EQUIVALENTS AT END OF PERIOD $ 6,377 $ 4,944
======== ========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid during the period for:
Interest and gold consignment fees $ 1,079 $ 1,219
Taxes $ 185 $ 67
</TABLE>
The accompanying notes are an integral part of these
consolidated condensed financial statements.
-6-
<PAGE>
MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
FORM 10-Q FOR QUARTER ENDED AUGUST 1, 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 August 1,
1998 and the unaudited consolidated condensed statements of operations for
the six months ended August 1, 1998 and August 2, 1997, the unaudited
consolidated statement of changes in stockholders' equity for the six
months ended August 1, 1998, and the unaudited consolidated condensed
statements of cash flows for the six months ended August 1, 1998 and August
2, 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-
<PAGE>
MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
FORM 10-Q FOR QUARTER ENDED AUGUST 1, 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 $296 per ounce as
compared to $335 per ounce for the quarter ended August 2, 1997.
3. INVENTORIES
-----------
Inventories consist of:
August 1, January 31,
1998 1998
------- -------
(Unaudited)
(In thousands)
Finished goods $36,683 $27,691
Work in process 17,982 13,335
Raw materials 4,901 5,095
------- -------
59,566 46,121
Less:
Consigned gold 45,333 33,208
------- -------
$14,233 $12,913
======= =======
Inventories as of August 1, 1998 and January 31, 1998 excluded 156,900 and
108,900 ounces of gold on consignment, respectively.
-8-
<PAGE>
MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
FORM 10-Q FOR QUARTER ENDED AUGUST 1, 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. 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 1, 1998, the Company had purchased a total of 1,351,500
shares on the open market for an aggregate of approximately $3,700,000.
-9-
<PAGE>
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
- ------------------------------------------------
AUGUST 1, 1998 AND AUGUST 2, 1997
- ---------------------------------
Net sales for the three months ended August 1, 1998 were approximately
$26,912,000, an increase of 19% from net sales of approximately $22,618,000 for
the comparable period last year. Had it not been for the decrease in the average
gold price, $296 versus last year's $335 an ounce, net sales would have
increased $8,165,000 or 36%.
Gross profit margin increased to approximately 21.4% of net sales for the second
quarter ended August 1, 1998, compared to approximately 16.1% for the comparable
period last year. The increase in the gross profit margin as compared to the
prior year was primarily due to the change in the lower average gold price as
well as a change in the customer and product mix.
Selling, general and administrative expenses for the three months ended August
1, 1998 were approximately $5,686,000, a decrease of $159,000 or 3% from
approximately $5,845,000 for the comparable period last year. As a percentage of
net sales, adjusted for the gold price difference, selling and shipping expenses
decreased to 18.5% for the three months ended August 1, 1998 from 25.8% for the
comparable period of the prior year. The decrease is primarily attributable to
decreases in (i) the provision for bad debts and (ii) costs related to a
terminated merger negotiation in the three months ended August 2, 1997. These
decreases were partially offset by increases in (i) advertising related expenses
and (ii) product and packaging supplies. These increases were primarily due to
the Company's increased sales volume.
Other income and interest income for the three months ended August 1, 1998 was
approximately $96,000 a decrease of $660,000, compared to approximately $756,000
for the comparable period last year. The decrease was primarily due to a gain on
the Company's sale of certain assets in May 1997.
Other expenses for the second quarter ended August 1, 1998 were approximately
$508,000, a decrease of $143,000 or 22% compared to approximately $651,000 for
the comparable period last year. Gold consignment fees decreased $105,000
primarily due to the lower average gold price. Interest expense decreased
$37,000 due to the Company's principal payments on its long term debt.
As a result of the above factors the Company had a net loss for the second
quarter ended August 1, 1998 of approximately $216,000 or $.03 per share on
7,148,000 weighted average shares outstanding, compared to a net loss of
$1,267,000 or $.16 per share on 7,706,000 weighted average shares outstanding
for the comparable period last year.
-10-
<PAGE>
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 SIX MONTHS ENDED
- ----------------------------------------------
AUGUST 1, 1998 AND AUGUST 2, 1997
- ---------------------------------
Net sales for the six months ended August 1, 1998 were approximately
$57,344,000, an increase of 14% from net sales of approximately $50,224,000 for
the comparable period last year. Had it not been for the decrease in the average
gold price, $298 versus last year's $343 an ounce, net sales would have
increased $12,406,000 or 25%.
Gross profit margin increased to approximately 21.4% of net sales for the six
months ended August 1, 1998, compared to approximately 17.4% for the comparable
period last year. The increase in the gross profit margin as compared to the
prior year was primarily due to the change in the lower average gold price as
well as a change in the customer and product mix.
Selling, general and administrative expenses for the six months ended August 1,
1998 were approximately $11,374,000, an increase of $277,000 or 3% from
approximately $11,097,000 for the comparable period last year. The increase is
primarily attributable to increases in (i) advertising related expenses and (ii)
product and packaging supplies. These increases were primarily due to the
Company's increased sales volume. The increases were partially offset by
decreases in (i) the provision for bad debts and (ii) costs related to a
terminated merger negotiation in the six months ended August 2, 1997. As a
percentage of net sales, adjusted for the gold price difference, general and
administrative expenses decreased to 18.2% for the six months ended August 1,
1998 from, 22.1% for the comparable period of the prior year.
Other income and interest income for the six months ended August 1, 1998 was
approximately $192,000, a decrease of $713,000 compared to approximately
$905,000 for the comparable period last year. The decrease was primarily due to
a gain on the Company's sale of certain intangible assets in May 1997.
Other expenses for the six months ended August 1, 1998 were approximately
$1,045,000, a decrease of $247,000 or 19% compared to approximately $1,292,000
for the comparable period last year. Interest expense decreased $142,000 due to
the Company's principal payments on its long term debt. Gold consignment fees
decreased $105,000 primarily due to the lower average gold price.
As a result of the above factors the Company had net income for the six months
ended August 1, 1998 of approximately $18,000 or $.00 per share on 7,292,000
weighted average shares outstanding, compared to a net loss of $1,690,000 or
$.22 per share on 7,787,000 weighted average shares outstanding for the
comparable period last year.
-11-
<PAGE>
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 166,000 ounces of fine gold or (ii)
consigned gold with an aggregate value equal to $64,750,000. On August 10, 1998,
the Company received approval from a new gold lender which is expected to
increase the aggregate ounces of fine gold available to 191,000 ounces with an
aggregate value of $70,000,000.
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 August 1, 1998, the Company
held 156,900 ounces of gold on consignment with a market value of $45,333,000.
The consignment agreements contain certain restrictive covenants relating to 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 August 1,
1998, the Company was in compliance with the covenants in its consignment
agreements and the Company's owned gold inventory was valued at approximately
$2,381,000. 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.
-12-
<PAGE>
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)
- -------------------------------
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 August 1, 1998, the
closing price of gold according to the Second London Gold Fix ranged from a low
of $286 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 8.19% 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 August 1, 1998, the Company was in compliance with
the covenants and $10,444,000 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 August 1, 1998,
the Company was in compliance with the covenants and $2,228,000 of principal
remained outstanding under the mortgage.
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 August 1, 1998, there was no amount outstanding
under the Line of Credit, due to seasonal borrowings. The Line of Credit
currently expires on July 31, 1999, subject to annual renewal.
During the six months ended August 1, 1998, the Company provided $3,504,000 of
cash from operations. The increase is primarily due to the decreased accounts
receivable levels and prepaid expenses which was partially offset by a decrease
in accounts payable. During the comparable period of the prior year, the Company
used $152,000 of cash from operations, primarily due to higher inventory levels
and increased prepaid expenses.
-13-
<PAGE>
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)
- -------------------------------
Cash of $1,103,000 was used for investing activities as compared to $2,772,000
used during the comparable six-month period last year. The decrease is primarily
due to the Company's decreased purchases of machinery and equipment.
Cash of $2,771,000 was used in financing activities during the six-month period,
compared to $2,562,000 used for the comparable period of the prior year.
For the balance of fiscal 1999, the Company projects capital expenditures of
approximately $400,000.
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.
Year 2000 Compliance
- --------------------
In 1997 the Company developed, as a strategic corporate goal, a project plan to
address the Year 2000 issue and is making progress against that plan as reported
monthly to the Company's Executive Management Committee. The project is staffed
primarily with members of the Information Systems (IS) Department for coding,
and outside consultants are used on an as-needed basis. Most Year 2000 efforts
are being made through the use of internal resources or routine software
upgrades provided by the Company's software vendors.
The Company anticipates maintaining its business application system hardware
platform (primarily IBM AS/400's) but replacing or upgrading all affected
software. Management expects that the Company will be fully Year 2000 compliant
no later than August 1999. Total expenditures related to remediation, testing,
conversion and updating system applications are expected to be approximately
$310,000 of which approximately $145,000 has been expensed through August 1,
1998. The cost of the Year 2000 project is being expensed as incurred and is not
expected to have a material adverse affect on the Company's results of
operations, liquidity or capital resources.
The costs of the project and the date on which the Company plans to complete the
Year 2000 compliance program are based on management's best estimates, which
were derived utilizing numerous assumptions of future events including the
continued availability of certain resources, third party modification plans and
other factors. However, there can be no guarantee that these estimates will be
achieved, and actual results could differ materially from these estimates.
Specific
-14-
<PAGE>
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)
Year 2000 Compliance (Continued)
- --------------------
factors that might cause such material differences include, but are not limited
to, the availability and cost of personnel trained in this area, the ability to
locate and correct all relevant computer codes and similar uncertainties.
Should the Company have a significant business application systems failure or
not complete its Year 2000 project, computer related failures in a number of
areas including, but not limited to, the failure of the Company's
telecommunications, financial, manufacturing or distribution systems could
result. The Company believes that the most significant impact would be a short
delay in receiving gold shipments or shipping customer orders. The Company does
not expect any material impact to operations or financial result from any minor
delay.
The Company has recently begun examining its relationship with certain key
customers and suppliers with whom it has significant business relationships to
determine, to the extent practical, the degree that such parties' principal
business application systems are Year 2000 compliant or their plans to attain
Year 2000 readiness. To the extent the Company's key customers are not Year 2000
compliant before the end of 1999, such customers may lose EDI capabilities in
January 2000. If EDI communications are no longer possible, the Company expects
to use voice, facsimile, e-mail, or traditional mail communications in order to
receive customer orders and process customer invoices. There can be no
assurances that the systems of other companies on which the Company's systems
rely will also be converted in a timely fashion, or that any such failure would
not have an adverse effect on the Company's operations.
The predictions are based on Management's reasonable expectations, however,
there can be no assurance that these estimates will be achieved. External Year
2000 readiness estimates are subject to greater uncertainty, as the results are
outside the direct control of Management.
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:
-15-
<PAGE>
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 (Continued)
- --------------------------
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.
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.
-16-
<PAGE>
MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1 through Item 4
Not applicable.
Item 6.
(a) Exhibits
--------
10.1 Letter dated June 18, 1998 among Registrant and Senior Note
Holders
10.2 Promissory Note dated July 31, 1998 from Registrant to the
Chase Manhattan Bank
27 Financial Data Schedule
(b) Reports on Form 8-K
-------------------
Not applicable.
-17-
<PAGE>
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 14, 1998 BY: /s/ ALLAN CORN
------------------------------
Allan Corn
Senior Vice President and
Chief Financial Officer
-18-
<PAGE>
EXHIBIT INDEX
TO
FORM 10-Q FOR QUARTER ENDED AUGUST 1, 1998
Exhibit No. Page No.
----------- --------
10.1 Letter dated June 18, 1998 among Registrant and 20
Senior Note Holders
10.2 Promissory Note dated July 31, 1998 from Registrant 21
to the Chase Manhattan Bank
27 Financial Data Schedule 27
-19-
Mr. Steve Nelson June 18, 1998
Reliastar Investment Research Inc.
100 Washington Avenue South, Ste. 800
Minneapolis, MN 55401-2121
Dear Steve:
As we discussed on the phone today, we need to clarify further the waiver letter
of April 14.
As acknowledged in your waiver letter, Michael Anthony took a special one-time
charge of $4.5 million in the fourth quarter of fiscal year 1998. This caused us
to need a waiver of the Fixed Charge Ratio requirements for the fiscal year
ending January 31, 1998 and the following three quarter periods of May 2, 1998,
August 1, 1998 and October 31, 1998. From an accounting point of view, this
charge has the effect of reducing the Company's current assets by approximately
$3 million ($4.5 million charge less tax refund receivable of $1.5 million). The
result is that the Company's working capital is penalized by $3 million. We
project that this will cause us to have a working capital below the required $36
million at the end of our next fiscal quarter, August 1, 1998. Compounding the
foregoing is the fact that the first $1 million payment of the 1995 notes will
move up to the current liabilities section of our balance sheet on that same
date. As you know, this has the effect of reducing our working capital by an
additional $1 million.
Clearly this was an oversight. Had we foreseen this, you would have included
this in your waiver letter. Accordingly, it is understood by all that we would
be considered to be in compliance with the Working Capital Requirement as long
as we have $33 million in working capital through our fiscal year ending January
30, 1999.
Thanks for your understanding. Please signify your acceptance of this
clarification by signing off and forwarding this letter to Holly Thompson at
Royal Maccabees and Steve Harkness at Farm Bureau for their signatures.
Very truly yours, RELIASTAR INSURANCE COMPANY OF NEW YORK
NORTHERN LIFE INSURANCE COMPANY
/s/ Michael A. Paolercio BY: /s/ Steve Nelson
-------------------------- -----------------------------------
Michael A. Paolercio Steve Nelson
Senior Vice President and Treasurer
ROYAL MACCABEES INSURANCE CO.
MAP/gj
map\waiver BY: /s/ Leonard D. Davenport
-----------------------------------
Leonard D. Davenport
FARM BUREAU MUTUAL INSURANCE COMPANY
FARM BUREAU LIFE INSURANCE COMPANY
BY: /s/ Steve Harkness
-----------------------------------
Steve Harkness
PROMISSORY NOTE
$15,000,000 New York, New York
July 31, 1998
FOR VALUE RECEIVED, MICHAEL ANTHONY JEWELERS, INC. (the "DEBTOR"),
HEREBY PROMISES TO PAY to the order of THE CHASE MANHATTAN BANK, formerly know
as Chemical Bank (the "Bank"), at its offices located at 10 111 West 40th
Street, New York, New York, or at such other place as the Bank or any holder
hereof may from time to time designate, the principal sum of FIFTEEN MILLION
DOLLARS ($15,000,000), or such lesser amount as may constitute the outstanding
balance hereof, in lawful money of the United States, on the Maturity Date (as
hereinafter defined) set forth on the Grid Schedule attached hereto (or earlier
as hereinafter referred to), and to pay interest in like money at such office or
place from the date hereof on the unpaid principal balance of each Loan (as
hereinafter defined) made hereunder at a rate equal to the Applicable Interest
Rate (as hereinafter defined) for such Loan, which shall be payable on the last
day of the Interest Period relating to such Loan and, if such Interest Period is
greater than three (3) months, at three (3) month intervals after such Loan is
made, until such Loan shall be due and payable (whether at maturity, by
acceleration or otherwise) and thereafter, on demand. Interest after maturity
shall be payable at a rate two percent (2%) per annum above the Bank's Prime
Rate which rate shall be computed for actual number of days elapsed on the basis
of a 360-day year and shall be adjusted as of the date of each such change, but
in no event higher than the maximum permitted under applicable law. "Prime Rate"
shall mean the rate of interest as is publicly announced at the Bank's principal
office from time to time as its Prime Rate.
INTEREST/GRID SCHEDULE
The Bank is authorized to enter on the Grid Schedule attached hereto (i) the
amount of each Loan made from time to time hereunder, (ii) the date on which
each Loan is made, (iii) the date on which each Loan shall be due and payable to
the Bank which in no event shall be later than July 31, 1999 (the "Maturity
Date"), (iv) the interest rate agreed between the Debtor and the Bank as the
interest rate to be paid to the Bank on each Loan (each such rate, the
"Applicable Interest Rate"), which rate, at the Debtor's option in accordance
herewith, shall be at (a) the Prime Rate (the "Prime Rate Loan(s)"), (b) a fixed
rate of interest determined by and available at the Bank in its sole discretion
(the "Fixed Rate") for the applicable Interest Period (the "Fixed Rate Loan(s)")
or (c) the Adjusted Eurodollar Rate (as hereafter defined) plus 2.5% (the
"Eurodollar Loan"), (v) the amount of each payment made hereunder, and (vi) the
outstanding principal balance of the Loans hereunder from time to time, all of
which entries, in the absence of manifest error, shall be rebuttably presumed
correct and binding on the Debtor; provided, however, that the failure of the
Bank to make any such entries shall not relieve the Debtor from its obligation
to pay any amount due hereunder.
-1-
<PAGE>
PREPAYMENT
The Debtor shall not have the right to prepay any Loan, other than
Loans based on the Prime Rate, prior to the Maturity Date of such Loan. Except
with respect to Prime Rate Loans, in the event the Debtor does prepay a Loan
prior to the Maturity Date, the Debtor shall reimburse the Bank on demand for
any loss incurred or to be incurred by it in the reemployment of the funds
released by any prepayment.
DISCRETIONARY LOANS BY THE BANK
The Bank may lend, in its sole discretion in each instance, such
amounts (each a "Loan" and collectively the "Loans") as may be requested by the
Debtor hereunder, which Loans shall in no event exceed $15,000,000 in aggregate
principal amount outstanding at any time. Any Eurodollar Loan shall be in a
minimum principal amount of $500,000 and in increments of $100,000. Each such
request for a Loan shall be made by any officer of the Debtor or any person
designated in writing by any such officer, all of which are hereby designated
and authorized by the Debtor to request Loans and agree to the terms thereof
(including without limitation the Applicable Interest Rate and Maturity Date
with respect thereto). The Debtor shall give the Bank notice at least three (3)
Business Days prior to the date hereof and the end of each Interest Period (as
hereafter defined) specifying whether the Loan shall bear interest at the Prime
Rate, the Fixed Rate or the Eurodollar Rate and the Interest Period applicable
thereto. In the event the Debtor shall fail to provide such notice, the Loan
shall be deemed to bear interest at the applicable Prime Rate and shall have an
Interest Period of one month. The principal amount of each Loan shall be prepaid
on the earlier to occur of the Maturity Date applicable thereto, or the date
upon which the entire unpaid balance hereof shall otherwise become due and
payable.
INCREASED COST
If at any time after the date hereof, the Board of Governors of the
Federal Reserve System or any political subdivision of the United States of
America or any other government, governmental agency or central bank shall
impose or modify any reserve or capital requirement on or in respect of loans
made by or deposits with the Bank or shall impose on the Bank or the Eurodollar
market any other conditions affecting Fixed Rate Loans or Eurodollar Loans, and
the result of the foregoing is to increase the cost to (or, in the case of
Regulation D, to impose a cost on) the Bank of making or maintaining any Fixed
Rate Loans or Eurodollar Loans or to reduce the amount of any sum receivable by
the Bank in respect thereof, by an amount deemed by the Bank to be material,
then, within 30 days after notice and demand by the Bank, the Debtor shall pay
to the Bank such additional amounts as will compensate the Bank for such
increased cost or reduction; provided, that the Debtor shall not be obligated to
compensate the Bank for any increased cost resulting from the application of
Regulation D as required by the definition of Adjusted Eurodollar Rate. Any such
obligation by the Debtor to the Bank shall not be due and owing until the Bank
has delivered written notice to the Debtor. Failure by the Bank to provide such
notice shall not be deemed a waiver of any of its rights hereunder. A
certificate of the Bank
-2-
<PAGE>
claiming compensation hereunder and setting forth the additional amounts to be
paid to it hereunder and the method by which such amounts were calculated shall
be conclusive in the absence of manifest error.
INDEMNITY
The Debtor shall indemnify the Bank against any loss or expense which
the Bank may sustain or incur as a consequence of the occurrence of any Event of
Default or any loss or reasonable expense sustained or incurred in liquidating
or employing deposits from third parties acquired to effect or maintain any
Fixed Rate Loan or Eurodollar Loan or any part thereof the Bank may sustain or
incur as a consequence of any default in payment of the principal amount of the
Loan or any part thereof or interest accrued thereon. The Bank shall provide to
the Debtor a statement, supported where applicable by documentary evidence,
explaining the amount of any such loss or expense, which statement shall be
conclusive absent manifest error.
CHANGE IN LEGALITY
(a) Notwithstanding anything to the contrary contained elsewhere in
this Note, if any change after the date hereof in any law or regulation or in
the interpretation thereof by any governmental authority charged with the
administration thereof shall make it unlawful (based on the opinion of any
counsel, whether in-house, special or general, for the Bank) for the Bank to
make or maintain any Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurodollar Loan, then, by written notice
to the Debtor by the Bank, the Bank may require that all outstanding Eurodollar
Loans made hereunder be converted to Prime Loans, whereupon all such Eurodollar
Loans shall be automatically converted to Prime Loans as of the effective date
of such notice as provided in paragraph (b) below.
(b) For purposes of this Section, a notice to the Debtor by the Bank
pursuant to paragraph (a) above shall be effective, if lawful and if any
Eurodollar Loans shall then be outstanding, on the last day of the then current
Interest Period; otherwise, such notice shall be effective on the date of
receipt by the Debtor.
EVENTS OF DEFAULT
If the Debtor shall default in the punctual payment of any sum payable
with respect to, or in the observance or performance of any of the terms and
conditions of this Note, or any other agreement with or in favor of the Bank, or
if a default or event of default that is accelerated shall occur for any reason
under any such agreement, or in the event of default in any other indebtedness
of the Debtor in excess of $100,000, or if the Bank shall, in its sole
discretion, consider any of the obligations of the Debtor hereunder insecure, or
if any warranty, representation or statement of fact made in writing to the Bank
at any time by an officer, agent or employee of the Debtor is false or
misleading in any material respect when made, or if the Debtor refuses upon the
request of the Bank to furnish any information or to permit inspection of any of
-3-
<PAGE>
its books or records within a reasonable amount of time, or if the Debtor shall
be dissolved or shall fail to maintain its existence in good standing, or if the
usual business of the Debtor shall be suspended or terminated, or if any levy,
execution, seizure, attachment or garnishment shall be issued, made or filed on
or against any material portion of the property of the Debtor, or if the Debtor
shall become insolvent (however defined or evidenced), make an assignment for
the benefit of creditors or make or send a notice of intended bulk transfer, or
if a committee of creditors is appointed for, or any petition or proceeding for
any relief under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, receivership, liquidation or dissolution law or statute
now or hereafter in affect (whether at law or in equity) is filed or commenced
by or against the Debtor or any material portion of its property which, if such
petition or proceeding for relief is involuntarily commenced, shall not have
been vacated, discharged, or stayed or bonded pending appeal within 60 days from
the entry thereof, or if any trustee or receiver is appointed for the Debtor or
any such property, then and in any such event, in addition to all rights and
remedies of the Bank under applicable law and otherwise, all such rights and
remedies cumulative, not exclusive and enforceable alternatively, successively
and concurrently, the Bank may, at its option, declare any and all of the
amounts owing under this Note to be due and payable, whereupon the maturity of
the then unpaid balance hereof shall be accelerated and the same, together with
all interest accrued hereon, shall forthwith become due and payable.
DEFINITIONS
A. ADJUSTED EURODOLLAR RATE
"Adjusted Eurodollar Rate" shall mean, with respect to any
Eurodollar Loan for any Interest Period, an interest rate per annum
(rounded upwards, if necessary, to the next 1/8 of 1 %) equal to the
product of (i) the Eurodollar Rate in effect for such Interest
Period and (ii) Statutory Reserves.
"Eurodollar Rate" shall mean, with respect to any Eurodollar Loan
for any Interest Period, the rate (rounded upwards, if necessary, to
the next 1/8 of 1 % at which dollar deposits approximately equal in
principal amount to the Bank's Eurodollar Loan and for the maturity
equal to the applicable Interest Period are offered by the Bank in
immediately available funds in an Interbank Market for Eurodollars
at approximately 11:00 a.m., New York City time, two Business Days
prior to the commencement of such Interest Period.
B. BUSINESS DAY
A "Business Day" shall mean any day other than a Saturday, Sunday or
other day on which the Bank is authorized or required by law or
regulation to close, and which is a day on which actions in dollar
deposits are being carried out in London, England for Eurodollar
Loans and New York City for Fixed Rate Loans and Prime Loans.
-4-
<PAGE>
C. INTEREST PERIOD
i) For Eurodollar Loans, "Interest Period" shall mean the period
commencing on the date of such Loan and ending 1, 2, 3 or 6
months (as selected by the Debtor and recorded on the grid
attached hereto) after the date of such Loan, however, the
Interest Period shall not extend past the Maturity Date.
i. For Fixed Rate Loans, "Interest Period" shall mean the period
requested by the Debtor and agreed to by the Bank, as available,
however, the Interest Period shall not extend past the Maturity
Date.
ii. For Prime Loans, "Interest Period" shall mean the period agreed
to by the parties hereto, however, the Interest Period shall not
extend past the Maturity Date.
If any Interest Period would end on a day which shall not be a
Business Day, such Interest Period shall be extended to the next
succeeding Business Day.
D. STATUTORY RESERVES
"Statutory Reserves" shall mean a fraction (expressed as a decimal)
the numerator of which is the number one and the denominator of
which is the number one minus the aggregate of the maximum reserve
percentages (including, without limitation, any marginal, special
emergency or supplemental reserves) expressed as a decimal
established by the Board of Governors of the Federal Reserve System
and any other banking authority to which the Bank is subject, (a)
with respect to the Adjusted Certificate of Deposit Rate, for new
negotiable time deposits in dollars of over $100,000 with maturities
approximately equal to the applicable Interest Period, and (b) with
respect to the Adjusted Eurodollar Rate, for Eurocurrency
Liabilities as defined in Regulation D. Eurodollar Loans shall be
deemed to constitute Eurocurrency Liabilities and as such shall be
deemed to be subject to such reserve requirements without benefit of
or credit for proration, exceptions or offsets which may be
available from time to time to the Bank under such Regulation D.
Statutory Reserves shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.
MISCELLANEOUS
The Debtor hereby waives diligence, demand, presentment, protest and
notice of any kind, and assents to extensions of the time of payment, release,
surrender or substitution of security, or forbearance or other indulgence,
without notice.
-5-
<PAGE>
This Note may not be changed, modified or terminated orally, but only
by an agreement in writing signed by the party to be charged and consented to in
writing by the party hereof.
In the event the Bank or any holder hereof shall refer this Note to an
attorney for collection, the Debtor agrees to pay, in addition to unpaid
principal and interest, all the costs and expenses incurred in attempting or
effecting collection hereunder, including reasonable attorney's fees, whether or
not suit is instituted.
In the event of any litigation with respect to this Note, THE BORROWER
WAIVES THE RIGHT TO A TRIAL BY JURY and all rights of setoff and rights to
interpose counter-claims and cross-claims. The Debtor hereby irrevocably
consents to the jurisdiction of the courts of the State of New York and of any
Federal court located in such State in connection with any action or proceeding
arising out of or relating to this Note. The execution and delivery of this Note
has been authorized by the Board of Directors and by any necessary vote or
consent of the stockholders of the Debtor. The Debtor hereby authorizes the Bank
to complete this Note in any particulars according to the terms of the loan
evidenced hereby. This Note shall be governed by and construed in accordance
with the laws of the State of New York applicable to contract made and to be
performed in such State, and shall be binding upon the successors and assigns of
the Debtor and inure to the benefit of the Bank, its successors, endorsees and
assigns.
If any term or provision of this Note shall be held invalid, illegal or
unenforceable the validity of all other terms and provisions hereof shall in no
way be affected thereby.
MICHAEL ANTHONY JEWELERS, INC.
By: /s/ Michael A. Paolercio
-------------------------
Title: Treasurer
By: /s/ Allan Corn
-------------------------
Title: Chief Financial Officer
-6-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
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.
</LEGEND>
<CIK> 0000799515
<NAME> MICHAEL ANTHONY JEWELERS, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> FEB-2-1998
<PERIOD-END> AUG-01-1998
<EXCHANGE-RATE> 1
<CASH> 6,377
<SECURITIES> 0
<RECEIVABLES> 18,684
<ALLOWANCES> (753)
<INVENTORY> 14,233
<CURRENT-ASSETS> 42,582
<PP&E> 43,471
<DEPRECIATION> 26,036
<TOTAL-ASSETS> 61,287
<CURRENT-LIABILITIES> 8,082
<BONDS> 0
0
0
<COMMON> 8
<OTHER-SE> 41,907
<TOTAL-LIABILITY-AND-EQUITY> 61,287
<SALES> 57,344
<TOTAL-REVENUES> 57,344
<CGS> 45,088
<TOTAL-COSTS> 45,088
<OTHER-EXPENSES> 11,182
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,045
<INCOME-PRETAX> 29
<INCOME-TAX> 11
<INCOME-CONTINUING> 18
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
