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 October 28, 1995
Commission file number: 0-15230
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
November 29, 1995
-----------------
8,333,000
2
MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
INDEX
-----
PAGE
----
PART I - FINANCIAL INFORMATION:
ITEM 1. FINANCIAL STATEMENTS
Consolidated Condensed Balance Sheets,
October 28, 1995 (Unaudited) and
January 28, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Condensed Statements of Operations
Three-Month and Nine-Month Periods Ended
October 28, 1995 and October 29, 1994 (Unaudited) . . . . . . . . . . . . . . . . . . . . 4
Consolidated Condensed Statement of Changes in
Stockholders' Equity, Nine-Month Period Ended
October 28, 1995 (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Consolidated Condensed Statements of Cash Flows,
For The Nine-Month Period Ended
October 28, 1995 and October 29, 1994 (Unaudited) . . . . . . . . . . . . . . . . . . . . 6
Notes to Consolidated Condensed Financial
Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-14
PART II - OTHER INFORMATION:
Items 1 Through Item 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Signature Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
-ii-
3
MICHAEL ANTHONY JEWELERS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
October 28, January 28,
ASSETS 1995 1995
------ -------------- -------------
(Unaudited)
CURRENT ASSETS:
Cash and equivalents $ 129 $5,815
Accounts receivable:
Trade (less allowances of $1,649 and $1,400) 39,485 26,671
Other 58 150
Inventories 21,274 20,150
Prepaid expenses and other current assets 1,018 659
Deferred taxes 651 651
-------- --------
Total current assets 62,615 54,096
PROPERTY, PLANT AND EQUIPMENT - net 17,772 16,281
INTANGIBLES - net 1,057 705
OTHER ASSETS 1,042 957
--------- ----------
$82,486 $72,039
========= ==========
LIABILITIES AND STOCKHOLDERS' EQUIT
-----------------------------------
CURRENT LIABILITIES:
Line of credit $ 5,000 $ -
Accounts payable - trade 3,494 4,989
Current portion of long term debt
and lease liability 3,040 2,680
Accrued expenses 4,563 3,255
Taxes payable 549 394
--------- --------
Total current liabilities 16,646 11,318
--------- --------
LONG TERM DEBT 18,255 12,528
--------- --------
DEFERRED TAXES 994 994
--------- --------
CAPITAL LEASE LIABILITY 572 754
--------- --------
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, 9,239,000
shares issued and outstanding as of October 28,
1995 and January 28, 1995, respectively 9 9
Additional paid-in capital 35,170 35,170
Retained earnings 13,825 13,578
Treasury stock, 799,000 and 578,000 shares,
respectively (2,985) (2,312)
--------- --------
Total stockholders' equity 46,019 46,445
--------- --------
$82,486 $72,039
========= ========
<FN>
The accompanying notes are an integral part of these 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 Nine Months Ended
October 28, October 29, October 28, October 29,
1995 1994 1995 1994
-------- ----------- --------- --------
NET SALES $47,037 $46,389 $99,198 $105,547
COST OF GOODS SOLD 38,789 37,034 82,463 85,422
-------- ------- ------- -------
GROSS PROFIT ON SALES 8,248 9,355 16,735 20,125
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 5,431 5,773 14,061 13,624
-------- ------- -------- --------
OPERATING INCOME 2,817 3,582 2,674 6,501
OTHER INCOME (EXPENSES):
Gold consignment fee, net (485) (440) (1,347) (1,104)
Interest expense (428) (366) (1,336) (1,166)
Interest income 55 53 314 364
Other income 8 13 89 55
---------- -------- -------- --------
Total Other Income (Expense) (850) (740) (2,280) (1,851)
--------- ------- ------- ---------
INCOME BEFORE INCOME TAXES 1,967 2,842 394 4,650
INCOME TAX PROVISION 776 1,137 147 1,730
--------- --------- ----- --------
NET INCOME $ 1,191 $ 1,705 $ 247 $2,920
======== ========= ======= ========
EARNINGS PER SHARE $ .14 $ .19 $ .03 $ .33
======== ======== ======= ========
WEIGHTED AVERAGE NUMBER OF SHARES 8,441 8,750 8,527 8,751
<FN>
The accompanying notes are an integral part of these 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 28, 1995 9,239 $ 9 $35,170 $13,578 (578) $(2,312) $46,445
Purchase of treasury stock - - - - (221) (673) (673)
Net income - - - 247 - - 247
-------- ------- --------- -------- ----- --------- ---------
Balance -
October 28, 1995 9,239 $ 9 $35,170 $13,825 (799) $(2,985) $46,019
====== ====== ======= ======== ===== ======== =======
<FN>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
- 5 -
6
MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
Nine Months Ended
October 28, October 29,
1995 1994
-------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income 247 $2,920
Adjustments to reconcile net income
to net cash provided by/(used in) operating activities:
Depreciation and amortization 2,691 1,576
Provision for accounts receivable 270 141
Provision for sales returns (80) (1,048)
Provision for deferred taxes - 124
(Increase)/decrease in operating assets:
Accounts receivable (12,912) (13,550)
Inventories (1,124) (6,263)
Prepaid expenses and other current assets (359) (183)
Other assets (287) (129)
Intangibles (427) 27
Increase/(decrease) in operating liabilities:
Accounts payable (1,495) 792
Accrued expenses 1,308 (5,084)
Taxes payable 155 (170)
--------- ---------
Net cash used in operating activities (12,013) (20,847)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (3,905) (3,465)
--------- ---------
Net cash used in investing activities (3,905) (3,465)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stock options - 244
Principal payments of long-term debt
and capital lease liabilities (2,595) (2,543)
Proceeds from long term debt 6,000 -
Purchase of treasury stock (673) (125)
Proceeds from line of credit 5,000 4,000
Proceeds from mortgage 2,500 -
--------- ---------
Net cash provided by financing activities 10,232 1,576
--------- ---------
NET DECREASE IN CASH AND EQUIVALENTS (5,686) (22,736)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 5,815 22,742
--------- ---------
CASH AND EQUIVALENTS AT END OF PERIOD $ 129 $ 6
======== =========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid during the period for:
Interest and gold consignment fees $2,817 $2,412
Taxes $ 176 $1,445
<FN>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
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MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
FORM 10-Q FOR QUARTER ENDED OCTOBER 28, 1995
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(INFORMATION SUBSEQUENT TO JANUARY 28, 1995 IS UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
The unaudited interim consolidated condensed balance sheet as of
October 28, 1995 and the consolidated condensed statements of operations
for the three months and nine months ended October 28, 1995 and October 29,
1994, and the consolidated condensed statements of cash flows for the nine
months ended October 28, 1995 and October 29, 1994, 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 1995 Transition 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
------------------
Earnings per share for all periods presented were computed on a primary
basis using the weighted average number of shares of common stock
outstanding. Options and warrants outstanding were not materially dilutive.
Reclassifications
-----------------
Certain reclassifications were made to the prior year's financial
statements to conform to the current year's presentation.
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.
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MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
FORM 10-Q FOR QUARTER ENDED OCTOBER 28, 1995
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(INFORMATION SUBSEQUENT TO JANUARY 28, 1995 IS UNAUDITED)
2. PRODUCT PRICING (Continued)
---------------
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 $383 per ounce as
compared to $387 per ounce for the quarter ended October 29, 1994.
3. INVENTORIES
-----------
Inventories consist of:
October 28, January 28,
1995 1995
---------- --------
(Unaudited)
(In thousands)
Finished goods $67,953 $60,411
Work in process 29,010 21,807
Raw materials 2,955 10,868
-------- ------
99,918 93,086
Less:
Consigned gold 78,644 72,936
-------- -------
$21,274 $20,150
======= =======
<FN>
Inventories as of October 28, 1995 and January 28, 1995 excluded 205,500 and
192,700 ounces of gold on consignment, respectively.
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MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
FORM 10-Q FOR QUARTER ENDED OCTOBER 28, 1995
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(INFORMATION SUBSEQUENT TO JANUARY 28, 1995 IS UNAUDITED)
4. STOCK REPURCHASE PROGRAM
------------------------
In May 1994, the Company announced a Common Stock repurchase program
pursuant to which the Company may repurchase up to 500,000 shares of Common
Stock. As of November 29, 1995, the Company had repurchased a total of
441,600 shares on the open market for an aggregate price of approximately
$1,439,000.
5. MORTGAGE PAYABLE
----------------
On October 6, 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 will accrue at 8%
per annum.
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ITEM 2 MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(INFORMATION SUBSEQUENT TO JANUARY 28, 1995 IS UNAUDITED)
RESULTS OF OPERATIONS FOR THE THREE MONTHS
- -------------------------------------------
ENDED OCTOBER 28, 1995 AND OCTOBER 29, 1994
- -------------------------------------------
Net sales for the three months ended October 28, 1995 were approximately
$47,037,000, an increase of approximately 1.4% from net sales of approximately
$46,389,000 for the comparable period of the prior year. The increase in net
sales resulted from increased shipments to the retail segment of the Company's
customer base which was offset in part by decreased shipments to the wholesale
segment of the Company's customer base and lower sales of the Company's
licensed professional sports products.
Gross profit margin decreased to 17.5% of net sales for the three months ended
October 28, 1995 as compared to 20.2% of net sales for the comparable period of
the prior year. The decrease in gross profit margin was attributable to a
change in the Company's product mix and the liquidation of discontinued
inventory and other inventory adjustments, compared to the comparable period of
the prior year.
Selling, general and administrative expenses for the three months ended October
28, 1995 were approximately $5,431,000, a decrease of approximately 5.9% from
$5,773,000 for the comparable period of the prior year. The decrease is
primarily attributable to decreased salaries and benefits and decreased rental
expense. As a percentage of sales, selling, general and administrative
expenses decreased to approximately 11.5% for the three months ended October
28, 1995 compared to 12.4% in the comparable period of the prior year.
The cost reduction program which the Company initiated in April 1995 is
beginning to have a positive impact on the Company's selling, general and
administrative expenses. In an effort to increase sales and promote new
products, the Company has committed to additional media and other related
advertising expenses for the fourth fiscal quarter.
Interest expense (including gold consignment fees) for the three months October
28, 1995 was approximately $913,000, an increase of $107,000 from the
comparable period of the prior year. This increase was due to the placement of
$6,000,000 senior secured notes and higher levels of consignment inventory.
As a result of the above factors, the Company's net income for the three months
ended October 28, 1995 was $1,191,000 compared to net income of $1,705,000 for
the comparable period of the prior year.
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ITEM 2 MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(INFORMATION SUBSEQUENT TO JANUARY 28, 1995 IS UNAUDITED)
RESULTS OF OPERATIONS FOR THE NINE MONTHS
- -------------------------------------------
ENDED OCTOBER 28, 1995 AND OCTOBER 29, 1994
- -------------------------------------------
Net sales for the nine months ended October 28, 1995 were approximately
$99,198,000 a decrease of approximately 6% from net sales of approximately
$105,547,000 for the comparable period of the prior year. The decrease in net
sales resulted from decreased shipments to the wholesale segment of the
Company's customer base and lower sales of the Company's licensed professional
sports products. The decrease also resulted from a weak retail sales
environment and a more conservative purchasing policy by certain customers.
Gross profit margin decreased to 16.9% of net sales for the nine months ended
October 28, 1995 as compared to 19.1% of net sales for the comparable period of
the prior year. The decrease in gross profit margin was attributable to a
change in the Company's product mix and the liquidation of discontinued
inventory and other inventory adjustments, compared to the comparable period of
the prior year.
Selling, general and administrative expenses for the nine months ended October
28, 1995 were approximately $14,061,000, an increase of approximately 3.2% from
$13,624,000 for the comparable period of the prior year. The increase is
primarily attributable to (i) higher advertising expenses incurred in
connection with a higher percentage of sales to the retail segment of the
Company's customer base and (ii) a recovery of bad debt in the nine-month
period ended October 29, 1994. As a percentage of sales, selling, general and
administrative expenses increased to approximately 14.2% for the nine months
ended October 28, 1995 compared to 12.9% in the comparable period of the prior
year.
Interest expense (including gold consignment fees) for the nine months ended
October 28, 1995 was approximately $2,683,000, an increase of $413,000 from the
comparable period of the prior year. This increase was due to the placement of
$6,000,000 senior secured notes and higher levels of consignment inventory.
As a result of the above factors, the Company's net income for the nine months
ended October 28, 1995 was $247,000 compared to net income of $2,920,000 for
the comparable period of the prior year.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company relies on a gold consignment program, short-term and long-term
borrowings and internally generated funds to finance inventories and accounts
receivable. The Company fills most of its gold supply needs through gold
consignment arrangements with the Gold Lenders.
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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 28, 1995 IS UNAUDITED)
Liquidity and Capital Resources (Continued)
- -------------------------------------------
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 an aggregate
consigned gold value not to exceed $108,471,000. 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.
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 October 20, 1995, the Company entered into a gold consignment agreement with
a new Gold Lender. On October 25, 1995, the Company received notice from an
existing Gold Lender that it plans to discontinue its involvement in the
jewelry lending business and will be terminating its gold consignment agreement
with the Company in February 1996. This change does not impact the
availability of aggregate ounces or gold value under the arrangements to 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.
In 1987 and 1992, the Company placed $10,000,000 principal amount of senior
secured notes with various insurance companies, which accrue interest at 10.5%
and 8.61% per annum, respectively. 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 7.44% per annum, which
is 1.5% above the three-month London Interbank Offered Rate, adjusted
quarterly.
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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 28, 1995, IS UNAUDITED)
Liquidity and Capital Resources (Continued)
- -------------------------------
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 October 28, 1995, the
Company was in compliance with the covenants. As of October 28, 1995,
$18,528,000 of principal remained outstanding under these notes.
In September 1994, the Company entered into a line of credit arrangement with a
commercial bank (the "Line of Credit"), under which the Company may borrow up
to $15,000,000. Borrowings under the facility bear interest at the Bank's
prime rate. The Line of Credit is secured by certain assets of the Company,
including accounts receivable and inventory. As of October 28, 1995, there was
$5,000,000 outstanding under the Line of Credit. The Line of Credit currently
expires on January 31, 1996, subject to annual renewal.
On October 6, 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 will accrue at 8% per annum. In addition,
the mortgage contains certain restrictive financial covenants. At October 28,
1995, the Company was in compliance with the covenants. As of October 28,
1995, $2,500,000 of principal remained outstanding under the mortgage.
Cash and equivalents decreased from $5,815,000 at January 28, 1995 to $129,000
at October 28, 1995, primarily due to the Company's increased level of accounts
receivable. Accounts receivable-trade increased from $26,671,000 at January
28, 1995 to $39,485,000 at October 28, 1995. The increase in accounts
receivable-trade results from the seasonal nature of the Company's sales.
Accounts payable-trade decreased from $4,989,000 at January 28, 1995 to
$3,494,000 at October 28, 1995. The decrease in accounts payable-trade
resulted primarily from lower accrued gold purchases. Accrued expenses
increased from $3,255,000 at January 28, 1995 to $4,563,000 at October 28,
1995. The increase is primarily related to increased advertising expenses in
connection with a higher percentage of sales to the retail segment of the
Company's customer base. Long term debt increased from $12,528,000 at January
28, 1995 to $18,255,000 at October 28, 1995. The increase in long-term debt is
related to the Company's placement of $6,000,000 of notes in February of 1995
and the $2,500,000 real estate loan obtained on October 6, 1995. The increase
was offset in part by two principal payments totalling $2,595,000 during the
year.
During the nine months ended October 28, 1995, the Company utilized $12,013,000
of cash from operations as compared with a utilization of $20,847,000 for the
comparable period of the prior year. The decrease in the utilization of cash
from operations is primarily due to (i) a decrease in cash used for inventory
as a result of the Company's better inventory management and (ii) an accrued
expense decrease which was principally due to a refund of an accounts
receivable advance.
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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 28, 1995, IS UNAUDITED)
Liquidity and Capital Resources (Continued)
- -------------------------------
The Company used $3,905,000 of cash from investing activities as compared to
$3,465,000 for the comparable period of the prior last year. The increase was
due to the purchase of land, machinery and equipment. During the nine months
ended October 28, 1995 financing activities provided the Company with
$10,232,000 of cash compared with $1,576,000 in the comparable period last
year. The increase is due to the receipt of the proceeds of $6,000,000 senior
secured notes and the proceeds of the real estate loan of $2,500,000 which was
offset in part by the purchase of treasury stock and repayment of the Company's
long term debt and capital lease liabilities.
For fiscal 1996, the Company projects that its remaining capital expenditures
will be approximately $500,000, which includes certain leasehold improvements
on its owned and leased properties and additional machinery and equipment
purchases.
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 1996, 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.
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15
MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1 through Item 4
Not applicable.
Item 5.
On October 16, 1995, Jerome Peterson notified the Company that he was
resigning from the Board of Directors due to his time commitments with other
business interests. On December 1, 1995, the Board elected Donald R. Miller to
fill the vacancy created by Mr. Peterson's resignation.
Item 6.
(a) Exhibits
--------
10.1 Loan Agreement dated October 6, 1995 between First Fidelity Bank,
National Association ("First Fidelity") and Registrant.
10.2 Mortgage Note in principal amount of $2,500,000 dated October 6, 1995
issued by Registrant in favor of First Fidelity.
10.3 Mortgage and Security Agreement dated October 6, 1995 by Registrant
for the benefit of First Fidelity.
10.4 Consignment Agreement dated October 20, 1995 between Registrant and
Union Bank of Switzerland ("UBS").
10.5 Fourth Amendment to Amended and Restated Security Agreement dated
October 20, 1995 among Registrant, UBS and Registrant's other gold
lenders.
10.6 Fifth Amendment to Amended and Restated Intercreditor Agreement dated
October 20, 1995 among Registrant, UBS and Registrant's other lenders.
10.7 Fifth Amendment to Assignment of Trademarks and Servicemarks dated
October 20, 1995 among Registrant, UBS and Registrant's other lenders.
10.8 Seventh Amendment to Amended and Restated Consignment Agreement dated
October 20, 1995 between Registrant and Rhode Island Hospital Trust
National Bank.
27 Financial Data Schedule
(b) Reports on Form 8-K
-------------------
Not applicable.
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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: December 11, 1995 By:/s/Allan Corn
------------------------
Allan Corn
Senior Vice President and
Chief Financial Officer
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17
EXHIBIT INDEX
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Exhibits
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10.1 Loan Agreement dated October 6, 1995 between First Fidelity Bank,
National Association ("First Fidelity") and Registrant.
10.2 Mortgage Note in principal amount of $2,500,000 dated October 6, 1995
issued by Registrant in favor of First Fidelity.
10.3 Mortgage and Security Agreement dated October 6, 1995 by Registrant
for the benefit of First Fidelity.
10.4 Consignment Agreement dated October 20, 1995 between Registrant and
Union Bank of Switzerland ("UBS").
10.5 Fourth Amendment to Amended and Restated Security Agreement dated
October 20, 1995 among Registrant, UBS and Registrant's other gold
lenders.
10.6 Fifth Amendment to Amended and Restated Intercreditor Agreement dated
October 20, 1995 among Registrant, UBS and Registrant's other lenders.
10.7 Fifth Amendment to Assignment of Trademarks and Servicemarks dated
October 20, 1995 among Registrant, UBS and Registrant's other lenders.
10.8 Seventh Amendment to Amended and Restated Consignment Agreement dated
October 20, 1995 between Registrant and Rhode Island Hospital Trust
National Bank.
27 Financial Data Schedule
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