<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                            FOR THE FISCAL YEAR ENDED
                                JANUARY 31, 1998
                             COMMISSION FILE NUMBER
                                     015230

                         MICHAEL ANTHONY JEWELERS, INC.
               (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
 
            DELAWARE                                        132910285
  (STATE OR OTHER JURISDICTION OF                       (I.R.S. EMPLOYER
   INCORPORATION OR ORGANIZATION)                       IDENTIFICATION NO.)

      115 SOUTH MACQUESTEN PARKWAY                            10550
         MOUNT VERNON, NEW YORK                             (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (914) 699-0000

        SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE

           SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

                          COMMON STOCK, PAR VALUE $.001

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
                              -----  -----

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendments to
this Form 10-K. [ ]

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of April 10, 1998.


    COMMON STOCK, PAR VALUE $.001                            7,284,793
        (TITLE OF EACH CLASS)                             ----------------
                                                         (NUMBER OF SHARES)

Aggregate market value of common stock held by nonaffiliates at April 10, 1998:
$11,947,523*




<PAGE>   2




                      DOCUMENTS INCORPORATED BY REFERENCE:

Part III Portions of registrant's Definitive Proxy Statement for Annual Meeting
of Stockholders for Fiscal 1998 (to be filed within 120 days of end of Fiscal
Year).

Part IV Certain exhibits to (i) registrant's Registration Statement on Form S-1
(File No. 338289), (ii) registrant's Annual Report on Form 10-K for the fiscal
year ended June 30, 1993, (iii) registrant's Registration Statement on Form S-3
(File No. 3371308), (iv) registrant's Annual Report on Form 10-K for the fiscal
year ended June 30, 1994, (v) registrant's Transition Report on Form 10-K for
the transition period from July 1, 1994 to January 28, 1995, (vi) registrant's
Annual Report on Form 10-K for the fiscal year ended January 27, 1996, (vii)
registrant's Quarterly Report on Form 10-Q for the quarter ended July 27, 1996,
(viii) registrant's Quarterly Report on Form 10-Q for the quarter ended October
26, 1996, (ix) registrant's Annual Report on Form 10-K for the fiscal year ended
February 1, 1997, (x) registrant's Quarterly Report on Form 10-Q for the quarter
ended May 3, 1997, (xi) registrant's Quarterly Report on Form 1-Q for the
quarter ended August 2, 1997 and (xii) registrant's Quarterly Report on Form
10-Q for the quarter ended November 1, 1997.

* Excludes holdings, among others, of Allan Corn, Frances Durden, Mark Hanna,
David Harris, Donald R. Miller, Michael Anthony Paolercio, Greg Torski and
Michael Wager who should not be deemed affiliates for any other purpose.



<PAGE>   3




                                     PART I

ITEM 1. BUSINESS.

GENERAL

         Michael Anthony Jewelers, Inc. (the "Company") is a leading designer,
marketer and manufacturer of affordable fine jewelry in the United States. The
Company sells its jewelry directly to jewelry chain stores, discount stores,
department stores, television home shopping networks, catalogue retailers, and
wholesalers. The Company manufactures jewelry targeted towards the middle
market, which generally retails between $20 and $200 and between $300 and $1,200
for watches. The Company's products include rope chain, bracelets, charms,
pendants, earrings, rings and watches, which is sold in over 20,000 retail
locations nationwide.

         Most of the Company's products are manufactured at its Mount Vernon,
New York facility. The Company utilizes manufacturing processes that combine
modern technology and mechanization with handcraftsmanship. In order to better
meet its customers' needs, the Company has developed a wide range of customer
service programs, such as inventory management assistance through electronic
data interchange, customized packaging, barcoding and computerized analysis of
sales and marketing trends. As a result of its vertical integration and customer
service programs, the Company is able to be responsive to its customers' needs
and manufacture and deliver most orders on a timely and more cost-effective
basis than many of its competitors.

         The Company was organized as a Delaware corporation in 1986 and is the
successor to Michael Anthony Jewelers, Inc., a New York corporation, organized
in 1977.

CHANGE IN FISCAL YEAR

         On November 3, 1994, the Company's Board of Directors approved a change
in the fiscal year end of the Company from June 30th to a fiscal year ending on
the last Saturday in January, effective for the seven month period ended January
28, 1995. During fiscal 1997, the Company changed its fiscal year end from the
last Saturday in January to the Saturday closest to the end of January,
effective with the fiscal year ended February 1, 1997. Fiscal years ended
January 31, 1998, February 1, 1997 and January 27, 1996 were comprised of 52, 53
and 52 weeks, respectively.

         As used below, (a) fiscal 1998 refers to the fiscal year ended January
31, 1998, (b) fiscal 1997 refers to the fiscal year ended February 1, 1997 and
(c) fiscal 1996 refers to the fiscal year ended January 27, 1996.


PRODUCT LINES

         The Company offers a broad selection of handcrafted gold and silver
jewelry. Many of the Company's products carry the "Ma" trademark, which has
become widely recognized in the jewelry industry and with certain consumers. One
of the Company's largest product lines is an extensive selection of casted gold
charms and pendants. The charms and pendants manufactured by the Company include
religious symbols; popular sayings ("talking charms"); sport themes and team
logos; animal motifs; nautical, seashore, western, musical, zodiac and other
thematic figures; initials; and abstract artistic creations.

         The M.A.J. manufacturing division manufactures gold rope chain, gold
locks used in the production of rope chain, and designs gold tubing and bangle
blanks used in the production of bangle bracelets. The M.A.E. manufacturing
division manufactures gold earrings and certain findings used to assemble
jewelry.

         The Company also manufactures a line of men's and ladies' 18 and 14
karat gold watches under the "Michael Anthony" and "Marc Anton" brand names.



                                      -3-
<PAGE>   4

         The tables below set forth the approximate percentage of (i) sales and
(ii) kilos shipped in fiscal years 1998, 1997 and 1996, respectively,
attributable to each of the Company's product categories.

<TABLE>
<CAPTION>
                                                                                                     APPROXIMATE
FISCAL 1998                                                                APPROXIMATE               % OF KILOS
PRODUCT CATEGORY                                                           % OF SALES                  SHIPPED
----------------                                                           ----------                  -------
<S>                                                                             <C>                        <C>
Casted                                                                          42                         34
Chains                                                                          42                         51
Earrings                                                                         6                          5
Other items                                                                     10                         10
                                                                               ---                        ---
         Total                                                                 100%                       100%
                                                                               ===                        ===
</TABLE>

<TABLE>
<CAPTION>
                                                                                                     APPROXIMATE
FISCAL 1997                                                                APPROXIMATE               % OF KILOS
PRODUCT CATEGORY                                                           % OF SALES                  SHIPPED
----------------                                                           ----------                  -------
<S>                                                                             <C>                        <C>
Casted                                                                          44                         37
Chains                                                                          43                         50
Earrings                                                                         5                          4
Other items                                                                      8                          9
                                                                               ---                        ---
         Total                                                                 100%                       100%
                                                                               ===                        ===
</TABLE>

<TABLE>
<CAPTION>
                                                                                                     APPROXIMATE
FISCAL 1996                                                                APPROXIMATE               % OF KILOS
PRODUCT CATEGORY                                                           % OF SALES                  SHIPPED
----------------                                                           ----------                  -------
<S>                                                                             <C>                        <C>
Casted                                                                          45                         34
Chains                                                                          42                         51
Earrings                                                                         6                          4
Other items                                                                      7                         11
                                                                               ---                        ---
         Total                                                                 100%                       100%
                                                                               ===                        ===
</TABLE>


         The Company's jewelry line includes licensed products manufactured
pursuant to arrangements with such licensors as Warner Bros., Inc. (licensors of
Looney Tunes(R) characters), National Football League Properties, Inc., Major
League Baseball Properties, Inc., NBA Properties, Inc., NHL Enterprises, Inc.,
United Features Syndicate (Peanuts(R)), Playboy Enterprises, Inc., Cathy(R) and
many nationally recognized colleges, including Notre Dame and the University of
Florida. The Company manufactures jewelry products, particularly charms,
pendants and pins, depicting the popular logos and symbols associated with these
licensors. The Company pays each of these licensors a royalty ranging from 6% to
12% on sales of the licensed products. During the fiscal year ended January 31,
1998, the Company's licensed products represented approximately 11% of the
Company's net sales.

         The Company maintains an inhouse design staff which utilizes CAD/CAM
(computer aided design/computer aided manufacturing) technology to enhance its
design, modeling and production capabilities. The equipment is utilized for the
design of the Company's new products and for modifying the scale of existing
Company designs. The Company's policy is to obtain proprietary protection for
its products and designs whenever possible.

         The Company updates its product catalogue each year by adding new
designs and eliminating less popular styles. Items removed from the Company's
current catalogue generally remain available on a special order basis.

         Management believes that the Company's future success will depend, in
part, on its ability to enhance its existing product lines and develop new
styles and products to meet an expanding range of customer requirements. As of
April 10, 1998, the Company's product development staff consisted of 16 full
time employees. The Company's product development expenses for fiscal 1998 were
approximately $1,004,000. The Company anticipates that it will continue to
commit substantial resources to product development in the future. The Company's
policy is to capitalize 50% of its product development costs. These costs are
amortized over two years.



                                      -4-
<PAGE>   5

MANUFACTURING PROCESS

         At the Company's manufacturing facility in Mount Vernon, New York,
manufacturing processes combine modern technology and mechanization with
handcraftsmanship to produce fashionable and affordable gold jewelry. The
manufacturing processes utilized by the Company include the casting (or lost
wax) method, a photoetching process which has allowed the Company to enter the
lower priced segment of the market through production of ultralight products and
the diamond cut process, a technique which produces a sparkling effect on a
finished piece of gold jewelry.

         The Company's rope chain product is manufactured by machinery designed
in accordance with a patented process. The equipment is capable of operating 24
hours a day and requires minimal direct labor costs, which has enabled the
Company to become one of the lowest cost producers of rope chain in the United
States.

         During fiscal 1998, the Company manufactured approximately 95% of its
products from gold bullion and other raw materials and purchased approximately
5% of its product as semi-finished or finished goods. The Company does not
believe the loss of any supplier would have a material adverse effect on its
business. Alternative sources of supply for the goods purchased by the Company
are readily available.

OPEN ORDERS

         Orders from the Company's retail customers typically have shipment
dates that range from 24 hours to 60 days. Substantially all of the Company's
wholesale customers' orders are for immediate shipment and generally are shipped
within 7 days of receipt. As of April 10, 1998, the aggregate dollar value of
the Company's orders was approximately $9,700,000. The Company expects that
substantially all of the current orders will be shipped in the next 45 days.
Management of the Company does not believe that open orders are indicative of
the Company's future results of operations, as open orders as of any given date
are not necessarily indicative of sales trends.

MARKETING AND SALES

         The Company markets and sells its jewelry primarily through its inhouse
sales force. Sales are made by the Company's sales personnel primarily at the
Company's showroom in Mount Vernon, New York and direct presentations at
customers' locations. Products are promoted through the use of catalogues,
advertisements in trade publications, trade show exhibitions and cooperative
advertising allowances with certain customers.

         The Company's marketing strategy includes a campaign to increase brand
recognition for the "Michael Anthony" name. This campaign includes advertising
in consumer magazines and a specially selected and packaged line of karat gold
jewelry, including watches, sold by the Company to certain retailers under the
"Michael Anthony" name. The Company believes that there is growing brand
recognition of the "Michael Anthony" name and the "Ma" trademark with consumers
and that this recognition has enhanced sales of its products.

         The Company's jewelry is sold primarily to jewelry chain stores,
discount stores, department stores, television home shopping networks, catalogue
retailers and wholesalers. The Company assists its customers in allocating their
purchasing budget among the items in the various product lines by advising them
of items having higher consumer demand as determined by the Company's
computerized market analysis. Prices vary on the basis of service required by
customers. The Company ships its products in bulk to wholesale distributors. For
certain retail chains, such as Sterling, Inc. (a division of Signet Group PLC
and the owner of Kay Jewelers and J.B. Robinson Jewelers), Wal*Mart, J.C.
Penney, Zales, Service Merchandise and Kmart, the Company prepackages and price
tags most items, and then ships an order of many different items to distribution
centers and stores in the chain. The Company provides additional services to
certain of its customers to meet their specific marketing needs, such as
tagging, boxing and point-of-sale displays.

         The Company also ships its jewelry to a limited number of customers on
a consignment basis. Under these arrangements, the Company delivers its products
under consignment, and upon sale, the customer pays the Company for the
consigned merchandise. Consigned



                                      -5-
<PAGE>   6

merchandise is subject to the Company's own consignment arrangements with its
gold lenders (the "Gold Lenders"). See ITEM 1. "BUSINESS - SUPPLY; RELATED
FINANCING ARRANGEMENTS" AND ITEM 7. "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - LIQUIDITY AND CAPITAL
RESOURCES."

         During the fiscal year ended January 31, 1998, sales to the five
largest of the Company's customers aggregated approximately 51% of total net
sales. The Company's two largest customers were J.C. Penney and Sterling, Inc.,
each accounting for approximately 12.5% of net sales. Except for certain retail
customers, generally the Company has no long-term contractual commitments with
any of its customers, nor are any of the Company's customers subject to any
contractual provisions or other restrictions which preclude them from purchasing
products from the Company's competitors.

         The Company reduces gross sales by the amount of returns and discounts
to determine net sales each month. The Company establishes each month a reserve
for returns based on its historical experience, the amount of gross sales and
the customer base. The total of actual returns and the provision for the returns
reserve amounted to approximately 12% of gross sales in fiscal 1998, 13% of
gross sales in fiscal 1997 and 14% of gross sales in fiscal 1996. For further
information regarding the reserve for returns, see Note 1 - Notes to
Consolidated Financial Statements.

         The reduction, delay or cancellation of orders or the return of a
significant amount of product from one or more of the Company's top customers,
the loss of one or more of the Company's top customers, or any financial
difficulties of any such customers resulting in their inability to pay amounts
owing to the Company, could have a material adverse effect on the Company's
business, operating results and financial condition.

INTELLECTUAL PROPERTY AND OTHER PROPRIETARY RIGHTS

         The Company manufactures its rope chain using machinery that is
designed in accordance with patented processes. The Company also maintains
certain trademarks and generally applies for copyrights covering the design of
certain of its products. The level of protection available under the law for the
Company's proprietary designs and products varies depending upon a number of
factors, including the distinctiveness of the product and originality of design.
There can be no assurance that the Company's patents, trademarks and copyrights
will prevent competitors from producing products that are substantially similar
to those of the Company. See ITEM 1. "BUSINESS - PRODUCT LINES."

         In addition, the Company seeks to avoid disclosure of its trade
secrets, including requiring those persons with access to the Company's
proprietary information to sign confidentiality agreements with the Company and
restricting access to the Company's systems.

         Despite the Company's efforts to protect its trademarks, copyrights and
other proprietary rights, unauthorized parties may attempt to copy aspects of
the Company's products or to obtain and use information that the Company
considers confidential. Policing unauthorized use of the Company's intellectual
property rights is difficult, and while the Company takes appropriate action
whenever it discovers unauthorized use of its trademarks or that of any of its
copywritten designs have been copied, knockoffs and counterfeit product are a
persistent problem in the jewelry industry. In addition, the laws of many
countries do not protect the Company's intellectual property rights to as great
an extent as do the laws of the United States. There can be no assurance that
the Company's means of protecting its intellectual property and other
proprietary rights will be adequate or that the Company's competitors will not
independently develop similar products.

         Management does not believe that the Company's products or processes
infringe the proprietary rights of any third parties, but there can be no
assurance that third parties will not claim infringement with respect to
existing or future products or processes. Any such claims, with or without
merit, could be time-consuming, result in costly litigation, cause product
shipment delays or require the Company to enter into royalty or licensing
agreements. Such royalty or licensing agreements, if required, may not be
available on terms acceptable to the Company or at all, which could have a
material adverse effect on the Company's business, operating results and
financial condition.



                                      -6-
<PAGE>   7

COMPETITION

         The jewelry industry is highly competitive, both in the United States
and on a global basis. The Company encounters competition primarily from
manufacturers with national and international distribution capabilities and, to
a lesser extent, from small regional suppliers of jewelry. Management believes
that the Company is well positioned in the industry and has a reputation for
responsive customer service, high quality and well designed jewelry with broad
consumer appeal.

         The principal competitive factors in the industry are price, quality,
design and customer service. The Company's specialized customer service programs
are important competitive factors in sales to nontraditional jewelry retailers,
including television shopping networks and discount merchandisers. However, the
recent trend towards consolidation at the retail level in the jewelry industry
and low labor costs outside of the United States may increase the level of
competition facing the Company. There can be no assurance that the Company will
be able to compete successfully against current and future competitors or that
competitive pressures faced by the Company will not have a material adverse
effect on its business, operating results and financial condition.

SEASONAL NATURE OF BUSINESS

         The Company's business is seasonal in nature. Presented below are the
Company's net sales for each quarter of fiscal 1998, fiscal 1997 and fiscal
1996:

<TABLE>
<CAPTION>
                                                                                    NET                     % OF
          ($ IN THOUSANDS)                                                         SALES                  NET SALES
          ----------------                                                         -----                  ---------
<S>                                                                                 <C>                         <C>
Fiscal 1998 Ended January 31, 1998
  First Quarter                                                                     $27,606                     21%
  Second Quarter                                                                    $22,618                     17%
  Third Quarter                                                                     $41,753                     32%
  Fourth Quarter                                                                    $37,972                     30%
Fiscal 1997 Ended February 1, 1997
  First Quarter                                                                     $29,203                     19%
  Second Quarter                                                                    $27,706                     18%
  Third Quarter                                                                     $48,772                     33%
  Fourth Quarter                                                                    $44,948                     30%
Fiscal 1996 Ended January 27, 1996
  First Quarter                                                                     $27,260                     19%
  Second Quarter                                                                    $24,902                     17%
  Third Quarter                                                                     $47,037                     32%
  Fourth Quarter                                                                    $46,058                     32%
</TABLE>

         The Company has experienced a seasonal pattern in its operating results
with the third and fourth quarters typically having the highest sales.

         This fluctuation is mitigated to a degree by the early placement of
orders by many of the Company's customers, particularly for the Christmas
holiday season. In addition, the Company markets holiday and seasonal products
year round for such occasions as Mother's Day, Valentine's Day, Father's Day,
religious holidays and school graduations.

SUPPLY; RELATED FINANCING ARRANGEMENTS

         Gold acquired as part of the manufacturing process is at least .995
fine and is then combined with other metals to produce 14 karat and 10 karat
gold. The term "karat" refers to the gold content of alloyed gold, measured from
a maximum of 24 karats (100% fine gold). Varying quantities of metals such as
silver, copper, nickel and zinc are combined with fine gold to produce 14 karat
gold of different colors. These alloys are in abundant supply and are readily
available to the Company.

         The Company utilizes gold consignment arrangements with the Gold
Lenders to supply substantially all of its gold needs. 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)



                                      -7-
<PAGE>   8

consigned gold with an aggregate value equal to $106,695,000. 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. At January 31, 1998, the Company held 108,900 ounces of gold on
consignment with a market value of $33,208,000.

         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 January 31, 1998, the Company was in compliance with the
covenants in its consignment agreements and the Company's owned gold inventory
was valued at approximately $3,996,000. 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 arrangements 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. See ITEM 7. "MANAGEMENT'S
DISCUSSION AND ANALYSIS AND FINANCIAL CONDITION AND RESULTS OF OPERATIONS."

         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 Commodity Exchange, Inc. ("COMEX").

         While the Company believes its supply of gold is relatively secure,
significant increases or rapid fluctuations in the cost of gold may impact the
demand for the Company's products. From July 1, 1995 until January 31, 1998, the
closing price of gold according to the Second London Gold Fix ranged from a low
of $278.70 per ounce to a high of $414.80 per ounce. During fiscal 1998, the
closing price of gold dropped from a high of $362.15 per ounce to a low of
$278.70 per ounce. There can be no assurance that fluctuations in the credit and
precious metals 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. See ITEM 7.
"MANAGEMENT'S DISCUSSION AND ANALYSIS AND FINANCIAL CONDITION AND RESULTS OF
OPERATIONS."

INSURANCE

         The Company maintains primary all-risk insurance, with limits in excess
of the Company's current inventory levels (including consigned gold), to cover
thefts and damage to inventory located on the Company's premises and insurance
on its goods in transit. The Company also maintains insurance covering thefts
and damage to inventory located at the premises of its suppliers. The amount of
coverage available under such policies is limited and may vary by location, but
generally is in excess of the value of the gold held by a particular supplier.
Additional insurance coverage is provided by some of the Company's suppliers.
The Company also maintains fidelity insurance (insurance providing coverage
against theft or embezzlement by employees of the Company).

EMPLOYEES

         As of January 31, 1998, the Company employed 554 persons, 437 of which
were directly engaged in manufacturing and distribution operations, with the
remaining 117 employees who were engaged in administration and sales. None of
the Company's employees are represented



                                      -8-
<PAGE>   9

by a union and the Company has not experienced any labor-related work stoppage.
The Company places a heavy emphasis on employee relations through educational
and training programs and employee teams. The Company considers its relations
with its employees to be good. The Company believes there is an adequate pool of
labor available to satisfy its foreseeable hiring needs for its sales,
manufacturing and distribution operations.

ENVIRONMENTAL MATTERS

         The Company's operations and properties are subject to a wide range of
federal, state and local laws and regulations, including those governing the
use, storage and handling, generation, treatment, emission, release, discharge
and disposal of certain materials and hazardous wastes, the remediation of
contaminated soil and groundwater and the health and safety of employees
(collectively, "Environmental Laws"). Since the Company's manufacturing
operations routinely involve the use of certain regulated materials thereby
exposing the Company to the risk of claims with respect to such matters, there
can be no assurance that material liabilities could not be incurred in
connection with any such claims. The Company has taken steps to reduce the
environmental risks associated with its operations and believes that it is
currently in substantial compliance with all Environmental Laws.

ACQUISITIONS

         While the Company intends to continue to aggressively market its gold
jewelry product lines to its existing customer base, management of the Company
believes opportunities exist to increase sales by expanding its customer base
and exploring product lines that may utilize diamonds or colored stones
(precious, semiprecious or synthetic). As part of the Company's strategy to
increase sales to new and existing customers, in 1994 and 1995 the Company
acquired two small jewelry manufacturers. As a result of these transactions, the
Company increased its market share with an existing customer and added certain
new customers.

         During fiscal 1998, the Company was engaged in merger discussions with
one of its major competitors; however, on July 18, 1997, both companies jointly
announced that negotiations were terminated due to an inability to agree on the
composition of the Board of Directors for the combined company. The Company
plans to pursue its long term growth strategy, that may include the acquisition
of one or more additional companies that manufacture and distribute jewelry
products.

ITEM 2. PROPERTIES.

         The manufacturing and distribution facilities of the Company are
located in three adjacent buildings in Mount Vernon, New York having a total of
approximately 74,000 square feet. Pursuant to lease agreements entered into in
May 1991 and May 1995, respectively, with Michael Anthony Company, now known as
MacQuesten Realty Company ("MRC"), a New York general partnership, the general
partners of which are Michael Paolercio ("MP") and Anthony Paolercio ("AP"),
during fiscal 1998 the Company paid rent of approximately $498,000, for the
adjacent buildings housing its manufacturing facilities located at 50, 60 and 70
South MacQuesten Parkway in Mount Vernon, plus real estate taxes and other
occupancy costs. The Company believes that the terms of these lease arrangements
with MRC are no less favorable than those that could have been obtained from an
unaffiliated party. Subject to the Company's option to acquire the properties
located at 60 and 70 South MacQuesten Parkway, Mt. Vernon, discussed in more
detail below, the Company will pay an average annual rent of approximately
$536,000 over the remaining term of the leases for the buildings at 60 and 70
South MacQuesten Parkway, plus real estate taxes and other occupancy costs.

         As part of its long-term strategic plan, on May 16, 1997, the Company
acquired one of the buildings housing its manufacturing facilities (the "50
Building") from MRC for a purchase price of $1,150,000. The 50 Building has
approximately 22,000 square feet.

         The Special Real Estate Committee of the Board of Directors, comprised
of the Company's independent, outside directors, obtained an appraisal of the 50
Building, and after reviewing the appraisal and negotiation with MRC as to the
terms of purchase, recommended the acquisition to the Company's Board of
Directors. On April 4, 1997,



                                      -9-
<PAGE>   10

the Board of Directors voted unanimously, with Michael and Anthony Paolercio
abstaining, to authorize the acquisition of the 50 Building, subject to (1)
receipt of an updated, satisfactory appraisal and (2) the Company obtaining an
exclusive, two-year option to acquire from MRC the remaining manufacturing
facilities housed in the buildings located at 60 and 70 South MacQuesten
Parkway, Mt. Vernon at an aggregate purchase price of $2,350,000 and on terms
and conditions substantially the same as those agreed to for the purchase of the
50 Building.

         In the event the Company exercises its option to acquire the properties
located at 60 and 70 South MacQuesten, the Company may incur additional
long-term indebtedness in order to finance the purchase.

         The Company also owns the building housing its sales and administrative
offices located at 115 South MacQuesten Parkway, in Mount Vernon, New York, and
an adjacent parking area. The headquarters building has approximately 71,000
square feet.

         See ITEM 7. "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS" and ITEM 13. "CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS."

         The offices and facilities of the Company are protected by
state-of-the-art security systems, procedures and a security staff.


ITEM 3. LEGAL PROCEEDINGS.

         On October 29, 1997, a decision was entered in the case of M.L. Logo v.
Michael Anthony Jewelers, New York State Supreme Court, County of New York,
Index No.: 106327/93 (the "Case"), pursuant to which the Company was ordered to
pay M.L. Logo according to the terms of an agreement entered into on May 16,
1986 (the "Agreement"). On April 20, 1998, the Company settled the Case and any
future payments that would have been due M.L. Logo under the Agreement for a
one-time payment of $600,000.

         Other legal proceedings to which the Company is a party are routine
litigation incidental to Michael Anthony's business which is not material to the
Company's business or financial condition.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         Not applicable.




                                      -10-
<PAGE>   11




                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         The Company's Common Stock is traded on the American Stock Exchange
("AMEX") under the symbol MAJ. The Company's Common Stock began its listing on
AMEX on October 25, 1991. Prior to its listing on AMEX, the Company's Common
Stock was traded in NASDAQ National Market System. The following table sets
forth the high and low sale prices per share on AMEX for the fiscal years 1998
and 1997.


FISCAL YEAR ENDED JANUARY 31, 1998             HIGH               LOW
----------------------------------             ----               ---
First Quarter                                   3-3/8             2-3/4
Second Quarter                                  4-1/4             3-1/16
Third Quarter                                   3-5/8             2-13/16
Fourth Quarter                                  2-15/16              2

FISCAL YEAR ENDED FEBRUARY 1, 1997              HIGH                LOW
----------------------------------              ----                ---

First Quarter                                    3-7/16             2-3/4
Second Quarter                                   3-5/8              2-3/4
Third Quarter                                    3-5/8              2-3/4
Fourth Quarter                                   3-7/16             2-15/16

         As of April 10, 1998, there were 224 holders of record of the Company's
Common Stock (including brokers holding in street name).

         The Company has never paid a cash dividend. The Company anticipates
that all of its earnings will be retained for use in its business and does not
intend to pay cash dividends in the foreseeable future. In addition, the
Company's senior secured note agreements contain covenants which limit the
payment of dividends. Future dividend policy will depend upon, among other
factors, the Company's earnings and its financial condition. See ITEM 7.
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS," and Note 6 "Long Term Debt" - Notes to the Consolidated Financial
Statement.

         In December 1995, the Company announced a Common Stock Repurchase
Program (the "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. As of April 10,
1998, the Company had repurchased a total of 1,058,000 shares of Common Stock
under the Stock Repurchase Program for a total of approximately $2,983,000.





                                      -11-
<PAGE>   12



ITEM 6. SELECTED FINANCIAL DATA.

         The following selected financial data of the Company should be read in
conjunction with the consolidated financial statements and related notes
appearing elsewhere in this Form 10-K.

<TABLE>
<CAPTION>
                                                                           SEVEN                 YEAR ENDED
                                     YEAR ENDED                            MONTHS                  JUNE 30,
                       -------------------------------------------         ENDED         ---------------------------
                        JAN. 31,        FEB. 1,          JAN. 27,         JAN. 28,
                          1998            1997             1996             1995            1994             1993
                        --------        -------          --------         --------          ----             ----
                                        (IN THOUSANDS,
                                   EXCEPT PER SHARE AMOUNTS)
STATEMENT OF OPERATIONS
<S>                      <C>             <C>              <C>              <C>            <C>              <C>     
  Net Sales              $129,949        $150,629         $145,257         $93,321        $142,787         $119,615
  Cost of goods sold      107,182         124,041          121,195          76,782         114,151           97,509
                         --------        --------         --------         -------        --------         --------
  Gross profit             22,767          26,588           24,062          16,539          28,636           22,106
  Selling, general
    and administrative     
    expenses               25,155          21,372           19,455          12,628          17,887           17,148
                         --------        --------         --------         -------        --------         --------
  Operating (loss)/income  (2,388)          5,216            4,607           3,911          10,749            4,958  
  Other(expense)/income:
   Interest expense/       
   gold consignment fee    (2,827)         (3,155)          (3,835)         (2,030)         (3,157)          (3,066)
   Other income/
    (expense), net          1,002             507              442             117             564              643
                         --------        --------         --------         -------        --------         --------
   (Loss)/income
    before income taxes    (4,213)          2,568            1,214           1,998           8,156            2,535
  Income tax               
  (benefit)/provision      (1,601)            778              486             774           3,176              964
                         --------        --------         --------         -------        --------         --------
  Net (loss)/income      $ (2,612)       $  1,790          $   728         $ 1,224        $  4,980         $  1,571
                         ========        ========          =======         =======        ========         ========
  (Loss)/earnings
   per share - basic     $  (0.34)       $   0.22          $  0.09         $  0.14        $   0.63         $   0.23
                         ========        ========          =======         =======        ========         ========
  (Loss)/earnings
  per share - diluted    $  (0.34)       $   0.22          $  0.09         $  0.14        $   0.62         $   0.23
                         ========        ========          =======         =======        ========         ========
  Weighted average
   number of shares -
   basic                    7,746           8,241            8,475           8,749           7,945            6,916
                         ========        ========          =======         =======        ========         ========
  Weighted average
   number of shares -           
   diluted                  7,746           8,263            8,479           8,862           8,083            6,916
                         ========        ========          =======         =======        ========         ========
  Balance Sheet Data:
  Working capital        $ 37,260        $ 42,042          $46,136         $42,778        $ 46,250         $ 31,311
  Total assets(1)          65,644          72,749           78,646          72,039          69,962           53,707
  Long-term debt and
   capital lease
   liability               12,736          14,294           19,192          13,282          13,210           15,824
  Stockholders' equity     43,389          47,042           46,048          46,445          45,608           28,402
</TABLE>
  

(1)      The year ended January 31, 1998, February 1, 1997, January 27, 1996,
         the seven months ended January 28, 1995 and the years ending June 30,
         1994 and 1993 do not include consigned inventory, which had approximate
         value of $33,208,000, $40,282,000, $60,700,000, $72,936,000,
         $70,818,000 and $61,796,000, respectively.



                                      -12-
<PAGE>   13
  


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

         Introduction

         On November 3, 1994, the Company's Board of Directors approved a change
in the fiscal year end of the Company from June 30th to a fiscal year ending on
the last Saturday in January, effective for the seven month period ended January
28, 1995. During fiscal 1997, the Company changed its fiscal year end from the
last Saturday in January to the Saturday closest to the end of January,
effective with the fiscal year ended February 1, 1997. Fiscal years ended
January 31, 1998, February 1, 1997 and January 26, 1996 were comprised of 52, 53
and 52 weeks, respectively.

         As used below, (a) "fiscal 1998" refers to the fiscal year ended
January 31, 1998, (b) "fiscal 1997" refers to the fiscal year ended February 1,
1997, and (c) "fiscal 1996" refers to the fiscal year ended January 27, 1996.

         Results of Operations

         The following table sets forth, as a percentage of net sales, certain
items appearing in the Company's Statements of Operations for the indicated
fiscal years.

<TABLE>
<CAPTION>
                                                                       YEAR ENDED
                                                      ------------------------------------------------
                                                      JANUARY 31,       FEBRUARY 1,        JANUARY 27,
                                                         1998              1997               1996
                                                      -----------       -----------        -----------
<S>                                                   <C>                 <C>                <C>   
Net sales                                                100.0%            100.0%             100.0%
Cost of sales                                             82.5              82.3               83.4
Selling, general and
  administrative expenses                                 19.3              14.2               13.4
Interest and gold consignment
  fee expense                                              2.2               2.1                2.6
Other income                                               (.8)              (.3)               (.2)
Income tax (benefit)/provision                            (1.2)               .5                 .3
Net (loss)/income                                         (2.0)              1.2                 .5
</TABLE>

FISCAL 1998 VS. FISCAL 1997

Net sales for fiscal 1998 were approximately $129,949,000, a decrease of 14%
from net sales of approximately $150,629,000 for the comparable period in fiscal
1997. The decrease in sales was primarily due to the lower average gold price in
fiscal 1998, $335 an ounce versus last year's average of $391 an ounce. Of the
$20,680,000 decrease in sales, $12,827,000 was due to lower gold prices,
$4,653,000 was due to fewer units sold and $3,200,000 due to one less week
compared to the 53 weeks in fiscal 1997.

Gross profit for fiscal 1998 decreased by approximately $3,821,000 from fiscal
1997. As a percentage of net sales, gross profit remained approximately the same
at 17.5% in fiscal 1998 compared to 17.7% in fiscal 1997. In the fourth quarter
of fiscal 1998, management of the Company reassessed its marketing and
production strategy and determined to implement a significantly different
strategy. This is a direct result of the changing order patterns of some of the
Company's major customers. As such, management made the determination to write
down certain inventory, by approximately $3,309,000, that was related to the
implementation of a SKU reduction program and the markdown of discontinued
styles. If it were not for this unusual charge, the Company's gross profit
margin would have been 20.1% for fiscal 1998, primarily due to the lower average
gold price as well as changes in product mix.

Selling, general and administrative expenses for fiscal 1998 were approximately
$25,155,000, an increase of $3,783,000 or 17.7% from approximately $21,372,000
for the comparable period in fiscal 1997. Included in selling, general and
administrative expenses for fiscal 1998 was a charge of approximately $1,191,000
that was due to a write down of certain company assets and other expenses. As a
percentage of net sales, adjusted



                                      -13-
<PAGE>   14

for the gold price difference of $12,827,000 discussed above and excluding the
$1,191,000 charge, selling, general and administrative expenses increased to
16.8% in fiscal 1998, from 14.2% in fiscal 1997. The increase is primarily
attributable to increases in (i) software implementation costs, (ii) payroll and
payroll related expenses, (iii) advertising expenses, and (iv) legal costs
associated with a litigation settlement. See ITEM 3. "LEGAL PROCEEDINGS."

Other income for fiscal 1998, was approximately $705,000, an increase of
$631,000 from approximately $74,000 for the comparable period in fiscal 1997.
The increase was primarily due a gain of $625,000 from the Company's sale of an
asset.

Interest expense and gold consignment fees for fiscal 1998, were approximately
$2,827,000, a decrease of $328,000 or 10% compared to approximately $3,155,000,
for the comparable period in fiscal 1997. The decrease was primarily due to (i)
the Company's lower average level of consigned inventory, (ii) lower average
gold prices and (iii) lower interest expense due to principal payments in
February and May 1997, and January 1998 on the Company's long term debt.

For the year ended January 31, 1998, an income tax benefit of $1,601,000 was
recorded compared to a provision of $778,000 for the prior year. The effective
tax rates for fiscal 1998 and fiscal 1997 were 38% and 30%, respectively. The
lower effective tax rate in fiscal 1997 was due to a reversal in fiscal 1997 of
prior year accruals for taxes.

As a result of the above factors the Company's net loss for fiscal 1998 was
approximately $(2,612,000) compared to net income of $1,790,000 for the
comparable period in fiscal 1997.

FISCAL 1997 VS. FISCAL 1996

Net sales for fiscal 1997 were approximately $150,629,000, an increase of 4%
from net sales of approximately $145,257,000 for the comparable period in fiscal
1996. The increase in net sales resulted primarily from the 53rd week, which
amounted to approximately $3,200,000 and increased shipments to the retail
segment of the Company's customer base, which increase was offset in part by
decreased shipments to the wholesale segment of the Company's customer base.

Gross profit margin increased to approximately 17.7% of net sales for fiscal
1997 compared to approximately 16.6% for the comparable period in fiscal 1996.
The increase in gross margin was attributable to a change in the Company's
product mix and increased sales of the Company's licensed products, which have
higher gross margins.

Selling, general and administrative expenses for fiscal 1997 were approximately
$21,372,000, compared to $19,455,000 for the comparable period in fiscal 1996.
As a percentage of net sales, these expenses increased to 14.2% in fiscal 1997
from 13.4% in fiscal 1996. The increased percentage is primarily attributed to
(i) increased product and packaging supplies, (ii) increased royalty and
licensing expenses, (iii) increased payroll and payroll related expenses and
(iv) the terminated acquisition negotiations with a company. These increases
were offset in part by a decrease in advertising related expenses.

Other expenses-net for fiscal 1997 were approximately $2,648,000, a decrease of
$745,000 or 22% compared to approximately $3,393,000 for the comparable period
in fiscal 1996. Interest expense (including gold consignment fees) was
approximately $3,155,000 a decrease of $680,000, or 18%, from $3,835,000 for the
comparable period in fiscal 1996. This decrease was primarily due to (i) a lower
average level of consignment inventory, (ii) lower consignment rates and (iii)
lower debt levels.

The effective tax rates for fiscal 1997 and fiscal 1996 were 30% and 40%,
respectively. The decrease in the effective tax rate is due to the reversal of
prior year accruals.

As a result of the above factors, the Company's net income for fiscal 1997 was
approximately $1,790,000 compared to $728,000 for the comparable period in
fiscal 1996.



                                      -14-
<PAGE>   15

1996 VS. TWELVE MONTHS ENDED JANUARY 28, 1995 (UNAUDITED)

Net sales for fiscal 1996 were approximately $145,257,000, a decrease of 3% from
net sales of approximately $149,583,000 for the comparable period in the prior
year. The decrease in sales was primarily related to a significant reduction in
volume of sales to the wholesale segment of the Company's customer base. This
decrease was partly offset by an increase in volume of sales to the retail
segment of the Company's customer base.

Gross profit margin decreased to 16.6% of net sales in fiscal 1996 compared to
18.0% for the comparable period in the prior year. The decrease in the gross
margin was due to the sale of discontinued and excess inventory, which
represented approximately 5% of net sales, at margins substantially below the
Company's normal gross margin and an increased percentage of sales of the
Company's rope chain which carries a lower gross margin than the Company's other
products.

Selling, general and administrative expenses for fiscal 1996 were approximately
$19,455,000, compared to $19,454,000 for the comparable period in the prior
year. As a percentage of net sales, these expenses increased to 13.4% in fiscal
1996 from 13.0% in the prior year. The increased percentage of selling expenses
is primarily attributed to advertising expenses that came from additional
support required by the Company's retail customers and the Company's effort to
increase its brand name recognition through advertising placed directly in a
consumer magazine.

Other income and expenses for fiscal 1996 were approximately $3,393,000, an
increase of $604,000 or 22% from $2,789,000 for the comparable period in the
prior year. Interest expense (including gold consignment fees) was approximately
$3,835,000, an increase of $579,000, or 18%, from $3,256,000 for the comparable
period in the prior year. This increase was primarily due to (i) higher
consignment rates, (ii) a higher average level of consigned inventory, and (iii)
loans placed in February and October 1995. The higher consignment rates had a
negative impact later in the fiscal year. The higher average level of consigned
inventory had a more significant impact in the beginning of the fiscal year. The
increase in gold consignment fees was partially offset by lower interest expense
due to principal payments in February and May 1995 on the Company's other
long-term debt and lower interest expense on the Company's short-term
borrowings.

The effective tax rates for fiscal 1996 and the comparable period in fiscal 1995
were 40% and 36.6%, respectively.

As a result of the above factors, the Company's net income for fiscal 1996 was
approximately $728,000 compared to $2,978,000 for the comparable period in 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 its inventories
and accounts receivable. 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. 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 January 31, 1998,
the Company held 108,900 ounces of gold on consignment with a market value of
$33,208,000.

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 January 31, 1998, the Company was in compliance with the covenants in
its consignment agreements and the Company's owned gold inventory was valued at
approximately $3,996,000. Management believes that the supply of gold available
through the Company's gold consignment arrangements, in



                                      -15-
<PAGE>   16


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.

         While the Company believes its supply of gold is relatively secure,
significant increases or rapid fluctuations in the cost of gold may impact the
demand for the Company's products. From July 1, 1995 until January 31, 1998, the
closing price of gold according to the Second London Gold Fix ranged from a low
of $278.70 per ounce to a high of nearly $414.80 per ounce. There can be no
assurances that fluctuations in the precious metals markets and credit 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, with
interest as of January 31, 1998 at 7.38% per annum. 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 January 31, 1998, $11,555,000 of principal remained
outstanding under the notes issued in 1992 and 1995.

        In the fourth quarter of fiscal 1998, management of the Company
reassessed its marketing and production strategy and determined to implement a
significantly different strategy. This was a direct result of the changing order
patterns of some of the Company's major customers. As such, management made the
determination to write down certain inventory, by approximately $3,309,000, that
was related to the implementation of a SKU reduction program and the markdown of
discontinued styles. Included in selling, general and administrative expenses
for the year ended January 31, 1998, was a charge of approximately $1,191,000
that was due to the write down of certain Company assets. Due to these unusual
charges in fiscal 1998 totalling $4,500,000, the Company was in default with a
financial covenant under the note agreements and mortgage payable. The Company
obtained waivers of this covenant noncompliance from both the insurance
companies and mortgage lender. In addition, the insurance companies reset the
financial covenant for fiscal 1999. Management expects the Company will be in
compliance with the amended covenant in fiscal 1999.

         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
January 31, 1998, the Company was in compliance with the covenants after
obtaining a waiver as discussed above. As of January 31, 1998, $2,283,000 of
principal remained outstanding under the mortgage.



                                      -16-
<PAGE>   17




         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 January 31, 1998, there was no amount
outstanding under the Line of Credit. The Line of Credit has been renewed and
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 of Credit, the Company believes that other lenders
would be willing to enter into a similar arrangement.

         During fiscal 1998, cash provided from operating activities was
$4,863,000. This was primarily attributable to a decrease in inventory of
$5,990,000.

         Cash of $3,976,000 was utilized for investing purposes during fiscal
1998, primarily for purchases of land, building and leasehold improvements of
$2,266,000 and machinery and equipment of approximately $1,744,000.

         During fiscal 1998, cash utilized in financing activities totaled
$4,570,000. This was primarily attributed to payments of long term debt of
$3,514,000 and the purchase of treasury stock of $1,056,000.

         As part of its long-term strategic planning, the Company may expand its
manufacturing and distribution facilities and acquire certain properties it is
currently leasing from MRC (the "Leased Properties"). If the Company acquires
such properties, the Company may incur or assume additional long-term
indebtedness in order to finance their purchase.

         For fiscal 1999, the Company projects capital expenditures of
approximately $1,800,000, which includes machinery and equipment expenses and
certain improvements on its leased and owned properties. See ITEM 2. PROPERTIES"
and ITEM 13. "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS".

         Except with respect to financing for the possible acquisition of its
Leased Properties as discussed above, 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

         The Year 2000 issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Computer
programs that have date sensitive software may recognize a date of 00 as the
year 1900 rather than 2000. This could result in a system failure or
miscalculations causing disruptions of operation, including, among other things,
a temporary inability to process transactions, send invoices, or engage in
similar normal business activities.

         The Company has developed a plan to address the Year 2000 issue. The
Company anticipates maintaining its hardware platform but replacing or upgrading
all affected software. Management expects that the Company will be fully Year
2000 compliant on or before June 1, 1999. The cost of the Year 2000 project is
not expected to have a material adverse affect on the Company's results of
operations.



                                      -17-
<PAGE>   18




FORWARD LOOKING STATEMENTS

         This Annual Report on Form 10-K 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 "Business" and "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 Annual Report on Form 10-K will occur or
continue in the future. Except for its required, periodic filings under the
Securities Exchange Act of 1934, the Company undertakes no obligations to
release publicly any revisions to these forward looking statements that may
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.

NEW ACCOUNTING STANDARDS

         During fiscal 1998, the Company adopted Statement of Financial
Accounting Standards No. 128, "Earnings Per Share", ("SFAS 128"), which requires
presentation of basic earnings per share which includes no dilution. Earnings
per share for all periods presented were computed on a basic basis using the
weighted average number of common shares outstanding. Options and warrants
outstanding were not materially dilutive.

         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 financial
statements 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 statements. The
Company anticipates that the adoption of SFAS No. 131 will not have a material
impact on current disclosures.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         See Item 14 and pages F1 through F25 and S1.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

         Not applicable.



                                      -18-
<PAGE>   19




                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
         The information contained under the heading "Election of Directors" of
the Company's Proxy Statement for the 1998 Annual Meeting of Stockholders is
incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION.

         The information contained under the heading "Executive Compensation" of
the Company's Proxy Statement for the 1998 Annual Meeting of Stockholders is
incorporated herein by reference.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The information contained under the heading "Beneficial Ownership of
Common Stock" of the Company's Proxy Statement for the 1998 Annual Meeting of
Stockholders is incorporated by reference herein.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         The information contained under the heading "Certain Transactions" of
the Company's Proxy Statement for the 1998 Annual Meeting of Stockholders is
incorporated herein by reference. See also ITEM 2. "PROPERTIES".

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORT ON FORM 8K.

         (a) The following documents are filed as a part of this Report:

                                                                           PAGE
                                                                           ----
         (1)      Financial Statements:
                  Independent Auditors' Report                               F1
                  Consolidated Balance Sheets                                F2
                  Consolidated Statements of Operations                      F3
                  Consolidated Statements of Changes in Stockholders'
                    Equity                                                   F4
                  Consolidated Statements of Cash Flows                      F5
                  Notes to Consolidated Financial Statements                 F7

         (2)      Financial Statement Schedule:

         Schedule II  Valuation and Qualifying Accounts                      S1

         All other schedules are omitted as the required information is
inapplicable or is presented in the consolidated financial statements or related
notes.

         The financial statement schedule should be read in conjunction with the
financial statements in the 1998 Annual Report to Stockholders.

         (3)      Exhibits:

<TABLE>
<CAPTION>
  Exhibit No.                      Description                             Page No.
  -----------                      -----------                             --------
<S>                     <C>                                   <C>
   3.1                  Certificate of Incorporation  of      Incorporated by reference to
                        Registrant, as amended                Exhibit 3.1 to  Amendment  No. 2 to
                                                              the Company's Registration
                                                              Statement on Form S3 (File No.
                                                              3371308) (the "1993 Registration
                                                              Statement")
</TABLE>



                                      -19-
<PAGE>   20

<TABLE>
<CAPTION>
<S>                     <C>                                   <C>
   3.1.1                Certificate of Merger of              Incorporated by reference to
                        Michael Anthony Jewelers,Inc.         Exhibit 3.1.1 of the Company's 
                        (New York) and Michael Anthony        Annual Report on Form
                        Jewelers, Inc.(Delaware)              10K for the fiscal year
                                                              ended June 30, 1993
                                                              (the "1993 Form 10-K")

   3.2                  Amended and Restated ByLaws of        Incorporated by reference to
                        Registrant                            Exhibit 3.2 to the Company's
                                                              Quarterly Report on Form 10Q for
                                                              the quarter ended July 29, 1995

   4.1                  Form of Common Stock Certificate      Incorporated by reference to
                                                              Exhibit 3.3 to the Company's
                                                              Registration Statement on Form S1
                                                              (File No. 338289) (the "1986
                                                              Registration Statement")

   4.2                  Form of Common Stock Purchase         Incorporated by reference to
                        Warrant Certificate                   Exhibit 3.4 to the 1986
                                                              Registration Statement

   10.1                 Consignment Agreement dated as of     Incorporated by reference to
                        August 20, 1993 between the           Exhibit 10.40 of the 1993 Form 10-K
                        Registrant and Fleet Precious
                        Metals Inc.

   10.2                 Security Agreement dated as of        Incorporated by reference to
                        August 20, 1993 among the             Exhibit 10.39 of the 1993 Form 10-K
                        Registrant and Fleet Precious
                        Metals Inc.

   10.3                 Amended and Restated Consignment      Incorporated by reference to
                        Agreement dated as of August 20,      Exhibit 10.41 of the 1993 Form 10-K
                        1993 between the Registrant and
                        Rhode Island Hospital Trust
                        National Bank

   10.4                 Amended and Restated Consignment      Incorporated by reference to
                        Agreement dated as of August 20,      Exhibit 10.44 to the 1993 Form 10-K
                        1993 between the Registrant and
                        ABN AMRO Bank N.V., New York
                        Branch

   10.5                 Amended and Restated Security         Incorporated by reference to
                        Agreement dated as of August  20,     Exhibit 10.46 to the 1993 Form 10-K
                        1993 between the Registrant and
                        Rhode Island Hospital Trust
                        National Bank ("RIHT")

   10.6                 Amended and Restated Intercreditor    Incorporated by reference to
                        Agreement dated as of August 20,      Exhibit 10.47 to the 1993 Form 10-K
                        1993, among the Registrant, its
                        gold  lenders, the  holders of the
                        Registrant's Senior Notes due 1998
                        and the holders of the
                        Registrant's 2002 Notes

   10.7                 First Amendment to 1993 Long-term     Incorporated by reference to
                        Incentive Plan of the Registrant      Exhibit 10.48 to the 1993 Form 10-K
                        dated as of September 21, 1993
</TABLE>



                                      -20-
<PAGE>   21
<TABLE>
<CAPTION>
<S>                     <C>                                   <C>
   10.8                 Second Amendment to Assignment of     Incorporated by reference to
                        Trademarks and Service Marks as       Exhibit 10.49 to the 1993 Form 10-K
                        Collateral dated as of July
                        12, 1990 between the Registrant and
                        RIHT, individually and as agent

   10.9                 Consignment Agreement dated as of     Incorporated by reference to
                        January 31, 1994 (effective as of     Exhibit 10.46 to the Company's
                        May 16, 1994 between the Annual       report on Form 10K for the
                        Registrant and Credit  Suisse, New    fiscal year ended June 30, 1994
                        York Branch                           (the "1994 Form 10-K")

   10.10                First Amendment to Amended and        Incorporated by reference to
                        Restated Security Agreement dated     Exhibit 10.47 to the 1994 Form 10-K
                        as of May 16, 1994 among the
                        Registrant, RIHT, individually and
                        as agent

   10.11                Second Amendment to Amended and       Incorporated by reference to
                        Restated Intercreditor Agreement      Exhibit 10.48 to the 1994 Form 10-K
                        dated as of May 16, 1994 among the
                        Registrant, its gold lenders,  the
                        holders of the Registrant's Senior
                        Notes due 1998 and the  holders of
                        the Registrant's 2002 Notes

   10.12                Third Amendment to Assignment of      Incorporated by reference to
                        Trademarks and Service Marks as       Exhibit 10.49 to the 1994 Form 10-K
                        Collateral dated as of May 16,
                        1994 between the Registrant and
                        RIHT individually and as agent

   10.13                Second Amendment to Amended and       Incorporated by reference to
                        Restated Security Agreement dated     Exhibit 10.53 to the 1994 Form 10-K
                        as of September 1, 1994 among the
                        Registrant, RIHT, individually and
                        as agent

   10.14                Third Amendment to Amended and        Incorporated by reference to
                        Restated Intercreditor Agreement      Exhibit 10.54 to the 1994 Form 10-K
                        dated as of September 1, 1994
                        among the Registrant, its gold
                        lenders, the holders of the
                        Registrant's Senior Notes due
                        1998, the holders of the
                        Registrant's 2002 Notes and
                        Chemical Bank

   10.15                Fourth Amendment to Assignment of     Incorporated by reference to
                        Trademarks and Service Marks as       Exhibit 10.55 to the 1994 Form 10-K
                        collateral dated as of September
                        1, 1994 between the Registrant and
                        RIHT, individually and as agent

   10.16                Third Amendment to Amended and        Incorporated by reference to
                        Restated Consignment Agreement        Exhibit 10.56 to the 1994 Form 10-K
                        dated as of September 1, 1994
                        between the Registrant and RIHT
</TABLE>



                                      -21-
<PAGE>   22
<TABLE>
<CAPTION>
<S>                     <C>                                   <C>
   10.17                Fourth Amendment to Amended and       Incorporated by reference to
                        Restated Consignment Agreement        Exhibit 10.51 to the Company's
                        dated as of November 22, 1994         Transition  Report on Form 10-K for
                        between the Registrant and RIHT       the transition period ended
                                                              January 28, 1995 (the "1995 Form
                                                              10-K")

   10.18                Contract of Sale dated as of          Incorporated by reference to
                        November 28, 1994 between Michael     Exhibit 10.52 to the 1995 Form 10-K
                        Anthony Company and the Registrant

   10.19                Note Purchase Agreement dated as      Incorporated by reference to
                        of February 15, 1995, among the       Exhibit 10.53 to the 1995 Form 10-K
                        Registrant and the holders of the
                        Registrant's Senior Notes due 2004
                        (the "2004 Notes")

   10.20                Security Agreement, dated as of       Incorporated by reference to
                        February 15, 1995, among the          Exhibit 10.54 to the 1995 Form 10-K
                        Registrant and the holders of the
                        2004 Notes

   10.21                $5,000,000 Senior Note due 2004 of    Incorporated by reference to
                        the Registrant in favor of            Exhibit 10.55 to the 1995 Form 10-K
                        Northern Life Insurance Company

   10.22                $1,000,000 Senior Note due 2004 of    Incorporated by reference to
                        the Registrant in favor of            Exhibit 10.56 to the 1995 Form 10-K
                        Northwestern National Life
                        Insurance Company

   10.23                Third Amendment to Amended and        Incorporated by reference to
                        Restated Security Agreement dated     Exhibit 10.57 to the 1995 Form 10-K
                        as of February  15, 1995 among the
                        Registrant and its gold lenders

   10.24                Fourth Amendment to Amended and       Incorporated by reference to
                        Restated Intercreditor Agreement      Exhibit 10.58 to the 1995 Form 10-K
                        dated as of February 15, 1995
                        among the Registrant, its gold
                        lenders, the holders of the
                        Registrant's Senior Notes due
                        1998, the holders of the
                        Registrant's 2002 Notes, the
                        holders of the Registrant's 2004
                        Notes and Chemical Bank

   10.25                Fifth Amendment to Amended and        Incorporated by reference to
                        Restated Consignment Agreement        Exhibit 10.59 to the 1995 Form 10-K
                        dated as of February 15, 1995
                        between the Registrant and RIHT

   10.26                Amended Security Agreement dated      Incorporated by reference to
                        as of March 29, 1995 between the      Exhibit 10.61 to the 1995 Form 10-K
                        Registrant and Chemical Bank

   10.27                Loan Agreement dated October 6,       Incorporated by reference to
                        1995 between First Fidelity Bank,     Exhibit 10.1 to the Company's
                        National Association ("First          Quarterly Report on Form 10Q for
                        Fidelity") and Registrant             the quarter ended October 28, 1995
                                                              (the "October 1995 Form 10-Q")
</TABLE>




                                      -22-
<PAGE>   23







<TABLE>
<CAPTION>
<S>                     <C>                                   <C>
   10.28                Mortgage Note in principal amount     Incorporated by reference to
                        of $2,500,000 dated October 6,        Exhibit 10.2 to the October 1995
                        1995 issued by Registrant in favor    Form 10-Q
                        of First Fidelity

   10.29                Mortgage and Security Agreement       Incorporated by reference to
                        dated October 6, 1995 by Registrant   Exhibit 10.3 to the October 1995
                        for the benefit of First Fidelity     Form 10-Q

   10.30                Fourth Amendment to Amended and       Incorporated by reference to
                        Restated Security Agreement dated     Exhibit 10.5 to the October 1995
                        October 20, 1995 among Registrant     Form 10-Q
                        and Registrant's gold lenders.

   10.31                Fifth Amendment to Amended and        Incorporated by reference to
                        Restated Security Agreement dated     Exhibit 10.6 to the October 1995
                        October 20, 1995 among Registrant     Form 10-Q
                        and Registrant's gold lenders.

   10.32                Fifth Amendment to Assignment of      Incorporated by reference to
                        Trademarks and Service Marks dated    Exhibit 10.7 to the October 1995
                        October 20, 1995 among Registrant     Form 10-Q
                        and Registrant's gold lenders

   10.33                Seventh Amendment to Amended and      Incorporated by reference to
                        Restated Consignment Agreement        Exhibit 10.8 to the October 1995
                        dated October 20, 1995 between        Form 10-Q
                        Registrant and Rhode Island
                        Hospital Trust National Bank

   10.34                Assignment of Trademarks and          Incorporated by reference to
                        Service Marks as Collateral, dated    Exhibit 10.56 to the Company's
                        July 12, 1990, between Registrant     Annual Report on Form 10-K for the
                        and Rhode Island Hospital Trust       fiscal year ended  January 27, 1996
                        National Bank, individually and as    (the "1996 Form 10-K")
                        agent

   10.35                First Amendment to Assignment of      Incorporated by reference to
                        Trademarks and Service Marks as       Exhibit 10.57 to the 1996 Form 10-K
                        Collateral dated as of June
                        5, 1992, between Registrant and
                        Rhode Island Hospital Trust
                        National Bank, individually and as
                        agent

   10.36                Deferred Compensation Plan dated      Incorporated by reference to
                        as of March 4, 1996                   Exhibit 10.59 to the 1996 Form 10-K

   10.37                Letter Agreement dated July 23,       Incorporated by reference to
                        1996 among the Company and certain    Exhibit 10.3 to the Company's
                        of the Senior Note Holders            Quarterly Report on Form 10-Q for
                                                              the quarter ended July 27, 1996
                                                              (the "July 1996 Form 10-Q")


   10.38                Letter Agreement dated July 23,       Incorporated by reference to
                        1996 among the Company and certain    Exhibit 10.4 to the July 1996 Form
                        of the Senior Note Holders            10-Q
</TABLE>

                                      -23-
<PAGE>   24

<TABLE>
<CAPTION>
<S>                     <C>                                   <C>
   10.39                Amendment to the 1993 Long Term       Incorporated by reference to
                        Incentive Plan                        Exhibit 10.1 to the Company's
                                                              Quarterly Report on Form 10-Q
                                                              for the quarter ended October
                                                              26, 1996 (the "October 1996
                                                              Form 10-Q")

   10.40                Amendment to the NonEmployees         Incorporated by reference to
                        Directors' Plan                       Exhibit 10.2 to the Company's
                                                              October 1996 Form 10-Q

   10.41                Lease dated as of May 1, 1991         Incorporated by reference to
                        between Michael Anthony Company       Exhibit 10.60 to the Company's
                        d/b/a MacQuesten Realty Company       Annual Report on Form 10-K for the
                        and Registrant                        year ended February 1, 1997 (the
                                                              "1997 Form 10-K")

   10.42                Lease dated as of May 1, 1991         Incorporated by reference to
                        between Michael Anthony Company       Exhibit 10.61 to the 1997 Form-10-K
                        d/b/a MacQuesten Realty Company
                        and Registrant

   10.43                Contract of Sale dated May 16,        Incorporated by reference to
                        1997 between Registrant and           Exhibit 10 to the Company's
                        MacQuesten Realty Company             Quarterly Report on Form 10-Q for
                                                              the quarter ended May 3, 1997

   10.44                Promissory Note dated August 22,      Incorporated by reference to
                        1997 issued by Registrant to the      Exhibit 10 to the Company's
                        Chase Manhattan Bank                  Quarterly Report on Form 10-Q for
                                                              the quarter ended August 2, 1997

   10.45                Severance and Termination             Incorporated by reference to
                        Agreement dated October 22, 1997      Exhibit 10 to the Company's
                        between Registrant and Mark Hanna     Quarterly Report on Form 10-Q for
                                                              the quarter ended November 1, 1997

   10.46                Note Purchase Agreement, dated as     Filed as an Exhibit to this Form
                        of May 1, 1992, among the             10-K on page 54
                        Registrant and the holders of the
                        Registrant's Senior Notes due 2002
                        (the "2002 Notes")

   10.47                Security Agreement, dated as of       Filed as an Exhibit to this Form
                        June 5, 1992, among the Registrant    10-K on page 78
                        and the holders of the 2002 Notes

   10.48                $3,500,000 Senior Note due 2002 of    Filed as an Exhibit to this Form
                        the Registrant in favor of            10-K on page 88
                        Northern Life Insurance Company

   10.49                $3,000,000 Senior Note due 2002 of    Filed as an Exhibit to this Form
                        the Registrant in favor of Royal      10-K on page 90
                        Maccabees Life Insurance Company

</TABLE>


                                      -24-
<PAGE>   25

<TABLE>
<CAPTION>
<S>                     <C>                                   <C>
   10.50                $1,000,000 Senior Note due 2002 of    Filed as an Exhibit to this Form
                        the Registrant in favor of The        10-K on page 92
                        North Atlantic Life Insurance
                        Company of America

   10.51                $1,000,000 Senior Note due 2002 of    Filed as an Exhibit to this Form
                        the Registrant in favor of Farm       10-K on page 94
                        Bureau Life Insurance Company of
                        Michigan

   10.52                $1,000,000 Senior Note due 2002 of    Filed as an Exhibit to this Form
                        the Registrant in favor of FB         10-K on page 96
                        Annuity Company

   10.53                $500,000 Senior Note due 2002 of      Filed as an Exhibit to this Form
                        the Registrant in favor of Farm       10-K on page 98
                        Bureau Mutual Insurance Company of
                        Michigan

   10.54                1993 Long-term Incentive Plan of      Filed as an Exhibit to this Form
                        the Registrant                        10-K on page 100

   10.55                1993 NonEmployee Directors' Stock     Filed as an Exhibit to this Form
                        Option Plan of the Registrant         10-K on page 129

   10.56                Letter agreement, dated April 14,     Filed as an Exhibit to this Form
                        1998, among the Registrant and        10-K on page 145
                        holders of the 2002 Notes

   10.57                Letter agreement, dated April 14,     Filed as an Exhibit to this Form
                        1998, among the Registrant and        10-K on page 147
                        holders of the 2004 Notes

   21                   Subsidiaries of the Registrant        Filed as an Exhibit to this Form
                                                              10-K on page 149

   27                   Financial Data Schedule               Filed as an Exhibit to this Form
                                                              10-K on page 150
</TABLE>


REPORT ON FORM 8K

         (b) Not applicable


                                      -25-
<PAGE>   26

INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
Michael Anthony Jewelers, Inc.
Mount Vernon, New York

We have audited the accompanying consolidated balance sheets of Michael Anthony
Jewelers, Inc. and subsidiaries as of January 31, 1998 and February 1, 1997 and
the related consolidated statements of operations, changes in stockholders'
equity and cash flows for each of the three years in the period ended January
31, 1998. Our audits also included the financial statement schedule listed in
the Index at Item 14(a)(2). These consolidated financial statements and
financial statement schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Michael Anthony Jewelers, Inc. and
subsidiaries as of January 31, 1998 and February 1, 1997, and the results of
their operations and their cash flows for each of the three years in the period
ended January 31, 1998, in conformity with generally accepted accounting
principles. Also, in our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.

/s/DELOITTE & TOUCHE LLP

April 20, 1998
Parsippany, New Jersey





                                      F-1
<PAGE>   27
                          MICHAEL ANTHONY JEWELERS, INC
                           CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                                    January 31,        February 1,
ASSETS                                                                                 1998               1997
------                                                                              -----------        -----------
<S>                                                                                   <C>                <C>    
CURRENT ASSETS:
     Cash and equivalents                                                              $6,747             $10,430
     Accounts receivable:
        Trade (less allowances of $1,196 and $1,404, respectively)                     22,234              21,500
        Other                                                                              40                  91
     Inventories                                                                       12,913              18,903
     Income tax refundable                                                              1,667                   -
     Prepaid expenses and other current assets                                          1,640                 885
     Deferred taxes                                                                       720                 578
                                                                                      -------             -------
          Total current assets                                                         45,961              52,387

PROPERTY, PLANT AND EQUIPMENT - net                                                    18,045              18,621
INTANGIBLES - net                                                                         584                 916
OTHER ASSETS                                                                            1,054                 825
                                                                                      -------             -------
                                                                                      $65,644             $72,749
                                                                                      =======             =======
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

CURRENT LIABILITIES:
     Accounts payable - trade                                                         $ 2,870             $ 3,141
     Current portion of long-term debt
        and lease liability                                                             1,446               3,402
     Accrued expenses                                                                   4,385               3,802
                                                                                      -------             -------

          Total current liabilities                                                     8,701              10,345
                                                                                      -------             -------

LONG-TERM DEBT                                                                         12,617              13,946
                                                                                      -------             -------
CAPITAL LEASE LIABILITY                                                                   119                 348
                                                                                      -------             -------
DEFERRED TAXES                                                                            818               1,068
                                                                                      -------             -------

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 and
         8,279,000 shares issued and outstanding  as of
         January 31, 1998, and February 1, 1997, respectively                               8                   8
     Additional paid-in capital                                                        31,747              31,732
     Retained earnings                                                                 13,484              16,096
     Treasury stock, 578,000 and 250,000 shares as of
         January 31, 1998 and February 1, 1997,
         respectively                                                                  (1,850)               (794)
                                                                                      -------             -------

               Total stockholders' equity                                              43,389              47,042
                                                                                      -------             -------

                                                                                      $65,644             $72,749
                                                                                      =======             =======
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.



                                      F-2
<PAGE>   28



                 MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)



<TABLE>
<CAPTION>
                                                                               Year Ended
                                                              ----------------------------------------------
                                                              January 31,      February 1,       January 27,
                                                                 1998             1997              1996
                                                              -----------      -----------       -----------
<S>                                                            <C>               <C>              <C>     
NET SALES                                                      $129,949          $150,629         $145,257

COST OF GOODS SOLD                                              107,182           124,041          121,195
                                                               --------          --------         --------

          GROSS PROFIT ON SALES                                  22,767            26,588           24,062

SELLING, GENERAL AND ADMINISTRATIVE
  EXPENSES                                                       25,155            21,372           19,455
                                                               --------          --------         --------

          OPERATING (LOSS)/INCOME                                (2,388)            5,216            4,607
                                                               --------          --------         --------

OTHER INCOME (EXPENSES):
     Gold consignment fee                                        (1,305)           (1,457)          (2,006)
     Interest expense                                            (1,522)           (1,698)          (1,829)
     Interest income                                                297               433              359
     Other income                                                   705                74               83
                                                               --------          --------         --------

         Total other income (expenses)                           (1,825)           (2,648)          (3,393)
                                                               --------          --------         --------

(LOSS)/INCOME BEFORE INCOME TAXES                                (4,213)            2,568            1,214

INCOME TAX (BENEFIT)/PROVISION                                   (1,601)              778              486
                                                               --------          --------         --------

          NET (LOSS)/INCOME                                    $ (2,612)         $  1,790         $    728
                                                               =========         ========         ========

(LOSS)/EARNINGS PER SHARE - BASIC
    AND DILUTED                                                $   (.34)         $    .22         $    .09
                                                               =========         ========         ========

WEIGHTED AVERAGE NUMBER OF SHARES                                 7,746             8,241            8,475
                                                               =========         ========         ========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.



                                      F-3
<PAGE>   29



                 MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                Common Stock        Additional                   Treasury Stock 
                            --------------------      Paid-In       Retained   ------------------ 
                            Shares       Dollars      Capital       Earnings   Shares     Dollars       Total
                            ------       -------      -------       --------   ------     -------       -----
<S>                          <C>         <C>          <C>           <C>          <C>      <C>          <C>    
Balance - January 28, 1995   9,239       $     9      $35,170       $13,578      (578)    $(2,312)     $46,455


Purchase of treasury stock       -             -            -             -      (387)     (1,125)      (1,125)
                                                      
Net income                       -             -            -           728         -           -          728
                             -----       -------      -------       -------      ----     -------      -------

Balance - January 27, 1996   9,239             9       35,170        14,306      (965)     (3,437)      46,048

Purchase of treasury stock       -             -            -             -      (250)       (811)        (811)

Retirement of treasury stock  (965)           (1)      (3,453)            -       965       3,454            -

Issuance of stock                5             -           15             -         -           -           15

Net income                       -             -            -         1,790         -           -        1,790
                             -----       -------      -------       -------      ----     -------      -------

Balance - February 1, 1997   8,279       $     8      $31,732       $16,096      (250)     $ (794)     $47,042

Purchase of treasury stock       -             -            -             -      (328)     (1,056)      (1,056)

Issuance of stock                3             -           15             -         -           -           15

Net loss                         -             -            -        (2,612)        -           -       (2,612)
                             -----       -------      -------       -------      ----     -------      -------

Balance - January 31, 1998   8,282       $     8      $31,747       $13,484      (578)    $(1,850)     $43,389
                             =====       =======      =======       =======      ====     =======      =======
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.




                                      F-4
<PAGE>   30




                 MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)



<TABLE>
<CAPTION>
                                                                                               Year Ended
                                                                                ----------------------------------------
                                                                                January 31,    February 1,   January 27,
                                                                                  1998            1997          1996
                                                                                -----------    -----------   -----------
<S>                                                                              <C>             <C>           <C>   
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net (loss)/income                                                            $(2,612)        $1,790        $  728
    Adjustments to reconcile net (loss)/income to net cash
      provided by operating activities:
             Depreciation and amortization                                         4,761          3,749         4,009
             Provision for accounts receivable                                       284            170           247
             Provision for sales returns                                               -            261           200
             Deferred tax (benefit)/provision                                       (392)           307          (160)
             (Gain)/loss on disposal of property, plant
               and equipment                                                          (2)            19            48
    Provision for stock compensation                                                  15             15             -
    (Increase)/decrease in operating assets:
             Accounts receivable                                                    (761)         8,087        (3,735)
             Inventories                                                           5,990            795           452
             Prepaid expenses and other current assets                            (2,422)           284          (593)
             Other assets                                                           (310)          (164)         (833)
    Increase/(decrease) in operating liabilities:
             Accounts payable                                                       (271)        (1,434)         (414)
             Accrued expenses                                                        583           (719)          872
                                                                                  ------         ------         -----

                  Net cash provided by operating activities                        4,863         13,160           821
                                                                                  ------         ------         -----

CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of property, plant and equipment                                     (4,010)        (3,816)       (4,616)
    Proceeds from sale of equipment                                                   34              -             -
                                                                                  ------         ------         -----

                  Net cash used in investing activities                           (3,976)        (3,816)       (4,616)
                                                                                  ------         ------         -----

CASH FLOWS FROM FINANCING ACTIVITIES:
    Principal payments of long-term debt
      and capital lease liabilities                                               (3,514)        (4,776)       (2,722)
    Proceeds from line of credit                                                  15,700          6,600         9,400
    Payments to line of credit                                                   (15,700)        (6,600)       (9,400)
    Purchase of treasury stock                                                    (1,056)          (811)       (1,125)
    Proceeds from mortgage                                                             -              -         2,500
    Borrowings of long-term debt                                                       -              -         6,000
                                                                                  ------         ------         -----

                  Net cash (used in)/provided by financing activities             (4,570)        (5,587)        4,653
                                                                                  ------         ------         -----

NET (DECREASE)/INCREASE IN CASH                                                   (3,683)         3,757           858

CASH AND EQUIVALENTS AT BEGINNING OF PERIOD                                       10,430          6,673         5,815
                                                                                  ------         ------         -----

CASH AND EQUIVALENTS AT END OF PERIOD                                             $6,747        $10,430        $6,673
                                                                                  ======        =======        ======
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.



                                      F-5
<PAGE>   31



                 MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)




<TABLE>
<CAPTION>
                                                                                              Year Ended
                                                                                -----------------------------------------
                                                                                January 31,    February 1,    January 27,
                                                                                  1998            1997           1996
                                                                                -----------    -----------    -----------
<S>                                                                                <C>            <C>           <C>   
SUPPLEMENTAL SCHEDULE OF NON-CASH
  INVESTING ACTIVITIES:

    Liability incurred for acquisition of
      equipment                                                                    $    -         $    -        $  200
    Capital lease obligations                                                      $    -         $    8        $  524


SUPPLEMENTAL DISCLOSURE OF
  CASH FLOW INFORMATION:

    Cash paid during the year for:
      Interest and gold consignment fees                                           $2,858         $3,451        $3,701
      Income taxes                                                                 $   95         $  425        $  475

</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.




                                      F-6
<PAGE>   32






   MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   AS OF JANUARY 31, 1998

   -----------------------------------------------------------------------------

   1.   NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        Nature of Operations

        Michael Anthony Jewelers, Inc. ("the Company"), is a leading designer,
        marketer and manufacturer of affordable fine jewelry whose customers
        include jewelry chain stores, discount stores, department stores,
        television home shopping networks, catalogue retailers, and wholesalers.

        Basis of Consolidation and Presentation

        The accompanying consolidated financial statements include the accounts
        of Michael Anthony Jewelers, Inc. and its subsidiaries, all of which are
        wholly-owned. All intercompany balances and transactions have been
        eliminated.

        Inventories and Cost of Goods Sold

        Inventories are valued at lower of cost (first in first-out method) or
        market.

        The Company satisfies a majority of its gold supply needs through gold
        consignment agreements with financial institutions that lease gold to
        the Company ("gold lenders"), whereby the gold lenders have agreed to
        consign fine gold to the Company (see Note 4). In accordance with the
        terms of the agreements, the Company has the option of repaying the gold
        lenders in an equivalent number of ounces of fine gold or cash based
        upon the then quoted market price of gold.

        The principal component of cost of goods sold is the cost of the gold
        bullion and other raw materials used in the production of the Company's
        jewelry. Other components of cost of goods sold include direct costs
        incurred by the Company in its manufacturing operations, depreciation,
        freight and insurance.

        Property, Plant and Equipment

        Property, plant and equipment are carried at cost. Depreciation is
        computed using the straight-line method over the estimated useful lives
        of the assets, five to fifteen years for machinery and equipment and
        thirty years for buildings. Leasehold improvements are amortized over
        the lesser of the estimated life of the asset or the lease.



                                      F-7
<PAGE>   33



   MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   AS OF JANUARY 31, 1998

   -----------------------------------------------------------------------------

   1.   NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        (Continued)

        Intangibles

        Intangible assets (net of accumulated amortization of $1,416,000 and
        $1,209,000 as of January 31, 1998 and February 1, 1997, respectively),
        consist of patents which are amortized on a straight-line basis over the
        lives of the patents, approximately 14 years and a covenant-not-to-
        compete which is amortized on a straight-line basis over the life of the
        covenant of five years.

        Revenue Recognition

        Revenue from sales to customers (other than consignment) is recognized
        at the time the merchandise is shipped. Merchandise sold under
        consignment arrangements between the Company and certain customers is
        not recognized as revenue by the Company until the products are sold by
        the consignee. In certain cases, the Company accepts payment for
        merchandise in gold. Additionally, the Company enters into arrangements
        for certain customers of its rope chain and tubing products whereby the
        gold value of the finished product is transferred in the form of fine
        gold ounces from the customer to the Company. The value of the finished
        product that exceeds the gold content value is recovered as revenue and
        the related cost to manufacture is recorded as an expense ("tolling
        arrangements").

        Allowance for Sales Returns

        The Company reduces gross sales by the amount of discounts and returns
        to determine net sales. Each month the Company estimates a reserve for
        returns based on historical experience and the amount of gross sales.
        The reserve is adjusted periodically to reflect the Company's actual
        return experience.

        Catalog Costs

        Catalog costs are charged to expense as incurred, the only exception
        being major catalog revisions. Costs capitalized are amortized over the
        units of catalogs shipped, up to a maximum of two years. At January 31,
        1998, February 1, 1997 and January 27, 1996, in connection with three
        significant catalog revisions, approximately $210,000, $124,000 and
        $250,000 respectively, had been capitalized. Included in the statement
        of operations for the years ended January 31, 1998, February 1, 1997 and
        January 27, 1996, is amortization expense of $229,000, $230,000 and
        $82,000, respectively.




                                      F-8
<PAGE>   34

   MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   AS OF JANUARY 31, 1998

   -----------------------------------------------------------------------------

   1.   NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        (Continued)

        Cash Equivalents

        Highly liquid investments with maturities of three months or less at the
        date of acquisition are classified as cash equivalents.

        Financial Instruments

        The Company utilizes financial instruments, including commodity futures,
        forwards and options on futures, to limit its exposure to fluctuations
        in the price of gold. The Company does not hold or issue such
        instruments for trading purposes. The Company hedges its future
        contracts for gold against anticipated sales commitments with its
        customers. Gains or losses on the future contracts are deferred until
        settlement of the related anticipated sales to a customer. At January
        31, 1998, there were forward contracts outstanding for the delivery of
        an aggregate of 5,000 ounces of gold at an average price of $302 or
        approximately $1.5 million. The Company's exposure to market risk
        related to the derivative financial instruments is limited to
        fluctuations in the price of gold. The Company is also exposed to credit
        loss in the event of nonperformance by the counterparties to the
        instruments; however, the risk of credit loss is not considered to be
        significant.

        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.






                                      F-9
<PAGE>   35



   MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   AS OF JANUARY 31, 1998

   -----------------------------------------------------------------------------

    1.  NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
         (Continued)

        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.

        Use of Estimates

        The preparation of financial statements in conformity with generally
        accepted accounting principles requires management to make estimates and
        assumptions that affect the reported amounts of assets and liabilities
        and disclosure of contingent assets and liabilities at the date of the
        financial statements and the reported amounts of revenues and expenses
        during the reporting period. Actual results could differ from those
        estimates.

        Fiscal Year End

        The Company's fiscal year end is the Saturday closest to the end of
        January, effective with the fiscal year ended February 1, 1997. The
        financial statements for the fiscal years ended January 31, 1998,
        February 1, 1997 and January 27, 1996 were comprised of 52, 53 and 52
        weeks, respectively.

        Reclassifications

        Certain reclassifications were made to the prior year's financial
        statements to confirm to the current presentation.




                                      F-10
<PAGE>   36



  MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  AS OF JANUARY 31, 1998

  ------------------------------------------------------------------------------

   2.    INVENTORIES

<TABLE>
<CAPTION>
         Inventories consist of:                                     January 31,         February 1,
                                                                        1998                 1997
                                                                     -----------         -----------
                                                                             (In thousands)
                         <S>                                         <C>                   <C>    
                          Finished goods                              $27,691               $37,020
                          Work in process                              13,335                14,597
                          Raw materials                                 5,095                 7,568
                                                                      -------               -------
                                                                       46,121                59,185
                          Less:
                           Consigned gold                              33,208                40,282
                                                                      -------               -------
                                                                      $12,913               $18,903
                                                                      =======               =======
</TABLE>

        At January 31, 1998 and February 1, 1997, inventories excluded
        approximately 108,900 and 116,950 ounces of gold on consignment,
        respectively.

        In the fourth quarter of fiscal 1998, management of the Company
        reassessed its marketing and production strategy and determined to
        implement a significantly different strategy. This was a direct result
        of the changing order patterns of some of the Company's major customers.
        As such, management made the determination to write down certain
        inventory, by approximately $3,309,000, as part of the implementation of
        a SKU reduction program and the markdown of discontinued styles.

   3.   PROPERTY, PLANT AND EQUIPMENT

        Property, plant and equipment consist of the following:

<TABLE>
<CAPTION>
                                                                     January 31,         February 1,
                                                                        1998                 1997
                                                                     -----------         -----------
                                                                             (In thousands)
                <S>                                                  <C>                   <C>  
                  Machinery and equipment                             $32,437               $30,257
                  Leasehold improvements                                2,492                 2,318
                  Building and building improvements                    6,331                 5,156
                  Land                                                  1,508                 1,070
                                                                      -------               -------
                                                                       42,768                38,801
                  Less:  Accumulated depreciation
                            and amortization                           24,723                20,180
                                                                      -------               -------
                                                                      $18,045               $18,621
                                                                      =======               =======
</TABLE>

        Included in selling, general and administrative expenses for the year
        ended January 31, 1998, was a charge of approximately $441,000 that was
        due to the write down of certain long-lived assets.



                                      F-11
<PAGE>   37

  MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  AS OF JANUARY 31, 1998

  ------------------------------------------------------------------------------

   4.   GOLD CONSIGNMENT AGREEMENTS

        The Company has gold consignment agreements with gold lenders. Under the
        terms of the agreements, the Company is entitled to lease the lesser of
        an aggregate amount of 250,000 ounces, or an aggregate consigned gold
        value not to exceed $106,695,000. The consigned gold is secured by
        certain property of the Company including its inventory and equipment.
        Title to such consigned gold remains with the gold lenders until the
        Company purchases the gold. However, during the period of consignment,
        the entire risk of physical loss, damage or destruction of the gold is
        borne by the Company. The purchase price per ounce is based on the daily
        Second London Gold Fix. The Company pays the gold consignors a
        consignment fee based on the dollar value of gold ounces outstanding, as
        defined in the agreements.

        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 agreement, 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.

        The consignment agreements contain certain restrictive covenants
        relating to maximum usage, net worth, working capital, and other
        financial ratios and each of the agreements require the Company to own a
        specific amount of gold at all times. As of January 31, 1998, the
        Company was in compliance with these covenants and the Company's owned
        gold inventory was valued at approximately $3,996,000.

   5.   ACCRUED EXPENSES

        Accrued expenses consist of the following:
<TABLE>
<CAPTION>
                                                                     January 31,         February 1,
                                                                        1998                1997
                                                                     -----------         -----------
                                                                             (In thousands)
                         <S>                                          <C>                   <C>   
                          Accrued advertising                          $1,177                $1,493
                          Accrued legal expense                           600                   -
                          Accrued payroll expenses                        497                   515
                          Accrued interest                                317                   347
                          Customer deposits payable                       154                   130
                          Other accrued expenses                        1,640                 1,317
                                                                       ------                ------

                                                                       $4,385                $3,802
                                                                       ======                ======
</TABLE>


                                      F-12
<PAGE>   38



   MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   AS OF JANUARY 31, 1998

   -----------------------------------------------------------------------------

   6.   LONG-TERM DEBT

        Long-term debt consists of the following:
<TABLE>
<CAPTION>
                                                                                      January 31,         February 1,
                                                                                         1998                1997
                                                                                      -----------         -----------
                                                                                             (In thousands)
       <S>                                                                              <C>                 <C>   
        Notes payable - insurance companies, interest at 8.61% payable
        semi-annually, principal payable in annual installments of $1,111,000
        through May 15, 2002.                                                            $5,555              $6,667

        Notes payable - insurance companies, interest at 1.5% above the London
        Interbank Offered Rate (LIBOR), adjusted and payable quarterly (7.38% 
        as of January 31, 1998), principal payable in annual installments of
        $1,000,000 commencing May 1999 through May 15, 2004, interest increases
        to 2.5% above LIBOR effective May 15, 1998.                                       6,000               6,000

        Mortgage payable - interest at 8%, interest and principal of $24,000
        payable monthly over a ten-year term through October 2005.                        2,283               2,384

        Notes payable - insurance companies, interest at 10.5%, paid in full
        at January 31, 1998.                                                                  -               1,750

        Other                                                                                 -                 100
                                                                                        -------             -------
                                                                                         13,838              16,901
        Less:  current portion                                                            1,221               2,955
                                                                                        -------             -------

                                                                                        $12,617             $13,946
                                                                                        =======             =======
</TABLE>

        The notes payable are secured by the Company's accounts receivable,
        machinery and equipment, inventory (secondary lien to the gold lenders)
        and proceeds. The mortgage payable is secured by the Company's corporate
        headquarters building and land, having a net book value of approximately
        $4,778,000 at January 31, 1998, and certain equipment therein.

        The note purchase agreements contain restrictive financial covenants and
        limit the payment of dividends. Although the Company does not expect to
        pay dividends in the near future, approximately $1,914,000 would have
        been available for payment at January 31, 1998. Additionally, the
        mortgage agreement contains certain restrictive financial covenants.



                                      F-13
<PAGE>   39



   MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   AS OF JANUARY 31, 1998

   -----------------------------------------------------------------------------

   6.   LONG-TERM DEBT (Continued)

        Due to the unusual charges (see Notes 2 and 3) in fiscal 1998 of
        approximately $3,750,000 and asset write-offs and other accruals of
        approximately $750,000, the Company was in default with a financial
        covenant under the note agreements and mortgage payable. The Company
        obtained waivers of this covenant noncompliance from both the insurance
        companies and mortgage lender. In addition, the insurance companies
        reset the financial covenant for fiscal 1999. Management expects the
        Company will be in compliance with the amended covenant in fiscal 1999.

        Maturities of long-term debt as of January 31, 1998 are as follows (in
        thousands):

                       Year Ending January
                       -------------------

                               1999                                  $1,221
                               2000                                   2,230
                               2001                                   2,240
                               2002                                   2,251
                               2003                                   2,262
                            Thereafter                                3,634
                                                                    -------
                                                                    $13,838
                                                                    =======

   7.   LINE OF CREDIT

        At January 31, 1998, the Company had a $15,000,000 line of credit
        agreement with no borrowings outstanding. The line of credit is secured
        by certain assets of the Company, including accounts receivable and
        inventory. Borrowings under the facility bear interest at the Company's
        option of the bank's prime rate, the fixed rate loan (as defined in the
        agreement) or the adjusted Eurodollar rate plus 2.5%. The line of credit
        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.



                                      F-14
<PAGE>   40



   MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   AS OF JANUARY 31, 1998

   -----------------------------------------------------------------------------

   8.   FAIR VALUE OF FINANCIAL INSTRUMENTS

        The carrying amounts and fair values of the Company's financial
        instruments are as follow:

<TABLE>
<CAPTION>
                                                            January 31, 1998              February 1, 1997
                                                         ----------------------         -------------------
                                                         Carrying         Fair          Carrying      Fair
                                                           Value          Value           Value       Value
                                                           -----          -----           -----       -----
                                                                             (In thousands)
       <S>                                              <C>             <C>            <C>          <C>   
        Notes with insurance companies:

             10.5% notes payable                          $    -          $    -         $1,750       $1,760
             8.61% notes payable                          $5,556          $5,725         $6,667       $6,814
             1995 notes payable                           $6,000          $6,000         $6,000       $6,000

             Mortgage payable                             $2,283          $2,283         $2,384       $2,384
             Promissory notes                             $    -          $    -         $  100       $  100
</TABLE>

        The fair values of the 10.5% and 8.61% notes payable and the mortgage
        payable were based on current rates available to the Company for debt
        with similar remaining maturities. The fair value of the 1995 notes
        payable was assumed to reasonably approximate its carrying amount since
        it contains a variable interest rate.

        The Company believes the carrying amount of the following financial
        instruments is equal to their fair value due to their short period of
        maturity: cash, accounts receivable, accounts payable and accrued
        expenses. The Second London Gold Fix is used daily to value the ounces
        of gold and as such the carrying value of gold inventory approximates
        fair value.

   9.   INCOME TAXES

        Deferred income taxes reflect the net tax effects of temporary
        differences between the carry amounts of assets and liabilities for
        financial purposes and for income tax purposes.

        As of January 31 1998, the balance sheet includes refundable income
        taxes of $1,667,000 which management anticipates receiving. The Company
        plans, for federal tax purposes, to carry back the net operating loss
        generated during the year ended January 31, 1998.



                                      F-15
<PAGE>   41



   MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   AS OF JANUARY 31, 1998

   -----------------------------------------------------------------------------

   9.   INCOME TAXES (Continued)

        Income tax (benefit)/provision consists of the following:

<TABLE>
<CAPTION>
                                                                           Year Ended
                                                        -----------------------------------------------
                                                         January 31,       February 1,      January 27,
                                                            1998              1997             1996
                                                            ----              ----             ----
                                                                         (In thousands)
             <S>                                         <C>                 <C>              <C> 
              Current:
                  Federal                                 $(1,080)            $398             $565
                  State and local                            (129)              73               81
                                                          -------             ----             ----
 
                                                           (1,209)             471              646
              Deferred income tax                            (392)             307             (160)
                                                          -------             ----             ----

                        Total                             $(1,601)            $778             $486
                                                          =======             ====             ====
</TABLE>


        The following is a reconciliation of the federal statutory rate to the
effective tax rate:

<TABLE>
<CAPTION>
                                                                           Year Ended
                                                        -----------------------------------------------
                                                         January 31,       February 1,      January 27,
                                                            1998              1997             1996
                                                            ----              ----             ----
                                                                         (In thousands)
          <S>                                             <C>                 <C>              <C> 
            Statutory tax rate                              34.0%               34.0%            34.0%
              State and local taxes/(benefit),
                 net of federal benefit                      4.0                 3.0              5.0
            Reversal of prior year accruals                    -                (7.3)               -
            Other                                              -                  .6              1.0
                                                            ----                ----              ---

            Statutory tax/(benefit) rate                    38.0%               30.3%            40.0%
                                                            ====                ====             ====
</TABLE>




                                      F-16
<PAGE>   42



   MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   AS OF JANUARY 31, 1998

   -----------------------------------------------------------------------------

   9.   INCOME TAXES (Continued)

        The tax effects of significant items comprising the Company's deferred
        tax liabilities and assets are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                January 31,          February 1,
                                                                  1998                   1997
                                                                -----------          -----------
       <S>                                                       <C>                 <C>   
        Non-current deferred tax liabilities:
          Difference between book and tax
            depreciation methods                                   $818                $1,068
                                                                   ----                ------

        Current deferred tax assets:
          Reserves for sales returns and
            doubtful accounts                                       454                   520
          Inventory reserve                                         150                    50
          Other                                                     116                     8
                                                                   ----                ------

                                                                    720                   578
                                                                   ----                ------

          Net deferred tax liabilities                             $ 98                $  490
                                                                   ====                ======
</TABLE>

   10.  OTHER INCOME

        Other income for the year ended January 31, 1998, includes a gain of
        approximately $625,000 on the sale of an asset.

   11.  RELATED PARTY TRANSACTIONS

        In May 1991, the Company entered into two lease agreements with
        MacQuesten Realty Company ("MRC"), a partnership consisting of certain
        stockholders of the Company. Pursuant to the agreements, the Company
        agreed to rent the manufacturing and distribution facilities from MRC
        for a period of ten years, at an average annual rental of $536,000, plus
        real estate taxes and other occupancy costs.

        The Company had another lease agreement with MRC to rent a manufacturing
        facility from MRC. On May 16, 1997, the Company acquired the facility
        for a purchase price of $1,150,000. As part of the transaction, the
        Company obtained an exclusive, two-year option to acquire from MRC the
        two remaining manufacturing and distribution facilities that are
        currently being leased from MRC (the "Leased Properties").



                                      F-17
<PAGE>   43




   MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   AS OF JANUARY 31, 1998

   -----------------------------------------------------------------------------

   12.  LEASES AND COMMITMENTS

        (a)  Leases

        The Company conducts certain operations from leased manufacturing and
        distribution facilities. In addition to rent, the Company pays property
        taxes, insurance and certain expenses relating to leased facilities and
        equipment. The Company also leases machinery and equipment.

        The following is a schedule of net minimum lease payments owed under
        capital and operating leases as of January 31, 1998:

                Year Ending                       Capital          Operating
                 January                          Leases            Leases
                 -------                          ------            ------
                                                       (in thousands)
                1999                                $241              $504
                2000                                 111               531
                2001                                   8               540
                2002                                   -               135
                                                    ----              ----

        Minimum lease payments:                      360             $1,710
                                                                     ======
          Less: Interest                              19
                                                    ----

        Present value of net
          minimum lease payments                     341
        Less: current portion                        222
                                                    ----
                                                    $119
                                                    ====


        The majority of the payments set forth above for operating leases are to
        MacQuesten Realty Company.



                                      F-18
<PAGE>   44



   MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   AS OF JANUARY 31, 1998

   -----------------------------------------------------------------------------

   12.  LEASES AND COMMITMENTS (Continued)

        The interest rates applicable to the capital leases range from 4.84% -
        8.18%. Included in property plant and equipment as of January 31, 1998,
        are capitalized assets with a carrying value of $696,000. Total
        capitalized lease amortization expense was $242,000, $353,000 and
        $256,000 for the years ended January 31, 1998, February 1, 1997 and
        January 27, 1996.

        Rent expense related to the MRC leases, for the years ended January 31,
        1998, February 1, 1997 and January 27, 1996, amounted to $498,000,
        $624,000 and $563,000, respectively, principally for manufacturing and
        distribution facilities.

        (b) The Company's product line includes licensed goods manufactured
        pursuant to two or three year agreements with licensors. Royalty fees
        range from 6% to 12% of net sales of these products, or a minimum
        guarantee, whichever is greater. The Company records the related expense
        over the units sold.

        As of January 31, 1998, the future guaranteed royalty commitments are as
follows:

                                                 Guaranteed
             Year Ending                           Royalty
               January                           Commitments
               -------                           -----------
                                                (in thousands)

                 1999                               $239
                 2000                                 45
                                                    ----
                                                    $284

   13.  STOCK PLANS

        The Company has elected to continue to account for employees stock-based
        transactions under Accounting Principles Board No. 25, "Accounting for
        Stock Issued to Employees". Since the exercise price of all stock
        options granted under the stock plans were equal to the price of the
        stock at the date of grant, no compensation has been recognized by the
        Company.



                                      F-19
<PAGE>   45



   MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   AS OF JANUARY 31, 1998

   -----------------------------------------------------------------------------

   13.  STOCK PLANS (Continued)

        Under the Company's stock option agreements, had the compensation
        expense been determined based upon the fair value at the grant date
        consistent with the methodology prescribed under SFAS No. 123,
        "Accounting for Stock Based Compensation," the Company's pro forma, net
        (loss)/income and (loss)/earnings per share would have been net
        (loss)/income of $(2,691,000), $1,712,000 and $692,000, and $(.35), $.21
        and $.08, (loss)/earnings per share for the years ended January 31,
        1998, February 1, 1997 and January 27, 1996, respectively. The weighted
        average per share fair value of the option granted during the year ended
        January 31, 1998 was estimated at $.74 on the date of grant using the
        Black-Scholes option-pricing model with the following weighted average
        assumptions:

                                                                 January 31,
                                                                    1998
                                                                 -----------
                      Expected life (years)                           2
                      Risk-free interest rates                      5.6%
                      Expected volatility                          36.9%
                      Expected dividend yield                         -

        The pro forma effect on net loss and loss per share for the year ended
        January 31, 1998 may not be representative of the pro forma effect in
        future years because it includes compensation cost on a straight line
        basis over the vesting periods of the grants and does not take into
        consideration the pro forma compensation costs for grants made prior to
        1996.

        INCENTIVE STOCK OPTION PLANS

        (1) During July 1986, the Company adopted the 1986 Incentive Stock
        Option Plan. The Plan, as amended, permits the granting of incentive
        stock options and non-qualified stock options to employees for the
        purchase of up to an aggregate of 500,000 shares of common stock. The
        option term is for a period not to exceed ten years from the date of
        grant. At January 31, 1998, all shares reserved under the plan had been
        granted.



                                      F-20
<PAGE>   46



   MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   AS OF JANUARY 31, 1998

--------------------------------------------------------------------------------

   13.  STOCK PLANS (Continued)

        The changes in the number of shares under option, the weighted average
        option price per share and the exercisable price per share are as
        follows:

        1986 Incentive Stock Option Plan
<TABLE>
<CAPTION>
                                                                                     Weighted
                                                                                      Average             Exercise
                                                                        Shares      Option Price           Price
                                                                        ------      ------------           -----

            <S>                                                        <C>            <C>             <C>  
             Outstanding and exercisable, January 28, 1995               91,500         $3.74           $3.50 - $4.00

             Lapsed                                                     (37,000)        $3.91           $3.50 - $4.00
                                                                        -------

             Outstanding and exercisable, January 27, 1996               54,500         $3.63           $3.63

             Lapsed                                                      (1,000)        $3.63           $3.63
                                                                        -------

             Outstanding and exercisable, February 1, 1997               53,500         $3.63           $3.63

             Lapsed                                                     (53,500)        $3.63           $3.63
                                                                        -------

             Outstanding and exercisable, January 31, 1998                    -         $   -           $   -
                                                                        =======
</TABLE>

        (2) During the year ended June 30, 1994, the Company adopted the 1993
        Long-Term Incentive Plan and the 1993 Non-Employee Directors' Stock
        Option Plan. The Plans permit the granting of incentive stock options
        and non-qualified stock options to employees and non-employee directors
        for the purchase of up to an aggregate of 2,000,000 and 250,000 shares
        of common stock, respectively. The option term is for a period not to
        exceed five years from the date of grant.

        Long-term Incentive Plan
<TABLE>
<CAPTION>
                                                                                     Weighted
                                                                                      Average            Exercise
                                                                        Shares      Option Price          Price
                                                                        ------      ------------          -----
            <S>                                                        <C>            <C>            <C>    
             Outstanding at January 28, 1995                            320,500        $5.12          $4.13 - $7.75

              Lapsed                                                    (27,000)       $5.52          $4.13 - $7.75
              Granted                                                   371,400        $3.00          $2.63 - $3.23
                                                                        -------

             Outstanding at January 27, 1996                            664,900        $3.92          $2.63 - $7.75

              Lapsed                                                    (11,400)       $3.88          $2.94 - $4.13
              Granted                                                    15,000        $3.31          $3.31
</TABLE>



                                      F-21
<PAGE>   47

   MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   AS OF JANUARY 31, 1998

   -----------------------------------------------------------------------------

   13.  STOCK PLANS (Continued)

        Long-term Incentive Plan (Continued)
<TABLE>
<CAPTION>
                                                                                   Weighted
                                                                                    Average              Exercise
                                                                    Shares        Option Price            Price
                                                                    ------        ------------            -----
            <S>                                                  <C>              <C>               <C> 
             Outstanding at February 1, 1997                       668,500          $3.91             $2.63 - $7.75

              Lapsed                                              (114,000)     $2.63 - $6.13         $2.63 - $6.13
              Granted                                              134,000          $3.00             $2.13 - $3.00
                                                                  --------

             Outstanding at January 31, 1998                       688,500          $3.60             $2.13 - $7.75
                                                                   =======
</TABLE>

        Options exercisable at January 31, 1998 were for 454,933 shares of
        common stock at a price between $2.63 - $7.75 a share. At January 31,
        1998, shares for future option grants totaling 1,296,500 were available
        under the plan.

        Non-Employee Directors' Stock Option Plan
<TABLE>
<CAPTION>
                                                                                   Weighted
                                                                                    Average           Exercise
                                                                       Shares     Option Price         Price
                                                                       ------     ------------         -----
<S>                                                                     <C>           <C>          <C>    
             Outstanding at January 28, 1995                            40,000        $5.85        $4.19 - $8.00

              Lapsed                                                   (10,000)       $7.31        $6.63 - $8.00
              Granted                                                   15,000        $3.02        $2.63 - $3.50
                                                                       -------

             Outstanding at January 27, 1996                            45,000        $4.58        $2.63 - $8.00

              Lapsed                                                   (10,000)       $7.31        $6.63 - $8.00
              Granted                                                   10,000        $3.03        $3.00 - $3.06
                                                                       -------

             Outstanding at February 1, 1997                            45,000        $3.63        $2.63 - $5.00

              Lapsed                                                    (5,000)       $4.18        $4.18
              Granted                                                   15,000        $3.00        $2.69 - $3.00
                                                                       -------

             Outstanding at January 31, 1998                            55,000        $2.69        $2.63 - $5.00
                                                                       =======
</TABLE>

        Options exercisable at January 31, 1998 were for 25,065 shares of common
        stock at a price between $2.63 - $5.00 a share. At January 31, 1998,
        shares for future option grants totaling 195,000 were available under
        this plan.



                                      F-22
<PAGE>   48

   MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   AS OF JANUARY 31, 1998

   -----------------------------------------------------------------------------

   13.  STOCK PLANS (Continued)

        WARRANTS AND NON-QUALIFIED OPTIONS

        The Company has granted common stock purchase warrants and non-qualified
        options.

        The changes in the number of shares under the stock purchase warrants
        and non-qualified options and the weighted average option price per
        share are as follows:

<TABLE>
<CAPTION>
                                                                                     Weighted
                                                                                      Average             Exercise
                                                                        Shares      Option Price           Price
                                                                        ------      ------------           -----
             <S>                                                       <C>             <C>             <C> 
             Outstanding at January 28, 1995                            122,500        $4.75           $3.25 - $7.50

              Lapsed                                                    (52,500)       $4.21           $4.00 - $4.50
                                                                       --------

             Outstanding at January 27, 1996                             70,000        $5.15           $3.25 - $7.50

              Lapsed                                                    (45,000)       $4.75           $4.00 - $6.25
                                                                       --------

             Outstanding at February 1, 1997                             25,000        $5.82           $3.25 - $7.50

              Granted                                                    96,000        $3.00           $3.00
                                                                       --------

             Outstanding and exercisable at
             January 31, 1998                                           121,000        $3.58           $3.00 - $7.50
                                                                       ========
</TABLE>

   14.  RETIREMENT PLAN

        The Company established a 401(k) Retirement Plan and Trust for all
        eligible employees. Under the terms of the plan the employee may
        contribute 1% to 20% of compensation. There is a partial employer
        matching contribution. Included in the statement of operations for the
        years ended January 31, 1998 and February 1, 1997 is $96,000 and $34,000
        of expense for the employer portion of the contribution. There were no
        employer contributions for the year ended January 27, 1996.



                                      F-23
<PAGE>   49




   MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   AS OF JANUARY 31, 1998

   -----------------------------------------------------------------------------

   15.  SIGNIFICANT CUSTOMERS

        Sales to the Company's two largest customers aggregated approximately
        25%, 25% and 29%, respectively, of net sales for the years ended January
        31, 1998, February 1, 1997 and January 27, 1996.

   16.  STOCK REPURCHASE PROGRAM

        In December 1995, the Company announced a Common Stock Repurchase
        Program, (the "1995 Stock Repurchase Program"), pursuant to which the
        Company may repurchase up to 750,000 share 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 the years ended January 31, 1998, February
        1, 1997, and January 27, 1996, the Company repurchased a total of
        328,000, 250,000 and 60,000 shares, respectively, on the open market
        under the 1995 Stock Repurchase Program for an aggregate price of
        approximately $1,056,000, $811,000 and $159,000, respectively. Effective
        May 24, 1996, the Board of Directors authorized the Company to retire
        965,200 shares of common stock, previously held as treasury stock. As of
        April 10, 1998, the Company had purchased an additional 420,000 shares
        on the open market for an aggregate of approximately $957,000.

        During the year ended January 27, 1996, the Company had repurchased
        327,500 shares on the open market under their 1994 stock repurchase
        program for $966,000. The Company will not re-issue these shares to the
        public. In November 1995, the Company discontinued this program.

   17.  LEGAL PROCEEDINGS

        In October 1997, a decision was entered in a case whereby the Company
        was ordered to pay the plaintiff according to the terms of an agreement
        entered into on May 16, 1986. On April 20, 1998, the Company settled the
        case and any future payments that would have been payable under the
        agreement for a one-time payment of $600,000. The settlement expense is
        included in selling, general and administrative expenses for the year
        ended January 31, 1998.

        The Company is involved in various legal claims and disputes, none of
        which is considered material and all of which, for the most part, are
        normal to the Company's business. In the opinion of management, the
        amount of losses that might be sustained, if any, from such claims and
        disputes would not have a material effect on the Company's financial
        statements.




                                      F-24
<PAGE>   50



                 MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




18.     Summary of Quarterly Results (Unaudited) in thousands

<TABLE>
<CAPTION>
                                  Year Ended January 31, 1998                         Year Ended February 1, 1997
                           -------------------------------------------        -------------------------------------------
                                         Quarter Ended                                       Quarter Ended
                           -------------------------------------------        -------------------------------------------
                           May 3,     Aug. 2,     Nov. 1,     Jan. 31,        Apr. 27,    Jul. 27,    Oct. 26,    Feb. 1,
                            1997        1997        1997        1998            1996        1996        1996        1997
                            ----        ----        ----        ----            ----        ----        ----        ----
<S>                        <C>       <C>          <C>         <C>              <C>          <C>       <C>         <C>    
Net sales (A)              $27,606    $22,618     $41,753     $37,972          $29,203      $27,706   $48,772     $44,948

Cost of goods sold          22,544     18,967      33,193      32,478           24,250       23,641    39,800      36,350
                           -------    -------     -------     -------          -------      -------   -------     -------


    Gross profit             5,062      3,651       8,560       5,494            4,953        4,065     8,972       8,598


Selling, general
   & administrative
   expenses                  5,252      5,845       6,233       7,825            4,335        4,482     6,019       6,536
                           -------    -------     -------     -------          -------      -------   -------     -------
Operating (loss)/income       (190)    (2,194)      2,327      (2,331)             618         (417)    2,953       2,062


Other income (expense):
   Gold consignment fees      (260)      (347)       (378)       (320)            (351)        (312)     (349)       (445)

   Interest expense           (381)      (304)       (363)       (474)            (429)        (410)     (426)       (433)

   Interest income             125        113          31          28              160          125        94          54

   Other - net                  24        643          19          19               14            6        34          20
                           -------    -------     -------     -------          -------      -------   -------     -------

  Total other income          (492)       105        (691)       (747)            (606)        (591)     (647)       (804)
    (expense)

(Loss)/Income from
  operations before
  income taxes                (682)    (2,089)      1,636      (3,078)              12       (1,008)    2,306       1,258



Income (benefit)/provision    (259)      (822)        650      (1,170)               4         (383)      878         279
                           -------    -------     -------     -------          -------      -------   -------     -------

       Net (loss)/income   $  (423)   $(1,267)    $   986     $(1,908)         $     8      $  (625)  $ 1,428    $    979
                           =======    =======     =======     =======          =======      =======   =======     =======
(Loss)/earnings per 
  share(B)                 $ (0.05)   $ (0.15)    $  0.13     $ (0.25)         $  0.00      $ (0.08)  $  0.17    $   0.12
                           =======    =======     =======     =======          =======      =======   =======     =======
</TABLE>


(A) The Company's net sales for the second quarter are subject to seasonal
    fluctuation. This fluctuation is mitigated to a degree by the early
    placement of orders for the holiday season.

(B) Per share amounts do not always add to the annual per share amount because
    the figures are required to be independently calculated.



                                      F-25
<PAGE>   51
                 MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
                                                                           ADDITIONS
                                  BALANCE AT                               CHARGED TO                    BALANCE AT
                                 BEGINNING OF     ADDITIONS CHARGED TO       OTHER                         END OF
DESCRIPTION                         PERIOD        COSTS AND EXPENSES        ACCOUNTS     DEDUCTIONS(A)     PERIOD
---------------------------------------------------------------------------------------------------------------------------
Allowance for
doubtful accounts:
---------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>                 <C>                <C>             <C>              <C>
Year ended January 31, 1998          $656                $284               $   -           $(224)           $716

Year ended February 1, 1997           901                 170                   -            (415)            656

Year ended January 27, 1996           646                 247                   -               8             901



Allowance for sales
returns:

Year ended January 31, 1998          $748                $  -               $   -           $(268)           $480

Year ended February 1, 1997           674                 261                   -            (187)            748

Year ended January 27, 1996           754                 200                   -            (280)            674
</TABLE>



(A)   Allowances, returns and uncollectible accounts charged against the
      reserve, (net of collections on previously written-off accounts).




                                      S-1
<PAGE>   52
                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) 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.

                                        By: /s/ MICHAEL PAOLERCIO
                                           -------------------------------------
                                        Michael W. Paolercio, Co-Chairman of the
                                        Board and Chief Executive Officer

                                        Date: April 30, 1998

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the registrant
in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
           SIGNATURE                                           TITLE                                        DATE
           ---------                                           -----                                        ----
<S>                                         <C>                                                           <C> 
/s/ MICHAEL PAOLERCIO                       Co-Chairman of the Board                                      April 30, 1998
---------------------------                 and Chief Executive Officer
(Michael W. Paolercio)                      (Principal Executive Officer)

/s/ ANTHONY PAOLERCIO                       Co-Chairman of the Board                                      April 30, 1998
---------------------------                 and President
(Anthony Paolercio, Jr.)                    

/s/ ALLAN CORN                              Chief Financial Officer,                                      April 30, 1998
---------------------------                 Senior Vice President
(Allan Corn)                                and Director (Principal
                                            Accounting Officer)

/s/ MICHAEL A. PAOLERCIO                    Senior Vice President,                                        April 30, 1998
---------------------------                 Treasurer and Director
(Michael Anthony Paolercio)                 

/s/ MICHAEL WAGER                           Director                                                      April 30, 1998
---------------------------
(Michael Wager)

/s/ DAVID HARRIS                            Director                                                      April 30, 1998
---------------------------
(David Harris)

/s/ DONALD MILLER                           Director                                                      April 30, 1998
---------------------------
(Donald Miller)
</TABLE>











<PAGE>   53


                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
                                                                        
                                                                        
    Exhibit No.                           Description                   
    -----------                           -----------                   
    <S>                    <C>                                          
       10.46                  Note Purchase Agreement, dated as         
                              of June 5, 1992, among the                
                              Registrant and the holders of the         
                              Registrant's Senior Notes due 2002        
                              (the "2002 Notes")                        
                                                                        
       10.47                  Security  Agreement, dated as of          
                              June 5, 1992, among the Registrant        
                              and the holders of the 2002 Notes         
                                                                        
       10.48                  $3,500,000 Senior Note due 2002 of        
                              the Registrant in favor of Northern       
                              Life Insurance Company                    
                                                                        
       10.49                  $3,000,000 Senior Note due 2002 of        
                              the Registrant in favor of Royal          
                              Maccabees Life Insurance Company          
                                                                        
       10.50                  $1,000,000 Senior Note due 2002 of        
                              the Registrant in favor of The            
                              North Atlantic Life Insurance             
                              Company of America                        
                                                                        
       10.51                  $1,000,000 Senior Note due 2002 of        
                              the Registrant in favor of Farm           
                              Bureau Life Insurance Company of          
                              Michigan                                  
                                                                        
       10.52                  $1,000,000 Senior Note due 2002 of        
                              the Registrant in favor of FB             
                              Annuity Company                           
                                                                        
       10.53                  $500,000 Senior Note due 2002 of          
                              the Registrant in favor of Farm           
                              Bureau Mutual Insurance Company of        
                              Michigan                                  
                                                                        
       10.54                  1993 Long-term Incentive Plan  of         
                              the Registrant                            
                                                                        
       10.55                  1993 NonEmployee Directors' Stock         
                              Option Plan of the Registrant             
                                                                        
       10.56                  Letter agreement, dated April 14,         
                              1998, among the Registrant and            
                              holders of the 2002 Notes                 
                                                                        
       10.57                  Letter agreement, dated April 14,         
                              1998, among the Registrant and            
                              holders of the 2004 Notes                 
                                                                        
        21                    Subsidiaries of Registrant                
                                                                        
        27                    Financial Data Schedule                   
</TABLE>